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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2016	Nov. 10, 2016
Document And Entity Information
Entity Registrant Name	AIR INDUSTRIES GROUP
Entity Central Index Key	0001009891
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
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		7,583,165
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash and Cash Equivalents	$ 1,297,000	$ 529,000
Accounts Receivable, Net of Allowance for Doubtful Accounts of $656,000 and $985,000, respectively	9,935,000	13,662,000
Inventory	43,026,000	36,923,000
Prepaid Expenses and Other Current Assets	1,328,000	1,583,000
Assets Held for Sale, Net	0	1,700,000
Total Current Assets	55,586,000	54,397,000
Property and Equipment, net	16,238,000	15,299,000
Capitalized Engineering Costs - Net of Accumulated Amortization of $4,875,000 and $4,595,000, respectively	1,391,000	1,027,000
Deferred Financing Costs, Net, Deposits and Other Assets	1,136,000	1,094,000
Intangible Assets, net	2,893,000	3,852,000
Deferred Tax Asset, Net	4,178,000	2,063,000
Goodwill	10,518,000	10,518,000
TOTAL ASSETS	91,940,000	88,250,000
Current Liabilities
Notes Payable and Capitalized Lease Obligations - Current Portion	34,106,000	40,893,000
Accounts Payable and Accrued Expenses	14,375,000	12,053,000
Deferred Gain on Sale - Current Portion	38,000	38,000
Deferred revenue	1,070,000	958,000
Income Taxes Payable	34,000	14,000
Total Current Liabilities	49,623,000	53,956,000
Long Term Liabilities
Notes Payable and Capitalized Lease Obligations - Net of Current Portion	8,493,000	3,912,000
Deferred Gain on Sale - Net of Current Portion	342,000	371,000
Deferred Rent	1,216,000	1,206,000
TOTAL LIABILITIES	59,674,000	59,445,000
Commitments and Contingencies
Stockholders' Equity
Preferred Stock - Par Value $.001 - Authorized 1,000,000 Shares, Designated as Series A Convertible Preferred Stock - par value $.001, Authorized 900,000 shares, 732,297 shares and 0 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	1,000	0
Common Stock - par value $.001 - Authorized 25,000,000 shares, 7,583,165 and 7,560,040 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	7,000	7,000
Additional Paid-In Capital	51,644,000	44,155,000
Accumulated Deficit	(19,386,000)	(15,357,000)
TOTAL STOCKHOLDERS' EQUITY	32,266,000	28,805,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 91,940,000	$ 88,250,000

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Allowance for Doubtful Accounts	$ 656,000	$ 985,000
Accumulated Amortization	$ 4,875,000	$ 4,595,000
Stockholders Equity
Preferred Stock par value	$ 0.001	$ 0.001
Preferred Stock Authorized	1,000,000	1,000,000
Preferred Stock, Issued	732,297	0
Preferred Stock, Outstanding	732,297	0
Preferred Stock, Liquidation Preference	$ 7,322,970	$ 0
Common Stock par value	$ 0.001	$ 0.001
Common Stock Authorized	25,000,000	25,000,000
Common Stock Issued	7,583,165	7,560,040
Common Stock Outstanding	7,583,165	7,560,040

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net Sales	$ 15,710,000	$ 21,076,000	$ 50,257,000	$ 56,944,000
Cost of Sales	13,713,000	16,898,000	41,284,000	44,500,000
Gross Profit	1,997,000	4,178,000	8,973,000	12,444,000
Operating Expenses	4,302,000	4,152,000	12,896,000	11,880,000
(Loss) Income from Operations	(2,305,000)	26,000	(3,923,000)	564,000
Interest and financing costs	(894,000)	(451,000)	(1,771,000)	(1,341,000)
Loss on extinguishment of debt	(172,000)	0	(172,000)	0
Other Income, Net	4,000	36,000	35,000	98,000
Loss before Income Taxes	(3,367,000)	(389,000)	(5,831,000)	(679,000)
Benefit from Income Taxes	1,320,000	726,000	2,102,000	519,000
Net (Loss) Income	(2,047,000)	337,000	(3,729,000)	(160,000)
Less: Cumulative preferred stock dividends	(252,000)	0	(334,000)	0
Net (Loss) Income attributable to common stockholders	$ (2,299,000)	$ 337,000	$ (4,063,000)	$ (160,000)
(Loss) Income per share - basic	$ (0.30)	$ 0.04	$ (0.54)	$ (0.02)
(Loss) Income per share - diluted	$ (0.30)	$ 0.04	$ (0.54)	$ (0.02)
Weighted average shares outstanding - basic	7,610,220	7,559,501	7,594,215	7,450,707
Weighted average shares outstanding - diluted	7,610,220	7,686,287	7,594,215	7,450,707

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (3,729,000)	$ (160,000)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation of property and equipment	2,808,000	2,679,000
Amortization of intangible assets	960,000	923,000
Amortization of capitalized engineering costs	280,000	238,000
Bad debt expense (Recovery)	(3,000)	76,000
Non-cash compensation expense	126,000	77,000
Amortization of deferred financing costs	356,000	142,000
Deferred gain on sale of real estate	(29,000)	(28,000)
Loss on sale of fixed assets held for sale	5,000	0
Deferred Income Taxes	(2,145,000)	(650,000)
Loss on extinguishment of debt	172,000	0
Amortization of convertible notes payable	184,000	0
(Increase) Decrease in Operating Assets:
Accounts Receivable	3,730,000	(114,000)
Inventory	(6,389,000)	(10,031,000)
Prepaid Expenses and Other Current Assets	285,000	12,000
Deposits and other assets	(199,000)	(108,000)
Increase (Decrease) in Operating Liabilities:
Accounts payable and accrued expenses	2,356,000	5,065,000
Deferred Rent	10,000	26,000
Deferred revenue	112,000	475,000
Income Taxes payable	(14,000)	(71,000)
NET CASH USED IN OPERATING ACTIVITIES	(1,124,000)	(1,449,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized engineering costs	(644,000)	(465,000)
Purchase of property and equipment	(1,341,000)	(967,000)
Proceeds from the sale of fixed assets	1,671,000	0
Cash paid for acquisitions	0	(6,945,000)
Cash acquired in acquisitions	0	605,000
NET CASH USED IN INVESTING ACTIVITIES	(314,000)	(7,772,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable - revolver, net	(3,782,000)	10,328,000
Proceeds from note payable - term loans	0	3,500,000
Payments of note payable - term loans	(2,814,000)	(1,466,000)
Capital lease obligations	(908,000)	(487,000)
Proceeds from capital lease financing	0	500,000
Proceeds from issuance of preferred stock	5,250,000	0
Proceeds from notes payable issuances – related party	2,900,000	0
Proceeds from notes payable issuances	2,720,000	0
Deferred financing costs	(199,000)	(362,000)
Notes payable - Sellers	0	(41,000)
Payments related to Lease Impairment	0	(44,000)
Expense for issuance of preferred stock	(663,000)	0
Expenses for issuance of convertible debt	(298,000)	0
Dividends paid	0	(3,334,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES	2,206,000	8,594,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	768,000	(627,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	529,000	1,418,000
CASH AND CASH EQUIVALENTS AT END OF YEAR	1,297,000	791,000
Supplemental cash flow information
Cash paid during the period for interest	1,678,000	1,172,000
Cash paid during the period for income taxes	13,000	445,000
Supplemental disclosure of non-cash transactions
Preferred stock issued for notes payable - related party	1,750,000	0
Preferred shares issued for PIK dividends	300,000	0
Acquisition of property and equipment financed by capital lease	2,096,000	1,811,000
Dividends payable	0	1,134,000
Placement agent warrants issued	26,000	0
Purchase of assets of Compac and assumption of liabilities in the acquisition of liabilities in the acquisition as follows:
Fair Value of Tangible Assets acquired	0	406,000
Intangible assets	0	600,000
Goodwill	0	560,000
Liabilities assumed	0	(95,000)
Cash acquired	0	1,471,000
Purchase of stock of The Sterling Engineering Corporation and assumption of liabilities in the acquisition as follows:
Fair Value of Tangible Assets acquired	0	8,181,000
Goodwill	0	4,540,000
Cash acquired	0	588,000
Liabilities assumed	0	(3,169,000)
Common Stock issued	0	(4,666,000)
Cash paid for acquisition	$ 0	$ 5,474,000

FORMATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

LiabilitiesAssumed5

FORMATION AND BASIS OF PRESENTATION

Organization

On August 30, 2013, Air Industries Group, Inc. (“Air Industries Delaware”) changed its state of incorporation from Delaware to Nevada as a result of a merger with and into its newly formed wholly-owned subsidiary, Air Industries Group, a Nevada corporation (“Air Industries Nevada” or “AIRI”) and the surviving entity, pursuant to an Agreement and Plan of Merger. The reincorporation was approved by the stockholders of Air Industries Delaware at its 2013 Annual Meeting of Stockholders. Air Industries Nevada is deemed to be the successor.

The accompanying consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corp. (“AIM”), Welding Metallurgy, Inc. ("WMI" or “Welding”), Miller Stuart, Inc. (“Miller Stuart”), Nassau Tool Works, Inc. (“NTW”), Woodbine Products, Inc. (“Woodbine” or “WPI”), Decimal Industries, Inc. ("Decimal"), Eur-Pac Corporation (“Eur-Pac” or “EPC”), Electronic Connection Corporation (“ECC”), AMK Welding, Inc. (“AMK”), Air Realty Group, LLC ("Air Realty"), The Sterling Engineering Corporation ("Sterling") effective March 1, 2015, and Compac Development Corporation (“Compac”) effective September 1, 2015 (together, the “Company”).

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.

Reclassifications

Certain account balances in 2015 have been reclassified to conform to the current period presentation.

ACQUISITIONS

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

ACQUISITIONS

The Company accounts for all business combinations in accordance with Financial Accounting Standards Board ("FASB") ASC 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs as incurred related to an acquisition in the condensed consolidated statements of income.

Sterling

On March 1, 2015, the Company acquired all of the common stock of Sterling for $5.4 million in cash and 425,005 shares of the common stock of AIRI. The common stock was valued at $9.89 per share, which was the closing share price on February 27, 2015. The cash consideration is subject to adjustment for working capital changes. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. The Company financed the acquisition of Sterling with the proceeds from the issuance of Term Loan D (see Note 7).

Sterling founded in 1941 manufactures components for aircraft and ground turbine engines.

The acquisition of Sterling was accounted for under ASC 805. The purchase price allocation is set forth below.

Fair value of tangible assets acquired	$	8,181,000
Goodwill		4,540,000
Cash acquired		588,000
Liabilities assumed		(3,169,000	)
Total	$	10,140,000

The below table sets forth selected unaudited proforma financial information for the Company as if Sterling were owned for the entire three and nine months ended September 30, 2015.

Three Months Ended

September 30, 2015

Net Sales

21,076,000

Income from operations

26,000

Nine Months Ended

September 30, 2015

Net Sales

58,783,000

Income from operations

711,000

The below table sets forth selected unaudited financial information for Sterling for the three and nine months ended September 30, 2016 and the portions of the three and nine months ended September 30, 2015 during which Sterling was a subsidiary of the Company.

	Three Months Ended
	September 30, 2016			September 30, 2015
Net Sales	$	1,442,000		$	1,853,000
Loss from Operations	$	(684,000	)	$	(570,000	)

	Nine Months Ended
	September 30, 2016			September 30, 2015
Net Sales	$	4,722,000		$	5,152,000
Loss from Operations	$	(1,516,000	)	$	(585,000	)

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal Business Activity

AIM is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. AMK is a provider of sophisticated welding and machining services for diversified aerospace and industrial customers. Sterling manufactures components for aircraft and ground turbine engines. Compac specializes in the manufacture of RFI/EMI (Radio Frequency Interference – Electro-Magnetic Interference) shielded enclosures for electronic components. The Company’s customers consist mainly of publicly traded companies in the aerospace industry.

Inventory Valuation

The Company does not take physical inventories at interim quarterly reporting periods. Approximately 48% of the inventory value at September 30, 2016 has been estimated using a gross profit percentage based on sales of previous periods to the net sales of the current period, as management believes that the gross profit percentage on these items are materially consistent from period to period.

The remainder of the inventory value at September 30, 2016 is estimated based on the Company's standard cost perpetual inventory system, as management believes the perpetual system computed value for these items provides a better estimate of value for that inventory.

The Company valued inventory at December 31, 2015 at the lower of cost on a first-in-first-out basis or market.

Credit and Concentration Risks

There was one customer that represented 14.2% and there were four customers that represented 55.3% of total sales for the three months ended September 30, 2016 and 2015, respectively. This is set forth in the table below.

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		14.2		18.8
	2		*		15.3
	3		*		11.1
	4		*		10.1

* Customer was less than 10% of sales for the quarter ended September 30, 2016

There were four customers that represented 53.3% and four customers that represented 62.1% of total sales for the nine months ended September 30, 2016 and 2015, respectively. This is set forth in the table below.

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		19.8		17.0
	2		11.9		14.9
	3		10.9		17.3
	4		10.7		12.9

There were three customers that represented 44.5% of gross accounts receivable and four customers that represented 61.1% of gross accounts receivable at September 30, 2016 and December 31, 2015, respectively. This is set forth in the table below.

Customer		Percentage of Receivables
		September		December
		2016		2015
		(Unaudited)
	1		18.5		26.6
	2		14.5		10.4
	3		11.5		13.6
	4		*		10.5

* Customer was less than 10% of Gross Accounts Receivable at September 30, 2016

As of September 30, 2016 and December 31, 2015, the Company had 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.

The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, the Company’s business could be severely harmed.

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:

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earnings per share		7,610,220		7,559,501		7,594,215		7,450,707
Effect of dilutive stock options and warrants		-		126,786		-		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		7,610,220		7,686,287		7,594,215		7,450,707

The following table sets forth the number of shares issuable upon exercise of outstanding options and warrants which were excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares:

	Three and Nine Months Ended
	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Stock Options		202,694		258,391
Warrants		-		46,800
		202,694		305,191

The following table sets forth the number of shares issuable upon conversion or exercise of outstanding convertible preferred stock, options and warrants which were excluded from the diluted per share calculation even though the exercise price was less than the average market price of the common shares and unvested restricted stock because the effect of including these potential shares was anti-dilutive due to the net loss applicable to common stockholders incurred during that period:

	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Convertible Preferred Stock		1,488,394		-
Stock Options		443,648		322,675
Warrants		519,573		117,785
Unvested Restricted Stock		52,000		-
		2,503,615		440,460

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 $43,000 and $23,000 for the three months ended September 30, 2016 and 2015, respectively, and $126,000 and $77,000 for the nine months ended September 30, 2016 and 2015, respectively, and was included in operating expenses on the accompanying Condensed Consolidated Statements of Operations.

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 $10,518,000 at September 30, 2016 and December 31, 2015 relates to the acquisitions of Welding $291,000, NTW $162,000, Woodbine $2,565,000, Eur-Pac $1,656,000, ECC $109,000, AMK $635,000, Sterling $4,540,000 and Compac $560,000. Goodwill is not amortized, but is tested for impairment annually, or if circumstances occur that 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 September 30, 2016 and December 31, 2015.

Debt Issuance Costs

Effective January 1, 2016, the Company adopted FASB ASU 2015-15 “Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. The amendments to the SEC paragraphs in this update state that given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The adoption of this amended guidance did not have a significant impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)” (“ASU 2016-01”). The main objective of ASU 2016-01 is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this amendment to have a significant impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The main objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. To meet that objective, the FASB is amending the FASB Accounting Standards Codification and creating Topic 842, Leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not expect the adoption of this amendment to have a significant impact on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment” (“ASU 2016-09”). ASU 2016-09 is part of the FASB Simplification Initiative. The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2016-09 will affect all entities that issue share-based payment awards to their employees. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not expect the adoption of these amendments to have a significant impact on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-10”). The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2016-10 affect the guidance in ASU 2014-09, “Revenue from Contracts with Customers”, which is not yet effective. The effective date and transition requirements of ASU 2016-10 are the same as the effective date and transition requirements of ASU 2014-09. They are effective prospectively for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently assessing the impact of the adoption of these amendments on its consolidated financial statements.

In May 2016, the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients. These amendments are effective at the same date that Topic 606 is effective. Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Topic 606 is effective for nonpublic entities one year later. The Company is currently assessing the impact of the adoption of the amendments to Topic 606 and these amendments on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. The standard provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows, including beneficial interests in securitization, which would impact the presentation of the deferred purchase price from sales of receivables. The standard is intended to reduce current diversity in practice. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of these amendments to have a significant impact on its consolidated financial statements.

Effective July 1, 2016, the Company adopted FASB Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes. The ASU is part of the Board's simplification initiative aimed at reducing complexity in accounting standards. To simplify presentation, the new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. Importantly, the guidance does not change the existing requirement that only permits offsetting within a jurisdiction - that is, companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. The Company reclassified the prior year deferred tax asset presented as of December 31, 2015 to conform with the new guidance.

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 consolidated financial statements.

Subsequent Events

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

PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

The components of property and equipment consisted of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Land	$	300,000		$	300,000
Buildings & Improvements		1,650,000			1,658,000		31.5 years
Machinery and Equipment		16,078,000			15,109,000		5 - 8 years
Capital Lease Machinery and Equipment		6,265,000			5,869,000		3 - 5 years
Capital Lease Facility		1,700,000			-		Term of Lease
Tools and Instruments		7,491,000			6,993,000		1.5 - 7 years
Automotive Equipment		217,000			191,000		5 years
Furniture and Fixtures		462,000			425,000		5 - 8 years
Leasehold Improvements		979,000			910,000		Term of Lease
Computers and Software		567,000			482,000		4-6 years
Total Property and Equipment		35,709,000			31,937,000
Less: Accumulated Depreciation		(19,471,000	)		(16,638,000	)
Property and Equipment, net	$	16,238,000		$	15,299,000

Depreciation expense for the three months ended September 30, 2016 and 2015 was approximately $957,000 and $1,045,000, respectively. Depreciation expense for the nine months ended September 30, 2016 and 2015 was $2,808,000 and $2,679,000, respectively. Assets held under capitalized lease obligations are depreciated over the shorter of their related lease terms or their estimated productive lives. Depreciation of assets under capital leases is included in depreciation expense for 2016 and 2015. Accumulated depreciation on these assets was approximately $2,056,000 and $1,065,000 as of September 30, 2016 and December 31, 2015, respectively.

INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

The components of intangibles assets consisted of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Customer Relationships	$	6,555,000		$	6,555,000		5 to 14 years
Trade Names		1,480,000			1,480,000		15 to 20 years
Technical Know-how		660,000			660,000		10 years
Non-Compete		150,000			150,000		5 years
Professional Certifications		15,000			15,000		.25 to 2 years
Total Intangible Assets		8,860,000			8,860,000
Less: Accumulated Amortization		(5,967,000	)		(5,008,000	)
Intangible Assets, net	$	2,893,000		$	3,852,000

Amortization expense for the three months ended September 30, 2016 and 2015 was approximately $320,000 and $309,000, respectively. Amortization expense for the nine months ended September 30, 2016 and 2015 was approximately $960,000 and $923,000, respectively.

SALE AND LEASEBACK TRANSACTION

9 Months Ended

Sep. 30, 2016

Sale And Leaseback Transaction

SALE AND LEASEBACK TRANSACTION

On April 11, 2016, the Company executed a Sale - Leaseback Arrangement, whereby the Company sold the building and real property located in South Windsor, Connecticut (the "Property") for a purchase price of $1,700,000. The net proceeds from the sale of the property were applied to the amounts owed to PNC Bank.

At September 30, 2016, the Company classified the Property as a Capital Lease Facility. The valuation of the property at the time of reclassification was $1,700,000. Amortization expense for the three and nine months ended September 30, 2016 was approximately, $9,000 and $12,000, respectively.

Simultaneous with the closing of the sale of the Property, the Company entered into a 15-year lease (the "Lease") with the purchaser for the property. Base annual rent is approximately $155,000 for the first year and increases approximately 3% per year, each year thereafter. The Lease grants the Company an option to renew the Lease for an additional period of five years. Pursuant to the terms of the Lease, the Company is required to pay all of the costs associated with the operation of the facilities, including, without limitation, insurance, taxes and maintenance. The Lease also contains representations, warranties, obligations, conditions and indemnification provisions in favor of the purchaser and grants the purchaser remedies upon a breach of the Lease by the Company, including the right to terminate the Lease and hold the Company liable for any deficiency in future rent.

The Company will account for the transaction under the provisions of FASB ASC 840-40, “Leases - Sale-Leaseback Transactions”.

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

9 Months Ended

Sep. 30, 2016

Notes and Loans Payable [Abstract]

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable and capital lease obligations consist of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Revolving credit note payable to PNC Bank N.A. ("PNC")	$	25,822,000		$	29,604,000
Term loans, PNC		7,019,000			9,833,000
Capital lease obligations		6,206,000			5,018,000
Related party notes payable		1,378,000			350,000
Notes payable (private placement)		2,174,000			-
Subtotal		42,599,000			44,805,000
Less: Current portion of notes and capital obligations		(34,106,000	)		(40,893,000	)
Notes payable and capital lease obligations, net of current portion		8,493,000			3,912,000

PNC Bank N.A. ("PNC")

The Company has a credit facility with PNC (the "Loan Facility") secured by substantially all of its assets. The Loan Facility has been amended many times during its term. The Loan Facility was amended in June 2016 (the “Twelfth Amendment”) and September 2016 (the “Thirteenth Amendment”). In connection with the Twelfth Amendment, the Company paid PNC a fee of $100,000 and reimbursed it for the fees and expenses of its counsel. The Twelfth Amendment provides for a $33,000,000 revolving loan In addition, in the Twelfth Amendment the four term loans (Term Loan A, Term Loan B, Term Loan C and Term Loan D) then outstanding were consolidated into a single term loan with the initial principal amount of $7,387,854. Further, in the Twelfth Amendment the Company acknowledged that there were then outstanding excess advances under the revolving loan in the amount of $12,500,000.

Under the terms of the Loan Facility, as amended, the revolving loan now bears interest at (a) the sum of the Alternate Base Rate plus one and three-quarters of one percent (1.75%) with respect to Domestic Rate Loans; and (b) the sum of the LIBOR Rate plus four and one-half of one percent (4.50%) with respect to LIBOR Rate Loans. The amount outstanding under the revolving loan, exclusive of the excess advance, was $25,822,000 and $29,604,000, as of September 30, 2016 and December 31, 2015, respectively.

The Loan Facility was further amended pursuant to the Thirteenth Amendment, to modify the advance rate with respect to our inventory to be the lesser of (i) 75% of the eligible inventory, an increase from 50%, and (ii) 90% of the liquidation value of the eligible inventory, an increase from 85%, subject to the inventory sublimit of $12,500,000 and such reserves as PNC may deem proper. In addition, in the Thirteenth Amendment the lender waived any default resulting from the Company’s obligation to comply with the minimum EBITDA covenant for the period ended June 30, 2016, consented to the issuance of the Company’s 12% Subordinated Convertible Notes and the amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of Preferred Stock and Series A Preferred Stock.

The repayment terms of Term Loan A had been amended in April 2014, when the Company borrowed $2,676,000, representing an additional $1,328,000 to partially fund the acquisition of Woodbine. Term Loan A, as amended in 2014, was to be repaid in monthly installments of $31,859 continuing until November 2016. On October 1, 2014, the Company borrowed $3,500,000 under Term Loan B for the acquisition of AMK. Term Loan B was to be repaid in sixty consecutive monthly principal installments of $58,333 continuing until November 2019.

Prior to the Twelfth Amendment, Term Loans A and B bore interest at (a) the sum of the Alternate Base Rate plus one and three quarters of one percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three percent (3.00%) with respect to LIBOR Rate Loans.

On December 31, 2014, the Company borrowed $2,500,000 under Term Loan C to refinance the Seller Note and Mortgage of $2,500,000 issued as part of the acquisition of AMK. The maturity date of Term Loan C was the first business day of January 2021, and it was to be paid in seventy two consecutive monthly principal installments, which commenced on the first business day of February 2015, and continued on the first business day of each month thereafter. The first seventy-one of the installments were to be in the amount of $34,722 with a seventy second and final payment of any unpaid principal and interest on the first business day of January 2021. Term Loan C bore interest at (a) the sum of the Alternate Base Rate plus two percent (2.00%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-quarter percent (3.25%) with respect to LIBOR Rate Loans.

On March 9, 2015, the Company borrowed $3,500,000 under Term Loan D for the acquisition of Sterling. The repayment of Term Loan D consisted of twenty consecutive monthly principal installments, the first nineteen in the amount of $62,847 which commenced on the first business day of April 2015, and continued on the first business day of each month thereafter, with a twentieth and final payment of any unpaid balance of principal and interest on the last business day of November 2016. Term Loan D bore interest at (a) the sum of the Alternate Base Rate plus two and one quarter percent (2.25%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-half percent (3.50%) with respect to LIBOR Rate Loans.

The repayment terms of the Term Loan provided for in the Twelfth Amendment consist of sixty (60) consecutive monthly principal installments, the first fifty-nine (59) of which shall be in the amount of $123,133 commencing on the first business day of July, 2016, and continuing on the first business day of each month thereafter, with a sixty (60th) and final payment of any unpaid balance of principal and interest payable on the last business day of June, 2021. Under the terms of the Loan Facility, as amended, the revolving loan now bears interest at (a) the sum of the Alternate Base Rate plus one and three-quarters of one percent (1.75%) with respect to Domestic Rate Loans; and (b) the sum of the LIBOR Rate plus four and one-half of one percent (4.50%) with respect to LIBOR Rate Loan.

At the closing of the Twelfth Amendment the Company paid $1,500,000 to reduce the outstanding excess under the revolving loan from $12,500,000 to $11,000,000. It also agreed that the excess advances will be paid down by $100,000 each week commencing the second week after the closing of the Twelfth Amendment. The outstanding excess under the revolving loan is $6,994,071.19 at September 30, 2016.

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 a specified Fixed Charge Coverage Ratio and maintain a minimum EBITDA. In addition, the Company is limited in the amount of Capital Expenditures it can make. The Company is also limited to the amount of dividends it can pay its shareholders as defined in the Loan Facility. As of December 31, 2015, the Company was not in compliance with the Fixed Charge Coverage Ratio covenant. As of December 31, 2015, the Company was in compliance with all other terms of the Loan Facility. The failure to maintain the requisite Fixed Charge Coverage Ratio constitutes a default under the Loan Facility and PNC at its option may give notice to the Company that all amounts under the Loan Facility are immediately due and payable consequently, all amounts due under the Term Loans are also classified as current. For the three months ended September 30, 2016, PNC has excluded the Fixed Coverage Charge Ratio requirement. As of September 30, 2016, the Company was not in compliance with the minimum EBITDA requirement. The Company has requested a waiver from PNC for the failure to meet the minimum EBITDA covenant. Because the revolving loans contain a subjective acceleration clause which could permit PNC to require repayment prior to maturity, all of the loans outstanding with PNC are classified with the current portion of notes and capital lease obligations.

Each day, the Company's cash collections are swept directly by the bank to reduce the revolving loans and the Company then borrows according to a borrowing base formula. 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 September 30, 2016, the scheduled future minimum principal payments for the term loans are as follows, however as discussed above, the balance of the term loans have been classified as current:

For the twelve months ending	Amount
For the 12 Months Ended 9/30/17	$	1,478,000
For the 12 Months Ended 9/31/18		1,478,000
For the 12 Months Ended 9/31/19		1,478,000
For the 12 Months Ended 9/31/20		1,478,000
For the 12 Months Ended 9/31/21		1,107,000
PNC Term Loan payable		7,019,000
Less: Current portion		(7,019,000	)
Long-term portion	$	-

Capitalized Lease Obligations

The Company is committed under several capital leases for property and equipment. Each equipment lease has a bargain purchase option exercisable at the termination of the lease. The present value of the minimum lease payments required under the property lease is greater than 90% of the fair value of the asset at acquisition. Capital lease obligations totaled $6,206,000 and $5,018,000 as of September 30, 2016 and December 31, 2015, respectively, with various interest rates ranging from approximately 4% to 14%.

As of September 30, 2016, 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
For the 12 Months Ended 9/30/2017	$	1,599,000
For the 12 Months Ended 9/30/2018		1,602,000
For the 12 Months Ended 9/30/2019		1,431,000
For the 12 Months Ended 9/30/2020		952,000
For the 12 Months Ended 9/30/2021		218,000
Thereafter		2,012,000
Total future minimum lease payments		7,814,000
Less: imputed interest		(1,608,000	)
Less: current portion		(1,265,000	)
Total Long Term Portion	$	4,941,000

Related Party Notes Payable

On September 8, 2015, the Company issued a promissory note (the “Taglich Note A”) to Michael Taglich in the principal amount of $350,000. The Taglich Note A bore interest at the rate of 4% per annum. The Company's obligation under the Taglich Note A was subordinated to its indebtedness to PNC.

On April 8, 2016, the Company issued a promissory note (the “Taglich Note B”) to Michael Taglich in the principal amount of $350,000. The Taglich Note B bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note B was subordinated to its indebtedness to PNC.

On April 8, 2016, the Company issued a promissory note (the “Taglich Note C”) to Robert Taglich in the principal amount of $350,000. The Taglich Note C bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note C was subordinated to its indebtedness to PNC.

On May 6, 2016, the Company issued a promissory note (the “Taglich Note D”) to Michael Taglich in the principal amount of $400,000. The Taglich Note D bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note D was subordinated to its indebtedness to PNC.

On May 6, 2016, the Company issued a promissory note (the “Taglich Note E”) to Robert Taglich in the principal amount of $300,000. The Taglich Note E bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note E was subordinated to its indebtedness to PNC.

On May 25, 2016, the Company issued 110,000 and 65,000 shares of Series A Preferred Stock to Michael Taglich and Robert Taglich, respectively upon surrender of Taglich Notes A – E, in the aggregate principal of $1,100,000 and $650,000, respectively.

On August 1, 2016, the Company issued a promissory note (the "Taglich Note F") to Michael Taglich, in the principal amount of $1,000,000. The Taglich Note F bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note F was subordinated to its indebtedness to PNC.

On August 4, 2016, the Company issued a promissory note (the "Taglich Note G") to Michael Taglich, in the principal amount of $500,000. The Taglich Note G bore interest at the rate of 7% per annum. The Company's obligation under the Taglich Note G was subordinated to its indebtedness to PNC.

On August 19, 2016 the Company issued to Michael Taglich a Note in the principal amount of $1,520,703, together with Warrants to purchase 61,817 shares of common stock, upon surrender for cancellation of Taglich Notes F & G in the aggregate principal amount of $1,500,000, together with accrued interest thereon and on notes previously exchanged for Series A Preferred Stock of $20,703. In addition, the Company issued to Robert Taglich a Note in the principal amount of $4,373, together with Warrants to purchase 177 shares of common stock, in consideration of the forgiveness of interest of $4,373 accrued on notes previsouly exchanged for Series A Preferred Stock.

On November 10, 2016, one of the principal stockholders of the Company loaned the Company $1,000,000. The terms of this loan have yet to be determined.

12% Subordinated Convertible Notes

On August 19, 2016, the Company entered into a Placement Agency Agreement with Taglich Brothers, Inc., as placement agent (the “Placement Agent”), pursuant to which the Placement Agent agreed to offer on behalf of the Company, on a best efforts basis, up to $4,250,000 of the Company’s 12% Subordinated Convertible Notes due December 31, 2017 (the “Notes”) to accredited investors (the “Offering”), together with five-year warrants to purchase 4,065 shares of common stock (the “Warrants”) for each $100,000 principal amount of Notes purchased, in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

The Notes are convertible, at the option of the holders, into shares of the Company’s common stock at an initial conversion price of $4.92 per share, subject to adjustment for certain events. The Notes are automatically convertible into shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) at a price of $10.00 per share, the stated value of the Series A Preferred Stock, upon the filing of a certificate of amendment to the Company’s Articles of Incorporation increasing the number of shares of Series A Preferred Stock so that a sufficient number of shares are available for issuance upon conversion of the Notes and for issuance in lieu of payment of cash dividends (the “Certificate of Amendment”) in accordance with the provisions of the certificate of designation authorizing the issuance of the Series A Preferred Stock. The amendment is subject to the approval of the Company’s stockholders. The Company will submit the amendment to its stockholders for their approval at its 2016 Annual Meeting of Stockholders, which is expected to be held in the fourth quarter of 2016.

Under the terms of the Placement Agency Agreement, the Placement Agent is entitled to a placement agent fee equal to 7% of the gross proceeds of the offering, five year warrants to purchase 8% of the number of shares of the Company’s common stock issuable upon conversion of the Notes at an exercise price of $6.15 per share, equal to 125% of the initial conversion price per share of the Notes, and reimbursement for its actual out-of-pocket expenses not to exceed in the aggregate $25,000.

In August 2016, the Company issued and sold a total of $2,720,000 principal amount of the Notes, together with Warrants to purchase an aggregate of 110,556 shares of common stock, yielding net proceeds to the Company of approximately $2,422,000, pursuant to a Securities Purchase Agreements with accredited investors. The Company also issued to Michael Taglich a Note in the principal amount of $1,520,703, together with Warrants to purchase 61,817 shares of common stock, upon surrender for cancellation of Taglich Notes F and G in the aggregate principal amount of $1,500,000, together with accrued interest thereon and on notes previously exchanged for Series A Preferred Stock of $20,703. In addition, the Company issued to Robert Taglich a Note in the principal amount of $4,373, together with Warrants to purchase 177 shares of common stock, in consideration of the forgiveness of interest of $4,373 accrued on notes previously exchanged for Series A Preferred Stock.

The Warrants including those issued to the placement agent are classified within stockholders’ equity, pursuant to ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging: Contracts in Own Equity. The Notes contain a contingent put that results in early settlement of the Notes upon the filing of a certificate of amendment to the Company’s Articles of Incorporation, increasing the number of shares of Series A Preferred Stock so that a sufficient number of shares are available for issuance upon conversion of the Notes. The embedded put feature is required to be separately measured at fair value with changes in value recognized in the statement of operations, pursuant to ASC 815-15, “Derivatives and Hedging: Embedded Derivatives”, as the put feature is not clearly and closely related to the convertible promissory note.

The proceeds received upon issuing the Notes and Warrants was allocated to each instrument on a relative fair value basis. The initial fair value of the Warrants was determined using the Black Scholes Merton valuation model with the following assumptions: expected term of 5 years; risk free interest rate of 1.2%; and volatility of 90%. The allocated value of the Notes was further reduced for the initial fair value of the embedded put of approximately $755,000. The resulting discount to the Notes, including the allocated transactions costs, is amortized to interest expense using the effective interest method over the term of the Notes.

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2016

Stockholders' Equity

STOCKHOLDERS' EQUITY

Preferred Stock Offering

On May 25, 2016, the Company, entered into a Placement Agency Agreement (the “Agreement”) with Craig-Hallum Capital Group LLC and Taglich Brothers, Inc., as placement agents (the “Placement Agents”), pursuant to which the Placement Agents agreed to offer on behalf of the Company, on a best efforts basis, up to $7,000,000 of the Company’s securities, (the “Offering”), in a private placement exempt from the registration requirements of the Securities Act of 1933.

Pursuant to the Agreement on May 25, 2016, and June 1, 2016, the Company completed a private placement of 700,000 shares of its Series A Convertible Stock (the “Series A Preferred Stock”) from which it derived gross proceeds of $5,250,000, net of $1,750,000 of principal amount of the Company’s promissory notes exchanged by Michael Taglich and Robert Taglich for shares of Series A Preferred Stock. The shares of Series A Preferred Stock have a stated value of $10.00 per share (“Stated Value”) and are initially convertible into shares of Common Stock at a price of $4.92 per share (subject to adjustment upon the occurrence of certain events). In connection with the placement the Company incurred approximately $606,000 of direct offering costs and $57,000 in legal expenses and granted to the Placement Agents warrants to purchase 8% of the number of shares of the Company’s common stock (113,822) issuable upon conversion of the Series A Preferred Stock sold in the offering (the “Placement Agent Warrants”).

The Placement Agent Warrants are exercisable in whole or in part, at an initial exercise price per share of $6.15, and are exercisable for cash or on a cashless basis for a period commencing on November 26, 2016 and expiring on May 26, 2021. The exercise price and number of shares of common stock issuable upon the exercise of the Placement Agent Warrants are subject to adjustment for stock dividends, splits, combinations and similar events.

Dividends on the Series A Preferred Stock (the “Preferred Shares”) are payable on a cumulative basis at an annual rate for the first two years after the date the Preferred Shares were issued (the “Original Issue Date”) of 12% of the Stated Value per share and thereafter at the annual rate of 16% of the Stated Value per share. Dividends are payable on the fifteenth day of March, June, September and December of each year, commencing on September 15, 2016. The Company may pay dividends in cash or in additional Preferred Shares (“PIK Shares”). If during the first two years after the Original Issue Date the Company fails to pay in respect of any dividend period a dividend at an annual rate of at least 8% of the Stated Value per share in cash, in addition to paying a sufficient number of PIK Shares so that the sum of the cash dividends and PIK Shares paid equals 12% per annum the Company will issue PIK Shares in an amount equal to the product of the proportion of the cash dividend not paid times 3% per annum. Thereafter if the Company fails to pay in respect of any dividend period a dividend at an annual rate of at least 10% of the Stated Value per share in cash, in addition to paying a sufficient number of PIK Shares so that the sum of the cash dividends and PIK Shares paid equals 16% per annum, the Company will issue PIK Shares in an amount equal to the product of the proportion of the cash dividend not paid times 3% per annum. If the Company pays any portion of the dividends payable during any dividend period in PIK Shares, it will not be permitted to declare or pay any cash dividends on its common stock during that dividend period.

Accordingly, we computed earned but undeclared preferred dividends at the stated rate of 12.0% through September 15, 2016, when the form of the dividend was announced and declared by our Board of Directors. Since the Board of Directors declared dividends in the form of PIK Shares for the dividend payment period ended September 15, 2016, the earned dividend was increased to 15% (from the 12% cash rate), as per the terms of the Series A Preferred Stock. The Company recognized the PIK dividend at the estimated fair value of the shares issued.

The Company recorded the issuance of 32,297 of PIK Shares during the three and nine months ended September 30, 2016 as a preferred dividend, with a fair value of $300,000. Accordingly, accumulated deficit and Additional Paid In Capital were increased by that amount during the three and nine months ended September 30, 2016. The fair value was determined using the closing market price of the Company's common stock of $4.57 per share on the date of issuance of the PIK Shares, taking into consideration that the Series A Preferred Shares were convertible into the common stock. For earning per share purposes, for the three and nine months ended September 30, 2016, the fair value of the PIK Shares issued as a dividend was less than the amounts previously earned by $23,000. At September 30, 2016 and December 31, 2015, the amounts of cumulative perpetual dividends earned and not declared on the Series A Preferred Stock were $35,000 and $0, based on the stated cash dividend rate of 12%, or $0.05 and $0 per Series A Preferred share, respectively.

Under Nevada law and the terms of the Series A Preferred Stock, dividends are payable only when, as and if authorized and declared by the Company’s board of directors. After payment of all liabilities and outstanding debt obligations, holders of Series A Preferred Stock are entitled to receive $10.00 plus accrued and unpaid dividends prior to the payment of amounts available for distribution to holders of the Company’s common stock upon the liquidation and dissolution of the Company.

Holders of Series A Preferred Stock may elect at any time to convert their Preferred Shares into shares of common stock at the conversion rate of 2.0325 shares of common stock for each Preferred Share, equivalent to an initial conversion price of approximately $4.92 per share of common stock. The conversion rate and the corresponding conversion price will be subject to certain anti-dilution and other adjustments, including stock splits, distributions in respect of the common stock and in the event of certain fundamental transactions such as mergers and other business combinations.

The Company may at its option, at any time and from time to time after the market price of a share of common stock is in excess of $9.84 for 30 consecutive trading days, cause all of the Preferred Shares to be converted into shares of common stock at the then-prevailing conversion rate, subject to the certain conditions set forth in the certificate of designations.

Commencing May 26, 2018, the Company may redeem all of the Preferred Shares for a redemption price of $10.00, plus accrued and unpaid dividends.

Holders of Preferred Shares will vote on an as-converted basis, together with holders of common stock, as a single class, on the election of directors and all other matters presented to stockholders, except for matters as to which under applicable law and the certificate of designation a class vote of the holders of the Series A Preferred Stock is required. The Company may not, without the affirmative vote of the record holders of a majority of the then outstanding shares of the Series A Preferred Stock voting together as a single class (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation authorizing the Series A Preferred Stock, (b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (c) increase the number of authorized shares of Series A Preferred Stock, unless such increase is necessary to pay PIK Dividends, (d) authorize a new series of preferred stock with dividend, liquidation or redemption rights senior or pari passu to the Series A Preferred Stock or (e) enter into any agreement with respect to any of the foregoing.

Common Stock Issuances

During the year ended December 31, 2015, the Company granted 52,000 shares of restricted common stock pursuant to an agreement in connection with the acquisition of Sterling. During the three and nine months ended September 30, 2016, 25,000 shares of that restricted stock has vested and is included in shares issued and outstanding. In addition, the Company issued an aggregate of 13,125 shares of common stock upon the exercise of options by certain of its directors.

Stock Options

On March 30, 2015, the Board of Directors adopted the Company’s 2015 Equity Incentive Plan (“2015 Plan”) which was approved by affirmative vote of the Company’s stockholders on June 25, 2015. The Plan authorized the grant of rights with respect to up to 350,000 shares.

In June 2016, the Board of Directors adopted the Company’s 2016 Equity Incentive Plan (“2016 Plan”) which authorized the grant of rights with respect to up to 350,000 shares. The 2016 Plan will be submitted to stockholders for approval at the 2016 Annual Meeting of Stockholders.

During the three and nine months ended September 30, 2016 the Company granted options to purchase 0 and 138,000 shares of common stock to certain of its employees, respectively. The weighted average fair value of the granted options was estimated using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 1.36%; expected volatility factors of 25.00%; expected dividend yield of 0%; and estimated option term of 5 years.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section S99
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
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+ Details

INCOME TAXES

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

The provision for income taxes for the nine months ended September 30, 2016 and 2015 is set forth below:

	2016			2015
		(Unaudited)
Current:
Federal		-			117,000
State		13,000			14,000
Prior year (over)/under Accrual
Federal		30,000			-
Total current expense		43,000			131,000
Deferred tax (benefit) expense		(2,145,000	)		(650,000)
Total tax (benefit) expense		(2,102,000	)		(519,000)

The components of net deferred tax assets are set forth below:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Deferred Tax Assets

Net operating losses		2,275,000			462,000
Bad debts		230,000			336,000
Accounts payable, accrued expenses and reserves		-			8,000
Inventory - 263A adjustment		1,035,000			919,000

Capitalized engineering costs		415,000			432,000
Deferred rent		413,000			410,000
Loss on extinguishment of debt		59,000			-
Deferred gain on sale of real estate		116,000			126,000
Lease impairment		-			-
Stock based compensation - options and restricted stock		132,000			79,000
Intangibles NTW		958,000			789,000
Capital loss carry forwards		-			-
Section 1231 loss carry forward		4,000			4,000
Inventory		725,000			680,000
Other		131,000			257,000
Total deferred tax assets before valuation allowance		6,493,000			4,502,000
Valuation allowance		(4,000	)		(4,000	)
Total deferred tax assets after valuation allowance		6,489,000			4,498,000


Deferred Tax Liabilities
Property and equipment		(1,996,000	)		(2,091,000	)
Amortization - Welding Transaction		(270,000	)		(313,000	)
Amortization - NTW Goodwill		(16,000	)		(13,000	)
Amortization - AMK Goodwill		(29,000	)		(18,000	)
Total deferred tax liabilities		(2,311,000	)		(2,435,000	)


Total Net Deferred Tax Assets		4,178,000			2,063,000

During the year ended December 31, 2015, the Company provided a valuation allowance on the deferred tax assets related to capital loss and section 1231 loss carryforwards. The valuation allowance at both September 30, 2016 and December 31, 2015 amounted to $4,000. Management believes that the remainder of the net deferred tax assets are more likely than not to be realized.

The Company received a notice dated August 8, 2016 from the Internal Revenue Service for examination of its corporate tax return for the year ended December 31, 2014. Since the audit has not been completed, the Company cannot determine if any additional taxes, interest or penalties will be assessed.

SEGMENT REPORTING

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

SEGMENT REPORTING

In accordance with FASB ASC 280, “Segment Reporting” ("ASC 280"), 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 follows ASC 280, which establishes standards for reporting information about operating segments in annual and interim financial statements, and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

The Company currently divides its operations into three operating segments: Complex Machining which consists of AIM and NTW; Aerostructures & Electronics which consists of WMI, WPI, Miller Stuart, Eur-Pac, ECC and Compac; and Turbine Engine Components which consists of AMK and Sterling.

The accounting policies of each segment are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on revenue, gross profit contribution and assets employed.

Financial information about the Company’s operating segments for the three and nine months ended September 30, 2016 and 2015 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

COMPLEX MACHINING
Net Sales	$	9,254,000		$	10,687,000		$	27,022,000		$	29,281,000
Gross Profit		1,476,000			2,568,000			5,898,000			6,886,000
Pre Tax (Loss) Income		(963,000)			549,000			(856,000	)		733,000
Assets		54,159,000			47,811,000			54,159,000			47,811,000

AEROSTRUCTURES & ELECTRONICS
Net Sales		3,738,000			7,408,000			14,939,000			19,468,000
Gross Profit		674,000			1,449,000			3,068,000			5,008,000
Pre Tax (Loss) Income		(893,000	)		(126,000	)		(1,832,000	)		598,000
Assets		19,562,000			22,683,000			19,562,000			22,683,000

TURBINE ENGINE COMPONENTS
Net Sales		2,718,000			2,981,000			8,296,000			8,195,000
Gross Profit		(153,000)			161,000			7,000			550,000
Pre Tax (Loss) Income		(1,248,000	)		(812,000	)		(2,900,000	)		(2,010,000	)
Assets		17,645,000			18,078,000			17,645,000			18,078,000

CORPORATE
Net Sales		-			-			-			-
Gross Profit		-			-			-			-
Pre Tax (Loss) Income		(263,000)			-			(243,000)			-
Assets		574,000			596,000			574,000			596,000

CONSOLIDATED
Net Sales		15,710,000			21,076,000			50,257,000			56,944,000
Gross Profit		1,997,000			4,178,000			8,973,000			12,444,000
Pre Tax (Loss) Income		(3,367,000	)		(389,000	)		(5,831,000	)		(679,000	)
Benefit from Income Taxes		1,320,000			726,000			2,102,000			519,000
Net (Loss) Income		(2,047,000	)		337,000			(3,729,000	)		(160,000	)
Assets	$	91,940,000		$	89,168,000		$	91,940,000		$	89,168,000

- 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
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Principal Business Activity

Inventory Valuation

The Company valued inventory at December 31, 2015 at the lower of cost on a first-in-first-out basis or market.

Credit and Concentration Risks

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		14.2		18.8
	2		*		15.3
	3		*		11.1
	4		*		10.1

* Customer was less than 10% of sales for the quarter ended September 30, 2016

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		19.8		17.0
	2		11.9		14.9
	3		10.9		17.3
	4		10.7		12.9

Customer		Percentage of Receivables
		September		December
		2016		2015
		(Unaudited)
	1		18.5		26.6
	2		14.5		10.4
	3		11.5		13.6
	4		*		10.5

* Customer was less than 10% of Gross Accounts Receivable at September 30, 2016

Earnings per share

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

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earnings per share		7,610,220		7,559,501		7,594,215		7,450,707
Effect of dilutive stock options and warrants		-		126,786		-		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		7,610,220		7,686,287		7,594,215		7,450,707

	Three and Nine Months Ended
	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Stock Options		202,694		258,391
Warrants		-		46,800
		202,694		305,191

	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Convertible Preferred Stock		1,488,394		-
Stock Options		443,648		322,675
Warrants		519,573		117,785
Unvested Restricted Stock		52,000		-
		2,503,615		440,460

Stock-Based Compensation

Goodwill

The Company has determined that there has been no impairment of goodwill at September 30, 2016 and December 31, 2015.

Debt Issuance Costs

Recently Issued Accounting Pronouncements

Subsequent Events

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

ACQUISITION (Tables) - Sterling

9 Months Ended

Sep. 30, 2016

Purchase price allocation

The acquisition of Sterling was accounted for under ASC 805. The purchase price allocation is set forth below.

Fair value of tangible assets acquired	$	8,181,000
Goodwill		4,540,000
Cash acquired		588,000
Liabilities assumed		(3,169,000	)
Total	$	10,140,000

Proforma results

The below table sets forth selected unaudited proforma financial information for the Company as if Sterling were owned for the entire three and nine months ended September 30, 2015.

Three Months Ended

September 30, 2015

Net Sales

21,076,000

Income from operations

26,000

Nine Months Ended

September 30, 2015

Net Sales

58,783,000

Income from operations

711,000

Selected financial information

The below table sets forth selected financial information for Sterling for the three and nine months ended September 30, 2016 and the portions of the three and nine months ended September 30, 2015 during which Sterling was a subsidiary of the Company.

	Three Months Ended
	September 30, 2016			September 30, 2015
Net Sales	$	1,442,000		$	1,853,000
Loss from Operations	$	(684,000	)	$	(570,000	)

	Nine Months Ended
	September 30, 2016			September 30, 2015
Net Sales	$	4,722,000		$	5,152,000
Loss from Operations	$	(1,516,000	)	$	(585,000	)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Credit and Concentration Risks

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		14.2		18.8
	2		*		15.3
	3		*		11.1
	4		*		10.1

* Customer was less than 10% of sales for the quarter ended September 30, 2016

Customer		Percentage of Sales
		2016		2015
		(Unaudited)		(Unaudited)
	1		19.8		17.0
	2		11.9		14.9
	3		10.9		17.3
	4		10.7		12.9

Customer		Percentage of Receivables
		September		December
		2016		2015
		(Unaudited)
	1		18.5		26.6
	2		14.5		10.4
	3		11.5		13.6
	4		*		10.5

* Customer was less than 10% of Gross Accounts Receivable at September 30, 2016

Earnings per share

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

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2016		2015		2016		2015
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Weighted average shares outstanding used to compute basic earnings per share		7,610,220		7,559,501		7,594,215		7,450,707
Effect of dilutive stock options and warrants		-		126,786		-		-
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share		7,610,220		7,686,287		7,594,215		7,450,707

	Three and Nine Months Ended
	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Stock Options		202,694		258,391
Warrants		-		46,800
		202,694		305,191

	September 30,		September 30,
	2016		2015
	(Unaudited)		(Unaudited)
Convertible Preferred Stock		1,488,394		-
Stock Options		443,648		322,675
Warrants		519,573		117,785
Unvested Restricted Stock		52,000		-
		2,503,615		440,460

PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Property and equipment

The components of property and equipment consisted of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Land	$	300,000		$	300,000
Buildings & Improvements		1,650,000			1,658,000		31.5 years
Machinery and Equipment		16,078,000			15,109,000		5 - 8 years
Capital Lease Machinery and Equipment		6,265,000			5,869,000		3 - 5 years
Capital Lease Facility		1,700,000			-		Term of Lease
Tools and Instruments		7,491,000			6,993,000		1.5 - 7 years
Automotive Equipment		217,000			191,000		5 years
Furniture and Fixtures		462,000			425,000		5 - 8 years
Leasehold Improvements		979,000			910,000		Term of Lease
Computers and Software		567,000			482,000		4-6 years
Total Property and Equipment		35,709,000			31,937,000
Less: Accumulated Depreciation		(19,471,000	)		(16,638,000	)
Property and Equipment, net	$	16,238,000		$	15,299,000

INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

The components of intangibles assets consisted of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Customer Relationships	$	6,555,000		$	6,555,000		5 to 14 years
Trade Names		1,480,000			1,480,000		15 to 20 years
Technical Know-how		660,000			660,000		10 years
Non-Compete		150,000			150,000		5 years
Professional Certifications		15,000			15,000		.25 to 2 years
Total Intangible Assets		8,860,000			8,860,000
Less: Accumulated Amortization		(5,967,000	)		(5,008,000	)
Intangible Assets, net	$	2,893,000		$	3,852,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Tables)

9 Months Ended

Sep. 30, 2016

Notes and Loans Payable [Abstract]

Notes payable and capital lease obligations

Notes payable and capital lease obligations consist of the following:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Revolving credit note payable to PNC Bank N.A. ("PNC")	$	25,822,000		$	29,604,000
Term loans, PNC		7,019,000			9,833,000
Capital lease obligations		6,206,000			5,018,000
Related party notes payable		1,378,000			350,000
Notes payable (private placement)		2,174,000			-
Subtotal		42,599,000			44,805,000
Less: Current portion of notes and capital obligations		(34,106,000	)		(40,893,000	)
Notes payable and capital lease obligations, net of current portion		8,493,000			3,912,000

Future minimum principal payments for term loan

As of September 30, 2016, the scheduled future minimum principal payments for the term loans are as follows, however as discussed above, the balance of the term loans have been classified as current:

For the twelve months ending	Amount
For the 12 Months Ended 9/30/17	$	1,478,000
For the 12 Months Ended 9/31/18		1,478,000
For the 12 Months Ended 9/31/19		1,478,000
For the 12 Months Ended 9/31/20		1,478,000
For the 12 Months Ended 9/31/21		1,107,000
PNC Term Loan payable		7,019,000
Less: Current portion		(7,019,000	)
Long-term portion	$	-

Future minimum lease payments, including imputed interest

As of September 30, 2016, 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
For the 12 Months Ended 9/30/2017	$	1,599,000
For the 12 Months Ended 9/30/2018		1,602,000
For the 12 Months Ended 9/30/2019		1,431,000
For the 12 Months Ended 9/30/2020		952,000
For the 12 Months Ended 9/30/2021		218,000
Thereafter		2,012,000
Total future minimum lease payments		7,814,000
Less: imputed interest		(1,608,000	)
Less: current portion		(1,265,000	)
Total Long Term Portion	$	4,941,000

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Provision for income taxes

The provision for income taxes for the nine months ended September 30, 2016 and 2015 is set forth below:

	2016			2015
		(Unaudited)
Current:
Federal		-			117,000
State		13,000			14,000
Prior year (over)/under Accrual
Federal		30,000			-
Total current expense		43,000			131,000
Deferred tax (benefit) expense		(2,145,000	)		(650,000)
Total tax (benefit) expense		(2,102,000	)		(519,000)

Deferred tax assets

The components of net deferred tax assets are set forth below:

	September 30,			December 31,
	2016			2015
	(Unaudited)
Deferred Tax Assets

Net operating losses		2,275,000			462,000
Bad debts		230,000			336,000
Accounts payable, accrued expenses and reserves		-			8,000
Inventory - 263A adjustment		1,035,000			919,000

Capitalized engineering costs		415,000			432,000
Deferred rent		413,000			410,000
Loss on extinguishment of debt		59,000			-
Deferred gain on sale of real estate		116,000			126,000
Lease impairment		-			-
Stock based compensation - options and restricted stock		132,000			79,000
Intangibles NTW		958,000			789,000
Capital loss carry forwards		-			-
Section 1231 loss carry forward		4,000			4,000
Inventory		725,000			680,000
Other		131,000			257,000
Total deferred tax assets before valuation allowance		6,493,000			4,502,000
Valuation allowance		(4,000	)		(4,000	)
Total deferred tax assets after valuation allowance		6,489,000			4,498,000


Deferred Tax Liabilities
Property and equipment		(1,996,000	)		(2,091,000	)
Amortization - Welding Transaction		(270,000	)		(313,000	)
Amortization - NTW Goodwill		(16,000	)		(13,000	)
Amortization - AMK Goodwill		(29,000	)		(18,000	)
Total deferred tax liabilities		(2,311,000	)		(2,435,000	)


Total Net Deferred Tax Assets		4,178,000			2,063,000

SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Operating segments

Financial information about the Company’s operating segments for the three and nine months ended September 30, 2016 and 2015 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

COMPLEX MACHINING
Net Sales	$	9,254,000		$	10,687,000		$	27,022,000		$	29,281,000
Gross Profit		1,476,000			2,568,000			5,898,000			6,886,000
Pre Tax (Loss) Income		(963,000)			549,000			(856,000	)		733,000
Assets		54,159,000			47,811,000			54,159,000			47,811,000

AEROSTRUCTURES & ELECTRONICS
Net Sales		3,738,000			7,408,000			14,939,000			19,468,000
Gross Profit		674,000			1,449,000			3,068,000			5,008,000
Pre Tax (Loss) Income		(893,000	)		(126,000	)		(1,832,000	)		598,000
Assets		19,562,000			22,683,000			19,562,000			22,683,000

TURBINE ENGINE COMPONENTS
Net Sales		2,718,000			2,981,000			8,296,000			8,195,000
Gross Profit		(153,000)			161,000			7,000			550,000
Pre Tax (Loss) Income		(1,248,000	)		(812,000	)		(2,900,000	)		(2,010,000	)
Assets		17,645,000			18,078,000			17,645,000			18,078,000

CORPORATE
Net Sales		-			-			-			-
Gross Profit		-			-			-			-
Pre Tax (Loss) Income		(263,000)			-			(243,000)			-
Assets		574,000			596,000			574,000			596,000

CONSOLIDATED
Net Sales		15,710,000			21,076,000			50,257,000			56,944,000
Gross Profit		1,997,000			4,178,000			8,973,000			12,444,000
Pre Tax (Loss) Income		(3,367,000	)		(389,000	)		(5,831,000	)		(679,000	)
Benefit from Income Taxes		1,320,000			726,000			2,102,000			519,000
Net (Loss) Income		(2,047,000	)		337,000			(3,729,000	)		(160,000	)
Assets	$	91,940,000		$	89,168,000		$	91,940,000		$	89,168,000

ACQUISITIONS (Details) - Sterling	9 Months Ended
ACQUISITIONS (Details) - Sterling	Sep. 30, 2016 USD ($)
Fair Value of Tangible Assets acquired	$ 8,181,000
Goodwill	1,963,000
Cash Acquired	588,000
Liabilities assumed	(3,169,000)
Total	$ 10,140,000

ACQUISITIONS (Details 1) - USD ($)	3 Months Ended	9 Months Ended
ACQUISITIONS (Details 1) - USD ($)	Sep. 30, 2015	Sep. 30, 2015
Business Combinations [Abstract]
Net Sales	$ 21,076,000	$ 58,783,000
Income from operations	$ 26,000	$ 711,000

ACQUISITIONS (Details 2) - USD ($)	3 Months Ended		9 Months Ended
ACQUISITIONS (Details 2) - USD ($)	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net Sales		$ 21,076,000		$ 58,783,000
Loss from operations		26,000		711,000
Sterling
Net Sales	$ 1,442,000	1,853,000	$ 4,722,000	5,152,000
Loss from operations	$ (684,000)	$ (570,000)	$ (1,516,000)	$ (585,000)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (Unaudited)

3 Months Ended

9 Months Ended

Sep. 30, 2016

Sep. 30, 2015

Sep. 30, 2016

Sep. 30, 2015

Accounting Policies [Abstract]

Customer 1

14.20%

18.80%

19.80%

17.00%

Customer 2

^[1]

15.30%

11.90%

14.90%

Customer 3

^[1]

11.10%

10.90%

17.30%

Customer 4

^[1]

10.10%

10.70%

12.90%

[1]	Customer was less than 10% of sales for the quarter ended September 30, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2)

Sep. 30, 2016

Dec. 31, 2015

Accounting Policies [Abstract]

Customer 1

18.50%

26.60%

Customer 2

14.50%

10.40%

Customer 3

11.50%

13.60%

Customer 4

^[1]

10.50%

[1]	Customer was less than 10% of Gross Accounts Receivable at September 30, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (Unaudited) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accounting Policies [Abstract]
Weighted average shares outstanding used to compute basic earnings per share	7,610,220	7,559,501	7,594,215	7,450,707
Effect of dilutive stock options and warrants	0	126,786	0	0
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share	7,610,220	7,686,287	7,594,215	7,450,707

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (Unaudited) - shares	Sep. 30, 2016	Sep. 30, 2015
Stock Options	202,694	258,391
Warrants	0	46,800
Anti dilutive Securities	202,694	305,191
Anti-dilutive
Convertible Preferred Stock	1,488,394	0
Stock Options	443,648	322,675
Warrants	519,573	117,785
Unvested Restricted Stock	52,000	0
Anti dilutive Securities	2,503,615	440,460

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Stock-based compensation	$ 43,000	$ 23,000	$ 126,000	$ 77,000
Impairment of goodwill	0		0		$ 0
Goodwill	10,518,000		10,518,000		10,518,000
Welding
Goodwill	291,000		291,000		291,000
NTW
Goodwill	162,000		162,000		162,000
Woodbine
Goodwill	2,565,000		2,565,000		2,565,000
Eur-Pac
Goodwill	1,656,000		1,656,000		1,656,000
ECC
Goodwill	109,000		109,000		109,000
AMK
Goodwill	635,000		635,000		635,000
Sterling
Goodwill	4,540,000		4,540,000		4,540,000
Compac
Goodwill	$ 560,000		$ 560,000		$ 560,000

PROPERTY AND EQUIPMENT (Details) - USD ($)	9 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Total Property and Equipment	$ 35,709,000	$ 31,937,000
Less: Accumulated Depreciation	(19,471,000)	(16,638,000)
Property and Equipment, net	16,238,000	15,299,000
Land [Member]
Total Property and Equipment	300,000	300,000
Buildings and Improvements [Member]
Total Property and Equipment	$ 1,650,000	1,658,000
Property Plant And Equipment Useful Life	31 years 6 months
Machinery and Equipment [Member]
Total Property and Equipment	$ 16,078,000	15,109,000
Machinery and Equipment [Member] \| Minimum
Property Plant And Equipment Useful Life	5 years
Machinery and Equipment [Member] \| Maximum [Member]
Property Plant And Equipment Useful Life	8 years
Capital Lease Machinery and Equipment [Member]
Total Property and Equipment	$ 6,265,000	5,869,000
Capital Lease Machinery and Equipment [Member] \| Minimum
Property Plant And Equipment Useful Life	3 years
Capital Lease Machinery and Equipment [Member] \| Maximum [Member]
Property Plant And Equipment Useful Life	5 years
Capital Lease Facility [Member]
Total Property and Equipment	$ 1,700,000	0
Property Plant And Equipment Useful Life	Term of Lease
Tools and Instruments [Member]
Total Property and Equipment	$ 7,491,000	6,993,000
Tools and Instruments [Member] \| Minimum
Property Plant And Equipment Useful Life	1 year 6 months
Tools and Instruments [Member] \| Maximum [Member]
Property Plant And Equipment Useful Life	7 years
Automotive Equipment [Member]
Total Property and Equipment	$ 217,000	191,000
Property Plant And Equipment Useful Life	5 years
Furniture and Fixtures [Member]
Total Property and Equipment	$ 462,000	425,000
Furniture and Fixtures [Member] \| Minimum
Property Plant And Equipment Useful Life	5 years
Furniture and Fixtures [Member] \| Maximum [Member]
Property Plant And Equipment Useful Life	8 years
Leasehold Improvements [Member]
Total Property and Equipment	$ 979,000	910,000
Property Plant And Equipment Useful Life	Term of Lease
Computers and Software [Member]
Total Property and Equipment	$ 567,000	$ 482,000
Computers and Software [Member] \| Minimum
Property Plant And Equipment Useful Life	4 years
Computers and Software [Member] \| Maximum [Member]
Property Plant And Equipment Useful Life	6 years

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 957,000	$ 1,045,000	$ 2,808,000	$ 2,679,000

INTANGIBLE ASSETS (Details) - USD ($)	9 Months Ended
INTANGIBLE ASSETS (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Customer Relationships	$ 6,555,000	$ 6,555,000
Trade Names	1,480,000	1,480,000
Technical Know-how	660,000	660,000
Non-Compete	150,000	150,000
Professional Certifications	15,000	15,000
Total Intangible Assets	8,860,000	8,860,000
Less: Accumulated Amortization	(5,967,000)	(5,008,000)
Intangible Assets, net	$ 2,893,000	$ 3,852,000
Customer Relationships [Member] \| Minimum
Intangible Assets Useful Life	5 years
Customer Relationships [Member] \| Maximum [Member]
Intangible Assets Useful Life	14 years
Trade Names [Member] \| Minimum
Intangible Assets Useful Life	15 years
Trade Names [Member] \| Maximum [Member]
Intangible Assets Useful Life	20 years
Technical Know-how [Member]
Intangible Assets Useful Life	10 years
Non-Compete [Member]
Intangible Assets Useful Life	5 years
Professional Certifications [Member] \| Minimum
Intangible Assets Useful Life	3 months
Professional Certifications [Member] \| Maximum [Member]
Intangible Assets Useful Life	2 years

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
INTANGIBLE ASSETS (Details Narrative) - USD ($)	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of the intangibles	$ 320,000	$ 309,000	$ 960,000	$ 923,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Notes and Loans Payable [Abstract]
Revolving credit note payable to PNC Bank N.A. ("PNC")	$ 25,822,000	$ 29,604,000
Term loans, PNC	7,019,000	9,833,000
Capital lease obligations	6,206,000	5,018,000
Related party note payable	1,378,000	350,000
Notes payable (private placement)	2,174,000	0
Subtotal	42,599,000	44,805,000
Less: Current portion of notes and capital lease obligations	(34,106,000)	(40,893,000)
Notes payable and capital lease obligations, net of current portion	$ 8,493,000	$ 3,912,000

- 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)	Sep. 30, 2016 USD ($)
Notes and Loans Payable [Abstract]
September 30, 2017	$ 1,478,000
September 30, 2018	1,478,000
September 30, 2019	1,478,000
September 30, 2020	1,478,000
September 30, 2021	1,107,000
PNC Term Loans payable	7,019,000
Less: Current portion	(7,019,000)
Long-term portion	$ 0

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 2)	Sep. 30, 2016 USD ($)
Notes and Loans Payable [Abstract]
September 30, 2017	$ 1,599,000
September 30, 2018	1,602,000
September 30, 2019	1,431,000
September 30, 2020	952,000
September 30, 2021	218,000
Thereafter	2,012,000
Total future minimum lease payments	7,814,000
Less: Imputed interest	(1,608,000)
Less: Current portion	(1,265,000)
Total Long Term Portion	$ 4,941,000

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Notes and Loans Payable [Abstract]
Balance due under revolving loan	$ 25,822,000	$ 29,604,000
Capital lease obligations	$ 6,206,000	$ 5,018,000
Interest rate minimum	4.00%
Interest rate maximum	14.00%

STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Dividends earned and not declared	$ 35,000	$ 0
Restricted Common Stock [Member]
Common stock shares issued		52,000
Common stock shares vested	25,000
Stock Options [Member] \| 2015 Plan [Member]
Shares available to be issued as options	350,000

INCOME TAXES (Details) - USD ($)	9 Months Ended
INCOME TAXES (Details) - USD ($)	Sep. 30, 2016	Sep. 30, 2015
Current
Federal	$ 0	$ 117,000
State	13,000	14,000
Prior year (over)/under Accrual
Federal	30,000	0
Total Current Expense	43,000	131,000
Deferred Tax (Benefit)	(2,145,000)	(650,000)
Net (Benefit from) Provision for Income Taxes	$ (2,102,000)	$ (519,000)

INCOME TAXES (Details 1) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current:
Net operating losses	$ 2,275,000	$ 462,000
Bad debts	230,000	336,000
Accounts payable, accrued expenses and reserves	0	8,000
Inventory - 263A adjustment	1,035,000	919,000
Non-current:
Capitalized engineering costs	415,000	432,000
Deferred rent	413,000	410,000
Loss on extinguishment of debt	59,000	0
Deferred gain on sale of real estate	116,000	126,000
Lease impairment	0	0
Stock based compensation - options and restricted stock	132,000	79,000
Intangibles NTW	958,000	789,000
Capital loss carry forwards	0	0
Section 1231 loss carry forward	4,000	4,000
Inventory	725,000	680,000
Other	131,000	257,000
Total deferred tax assets before valuation allowance	6,493,000	4,502,000
Valuation allowance	(4,000)	(4,000)
Total deferred tax assets after valuation allowance	6,489,000	4,498,000
Deferred tax liabilities:
Property and equipment	(1,996,000)	(2,091,000)
Amortization - Welding Transaction	(270,000)	(313,000)
Amortization - NTW Goodwill	(16,000)	(13,000)
Amortization - AMK Goodwill	(29,000)	(18,000)
Total deferred tax liabilities	(2,311,000)	(2,435,000)
Total Net Deferred Tax Assets	$ 4,178,000	$ 2,063,000

INCOME TAXES (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Valuation allowance	$ 4,000	$ 4,000

SEGMENT REPORTING (Details) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
SEGMENT REPORTING (Details) (Unaudited) - USD ($)	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Gross Profit	$ 1,997,000	$ 4,178,000	$ 8,973,000	$ 12,444,000
Pre Tax (Loss) Income	(3,367,000)	(389,000)	(5,831,000)	(679,000)
Benefit from (Provision for) Income Taxes	1,320,000	726,000	2,102,000	519,000
Assets	91,940,000		91,940,000		$ 88,250,000
COMPLEX MACHINING
Net Sales	9,254,000	10,687,000	10,687,000	29,281,000
Gross Profit	1,476,000	2,568,000	2,568,000	6,886,000
Pre Tax (Loss) Income	(963,000)	549,000	549,000	733,000
Assets	54,159,000	47,811,000	54,159,000	47,811,000
AEROSTRUCTURES AND ELECTRONICS
Net Sales	3,738,000	7,408,000	7,408,000	19,468,000
Gross Profit	674,000	1,449,000	1,449,000	5,008,000
Pre Tax (Loss) Income	(893,000)	(126,000)	(126,000)	598,000
Assets	19,562,000	22,683,000	19,562,000	22,683,000
TURBINE ENGINE COMPONENTS
Net Sales	2,718,000	2,981,000	2,981,000	8,195,000
Gross Profit	(153,000)	161,000	161,000	550,000
Pre Tax (Loss) Income	(1,248,000)	(812,000)	(812,000)	(2,010,000)
Assets	17,645,000	18,078,000	17,645,000	18,078,000
CORPORATE
Net Sales	0	0	0	0
Gross Profit	0	0	0	0
Pre Tax (Loss) Income	(263,000)	0	0	0
Assets	574,000	596,000	574,000	596,000
CONSOLIDATED
Net Sales	15,710,000	21,076,000	21,076,000	56,944,000
Gross Profit	1,997,000	4,178,000	4,178,000	12,444,000
Pre Tax (Loss) Income	(3,367,000)	(389,000)	(389,000)	(679,000)
Benefit from (Provision for) Income Taxes	1,320,000	726,000	726,000	519,000
Net (Loss) Income	(2,047,000)	337,000	337,000	(160,000)
Assets	$ 91,940,000	$ 89,168,000	$ 91,940,000	$ 89,168,000