Good day, ladies and gentlemen, and welcome to the second quarter 2008 Air Industries Group earnings conference call. My name is Erica and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Chris Witty with Darrow Associates, Investor Relations. You may proceed, sir.

Thank you, operator. Good morning, everyone. I am Chris Witty of Darrow Associates and I welcome you to Air Industries Second Quarter Conference Call. For those who have not had a chance yet to review the earnings release, it's posted and it can be viewed on the Internet or you can get it to you thru e-mail or fax. ,: Before we proceed with the formal remarks, please be advised that statements made during this presentation that are not historical facts are forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements may include but are not limited to revenue and earnings projections, statements of business plans and objectives, product development and time to market issues, and capital structure, and other financial matters. Forward-looking statements may differ from actuality and relying on them is subject to risk. Factors causing forward-looking statements in this presentation to differ from results are discussed in the company's Form 10-K and 10-Q filings with the Securities and Exchange Commission. The company is not necessarily obligated to update forward-looking statements whether as a result of new information, future events, or otherwise. I will now turn the call over to Pete Rettaliata. Please go ahead, Pete.

Thank you, Chris. Good morning to all of you and thank you for participating in our second quarter of 2008 financial results conference call. We filed our second quarter 10-Q on Tuesday and issued a press release on our results earlier today. In a moment, I will ask Lou Giusto, our CFO to review the financial performance for the quarter. First, I will cover some of the larger issues that are driving the company and keeping us very busy. After these remarks, we will be pleased to take questions from you. We have significant developments on the horizon. These events have been publicly announced and we have provided periodic updates. For today's conference call I would like to address these developments in order to give you granularity of the three primary objectives at Air Industries. These objectives are – number one, to grow the company through internal initiatives, number two, to grow the company through strategic acquisitions, and number three, to streamline and maximize efficiencies in our operations at the subsidiaries and corporate levels. I will first discuss our objective to streamline and maximize efficiencies in our operations at the subsidiary and corporate levels. At the corporate level, our operating income has suffered in the past two quarters primarily as a result of higher levels of general and administrative expenses associated with our strategic acquisition program and other public company costs particularly those related to financial control required for Sarbanes-Oxley. While we have largely completed the upgrades of our internal system and the effort to be Sarbanes-Oxley compliant we have been operating the last few quarters a bit short-handed in our financial department. But we intend to add additional talent in the near future to bolster our capabilities. As we continue to strengthen our financial team we will be better…

Thank you, Pete. Good morning, ladies and gentlemen. I will begin with the review of the second quarter 2008 income statement followed by the balance sheet and other financial items. Please take note of the following adjustments in our reporting process. In the fourth quarter of 2007, the company was able to quantify the capitalization of preproduction costs in accordance with the emerging issue, task force issue No. 99-5 accounting for preproduction costs related to long-term supply arrangements. Certain expenditures which had historically expensed including amounts expensed in the second quarter 2007 of approximately $434,000 and $685,000 in the second quarter of 2008 had been capitalized. Now, let's get to our financial results in detail. Net sales for the second quarter of 2008 were $12.7 million, an increase of 16% as compared to $11 million in the second quarter of 2007. The increase in revenue reflects both organic growth at our Air Industries Machining subsidiaries and an expansion of the company as a result of its strategic acquisition program. As a reminder, beginning with the fourth quarter of 2007, the company's net sales included results from Sigma Metals and Welding Metallurgy for the full quarterly periods. In the second quarter of 2008, the company's mix of business was approximately 60% military and 40% commercial as compared to approximately 68% military and 32% commercial in the second quarter of '07. Our largest customer Sikorsky represented about 37% of our revenue in the second quarter of '08 as compared to approximately 47% in the second quarter of '07. On a segment basis, Air Industries Machining had revenues of $7.9 million in the second quarter of 2008 or 61% of total company revenues as compared with $8.2 million or 75% of total revenue in the same period of 2007. Sigma Metals had revenue…

Thanks, Lou. Ladies and gentlemen, as in the past quarters, I believe that we continue to demonstrate that Air Industries Group is executing a plan for growth and diversification in the very effective aerospace and defense market. The outlook for industry remains promising and we are working very hard to improve our positioning to capitalize on the many opportunities for increased market share and market expansion. I would now like to turn the call back to the operator so that we may begin the question-and-answer session.

(Operator instructions) Your first question comes from the line of Howard Halpern from Taglich Brothers. You may proceed. Howard Halpern – Taglich Brothers: Good morning.

Good morning.

Good morning, Howard Howard Halpern – Taglich Brothers: In terms of the cost reduction campaign could you give us some idea as color as to the amount or maybe an annualized basis you hope to take out of your cost structure?

I would think that we have identified something over $1 million annually right now and we are aiming at a number closer to a $1.6 million in terms of annualized reduction. Those reductions come from some very (inaudible) activities like reducing healthcare costs in terms of joining programs and things like that as well as reducing much of our activity related to acquisitions that are heightened at this time in working with Blair-HSM deal. Howard Halpern – Taglich Brothers: In terms of this quarter, could you give a number on how much expense went into the process of acquiring Blair?

I don't think I can calculate that right now, because in some ways it also gets tied to other improvements in our financial reporting activity that will permanently remain part of our program. Howard Halpern – Taglich Brothers: Turning to I guess top line results. Looking at 10-Q, you talked about delivery gates [ph] were deferred. Do you have a revenue number that I guess still I get into the second – it's still from the second quarter into the third quarter?

The main deferral has to do with a slowdown with the A380 program delivery schedule in the second half of this year. That program I believe accounted for something like $4 million in 2008, it will probably be cut in half for us. However, we have a very strong backlog and demand with the second half of 2008. We built in a lot of inventory and our work in process which really just means that we are shifting our priorities to support more quickly the Sikorsky buildup for BLACK HAWK. So I don't see this necessarily has a change in our net sales for 2008, but we have had to make some shifts in terms of our manufacturing priorities. It means we will carry our higher level inventory to that period and not realize some of the revenues that we may have on the A380 program. Howard Halpern – Taglich Brothers: But you really expect a better second half in terms of the top line and you had…

Absolutely. If you follow the progression we have doubled the level of work in process inventory from this time last year in anticipation of customer demand was the second half a large portion of which had to do with the growth and demand for Sikorsky BLACK HAWK and as you would figure that has awful lot to do with the (inaudible). Howard Halpern – Taglich Brothers: And do you have the product mix also with the second half that could potentially get your gross margins into the 30% area?

We have been growing from a gross profit level from below 20 to the mid-to-high 20s. I don't know that I would say that in this period we will be in 30% gross profit. Howard Halpern – Taglich Brothers: And lastly, looking at the Q2 – also looking at the Q, will you able – or have you expect to with the next couple days to restructure the note payable to Welding?

Yes. We have done some work to restructure that note with principal who sold us the company, and we are in that process right now.

Yes, the lawyers are engaged in writing up an agreement, it has not been finalized as of this call, but we are – we believe that the result is going to be favorable to the company. Howard Halpern – Taglich Brothers: Thanks, guys.

Your next question comes from the line of Jim Schwartz from Gunn Allen. You may proceed. Joel Schwartz – Gunn Allen: Hey, good morning, Pete, it's actually Joel Schwartz [ph]. How are you?

Good morning, Joe.

Good morning, Joe. Joel Schwartz – Gunn Allen: Hey, Pete, one – maybe two quick questions. With regards to the increasing your backlog is there an amount that you can attribute if any to that increase in backlog with maybe a diversion of your resources focus on the Blair deal? Or is it simply just a function unit – functioning of new relationships and good business? And after that, can you give a little more clarity on the Blair transaction, possible timing or progress? Thank you.

Sure. I can't attribute any of the increase in our backlog as the Air Industries Group has related to the Blair acquisition right now. What I can say – but I can't say too much about it, because I'd be speaking a little bit outside of where I have some authority. Blair-HSM is seeing some increase in their backlog, some of which in their potential backlog, some of which had to do with working together with them in some partnership on proposals or more advanced equipment that would require both of us to contribute. So I think much of the increase in backlog in we accrued up until now because of the relationship will start to occur first at Blair-HSM. We also have some very big opportunities that have not yet been realized but are waiting for the time at which we complete the deal. Most specifically, happy to do with landing gear, landing gear licenses. Now, that being said, we believe we are in the final stages of due diligence and we are very close to completing this transaction.

One other thing that we can add here is backlog for us is the direct function of what's happening within the aerospace industry in general. And I think we here would like to share with the people on this call that the aerospace industry is enjoying robust period in its history right now and we are benefiting from that. As a result, you will see our backlog continuing to grow. The opportunities that are being presented to us are significant and we are entertaining (inaudible).

I think I would also like to add to that we have been very, very selective about the projects that we have decided to become involved in, having to do with where we think they will be 10 years from now, not just a general flush up of the business today. There is certain projects that are better than others was a long-term. And so, we have been very careful to make sure that we get into Position A and we have had some very favorable comments from some consultants as to the nature of our distribution of contract involvement. Joel Schwartz – Gunn Allen: Okay, thank you.

(Operator instructions) We have no further questions at this time. I would now like to turn it over to Mr. Rettaliata for closing remarks.

Well, thank you and thank you for participating on today’s conference call. We appreciate the continued support of our shareholders and the interest from the broader investment community and our plans for aerospace industry expansion. We look forward to keeping you appraised on the developments of our businesses. Please feel free to call should you have any questions about the company. Thank you again for your participation today and good bye.

Thank you for your participation. You may now disconnect.