UNITED STATES



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A

(Amendment No. 2)



xAnnual
Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended: December 31,
2016



oTransition
Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to_______



Commission File No. 001-35927



AIR INDUSTRIES GROUP

(Name of small business issuer in its charter)



|Nevada                                                         | 80-0948413                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     

|360
    Motor Parkway, Suite 100, Hauppauge, New York 11788
|-----------------------------------------------------------
|(Address
    of Principal Executive Offices)               
|                                                           
|(631) 881-4920                                             
|(Registrant’s Telephone Number, Including Area Code)       



Securities registered pursuant to Section
12(b) of the Act:



|Title of Each Class            | Name of Exchange on which Registered
|------------------------------ | ------------------------------------
|Common Stock, par value $0.001 | NYSE MKT                            



Securities registered pursuant to Section
12(g) of the Act: None



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yeso Nox



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yeso Nox



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 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 the past 90 days.  Yesx
Noo



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K.o



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large
accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):



|Large Accelerated Filero | Non-Accelerated Filero | Accelerated Filero | Smaller Reporting Companyx
|------------------------ | ---------------------- | ------------------ | --------------------------
|                         |                        |                    | Emerging Growth Company x 



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
o



Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso
Nox



As of June 30, 2016, the aggregate market value of our common
stock held by non-affiliates was $31,907,973, based on 6,717,468 shares of outstanding common stock held by non-affiliates, and
a price of $4.75 per share, which was the last reported sale price of our common stock on the NYSE MKT on that date.



There were a total of 7,650,165 shares of the registrant’s
common stock outstanding as of March 15, 2017.



DOCUMENTS INCORPORATED BY REFERENCE:



Portions of the registrant’s definitive
Proxy Statement relating to its 2017 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual
Report on Form 10-K where indicated. Such Proxy Statement will be filed with the U.S. Securities and Exchange Commission within
120 days after the end of the fiscal year to which this report relates.



Explanatory Note



This amendment is being filed to include the information required
by Part III of Form 10-K previously omitted pursuant to General Instruction G(3) to Form 10-K and certain exhibits.












AIR INDUSTRIES GROUP

FORM 10-K/A (Amendment No. 2)

For the Fiscal Year Ended December 31,
2016



Page



|PART III                                                                                |   
|--------------------------------------------------------------------------------------- | --
|                                                                                        |   
|Item 10.       Directors, Executive Officers and Corporate Governance                   | 3 
|Item 11.       Executive Compensation                                                   | 9 
|Item 12.       Security Ownership of Certain Beneficial Owners and Management           | 11
|Item 13.       Certain Relationships and Related Transactions and Director Independence | 12
|Item 14.       Principal Accountant Fees and Services                                   | 16
|                                                                                        |   
|PART IV                                                                                 |   
|                                                                                        |   
|Item 15.       Exhibits and Financial Statement Schedules                               | 17







2






PART III



Item 10.  Directors, Executive Officers, and Corporate
Governance



Our directors and executive officers are:



|Name:                |  | Age |  | Position                              
|-------------------- |  | --- |  | --------------------------------------
|Peter D. Rettaliata  |  | 66  |  | Acting President and CEO  and Director
|Michael E. Recca     |  | 66  |  | Chief Financial Officer               
|Michael N. Taglich   |  | 51  |  | Chairman of the Board                 
|Seymour G. Siegel    |  | 74  |  | Director                              
|Robert F. Taglich    |  | 50  |  | Director                              
|David J. Buonnano    |  | 61  |  | Director                              
|Robert  C. Schroeder |  | 50  |  | Director                              
|Michael Brand        |  | 59  |  | Director                              



Peter D. Rettaliata
has been our Acting President and Chief Executive Officer since March 2, 2017, and has been a director of our company since 2005.
He served as our President and Chief Executive Officer from November 30, 2005 to December 31, 2014. He also served as the President
of our wholly-owned subsidiary, AIM, from 1994 to 2008. Prior to his involvement at AIM, Mr. Rettaliata was employed by Grumman
Aerospace Corporation for twenty-two years. Professionally, Mr. Rettaliata has served as the Chairman of "ADDAPT", an
organization of regional aerospace companies, as a member of the Board of Governors of the Aerospace Industries Association, and
as a member of the Executive Committee of the AIA Supplier Council. He is a graduate of Niagara University where he received a
B.A. in History and the Harvard Business School where he completed the PMD Program. Mr. Rettaliata’s extensive experience
in the aerospace industry and his knowledge of our operations qualify him to serve as a Director.



Michael E. Reccahas been our Chief Financial Officer since October 1, 2016. Mr. Recca has been engaged by us since September 2008 in a variety
of positions related to our capital finance and acquisition programs.  Most recently he served as Chief of Corporate Development
& Capital Markets, a position in which he directed our acquisition program and coordinated with our lenders.  Mr. Recca
received a Bachelor of Arts degree from the SUNY Stony Brook and an MBA from Columbia University.



Michael N. Taglich
has been Chairman of our Board of Directors since September 22, 2008. He is Chairman and President of Taglich Brothers, Inc. ("Taglich
Brothers"), a New York City based securities firm which he co-founded in 1992 and which is focused on public and private micro-cap
companies. From 1987 to 1992, Mr. Taglich served as a Vice President at Weatherly Securities. He brings a broad depth and breadth
of capital and business background to the Board, with extensive experience in exit strategies. Mr. Taglich is currently Chairman
of the Board of SCOLR Pharma Inc, a publicly traded pharmaceutical company, and BioVentrix, Inc., a privately held medical device
company whose products are directed at heart failure. He also serves as a Director of Bridgeline Digital, Inc. and DecisionPoint
Systems, Inc., each of which is a publicly traded company. Mr. Taglich holds a B.S. degree in General and International Business
from New York University and holds Series 27 and Series 7 securities licenses. Mr. Taglich’s extensive experience in the
capital markets and his knowledge of the aerospace industry qualify him to serve as a Director.





3






Seymour G. Siegelhas been a director of our company since 2005. A Certified Public Accountant no longer in practice, he was a principal emeritus
at Rothstein Kass (now KPMG), an international firm of accountants and consultants until July 2014. Mr. Siegel was a founder
of Siegel Rich & Co., CPAs, which eventually merged with what is now known as WeiserMazars LLP, where he was a senior partner
until January 1995, when he sold his interest in the firm and co-founded a business advisory firm which later became a part of
Rothstein Kass. In addition to serving as a Director and Chairman of the Audit Committees of our Board, Mr. Siegel also serves
as a Director and Chairman of the Audit Committee of Root 9B Technologies Inc.  Mr. Siegel received his Bachelor of Business
Administration from the Bernard M. Baruch School of the City College of New York. Mr. Siegel’s extensive knowledge and experience
in accounting matters and familiarity with the issues of manufacturing businesses qualify him to serve as a Director.



Robert F. Taglich
has been a director of our company since 2008. He is a Managing Director of Taglich Brothers, which he co-founded in 1992. Prior
to founding Taglich Brothers, Mr. Taglich was a Vice President at Weatherly Securities. Mr. Taglich has served in various positions
in the brokerage securities industry for the past 25 years. Mr. Taglich is a Director of Bridgeline Digital, Inc., a publicly traded
company He also serves on the board of privately held BioVentrix, Inc., a medical device company whose products are directed at
heart failure. Mr. Taglich holds a Bachelor’s degree from New York University. Mr. Taglich’s extensive experience in
the capital markets and his knowledge of the aerospace industry qualify him to serve as a Director.



David
J. Buonanno has been a director of our company since 2008. He is the Founder and President of Buonanno Enterprises Consulting,
providing strategic management, supply chain/operations and recruitment services to aerospace and defense industry clients. He
is a member of the Executive Advisory Board of Bridgeways, Inc. and the Advisory Board of Alken Industries, Inc. Mr. Buonanno has
extensive experience in manufacturing, supply management and operations. He was employed by Sikorsky Aircraft, Inc., a subsidiary
of United Technologies Corporation, as Vice President, Supply Management and International Offset (from January 1997 to July 2006)
and as Director, Systems Subcontracts (from November 1992 to January 1997). From May 1987 to November 1992, he was employed by
General Electric Company serving as Operations Manager and Manager, Program Materials Management of GE’s Astro-Space Division.
From June 1977 to May 1987, he was employed by RCA and affiliated companies. Mr. Buonanno attended Lehigh University College of
Electrical Engineering and holds a B.S. in Business Administration from Rutgers University. He completed the Program for Management
Development at Harvard Business School in 1996.  Mr. Buonanno’s extensive experience in the aerospace and defense
industries and familiarity with the operations of companies in the industry qualify him to serve as a Director.



Robert C. Schroederhas been a director of our company since 2008. He is Vice President - Investment Banking of Taglich Brothers and specializes
in advisory services and capital raising for small public and private companies. Mr. Schroeder joined Taglich Brothers in April
1993 as an Equity Analyst publishing sell-side research. Prior to joining Taglich Brothers, he served in various positions in
the brokerage and public accounting industry. Mr. Schroeder also serves as a director of the following publicly traded companies:
DecisionPoint Systems, Inc., a leading provider and integrator of Enterprise Mobility, Wireless Applications and RFID solutions,
and Intellinetics, Inc., a provider of cloud-based enterprise content management solutions. Mr. Schroeder received a B.S. degree
in accounting and economics from New York University. He is a Chartered Financial Analyst and a member of the Association for
Investment Management and Research and a member of the New York Society of Security Analysts. Mr. Schroeder’s extensive
experience in the capital markets qualify him to serve as a Director.



Michael Brand
has been a director of our company since 2012, and since March 2017 has served as a consultant to our company focused on day to
day production issues, scheduling of the products to be manufactured and related operational issues such as the maintenance of
appropriate inventory levels. He was the President of Goodrich Landing Gear, a unit of Goodrich Corporation, from July 2005 to
June 2012. Prior to joining Goodrich for over 25 years he held senior management positions in the Aerospace industry. He began
his career at General Electric Corporation and rose to senior management in its jet engine manufacturing operations. Mr. Brand
is a graduate of Clarkson University, with advanced degrees and certificates from Xavier University and the Wharton School. Mr.
Brand’s extensive experience in the aerospace and defense industries and familiarity with the operations of companies in
the industry qualify him to serve as a Director.





4






Michael N. Taglich and Robert F. Taglich
are brothers.



All directors hold office
until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Officers are elected
by and serve at the discretion of the Board of Directors. Employee directors do not receive any compensation for their services
as directors. Non-employee directors are entitled to receive compensation per year for serving as directors and may receive option
grants from our company.



Information Concerning the Board of Directors



Board Leadership Structure and Risk Oversight



The Board does not
have a policy requiring separation of the roles of Chief Executive Officer and Chairman of the Board. Nevertheless, Michael N.
Taglich is Chairman of the Board and Peter D. Rettaliata is Acting Chief Executive Officer of the Company.



The Board has determined
that a non-employee director serving as Chairman is in the best interests of our stockholders at this time. This structure ensures
a greater role of non-employee Directors in the active oversight of our business, including risk management oversight, and in setting
agendas and establishing Board priorities and procedures. This structure also allows the Chief Executive Officer to focus to a
greater extent on the management of our day-to-day operations.



The Board of Directors
as a whole is responsible for consideration and oversight of risks facing the Company, and is responsible for ensuring that material
risks are identified and managed appropriately. Certain risks are overseen by committees of the Board of Directors and these committees
make reports to the full Board of Directors, including reports on noteworthy risk-management issues. Members of the Company’s
senior management team regularly report to the full Board about their areas of responsibility and a component of these reports
is risk within the area of responsibility and the steps management has taken to monitor and control such exposures. Additional
review or reporting on risks is conducted as needed or as requested by the Board or one of its committees.



Board Independence



Our Board of Directors
has determined that Robert Schroeder, Seymour G. Siegel, David Buonanno and Michael Brand are "independent directors"
within the meaning of NYSE MKT Rule 803A(2).



Director Compensation



Non-employee Directors
are entitled to receive compensation for serving as directors and may receive option grants from our company. Each Director also
is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred
in attending meetings of our Board of Directors or committees of our Board of Directors or shareholder meetings or otherwise in
connection with the discharge of his duties as a Director. The compensation committee will assist the directors in reviewing and
approving the compensation structure for our directors.





5






The following table
sets forth certain information regarding the compensation paid to our directors during the fiscal year ended December 31, 2016.





|DIRECTOR COMPENSATION
|---------------------
|                     
|                     
|                     
|Name                 
|                     
|Michael N. Taglich   
|Robert F. Taglich    
|Robert Schroeder     
|David Buonanno       
|Seymour G. Siegel    
|Michael Brand        
|Peter D. Rettaliata  





Board Meetings; Committees and Membership



The Board of Directors
held four meetings during the fiscal year ended December 31, 2016 (“fiscal 2016”). During fiscal 2016, each of the
directors then in office attended more than 75% of the aggregate of (i) the total number of meetings of the Board of Directors
and (ii) the total number of meetings of all committees of the Board on which such director served.



We maintain the following
committees of the Board of Directors: the Audit Committee, the Compensation Committee and the Nominating Committee. Each committee
is comprised entirely of directors who are “independent” within the meaning of NYSE MKT Rule 803A(2). Each committee
acts pursuant to a separate written charter, and each such charter has been adopted and approved by the Board of Directors. Copies
of the committee charters are available on our website at airindustriesgroup.com under the heading “Investor Relations.”



Audit
Committee. Messrs. Siegel, Schroeder and Buonanno are members of the Audit Committee. Mr. Siegel serves as Chairman of the
Audit Committee and also qualifies as an "audit committee financial expert," as that term is defined in Item 407(d)(5)(ii)
of Regulation S-K. The Board has determined that each member of our Audit Committee meets the financial literacy requirements under
the Sarbanes-Oxley Act and SEC rules and the independence requirements under NYSE MKT Rule 803A(2).





6






Our Audit Committee is responsible for preparing
reports, statements and charters of audit committees required by the federal securities laws, as well as:



|· | overseeing and monitoring
the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements as they relate to
financial statements or accounting matters, and our internal accounting and financial controls;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                          
|· | preparing the report that
SEC rules require be included in our annual proxy statement;                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                          
|· | overseeing and monitoring
our independent registered public accounting firm's qualifications, independence and performance;                                                                                                                              
|  |                                                                                                                                                                                                                                                          
|· | providing the Board with
the results of its monitoring and its recommendations; and                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                          
|· | providing to the Board additional information and materials as it deems necessary to make the Board aware of significant financial matters that require the attention of the Board.                                                                      



Compensation Committee.
Our Compensation Committee is composed of Messrs. Siegel, Buonanno and Brand. The Compensation Committee is responsible for:



|· | establishing the Company’s
general compensation policy, in consultation with the Company’s senior management, and overseeing  the development
and implementation of compensation programs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | reviewing and approving
corporate goals and objectives relevant to the compensation of the CEO, and evaluating the performance of the CEO at least annually
in light of those goals and objectives and communicating the results of such evaluation to the CEO and the Board, and determining
the CEO’s compensation level based on this evaluation, subject to ratification by the independent directors on the Board.
In determining the incentive component of CEO compensation, the Committee will consider, among other factors, the Company’s
performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, the awards
given to the CEO in past years, and such other factors as the Committee may determine to be appropriate;
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | reviewing and approving
the compensation of all other executive officers of the Company, such other managers as may be directed by the Board, and the
directors of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | overseeing the Board’s
benefit and equity compensation plans, overseeing the activities of the individuals and committees responsible for administering
these plans, and discharging any responsibilities imposed on the Committee by any of these plans;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | approving issuances under,
or any material amendments to, any stock option or other similar plan pursuant to which a person not previously an employee or
director of the Company, as an inducement material to the individual’s entering into employment with the Company, will acquire
stock or options;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | in consultation with management,
overseeing regulatory compliance with respect to compensation matters, including overseeing the Company’s policies
on structuring compensation programs to preserve related tax objectives;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | reviewing and approving
any severance or similar termination payments proposed to be made to any current or former officer of the Company; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|· | preparing an annual report on executive compensation for inclusion in our proxy statement for the election of directors, if required under the applicable SEC rules.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





7






Nominating
Committee. Our Nominating Committee is composed of Messrs. Schroeder, Siegel and Brand. The purpose of the Nominating
Committee is to seek and nominate qualified candidates for election or appointment to our Board of Directors. The Nominating Committee
will seek candidates for election and appointment that possess the integrity, leadership skills and competency required to direct
and oversee the Company’s management in the best interests of its stockholders, customers, employees, communities it serves
and other affected parties.



A candidate must be
willing to regularly attend Committee and Board of Directors meetings, to develop a strong understanding of the Company, its businesses
and its requirements, to contribute his or her time and knowledge to the Company and to be prepared to exercise his or her duties
with skill and care. In addition, each candidate should have an understanding of all corporate governance concepts and the legal
duties of a director of a public company.



Stockholders may contact
the Nominating Committee Chairman, the Chairman of the Board or the Corporate Secretary in writing when proposing a nominee. This
correspondence should include a detailed description of the proposed nominee’s qualifications and a method to contact that
nominee if the Nominating Committee so chooses.



Stockholder Communications



Any stockholder who desires to contact any
of our Directors can write to Air Industries Group, 360 Motor Parkway, Suite 100, Hauppauge, NY 11788 Attention: Stockholder
Relations. Your letter should indicate that you are an Air Industries Group stockholder. Depending on the subject matter, our stockholder
relations personnel will:





| | · | forward the communication to the Director(s)
to whom it is addressed;                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                 
| | · | forward the communication to the appropriate
management personnel;                                                                              
| |   |                                                                                                                                                 
| | · | attempt to handle the inquiry directly,
for example where it is a request for information about the Company, or it is a stock-related matter; or
| |   |                                                                                                                                                 
| | · | not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.                      





Code of Ethics



We have adopted a written code of ethics
that applies to our principal executive officers, senior financial officers and persons performing similar functions. Upon written
request to our corporate secretary, we will provide you with a copy of our code of ethics, without cost.





8






Item 11.  Executive Compensation



Summary Compensation Table



The following summary
compensation table shows, for the periods indicated, information regarding the compensation awarded to, earned by or paid
to our principal executive officer and our chief accounting officer (our only other executive officer whose compensation exceeded
$100,000), for all services rendered in all capacities to our company and its subsidiaries. The individuals listed in the following
table are referred to herein collectively as our “named executive officers.”



Executive Compensation Table





|                                |      |         |         |        |        | Non-equity  | Nonqualified |               |       |     |      
|------------------------------- | ---- | ------- | ------- | ------ | ------ | ----------- | ------------ | ------------- | ----- | --- | -----
|                                |      |         |         |        |        | Incentive   | deferred     |               |       |     |      
|                                |      |         |         | Stock  | Option | Plan        | compensation | All
    other |       |     |      
|Name
    and principal Position | Year | Salary  | Bonus   | awards | awards | Information | earnings     | compensation  |       |     | Total
|                                |      | ($)     | ($)     | ($)    | ($)    | ($)         | ($)          | ($)           |       |     | ($)  
|Daniel
    R. Godin (1)         | 2016 | 250,000 | -       | -      | -      | -           | -            | $             | 9,600 | (3) | $    
|President
    and CEO           | 2015 | 254,807 | 125,000 |        |        |             |              |               | 9,600 | (3) |      
|Marianne
    Giglio (2)         | 2016 | 126,396 | -       | -      | -      | -           | -            | $             | 4,500 | (3) | $    
|Chief
    Accounting Officer    |      |         |         |        |        |             |              |               |       |     |      







(1) Mr. Godin resigned as our President and CEO effective as
of March 24, 2016.



(2) Ms. Giglio joined our company on March 7, 2016, became our
Chief Accounting Officer on April 22, 2016 and served in that capacity until October 1, 2016.



(3) Represents car allowance.



None of our executive officers or key employees
named in the above table has an employment agreement providing for a fixed term of employment. All are employees at will terminable
at any time without any severance, other than that payable to employees generally.



Peter D. Rettaliata receives $50,000 per
annum for serving as a director of, and consultant to, our company. We have not yet reached agreement on the compensation he is
to receive for serving as our Acting President and Chief Executive Officer.



Michael Recca, our Chief Financial Officer,
receives a salary of $200,000 per annum.



Executive Compensation Policies as They
Relate to Risk Management



The Compensation Committee
and management have considered whether our compensation policies might encourage inappropriate risk taking by the Company’s
executive officers and other employees. The Compensation Committee has determined that the current compensation structure aligns
the interests of the executive officers with those of the Company without providing rewards for excessive risk taking by awarding
a mix of fixed and performance based or discretionary bonuses with the performance based compensation focused on profits as opposed
to revenue growth.



During the years ended
December 31, 2016 and 2015, less than 1% of the total compensation paid to employees was paid in performance-based compensation,
including commissions and bonuses.





9






Equity Awards – 2016



We did not grant any
equity awards in the form of shares to any of the named Executive Officers during 2016 and consequently have  the table which would have described such awards.



Outstanding Equity Awards at 2016 Year-End



The following table shows certain information
regarding outstanding equity awards held by our named Executive Officers as of December 31, 2016.



|Option Awards   |             | Stock Awards
|--------------- | ----------- | ------------
|                |             |             
|                | Number of   |             
|                | Securities  |             
|                | Underlying  |             
|                | Unexercised |             
|                | Options (#) |             
|Name            | Exercisable |             
|                |             |             
|Daniel R. Godin | 120,000     |             
|Marianne Giglio | -           |             



Equity Incentive Plans





We have three equity
incentive plans, the 2016 Equity Incentive Plan (“the “2016 Plan”), which our Board of Directors adopted in June
2016 and our stockholders approved on November 30, 2016, the 2015 Equity Incentive Plan (the “2015 Plan”), which our
Board of Directors adopted in March 2015 and our stockholders approved in June 2015, and the 2013 Equity Incentive Plan (the “2013
Plan”), which our Board of Directors adopted in May 2013 and our stockholders approved in July 2013.   The
Plans are virtually identical, except that the 2016 Plan and the 2015 Plan authorized the issuance of 350,000 shares of Common
Stock and the 2013 Plan authorized the issuance of 600,000 shares. As of December 31, 2016, options to purchase 138,000 shares
have been granted and remain outstanding under the 2015 Plan, and 212,000 shares remained available for grant, and options to purchase
564,342 shares remain outstanding and no shares remained available for issuance under the 2013 Plan. No stock awards have been
made or options granted under the 2016 Plan. The Plans permit the Company to grant stock awards and non-qualified and incentive
stock options to employees, directors and consultants. The Plans are administered by the Compensation Committee of the Board and
each has a term of ten years from the date it was adopted by the Board.





10






We
adopted the Plans to provide a means by which employees, directors, and consultants of our Company and those of our subsidiaries
and other designated affiliates, which we refer to together as our affiliates, may be given an opportunity to purchase our Common
Stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such
positions, and to provide incentives for such persons to exert maximum efforts for our success and the success of our affiliates.



Item 12.  Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters



The following table
sets forth information known to us regarding beneficial ownership of our Series A Preferred Stock and our Common Stock as of March
15, 2017, by (i) each person known by us to own beneficially more than 5% of our outstanding Series A Preferred Stock or Common
Stock, (ii) each of our directors, (iii) our chief executive officer, and (iii) all of our directors and executive officers as
a group. Except as otherwise indicated, we believe, based on information provided by each of the individuals named in the table
below, that such individuals have sole investment and voting power with respect to such shares, subject to community property laws,
where applicable. As of March 15, 2017 we had outstanding 1,247,668 shares of our Series A Preferred Stock and of 7,650,165 shares
of our Common Stock. Each share of Series A Preferred Stock is convertible into 2.0325 shares of Common Stock and holders of Series
A Preferred Stock vote together with holders of Common Stock as a single class, except on certain matters specified in the Certificate
of Designation authorizing the issuance of the Series A Preferred Stock and as required under applicable law, with holders of Series
A Preferred Stock entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Series
A Preferred Stock owned of record by such shareholder could have been converted on the Record Date (2.0325 times the number of
shares of Series A Preferred Stock owned of record) and each share of Common Stock entitled to one vote. Except as stated in the
table, the address of the holder is c/o our company, 360 Motor Parkway, Suite 100, Hauppauge, New York 11788.





|                                                            |  | Number of Shares   |         | Percent of  Class
|----------------------------------------------------------- |  | ------------------ | ------- | -----------------
|Name                                                        |  | Series A Preferred |         | Common           
|Directors and Executive Officers:                           |  |                    |         |                  
|                                                            |  |                    |         |                  
|Michael N. Taglich                                          |  |                    | 288,162 |                  
|Robert F. Taglich                                           |  |                    | 101,876 | (2)              
|Peter D. Rettaliata                                         |  |                    | 0       |                  
|Seymour G. Siegel                                           |  |                    | 0       |                  
|David Buonanno                                              |  |                    | 2,696   |                  
|Robert Schroeder                                            |  |                    | 0       |                  
|Michael Brand                                               |  |                    | 0       |                  
|Daniel Godin, President and CEO(9)                          |  |                    | 0       |                  
|                                                            |  |                    |         |                  
|All Directors and Executive Officers as a group (8 persons) |  |                    | 392,734 |                  







___

* Less than 1%





11






|(1) Includes 30,736 shares owned by Taglich
        Brothers, Inc. and other entities controlled by Mr. Taglich, 585,689 shares he may acquire upon conversion of the Series A Preferred
        Stock, 698,891 shares he may acquire upon conversion of 8% Notes (including 138,244 shares that may be acquired by Taglich Brothers,
        Inc. upon conversion of 8% Notes), 308,364 shares he may acquire upon exercise of warrants (including 17,385 shares which may be
        acquired by Taglich Brothers, Inc. upon exercise of warrants) and 15,250 shares he may acquire upon exercise of options, in each
        case exercisable within 60 days.
        
        (2) Includes 6,478 shares owned as custodian
        for his children.
        
        (3) Includes 30,736 shares owned by Taglich
        Brothers, Inc. and other entities controlled by Mr. Taglich, 207,077 shares he may acquire upon conversion of the Series A Preferred
        Stock (13,154 of which are owned as custodian for his children), 359,103 shares he may acquire upon conversion of 8% Notes (including
        138,244 shares that may be acquired by Taglich Brothers, Inc. upon conversion of 8% Notes), 184,516 shares he may acquire upon
        exercise of warrants (including 17,385 shares which may be acquired by Taglich Brothers, Inc. upon exercise of warrants and 2,436
        owned as custodian for his children) and 15,250 shares he may acquire upon exercise of options, in each case exercisable within
        60 days.
        
        (4) Includes 64,216 shares he may acquire
        upon exercise of options exercisable within 60 days.
        
        (5) Includes 15,250 shares he may acquire
        upon exercise of options exercisable within 60 days.
        
        (6) Includes 5,480 shares he my acquire
        upon conversion of Series A Preferred Stock, 1,016 shares he may acquire upon exercise of warrants and 15,250 shares he may acquire
        upon exercise of options, in each case exercisable within 60 days.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) Includes 75,283 shares he may acquire
        upon exercise of warrants and 15,250 shares he may acquire upon exercise of options, in each case exercisable within 60 days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(8) Represents shares he may acquire upon
        exercise of options exercisable within 60 days.
        
        (9) Mr. Godin resigned as President and
        CEO effective March 24, 2017. Options to purchase 100,000 shares of Common Stock expired unexercised as of that date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(10) Includes 798,246 shares that may be acquired upon conversion of Series A Preferred Stock, 919,750 shares that may be acquired upon conversion of 8% Notes, 551,794 shares that may be acquired upon exercise of warrants and 272,492 shares that may be acquired upon exercise of options, in each case exercisable within 60 days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



Item 13.  Certain Relationships and Related Transactions
and Director Independence



Our Policy Concerning Transactions with Related Persons



Under Item 404 of SEC
Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar
transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to
which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount
involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last
two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more
than 5% of any class of our voting securities (a “significant shareholder”), or any member of the immediate family
of any of the foregoing persons, had or will have a direct or indirect material interest.





12






We recognize that transactions
between us and any of our Directors or Executives or with a third party in which one of our officers, directors or significant
shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions
are based on considerations other than the best interests of our Company and stockholders.



The Audit Committee
of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company
and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such
transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board
of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained
from an unaffiliated party.



Transactions with Related Persons



The following includes
a summary of transactions since January 1, 2014, or any currently proposed transaction, in which we were or are to be a participant
and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end
for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.



From time to time when
needed, we have borrowed funds from Michael Taglich and Robert Taglich, directors and principal stockholders of our company, as
discussed below. In addition, as discussed below, Taglich Brothers, Inc. (“Taglich Brothers”), of which Michael Taglich
and Robert Taglich are the principals, has acted as placement agent for offerings of our securities and provided us with other
investment banking and advisory services.



On January 1, 2014,
we entered into a Capital Market Advisory Agreement with Taglich Brothers pursuant to which Taglich Brothers provided us, on a
non-exclusive basis, business advisory services for a monthly fee of $7,000 and a warrant to purchase 10,000 shares of our common
stock at an exercise price of $8.72 per share. This agreement renewed annually until terminated in October 2016. We paid Taglich
Brothers $1,500 per month for posting its research reports on our company on its website pursuant to a research distribution agreement,
or a total of $18,000 for each of 2014 and 2015 and $9,000 for 2016.



In connection with
our public offering of 1,170,000 shares of common stock completed on June 3, 2014, we paid Taglich Brothers, which acted as placement
agent for the offering, $842,400, representing 8% of the gross proceeds of the offering as a sales commission, plus an additional
$75,000 in reimbursement of counsel fees. In addition, we granted Taglich Brothers placement agent warrants to purchase 46,800
shares of common stock, representing 4% of the shares sold in the offering as additional compensation. The warrants are exercisable
for cash or on a cashless basis at a per share exercise price equal to $11.25, commencing May 29, 2015 and expiring May 28, 2019.



On September 8, 2015,
we borrowed $350,000 from Michael Taglich and issued our promissory note in the principal amount of $350,000 to evidence our obligation
to repay that indebtedness. The note bore interest at the rate of 4% per annum and was payable on September 7, 2016.



On April 8, 2016, we
borrowed $350,000 from each of Michael N. Taglich and Robert F. Taglich and issued our promissory notes in the principal amount
of $350,000 to evidence our obligation to repay that indebtedness. The notes bore interest at the rate of 7% per annum and were
payable on June 30, 2016, or earlier upon our receipt of proceeds from the sale of our equity securities in the aggregate amount
of $1,000,000.



On May 6, 2016, we
borrowed $400,000 from Michael N. Taglich and $300,000 from Robert F. Taglich and issued our promissory notes in the principal
amount of $400,000 to Michael N. Taglich and $300,000 to Robert F. Taglich to evidence our obligation to repay that indebtedness.
The notes bore interest at the rate of 7% per annum and were payable on June 30, 2016, or earlier upon our receipt of proceeds
from the sale of our equity securities in the aggregate amount of $2,000,000.





13






On May 26, 2016, we
issued 110,000 shares of our Series A Preferred Stock to Michael Taglich and 65,000 shares of our Series A Preferred Stock to Robert
Taglich upon surrender of the aforementioned promissory notes in connection with the private placement of 700,000 shares of our
Series A Preferred Stock, for which Taglich Brothers acted as co-placement agent.



As compensation for
its services as co-placement agent for the private placement of our Series A Preferred Stock completed in June 2016, we paid Taglich
Brothers a fee of $326,000 and issued to Taglich Brothers five-year warrants to purchase 56,910 shares of common stock at an initial
exercise price of $6.15, subject to certain anti-dilution and other adjustments, including stock splits, and in the event of certain
fundamental transactions such as mergers and other business combinations.



In August 2016, we
issued two promissory notes to Michael Taglich in principal amounts of $500,000 and $1,000,000, respectively.  The notes
bore interest at the rate of 7% per annum.  The principal and interest were payable on December 31, 2016, or earlier
upon our receipt of proceeds from the sale of our equity securities in the aggregate amount of $2,000,000.



On August 19, 2016,
we issued to Michael Taglich our 12% Subordinated Convertible Note due December 31, 2017 in the principal amount of $1,520,713,
together with warrants to purchase 61,817 shares of Common Stock, upon surrender for cancellation of promissory notes in the aggregate
principal amount of $1,500,000, together with accrued interest thereon and on notes previously exchanged for Series A Preferred
Stock of $20,713. In addition, we issued to Robert Taglich our 12% Subordinated Convertible Note due December 31, 2017 in the principal
amount of $4,373, together with warrants to purchase 177 shares of Common Stock, in consideration of the forgiveness of interest
of $4,373 accrued on notes previously exchanged for Series A Preferred Stock.



As compensation for
its services as placement agent for the private placement in August 2016 of our 12% Subordinated Convertible Notes due December
31, 2017 (the “12% Notes”), we paid Taglich Brothers a fee of $295,400 and issued to Taglich Brothers five-year warrants
to purchase 68,617 shares of Common Stock at an initial exercise price of $6.15, subject to certain anti-dilution and other adjustments,
including stock splits, and in the event of certain fundamental transactions such as mergers and other business combinations.



On November 23, 2016,
we issued and sold to Michael Taglich and Robert Taglich our 8% Subordinated Convertible Notes due November 31, 2018 (the “2018
Notes’) in the principal amounts of $1,000,000 and $100,000, respectively, together with five-year warrants to purchase 88,889
and 8,889 shares of Common Stock, respectively, for a purchase price of $1,000,000 and $100,000, respectively. The 2018 Notes have
a conversion price of $2.25 per share and the warrants have an exercise price of $3.00 per share. The conversion price of the 2018
Notes and the exercise price of the warrants, as well as the number of shares issuable upon conversion of the 2018 Notes and the
exercise of the warrants, are subject to certain anti-dilution and other adjustments, including stock splits, and in the event
of certain fundamental transactions such as mergers and other business combinations. The warrants may be exercised until November
30, 2021 and may be exercised on a cashless basis for a lesser number of shares depending upon prevailing market prices at the
time of exercise.



As compensation for
its services as placement agent for the private placement in November 2016 of the 2018 Notes, we issued to Taglich Brothers, in
lieu of cash payment of sales commissions, 2018 Notes in the principal amount of $112,000. We also issued to Taglich Brothers a
five-year warrant to purchase 62,222 shares of Common Stock. The warrants may be exercised until November 30, 2021, have an exercise
price of $3.00, subject to certain anti-dilution and other adjustments, including stock splits, and in the event of certain fundamental
transactions such as mergers and other business combinations, and may be exercised on a cashless basis for a lesser number of shares
depending upon prevailing market prices at the time of exercise.





14






On December 22, 2016,
we issued and sold to Michael Taglich and Robert Taglich 2018 Notes in the principal amounts of $300,000 and $200,000, respectively,
together with warrants to purchase 22,815 shares and 15,209 shares, respectively, of Common Stock for a purchase price of $$300,000
and $200,000, respectively. The outstanding principal amount plus accrued interest on the 2018 Notes are convertible at the option
of the holder into shares of Common Stock at an initial conversion price of $2.63, subject to certain anti-dilution and other adjustments,
including stock splits, and in the event of certain fundamental transactions such as mergers and other business combinations. The
warrants may be exercised until November 30, 2021 and have an exercise price of $3.00 per share, subject to certain anti-dilution
and other adjustments, including stock splits, and in the event of certain fundamental transactions such as mergers and other business
combinations, and may be exercised on a cashless basis for a lesser number of shares depending upon prevailing market prices at
the time of exercise.



As compensation for
its services as placement agent for the private placement in December 2016 of the 2018 Notes, we issued to Taglich Brothers, in
lieu of cash payment of sales commissions, 2018 Notes in the principal amount of $94,000. We also issued to Taglich Brothers five-year
placement agent warrants to purchase 44,677 shares of Common Stock at an exercise price pf $3.00 per share and having the same
terms as the warrants issued to purchasers of the 2018 Notes in the December 2016 private placement.



On February 7, 2017,
we issued and sold to Robert Taglich our 8% Subordinated Convertible Notes due January 31, 2019 in the principal amount of $250,000
(one of a series of our 8% Subordinated Convertible Notes due January 31, 2019, hereinafter referred to as the “2019 Notes”),
together with a five year warrant to purchase 19,230 shares of Common Stock for a purchase price of $250,000. The 2019 Note issued
to Robert Taglich has a conversion price of $3.71 per share, and the warrant issued to Robert Taglich has an exercise price of
$3.71 per share. The conversion price of the 2019 Notes and the exercise price of the warrants, as well as the number of shares
issuable upon conversion of the 2019 Notes and the exercise of the warrants, are subject to certain anti-dilution and other adjustments,
including stock splits, and in the event of certain fundamental transactions such as mergers and other business combinations. The
warrants may be exercised until January 31, 2022 and may be exercised on a cashless basis for a lesser number of shares depending
upon prevailing market prices at the time of exercise.



As compensation for
its services as placement agent for the private placement in February 2017 of the 2019 Notes, we issued to Taglich Brothers, in
lieu of cash payment of sales commissions, 2019 Notes in the principal amount of $80,000 (of which a 2019 Note in the principal
amount of $20,000 has a conversion price of $3.71 per share and a 2019 Note in the principal amount of $60,000 has a conversion
price of $3.25 per share). We also issued to Taglich Brothers five-year placement agent warrants to purchase 44,677 shares of Common
Stock at an exercise price of $4.45 per share having the same terms as the warrants issued to purchasers of the 2019 Notes in the
February 2019 private placement.



On March 8, 2017,
we issued and sold to Robert Taglich a 2019 Note in the principal amount of $100,000, together with a five year warrant to purchase
7,692 shares of Common Stock for a purchase price of $100,000. The 2019 Note issued to Robert Taglich has a conversion price of
$3.30 per share, and the warrant issued to Robert Taglich has an exercise price of $3.30 per share. The conversion price of the
2019 Notes and the exercise price of the warrants, as well as the number of shares issuable upon conversion of the 2019 Notes and
the exercise of the warrants, are subject to certain anti-dilution and other adjustments, including stock splits, and in the event
of certain fundamental transactions such as mergers and other business combinations. The warrants may be exercised until January
31, 2022 and may be exercised on a cashless basis for a lesser number of shares depending upon prevailing market prices at the
time of exercise.



As compensation for
its services as placement agent for the private placement in March 2017 of the 2019 Notes, we issued to Taglich Brothers, in lieu
of cash payment of sales commissions, 2019 Notes in the principal amount of $96,000 (of which a 2019 Note in the principal amount
of $44,000 has a conversion price of $3.30 per share, a 2019 Note in the principal amount of $43,600 has a conversion price of
$3.78 per share and a 2019 Note in the principal amount of $8,000 has a conversion price of $3.25 per share) and five-year warrants
to purchase a total of 7,385 shares of Common Stock (of which warrants to purchase 3,416 shares have an exercise price of $3.30
per share, warrants to purchase 2,354 shares have an exercise price of $3.78 and warrants to purchase 615 shares have an exercise
price of $4.00). We also issued to Taglich Brothers placement agent warrants to purchase a total of 36,877 shares of Common Stock,
of which warrants to purchase 17,030 shares have an exercise price of $3.30 per share, warrants to purchase 16,770 shares have
an exercise price of $3.78 and warrants to purchase 3,077 shares have an exercise price of $4.00, and having the same terms as
the warrants issued to purchasers of the 2019 Notes in the March 2019 private placement.





15






Taglich Brothers or
its affiliates may in the future provide investment banking, commercial banking and/or other services to us from time to time,
for which they may in the future receive customary fees and expenses.



On March 17, 2017,
we borrowed $200,000 and $300,000 from each of Michael N. Taglich and Robert F. Taglich, respectively, and issued our promissory
notes in the principal amounts of $200,000 and $300,000 to Michael N. Taglich and Robert F. Taglich, respectively, to evidence
our obligation to repay that indebtedness. The notes bear interest at the rate of 7% per annum and are payable on September 17,
2017. Michael and Robert Taglich have the option to convert the unpaid principal amount and accrued interest on the promissory
notes into shares of common stock or other securities of our company which we may offer and sell in a public or private financing
(each a “Financing”), on the same terms and conditions as are offered to purchasers in such Financing, or, if more
favorable to us, on such other terms as may be required under the rules of the NYSE MKT, which option they must exercise by notice
to us within three business days following the completion of such Financing. Upon completion of a Financing, upon notice to Michael
and Robert Taglich, we have the right to convert the unpaid principal amount of those promissory notes and accrued interest thereon
into shares of common stock or other of our securities sold in the Financing on the same terms and conditions as are offered to
purchasers in the Financing, or if more favorable to us, on such other terms as may be required under the rules of the NYSE MKT,
which right we must exercise within three business days following the completion of such Financing.



The foregoing transactions
were reviewed and approved by the Audit Committee or our Board of Directors. We believe that the terms of each transaction were
not less favorable to us than those terms that could be obtained from an unaffiliated third party.



Item 14.  Principal Accountant Fees and Services



As required by our Audit Committee charter,
our Audit Committee pre-approved the engagement of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. for all audit and permissible
non-audit services. The Audit Committee annually reviews the audit and permissible non-audit services performed by our principal
accounting firm and reviews and approves the fees charged by our principal accounting firm. The Audit Committee has considered
the role of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. in providing tax and audit services and other permissible non-audit
services to us and has concluded that the provision of such services, if any, was compatible with the maintenance of such firm's
independence in the conduct of its auditing functions.



During fiscal year 2016 and fiscal year
2015, the aggregate fees which we paid to or were billed by Rotenberg Meril Solomon Bertiger & Guttilla, P.C. for professional
services were as follows:



|                       |  | Year Ended December 31,
|---------------------- |  | -----------------------
|                       |  | 2016                   
|                       |  |                        
|Audit Fees (1)         |  | $                      
|Audit Related Fees (2) |  |                        
|Tax Fees (3)           |  |                        
|                       |  |                        
|                       |  | $                      



(1) Fees for services to perform an audit or review in accordance
with generally accepted auditing standards and services that generally only our independent registered public accounting firm can
reasonably provide, such as the audit of our consolidated financial statements, the review of the financial statements included
in our quarterly reports  and for services that are normally provided by independent registered public accounting firms
in connection with statutory and regulatory engagements.





16






(2) Fees for assurance and related services that are traditionally
performed by our independent registered public accounting firm, such as audit attest services not required by statute or regulation,
and consultation concerning financial accounting and reporting standards.



(3) Fees for tax compliance. Tax compliance generally involves
preparation of original and amended tax returns, claims for refunds and tax payment planning services.



PART IV



ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



The following exhibits are included as part
of this report. References to “the Company” in this Exhibit List mean Air Industries Group, a Nevada corporation.



|Exhibit No. |  | Description                                                                                                                             
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                         
|3.3         |  | Certificate of Amendment filed November 30, 2016 increasing
number of authorized shares of preferred stock and Series A Preferred Stock.
|            |  |                                                                                                                                         
|10.73       |  | Promissory note dated March 17, 2017 in the principal
amount of $200,000 payable to Michael Taglich.                                    
|            |  |                                                                                                                                         
|10.74       |  | Promissory note dated March 17, 2017 in the principal
amount of $300,000 payable to Robert Taglich                                      
|            |  |                                                                                                                                         
|31.1        |  | Certification of principal
executive officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange Act of 1934.                 
|            |  |                                                                                                                                         
|31.2        |  | Certification of principal financial officer pursuant to Rule 13a-14 or Rule 15d-14 of the Exchange Act of 1934.                        
|            |  |                                                                                                                                         
|32.1        |  | Certification of principal executive officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).            
|            |  |                                                                                                                                         
|32.2        |  | Certification of principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).            





17






SIGNATURES



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



Dated: May 1, 2017



| | AIR INDUSTRIES GROUP |                                                                                                      
| | -------------------- | -----------------------------------------------------------------------------------------------------
| |                      |                                                                                                      
| | By:                  | /s/  Michael E. Recca                                                                                
| |                      | Michael E. Recca
        Chief Financial Officer
        (principal financial and accounting officer)
| |                      |                                                                                                      





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