**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

to .

**LMI      AEROSPACE, INC.**

| **Missouri**(State                or other jurisdiction ofincorporation                or organization)                             | **43-1309065**(I.R.S.                EmployerIdentification                No.) |
|-------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|
|                                                                                                                                |                                                                            |
| **3600                Mueller Road****St.                Charles, Missouri**(Address                of principal executive offices) |  **63302-0900**(Zip                Code)                                   |

**(636)      946-6525**

----

**LMI      AEROSPACE, INC.**

**QUARTERLY      REPORT ON FORM 10-Q**

**FOR      THE FISCAL QUARTER ENDING SEPTEMBER 30, 2006**

| PART                I. FINANCIAL INFORMATION                                                                                                                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                 | Page                No. |
| **Item                1.  Financial Statements                (unaudited).**                                                                               |   |
|                                                                                                                                                                 |   |
| Condensed                Consolidated Balance Sheets as of                September 30, 2006 and December 31, 2005.                                                  | 3 |
|                                                                                                                                                                 |   |
| Condensed                Consolidated Statements of Operations                for the three months and nine months ended September 30, 2006 and                2005. | 4 |
|                                                                                                                                                                 |   |
| Condensed                Consolidated Statements of Cash                Flows for the nine months ended September 30, 2006 and                2005.                  | 5 |
|                                                                                                                                                                 |   |
| Notes                to Condensed Consolidated Financial                Statements.                                                                                  | 6 |
|                                                                                                                                                                 |   |
| **Item                2.  Management’s Discussion and Analysis of                Financial Condition and****Results                of Operations.**  | 13 |
|                                                                                                                                                                 |   |
| **Item                3.  Quantitative and Qualitative Disclosures                About Market Risk.**                                                     | 19 |
|                                                                                                                                                                 |   |
| **Item                4.**  **Controls                and Procedures.**                                                                                    | 19 |
|                                                                                                                                                                 |   |
| PART                II. OTHER INFORMATION                                                                                                                            |
|                                                                                                                                                                 |   |
| **Item                1.  Legal                Proceedings.**                                                                                              | 20 |
|                                                                                                                                                                 |   |
| **Item                1A.  Risk                Factors.**                                                                                                  | 20 |
|                                                                                                                                                                 |   |
| **Item                2.  Unregistered Sales of Equity                Securities and Use of Proceeds.**                                                    | 20 |
|                                                                                                                                                                 |   |
| **Item                3.  Defaults Upon Senior                Securities.**                                                                                | 20 |
|                                                                                                                                                                 |   |
| **Item                4.  Submission of Matters to a Vote of                Security Holders.**                                                            | 20 |
|                                                                                                                                                                 |   |
| **Item                5.  Other                Information.**                                                                                              | 20 |
|                                                                                                                                                                 |   |
| **Item                6.  Exhibits.**                                                                                                                      | 20 |
|                                                                                                                                                                 |   |
| SIGNATURE                PAGE                                                                                                                                        | 21 |
|                                                                                                                                                                 |   |
| EXHIBIT                INDEX                                                                                                                                         | 22 |

----

**PART      I**

**FINANCIAL      INFORMATION**

**Item      1.  Financial Statements      (unaudited).**

**LMI      Aerospace, Inc.**

**Condensed      Consolidated Balance      Sheets**

*(Amounts      in thousands, except share and per share data)*

|                                                                                                                                                                                                                                     |   | **(Unaudited)****September                30,****2006** |    |  **December                31,****2005** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|-----------------------------------------------|--------|
| Assets                                                                                                                                                                                                                                   |   |                                                    |    |                                          |   |
| Current                assets:                                                                                                                                                                                                           |   |                                                    |    |                                          |   |
| Cash                and cash equivalents                                                                                                                                                                                                 |   | $                                                       | 11,015  |                                          | $      | 35 |   |
| Short-term                investments                                                                                                                                                                                                    |   |                                                    | 15,332  |                                          |   | - |   |
| Trade                accounts receivable, net of allowance of $227 atSeptember                30, 2006 and $244 at December 31, 2005                                                                                                     |   |                                                    | 14,908  |                                          |   | 16,088 |   |
| Inventories                                                                                                                                                                                                                              |   |                                                    | 31,965  |                                          |   | 25,333 |   |
| Prepaid                expenses and other current assets                                                                                                                                                                                 |   |                                                    | 1,525   |                                          |   | 1,205 |   |
| Deferred                income taxes                                                                                                                                                                                                     |   |                                                    | 1,610   |                                          |   | 1,610 |   |
| Total                current assets                                                                                                                                                                                                      |   |                                                    | 76,355  |                                          |   | 44,271 |   |
|                                                                                                                                                                                                                                     |   |                                                    |    |                                          |   |   |   |
| Property,                plant and equipment, net                                                                                                                                                                                        |   |                                                    | 19,923  |                                          |   | 18,162 |   |
| Goodwill                                                                                                                                                                                                                                 |   |                                                    | 5,653   |                                          |   | 5,653 |   |
| Customer                intangible assets, net                                                                                                                                                                                           |   |                                                    | 3,528   |                                          |   | 3,114 |   |
| Other                assets                                                                                                                                                                                                              |   |                                                    | 634     |                                          |   | 757 |   |
| Total                assets                                                                                                                                                                                                              |   | $                                                       | 106,093 |                                          | $      | 71,957 |   |
|                                                                                                                                                                                                                                     |   |                                                    |    |                                          |   |   |   |
| Liabilities                and stockholders’ equity                                                                                                                                                                                |   |                                                    |    |                                          |   |   |   |
| Current                liabilities:                                                                                                                                                                                                      |   |                                                    |    |                                          |   |   |   |
| Accounts                payable                                                                                                                                                                                                          |   | $                                                       | 9,807   |                                          | $      | 7,407 |   |
| Accrued                expenses                                                                                                                                                                                                          |   |                                                    | 3,961   |                                          |   | 6,077 |   |
| Current                installments of long-term debt and capital leaseobligations                                                                                                                                                       |   |                                                    | 1,433   |                                          |   | 1,846 |   |
| Total                current liabilities                                                                                                                                                                                                 |   |                                                    | 15,201  |                                          |   | 15,330 |   |
|                                                                                                                                                                                                                                     |   |                                                    |    |                                          |   |   |   |
| Long-term                debt and capital lease obligations, less current installments                                                                                                                                                   |   |                                                    | 2,088   |                                          |   | 14,462 |   |
| Subordinated                debt                                                                                                                                                                                                         |   |                                                    | -       |                                          |   | 1,000 |   |
| Deferred                income taxes                                                                                                                                                                                                     |   |                                                    | 1,333   |                                          |   | 1,333 |   |
| Total                long-term liabilities                                                                                                                                                                                               |   |                                                    | 3,421   |                                          |   | 16,795 |   |
|                                                                                                                                                                                                                                     |   |                                                    |    |                                          |   |   |   |
| Stockholders’                equity:                                                                                                                                                                                               |   |                                                    |    |                                          |   |   |   |
| Common                stock, $.02 par value per share; authorized28,000,000                shares; issued 11,571,181 shares and 8,797,909                shares at September 30, 2006 and December 31,                2005, respectively |   |                                                    | 231     |                                          |   | 176 |   |
| Preferred                stock, $.02 par value per share; authorized 2,000,000shares;                none issued in both periods                                                                                                         |   |                                                    | -       |                                          |   | - |   |
| Additional                paid-in capital                                                                                                                                                                                                |   |                                                    | 65,798  |                                          |   | 26,307 |   |
| Treasury                stock, at cost, 403,032 shares at September 30, 2006and                433,972 shares at December 31, 2005                                                                                                       |   |                                                    | (1,912  | )                                             |   | (2,059 | ) |
| Retained                earnings                                                                                                                                                                                                         |   |                                                    | 23,354  |                                          |   | 15,408 |   |
| Total                stockholders’ equity                                                                                                                                                                                          |   |                                                    | 87,471  |                                          |   | 39,832 |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                          |   | $                                                       | 106,093 |                                          | $      | 71,957 |   |

*See      accompanying Notes to Condensed Consolidated Financial      Statements.*

----

**LMI      Aerospace, Inc.**

**Condensed      Consolidated Statements of      Operations**

*(Amounts      in thousands, except share and per share data)*

*(Unaudited)*

|                                                        |   | **Three                Months Ended****September                30,** |       | **Nine                Months Ended****September                30,** |       |
|-------------------------------------------------------------|--------|-----------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
|                                                        |   | **2006**                                                              | ** ** | **2005**                                                             | ** ** | **2006** | ** ** | **2005** |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |
| Net                sales                                    |   | $                                                                     | 30,799     |                                                                 | $          | 24,255 |   | $ | 92,809 |   | $ | 72,236 |   |
| Cost                of sales                                |   |                                                                  | 22,430     |                                                                 |       | 17,917 |   |   | 67,271 |   |   | 55,051 |   |
| Gross                profit                                 |   |                                                                  | 8,369      |                                                                 |       | 6,338 |   |   | 25,538 |   |   | 17,185 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses |   |                                                                  | 4,435      |                                                                 |       | 3,844 |   |   | 12,807 |   |   | 10,784 |   |
| Income                from operations                       |   |                                                                  | 3,934      |                                                                 |       | 2,494 |   |   | 12,731 |   |   | 6,401 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Other                income (expense):                      |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Interest                expense                             |   |                                                                  | 134        |                                                                 |       | (406 | ) |   | (216 | ) |   | (1,249 | ) |
| Other,                net                                   |   |                                                                  | (63        | )                                                                    |       | 2 |   |   | (63 | ) |   | 2 |   |
| Income                before income taxes                   |   |                                                                  | 4,005      |                                                                 |       | 2,090 |   |   | 12,452 |   |   | 5,154 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Provision                for income taxes                   |   |                                                                  | 1,289      |                                                                 |       | 787 |   |   | 4,470 |   |   | 1,958 |   |
| Net                income                                   |   | $                                                                     | 2,716      |                                                                 | $          | 1,303 |   | $ | 7,982 |   | $ | 3,196 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Amounts                per common share:                    |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Net                income per common share                  |   | $                                                                     | 0.24       |                                                                 | $          | 0.16 |   | $ | 0.78 |   | $ | 0.39 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Net                income per common share,                 |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| assuming                dilution                            |   | $                                                                     | 0.24       |                                                                 | $          | 0.16 |   | $ | 0.77 |   | $ | 0.38 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Weighted                average common shares               |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| outstanding                                                 |   |                                                                  | 11,112,599 |                                                                 |       | 8,268,794 |   |   | 10,266,897 |   |   | 8,248,959 |   |
|                                                        |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| Weighted                average dilutive common             |   |                                                                  |       |                                                                 |       |   |   |   |   |   |   |   |   |
| shares                outstanding                           |   |                                                                  | 11,234,505 |                                                                 |       | 8,382,514 |   |   | 10,390,833 |   |   | 8,358,130 |   |

*See      accompanying Notes to Condensed Consolidated Financial      Statements.*

----

**LMI      Aerospace, Inc.**

**Condensed      Consolidated Statements of Cash      Flows**

*(Amounts      in thousands)*

*(Unaudited)*

|                                                                    |       | **Nine                  Months Ended September 30,** | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                              | ** ** | **2006**                                             | ** ** | **2005** |   |
| Operating                  activities:                                  |       |                                                 |       |   |   |
| Net                  income                                             |       | $                                                    | 7,982      |   | $ | 3,196 |   |
| Adjustments                  to reconcile net income to                 |       |                                                 |       |   |   |   |   |
| net                  cash provided by operating activities:             |       |                                                 |       |   |   |   |   |
| Depreciation                  and amortization                          |       |                                                 | 2,763      |   |   | 3,278 |   |
| Charges                  for inventory obsolescence and valuation       |       |                                                 | 550        |   |   | 896 |   |
| Restricted                  stock compensation                          |       |                                                 | 133        |   |   | -- |   |
| Changes                  in operating assets and liabilities:           |       |                                                 |       |   |   |   |   |
| Trade                  accounts receivable                              |       |                                                 | 1,180      |   |   | (3,392 | ) |
| Inventories                                                             |       |                                                 | (7,182     | ) |   | (3,249 | ) |
| Prepaid                  expenses and other assets                      |       |                                                 | (133       | ) |   | (125 | ) |
| Income                  taxes                                           |       |                                                 | (3,425     | ) |   | 1,687 |   |
| Accounts                  payable                                       |       |                                                 | 2,400      |   |   | 497 |   |
| Accrued                  expenses                                       |       |                                                 | 1,218      |   |   | 663 |   |
| Net                  cash provided by operating activities              |       |                                                 | 5,486      |   |   | 3,451 |   |
|                                                                    |       |                                                 |       |   |   |   |   |
| Investing                  activities:                                  |       |                                                 |       |   |   |   |   |
| Additions                  to property, plant and equipment             |       |                                                 | (4,381     | ) |   | (1,298 | ) |
| Proceeds                  from sale of equipment                        |       |                                                 | 127        |   |   | 21 |   |
| Purchase                  of debt securities                            |       |                                                 | (18,192    | ) |   | -- |   |
| Proceeds                  from matured debt securities                  |       |                                                 | 2,979      |   |   | -- |   |
| Acquisition                  of Technical Change Associates             |       |                                                 | (626       | ) |   | -- |   |
| Net                  cash used by investing activities                  |       |                                                 | (20,093    | ) |   | (1,277 | ) |
|                                                                    |       |                                                 |       |   |   |   |   |
| Financing                  activities:                                  |       |                                                 |       |   |   |   |   |
| Proceeds                  from public offering                          |       |                                                 | 39,249     |   |   | -- |   |
| Proceeds                  from issuance of debt                         |       |                                                 | 512        |   |   | -- |   |
| Net                  payments on revolving line of credit               |       |                                                 | (8,898     | ) |   | (1,174 | ) |
| Principal                  payments on long-term debt and notes payable |       |                                                 | (5,401     | ) |   | (1,524 | ) |
| Proceeds                  from exercise of stock options                |       |                                                 | 125        |   |   | 187 |   |
| Net                  cash provided (used) by financing activities       |       |                                                 | 25,587     |   |   | (2,511 | ) |
|                                                                    |       |                                                 |       |   |   |   |   |
| Net                  increase (decrease) in cash and cash equivalents   |       |                                                 | 10,980     |   |   | (337 | ) |
| Cash                  and cash equivalents, beginning of year           |       |                                                 | 35         |   |   | 414 |   |
| Cash                  and cash equivalents, end of quarter              |       | $                                                    | 11,015     |   | $ | 77 |   |
|                                                                    |       |                                                 |       |   |   |   |   |
| Supplemental                  disclosures of cash flow information:     |       |                                                 |            |   |   |  |   |
| Interest                  paid                                          |       | $                                                    | 635        |   | $ | 1,292 |   |
| Income                  taxes paid (refunded), net                      |       | $                                                    | 7,895      |   | $ | 263 |   |

*See      accompanying Notes to Condensed Consolidated Financial      Statements.*

----

**LMI            Aerospace, Inc.**

**Notes            to Condensed Consolidated Financial            Statements**

*(Dollar            amounts in thousands, except share and per share data)*

*(Unaudited)*

**1.  Overview      and Accounting Policies**

**Description      of Business**

**Basis      of Presentation**

**Customer      Concentration**

----

**LMI              Aerospace, Inc.**

**Notes              to Condensed Consolidated Financial Statements**

*(Dollar              amounts in thousands, except share and per share data)*

*(Unaudited)*

**Income      Taxes**

**Use      of Estimates**

**2.  Short-term      Investments**

|                                                                                                                        |   | **September                30,****2006** |   | **December                31,**** 2005** |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                                        |   |                                     |   |                                          |   |
| Debt                securities issued by U.S. Treasury and otherU.S.                government corporations and agencies    |   | $                                        | 14,923 |                                          | $      | - |   |
| Debt                securities issued by states of the United Statesand                political subdivisions of the states |   |                                     | 409    |                                          |   | - |   |
|                                                                                                                        |   | $                                        | 15,332 |                                          | $      | - |   |

**3.  Inventories**

|                             |   | **September                30, 2006** |   | **December                31, 2005** |   |
|----------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
|                             |   |                                  |   |                                 |   |
| Raw                materials     |   | $                                     | 5,531  |                                 | $      | 5,209 |   |
| Work                in progress  |   |                                  | 8,338  |                                 |   | 6,480 |   |
| Finished                goods    |   |                                  | 18,096 |                                 |   | 13,644 |   |
| Total                inventories |   | $                                     | 31,965 |                                 | $      | 25,333 |   |

----

**LMI          Aerospace, Inc.**

**Notes          to Condensed Consolidated Financial Statements**

*(Dollar          amounts in thousands, except share and per share data)*

*(Unaudited)*

**4.  **
**Goodwill      and Intangible Assets**

**Customer-Related      Intangible Assets**

|                                    |   | **September                30,****2006** |   | **December                31, 2005** |   |
|-----------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|
|                                    |   |                                     |   |                                 |   |
| Gross                Amount             |   | $                                        | 4,694  |                                 | $      | 3,975 |   |
| Accumulated                Amortization |   |                                     | (1,166 | )                                    |   | (861 | ) |
| Intangible                assets, net   |   | $                                        | 3,528  |                                 | $      | 3,114 |   |

**5.  Long-Term        Debt and Revolving Line of Credit**

|                                                                                                                                                        |   | **September                  30,** |   | **December                  31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                                        |   | **2006**                           |   | **2005**                          |   |
| Term                  Loans:                                                                                                                                |   |                               |   |                              |   |
| Real                  estate                                                                                                                                |   | $                                  | -      |                              | $      | 3,280 |   |
| Equipment                                                                                                                                                   |   |                               | 2,655  |                              |   | 3,540 |   |
| Revolving                  line of credit                                                                                                                   |   |                               | -      |                              |   | 8,899 |   |
| Notes                  payable, principal and interest payable monthly,at                  fixed rates, ranging from 6.99% to 7.20%                         |   |                               | 866    |                              |   | 589 |   |
| Total                  debt                                                                                                                                 |   |                               | 3,521  |                              |   | 16,308 |   |
| Less                  current installments                                                                                                                  |   |                               | 1,433  |                              |   | 1,846 |   |
| Total                                                                                                                                                       |   | $                                  | 2,088  |                              | $      | 14,462 |   |
| Subordinated                  notes due December 2007 payable to    certain                  directors, interest payable monthly at 12% |   | $                                  | -      |                              | $      | 1,000 |   |

----

**LMI          Aerospace, Inc.**

**Notes          to Condensed Consolidated Financial Statements**

*(Dollar          amounts in thousands, except share and per share data)*

*(Unaudited)*

**Credit      Facility**

| ·   | A                revolving line of credit (the “Revolver”) of up to $23,250, subject to a                borrowing base calculation. The borrowing base calculation at September                30, 2006 allowed the Company to borrow up to $22,280. The Revolver                requires monthly payments of interest at Wells Fargo’s prime lending rate                (8.25% at September 30, 2006) and matures on November 15, 2009. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | An                equipment term loan (the “Equipment Loan”) of $4,720 payable monthly over                three years in equal monthly principal installments of $98. The Equipment                Loan previously required monthly interest payments at Wells Fargo’s prime                lending rate plus 4%. In January 2006, the rate was reduced to Wells                Fargo’s prime lending rate plus 0.5% after the payment by the Company of                a                $50 fee. Effective as of September 1, 2006, the rate is reduced to                prime                plus 0.25% per the terms of the Amended                Facility. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                real estate term loan (the “Real Estate Loan”) of $3,645 payable in equal                monthly principal installments of $30 over three years, using a ten                year                amortization table. The Real Estate Loan previously required interest                at                Wells Fargo’s prime lending rate plus 4%. In January 2006, the rate was                reduced to Wells Fargo’s prime lending rate plus 0.5% upon the                satisfaction by the Company of the conditions that it maintain sufficient                liquidity and reduce the borrowing base calculation by $1,800 over                the                first year of the agreement. On March 29, 2006, the remaining balance                was                repaid with proceeds from the Company’s public offering completed thereon. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**LMI            Aerospace, Inc.**

**Notes            to Condensed Consolidated Financial Statements**

*(Dollar            amounts in thousands, except share and per share data)*

*(Unaudited)*

**Other      Notes **

**6.  Earnings      Per Common Share**

**7.  Stock-Based      Compensation**

----

**LMI            Aerospace, Inc.**

**Notes            to Condensed Consolidated Financial Statements**

*(Dollar            amounts in thousands, except share and per share data)*

*(Unaudited)*

| **Stock                Options**                      |   | **Shares** |    | **Weighted****Average                Exercise Price** |   | **Weighted****Average****Remaining****Contractual****Life** |   | **Aggregate****Intrinsic****Value** |                   |
|-------------------------------------------------------|--------|------------|---------|------------------------------------------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------|------------------------|
| Outstanding                at January 1, 2006         |   |       | 198,024 |                                                       | $      | 3.30                                                        |   |                                |                   |   |   |   |   |
| Granted                                               |   |       | -       |                                                       | $      | -                                                           |   |                                |                   |   |   |   |   |
| Exercised                                             |   |       | (34,140 | )                                                          | $      | 3.56                                                        |   |                                |                   |   |   |   |   |
| Forfeited                or expired                   |   |       | (8,900  | )                                                          | $      | 4.05                                                        |   |                                |                   |   |   |   |   |
|                                                  |   |       |         |                                                       |   |                                                             |   |                                |                        |   |   |  |   |
| Outstanding                at September 30, 2006 |   |       | 154,984 |                                                       | $      | 3.20                                                        |   |                                | 4.3                yrs |   | $ | 2,371 |   |
|                                                  |   |       |         |                                                       |   |                                                             |   |                                |                        |   |   |  |   |
| Exercisable                at September 30, 2006 |   |       | 154,609 |                                                       | $      | 3.20                                                        |   |                                | 4.3                yrs |   | $ | 2,365 |   |

| **Range                  of****Exercise****Prices** |   | **Number                  of****Outstanding****Options** |   | **Weighted****Average****Remaining****Contractual****Life** |   | **Weighted****Average****Exercise****Price** |   | **Number****Exercisable** |   | **Weighted****Average****Exercise****Price** |
|-----------------------------------------------------|--------|----------------------------------------------------------|--------|-------------------------------------------------------------|--------|----------------------------------------------|--------|---------------------------|--------|----------------------------------------------|
| $1.31                  - $1.95                      |   | 15,000                                                   |   | 7.8                                                         |   | $                  1.31                      |   | 15,000                    |   | $                  1.31                      |
| $1.96                  - $2.90                      |   | 86,184                                                   |   | 3.9                                                         |   | 2.57                                         |   | 85,809                    |   | 2.58                                         |
| $2.91                  - $4.35                      |   | 18,500                                                   |   | 3.9                                                         |   | 3.41                                         |   | 18,500                    |   | 3.41                                         |
| $4.36                  - $6.06                      |   | 35,300                                                   |   | 3.9                                                         |   | 5.42                                         |   | 35,300                    |   | 5.42                                         |
| Total                                               |   | 154,984                                                  |   | 4.3                                                         |   | $                  3.20                      |   | 154,609                   |   | $                  3.20                      |

----

**LMI            Aerospace, Inc.**

**Notes            to Condensed Consolidated Financial Statements**

*(Dollar            amounts in thousands, except share and per share data)*

*(Unaudited)*

| **Restricted                  Stock Awards**                                                                                                                                                                                                                                   |   | **Shares** |    | **Weighted****Average****Grant Date****Fair                  Value** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|---------|---------------------------------------------------------------------------|--------|
| Outstanding                  at January 1, 2006                                                                                                                                                                                                                                |   |       | 15,750  |                                                                      | $      | 9.06 |   |
| Granted                                                                                                                                                                                                                                                                        |   |       | 21,250  |                                                                      |   | 15.65 |   |
| Vested                                                                                                                                                                                                                                                                         |   |       | — |                                                                      |   | — |   |
| Forfeited                                                                                                                                                                                                                                                                      |   |       | — |                                                                      |   | — |   |
|                                               |   |       |         |                                                                      |   |  |   |
| Outstanding                  at September 30, 2006                                                                                                                                                                                                                             |   |       | 37,000  |                                                                      | $      | 12.85 |   |
|                                                                                                                                                                                                                                                                           |   |       |         |                                                                      |   |  |   |

|                                                                                                                                                         |   | **Three                  Months Ended** |   | **Nine                  Months Ended**  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                         |   | **September                  30, 2005** |   | **September                  30, 2005** |   |
|                                                                                                                                                         |   |                                    |   |                                    |   |
| Net                  income                                                                                                                                  |   | $                                       | 1,303  |                                    | $      | 3,196 |   |
| Total                  stock-based employee compensationexpense                  determined under fair valuebased                  method, net of tax effect |   |                                    | (1     | )                                       |   | (19 | ) |
| Pro                  forma net income                                                                                                                        |   | $                                       | 1,302  |                                    | $      | 3,177 |   |
|                                                                                                                                                         |   |                                    |   |                                    |   |   |   |
| Net                  income per common share - basic andassuming                  dilution1                                                                  |   |                                    |   |                                    |   |   |   |
| As                  reported                                                                                                                                 |   | $                                       | 0.16   |                                    | $      | 0.39 |   |
| Pro                  forma                                                                                                                                   |   | $                                       | 0.16   |                                    | $      | 0.38 |   |

|  | 1 | Options                to purchase 10,500 shares of common stock were outstanding at September                30, 2005, but were not included in the computations of diluted EPS                because                the options’ exercise price was greater than the Year-to-Date average                market price of the common shares. |
|--|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Item      2.  Management’s Discussion and Analysis of Financial      Condition and Results of Operations.**

**OVERVIEW**

----

**RESULTS      OF OPERATIONS**

*Three      months ended September 30, 2006 compared to three months ended September 30,      2005*

|                                          |   | **Three                Months Ended****September                30, 2006** | ** ** | **Three                Months Ended****September                30, 2005** |   |
|-----------------------------------------------|--------|----------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|--------|
|                                          |   | ($                in millions)                                             |       |
| Net                sales                      |   | $                                                                          | 30.8       |                                                                       | $      | 24.2 |   |
| Cost                of sales                  |   |                                                                       | 22.4       |                                                                       |   | 17.9 |   |
| Gross                profit                   |   |                                                                       | 8.4        |                                                                       |   | 6.3 |   |
| S,G                & A                    |   |                                                                       | 4.5        |                                                                       |   | 3.8 |   |
| Income                from operations         |   |                                                                       | 3.9        |                                                                       |   | 2.5 |   |
| Interest                income (expense), net |   |                                                                       | 0.1        |                                                                       |   | (0.4 | ) |
| Income                before income taxes     |   |                                                                       | 4.0        |                                                                       |   | 2.1 |   |
| Provision                for income taxes     |   |                                                                       | 1.3        |                                                                       |   | 0.8 |   |
| Net                income                     |   | $                                                                          | 2.7        |                                                                       | $      | 1.3 |   |

**Net      Sales.**

| **Category**                                   | ** ** | **Three                Months****Ended****September                30,****2006** | ** ** | **%                of****Total** | ** ** | **Three                Months****Ended****September                30,****2005** | ** ** | **%                of****Total** |   |
|------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------|--------|
| Corporate                and regional aircraft |       | $                                                                                | 11.6       |                             |       | 37.7                                                                             | %          | $                                | 10.2   |   |   | 42.1 | % |
| Large                commercial aircraft       |       |                                                                             | 9.5        |                             |       | 30.8                                                                             |       |                             | 7.2    |   |   | 29.8 |   |
| Military                                       |       |                                                                             | 7.6        |                             |       | 24.7                                                                             |       |                             | 3.8    |   |   | 15.7 |   |
| Technology                                     |       |                                                                             | 1.0        |                             |       | 3.2                                                                              |       |                             | 1.7    |   |   | 7.0 |   |
| Other                (1)                       |       |                                                                             | 1.1        |                             |       | 3.6                                                                              |       |                             | 1.3    |   |   | 5.4 |   |
| Total                                          |       | $                                                                                | 30.8       |                             |       | 100.0                                                                            | %          | $                                | 24.2   |   |   | 100.0 | % |

----

**Gross      Profit.**

**Selling,      General and Administrative Expenses.**

**Net      Interest Income.**

**Income      Tax Expense.**

----

*Nine      months ended September 30, 2006 compared to nine months ended September 30,      2005*

|                                      |   | **Nine                Months Ended****September                30, 2006** | ** ** | **Nine                Months Ended****September                30, 2005** |   |
|-------------------------------------------|--------|---------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|--------|
|                                      |   | ($                in millions)                                            |       |
| Net                sales                  |   | $                                                                         | 92.8       |                                                                      | $      | 72.2 |   |
| Cost                of sales              |   |                                                                      | 67.3       |                                                                      |   | 55.0 |   |
| Gross                profit               |   |                                                                      | 25.5       |                                                                      |   | 17.2 |   |
| S,G                & A                |   |                                                                      | 12.8       |                                                                      |   | 10.8 |   |
| Income                from operations     |   |                                                                      | 12.7       |                                                                      |   | 6.4 |   |
| Interest                expense, net      |   |                                                                      | 0.2        |                                                                      |   | 1.2 |   |
| Income                before income taxes |   |                                                                      | 12.5       |                                                                      |   | 5.2 |   |
| Provision                for income taxes |   |                                                                      | 4.5        |                                                                      |   | 2.0 |   |
| Net                income                 |   | $                                                                         | 8.0        |                                                                      | $      | 3.2 |   |

**Net      Sales.**

| **Category**                                   | ** ** | **Nine                Months Ended September 30,****2006** | ** ** | **%                of****Total** | ** ** | **Nine                Months Ended September 30,****2005** | ** ** | **%                of****Total** |   |
|------------------------------------------------|------------|------------------------------------------------------------|------------|----------------------------------|------------|------------------------------------------------------------|------------|----------------------------------|--------|
| Corporate                and regional aircraft |       | $                                                          | 35.7       |                             |       | 38.5                                                       | %          | $                                | 30.2   |   |   | 41.8 | % |
| Large                commercial aircraft       |       |                                                       | 28.1       |                             |       | 30.3                                                       |       |                             | 20.1   |   |   | 27.9 |   |
| Military                                       |       |                                                       | 20.4       |                             |       | 22.0                                                       |       |                             | 12.2   |   |   | 16.9 |   |
| Technology                                     |       |                                                       | 4.7        |                             |       | 5.1                                                        |       |                             | 3.5    |   |   | 4.8 |   |
| Other                (1)                       |       |                                                       | 3.9        |                             |       | 4.2                                                        |       |                             | 6.2    |   |   | 8.6 |   |
| Total                                          |       | $                                                          | 92.8       |                             |       | 100.0                                                      | %          | $                                | 72.2   |   |   | 100.0 | % |

----

**Gross      Profit.**

**Selling,      General and Administrative Expenses. **

**Net      Interest Expense.**

**Income      Tax Expense.**

----

**LIQUIDITY      AND CAPITAL RESOURCES**

**CONTRACTUAL      OBLIGATIONS AND COMMITMENTS**

----

**Item      3.** **  Quantitative      and Qualitative Disclosures About Market Risk.**

**Item      4.  Controls and      Procedures.**

----

**PART      II**

**OTHER      INFORMATION**

**Item      1.  Legal      Proceedings.**

**Item      1A.  Risk Factors.**

**Item      2.  Unregistered Sales of Equity Securities      and Use of Proceeds.**

**Item      3.  Defaults Upon Senior      Securities.**

**Item      4.  Submission of Matters to a Vote of Security      Holders.**

**Item      5.  Other      Information.**

**Item      6.  Exhibits.**

----

**SIGNATURES**

|                                   | LMI                AEROSPACE, INC. |
|----------------------------------------|------------------------------------|
|                                   |                               |   |
| Date:                November 13, 2006 |                               | /s/                Ronald S. Saks |
|                                   |                               | Ronald                S. SaksPresident                and Chief Executive Officer(Principal                Executive Officer) |
|                                   |                               |   |
| Date:                November 13, 2006 |                               | /s/                Lawrence E. Dickinson |
|                                   |                               | Lawrence                E. DickinsonChief                Financial Officer and Secretary(Principal                Financial and Principal AccountingOfficer) |

----

**EXHIBIT      INDEX**

| ExhibitNumber | Description                                                                                                                                                            |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                   |
| 10.1          | Memorandum                of Agreement effective as of January 1, 2006 between LMI Aerospace,                Inc.                and Gulfstream Aerospace Corporation. |
|          |                                                                                                                                                                   |
| 31.1          | Rule                13a-14(a) Certification of Ronald S. Saks, President and Chief Executive                Officer.                                                   |
|          |                                                                                                                                                                   |
| 31.2          | Rule                13a-14(a) Certification of Lawrence E. Dickinson, Chief Financial                Officer                and Secretary.                             |
|          |                                                                                                                                                                   |
| 32            | Certification                pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section                906 of                Sarbanes-Oxley Act of 2002.        |