<PAGE>
As filed with the Securities and Exchange Commission on January 7, 1998
Registration No. 333-08391
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
POST EFFECTIVE AMENDMENT NO. 1 AND
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------
CPI AEROSTRUCTURES, INC.
(Name of Registrant as Specified in Its Charter)
---------------------------------
New York 11-2520310
(State or Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
200A Executive Drive
Edgewood, New York 11717
(516) 586-5200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------------------------
Theodore J. Martines
Executive Vice President
CPI Aerostructures, Inc.
200A Executive Drive
Edgewood, New York 11717
(516) 586-5200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Elliot H. Lutzker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158
Telephone: (212) 687-3860
Fax: (212) 949-7052
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
================================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Proposed Proposed
Title of Each Maximum Maximum
Class of Amount Offering Aggregate Amount of
Securities to to be Price Offering Registration
Be Registered Registered Per Share(1) Price (1) Fee
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, $.00l par 2,050,000 shs. (2)$ 1.00(2) $2,050,000 $ 706.90(14)
value
- - ----------------------------------------------------------------------------------------------------------------------
Common Shares, $.001 par 993,750 shs. (3) $2.00 $1,987,500 $ 602.27(14)
value
- - ----------------------------------------------------------------------------------------------------------------------
Bonus Shares, $.001 par value 300,012 shs. (4) $2.00 $ 600,024 $ 181.83
- - ----------------------------------------------------------------------------------------------------------------------
Placement Agent's Common 205,000 shs. (5) $1.00 $ 205,000 $ 70.69(14)
Shares
- - ----------------------------------------------------------------------------------------------------------------------
Placement Agent's Common 102,500 shs. (6) $2.00 $ 205,000 $ 70.69(14)
Shares
- - ----------------------------------------------------------------------------------------------------------------------
Placement Agent Bonus Shares, 33,825 shs. (4) $2.00 $ 67,650 $ 20.50
$0.001 par value
- - ----------------------------------------------------------------------------------------------------------------------
Consultant's Common Shares 300,000 shs. (7) $1.00 $ 300,000 $ 103.45(14)
- - ----------------------------------------------------------------------------------------------------------------------
Underwriter's Warrants 100,000 wts. (8) 6.00 $ 600,000 $ 181.82(14)
- - ----------------------------------------------------------------------------------------------------------------------
Underwriter's Common 566,038 shs. (9) (10) (10) (10)
Shares, $.001 Par Value
- - ----------------------------------------------------------------------------------------------------------------------
Underwriter's Unit Warrants 100,000 wts. (9) (10) (10) (10)
- - ----------------------------------------------------------------------------------------------------------------------
Underwriter's Unit Warrant 100,000 shs. (11) $2.50 $ 250,000 $ 75.76(14)
shares
- - ----------------------------------------------------------------------------------------------------------------------
Common Shares, $.001 par 100,000 shs. (12) $2.71(13) $ 2.71 $ 82.12
value
======================================================================================================================
Total Registration Fee............................................................................ $2,096.03(14)
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended.
(2) These shares were sold in a private placement (the "Private Placement") by
the Company as part of 82 units ("Units"), each consisting of 25,000 Common
Shares and Redeemable Class B Common Share Purchase Warrants (the
"Warrants") to purchase 12,500 Common Shares, at $25,000 per Unit.
(3) Issued upon exercise of the warrants issued in the Private Placement.
ii
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(4) These Shares were issued pursuant to the Company's temporary increase of
33% of the number of shares issuable upon the exercise of Class B Warrants.
(5) These shares were issued upon exercise of Placement Agent's Warrants to
purchase 8.2 Units issued by the Company in the Private Placement to Barber
& Bronson Incorporated (the "Placement Agent").
(6) Issued upon exercise of the Placement Agent's Warrants.
(7) Issued upon exercise of the warrants issued to the Placement Agent in April
1996 for consulting services.
(8) Issued to Whale Securities Co., L.P., the Underwriter of the Company's
September 1992 initial public offering. and its assignees (collectively,
the "Underwriter"). Each Underwriter's Warrant is exercisable at $1.06 per
Warrant, as adjusted, to purchase 5.66038 Common Shares and one Common
Share Purchase Warrant to purchase one Common Share, at $2.50 per share, as
adjusted.
(9) Issuable upon exercise of the Underwriter's Warrants.
(10) Pursuant to Rule 457(g), no additional registration fee is required for
securities issuable upon exercise of the Underwriter's Warrants.
(11) Issuable upon exercise of the Underwriter's Unit Warrants.
(12) Issued to Chase Equity Associates, L.P. ("Chase") pursuant to a
Compensation letter dated August 25, 1997, between the Company and the
Chase Manhattan Bank (the "Lender") as part of the consideration for the
Lender's providing financing for the Company's purchase of Kolar Machine,
Inc., a New York corporation.
(13) Pursuant to Rule 457(c) under the Securities Act, the registration fee has
been caluclated based upon the closing sale price of the Comapny's Common
Stock on December 23, 1997.
(14) Of the $2,096.03 Total Registration Fee, $1,951.74 was previously paid by
the Company pursuant to the Registration Statement on Form S-3,
Registration No. 333-08391, filed on August 27, 1996, and $144.29 is being
paid with this Registration Statement.
Pursuant to Rule 429 under the Act, this Registration Statement relates
to the Registration Statement on Form S-3 (File No. 333-08391), as amended. The
Registrant hereby amends this Registration Statement on such date or dates as
may be to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933, as amended, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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This document is a preliminary document being issued for information only. It
does not, nor is intended to constitute, an offer to acquire any Shares in the
Company. An investor who subsequently acquires Shares in the Company must rely
on the terms of and disclosure in a final form of the Private Placement
Memorandum to be produced by the Company. This document is confidential to the
adressee and it may not be copied or passed on, in whole or in part, or its
contents be discussed with any person outside the group or affiliates of the
addressee or their professional advisers. This document has not been approved by
any competent Supervisory authority, including the Bermuda Monetary Authority,
and the information contained herein is subject to material updating, revision,
correction, completion, verification and amendment. Statements contained herein
include statements of circumstances which may exist at the date upon which the
Private Placement Memorandum is circulated, but may not exist at the present
time.
SUBJECT TO COMPLETION, JANUARY 7 1998
PROSPECTUS
CPI AEROSTRUCTURES, INC.
4,751,125 Common Shares
This Prospectus pertains to 4,751,125 Common Shares (the "Shares"),
$.001 par value per share of CPI Aerostructures, Inc., a New York corporation
("CPI Aerostructures" or the "Company"), that may be sold by the Selling
Shareholders named herein (the "Selling Shareholders").
The Shares offered hereby were initially issued by the Company to
certain investors in a private placement (the "Private Placement") of 82 Units
(the "Units"), each Unit consisting $25,000 Common Shares and redeemable Class B
Common Share Purchase Warrants ("Warrants") to purchase 12,500 Common Shares, at
$25,000 per Unit; to Barber & Bronson Incorporated, the Company's placement
agent in the Private Placement (the "Placement Agent") , in the form of warrants
(the "Placement Agent's Warrants") to purchase 8.2 Units (the "Placement Agent's
Units"), each Placement Agent's Unit consisting of 25,000 Common Shares and
Warrants to purchase 12,500 Common Shares; to the Placement Agent in the form of
consultant's warrants issued in consideration for consulting services (the
"Consultant's Warrants"); to Whale Securities Co., L.P. and its assignees
(collectively, the "Underwriter"), the underwriter of the Company's initial
public offering ("IPO") in the form of underwriter's warrants (the "Whale
Warrants") to purchase an aggregate of 566,038 Common Shares, as adjusted, and
Warrants to purchase an additional 100,000 Common Shares, as adjusted. The
Company temporarily increased the number of shares issuable upon the exercise of
the Warrants ("Bonus Shares"), 300,012 Bonus Shares were issued upon the
exercise of Warrants and 33,825 Bonus Shares were issued upon exercise of the
Placement Agent Warrants. In addition, 100,000 Shares were issued to Chase
Equity Associates, L.P. ("Chase") an affiliate of Chase Manhattan Bank
("Lender") by the Company pursuant to a Compensation Letter ("Compensation
Letter") as part consideration for the Lender's providing financing for the
Company's purchase of Kolar Machine, Inc., a New York corporation. See "Selling
Shareholders." The Company will not directly receive any proceeds from the sale
of the Shares by the Selling Shareholders but will receive the exercise price
from the Consultant's Warrants and Whale Warrants. See "Use of Proceeds." The
registration of the Shares offered hereby is being effected in connection with
registration rights granted by the Company pursuant to the terms of the Private
Placement, the Consultant's Warrants, the Placement Agent's Warrants, the
Underwriter's Units and the Compensation Letter. In accordance with the terms of
such rights, the Company will bear the expenses of such registration, which are
estimated, except that the Selling Shareholders will bear the cost of all
brokerage commissions and discounts incurred in connection with the sale of
their portion of the Shares and their respective legal expenses. On January 5,
1998, the closing sale price of the Common Stock as reported by NASDAQ was
$2 21/32.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Commencing on the effective date of this Prospectus, the Shares may be
sold, from time to time, by the Selling Shareholders directly to purchasers or,
alternatively, may be offered through agents, brokers, dealers or underwriters,
who may receive compensation in the form of commissions or discounts from the
Selling Shareholders or purchasers of the Shares. Sales of the Shares may be
made on the Nasdaq Small Cap Market ("Nasdaq"), in privately negotiated
transactions or otherwise, and such sales may be made at the
The Date of this Prospectus is January __, 1998.
<PAGE>
market price prevailing at the time of sale, a price related to such prevailing
market price or at a negotiated price.
Any brokers, dealers or agents that participate in the distribution of
the Shares may be deemed to be underwriters under Section 2(11) of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
or discounts received by them on the resale of such Shares may be deemed to be
underwriting compensation under the Securities Act. The sale of the Shares by
the Selling Shareholders is subject to the prospectus delivery and other
requirements of the Securities Act. See "Plan of Distribution."
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and if given or made, such other information and representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, such
securities in any circumstances in which such offer or solicitation is unlawful.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 5th Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Suite 1300, Seven World Trade Center, New York, New York
10048, and at Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may be obtained, at prescribed rates, by
writing to the Commission, Public Reference Section, 450 5th Street, N.W.,
Washington, D.C. 20549. The Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into
this Prospectus by reference:
(1) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1996 ("Form 10-KSB").
(2) The Company's Definitive Proxy Statement dated April 21, 1997.
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(3) The Company's Quarterly Reports on Form 10-QSB dated for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997
("Forms 10-QSB").
(4) The description of the Company's Common Shares contained in the
Company's registration statement on Form 8-A (File No.1-11398), dated
September 16, 1992, filed pursuant to Section 12(g) of the Exchange
Act, including any amendment or report filed for the purpose of
updating such information.
(5) The Company's Current Reports on Form 8-K dated September 9, 1997 and
October 9, 1997, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company furnishes its shareholders with annual reports which
contain financial statements audited by its independent certified public
accounts and such other interim reports containing unaudited financial
information as it deems appropriate.
The Company will provide without charge to each person who receives
this Prospectus, upon written request, a copy of any information that is
incorporated by reference in the Prospectus (not including exhibits to the
information that is incorporated by reference unless the exhibits are themselves
specifically incorporated by reference). Such requests should be directed to the
following address:
CPI AEROSTRUCTURES, INC.
200A Executive Drive
Edgewood, New York 11717
Attention: Corporate Secretary
3
<PAGE>
THE COMPANY
CPI Aerostructures is engaged in contract production of structural
aircraft parts and sub-assemblies (a series of parts fitted together to form a
complex aerodynamic structure) for the commercial and military sectors of the
aircraft industry. The Company's operations consist primarily of incorporating
component aircraft parts supplied by third parties into complex sub-assemblies
to satisfy specific customer requirements and precision certification standards.
The sub-assemblies are incorporated into jet engine housings (nacelles) by the
Company's customers or aircraft manufacturers to form final aircraft assemblies.
In connection with its commercial assembly operations, the Company also provides
engineering, technical and program management services to its customers.
Recent Developments
On October 9, 1997, CPI Aerostructures, Inc., a New York corporation
(the "Company"), completed the acquisition (the "Closing") of Kolar Machine,
Inc., an Ithaca, New York corporation ("Kolar" or the "Seller"). On September 9,
1997, the Company had entered into an Asset Purchase Agreement (the "Agreement")
with the Seller and the Seller's President pursuant to which Kolar, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company (the "Buyer"),
agreed to acquire certain tangible and intangible assets associated with the
business (the "Business") of the Seller. The Seller has been engaged in the
business of precision machining and assembly manufacturing, servicing the
electronics industry, including computer and microwave device manufacturers, as
well as the materials handling, aerospace and banking industries. Upon the
Closing, the Seller ceased to operate the Business, which was reconstituted as a
new business of the Buyer.
Pursuant to the terms of the Agreement, at the Closing the Buyer paid
to the Seller $9,400,000 in immediately available funds by wire transfer and
issued its $4,000,000 promissory note to the Seller (the "Note"). Pursuant to
the terms of the Agreement, the Purchase Price was increased by $555,064 based
upon the Seller's delivery of audited financial statements following the
Closing. The Note is convertible by Seller, in whole or in part, commencing in
February 1998 in no less than 100,000 share increments into 1,000,000 shares of
the Company's Common Stock. In addition, pursuant to the Agreement, the Buyer
separately purchased from the Seller's President for $1,500,000, certain real
property that he owned and that is associated with the Business. The Company
financed the acquisition of the Business substantially from The Chase Manhattan
Bank and through the exercise of warrants issued in a May 1996 private
placement.
RISK FACTORS
The Shares offered hereby involve a high degree of risk and should be
purchased only by persons who can afford to risk the loss of their entire
investment. In addition to other information contained in this Prospectus,
prospective investors should carefully consider the following Risk Factors
before making a decision to invest in the Company.
This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially. Factors that could cause or contribute
to such difference include, but are not limited to, those discussed below, as
well as those discussed elsewhere in this Prospectus.
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Cyclicality of the Aerospace Industry
The commercial sector of the aircraft industry experienced one of the
most severe downturns in its history from 1993 to 1995 characterized by
bankruptcies and consolidations among the major airlines. Permanent reductions
in capital spending for the military and current decreased demand for commercial
aircraft, resulting in contract cancellations or "stretch outs" (an extension of
a program period of performance resulting in extensions of delivery dates),
materially adversely affected the Company's operating results in 1994 and 1995.
Although the Company operated profitably during 1996 and 1997, the aerospace
industry remains cyclical and there can be no assurance the industry will not
experience another downturn which could have a material adverse effect on the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Form 10-KSB and Forms 10-QSB.
Ability to Manage Growth
The Company acquired Kolar in October 1997 and intends to continue to
expand its current level of operations. Kolar has reported higher revenues than
the Company for the most recent fiscal years. The Company's rapid growth is
expected to place significant demands on the Company's management, technical,
financial and other resources. In addition, successful expansion of the
Company's operations will depend on, among other things, its ability to attract,
hire and retain skilled management and other personnel, secure adequate sources
of products on commercially reasonable terms and successfully manage growth,
none of which can be assured. To manage growth effectively, the Company will
need to improve operational, financial and management information systems,
procedures and controls. There can be no assurance that the Company will be able
to manage its future growth effectively, and failure to do so could have a
material adverse effect on the Company's business, financial condition and/or
operating results. See "Recent Developments" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's Form
10-KSB and Forms 10-QSB.
Integration of Acquisition
A key component of the Company's future success depends upon its
ability to combine the operations of Kolar into a vertically integrated company.
While the Company and Kolar operate in different industries there are operating
efficiencies to be achieved by the combined entities through combined
management, technical, informational and financial resources. There can be no
assurance that the Company will be able to effectively integrate Kolar with its
own operations, and failure to do so could have a material adverse effect on the
Company's business, financial condition and/or operating results. See "Recent
Developments" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Form 10-KSB and Forms 10-QSB.
Leverage
The Company incurred a substantial amount of indebtedness in connection
with its acquisition of Kolar and its refinancing with its senior lender in
October 1997. The Company remains leveraged and its present debt service
requirements are substantial. The effect of such leverage may negatively impact,
without limitation, the ability of the Company (i) to obtain additional
financing on favorable terms; (ii) to service existing debt; and (iii) to comply
with financial and other covenants and operating restrictions imposed under the
terms of its existing long-term indebtedness.
The ability of the Company to satisfy such obligations will primarily
depend upon the future financial and operating performance of its operating
subsidiaries and upon the Company's ability to renew or refinance bank
borrowings and/or to raise additional equity capital. The Company's future
performance is dependent upon financial, business and other economic factors
affecting the Company and the economy in particular, many of which are beyond
the control of the Company and its subsidiaries. See "Management's
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Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" in the Company's Form 10-KSB and Forms 10-QSB.
Dependence on Rohr
For the years ended December 31, 1995 and 1996, sales of the Company's
products to Rohr, Inc. ("Rohr") and The Nordam Corporation ("Nordam") accounted
for approximately 89% and 75%, respectively, of the Company's revenues. Rohr
curtailed its operations during the last several years as a result of a general
downturn in the commercial aircraft industry and the loss of military business
before it was sold to B.F. Goodrich Aerospace. The Company's contract with Rohr
concerning the Raytheon 1000 Executive Jet was sold to Nordam, which terminated
the pylon portion of the contract in September 1995. There can be no assurance
that Rohr, for financial or other reasons, will not seek to further reduce its
level of operations in the future or that a further decline in the economic
prospects of Rohr, which could result in reduction or deferral of capital
expenditures, either of which could adversely affect the Company.
The Company's agreements with Rohr are subject to termination at will
by Rohr and require the Company to, among other things, deliver certain minimum
quantities of products pursuant to specific schedules. Termination of any of the
Company's contracts with Rohr or the inability of the Company to maintain or
enter into new contracts would have a material adverse effect on the Company
unless it is able to diversify its operations. For the year ended December 31,
1996, the Company's three agreements with Rohr and Nordam for the production of
sub-assemblies for the McDonnell Douglas MD-90, the Boeing 757 and the Raytheon
1000 accounted for approximately 59%, 4% and 12%, respectively, of the Company's
revenues. The Boeing 757 is currently in production and the Company anticipates
additional orders possibly in 1998 when Rohr is expected to deplete its
inventory. The McDonnell Douglas MD-90 program is currently in production
although McDonnell Douglas recently announced plans to discontinue the MD-90
Program after current orders are completed. The discontinuance of this program
will have a material adverse effect upon the Company but with the acquisition of
Kolar, the MD-90 Program which accounted for 59% of the Company's revenues in
1996 is expected to decrease to approximately 10% of revenues on a pro-forma
basis for 1998. The Company is seeking to replace the MD-90 Program with other
business but there can be no assurance that the Company will be successful in
its efforts.
Production of engine mounts for Nordam under the Raytheon 1000 program
continue, but production of pylons under such program was terminated in
September 1995. There can be no assurance that Rohr and Nordam will purchase
additional products under such agreements or that the Company will obtain
additional contracts for programs similar in scope to those previously obtained.
In addition to its dependence on Rohr, the Company is dependent on sales of the
particular aircraft (e.g., by Boeing), over which the Company has no control.
See "Business - Customers and Contracts" in the Form 10-KSB.
Rescheduling and Early Termination; Fixed-Price Contracts; Cost Overruns
The Company's contracts with Rohr and Nordam are subject to premature
termination and rescheduling. Rohr may, in its sole discretion, elect to
postpone or reschedule product delivery at any time. Delays, suspension and
termination of performance by Rohr under these agreements since the beginning of
1993, have materially adversely affected the Company's operating results. The
Company had expended significant funds for non-recurring costs associated with
design, tooling and prototype development, as well as the purchase of component
parts used in its operations, which have been recovered.
Prices under the Company's contracts with Rohr are fixed during the
term of such contracts, subject to price escalation in accordance with published
indices which account principally for materials and labor costs. Accordingly,
the Company is subject to increased risk of loss in the event production costs
are greater than anticipated. Unforeseen events, including unanticipated
production cost overruns and technical and operating difficulties, could have a
material adverse effect on the Company. In the past, the Company has
6
<PAGE>
incurred cost overruns which could not be recovered, resulting in reduced
profitability. Although the Company maintains procedures to continuously review
costs under contracts and takes such steps as it deems necessary to reduce the
Company's exposure to cost overruns, there can be no assurance that any measures
taken will assure completion of a program or that a completed program will not
involve substantially higher than anticipated costs to the Company, which may
reduce its ability to realize profits from such program. See "Business -
Customers and Contracts" in the Form 10-KSB.
Dependence on Government Contracts
For the years ended December 31, 1995 and 1996, 7% and 24%,
respectively, of the Company's revenues were derived from United States
Government military contracts. Government reductions in capital expenditures for
the military significantly decreased production of new aircraft during the last
several years. However, the reductions in military budgets for new aircraft have
not affected demand for replacement parts and servicing of aging military
aircraft. The September 1995 awards for the A-10 and C-5 military contracts have
increased the Company's future annual revenues derived from military contracts.
There can be no assurance that future reductions in military spending will not
adversely affect the Company's future operating results. Termination of the
Company's contracts with the United States Government or the inability to obtain
or maintain new contracts could have a material adverse effect on the Company.
Moreover, the Company's operations in the military sector are subject to risks,
including delay; termination for convenience; reduction or modification of
contracts in the event of changes in the government's policies or as a result of
budgetary constraints; and increased or unexpected costs resulting in losses,
any or all of which could have a material adverse effect on the Company. See
"Business - Customers and Contracts" in the Form 10-KSB.
Competitive Bidding
The Company obtains military contracts through the process of
competitive bidding. Contracts from which the Company has derived and expects to
derive a significant portion of its revenues were obtained through competitive
bidding. There can be no assurance that the Company will continue to be
successful in having its bids accepted or, if accepted, that awarded contracts
will generate sufficient revenues to result in profitability for the Company.
Additionally, inherent in the competitive bidding process is the risk that if a
bid is submitted and a contract is subsequently awarded, actual performance
costs may exceed the projected costs upon which the submitted bid or contract
price was based. To the extent that actual costs exceed the projected costs on
which bids or contract prices were based, the Company's profitability could be
materially adversely affected. See " Business - Customers and Contracts; and
Marketing" in the Form 10-KSB.
Possible Fluctuations in Operating Results
The Company's sales cycle, which generally commences at a time a
prospective customer issues a request for a proposal and ends with the award of
a contract with that customer, typically ranges from six months to one year. The
period from the time of execution of the contract until completion of one or
more pre-production phases of such contract (i.e., design, tooling and prototype
development), during which time the Company recognizes revenue, typically ranges
from two to three years. The Company's production cycle, which generally
commences at the time the Company orders component parts and ends upon shipment
of the final assembly, generally ranges from six to eighteen months. The
principal factors affecting production scheduling are the length of time
required to procure component parts and the customer's desire to accelerate or
stagger delivery schedules. Pursuant to the Company's contracts with Rohr, the
Company is not entitled
7
<PAGE>
to receive cash payments until products are shipped. The Company recognizes
revenue as costs are incurred under such contracts based upon the percentage of
completion method of accounting, which is measured by the percentage of actual
costs incurred to date against estimated total costs. Accordingly, revenues may
be recognized by the Company even though associated cash payments have not been
received. To the extent that estimated costs of completion increase or progress
under a contract is otherwise impeded, revenue recognition may be adversely
affected. Furthermore, since provision for estimated losses on uncompleted
contracts is made in the period in which such losses are determined, the
Company's recorded revenues may be written-off in later periods in the event the
Company's cost estimates prove to be inaccurate or a contract is terminated.
There can be no assurance that such factors will not cause significant
fluctuations in operating results.
In fact, upon the termination of the pylon portion of the Hawker 1000
contract in September 1995, the Company incurred a charge against cost of goods
sold of approximately $1,473,000. This charge was based, on its impact on past
revenues using the percentage of completion method of accounting. In the event
that such recovery is for a lesser amount than to what the Company believes it
is contractually entitled to, the Company would incur an additional charge. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Note 1 of Notes to Financial Statements" in the Form 10-KSB.
Dependence on Third Party Suppliers and Manufacturers
The Company purchases substantially all of its supply of raw materials,
principally metals and special parts, and component parts incorporated into its
products, from third-party suppliers and manufacturers. The Company believes
that there are numerous available sources of supply for the Company's raw
materials. While the Company attempts to maintain alternative sources for the
Company's raw materials, the Company's business is subject to the risk of price
fluctuations and periodic delays in delivery of raw materials. Failure by
certain suppliers to continue to supply the Company with raw materials on
commercially reasonable terms, or at all, would have a material adverse effect
on the Company. The Company has subcontracted production of substantially all
component parts incorporated into its products to third party manufacturers.
Accordingly, the Company is substantially dependent on the ability of such
manufacturers, among other things, to meet stringent performance and quality
specifications and to conform to delivery schedules. Failure by the Company's
manufacturers to comply with these and other requirements would have a material
adverse effect on the Company. Furthermore, there can be no assurance that such
manufacturers will dedicate sufficient production capacity to satisfy the
Company's requirements for component parts within scheduled delivery times. The
Company from time to time is required to purchase special parts from sole
suppliers and manufacturers. The Company generally does not maintain supply
agreements with its suppliers or manufacturers and purchases raw materials and
component parts pursuant to purchase orders in the ordinary course of business.
Failure or delay by suppliers and manufacturers in supplying necessary raw
materials and components to the Company would adversely affect the Company's
profit margin and the Company's ability to obtain and deliver products on a
timely and competitive basis. See "Business - Raw Materials, Suppliers and
Manufacturers" in the Form 10-KSB.
Competition; Technological Changes
The markets for the Company's products are highly competitive. The
Company competes with numerous well-established foreign and domestic
subcontractors engaged in the supply of aircraft parts and assemblies to the
commercial and military sectors of the aircraft industry, most of which possess
substantially greater financial, marketing, personnel and other resources than
the Company and have established
8
<PAGE>
reputations for success in the development, manufacture, sale and service of
products. The Company also faces competition from foreign and domestic prime
contractors, including Rohr, all of whom possess greater resources than the
Company, thereby permitting such companies to implement extensive production
programs in response to orders from aircraft manufacturers. The market for
commercial aircraft is dominated by The Boeing Company, and Airbus Industries, a
government supported European aircraft consortium, which typically contract
production of assemblies to a limited number of large commercial contractors.
Consequently, the Company's ability to increase market penetration in the
commercial sector may be limited by the relatively small number of prime
contractors in this market.
In addition, the markets for the Company's services and products are
characterized by technological changes. The Company's ability to compete
successfully depends, in large part, on the Company having a technically
competent staff and quality control procedures and on the Company's ability to
adapt to technological changes and advances in the aircraft industry, including
ensuring continuing compatibility with evolving requirements of its customers
and aircraft manufacturers. There can be no assurance that the Company will be
able to continue to keep pace with the technological demands of the marketplace
or successfully enhance its services and products to be compatible with products
of specific aircraft manufacturers. See "Business - Competition" in the Form
10-KSB.
Potential Products Liability and Warranty Expense
The Company may be exposed to potential significant products liability
claims although it has not been sued to date. The Company maintains a $2 million
general liability insurance policy, a $10 million products liability insurance
policy, and a $5 million umbrella liability insurance policy, which it believes
is adequate coverage for the types of products presently marketed. There can be
no assurance, however, that such insurance will be sufficient to cover potential
claims or that the present level of coverage will be available in the future at
reasonable cost. A partially insured or a completely uninsured successful claim
against the Company could have a material adverse effect on the Company. The
Company generally warrants its products to be free from defects in materials,
workmanship and manufacturing processes for a specified period, generally
limited to three years from the date of shipment. There can be no assurance that
future warranty expenses will not have a material adverse effect on the Company.
Under the Company's agreements with Rohr, the Company has agreed to
indemnify Rohr for any costs, damages, expenses or other loss or liability
incurred or paid (including reasonable attorneys' fees) arising out of any
asserted claims made against Rohr, for parts supplied by the Company, provided
that such claims do not arise out of the sole fault of Rohr. There can be no
assurance that the Company will not be required to indemnify Rohr in the event
of an adverse claim made against Rohr or that it will have the financial or
other resources to do so. Moreover, to the extent the Company assumes design
responsibility for products in the future, the Company could be required to
obtain a higher level of insurance in order to cover possible design defects.
There can be no assurance that the Company will be able to obtain a
significantly increased level of coverage on commercially reasonable terms,
which could limit the Company's ability to expand its operations. See "Business
- - - Insurance" in the Form 10-KSB.
Potential Liability; Government Regulation
The Company's operations require the use of a limited amount of
chemicals and other materials for painting and cleaning, including solvents and
thinners, that are classified under applicable laws as hazardous chemicals and
substances. The Company does not maintain environmental impairment insurance.
There
9
<PAGE>
can be no assurance that the Company will not incur environmental liability
arising out of the use of hazardous substances. To date, the Company has not
incurred any such liability. The use of hazardous substances is subject to
extensive and frequently changing federal, state and local laws and substantial
regulation under these laws by governmental agencies, including the United
States Environmental Protection Agency, the Occupational Safety and Health
Administration, various state agencies and county and local authorities acting
in conjunction with federal and state authorities. Among other things, these
regulatory bodies impose requirements to control air, soil, and water pollution,
to protect against occupational exposure to such chemicals, including health and
safety risks, and to require notification or reporting of the storage, use and
release of certain hazardous chemicals and substances. The Company believes that
it is in substantial compliance with all material federal, state and local laws
and regulations governing its operations and has obtained all licenses and
permits required for the operation of its business.
Amendments to statutes and regulations and/or the Company's operations
in the future could require the Company to continually modify or alter methods
of operations at costs which could be substantial and could subject the Company
to increased regulation. There can be no assurance that the Company will be
able, for financial or other reasons, to comply with applicable laws and
regulations. Failure by the Company to comply with applicable laws and
regulations could subject the Company to civil remedies, including fines and
injunctions as well as potential criminal sanctions, which could have a material
adverse effect on the Company. See "Business - Government Regulation" in the
Form 10-KSB.
Federal Aviation Administration Regulation and Quality Control Standards
The manufacture of commercial aircraft is subject to extensive
regulation by the Federal Aviation Administration ("FAA") and foreign regulatory
authorities. Under the FAA requirements, each aircraft is required to undergo a
stringent certification process pursuant to which it is inspected for conformity
with specifications and manufacturing processes and tested for safety,
airworthiness and design characteristics. Upon receipt by an aircraft
manufacturer of a production certificate issued by the FAA for a new aircraft,
such manufacturer is required to assure that its suppliers comply with all
applicable laws and regulations. Under FAA implementation of such regulations,
each supplier, including the Company, is subject to periodic FAA surveillance
and investigation. As a result, each manufacturer places contractual obligations
upon each of its suppliers requiring such suppliers to comply with the FAA
regulations. In order to assure compliance with FAA regulations, the Company's
customers impose quality control standards upon the Company which incorporate
the FAA requirements. These requirements are also incorporated into the
inspection criteria and data to be supplied to the Company's customers pursuant
to the Company's contracts. Among other things, the Company is required to
inspect parts, maintain back-up documents from its suppliers relating to
materials and processes and prepare documentation in order to substantiate all
of the foregoing. In addition, the Company's customers require the Company to
qualify as an approved supplier. In order to so qualify, the Company is required
to satisfy stringent quality control standards and undergo extensive in-plant
inspections of the Company's personnel, production processes, equipment and
quality control systems. Although the Company's efforts are devoted to ensure
that its capabilities and quality control standards meet its customers'
requirements, there can be no assurance that the Company will be able to comply
with quality control standards, that the Company's customers will comply with
the FAA's or aircraft manufacturers' requirements, or that the Company will be
able, for financial or other reasons, to qualify as an approved supplier for its
existing and prospective customers. See "Business - Operations" in the Form
10-KSB.
10
<PAGE>
Limited Marketing Capability
The Company has limited marketing capabilities and resources. To date,
substantially all of the Company's commercial marketing activities, exclusive of
Kolar, have been conducted by members of Management. Such activities have
consisted primarily of personal contact with potential customers. Because of the
nature of the Company's business, Management will continue to devote a
substantial amount of time developing and maintaining continuing personal
relationships with the Company's customers. The Company's growth prospects,
outside of Kolar, will be largely dependent upon the Company's ability to
achieve greater penetration of the commercial aircraft market and an up-swing in
military procurement. Achieving market penetration will require significant
efforts by the Company to create awareness of and demand for the Company's
services. Accordingly, the Company's ability to build its client base will be
limited by the number of marketing personnel and will be dependent on the
efforts of such individuals. See "Business - Marketing" in the Form 10-KSB.
Lack of Patents; Trademarks and Proprietary Protection
None of the Company's current assembly processes or products are
protected by patents. The Company relies on proprietary know-how and
confidential information and employs various methods to protect the processes,
concepts, ideas and documentation associated with its products. However, such
methods may not afford complete protection and there can be no assurance that
others will not independently develop such processes, concepts, ideas and
documentation. There can be no assurance that the Company will be able to
adequately protect its trade secrets or that other companies will not acquire
information which the Company considers to be proprietary.
In March 1994, the Company determined that it would be prudent to
protect its reputation in the aircraft structural products market. It applied
for, and received, trademark protection from the United States Patent and
Trademark Office as to the use of its name and logo. See "Business - Proprietary
Information" in the Form 10-KSB.
Control by Current Shareholders
Arthur August and Theodore J. Martines, President and Executive Vice
President, respectively, of the Company, and their affiliates, beneficially own
approximately 22% of the Company's outstanding Common Shares, including the
exercise of currently exercisable stock options. Accordingly, as the two largest
shareholders in the Company, Messrs. August and Martines and their affiliates
may be able to elect all of the Company's directors; increase the authorized
capital; dissolve, merge, or sell the assets of the Company; and generally
direct the affairs of the Company. See "Shares Eligible for Future Sale" below;
and "Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act," "Security Ownership of Certain
Beneficial Owners and Management" and "Certain Relationships and Related
Transactions" in the Form 10-KSB.
Dependence on Key Personnel
The success of the Company is largely dependent on the personal efforts
of Arthur August, Theodore J. Martines, Daniel Liguori, President of Kolar, and
other key employees. Although each of the three officers is employed under a
three-year employment agreement, the loss of the services of such individuals
would have a material adverse effect on the Company's business and prospects.
The Company currently maintains
11
<PAGE>
"key man" life insurance on the life of Mr. Liguori in the amount of $8,000,000
(payable to Chase Manhattan Bank).
No Dividends
To date, the Company has not paid any cash dividends on its Common
Shares and does not expect to declare or pay any cash or other dividends in the
foreseeable future. See "Market for Common Equity and Related Shareholder
Matters - Dividend Policy" in the Form 10-KSB.
Shares Eligible for Future Sale
The Company had 7,902,997 Common Shares outstanding as of December 17,
1997, of which approximately 4,811,000 shares are deemed to be "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act, in that such shares were issued and sold by the Company in
private transactions not involving a public offering. Of such shares, 1,300,000
are held by Messrs. August and Martines and members of their families, and are
eligible for sale under Rule 144. 2,050,000 Shares were sold in the June 1996
Private Placement, 993,750 shares were issued upon the exercise of Warrants,
300,012 shares were issued as Bonus Shares for the early exercise of the
Warrants, 33,825 shares were issued as Bonus Shares for the early exercise of
the Placement Agent Warrant, and 100,000 Shares were issued to Chase as part
consideration for the Lender's providing financing for the Company's acquisition
of Kolar and are being registered hereby for resale by the investors on a Form
S-3 Registration Statement. See "Recent Developments."
Messrs. August and Martines agreed with the Company's former
investment banking consultant (which agreement is in dispute and has been
terminated by the Company), not to sell or otherwise dispose of their shares
prior to January 26, 1998, unless the Company (i) is able to complete an
underwritten secondary public offering, or (ii) obtains $11,000,000 of gross
revenue as shown on its audited financial statements or as shown on a pro forma
basis with any acquired company, for the then current fiscal year, at which time
the lock-up would be terminated. The foregoing lock-up, however, is exclusive of
Rule 144 sales through the Company's former investment banking consultant, in
the amount of $250,000 per annum for Arthur August and $62,500 for Theodore
Martines (which increases to $250,000 per annum should Mr.
Martines retire).
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or person whose shares are aggregated), who has owned restricted
Common Shares beneficially for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class or, if the Common
Shares are quoted on the Nasdaq system, the average weekly trading volume during
the four calendar weeks preceding the sale. A person who has not been an
affiliate of the Company for at least the three months immediately preceding the
sale and who has beneficially owned Common Shares for at least two years is
entitled to sell such shares under Rule 144 without regard to any of the
limitations described above.
The underwriter for the Company's IPO had two demand registration
statements to register an aggregate of 666,038 shares underlying Underwriters'
Warrants until September 24, 1997 and unlimited piggyback registration rights
until September 24, 1999. These shares have been registered for resale pursuant
to a separate Registration Statement and may be offered for sale. The Company's
former investment banking
12
<PAGE>
consultant has one demand registration statement to register an aggregate of
120,000 Common Shares underlying the former consultant's options (which
agreement is in dispute and has been terminated by the Company) until January
31, 2000 and unlimited piggyback registration rights until January 31, 2000.
The Company could register the Common Shares issuable upon exercise of
outstanding stock options at any time in which event such shares would be
immediately eligible for sale.
No prediction can be made as to the effect, if any, that market sales
of Common Shares or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Shares may be sold in the public market may
adversely affect prevailing market prices for the Common Shares and could impair
the Company's ability to raise capital through the sale of its equity
securities.
Effect of Outstanding Exercisable Securities and Registration Rights
The Company had outstanding options and warrants to purchase Common
Shares exercisable at various prices from $1.00 to $3.00 (subject to adjustment)
pursuant to which an aggregate of approximately 1,371,500 Common Shares may
currently be issued. This includes warrants to the Company's former underwriter,
former investment banking consultant and the Placement Agent to purchase up to
an aggregate of approximately 744,850 Common Shares (subject to adjustment) (the
"Underwriters' Warrants"); and 626,400 employee and consultant stock options
granted as of December 10, 1997.
During the respective terms of the Company's outstanding derivative
securities, the holders thereof may be able to purchase Common Shares at prices
substantially below the then current market price of the Company's Common Shares
with a resultant dilution in the interests of the existing shareholders. The
holders of the Company's derivative securities may be expected to exercise their
rights to acquire Common Shares at times when the Company would, in all
likelihood, be able to obtain needed capital through a new offering of
securities on terms more favorable than those provided by these outstanding
securities. Thus, the terms upon which the Company may obtain additional
financing during the next several years may be adversely affected. In addition,
the exercise of outstanding derivative securities and the subsequent public
sales of Common Shares by holders of such securities pursuant to a registration
statement, including the one for the Shares offered hereby, effected at their
demand, under Rule 144 or otherwise, could have an adverse effect upon the
market for and price of the Company's securities. See "Description of
Securities," "The Offering and Sale of Units," "Shares Eligible for Future Sale"
and "Executive Compensation - Stock Options" in the Form 10-KSB."
Securities Market Factors
In recent years, the securities markets have experienced a high level
of volume volatility and market prices for many companies, particularly small
and emerging growth companies, have been subject to wide fluctuations in
response to quarterly variations in operating results. The securities of many of
these companies which trade in the over-the-counter market, have experienced
wide price fluctuations, which in many cases were unrelated to the operating
performance of, or announcements concerning, the issuers of the affected stock.
Factors such as announcements by the Company or its competitors concerning
technological innovations, new products or procedures, government regulations
and developments or disputes relating to proprietary rights and factors
affecting the aerospace industry generally may have a significant impact on the
market for the Company's securities. General market price declines or market
volatility in the future
13
<PAGE>
could adversely affect the future price of the Company's securities. See "Market
for Common Equity and Related Shareholder Matters" in the Form 10-KSB.
USE OF PROCEEDS
The Shares offered hereby were initially issued by the Company to
certain investors in the Private Placement consisting of 82 Units, each Unit
consisting of 25,000 Common Shares and redeemable Warrants to purchase 12,500
Common Shares, at $25,000 per Unit, to the Placement Agent of the private
Placement in the form of Placement Agent's Warrants to purchase 8.2 Units
consisting of 205,000 Common Shares and Warrants to purchase 102,500 Common
Shares. The Company temporarily increased the number of shares issuable upon
the exercise of the Warrants, 4,167 Bonus Shares were issued per unit upon the
exercise of the Warrants, and the Placement Agent Warrants. The Company issued
to the Placement Agent in April 1996 as Consultant's Warrants to purchase
300,000 Common Shares issued in consideration for consulting services, and
Underwriter's Warrants to Whale Securities Co., L.P. and its assignees
(collectively, the "Underwriter"), the underwriter of the Company's IPO to
purchase an aggregate of 566,038 Common Shares, as adjusted, and warrants to
purchase an additional 100,000 Common Shares.
The Company will not receive the proceeds of sales of the Shares by the
Selling Shareholders. However, upon the full exercise of the Underwriter's
Warrants, the Underwriter's Unit Warrants, and the Consultants Warrants the
Company will receive aggregate cash of $600,000, $250,000 and $300,000,
respectively. The Company will use the proceeds from the payment of the
respective exercise prices for working capital and general corporate purposes.
14
<PAGE>
SELLING SHAREHOLDERS
The table below sets forth, with respect to each Selling Shareholder,
based upon information available to the Company as of the date hereof, the
number of Common Shares beneficially owned, the number of Shares to be sold, and
the number and percentage of outstanding Common Shares beneficially owned before
and after the sale of the Shares offered hereby. None of the Selling
Shareholders has been an affiliate of the Company during the preceding three
years, except as noted. Although there can be no assurance that the Selling
Shareholders will sell any or all of the Shares, the following table assumes
that each of the Selling Shareholders will sell all Shares offered by this
Prospectus.
<TABLE>
<CAPTION>
Amount and Shares Percent of
Nature Beneficially Class(2)
Beneficial Shares to Owned After After
Name Ownership(1) Be Sold Offering offering
- - ---- ------------ ------- -------- --------
<S> <C> <C> <C> <C>
Leonard Adler & Eileen Adler 41,667 41,667 -0- -0-
TEN BY ENT
Mark Allbaugh & Florence 41,667 41,667 -0- -0-
Allbaugh JTWROS
Barry Barak & Helen Barak 41,667 41,667 -0- -0-
JTWROS
Bruce C. Barber & Karen Eva 148,203(4) 148,203 -0- -0-
Barber JTWROS(3)
George C. Barber & Shirley 41,667 41,667 -0- -0-
Barber JTWROS
Sonya Ben-Shmuel 41,667 41,667 -0- -0-
Herman Bhojwani 37,500 37,500 -0- -0-
Billy H. Branch & Tom 12,500 12,500 -0- -0-
Branch JTWROS
Paul M. Bronson & Laura 41,667 41,667 -0- -0-
Mae Bronson JTWROS
Peter David Bronson & 41,667 41,667 -0- -0-
Maguy F. Bronson JTWROS
Steven N. Bronson(3) 332,219(5) 332,219 -0- -0-
James S. Cassel(3) 169,488(6)(7) 169,488 -0- -0-
James S. Cassel & Mindy E 20,833 20,833 -0- -0-
Cassel TEN BY ENT(3)
Marvin S. Cassel & Leslie 20,833 20,833 -0- -0-
Cassel JTWROS
EVEREN Clearing Corp Cust 20,833 20,833 -0- -0-
EBO Mindy E. Cassel IRA
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Amount and Shares Percent of
Nature Beneficially Class(2)
Beneficial Shares to Owned After After
Name Ownership(1) Be Sold Offering offering
- - ---- ------------ ------- -------- --------
<S> <C> <C> <C> <C>
C S Chase Construction Co 37,500 37,500 -0- -0-
EVEREN Clearing Corp. Cust 20,833 20,833 -0- -0-
FBO Gary Wayne Cole
SEPIRA
Anthony Conza 41,667 41,667 -0- -0-
James A.W. Cook 41,667 41,667 -0- -0-
Vincent Coppola Jr., MD & 41,667 41,667 -0- -0-
Lillian Coppola JTWROS
Susan Crampton & Stuart 41,667 41,667 -0- -0-
Crampton JTWROS
Prema Das 37,500 37,500 -0- -0-
EVEREN Clearing Corp 41,667 41,667 -0- -0-
CUST FBO Ronald A. David IRA
Thomas L. Delaney 37,500 37,500 -0- -0-
Roy A. Dempsey 62,500 62,500 -0- -0-
EVEREN Clearing Corp Cust 41,667 41,667 -0- -0-
FBO Gordon J. Dow SEP
IRA
Martin Elkin & Dolores Elkin 20,833 20,833 -0- -0-
TEN ENT
Eric R. Elliot 73,001(8) 73,001 -0- -0-
Leanore R. Elliot 41,667 41,667 -0- -0-
Feller Development Corp 41,667 41,667 -0- -0-
Fred Fialkow 62,500 62,500 -0- -0-
Ronald R. Fieldstone & Linda 41,667 41,667 -0- -0-
Fieldstone TEN BY ENT
William T. Foran Tr 41,667 41,667 -0- -0-
William T. Foran Trust
U/A Dtd 5-29-92
Everen Clearing Corp Cust 41,667 41,667 -0- -0-
FBO David E. French IRA
Rollover
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Amount and Shares Percent of
Nature Beneficially Class(2)
Beneficial Shares to Owned After After
Name Ownership(1) Be Sold Offering offering
- - ---- ------------ ------- -------- --------
<S> <C> <C> <C> <C>
Shiva Enterprises Family 41,667 41,667 -0- -0-
Limited Partnership
c/o Rajesh K. Soin
Emanuel Goldstein & Rosa 20,833 20,833 -0- -0-
Goldstein JTWROS
Robert D. Goldstein 41,667 41,667 -0- -0-
Herman Goodman & Rose 41,667 41,667 -0- -0-
Marie Goodman JTWROS
EVEREN Clearing Corp Cust 20,833 20,833 -0- -0-
FBO Raymond H. Grebasch
IRA
Thomas J. Hanford 41,667 41,667 -0- -0-
Mark Hart 41,667 41,667 -0- -0-
Daniel F. Herr 20,833 20,833 -0- -0-
First-Union National Bank 41,667 41,667 -0- -0-
FBO Joel D. Kamphuis
Stanley B. Kane TR 41,667 41,667 -0- -0-
Stanley B. Kane REV TRUST
U/A Dtd 3/14/89
Frank Lagalia & Lydia 41,667 41,667 -0- -0-
Lagalia, JT TEN
Steven Levin 20,833 20,833 -0- -0-
Norman Levine 20,833 20,833 -0- -0-
Mark Allen Llano & Suzanne 41,667 41,667 -0- -0-
LIano JTWROS
John O'Gorman 18,750 18,750 -0- -0-
Doug Olson 37,500 37,500 -0- -0-
Nancy A. Pantori & Michael 41,667 41,667 -0- -0-
Pantori JTWROS
Robert S. Pearlman & Rita J. 41,667 41,667 -0- -0-
Pearlman JTWROS
EVEREN Clearing Corp Cust 41,667 41,667 -0- -0-
FBO Dr. Paul Pesce IRA
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Amount and Shares Percent of
Nature Beneficially Class(2)
Beneficial Shares to Owned After After
Name Ownership(1) Be Sold Offering offering
- - ---- ------------ ------- -------- --------
<S> <C> <C> <C> <C>
EVEREN Clearing Corp. Cust 20,833 20,833 -0- -0-
FBO S. Daniel Ponce IRA
Leonard A. Pulin 20,833 20,833 -0- -0-
Independent Trust Corporation 37,500 37,500 -0- -0-
F/B/O Prime Discount Securities
Private Opportunity Partners Limited 416,670 416,670 -0- -0-
Attn: Steven N. Bronson(3)
R.J. Srein Corp. 41,667 41,667 -0- -0-
Profit Sharing Plan
U/A/D 10/31/83
Laura G. Roberts 41,667 41,667 -0- -0-
Mildred Rostolder 18,750 18,750 -0- -0-
Deanna R. Salpeter 20,833 20,833 -0- -0-
Richard Serbin & Kathie 20,833 20,833 -0- -0-
Serbin JTWROS
James Allan Settlage & Carol 41,667 41,667 -0- -0-
Lynn Settlage JTWROS
David Shear & Hannah Shear 20,833 20,833 -0- -0-
TEN ENT
Hagui Schechter 41,667 41,667 -0- -0-
EVEREN Clearing corp Cust 41,667 41,667 -0- -0-
FBO Yehuda Schechter IRA
Rollover
Zvika Schechter 20,833 20,833 -0- -0-
Nancy B. Sheretz 41,667 41,667 -0- -0-
Craig L. Silverman 37,500 37,500 -0- -0-
David Singerman 41,667 41,667 -0- -0-
Richard Sinise 50,000 50,000 -0- -0-
Mark A. Skoda 41,667 41,667 -0- -0-
Joseph A. Spinella 41,667 41,667 -0- -0-
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Amount and Shares Percent of
Nature Beneficially Class(2)
Beneficial Shares to Owned After After
Name Ownership(1) Be Sold Offering offering
- - ---- ------------ ------- -------- --------
<S> <C> <C> <C> <C>
Delaware Charter Guarantee 41,667 41,667 -0- -0-
& Trust Co. Custodian FBO
Law Office of Bruce R. Thaw
KEOUGH Plan
Allan Thaw 41,667 41,667 -0- -0-
EB Family Partners LTD VA 41,667 41,667 -0- -0-
DTD 03-26-93
ATTN: Eliahu Ben Shmuel
Robert Van Lier 20,833 20,833 -0- -0-
Frank Vicino, Jr. 41,667 41,667 -0- -0-
Stephen Yetzer & Karen 41,667 41,667 -0- -0-
Yetzer TR The Yetzer Family
Trust U/A dtd 3-12-93
Stephen W. Zack 20,833 20,833 -0- -0-
Boris Zalkind 41,667 41,667 -0- -0-
Robert B. Zann TR 41,667 41,667 -0- -0-
Robert B. Zann REV TRUST
U/A dtd 2/22/94
Charles Watkins 30,000(9) 30,000 -0- -0-
Barry J. Booth 6,330(10) 6,330 -0- -0-
Alvin Katz 30,000(9) 30,000 -0- -0-
Whale Securities Co., L.P. 351,162(11) 351,162 -0- -0-
William G. Walters 70,906(11) 70,906 -0- -0-
Elliot S. Smith 70,900(11) 70,900 -0- -0-
Estate of Howard D. Harlow 54,795(11) 54,795 -0- -0-
Nicholas Anari 11,196(11) 11,196 -0- -0-
James D. Whitten 5,541(11) 5,541 -0- -0-
Cynthia Buchwalter 1,632(11) 1,632 -0- -0-
Mark Silverman 99,906(11) 99,906 -0- -0-
Chase Equity Associate, L.P. 100,000 100,000 -0- -0-
</TABLE>
19
<PAGE>
(1) Under Securities and Exchange Commission rules, beneficial ownership
includes any shares as to which an individual has sole or shared voting
power or investment power. Unless otherwise indicated, the Company believes
that all persons named in the table have sole voting and investment power
with respect to all Common Shares beneficially owned by them. A person is
also deemed to be the beneficial owner of securities that can be acquired
by such person within 60 days from the date hereof upon the exercise of
warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such
person (but not those held by any other person) and are exercisable within
60 days from the date hereof have been exercised.
(2) Based on a total of 7,902,997 Common Shares issued and outstanding as of
December 17, 1997.
(3) Bruce Barber, Steven N. Bronson and James S. Cassel are each officers and
directors of Barber & Bronson Incorporated ("BBI"), the Placement Agent.
BBI is a consultant of the Company pursuant to a consulting agreement dated
April 3, 1996, which expires on April 2,1998, and pursuant to which the
Placement Agent and its assigns received Consultant's Warrants to purchase
300,000 Common Shares in April 1996. BBI also acted as Placement Agent of
the Private Placement pursuant to which it received Placement Agent's
Warrants to purchase 8.2 Units, each Unit consisting of 25,000 Common
Shares and warrants to purchase 12,500 Common Shares at a price of $25,000
per Unit. BBI was issued 33,825 Bonus Shares for the early exercise of the
Placement Agent Warrants.
(4) Includes 49,926 Common Shares issuable upon exercise of Consultant's
Warrants.
(5) Includes 119,890 shares issuable upon exercise of Consultant's Warrants
issued on April 3, 1996 to the Placement Agent under the Company's
consulting agreement with the Placement Agent. Does not include an
additional 416,670 Common Shares beneficially owned by Private Opportunity
Partners, Ltd., of which Mr. Bronson is President of the partnership's sole
general partner Mr. Bronson disclaims beneficial ownership of the
securities owned by Private Opportunity Partners, Ltd.
(6) Includes 52,500 shares issuable upon exercise of Consultant's Warrants.
(7) For purposes of this calculation, the number of shares beneficially owned
has been increased to include 20,833 Common Shares issued to EVEREN
Clearing Corp. Cust FBO James S. Cassel IRA and James S. Cassel & Mindy E.
Cassel TEN BY ENT. Does not include 20,833 Common Shares issued to Mr.
Cassel's wife's IRA. Mr. Cassel disclaims beneficial ownership of such
securities.
(8) Includes 20,833 Common Shares issued to Everen Clearing Corp. Cust. FB0
Eric E. Elliot IRA and 14,684 shares issuable upon exercise of Consultant's
Warrants.
(9) Consists of shares issuable upon exercise of Consultant's Warrants.
(10) Consists of 3,000 Common Shares issuable upon exercise of Consultant's
Warrants.
(11) Issuable upon full exercise of Underwriter's Warrants issued to Whale
Securities Co., L.P. and its assignees in the Company's initial public
offering, each warrant exercisable at $1.06. as adjusted,
20
<PAGE>
to purchase 5.66038 Common Shares and one Common Share Purchase Warrant to
purchase one Common Share at $2.50 per Common Share. Does not include any
Common Shares that may be held by Whale Securities Co., L.P., a registered
NASD member firm in its firm trading account.
PLAN OF DISTRIBUTION
The Selling Shareholders are offering the Shares for their own account
and not for the account of the Company. The Selling Shareholders may continue to
sell the Shares directly to purchasers or, alternatively, may offer the Shares
from time to time through other agents, brokers, dealers or underwriters, who
may receive compensation in the form of concessions or commissions from the
Selling Shareholders. Sales of the Shares may be made in one or more
transactions on Nasdaq, in privately negotiated transactions or otherwise, and
such sales may be made at the market price prevailing at the time of sale, a
price related to such prevailing market price or a negotiated price. The sale of
the Shares is subject to the Prospectus delivery and other requirements of the
Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Common Shares of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the Common Shares of the Company during the applicable "cooling off"
periods prior to the commencement of such distribution. In addition and without
limiting the foregoing, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder
including, without limitation, Rule 102 of Regulation M promulgated under the
Exchange Act, which provisions may limit the timing of purchases and sales of
Common Shares by the Selling Shareholders.
To the extent required, the Company will use its best efforts to file,
during any period in which offers or sales are being made, one or more
amendments or supplements to this Prospectus or a new registration statement
with respect to the Shares to describe any material information with respect to
the plan of distribution not previously disclosed in this Prospectus, including
the name or names of any additional underwriters, dealers or agents, if any, the
purchase price paid by the underwriter for Shares purchased from a Selling
Shareholder, and any discounts, commissions or concessions allowed or reallowed
or paid to dealers.
COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
LEGAL MATTERS
Snow Becker Krauss P.C., 605 Third Avenue, New York, New York 10158 is
acting as counsel to the Company and will pass upon the legality of the Common
Shares offered hereby. SBK Investment Partners, a partnership consisting of
certain members of Snow Becker Krauss P.C., holds options to purchase 20,000
of the Company's Common Shares.
21
<PAGE>
EXPERTS
The financial statements of CPI Aerostructures, Inc. at December 31,
1996 and for each of the two years in the period ended December 31, 1996
incorporated herein by reference to the Company's Form 10-KSB for the fiscal
year ended December 31, 1996 in this Prospectus have been included in reliance
upon the report of Goldstein Golub Kessler & Company, P.C., independent
certified public accountants, given upon the authority of said firm as experts
in accounting and auditing.
22
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
or incorporated by reference into the Prospectus and, if given or made, such
other information and representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or the solicitation of an offer to buy any securities other than the securities
to which it relates or any offer to sell or the solicitation or an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Subject to any duties and obligations under applicable securities laws
to update information contained or incorporated by reference herein, neither the
delivery of this Prospectus nor any sales made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs or the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
----
Available Information ............................................. 2
Information Incorporated by Reference.............................. 2
The Company........................................................ 4
Risk Factors....................................................... 4
Use of Proceeds.................................................... 14
Selling Shareholders............................................... 15
Plan of Distribution............................................... 21
Commission Position on Indemnification for
Securities Act Liabilities..................................... 21
Legal Matters...................................................... 21
Experts............................................................ 22
Financial Statements............................................... F-1
================================================================================
================================================================================
4,751,125
Common Shares
CPI AEROSTRUCTURES,
INC.
Prospectus
January__, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
The expenses payable by the Company in connection with the issuance and
distribution of the securities being registered are estimated below:
SEC registration fee................................... $144.29
Blue sky fees and expenses............................. 2,500
Legal fees and expenses................................ 20,000
Printing and engraving expenses........................ 5,000
Accounting fees........................................ 5,000
Miscellaneous.......................................... 2,355.71
--------
Total......................................... $35,000
========
Item 15. Indemnification of Directors and Officers.
Except to the extent hereinafter set forth, there is no statute,
charter provision, By-law, contract or other arrangement under which any
controlling person, Director or officer of CPI Aerostructures, Inc., a New York
corporation (the "Company or the "Registrant"), is insured or indemnified in any
manner against liability which he may incur in his capacity as such,
Article 6 of the Company's Certificate of incorporation provides for
the indemnification of officers and directors to the fullest extent allowed by
the New York Business Corporation Law ("BCL"). In addition, ARTICLE 6 of the
By-laws of the Company states:
"6.1 INDEMNIFICATION
"On the terms, to the extent, and subject to the conditions prescribed
by statute and by such rules and regulations, not inconsistent with statute, as
the Board of Directors may in it discretion impose in general or particular
cases or classes of cases, (a) the Corporation shall indemnify any person made,
or threatened to be made, a party to an action or proceeding, civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and expenses, including attorney's
fees, actually and necessarily incurred as a result of such action or
Proceeding, or any appeal therein, and (b) the Corporation may pay, in advance
of final disposition of any such action or proceeding, expenses incurred by such
person in defending such action or proceeding.
On the terms, to the extent, and subject to the conditions prescribed
by statute and by such rules and regulations, not inconsistent with statute, as
the Board of Directors may in its discretion impose in general or particular
cases or classes of cases, (a) the Corporation shall indemnify any person made a
party to an action by or in the right of the Corporation to procure a judgment
in its favor, by reason of the fact that he, his testator or intestate, is or
was a director or officer of the Corporation, against the reasonable expenses,
II-1
<PAGE>
including attorney's fees, actually and necessarily incurred by him in
connection with an appeal therein, and (b) the Corporation may pay, in advance
of final disposition of any such action or proceeding, expenses incurred by such
person in defending such action or proceeding."
Under Section 402(b) of the New York Business Corporation Law ("BCL"),
directors and officers may be indemnified against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard of care is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action. Moreover, the BCL requires court approval before
there can be any indemnification where the person seeking indemnification has
been found liable to the corporation. The statute provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may he entitled under the Certificate of Incorporation of the
Company or any by-law, agreement, vote of Shareholders or disinterested
directors, or otherwise.
The BCL provides, in part, that no director shall be personally liable
to a corporation or its Shareholders for monetary damages for any breach of
fiduciary duty by such director as a director, except:
(i) for breach of the director's duty of loyalty to the
corporation or its Shareholders;
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law:
(iii) pursuant to Section 702 of the BCL; or
(iv) for any transaction from which the director derived an improper
personal benefit.
Item 16. Exhibits
Exhibit
No. Description
(a) Exhibits
3.1 Certificate of Incorporation of the Registrant, as amended. (1)
3.2 Amended and Restated By-Laws of the Registrant. (1)
4.1 Form of Underwriter's Warrants issued to the Underwriter. (1)
4.4 Stock Option Agreement dated January 3, 1996 between the Registrant and
Stanley Wunderlich.(9)
10.1 Employment Agreement between Registrant and Arthur August dated
September 15, 1995. (8)
II-2
<PAGE>
10.2 Employment Agreement between Registrant and Theodore J. Martines dated
September 15,1995. (8)
10.3 1995 Employee Stock Option Plan. (8)
10.4 Rohr Basic Purchase Agreement dated October 5, 1988 for PW3OO Pylon
Assembly on BAC 125-100 Executive Jet. (1)
10.5 Rohr Basic Purchase Agreement dated March 12, 1991 for Apron Assembly
on McDonnell Douglas MD-90. (1)
10.6 Rohr Basic Purchase Agreement dated May 8,1990 for Boeing 757 Lower Pan
Assembly. (1)
10.7 Form of military contract. (1)
10.8 Memorandum of Agreement Concerning Select Supplier Program dated
January 30, 1990 by and between the Company and Rohr Industries, Inc.
(1)
10.9 Registrant's Sick Pay Plan. (1)
10.10 Basic Agreement for Sub-Assembly dated December 10, 1992 by and between
the Registrant and Mitsui & Co. (U.S.A.), Inc. (2)
10.11 Lock-Up/Modification Agreement dated September 24, 1994 by and between
the Company and Whale Securities Co., L.P (6)
10.12 First Amendment to SPA MD-90-AP-91-CPI by and between the Company and
Rohr, Inc. for MD90 V2500 Apron Assembly. (6)
10.13 Lease dated November 15, 1995 by and between the Company and Heartland
Rental Properties Partnership for the Company's facilities in
Edgewood, New York. (8.)
10.14 Solicitation Contract dated September 19, 1995 from the Department of
the Air Force. (8)
10.15 Solicitation Contract dated September 22, 1995 from the Department of
the Air Force. (8)
10.16 Consulting Agreement between the Company and Stanley Wunderlich dated
as of January 1, 1996. (8)
10.17 Form of Registration Rights Agreement dated June 17, 1996. (9)
10.18 Form of Subscription Agreement. (9)
10.19 Form of Placement Agent Warrants dated June 17, 1996 (9)
10.20 Form of Consultant's Warrants dated April 3, 1996. (9)
II-3
<PAGE>
10.21 Form of Redeemable Common Share Purchase Warrant dated June 19, 1996.
(9)
10.22 Placement Agent Agreement dated May 10,1996 between the Company and the
Placement Agent. (9)
10.23 Financial Consulting Agreement dated April 3, 1996 between the Company
and the Placement Agent. (9)
10.24 Financial Consulting Agreement dated September 11, 1997 between the
Company and Andreas Zigouras.(11)
10.25 Line of Credit Agreement dated September 15, 1996 between the Company
and the Chase Manhattan Bank. (11)
10.26 Termination letter dated June 28, 1996 between Chrysler Capital
Corporation and the Company.(11)
10.27 Asset Purchase Agreement, dated September 9, 1997 by and among Kolar
Machine, Inc., Daniel Liguori and Kolar, Inc., a wholly owned
subsidiary of the Company. (12)
10.28 Financial Statements of Kolar Machine, Inc.(13)
*21.1 Subsidiaries of the Company.
*23.1 Consent of Snow Becker Krauss P.C. (contained in Exhibit 5.1).
*23.2 Consent of Goldstein, Golub, Kessler & Company.
*24.1 Power of Attorney (see Signature Page to this Registration Statement).
- - ---------------
* Included herein
(1) Filed as an exhibit to the Company's Registration Statement on Form S-1
(No. 33-49270) declared effective on September 16, 1992 and
incorporated herein by reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for
December 31, 1992 and incorporated herein by reference.
(3) Filed as an exhibit to Post-Effective Amendment No.2 to the Company's
Registration Statement on Form S-1 (No. 33-49270) declared effective on
October 26, 1993 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-K for
December 31,1993 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Registration Statement on Form
SB-2 (No. 33-83150) declared effective October 7, 1994 and incorporated
herein by reference.
II-4
<PAGE>
(6) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
December 31, 1994 and incorporated herein by reference.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K for
April 29, 1994, as amended, and incorporated herein by reference
(8) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
December 31, 1995 and incorporated herein by reference.
(9) Incorporated herein by reference to the Form S-8 Registration Statement
(No. 333-31481).
(10) Filed as an exhibit to the Company's Report on Form 8-K for June 19,
1996 and incorporated herein by reference.
(11) Filed as an exhibit to the Company's Report on Form 10-KSB for December
31, 1996 and incorporated herein by reference.
(12) Filed as an exhibit to the Company's Current Report on Form 8-K for
September 9, 1997 and incorporated herein by reference.
(13) Filed as an exhibit to the Company's Current Report on Form 8-K/A for
October 9, 1997 and incorporated herein by reference.
Item 17. Undertakings
The Company hereby undertakes:
(1) To file, during any period in which it offers or sells Securities,
a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Act");
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or
II-5
<PAGE>
otherwise, the small business issuer has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(6) For determining any liability under the Act, to treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or
497(11) under the Act as part of this registration statement as of the time the
Commission declared it effective.
(7) For determining any liability under the Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the Securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edgewood, State of New York, on January 6, 1998.
CPI AEROSTRUCTURES, INC.
By: /s/ Arthur August
----------------------------
Arthur August, President
POWER OF ATTORNEY
Each of the undersigned hereby authorizes Arthur August as his
attorney-in-fact to execute in the name of each such person and to file such
amendments (including post-effective amendments) to this registration statement
as the Registrant deems appropriate and appoints such person as attorney-in-fact
to sign on his behalf individually and in each capacity stated below and to file
all amendments, exhibits, supplements and post-effective amendments to this
registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on January 6,
1998 in the capacities indicated.
/s/ Arthur August Chairman of the Board,
- - ---------------------------- President (Principal Executive
Arthur August Officer) and Director
/s/ Theodore J. Martines Executive Vice President
- - ---------------------------- (Principal Accounting and
Theodore J. Martines Financial Officer) and Director
/s/ Stanley Wunderlich Director
- - ----------------------------
Stanley Wunderlich
/s/ Walter Paulick Director
- - -----------------------------
Walter Paulick
II-7
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors and Shareholders of
CPI Aerostructures Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of our report dated
February 10, 1997, on the balance sheet of CPI Aerostructures Inc. as of
December 31, 1996, and the related statements of operations, shareholders'
equity, and cash flows for each of the two years in the period then ended, which
report appears in the December 31, 1996 annual report on form 10-KSB of CPI
Aerostructures Inc. We also consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement of our report dated
November 7, 1997 on the balance sheet of Kolar Machine Inc. as of October 9,
1997 and the related statements of income and retained earnings, and cash flows
for the period from January 1, 1997 to October 9, 1997 and for the year ended
December 31, 1996, which report appears in the December 16, 1997 report on Form
8-K of CPI Aerostructures Inc. We also consent to the reference to our firm
under the caption "experts" in such Prospectus.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
January 6, 1998
II-8
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
(a) Exhibits
21.1 Subsidiaries of the Company.
23.1 Consent of Snow Becker Krauss P.C. (contained in Exhibit 5.1).
23.2 Consent of Goldstein, Golub, Kessler & Company.
24.1 Power of Attorney (see Signature Page to this Registration Statement).
<PAGE>
Exhibit 5.1
January 5, 1998
CPI Aerostructures, Inc.
200A Executive Drive
Edgewood, NY 11717
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to CPI Aerostructures, Inc. (the "Company"), a
New York corporation, in connection with the Company's post-effective amendment
no. 1 and Form S-3 registration statement (the "Registration Statement") to be
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended. The Registration Statement includes 4,751,125 shares of
Common Stock or Common Stock underlying Warrants (the "Common Stock").
As counsel to the Company, we have examined the Company's Certificate of
Incorporation, By-laws, records of corporate proceedings, and such other
documents as we have deemed necessary or appropriate as a basis for the opinions
set forth below. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
accuracy and completeness of all documents submitted to us as copies and the
authenticity of the originals of such latter documents. As to any facts material
to such opinions which we did not independently establish or verify, we have
relied upon statements or representations of officers and other representatives
of the Company, public officials or others.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly organized, is validly existing, and in good
standing under the laws of the State of New York.
2. The Common Stock has been duly authorized and issued, the shares of
Common Stock were legally issued, fully paid and non-assessable
securities.
<PAGE>
CPI Aerostructures, Inc.
January 5, 1998
Page 2
We hereby consent to the reference of our name in the Prospectus under the
caption "Legal Opinion" and to inclusion of this opinion as Exhibit 5.1 to the
Registration Statement and all amendments thereto.
Very truly yours,
/S/ Snow Becker Krauss P.C.
----------------------------------
SNOW BECKER KRAUSS P.C.
<PAGE>
Exhibit 21.1
Subsidiaries of CPI Aerostructures, Inc.
Name State of Incorporation
- - ---- ----------------------
Kolar, Inc. Delaware
