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BUSINESS COMBINATION
 12 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
BUSINESS COMBINATION

NOTE 22 – BUSINESS COMBINATION

 

On July 1, 2023, the Company under AIS, completed the acquisition of a leading service contractor and steel fabricator that specializes in industrial and water treatment markets, Heisey Mechanical, Ltd. (“Heisey”) based in Columbia, Pennsylvania. The real estate of the business was purchased at fair market value on August 30, 2023, for $1,500,000 in a separate transaction.

 

Heisey provides the water treatment industry with a variety of fabricated vessels and equipment including ASME pressure vessels, heat exchangers, mix tanks, reactors, and other specialized fabricated equipment. Additionally, the contracting team assists with installation and service of fabricated items. The company has over 33,000 square feet of manufacturing floor space in its facility and an experienced staff of fabricators, welders, and field mechanics.

 

The purchase price allocation presented below compares the preliminary allocation which was developed based on an estimate of fair values of Heisey’s identifiable tangible and intangible assets acquired and liabilities assumed as of July 1, 2023, compared to the final allocation.

 

The consideration transferred and allocation of Heisey’s tangible and intangible assets and liabilities, are as follows.

 

   Preliminary   Final 
Consideration Transferred:          
Cash  $393,291   $393,291 
Seller’s note   240,000    240,000 
Financed amount   2,160,000    2,160,000 
Total consideration transferred  $2,793,291   $2,793,291 
           
           
Purchase Price Allocation:          
Inventory   300,000    443,069 
Contract assets   667,259    667,259 
Machinery and equipment   1,625,000    1,625,000 
Contract liabilities   (216,469)   (216,469)
Accrued expenses   (57,499)   (57,499)
Goodwill   475,000    331,931 
Total consideration transferred  $2,793,291   $2,793,291 

 

The unaudited pro forma summary below presents the results of operations as if the Heisey acquisition occurred on October 1, 2022. Proforma adjustments for the twelve months ended September 30, 2023, includes $127,800 of depreciation expense from acquired fixed assets, $127,883 of interest expense on the debt used in the acquisition. The pro forma summary uses estimates and assumptions based on information available at the time. Management believes the estimates and assumptions to be reasonable; however, actual results may have differed significantly from this unaudited pro forma financial information. The unaudited pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations.

 

   Unaudited 
   For the year ended 
   September 30, 2023 
     
Revenues  $66,274,838 
Net loss   (9,173,748)

 

On August 30, 2023, the Company acquired a mortgage in the amount of $1,200,000 from Fulton Bank to finance the purchase of the properties formerly owned by Heisey Mechanical Ltd. The mortgage carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.8% and matures on September 30, 2043.