2.	Acquisitions

Acquisitions of Interests in Delphax

Pursuant to a Securities Purchase Agreement dated as of

October 2, 2015 (

the "Securities Purchase Agreement") among the Company, Delphax Technologies, Inc. and its subsidiary, Delphax Technologies Canada Limited ("Delphax Canada"), on

November 24, 2015 (

the "Closing Date"), the Company purchased (i) at face value a

$2,500,000

principal amount Five-Year Senior Subordinated Promissory Note (the "Senior Subordinated Note") issued by Delphax Canada for a combination of cash and the surrender of outstanding principal of

$500,000

and accrued and unpaid interest thereunder, and cancellation of, a

-Day Senior Subordinated Note purchased at face value by the Company from Delphax Canada on

October 2, 2015

pursuant to the Securities Purchase Agreement and (ii) for

$1,050,000

in cash a total of

43,000

shares of Delphax's Series B Preferred Stock (the "Series B Preferred Stock") and a Stock Purchase Warrant (the "Warrant") to acquire an additional

95,600

shares of Series B Preferred Stock at a price of

$33.4728

per share (subject to adjustment for specified dilutive events).

Principal under the Senior Subordinated Note is due on

October 24, 2020

and bears interest at an annual rate of

8.5%.

Interest is to be paid in kind until, in the absence of specified events,

November 24, 2017.

Thereafter, interest is to be paid in cash. Interest in kind is to be paid monthly, while interest payable in cash is to be paid quarterly. The Senior Subordinated Note is guaranteed by Delphax and is secured by security interests granted by Delphax and Delphax Canada in their respective inventories, equipment, accounts receivable, cash, deposit accounts, contract rights and other specified property, as well as a pledge by Delphax of the outstanding capital stock of its subsidiaries, including Delphax Canada. Pursuant to the terms of a subordination agreement (the "Subordination Agreement") entered into on

October 2, 2015

by Delphax, Delphax Canada, the Company and the senior lender (the "Senior Lender") that provides a revolving credit facility under an agreement with Delphax and Delphax Canada (the "

Delphax Senior Credit Agreement"), the Company's rights with respect to payment under and enforcement of the Senior Subordinated Note, and enforcement of its security interests are subordinated to the rights of the Senior Lender under the Delphax Senior Credit Agreement.

Each share of Series B Preferred Stock is convertible into

100

shares of common stock of Delphax, subject to anti-dilution adjustments, and has

liquidation preference over shares of common stock of Delphax.

dividends are required to be paid with respect to the shares of Series B Preferred Stock, except that ratable dividends (on an as-converted basis) are to be paid in the event that dividends are paid on the common stock of Delphax. Based on the number of shares of Delphax common stock outstanding and reserved for issuance under Delphax's employee stock option plans at the Closing Date, the number of shares of common stock underlying the Series B Preferred Stock purchased by the Company represent approximately

38%

of the shares of Delphax common stock that would be outstanding assuming conversion of Series B Preferred Stock held by the Company

Pursuant to the terms of the Series B Preferred Stock, for so long as amounts are owed to the Company under the Senior Subordinated Note or the Company continues to hold a specified number of the Series B Preferred Stock and interests in the Warrant sufficient to permit it to acquire up to

50%

of the number of shares of Series B Preferred Stock initially purchasable under the Warrant (or holds shares of Series B Preferred Stock acquired in connection with the exercise of the Warrant equal to

50%

of the number of shares of Series B Preferred Stock initially purchasable under the Warrant), then

● holders of the Series B Preferred Stock, voting as a separate class, would be entitled to elect (and exercise rights of removal and replacement) with respect to

three

-sevenths of the board of directors of Delphax, and after

June 1, 2016

the holders of the Series B Preferred Stock, voting as a separate class, would be entitled to elect (and to exercise rights of removal and replacement of) with respect to

four

-sevenths of the members of the board of directors of Delphax; and

● without the written consent or waiver of the Company, Delphax

may

not

enter into specified corporate transactions.

Pursuant to the provision described above, beginning on

November 24, 2015,

three

designees of the Company were elected to the board of directors of Delphax, which had a total of

seven

members following their election.

The Warrant expires on

November 24, 2021.

In the event that Delphax were to declare a cash dividend on its common stock, the Warrant provides that the holder of the Warrant would participate in the dividend as if the Warrant had been exercised in full and the shares of Series B Preferred Stock acquired upon exercise had been fully converted into Delphax common stock. The Warrant provides that, prior to any exercise of the Warrant, the holder of the Warrant must

first

make a good faith written tender offer to existing holders of Delphax common stock to purchase an aggregate amount of common stock equal to the number of shares of common stock issuable upon conversion of the Series B Preferred Stock that would be purchased upon such exercise of the Warrant. The Warrant requires that the per share purchase price to be offered in such tender offer would be equal to the then-current exercise price of the Warrant divided by the then-current conversion rate of the Series B Preferred Stock. To the extent that shares of common stock are purchased by the holder in the tender offer, the amount of shares of Series B Preferred Stock purchasable under the Warrant held by such holder is to be ratably reduced. The Warrant is to provide that it

may

be exercised for cash, by surrender of principal and interest under the Senior Subordinated Note equal to

0.95

times the aggregate exercise price or by surrender of a portion of the Warrant having a value equal to the aggregate exercise price based on the difference between the Warrant exercise price per share and an average market value, measured over a

-trading day period, of Delphax common stock that would be acquired upon conversion of

one

share of Series B Preferred Stock.

As a result of the above transactions, the Company determined that it had obtained control over Delphax and it included Delphax in its consolidated financial statements beginning on

November 24, 2015.

See Note

The following table summarizes the p

rovisional fair values of consolidated Delphax assets and liabilities as of the Closing Date:

	November 24, 2015

ASSETS
Cash and cash equivalents	$	586,061
Accounts receivable		1,740,210
Inventories		3,972,802
Other current assets		693,590
Property and equipment		722,714
Intangible assets - trade name		120,000
Intangible assets - patents		1,090,000
Goodwill		375,408
Total assets	$	9,300,785

LIABILITIES
Accounts payable	$	1,663,199
Accrued expenses		1,949,522
Income tax payable		11,312
Debt		3,313,317
Other long-term liabilities		650,500
Total liabilities	$	7,587,850


Net Assets	$	1,712,935

The Company determined that it was reasonable to use the price which it paid for its equity interest as the basis for estimating the total fair value of Delphax

’s equity as of the

November 24, 2015

acquisition date. The effect of the Company’s equity and debt investments of

$1,050,000

and

$2,500,000,

respectively, are

not

reflected in the above table. As such, the amounts presented reflect the fair values of Delphax’s assets and liabilities immediately prior to the Company’s investments. The net assets amount presented above is the estimated acquisition date fair value of the non-controlling interests in Delphax.

Delphax

’s debt immediately prior to the acquisition included approximately

$508,000

due under the

-Day Senior Subordinated Note. The goodwill is

not

deductible for income tax purposes.

The Company has finalized its Delphax acquisition accounting.

Direct costs relating to the above transactions of

$110,000

were expensed as incurred during the year ended

March 31, 2016,

and are included in the general and administrative expenses in the consolidated statements of income and comprehensive income.

Pro-forma financial information is

not

presented as the results are

not

material to the Company’s condensed consolidated financial statements.

January 6, 2017,

the Company acquired all rights, and assumed all obligations, of a

third

-party lender under the Delphax Senior Credit Agreement with Delphax and Delphax Canada providing for a

$7.0

million revolving senior secured credit facility, subject to a borrowing base of North American accounts receivable and inventory, including obligations, if any, to fund future borrowings under the Delphax Senior Credit Agreement. In connection with this transaction, the Company paid to such

third

-party senior lender an amount equal to the approximately

$1.26

million outstanding borrowing balance, plus accrued and unpaid interest and fees. Also in connection with this transaction, the Company, Delphax and Delphax Canada entered into an amendment to the Delphax Senior Credit Agreement to reduce the maximum amount of borrowings permitted to be outstanding under the Delphax Senior Credit Agreement from

$7.0

million to

$2.5

million, to revise the borrowing base to include in the borrowing base

100%

of purchase orders from customers for products up to

$500,000,

to provide that the interest rate on all borrowings outstanding until all loans under the Delphax Senior Credit Agreement are repaid in full will be a default rate equal to

2.5%

per month to be paid monthly, and to provide for the payment to the Company from Delphax Canada and Delphax of fees equal to

$25,000

upon execution of the amendment and of

$50,000

upon repayment in full of all loans under the Delphax Senior Credit Agreement. On

January 6, 2017,

the Company notified Delphax and Delphax Canada of certain “Events of Default” (as defined under the Delphax Senior Credit Agreement) existing under the Delphax Senior Credit Agreement and that the Company was reserving all rights to exercise remedies under the Delphax Senior Credit Agreement and that

delay in exercising any such remedy is to be construed as a waiver of any of its remedies. Also, on

January 6, 2017,

the Company and Delphax Canada entered into a Forbearance and Amendment Agreement dated as of

January 6, 2017,

which amended the Senior Subordinated Note to increase the default rate of interest from an annual rate of

10.5%

to an annual rate of

18%,

to be in effect until all amounts under the Senior Subordinated Note are paid in full, and which provides that so long as

Event of Default (as defined in the Senior Subordinated Note) occurs under the Senior Subordinated Note, other than Events of Default that existed as of

January 6, 2017,

the Company agreed to forbear from exercising its remedies under the Senior Subordinated Note until

May 31, 2017

and further provided for the payment by Delphax Canada to the Company of a forbearance fee equal to

approximately

$141,000.

June 30, 2017,

Delphax Canada was

not

in compliance with financial covenants under the Delphax Senior Credit Agreement. Notwithstanding the existence of events of default, the Company permitted additional borrowings under the Delphax Senior Credit Agreement to, among other things, fund a final production run by Delphax Canada of consumable products for its legacy printing systems, which production run was primarily completed over the

first

six

months of calendar

2017.

Delphax Canada is Delphax's sole manufacturing subsidiary.

Events of default under the Delphax Senior Credit Agreement persisted. On

July 13, 2017,

the Company delivered a demand for payment and Notice of Intention to Enforce Security to Delphax Canada. On

August 10, 2017,

the Company foreclosed on all personal property and rights to undertakings of Delphax Canada. The Company foreclosed as a secured creditor with respect to amounts owed to it by Delphax Canada under the Delphax Senior Credit Agreement. The Company provided notice of its intent to foreclose to Delphax Canada and its secured creditors and shareholder on

July 26, 2017.

The outstanding amount owed to the Company by Delphax Canada under the Delphax Senior Credit Agreement on

July 26, 2017

was approximately

$1,510,000.

The Company also submitted an application to the Ontario Superior Court of Justice in Bankruptcy and Insolvency (the "Ontario Court") seeking that Delphax Canada be adjudged bankrupt. On

August 8, 2017,

the Ontario Court issued an order adjudging Delphax Canada to be bankrupt. The recipients of the foreclosure notice did

not

object to the foreclosure or redeem. As a result, the foreclosure was completed on

August 10, 2017,

and the Company accepted the personal property and rights to undertakings of Delphax Canada in satisfaction of the amount secured by the Delphax Senior Credit Agreement.

The intercompany balances under the Delphax Senior Credit Agreement and Senior

Subordinated Note as of

June 30, 2017

are eliminated in the presentation of the condensed consolidated financial statements. The effect of interest expense arising under the Senior Subordinated Note and, since

January 6, 2017

under the Delphax Senior Credit Agreement, and other intercompany transactions, are reflected in the attribution of Delphax net income or loss to non-controlling interests because Delphax is a variable interest entity.

As further discussed in

Note

the Company recognized significant expenses in the

June 30, 2016

quarter associated with Delphax employee benefit costs and write-downs of Delphax inventories, long-lived tangible and intangible assets, and goodwill. The Company concluded that the charges were necessary to reflect changes in market conditions and business outlook during the

June 30, 2016

quarter and were

not

associated with conditions that existed as of the Delphax Closing Date. As such, these adjustments were

not

accounted for as “measurement period” adjustments.

have determined that the attribution of Delphax net income or loss should be based on consideration of all of Air T’s investments in Delphax and Delphax Canada. The Warrant provides that in the event that dividends are paid on the common stock of Delphax, the holder of the Warrant is entitled to participate in such dividends on a ratable basis as if the Warrant had been fully exercised and the shares of Series B Preferred Stock acquired upon such exercise had been converted into shares of Delphax common stock. This provision would have entitled Air T, Inc. to approximately

67%

of any Delphax dividends paid, with the remaining

33%

paid to the non-controlling interests. We concluded that this was a substantive distribution right which should be considered in the attribution of Delphax net income or loss to non-controlling interests. We furthermore concluded that our investment in the debt of Delphax should be considered in attribution. Specifically, Delphax’s net losses are attributed

first

to our Series B Preferred Stock and Warrant investments and to the non-controlling interest (

67%/33%

) until such amounts are reduced to zero. Additional losses are then fully attributed to our debt investments until they too are reduced to zero. This sequencing reflects the relative priority of debt to equity. Any further losses are then attributed to Air T and the non-controlling interests based on the initial

67%/33%

share. Delphax net income is attributed using a backwards-tracing approach with respect to previous losses.

As a result of the application of the above-described attribution methodology, for the

quarter ended

June 30, 2017,

the attribution of Delphax net income to non-controlling interests was

3.4%

and for the quarter ended

June 30, 2016,

the attribution of Delphax net loss to non-controlling interests was

33%.

Acquisition of Interests in Contrail Aviation

July 18, 2016 (

the “Contrail Closing Date”), pursuant to an asset purchase agreement (the “Asset Purchase Agreement”) between Contrail Aviation Support, LLC (“Contrail Aviation”), a subsidiary of the Company, Contrail Aviation Support, Inc. (the “Seller” or “Contrail”) and Joseph Kuhn, the sole shareholder of the Seller, Contrail Aviation completed the purchase of all of the assets owned, used or usable by the Seller, other than cash, equity in the Seller

’s IC-DISC subsidiary and certain other specified excluded assets. Pursuant to the Asset Purchase Agreement, Contrail Aviation also assumed certain liabilities of the Seller. Prior to this acquisition, the Seller, based in Verona, Wisconsin, engaged in the business of acquiring surplus commercial jet engines and components and supplying surplus and aftermarket commercial jet engine components. In connection with the acquisition, Contrail Aviation offered employment to all of the Seller’s employees and Mr. Kuhn was appointed Chief Executive Officer of Contrail Aviation.

The acquisition consideration consisted of (i)

$4,033,368

in cash, (ii) equity membership units in Contrail Aviation representing

21%

of the total equity membership units in

Contrail Aviation, and (iii) and contingent additional deferred consideration payments which are more fully described below. In addition to the net assets of the seller, beginning equity of Contrail included cash of approximately

$904,000.

Pursuant to the Asset Purchase Agreement, Contrail Aviation agreed to pay as contingent additional deferred consideration up to a maximum of

$1,500,000

per year and

$3,000,000

in the aggregate (collectively, the “Earnout Payments” and each, an “Earnout Payment”), calculated as follows:

(i) if Contrail Aviation generates EBITDA (as defined in the Asset Purchase Agreement) in any Earnout Period (as defined below) less than

$1,500,000,

Earnout Payment will be payable with respect to such Earnout Period;

(ii) if Contrail Aviation generates EBITDA in any Earnout Period equal to or in excess of

$1,500,000,

but less than

$2,000,000,

the Earnout Payment for each such Earnout Period will be an amount equal to the product of (

) the EBITDA generated with respect to such Earnout Period minus

$1,500,000,

and (y)

two

(

);

(iii) if Contrail Aviation generates EBITDA in any Earnout Period equal to or in excess of

$2,000,000,

but less than

$4,000,000,

the Earnout Payment for each such Earnout Period will be equal to

$1,000,000;

(iv) if Contrail Aviation generates EBITDA in any Earnout Period equal to or in excess of

$4,000,000,

the Earnout Payment for each such Earnout Period will be equal to

$1,500,000;

and

(v) if, following the

fifth

Earnout Period, Contrail Aviation has generated EBITDA equal to or in excess of

$15,000,000

in the aggregate during all Earnout Periods, but the Seller has received or is owed less than

$3,000,000

in aggregate Earnout Payments pursuant to clauses (i) through (iv), above, Contrail Aviation will make an additional Earnout Payment to the Seller in an amount equal to the difference between

$3,000,000

and the aggregate Earnout Payments already received or payable pursuant to clauses (i) through (iv), above.

As used in the Asset Purchase Agreement, “Earnout Period” means each of the

first

five twelve

-full-calendar-month periods following the closing of the acquisition. The

Company has estimated its liability with respect to the Earnout Payment to be

$2,900,000,

which amount is included in the “Other non-current liabilities” in the consolidated balance sheet at

June 30, 2017,

excluding the portion denoted as payable below which has been reclassified to a current liability at

June 30, 2017.

As a result of the EBITDA of Contrail Aviation being approximately

$2.1

million for the

first

Earnout Period, the Earnout Payment with respect to that Earnout Period is

$1,000,000,

which amount is payable in

October 2017.

On the Contrail Closing Date, Contrail Aviation and the Seller entered into an Operating Agreement (the “Operating Agreement”) providing for the governance of and the terms of membership interests in Contrail Aviation and including put and call options (“Put/Call Option”) permitting, at any time after the

fifth

anniversary of the Contrail Closing Date, Contrail Aviation at its election to purchase from the Seller, and permitting the Seller at its election to require Contrail Aviation to purchase from the Seller, all of the Seller

’s equity membership interests in Contrail Aviation at a price to be agreed upon, or failing such an agreement to be determined pursuant to

third

-party appraisals in a process specified in the Operating Agreement.

The following table summarizes the fair values of assets acquired and liabilities assumed by Contrail Aviation as of the Contrail Closing Date:

	July 18, 2016

ASSETS
Accounts receivable	$	1,357,499
Inventories		2,118,475
Prepaid expenses		30,121
Property and equipment		33,095
Intangible assets - non-compete		69,700
Intangible assets - tradename		322,000
Intangible assets - certification		47,000
Intangible assets - customer relationship		451,000
Goodwill		4,227,205
Total assets	$	8,656,095

LIABILITIES
Accounts payable	$	366,575
Accrued expenses		43,652
Earnout liability		2,900,000
Total liabilities	$	3,310,227


Net Assets	$	5,345,868

The Company

’s purchase accounting reflects the estimated net fair value of the Seller’s assets acquired and liabilities assumed as of the Contrail Closing Date. Purchase accounting also reflects the Company’s current estimate that the Earnout Payments will be due at the above-specified maximum level. The Contrail Closing Date balance sheet information disclosed above reflects the present value of such estimated Earnout Payments.

The Company has finalized its Contrail Aviation acquisition accounting.

The Put/Call Option specifies a fair value strike price as of the exercise date. As such, the Company assigned

value to the Put/Call Option for purposes of purchase accounting. Because the Put/Call Option permits the Seller to require Contrail Aviation to purchase all of the Seller

’s equity membership interests in Contrail Aviation, the Company has presented this redeemable non-controlling interest in Contrail Aviation between the liabilities and equity sections of the accompanying condensed consolidated balance sheets. The Company estimates that the fair value of Contrail Aviation increased between

March 31, 2017

and

June 30, 2017.

Therefore, in addition to allocation of the Seller’s proportionate share of Contrail Aviation’s net earnings for the period, the Company has adjusted the redeemable non-controlling interest by a portion of the estimated fair value increase.

Pro forma financial information is

not

presented as the results are

not

material to the Company

’s condensed consolidated financial statements.

Acquisition of

AirCo Assets

May 2, 2017

and

May 31, 2017,

our newly formed subsidiaries, AirCo, LLC and AirCo Services, LLC (collectively, “AirCo”) acquired the inventory and principal business assets, and assumed specified liabilities, of Aircraft Instrument and Radio Company, Incorporated, and Aircraft Instrument and Radio Services, Inc. (collectively, the “AirCo Sellers”). The acquired business, which is based in Wichita, Kansas, distributes and sells airplane and aviation parts and maintains a license under Part

145

of the regulations of the Federal Aviation Administration. The consideration paid for the acquired business was

$2,400,000.

The following table summarizes the provisional fair values of assets acquired and liabilities assumed by

AirCo as of

May 2, 2017,

the date of the completion of the acquisition (the “AirCo Closing Date”):

	May 2, 2017

Assets acquired and liabilities assumed at fair value:
Accounts receivables	$	748,936
Inventories		3,100,000
Property and equipment		26,748
Accounts payable		(313,117	)
Accrued expenses		(382,687	)
Net assets acquired	$	3,179,880

Net assets acquired		3,179,880
Consideration paid		2,400,000
Bargain purchase gain	$	779,880

The Company

’s purchase price accounting reflects the estimated net fair value of the AirCo Sellers assets acquired and liabilities assumed as of the AirCo Closing Date. The Company’s initial accounting for this acquisition is incomplete as of the date of this report. Therefore, as permitted by applicable accounting guidance, the foregoing amounts are provisional.

The tax impact related to the bargain purchase gain was to record a deferred tax liability

and record tax expense against the bargain purchase gain of approximately

$278,000

The resulting net bargain purchase gain after taxes was approximately

$502,000.

Pro forma financial information is

not

presented as the results are

not

material to the Company

’s condensed consolidated financial statements.

Other Acquisitions

and Business I

nvestments

October 3, 2016,

a newly formed s

ubsidiary of the Company, Stratus Aero Partners LLC, acquired

100%

of the outstanding equity interests of Jet Yard, LLC (“Jet Yard”) from the holder thereof. The cash purchase price was

$15,000

and there are

contractual provisions, such as an earn-out, which could result in an increase to this price. Jet Yard is registered to operate a repair station under Part

145

of the regulations of the Federal Aviation Administration and its principal asset on the acquisition date was a contract with Pinal County, Arizona to lease approximately

48.5

acres of land at the Pinal Air Park in Marana, Arizona. Jet Yard was organized in

2014,

entered into the lease in

June 2016

and had maintained de minimus operations from formation through the acquisition date. The lease expires in

May 2046

with an option to renew for an additional

-year period (though the lease to a

2.6

-acre parcel of the leased premises

may

be terminated by Pinal County upon

days’ notice). The lease provides for an initial annual rent of

$27,000,

which rental rate escalates based on a schedule in annual increments during the

first

seven

years of the lease (at which time the annual rental rate would be

$152,000

), and increases by an additional

five

percent for each

three

-year period thereafter. Because the rental expense will be accounted for on a straight-line basis over the term of the lease, the rental expense in the initial years will exceed the corresponding cash payments. The lease agreement permits Pinal County to terminate the lease if Jet Yard fails to make substantial progress toward the construction of facilities on the leased premises in phases in accordance with a specified timetable, which includes, as the initial phase, the construction of a demolition pad to be completed by

March 2017

and, as the final and most significant phase, the construction of an aircraft maintenance hangar large enough to house a Boeing

B777

300

by the

first

quarter of

2021.

The construction of the demolition pad required by

March 31, 2017

under the lease has

not

been completed and Jet Yard and Pinal County are in discussions with respect to improvements on the leased premises.

The acquired Jet Yard business is included in the Company

’s commercial jet engine segment. The Company has finalized its Jet Yard acquisition accounting.

Pursuant to an Asset Purchase Agreement signed on

October 31, 2016,

GAS acquired, effective as of

October 1, 2016,

substantially all of the assets of D&D which was in the business of marketing, selling and providing aviation repair, equipment, parts, and maintenance sales services and products at the Fort Lauderdale airport. The total amount paid at closing in connection with this acquisition was

$400,000.

Additionally,

$100,000

was due within

days after closing and an additional

$100,000

is payable in equal monthly installments of

$16,667

commencing on

November 1, 2016.

Earn-out payments of

$100,000

are also payable based on specified performance for the

twelve

-month period ending

September 30, 2017.

For purposes of purchase accounting, the Company estimated that the above-mentioned earn-out will be paid in full. Therefore, the Company estimated the total purchase consideration at approximately

$700,000.

The Company allocated the purchase consideration to identifiable tangible and intangible assets.

liabilities were assumed in the acquisition. The estimated fair value of identifiable tangible and intangibles assets was approximately

$200,000

and

$300,000,

respectively. The

$200,000

excess of the purchase consideration over the estimated fair value of identifiable assets was recorded as goodwill. The basis of the acquired assets will be “stepped up” for income tax purposes. As such,

deferred taxes were recognized in purchase accounting.

The acquired D&D business is operated by GAS and included in the Company

’s ground support services segment. The Company has finalized its D&D acquisition accounting.

June 7, 2017,

the Company

’s Space Age Insurance Company subsidiary (“SAIC”) invested

$500,000

for a

40%

interest in TFS Partners LLC (“TFS Partners”), a single-purpose investment entity organized by SAIC and other investors for the purpose of making an investment in a limited liability company, The Fence Store LLC (“Fence Store LLC”), organized for the purpose of acquiring substantially all of the assets of The Fence Store, Inc. (“Fence Store Inc.”). TFS Partners acquired a

60%

interest in Fence Store LLC, which has completed the purchase of substantially all of the assets of Fence Store Inc. Prior to this transaction, Fence Store Inc. operated a business under the tradename “Town and Country Fence” selling and installing residential and commercial fencing in the greater Twin Cities, Minnesota area. Fence Store LLC intends to continue this business. The Company accounts for its investment in TFS Partners using the equity method of accounting.

Pro forma financial information is

not

presented for the above acquisitions as the results are

not

material to the Company

’s consolidated financial statements.