What changed in this filing

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Item 3. Legal Proceedings

2021-03-29 compared with 2020-03-27 · 30 added, 50 removed, 5 unchanged (94% of the section changed)

LEGAL PROCEEDINGS

number of actions have been commenced against us by vendors, landlords and former landlords, including a third party claim as

a result of an injury suffered on a portion of a leased property not occupied by us.

As certain of these claims represent amounts

included in accounts payable they are not specifically discussed herein.

Park Associates, LLC commenced an action on or about January 11, 2017 against Air Industries Group in the NYS Supreme Court, County

of Suffolk, seeking the recovery of all rent due under an alleged commercial lease through the end of its term, plus attorney’s

This action was settled by our agreement to pay approximately $111,000, all of which was accrued during 2019.

employee commenced an action against, among others, Sterling Engineering and Air Industries Group, in Connecticut Commission on

Human Rights and Opportunities, seeking lost wages in an undetermined amount for the employee’s termination.

remains in the early pleading stage.

We believe we are not liable to the employee and any amount we might have to pay would be

covered by insurance.

Pharmacal Corp.

commenced an action on October 2, 2018, relating to a Sublease entered into between us and Contract Pharmacal

in May 2018 with respect to the property that was formerly occupied by Welding Metallurgy, Inc., at 110 Plant Avenue, Hauppauge,

In the action Contract Pharmacal seeks damages for an amount in excess of $1,000,000 for our failure to make the entire

premises available by the Sublease commencement date.

We dispute the validity of the claims asserted by Contract Pharmacal and

believe we have meritorious defenses to those claims.

Recently the Court has ordered limited discovery which is ongoing.

December 20, 2018, pursuant to a Stock Purchase Agreement dated as of March 21, 2018 (“SPA”), the Company

completed the sale of all of the outstanding shares of its subsidiary, Welding Metallurgy, Inc.

to CPI Aerostructures.

March 19, 2019, in accordance with the procedures set forth in the SPA with CPI Aerostructures, the Company received a notice

from CPI claiming that the working capital deficit used to compute the purchase price was understated.

The issue of the

amount of the working capital deficit was submitted to BDO USA, LLP (“BDO”), acting as an expert, and it issued a

report dated September 3, 2019, where it determined that the amount of the working capital deficit was approximately

On September 9, 2019 the Company received a demand from CPI for payment of such amount.

The Company advised CPI

that the determination of BDO is void because, among other things, it believes BDO exceeded the scope of its authority as set

forth in the SPA.

On September 27, 2019, CPI filed a notice of motion in the Supreme Court of the State of New York, County

of New York, against the Company seeking, among other things, an order of specific performance requiring delivery of the

funds deposited in escrow, together with the balance of the working capital deficit which it claimed, and a judgment against

the Company in the amount of approximately $4,200,000 of which $2,000,000 would be satisfied by delivery of the funds in

On October 7, 2019, the Company agreed to the release of $619,316 of the funds held in escrow in respect of claims

related to the working capital deficit not related to the value of WMI’s inventory.

As of December 31, 2019 and 2018,

the Company has placed a reserve against substantially all of the escrowed amount and cannot estimate the amount of loss.

Additionally, outside counsel for the Company has advised that they cannot offer an opinion as to the probable outcome at

this stage in the proceedings.

For, among others, the reasons stated above the Company intends to contest vigorously any

claim CPI may make for payment based on the BDO Report.

time to time we also may be engaged in various lawsuits and legal proceedings in the ordinary course of our business.

We are currently

not aware of any legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would

have a material adverse effect on our business, financial condition or operating results.

We, however, have had claims brought

against us by a number of vendors due to our liquidity constraints.

A number of actions

have been commenced against us in the ordinary course of business by vendors, landlords and former landlords, including a third

party claim as a result of an injury suffered on a portion of a leased property not occupied by us.

As certain of these claims

represent amounts included in accounts payable they are not specifically discussed herein.

Contract Pharmacal

(“Contract Pharmacal”) commenced an action on October 2, 2018, relating to a Sublease entered into between us

and Contract Pharmacal in May 2018 with respect to the property that was formerly occupied by Welding Metallurgy, Inc.

(“WMI”),

at 110 Plant Avenue, Hauppauge, New York.

In the action, Contract Pharmacal seeks damages for an amount in excess of $1,000,000

for our failure to make the entire premises available by the Sublease commencement date.

We dispute the validity of the claims

asserted by Contract Pharmacal and believe we have meritorious defenses to those claims.

The pace of litigation in the civil courts

in New York has been slowed by the impact of Covid-19.

The Court has ordered us and Contract Pharmacal to complete discovery, which

On December 20, 2018,

we completed the sale of all of the outstanding shares of our subsidiary, WMI, to CPI Aerostructures (“CPI”).

ensued a dispute with CPI regarding amounts it claimed were due based upon the value it ascribed to the inventory as of the closing

On December 23, 2020, we reached an agreement with CPI to settle the working capital dispute.

Pursuant to the settlement,

the escrow agent released to CPI the $1,380,684 remaining in the escrow account which had been established at the closing and we

exchanged mutual releases customary in the circumstances.

From time to time we

may be engaged in various lawsuits and legal proceedings in the ordinary course of our business.

We are currently not aware of

any legal proceedings the ultimate outcome of which, in our judgment based on information currently available, would have a material

adverse effect on our business, financial condition or operating results.

There are no proceedings in which any of our directors,

2 unchanged sentences

MINE SAFETY DISCLOSURES.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings