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ACQUISITION

9 Months Ended

Sep. 30, 2014

Woodbine

On April 1, 2014, the Company, through its wholly-owned subsidiary Welding, acquired all of the common stock of Woodbine for $2.4 million and 30,000 shares of the common stock of AIRI. The common stock was valued at $9.68 per share, which was the closing share price on April 1, 2014. Additionally, a working capital adjustment in the amount of $165,000 was paid to the former stockholders of Woodbine during June of 2014. The Company financed the acquisition of Woodbine by increasing its borrowings on its existing revolving loan and term loan facilities (see Note 7).

Woodbine is a long established manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Woodbine’s products and customers are very complementary to those of Decimal Industries, Inc., which was acquired in July 2013.

The acquisition of Woodbine was accounted for under FASB ASC 805, “Business Combinations” (“ASC 805”). The purchase price allocation is set forth below.

Fair Value of Tangible Assets acquired	$	472,000
Goodwill		2,402,000
Liabilities assumed		(19,000	)
Total	$	2,855,000

Eur-Pac

On June 1, 2014, the Company acquired all of the common stock of Eur-Pac for $1,625,000 and 20,000 shares of the common stock of AIRI. The common stock was valued at $9.78 per share, which was the closing share price on that date. Additionally, a working capital adjustment in the amount of $78,000 was paid in August 2014. The Company financed the acquisition of Eur-Pac with the proceeds of its Registered Direct Offering (see Note 8).

Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies.

The acquisition of Eur-Pac was accounted for under ASC 805. The purchase price allocation is set forth below.

Fair Value of Tangible Assets acquired	$	409,000
Goodwill		1,659,000
Liabilities assumed		(170,000	)
Total	$	1,898,000

ECC

On September 1, 2014, the Company through its wholly-owned subsidiary Eur-Pac, acquired all of the common stock of ECC for $209,000. The Company financed the acquisition from its regular working capital.ECC is a manufacturer of stripped, terminated, bonded and tinned lead wires, used by a variety of contractors, manufacturers and OEMs.

The acquisition of ECC was accounted for under ASC 805. The purchase price allocation is set forth below.

Fair Value of Tangible Assets acquired	$	129,000
Goodwill		106,000
Cash Acquired		5,000
Liabilities Assumed		(31,000	)
Total	$	209,000

AMK

On October 1, 2014, the Company acquired all of the common stock of AMK Technical Services (“AMK”), for $6,953,000, subject to a working capital adjustment. The purchase price included a preliminary working capital adjustment of $203,000. At closing, the Company paid $4,453,000 and issued a Seller Note and Mortgage of $2,500,000. The note bears interest at the rate of 5% per annum and interest and principal are due and payable on or before December 31, 2014. The note is secured by a mortgage on the property.

This acquisition will be accounted for under ASC 805. The purchase price allocation has not yet been completed. AMK is a long established provider of sophisticated welding and machining services for diversified aerospace and industrial customers.