XML 18 R8.htm IDEA: XBRL DOCUMENT
v3.20.2

BUSINESS COMBINATIONS | 6 Months Ended
--- | ---
Jun. 30, 2019
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | 2. Business Combinations As discussed in Note 1, the Company acquired WMI and Compac from Air Industries Group (“Air Industries”) on December 20, 2018. The WMI Acquisition was accounted for as a business combination in accordance with ASC 805. Accordingly, the Company is required to determine and record the estimated fair value of the assets acquired, including any potential intangible assets, and liabilities assumed at the date of acquisition. The acquisition was considered a stock purchase for tax purposes. The purchase price for the acquisition was $7.9 million, which was subject to a post-closing working capital adjustment. $2 million dollars of the purchase price was placed in escrow at closing and may be released after the completion of the working capital adjustment and for the indemnification contingencies. The escrowed amount is shown as restricted cash on the consolidated balance sheet as of June 30, 2019. The working capital adjustment is based on the historical values of components of working capital as defined in the Stock Purchase Agreement “SPA”. We calculated a post-closing working capital adjustment. Air Industries formally objected to our calculation. The SPA provided the parties 30 days to come to an agreement on the working capital adjustment. The Company and Air Industries could not come to an agreement within the time specified and as such have submitted the issues to BDO USA, LLP for a binding resolution. The working capital purchase price adjustment is expected to be finalized not later than the third quarter of 2019. As of June 30, 2019, the Company was in the process of determining the fair values of the assets and liabilities acquired and had recorded provisional estimates as of the acquisition date. As the Company completes this process and additional information becomes known concerning the acquired assets and assumed liabilities, management will make adjustments to the fair value of the amounts provisionally recorded in the opening balance sheet of WMI during the measurement period, which is no longer than a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. If the final aggregate fair value of the net assets acquired is less than the final purchase price paid, then the Company may be required to record goodwill. Conversely, if the final aggregate fair value of the net assets acquired is in excess of the final purchase price paid, then the Company may potentially conclude that the purchase of WMI was a “bargain purchase.” As stated above, as of June 30, 2019, the Company determined the following provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI:
|  | Provisional Fair Values |
Other current assets |  | $ | 1,049,000 |
Accounts receivable |  |  | 1,522,000 |
Inventory |  |  | 7,969,000 |
Property and equipment, net |  |  | 586,000 |
Current liabilities |  |  | (5,174,000 | )
Total |  | $ | 5,952,000 |
Please see Note 14, “Subsequent Events” for additional discussion and final fair value of assets and liabilities assumed from WMI and the working capital dispute between CPI and Air Industries. The following table presents the unaudited pro forma revenue and net income for the period presented as if the WMI Acquisition had occurred on January 1, 2018, based on the provisional estimates of the fair value of the net assets acquired:
|  | Three months ended |  |  | Six months ended |
|  | June 30, 2018 |
Revenue |  | $ | 21,077,746 |  |  | $ | 38,610,474 |
Net loss |  | $ | (1,489,378 | ) |  | $ | (3,348,723 | )

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration