EXHIBIT 10.36

                             STOCK OPTION AGREEMENT


                  AGREEMENT, made as of the 14th day of August, 2001 by and
between CPI Aerostructures, Inc., a New York corporation ("Company") with
principal offices located at 200A Executive Drive Edgewood, New York 11717, and
Arthur August ("Employee") residing at 7155 Wainscott Court, Sarasota, Florida
34238.

                  WHEREAS, on August 14, 2001 ("Grant Date"), pursuant to the
terms and conditions of the Company's Performance Equity Plan 2000 ("Plan"), the
Board of Directors of the Company authorized the grant to the Employee of an
option ("Option") to purchase an aggregate of 100,000 shares of the authorized
but unissued common stock of the Company, $.001 par value ("Common Stock"),
conditioned upon the Employee's acceptance thereof upon the terms and conditions
set forth in this Agreement and subject to the terms of the Plan (capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Plan); and

                  WHEREAS, simultaneously herewith, the Company has entered into
an Employment Agreement with Employee ("Employment Agreement") pursuant to which
Employee is entitled to the grant of the Option; and

                  WHEREAS, the Employee desires to acquire the Option on the
terms and conditions set forth in this Agreement and subject to the terms of the
Plan;

                  IT IS AGREED:

                  1.       Grant of Stock Option.  The Company hereby grants to
the Employee the right and option to purchase all or any part of an aggregate of
100,000 shares of the Common Stock ("Option Shares") on the terms and conditions
set forth herein and subject to the provisions of the Plan.

                  2.       Non-Incentive Stock Option.  The Option represented
hereby is not intended to be an Option that qualifies as an "Incentive Stock
Option" under Section 422 of the Internal Revenue Code of 1986, as amended.

                  3.       Exercise Price. The exercise price ("Exercise Price")
of the Option is $1.20 per share, subject to adjustment as hereinafter provided.

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                  4.       Exercisability.  Subject to the terms and conditions
of the Plan and this Agreement, this Option is exercisable immediately to the
extent of all of the Option Shares and shall remain exercisable until the close
of business on August 13, 2011 ("Exercise Period").

                  5.       Effect of Termination of Employment.

                           5.1      Termination Due to Death or Disability.  If
Employee's employment by the Company terminates by reason of death or
Disability, the Option may thereafter be exercised until the expiration of the
Exercise Period.

                           5.2      Termination by the Company Without Cause or
by Employee for "Good Reason". Subject to Section 5.5, if Employee's employment
is terminated (i) by the Company without cause, or (ii) by Employee for "Good
Reason" as such term is defined in Section 4.5 of the Employment Agreement, then
the Option may be exercised until the expiration of the Exercise Period.

                           5.3      Termination Due to Normal Retirement.
Subject to Section 5.5, if Employee's employment is terminated due to Normal
Retirement, then the Option may be exercised for a period of three years from
the date of such termination or until the expiration of the Exercise Period,
whichever is shorter.

                           5.4      Other Termination.  If Employee's employment
is terminated for any reason other than (i) death, (ii) Disability, (iii) Normal
Retirement, (iv) without cause by the Company or (v) by the Employee for "Good
Reason," the Option shall expire on the date of termination of employment.

                           5.5      Option Null and Void.  In the event that (a)
the Employee's employment is terminated by the Company for cause, or (b) after
the term of Employee's employment with the Company, Employee engages in activity
that violates Section 6.4 of the Employment Agreement (to the extent such
section is applicable), the Board of Directors, in its sole discretion, may
annul any award granted hereunder and require the Employee to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Employee within the 12 month period prior to the date of termination. In such
event, the Employee hereby agrees to remit to the Company, in cash, an amount
equal to the difference between the Fair Market Value of the Option Shares on
the date of termination (or the sales price of such Shares if the Option Shares
were sold during such 12 month period) and the Exercise Price of such Shares.

                  6.       Withholding Tax. Not later than the date as of which
an amount first becomes includible in the gross income of the Employee for
Federal income tax purposes with respect to the Option, the Employee shall pay
to the Company, or make arrangements satisfactory to the Committee regarding the

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payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount ("Withholding Tax"). The
obligations of the Company under the Plan and pursuant to this Agreement shall
be conditional upon such payment or arrangements with the Company and the
Company shall, to the extent permitted by law, have the right to deduct any
Withholding Taxes from any payment of any kind otherwise due to the Employee
from the Company.

                  7.       Adjustments. In the event of any change in the shares
of Common Stock of the Company as a whole occurring as the result of a common
stock split or reverse split, common stock dividend payable on shares of Common
Stock, combination or exchange of shares, or other extraordinary or unusual
event occurring after the grant of the Option, the Board of Directors shall
determine, in its sole discretion, whether such change equitably requires an
adjustment in the terms of this Option or the aggregate number of shares
reserved for issuance under the Plan. Any such adjustments will be made by the
Board of Directors, whose determination will be final, binding and conclusive.

                  8.       Method of Exercise.

                           8.1      Notice to the Company.  The Option shall be
exercised in whole or in part by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place of
business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice and of the
Withholding Taxes, if any.

                           8.2      Delivery of Option Shares.  The Company
shall deliver a certificate for the Option Shares to the Employee as soon as
practicable after payment therefor.

                           8.3      Payment of Purchase Price.

                                    8.3.1.  Cash Payment.  The Employee shall
make cash payments by wire transfer, certified or bank check or personal check,
in each case payable to the order of the Company; the Company shall not be
required to deliver certificates for Option Shares until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof.

                                    8.3.2.  Cashless Payment.  Provided that
prior approval of the Company has been obtained, the Employee may use Common
Stock of the Company owned by him to pay the purchase price for the Option
Shares by delivery of stock certificates in negotiable form which are effective
to transfer good and valid title thereto to the Company, free of any liens or
encumbrances. Shares of Common Stock used for this purpose shall be valued at
the Fair Market Value.


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                                    8.3.3.  Payment of Withholding Tax.  Any
required Withholding Tax may be paid in cash or with Common Stock in accordance
with Sections 8.3.1 and 8.3.2.

                                    8.3.4.  Exchange Act Compliance.
Notwithstanding the foregoing, the Company shall have the right to reject
payment in the form of Common Stock if in the opinion of counsel for the
Company, (i) it could result in an event of "recapture" under Section 16(b) of
the Securities Exchange Act of 1934; (ii) such shares of Common Stock may not be
sold or transferred to the Company; or (iii) such transfer could create legal
difficulties for the Company.

                  9.       Transfer. Except as may be set forth in the next
sentence of this Section or in the Agreement, the Option shall not be
transferable by the Employee other than by will or by the laws of descent and
distribution, and the Option shall be exercisable, during the Employee's
lifetime, only by the Employee (or, to the extent of legal incapacity or
incompetency, the Employee's guardian or legal representative). Notwithstanding
the foregoing, the Employee, with the approval of the Committee, may transfer
all or a portion of the Option (i) (A) by gift, for no consideration, or (B)
pursuant to a domestic relations order, in either case, to or for the benefit of
the Employee's "Immediate Family" (as defined below), or (ii) to an entity in
which the Employee and/or members of Employee's Immediate Family own more than
fifty percent of the voting interest, in exchange for an interest in that
entity, subject to such limits as the Committee may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
the Option prior to such transfer. The term "Immediate Family" shall mean any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Employee's household (other than a tenant
or employee), a trust in which these persons have more than fifty percent
beneficial interest, and a foundation in which these persons (or the Employee)
control the management of the assets.

                  10.      Company Representations.  The Company hereby
represents and warrants to the Employee that:

                           (i)      the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate all of
the transactions contemplated hereunder; and

                           (ii)     the Option Shares, when issued and delivered
by the Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and non-assessable.


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                  11.      Employee Representations.  The Employee hereby
represents and warrants to the Company that:

                           (i)      he is acquiring the Option and shall acquire
the Option Shares for his own account and not with a view towards the
distribution thereof;

                           (ii)     he has received a copy of the Plan as in
effect as of the date of this Agreement;

                           (iii)    he has received a copy of all reports and
documents required to be filed by the Company with the Securities and Exchange
Commission pursuant to the Exchange Act, within the last 24 months and all
reports issued by the Company to its stockholders;

                           (iv)     he understands that he must bear the
economic risk of the investment in the Option Shares, which cannot be sold by
him unless they are registered under the Securities Act of 1933 ("1933 Act") or
an exemption therefrom is available thereunder and that the Company is under no
obligation to register the Option Shares for sale under the 1933 Act;

                           (v)      in his position with the Company, he has had
both the opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf concerning the
terms and conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such information
or can acquire it without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (iii) above;

                           (vi)     he is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of the Option
Shares in the absence of registration under the 1933 Act or an exemption
therefrom as provided herein;

                           (vii)    if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the 1933 Act,
the certificates evidencing the Option Shares shall bear the following legends:

                           "The shares represented by this certificate have been
                           acquired for investment and have not been registered
                           under the Securities Act of 1933. The shares may not
                           be sold or transferred in the absence of such
                           registration or an exemption therefrom under said
                           Act."


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                           "The shares represented by this certificate have been
                           acquired pursuant to a Stock Option Agreement dated
                           as of August 14, 2001, a copy of which is on file
                           with the Company, and may not be transferred, pledged
                           or disposed of except in accordance with the terms
                           and conditions thereof."

                  12.      Restriction on Transfer of Option Shares. Anything in
this Agreement to the contrary notwithstanding, the Employee hereby agrees that
he shall not sell, transfer by any means or otherwise dispose of the Option
Shares acquired by him without registration under the 1933 Act, or in the event
that they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, (ii) the Employee has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt, and (iii) such transfer is in compliance with the Company's
Insider Trading Policy, as in effect at such time.

                  13.      Miscellaneous.

                           13.1     Notices.  All notices, requests, deliveries,
payments, demands and other communications which are required or permitted to be
given under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either party shall have specified by notice in writing to the other. Notice
shall be deemed duly given hereunder when delivered or mailed as provided
herein.

                           13.2     Conflicts with the Plan.  In the event of a
conflict between the provisions of the Plan and the provisions of this
Agreement, the provisions of the Plan shall in all respects be controlling.

                           13.3     Employee and Stockholder Rights.  The
Employee shall not have any of the rights of a stockholder with respect to the
Option Shares until such shares have been issued after the due exercise of the
Option. Nothing contained in this Agreement shall be deemed to confer upon
Employee any right to continued employment with the Company or any subsidiary
thereof, nor shall it interfere in any way with the right of the Company to
terminate Employee in accordance with the provisions regarding such termination
set forth in Employee's written employment agreement with the Company, or if
there exists no such agreement, to terminate Employee at will.

                           13.4     Waiver.  The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.

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                           13.5     Entire Agreement.  This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof. This Agreement may not be amended except by writing executed by
the Employee and the Company.

                           13.6     Binding Effect; Successors.  This Agreement
shall inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.

                           13.7     Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to choice of law provisions).

                           13.8     Headings.  The headings contained herein are
for the sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or provisions of
this Agreement.

                  IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above:

CPI AEROSTRUCTURES, INC.




By: /s/ Edward J. Fred
   ------------------------------------
     Name:    Edward J. Fred
     Title:   Chief Financial Officer and Vice President


EMPLOYEE:


/s/ Arthur August
----------------------------
Arthur August




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                                                                 EXHIBIT A

                      FORM OF NOTICE OF EXERCISE OF OPTION


--------------------
       DATE

CPI AEROSTRUCTURES, INC.
200A Executive Drive
Edgewood, New York  11717
Attention:


                           Re:      Purchase of Option Shares

Gentlemen:

                  In accordance with my Stock Option Agreement dated as of
August 14, 2001 with CPI Aerostructures, Inc. ("Company"), I hereby irrevocably
elect to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock"), which are being purchased for
investment and not for resale.

                  As payment for my shares, enclosed is (check and complete
applicable box[es]):

                  |_|      a [personal check] [certified check] [bank check]
                           payable to the order of "CPI Aerostructures, Inc." in
                           the sum of $_________;

                  |_|      confirmation of wire transfer in the amount of
                           $_____________; and/or

                  |_|      with the consent of the Company, a certificate for
                           __________ shares of the Company's Common Stock, free
                           and clear of any encumbrances, duly endorsed, having
                           a Fair Market Value (as such term is defined in the
                           Performance Equity Plan 2000) of $_________.

                  I hereby represent and warrant to, and agree with, the Company
that:

                     (i) I am acquiring the Option Shares for my own account,
         for investment, and not with a view towards the distribution thereof;

                     (ii) I have received a copy of the Plan and all reports and
         documents required to be filed by the Company with the Commission
         pursuant to the Exchange Act within the last 24 months and all reports
         issued by the Company to its stockholders;

                     (iii) I understand that I must bear the economic risk of
         the investment in the Option Shares, which cannot be sold by me
         unless they are registered under the Securities Act of 1933 ("1933
         Act") or an exemption therefrom is available thereunder and that the
         Company is under no obligation to register the Option Shares for sale
         under the 1933 Act;

                     (iv) I agree that I will not sell, transfer by any means
         or otherwise dispose of the Option Shares acquired by me hereby except
         in accordance with Company's policy, if any, regarding the sale and
         disposition of securities owned by employees and/or directors of the
         Company;



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                     (v) in my position with the Company, I have had both the
         opportunity to ask questions and receive answers from the officers
         and directors of the Company and all persons acting on its behalf
         concerning the terms and conditions of the offer made hereunder and to
         obtain any additional information to the extent the Company possesses
         or may possess such information or can acquire it without unreasonable
         effort or expense necessary to verify the accuracy of the information
         obtained pursuant to clause (ii) above;

                    (vi) my rights with respect to the Option Shares shall, in
         all respects, be subject to the terms and conditions of the Company's
         Performance Equity Plan 2000 and the Agreement.

                    (vii) I am aware that the Company shall place stop
         transfer orders with its transfer agent against the transfer of the
         Option Shares in the absence of registration under the 1933 Act or an
         exemption therefrom as provided herein; and

                    (viii) if, at the time of issuance of the Option Shares,
         the issuance of such shares have not been registered under the 1933
         Act, the certificates evidencing the Option Shares shall bear the
         following legends:

                          "The shares represented by this certificate
                          have been acquired for investment and have
                          not been registered under the Securities Act
                          of 1933. The shares may not be sold or
                          transferred in the absence of such
                          registration or an exemption therefrom under
                          said Act."

                          "The shares represented by this certificate
                          have been acquired pursuant to a Stock
                          Option Agreement dated as of August 14,
                          2001, a copy of which is on file with the
                          Company, and may not be transferred, pledged
                          or disposed of except in accordance with the
                          terms and conditions thereof."

                    (ix)  I am aware and understand that I may be subject to an
         Insider Trading Policy.

                  Kindly forward to me my certificate at your earliest
convenience.


Very truly yours,

------------------------------              -----------------------------------
(Signature)                                 (Address)

------------------------------              -----------------------------------
(Print Name)

                                            -----------------------------------
                                            (Social Security Number)


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