|                                                                     |   |                                        |
|--------------------------------------------------------------------------|--------|---------------------------------------------|
| Delaware                                                                 |   | 20-4763096                                  |
| (State      or Other Jurisdiction of Incorporation      or Organization) |   | (IRS      Employer Identification      No.) |
|                                                                     |   |                                        |

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|                                  |   |                                                                       |   |   |   |   |
|---------------------------------------|--------|----------------------------------------------------------------------------|--------|--------|--------|--------|
|                                  |   |                                                                       |   | Page   |
| PART      IFINANCIAL      INFORMATION |
| Item 1.                          |   | Financial      Statements                                                  |   |   | 3      |   |
|                                  |   | Condensed      Consolidated Balance Sheets — (Unaudited)             |   |   | 4      |   |
|                                  |   | Condensed      Consolidated Statements of Income (Loss)— (Unaudited) |   |   | 5      |   |
|                                  |   | Condensed      Consolidated Statements of Cash Flows — (Unaudited)   |   |   | 6      |   |
|                                  |   | Notes      to Condensed Consolidated Financial Statements                  |   |   | 7      |   |
| Item 2.                          |   | Plan      of Operations                                                    |   |   | 12     |   |
| Item 3.                          |   | Controls      and Procedures                                               |   |   | 16     |   |
| PART      IIOTHER      INFORMATION    |
| Item 6.                          |   | Exhibits                                                                   |   |   | 17     |   |
| Signatures                            |   |                                                                       |   |   | 17     |   |

----

| CONDENSED      CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED):                                                                    | Pages  |
|------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                               |   |
| Condensed      Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December      31, 2007 (Audited)                    | 4      |
|                                                                                                                               |   |
| Condensed      Consolidated Statements of Income (Loss) for the Six and Three Months      Ended June 30, 2008 and 2007 (Unaudited) | 5      |
|                                                                                                                               |   |
| Condensed      Consolidated Statements of Cash Flows for the Six Months Ended June 30,      2008 and 2007 (Unaudited)              | 6      |
|                                                                                                                               |   |
| Notes      to Condensed Consolidated Financial Statements                                                                          | 7-11   |

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|                                                        PRECISION AEROSPACE COMPONENTS, INC.        |   |          |       |   |              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                                                       CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |   |          |       |   |              |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                  |   |          |       |   |
|                                                                                                                                                                                                                                                                                                                                                    |   | June      30, |       |   | December      31, |   |
|                                                                                                                                                                                                                                                                                                                                                    |   | 2008          |       |   | 2007              |   |
| CURRENT      ASSETS                                                                                                                                                                                                                                                                                                                                     |   | (Unaudited)   |       |   | (Audited)         |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                                                                          |   | $             | 496,892    |   |              | $      | 154,709 |   |
| Accounts      receivable, net                                                                                                                                                                                                                                                                                                                           |   |          | 985,099    |   |              |   | 837,552 |   |
| Inventory,      net                                                                                                                                                                                                                                                                                                                                     |   |          | 4,393,327  |   |              |   | 3,885,332 |   |
| Prepaid      expenses                                                                                                                                                                                                                                                                                                                                   |   |          | 57,519     |   |              |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          | 5,932,837  |   |              |   | 4,877,593 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| PROPERTY      AND EQUIPMENT - Net                                                                                                                                                                                                                                                                                                                       |   |          | 224,770    |   |              |   | 260,582 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| OTHER      ASSETS                                                                                                                                                                                                                                                                                                                                       |   |          |       |   |              |   |   |   |
| Deposits                                                                                                                                                                                                                                                                                                                                                |   |          | 12,700     |   |              |   | 12,700 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                |   |          | 2,443,114  |   |              |   | 2,443,114 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          | 2,455,814  |   |              |   | 2,455,814 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| TOTAL      ASSETS                                                                                                                                                                                                                                                                                                                                       |   | $             | 8,613,421  |   |              | $      | 7,593,989 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| LIABILITIES,      TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                   |   |          |       |   |              |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| CURRENT      LIABILITIES                                                                                                                                                                                                                                                                                                                                |   |          |       |   |              |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| Accounts      payable and accrued expenses                                                                                                                                                                                                                                                                                                              |   | $             | 507,317    |   |              | $      | 606,627 |   |
| Subordinated      note payable-current portion                                                                                                                                                                                                                                                                                                          |   |          | 225,000    |   |              |   | 300,000 |   |
| Loan      payable-current portion                                                                                                                                                                                                                                                                                                                       |   |          | 2,722,506  |   |              |   | 387,466 |   |
| Income      taxes payable                                                                                                                                                                                                                                                                                                                               |   |          | 85,208     |   |              |   | 429,883 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          | 3,540,031  |   |              |   | 1,723,976 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| LONG      -TERM LIABILITIES                                                                                                                                                                                                                                                                                                                             |   |          |       |   |              |   |   |   |
| Subordinated      note payable-long term portion                                                                                                                                                                                                                                                                                                        |   |          | -          |   |              |   | 150,000 |   |
| Convertible      note payable                                                                                                                                                                                                                                                                                                                           |   |          | -          |   |              |   | 1,000,000 |   |
| TOTAL      LIABILITIES                                                                                                                                                                                                                                                                                                                                  |   |          | -          |   |              |   | 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 |   |
| Prepaid      Services                                                                                                                                                                                                                                                                                                                                   |   |          | (525,470   | )      |              |   | - |   |
| Additional      paid-in capital -warrants                                                                                                                                                                                                                                                                                                               |   |          | 843,272    |   |              |   | 843,272 |   |
| Additional      paid-in capital -options                                                                                                                                                                                                                                                                                                                |   |          | 4,378,932  |   |              |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          | 4,704,819  |   |              |   | 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 |   |
| Retained      earnings (deficit)                                                                                                                                                                                                                                                                                                                        |   |          | (5,473,429 | )      |              |   | (1,973,344 | ) |
| TOTAL      STOCKHOLDERS'  EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                    |   |          | 368,571    |   |              |   | 3,868,656 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |
| TOTAL      LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY      (DEFICIT)                                                                                                                                                                                                                                                                        |   | $             | 8,613,421  |   |              | $      | 7,593,989 |   |
|                                                                                                                                                                                                                                                                                                                                                    |   |          |       |   |              |   |   |   |

----

|                                                                                                           PRECISION      AEROSPACE COMPONENTS, INC. |   |   |                           |          |   |                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|---------------|--------|----------------------------------------------|
| CONDENSED      CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| FOR      THE SIX AND THREE MONTHS ENDED JUNE 30, 2008 AND 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | Six Months ended June      30, |          |   |  Three Months      ended  June 30, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 2008                           |          |   | 2007                                         |   |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |
| REVENUE      - SALES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | $                              | 5,837,280     |   |                                         | $ | 4,303,789 |   |   | $ | 2,731,812 |   |   | $ | 2,351,571 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      REVENUE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |                           | 5,837,280     |   |                                         |   | 4,303,789 |   |   |   | 2,731,812 |   |   |   | 2,351,571 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      COST OF GOODS SOLD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |                           | 3,942,917     |   |                                         |   | 2,626,036 |   |   |   | 1,823,663 |   |   |   | 1,443,744 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| GROSS      PROFIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |                           | 1,894,363     |   |                                         |   | 1,677,753 |   |   |   | 908,149 |   |   |   | 907,827 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|         General and administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |                           | 937,687       |   |                                         |   | 842,606 |   |   |   | 468,371 |   |   |   | 376,800 |   |
|         Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                           | 3,853,462     |   |                                         |   | - |   |   |   | 788,210 |   |   |   | - |   |
|         Professional Fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |                           | 164,410       |   |                                         |   | 88,255 |   |   |   | 115,463 |   |   |   | 70,178 |   |
|         Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |                           | 39,928        |   |                                         |   | 38,126 |   |   |   | 20,067 |   |   |   | 19,063 |   |
|         Total Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |                           | 4,995,487     |   |                                         |   | 968,987 |   |   |   | 1,392,111 |   |   |   | 466,041 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      (LOSS) BEFORE OTHER (EXPENSE)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |                           | (3,101,124    | )      |                                         |   | 708,766 |   |   |   | (483,962 | ) |   |   | 441,786 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |                           | (125,644      | )      |                                         |   | (86,791 | ) |   |   | (30,082 | ) |   |   | (69,308 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           | (125,644      | )      |                                         |   | (86,791 | ) |   |   | (30,082 | ) |   |   | (69,308 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME BEFORE PROVISION FOR INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | (3,226,768                     | )             |   |                                         | 621,975 |   |   |   | (514,044 | ) |   |   | 372,478 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |                           | 273,317       |   |                                         |   | 230,599 |   |   |   | 118,635 |   |   |   | 141,815 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS) APPLICABLE TO COMMON SHARES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | $                              | (3,500,085    | )      |                                         | $ | 391,376 |   |   | $ | (632,679 | ) |   | $ | 230,663 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| NET      INCOME (LOSS)  PER BASIC SHARES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | $                              | (0.11         | )      |                                         | $ | 0.01 |   |   |   | (0.02 | ) |   | $ | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           | 8,999,978,902 |   |                                         |   | 6,913,003,091 |   |   |   | 8,772,556,464 |   |   |   | 6,913,003,091 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |                           |          |   |                                         |   |   |   |   |   |   |   |   |   |   |   |

----

|                                          PRECISION AEROSPACE COMPONENTS, INC.                  |   |   |       |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                                                                                                                                                                                              |   |   |       |   |
|                                           FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007 |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |
|                                                                                                                                                                                                                                                                          |   | 2008   |       |   | 2007   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                                     |   |   |       |   |   |   |
|    Net      (loss) income                                                                                                                                                                                                                                      |   | $      | (3,500,085 | )      |   | $      | 391,376 |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Adjustments      to reconcile net income (loss) to net cash                                                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
| (used      in) operating activities:                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Depreciation      and amortization                                                                                                                                                                                                                                            |   |   | 39,928     |   |   |   | 38,126 |   |
| Stock      Based Compensation                                                                                                                                                                                                                                                 |   |   | 3,853,462  |   |   |   |   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Changes      in assets and liabilities:                                                                                                                                                                                                                                       |   |   |       |   |   |   |   |   |
| Decrease      (increase) in assets                                                                                                                                                                                                                                            |   |   |       |   |   |   |   |   |
|    Decrease      (increase) in accounts receivable                                                                                                                                                                                                             |   |   | (147,547   | )      |   |   | (98,173 | ) |
|    Decrease      (increase) in inventory                                                                                                                                                                                                                       |   |   | (507,995   | )      |   |   | 79,456 |   |
|    Decrease      (increase) in prepaid expenses                                                                                                                                                                                                                |   |   | (57,519    | )      |   |   | (33,630 | ) |
|    Decrease      (increase) in security deposits                                                                                                                                                                                                               |   |   | -          |   |   |   | 88,815 |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Increase      (decrease) in liabilities                                                                                                                                                                                                                                       |   |   |       |   |   |   |   |   |
|    Increase      (decrease)  in accounts payable and accrued    expenses                                                                                                                                                                             |   |   | (99,310    | )      |   |   | (778,476 | ) |
|    Increase      (decrease) in income taxes payable                                                                                                                                                                                                            |   |   | (344,675   | )      |   |   | 230,299 |   |
| Total      adjustments                                                                                                                                                                                                                                                        |   |   | 2,736,344  |   |   |   | (473,583 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Net      cash (used in) operating activities                                                                                                                                                                                                                                  |   |   | (763,741   | )      |   |   | (82,207 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                                                                                                                                                                                                     |   |   |       |   |   |   |   |   |
|    (Purchase)      of property and equipment                                                                                                                                                                                                                   |   |   | (4,116     | )      |   |   | (11,775 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Net      cash (used in) investing activities                                                                                                                                                                                                                                  |   |   | (4,116     | )      |   |   | (11,775 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| 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  |   |   |   | 219,658 |   |
|    (Payment)      of principle of subordinated note payable                                                                                                                                                                                                    |   |   | (225,000   | )      |   |   | (150,000 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| Net      cash provided by financing activities                                                                                                                                                                                                                                |   |   | 1,110,040  |   |   |   | 69,658 |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| INCREASE      (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                         |   |   | 342,183    |   |   |   | (24,324 | ) |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                                                                                                                                                                                                          |   |   | 154,709    |   |   |   | 67,094 |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS - END OF PERIOD                                                                                                                                                                                                                                |   | $      | 496,892    |   |   | $      | 42,770 |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                                                                                                                        |   |   |       |   |   |   |   |   |
| Cash      paid during the period for:                                                                                                                                                                                                                                         |   |   |       |   |   |   |   |   |
|     Interest      paid                                                                                                                                                                                                                                    |   | $      | 125,644    |   |   | $      | 86,791 |   |
|     Income      taxes paid                                                                                                                                                                                                                                |   | $      | 651,753    |   |   | $      | - |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      SCHEDULE OF NONCASH ACTIVITY:                                                                                                                                                                                                                               |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |
|   Issuance      of options for stock based compensation                                                                                                                                                                                                             |   | $      | 3,853,462  |   |   | $      | - |   |
|                                                                                                                                                                                                                                                                          |   |   |       |   |   |   |   |   |

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

----

----

|                                              |   |   |     |
|---------------------------------------------------|--------|--------|----------|
|                                              |   | 2008   |     |
|                                              |   |   |     |
| Furniture      and fixtures                       |   | $      | 2,392    |   |
| Equipment      and other                          |   |   | 358,298  |   |
| Leasehold      improvements                       |   |   | 6,488    |   |
|                                              |   |   | 367,178  |   |
|                                              |   |   |     |   |
| Less      accumated depreciation and amortization |   |   | (142,408 | ) |
|                                              |   |   |     |   |
| Property      and equipment, net                  |   | $      | 224,770  |   |

|                  |   |    | 2008          |   |
|-----------------------|--------|---------|---------------|--------|
|                  |   |    |          |   |
| Accounts      payable |   |  $ |  481,044 |   |
| Accrued      expenses |   |    |  26,273  |   |
| Total                 |   |  $ |  507,317 |   |
|                  |   |    |          |   |
|                  |   |    |          |   |

----

| Short-term      debt as of June 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% (6.25 on March  31,      2008). |   |   | 225,000   |   |
|                                                                                                                                                                       |   | $      | 2,947,506 |   |

7. OPTIONS AND AGREEMENTS

----

|                                                                          |   |                  |          |   |                 |   |
|-------------------------------------------------------------------------------|--------|-----------------------|---------------|--------|----------------------|--------|
| For      3/31/08                                                              |   | Originally      Filed |          |   | Restated             |   |
|                                                                          |   | For      the quarter  |          |   | For      the quarter |   |
|                                                                          |   | ended      March 31,  |          |   | ended      March 31, |   |
|                                                                          |   | 2008                  |          |   | 2008                 |   |
|                                                                          |   |                  |          |   |                 |   |
|                                                                          |   |                  |          |   |                 |   |
| Assets                                                                        |   | $                     | 8,886,887     |   |                 | $      | 8,886,887 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| Liabilities                                                                   |   |                  | 3,969,026     |   |                 |   | 3,969,026 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| Temporary      Equity                                                         |   |                  | 1,216,269     |   |                 |   | 3,916,611 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| Stockholders'  Equity                                               |   |                  | 3,701,592     |   |                 |   | 1,001,250 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| Total      Liabilities and Stockholders'  Equity                    |   | $                     | 8,886,887     |   |                 | $      | 8,886,887 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
|                                                                          |   | Originally      Filed |          |   | Restated             |   |
|                                                                          |   | For      the quarter  |          |   | For      the quarter |   |
|                                                                          |   | ended      March 31,  |          |   | ended      March 31, |   |
|                                                                          |   | 2008                  |          |   | 2008                 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| GROSS      PROFIT                                                             |   | $                     | 986,214       |   |                 | $      | 986,214 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| OPERATING      EXPENSES:                                                      |   |                  | 903,034       |   |                 |   | 3,603,376 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| NET      INCOME (LOSS) BEFORE OTHER (EXPENSE)                                 |   |                  | 83,180        |   |                 |   | (2,617,162 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| OTHER      (EXPENSE)                                                          |   |                  |          |   |                 |   |   |   |
| Interest      expense                                                         |   |                  | (95,562       | )      |                 |   | (95,562 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| NET      INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES                      |   | $                     | (12,382       | )      |                 | $      | (2,712,724 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| Provision      for income taxes                                               |   |                  | 154,682       |   |                 |   | 154,682 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| NET      INCOME (LOSS) APPLICABLE TO COMMON SHARES                            |   | $                     | (167,064      | )      |                 | $      | (2,867,406 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| NET      INCOME (LOSS) PER BASIC SHARES                                       |   | $                     | (0.01         | )      |                 | $      | (0.09 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| NET      INCOME (LOSS) PER DILUTED SHARES                                     |   | $                     | (0.00         | )      |                 | $      | (0.00 | ) |
|                                                                          |   |                  |          |   |                 |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF BASIC COMMON  SHARES    OUTSTANDING |   |                  | 33,324,691    |   |                 |   | 33,324,691 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF FULLY DILUTED                                 |   |                  |          |   |                 |   |   |   |
|    COMMON      SHARES OUTSTANDING                              |   |                  | 9,227,401,341 |   |                 |   | 9,227,401,341 |   |
|                                                                          |   |                  |          |   |                 |   |   |   |

----

----

----

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----

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

----

|                |   |                                                                                                                                                                                     |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 |

----