----

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|                                                                    |   |                                       |
|-------------------------------------------------------------------------|--------|--------------------------------------------|
| Delaware                                                                |   | 20-4763096                                 |
| (State      or Other Jurisdiction ofIncorporation      or Organization) |   | (IRS      EmployerIdentification      No.) |

|   | Large      Accelerated Filer [  ]                                                                    |   | Accelerated      Filer [  ] |
|--------|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|
|   | Non-Accelerated      Filer [    ]  (Do not check if a smaller      reporting company) |   | Smaller      Reporting Company [X]    |

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|                                  |   |                                                                                                  |   |   |           |   |
|---------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|
|                                  |   |                                                                                                  |   | Page   |
| PART      IFINANCIAL      INFORMATION |
| Item 1.                          |   | Financial      Statements                                                                             |   |   | 2              |   |
|                                  |   | Condensed      Consolidated Balance Sheets — (Unaudited)                                        |   |   | 3              |   |
|                                  |   | Condensed      Consolidated Statements of Income (Loss)— (Unaudited)                            |   |   | 4              |   |
|                                  |   | Condensed      Consolidated Statements of Cash Flows — (Unaudited)                              |   |   | 5              |   |
|                                  |   | Notes      to Condensed Consolidated Financial Statements                                             |   |   | 6              |   |
| Item 2.                          |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations |   |   | 9              |   |
| Item 3.                          |   | Quantitative      and Qualitative Disclosures about Market Risk                                       |   |   | 13             |   |
| Item      4 and 4T                    |   | Controls      and Procedures                                                                          |   |   |        13 |   |
| PART      IIOTHER      INFORMATION    |
| Item 6.                          |   | Exhibits                                                                                              |   |   | 14             |   |
| Signatures                            |   |                                                                                                  |   |   | 14             |   |

----

|                                                 PRECISION AEROSPACE COMPONENTS, INC.       |   |               |       |              |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|-------------------|--------|--------|
|                                                 CONDENSED CONSOLIDATED BALANCE SHEETS |   |               |       |              |   |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |
| ASSETS                                                                                                                                                                                                                                                                                                  |   |               |       |
|                                                                                                                                                                                                                                                                                                    |   | September      30, |       | December      31, |   |
|                                                                                                                                                                                                                                                                                                    |   | 2008               |       |              | 2007   |   |
|                                                                                                                                                                                                                                                                                                    |   | (Unaudited)        |       | (Audited)         |   |
| CURRENT      ASSETS                                                                                                                                                                                                                                                                                     |   |               |       |              |   |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                          |   | $                  | 423,456    |              |   | $      | 154,709 |   |
| Accounts      receivable, net                                                                                                                                                                                                                                                                           |   |               | 950,618    |              |   |   | 837,552 |   |
| Inventory,      net                                                                                                                                                                                                                                                                                     |   |               | 4,431,470  |              |   |   | 3,885,332 |   |
| Prepaid      expenses                                                                                                                                                                                                                                                                                   |   |               | 48,606     |              |   |   | - |   |
|                                                                                                                                                                                                                                                                                                    |   |               | 5,854,150  |              |   |   | 4,877,593 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| PROPERTY      AND EQUIPMENT - Net                                                                                                                                                                                                                                                                       |   |               | 204,702    |              |   |   | 260,582 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| OTHER      ASSETS                                                                                                                                                                                                                                                                                       |   |               |       |              |   |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                                |   |               | 24,700     |              |   |   | 12,700 |   |
| Goodwill                                                                                                                                                                                                                                                                                                |   |               | 2,443,114  |              |   |   | 2,443,114 |   |
|                                                                                                                                                                                                                                                                                                    |   |               | 2,467,814  |              |   |   | 2,455,814 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| TOTAL      ASSETS                                                                                                                                                                                                                                                                                       |   | $                  | 8,526,666  |              |   | $      | 7,593,989 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| LIABILITIES,      TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                   |   |               |       |              |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                                                                                                                                                |   |               |       |              |   |   |   |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| Accounts      payable and accrued expenses                                                                                                                                                                                                                                                              |   | $                  | 370,321    |              |   | $      | 606,627 |   |
| Subordinated      note payable-current portion                                                                                                                                                                                                                                                          |   |               | 150,000    |              |   |   | 300,000 |   |
| Loan      payable-current portion                                                                                                                                                                                                                                                                       |   |               | 2,722,506  |              |   |   | 387,466 |   |
| Income      taxes payable                                                                                                                                                                                                                                                                               |   |               | 69,603     |              |   |   | 429,883 |   |
|                                                                                                                                                                                                                                                                                                    |   |               | 3,312,430  |              |   |   | 1,723,976 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| LONG      -TERM LIABILITIES                                                                                                                                                                                                                                                                             |   |               |       |              |   |   |   |   |
| Subordinated      note payable-long term portion                                                                                                                                                                                                                                                        |   |               | -          |              |   |   | 150,000 |   |
| Convertible      note payable                                                                                                                                                                                                                                                                           |   |               | -          |              |   |   | 1,000,000 |   |
| TOTAL      LIABILITIES                                                                                                                                                                                                                                                                                  |   |               | 3,312,430  |              |   |   | 2,873,976 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| TEMPORARY      EQUITY                                                                                                                                                                                                                                                                                   |   |               |       |              |   |   |   |   |
| Preferred      Stock A $.001 par value; 7,100,000 shares authorized                                                                                                                                                                                                                                     |   |               |       |              |   |   |   |   |
| 5,274,152      shares issued and outstanding                                                                                                                                                                                                                                                            |   |               | 5,274      |              |   |   | 5,274 |   |
| Preferred      Stock B $.001 par value; 2,900,000 shares authorized                                                                                                                                                                                                                                     |   |               |       |              |   |   |   |   |
| 2,811,000      shares issued and outstanding                                                                                                                                                                                                                                                            |   |               | 2,811      |              |   |   | 2,811 |   |
| Additional      paid-in capital -warrants                                                                                                                                                                                                                                                               |   |               | 843,272    |              |   |   | 843,272 |   |
| Additional      paid-in capital -options                                                                                                                                                                                                                                                                |   |               | 4,378,930  |              |   |   | - |   |
| TOTAL      TEMPORARY EQUITY                                                                                                                                                                                                                                                                             |   |               | 5,230,287  |              |   |   | 851,357 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| STOCKHOLDERS'      EQUITY (DEFICIT)                                                                                                                                                                                                                                                                     |   |               |       |              |   |   |   |   |
| Preferred      Stock A $.001 par value; 7,100,000 shares authorized                                                                                                                                                                                                                                     |   |               | -          |              |   |   | - |   |
| 5,274,152      shares issued and outstanding                                                                                                                                                                                                                                                            |   |               |       |              |   |   |   |   |
| Preferred      Stock B $.001 par value; 2,900,000 shares authorized                                                                                                                                                                                                                                     |   |               | -          |              |   |   | - |   |
| 2,811,000      shares issued and outstanding                                                                                                                                                                                                                                                            |   |               |       |              |   |   |   |   |
| Common      stock, $.001 par value; 100,000,000 shares authorized                                                                                                                                                                                                                                       |   |               |       |              |   |   |   |   |
| 33,324,691      shares issued and outstanding                                                                                                                                                                                                                                                           |   |               | 33,325     |              |   |   | 33,325 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                         |   |               | 5,808,675  |              |   |   | 5,808,675 |   |
| Accumulated      deficit                                                                                                                                                                                                                                                                                |   |               | (5,858,051 | )                 |   |   | (1,973,344 | ) |
| TOTAL      STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                               |   |               | (16,051    | )                 |   |   | 3,868,656 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |
| TOTAL      LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY      (DEFICIT)                                                                                                                                                                                                                        |   | $                  | 8,526,666  |              |   | $      | 7,593,989 |   |
|                                                                                                                                                                                                                                                                                                    |   |               |       |              |   |   |   |   |

----

|                                                                                                                                   PRECISION AEROSPACE COMPONENTS, INC. |   |   |                               |          |                                  |   |   |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------|---------------|---------------------------------------|--------|--------|---------------|
|                                                                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)                                                                                                                                                                                                                                                                                                                                                         |   |   |                               |          |
|                                                                      FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2008 AND      2007                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | Nine Months ended September    30, |          | Three Months ended September      30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 2008                               |          |                                  | 2007   |   |          |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
| REVENUE      - SALES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | $                                  | 8,601,266     |                                  |   | $      | 6,863,343     |   |   |   | $ | 2,763,986 |   |   | $ | 2,559,554 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| TOTAL      REVENUE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |                               | 8,601,266     |                                  |   |   | 6,863,343     |   |   |   |   | 2,763,986 |   |   |   | 2,559,554 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| TOTAL      COST OF GOODS SOLD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                               | 5,883,410     |                                  |   |   | 4,312,209     |   |   |   |   | 1,940,493 |   |   |   | 1,686,173 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| GROSS      PROFIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                               | 2,717,856     |                                  |   |   | 2,551,134     |   |   |   |   | 823,493 |   |   |   | 873,381 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| General      and administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |                               | 1,410,703     |                                  |   |   | 1,170,863     |   |   |   |   | 473,016 |   |   |   | 358,257 |   |
| Stock      Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                               | 4,378,930     |                                  |   |   | -             |   |   |   |   | 525,468 |   |   |   | - |   |
| Professional      Fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |                               | 223,841       |                                  |   |   | 144,928       |   |   |   |   | 59,431 |   |   |   | 56,673 |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |                               | 59,996        |                                  |   |   | 58,850        |   |   |   |   | 20,068 |   |   |   | 20,724 |   |
| Total      Operating Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                               | 6,073,470     |                                  |   |   | 1,374,641     |   |   |   |   | 1,077,983 |   |   |   | 435,654 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| INCOME      (LOSS) BEFORE OTHER INCOME (EXPENSE)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |                               | (3,355,614    | )                                     |   |   | 1,176,493     |   |   |   |   | (254,490 | ) |   |   | 437,727 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Expiration      of Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |                               | -             |                                  |   |   | 50,000        |   |   |   |   | - |   |   |   | 50,000 |   |
| Interest      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |                               | (170,480      | )                                     |   |   | (180,916      | ) |   |   |   | (44,836 | ) |   |   | (64,125 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               | (170,480      | )                                     |   |   | (130,916      | ) |   |   |   | (44,836 | ) |   |   | (14,125 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| INCOME      (LOSS) BEFORE PROVISION FOR INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               | (3,526,094    | )                                     |   |   | 1,045,577     |   |   |   |   | (299,326 | ) |   |   | 423,602 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |                               | 358,613       |                                  |   |   | 392,087       |   |   |   |   | 85,296 |   |   |   | 161,488 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) APPLICABLE TO COMMON SHARES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | $                                  | (3,884,707    | )                                     |   | $      | 653,490       |   |   |   | $ | (384,622 | ) |   | $ | 262,114 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) PER BASIC SHARES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | $                                  | (0.12         | )                                     |   | $      | 0.02          |   |   |   | $ | (0.01 | ) |   | $ | 0.01 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) PER DILUTED SHARES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | $                                  | -             |                                  |   | $      | -             |   |   |   | $ | - |   |   | $ | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF BASIC COMMON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|  SHARES      OUTSTANDING                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                               | 33,324,691    |                                  |   |   | 33,324,691    |   |   |   |   | 33,324,691 |   |   |   | 33,324,691 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF FULLY DILUTED                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |
|  COMMON      SHARES OUTSTANDING                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               | 8,923,618,083 |                                  |   |   | 8,999,719,761 |   |   |   |   | 8,772,556,464 |   |   |   | 8,999,719,761 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                               |          |                                  |   |   |          |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                             PRECISION AEROSPACE COMPONENTS, INC. |   |   |       |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND      2007                                                                                                                                                                                                                          |   |   |       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2008   |       |   | 2007   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |       |   |   |   |
|    Net      (loss) income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $      | (3,884,707 | )      |   | $      | 653,490 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Adjustments      to reconcile net income (loss) to net cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |       |   |   |   |   |   |
| (used      in) operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Depreciation      and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 59,996     |   |   |   | 58,850 |   |
| Stock      Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 4,378,930  |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Changes      in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |       |   |   |   |   |   |
| Decrease      (increase) in assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |       |   |   |   |   |   |
|    Decrease      (increase) in accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | (113,066   | )      |   |   | (400,814 | ) |
|    Decrease      (increase) in inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | (546,138   | )      |   |   | (198,762 | ) |
|    Decrease      (increase) in prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (48,606    | )      |   |   | (16,815 | ) |
|    Decrease      (increase) in security deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | (12,000    | )      |   |   | 84,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Increase      (decrease) in liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |       |   |   |   |   |   |
|    Increase      (decrease)  in accounts payable and accrued    expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | (236,306   | )      |   |   | (703,755 | ) |
|    Increase      (decrease) in income taxes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | (360,280   | )      |   |   | 273,408 |   |
| Total      adjustments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 3,122,530  |   |   |   | (903,888 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Net      cash (used in) operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (762,177   | )      |   |   | (250,398 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |       |   |   |   |   |   |
|    (Purchase)      of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | (4,116     | )      |   |   | (17,775 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Net      cash (used in) investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (4,116     | )      |   |   | (17,775 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |       |   |   |   |   |   |
|    (Payment)      of convertible note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (1,000,000 | )      |   |   | - |   |
|    (Payment)      of S/T loan payable Greater Bay                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (387,466   | )      |   |   | - |   |
|     Proceeds      from issuance of short term loan payable - Great Bay                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 2,722,506  |   |   |   | 472,157 |   |
|    (Payment)      of principle of subordinated note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | (300,000   | )      |   |   | (225,000 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Net      cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 1,035,040  |   |   |   | 247,157 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| INCREASE      (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 268,747    |   |   |   | (21,016 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 154,709    |   |   |   | 67,094 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS - END OF PERIOD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | 423,456    |   |   | $      | 46,078 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |       |   |   |
| Cash      paid during the period for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
|     Interest      paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $      | 169,299    |   |   | $      | 86,791 |   |
|     Income      taxes paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | 651,753    |   |   | $      | 67,999 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF NONCASH ACTIVITY:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
|   Issuance      of options for stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $      | 4,378,930  |   |   | $      | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |       |   |   |   |   |   |

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|   | Warehouse      equipment    | 5      years        |
|--------|-----------------------------|---------------------|
|   | Leasehold      improvements | 5 –      39** |
|   | Computers                   | 5      years        |
|   | Furniture      and fixtures | 7      years        |

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|                                              |   |   |     |
|---------------------------------------------------|--------|--------|----------|
|                                              |   | 2008   |     |
|                                              |   |   |     |
| Furniture      and fixtures                       |   | $      | 2,392    |   |
| Equipment      and other                          |   |   | 358,298  |   |
| Leasehold      improvements                       |   |   | 6,488    |   |
|                                              |   |   | 367,178  |   |
|                                              |   |   |     |   |
| Less      accumated depreciation and amortization |   |   | (162,476 | ) |
|                                              |   |   |     |   |
| Property      and equipment, net                  |   | $      | 204,702  |   |

|                  |   |    | 2008          |   |
|-----------------------|--------|---------|---------------|--------|
|                  |   |    |          |   |
| Accounts      payable |   |  $ |  343,514 |   |
| Accrued      expenses |   |    |  26,807  |   |
| Total                 |   |  $ |  370,321 |   |
|                  |   |    |          |   |
|                  |   |    |          |   |

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| Short-term      debt as of September 30, 2008 consists of the following:                                                                                                 |   |   |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                                                                                                                                     |   |   |      |
|                                                                                                                                                                     |   | 2007   |      |
| Revolving      funding facility. Due 2009 (See note 5).                                                                                                                  |   | $      | 2,722,506 |   |
|                                                                                                                                                                     |   |   |      |   |
| $750,000      subordinated term loan due April 30, 2009 secured by all assets equipment      at a variable rate of Prime plus 1% (6.00 on September 30,      2008). |   |   | 150,000   |   |
|                                                                                                                                                                     |   | $      | 2,872,506 |   |

7. OPTIONS AND AGREEMENTS

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|             |   |                                                                                                                                                                                |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit      No. |   | Exhibit                                                                                                                                                                             |
|             |   |                                                                                                                                                                                |
| 31.1             |   | Certification      of Chief Executive Officer of the Company required by Rule 13a-14(a) under      the Securities Exchange Act of 1934, as amended                                  |
|             |   |                                                                                                                                                                                |
| 31.2             |   | Certification      of Chief Financial Officer of the Company required by Rule 13a-14(a) under      the Securities Exchange Act of 1934, as amended                                  |
|             |   |                                                                                                                                                                                |
| 32.1             |   | Certification      of Chief Executive Officer and Chief Financial Officer of the Company      required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as      amended |

|                          |   |                                       |   |
|-------------------------------|--------|--------------------------------------------|--------|
| Dated:      November 13, 2008 |   | PRECISION      AEROSPACE                   |   |
|                          |   | COMPONENTS,      INC.                      |   |
|                          |   |  /s/      Andrew S. Prince            |   |
|                          |   |                                       |   |
|                          |   | Andrew      S. Prince                      |   |
|                          |   | President      and Chief Executive Officer |   |

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|                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit      Number          |   |                                                                                                                                                     Description |
|                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.1                                                                      |   | Certification      of Chief Executive Officer of the Company required by Rule 13a-14(a) under      the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.2                                                                      |   | Certification      of Chief Financial Officer of the Company required by Rule 13a-14(a) under      the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 32.1                                                                      |   | Certification      of Chief Executive Officer and Chief Financial Officer of the Company      required by Rule 13a-14(b) under the Securities Exchange Act of 1934,      as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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