SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]      Quarterly  Report  Pursuant  to  Section 13 or 15(d) of the  Securities
         Exchange Act of 1934. For the quarterly period ended June 30, 1998.

[ ]      Transition  Report  Pursuant to  Section 13 or 15(d) of the  Securities
         Exchange Act of 1934. For the transition period from _______________ to
         _________________.

Commission file number:  0-24293

                               LMI AEROSPACE, INC.
             (Exact name of registrant as specified in its charter)

                Missouri                                       43-1309065
    (State or Other Jurisdiction of                         (I.R.S. Employer
     Incorporation or Organization)                        Identification No.)

           3600 Mueller Road
         St. Charles, Missouri                                    63302
(Address of Principal Executive Offices)                       (ZIP Code)

                                 (314) 946-6525
              (Registrant's Telephone Number, Including Area Code)

         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 preceding 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.
Yes         No  X

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

                                                Number of Shares outstanding
Title of class of Common Stock                       as of June 30, 1998
------------------------------                  -------------------------------

Common Stock, par value $.02 per share                     8,389,422
                                                          -----------

<PAGE>


                               LMI AEROSPACE, INC.

                          QUARTERLY REPORT ON FORM 10-Q
                   FOR THE FISCAL QUARTER ENDING JUNE 30, 1998

                          PART I. FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS (UNAUDITED)

         Condensed Consolidated Balance Sheets
         of December 31, 1997 and June 30, 1998

         Condensed  Consolidated  Statements of Operations  
         for the three months and the six months ending 
         June 30, 1998 and 1997

         Condensed Consolidated Statements of Cash Flows for
         the six months ending June 30, 1998 and 1997

         Notes to Unaudited Condensed Consolidated 
         Financial Statements


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL     
         CONDITION AND RESULTS OF OPERATIONS

                           PART II. OTHER INFORMATION

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K


SIGNATURE PAGE


<PAGE>
                               LMI Aerospace, Inc.

                      Condensed Consolidated Balance Sheets
             (Amounts in thousands, except share and per share data)



                                                December 31,          June 30,
                                                    1997                1998
                                                 -------------------------------
Assets                                                               (unaudited)
Current assets:
   Cash and cash equivalents                     $     244         $       423
   Amounts due from underwriter                          -              21,390
   Trade accounts receivable                         8,058               9,191
   Inventories                                       8,701               9,540
   Prepaid expenses                                    147                 223
   Other current assets                                109                 102
    Deferred income taxes                              502                 502
                                                --------------------------------
Total current assets                                17,761              41,371

Property, plant, and equipment, net                 15,652              17,617
Other assets                                           216                 210
                                                --------------------------------
                                                  $ 33,629            $ 59,188
                                                ================================

Liabilities and stockholders' equity 
Current liabilities:
   Accounts payable                              $   3,318            $  3,847
   Accrued expenses                                  1,940               2,709
   Income taxes payable                                430                 338
   Demand note payable to stockholder                  250                   -
   Current installments of long-term debt              567                 644
                                                --------------------------------
Total current liabilities                            6,505               7,538

Long-term debt, less current installments            9,274               9,452
Deferred income taxes                                1,099               1,099
                                                --------------------------------
Total noncurrent liabilities                      $ 10,373           $  10,551

Stockholders' equity:
   Common stock of $.02 par value; 
     authorized 28,000,000 shares; issued 
     5,908,471 at December 31, 1997 and         $      118         $       168
     8,389,422 at June 30, 1998, 
     respectively
   Subscriptions receivable                              -                (600)
   Additional paid-in capital                        1,543              23,060
   Retained earnings                                15,090              18,471
                                                --------------------------------
Total stockholders' equity                          16,751              41,099
                                                ================================
                                                  $ 33,629            $ 59,188
                                                ================================

See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>


                               LMI Aerospace, Inc.

                 Condensed Consolidated Statements of Operations
                  (Amounts in thousands, except per share data)
                                   (Unaudited)

                                                    For the Three Months             For the Six Months
                                                       Ended June 30                    Ended June 30
                                                   1997             1998             1997           1998
                                           ------------------------------------------------------------------
<S>                                            <C>               <C>            <C>             <C>
Net sales                                         $ 14,383          $ 15,657       $ 27,073        $ 31,993
Cost of sales                                       10,266            10,841         19,660          22,343
                                           ------------------------------------------------------------------
Gross profit                                         4,117             4,816          7,413           9,650

Selling, general, and administrative
   expenses                                          1,672             1,850          3,161           3,734
                                           ------------------------------------------------------------------
Income from operations                               2,445             2,966          4,252           5,916

Interest expense                                       250               209            531             462
                                           ------------------------------------------------------------------

Income before income taxes                           2,195             2,757          3,721           5,454
Provision for income taxes                             845             1,034          1,433           2,072
                                           ==================================================================
Net income                                         $ 1,350           $ 1,723        $ 2,288         $ 3,382
                                           ==================================================================

Net income per common share                         $ .23              $ .29          $ .39           $ .57
                                           ==================================================================

Net income per common share - assuming
   dilution                                         $ .23              $ .28           $ .39          $ .56
                                           ==================================================================

Weighted average common shares
   outstanding                                   5,822,839         5,988,860      5,822,839       5,948,666
                                           ==================================================================
Weighted average dilutive stock options
   outstanding                                      64,082           149,346         55,446         131,478
                                           ==================================================================

</TABLE>

See accompanying notes.


<PAGE>

<TABLE>
<CAPTION>

                               LMI Aerospace, Inc.

                 Condensed Consolidated Statements of Cash Flows
                             (Amounts in thousands)
                                   (Unaudited)

                                                            For the Six Months Ended June 30
                                                            1997              1998
                                                        -------------------------------------
<S>                                                      <C>               <C>

Operating activities
Net income                                                   $  2,288          $  3,382
Adjustments to reconcile net income to
net cash provided by operating activities:
   Net cash provided by operating activities:
     Depreciation and amortization                             1,004             1,246
     Changes in operating assets and liabilities:
       Trade accounts receivable                                (327)           (1,133)
       Inventories                                              (310)             (839)
       Prepaid expenses                                          (67)              (76)
       Other current assets                                       63               (36)
       Other assets                                               20                 9
       Income taxes payable                                     (210)              (92)
       Accounts payable                                          589               529
       Accrued expenses                                          856               807
                                                       -------------------------------------
Net cash provided by operating activities                      3,906             3,797

Investing activities
Additions to property, plant, and equipment                   (1,233)           (3,160)
                                                       -------------------------------------
Net cash used in investing activities                         (1,233)           (3,160)

Financing activities
Proceeds from issuance of long-term debt                         391             2,073
Principal payments on long-term debt                          (2,465)           (2,068)
Proceeds from exercise of stock options                            -                29
Payments for consummation of initial public offering               -              (492)
                                                       -------------------------------------
Net cash used in financing activities                         (2,074)             (458)
Activities
                                                       -------------------------------------

Net change in cash and cash equivalents                          599               179
Cash and cash equivalents, beginning of period                   205               244
                                                       =====================================
Cash and cash equivalents, end of period                  $      804       $       423
                                                       =====================================


Supplemental Disclosures of Cash Flow
Information
  Amounts due from underwriter                                     -          $ 21,390
  Accrual for initial public offering costs                        -               458
  Common Stock contributed to profit sharing plan                  -               296
  Stock bonus issued to officer of Company                         -               200

</TABLE>

See accompanying notes.


<PAGE>

                               LMI Aerospace, Inc.

              Notes to Condensed Consolidated Financial Statements
         (Dollar amounts in thousands, except share and per share data))
                                   (Unaudited)
                                  June 30, 1998

1. Accounting Policies

Basis of Presentation

LMI  Aerospace,  Inc.  (the  Company)  (formerly  Leonard's  Metal,  Inc.)  is a
fabricator,  finisher,  and integrator of formed,  close tolerance  aluminum and
specialty alloy components for use by the aerospace  industry.  The Company is a
Missouri  corporation with  headquarters in St. Charles,  Missouri.  The Company
maintains  facilities in St.  Charles,  Missouri;  Seattle,  Washington;  Tulsa,
Oklahoma; and Wichita, Kansas.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring  accruals)  considered  necessary for a fair  representation
have been  included.  Operating  results for the three and six months ended June
30, 1998 are not necessarily  indicative of the results that may be expected for
the year ended December 31, 1998. These financial  statements  should be read in
conjunction  with  the  consolidated   financial   statements  and  accompanying
footnotes  for the year  ended  December  31,  1997  included  in the  Company's
prospectus dated June 29, 1998 as filed with the SEC.

Earnings per Common Share

In 1997, the Company  adopted SFAS No. 128,  Earnings per Share,  which replaced
the  calculation of primary and fully diluted  earnings per share with basic and
diluted  earnings per share. All earnings per share amounts for all periods have
been presented or, where appropriate, restated to conform to SFAS No. 128.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  management  to  make  certain  estimates  and
assumptions.  These estimates and assumptions affect the reported amounts in the
financial  statements and accompanying  notes.  Actual results could differ from
those estimates.

2. Initial Public Offering

On April 27, 1998, the Company's  Board of Directors  authorized the filing of a
registration  statement with the Securities and Exchange  Commission relating to
an initial public offering of 2,300,000 shares of the Company's  unissued common
stock (345,000 additional shares if the underwriters'  over-allotment option was
exercised). In connection with the initial public offering, the Company effected
a 2.29-for-one stock dividend of the Company's common stock payable June 1, 1998
to  shareholders  of record on May 1, 1998. All  references in the  accompanying
financial  statements  to the  number of shares of common  stock and per  common
share amounts have been retroactively adjusted to reflect the stock dividend. In
addition,  the Company's  capital  structure  was changed to reflect  28,000,000
shares of common stock and 2,000,000 shares of preferred stock authorized.

During  April 1998,  the  Company  issued  32,900 new shares of common  stock as
compensation to one of its officers,  pursuant to an employment  agreement,  and
recorded  approximately $200 of deferred  compensation  expense to be recognized
over the  subsequent 24 months.  In addition,  the Company sold 98,700 shares of
common stock to one of its  officers,  pursuant to an  employment  agreement and
recorded a subscription  receivable of $600 in stockholders' equity. The Company
has no compensation obligation related to this transaction.

The initial public offering of 2,300,000 shares was consummated on June 30, 1998
and all proceeds  were in transit to the Company and recorded as a current asset
in Amounts due from underwriter.

3. Inventories

Inventories consist of the following:

                                         December 31,           June 30,
                                             1997                 1998
                                     ------------------------------------------
Raw materials                                 $2,990             $ 3,891
Work in process                                3,875               3,738
Finished goods                                 1,836               1,911
                                     ==========================================
                                              $8,701             $ 9,540
                                     ==========================================

<PAGE>

4. Property, Plant, and Equipment

Property, plant, and equipment consist of the following:

                                         December 31,           June 30,
                                             1997                 1998
                                     ------------------------------------------
Land                                      $      638           $      638
Buildings                                      7,405                7,474
Machinery and equipment                       18,376               19,409
Software costs                                   523                  591
Leasehold improvements                           426                  427
Construction in progress                         298                2,242
                                     ------------------------------------------
                                              27,666               30,781
Less accumulated depreciation                (12,014)             (13,164)
                                     ==========================================
                                            $ 15,652             $ 17,617
                                     ==========================================

<TABLE>
<CAPTION>

5. Long-Term Debt

Long-term debt consists of the following:

                                                                       December 31,          June 30,
                                                                           1997                1998
                                                                    ---------------------------------------
<S>                                                                   <C>                <C>
Revolving line of credit, interest payable monthly, at a
   variable rate                                                         $  1,281            $  2,309
Industrial Development Revenue Bond, interest payable
   monthly, at a variable rate                                              2,500               2,500
Term loan note payable, principal and interest payable
   monthly, at a fixed rate of 9.0%                                         3,482               3,351
Real estate note payable, principal and interest payable
   monthly, at a variable rate                                                428                 416
Notes payable, principal and interest payable monthly, at
   fixed rates, ranging from 8.25% to 9.56%                                 1,233               1,428
Subordinated debentures, interest payable monthly, at a fixed
   rate of 11%                                                                800                  --
Capital lease obligations                                                     117                  92
                                                                    ---------------------------------------
                                                                            9,841              10,096
Less current installments                                                     567                 644
                                                                    =======================================
                                                                          $ 9,274             $ 9,452
                                                                    =======================================
</TABLE>


On March 31, 1998, the Company  secured a $15,000  unsecured line of credit with
Magna Bank to fund various corporate needs. Interest is payable monthly based on
a quarterly cash flow leverage calculation and the LIBOR rate (7.09% at June 30,
1998).  This  facility  matures on March 30, 2000 and requires  compliance  with
certain  non-financial  and financial  covenants  including minimum tangible net
worth and EBITDA requirements. The credit facility prohibits the payment of cash
dividends on common stock without  Magna's prior  written  consent.  The Company
drew upon the line in March 1998 to retire  certain  outstanding  debt balances,
including the previous  revolving  line of credit ($1,281 at December 31, 1997),
demand  notes to  former  shareholders  ($250 at  December  31,  1997),  and the
subordinated  debentures ($800 at December 31, 1997). (See Note 7 for subsequent
payoff.)

The Industrial  Revenue Bond (IRB) bears  interest at a variable rate,  which is
based on the existing market rates for comparable  outstanding  tax-exempt bonds
(4.1  percent  and  3.8  percent  at  December  31,  1997  and  June  30,  1998,
respectively),  not to  exceed 12  percent.  The IRB is  secured  by a letter of
credit, and Magna Bank NA (Magna),  which holds 100 percent participation in the
letter of credit, has a security interest in certain equipment. The bond matures
in November 2000.

During 1997, the Company executed a new 9.0 percent term note payable for $3,500
with Magna secured by certain  Company-owned  real estate. The term note payable
requires  monthly  principal  and interest  payments of $45,  and any  remaining
principal  balance is due upon maturity in November  2000. The term note payable
contains certain nonfinancial and financial covenants, including leverage ratio,
current ratio, and minimum  tangible net worth.  All of the Company's  property,
plant and  equipment  is  pledged  under the  above  agreement.  (See Note 7 for
subsequent payoff.)

The real estate note  payable  with the Oklahoma  Industrial  Finance  Authority
requires  monthly  principal  and interest  payments  through May 2009 and bears
interest  at the  prime  rate  adjusted  quarterly  based on the last day of the
previous  quarter (8.5 percent at December 31, 1997 and June 30, 1998). The real
estate note  payable is secured by a mortgage on the  property.  (See Note 7 for
subsequent payoff.)

The Company  entered  into  various  notes  payable for the  purchase of certain
equipment.  The notes are  payable in monthly  installments  including  interest
(ranging from 8.25 percent to 9.56 percent  through  November  2002).  The notes
payable are secured by equipment.

6. Commitments and Contingencies

The  Company is  involved  in various  claims and legal  actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition  of these  matters  will not have a material  adverse  effect on the
Company's financial position.

7. Subsequent Event

On July 6, 1998,  the Company  received the proceeds  ($21,390) from the initial
public offering and retired  certain  outstanding  debt balances,  including the
term loan note  payable  ($3,351  at June 30,  1998)  and the real  estate  note
payable  ($416 at June  30,  1998).  In  addition,  the  Company  paid  down the
revolving  line  of  credit  ($2,309  at  June  30,  1998).  The   underwriter's
over-allotment  option of 345,000  shares was  exercised  and issued on July 14,
1998 and the Company received proceeds of approximately $3,209.

On August 11, 1998,  the Company  announced  that it had reached an agreement in
principal to acquire the assets of Precise Machine Company ("Precise"), based in
Irving, Texas. Precise manufactures precision machined components used primarily
by the defense,  aerospace and  financial  service  industries  and had sales of
approximately  $3 million  for the year ended  1997.  Terms of the sale have not
been finalized.  As of June 30, 1998,  Precise's unaudited financial  statements
reflected net sales of $1,636 for the six months then ended.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Except for the historical  information  contained  herein,  the following report
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual results could differ  materially  from those  discussed  here.
Factors that could cause or contribute to such differences  include, but are not
limited to, those discussed in the section entitled Management's  Discussion and
Analysis of Financial Conditions and Results of Operations.

Overview

LMI Aerospace, Inc. is a leading fabricator,  finisher and integrator of formed,
close tolerance aluminum and specialty alloy components for use by the aerospace
industry.  The Company has been engaged in  manufacturing  components for a wide
variety  of  aerospace  applications.  Components  manufactured  by the  Company
include leading edge wing slats, flaps and lens assemblies; cockpit window frame
assemblies; fuselage skins and supports, and passenger and cargo door frames and
supports.  The Company  maintains  multi-year  contracts  with leading  original
equipment  manufacturers and primary  subcontractors  of commercial,  corporate,
regional and military  aircraft.  Such contracts,  which govern virtually all of
the Company's sales, designate the Company as the sole supplier of the aerospace
components sold under the contracts.  Customers include Boeing, Lockheed Martin,
Northrop  Grumman,  Gulfstream,  Learjet,  Canadair,  DeHavilland  and PPG.  The
Company manufactures approximately 14,000 parts for integration into such models
as Boeing's  737,  747,  757, 767 and 777  commercial  aircraft,  Canadair's  RJ
regional aircraft,  Gulfstream's G-IV and G-V corporate  aircraft,  and Lockheed
Martin's F-16 and C-130 military aircraft.

In the second  quarter of 1998,  the Company  executed  two new  contracts  with
certain of its customers.  The Company entered into a new 10-year  contract with
the Wichita  division of Boeing.  The  Company has a long  history of  component
production  with the Wichita  facility which now will be managed under this long
term agreement. Additionally, the Company entered into a renewal of its contract
with Lockheed Martin, extending the agreement for an additional 4 years.

Subsequent  to June 30, 1998,  the Company  reached an agreement in principal to
purchase  the assets of Texas  based  Precise  Machine  Company  ("Precise"),  a
company  specializing in the manufacture of precision machined  components.  The
Company  believes  that the  addition  of Precise  will  expand its  integration
capabilities  to better  support its  customer  base as well as allow it to gain
access to non-aerospace customers.  This acquisition is also consistent with the
Company's  strategy of locating  facilities in close proximity to its customers.
Precise  provides the Company with a facility near Northrop Grumman and Lockheed
Martin, customers also served by Precise.

Results of Operations - Quarter Ended June 30, 1998 compared to June 30, 1997.

Net Sales.  Net sales for the  quarter  ended June 30, 1998 rose 8.9% from $14.4
million  in 1997 to  $15.7  million.  This  increase  was  primarily  due to the
Company's  participation  on the 737 New Generation  ("737 NG") which added $1.8
million in sales in the second quarter rising to $2.9 million from $1.1 million.
The Company's  sales growth was inhibited by  difficulties  in production of the
leading edge wing slats produced for the 737 NG. These  production  difficulties
have been  resolved and should  result in a deferral of sales into the third and
fourth quarter of approximately $0.6 million.

Additionally, net sales on the 747 model aircraft contributed an additional $0.4
million,  rising to $4.2 million from $3.8 million.  Although the second quarter
of 1998 was  positively  impacted by the 747,  Boeing  recently  announced a 30%
reduction  in output on this model and,  therefore,  reductions  in volume  will
likely occur for the foreseeable  future.  With  production  rates declining and
scheduled  to end in 2000,  sales of the 737 Classic  components  were down $1.2
million, dropping from $2.7 million to $1.5 million.

Gross Profit. Gross profit increased 17.0% in the second quarter of 1998 to $4.8
million  (30.8% of net  sales)  from $4.1  million  (28.6% of net  sales).  This
improvement  in margins  was  primarily  due to better  coverage  of fixed costs
provided by the increase in sales. Certain overhead expenses increased, however,
at a slower rate than the rise in sales.

Selling,  General, and Administrative  Expenses ("SG&A").  SG&A increased 11% in
the  second  quarter  of 1998 to $1.8  million  (11.8% of net  sales)  from $1.7
million (11.6% of net sales) in 1997.

Income Taxes.  The  effective  tax rate in the second  quarter of 1998 was 37.5%
compared  to  38.5%  in  1997.  This  change  in  effective  rates is due to the
recognition of state income tax credits available to the Company.

Net  Income.  As a result of the  foregoing,  the net  income  rose 27.7% in the
second quarter of 1998, rising to $1.7 million from $1.4 million.

Earnings Per Share.  The initial  public  offering  had a minimal  impact on the
weighted  average common shares  outstanding  used in the earnings per share for
the quarter  ended June 30, 1998.  The  2,300,000  newly issued common stock was
outstanding for one day during the period.

Results of Operations - Six Months Ended June 30, 1998 compared to June 30, 1997

Net Sales.  Net sales  increased  18.2% in the six months  ended June 30,  1998,
rising from $27.1 million in 1997 to $32.0 million.  Net sales  increased on all
Boeing  7-series  models with the exception of the 737 Classic,  which Boeing is
phasing out of  production.  The increase in net sales was  primarily due to the
Company's participation on the 737 NG aircraft which saw net sales increase $4.5
million in 1998, growing to $6.2 million from $1.7 million. The first six months
of 1998 also were aided by increased shipments on the 747, with sales growing to
$8.6 million from $7.8 million.  As stated earlier,  Boeing's  announcement of a
production rate decrease will diminish the  contribution of this model in future
quarters.  The Company's net sales of components  for the 737 Classic  decreased
approximately $1.6 million, from $5.2 million in 1997 to $3.6 million in 1998.

Sales  for  Corporate/Regional  aircraft  during  the first  half of 1998,  were
essentially  unchanged from the comparable period in 1997, however,  the Company
began  shipments in June,  1998 on a new program  supporting the Gulfstream G-IV
and G-V which should positively impact future quarters.

Gross Profit.  Gross profit (net sales less cost of goods sold)  increased 30.2%
in the first six months of 1998,  from $7.4 million (27.4% of net sales) to $9.7
million (30.2% of net sales). The increase in gross profit was predominantly the
result of better coverage of fixed costs afforded by the increase in net sales.

Selling,  General, and Administrative Expenses ("SG&A"). SG&A increased 18.1% in
1998,  commensurate  with the increase in sales, from $3.2 million (11.7% of net
sales) in 1997 to $3.7  million  (11.7% of net  sales).  The  Company's  SG&A is
driven in large part by the salaries, wages, and related fringe benefits paid to
its selling and administrative employees which accounted for $0.2 million of the
increase.

Income Taxes. The effective income tax rate for the first six months of 1998 was
38%, down from 38.5% in 1997.  This reduction in effective rate is the result of
the Company's utilization of several different state income tax credits.

Net Income.  The increase in net sales,  improvements in gross profits and other
changes discussed above,  drove net increase up for the six months 47.8% to $3.4
million in 1998 from $2.3 million.

Earnings Per Share.  The initial  public  offering  had a minimal  impact on the
weighted  average common shares  outstanding  used in the earnings per share for
the six-months  ended June 30, 1998. The 2,300,000 newly issued common stock was
outstanding for one day during the period.

Liquidity and Capital Resources.

On June 30, 1998, the Company  completed an initial public  offering  ("IPO") of
its common stock in which it sold 2,300,000 shares at $10.00 per share. Although
the IPO was completed during the second quarter, proceeds of the offering ($20.4
million after  expenses of $2.6  million) were not received  until July 6, 1998.
Therefore,  the pending  receipt of the proceeds was  accounted for as a current
receivable.  Immediately  upon  receipt  of the cash from the IPO,  the  Company
retired term debt of $3.3  million  with Magna Bank,  N.A. and $0.4 million with
the Oklahoma  Industrial Finance Authority.  Both of these notes were secured by
real estate of the Company.  Additionally,  the Company used $2.4 million of the
proceeds to  temporarily  pay down the revolving line of credit with Magna Bank,
N.A. The Company  maintains  its ability to borrow up to $15 million  under this
revolving  line of credit.  The balance of these  proceeds  from the IPO will be
used to fund acquisitions, working capital needs, or capital investment needs.

Subsequent to the end of the quarter, the underwriters informed the Company that
they were exercising their option to sell the 15% over allotment. Therefore, the
Company  received an  additional  $3.2 million in cash for 345,000  newly issued
shares. These proceeds are not reflected in the quarterly financial statements.

The working capital needs of the Company are generally funded by cash flows from
operations.  During the first six months of 1998, operating activities generated
$3.8  million of cash  compared to $3.9 million in the first six months of 1997.
The growth of the Company has required a substantial  investment in  receivables
($1.1 million  increase  during 1998) and  inventories  ($0.8  million  increase
during  1998).  Cash  was  used to  support  capital  expenditures  and fund the
preliminary costs of the IPO.

The Company continued to invest in property,  plant and equipment  spending $3.2
million in 1998. In Tulsa, the Company neared completion of a 33,000 square foot
addition ($1.1  million)  nearly  doubling its available  space to 75,000 square
feet. The Auburn facility upgraded its punching  capability with the addition of
a new CNC punching machine ($0.4 million) to replace an older,  slower model and
spent $0.2 million  upgrading and  customizing a newly leased 80,000 square foot
facility that will replace the current 45,000 square foot facility.  The Company
also began expansion  efforts at one of its St. Charles locations which will add
approximately  20,000 square feet ($0.1 million) and purchased another five axis
routing  machine  ($0.2  million) to support  the 737 NG leading  edge wing slat
program.  Additionally,  in conjunction with the Company's fourth quarter,  1997
conversion  to a new  software  system  and  upgrading  of  several  local  area
networks,  the Company  spent $0.2  million on computer  hardware,  software and
training.  The Company  estimates it will expend an additional $1.8 million over
the balance of 1998, primarily on facility expansions.

As earlier  discussed,  the Company has agreed to purchase the assets of Precise
and will utilize a portion of the proceeds of the  offering.  This is consistent
with our stated intentions.

                           PART II. OTHER INFORMATION

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Sale of Unregistered Stock

(c)      During the quarter ended June 30, 1998,  the Company  issued 32,900 new
         shares  of  Common  Stock  to  one  of  its  officers,  pursuant  to an
         employment  agreement and sold 98,800 shares of Common Stock to another
         officer pursuant to an employment agreement and recorded a subscription
         receivable  of $600,000 in  stockholders'  equity with  respect to this
         transaction.

Use of Proceeds from the Public Offering

(d)      Pursuant to a registration  statement on Form S-1 (No. 333-51357) which
         was declared  effective  by the SEC on June 30, 1998,  the Company sold
         2,300,000  shares of Common Stock in a public offering for an aggregate
         price of $23.0 million The managing underwriter of such public offering
         was EVEREN  Securities,  Inc.  In  connection  therewith,  the  Company
         granted  to the  underwriters  a 45-day  option  to  purchase  up to an
         aggregate of 345,000 additional shares of Common Stock.

         The  total  expenses  incurred  in  connection  with the  issuance  and
         distribution of the Common Stock,  including those  associated with the
         over  allotment   option  were  $2,801,500.   Underwriting   discounts,
         including  those  associated  with the over allotment were  $1,851,500.
         None of the expenses  were paid  directly or  indirectly  to directors,
         officers,  persons  owning  ten (10)  percent  or more of any  class of
         equity securities or affiliates of the Company.

         Net proceeds  from the sale of the shares of Common  Stock,  such funds
         have been used to retire  term debt of $3.3  million  with Magna  Bank,
         N.A. and $0.4 million with the Oklahoma  Industrial  Finance Authority.
         Additionally,  the  Company  used  $2.4  million  of  the  proceeds  to
         temporarily  pay down a revolving line of credit with Magna Bank,  N.A.
         The  remainder  of the  proceeds are  currently  held in highly  liquid
         assets to be used to support the Company's growth  strategies  through,
         among  other  things,  the  funding of  acquisitions  of  complementary
         businesses.


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)      See Exhibit Index

         (B)       No current reports on Form 8-K have been filed by the Company
                   during the six month period ended June 30, 1998.


<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    LMI AEROSPACE, INC.



Date:  August 14, 1998              By: /s/ Lawrence E. Dickinson
                                        Lawrence E. Dickinson
                                        Chief Financial Officer and Secretary


<PAGE>


                                  EXHIBIT INDEX

Exhibit Number          Description
--------------          -----------
     27                 Financial Data Schedule