Note 9 ? Business Combination Morris On January 9, 2019, (with an effective date of January 1, 2019) the Company entered into a Securities Purchase Agreement (the "SPA") with Morris Sheet Metal Corp., an Indiana corporation, JTD Spiral, Inc. a wholly owned subsidiary of MSM, an Indiana corporation, Morris Enterprises LLC, an Indiana limited liability company and Morris Transportation LLC, an Indiana limited liability company. A summary of the purchase price allocation at fair value is below. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as new information is obtained about facts and circumstances that existed at the acquisition date. Purchase Allocation Cash $ 192,300 Accounts receivable 1,498,591 Inventory 453,841 Prepaid expenses and other current assets 858,456 Property and equipment 4,214,965 Goodwill 603,592 Accounts payable (234,236) Accrued expenses (443,908) Notes payable (1,033,695) $ 6,109,906 The purchase price was paid as follows: Cash 2,159,906 Seller notes 3,450,000 Acquisition contingency 500,000 $ 6,109,906 One year after the closing date, the sellers will calculate monthly the 85/25 requirement to meet the Construction Industry Exemption for the Withdraw Liability (WDL). If the calculations verify Morris Sheet Metal Corp. and/or JTD Spiral, Inc. met the Exemption requirement for six consecutive months the Company will pay the sellers a $500,000 success fee. The Company anticipates that this contingency will be met and it will be obligated to pay the additional $500,000. Simultaneous with the purchase of Morris, a building, owned by Morris prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $3,267,000 were used to fund the cash consideration to the sellers. The building and the lease is being treated as a financing lease (see Note 4). American Precision Fabricators (?APF?) On April 5, 2018, the Company announced that it had entered into a Securities Purchase Agreement (the "SPA") with APF, an Arkansas corporation, and Andy Galbach ("Galbach") and Clarence Carl Davis, Jr. ("Davis"), the owners of APF (the "Sellers"). Pursuant to the SPA, the Company acquired 100% of the outstanding shares in APF. The total purchase price of APF from the SPA amounted to $4,500,000, which consisted of aggregate cash consideration paid to the Sellers of $2,100,000, an aggregate of $1,950,000 of secured promissory notes due to the Sellers (see Note 5), and an aggregate of $450,000 of convertible promissory notes due to the Sellers. At the closing date, the Company and the Sellers agreed to a reduction of the purchase price of $123,250, resulting from a net working capital adjustment which was deducted from the cash consideration due to the Sellers. As a result, the total purchase price of APF was $4,376,750. A summary of the purchase price allocation at fair value is below. During the period ended June 30, 2019, the Company finalized the purchase price allocation. As a result the Company took a charge to earnings during the three months ended June 30, 2019 for $65,833 for amortization on the customer list from the purchase date to June 30, 2019. Purchase Allocation Accounts receivable $ 945,050 Inventory 675,074 Prepaid expenses and other current assets 250,040 Property and equipment 3,300,000 Customer list 790,000 Goodwill 440,100 Accounts payable (1,234,328) Accrued expenses (154,186) Line of credit (165,000) Deferred tax liability (470,000) $ 4,376,750 The following are the unaudited pro forma results of operations for the nine months ended September 30, 2019 and 2018, as if Morris and APF had been acquired on January 1, 2018. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated. Nine Months Ended September 30, 2019 2018 Sales $ 20,690,014 $ 19,812,607 Cost of goods sold 15,542,194 14,202,405 Gross profit 5,147,820 5,610,202 Operating expenses 5,509,996 5,675,248 Loss from operations (362,176) (65,046) Net loss from continuing operations (3,581,832) (2,121,185) Loss per share (0.06) (0.08)