<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Commission File Number 1-11398
ended June 30, 1996
CPI AEROSTRUCTURES, INC.
(Exact Name of Small Business Issuer as Specified in its Character)
New York 11-2520310
- --------------------------------- ------------------------------------
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation or Organization)
200A EXECUTIVE DRIVE, EDGEWOOD, NY 11717
(Address of Principal Executive Offices)
Telephone number (516) 586-5200
(Issuer's Telephone Number Including Area Code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or such period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No ____
The number of shares of common stock, par value $.001 per
share, outstanding was 5,778,304 as of June 30, 1996.
===============================================================================
<PAGE>
CPI AEROSTRUCTURES, INC.
INDEX
============================================================================
Part I. Financial Information:
Item 1 - Financial Statements:
Balance Sheets as of June 30, 1996 (Unaudited) and 3
December 31, 1995
Statements of Income for the Three and Six Months ended
June 30, 1996 (Unaudited) and 1995 (Unaudited) 4
Statements of Cash Flows for the Six Months ended
June 30, 1996 (Unaudited) and 1995 (Unaudited) 5
Notes to Financial Statements (Unaudited) 6-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
Part II. Other
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
2
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<TABLE>
<CAPTION>
CPI AEROSTRUCTURES, INC.
BALANCE SHEETS
======================================================================================================================
June 30, December 31,
1996 1995
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 327,703 $ 998,517
Accounts receivable 1,755,407 1,565,048
Costs and estimated earnings in excess of billings on uncompleted 10,241,190 9,677,390
contracts (Note 2)
Other current assets 331,445 329,199
- ----------------------------------------------------------------------------------------------------------------------
Total current assets 12,655,745 12,570,154
Property, Plant and Equipment, net 196,155 196,384
Deferred Income Taxes 113,000 113,000
Other Assets 29,226 75,519
- ----------------------------------------------------------------------------------------------------------------------
Total Assets $12,994,126 $12,955,057
======================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,497,310 $ 1,160,285
Accrued expenses 291,327 260,288
Current portion of long-term debt 16,135 630,525
Deferred income taxes 445,000 445,000
- ----------------------------------------------------------------------------------------------------------------------
Total current liabilities 2,249,772 2,496,098
Long-term Debt - 1,730,229
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 2,249,772 4,226,327
- ----------------------------------------------------------------------------------------------------------------------
Commitments
Shareholders' Equity
Common stock - $.001 par value; authorized 10,000,000 shares,
5,778,304 and 3,728,304 issued and outstanding, respectively 5,778 3,728
Additional paid-in capital 9,123,691 7,436,079
Retained earnings 1,614,885 1,288,923
- ----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 10,744,354 8,728,730
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $12,994,126 $12,955,057
======================================================================================================================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
CPI AEROSTRUCTURES, INC.
STATEMENTS OF INCOME
======================================================================================================================
For the Three Months ended June 30, For the Six Months Ended June 30,
1996 1995 1996 1995
(Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $1,635,874 $1,078,994 $3,186,493 $2,362,031
Cost of sales 1,049,033 584,211 2,022,182 1,303,988
- ----------------------------------------------------------------------------------------------------------------------
Gross profit 586,841 494,783 1,164,311 1,058,043
Selling, general and administrative 333,121 281,134 667,496 609,605
expenses
- ----------------------------------------------------------------------------------------------------------------------
Income from operations 253,720 213,649 496,815 448,438
- ----------------------------------------------------------------------------------------------------------------------
Other (income) expense:
Interest income (4,631) 14,628 (34,652) (12,645)
Interest expense 51,872 106,070 109,451 214,997
- ----------------------------------------------------------------------------------------------------------------------
Total other expenses, net 47,241 120,698 74,799 202,352
- ----------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes
and extraordinary item 206,479 92,951 422,016 246,086
Provision for income taxes 72,000 40,000 147,000 105,000
Income before extraordinary item $ 134,479 $ 52,951 $ 275,016 $ 141,086
Extraordinary item - gain on early
extinguishment of debt, net of provision - -
for income taxes of $28,000 50,947 50,947
- ----------------------------------------------------------------------------------------------------------------------
Net Income $ 185,426 $ 52,951 $ 325,963 $ 141,086
======================================================================================================================
Earnings per shares (Note 3):
Income before extra ordinary item $ .03 $ .02 $ .07 $ .04
Extraordinary item $ .01 $ - $ .01 $ -
- ----------------------------------------------------------------------------------------------------------------------
Net earnings $ .04 $ .02 $ .08 $ .04
======================================================================================================================
Weighted average shares and common
share equivalents outstanding 4,396,323 3,728,304 4,262,336 3,720,377
======================================================================================================================
</TABLE>
See Notes to Financial Statements
4
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<TABLE>
<CAPTION>
CPI AEROSTRUCTURES, INC.
STATEMENTS OF CASH FLOWS
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For the Six Months Ended June 30, 1996 1995
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 325,963 $ 141,086
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 39,867 62,168
Extraordinary item (50,947)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (190,359) 954,541
(Increase) decrease in prepaid expenses and other current assets (2,246) 51,904
Increase in costs and estimated earnings in excess of billings on
uncompleted contracts (563,800) (1,031,482)
(Increase) decrease in other assets 25,239 (37,330)
Increase in accounts payable 337,025 17,426
Increase (decrease) in accrued expenses 3,039 (148,001)
Increase in income taxes payable - 105,000
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (76,219) 115,312
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (39,638) -
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (39,638) -
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term debt and officer note payments (2,244,619) (397,459)
Proceeds from exercise of stock options/warrants/private placement 1,689,662 145,174
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (554,957) (252,285)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (670,814) 136,973
Cash at beginning of year 998,517 1,796,095
======================================================================================================================
Cash at end of period $ 327,703 $ 1,659,112
======================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 131,937 $ 259,321
======================================================================================================================
Income taxes $ 10,300 $ 32,926
======================================================================================================================
</TABLE>
See Notes to Financial Statements
5
<PAGE>
CPI AEROSTRUCTURES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. INTERIM The financial statements as of June 30, 1996 and for the six
FINANCIAL and three months ended June 30, 1996 and 1995 are unaudited.
STATEMENTS In the opinion of the management of the Company, these
financial statements reflect all adjustments (consisting
solely of normal recurring adjustments) necessary to present
fairly the financial position of the Company and the results
of operations for such interim periods are not necessarily
indicative of the results to be obtained for a full year.
2. COSTS AND Costs and estimated earnings in excess of billings on
ESTIMATED uncompleted contracts consist of:
EARNINGS IN
EXCESS OF
BILLINGS ON
UNCOMPLETED
CONTRACTS:
<TABLE>
<CAPTION>
June 30, 1996
----------------------------------------------------------------------------------------
U.S.
Government Commercial Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs incurred on uncompleted
contracts $667,157 $21,194,299 $21,861,456
Estimated earnings 239,528 11,747,120 11,986,648
----------------------------------------------------------------------------------------
906,685 32,941,419 33,848,104
Less billings to date 552,273 23,054,641 23,606,914
========================================================================================
Costs and estimated earnings
in excess of billings on
uncompleted contracts $354,412 $9,886,778 $10,241,190
========================================================================================
December 31, 1995
----------------------------------------------------------------------------------------
U.S.
Government Commercial Total
----------------------------------------------------------------------------------------
Costs incurred on uncompleted
contracts $631,426 $19,738,969 $20,370,395
Estimated earnings 201,250 10,777,343 10,978,593
----------------------------------------------------------------------------------------
832,676 30,516,312 31,348,988
Less billings to date 716,030 20,955,568 21,671,598
========================================================================================
Costs and estimated earnings
in excess of billings on
uncompleted contracts $116,646 $9,560,744 $9,677,390
========================================================================================
</TABLE>
6
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CPI AEROSTRUCTURES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
3. EARNINGS PER The earnings per share calculations are computed by dividing
COMMON SHARE: net income, increased by proforma reductions in interest
expense (net of tax) resulting from the assumed exercise of
stock options and warrants and the resulting assumed
reduction of outstanding indebtedness, by the weighted
average number of common and common equivalent shares
outstanding.
7
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CPI AEROSTRUCTURES, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
===============================================================================
Material Changes in Results of Operations
The Company's revenues for the three months ended June 30, 1996 were $1,635,874
compared to $1,078,994 for the same period last year, representing an increase
of $556,880, or 52%. Revenues for the six month period ended June 30, 1996 were
$3,186,493 compared to $2,362,031 for the same period last year, representing an
increase of $824,462 or 35%. This increase is due in part to an accelerated
delivery schedule of Apron assemblies which the Company builds for Rohr
Industries, for use on the MD-90 aircraft. Additionally, revenue from the
Company's new military contracts, which it was awarded in late 1995 has begun,
as the Company commenced deliveries of spare parts for the C-5 aircraft during
the six months ended June 30, 1996. It is anticipated that because of these new
contracts, and specifically the increased magnitude of the C-5 contract, the
Company's revenues should remain at a higher level than 1995. Commercial
aircraft programs represented 76% of total revenues for the six months ended
June 30, 1996 compared to 96% for the same period in 1995.
The above statements discussed in this Report include forward looking statements
that involve risks and uncertainties, including the timely delivery and
acceptance of the Company's products and the other risks detailed from time to
time in the Company's SEC reports.
Gross profit increased by $92,058, or 19%, from the three months ended June 30,
1996 to the three months ended June 30, 1995. Gross profit for the six month
period ended June 30, 1996 was $1,164,311 compared to $1,058,043 for the same
period last year, representing an increase of $106,268 or 10%. Gross profit as a
percentage of revenues for the six months ended June 30, 1996 was 37% compared
to 45% for the same period last year.
Selling, general, and administrative expenses increased by $51,987 or 18%, from
the three months ended June 30, 1995 to the three months ended June 30, 1996.
Selling, general and administrative expenses for the six months ended June 30,
1996 were $667,496 compared to $609,605 for the comparable period last year,
representing an increase of $57,891 or 9%. Interest expense decreased by
$105,546, or 49%, for the six months ended June 30, 1996, primarily attributable
to a reduction in debt to Chrysler Capital Corporation, ("Chrysler") and the
extinguishment of the Company's debt to Chase Manhattan for the mortgage on its
building, which was sold in December, 1995.
The resulting net income for the three months ended June 30, 1996, was $185,426
versus $52,951 for the same period last year. Net income for the six months
ended June 30, 1996 was $325,963 compared to $141,086 for the same period last
year, representing an increase of $184,877 or 131%. Earnings per share were $.08
for the six months ended June 30, 1996, based upon the weighted average common
shares outstanding of 4,262,336 as compared to earnings per share of $.04 for
the six months ended June 30, 1995 based upon the weighted average common shares
outstanding of 3,720,377.
Material Changes in Financial Condition
At June 30, 1996 and December 31, 1995, the Company had working capital of
$10,405,973 and $10,074,056, respectively, an increase of $331,917. This is
primarily attributable to the retirement of the Company's debt to Chrysler. On
June 19, 1996, the Company completed a $2,050,000 Equity Private Placement. The
net proceeds of the offering, along with working capital, were used to eliminate
the Company's debt to Chrysler.
8
<PAGE>
CPI AEROSTRUCTURES, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
===============================================================================
The Company has financed its working capital requirements during the past three
years through borrowings primarily from Chrysler, the Company's initial public
offering and subsequent warrant exercise, and operating cash flow. Historically,
a large portion of the Company's cash has been used for costs and estimated
earnings in excess of billings. Costs and estimated earnings in excess of
billings includes the aggregate of costs and related profit which has been
incurred and earned in performance of work for which the Company has firm
contracts, but has not yet been billed to the customer.
Costs and estimated earnings are recoverable upon shipment of products,
presentation of billings in accordance with contract terms or completion of a
contract.
Net cash used in operating activities for the six months ended June 30, 1996 was
$76,319. This decrease in cash was primarily the result of net income of
$325,963 and an increase in accounts payable of $337,025 and an increase in
accrued expenses of $3,039 offset by an increase in costs and estimated earnings
in excess of billings of $563,800 and an increase in accounts receivable of
$190,359. The Company's continued requirement to incur significant costs in
connection with commercial contracts in advance of receipt of associated cash
has caused the increase in costs and estimated earnings in excess of billings on
uncompleted contracts.
9
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CPI AEROSTRUCTURES, INC.
===============================================================================
ITEM 6. Exhibits and Reports on Form 8-K
a) No Exhibits
b) A report on Form 8-K was filed with the Securities and
Exchange Commission regarding the Company's June 19, 1996
private placement (the "Private Placement") under Regulation D
promulgated under the Securities Act of 1933, as amended, of
82 Units (the "Units"), each Unit consisting of 25,000 shares
(the "Shares") of common stock, $.001 par value per share (the
"Common Stock") of the Company and 5-year Common Stock
Purchase Warrants (the "Warrants") to purchase 12,500 shares
of Common Stock at $2.00 per share, for a total purchase price
of $2,050,000 ($25,000 per Unit), through Barber & Bronson
Incorporated, as placement agent (the "Placement Agent"). The
net proceeds of the Private Placement, along with working
capital, were used to repay all of the Company's indebtedness
to Chrysler Capital Corporation. The purchasers were granted
certain demand and piggyback registration rights with respect
to the shares included in the Units and underlying the
Warrants.
The Company paid the Placement Agent a selling commission of
10% of the gross proceeds of the Private Placement and a
non-accountable expense allowance in an amount equal to 3% of
the gross proceeds of the Private Placement. The Company also
sold to the Placement Agent, for nominal consideration,
five-year warrants (the "Placement Agent Warrants") to
purchase 8.2 additional Units at a purchase price of $25,000
per Unit. The Company previously retained the Placement Agent,
pursuant to a financial consulting agreement (the "Consulting
Agreement"), to provide financial consulting services for a
period of 24 months commencing on April 3, 1996, for an
aggregate of $72,000 payable at the rate of $3,000 per month.
The Placement Agent received five-year warrants to purchase
300,000 shares of Common Stock at an exercise price of $1.00
per share (the "Consulting Warrants"). The Placement Agent has
been granted certain demand and piggy back registration rights
with respect to the shares of Common Stock underlying the
Placement Agent Warrants and the Consulting Warrants.
Furthermore, the Consulting Agreement provides for finder's
fee arrangements and a three-year right of first refusal for
the Placement Agent to serve as the underwriter or placement
agent for any future public or private offering effected by
the Company.
Pursuant to the anti-dilution provisions of the warrants
("Underwriter's Warrants") issued to Whale Securities Co.,
L.P. ("Whale"), the underwriter of the Company's initial
public offering, the number of shares issuable to Whale and
its assignees upon issuance of the Underwriter's Warrants was
increased from 200,000 to 666,038 (as corrected) following
various stock issuances by the Company, including but not
limited to, the Private Placement.
10
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CPI AEROSTRUCTURES, INC.
===============================================================================
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CPI AEROSTRUCTURES, INC.
Dated: July 25, 1996
By: /S/ Arthur August
-------------------------
Arthur August
President
(Principal Executive Officer)
Dated: July 25, 1996 By: /S/ Theodore J. Martines
-------------------------
Theodore J. Martines
Executive Vice President
(Principal Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000889348
<NAME> CPI AEROSTRUCTURES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 327,703
<SECURITIES> 0
<RECEIVABLES> 1,755,407
<ALLOWANCES> 0
<INVENTORY> 10,241,190
<CURRENT-ASSETS> 331,445
<PP&E> 515,866
<DEPRECIATION> 319,711
<TOTAL-ASSETS> 12,944,126
<CURRENT-LIABILITIES> 2,249,772
<BONDS> 0
0
0
<COMMON> 5,778
<OTHER-SE> 10,738,576
<TOTAL-LIABILITY-AND-EQUITY> 12,944,126
<SALES> 3,186,493
<TOTAL-REVENUES> 3,186,493
<CGS> 2,022,182
<TOTAL-COSTS> 2,022,182
<OTHER-EXPENSES> 667,496
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109,451
<INCOME-PRETAX> 422,016
<INCOME-TAX> 147,000
<INCOME-CONTINUING> 275,016
<DISCONTINUED> 0
<EXTRAORDINARY> 50,947
<CHANGES> 0
<NET-INCOME> 325,963
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
