U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

[X]  Annual Report under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934 (Fee required)

     For the fiscal year ended           December 31, 2000
                                   ----------------------------------

[ ]  Transition  Report under Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 (No fee required)

     For the transition period from ______________ to _________________

                         Commission file number 1-11398
                                -----------------


    New York                                            11-2520310
----------------------                              ---------------
(State or Other Jurisdiction                        (I.R.S. Employer
of Incorporation or Organization)                   Identification No.)

200A Executive Drive, Edgewood, New York                  11717
----------------------------------------               -----------
(Address of Principal Executive Offices)               (Zip Code)

                                 (631) 586-5200
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                            Name of Each Exchange on Which
Title of Each Class                           Each Class is Registered
-------------------                         ------------------------------
            None                                          None
      -----------------                     ------------------------------

              Securities registered under Section 12(g) of the Act:

                     Common Stock, $.001 par value per share
              -----------------------------------------------------
                                (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for past 90 days. Yes X   No ___

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The issuer's revenues for its most recent fiscal year were $28,621,681.

     The aggregate market value of the Common Stock held by non-affiliates of
the registrant on April 10, 2001 was approximately $5,158,943.

     As of April 10, 2001, the Issuer had 2,648,509 shares of Common Stock,
$.001 par value, outstanding.

     Transitional Small Business Disclosure Format: Yes _____ No X


<PAGE>

                            CPI AEROSTRUCTURES, INC.
                         FORM 10-KSB ANNUAL REPORT-2000
                                TABLE OF CONTENTS

PART I                                                                      PAGE

Item 1.      Description of Business........................................   3
Item 2.      Description of Property........................................   9
Item 3.      Legal Proceedings..............................................   9
Item 4.      Submission of Matters to a Vote of Security Holders............   9

PART II

Item 5.      Market for Common Equity and Related Stockholder Matters.......   9
Item 6.      Management's Discussion and Analysis...........................  11
Item 7.      Financial Statements...........................................  13
Item 8.      Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure......................................  13

PART III

Item 9.      Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act.............  13
Item 10.     Executive Compensation.........................................  15
Item 11.     Security Ownership of Certain Beneficial Owners and Management.  19
Item 12.     Certain Relationships and Related Transactions.................  21
Item 13.     Exhibits, List and Reports on Form 8-K.........................  21

                                     PAGE 2

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Item 1.  DESCRIPTION OF BUSINESS

Business Development

         The business of CPI Aerostructures, Inc. (the "Company") is conducted
through two distinct corporations. The parent company, CPI Aerostructures, Inc.
("CPI") is engaged in contract production of structural aircraft parts and
sub-assemblies for the commercial and military sectors of the aircraft industry.
In connection with its commercial assembly operations, CPI provides engineering,
technical and program management services to its customers. CPI also owns all of
the outstanding stock of Kolar, Inc. ("Kolar"), which manufactures precision
machine parts and sub-assemblies for the electronics industry, including
computer and microwave device manufacturers, as well as the materials handling,
aerospace and banking industries. As used herein, "CPI" refers to the aircraft
products business and the "Company" refers to the business of both CPI and Kolar
taken together.

         CPI was incorporated under the laws of the State of New York in January
1980 under the name Composite Products International, Inc. The Company changed
its name to Consortium of Precision Industries, Inc. in April 1989 and to CPI
Aerostructures, Inc. in July 1992. In September 1992, the Company completed its
initial public offering with the Company receiving net proceeds of approximately
$4,600,000.

         Kolar was incorporated under the laws of the State of Delaware in July
1997 to acquire Kolar Machine, Inc., a precision machining and assembly
manufacturer located in Ithaca, New York. On October 9, 1997, Kolar purchased
substantially all of the assets of Kolar Machine, Inc. and the related real
property for approximately $14.5 million. The deal was accomplished using cash
and debt financing which was provided by the Chase Manhattan Bank and a
"seller's note."

Business of Issuer

         CPI is engaged in contract production of structural aircraft parts and
sub-assemblies for the commercial and military sectors of the aircraft industry.
The following table sets forth information relating to the approximate dollar
amounts and percentages of CPI's revenue from the commercial and military
sectors of the aircraft industry:


                                        Years Ended
                       December 31,                         December 31,
                          2000                                  1999
                       ------------                         ------------
                                (Dollar amounts in thousands)

Commercial       $2,007               24.3%         $1,408              23.2%

Military          6,254               75.7           4,672              76.8
                 ------              -----          ------             -----

  Total          $8,261              100.0%         $6,080             100.0%
                 ======              =====          ======             =====


         Kolar manufactures precision parts and sub-assemblies for a variety of
different markets. Kolar accounted for approximately 71% (or $20,360,000) of the
Company's revenue in 2000 and 72% (or $15,500,000) of the Company's revenue in
1999.

Products

         CPI

         CPI's products are sub-assemblies (a series of parts fitted together to
form a complex aerodynamic structure). These products are incorporated into jet
engine housings (nacelles) by CPI's customers or aircraft manufacturers to form
final aircraft assemblies. CPI's products are custom designed and developed to
fit precise certification standards imposed by CPI's customers and applicable


                                     PAGE 3

<PAGE>

regulatory bodies. Due to the critical functions served by CPI's products,
sub-assemblies are often manufactured using durable, heat-resistant, and/or
light-weight metals, including titanium, inconel and various metal alloys
containing similar properties.

         CPI's principal  commercial aircraft products include aprons and engine
mounts,  which are  structures  used to attach jet engine  housings to aircraft.
Apron  assemblies are panels that function as the  aerodynamic  surface  between
pylons  (structures which attach nacelles to the wing or fuselage) and nacelles.
Aft fairing assemblies are the exterior portion of a pylon.

         CPI also assembles structural replacement parts for military aircraft,
including spoilers, flaps, ducts, skins and doors. Spoilers and flaps are
aerodynamic panels attached to the wings of an aircraft that enable an aircraft
to ascend and brake during takeoff and landing. Ducts are open panels to enable
free airflow within an aircraft. Skins are the outer layer of an aircraft. CPI
has the capabilities to produce additional aircraft products for both commercial
and military applications.

         Kolar

         Kolar's principal products include detail parts and major
sub-assemblies for high-speed machines that route printed circuit boards through
a series of operations while inserting and bonding components to the board. The
printed circuit boards are ultimately used in ATM machines, computers, and a
variety of other electronic devices.

         In the materials handling market, Kolar's customers produce high speed
equipment used for the weighing and measuring of cartons and containers.

Customers and Contracts

         CPI - Commercial

         Pursuant to long-term agreements with Rohr Industries, Inc. (owned by
B. F. Goodrich), a leading commercial aircraft supplier of nacelles, CPI
operates as a subcontractor under Rohr's production programs with The Boeing
Company. In June 1994, Rohr sold its corporate jet business to the Nordam
Corporation ("Nordam") and CPI's agreement with Rohr concerning the Hawker 1000
Executive Jet, an eight to ten seat aircraft, was transferred to Nordam. CPI
provides Nordam with engine mounts and all related sub-assemblies and
components, which are now used in connection with production of the Lear 60
Executive Jet. CPI's agreement with Nordam contains provisions that allow
termination of such contract at will, in whole or in part, at the convenience of
the customer and generally provides that the customer must reasonably compensate
CPI for work performed through the termination date. For the years ended
December 31, 1999 and 2000, sales derived from Nordam were approximately 23% and
24%, respectively.

         Generally, CPI's commercial agreements provide that the price for
products is subject to annual adjustment calculated in accordance with an
escalation formula (based on statistics published by the United States
Department of Labor), which account primarily for industry costs for labor and
materials. In addition, the agreements contain re-pricing provisions which
adjust the price under certain circumstances as a result of changes in the
scope, design, quantity or delivery schedule provisions.


         CPI - Military

         CPI supplies structural aircraft parts and sub-assemblies to the
military under prime contracts with several branches of the United States
Government. For the years ended December 31, 1999 and 2000, 77% and 76%,
respectively, of CPI's revenues were derived from military contracts.

         As of December 31, 1999 and 2000, CPI had eighty-two and one-hundred
thirteen military contracts, respectively, in various stages of completion.
Additionally, the Company has added forty-nine new military contracts since

                                     PAGE 4

<PAGE>

December 31, 2000. Contract terms are generally one to two years. Product prices
under these contracts are fixed. Each contract obligates CPI to deliver a
specific quantity of units according to specified delivery schedules. Each
contract contains re-pricing clauses, which adjust the fixed price for each
product delivered in the event that the government requests design, quantity or
schedule changes for products. CPI generally provides its own tooling to produce
products under military contracts. CPI typically recovers all of its tooling
costs under a contract following the delivery of the first unit produced. For
contracts with an aggregate dollar amount in excess of $100,000, CPI is
generally entitled to receive progress payments to cover approximately 90% of
CPI's total costs at the time of the request.

         Pursuant to military contracts, CPI provides a warranty which covers
defects in materials and workmanship for products delivered to the government.
The warranty provides for the replacement or repair of defective products. CPI
is not required under its contracts to carry liability insurance. Such contracts
incorporate by reference the Federal Acquisition Regulations (FAR) which provide
that the government generally acts as a self-insurer for loss of or damage to
property that occurs after acceptance of delivered products and results from
defects or deficiencies of the products.

         Kolar

         Kolar operates almost exclusively on a purchase order basis with its
current customers. The one exception is the Purchase Agreement, described below,
entered into between Universal Instrument Corporation ("Universal") and Kolar in
November 1997. Kolar has long-standing relationships with its two major
customers, including Universal, which customers together comprise over 91% of
Kolar's revenues.

         During the later part of 2000, and into the first quarter of 2001,
Kolar has experienced a major downturn in the business it has received from
Universal. Universal's major customers are in the semiconductor and electronics
industries, and the worldwide slowdown in these segments has resulted in a
substantial reduction in the number of orders for equipment that Universal has
placed with Kolar. The Company anticipates at least a 50% reduction of revenue
derived from this customer during 2001.

         Universal has been Kolar's largest customer for approximately thirteen
years, and accounted for more than 81% and 77% of Kolar's revenues in 2000 and
1999, respectively. Kolar manufactures detail parts and a major sub-assembly for
Universal's high speed machines that route printed circuit boards through a
series of operations while inserting and bonding components to the board. Kolar
also produces numerous other detail parts for various applications in machinery
used by Universal. In November 1997, Universal entered into a Purchase Agreement
with Kolar setting forth the terms and conditions under which Universal is
purchasing products from Kolar. The agreement is for four years, unless earlier
terminated, however, it does not provide for any fixed quantities of sales and
is subject to Kolar's receipt of purchase orders pursuant to the Purchase
Agreement.

         Hi Speed Checkweigher ("Hi Speed") is Kolar's second largest customer
and has been a customer of Kolar for approximately 40 years. Hi Speed accounted
for approximately 10% and 11% of Kolar's revenues in 2000 and 1999,
respectively. Hi Speed produces high speed equipment used for the weighing and
measuring of cartons and containers.

Production and Assembly

         CPI

         CPI's assembly operations consist primarily of incorporating component
aircraft parts supplied by third parties into complex sub-assemblies to satisfy
specific customer requirements and precision certification standards. CPI
subcontracts production of component parts in its assembly operations, which are
shaped, formed, welded and/or machined to specified configurations. This allows
CPI to avoid additional costs of extensive manufacturing and production
facilities, parts fabrication and expensive capital equipment. CPI's employees
process component parts to add drilling, routing, boring and other processes
prior to assembly. Components are placed, attached and incorporated into final

                                     PAGE 5


<PAGE>

assemblies by CPI-trained personnel. CPI's operations are generally conducted on
a five-day basis with single shifts. CPI packages its products in accordance
with specifications for shipment to its customers. CPI's customers are generally
responsible for arranging product shipment by common carrier.



         Kolar

         Kolar's production operations consist primarily of machining raw
materials such as aluminum and steel into component parts to satisfy specific
customer requirements and precision standards. In the assembly operations, Kolar
incorporates machined parts, which it manufactures, with components purchased
from subcontractors, to produce assemblies used in high speed, automated
equipment. Kolar packages its products in accordance with specifications for
shipment to its customers. Kolar is generally responsible for arranging product
shipment, usually using its own vehicles.


Marketing

         To date, substantially all of CPI's and Kolar's marketing activities
have been conducted by members of management. Such activities have consisted
primarily of personal contact with potential customers.

         CPI's sales cycle, which generally commences at the time a prospective
customer issues a request for proposal and ends upon execution of a contract
with the customer, typically ranges from six months to one year. A portion of
CPI's commercial marketing efforts involves responding to requests from
potential contractors. CPI obtains military contracts for its products and
services through the process of competitive bidding.

         In April 1999, the Company introduced its CPI and Kolar websites
(www.cpiaero.com and www.kolar.com). A prospective customer can learn about the
Company and contact management from such sites. Additionally, both CPI and Kolar
have signed agreements with a number of sales representatives to market the
Company's products to a broader base of customers.


Backlog

         CPI produces custom sub-assemblies pursuant to long-term contracts and
customer purchase orders. Backlog consists of aggregate contract values under
basic ordering agreements or for production orders, excluding the portion
previously included in operating revenues on the basis of percentage of
completion accounting, and including estimates of future contract price
escalation. All of CPI's backlog is subject to termination at will and
rescheduling, without significant penalty. As of December 31, 2000 and 1999,
CPI's backlog was approximately $11.3 million and $9.5 million, respectively .

         Of CPI's backlog at December 31, 2000, approximately 18% and 82% is
attributable to commercial and military contracts, respectively. Approximately
$7.7 million (82%) of CPI's current backlog at December 31, 2000 is scheduled
for delivery during the year ending December 31, 2001.

Raw Materials, Suppliers and Manufacturers

         The Company makes extensive use of metals, including, titanium,
inconel, steel, aluminum and alloys as raw materials in the production of its
products. Rod, bar tubing and extrusions made of aluminum, steel and titanium
and other materials such as rubber and adhesives are also utilized. The
Company's decision to purchase certain raw materials is generally based on
required specifications of its customers. The Company purchases all of its
supply of metals and other raw materials pursuant to purchase orders from third
party distributors who purchase raw materials from original manufacturers

                                     PAGE 6

<PAGE>

located throughout the United States. The Company is attempting to maintain
alternative sources of supply for the Company's raw materials and believes that
alternative sources are currently available for most of such materials.

         CPI subcontracts production of substantially all component parts
incorporated into its products to third party manufacturers under firm fixed
price orders. CPI's decision to purchase certain components is generally based
upon whether such components are available to meet required specifications and
at a cost and delivery consistent with customer requirements. CPI, from time to
time, is required to purchase custom made parts from sole suppliers and
manufacturers in order to meet specific customer requirements. To date, CPI has
not experienced material delays in connection with obtaining custom parts.

         The Company generally does not maintain supply agreements with its
suppliers or manufacturers and purchases raw materials and component parts
pursuant to purchase orders in the ordinary course of business. The Company
believes that the supplies of materials through the end of 2000 will be
adequate.


Competition

         The markets for CPI's products are highly competitive. CPI competes
with numerous well-established foreign and domestic subcontractors engaged in
the supply of aircraft parts and assemblies to the commercial sector of the
aircraft industry, including Northrop Grumman Corporation, Aeronca, Inc.,
Shin-Meiwa and other subcontractors throughout the world. CPI also faces
competition from foreign and domestic prime contractors, including Nordam, all
of whom possess greater resources than CPI, thereby permitting such companies to
implement extensive production programs in response to orders from aircraft
manufacturers. The market for large commercial jet aircraft is dominated by The
Boeing Company and Airbus Industries, which typically contract production of
assemblies to a limited number of large commercial contractors. Consequently,
CPI's ability to increase market penetration in the commercial sector may be
limited by the relatively limited number of prime contractors in this market.

         CPI competes on the basis of price, development and production
capabilities and service. To the extent possible, CPI seeks to limit its
operations to the assembly of complex sub-assemblies while subcontracting
production of component parts, which allows CPI to avoid the significant costs
associated with maintaining capital equipment.

         CPI also faces competition from numerous military subcontractors. CPI
competes for military contracts on the basis of price. CPI is able to obtain
military contracts that are "set-aside" for small businesses.

         While the markets for Kolar's products are also highly competitive, its
track record of superior performance with its mature customer base has given
Kolar a slight advantage over new entrants into the precision machining
business, and specifically in the Upstate New York area.

         Kolar's two most significant competitors are DFF Corporation of
Massachusetts and Arlington Machine of New York State. DFF Corporation has a
large facility and assembly capability. Arlington Machine has excellent
machining capabilities. Both competitors have a price structure similar to
Kolar.

Government Regulation

         The Company is subject to regulations administered by the United States
Environmental Protection Agency, the Occupational Safety and Health
Administration, various state agencies and county and local authorities acting
in cooperation with Federal and state authorities. Among other things, these
regulatory bodies impose restrictions to control air, soil and water pollution,
to protect against occupational exposure to chemicals, including health and
safety risks, and to require notification or reporting of the storage, use and
release of certain hazardous chemicals and substances. The extensive regulatory
framework imposes compliance burdens and risks on the Company. Governmental
authorities have the power to enforce compliance with these regulations and to
obtain injunctions or impose civil and criminal fines in the case of violations.

                                     PAGE 7

<PAGE>

         The Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") imposes strict, joint and several liability on the
present and former owners and operators of facilities which release hazardous
substances into the environment. The Resource Conservation and Recovery Act of
1976 ("RCRA"), regulates the generation, transportation, treatment, storage and
disposal of hazardous waste. In New York, the handling, storage and disposal of
hazardous substances is governed by the Environmental Conservation Law, which
contains the New York counterparts of CERCLA and RCRA. In addition, the
Occupational Safety and Health Act, which requires employers to provide a place
of employment that is free from recognized and preventable hazards that are
likely to cause serious physical harm to employees, obligates employers to
provide notice to employees regarding the presence of hazardous chemicals and to
train employees in the use of such substances.

         CPI's operations require the use of a limited amount of chemicals and
other materials for painting and cleaning, including solvents and thinners, that
are classified under applicable laws as hazardous chemicals and substances. CPI
has obtained a permit from the Town of Islip, New York, Building Division in
order to maintain a paint booth containing flammable liquids.

         The Company believes that it is in substantial compliance with all
federal, state and local laws and regulations governing its operations and has
obtained all material licenses and permits required for the operations of its
business.

Warranty

         Pursuant to all of CPI's commercial contracts, CPI warrants that
products will strictly conform to all specifications provided by the customer
and will be free from defects in material and workmanship for a specified period
(ranging from one to four years). CPI's liability is limited to repair or
replacement of defective products. Notwithstanding such limitation, CPI agreed
to indemnify the customers for any costs, damages, expenses or other loss or
liability incurred or paid (including reasonable attorneys' fees) arising out of
asserted claims for property damage, personal injury or death, or any other
damages, including claims of consequential loss and breach of contract as a
result of, among other things, the performance of work, products or workmanship,
provided that such claims do not arise as a result of the sole fault of the
customers.

         Pursuant to military contracts, CPI provides a warranty, which covers
defects in materials and workmanship for products delivered to the government.
The warranty provides for the replacement or repair of defective products. CPI
is not required under its contracts to carry liability insurance. Such contracts
incorporate by reference the Federal Acquisition Regulations (FAR) which provide
that the government generally acts as a self-insurer for loss of or damage to
property that occurs after acceptance of delivered products and results from
defects or deficiencies of the products.

         Kolar generally warrants its products to be free from defects in
materials, workmanship and manufacturing processes for a specified period,
ranging from one to four years from the date of shipment.

Insurance

         CPI maintains a $2 million general liability insurance policy, a $10
million products liability insurance policy, and a $5 million umbrella liability
insurance policy. Kolar maintains a $1 million general and products liability
insurance policy, and a $10 million umbrella liability insurance policy. The
Company believes this coverage is adequate for the types of products presently
marketed.

Proprietary Information

         None of CPI's current assembly processes or products are protected by
patents. CPI relies on proprietary know-how and confidential information and
employs various methods to protect the processes, concepts, ideas and
documentation associated with its products. However, such methods may not afford
complete protection and there can be no assurance that others will not
independently develop such processes, concepts, ideas and documentation. CPI has
registered the name CPI Aerostructures and its logo as trademarks.

                                     PAGE 8

<PAGE>

Employees

         As of April 10, 2001, CPI employed 23 full-time employees including its
two executive officers. As of April 10, 2001, Kolar employed 72 full-time
employees including one executive officer.

         The Company also employs temporary personnel with specialized
disciplines on an as-needed basis. None of the Company's employees are members
of unions. The Company believes that its relations with its employees are good.

Diversification Program

         In November 1993, management decided to diversify its operations. This
decision led to the acquisition of Kolar Machine, Inc. in October of 1997. Since
then, the Company has continued to review candidates for potential acquisitions.


Item 2.  DESCRIPTION OF PROPERTY

         CPI Aerostructures' executive offices and production facilities are
situated in an approximate 25,000 square foot building located at 200A Executive
Drive, Edgewood, New York 11717. CPI Aerostructures occupies this facility under
a lease with an unaffiliated landlord, which commenced on December 1, 1995 and
ends on March 31, 2001. The current monthly base rent is $13,451, plus common
area costs, over the term of the lease. The Company believes that its facilities
are adequate for its current needs. As of April 1, 2001, the Company anticipates
to remain in its current facilities on a month-to-month basis.

         Kolar's executive offices and production facilities are situated in
approximately 46,000 square feet in a total of four buildings that the Company
owns. The buildings are located in Ithaca, New York at 407 Cliff Street, 618
West Buffalo Street, 604 Elmira Road and 612 Elmira Road. Kolar also rents 8,600
square feet located at 239 Cherry Street in Ithaca, New York. Kolar occupies
this facility under a lease with an unaffiliated landlord, which commenced on
September 13, 1999 and ends on August 31, 2002. The current monthly base rent is
$4,310 plus common area costs over the term of the lease. The Company believes
that its facilities are adequate for its current needs.

Item 3.  LEGAL PROCEEDINGS

         None

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         None


                                     PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

         The Company's Common Stock is listed on the American Stock Exchange
("Amex"), under the symbol CVU. The stock symbol changed from CPIA to CVU on
September 5, 2000, when CPI ceased trading on The Nasdaq SmallCap Market, Inc.
("NASDAQ") and began trading on the Amex.

         The following tables set forth for the last two fiscal years, the high
and low last sales prices of CPI's Common Stock for the periods indicated, as
reported by the Nasdaq (through September 4, 2000) and by the Amex (from

                                     PAGE 9

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September 5, 2000 through December 31, 2000). These prices represent
inter-dealer quotations, without retail mark-up, mark-down or commission, and
may not necessarily represent actual transactions.

      Period                                       High              Low
      ------                                       ----              ---

      1999
      ----
      Quarter Ended March 31, 1999                 $3.656            $2.063

      Quarter Ended June 30, 1999                  $2.344            $1.281

      Quarter Ended September 30, 1999             $1.183            $1.25

      Quarter Ended December 31, 1999              $3.094            $1.094


      2000
      ----
      Quarter Ended March 31, 2000                 $3.875            $2.750

      Quarter Ended June 30, 2000                  $3.266            $2.125

      Quarter Ended September 30, 2000             $3.750            $2.031

      Quarter Ended December 31, 2000              $3.875            $2.625

         On April 9, 2001, the closing sale price for the Company's Common Stock
on the Amex was $1.95.

Holders

         On April 10, 2001, there were 131 holders of record of the Company's
Common Stock. The Company reasonably believes that there are in excess of 1,900
beneficial holders of its Common Stock.

Dividend Policy

         To date, the Company has not paid any dividends on its Common Stock.
The payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend on the Company's earnings, if any, its
capital requirements and financial condition and other relevant factors. The
Board of Directors does not intend to declare any cash or other dividends in the
foreseeable future, but instead intends to retain earnings, if any, for use in
the Company's business operations.

         In addition, the Company's Credit Agreement with its several lenders
provides that the Company may not declare or pay any dividend on its Common
Stock so long as any amounts are owing to the several lenders. See "Item 6.
Management's Discussion and Analysis - Financing Arrangements."


Recent  Sales  of  Unregistered  Securities,  Use of  Proceeds  from  Registered
Securities

         None

                                    PAGE 10


<PAGE>

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

         The following discussion and analysis should be read in conjunction
with the Financial Statements and Notes thereto appearing under Item 7 of this
Report.

         Certain statements discussed in this Report include forward-looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. Including the
timely delivery and acceptance of the Company's products, the timing of
commercial and government funding approvals, and the other risks detailed from
time to time in the Company's SEC reports.




General

         Consistent with industry practice, CPI uses the percentage of
completion method of accounting for its business. Under this method, CPI
recognizes revenues as costs are incurred under its contracts, measured by the
percentage of actual costs incurred to date against estimated total costs. Under
CPI's commercial contracts, CPI does not receive cash payments until products
are shipped. Accordingly, revenues may be recognized by CPI even though
associated cash payments have not been received. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined. Changes in contract performance may result in revisions to costs and
income, which are recognized in the period in which revisions are determined to
be required. CPI's recorded revenues may be written-off in later periods in the
event CPI's cost estimates prove to be inaccurate or a contract is terminated.
For Kolar, revenue is recognized when goods are shipped to customers.


Results of Operations

         Year Ended December 31, 2000 as Compared to the Year Ended December 31,
1999

         The Company's revenue for the year ended December 31, 2000 ("2000") was
$28,622,000 compared to $21,603,000 for the year ended December 31, 1999
("1999"), representing an increase of $7,019,000, or 32%. This increase reflects
a significant increase in sales in both the aerospace and machining segments.

         Gross profit for 2000 was $7,377,000 compared to $5,935,000 for 1999,
representing an increase of $1,442,000. Gross profit as a percentage of revenue
for 2000 was 26%, compared to 27% for 1999.

         Selling, general and administrative expenses for 2000 were $4,645,000
compared to $4,018,000 for 1999, representing an increase of $627,000. This
increase is primarily attributable to the increased level of sales, which was
32%. Additionally, the Company wrote off approximately $301,000 of a receivable,
which may be uncollectible. Selling, general and administrative expenses as a
percentage of revenue for 2000 and 1999 were 16% and 19%, respectively. Interest
expense for 2000 was $1,154,000, compared to $1,117,000 for 1999, representing
an increase of $37,000.

         The net income for 2000 was $1,929,000 compared to $809,000 for 1999,
representing an increase of $1,120,000. Basic earnings per share was $.73 on
2,648,509 average shares outstanding compared to $0.31 on 2,648,509 average
shares outstanding for fiscal 1999. Diluted earnings per share was $.70 in 2000
on 2,763,888 weighted average shares outstanding compared to $0.30 in 1999 on
2,654,273 weighted average shares outstanding.

                                    PAGE 11
<PAGE>

Liquidity and Capital Resources

         General

         A large portion of the Company's cash has been used for costs incurred
on various commercial contracts that are in process. These costs are components
of "Costs and estimated earnings in excess of billings on uncompleted contracts"
and represents the aggregate costs and related earnings for uncompleted
contracts for which the customer has not yet been billed. These costs and
earnings are recovered upon shipment of products and presentation of billings in
accordance with contract terms. CPI's continued requirement to incur significant
costs, in advance of receipt of associated cash for commercial contracts has
caused an increase in the gap between aggregate costs and earnings and the
related billings to date.

         Net cash provided by operating activities for 2000 was $1,624,000
compared to $1,458,000 for 1999. This increase in cash was primarily
attributable to net income of $1,929,000 depreciation and amortization of
$1,678,000, a decrease in accounts receivable of $238,000, a decrease in prepaid
expense and other current assets of $7,000, an increase in accounts payable and
accrued expenses of $368,532, an increase in income taxes payable of $8,440 and
an increase in interest payable of $65,000, offset by an increase in costs and
estimated earnings in excess of billings of $465,000, an increase in inventory
of $1,775,000, a change in deferred income taxes of $390,000, and a decrease in
other assets of $70,000.

         Net cash used in financing activities was $1,504,000 in 2000, compared
to net cash used in financing activities of $1,512,000 in 1999. The Company
repaid long term debt of $2,829,000 in 2000, as compared to $1,512,000 in 1999.
Net cash used in investing activities of $243,000 for 2000 and $234,000 for 1999
resulted from the Company's purchase of additional machinery and equipment.

         As a result of the foregoing, the Company's cash at December 31, 2000
decreased by $124,000 from the prior year to $172,000. The Company believes it
will have sufficient cash flow for 2001 to satisfy its cash requirements,
subject to successful restructuring of its existing debt, as described below.


         Financing Arrangements

         The Company has an agreement with The Chase Manhattan Bank and Mellon
Bank providing a line of credit through June 30, 2001, which will be used for
working capital and other corporate purposes as needed. The Company has
available up to $2,500,000 under the line of credit, subject to limits based on
amounts of accounts receivable, as defined. Interest is at the bank's prime rate
(9.5% at December 31, 2000) plus 1.5%. The line of credit is secured by
substantially all assets of the Company. As of December 31, 2000, there was an
outstanding balance of $1,700,000 on this line of credit, which has been renewed
annually since its inception in 1997.

         On October 9, 1997, the Company incurred significant indebtedness in
connection with the acquisition of Kolar Machine, Inc. The Company entered into
a term loan agreement with The Chase Manhattan Bank and Mellon Bank in the
amount of $9,400,000. This loan was payable in quarterly installments of
$587,000, plus monthly interest at the Bank's published prime rate plus 1.5%,
maturing December 31, 2001. This loan is collateralized by all of the assets of
the Company and its subsidiary. The Company also entered into a mortgage loan
agreement with The Chase Manhattan Bank in the amount of $975,000. This loan is
payable in monthly installments of $9,487, including interest at 8.3%, maturing
October 31, 2007. This loan is collateralized by Kolar's land and building.
Additionally, the Company entered into a subordinated note agreement with Mr.
Daniel Liguori, the seller of Kolar, in the amount of $4,000,000. Interest only
is payable monthly at 8%, maturing January 1, 2002, payable 91 days following
maturity. This note is currently convertible into 333,334 shares of CPI Common
Stock.

         In December 1998, the Company re-structured its term loan agreement
with the Chase and Mellon banks. Under the new arrangement, the principal
payment due in December 1998, was deferred and will be amortized evenly through
December 31, 2001. Loan payments for 2000 were payable monthly, at the rate of
$200,000 per month through December 31, 2000. Commencing January 2001, the
amortization increased to $317,000 per month. Additionally, Mr. Liguori has

                                    PAGE 12


<PAGE>

deferred the Company's payment of interest to him for thirteen months, beginning
with the December 1998 payment. This deferred interest will accrue and become
payable upon maturity of the Mr. Liguori's note. Interest payments began again
in January 2000.

         The Term Loan Agreement with Chase and Mellon banks requires the
Company to maintain specified levels of working capital and other financial
ratios. At December 31, 2000 the Company was not in compliance with certain
covenants. Additionally, the Company was not in compliance with certain
covenants on March 31, 2001, the next compliance measurement date. As a result,
the Term Loan Agreement has been classified as a current liability in the
Company's financial statements. At the present time, the Company is in the
process of negotiating certain amendments to the Term Loan Agreement and its
note with Daniel Liguori to restructure its existing debt and its covenants. The
Company anticipates it will receive a waiver of its non-compliance with the
covenants. The Company also anticipates that Chase and Mellon banks will agree
to amend the covenants for succeeding quarters. If the Company does not
successfully restructure its existing debt and covenants, it may need to raise
additional capital in order to continue its business operations.


Inflation

         Inflation has historically not had a material effect on the Company's
operations.

Impact of Accounting Standards Adopted by the Company

         The impact of recently adopted accounting standards is discussed in
Note 1 of Notes to Financial Statements.


Item 7.  FINANCIAL STATEMENTS

         This information appears following Item 13 of this Report and is
incorporated herein by reference.


Item 8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         None


                                    PART III

Item 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The directors and executive officers of the Company are as follows:

         Name                   Age        Position
         ----                   ---        --------

Arthur August (2)               66         Chairman of the Board of Directors,
                                           President, Chief Executive
                                           Officer and Director

Edward J. Fred (1)              42         Executive Vice President,
                                           Chief Financial Officer,
                                           Secretary and Director

Walter Paulick (1)(2)           54         Director

Kenneth McSweeney (1)(2)        69         Director

Timothy Stone (3)               40         President of Kolar

                                    PAGE 13


<PAGE>

(1)    Member of Compensation Committee.

(2)    Member of Audit Committee.

(3)    Mr. Stone became an Officer of the Company in October 2000, and an
       "executive officer" in March 2001.


         Arthur August, a founder of the Company, has been the Chairman of the
Board, President, Chief Executive Officer and a director since January 1980.
From 1956 to 1979, Mr. August was employed by Northrop Grumman Corporation
("Grumman"), an aerospace products manufacturer, where he last held the position
of Deputy Director. Mr. August holds a degree in Aeronautical Engineering from
the Academy of Aeronautics (1956), a B.S. degree in Industrial Management from
C. W. Post College (1963), a Masters degree in Engineering from New York
University (1965) and is a graduate of the Program for Management Development at
the Harvard Graduate School of Business (1977).

         Edward J. Fred has been Secretary and a director of the Company
effective December 31, 1998. Mr. Fred was appointed to the position of Executive
Vice President on May 1, 2000. He was Controller of the Company from February
1995 to April 1998, when he was appointed as Chief Financial Officer. For
approximately ten years prior to joining the Company, Mr. Fred served in various
positions for the international division of Grumman, where he last held the
position of Controller.

         Walter Paulick has been a director of the Company since April 1992. Mr.
Paulick is currently a self employed financial consultant. From 1982 to November
1992, Mr. Paulick was a Vice President of Parr Development Company, Inc., a real
estate development company. From 1980 to 1982, Mr. Paulick was employed by Key
Bank, where he last held the position of Vice President. From 1971 to 1980, Mr.
Paulick was a Vice President of National Westminster U.S.A.

         Kenneth McSweeney has been a director of the Company since February
1998. He has provided various consulting services for the Company since January
1995. Mr. McSweeney is currently an independent consultant to various aerospace
corporations. From 1961 to 1995, Mr. McSweeney served in various management
positions for the Grumman Corporation, most recently as the Vice President of
their Aerostructures Division and a Director of Business Development for the
Mideast and gulf coast region. Mr. McSweeney has extensive experience in
aerostructures and logistics support products and is a licensed professional
engineer in New York State. He holds a Bachelor and Master of Science Degree in
Electrical Engineering from the Polytechnic Institute of Brooklyn and a Masters
in Business Management from CW Post College. He also completed the Executive
Development Program at the Cornell School of Business and Public Administration.

         Timothy Stone has been President of Kolar since July, 2000. Mr. Stone
has over eight years experience in managing manufacturing facilities. Most
recently, he served as the operations manager for a Division of Thomas & Betts.
His initial leadership skills were developed while serving in the Marine Corp.,
and strengthened by his 4-year career in the National Football League.

Compensation, Meetings and Committees

         Directors hold office for three years with elections held on staggered
basis at each annual meeting of shareholders. Directors currently receive no
cash compensation for serving on the Board of Directors. The Company's two
non-officer directors have each received stock options from the Company. Mr.
Paulick received options to purchase 1,667 shares of Common Stock in each of
1996 and 1998, options to purchase 3,334 in 1997, and options to purchase 5,000
shares of Common Stock in 1999. Mr. McSweeney received options to purchase 1,667
shares of Common Stock in 1998 and options to purchase 5,000 shares of Common
Stock in 1999. Directors are also reimbursed for reasonable expenses incurred in
attending meetings. The Company held four meetings of the Board of Directors in
2000 and took action by unanimous written consent in lieu of a meeting on 10
occasions. Officers are elected annually by the Board of Directors and serve at

                                    PAGE 14

<PAGE>

the discretion of the Board, subject to the terms of their respective employment
agreements. See "Employment Agreements".

         Compensation Committee. Messrs. Fred, Paulick and McSweeney serve on
the Company's Compensation Committee, which reviews and approves the
compensation to be paid to certain officers of the Company.

         Audit Committee. Mssrs. Paulick (Chairman), August and McSweeney serve
on the Company's Audit Committee, which is appointed by the Board to assist the
Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the compliance by the Company with legal and regulatory
requirements and (3) the independence and performance of the Company's internal
and external auditors. The Audit Committee also reviews all related party
transactions on an ongoing basis for potential conflict of interest situations.
The Audit Committee held four meetings during 2000.

         No member of the Board of Directors attended fewer than 75% of the
total number of meetings of the Board and committees thereof upon which he
served during 2000.

Compliance with 16(a) of the Exchange Act

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and ten percent stockholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the Company's copies of such forms received or written representations
from certain reporting persons that no Form 5's were required for those persons,
the Company believes that, during the fiscal year ended December 31, 2000, all
filing requirements applicable to its Officers, Directors and greater than ten
percent beneficial owners were complied with.


Item 10. EXECUTIVE COMPENSATION

         The following table sets forth all compensation awarded to, earned by,
or paid for all services rendered to the Company during the fiscal years ended
December 31, 2000, 1999 and 1998, by the Company's Chief Executive Officer and
the Company's other executive officers whose total compensation exceeded
$100,000.


<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                           Annual Compensation       Long Term Compensation
                           -------------------       -----------------------
                                                                  Securities
Name and                                                          Underlying
Principal Position         Year       Salary($)     Bonus ($)    Options (#)
------------------         -----      ----------    ---------    -----------
<S>                         <C>         <C>           <C>          <C>
Arthur August,              2000        $307,854      $82,000      200,000
Chief Executive             1999        $313,114      $36,000      115,000
Officer and President       1998        $321,102        -0-         33,334

                                    PAGE 15
<PAGE>

                           SUMMARY COMPENSATION TABLE

                           Annual Compensation       Long Term Compensation
                           -------------------       -----------------------
                                                                  Securities
Name and                                                          Underlying
Principal Position         Year       Salary($)     Bonus ($)    Options (#)
------------------         -----      ----------    ---------    -----------

Edward J. Fred,             2000        $149,728      $59,000      125,000
Executive Vice  President   1999        $102,595        -0-         60,000
and                         1998         $92,192        -0-         13,334
Chief Financial Officer

Daniel Ligouri              2000        $126,628(1)     -0-           -0-
Former President -          1999        $156,621        -0-           -0-
Kolar (1)                   1998        $160,470        -0-           -0-

Timothy Stone (2)           2000        $103,284        -0-           -0-
President - Kolar
</TABLE>



(1)      Daniel Liguori was employed as President of Kolar pursuant to an
         employment agreement, which expired on October 9, 2000. Mr. Liguori
         resigned from this position on July 10, 2000, but continued his
         employment through the contract end date. The employment agreement
         provided Mr. Liguori with an annual base salary of $168,000. Amounts
         shown reflect his salary from January 1, 2000 through October 9, 2000.

(2)      Mr. Stone became an executive officer in March 2001. We are providing
         compensation information regarding Mr. Stone on a voluntary basis.



<TABLE>
<CAPTION>
                        OPTION GRANTS IN LAST FISCAL YEAR
                      ----------------------------------------------------------
                        Number of     Percent of
                       Securities      Options
                       Underlying      Granted
                         Options    to Employees in   Exercise Price  Expiration
                       Granted(#)   Fiscal Year(1)         ($/SH)          Date
                       ---------    ---------------   --------------  ----------
<S>                      <C>             <C>               <C>         <C>
      Arthur August      200,000         49.0%             $2.59       05/18/10

      Edward J. Fred     125,000         30.6%             $2.59       05/18/10

      Timothy Stone       30,000          7.4%             $3.13       03/25/10
</TABLE>


(1)      The Company granted a total of 408,000 options to employees in the
         fiscal year ended December 31, 2000.

                                    PAGE 16
<PAGE>

(2)      Mr. Stone became an executive officer in March 2001. We are providing
         compensation information regarding Mr. Stone on a voluntary basis.



<TABLE>
<CAPTION>
                             AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                                            FYE OPTION VALUES

                                               Number of Unexercised     Value of Unexercised
                                                 Options at FYE(#)    In-The-Money Options at FYE
                   Shares Acquired    Value        Exercisable/             ($)Exercisable/
Name               on Exercise (#)   Realized    Unexercisable (1)           Unexercisable
----               ---------------   --------    -----------------           -------------
<S>                      <C>            <C>        <C>                            <C>
Arthur August
                          -0-            -0-       398,835/16,167                 -0-

Edward J. Fred            -0-            -0-         205,002/0                    -0-

Timothy Stone (1)         -0-            -0-         30,000/0                      -0-
</TABLE>


         On December 31, 2000, the last reported sales price of the Company's
Common Stock on the American Stock Exchange was $2.813.

         The Company has no long-term incentive plan awards.

(1)      Mr. Stone became an executive officer in March 2001. We are providing
         compensation information regarding Mr. Stone on a voluntary basis.


Employment Agreements

         Arthur August is employed by the Company as Chairman of the Board,
President and Chief Executive Officer. Edward J. Fred is employed by the Company
as Executive Vice President, Chief Financial Officer and Secretary. The
employment agreements provide Messrs. August and Fred with annual base salaries
of $300,000, and $150,000, respectively, during the term of their contracts.
Pursuant to his employment agreement, which expires on September 30, 2002, Mr.
August is entitled to receive an annual bonus equal to 4% of the Company's net
income each of the years he is employed by the Company. Mr. Fred's employment
agreement expires on December 31, 2001 and he is entitled to a 2% annual bonus
for each of the years he is employed by the Company. Mr. August's employment
agreement was amended on October 18, 2000 to include a provision affording Mr.
August full benefits under the Greit Plan, described below.

         The agreements with Messrs. August and Fred provide that during the
term of employment with the Company, and for a period of one-year thereafter,
the employees will not compete with the Company or engage in any activities that
would interfere with the performance of their duties as employees of the
Company. The agreements provide that the Company will maintain hospital and
health insurance benefits for the employee following retirement.

         Timothy Stone was appointed President of Kolar on July 10, 2000,
succeeding Mr. Liguori in that position. Pursuant to an employment agreement,
which expires on April 30, 2003. Mr. Stone receives an annual salary of $120,000
and provides that during the term of employment with Kolar, and for a period of
one year thereafter, Mr. Stone will not compete with Kolar.

                                    PAGE 17
<PAGE>

Employee Benefit Plans

         On February 1, 1991, the Company adopted a Qualified Sick Pay Plan (the
"QSP Plan") which covers full-time executive officers and managers. The QSP Plan
provides covered employees with income during periods of disability due to
sickness or injury and is funded through the purchase of disability income
insurance policies.

         On September 11, 1996, the Company instituted a fully-qualified 401(k)
Employee Savings Plan. The plan is totally voluntary and employee contributions
to the plan commenced on October 1, 1996. The Company has the option to make
voluntary matching and profit sharing contributions to the account of its
employees.

         In October 2000, the Company adopted the Greit Plan, for the purpose of
offering senior management a deferred compensation death benefit plan that
provides a tax-free benefit and which is tax-neutral to the Company. Pursuant to
the plan, the Company loaned Arthur August $150,000, which Mr. August used to
purchase a Greit Plan. The Greit Plan will pay a variable benefit to Mr.
August's beneficiary upon Mr. August's death. The Company will loan Mr. August
$150,000 in each of the next four years to pay the premium of the Greit Plan.
The Company will be repaid out of the proceeds of the plan upon Mr. August's
death.



Stock Options

         Performance Equity Plan 2000

         The Performance Equity Plan 2000 ("2000 Plan") authorizes the grant of
700,000 options, of which options to purchase an aggregate of 225,000 shares of
Common Stock have been granted, at exercise price of $2.59 per share, to certain
employees and executive officers of the Company. These include ten year options
to purchase 75,000 shares of Common Stock granted to Arthur August, Chairman of
the Board of Directors, Chief Executive Officer and President; ten year options
to purchase 125,000 shares of Common Stock granted to Edward J. Fred, Executive
Vice President, Chief Financial Officer, and Secretary; ten year options to one
non-executive officer to purchase 25,000 shares of Common Stock. As of April 10,
2001, options to purchase 475,000 additional shares remain eligible for the
grant of options.

         1998 Performance Equity Plan

         The 1998 Performance Equity Plan ("1998 Plan") authorizes the grant of
463,334 options, of which options to purchase an aggregate of 451,002 shares of
Common Stock have been granted, at exercise prices ranging from $2.53 to $6.90
per share, to certain employees and executive officers of the Company. These
include five year options to purchase 33,334 and 85,000 shares of Common Stock
granted to Arthur August, Chairman of the Board of Directors, Chief Executive
Officer and President at an exercise price of $6.90, $2.79 and $2.59 per share
respectively; ten-year options to purchase 13,334 and 60,000 shares of Common
Stock to Edward J. Fred, Executive Vice President, Chief Financial Officer, and
Secretary, at an exercise price of $6.27 and $2.53 per share respectively;
ten-year options to one non-executive officer to purchase 13,334 and 60,000
shares of Common Stock at an exercise price of $6.27 and $2.53 per share
respectively; ten-year options to purchase 30,000 shares of Common Stock to
Timothy Stone, President of Kolar, at an exercise price of $3.13; ten-year
options to purchase 16,000 shares of Common Stock to employees and directors at
an exercise price of $2.53 per share; ten-year options to purchase 25,000
shares of Common Stock to employees and directors at an exercise price of $3.13
per share. As of April 10, 2001, options to purchase 12,332 additional shares,
remain eligible for the grant of options.

         1995 Stock Option Plan

         The 1995 Employee Stock Option Plan (the "1995 Plan"), authorizes the
grant of 200,000 options, of which options to purchase an aggregate of 156,143
shares of Common Stock have been granted, at exercise prices ranging from $2.53
to $9.00 per share, to certain employees, executive officers, and directors of
the Company including: five-year options to purchase an aggregate of 66,668
shares of Common Stock granted to Arthur August, Chairman of the Board of
Directors, Chief Executive Officer and President, at exercise prices ranging
from $5.43 to $6.81 per share; five-year options to purchase 6,668 shares of
Common Stock to Edward J. Fred, Chief Financial Officer; five-year options to
purchase an aggregate of 31,501 shares of Common Stock to Stanley Wunderlich, a


                                    PAGE 18

<PAGE>

former Director, five-year options to purchase 5,000 shares of Common Stock to
Craig Sakin, a former Director; five-year options to purchase 5,001 shares of
Common Stock to Walter Paulick, a Director, five-year options to purchase 1,667
shares of Common Stock to Kenneth McSweeney, a Director, and five-year options
to ten non-executive officer employees to purchase an aggregate of 33,005 shares
of Common Stock. As of April 10, 2001, options to purchase 21,667 additional
shares, remain eligible for the grant of options.

         1992 Employee Stock Option Plan

         The 1992 Employee Stock Option Plan (the "1992 Plan") authorizes the
grant of 83,334 options, of which options to purchase 62,167 shares are
outstanding at exercise prices ranging from $2.59 to $6.27 per share to certain
employees, executive officers and directors of the Company, including: options
to purchase 40,000 shares held by Arthur August, Chairman of the Board of
Directors, Chief Executive Officer and President at an exercise price of $2.59,
1,667 shares held by Walter Paulick, a director, exercisable at $6.00 per share,
and 20,502 shares held by six non-executive employees exercisable at prices
ranging from $3.50 to $6.27. As of April 10, 2001, options to purchase 5,112
shares remain eligible for the grant of options.


         Other Options

         In April 1998, the Company issued 33,334 warrants to Gaines Berland,
Inc. as compensation for acting as the Company's investment banker, pursuant to
a consulting agreement. These warrants entitle the investment banker to purchase
33,334 shares of Common Stock at an exercise price of $7.50 during the five-year
period commencing April 1, 1998.

         In May 1999, the Company issued 100,000 warrants to Catalyst Financial
Corp as compensation for acting as the Company's investment banker, pursuant to
a consulting agreement. These warrants entitle the investment banker to purchase
100,000 shares of Common Stock at an exercise price of $1.875, during the
five-year period commencing May 4, 1999. An option to purchase 15,000 shares of
Common Stock was issued to a consultant in December 1999 at an exercise price of
$2.53.


Item 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of the date hereof, certain
information concerning those persons known to the Company, based on information
obtained from such persons, with respect to the beneficial ownership (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
Common Stock by (i) each person known by the Company to be the owner of more
than 5% of the outstanding shares of Common Stock, (ii) each director, (iii) the
Chief Executive Officer and the Company's other executive officers whose total
compensation exceeded $100,000, and (iv) all directors and executive officers as
a group:

                                    PAGE 19

<PAGE>

<TABLE>
<CAPTION>
Name and Address                      Shares                   Percent of
of Beneficial Owner           Beneficially Owned(1)          Common Stock(2)
-------------------           ----------------------         ---------------
<S>                               <C>       <C>                <C>
Arthur August (3)                 702,269   (5)                23.1%

Edward J. Fred(3)                 205,102   (6)                 7.2%

Walter Paulick(3)                  11,668   (7)                 *

Kenneth McSweeney(3)                6,667   (8)                 *

Timothy Stone(4)                   30,000   (9)                 1.1%

Daniel Liguori (4)                333,334   (10)               11.2%

All Directors and                 955,706   (11)               29.0%
Executive Officers
as a group (Five persons)
</TABLE>

*        Less than 1% of the outstanding Common Stock of the Company.

(1)      Unless otherwise noted, the Company believes that all persons named in
         the table have sole voting and investment power with respect to all
         shares of Common Stock beneficially owned by them, subject to community
         property laws, where applicable. A person is deemed to be the
         beneficial owner of securities that can be acquired by such person
         within 60 days from the date hereof upon the exercise of warrants or
         options.

(2)      Based on 2,648,509 shares issued and outstanding. Each beneficial
         owner's percentage ownership is determined by assuming that options or
         warrants that are held by such person (but not those held by any other
         person) and which are exercisable within 60 days from the date hereof
         have been exercised.

(3)      The business address of such person is care of the Company, 200A
         Executive Drive, Edgewood, New York 11717.

(4)      The business address of such person is care of Kolar, Inc., 407 Cliff
         Street, Ithaca, New York 14850.

(5)      Includes 398,835 shares of Common Stock, which Mr. August has the right
         to acquire upon exercise of options granted pursuant to the 1992 Plan,
         the 1995 Plan, the 1998 Plan, and its 2000 Plan. Excludes an aggregate
         of 43,333 shares of Common Stock owned by Mr. August's children or held
         in trust for Mr. August's grandchildren, and 3,000 shares of Common
         Stock owned by Mr. August's wife, all of which shares Mr. August
         disclaims beneficial ownership. Also excludes 16,167 shares of Common
         Stock issuable upon the exercise of options which are not exercisable
         within the next 60 days.

(6)      Includes 205,002 shares of Common Stock which Mr. Fred has the right to
         acquire upon exercise of options granted pursuant to the 1995 Plan, the
         1998 Plan, and the 2000 Plan.

(7)      Represents 11,668 shares of Common Stock which Mr. Paulick has the
         right to acquire upon exercise of options granted pursuant to the
         Company's 1992 Plan , the 1995 Plan and the 1998 Plan.

(8)      Represents 6,667 shares of Common Stock which Mr. McSweeney has the
         right to acquire upon exercise of options granted pursuant to the 1995
         Plan, and 1998 Plan.

(9)      Represents 30,000 shares of Common Stock which Mr. Stone has the right
         to acquire upon exercise of options granted pursuant to the 1998 Plan.

(10)     Represents 333,334 shares of Common Stock which Mr. Liguori has the
         right to acquire by converting the promissory note he received in
         connection with the Company's purchase of Kolar Machine, Inc.

                                    PAGE 20
<PAGE>

(11)     Includes an aggregate of 975,006, shares of Common Stock which Messrs.
         August, Fred, Paulick, McSweeney and Stone have the right to acquire
         upon exercise of outstanding options and conversion rights.


Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         For information concerning employment agreements with, compensation of,
and stock options granted to the Company's executive officers and directors, see
"Item 10. Executive Compensation -- Employment Agreements; and Stock Options."

         On January 1, 1996, the Company entered into a consulting agreement
with Stanley Wunderlich. Mr. Wunderlich was a director of the Company from
November 1995 until February 1, 1998, when he resigned from the Board of
Directors. The agreement terminated by its own terms on December 31, 1997. The
Company and Mr. Wunderlich entered into a new consulting agreement on January 1,
1998. This agreement terminated on December 31, 1999. Pursuant to the agreement,
Mr. Wunderlich provided the Company with financial advisory consulting services
including, but not limited to, assisting with financial public relations,
arranging meetings with securities analysts and money managers, rendering advice
with regard to changes in the capitalization or corporate structure of the
Company, and advising the Company in connection with potential mergers or
acquisitions. In consideration for these services, Mr. Wunderlich was
compensated at the rate of $1,000 per month, including reasonable expenses. In
addition, in January 1998, as further compensation for these consulting
services, Mr. Wunderlich was granted 25,000 non-qualified stock options
exercisable at a price of $7.50 per share for a period of five years.

Item 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a) Exhibits

         3.1      Certificate of Incorporation of the Registrant, as amended.(1)

         3.1(a)   Certificate of Amendment of Certificate of Incorporation filed
                  on July 14, 1998. (14)

         3.2      Amended and Restated By-Laws of the Registrant.(1)

         4.1      Form of Underwriter's Warrants issued to the Underwriter.(1)

         4.2      Form of Registration Rights Agreement dated June 17, 1996. (9)

         4.3      Form of Subscription Agreement. (9)

         4.4      Form of Placement Agent Warrants dated June 17, 1996. (9)

         4.5      Form of Consultant's Warrants dated April 3, 1996. (9)

         4.6      Form of Redeemable Common Share Purchase Warrant dated June
                  17, 1996. (9)

         10.1     Employment Agreement between Registrant and Arthur August
                  dated September 15, 1995. (8)

         10.2     Employment Agreement between Registrant and Theodore J.
                  Martines dated September 15, 1995. (8)

         10.3     1992 Stock Option Plan. (1)

                                    PAGE 21

<PAGE>

         10.4     1995 Employee Stock Option Plan.(12)

         10.5     Rohr Basic Purchase Agreement dated March 12, 1991 for Apron
                  Assembly on McDonnell Douglas MD-90.(1)

         10.6     Rohr Basic Purchase Agreement dated May 8, 1990 for Boeing 757
                  Lower Pan Assembly.(1)

         10.7     Form of military contract.(1)

         10.8     Registrant's Sick Pay Plan.(1)

         10.9     Basic Agreement for Sub-Assembly dated December 10, 1992 by
                  and between the Registrant and Mitsui & Co. (U.S.A.), Inc.(2)

         10.10    Lock-Up/Modification Agreement dated September 24, 1994 by and
                  between the Company and Whale Securities Co., L.P. (6)

         10.11    First Amendment to BPA MD-90-AP-91-the Company by and between
                  the Company and Rohr, Inc. for MD90 V2500 Apron Assembly. (6)

         10.12    Lease dated November 15, 1995 by and between the Company and
                  Heartland Rental Properties Partnership for the Company's
                  facilities in Edgewood, New York. (8)

         10.13    Solicitation Contract dated September 19, 1995 from the
                  Department of the Air Force. (8)

         10.14    Solicitation Contract dated September 22, 1995 from the
                  Department of the Air Force. (8)

         10.15    Placement Agent Agreement dated May 10, 1996 between the
                  Company and the Placement Agent. (9)

         10.16    Financial Consulting Agreement dated April 3, 1996 between the
                  Company and the Placement Agent. (9)

         10.17    Financial Consulting Agreement dated September 11, 1996
                  between the Company and Andreas Zigouras.(10)

         10.18    Line of Credit Agreement dated September 15, 1996 between the
                  Company and The Chase Manhattan Bank.(10)

         10.19    Asset Purchase Agreement, dated September 9, 1997 by and among
                  Kolar Machine, Inc., a New York corporation, Daniel Liguori,
                  Registrant and Kolar, Inc., a Delaware corporation and
                  wholly-owned subsidiary of Registrant. (11)

         10.20    Consulting Agreement dated January 1, 1998 between the Company
                  and Stanley Wunderlich. (13)

         10.21    Credit Agreement dated as of October 9, 1997 among CPI
                  Aerostructures, Inc., Kolar, Inc., as Borrower, the Several
                  Lenders from Time to Time Parties Hereto and The Chase
                  Manhattan Bank, as Administrative Agent ("Credit Agreement").
                  (13)

         10.22    Employment Agreement between Kolar, Inc. and Daniel Liguori
                  dated October 9, 1997. (13)

         10.23    Purchase Agreement dated as of November 10, 1997 between Kolar
                  and Universal Instruments Corporation. (13)

                                    PAGE 22

<PAGE>

         10.24    Amendment to the Credit Agreement dated February 12, 1999.
                  (14)

         10.25    Second Amendment to the Credit Agreement dated as of April 15,
                  1999. (14)

         10.26    Employment Agreement between the Company and Arthur August
                  dated December 16, 1998. (14)

         10.27    Employment Agreement between the Company and Edward Fred dated
                  December 16, 1998. (14)

         10.28    1998 Performance Equity Plan. (14)

         *10.29   Performance Equity Plan 2000.

         *10.30   Third Amendment to the Credit Agreement dated April 25, 1999.

         *10.31   Fourth Amendment to the Credit Agreement dated December 30,
                  1999.

         *10.32   Fifth Amendment to the Credit Agreement dated June 12, 2000.

         *10.33   Sixth Amendment to the Credit Agreement dated August 22, 2000.

         *10.34   Waiver to the Credit Agreement dated November 9, 2000.

          11.1    Statement regarding computation of per share earnings.(2)

          16.1    Letter on change in certifying accountant. (7)

          21.1    Subsidiaries of the Registrant. (13)

         *23.1    Consent of Goldstein Golub Kessler, LLP.

          99.1    Risk factors. (15)

*Filed with this Annual Report on Form 10-KSB.

         (1)      Filed as an exhibit to the Company's Registration Statement on
                  Form S-1 (No. 33-49270) declared effective on September 16,
                  1992 and incorporated herein by reference.

         (2)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for December 31, 1992 and incorporated herein by
                  reference.

         (3)      Filed as an exhibit to Post-Effective Amendment No. 2 to the
                  Company's Registration Statement on Form S-1 (No. 33-49270)
                  declared effective on October 26, 1993 and incorporated herein
                  by reference.

         (4)      Filed as an exhibit to the Company's Annual Report on Form
                  10-K for December 31, 1993 and incorporated herein by
                  reference.

         (5)      Filed as an exhibit to the Company's Registration Statement on
                  Form SB-2 (No. 33-83150) declared effective October 7, 1994
                  and incorporated herein by reference.

                                    PAGE 23
<PAGE>

         (6)      Filed as an exhibit to the Company's Annual Report on Form
                  10-KSB for December 31, 1994 and incorporated herein by
                  reference.

         (7)      Filed as an exhibit to the Company's Current Report on Form
                  8-K for April 29, 1994, as amended, and incorporated herein by
                  reference.

         (8)      Filed as an exhibit to the Company's Annual Report on Form
                  10-KSB for December 31, 1996, as amended, and incorporated
                  herein by reference.

         (9)      Filed as an exhibit to the Company's Current Report of Form
                  8-K for June 19, 1996 and incorporated herein by reference.

         (10)     Filed as an exhibit to the Company's Annual Report on Form
                  10-KSB for December 31, 1996 and incorporated herein by
                  reference.

         (11)     Filed as an exhibit to CPI's Current Report on Form 8-K for
                  September 9, 1997 and incorporated herein by reference.

         (12)     Filed as an exhibit to the Company's Annual Report on Form
                  10-KSB for December 31, 1995 and incorporated herein by
                  reference.

         (13)     Filed as an exhibit to the Company's Annual Report 10-KSB for
                  December 31, 1997 and incorporated herein by reference.

         (14)     Filed as an exhibit to the Company's Annual Report 10-KSB for
                  December 31, 1998 and incorporated herein by reference.

         (15)     Filed as an exhibit to the Company's Annual Report 10-KSB for
                  December 31, 1999 and incorporated herein by reference.

(b)  Reports on Form 8-K

         None.


                                    PAGE 24

<PAGE>

                                      CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------






Independent Auditor's Report                                            F-1


Consolidated Financial Statements:

   Balance Sheet as of December 31, 2000                                F-2

   Statement of Income for the Years Ended December 31, 2000
        and 1999                                                        F-3

   Statement of Shareholders' Equity for the Years Ended
        December 31, 2000 and 1999                                      F-4

   Statement of Cash Flows for the Years Ended December 31, 2000
        and 1999                                                        F-5

   Notes to Consolidated Financial Statements                        F-6 - F-15


                                    PAGE 25

<PAGE>






INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
CPI Aerostructures, Inc.


We have audited the accompanying consolidated balance sheet of CPI
Aerostructures, Inc. and Subsidiary as of December 31, 2000 and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the two years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CPI Aerostructures,
Inc. and Subsidiary as of December 31, 2000, and the results of their operations
and their cash flows for each of the two years in the period ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States of America.


/s/ Goldstein Golub Kessler LLP

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 8, 2001, except for the last paragraph
of Note 5 as to which the date is March 31, 2001


                                                                             F-1

<PAGE>

<TABLE>
<CAPTION>
                                                      CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                                                   CONSOLIDATED BALANCE SHEET
---------------------------------------------------------------------------------------------
December 31, 2000
---------------------------------------------------------------------------------------------
<S>                                                                            <C>
ASSETS

Current Assets:
  Cash and cash equivalents                                                     $    172,184
  Accounts receivable                                                              2,107,555
  Costs and estimated earnings in excess of billings on uncompleted contracts      4,403,779
  Inventory                                                                        4,984,682
  Deferred income taxes, net of valuation allowance of $1,146,000                  1,214,000
  Prepaid expenses and other current assets                                          114,333
---------------------------------------------------------------------------------------------

      Total current assets                                                        12,996,533

Property, Plant and Equipment, net                                                 6,142,330

Goodwill                                                                           6,066,258

Other Assets                                                                         308,579

--------------------------------------------------------------------------------------------
      Total Assets                                                              $ 25,513,700
============================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                                                              $  2,663,300
  Income taxes payable                                                                34,000
  Accrued expenses                                                                   560,444
  Line of credit                                                                   1,700,000
  Current portion of long-term debt                                                6,043,239
  Interest payable                                                                    10,720

--------------------------------------------------------------------------------------------
      Total current liabilities                                                   11,011,703

Long-term Debt                                                                     4,460,003

Interest Payable                                                                     374,400

Deferred Income Taxes                                                                431,000

--------------------------------------------------------------------------------------------
      Total Liabilities                                                           16,277,106
--------------------------------------------------------------------------------------------

Commitments and Contingencies

Shareholders' Equity:
  Common stock - $.001 par value; authorized 50,000,000 shares,
   issued and outstanding 2,648,509 shares                                             2,649
  Additional paid-in capital                                                      12,319,674
  Accumulated deficit                                                             (3,085,729)

--------------------------------------------------------------------------------------------
      Shareholders' Equity                                                         9,236,594
--------------------------------------------------------------------------------------------

      Total Liabilities and Shareholders' Equity                                $ 25,513,700
============================================================================================
                                              See Notes to Consolidated Financial Statements

                                                                                         F-2
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                                    CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                                           CONSOLIDATED STATEMENT OF INCOME
-------------------------------------------------------------------------------------------

Year ended December 31,                                      2000                 1999
-------------------------------------------------------------------------------------------
<S>                                                       <C>                  <C>
Revenue                                                   $28,621,681          $21,603,284

Cost of sales                                              21,245,108           15,668,154
------------------------------------------------------------------------------------------

Gross profit                                                7,376,573            5,935,130


Selling, general and administrative expenses                4,644,747            4,018,232

------------------------------------------------------------------------------------------
Income from operations                                      2,731,826            1,916,898
------------------------------------------------------------------------------------------

Other (income) expense:
  Interest income                                                (422)                (667)
  Interest expense                                          1,154,418            1,116,661
  Other (income) expense, net                                  24,624             (311,013)

------------------------------------------------------------------------------------------
Total other expenses, net                                   1,178,620              804,981
------------------------------------------------------------------------------------------

Income before provision (benefit) for income taxes          1,553,206            1,111,917

Provision (benefit) for income taxes                         (376,000)             303,000

------------------------------------------------------------------------------------------
Net income                                               $  1,929,206          $   808,917
==========================================================================================

Earnings per common share - basic                        $        .73          $       .31
==========================================================================================

Earnings per common share - diluted                      $        .70          $       .30
==========================================================================================

Shares used in computing earnings per common share:
  Basic                                                     2,648,509            2,648,509
  Diluted                                                   2,763,888            2,654,273
==========================================================================================

                                            See Notes to Consolidated Financial Statements

                                                                                       F-3
</TABLE>


<PAGE>

<TABLE>

                                                            CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                                     CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------

Years ended December 31, 1999 and 2000
---------------------------------------------------------------------------------------------------

                                                                           Retained
                                                          Additional       Earnings         Total
                                     Common                 Paid-in      (Accumulated   Shareholders'
                                     Shares      Amount     Capital        Deficit)        Equity
----------------------------------------------------------------------------------------------------
<S>                <C>               <C>         <C>       <C>           <C>              <C>
Balance at January 1, 1999           2,648,509   $2,649    $11,931,522   $(5,823,852)     $6,110,319

Net income                                   -        -              -       808,917         808,917

Amortization of fair value of
 warrants issued in conjunction
 with consulting agreement                   -        -        274,502             -         274,502

----------------------------------------------------------------------------------------------------
Balance at December 31, 1999         2,648,509    2,649     12,206,024    (5,014,935)      7,193,738

Net income                                   -        -              -     1,929,206       1,929,206

Amortization of fair value of
 warrants issued in conjunction
 with consulting agreement                   -        -        113,650             -         113,650

----------------------------------------------------------------------------------------------------
Balance at December 31, 2000         2,648,509   $2,649    $12,319,674   $(3,085,729)     $9,236,594
====================================================================================================



                                                     See Notes to Consolidated Financial Statements

                                                                                                F-4
</TABLE>



<PAGE>



<TABLE>
<CAPTION>
                                                                       CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                                                          CONSOLIDATED STATEMENT OF CASH FLOWS

--------------------------------------------------------------------------------------------------------------
Year ended December 31,                                                           2000               1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>               <C>
Cash flows from operating activities:
  Net income                                                                   $ 1,929,206       $    808,917
  Adjustments to reconcile net income to net cash provided by
   operating activities:
    Depreciation and amortization                                                1,564,084          1,704,030
    Warrants issued for consulting fees                                            113,650            274,502
    Loss on disposal of fixed assets                                                   481                  -
    Deferred portion of provision (benefit) for income taxes                      (390,000)           266,000
    Bad debts                                                                      301,377                  -
    Changes in operating assets and liabilities:
      Increase in accounts receivable                                              (63,442)          (656,283)
      Decrease in income tax refund receivable                                      29,597            486,403
      Increase in costs and estimated earnings in excess of billings
       on uncompleted contracts                                                   (465,250)          (832,605)
      Increase in inventory                                                     (1,774,751)          (771,516)
      Decrease (increase) in prepaid expenses and other current assets               6,851            (19,183)
      Increase in other assets                                                     (70,259)          (379,740)
      Increase in accounts payable and accrued expenses                            368,532            231,959
      Increase in income taxes payable                                               8,440             25,560
      Increase in interest payable                                                  65,120            320,000
-------------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                               1,623,636          1,458,044
-------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Purchase of property, plant and equipment                                       (252,193)          (245,438)
  Proceeds from sale of fixed assets                                                 9,100             11,183
-------------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                                    (243,093)          (234,255)
-------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from line of credit                                                   1,325,000            200,000
  Proceeds from officers' note                                                           -            130,000
  Repayment of long-term debt                                                   (2,829,057)        (1,512,387)
  Repayment of officers' note                                                            -           (130,000)
  Repayment of line of credit                                                            -           (200,000)

-------------------------------------------------------------------------------------------------------------
         Net cash used in financing activities                                  (1,504,057)        (1,512,387)
-------------------------------------------------------------------------------------------------------------

Net decrease in cash                                                              (123,514)          (288,598)

Cash and cash equivalents at beginning of year                                     295,698            584,296
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                       $   172,184       $    295,698
=============================================================================================================

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest                                                                   $ 1,115,965       $    795,365
=============================================================================================================
    Income taxes                                                               $    12,645       $     11,197
=============================================================================================================

Supplemental schedule of noncash financing activity:
  Financing obligation incurred in connection with
   the acquisition of equipment                                                $ 1,772,098        $   505,274
=============================================================================================================

                                                               See Notes to Consolidated Financial Statements

                                                                                                          F-5
</TABLE>
<PAGE>


                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


1. PRINCIPAL        The Company consists of CPI Aerostructures, Inc. ("CPI") and
   BUSINESS         its wholly owned subsidiary, Kolar, Inc. ("Kolar"),
   ACTIVITY AND     collectively, the "Company."
   SUMMARY OF
   SIGNIFICANT      CPI's operations consist of the design and production of
   ACCOUNTING       complex aerospace structural subassemblies under U.S.
   POLICIES:        government and commercial contracts. The length of the
                    Company's contracts varies but is typically between one and
                    two years for U.S. government contracts and up to 10 years
                    for commercial contracts.

                    Kolar's principal business is the precision computer
                    numerical control machining of metal products on a
                    contract-order basis. The Company operates in and
                    distributes from New York State.

                    CPI's revenue is recognized based on the percentage of
                    completion method of accounting for long-term contracts
                    measured by the percentage of total costs incurred to date
                    to estimated total costs at completion for each contract.
                    Contract costs include all direct material, labor costs,
                    tooling and those indirect costs related to contract
                    performance, such as indirect labor, supplies, tools,
                    repairs and depreciation costs. Selling, general and
                    administrative costs are charged to expense as incurred.
                    Estimated losses on uncompleted contracts are recognized in
                    the period in which such losses are determined. Changes in
                    job performance may result in revisions to costs and income
                    and are recognized in the period in which revisions are
                    determined to be required. In accordance with industry
                    practice, costs and estimated earnings in excess of billings
                    on uncompleted contracts, included in the accompanying
                    consolidated balance sheet, contain amounts relating to
                    contracts and programs with long production cycles, a
                    portion of which will not be realized within one year. CPI's
                    recorded revenue may be adjusted in later periods in the
                    event that CPI's cost estimates prove to be inaccurate or a
                    contract is terminated.

                    Kolar's revenue is recognized when goods are shipped to
                    customers.

                    Inventory is stated at the lower of cost (first-in,
                    first-out method) or market.

                    The Company maintains cash in bank deposit accounts which,
                    at times, may exceed federally insured limits. The Company
                    has not experienced any losses in such accounts. The Company
                    believes it is not exposed to any significant credit risk on
                    cash.

                    The Company considers all highly liquid investments with an
                    original maturity of three months or less to be cash
                    equivalents.

                    Depreciation and amortization of property, plant and
                    equipment is provided for by the straight-line method over
                    the estimated useful lives of the respective assets or the
                    life of the lease, for leasehold improvements.

                    At each balance sheet date, the Company evaluates the period
                    of amortization of intangible assets. The factors used in
                    evaluating the period of amortization include: (i) current
                    operating results, (ii) projected future operating results,
                    and (iii) any other material factors that affect continuity
                    of the business.

                                                                             F-6
<PAGE>


                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


                    The Company has incurred approximately $549,000 of costs of
                    obtaining debt, and has deferred such costs. These costs
                    will be amortized over the life of the debt. The unamortized
                    portion of these deferred financing costs, approximately
                    $130,000 at December 31, 2000, is included in other assets.

                    On June 24, 1999, the shareholders of the Company voted to
                    enact a one-for-three reverse stock split. All earnings per
                    share calculations, number of shares and equity transactions
                    have been restated to reflect the reverse stock split.

                    The preparation of financial statements in conformity with
                    accounting principles generally accepted in the United
                    States of America requires the use of estimates by
                    management. Actual results could differ from these
                    estimates.

                    In accordance with the provisions of Statement of Financial
                    Accounting Standards ("SFAS") No. 123, Accounting for
                    Stock-Based Compensation, the Company has elected to apply
                    APB Opinion No. 25 and related interpretations in accounting
                    for its stock options issued to employees and, accordingly,
                    does not recognize additional compensation cost as required
                    by SFAS No. 123. The Company, however, has provided the pro
                    forma disclosures as if the Company had adopted the cost
                    recognition requirements.

                    Basic earnings per common share is computed using the
                    weighted-average number of shares outstanding. Diluted
                    earnings per common share is computed using the
                    weighted-average number of shares outstanding adjusted for
                    the incremental shares attributed to outstanding options and
                    warrants to purchase common stock. Incremental shares of
                    115,379 and 5,764 were used in the calculation of diluted
                    earnings per common share in 2000 and 1999, respectively.
                    The convertible securities attributable to the note payable
                    - seller (see Note 5) have been excluded from the fully
                    diluted computation as their effect would be antidilutive.


2.  COSTS AND       At December 31, 2000, costs and estimated earnings in excess
    EXTIMATED       of billings on uncompleted contracts consist of:
    EARNINGS IN
    EXCESS OF
    BILLINGS ON
    UNCOMPLETED
    CONTRACTS
<TABLE>
<CAPTION>
                                                        U.S.
                                                     Government    Commercial     Total
                    ----------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>
                    Costs incurred on
                     uncompleted contracts           $2,920,896   $11,718,432  $14,639,328
                    Estimated earnings                  909,009     6,227,850    7,136,859
                   -----------------------------------------------------------------------
                                                      3,829,905    17,946,282   21,776,187
                   Less billings to date              2,156,866    15,215,542   17,372,408
                   -----------------------------------------------------------------------
                      Costs and estimated earnings
                       in excess of billings on
                       uncompleted contracts         $1,673,039  $  2,730,740  $ 4,403,779
                   =======================================================================
</TABLE>

                    Unbilled costs and estimated earnings are billed in
                    accordance with applicable contract terms. As of December
                    31, 2000, approximately $1,521,000 of the balances above are
                    not expected to be collected within one year.

                                                                             F-7
<PAGE>

<TABLE>
<CAPTION>


                                                                 CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                                              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------------


 3. INVENTORY:      Inventory consists of the following:
<S>                          <C>                                               <C>             <C>
                              Raw materials                                                    $1,665,275
                              Work-in-progress                                                    672,979
                              Finished goods                                                    2,646,428
---------------------------------------------------------------------------------------------------------
                                                                                               $4,984,682
=========================================================================================================


  4.  PROPERTY,     Property, plant and equipment, at cost, consists of the
      PLANT AND     following:
      EQUIPMENT:
                                                                                                Estimated
                              December 31, 2000                                                Useful Life
                              ----------------------------------------------------------------------------

                              Land                                             $   412,200
                              Machinery and equipment                            7,351,049    5 to 10 years
                              Building                                           1,050,132         39 years
                              Furniture and fixtures                                65,585          7 years
                              Automobiles and trucks                                89,498          5 years
                              Leasehold improvements                                66,791          3 years
                              -----------------------------------------------------------------------------
                                                                                 9,035,255
                              Less accumulated depreciation and amortization     2,892,925
                              -----------------------------------------------------------------------------
                                                                               $ 6,142,330
                              =============================================================================

                              An aggregate of approximately $2,277,000 has been
                              acquired under capital lease. As of December 31,
                              2000, the Company recorded approximately $160,000
                              of depreciation expense on this equipment.


  5.  LONG-TERM               Long-term debt consists of the following:
      DEBT:
                              Note payable - bank (a)                                        $  3,797,500
                              Note payable - bank (b)                                             850,328
                              Note payable - seller (c)                                         4,000,000
                              Other (d)                                                         1,855,414
                              ---------------------------------------------------------------------------
                                                                                               10,503,242
                              Less current maturities                                           6,043,239
                              ---------------------------------------------------------------------------
                                                                                             $  4,460,003
                              ===========================================================================
</TABLE>

                              (a)   The note, as amended in December 1998, is
                                    payable to a commercial bank in monthly
                                    installments of $317,000 from January 2001
                                    through December 2001, plus monthly interest
                                    at the bank's published prime rate (9.50% at
                                    December 31, 2000) plus 1.5%. This note and
                                    the line of credit disclosed in Note 8 are
                                    collateralized by substantially all of the
                                    assets of the Company.

                                                                             F-8
<PAGE>


                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

                              (b)   The note is payable to a commercial bank in
                                    monthly installments of $9,487, including
                                    interest at 8.3%, maturing October 31, 2007.
                                    This note is collateralized by Kolar's land
                                    and building.

                              (c)   In 1997, the Company acquired substantially
                                    all of the assets of Kolar Machine Inc. The
                                    acquisition was partially financed through a
                                    $4,000,000 note payable to Mr. Daniel
                                    Liguori, the seller ("Seller") of Kolar
                                    Machine, Inc. The note payable to the Seller
                                    bears interest at 8% per annum. The Seller
                                    has deferred the Company's payment of
                                    interest on this note during 1999, and the
                                    accrued interest through December 1999 will
                                    be payable upon maturity of the Seller's
                                    note. Monthly interest payments began again
                                    in January 2000. This note matures April 1,
                                    2002. The note payable - Seller is
                                    convertible into 333,334 shares of the
                                    Company's common stock at any time prior to
                                    the maturity of the note.

                                (d) The Company leases equipment and automobiles
                                    under capital leases which expire at various
                                    dates through January 2006. The leases
                                    require monthly payments of principal and
                                    interest, imputed at interest rates ranging
                                    from 7.75% to 16.2%.

                    The note payable - bank (a) requires the Company to maintain
                    specified levels of working capital and other financial
                    ratios, as defined. At December 31, 2000 the Company was not
                    in compliance with certain covenants. Additionally, the
                    Company was not in compliance with certain covenants on
                    March 31, 2001, the next compliance measurement date. As a
                    result, the note payable - bank (a) has been classified as a
                    current liability. In addition, as a result of
                    cross-collateralization clauses in note payable - bank (b)
                    and other (d), all amounts due to the bank, $1,818,906 in
                    the aggregate, that would otherwise be included in
                    noncurrent liabilities is presented as current at December
                    31, 2000. The Company and the bank are in the process of
                    amending the covenants.

                    Maturities of long-term debt are as follows:

                    Year ending December 31,

                       2001                                $ 6,043,239
                       2002                                  4,152,776
                       2003                                    148,681
                       2004                                    144,267
                       2005                                     14,279

                   ---------------------------------------------------
                                                           $10,503,242
                   ===================================================


                    At December 31, 2000, the carrying value of the Company's
                    long-term debt approximated its estimated fair value based
                    upon current borrowing rates for similar issues.


6. COMMITMENTS:     The Company leases a warehouse under a  noncancelable
                    operating lease expiring in August 2002.


                                                                             F-9

<PAGE>


                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


                    The aggregate future minimum rental commitment under this
                    lease is as follows:

                    Year ending December 31,

                       2001                                      $51,720
                       2002                                       34,480
                    -----------------------------------------------------
                                                                 $86,200
                    ====================================================


                    Total rental expense for the years ended December 31, 2000
                    and 1999 amounted to $236,598 and $176,121, respectively.
                    The Company is required to pay additional expenses, as
                    defined.

                    The Company has employment agreements with four employees.
                    The aggregate future commitment under these agreements is as
                    follows:

                    Year ending December 31,

                        2001                                      $639,000
                        2002                                       130,200
                        2003                                        44,100
                    ------------------------------------------------------
                                                                  $813,300
                    ======================================================


                    These agreements provide for additional bonus payments that
                    are calculated, as defined.


7.  INCOME TAXES:   The provision (benefit) for income taxes consists of the
                    following:

                    Year ended December 31,       2000               1999
                    -------------------------------------------------------

                       Current:
                         Federal              $   4,000           $   4,000
                         State and local         10,000              33,000
                    -------------------------------------------------------
                                                 14,000              37,000
                    -------------------------------------------------------

                      Deferred:
                        Federal                (351,000)            231,000
                        State and local         (39,000)             35,000
                    -------------------------------------------------------
                                               (390,000)            266,000
                    -------------------------------------------------------
                                              $(376,000)          $ 303,000
                    =======================================================

                                                                            F-10
<PAGE>

                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


                    The difference between the income tax provision (benefit)
                    computed at the federal statutory rate and the actual tax
                    provision (benefit) is accounted for as follows:

                    December 31,                             2000        1999
                    -----------------------------------------------------------
                    Taxes computed at the federal
                     statutory rate                       $ 528,000   $ 378,000
                    State income taxes, including
                     deferred, net of federal benefit         7,000      25,000
                    Other, including officers' life
                     insurance and various permanent
                     differences                             59,000       8,000
                    Utilization of net operating loss
                     carryforward                          (970,000)   (108,000)
                    -----------------------------------------------------------
                                                          $(376,000)  $ 303,000
                    ===========================================================

                    The components of deferred income tax assets (liabilities)
                    are as follows:

                                                          Current     Noncurrent
                    -----------------------------------------------------------

                    Long-term contracts                $   (158,000)  $(431,000)
                    Property, plant and equipment          -                  -
                    Inventory                                72,000           -
                    Net operating loss carryforwards      2,446,000           -
                    Valuation allowance                  (1,146,000)          -

                    -----------------------------------------------------------
                                                       $  1,214,000   $(431,000)
                    ===========================================================


                    As of December 31, 2000, the Company had net operating loss
                    carryforwards of approximately $6,183,000 for federal income
                    tax purposes expiring in 2013.


8. LINE OF CREDIT:  The Company has an aggregate $2,500,000 line of credit
                    agreement, expiring June 30, 2001, with The Chase Manhattan
                    Bank and Mellon Bank for working capital and other corporate
                    purposes as needed. Borrowings are subject to limits based
                    on amounts of accounts receivable, as defined. Interest is
                    at the banks' prime rate (9.50% at December 31, 2000) plus
                    1.5%. The line of credit and the note payable described in
                    Note 5(a) are collateralized by substantially all of the
                    assets of the Company.


9. EMPLOYEES STOCK  In April 1992, the Company adopted the 1992 Stock Option
   OPTION PLANS:    Plan (the "1992 Plan"). The 1992 Plan, for which 83,334
                    common shares are reserved for issuance, provides for the
                    issuance of either incentive stock options or nonqualified
                    stock options to employees, consultants or others who
                    provide services to the Company. The initial options granted
                    to employees and directors with three or more years of
                    service became exercisable as to one-third of the shares
                    each year beginning on September 16, 1992. The initial
                    options granted


                                                                            F-11
<PAGE>


                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

                    to those with less than three years of service became
                    exercisable as to one-third of the shares each year
                    beginning on September 16, 1993. The options may not be
                    exercised more than five years from the date of issuance. In
                    1995, the option price for all outstanding employees' and
                    director's stock options was lowered to $9.00.

                    In 1995, the Company adopted the 1995 Stock Option Plan (the
                    "1995 Plan"), as amended, for which 200,000 common shares
                    are reserved for issuance. The 1995 Plan provides for the
                    issuance of either incentive stock options or nonqualified
                    stock options to employees, consultants or others who
                    provide services to the Company. The options' exercise price
                    is equal to the closing price of the Company's shares on the
                    day of issuance, except for incentive stock options granted
                    to the Company's president, which are exercisable at 110% of
                    the closing price of the Company's shares on the date of
                    issuance.

                    In 1998, the Company adopted the 1998 Stock Option Plan (the
                    "1998 Plan"). The 1998 Plan, as amended, reserved 463,334
                    common shares for issuance. The 1998 Plan provides for the
                    issuance of either incentive stock options or nonqualified
                    stock options to employees, consultants or others who
                    provide services to the Company. The options' exercise price
                    is equal to the closing price of the Company's shares on the
                    day of issuance, except for incentive stock options granted
                    to the Company's president, which are exercisable at 110% of
                    the closing price of the Company's shares on the date of
                    issuance.

                    In 2000, the Company adopted the 2000 Stock Option Plan (the
                    "2000 Plan"). The 2000 Plan, as amended, reserved 700,000
                    common shares for issuance. The 2000 Plan provides for the
                    issuance of either incentive stock options or nonqualified
                    stock options to employees, consultants or others who
                    provide services to the Company. The options' exercise price
                    is equal to the closing price of the Company's shares on the
                    day of issuance, except for incentive stock options granted
                    to the Company's president, which are exercisable at 110% of
                    the closing price of the Company's shares on the date of
                    issuance.

                    The Company has 5,112 options available for future grant
                    under the 1992 Plan, 21,667 options available for grant
                    under the 1995 Plan, 12,332 options available for grant
                    under the 1998 Plan, and 475,000 options available for grant
                    under the 2000 Plan.

                    If the Company had elected to recognize compensation cost
                    based on the fair value of the options granted at grant date
                    as prescribed by SFAS No. 123, net income and earnings per
                    share would have been adjusted to the pro forma amounts
                    indicated in the table below:

                                            As Reported           Pro Forma
                                          2000       1999       2000      1999
                    ------------------------------------------------------------

                    Net income          $1,929,206  $808,917 $1,832,000 $596,000
                    ============================================================

                    Earnings per share:
                      Basic             $      .73  $    .31 $      .69 $    .23
                      Diluted           $      .70  $    .30 $      .66 $    .22
                    ============================================================

                                                                            F-12
<PAGE>

                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

                    A summary of the status of the Company's four stock option
                    plans as of December 31, 2000 and 1999 and changes during
                    those years is as follows:
<TABLE>
<CAPTION>
                                                     2000                1999
                    ------------------------------------------------------------------
                                                         Weighted-           Weighted-
                                                          Average             Average
                                                         Exercise            Exercise
                    Fixed Options               Options    Price    Options    Price
                    ------------------------------------------------------------------
<S>                                             <C>        <C>       <C>        <C>
                    Outstanding at beginning
                     of year                    515,313    $4.27     327,468    $5.97
                    Granted during year         408,000     2.67     269,000     2.64
                    Exercised                    -            -      -              -
                    Forfeited                    29,001     4.11      81,155     5.72
                    -----------------------------------------------------------------
                    Outstanding at end of year  894,312    $3.54     515,313    $4.27
                    ==================================================================
</TABLE>

                    The following table summarizes information about stock
                    options outstanding and exercisable at December 31, 2000:

                                      Weighted
                                       Number        Average      Weighted-
                                     Outstanding    Remaining      Average
                        Range of         and       Contractual    Exercise
                    Exercise Price   Exercisable      Life          Price
                    --------------------------------------------------------
                    $2.53 - $9.00       894,312    3.65 years       $3.54
                    =========================================================

                    The Company's assumptions used to calculate the fair values
                    of options issued were (i) risk-free interest rate of 5.25%,
                    (ii) expected life of five years, (iii) expected volatility
                    of 174.71%, and (iv) expected dividends of zero.


10.   WARRANTS      In January 1996, the Company issued stock options to
      AND OPTIONS:  purchase  6,167 shares at $3.18 per share to a director.

                    In March 1996, the Company issued 100,000 warrants to Barber
                    and Bronson, Inc. as partial compensation for acting as the
                    Company's Placement Agent for its private placement of
                    equity. These warrants entitle the Placement Agent to
                    purchase 100,000 shares of common stock at an exercise price
                    of $3 during the five-year period commencing June 19, 1996.
                    In 1997, 10,000 of these warrants were exercised.

                    In September 1996, the Company issued options to purchase
                    3,334 shares of common stock to two directors at an exercise
                    price of $6.00 per share of common stock. These options
                    expire in 2001.

                    In February 1997, the Company issued options to purchase
                    3,334 shares of common stock to two directors at an exercise
                    price of $6.18 per share of common stock. These options
                    expire in 2002.

                                                                            F-13
<PAGE>

                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

                    In January 1998, the Company issued options to purchase
                    25,000 shares of common stock to a consultant, who was also
                    a director, at an exercise price of $7.50 per share of
                    common stock. In February 1998, the Company issued options
                    to purchase 3,334 shares of common stock to two directors at
                    an exercise price of $6.93 per share of common stock. These
                    options expire in 2003.

                    In March 1998, the Company issued 33,334 warrants to Gaines
                    Berland, Inc. as compensation for acting as the Company's
                    investment banker pursuant to a consulting agreement. These
                    warrants entitle the investment banker to purchase 33,334
                    shares of common stock at an exercise price of $7.50 during
                    the five-year period commencing April 1, 1998. This
                    agreement was terminated in 1999. In 1999, the Company
                    recorded a charge to operations of $198,734 to write off the
                    unamortized portion of warrants issued under this agreement.

                    In May 1999, the Company issued 100,000 warrants to Catalyst
                    Financial Corp. as partial compensation in the amount of
                    $227,300 for acting as the Company's investment banker
                    pursuant to a consulting agreement. These warrants entitle
                    the investment banker to purchase 100,000 shares of common
                    stock at an exercise price of $1.875 during the five-year
                    period commencing May 4, 1999. In December 1999, the Company
                    issued options to purchase 15,000 shares of common stock to
                    a consultant at the exercise price of $2.53 per share of
                    common stock. Also in December 1999, the Company issued
                    options to purchase 10,000 shares of common stock to two
                    directors at an exercise price of $2.53 per share of common
                    stock.


11. EMPLOYEE        On September 11, 1996, CPI's board of directors  instituted
    BENEFIT PLANS:  a defined contribution plan under Section 401(k) of the
                    Internal Revenue Code (the "Code"). On October 1, 1998, the
                    Company amended and standardized both the CPI and Kolar
                    plans as required by the Code. Pursuant to the amended plan,
                    qualified employees may contribute a percentage of their
                    pretax eligible compensation to the Plan and the Company
                    will match a percentage of each employee's contribution.
                    Additionally, the Company has a profit-sharing plan covering
                    all eligible employees. Contributions by the Company are at
                    the discretion of management. The amount of contributions
                    recorded by the Company in 2000 and 1999 amounted to
                    $184,373 and $119,627, respectively.


12. CONTINGENCIES:  From time to time, the Company is subject to routine
                    litigation incidental to its business. The Company believes
                    that the settlement of any pending legal proceedings will
                    not have a material adverse effect on the Company's
                    financial condition.


13. SEGMENT         The Company's operations are classified into two business
    INFORMATION:    segments: production of complex aerospace structural
                    subassemblies ("Aerospace") and computer numerical control
                    machining of metal products ("Machining").


                                                                            F-14

<PAGE>

                                         CPI AEROSTRUCTURES, INC. AND SUBSIDIARY

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

                    Summarized financial information by business segment for
                    2000 and 1999 is as follows:

                              December 31,          2000             1999
                     --------------------------------------------------------

                     Net sales:
                       Aerospace                $  8,261,351    $  6,079,936
                       Machining                  20,360,330      15,523,348
                    --------------------------------------------------------
                                                 $28,621,681    $ 21,603,284
                    ========================================================

                     Operating income:
                       Aerospace                $  1,163,364    $    474,212
                       Machining                   1,568,462       1,442,686
                    --------------------------------------------------------
                                                $  2,731,826    $  1,916,898
                    ========================================================

                     December 31,                    2000            1999
                    --------------------------------------------------------

                     Total assets:
                       Aerospace                $  6,838,934    $  5,814,906
                       Machining                  18,674,766      16,880,805
                    --------------------------------------------------------
                                                $ 25,513,700    $ 22,695,711
                    ========================================================


                     Depreciation and
                      amortization:
                       Aerospace                $     30,193    $     39,913
                       Machining                     888,208         718,433
                    --------------------------------------------------------
                                                $    918,401    $    758,346
                    ========================================================

                    Capital expenditures:
                      Aerospace                 $    70,837     $     23,488
                      Machining                   1,953,454          727,224
                    --------------------------------------------------------
                                                $ 2,024,291     $    750,712
                    ========================================================


14. MAJOR           Approximately 58% and 55% of the Company's sales in 2000 and
    CUSTOMERS:      1999, respectively, were to Universal Instruments Inc.
                    ("Universal").

                    Approximately 22% of the Company's sales in both 2000 and
                    1999 were to the U.S. government.

                    At December 31, 2000, approximately 70% of accounts
                    receivable were due from Universal and the U.S. government
                    (35% Universal and 35% for the U.S. government).


                                                                            F-15



<PAGE>

                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Dated:  April 10, 2001                       CPI AEROSTRUCTURES, INC.


                                             By: /s/ Arthur August
                                                --------------------------
                                                  Arthur August,
                                                  President



         In accordance with the Exchange Act, this Report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated:

 Signature                     Title                          Date
 ---------                     -----                          ----

/s/ Arthur August             Chairman of the Board,          April 10, 2001
---------------------         President (Principal
Arthur August                 Executive Officer)
                              and Director

/s/ Edward J. Fred            Vice  President                 April 10, 2001
---------------------         (Principal
Edward J. Fred                Accounting and Financial
                              Officer) and Director

/s/ Walter Paulick            Director                        April 10, 2001
---------------------
Walter Paulick

/s/ Kenneth McSweeney         Director                        April 10, 2001
---------------------
Kenneth McSweeney


                                    PAGE 42