Sterling

On March 1, 2015, the Company acquired all of the common stock of Sterling, for $5.4 million in cash and 425,005 shares of the common stock of AIRI. The common stock was valued at $9.89 per share, which was the closing share price on February 27, 2015. The cash consideration is subject to adjustment for working capital changes. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. The Company financed the acquisition of Sterling with the proceeds from the issuance of Term Loan D (see Note 6).

Sterling founded in 1941 manufactures components for aircraft and ground turbine engines.

The acquisition of Sterling 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	$	8,281,000
Goodwill		1,963,000
Cash acquired		588,000
Liabilities assumed		(1,216,000	)
Total	$	9,616,000

The below table sets forth selected proforma financial information as if AMK and Sterling were owned for the three months ended March 31, 2015 and 2014.

	Three Months Ended
	March 31, 2015		March31, 2014
Net Sales	$	18,650,000	$	18,343,000
Income (loss) from operations	$	275,000	$	(85,000	)

The below table sets forth selected financial information for the 2014 and 2015 acquisitions for the three months ended March 31, 2015 and 2014.

2015	WPI		EPC		ECC		AMK			Sterling
Net Sales	$	145,000	$	1,071,000	$	149,000	$	1,077,000		$	887,000
Income (loss) from operations	$	40,000	$	126,000	$	32,000	$	(530,000	)	$	78,000

2014	WPI		EPC		ECC		AMK			Sterling
Net Sales	$	-	$	-	$	-	$	-		$	-
Income (loss) from operations	$	-	$	-	$	-	$	-		$	-

Purchase price allocation

The acquisition of Sterling 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	$	8,281,000
Goodwill		1,963,000
Cash acquired		588,000
Liabilities assumed		(1,216,000	)
Total	$	9,616,000

Selected financial information

2015	WPI		EPC		ECC		AMK			Sterling
Net Sales	$	145,000	$	1,071,000	$	149,000	$	1,077,000		$	887,000
Income (loss) from operations	$	40,000	$	126,000	$	32,000	$	(530,000	)	$	78,000

2014	WPI		EPC		ECC		AMK			Sterling
Net Sales	$	-	$	-	$	-	$	-		$	-
Income (loss) from operations	$	-	$	-	$	-	$	-		$	-