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<SEC-DOCUMENT>0001094891-02-000077.txt : 20020414
<SEC-HEADER>0001094891-02-000077.hdr.sgml : 20020414
ACCESSION NUMBER:		0001094891-02-000077
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20020123
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20020215

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CPI AEROSTRUCTURES INC
		CENTRAL INDEX KEY:			0000889348
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		IRS NUMBER:				112520310
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-11398
		FILM NUMBER:		02551381

	BUSINESS ADDRESS:	
		STREET 1:		200A EXECUTIVE DR
		CITY:			EDGEWOOD
		STATE:			NY
		ZIP:			11717
		BUSINESS PHONE:		5165865200
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>cpi_8k-01312002body.txt
<DESCRIPTION>REPORT ON FORM 8-K FOR EVENT DATED 1/22/2002
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                 --------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported)                January 22, 2002
                                                                ----------------


                            CPI AEROSTRUCTURES, INC.
               (Exact Name of Registrant as Specified in Charter)



              New York                1-11398           11-2520310
- ----------------------------     --------------      ------------------
(State or Other Jurisdiction      (Commission        (IRS Employer
    of Incorporation)             File Number)       Identification No.)




200A Executive Drive, Edgewood, New York                            11717
- ----------------------------------------                           ------
(Address of Principal Executive Offices)                         (Zip Code)



Registrant's telephone number, including area code    (631) 586-5200
                                                      --------------



                                 Not Applicable
          ------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)






<Page>





ITEM 5.  OTHER EVENTS

         On January 22, 2002, CPI Aerostructures, Inc. ("CPI") announced that
its wholly owned subsidiary, Kolar, Inc. ("Kolar"), will close the Kolar
facility located in Ithaca, New York and begin the process to liquidate all of
its assets through an auction of the fixed assets of Kolar and the sale of the
real estate currently owned by Kolar. The proceeds of this liquidation will be
used to reduce Kolar's liabilities on certain bank debt in the amount of
approximately $6.3 million that is currently in default. The bank debt and
Kolar's obligations to its previous owner are secured by liens on the assets and
real estate to be sold and are guaranteed by CPI.

         A Peaceful Possession Agreement has been entered into by Kolar and the
banks, which provides that Kolar will deliver all the fixed asset collateral to
the banks at Kolar's premises for the purpose of enabling the banks to dispose
of the collateral.

         An auction sale agreement has also been entered into by Kolar, the
banks and Daley-Hodkin Corporation, auctioneer, which provides that an auction
sale of the machinery, equipment and vehicles of Kolar will be conducted no
later than March 21, 2002. The proceeds of the liquidation are not expected to
fully satisfy all of the obligations to the banks. There can be no assurance
that satisfactory payment terms will be made with the banks regarding the
balance of portions of the bank debt, the due date of which was recently
extended to June 30, 2002.

         An amendment to the credit agreement relating to the bank debt as well
as supplement to such amendment has been entered into by CPI, Kolar and the
banks, which extended the due date of a certain portion of the loan to June 30,
2002. CPI will issue an aggregate of 70,000 shares of common stock to the banks
or its designees in consideration of the extension.  CPI has agreed to afford
piggy-back registration rights to the holders of such shares of common stock.


         ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
                  EXHIBITS.


         (c)      Exhibits

         10.39    Peaceful Possession Agreement, by and among Kolar, Inc.,
                  JPMorgan Chase Bank f/k/a the Chase Manhattan Bank and J.P.
                  Morgan Leasing, Inc., dated January 24, 2002 (without
                  schedule).

         10.40    Auction Sale Agreement, among Daley-Hodkin Corporation, Kolar,
                  Inc., JPMorgan Chase and J.P. Morgan Leasing, Inc., dated
                  January 10, 2002.

         10.41    Ninth Amendment to Credit Agreement dated as of December 31,
                  2001.

         10.42    Supplement to Ninth Amendment to Credit Agreement dated
                  January 4, 2002.

         99.1     Press Release regarding the liquidation of Kolar, Inc.'s
                  assets, dated January 22, 2002.




<Page>



                                    SIGNATURE


         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 hereunto duly authorized.


Dated:   February 12, 2002                           CPI AEROSTRUCTURES, INC.



                                                     By:    /s/ Edward J. Fred
                                                        ------------------------
                                                            Edward J. Fred
                                                            President and Chief
                                                            Financial Officer



<Page>


                                  EXHIBIT INDEX



Exhibit No.       Description


10.39    Peaceful Possession Agreement, by and among Kolar, Inc., JPMorgan Chase
         Bank f/k/a the Chase Manhattan Bank and J.P. Morgan Leasing, Inc.,
         dated January 24, 2002 (without schedule).

10.40    Auction Sale Agreement, among Daley-Hodkin Corporation, Kolar, Inc.,
         JPMorgan Chase and J.P. Morgan Leasing, Inc., dated January 10, 2002.

10.41    Ninth Amendment to Credit Agreement dated as of December 31, 2001.

10.42    Supplement to Ninth Amendment to Credit Agreement dated January 4,
         2002.

99.1     Press Release regarding the liquidation of Kolar, Inc.'s assets, dated
         January 22, 2002.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.39
<SEQUENCE>3
<FILENAME>cpi_8k-01312002ex1039.txt
<DESCRIPTION>PEACEFUL POSSESSION AGREEMENT
<TEXT>
                                                                  Exhibit 10.39

                          PEACEFUL POSSESSION AGREEMENT

         AGREEMENT made this 24th day of January, 2002, by and among between
Kolar, Inc., a Delaware corporation with an office at 407 Cliff Street, Ithaca,
New York 14850 (hereinafter called the "Debtor"), JPMorgan Chase Bank f/k/a The
Chase Manhattan Bank, as lender and Administrative Agent, a New York Banking
corporation with an office at 395 North Service Road, Suite 302, Melville, New
York 11747 and J.P. Morgan Leasing, Inc., a New York Corporation with an office
at One Chase Square, Rochester, New York 14643 (hereinafter collectively the
"Bank").
                              W I T N E S S E T H :
         WHEREAS, in order to secure certain indebtedness (i) evidenced by a
certain Credit Agreement, dated as of October 9, 1997, as amended from time to
time (the "Credit Agreement") and certain notes (the "Notes") executed in
connection with the Credit Agreement and (ii) a certain line of credit dated
July 11, 2001 (the "Line"), the Promissory Note dated October 1, 2001 in the
original amount of $1,020,000 in favor of the Chase Manhattan Bank (the "Chase
Note") and the Promissory Note dated December 31, 2001, in the original
principal amount of $680,000, payable to Mellon Bank (the "Mellon Note") and
(iii) a certain Master Lease Purchase Agreement dated as of August 14, 2000 and
Schedule 1 annexed thereto (the "Lease", and the Credit Agreement, Notes, Line,
Chase Note, Mellon Note, Lease and the documents executed in connection
therewith are collectively referred to as the "Financing Agreements"), the
Debtor has, pursuant to certain of the Financing Agreements, granted to the Bank
a security interest in all of its personal property collateral, wherever located
as more fully set forth on Schedule A hereto (the foregoing hereinafter
collectively called the "Collateral"); and

         WHEREAS, the Debtor is presently in default under the terms of the
Financing Agreements between the Debtor and Bank; and

                                      -1-
<page>

         WHEREAS, pursuant to the terms of the Financing Agreements, the Bank is
presently entitled to possession of the Collateral, including the right to make
direct collection of the accounts receivable; and

         WHEREAS, the Debtor desires to deliver peaceful possession of the
Collateral to the Bank at the Debtor's premises located at 407 Cliff Street,
618-620 Buffalo Street, 604 and 612 Elmira Road, and 239 Cherry Street, Ithaca,
New York (the "Premises") pursuant to the Financing Agreements and for the
purpose of enabling the Bank to dispose of the Collateral at said Premises;

         NOW THEREFORE, the parties hereto agree as follows:

1. The Debtor hereby delivers peaceful possession of the Collateral to the Bank
for the purpose of enabling the Bank to sell, convey or otherwise dispose of
said Collateral pursuant to its security interests therein. Possession of the
Collateral shall be effectuated by the Bank taking possession of the Collateral
on the Debtor's Premises. At its sole option, the Bank may post signs at the
Premises and take any other action it deems reasonable to indicate the Bank's
possession as a secured party and to preserve, protect and secure the
Collateral.

2. In connection with the foregoing, the Debtor grants the Bank and
its designees permission to enter upon the Debtor's Premises and to have
complete access to and control over the Debtor's books and records for so long
as the Bank reasonably deems necessary. The Bank or its designees may remain in
possession of said Collateral for the purpose of taking any steps which it deems
necessary in order to dispose of the Collateral, and it may remain in possession
thereof for so long as it deems necessary to effectuate a commercially
reasonable disposition of all or any portion of the Collateral. The Bank may
designate the personnel who will conduct such disposition of Collateral from
such Premises. The Bank or its designees may, in its sole discretion, remain in
possession to use or operate all or any part of the Collateral for the purpose
of completing customer orders or otherwise preserving the Collateral or its
value in any reasonable manner so as to maintain the going business value of the
Collateral. While the Bank, or its designees, is in possession of the
Collateral, it shall have no liability to the Debtor, except for acts of willful
misconduct or gross negligence occasioned by it or its servants, agents or
representatives.

                                      -2-
<page>
 3. During such period as the Bank remains in possession of the
Collateral as provided hereunder prior to the time of sale or disposition, the
Bank shall not be deemed to be in control of the Premises and shall have no
liability for the payment of any taxes, rents or other charges in relation to
the Collateral or the Premises. The risk of accidental loss or damage to the
Collateral shall remain upon the Debtor to the extent of any deficiency in any
effective insurance coverage, except for acts of willful misconduct or gross
negligence occasioned by the Bank or its servants, agents or representatives. At
its sole option and discretion, the Bank may pay the costs of insurance or other
charges incurred in the custody or preservation of the Collateral on the
Premises and such costs shall be secured by the Collateral.

4. The Debtor acknowledges that the Bank intends to commence active preparation
immediately for the sale or other disposition of the Collateral and will
accomplish such sale or disposition in a commercially reasonable time and manner
hereafter. In the event the Bank determines that it is commercially reasonable
to dispose of all or any portion of said Collateral by means of private sale, or
the Bank determines it is commercially reasonable to make a public sale of all
or any portion of the Collateral, the Bank shall give five (5) days prior notice
to the Debtor of the time and place of such public or private sale. Such notice
shall be sent to the Debtor at 407 Cliff Street, Ithaca, New York 14850. The
Debtor hereby agrees that the notice given or described herein constitutes or
shall constitute reasonable notification within the meaning of the Uniform
Commercial Code.

                                      -3-
<page>
5. The Debtor shall cooperate to the extent reasonably required
by the Bank in furnishing information and assistance necessary to effectuate the
sale of Collateral and in obtaining and/or preparing any bills of sale or other
documents required incident to such sale.

6. The Debtor shall supply to the Bank all necessary information which the Bank
reasonably requires with respect to the collection of its receivables and shall
provide to the Bank all necessary books, records, invoices and other documents
relevant to the collection of the receivables and shall exercise its best
efforts to provide the Bank with witnesses or other parties who have knowledge
of information relevant to the collection of these receivables.

7. The Bank does not accept possession of the Collateral, nor assignment of the
receivables, as full satisfaction or a release of the Debtor's obligations to
the Bank, and the Bank shall continue to have all rights and remedies to which
it is otherwise entitled with respect to the obligations secured by the
Collateral, including but not limited to the right to collect a deficiency
judgment against the Debtor or any guarantor and this agreement shall not
constitute a waiver or modification thereof. Such rights and remedies shall be
cumulative and may be pursued by the Bank at any time, whether or not the
disposition of the Collateral has been effectuated.

8. Debtor will indemnify, defend and hold the Bank, its agents and employees
harmless from any and all loss, liability, damage and expenses, including
attorney's fees, in any way suffered, incurred or paid by the Bank, its agents
and employees as a result of any spill of waste oil and/or other contaminants on
the Debtor's premises, except for acts of willful misconduct or gross negligence
occasioned by the Bank or its servants, agents or representatives, and the
Debtor hereby consents to the removal of all waste oil and/or other contaminants
from the Collateral by the Bank or its agents.

9. (a). The Debtor acknowledges that the outstanding principal balance under the
Financing Agreements on the date hereof is as follows:

         A. Credit Agreement: $ 3,243,819.88

         B. Chase Note: $1,020,000.00

         C. Mellon Note $ 680,000.00

         D. Lease $1,287,422.28 (as of February 4, 2002; valid through February
            18, 2002)

         E. Restructuring Fees $ 50,000.00

which sums, with interest thereon, costs and expenses as set forth in the
Financing Agreements, are due and owing without offset, counterclaim and/or
defense of any kind whatsoever.

  (b) The Financing Agreements are legal, valid, binding and enforceable against
the Debtor and it has no counterclaim, claim of offset or defense with respect
thereto.

10. This Agreement may be executed and delivered in multiple counter
part copies, each of which shall be an original and all of which shall
constitute one and the same agreement. This Agreement may not be amended,
supplemented or modified unless pursuant to a writing executed by each of the
Parties hereto.

IN WITNESS WHEREOF, the parties have caused this instrument to
be executed in their corporate names on the day and year first above written.


BANK:

         JPMORGAN CHASE BANK

By:      /s/ Emilia Teige
         ------------------------------------
         Emilia Teige, Vice President

         J.P. MORGAN LEASING, INC.

By:      /s/ Michael O'Hern
         -------------------------------------
         Michael O'Hern, Senior Vice President

DEBTOR:

         KOLAR, INC.

By:      /s/ Edward J. Fred
         ------------------------------------
         Edward J. Fred, Vice President & CFO

                                      -4-
<Page>


CONSENTED HEREIN:

         CPI AEROSTRUCTURES, INC.

By:      /s/ Edward J. Fred
         ------------------------------------
         Edward J. Fred, President & CFO



                                      -5-

<Page>


STATE OF NEW YORK )
                  ) ss.:
COUNTY OF         )

         On this ____ day of __________________, 20____, before me, the
undersigned officer, personally appeared _________________________,
______________________ of ________________________________________, signer and
sealer of the foregoing instrument and acknowledged the same to be his free act
and deed and the free act and deed of said corporation.



                                             -----------------------------------
                                             Notary Public
                                             My Commission Expires: ____________

STATE OF NEW YORK )
                  ) ss.:
COUNTY OF         )

         On this 24th day of January, 2002, before me, the undersigned officer,
personally appeared Edward J. Fred, President and CFO of CPI Aerostructures,
Inc., signer and sealer of the foregoing instrument and acknowledged the same to
be his free act and deed and the free act and deed of said corporation.


                                          /s/ Catherine A. Clare
                                          -----------------------------------
                                          Notary Public
                                          My Commission Expires: July 27, 2002


                                      -6-
<Page>

STATE OF NEW YORK )
                  ) ss.:
COUNTY OF         )

         On this ____ day of __________________, 20____, before me, the
undersigned officer, personally appeared _________________________,
______________________ of ________________________________________, signer and
sealer of the foregoing instrument and acknowledged the same to be his free act
and deed and the free act and deed of said corporation.



                                             -----------------------------------
                                             Notary Public
                                             My Commission Expires: ____________
STATE OF NEW YORK )
                  ) ss.:
COUNTY OF         )

         On this ____ day of __________________, 20____, before me, the
undersigned officer, personally appeared _________________________,
______________________ of ________________________________________, signer and
sealer of the foregoing instrument and acknowledged the same to be his free act
and deed and the free act and deed of said corporation.



                                             -----------------------------------
                                             Notary Public
                                             My Commission Expires: ____________


                                      -7-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.40
<SEQUENCE>4
<FILENAME>cpi_8k-01312002ex1040.txt
<DESCRIPTION>DALEY-HODKIN CORPORATION PROPOSAL
<TEXT>
                                                                  Exhibit 10.40

                                                                January 10, 2002

VIA FACSIMILE (212) 889-7577

Herrick, Feinstein LLP
Two  Park Avenue
New York, New York   10016

Attention: Andrew Gold, Esq.


                                           Re:     Kolar, Inc.
                                                   407 Cliff Street,
                                                   618-620 West Buffalo Street,
                                                   604 and 612 Elmira Road,
                                                   239 Cherry Street,
                                                   Ithaca, New York

Dear Mr. Gold:

The following is Daley-Hodkin Corporation's ("DHC") proposal to conduct an
auction sale of the machinery, equipment and vehicles ("Personal Property") as
set forth in Schedule A, annexed hereto, located at Kolar, Inc., at the above
mentioned facility addresses ("Kolar"). The auction sale will be conducted on a
date to be agreed upon between DHC, JPMorgan Chase ("JPMorgan") and J.P. Morgan
Leasing, Inc. ("Chase Equipment"), (JPMorgan Chase and Chase Equipment are
collectively referred to as the ("Secured Lenders") and no later then March 1,
2002.


1. METHODOLOGY OF SALE

DHC proposes to conduct a public auction sale of the Personal Property, which
will be offered for sale "As Is," "Where Is," without representations or
warranties, other then the transfer of title. The Personal Property as set forth
in Schedule A annexed hereto, will be offered for sale in the order set forth
below and in the following categories:

a)       Bulk bid for all Personal Property
b)       Bulk bid for Machinery and Equipment
c)       Bulk bid for Vehicles
d)       Individual bids

The combination of individual categories of Personal Property and/or equivalent
bulk categories must exceed the bulk bid for all of the Personal Property
(indicated above as "a") by five (5%) percent in order to be successful.
Additionally, the sum of the individual bids must exceed the related bulk bid
for those items by five (5%) percent in order to be successful.

<page>
                                                        Page 2
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

2. SALE AND DISPOSITION OF PERSONAL PROPERTY

Immediately following our retention, DHC will contact other secured parties
which have equipment at Kolar. Those secured parties which opt to include their
equipment in the sale will share expenses on a pro rata basis, which will result
in a mitigation of the Secured Lender's expenses.

This proposal is predicated upon the assumption that Kolar will provide DHC with
a minimum of seven Kolar employees to assist us in preparing for the auction
sale with Kolar paying all costs. The Kolar employees will work under the
supervision of DHC personnel and will be made available to assist DHC on a
full-time basis through the end of the auction sale removal period.

DHC personnel will prepare the Personal Property for sale. This preparation will
include but not be limited to: organizing, grouping and lotting the items to be
sold. Where determined to be appropriate, DHC will cosmetically clean certain
items to enhance their marketability.

When everything is lotted and in good order, our staff will prepare a detailed
schedule of all of the Personal Property to be sold. Each lot, as assembled by
our lotting personnel, will be assigned a Lot Number Tag. The Lot Number Tag
will correspond to a description in a lot-numbered Sale Catalog to be
distributed to the bidders on sale day.


3. TERMS OF SALE

Our Terms of Sale require a non-refundable minimum deposit in the form of cash,
cashier's check, wire transfer or other certified funds equal to twenty-five
(25%) percent of the bid price from the successful bidder(s) at the time of
knockdown, with the balance payable within twenty-four (24) hours following
conclusion of the auction sale. DHC will assume the credit risk for all
deposits.


4.  MARKETING

A detailed listing of the Personal Property to be sold will be assembled in a
direct mail brochure. Incorporated in this brochure will be a prominently
displayed invitation for the public to inspect the Personal Property prior to
the sale. Display advertisements will be placed in appropriate newspapers and
trade publications. DHC proposes to market the Personal Property as follows:

              Direct Mail Brochures                               Qty. 15,000

              Newspaper/Trade Publication                        # of Insertions
              The New York Times                                           2
              The Syracuse Post Standard                                   2
              The Ithaca Journal                                           2
              The Binghamton Press and Sun Bulletin                        2
              American Metal Market                                        2
              Metalworking Machinery Mailer                                2

<page>
                                                        Page 3
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.


In addition, the advertising information will be posted on DHC's Internet Web
Site (www.daley-hodkin.com) with links to DHC's site from appropriate industry
web sites, the Industrial Auctioneers Association and National Auctioneers
Association Web Pages.


5.  SALE DAY PROCEDURES

All bidders must register and obtain a bid paddle in order to bid. This provides
a permanent registration of all bidders at the sale.

         o        Our auction bookkeeping system is totally computerized with
                  full duplication of all records permanently maintained;

         o        The entire auction sale is audio recorded;

         o        Daley-Hodkin Corporation assumes full responsibility for all
                  monies collected, including payment of applicable sales taxes;

         o        You, or a representative that you designate, will be provided
                  with a duplicate copy of the Auctioneer's selling sheets on
                  which you may record each and every lot as sold for your own
                  accounting.

         o        The sale will be conducted in accordance with the Terms of
                  Sale, annexed hereto, or any modifications agreed to among the
                  parties.


6.  POST-SALE REMOVAL

DHC personnel will remain on the premises after the auction sale for a period of
approximately three weeks to supervise the removal of the Personal Property
("Removal"). This supervision is provided to ensure an orderly and controlled
Removal, as well as to guard against damage to the real property during the
Removal period.


7.  ACCOUNTING

Within ten business days following conclusion of the sale and Removal,
seventy-five (75%) percent of the estimated net proceeds, which have cleared the
banking system will be provided to the Secured Lenders. A complete accounting
along with the balance of the remittance, net of DHC's fee and expenses, will be
provided within thirty days following conclusion of the auction sale and Removal
period. DHC's accounting will include a detailed summary of the auction sale and
will be accompanied by our check for the net proceeds.


<page>
                                                        Page 4
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.



8.  FEE AND EXPENSE STRUCTURE

There will be no fee charged directly to the Secured Lenders. DHC's fee will be
derived from a ten (10%) percent buyer's premium, which will be added to each
buyers invoice. This buyer's premium will limit your cost of sale to expenses
only. We anticipate the expenses to include but will not be limited to: DHC
labor, including: lotting, cataloging, bookkeeping, supervision of delivery;
advertising and marketing, travel, legal, telephone and trash removal. All
expenses advanced by DHC shall be deducted from the gross proceeds of sale.

In the event that JPMorgan or Chase Equipment shall terminate this Agreement
anytime after execution hereof except for cause (i.e. DHC's negligence or
intentional misconduct) prior to DHC's insertion of advertising, the party
terminating this Agreement shall pay to DHC the sum of $10,000 plus
reimbursement of all out of pocket expenses advanced. If JPMorgan or Chase
Equipment terminates this Agreement after DHC's insertion of advertising, the
party terminating this Agreement will pay to DHC the sum of $25,000 plus
reimbursement of all expenses advanced. Once DHC is retained, the Secured
Lenders agree not to withdraw any of the Personal Property from the sale. All
Personal Property sold within 120 days of the date hereof shall be subject to a
ten (10%) percent commission payable by the Secured Lenders to DHC and may be
deducted from the auction proceeds.

Expenses incurred in connection with marketing will not exceed $30,000. Labor,
travel and miscellaneous expenses through completion of final will not exceed
$40,000. Total expenses will be capped at $70,000.

In the event Kolar is unable to provide all seven Kolar employees, our expenses
will be increased by approximately $35,000, which will be prorated based upon
the number of additional personnel required.


9.  TERMS & CONDITIONS

         A.       DHC is retained as The Secured Lenders' exclusive agent for
                  the sale of the Personal Property from the time of execution
                  of this Agreement and for an additional ninety days from the
                  date of the auction sale.

         B.       Kolar will provide unrestricted access to DHC to enter and use
                  the premises from the date of execution of this Agreement and
                  for an additional three weeks following the conclusion of the
                  auction sale for the purposes of (i) preparing the Personal
                  Property for sale; (ii) conducting the sale thereon; and (iii)
                  delivery of the Personal Property to the purchasers. DHC shall
                  not be charged any fees associated with its use of the
                  premises and Kolar shall provide adequate utilities to the
                  premises at no charge to DHC.

         C.       In the event that prior to the sale of all of the Personal
                  Property, all or a material portion of the Personal Property
                  shall be lost or damaged by fire or other casualty, or by
                  theft or vandalism, neither the Secured Lenders nor DHC will
                  be required to proceed with the auction sale and the Secured
                  Lenders shall reimburse DHC for all expenses advanced.

         D.       If not executed, this proposal shall expire ten days after the
                  date first written above.

<page>
                                                        Page 5
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

         E.       Certain purchasers of Personal Property, or their agents, may
                  be required by DHC and/or the Secured Lenders to provide a
                  current certificate of insurance in favor of DHC and the
                  Secured Lenders, in the amount of $1,000,000, before they are
                  permitted to remove those items from the premises.

         F.       The Personal Property which was contained in the facility at
                  the time of DHC's inspection on December 21 and 22, 2001 and
                  as set forth in Schedule A hereto, shall be (i) contained in
                  the facility as of the date DHC first enters the facility to
                  begin its preparations for sale and (ii) shall remain at the
                  facility through the date of sale.

         G.       DHC has no obligation to remove any "Hazardous Substances"1
                  that may be located at the premises or otherwise associated
                  with the Personal Property.


10.  REPRESENTATIONS OF THE SECURED LENDERS AND KOLAR

The Secured Lenders represents and warrants to DHC that:

         (a)      The Secured Lenders have not received written notice of any
                  lien encumbering the Personal Property other than and the
                  liens of Kolar Machine, Inc. now known as Ralok, Inc.;

         (b)      The Personal Property will be sold free and clear of all
                  liens, claims, encumbrances, security interests, adverse
                  claims, mortgages, pledges, liabilities, conditional sale
                  agreements, restrictions, and charges of any kind
                  (collectively, "Liens");

         (c)      The Secured Lenders have the authority and have performed all
                  acts necessary to sell, transfer and deliver good and
                  merchantable title to the Personal Property to the purchaser
                  free and clear of all liens;

         (d)      The persons executing this Agreement on behalf of JPMorgan and
                  Chase Equipment are duly authorized to do so;

         (e)      The terms of this Agreement are binding upon and enforceable
                  against JPMorgan and Chase Equipment;

         (f)      To the best of Kolar's knowledge, information or belief, the
                  Personal Property has never been and is not being used to
                  make, store, handle, treat, dispose, generate or transport
                  "Hazardous Substances" in violation of any applicable laws.

- -----------------
1 The term "Hazardous Substances" means collectively, any chemical, solid,
liquid, gas, or other substance having the characteristics identified in, listed
under, or designated pursuant to any law, statute, or regulation of a government
or political subdivision or agency thereof, as presenting an imminent and
substantial danger to the public health or welfare or to the environment, or as
otherwise requiring special handling, collection, storage, treatment, disposal
or transportation.

<page>
                                                        Page 6
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.
11. REPRESENTATIONS OF DHC

DHC represents and warrants to the Secured Lenders:

         (a)      All necessary authority to conduct the sale has been obtained
                  by DHC;

         (b)      The person executing this Agreement on behalf of DHC is duly
                  authorized to do so;

         (c)      The terms of this Agreement are binding upon and enforceable
                  against DHC;

         (d)      DHC shall conduct the auction, including but not limited to
                  the marketing of same, in a commercially reasonable manner in
                  accordance with this Agreement;

         (e)      DHC carries comprehensive insurance, which includes: general
                  liability and worker's compensation.


12. INDEMNIFICATION BY JPMORGAN

JPMorgan hereby indemnifies, defends and agrees to hold harmless DHC and DHC's
officers, agents and employees from and against any and all claims, demands,
liabilities, judgments, damages, settlements, costs and expenses (including but
not limited to court costs and reasonable attorney's fees), (the "Claims"), but
only to the extent that such Claims are not compensated by any policies of
insurance, that may be sustained or incurred by DHC or DHC's officers, agents
and employees as a result of or arising from or in connection with the auction
sale, except those Claims arising from DHC's negligence, intentional misconduct
or breach of this Agreement.


13. INTENTIONALLY OMMITTED


14. INDEMNIFICATION BY DHC

DHC hereby indemnifies and agrees to hold harmless the Secured Lenders and the
Secured Lenders' officers, agents and employees from and against any and all
claims that may be incurred by the Secured Lenders as a result of DHC's
negligence, intentional misconduct or breach of this Agreement.


<page>
                                                        Page 7
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.

15. BINDING OBLIGATION; ASSIGNMENT

This Agreement shall be binding upon the Parties and their respective successors
and assigns. Neither party may assign its interest in this Agreement without the
prior written consent of the other party.


16. FINAL AGREEMENT

This Agreement and any and all (i) exhibits that are attached hereto and made a
part hereof, and (ii) side agreements, letter agreements, and amendments (if
any) that are executed by the Secured Lenders and DHC in furtherance of this
Agreement contain the final and entire Agreement and understanding of the
Parties, and any terms and conditions not set forth in this Agreement (or in
such exhibits, side letters, letter agreements, and amendments) are not a part
of this Agreement and the understanding of the Parties. This Agreement may be
modified, amended or altered only in writing signed by the Party to be bound by
the change or alteration.


17. NOTICES

Any notice required or permitted by or in connection with this Agreement,
without implying the obligation to provide any such notice, shall be in writing
and shall be made by certified mail, return receipt requested, postage prepaid,
addressed to the respective Parties at the appropriate address set forth below.
If notice is tendered pursuant to the provisions of this Section and is refused
by the intended recipient thereof, the notice, nevertheless, shall be considered
to have been given.

                  If to JPMorgan:
                           JPMorgan Chase
                           395 North Service Road - 3rd Floor
                           Melville, New York 11747
                           Attention:  Richard E. Grabowski

                  If to Chase Equipment:
                           J.P. Morgan Leasing Inc.
                           One Chase Square (MC-6)
                           Rochester, New York 14643
                           Attention: Michael O'Hern
                                Operations Manager

                  If to DHC:
                            Daley-Hodkin Corporation
                            135 Pinelawn Road
                            Melville, New York 11747
                            Attention: Morris Hodkin

<page>
                                                        Page 8
January 10, 2002
Andrew Gold, Esq. -- Herrick, Feinstein LLP
RE: KOLAR, INC.



                  If to Kolar:
                            Kolar, Inc.
                            200A Executive Drive,
                            Edgewood, New York 11717
                            Attention: Edward J. Fred

If the within meets with your approval, please sign where indicated below,
return by fax and mail the original to my attention.

                                                     Yours truly,

                                                     DALEY-HODKIN CORPORATION

                                                     /s/ Morris Hodkin

                                                     Morris Hodkin

Accepted and agreed to
this 14th day of January 2002

/s/ Emilia Teige
- -------------------------
Emilia Teige, VP
JPMorgan Chase


Accepted and agreed to
this 31st day of January 2002


/s/ Michael J. O'Hern
- -------------------------
Michael J. O'Hern, Sernior Vice President
J.P. Morgan Leasing, Inc.


Accepted and agreed to
this 31st day of January 2002


/s/ Edward J. Fred
- -------------------------
Edward J. Fred
Kolar, Inc.

cc: Cindy Korman, Esq.

<page>
Kolar, Inc.                                                 February 14, 2002

                                  TERMS OF SALE

Daley-Hodkin Corporation (the "Auctioneer") hereby sells on account of the
Secured Parties (all Secured Parties will be defined) its right, title and
interest in all of the machinery, equipment, office furniture, office equipment
and vehicles (the "Items") of Kolar, Inc. All Items are offered "AS IS" and
"WHERE IS" without any representation or warranty whatsoever, either expressed
or implied, including but not limited to representations or warranties as to
quality, quiet enjoyment, condition, mileage, OSHA safety equipment,
description, merchantability or fitness for known use for any particular
purpose.

All bidders must register to become eligible to bid. All bidders are required to
provide their paddle number at time of knockdown and a minimum first deposit of
$200 or 25% of the Bid Price, whichever is greater. Payment of the balance in
full must be made within 24 hours after the sale is concluded. Payment of the
entire balance due must be made prior to the removal of any item(s) purchased.

In the event a bidder fails to give the required deposit or fails to pay balance
in full as above, the Auctioneer may, without notice to the purchaser, resell
the Items any time during or after the sale. All deposits and payments shall
consist of cash, cashier's check, or other certified funds made payable to
Daley-Hodkin Corporation. Signed checks will be accepted only if accompanied by
a bank letter drawn by a bank which is reasonably acceptable to the Auctioneer
and which states that the bank will guarantee payment up to a specified amount
(this letter MUST contain the words "guarantee payment"). Signed checks
delivered to the Auctioneer by the Buyer, omitting the dollar amounts will be
completed and deposited by the Auctioneer at the conclusion of the auction sale.

A ten (10 %) percent buyer's premium will be added to the purchase price of each
lot and will be added to your invoice.

The Auctioneer reserves the right to sell in bulk, consecutive lot number order,
or in any order, he deems suitable. To be successful, the cumulative total of
the individual bids must exceed the bulk bid(s) by five (5 %) percent. In the
event of any disputed bid, the Auctioneer reserves the right to put the disputed
Item up for sale to the highest bidder. The auction sheets and records of sale
as set forth by the Auctioneer shall be deemed to be accepted as final by all
purchasers. The Auctioneer is not bound by any actions or statements made by any
person other than itself. In the event the Auctioneer is unable to release any
Item to a purchaser, the extent of the Auctioneer's and the Secured Party's
liability will be to refund any funds collected against that Item.

Removal of the Items purchased must be completed in accordance with the Terms Of
Sale. All Items are required to be removed by the purchaser at its own risk and
expense and in compliance with all applicable laws, regulations or ordinances
including State and Federal Environmental laws. No allowances or adjustment of
any kind will be made once the Items purchased are removed from the sale
premises. Items CANNOT be removed until the day after the sale has been
completed. All Items must be removed from the premises during normal business
hours, Monday through Friday during the hours of 8:00a.m to 4:00p.m. and must be
completed as set forth in the following removal schedule:


Daley-Hodkin Corporation                                     Auctioneers     1

<page>
Kolar, Inc.                                                 February 14, 2002

         Item                 Starting Removal Date         Final Removal Date
- -----------------------     -------------------------      ---------------------
Items including, but not    Friday, February 15, 2002      Friday, March 1, 2002
limited to,  office
furniture, hand tools,
inspection equipment, and
otherreadily movable items

All Shelving and racking     Friday, February 15, 2002     Friday, March 1, 2002

All other Items              Friday, February 15, 2002     Friday, March 8, 2002
- --------------------------------------------------------------------------------

Removal on Saturdays and Sundays will be by appointment only at the Auctioneer's
discretion. Buyers will be assigned a checker to escort them to their purchases
on a first come first serve basis.

Any Items purchased, which are not removed by the required dates, or if the
purchaser fails to comply with the terms of final payment and/or removal as
required, shall be deemed abandoned and forfeited. The Auctioneer reserves the
right to resell the Items concerned, without notice to the purchaser and the
purchaser's payments will be forfeited. The purchaser will remain liable for any
deficiency as well as any expenses incurred in connection with the resale or
removal of any abandoned and forfeited Item.

All lots offered for sale that have drawers, storage compartments or any other
areas for storage, are sold without contents therein or thereon unless
specifically announced otherwise by the Auctioneer. The obligation to obtain
applicable permits, licenses and registration fees (i.e.: software, vehicles,
etc.) are the sole responsibility of the purchaser. Computers are sold as
hardware only; purchasers do not have rights to any information or software,
which may be in the system.

All purchasers and their agents who assist in removal of the Items may, at the
Auctioneer's discretion, be required to provide a Certificate of Insurance
naming Daley-Hodkin Corporation, JPMorgan Chase and Chase Equipment Leasing,
Inc. as loss payee with a minimum coverage of one million ($1,000,000) dollars.
All chemicals, fluids, filters or storage containers associated with any Items
purchased must be removed by qualified personnel in an environmentally safe
manner before any Item will be released. All overflows or spills must be cleaned
up with absorbent material, which must be removed from the premises. Removal
will not be permitted until Daley-Hodkin Corporation has inspected the clean up.
All purchasers are required to disconnect and cap electrical and water lines in
a professional and reasonable manner. Failure to do so will result in the
purchaser being held responsible for any costs or damages incurred.

All information, materials and reports verbal or printed that have been provided
by the Auctioneer are correct to the best of our knowledge and in no other way
is accuracy of same guaranteed by the Auctioneer. Vehicle odometers readings are
correct to the best of our knowledge; however, the Auctioneer does not warrant
or guarantee their accuracy. Purchasers shall rely on their own due diligence
and inspection.

The Secured Parties reserve the right to confirm or reject any and all bids.

NEW YORK: Applicable 8% sales tax must be paid to the Auctioneer. Exceptions:
New York State Resale Certificates and/or Exemption Certificates will be
accepted. New York State Exemption Certificates will be accepted for purchases
of machinery and equipment. Sales tax will be collected from all out of state
purchasers and will be refunded directly to the purchaser upon receipt of a
properly completed bill of lading from a common carrier showing out of state
delivery, if received prior to the 15th day of next month. Otherwise, refunds
must be obtained directly from the New York State Sales Tax Bureau. IRS
regulations require us to report all cash payments, as defined by the IRS,
exceeding $10,000.00 from any one purchaser for one transaction or two or more
related transactions.

Daley-Hodkin Corporation                                        Auctioneers   2

<page>
Kolar, Inc.                                                 February 14, 2002

VEHICLES: All buyers must pay state sales tax to the department of motor
vehicles of the respective state in which the vehicle will be registered. The
exact name and address in which the vehicle will be registered must be submitted
to the Auctioneer at the time of payment.

These terms supersede any other posted or printed Terms of Sale. These Terms of
Sale are read at the beginning of the sale and posted on the premises so that
all prospective purchasers are deemed to have full knowledge of same regardless
of what time they entered the sale premises. Modification to these terms or
additional terms and conditions of sale may be announced and/or posted by the
Auctioneer at any time. A successful bid is considered acceptance of the above
terms and is a binding contract.






Daley-Hodkin Corporation                                       Auctioneers     3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.41
<SEQUENCE>5
<FILENAME>cpi_8k-01312002ex1041.txt
<DESCRIPTION>NINTH AMENDMENT DATED AS OF 12/31/2001
<TEXT>
                                                                   Exhibit 10.41


         NINTH AMENDMENT, dated as of December 31, 2001 (the "Amendment"), to
the Credit Agreement, dated as of October 9, 1997 (as amended, supplemented or
otherwise modified from time, the "Credit Agreement"), among CPI AEROSTRUCTURES,
INC., a New York corporation ("Holdings"), KOLAR, INC., a Delaware corporation
(the "Borrower"), the several banks and other financial institutions from time
to time parties thereto (collectively, the "Lenders"), and JPMORGAN CHASE BANK,
a New York banking corporation, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent").



                              W I T N E S S E T H:
                               - - - - - - - - - -



         WHEREAS, Holdings, the Borrower, the Lenders and the Administrative
Agent are parties to the Credit Agreement; and

         WHEREAS, Holdings, and the Borrower have requested that the Lenders
agree to amend certain provisions in the Credit Agreement upon the terms and
subject to the conditions set forth herein; and

         WHEREAS, the Administrative Agent and the Lenders are willing to agree
to the requested amendments;

         NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto hereby agree as follows

1.       Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

2.       Amendment to Section 2.3(a) of the Credit Agreement. Section 2.3(a) of
the Credit Agreement is hereby amended by deleting such Section in its entirety
and substituting in lieu thereof the following:

         "(a) The Tranche A Term Loans shall mature on June 30, 2002 with the
         amount outstanding on the effective date of the Amendment to this
         Agreement to be paid in seven (7) consecutive monthly installments
         payable on the Business Day of each month as follows:

            December 31, 2001                                   $25,000.00
            January 31, 2002                                    $50,000.00
            February 28, 2002                                   $50,000.00
            March 31, 2002                                      $50,000.00
            April 30, 2002                                     $100,000.00
            May 30, 2002                                       $100,000.00
            June 30, 2002                                    $2,188,500.00
<page>

3.       Representations and Warranties. On and as of the date hereof, Holdings
and the Borrower hereby jointly and severally confirm, reaffirm and restate the
representations and warranties set forth in Section 3 of the Credit Agreement
mutatis mutandis. To the extent that any of the representations and warranties
set forth in Section 3 of the Credit Agreement expressly relate to a specific
earlier date, Holdings and the Borrower jointly and severally hereby confirm,
reaffirm and restate such representations and warranties as of such earlier
date.

4.       Effectiveness. This Amendment shall become effective on the date (the
"Amendment Effective Date") on which the Administrative Agent shall have
received:

         (i)      an executed counterpart of this Amendment from Holdings, the
                  Borrower, and the Required Lenders; and

         (ii)     on or before January 31, 2002, stock certificates representing
                  (a) 30,000 shares of common stock in Holdings in the name of
                  JPMorgan Chase Bank, Chase Equity Associates L.P. or its or
                  their designee, and (b) 20,000 shares of common stock in
                  Holdings in the name of Mellon Bank, N.A. or its designee.
                  Such shares shall be duly issued, fully paid and
                  non-assessable subject to appropriate registration rights, and
                  free and clear of all liens, encumbrances and restrictions on
                  transferability.

         (iii)    on or before January 31, 2002, payment and performance of such
                  additional obligations as Borrower or Holdings shall have
                  hereunder, including but not limited to the obligations
                  described in paragraph 6 hereof.

5.       Continuing Effect: No Other Amendments, Waivers or Consents. Except as
expressly provided herein, all of the terms and provisions of the Credit
Agreement are and shall remain in full force and effect. The amendments provided
for herein are limited to the specific subsections of the Credit Agreement
specified herein and shall not constitute a consent, waiver or amendment of, or
an indication of the Administrative Agent's or the Lenders' willingness to
consent to any action requiring consent under any other provisions of the Credit
Agreement or the same subsection for any other date or time period.

6.       Expenses. Holdings and the Borrower agree to pay and reimburse the
Administrative Agent for all its reasonable costs and out-of-pocket expenses
incurred in connection with the preparation and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent, and to, compensate, pay and/or reimburse
Administrative Agent in accordance with such additional agreements as may have
been entered into between Borrower, Holdings, and Administrative Agent.

7.       Counterparts. This Amendment may be executed in any number of
counterparts by the parties hereto (including by facsimile transmission), each
of which counterparts when so executed shall be an original, but all the
counterparts shall together constitute one and the same instrument.

8.       GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.



<Page>


         WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date written next to the signature of each party.



                                               CPI AEROSTRUCTURES, INC.



                                               By:  /s/ Edward J. Fred
                                                  ------------------------------
                                                     Name: Edward J. Fred
                                                     Title: President and Chief
                                                              Financial Officer

                                               KOLAR, INC.



                                               By:  /s/ Edward J. Fred
                                                  ------------------------------
                                                     Name: Edward J. Fred
                                                     Title: Executive Vice
                                                              President and
                                                              Chief Financial
                                                              Officer

                                               JPMORGAN CHASE BANK
                                               As administrative Agent
                                                 and as Lender


                                               By: /s/ Richard E. Grabowski
                                                  ------------------------------
                                                     Name: Richard E. Grabowski
                                                     Title: Vice President

                                               MELLON BANK, N.A.
                                               As Lender


                                               By: /s/  Kim D. Elm
                                                  ------------------------------
                                                      Name: Kim D. elm
                                                      Title: First Vice
                                                                President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>6
<FILENAME>cpi_8k-01312002ex1042.txt
<DESCRIPTION>LETTER SUPPLEMENT TO NINTH AMENDMENT
<TEXT>
                                                                   Exhibit 10.42


                                   Kolar INC.
                      407 CLIFF STREET ITHACA, N.Y. 14850
                    PHONE (607) 273-5182  FAX (607) 273-2033








                                                                 January 4, 2002





JPMorgan Chase Bank
Administrative Agent

         Re:      Ninth Amendment to Credit Agreement among CPI AEROSTRUCTURES,
                  INC., a New York corporation ("Holdings"), KOLAR, INC., a
                  Delaware corporation (the "Borrower") and JPMorgan Chase Bank
                  as Administrative Agent and the Lenders party thereto.
                  -------------------------------------------------------------

Dear Sirs:

                  This letter is supplemental to the Ninth Amendment to Credit
Agreement dated October 9, 1997 ("Ninth Amendment") among Holdings, Borrower,
JPMorgan Chase Bank as Administrative Agent and the Lenders party thereto, but
is for the benefit of Administrative Agent only. All capitalized terms used
herein shall, unless otherwise indicated, have the meanings assigned to them in
said Ninth Amendment.

                  In addition to the obligations of Holdings and Borrower
contained in said Ninth Amendment, Holdings and Borrower agree that, on or
before January 31, 2002, they will furnish to Administrative Agent, for its sole
benefit, stock certificates representing an additional 20,000 shares of common
stock in Holdings in the name of JPMorgan Chase Bank, Chase Equity Associates
L.P. or its or their designee. Such shares shall be duly issued, fully paid and
non-assessable subject to appropriate registration rights, and free and clear of
all liens, encumbrances and restrictions on transferability.

<Page>


JPMorgan Chase Bank
January 2, 2002
Page 2


                  Holdings and Borrower each acknowledge their understanding
that full compliance with the terms of this letter shall constitute one of the
conditions precedent to the Ninth Amendment becoming effective.

                                    Very truly yours,

                                    CPI AEROSTRUCTURES, INC.


                                    By:   /s/ Edward J. Fred
                                    --------------------------------------------
                                    Name: Edward J. Fred
                                    Title: President and Chief Financial Officer


                                    KOLAR, INC.


                                    By:   /s/ Edward J. Fred
                                    --------------------------------------------
                                    Name: Edward J. Fred
                                    Title: Executive Vice President & CFO

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>7
<FILENAME>cpi_8k-01312002ex991.txt
<DESCRIPTION>PRESS RELEASE RE: KOLAR (JANUARY 22, 2002)
<TEXT>
                                                                    Exhibit 99.1

FOR IMMEDIATE RELEASE:

    CPI AEROSTRUCTURES ANNOUNCES THAT IT WILL LIQUIDATE ITS KOLAR SUBSIDIARY

Edgewood, N.Y. (January 22, 2002) - CPI Aerostructures, Inc. (AMEX Symbol: CVU)
announced today that it will close its Kolar facility, which is located in
Ithaca, New York, and liquidate the assets of its Kolar, Inc. subsidiary. This
process will occur over the next two months, and will involve an auction of the
fixed assets of Kolar, Inc., and the sale of the real estate that Kolar
currently owns. The proceeds of this liquidation will be used to reduce Kolar's
liabilities on certain bank debt that is currently in default. The bank debt and
Kolar's obligations to its previous owner are secured by liens on the assets and
real estate to be sold and are guaranteed by CPI. The proceeds of the
liquidation are not expected to fully satisfy all such obligations. There can be
no assurance that satisfactory payment terms will be made with the banks
regarding the balance of portions of the bank debt, which is currently due no
later than June 30, 2002. Agreements for the liquidation have been executed with
the banks and the liquidator and the previous owner has consented to the sale.

"We are quite saddened by this, " stated CPI's President, Edward J. Fred. "Our
analysis of the situation made it very clear that Kolar, Inc. could not survive
the downturn in the electronics manufacturing sector, and that we had no
recourse but to close the facility."

"The unfortunate events at Kolar are in no way a reflection on the people who
worked there, as they are as dedicated a group of individuals as any company
could hope to have. Our sincere thanks go out to them for all they attempted to
do in an effort to keep Kolar viable."

"On the other hand, the aircraft segment of CPI is experiencing record growth.
The preliminary estimates indicate that the aircraft segment will produce
revenue in excess of $20 million in 2002, and we need to concentrate all of our
efforts and resources towards that part of the business," concluded Mr. Fred.

The above statements include forward looking statements that involve risks and
uncertainties, which are described from time to time in the Company's SEC
reports, including the Company's Form 10-KSB for the year ended December 31,
2000, and the Company"s Form 10-QSB for the quarters ended March 31, 2001, June
30, 2001, and September 30, 2001.

Founded in 1980, CPI Aerostructures, Inc, is a precision machining and
sub-assembly manufacturer servicing the commercial and military sector of the
aircraft industry.

INVESTOR RELATIONS CONTACT:

      EDWARD J. FRED
      PRESIDENT AND
      CHIEF FINANCIAL OFFICER
      CPI AEROSTRUCTURES, INC.
      (631) 586-5200 / www.cpiaero.com

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
