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 March 31, 2004.


|_|     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: 000-24293

                               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                      63302-0900
    (Address of principal executive offices)            (Zip Code)

                                 (636) 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  X  No ___
                                              ---

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). 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 May 14, 2004.
    ------------------------------           ----------------------------

 Common Stock, par value $.02 per share              8,181,786

<PAGE>

                               LMI AEROSPACE, INC.
                               -------------------

                          QUARTERLY REPORT ON FORM 10-Q
                  FOR THE FISCAL QUARTER ENDING MARCH 31, 2004

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited).

     Condensed Consolidated Balance Sheets as of March 31, 2004 and December 31,
     2003.

     Condensed Consolidated  Statements of Operations for the three months ended
     March 31, 2004 and 2003.

     Condensed Consolidated  Statements of Cash Flows for the three months ended
     March 31, 2004 and 2003.

     Notes to Unaudited Condensed Consolidated Financial Statements.

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Item 4.  Controls and Procedures.

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

Item 6.  Exhibits and Reports on Form 8-K.


SIGNATURE PAGE

EXHIBIT INDEX


<PAGE>

                               LMI Aerospace, Inc.
                           Consolidated Balance Sheets
             (Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                      (Unaudited)
                                                                       March 31,          December 31,
                                                                          2004                2003
                                                                  -----------------------------------------
<S>                                                                <C>                   <C>
Assets
Current assets:
   Cash and cash equivalents                                          $      298            $    441
   Trade accounts receivable, net of allowance                             9,640               9,158
     of $250 in March 2004 and $245 in December 2003
   Inventories                                                            24,136              24,159
   Prepaid expenses                                                          812                 787
   Deferred income taxes                                                   2,206               2,206
   Income taxes receivable                                                 1,922               1,933
                                                                  -----------------------------------------
Total current assets                                                      39,014              38,684

Property, plant and equipment, net                                        21,476              22,248
   Goodwill                                                                5,653               5,653
   Customer intangible assets, net                                         3,696               3,792
   Other assets                                                              252                 142
                                                                  -----------------------------------------
Total Assets                                                            $ 70,091            $ 70,519
                                                                  =========================================

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                    $   5,444            $  4,570
   Accrued expenses                                                        2,073               2,126
   Current installments of long-term debt and capital lease
     obligations                                                          20,463               6,069
                                                                  -----------------------------------------
Total current liabilities                                                 27,980              12,765

Long-term debt and capital lease obligations, less current
   installments                                                            7,635              21,756
Deferred income taxes                                                      2,206               2,206
                                                                  -----------------------------------------
Total long-term liabilities                                                9,841              23,962

Stockholders' equity:
   Common stock of $.02 par value per share; authorized
     28,000,000 shares; issued 8,736,427 shares in both
     periods                                                                 175                 175
   Preferred stock; authorized 2,000,000 shares; none issued in
     both periods                                                              -                   -
   Additional paid-in capital                                             26,171              26,171
   Treasury stock, at cost, 554,641 shares in both periods                (2,632)             (2,632)
   Accumulated other comprehensive income (loss)                              17                  20
   Retained earnings                                                       8,539              10,058
                                                                  -----------------------------------------
Total stockholders' equity                                                32,270              33,792
                                                                  -----------------------------------------
Total liabilities and stockholders' equity                              $ 70,091           $  70,519
                                                                  =========================================
</TABLE>
See accompanying notes.


<PAGE>


                               LMI Aerospace, Inc.
                      Consolidated Statements of Operations
                  (Amounts in thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     For the Three Months Ended
                                                              March 31,
                                                     2004              2003
                                                   -----------------------------
<S>                                              <C>               <C>
Net sales                                           $  18,540         $  20,842
Cost of sales                                          15,869            18,623
                                                   ------------------------------
Gross profit                                            2,671             2,219

Selling, general and administrative expenses            3,216             3,310
Restructuring charges                                     529                 -
                                                   -----------------------------
   Loss from operations                                (1,074)           (1,091)

Other income (expense):
    Interest expense                                     (445)             (440)
    Other, net                                              -                 -
                                                   -----------------------------
Loss before income taxes                               (1,519)           (1,531)

Provision for (benefit of) income taxes                     -              (574)
                                                   -----------------------------
Net loss                                           $   (1,519)         $   (957)
                                                   =============================

Amounts per common share basic and dilutive:
   Net loss per common share                         $  (0.19)        $   (0.12)
                                                   =============================

Weighted average common shares outstanding          8,181,786         8,181,786
                                                   =============================
</TABLE>
See accompanying notes.

<PAGE>


                               LMI Aerospace, Inc.
                      Consolidated Statements of Cash Flow
                  (Amounts in thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                               For the Three Months Ended March 31,
                                                                   2004                     2003
                                                           -------------------------------------------------
<S>                                                          <C>                        <C>
Operating activities:
Net loss                                                        $  (1,519)                 $  (957)
Adjustments to reconcile net loss to
   net cash provided by (used by) operating activities:
     Depreciation and amortization                                  1,163                    1,219
     Changes in operating assets and liabilities:
         Trade accounts receivable                                   (482)                    (210)
         Inventories                                                   23                   (1,016)
         Prepaid expenses and other assets                           (140)                    (326)
         Income taxes                                                   7                     (611)
         Accounts payable                                             874                       60
         Accrued expenses                                             (49)                     125
                                                           -------------------------------------------------
Net cash provided by (used by) operating activities                  (123)                  (1,716)

Investing activities:
Additions to property, plant and equipment                           (290)                    (416)
Proceeds from sale of equipment                                         -                      301
                                                           ------------------------------------------------
Net cash provided by (used by) investing activities                  (290)                    (115)

Financing activities:
Net borrowings on revolving line of credit                          1,357                    2,583
Principal payments on long-term debt                               (1,084)                  (1,338)
                                                           ------------------------------------------------
Net cash provided by (used by) financing activities                   273                    1,245

Effect of exchange rate changes on cash                                (3)                       -
                                                           -------------------------------------------------
Net decrease in cash and cash equivalents                            (143)                    (586)
Cash and cash equivalents, beginning of year                          441                    1,182
                                                           -------------------------------------------------
Cash and cash equivalents, end of quarter                        $    298                  $   596
                                                           =================================================

Supplemental disclosures of cash flow information
Interest paid                                                      $  447                   $  416
Income taxes paid (refunded), net                                  $  (11)                $      5
</TABLE>

See accompanying notes.



<PAGE>


                               LMI Aerospace, Inc.
                   Notes to Consolidated Financial Statements
         (Dollar amounts in thousands, except share and per share data)
                                   (Unaudited)
                                 March 31, 2004


1. Accounting Policies

Description of Business

LMI Aerospace, Inc. (the "Company") fabricates,  machines and integrates formed,
close tolerance aluminum and specialty alloy components for use by the aerospace
and laser  equipment  industries.  The  Company is a Missouri  corporation  with
headquarters in St. Charles,  Missouri.  The Company maintains facilities in St.
Charles, Missouri; Auburn, Washington; Tulsa, Oklahoma; Wichita, Kansas; Irving,
Texas;  Sun Valley and  Oceanside,  California;  Pooler,  Georgia;  and Langley,
British Columbia.

Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
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 accounting  principles  generally accepted
in the United  States  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  months  ended March 31, 2004 are not  necessarily  indicative  of the
results  that may be  expected  for the year  ended  December  31,  2004.  These
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial statements and accompanying footnotes included in the Company's Annual
Report on Form 10-K for the year  ended  December  31,  2003,  as filed with the
Securities and Exchange Commission.

The Company's losses from operations in recent years together with its inability
to meet certain covenants under its loan agreement have raised substantial doubt
about the  Company's  ability to  continue  as a going  concern.  The  Company's
ability to continue as a going concern is ultimately dependent on its ability to
improve  operating  performance  such that it can  operate  profitably,  sustain
positive operating cash flows and support its required financial  covenants with
its primary  lender.  Management  is  currently  seeking  alternative  financing
arrangements  and  pursuing  the sale of certain  assets to replace  its current
lender and secure  additional  funds.  However,  there is no assurance  that the
Company  will be  successful  in  improving  its  operating  results,  obtaining
alternative  financing  or  consummating  the  sale  of  assets.  The  financial
statements do not include any adjustments to reflect the possible future effects
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.

The accompanying  unaudited consolidated financial statements have been prepared
on the going concern basis, which contemplates the realization of assets and the
satisfaction  of  liabilities  in the normal  course of  business,  although the
report of our  independent  accountant as of and for the year ended December 31,
2003 expresses  substantial  doubt as to the Company's  ability to continue as a
going  concern.  The financial  statements do not include any  adjustments  that
might result from the outcome of this uncertainty.

Operating Results and Management's Plan

In response to the substantial  doubt about the Company's ability to continue as
a going concern,  management has reduced the Company's cost structure,  improved
the Company's processes and systems and implemented strict controls over capital
spending.  Management  believes  these  activities  will continue to improve the
Company's  result  of  operations,  cash  flow from  operations  and its  future
prospects.  As a result of all the  factors  cited,  management  of the  Company
believes that the Company  should be able to sustain its operations and continue
as a going concern.  However, the ultimate outcome of this uncertainty cannot be
presently determined. Accordingly, there remains doubt as to whether the Company
will be able to continue as a going concern.

As  discussed  in the  Company's  Annual  Report on Form 10-K,  the  Company has
undertaken a plan to reduce operating expenses,  increase efficiencies and align
its cost structure  with current levels of demand for its products.  On July 23,
2003, as outlined in Note 7 of the Consolidated Financial Statements included as
part of this Quarterly Report on Form 10-Q, the Company announced the details of
a  restructuring  plan  for  its  St.  Charles  operations  which  includes  the
rationalization of the work force and the closure of two of the four St. Charles
facilities.  In addition,  in December 2003, the Company announced an additional
restructuring  program at its Wichita  facility  which included the reduction of
workforce and the sale of an LMI owned building and excess equipment.

On March 30, 2004, the Company and Union Planters Bank N.A.  ("Union  Planters")
entered into a Thirteenth Amendment to Loan Agreement ("Thirteenth  Amendment"),
amending the Loan Agreement  dated as of August 15, 1996 (the "Loan  Agreement")
between Leonard's Metal,  Inc., the predecessor in interest to the Company,  and
Magna Bank, National Association, the predecessor in interest to Union Planters.
The primary purposes of the Thirteenth Amendment were to (a) extend the maturity
of the Company's  Revolving  Line of Credit  provided  under the Loan  Agreement
("Revolving Credit Loan") from March 31, 2004 to March 31, 2005, and (b) waive a
default  arising under the Loan  Agreement  providing for the  maintenance  of a
minimum  consolidated EBITDA amount (the "EBITDA Covenant") for the period ended
December 31, 2003. The Thirteenth  Amendment  contemplates the full repayment of
all indebtedness  under the Loan Agreement by March 31, 2005 through the sale of
one or more  businesses of the Company  and/or the  procurement  of  alternative
financing.

Please see Note 4 of the Consolidated  Financial  Statements included as part of
this Quarterly Report on Form 10-Q for more detailed information relating to the
Company's debt and the Thirteenth Amendment.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United  States  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.

Stock-Based Compensation

The  Company  accounts  for its  stock-based  compensation  in  accordance  with
Accounting  Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations and provides the pro forma disclosures
required by  Statements  of Financial  Accounting  Standards  No.  ("SFAS") 123,
Accounting  for  Stock-Based  Compensation,  and SFAS No.  148,  Accounting  for
Stock-Based  Compensation - Transition and Disclosure.  No stock-based  employee
compensation  expense is  recognized  in the  statement  of  operations,  as all
options  granted had an exercise price equal to the fair value of the underlying
common stock on the date of grant. Had the Company determined  compensation cost
based on the fair value of the  underlying  common stock at the grant date under
SFAS No.  123,  net income and  earnings  per share  amounts  would have been as
follows:
<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                          March 31,
                                                     2004          2003
                                                 ---------------------------
<S>                                            <C>           <C>
Net loss                                          $ (1,519)     $  (957)
   Total stock-based employee compensation
     expense determined under fair value based
     method, net of tax effect                        (25)         (28)
                                                 ---------------------------
   Pro forma net loss                             $ (1,544)     $  (985)
                                                 ===========================

Net loss per common share - basic and assuming
   dilution
   As reported                                    $  (0.19)     $  (0.12)
   Pro forma                                      $  (0.19)     $  (0.12)
</TABLE>

2.  Inventories

Inventories consist of the following:
<TABLE>
<CAPTION>
                                                  March 31,        December 31,
                                                    2004              2003
                                               --------------    ---------------
<S>                                            <C>               <C>
        Gross inventory
             Raw materials                        $ 3,789             $ 3,877
             Work in progress                       6,851               6,238
             Finished goods                        16,285              16,864
                                               --------------    ---------------
        Total gross inventory                      26,925              26,979


        Reserves

             Lower cost or market                   (562)               (647)
             Obsolescence & slow moving           (2,227)             (2,173)
                                               -------------     ---------------
        Total reserves                            (2,789)             (2,820)

                                               -------------     ---------------
        Net inventory                            $ 24,136            $ 24,159
                                               =============     ===============
</TABLE>
The Company  performed an in-depth  analysis of inventory  obsolescence and slow
moving  products at the end of the fourth  quarter of 2003.  This  analysis  was
based on the current  markets for the  Company's  products and the change in the
buying  patterns of the Company's major  customers.  The result of this analysis
was the recording in the fourth  quarter of 2003 of an  additional  obsolescence
reserve of $1,421.  The  Company's  reserve  for  obsolescence  and slow  moving
products totaled $2,227 at March 31, 2004 and $2,173 at December 31, 2003.

In the fourth quarter of 2002, the Company established a lower of cost or market
(LOCOM)  reserve to accrue losses on components  which had  inadequate  pricing,
high levels of scrap and high amounts of  inefficient  labor;  on March 31, 2004
and December 31, 2003, this reserve was at $562 and $647, respectively.

The total for both the reserve for obsolescence and slow moving products and the
reserve for LOCOM was $2,789 and $2,820 for March 31, 2004 and December 31,
2003, respectively.

3.  Goodwill and Intangibles

As required by SFAS No. 142,  Goodwill and Other Intangible Assets ("SFAS 142"),
the Company performs an annual goodwill  impairment test on a reporting  segment
basis. A fair value approach is utilized by management  regarding projected cash
flows and other factors to determine the fair value of the respective assets. If
required,  an  impairment  charge  is  recognized  for the  amount  by which the
carrying amount of goodwill exceeds its fair value.

In the  fourth  quarter of 2003,  the  Company  performed  the  required  annual
impairment  test under SFAS No. 142 and concluded  that the  remaining  goodwill
balance,  which relates to the Machining and  Technology  segment only,  was not
further  impaired.  The  remaining  goodwill  was  $5,653 at March 31,  2004 and
December 31, 2003.

Customer Related Intangibles

The  carrying  amount of  customer  related  intangibles  at March 31,  2004 and
December 31, 2003 were as follows:
<TABLE>
<CAPTION>
                                                     Gross         Accumulated            Useful
                                                    Amount        Amortization              Life
                                            --------------- ------------------- -----------------
<S>                                           <C>               <C>                 <C>
Versaform                                           $3,975                $398          15 years
Stretch Forming Corp.                                  329                 210         3.5 years
                                            --------------- -------------------
         March 31, 2004                             $4,304                $608
                                            =============== ===================

Versaform                                           $3,975                $332
Stretch Forming Corp.                                  329                 180
                                            --------------- -------------------
         December 31, 2003                          $4,304                $512
                                            =============== ===================
</TABLE>

Customer  related  intangibles  amortization  expense was $96 for both  quarters
ended March 31, 2004 and March 31, 2003.

4.  Long-Term Debt and Revolving Line of Credit

Long-term debt and revolving line of credit consists of the following:
<TABLE>
<CAPTION>
                                                                       March 31,      December 31
                                                                         2004             2003
                                                                  ----------------------------------
<S>                                                                 <C>             <C>
  Term Loans:
    Tempco                                                             $  9,161        $  9,670
    Versaform                                                             8,774           9,167
  Revolving line of credit                                                9,041           7,684
  Note payable to Director, principal and interest payable
     monthly at 7%                                                          505             614
  Notes payable, principal and interest payable monthly, at
     fixed rates, ranging from 6.99% to 10.00%                              617             679
  Capital lease obligations                                                   0              11
                                                                  ----------------------------------
                                                                         28,098          27,825
  Less current installments                                              20,463           6,069
                                                                  ----------------------------------
         Total Debt                                                    $  7,635       $  21,756
                                                                  ==================================
</TABLE>
The Loan Agreement with Union Planters  consists of the Revolving Credit Loan, a
term loan to finance the purchase of Tempco ("Tempco Term Loan") and a term loan
to finance the purchase of Versaform ("Versaform Term Loan"). The Loan Agreement
is secured by all the  domestic  assets of the Company and  requires  compliance
with certain non-financial and financial covenants,  including minimum levels of
tangible net worth and the EBITDA Covenant.

On January 5, 2004 the Company's  extended its Loan Agreement to March 31, 2004,
received a waiver for certain  non-financial  covenants,  and agreed to a fee of
$75.  Subsequently,  on March 30, 2004, the Company and Union  Planters  entered
into the Thirteenth Amendment.  The primary purposes of the Thirteenth Amendment
were to (a) extend the  maturity  of the  Company's  Revolving  Credit Loan from
March 31,  2004 to March 31,  2005 and (b)  waive a  default  arising  under the
EBITDA Covenant for the period ended December 31, 2003.

In addition, under the terms of the Thirteenth Amendment:

     o    The  maximum  principal  amount  of  the  Revolving  Credit  Loan  was
          increased from  approximately  $9,088 to $9,700 through  September 30,
          2004, subject to a borrowing base calculation and further subject to a
          newly established inventory reserve requirement and a more restrictive
          requirement  for  eligible  receivables,  which,  notwithstanding  the
          increased   borrowing   maximum  amount  provided  by  the  Thirteenth
          Amendment,  could reduce the amount of borrowing  available  under the
          Revolving Credit Loan.

     o    The interest rate on the Revolving  Credit Loan was changed from LIBOR
          plus 2.5% to Union Planters' prime rate plus 1.0%. (The prime rate was
          4.0% at March 31, 2004.) Moreover, if the Company has not executed and
          delivered a letter of intent regarding (i) the sale of the stock or of
          all or substantially all of the assets of certain of its subsidiaries,
          and/or (ii) the procurement by the Company of debt financing providing
          the  Company  with  sufficient  funds to  repay in full the  Company's
          obligations to Union  Planters  ("Letter of Intent") on or before June
          30,  2004,  the  interest  rate on the  Revolving  Credit Loan will be
          increased to prime plus 1.5% and further  increased to prime plus 2.0%
          if the Company has not paid all of its  obligations  to Union Planters
          in full on or before  September  30, 2004.  The  interest  rate on the
          Tempco Term Loan provided under the Loan Agreement, which, as of March
          30, 2004, had a total  outstanding  principal balance of approximately
          $9,161,  was changed from LIBOR plus 3.0%,  subject to a floor of 7.0%
          and a ceiling  of 8.5%,  to Union  Planters'  prime  rate  plus  2.0%,
          subject to a floor of 7.0%.  The interest rate on the  Versaform  Term
          Loan provided under the Loan  Agreement,  which, as of March 30, 2004,
          had a total outstanding principal balance of approximately $8,774, was
          changed from LIBOR plus 3.0% to Union  Planters' prime rate plus 2.0%.
          Moreover,  if the Company has not executed  and  delivered a Letter of
          Intent on or before June 30, 2004,  the interest  rate on Term Loans A
          and B will be increased to Union Planters' prime plus 2.5% and further
          increased  to Union  Planters'  prime plus 3.0% if the Company has not
          paid  all of its  obligations  to  the  Buyer  in  full  on or  before
          September 30, 2004.

     o    If, by June 30,  2004,  the  Company  does not enter  into one or more
          Letters of Intent,  a fee of $125 will be payable on the  earliest  of
          March 31, 2005, the date the Company repays all of its  obligations to
          Union Planters or the date on which Union Planters  accelerates all of
          the Company's obligations.

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by September 30, 2004, a fee of $350 will be payable to Union
          Planters  ($100 on October 1, 2004 and $250 on the  earliest  of March
          31, 2005, the date the Company repays all of its  obligations to Union
          Planters or the date on which Union  Planters  accelerates  all of the
          Company's obligations).

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by December  30, 2004, a fee of $200 will be payable to Union
          Planters  ($100 on December 31, 2004 and $100 on the earliest of March
          31, 2005, the date the Company repays all of its  obligations to Union
          Planters or the date on which Union  Planters  accelerates  all of the
          Company's obligations).

Thus,  increased  interest  rates and  additional  fees will  apply  during  the
remaining  term  of  the  Loan  Agreement   (through  March  31,  2005)  if  the
indebtedness under the Loan Agreement is not repaid in full through  alternative
financing  and/or sales of assets by certain  prescribed  dates. The Company has
engaged Lincoln Partners LLC, a Chicago, Illinois based investment banking firm,
to assist in these efforts.

At December 31, 2003, the Company's  Revolving  Credit Loan allowed for a $9,088
line of  credit,  subject  to a  borrowing  base  calculation,  to fund  various
corporate  needs.  Interest was payable monthly based on a ninety day LIBOR plus
2.25% and was 3.67% at December 31, 2003. The Company had $7,684  outstanding on
this line at December  31,  2003.  This  facility was amended in January 2004 to
extend  maturities  to March 31,  2004 and  included  an increase in interest to
LIBOR plus  2.5%.  On March 30,  2004,  the  Company  further  amended  the Loan
Agreement  to extend the  Revolving  Credit Loan  maturity to March 31, 2005 and
establish the Revolving Credit Loan line at $9,700 until September 30, 2004, and
$9,000  thereafter,  each subject to a borrowing base. The Revolving Credit Loan
interest was amended to prime plus 1.0% with possible  adjustments  as described
above.  This increase was due to the net loss in the first quarter of 2004.  The
Company's  revolving  credit  line at  March  31,  2004 was at  $9,041,  with an
additional line capacity of $659. The credit  facility  prohibits the payment of
cash  dividends  on common  stock  without  the prior  written  consent of Union
Planters.

The Company  borrowed $14,250 (Tempco Term Loan) on April 2, 2001 to finance the
Tempco acquisition. The Tempco Term Loan required monthly principal and interest
payments over three years using a seven year  amortization  and bearing interest
at ninety day LIBOR plus 3.0%,  subject to a cap of 8.5% and a floor of 7.0%. On
March 30, 2004 the Company  amended this note  establishing  a maturity of March
31, 2005 and interest at prime plus 2.0% with possible  adjustments as described
above. The interest rate was 7.0% at March 31, 2004 and December 31, 2003.

The  Versaform  Term Loan was issued for $11,000 on May 15, 2002.  The Versaform
Term Loan  required  monthly  principal  and interest  payments over three years
using a seven year  amortization and bears interest at the ninety day LIBOR plus
3.0%.  The  interest  rate was 6.0% at March 31, 2004 and 4.2% at  December  31,
2003.  On March 30, 2004 the Company  amended this note  increasing  interest to
prime plus 2.0% with possible adjustments as described above. The March 30, 2004
amendment did not change the original  maturity of October 15, 2005 as stated in
the Versaform Term Loan agreement.

The  Company  entered  into a note  payable  for $1,300  with the prior owner of
Versaform in connection with the acquisition. The prior owner has since become a
member of the board of directors of the  Company.  This note is payable  monthly
over three years and bears interest at 7.0%.  This note is secured by 65% of the
stock of the Company's Canadian subsidiary.

The Company entered into other various notes payable for the purchase of certain
equipment.  The notes are  payable in monthly  installments  including  interest
ranging from 6.99% - 10.0% through  November 2006. The notes payable are secured
by equipment.

5. Business Segment Information

As set forth in the criteria of SFAS No. 131,  Disclosures  about Segments of an
Enterprise and Related Information, the Company is organized into two reportable
segments:  the Sheet Metal segment and the Machining and Technology segment. The
Sheet Metal segment fabricates, finishes and integrates close tolerance aluminum
and  specialty  alloy  components  primarily  for the  aerospace  industry.  The
Machining and Technology segment machines close tolerance aluminum and specialty
alloy  components  for  the  aerospace,   semiconductor   and  medical  products
industries.

The accounting  policies of the segments are the same as those described in Note
1 of the Consolidated  Financial  Statements  included as part of this Quarterly
Report on Form 10-Q. Sales between segments are insignificant. Corporate assets,
liabilities,  and  expenses  related  to the  Company's  corporate  offices  are
allocated to the  segments,  except for income taxes.  The table below  presents
information  about  reported  segments on the basis used  internally to evaluate
segment performance:
<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                  March 31,
                                                             2004             2003
                                                      ----------------------------------
<S>                                                   <C>                <C>
Net sales:

   Sheet Metal                                           $   14,750         $   17,164
   Machining and Technology                                   3,790              3,678
                                                      ----------------------------------
                                                         $   18,540         $   20,842
                                                      ==================================
Income (loss) before interest and income taxes:

    Sheet Metal                                          $   (1,478)        $   (1,273)
    Machining and Technology                                    404                182
                                                      ----------------------------------
                                                         $   (1,074)        $   (1,091)
                                                      ==================================

Interest expense:

    Sheet Metal                                              $  112             $  158
    Machining and Technology                                    167                207
    Corporate                                                   166                 75
                                                      ---------------------------------
                                                             $  445             $  440
                                                      =================================

Depreciation and amortization:

    Sheet Metal                                             $   884           $  1,013
    Machining and Technology                                     99                 97
    Corporate                                                   180                109
                                                      ---------------------------------
                                                            $ 1,163           $  1,219
                                                      =================================

Capital expenditures:

    Sheet Metal                                              $  267             $  317
    Machining and Technology                                      9                 26
    Corporate                                                    14                 73
                                                      ---------------------------------
                                                             $  290             $  416
                                                      =================================

                                                           March 31,        December 31,
                                                             2004              2003
                                                      ----------------------------------

Goodwill:

    Sheet Metal                                            $      -           $      -
    Machining and Technology                                  5,653              5,653
    Corporate                                                     -                  -
                                                      ---------------------------------
                                                           $  5,653           $  5,653
                                                      =================================

Total Assets:

    Sheet Metal                                            $ 49,244           $ 49,896
    Machining and Technology                                 15,444             15,016
    Corporate                                                 5,403              5,607
                                                      ---------------------------------
                                                           $ 70,091           $ 70,519

</TABLE>
6. Comprehensive Loss

Comprehensive  loss includes  adjustments  to net loss for the change in foreign
currency translations as follows:

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                    March 31,
                                                                 2004             2003
                                                      ----------------------------------
<S>                                                   <C>                <C>
Net loss                                                 $   (1,519)        $   (957)

Other comprehensive income (loss):

       Foreign currency translation adjustments                  (3)              31
                                                      ----------------------------------
Comprehensive loss                                       $   (1,522)        $   (926)
                                                      ==================================
</TABLE>

7. Restructuring Charges

The Company adopted SFAS No. 146,  Accounting for Costs Associated with Exit and
Disposal Activities, in 2003. SFAS No. 146 requires companies to recognize costs
associated with exit and disposal  activities when they are incurred rather than
at the date of commitment  to an exit or disposal  plan.  Costs covered  include
lease  termination,   costs  to  consolidate  facilities  and  certain  employee
severance  costs  that  are  associated  with  a   restructuring,   discontinued
operation, plant closing or other exit or disposal activity.

On July 23, 2003, the Company  announced the details of a restructuring  plan to
reduce operating expenses and increase efficiencies at its St. Charles, Missouri
location  which included a reduction of work force of  approximately  30 people,
the exit of two leased facilities and relocation of a significant  amount of its
manufacturing  equipment.  In December 2003, the Company announced an additional
restructuring program at the Wichita, Kansas plant, including a staged reduction
in workforce of  approximately  60  employees,  and the sale of a  Company-owned
building and excess equipment. The Wichita restructuring program is scheduled to
occur over a five month period  during which the Company  plans to transfer from
its Wichita  facility all extrusion  stretch work to its Auburn,  Washington and
Vista, California locations and its milling work packages to its Tulsa, Oklahoma
and  Auburn,  Washington  facilities  and plans to  transfer  its high  pressure
forming work currently produced in Auburn to the Wichita, Kansas plant. Employee
severance costs for the Wichita plant restructuring will be paid upon completion
of service  term in 2004 and,  therefore,  were not accrued in 2003 per SFAS No.
146. The costs incurred for these  restructuring plans as of March 31, 2004 were
$529, incurred as follows: $394 for moving and relocation and $135 for severance
costs. The Company expects to incur total  restructuring costs for both of these
programs of $910 for the year ending December 31, 2004. All restructuring  costs
are  attributable  to the Sheet Metal  Segment and are  classified as a separate
component of Selling, General and Administrative expenses.

8.  Income Taxes

The Company  accounts  for income  taxes under the  provisions  of SFAS No. 109,
"Accounting for Income Taxes." The objectives of accounting for income taxes are
to recognize the amount of taxes payable or refundable  for the current year and
deferred tax  liabilities  and assets for the future tax  consequences of events
that have been recognized in the Company's financial  statements or tax returns.
SFAS No. 109 also  requires  that  deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized.

The Company currently has significant  deferred tax assets, which are subject to
periodic  recoverability  assessments.  Pursuant  to  FASB  109,  and due to the
uncertainty  of future taxable  income,  the Company has recorded a deferred tax
asset and corresponding  valuation  reserve allowance  relating to the Company's
loss in the first quarter of 2004.

As of March 31,  2004,  the  Company  had a deferred  tax asset of $2,206 and an
offsetting deferred tax liability of $2,206.

Differences between the effective rate of taxes recorded and income taxes at the
statutory  rates are due to  anticipated  utilization of available net operating
loss carryforwards.

<PAGE>




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

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for forward-looking  statements. The Company makes forward-looking statements in
the "Management's  Discussion and Analysis of Financial Condition and Results of
Operations"  section of this Quarterly  Report on Form 10-Q, which represent the
Company's expectations or beliefs about future events and financial performance.
When used in this report, the words "expect," "believe,"  "anticipate,"  "goal,"
"plan,"  "intend,"  "estimate,"  "may,"  "will" or similar words are intended to
identify  forward-looking  statements.   These  forward-looking  statements  are
subject to known and unknown risks,  uncertainties  and  assumptions,  including
those referred to in the "Risk Factors"  section of the Company's  Annual Report
on Form 10-K for the year ended  December 31, 2003, as filed with the Securities
and Exchange Commission on April 15, 2004.

In light of these risks,  uncertainties,  and assumptions,  the  forward-looking
events  discussed  may not occur.  In  addition,  actual  results  could  differ
materially from those suggested by the forward-looking statements.  Accordingly,
investors  are  cautioned  not to place undue  reliance  on the  forward-looking
statements.  Except as required by law, the Company  undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information,  future events or otherwise.  Investors should, however, review
additional  disclosures  made by the Company  from time to time in its  periodic
filings with the Securities and Exchange Commission.

This  Quarterly  Report on Form  10-Q  should  be read  completely  and with the
understanding  that  the  Company's  actual  future  results  may be  materially
different from what the Company expects. All forward-looking  statements made by
the  Company  in this  Form 10-Q and in the  Company's  other  filings  with the
Securities and Exchange Commission are qualified by these cautionary statements.

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require the Company to
make  estimates  and  assumptions.  (See  Note 1 of the  Consolidated  Financial
Statements  included as part of this Quarterly Report on Form 10-Q). The Company
believes that certain significant accounting policies have the potential to have
a more  significant  impact on the financial  statements  either  because of the
significance  of the  financial  statements to which they relate or because they
involve a higher degree of judgment and  complexity.  A summary of such critical
accounting  policies  can  be  found  in  the  section  entitled   "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operation"
contained in the Company's  Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.

OVERVIEW

The Company is a leader in  fabricating,  machining,  finishing and  integrating
formed,  close tolerance aluminum and specialty alloy components and sheet metal
products  for  use by the  aerospace,  technology  and  commercial  sheet  metal
industries.  Aerospace  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  manufactures more than 20,000 aerospace  components for integration
into a variety of civilian  and  military  aircraft  platforms  manufactured  by
leading original equipment manufacturers and prime subcontractors.  In addition,
the Company  produces  components  and  assemblies  for laser  equipment used by
semiconductor  and medical equipment  manufacturers in the technology  industry.
The Company also  produces  sheet metal  products  for various  companies in the
commercial  sheet  metal  industry.   In  addition  to   manufacturing   quality
components, the Company provides its customers with value-added services related
to the design, production and finishing of its components.


<PAGE>


Historically,  the Company's business was primarily  dependent on the commercial
aircraft market,  with Boeing Company as the Company's  principal  customer.  In
order to diversify its products and customer  base,  the Company  implemented an
acquisition  and  marketing  strategy in the late 1990's that has  broadened the
number of industries to which the Company sells its components,  and, within the
aerospace  industry,  diversified  its  customer  base to reduce  the  Company's
dependence on Boeing Company.  The following table specifies the Company's sales
by market as a  percentage  of total sales for the three  months ended March 31,
2004 as compared to the three months ended March 31, 2003:
<TABLE>
<CAPTION>
      Market                                      1st Qtr         1st Qtr
                                                   2004             2003
                                                % of Total       % of Total
      ------------------------------------------------------------------------
<S>                                              <C>               <C>
        Commercial aircraft                          30.0  %           24.8  %
        Corporate and regional aircraft              26.8              29.4
        Military products                            23.2              21.2
        Technology products                          12.0              12.0
        Other (1)                                     8.0              12.6
                                            ----------------------------------
        Total                                       100.0  %          100.0  %
                                            ==================================
</TABLE>
         (1) Includes commercial sheet metal and various aerospace products.

Beginning in 2001,  the Company  began an aggressive  acquisition  campaign that
resulted in the consummation of four  transactions  through 2002. In April 2001,
the Company  acquired  Tempco  Engineering  Inc.  ("Tempco") and its affiliates,
which expanded the Company's  aerospace  product line and introduced the Company
to  the  technology  industry.   The  Company  acquired  Versaform   Corporation
("Versaform")  and its affiliates on May 16, 2002,  Stretch Forming  Corporation
("SFC") on June 12, 2002 and  Southern  Stretch  Forming and  Fabrication,  Inc.
("SSFF")  on  September  30,  2002.  The  Versaform  acquisition   significantly
increased the Company's  presence in the corporate and regional  aircraft market
while adding various  military  products to the Company's  product line. The SFC
acquisition  further  supplemented the Company's military product line. Finally,
the  Company's  acquisition  of SSFF  increased  the  Company's  business in the
corporate and regional aircraft market.

Unlike the other  acquisitions,  Tempco operates and is managed as an autonomous
unit.  Accordingly,  it is  treated  as a  business  segment  separate  from the
Company's other businesses. The Tempco business, which sells machined components
to  both  the  aerospace  and  technology  industries,  is  referred  to in this
discussion  as the  Machining and  Technology  segment and the  Company's  other
businesses are referred to as the Sheet Metal segment.

The following table is a summary of the Company's operating results for the
three months ended March 31, 2004 and March 31, 2003:

<TABLE>
<CAPTION>
($ in millions)                        March 31, 2004                            March 31, 2003
                          ----------------------------------------    ------------------------------------------
                              Sheet     Machining &                      Sheet     Machining &           Total
                              Metal      Technology         Total        Metal      Technology
                          ----------------------------------------    ------------------------------------------
<S>                        <C>              <C>          <C>          <C>              <C>            <C>
Net sales                     $14.7            $3.8         $18.5        $17.1            $3.7           $20.8
Cost of Sales                  12.9             2.9          15.8         15.5             3.1            18.6
                          ----------------------------------------    ------------------------------------------
Gross profit                    1.8              .9           2.7          1.6              .6             2.2
S, G & A                        2.8              .5           3.3          2.9              .4             3.3
Restructuring expenses           .5               0            .5            0               0               0
                          ----------------------------------------    ------------------------------------------
Income (loss) from
   operations               $ (1.5)            $ .4         $(1.1)      $(1.3)            $ .2           $(1.1)
                          ========================================    ==========================================
</TABLE>

RESULTS OF OPERATIONS

Three months ended March 31, 2004 compared to March 31, 2003

Sheet Metal Segment
-------------------

Net Sales.
($ in millions)
<TABLE>
<CAPTION>
                                        1st Qtr      % of         1st Qtr        % of
       Category                            2004      Total         2003         Total
       --------------------------------------------------------------------------------
<S>                                    <C>        <C>            <C>         <C>
       Commercial aircraft                $ 5.6       37.8  %       $ 5.2        30.4 %
       Military Products                    3.1       21.3            3.8        22.5
       Corporate and regional               5.0       33.7            6.7        39.3
       Other                                1.0        7.2            1.4         7.8
                                    ---------------------------------------------------
       Total                              $14.7      100.0  %       $17.1       100.0 %
                                    ===================================================
</TABLE>
Net sales for the Sheet Metal  segment  were $14.7  million for the three months
ended March 31,  2004,  $2.4  million  lower than net sales for the three months
ended March 31, 2003. Corporate and Regional sales of $5.0 million for the first
quarter of 2004 were $1.7 million lower than  Corporate  and Regional  sales for
the  comparable  period of the prior year primarily  because of high  Gulfstream
shipments in 2003 generated by the customer's higher production rates.  Military
sales in the first quarter of 2004 were at $3.1 million, $0.7 million lower than
military  sales in the first  quarter of 2003 due to reduced  demand by Lockheed
Martin  Corporation  for the F-16 program.  Partly  offsetting,  were  increased
Commercial  Aircraft  sales of $5.6  million  in the first  quarter  2004,  $0.4
million higher than Commercial  Aircraft sales in the first quarter of the prior
year, primarily reflecting increased Boeing Company volume in the 737 program.

Gross Profit. Gross profit for the quarter ended March 31, 2004 was $1.8 million
(12.2% of net sales),  an increase from $1.6 million (9.3% of net sales) for the
quarter  ended March 31, 2003.  Gross  profit  increased  primarily  due to cost
reduction and restructuring efforts during the second half of 2003 and the first
quarter of 2004, at the Company's St. Charles, MO and Wichita, KS facilities.

The Company continues to encounter  production  difficulties on certain products
for the C-130 for which it is  preparing  a claim to attempt  to recover  losses
incurred  and to re-price  product for future  deliveries.  No benefit  from any
potential  claim for the C-130  components  has been  accrued.  The benefit of a
claim,  if any,  will not be recorded  until such time as the  customer  and the
Company agree on a settlement.  Additionally, scrap and other start-up costs are
hindering performance on the B-52 refurbishment program.

Selling,  General and  Administrative  Expenses ("SGA").  SGA expenses excluding
restructuring charges, for the first quarter of 2004 were $2.8 million (19.0% of
net sales), down from $2.9 million (16.7% of net sales) for the first quarter of
2003 due to reduced salaries, supplies and other expenses.

Restructuring  Charges.  During the first quarter of 2004, the Company continued
its  plans  of  reducing  employment  levels  at its  St.  Charles  and  Wichita
operations.  During the first quarter,  the Company incurred total restructuring
charges  of $0.5  million:  severance  costs  of $0.1  million  and  moving  and
relocation  costs of $0.4 million.  The Company expects to spend a total of $0.9
million in the year 2004 to complete this restructuring.

Interest  Expense.  Interest  expense  for the  first  quarter  of 2004 was $0.1
million, slightly lower than the $0.2 reported in the first quarter of the prior
year.

Machining and Technology Segment
--------------------------------

Net Sales.
($ in millions)
<TABLE>
<CAPTION>
                                  1st Qtr      % of      1st Qtr      % of
       Category                      2004     Total        2003      Total
       ------------------------------------------------------------------------
<S>                               <C>      <C>          <C>       <C>
       Technology products           $2.2      57.9  %     $2.5       67.6  %
       Aerospace products             1.2      31.6          .7       18.9
       Other                           .4      10.5          .5       13.5
                               ------------------------------------------------
       Total                         $3.8     100.0  %     $3.7      100.0  %
                               ================================================
</TABLE>
Net sales for the  Machining  and  Technology  segment  were $3.8 million in the
first  quarter  of 2004,  up 2.7% from $3.7  million in the prior  year's  first
quarter. Net sales of technology products were $2.2 million in the first quarter
of 2004, down $0.3 million from the prior year's first quarter.  This decline is
primarily  attributable  to the decline in the demand for equipment  used in the
production of semiconductors. Favorably offsetting the lower technology products
were higher  aerospace  products  sales of $1.2 million in the first  quarter of
2004,  up from $0.7 million in the first quarter of 2003,  reflecting  increased
defense spending.

Gross  Profit.  The gross profit for the segment was $0.9 million  (23.7% of net
sales) in the first quarter of 2004, an increase from $0.6 million (16.2% of net
sales) in the first  quarter of 2003.  The increase in gross profit in the first
quarter of 2004 was due to higher volume,  favorable leverage of fixed costs and
implemented cost containment programs.

Selling, General and Administrative Expenses. SGA expenses for the quarter ended
March 31, 2004 were $0.5 million,  slightly higher than the $0.4 reported in the
first quarter of last year due to higher corporate expenses.

Interest  Expense.  Interest  expense  for the  first  quarter  of 2004 was $0.2
million for the segment, unchanged from the prior year's first quarter.

Non-Segment Expenses
--------------------

Interest  Expense.  Interest  expense not assigned to a segment is primarily the
result of the Company's  revolving  credit  agreement which is used to fund both
segments'  cash  needs.  Interest  expense  not  assigned  to a segment was $0.2
million  in the first  quarter  of 2004  compared  to $0.1  million in the first
quarter of 2003.

Income  Taxes.  The  Company  did not record an income tax  benefit in the first
quarter of 2004,  compared to a benefit of $0.6 million in the first  quarter of
2003. In 2003, the Company had net operating  loss  carrybacks  available  which
were fully  utilized in 2003.

Liquidity and Capital Resources

During the three month period ended March 31, 2004,  the Company  incurred a net
loss of $1.5 million.  Primarily as a result of our continuing losses, inability
to meet our covenants and lack of liquidity,  our independent  certified  public
accountants   modified  their  opinion  on  the  Company's   December  31,  2003
Consolidated Financial Statement to contain a paragraph wherein they expressed a
substantial doubt about our ability to continue as a going concern.  The Company
has taken  steps to improve  our  current  liquidity  and  provide  the  capital
necessary to fund our plan for future growth.  Our efforts to raise  alternative
capital are  discussed  below,  and  additional  information  is included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.

The Company's  balance of cash and equivalents was $298,000 as of March 31, 2004
compared to a balance of $441,000 as of  December  31,  2003.  Cash flow used by
operating activities for the first quarter of 2004 was $123,000,  reflecting the
Company's $1.8 million net loss and higher accounts  receivable,  which was only
partly offset by non-cash  depreciation  and  amortization  and higher  accounts
payable. Cash used by investing activities was $290,000 in first quarter of 2004
and reflected capital  expenditures.  The Company's financing activities in 2004
provided $273,000,  reflecting  additional borrowings on the Company's revolving
credit line, which were used to pay down long-term debt and notes payable and to
support operations.

The  Company's  ratio of total debt to  capitalization  (debt plus  stockholders
equity) was 46.5% as of March 31, 2004 and 45.2% as of December 31,  2003.  This
increase was  primarily  due to the net loss in the first  quarter of 2004.  The
Company's  revolving  credit line at March 31, 2004 was at  $9,041,000,  with an
additional line capacity of $659,000.

In 2003,  the Company's  failure to meet certain  financial  covenants  with its
primary lender resulted in a  renegotiation  of its Loan Agreement on January 5,
2004 and again on March 30, 2004.

On March 30, 2004,  the Company and Union  Planters  entered into the Thirteenth
Amendment,  amending the Loan Agreement.  The primary purposes of the Thirteenth
Amendment were to (a) extend the maturity of the Company's Revolving Credit Loan
provided  under the Loan Agreement from March 31, 2004 to March 31, 2005 and (b)
waive a default  arising under the Loan Agreement of the EBITDA Covenant for the
period ended December 31, 2003.

In addition, under the terms of the Thirteenth Amendment to Loan Agreement:

     o    The  maximum  principal  amount  of  the  Revolving  Credit  Loan  was
          increased from  $9,088,323 to $9,700,000  through  September 30, 2004,
          subject to a borrowing base calculation and further subject to a newly
          established  inventory  reserve  requirement  and a  more  restrictive
          requirement for eligible receivables, which could reduce the amount of
          borrowing availability under the Revolving Credit Loan.

     o    The interest rate on the Revolving  Credit Loan was changed from LIBOR
          plus 2.5% to Union  Planters' prime rate plus 1.0%.  Moreover,  if the
          Company has not executed and delivered a Letter of Intent on or before
          June 30, 2004, the interest rate on the Revolving  Credit Loan will be
          increased to prime plus 1.5%, and further increased to prime plus 2.0%
          if the Company has not paid all of its  obligations  to Union Planters
          in full on or before  September  30, 2004.  The  interest  rate on the
          Tempco Term Loan provided under the Loan Agreement, which, as of March
          30, 2004, had a total outstanding principal balance of $9,160,714, was
          changed from LIBOR plus 3.0%, subject to a floor of 7.0% and a ceiling
          of 8.5%, to Union Planters'  prime rate plus 2.0%,  subject to a floor
          of 7.0%.  The interest rate on the Versaform  Term Loan provided under
          the  Loan  Agreement,  which,  as of  March  30,  2004,  had  a  total
          outstanding  principal  balance of $8,773,816,  was changed from LIBOR
          plus 3.0% to Union  Planters' prime rate plus 2.0%.  Moreover,  if the
          Company has not executed and delivered a Letter of Intent on or before
          June  30,  2004,  the  interest  rate  on  Term  Loans A and B will be
          increased to Union Planters' prime plus 2.5% and further  increased to
          Union Planters' prime plus 3.0% if the Company has not paid all of its
          obligations to the Buyer in full on or before September 30, 2004.

     o    If, by June 30,  2004,  the  Company  does not enter  into one or more
          Letters of Intent,  a fee of $125,000  will be payable on the earliest
          of March 31, 2005, the date the Company repays all of its  obligations
          to Union Planters or the date on which Union Planters  accelerates all
          of the Company's obligations.

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by September  30, 2004, a fee of $350,000  will be payable to
          Union  Planters  ($100,000  on  October  1, 2004 and  $250,000  on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by December 30,  2004,  a fee of $200,000  will be payable to
          Union  Planters  ($100,000  on December  31, 2004 and  $100,000 on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

In addition,  the Company has  executed a  $1,300,000  note in favor of a former
owner of  Versaform,  now a director  of the  Company,  in  connection  with the
Company's purchase of Versaform.  This note is secured by a pledge of 65% of the
Company's  interest in its Canadian  subsidiary,  and as part of its obligations
under  this  note,  the  Company's  Canadian  subsidiary  is  subject to various
restrictive  covenants relating to the its financial  performance.  This note is
payable monthly over three years and bears interest at 7.0%.

The Company has entered  into other  various  notes  payable for the purchase of
certain  equipment.  The notes are  payable  in monthly  installments  including
interest ranging from 6.99% - 10.0% through November 2006. The notes payable are
secured by equipment. The Company also has entered into capital lease agreements
for the  purchase  of  certain  equipment.  The  leases  are  payable in monthly
installments including interest ranging from 4.98% - 9.15% through August 2005.

Please see Note 4 of the Consolidated  Financial  Statements included as part of
this Quarterly Report on Form 10-Q for more detailed information relating to the
Company's debt and the Thirteenth Amendment.

As a result of the  above-described  debt,  the Company is required to utilize a
significant  portion  of its cash  generated  from  operations  to meet its debt
service obligations.  Furthermore,  if the Company were to fail in the future to
comply with the restrictive covenants in the Loan Agreement or in the promissory
note, the Company's  operations  could be negatively  impacted and the Company's
ability to take  advantage of  potential  business  opportunities  as they arise
could  be  limited.  Moreover,  the  Company's  failure  to  comply  with  these
restrictive financial and other covenants could result in a default that, if not
cured or waived,  could cause the Company to be required to repay its borrowings
before  their due dates.  If the Company  were unable to make this  repayment or
otherwise refinance these borrowings, the Company's creditors could foreclose on
the assets securing its borrowings.  Although in the Thirteenth  Amendment Union
Planters  waived the default  arising  from a failure of the Company to meet the
EBITDA  Covenant,  such  waiver was  limited to and valid only for the  specific
purposes given.  Union Planters is not obligated solely by reason of such waiver
to agree to any additional waivers.

In addition to the cash requirements for debt service,  the Company  anticipates
that it will incur  significant  additional  costs in 2004 to meet the increased
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 regarding internal
controls and  procedures.  Please see Item 4 - Controls and  Procedures  of this
Quarterly  Report on Form 10-Q for more  detailed  information  relating  to the
Company's internal controls and procedures.

Based upon forecasted operating results and cash flows,  management believes the
current  lending  agreement  is  sufficient  to meet  its  cash  needs  in 2004.
Management  has also  developed a plan that includes  restructuring  or possibly
disposing of segments of our business,  increasing sales and raising alternative
capital. However, the Company's losses from operations in recent years, together
with its inability to meet the EBITDA Covenant and certain other covenants under
the Loan Agreement, have raised substantial doubt about the Company's ability to
continue as a going concern.

If the Company fails to meet its covenants, fails to comply with the refinancing
or sale of assets  contemplated in the Loan Agreement,  or is unable to fund its
operations  within the limits of the Loan  Agreement,  no assurance can be given
that additional  and/or  replacement  financing can be obtained on reasonable or
acceptable  terms  or that  the  Company  will be  able to  continue  as a going
concern.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern, although the report of our independent
accountant as of and for the year ended December 31, 2003 expresses  substantial
doubt as to the Company's ability to continue as a going concern.  The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Market  risk  represents  the risk of loss  that  may  impact  the  consolidated
financial  position,  results of  operations  or cash flows of the Company.  The
Company is exposed to market  risk  primarily  due to  fluctuations  in interest
rates.  The Company does not utilize any  particular  strategy or instruments to
manage its interest rate risk.

The Company's  outstanding  credit facility carries an interest rate that varies
in  accordance  with the  prime  rate.  The  Company  is  subject  to  potential
fluctuations in its debt service as the prime rate changes.  Based on the amount
of the Company's outstanding debt as of March 31, 2004, a hypothetical 1% change
in the interest rate of the Company's  outstanding  credit facility would result
in a change in annual interest expense of approximately $0.3 million.

Item 4.    Controls and Procedures.

As of end of the fiscal  quarter  ended  March 31,  2004,  the  Company's  Chief
Executive  Officer and Chief Financial  Officer carried out an evaluation,  with
the  participation  of other members of the Company's  management as they deemed
appropriate,  of the  effectiveness of the design and operation of the Company's
disclosure  controls and procedures (as defined in Exchange Act Rules  13a-15(e)
and  15d-15(e)  under  the  Securities  Exchange  Act of  1934).  Based on their
evaluation of these  disclosure  controls and  procedures,  the Chief  Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and procedures were effective in all material respects in ensuring that
material  information  required  to be  disclosed  in the  periodic  reports the
Company  files  with  the  Securities  and  Exchange   Commission  is  recorded,
processed, summarized and reported in a timely manner.

This  portion  of our  Quarterly  Report on Form 10-Q is our  disclosure  of the
conclusions of our management,  including our Chief Executive  Officer and Chief
Financial  Officer,  regarding the effectiveness of our disclosure  controls and
procedures  as of the  end of the  period  covered  by  this  report,  based  on
management's evaluation of those disclosure controls and procedures.  You should
read this disclosure in conjunction with the certifications attached as Exhibits
31.1  and  31.2 to  this  Quarterly  Report  on Form  10-Q  for a more  complete
understanding of the topics presented.

In connection with its 2003 year-end audit,  our  independent  certified  public
accountant  identified a material weakness relating to our internal controls and
procedures.  While we are in the process of implementing a more effective system
of  controls  and  procedures,  we have  instituted  certain  interim  controls,
procedures and other changes to ensure that information required to be disclosed
in this Quarterly Report on Form 10-Q has been recorded,  processed,  summarized
and reported accurately.

The interim steps that we have taken as a result of the  aforementioned  control
deficiencies  to ensure  that all  material  information  about the  Company  is
accurately  disclosed  in this  Quarterly  Report  on  Form  10-Q  included  the
application  of  additional  methods and  techniques to evaluate the accuracy of
inventory costing and adequacy of inventory reserves.

Based in part on the steps listed  above,  our Chief  Executive  Officer and our
Chief  Financial  Officer  have  concluded  that  our  disclosure  controls  and
procedures are effective to ensure that the information  that we are required to
disclose in reports that we file or submit under the Securities  Exchange Act of
1934 is recorded, processed,  summarized and reported accurately within the time
periods specified in Securities and Exchange Commission rules and forms.

In addition, in order to address further the deficiencies described above and to
improve our internal  disclosure and control  procedures for future periods,  we
will:

     1.   Review,  select and implement  available  improvements  to information
          systems for inventory accounting;

     2.   Perform a review of internal  controls and  procedures  in  connection
          with Section 404 of Sarbanes Oxley legislative requirements;

     3.   Perform more detailed  quarterly  reconciliations  and analyses of the
          company's inventory accounts;

     4.   Continue  to enhance  staffing  to  provide  sufficient  resources  to
          accomplish the foregoing objectives.

These steps will constitute  significant  changes in internal controls.  We will
continue to evaluate the  effectiveness of our disclosure  controls and internal
controls and  procedures on an ongoing  basis,  and will take further  action as
appropriate.

Other than as discussed above, no significant changes were made in the Company's
internal  controls or in other  factors  that could  significantly  affect these
controls during the first quarter of 2004.



<PAGE>


                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings.

On  February  6, 2004,  Versaform,  a  wholly-owned  subsidiary  of the  Company
acquired on May 16, 2002, was served a subpoena by the federal government.

The subpoena relates to the time period January 1, 1999 through February 6, 2004
and was  issued  in  connection  with an  investigation  by  certain  government
agencies  including  the  Department  of Defense,  Office of Inspector  General,
Defense Criminal  Investigative Service and the Federal Bureau of Investigation.
The subpoena refers to structural  components Versaform  manufactured for Nordam
Corporation  for B-52 engine  cowlings,  components  for  auxiliary  power units
Versaform  manufactured for Hamilton Sundstrand,  a United Technologies Company,
and certain tools Versaform manufactured for Lockheed Martin Corporation.

The Company has not been  served  with any notice of any  pending  legal  action
filed by any government agency. Accordingly, the Company has no knowledge of any
specific   allegations  of  wrongdoing   against  Versaform  by  any  regulatory
authority.

The Company intends to cooperate fully with the federal government in connection
with any investigation of this matter and has currently provided all information
and support of related manufacturing and sales activity requested.

Other than as noted above, the Company is not a party to any legal  proceedings,
other than  routine  claims and lawsuits  arising in the ordinary  course of its
business. The Company does not believe such claims and lawsuits, individually or
in the aggregate, will have a material adverse effect on the Company's business.

Item 6.  Exhibits and Report on Form 8-K.

     (a)  Exhibits:

          See Exhibit Index.

     (b)  The Company filed the following reports on Form 8-K during the quarter
          ended March 31, 2004:

          (i)  On January 6, 2004,  the Company  filed a Current  Report on Form
               8-K, announcing the Twelfth Amendment to the Loan Agreement.

          (ii) On March 17,  2004,  the Company  filed a Current  Report on Form
               8-K,  announcing  the  service  of  a  subpoena  duces  tecum  on
               Versaform in connection with an  investigation by certain federal
               agencies.

         (iii) On March 31,  2004,  the Company  filed a Current  Report on Form
               8-K,  announcing the  Thirteenth  Amendment to the Loan Agreement
               and its filing of a Form 12(b)-25 for a 15-day  extension to file
               its Annual Report on Form 10-K for the year 2003.


<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,  in the County of St. Charles and State
of Missouri on the 17th day of May, 2004.

                               LMI AEROSPACE, INC.

                               /s/ Ronald S. Saks
                               --------------------------------------
                               Ronald S. Saks,
                               President and Chief Executive Officer

                               /s/ Lawrence E. Dickinson
                               --------------------------------------
                               Lawrence E. Dickinson
                               Chief Financial Officer and Secretary


<PAGE>


                                  EXHIBIT INDEX

Exhibit No.       Description

10.31  Twelfth  Amendment  to Loan  Agreement  dated  January 5, 2004,  filed as
       Exhibit  10 to the  Registrant's  Form  8-K  filed  January  6,  2004 and
       incorporated herein by reference.

10.32  Thirteenth  Amendment to Loan  Agreement  dated March 30, 2004,  filed as
       Exhibit  10.1 to the  Registrant's  Form 8-K  filed  March  31,  2004 and
       incorporated herein by reference.

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,  Secretary and
       Chief Financial Officer.

32     Certification  pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to
       Section 906 of the Sarbanes-Oxley Act of 2002.