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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | Note 8. COMMITMENTS AND CONTINGENCIES Contingencies On July 5, 2018, CPI filed a complaint in the Supreme Court of the State of New York, County of New York, against the Company relating to the previously announced SPA dated as of March 21, 2018 between the Company and CPI, pursuant to which the Company agreed to sell to CPI all of the shares of capital stock of WMI Group. On July 2, 2018, the Company notified CPI that it was terminating the SPA due to CPI’s failure to close on a timely basis. The complaint alleges that the Company willfully breached its contractual obligation to provide financial information required to fulfill key conditions for closing under the SPA. CPI is seeking, among other things, an order of specific performance requiring the Company to comply with its obligations under the SPA, monetary damages, and attorneys’ fees and costs. On July 30, 2018, the Company filed its answer and asserted counterclaims against CPI. The Company denied the allegations made by CPI in the complaint and alleged that CPI breached the Agreement and the covenant of good faith and fair dealing. The Company is seeking a declaration that the SPA has terminated, along with monetary damages, attorneys’ fees, and costs. On July 31, 2018, CPI filed a motion for a preliminary injunction against the Company. The motion argued that the Company’s failure to provide financial data and other information necessary to close the transaction contemplated by the SPA will cause irreparable injury to CPI. CPI is seeking an order directing the Company to furnish CPI with all previously requested financial, operating, and other data and information relating to WMI Group. The Company disputes the validity and applicability of the claims asserted by CPI and believes that it has meritorious defenses to those claims and intends to contest the action vigorously. On October 3, 2018, the Company entered into a stipulation with CPI pursuant to which it agreed to deliver to CPI no later than November 16, 2018, audited financial statements of WMI Group. The audit of WMI Group was not completed as of that date, and is still in process as of the date of the Company’s third quarter 2018 Form 10-Q. CPI will have three weeks after receipt of the audited financial statements to close the transaction in accordance with the terms of the SPA. The stipulation contemplates that the parties will enter into an Amendment to the SPA incorporating the terms of the Stipulation into the SPA. On November 9, 2018, the Court issued an Order directing that the Company and CPI enter into an Amendment to the SPA which, among other things, confirms the parties’ obligations with respect to the delivery of the audited financial statements of WMI Group and obligation to close the transaction within 21 days thereafter. A number of actions have been commenced against the Company 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 the Company. As certain of these claims represent amounts included in accounts payable they are not specifically discussed herein. Westbury 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 approximately $31,000 for past rent arrears, and for an unidentified sum representing all additional rent due under an alleged commercial lease through the end of its term, plus attorney’s fees. The Company believes that it has a meritorious defense, and there was no lease on the property and that its subsidiary Compac Development Corp was a hold-over tenant occupying the space on month-to-month tenancy. An employee of the Company commenced an action against, among others, Rechler Equity B-2, LLC and Air Industries Group, in the Supreme Court State of New York, Suffolk County, seeking compensation in an undetermined amount for injuries suffered while leaving the premises occupied by Welding Metallurgy, Inc. Rechler Equity B-2, LLC, has served a Third Party Complaint in this action against Air Industries Group, Inc. and Welding Metallurgy, Inc. The action remains in the early pleading stage. The Company believes it is not liable to the employee and any amount it might have to pay would be covered by insurance. An employee of the Company 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. The action remains in the early pleading stage. The Company believes it is not liable to the employee and any amount it might have to pay would be covered by insurance. Contract Pharmacal Corp. commenced an action on October 2, 2018, relating to a Sublease entered into between the Company and Contract Pharmacal in May 2018 with respect to the property occupied by WMI at 110 Plant Avenue, Hauppauge, New York. In the action Contract Pharmacal seeks damages and an order directing that the Company make all of the space referenced in the Sublease available to Contract Pharmacal. The Company disputes the validity of the claims asserted by Contract Pharmacal and believes that it has meritorious defenses to those claims and intends to contest the action vigorously. On October 15, 2018, a class action complaint was filed in the United States District Court for the Eastern District of New York (Michael Kishmoian vs. Air Industries et al Case No. 18cv5757) naming the Company and certain of its directors and a former director. The Complaint alleges that the proxy statement for the Company’s 2017 Annual Meeting of Stockholders contained false and misleading misstatements relating to whether brokers had discretionary authority to vote the shares of their customers in connection with the proposal to increase the number of shares the Company is authorized to issue. In the Complaint the plaintiff seeks to void the amendment and rescind any shares issued using the shares authorized by the amendment. The Company has contacted its insurers and is in the early stages of determining the merits of the claim and available defenses. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss, if any, that may result from this action.

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