View Filing Data

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2013	May 03, 2013
Document And Entity Information
Entity Registrant Name	AIR INDUSTRIES GROUP, INC.
Entity Central Index Key	0001009891
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,711,093
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Current Assets
Cash and Cash Equivalents	$ 966,000	$ 490,000
Accounts Receivable, Net of Allowance for Doubtful Accounts of $725,000 and $705,000	9,509,000	11,631,000
Inventory	27,464,000	26,739,000
Prepaid Expenses and Other Current Assets	420,000	546,000
Deposits - Customers	3,000	133,000
Total Current Assets	38,362,000	39,539,000
Property and Equipment, net	5,526,000	5,883,000
Capitalized Engineering Costs - net of Accumulated Amortization of $3,550,000 and $3,449,000	807,000	802,000
Deferred Financing Costs, net, deposit and other assets	676,000	590,000
Intangible Assets, net	5,598,000	5,889,000
Goodwill	453,000	453,000
TOTAL ASSETS	51,422,000	53,156,000
Current Liabilities
Notes Payable and Capitalized Lease Obligations - Current Portion	17,675,000	19,211,000
Accounts Payable and Accrued Expenses	7,291,000	7,077,000
Lease Impairment - Current	82,000	85,000
Deferred Gain on Sale - Current Portion	38,000	38,000
Dividends Payable	358,000
Income Taxes Payable	1,941,000	1,448,000
Total Current Liabilities	27,385,000	27,859,000
Long Term Liabilities
Notes Payable and Capitalized Lease Obligation - Net of Current Portion	3,469,000	4,640,000
Lease Impairment - Net of Current Portion	108,000	127,000
Deferred Gain on Sale - Net of Current Portion	475,000	485,000
Deferred Rent	1,076,000	1,057,000
TOTAL LIABILITIES	32,513,000	34,168,000
Stockholders' Equity
Preferred Stock Par Value $.001 - Authorized 8,003,716 shares, 0 Shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively.
Designated as Series "B" Convertible Preferred - $.001 Par Value, 4,000,000 Shares Authorized, 0 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively; Liquidation Value, $ 0
Common Stock - Par value $.001, Authorized 20,000,000 Shares, 5,711,093 and 5,711,093 Shares Issued and Outstanding as of March 31, 2013 and December 31, 2012, respectively	6,000	6,000
Additional Paid-In Capital	37,555,000	37,913,000
Accumulated Deficit	(18,652,000)	(18,931,000)
TOTAL STOCKHOLDERS' EQUITY	18,909,000	18,988,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 51,422,000	$ 53,156,000

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Allowance for Doubtful Accounts	$ 725,000	$ 705,000
Accumulated Amortization	$ 3,550,000	$ 3,449,000
Stockholders Equity
Preferred Stock par value	$ .001	$ .001
Preferred Stock Authorized	8,003,716	8,003,716
Series A Convertible Preferred Stock par Value	$ .001	$ .001
Series A Convertible Preferred Stock Authorized	1,000	1,000
Series A Convertible Preferred Stock Issued	0	0
Series A Convertible Preferred Stock Outstanding	0	0
Series B Convertible Preferred Stock par Value	$ .001	$ .001
Series B Convertible Preferred Stock Authorized	4,000,000	4,000,000
Series B Convertible Preferred Stock Issued	0	0
Series B Convertible Preferred Stock Outstanding	0	0
Common Stock par value	$ .001	$ .001
Common Stock Authorized	20,000,000	20,000,000
Common Stock Issued	5,711,093	5,711,093
Common Stock Outstanding	5,711,093	5,711,093

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Condensed Consolidated Statements Of Income
Net Sales	$ 14,325,000	$ 16,038,000
Cost of Sales	10,678,000	12,767,000
Gross Profit	3,647,000	3,271,000
Operating Expenses	2,469,000	1,674,000
Income from Operations	1,178,000	1,597,000
Interest and financing costs	(385,000)	(497,000)
Other (expense) income, net	(25,000)	6,000
Income before provision for income taxes	768,000	1,106,000
Provision for income taxes	489,000	286,000
Net income	$ 279,000	$ 820,000
Income per share - basic	$ 0.05	$ 0.23
Income per share - diluted	$ 0.05	$ 0.23
Weighted average shares outstanding - basic	5,711,093	3,579,114
Weighted average shares outstanding - diluted	5,809,572	3,579,114

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ 279,000	$ 820,000
Adjustments to Reconcile Net Income to Net Cash provided by Operating Activities
Depreciation of property and equipment	403,000	356,000
Amortization of intangible assets	291,000	42,000
Amortization of capitalized engineering costs	101,000	110,000
Bad debt expense	27,000	86,000
Non-cash compensation expense		22,000
Amortization of deferred financing costs	15,000	13,000
Gain on sale of real estate	(10,000)	(10,000)
Adjustments to Lease Impairment		53,000
Changes in Assets and Liabilities (Increase) Decrease in Operating Assets:
Accounts Receivable	2,095,000	(1,844,000)
Inventory	(725,000)	856,000
Prepaid Expenses and Other Current Assets	126,000	(12,000)
Deposits	130,000	(41,000)
Other Assets	(100,000)	19,000
Increase (Decrease) in Operating Liabilities:
Accounts payable and accrued expenses	213,000	9,000
Deferred Rent	19,000	24,000
Income Taxes payable	493,000	223,000
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,357,000	726,000
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized engineering costs	(107,000)	(77,000)
Purchase of property and equipment	(45,000)	(54,000)
Deposit for new property and equipment		(101,000)
NET CASH USED IN INVESTING ACTIVITIES	(152,000)	(232,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable - Sellers	(157,000)	(146,000)
Capital lease obligations	(185,000)	(139,000)
Notes payable - Revolver	(1,914,000)	403,000
Payments of notes payable - Term Loan PNC	(450,000)	(250,000)
Payments related to Lease Impairment	(23,000)	(28,000)
NET CASH USED IN FINANCING ACTIVITIES	(2,729,000)	(160,000)
NET INCREASE IN CASH AND CASH EQUIVALENTS	476,000	334,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	490,000	577,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD	966,000	911,000
Schedule of noncash activities
Dividends payable	358,000
Supplemental cash flow information:
Cash paid during the year for interest	381,000	437,000
Cash paid during the period for income taxes		$ 64,000

FORMATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2013

Formation And Basis Of Presentation

Note 1. FORMATION AND BASIS OF PRESENTATION

Organization

Air Industries Group, Inc. (the "Company" or “AIRI”), a Delaware corporation, was incorporated on January 13, 2006.

The accompanying consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corporation (“AIM”), Welding Metallurgy, Inc. ("Welding") and Nassau Tool Works, Inc. (“NTW”).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal Business Activity

The Company through its AIM subsidiary is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. The Company's customers consist mainly of publicly traded companies in the aerospace industry.

Inventory Valuation

Inventory at March 31, 2013 and 2012 was computed based on a “gross profit” method.

The Company valued inventory at December 31, 2012 at the lower of cost on a first-in-first-out basis or market.

Credit and Concentration Risks

There were three customers that represented 59.3% and 67.9% of total sales for the three months ended March 31, 2013 and 2012, respectively. This is set forth in the table below.

Customer	Percentage of Sales
	2013		2012
	(Unaudited)		(Unaudited)

1		25.8		37.8
2		18.3		30.1
3		15.2		*

* Customer was less than 10% of sales for three months ended March 31, 2012

There were three customers that represented 51% and 54.6% of gross accounts receivable at March 31, 2013 and December 31, 2012, respectively. This is set forth in the table below.

Customer	Percentage of Receivables
	March		December
	2013		2012
	(Unaudited)
1		19.1		18.6
2		17.0		25.3
3		14.9		10.7

The Company has occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts.

AIM has several sole-source suppliers of various parts that are used in one or more of its products. If any of these sole

source suppliers were to go out of business or be unable to provide it parts for any reason, AIM would be required to develop new suppliers or to re-engineer its products, or both, which could delay shipment of products and have a material adverse effect on its operating results

Earnings per share

Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive.

The following is a reconciliation of the denominators of basic and diluted earnings per share computations:

	March 31, 2013		March 31, 2012
	(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earning per share		5,711,093		3,579,114
Effect of dilutive stock options and warrants		98,479		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		5,809,572		3,579,114

The following securities have been excluded from the calculation as their effect would be anti-dilutive:

	March 31,		March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Stock Options		12,548		306,336
Warrants		250		250
		12,798		306,586

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock-based compensation amounted to $0 and $22,000 for the three months ending March 31, 2013 and 2012, respectively and was included in operating expenses on the accompanying Condensed Consolidated Statement of Income.

Goodwill

Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $453,000 relates to the acquisition of Welding ($291,000) and NTW Acquisition ($162,000). Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances change that will more likely than not reduce the fair value of the reporting unit below its carrying amount.

The Company has determined that there has been no impairment of goodwill at March 31, 2013 and December 31, 2012.

Recently Issued Accounting Pronouncements

Effective January 1, 2013, the Company adopted ASU 2013-01, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (ASU 2013-01). ASU 2013-01 requires the disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance is effective prospectively for the Company for annual and interim periods beginning January 1, 2013. The adoption of ASU 2013-01 did not have a material effect on the Company’s financial position, results of operations or cash flows.

The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Reclassifications

Certain account balances in 2012 have been reclassified to conform to the current period presentation.

Subsequent Events

Management has evaluated subsequent events through the date of this filing.

ACCOUNTS RECEIVABLE

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Note 3. ACCOUNTS RECEIVABLE

The components of accounts receivable are detailed as follows:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Accounts Receivable Gross	$	10,234,000		$	12,336,000
Allowance for Doubtful Accounts		(725,000	)		(705,000	)
Accounts Receivable Net	$	9,509,000		$	11,631,000

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2013

Property And Equipment

Note 4. PROPERTY AND EQUIPMENT

The components of property and equipment consisted of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Machinery and Equipment	$	5,818,000		$	5,801,000		5 - 8 years
Capital Lease Machinery and Equipment		4,503,000			4,503,000		5 - 8 years
Tools and Instruments		3,984,000			3,968,000		1.5 - 7 years
Automotive Equipment		55,000			55,000		5 years
Furniture and Fixtures		232,000			232,000		5 - 8 years
Leasehold Improvements		612,000			612,000		Term of Lease
Computers and Software		331,000			318,000		4-6 years
Total Property and Equipment		15,535,000			15,489,000
Less: Accumulated Depreciation		(10,009,000	)		(9,606,000	)
Property and Equipment, net	$	5,526,000		$	5,883,000

Depreciation expense for the three months ended March 31, 2013 and 2012 was approximately $403,000 and $356,000, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2013

Intangible Assets

Note 5. INTANGIBLE ASSETS

The components of the intangibles assets consisted of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Customer Relationships	$	5,815,000		$	5,815,000
Trade Names		770,000			770,000
Technical Know-how		660,000			660,000
Non-Compete		50,000			50,000
Professional Certifications		15,000			15,000
Total Intangible Assets		7,310,000			7,310,000
Less: Accumulated Amortization		(1,712,000	)		(1,421,000	)
Intangible Assets, net	$	5,598,000		$	5,889,000

The expense for the amortization of the intangibles for the three months ended March 31, 2013 and 2012 was approximately $291,000 and $42,000, respectively.

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

3 Months Ended

Mar. 31, 2013

Notes Payable And Capital Lease Obligations

Note 6. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable and capital lease obligations consist of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Revolving credit notes payable to PNC Bank N.A. ("PNC") and
secured by substantially all assets	$	13,752,000		$	15,667,000
Term loan, PNC		3,298,000			3,748,000
Capital lease obligations		1,875,000			2,060,000
Notes payable to sellers of acquired business		1,219,000			1,376,000
Junior subordinated notes		1,000,000			1,000,000
Subtotal		21,144,000			23,851,000
Less: Current portion of notes and capital obligations		(17,675,000	)		(19,211,000	)
Notes payable and capital lease obligations, net of current portion	$	3,469,000		$	4,640,000

PNC Bank N.A. ("PNC")

The Company has a credit facility with PNC (the "Loan Facility"), secured by substantially all of its assets. Simultaneously with the NTW Acquisition, the Company entered into an amendment to the Loan Facility and paid an amendment fee of $50,000. The Loan Facility now provides for maximum borrowings of $23,400,000 consisting of the following:

(i)	a $18,000,000 revolving loan (includes inventory sub-limit of $12,250,000) and
(ii)	a $5,400,000 term loan.

The revolving loan bears interest at (a) the sum of PNC's base commercial lending rate as published from time to time ("PNC Rate") plus 2.00% or (b) the greater of the sum of the Eurodollar rate plus 3.5. The revolving loan had an interest rate of 5.50% per annum at both March 31, 2013 and December 31, 2012, and an outstanding balance of $13,752,000 and $15,667,000, respectively. The maturity date of the revolving loan is November 30, 2016.

Each day, the Company's cash collections are swept directly by the bank to reduce the revolving loans and it then borrows according to a borrowing base. As such, the Company generally has no cash on hand. Because the revolving loans contain a subjective acceleration clause which could permit PNC to require repayment prior to maturity, the loans are classified with the current portion of notes and capital lease obligations.

The maturity date of the term loan is June 2015 and bears interest, at the option of the Company equal to (a) the greater of (i) the sum of the PNC Rate plus 6.5% and (ii) 11.5%, with respect to Domestic Rate Loans or (b) the greater of (i) the sum of the Eurodollar Rate plus 8.5% and (ii) 10.5%, with respect to Eurodollar Rate Loans. Repayment under the term loan shall consist of 36 consecutive monthly principal installments, the first 35 of which will be in the amount of $150,000 commencing on the first business day of July 2012, with the 36th and final payment of any unpaid balance of principal and interest payable on the first business day of June 2015. Additionally, there is a mandatory prepayment equal to 50% of Excess Cash Flow (as defined) for each fiscal quarter commencing with the fiscal quarter ended September 30, 2012, payable upon the delivery of the financial statements to PNC for such fiscal period, but no later than 45 days after the end of the fiscal period. As of March 31, 2013, the amount due for the Excess Cash Flow was calculated as $698,000. At March 31, 2013 and December 31, 2012, the balance due under the term loan was $3,298,000 and $3,748,000, respectively.

To the extent that the Company disposes of collateral used to secure the Loan Facility, other than inventory, the Company must promptly repay the draws on the credit facility in the amount equal to the net proceeds of such sale.

The terms of the Loan Facility require that, among other things, the Company maintain certain financial ratios and levels of working capital. As of both March 31, 2013 and December 31, 2012, the Company was in compliance with all terms of its credit facility with PNC.

The Loan Facility also is secured by all assets of the Company and the Company's receivables are payable directly into a lockbox controlled by PNC (subject to the terms of the Loan Facility). PNC may use some elements of subjective business judgment in determining whether a material adverse change has occurred in the Company's condition, results of operations, assets, business, properties or prospects allowing it to demand repayment of the Loan Facility.

As of March 31, 2013 the future minimum principal payments for the term loan are as follows

For the twelve months ending	Amount
March 31, 2014	$	2,498,000
March 31, 2015		800,000
PNC Term Loan Payable		3,298,000
Less: Current portion		(2,498,000	)
Long-term portion	$	800,000

Interest expense related to these credit facilities amounted to approximately $268,000 and $205,000 for the three months ended March 31, 2013 and 2012, respectively.

On July16, 2012, the Company entered into the 18th amendment to its Credit Facility with PNC. This amendment allowed for the repayment of $115,000 of our Junior Subordinated Notes (see discussion below).

Capital Leases Payable – Equipment

The Company is committed under several capital leases for manufacturing and computer equipment. All leases have bargain purchase options exercisable at the termination of each lease. Capital lease obligations totaled $1,875,000 and $2,060,000 as of March 31, 2013 and December 31, 2012, respectively, with various interest rates ranging from 7.0% to 9.5%.

As of March 31, 2013, the aggregate future minimum lease payments, including imputed interest, with remaining terms of greater than one year are as follows:

For the twelve months ending	Amount
March 31, 2014	$	900,000
March 31, 2015		488,000
March 31, 2016		396,000
March 31, 2017		241,000
March 31, 2018		95,000
Total future minimum lease payments		2,120,000
Less: imputed interest		(245,000	)
Less: current portion		(769,000	)
Total Long Term Portion	$	1,106,000

Notes Payable - Sellers

As of March 31, 2013 and December 31, 2012, the balance owed to the sellers of Welding is:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Former Welding Stockholders	$	1,219,000		$	1,376,000
Less: Current Portion		(656,000	)		(644,000	)
Total long-term portion	$	563,000		$	732,000

In connection with the acquisition of Welding on August 24, 2007, the Company incurred a note payable (“Note”) to the former stockholders of Welding. Our obligation under the Note is subordinate to our indebtedness to PNC.

The Note and payment terms were adjusted and/or amended several times. On October 1, 2010, the Company entered into a letter agreement with the former stockholders of Welding making the new balance of the Note $2,397,967. Payments on the Note began on October 1, 2010. It was further agreed that payments would be made according to the following schedule: equal monthly installments of $40,000 on the first business day of each month until December 31, 2011, followed by equal monthly installments of $60,000 on the first business day of each month commencing on January 1, 2012 and continuing until the entire principal amount of the obligation is paid in full, which is estimated to be in January 2015. Interest shall accrue at the rate of 7% per annum, and each payment will first apply to interest and then to principal. At March 31, 2013 and December 31, 2012, the balance owed under the Note was $1,219,000 and $1,376,000, respectively.

As of March 31, 2013, the future minimum payments for the note payable to the former stockholders of Welding are as follows:

For the twelve months ending	Amount
March 31, 2014	$	656,000
March 31, 2015		563,000
Former WMI Stockholders Notes Payable		1,219,000
Less: Current portion		(656,000	)
Long-term portion	$	563,000

Interest expense related to notes payable to the former stockholder was $23,000 and $34,000 for the three months ended March 31, 2013 and December 31, 2012, respectively.

Junior Subordinated Notes

In 2008 and 2009, the Company sold in a series of private placements to accredited investors $5,990,000 of principal in junior subordinated notes. The notes bear interest at the rate of 1% per month (or 12% per annum).

In connection with the offering of the Company's junior subordinated notes, the Company issued to Taglich Brothers, Inc. ("Taglich"), as placement agent, a junior subordinated note in the principal amount of $510,000. The terms of the note issued to Taglich are identical to the notes. In connection with the amounts raised in 2009, the Company issued to Taglich a note on the same terms as the Junior Subordinated Notes referred to above for commission of $44,500.

In conjunction with the Private Placement of our common stock to raise money for the NTW Acquisition, we solicited the holders of our Junior Subordinated Notes to convert their notes to Common Stock at a price of $6.00 per share. On June 29, 2012, we issued 867,461 shares of our common stock in exchange for approximately $5,204,000 of our Junior Subordinated Notes. On July 26, 2012, we repaid $115,000 of our Junior Subordinated Notes along with the accrued interest thereon of approximately $1,000.

The due dates of the remaining notes were extended from November 18, 2013 to mature on November 30, 2016 and are subordinated to the Company's obligations to PNC.

The balance owed at both March 31, 2013 and December 31, 2012 amounted to $1,000,000.

Interest expense amounted to $30,000 and $191,000 for the three months ended March 31, 2013 and 2012, respectively.

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2013

Stockholders' Equity

Note 7. STOCKHOLDERS' EQUITY

Common Stock Issuances

There were no shares issued during the three months ended March 31, 2013 and 2012.

Dividends

On March 11, 2013, the Board of Directors approved and the Company announced a quarterly dividend of $0.0625 per common share to be paid on April 1, 2013 to all shareholders of record as of the close of business on March 15, 2013. The approximate amount of the dividend was $358,000.

Derivative Liability

In connection with the issuances of equity instruments or debt, the Company may issue options or warrants to purchase common stock. In certain circumstances, these options or warrants may be classified as liabilities, rather than as equity. In addition, the equity instrument or debt may contain embedded derivative instruments, such as conversion options or listing requirements, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative liability instrument. The Company accounts for derivative liability instruments under the provisions of FASB ASC 815, “Derivatives and Hedging.

The Company issued warrants to Taglich. Such warrants contain “cashless exercise” provisions. As a result, the value of the warrants has to be recognized as a liability. In addition, the Company would be required to revalue the derivative liability at the end of each reporting period with the change in value reported on the statement of operations. The Company did not account for the derivative liability in its financial statements as it was determined to not be material.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21463-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

CONTINGENCIES

3 Months Ended

Mar. 31, 2013

ContingenciesAbstract

Note 8. CONTINGENCIES

Litigation

Sigma Metals, Inc. (“Sigma”): Several former vendors to Sigma, a former subsidiary of the Company, had commenced legal action against Sigma seeking to recover amounts owed to them. All of these have been settled except for one that is still deciding whether to commence litigation seeking the recovery of approximately $71,000. Settlement discussions have commenced with this vendor but there is not yet a definitive resolution.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

INCOME TAXES

3 Months Ended

Mar. 31, 2013

Income Taxes

Note 9. INCOME TAXES

The provision for income taxes as at March 31, are set forth below:

	2013		2012
	(Unaudited)		(Unaudited)
Current
Federal	$	376,000	$	-
Federal AMT		-		227,000
State		113,000		59,000
Total Expense		489,000		286,000

Deferred
Federal		-		-
State		-		-
Total Deferred Taxes		-		-
Net Expense for Income Taxes	$	489,000	$	286,000

The components of net deferred tax assets as of March 31, 2013 and December 31 2012 are set forth below:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Deferred tax assets:
Capital loss carry forwards	$	1,088,000		$	1,088,000
Bad debts		290,000			282,000
Stock based compensation - options and restricted stock		506,000			506,000
Capitalized engineering costs		461,000			447,000
Account payable, accrued expenses and reserves		9,000			9,000
Deferred rent		430,000			423,000
Amortization - NTW Transaction		210,000			138,000
Inventory - 263A adjustment		734,000			569,000
Lease Impairment		76,000			85,000
Deferred gain on sale of real estate		205,000			209,000
Section 1231 loss carryover		86,000			86,000
Total deferred tax assets before valuation allowance		4,095,000			3,842,000
Valuation allowance		(2,608,000	)		(2,269,000	)
Total deferred tax assets after valuation allowance		1,487,000			1,573,000

Deferred tax liabilities:
Property and equipment		(928,000	)		(997,000	)
Amortization - Welding Transaction		(559,000	)		(576,000	)
Total Deferred Tax Liability		(1,487,000	)		(1,573,000	)

Net deferred tax asset	$	-		$	-

Realization of deferred tax assets is dependent on future earnings. Due to the uncertainty of realization of the net deferred tax assets, the Company has provided a valuation allowance. In assessing the realizability of it, management considers whether it is more likely than not that some or perhaps all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making the assessment. The valuation allowance at March 31, 2013 and December 31, 2012 amounted to $2,608,000 and $2,269,000, respectively.

The Company has a capital loss carry forward from the sale of Sigma of $2,719,000 which will expire in fiscal 2015.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

+ Details

SEGMENT REPORTING

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Note 10. SEGMENT REPORTING

In accordance with FASB ASC 280, “Segment Reporting”, the Company discloses financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company is operating in three segments. AIM manufactures components and subassemblies for the defense and aerospace industry. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. The financial information of NTW is only included as of the date of acquisition (June 20, 2012). Welding provides specialty welding services and metal fabrications to the defense and commercial aerospace industry. While each of these segments service the same industries and a similar customer base, we evaluate the performance of each segment separately in deciding how to allocate resources and in accessing profitability. Financial information about the Company's operating segments for the three months ended March 31, 2013 and 2012 are as follows:

Three Months Ended March 31,
		2013			2012
		(Unaudited)			(Unaudited)
*AIM*
	Net Sales	$	7,478,000		$	12,143,000
	Gross Profit		1,460,000			2,246,000
	Pre Tax Income		493,000			913,000
	Assets		23,871,000			27,721,000

*WMI*
	Net Sales		3,139,000			3,895,000
	Gross Profit		849,000			1,025,000
	Pre Tax (Loss) Income		(11,000	)		492,000
	Assets		9,796,000			8,338,000

*NTW*
	Net Sales		3,708,000			-
	Gross Profit		1,338,000			-
	Pre Tax Income		493,000			-
	Assets		13,563,000			-

*Corporate*
	Net Sales		-			-
	Gross Profit		-			-
	Pre Tax Loss		(207,000	)		(299,000	)
	Assets		12,256,000			6,832,000

*Consolidated*
	Net Sales		14,325,000			16,038,000
	Gross Profit		3,647,000			3,271,000
	Pre Tax Income		768,000			1,106,000
	Provision for Taxes		489,000			286,000
	Net Income		279,000			820,000
	Elimination of Assets		(8,064,000	)		(4,929,000	)
	Assets		51,422,000			37,962,000

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies Policies

Principal Business Activity

Inventory Valuation

Inventory at March 31, 2013 and 2012 was computed based on a “gross profit” method.

The Company valued inventory at December 31, 2012 at the lower of cost on a first-in-first-out basis or market.

Credit and Concentration Risks

There were three customers that represented 59.3% and 67.9% of total sales for the three months ended March 31, 2013 and 2012, respectively. This is set forth in the table below.

Customer	Percentage of Sales
	2013		2012
	(Unaudited)		(Unaudited)

1		25.8		37.8
2		18.3		30.1
3		15.2		*

* Customer was less than 10% of sales for three months ended March 31, 2012

There were three customers that represented 51% and 54.6% of gross accounts receivable at March 31, 2013 and December 31, 2012, respectively. This is set forth in the table below.

Customer	Percentage of Receivables
	March		December
	2013		2012
	(Unaudited)
1		19.1		18.6
2		17.0		25.3
3		14.9		10.7

The Company has occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts.

AIM has several sole-source suppliers of various parts that are used in one or more of its products. If any of these sole source suppliers were to go out of business or be unable to provide it parts for any reason, AIM would be required to develop new suppliers or to re-engineer its products, or both, which could delay shipment of products and have a material adverse effect on its operating results.

Earnings per share

The following is a reconciliation of the denominators of basic and diluted earnings per share computations:

	March 31, 2013		March 31, 2012
	(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earning per share		5,711,093		3,579,114
Effect of dilutive stock options and warrants		98,479		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		5,809,572		3,579,114

The following securities have been excluded from the calculation as their effect would be anti-dilutive:

	March 31,		March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Stock Options		12,548		306,336
Warrants		250		250
		12,798		306,586

Stock-Based Compensation

Goodwill

The Company has determined that there has been no impairment of goodwill at March 31, 2013 and December 31, 2012.

Recently Issued Accounting Pronouncements

The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Reclassifications

Certain account balances in 2012 have been reclassified to conform to the current period presentation.

Subsequent Events

Management has evaluated subsequent events through the date of this filing.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies Tables

Credit and Concentration Risks

There were three customers that represented 59.3% and 67.9% of total sales for the three months ended March 31, 2013 and 2012, respectively. This is set forth in the table below.

Customer	Percentage of Sales
	2013		2012
	(Unaudited)		(Unaudited)

1		25.8		37.8
2		18.3		30.1
3		15.2		*

* Customer was less than 10% of sales at March 31, 2012

There were three customers that represented 51% and 54.6% of gross accounts receivable at March 31, 2013 and December 31, 2012, respectively. his is set forth in the table below.

Customer	Percentage of Receivables
	March		December
	2013		2012
	(Unaudited)
1		19.1		18.6
2		17.0		25.3
3		14.9		10.7

Earnings per share

The following is a reconciliation of the denominators of basic and diluted earnings per share computations:

	2013		2012
	(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earning per share		5,711,093		3,579,114
Effect of dilutive stock options and warrants		98,479		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		5,809,572		3,579,114

Anti-dilutive Securities

The following securities have been excluded from the calculation as their effect would be anti-dilutive:

	March 31,		March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Stock Options		12,548		306,336
Warrants		250		250
		12,798		306,586

- Definition

Tabular disclosure of the nature of a concentration, a benchmark to which it is compared, and the percentage that the risk is to the benchmark.

+ References + Details

ACCOUNTS RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Components of accounts receivable

The components of accounts receivable are detailed as follows:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Accounts Receivable Gross	$	10,234,000		$	12,336,000
Allowance for Doubtful Accounts		(725,000	)		(705,000	)
Accounts Receivable Net	$	9,509,000		$	11,631,000

PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2013

Property And Equipment Tables

Property and equipment

The components of property and equipment consisted of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Machinery and Equipment	$	5,818,000		$	5,801,000		5 - 8 years
Capital Lease Machinery and Equipment		4,503,000			4,503,000		5 - 8 years
Tools and Instruments		3,984,000			3,968,000		1.5 - 7 years
Automotive Equipment		55,000			55,000		5 years
Furniture and Fixtures		232,000			232,000		5 - 8 years
Leasehold Improvements		612,000			612,000		Term of Lease
Computers and Software		331,000			318,000		4-6 years
Total Property and Equipment		15,535,000			15,489,000
Less: Accumulated Depreciation		(10,009,000	)		(9,606,000	)
Property and Equipment, net	$	5,526,000		$	5,883,000

INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2013

Intangible Assets Tables

Intangible assets

The components of the intangibles assets consisted of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Customer Relationships	$	5,815,000		$	5,815,000
Trade Names		770,000			770,000
Technical Know-how		660,000			660,000
Non-Compete		50,000			50,000
Professional Certifications		15,000			15,000
Total Intangible Assets		7,310,000			7,310,000
Less: Accumulated Amortization		(1,712,000	)		(1,421,000	)
Intangible Assets, net	$	5,598,000		$	5,889,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Tables)

3 Months Ended

Mar. 31, 2013

Notes Payable And Capital Lease Obligations Tables

Notes payable and capital lease obligations

Notes payable and capital lease obligations consist of the following:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Revolving credit notes payable to PNC Bank N.A. ("PNC") and
secured by substantially all assets	$	13,752,000		$	15,667,000
Term loan, PNC		3,298,000			3,748,000
Capital lease obligations		1,875,000			2,060,000
Notes payable to sellers of acquired business		1,219,000			1,376,000
Junior subordinated notes		1,000,000			1,000,000
Subtotal		21,144,000			23,851,000
Less: Current portion of notes and capital obligations		(17,675,000	)		(19,211,000	)
Notes payable and capital lease obligations, net of current portion	$	3,469,000		$	4,640,000

Future minimum principal payments for term loan

As of March 31, 2013 the future minimum principal payments for the term loan are as follows

For the twelve months ending	Amount
March 31, 2014	$	2,498,000
March 31, 2015		800,000
PNC Term Loan Payable		3,298,000
Less: Current portion		(2,498,000	)
Long-term portion	$	800,000

Future minimum lease payments, including imputed interest

As of March 31, 2013, the aggregate future minimum lease payments, including imputed interest, with remaining terms of greater than one year are as follows:

For the twelve months ending	Amount
March 31, 2014	$	900,000
March 31, 2015		488,000
March 31, 2016		396,000
March 31, 2017		241,000
March 31, 2018		95,000
Total future minimum lease payments		2,120,000
Less: imputed interest		(245,000	)
Less: current portion		(769,000	)
Total Long Term Portion	$	1,106,000

Notes Payable - Sellers

As of March 31, 2013 and December 31, 2012, the balance owed to the sellers of Welding is:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Former Welding Stockholders	$	1,219,000		$	1,376,000
Less: Current Portion		(656,000	)		(644,000	)
Total long-term portion	$	563,000		$	732,000

Future minimum payments for the note payable to the former stockholders of Welding

As of March 31, 2013, the future minimum payments for the note payable to the former stockholders of Welding are as follows:

For the twelve months ending	Amount
March 31, 2013	$	656,000
March 31, 2014		563,000
Former WMI Stockholders Notes Payable		1,219,000
Less: Current portion		(656,000	)
Long-term portion	$	563,000

INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2013

Income Taxes Tables

Provision for income

The provision for income taxes as at March 31, are set forth below:

	2013		2012
	(Unaudited)		(Unaudited)
Current
Federal	$	376,000	$	-
Federal AMT		-		227,000
State		113,000		59,000
Total Expense		489,000		286,000

Deferred
Federal		-		-
State		-		-
Total Deferred Taxes		-		-
Net Expense for Income Taxes	$	489,000	$	286,000

Deferred tax assets

The components of net deferred tax assets as of March 31, 2013 and December 31 2012 are set forth below:

	March 31,			December 31,
	2013			2012
	(Unaudited)
Deferred tax assets:
Capital loss carry forwards	$	1,088,000		$	1,088,000
Bad debts		290,000			282,000
Stock based compensation - options and restricted stock		506,000			506,000
Capitalized engineering costs		461,000			447,000
Account payable, accrued expenses and reserves		9,000			9,000
Deferred rent		430,000			423,000
Amortization - NTW Transaction		210,000			138,000
Inventory - 263A adjustment		734,000			569,000
Lease Impairment		76,000			85,000
Deferred gain on sale of real estate		205,000			209,000
Section 1231 loss carryover		86,000			86,000
Total deferred tax assets before valuation allowance		4,095,000			3,842,000
Valuation allowance		(2,608,000	)		(2,269,000	)
Total deferred tax assets after valuation allowance		1,487,000			1,573,000

Deferred tax liabilities:
Property and equipment		(928,000	)		(997,000	)
Amortization - Welding Transaction		(559,000	)		(576,000	)
Total Deferred Tax Liability		(1,487,000	)		(1,573,000	)

Net deferred tax asset	$	-		$	-

SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2013

Segment Reporting Tables

Operating segments

Financial information about the Company's operating segments for the three months ended March 31, 2013 and 2012 are as follows:

Three Months Ended March 31,
		2013			2012
		(Unaudited)			(Unaudited)
*AIM*
	Net Sales	$	7,478,000		$	12,143,000
	Gross Profit		1,460,000			2,246,000
	Pre Tax Income		493,000			913,000
	Assets		23,871,000			27,721,000

*WMI*
	Net Sales		3,139,000			3,895,000
	Gross Profit		849,000			1,025,000
	Pre Tax (Loss) Income		(11,000	)		492,000
	Assets		9,796,000			8,338,000

*NTW*
	Net Sales		3,708,000			-
	Gross Profit		1,338,000			-
	Pre Tax Income		493,000			-
	Assets		13,563,000			-

*Corporate*
	Net Sales		-			-
	Gross Profit		-			-
	Pre Tax Loss		(207,000	)		(299,000	)
	Assets		12,256,000			6,832,000

*Consolidated*
	Net Sales		14,325,000			16,038,000
	Gross Profit		3,647,000			3,271,000
	Pre Tax Income		768,000			1,106,000
	Provision for Taxes		489,000			286,000
	Net Income		279,000			820,000
	Elimination of Assets		(8,064,000	)		(4,929,000	)
	Assets		51,422,000			37,962,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)

3 Months Ended

Mar. 31, 2013

Mar. 31, 2012

Summary Of Significant Accounting Policies Details

Customer 1

25.80%

37.80%

Customer 2

18.30%

30.10%

Customer 3

15.20%

0.00%

^[1]

[1]	Customer was less than 10% of sales at March 31, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	Mar. 31, 2013	Dec. 31, 2012
Summary Of Significant Accounting Policies Details 1
Customer 1	19.10%	18.60%
Customer 2	17.00%	25.30%
Customer 3	14.90%	10.70%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares	Mar. 31, 2013	Mar. 31, 2012
Summary Of Significant Accounting Policies Details 2
Weighted average shares outstanding used to compute basic earning per share	5,711,093	3,579,114
Effect of dilutive stock options and warrants	98,479
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share	5,809,572	3,579,114

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - shares	Mar. 31, 2013	Mar. 31, 2012
Summary Of Significant Accounting Policies Details 3
Stock Options	12,548	306,336
Warrants	250	250
Anti dilutive Securities	12,798	306,586

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Summary Of Significant Accounting Policies Details Narrative
Customer Sales	59.30%	67.90%
customers gross accounts receivables	51.00%		54.60%
Stock-based compensation	$ 0	$ 22,000

ACCOUNTS RECEIVABLE (Details) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Receivables [Abstract]
Accounts Receivable Gross	$ 10,234,000	$ 12,336,000
Allowance for Doubtful Accounts	(725,000)	(705,000)
Accounts Receivable Net	$ 9,509,000	$ 11,631,000

PROPERTY AND EQUIPMENT (Details) - USD ($)

3 Months Ended

Mar. 31, 2013

Dec. 31, 2012

Total Property and Equipment

$ 15,535,000

$ 15,489,000

Less: Accumulated Depreciation

(10,009,000)

(9,606,000)

Property and Equipment, net

5,526,000

5,883,000

Machinery and Equipment

Total Property and Equipment

$ 5,818,000

5,801,000

Machinery and Equipment | Minimum

Property Plant And Equipment Useful Life

5 years

Machinery and Equipment | Maximum

Property Plant And Equipment Useful Life

8 years

Capital Lease Machinery and Equipment

Total Property and Equipment

$ 4,503,000

4,503,000

Capital Lease Machinery and Equipment | Minimum

Property Plant And Equipment Useful Life

5 years

Capital Lease Machinery and Equipment | Maximum

Property Plant And Equipment Useful Life

8 years

Tools and Instruments

Total Property and Equipment

$ 3,984,000

3,968,000

Tools and Instruments | Minimum

Property Plant And Equipment Useful Life

1 year 6 months

Tools and Instruments | Maximum

Property Plant And Equipment Useful Life

7 years

Automotive Equipment

Total Property and Equipment

$ 55,000

55,000

Property Plant And Equipment Useful Life

5 years

Furniture and Fixtures

Total Property and Equipment

$ 232,000

232,000

Furniture and Fixtures | Minimum

Property Plant And Equipment Useful Life

5 years

Furniture and Fixtures | Maximum

Property Plant And Equipment Useful Life

8 years

Leasehold Improvements

Total Property and Equipment

$ 612,000

612,000

Leasehold Improvements | Minimum

Property Plant And Equipment Useful Life

^[1]

0 years

Leasehold Improvements | Maximum

Property Plant And Equipment Useful Life

^[1]

0 years

Computers and Software

Total Property and Equipment

$ 331,000

$ 318,000

Computers and Software | Minimum

Property Plant And Equipment Useful Life

4 years

Computers and Software | Maximum

Property Plant And Equipment Useful Life

6 years

[1]	Term of Lease

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Mar. 31, 2013	Mar. 31, 2012
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 403,000	$ 356,000

INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Intangible Assets Details
Customer Relationships	$ 5,815,000	$ 5,815,000
Trade Names	770,000	770,000
Technical Know-how	660,000	660,000
Non-Compete	50,000	50,000
Professional Certifications	15,000	15,000
Total Intangible Assets	7,310,000	7,310,000
Less: Accumulated Amortization	(1,712,000)	(1,421,000)
Intangible Assets, net	$ 5,598,000	$ 5,889,000

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended
INTANGIBLE ASSETS (Details Narrative) - USD ($)	Mar. 31, 2013	Mar. 31, 2012
Notes to Financial Statements
Amortization of the intangibles	$ 291,000	$ 42,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Notes Payable And Capital Lease Obligations Details
Revolving credit notes payable to PNC Bank N.A. ("PNC") and secured by substantially all assets	$ 13,752,000	$ 15,667,000
Term loan, PNC	3,298,000	3,748,000
Capital lease obligations	1,875,000	2,060,000
Notes payable to sellers of acquired business	1,219,000	1,376,000
Junior subordinated notes	1,000,000	1,000,000
Subtotal	21,144,000	23,851,000
Less: Current portion of notes and capital obligations	(17,675,000)	(19,211,000)
Notes payable and capital lease obligations, net of current portion	$ 3,469,000	$ 4,640,000

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 1)	Mar. 31, 2013 USD ($)
Notes Payable And Capital Lease Obligations Details 1
March 31, 2014	$ 2,498,000
March 31, 2015	800,000
PNC Term Loan Payable	3,298,000
Less: Current portion	(2,498,000)
Long-term portion	$ 800,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 2)	Mar. 31, 2013 USD ($)
Notes Payable And Capital Lease Obligations Details 2
March 31, 2014	$ 900,000
March 31, 2015	488,000
March 31, 2016	396,000
March 31, 2017	241,000
March 31, 2018	95,000
Total future minimum lease payments	2,120,000
Less: imputed interest	(245,000)
Less: current portion	(769,000)
Total Long Term Portion	$ 1,106,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 3) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Notes Payable And Capital Lease Obligations Details 3
Former Welding Stockholders	$ 1,219,000	$ 1,376,000
Less: Current Portion	(656,000)	(644,000)
Total long-term portion	$ 563,000	$ 732,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 4)	Mar. 31, 2013 USD ($)
Future minimum payments for the note payable to the former stockholders of Welding:
March 31, 2013	$ 656,000
March 31, 2014	563,000
Former WMI Stockholders Notes Payable	1,219,000
Less: Current portion	(656,000)
Long-term portion	$ 563,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Notes to Financial Statements
Revolving loan interest rate	5.50%		5.50%
Outstanding balance of revolving loan	$ 13,752,000		$ 15,667,000
Revolving loan maturity date	Nov. 30, 2016
Amount due for Excess Cash Flow	$ 698,000
Balance due under term loan	3,298,000		3,748,000
Interest expense related to credit facilities	268,000	$ 205,000
Capital lease obligations	$ 1,875,000		$ 2,060,000
Interest rate minimum	7.00%		7.00%
Interest rate maximum	9.50%		9.50%
Balance owed under note	$ 1,219,000		$ 1,376,000
Interest expense related to notes payable	23,000		34,000
Balance owed amounted to	1,000,000		$ 1,000,000
Interest expense amounted to	$ 30,000	$ 191,000

INCOME TAXES (Details) - USD ($)	3 Months Ended
INCOME TAXES (Details) - USD ($)	Mar. 31, 2013	Mar. 31, 2012
Current
Federal	$ 376,000
Federal AMT		227,000
State	113,000	59,000
Total Expense	489,000	286,000
Deferred
Federal
State
Total Deferred Taxes
Net Expense for Income Taxes	$ 489,000	$ 286,000

INCOME TAXES (Details 1) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Capital loss carry forwards	$ 1,088,000	$ 1,088,000
Bad debts	290,000	282,000
Stock based compensation - options and restricted stock	506,000	506,000
Capitalized engineering costs	461,000	447,000
Account payable, accrued expenses and reserves	9,000	9,000
Deferred rent	430,000	423,000
Amortization - NTW Transaction	210,000	138,000
Inventory - 263A adjustment	734,000	569,000
Lease Impairment	76,000	85,000
Deferred gain on sale of real estate	205,000	209,000
Section 1231 loss carryover	86,000	86,000
Total deferred tax assets before valuation allowance	4,095,000	3,842,000
Valuation allowance	(2,608,000)	(2,269,000)
Total deferred tax assets after valuation allowance	1,487,000	1,573,000
Deferred tax liabilities:
Property and equipment	(928,000)	(997,000)
Amortization - Welding Transaction	(559,000)	(576,000)
Total Deferred Tax Liability	(1,487,000)	(1,573,000)
Net deferred tax asset

INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended
INCOME TAXES (Details Narrative) - USD ($)	Mar. 31, 2013	Dec. 31, 2012
Valuation allowance	$ 2,608,000	$ 2,269,000
Capital Loss Carry forward
capital loss carry forward	$ 2,719,000
capital loss carry forward expiry date	Expire in fiscal 2015

SEGMENT REPORTING (Details) - USD ($)	3 Months Ended
SEGMENT REPORTING (Details) - USD ($)	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Gross Profit	$ 1,178,000	$ 1,597,000
Provision for Taxes	489,000	286,000
Assets	51,422,000		$ 53,156,000
AIM
Net Sales	7,478,000	12,143,000
Gross Profit	1,460,000	2,246,000
Pre Tax Income	493,000	913,000
Assets	23,871,000	27,721,000
WMI
Net Sales	3,139,000	3,895,000
Gross Profit	849,000	1,025,000
Pre Tax Income	(11,000)	492,000
Assets	9,796,000	8,338,000
NTW
Net Sales	3,708,000
Gross Profit	1,338,000
Pre Tax Income	493,000
Assets	13,563,000
Corporate
Net Sales
Gross Profit
Pre Tax Income	(207,000)	(299,000)
Assets	12,256,000	6,832,000
Consolidated
Net Sales	14,325,000	16,038,000
Gross Profit	3,647,000	3,271,000
Pre Tax Income	768,000	1,106,000
Provision for Taxes	489,000	286,000
Net Income	279,000	820,000
Elimination of Assets	(8,064,000)	(4,929,000)
Assets	$ 51,422,000	$ 37,962,000