Nevada
|
80-0948413
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
1479 North Clinton Avenue, Bay Shore, NY 11706
|
|
(Address of Principal Executive Offices)
|
|
(631 968-5000)
|
|
(Registrant’s Telephone Number, Including Area Code)
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Title of Each Class
|
Name of Exchange on which Registered
|
Common Stock, par value $0.001
|
NYSE MKT
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Page
|
||
PART I
|
||
Item 1.
|
Business
|
1 |
Item 1A.
|
Risk Factors
|
8 |
Item 2.
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Properties
|
14 |
Item 3.
|
Legal Proceedings
|
14 |
Item 4.
|
Mine Safety Disclosures
|
14 |
PART II
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
15 |
Item 6.
|
Selected Financial Data
|
16 |
Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
16 |
Item 8.
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Financial Statements and Supplementary Data
|
27 |
Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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27 |
Item 9A.
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Controls and Procedures
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27 |
Item 9B.
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Other Information
|
28 |
PART III
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||
Item 10.
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Directors, Executive Officers and Corporate Governance
|
29 |
Item 11.
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Executive Compensation
|
33 |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
37 |
Item 13.
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Certain Relationships and Related Transactions
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38 |
Item 14.
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Principal Accountant Fees and Services
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38 |
Item 15. |
Exhibits and Financial Statements Schedule
|
39 |
Index to Consolidated Financial Statements
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F-1
|
|
Favorable differentiation of Welding Metallurgy from the competition, and the securing of long-term customer commitments.
|
|
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Diversification of customer base.
|
|
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Evolution from being a supplier of welding services to being a supplier of welded assemblies.
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|
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Development into a Product Integrator, focused on providing Structural Assemblies to the Industry.
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1)
|
Risks related to our business, including risks specific to the defense and aerospace Industry:
|
|
2)
|
Risks arising from our indebtedness; and
|
|
3)
|
Risks related to our common stock and our status as a public company.
|
High
|
Low
|
|||||||
Quarter Ended March 31, 2012
|
$
|
9.64
|
$
|
2.95
|
||||
Quarter Ended June 30, 2012
|
$
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6.27
|
$
|
3.17
|
||||
Quarter Ended September 30, 2012
|
$
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6.27
|
$
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5.50
|
||||
Quarter Ended December 31, 2012
|
$
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12.00
|
$
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5.70
|
||||
Quarter Ended March 31, 2013
|
$
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6.00
|
$
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7.27
|
||||
Quarter Ended June 30, 2013
|
$
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6.24
|
$
|
5.97
|
||||
Quarter Ended September 30, 2013
|
$
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5.97
|
$
|
7.91
|
||||
Quarter Ended December 31, 2013
|
$
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7.61
|
$
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9.50
|
Plan Category
|
Number of
Securities to
be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
|
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
|
|||||||||
Eq Equity compensation plans approved by security holders
|
422,040 | $ | 9.34 | 177,960 | ||||||||
Equ Equity compensation plans not approved by security holders
|
118,335 | $ | 6.30 | None | ||||||||
Tot Total
|
540,375 | $ | 8.67 | 177,960 |
Statement of Operations Data
|
||||||||
2013
|
2012
|
|||||||
Net sales
|
$ | 62,833,000 | $ | 64,215,000 | ||||
Cost of sales
|
47,598,000 | 49,357,000 | ||||||
Gross profit
|
15,235,000 | 14,858,000 | ||||||
Operating and interest costs
|
11,962,000 | 10,717,000 | ||||||
Other income (expense) net
|
296,000 | (146,000 | ) | |||||
Income taxes (benefit)
|
(170,000 | ) | 1,447,000 | |||||
Net Income
|
$ | 3,739,000 | $ | 2,548,000 | ||||
Balance Sheet Data
|
||||||||
December 31, 2013
|
December 31, 2012
|
|||||||
Cash and cash equivalents
|
$ | 561,000 | $ | 490,000 | ||||
Working capital
|
12,531,000 | 11,680,000 | ||||||
Total assets
|
50,172,000 | 53,156,000 | ||||||
Total stockholders' equity
|
21,613,000 | 18,988,000 |
2013
|
2012
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 34,997,000 | $ | 42,075,000 | |||||
Gross Profit
|
6,305,000 | 8,218,000 | |||||||
Pre Tax Income
|
2,368,000 | 3,260,000 | |||||||
Assets
|
21,889,000 | 24,673,000 | |||||||
WMI
|
|||||||||
Net Sales
|
13,630,000 | 14,907,000 | |||||||
Gross Profit
|
3,482,000 | 4,030,000 | |||||||
Pre Tax Loss
|
(203,000 | ) | 1,138,000 | ||||||
Assets
|
11,619,000 | 10,818,000 | |||||||
NTW
|
|||||||||
Net Sales
|
14,206,000 | 7,233,000 | |||||||
Gross Profit
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5,448,000 | 2,610,000 | |||||||
Pre Tax Income
|
1,905,000 | 796,000 | |||||||
Assets
|
11,318,000 | 14,410,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(501,000 | ) | (1,199,000 | ) | |||||
Assets
|
9,647,000 | 13,200,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
62,833,000 | 64,215,000 | |||||||
Gross Profit
|
15,235,000 | 14,858,000 | |||||||
Pre Tax Income
|
3,569,000 | 3,995,000 | |||||||
Provision for Taxes
|
(170,000 | ) | 1,447,000 | ||||||
Net Income
|
3,739,000 | 2,548,000 | |||||||
Elimination of Assets
|
(4,301,000 | ) | (9,945,000 | ) | |||||
Assets
|
50,172,000 | 53,156,000 |
●
|
Consolidated: Gross profit from operations for the year ended December 31, 2013 was $15,235,000 an increase of approximately $377,000 or 2.5% as compared to gross profit of $14,858,000 for the year ended December 31, 2012.
|
|
●
|
AIM: Gross profit from operations for the year ended December 31, 2013 was $6,305,000 a decrease of approximately ($1,913,000) or (23.3%) as compared to gross profit of $8,218,000 for the year ended December 31, 2012. The decline in gross profit is due almost entirely to lower sales. Gross margin stayed relatively constant during 2013 as compared to 2012.
|
|
●
|
WMI: Gross profit from operations for the year ended December 31, 2013 was $3,482,000 a decrease of approximately ($548,000) or (13.6%) as compared to gross profit of $4,030,000 for the year ended December 31, 2012. The decrease in gross profit at WMI is due to reduced sales, and by a lower gross margin. WMI’s gross margin declined from 27% of sales in 2012 to 25.5% in 2013.
|
|
●
|
NTW: Gross profit from operations for the year ended December 31, 2013 was $ 5,448,000. Gross profit for the period June 20, 2012 to December 31, 2012 was $2,610,000.
|
●
|
Consolidated SG&A costs for the year ended December 31, 2013 totaled $10,622,000 and increased by $1,748,000 or 19.7% compared to $8,874,000 for the year ended December 31, 2012. Beginning January 1, 2013, the Company began to allocate all of the corporate SG&A costs of Air Industries Group to AIM, WMI and NTW. For 2013 these are allocated 50% to AIM and 25% to each of WMI and NTW. For the year ended December 31, 2012 SG&A costs have been reclassified to reflect an allocation of AIRI corporate costs of 75% to AIM and 25% to WMI during the first six months of 2012 and 50% to AIM and 25% each to each of WMI and NTW beginning with the third quarter of 2012. For 2012, SG&A at NTW included only the period from June 20, to December 31. The amount reclassified for the year ended December 31, 2012 is approximately $921,000 to AIM; $363,000 to WMI and $167,000 to NTW. Included in SG&A costs for 2013 are approximately $1,754,000 in costs incurred at NTW for the period January 1 to June 30, 2013, which accounts for nearly 100% of the increase in SG&A.
|
o
|
AIM: SG&A costs for the year ended December 31, 2013 totaled approximately $3,150,000 and decreased by ($1,131,000) or (26.4 %) compared $4,281,000 for the year ended December 31, 2012.
|
|
o
|
WMI: SG&A costs for the year ended December 31, 2013 totaled approximately $3,928,000 and increased by $1,148,000 or approximately 41.3% compared to $2,780,000 for the year ended December 31, 2012. The increase in SG&A costs at Welding resulted in part from a reclassification in 2012 of certain management personnel costs from factory overhead to SG&A and by additional personnel resulting from the Decimal Industries acquisition in July 2013.
|
|
o
|
NTW: SG&A costs for the year ended December 31, 2013 totaled approximately $3,544,000 an increase of $1,733,000 compared to $1,811,000 for the period June 20, 2012 to December 31, 2012.
|
2013
|
2012
|
|||||||
Cash Provided by (used in):
|
||||||||
Operating activities
|
$ | 8,889 | $ | 1,694 | ||||
Investing activities
|
(1,118 | ) | (13,038 | ) | ||||
Financing Activities
|
(7,700 | ) | 11,257 | |||||
Net increase in cash and cash equivalents
|
$ | 71 | $ | (87 | ) |
Payment due by period
(in thousands)
|
||||||||||||||||||||
Less than
|
1-3 | 3-5 |
More than
|
|||||||||||||||||
Total
|
1 year*
|
years
|
years
|
5 years
|
||||||||||||||||
Long term debt and capital leases
|
$ | 17,801 | $ | 15,118 | $ | 1,224 | $ | 1,459 | $ | - | ||||||||||
Operating leases
|
13,148 | 1,674 | 2,741 | 2,132 | 6,601 | |||||||||||||||
Total
|
$ | 30,949 | $ | 16,792 | $ | 3,965 | $ | 3,591 | $ | 6,601 | ||||||||||
* The revolving line of credit with our senior lender is classified as due in less than 1 year
|
Name:
|
Age
|
Position
|
||
Peter D. Rettaliata
|
63
|
President, CEO and Director
|
||
Dario A. Peragallo
|
51
|
President of AIM
|
||
Gary Settoducato
|
52
|
President of Welding Metallurgy
|
||
Scott A. Glassman
|
36
|
Chief Accounting Officer and Secretary
|
||
Seymour G. Siegel
|
71
|
Director
|
||
David J. Buonanno
|
59
|
Director
|
||
Michael N. Taglich
|
48
|
Chairman of the Board
|
||
Robert F. Taglich
|
47
|
Director
|
||
Robert Schroeder
|
47
|
Director
|
||
Michael Brand
|
54
|
Director
|
·
|
overseeing and monitoring the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters, and our internal accounting and financial controls;
|
·
|
preparing the report that SEC rules require be included in our annual proxy statement;
|
·
|
overseeing and monitoring our independent registered public accounting firm's qualifications, independence and performance;
|
·
|
providing the Board with the results of its monitoring and its recommendations; and
|
·
|
providing to the Board additional information and materials as it deems necessary to make the Board aware of significant financial matters that require the attention of the Board.
|
·
|
establishing the Company’s general compensation policy, in consultation with the Company’s senior management, and overseeing the development and implementation of compensation programs.
|
·
|
reviewing and approving corporate goals and objectives relevant to the compensation of the CEO, and evaluating the performance of the CEO at least annually in light of those goals and objectives and communicating the results of such evaluation to the CEO and the Board, and has the sole authority to determine the CEO’s compensation level based on this evaluation, subject to ratification by the independent directors on the Board. In determining the incentive component of CEO compensation, the Committee will consider, among other factors, the Company’s performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, the awards given to the CEO in past years, and such other factors as the Committee may determine to be appropriate.
|
·
|
reviewing and approving the compensation of all other executive officers of the Company, such other managers as may be directed by the Board, and the directors of the Company.
|
·
|
overseeing the Board’s benefit and equity compensation plans, overseeing the activities of the individuals and committees responsible for administering these plans, and discharging any responsibilities imposed on the Committee by any of these plans.
|
·
|
approving issuances under, or any material amendments to, any stock option or other similar plan pursuant to which a person not previously an employee or director of the Company, as an inducement material to the individual’s entering into employment with the Company, will acquire stock or options.
|
·
|
in consultation with management, overseeing regulatory compliance with respect to compensation matters, including overseeing the Company’s policies on structuring compensation programs to preserve related tax objectives.
|
·
|
reviewing and approving any severance or similar termination payments proposed to be made to any current or former officer of the Company.
|
·
|
preparing an annual report on executive compensation for inclusion in our proxy statement for the election of directors, if required under the applicable SEC rules.
|
•
|
forward the communication to the Director(s) to whom it is addressed;
|
|
|
•
|
forward the communication to the appropriate management personnel;
|
•
|
attempt to handle the inquiry directly, for example where it is a request for information about the Company, or it is a stock-related matter; or
|
|
•
|
not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.
|
Non-
equity
|
Nonqualifi
ed
|
||||||||||||||||||
Incentive
|
deferred
|
|
|||||||||||||||||
Stock
|
Option
|
Plan
|
compensat
ion
|
All other
|
|||||||||||||||
Name and principal Position
|
Year
|
Salary
|
Bonus
|
awards
|
awards
|
Informatio
n
|
earnings
|
compensat
ion
|
Total
|
||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||
Peter D. Rettaliata
|
2013
|
237,203
|
12,000
|
-
|
13,968
|
-
|
-
|
-
|
263,171
|
||||||||||
CEO
|
2012
|
230,901
|
32,500
|
-
|
-
|
-
|
-
|
-
|
263,401
|
||||||||||
Dario A. Peragallo
|
2013
|
235,676
|
11,000
|
-
|
16,761
|
-
|
-
|
5,988
|
(1)
|
269,425
|
|||||||||
President of AIM
|
2012
|
228,236
|
32,500
|
-
|
-
|
-
|
-
|
5,988
|
(1)
|
266,724
|
|||||||||
Scott A. Glassman
|
2013
|
143,937
|
6,400
|
-
|
3,723
|
-
|
-
|
3,000
|
(1)
|
157,060
|
|||||||||
Chief Accounting Officer
|
2012
|
124,100
|
8,000
|
-
|
-
|
-
|
-
|
3,000
|
(1)
|
135,100
|
|||||||||
Gary Settoducato
|
2013
|
196,028
|
7,500
|
-
|
16,761
|
-
|
-
|
6,586
|
(1)
|
226,875
|
|||||||||
President of WMI
|
2012
|
178,365
|
35,000
|
-
|
-
|
-
|
-
|
6,348
|
(1)
|
219,713
|
Option Awards |
Stock Awards
|
||||||||||
Equity Incentive
|
|||||||||||
Number of
|
Number of
|
Plan Awards:
|
Equity Incentive Plan
|
||||||||
Securities
|
Securities
|
Number of
|
Awards: Market or
|
||||||||
Underlying
|
Underlying
|
Unearned Shares,
|
Payout Value of
|
||||||||
Unexercised
|
Unexercised
|
Option
|
Option
|
Units or Other
|
Unearned Shares,
|
||||||
Options (#)
|
Options (#)
|
Exercise
|
Expiration
|
Rights That Have
|
Units or Other Rights
|
||||||
Name
|
Exercisable
|
Unexercisable
|
Price
|
Date
|
Not Vested (#)
|
That Have Not Vested
|
|||||
Peter D. Rettaliata
|
375
|
-
|
88.00
|
9/26/2015
|
- | - | |||||
Peter D. Rettaliata
|
375
|
-
|
171.20
|
9/15/2015
|
- | - | |||||
Peter D. Rettaliata
|
375
|
-
|
190.80
|
9/15/2015
|
- | - | |||||
Peter D. Rettaliata
|
375
|
-
|
114.00
|
9/15/2015
|
- | - | |||||
Peter D. Rettaliata
|
1,500
|
-
|
90.00
|
9/15/2015
|
- | - | |||||
Peter D. Rettaliata
|
51,716
|
-
|
4.50
|
7/29/2015
|
- | - | |||||
Peter D. Rettaliata
|
-
|
18,750
|
6.60
|
9/30/2018
|
- | - | |||||
Dario Peragallo
|
375
|
-
|
88.00
|
9/26/2015
|
- | - | |||||
Dario Peragallo
|
375
|
-
|
171.20
|
9/15/2015
|
- | - | |||||
Dario Peragallo
|
375
|
-
|
190.80
|
9/15/2015
|
- | - | |||||
Dario Peragallo
|
375
|
-
|
114.00
|
9/15/2015
|
- | - | |||||
Dario Peragallo
|
1,500
|
90.00
|
9/15/2015
|
- | - | ||||||
Dario Peragallo
|
51,716
|
-
|
4.50
|
7/29/2015
|
- | - | |||||
Dario Peragallo
|
-
|
22,500
|
6.60
|
9/30/2018
|
- | - | |||||
Scott Glassman
|
25
|
-
|
110.40
|
12/31/2015
|
- | - | |||||
Scott Glassman
|
12,168
|
-
|
4.50
|
7/29/2015
|
- | - | |||||
Scott Glassman
|
-
|
5,000
|
6.60
|
9/30/2018
|
- | - | |||||
Gary Settaducato
|
75
|
-
|
96.00
|
12/31/2015
|
- | - | |||||
Gary Settaducato
|
113
|
-
|
110.40
|
12/31/2015
|
- | - | |||||
Gary Settaducato
|
44,589
|
-
|
4.50
|
12/31/2015
|
- | - | |||||
Gary Settaducato
|
-
|
22,500
|
6.60
|
9/30/2018
|
- | - |
NAME
|
Number of Shares
|
Percent of Class
|
||||||||||
Owner of More than 5% of Class:
|
||||||||||||
Hillson Partners LP (1)
|
||||||||||||
Hillson Private Partners II, LLLP (1)
|
331,556 | 5.65 | % | |||||||||
110 North Washington Street, Suite 401
|
||||||||||||
Rockville, MD 20850
|
||||||||||||
Directors and Executive Officers:
|
||||||||||||
Peter D. Rettaliata
|
56,961 | (2 | ) * | |||||||||
Michael N. Taglich
|
420,673 | (3 | ) | 7.12 | % | |||||||
Seymour G. Siegel
|
8,039 | (4 | ) * | |||||||||
David J. Buonanno
|
7,789 | (4 | ) * | |||||||||
Robert F. Taglich
|
439,174 | (3 | ) | 7.44 | % | |||||||
Robert Schroeder
|
77,309 | (5 | ) | 1.32 | % | |||||||
Michael Brand
|
6,750 | (6 | ) * | |||||||||
Dario Peragallo
|
57,500 | (2 | ) * | |||||||||
Gary Settoducato
|
44,796 | (7 | ) * | |||||||||
Scott Glassman
|
12,205 | (8 | ) * | |||||||||
All Directors and officers
|
1,068,770 | (9 | ) | 17.99 | % | |||||||
as a group (10 persons)
|
(1) The general partner of Hillson Partners LP and Hillson Private Partners II, LLP is Danuel H Abramowitz, who
has the sole power to vote and dispose of the shares.
|
(2) Includes 54,416 shares we may issue upon exercise of options.
|
(3) Includes 30,736 shares owned by Taglich Brothers, Inc. and other entities controlled by Mr. Taglich 31,190
share we may issue upon exercise of warrants and 6,750 shares we may issue upon exercise of options.
|
(4) Includes 7,250 shares we may issue upon exercise of options.
|
(5) Includes 20,005 shares we may issue upon exercise of warrants and 6,750 shares we may issue upon exercise of
options.
|
(6) Includes 6,750 shares we may issue upon exercise of options.
|
(7) Includes 44,777 shares we may issue upon exercise of options.
|
(8) Includes 12,193 shares we may issue upon exercise of options.
|
(9) Includes 51,195 shares we may issue upon exercise of warants and 207,302 shares we may issue upon exercise
of options.
|
Year Ended December 31,
|
||||||||
2013
|
2012
|
|||||||
Audit Fees (1)
|
$ | 240,000 | $ | 281,630 | ||||
Audit Related Fees (2)
|
49,602 | 41,411 | ||||||
Tax Fees (3)
|
43,149 | 47,295 | ||||||
$ | 332,751 | $ | 370,336 |
2.1
|
Agreement and Plan of Merger dated July 29, 2013 between Air Industries Group, Inc. and Air Industries Group (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed August 30, 2013).
|
2.2
|
Articles of Merger between Air Industries Group and Air Industries Group, Inc. filed with the Secretary of State of Nevada on August 28, 2013 (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed August 30, 2013).
|
2.3
|
Certificate of Merger between Air Industries Group and Air Industries Group, Inc. filed with the Secretary of State of Nevada on August 29, 2013 (incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K filed August 30, 2013).
|
3.1
|
Articles of Incorporation of Air Industries Group (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed August 30, 2013).
|
3.2
|
By-Laws of the Registrant (incorporated by reference to Exhibit 3.4 to the Registrant's Current Report on Form 8-K filed August 30, 2013).
|
4.1
|
Form of Warrant Agreement dated as of December 31, 2008 between the Registrant and Taglich Brothers, Inc. (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed January 7, 2009).
|
10.1
|
Contract of Sale, dated as of November 7, 2005, by and between KPK Realty Corp. and Gales Industries Incorporated for the purchase of the property known as 1460 North Fifth Avenue and 1479 North Clinton Avenue, Bay Shore, NY (incorporated by reference to Exhibit 10.6 of the Registrant's Current Report on Form 8-K filed December 6, 2005).
|
10.2
|
Mortgage and Security Agreement, dated as of November 30, 2005, by and between Air Industries Machining, Corp. and PNC Bank (incorporated by reference to Exhibit 10.20 of the Registrant's Current Report on Form 8-K filed December 6, 2005).
|
10.3
|
Long Term Agreement, dated as of August 18, 2000, between Air Industries Machining, Corp. and Sikorsky Aircraft Corporation (incorporated by reference to Exhibit 10.21 of the Registrant's Current Report on Form 8-K filed December 6, 2005).
|
10.4
|
Long Term Agreement, dated as of September 7, 2000, between Air Industries Machining, Corp. and Sikorsky Aircraft Corporation (incorporated by reference to Exhibit 10.22 of the Registrant's Current Report on Form 8-K filed December 6, 2005).
|
10.5
|
Stock Purchase Agreement, dated March 9, 2009, between Gales Industries Incorporated and John Gantt and Lugenia Gantt, the shareholders of Welding Metallurgy, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed March 14, 2009).
|
10.6
|
Amendment No. 1 dated August 2, 2009 to the Stock Purchase Agreement, dated March 9, 2009, between Gales Industries Incorporated and John Gantt and Lugenia Gantt, the shareholders of Welding Metallurgy, Inc. (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K/A filed August 3, 2009).
|
10.7
|
7% Promissory Note of Registrant in the principal amount of $2,000,000 in favor of John and Lugenia Gantt (incorporated by reference from the Registrant's Current Report on Form 8-K filed August 26, 2009).
|
10.8
|
Registration Rights Agreement dated as of August 24, 2009 by and among the Registrant and John and Lugenia Gantt (incorporated by reference from the Registrant's Current Report on Form 8-K filed August 26, 2009).
|
10.9
|
Amended and Restated Promissory Note dated as of August 26, 2009 payable to John and Lugenia Gantt (the "Amended and Restated Gantt Note") (incorporated by reference from Exhibit 10.46 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”).
|
10.10
|
Amendment dated as of October 9, 2009 to Amended and Restated Gantt Note (incorporated by reference from Exhibit 10.47 to the Registrant's 2007 Form 10-K).
|
10.11
|
Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “PNC Loan Agreement”) dated June 27, 2013 by and among PNC Bank, National Association, as Lender and Agent, and Air Industries Machining, Corp., Welding Metallurgy, Inc., Nassau Tool Works, Inc. and
Air Industries Group, Inc.
(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed June 27, 2013).
|
10.12
|
Guarantor’s Ratification by Air Industries Group, Inc. under PNC Agreement (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed June 27, 2013).
|
10.13
|
Securities Purchase Agreement for sale of junior subordinated notes and series B convertible preferred stock (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed October 7, 2010).
|
10.14
|
Junior Subordinated Note due 2010 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed October 7, 2010).
|
10.15
|
Asset Purchase Agreement dated as of June 20, 2012 among the Registrant, Nassau Tool Works, Inc., Vincent DiCarlo and Robert E. Hunt (incorporated by reference to Exhibit 10.22 to the Registrant's Form 10).
|
10.16
|
Assignment and Assumption Agreement dated as of June 20, 2012 between the Registrant and NTW Operating Inc. (incorporated by reference to Exhibit 10.23 to the Registrant's Form 10).
|
10.17
|
2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.24 to the Registrant's Form 10).
|
10.18
|
Subscription documents for purchase of common stock and conversion of junior subordinated notes into common stock. (incorporated by reference to Exhibit 10.25 to the Registrant's Form 10).
|
10.19
|
Placement Agent Agreement dated as of May 21, 2012 between the Registrant and Taglich Brothers Inc. (incorporated by reference to Exhibit 10.26 to the Registrant's Form 10).
|
10.20
|
2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-8 (Registration No. 333-191560) filed on October 4, 2013).
|
10.21
|
Common Stock Purchase Agreement dated October 25, 2013 with Kimura Corporation (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed October 29, 2013).
|
10.22 | First Amendment to PNC Loan Agreement. |
10.23
|
Amended and Restated PNC Loan Agreement.
|
10.24
|
Amended and Restated Revolving Credit Note issued under the PNC Loan Agreement.
|
10.25
|
Second Amendment to Term Note issued under the PNC Loan Agreement.
|
14.1
|
Code of Ethics (incorporated by reference to Exhibit 14.1 to the Registrant's Registration Statement on Form SB-2 (Registration No. 333-144561) filed July 13, 2009 and declared effective July 27, 2009).
|
21.1
|
Subsidiaries.
|
23.1
|
Consent of Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
|
31.1 |
Certification of principal executive officer pursuant to Rule 13a-14 or Rule 15d-14 of Securities Exchange
Act of 1934.
|
31.2 |
Certification of principal financial officer pursuant to Rule 13a-14 or Rule 15d-14 of the Exchange Act
of 1934.
|
32.1 |
Certification of principal executive officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350).
|
32.2 |
Certification of principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350).
|
101.INS**
|
XBRL Instance Document
|
||
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
AIR INDUSTRIES GROUP
|
|||
By:
|
/s/ Peter D. Rettaliata
|
||
Peter D. Rettaliata
President and CEO
(principal executive officer)
|
By:
|
/s/ Peter D. Rettaliata
|
||
Scott Glassman
Chief Accounting Officer and Treasurer
(principal financial and accounting officer)
|
|||
Signature
|
Capacity
|
|
/s/ Peter D. Rettaliata
|
||
Peter D. Rettaliata
|
President, CEO and a Director
|
|
/s/ Scott Glassman
|
||
Scott Glassman
|
Chief Accounting Officer and Treasurer
|
|
/s/ Michael N. Taglich
|
||
Michael N. Taglich
|
Chairman of the Board
|
|
/s/ Seymour G. Siegel
|
||
Seymour G. Siegel
|
Director
|
|
/s/ Robert F. Taglich
|
||
Robert F. Taglich
|
Director
|
|
/s/ David J. Buonanno
|
||
David J. Buonanno
|
Director
|
|
/s/ Robert Schroeder
|
||
Robert Schroeder
|
Director
|
|
/s/ Michael Brand
|
||
Michael Brand
|
Director
|
|
2013
|
2012
|
|||||||
Net Sales
|
$ | 62,833,000 | $ | 64,215,000 | ||||
Cost of Sales
|
47,598,000 | 49,357,000 | ||||||
Gross Profit
|
15,235,000 | 14,858,000 | ||||||
Operating Expenses
|
10,622,000 | 8,874,000 | ||||||
Income from operations
|
4,613,000 | 5,984,000 | ||||||
Interest and financing costs
|
(1,340,000 | ) | (1,843,000 | ) | ||||
Other (expense) income, net
|
296,000 | (146,000 | ) | |||||
Income before provision for income taxes
|
3,569,000 | 3,995,000 | ||||||
(Benefit from) Provision for income taxes
|
(170,000 | ) | 1,447,000 | |||||
Net income
|
$ | 3,739,000 | $ | 2,548,000 | ||||
Income per share - basic
|
$ | 0.65 | $ | 0.54 | ||||
Income per share - diluted
|
$ | 0.63 | $ | 0.54 | ||||
Weighted average shares outstanding - basic
|
5,739,014 | 4,680,581 | ||||||
Weighted average shares outstanding - diluted
|
5,932,726 | 4,759,246 |
Additional
|
Total
|
|||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Paid-in
|
Accumulated
|
Stockholders'
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balance, January 1, 2012
|
- | $ | - | 3,579,114 | $ | 4,000 | $ | 26,141,000 | $ | (21,479,000 | ) | $ | 4,666,000 | |||||||||||||||
Issuance of Shares For Acquisition
|
- | - | 66,667 | - | 300,000 | - | 300,000 | |||||||||||||||||||||
Issuance of Shares For Private Placement
|
- | - | 1,185,851 | 1,000 | 6,527,000 | - | 6,528,000 | |||||||||||||||||||||
Issuance of Shares For conversion of Junior Subordinated Notes
|
- | - | 867,461 | 1,000 | 5,203,000 | - | 5,204,000 | |||||||||||||||||||||
Issuance of Shares For Costs Associated with Private Placement
|
- | - | 12,000 | - | - | - | - | |||||||||||||||||||||
Dividends Paid
|
- | - | - | - | (359,000 | ) | - | (359,000 | ) | |||||||||||||||||||
Stock compensation expense
|
- | - | - | - | 101,000 | - | 101,000 | |||||||||||||||||||||
Net income
|
- | - | - | - | - | 2,548,000 | 2,548,000 | |||||||||||||||||||||
Balance, December 31, 2012
|
- | - | 5,711,093 | 6,000 | 37,913,000 | (18,931,000 | ) | 18,988,000 | ||||||||||||||||||||
Issuance of Shares For Private Placement
|
- | - | 133,000 | - | 997,000 | - | 997,000 | |||||||||||||||||||||
Dividends Paid
|
- | - | (1,432,000 | ) | (1,432,000 | ) | ||||||||||||||||||||||
Dividends Payable
|
(717,000 | ) | (717,000 | ) | ||||||||||||||||||||||||
Stock compensation expense
|
- | - | 38,000 | 38,000 | ||||||||||||||||||||||||
Net income
|
- | - | 3,739,000 | 3,739,000 | ||||||||||||||||||||||||
Balance, December 31, 2013
|
- | $ | - | 5,844,093 | $ | 6,000 | $ | 36,799,000 | $ | (15,192,000 | ) | $ | 21,613,000 |
Fair Value of Tangible Assets acquired (including cash acquired of $7,000)
|
$ | 513,000 | ||
Liabilities assumed
|
(10,000 | ) | ||
Negative goodwill resulting from the bargain purchase acquisition
|
(361,000 | ) | ||
Total
|
$ | 142,000 |
Fair Value of Tangible Assets acquired
|
$ | 7,941,000 | ||
Intangible assets, subject to amortization
|
4,975,000 | |||
Goodwill
|
162,000 | |||
Liabilities assumed
|
(660,000 | ) | ||
Total
|
$ | 12,418,000 |
|
1.
|
At closing, Old Nassau Tool was paid $11,400,000.
|
|
2.
|
The issuance of 66,667 shares of common stock valued at $300,000.
|
|
3.
|
$200,000 paid in July after the release of a lien on certain property and equipment purchased.
|
|
4.
|
$518,000 to be paid as a working capital adjustment. See below.
|
|
·
|
The customer requests that the transaction be on a bill and hold basis. A customer must initiate the request for any bill and hold arrangement. Upon request for a bill and hold, the Company requires a signed letter from the customer upon which the customer specifically requests the bill and hold arrangement. Upon receipt of the letter, the Company begins its evaluation process to determine whether a bill and hold arrangement can be granted.
|
|
·
|
The customer has made fixed commitment to purchase in written documentation. All customers’ orders are through firm written purchase orders.
|
|
·
|
The goods are segregated from other inventory and are not available to fill any other customers’ orders. The Company’s goods are made to customers’ or their customer’s specifications and could not be sold to others.
|
|
·
|
The risk of ownership has passed to the customer. The product is complete and ready for shipment. The earnings process is complete. An internal evaluation is made as to whether the product is complete and ready for shipment. This involves a review of the purchase order and a completed inspection process by the Company’s quality control department.
|
|
·
|
The date is determined by which the Company expects payment and the Company has not modified its normal billing and credit terms for this buyer. Payment is expected as if the goods had been shipped.
|
|
·
|
The customer has the expected risk of loss in the event of a decline in the market value of goods. All goods are made to firm purchase orders with fixed prices. Any decline in value would not affect the pricing of the goods. The Company has not at any point, agreed to a price reduction on a bill and hold arrangement.
|
Customer
|
Percentage of Sales
|
|||
2013
|
2012
|
|||
1
|
27.7
|
27.6
|
||
2
|
18.3
|
26.3
|
||
3
|
10.0
|
**
|
||
4
|
*
|
11.4
|
||
* Customer was less than 10% of sales for the year ended December 31, 2013
|
||||
** Customer was less than 10% of sales for the year ended December 31, 2012
|
Customer
|
Percentage of Receivables
|
|||
December
|
December
|
|||
2013
|
2012
|
|||
1
|
22.8
|
18.6
|
||
2
|
20.1
|
10.7
|
||
3
|
*
|
25.3
|
||
* Customer was less than 10% of Gross Accounts Receivable at December 31, 2013
|
2013
|
2012
|
|||||||
Weighted average shares outstanding used to compute basic earning per share
|
5,739,014 | 4,680,581 | ||||||
Effect of dilutive stock options and warrants
|
193,712 | 78,665 | ||||||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share
|
5,932,726 | 4,759,246 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Stock Options
|
24,548 | 11,948 | ||||||
Warrants
|
- | 118,835 | ||||||
24,548 | 130,783 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Accounts Receivable Gross
|
$ | 9,367,000 | $ | 12,336,000 | ||||
Allowance for Doubtful Accounts
|
(783,000 | ) | (705,000 | ) | ||||
Accounts Receivable Net
|
$ | 8,584,000 | $ | 11,631,000 |
Balance at
|
Charged to Costs
|
Deductions From
|
Balance at End of
|
|||||||||||||
Beginning of Year
|
and Expenses
|
Reserves
|
Year
|
|||||||||||||
Year ended December 31, 2013
|
||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 705,000 | $ | 400,000 | $ | 322,000 | $ | 783,000 | ||||||||
Year ended December 31, 2012
|
||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 950,000 | $ | 262,000 | $ | 507,000 | $ | 705,000 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Raw Materials
|
$ | 6,002,000 | $ | 6,105,000 | ||||
Work In Progress
|
15,665,000 | 16,730,000 | ||||||
Finished Goods
|
7,712,000 | 6,653,000 | ||||||
Progress Payments Received
|
(416,000 | ) | (525,000 | ) | ||||
Inventory Reserve
|
(2,741,000 | ) | (2,224,000 | ) | ||||
Total Inventory
|
$ | 26,222,000 | $ | 26,739,000 |
December 31,
|
December 31,
|
||||||||
2013
|
2012
|
||||||||
Machinery and Equipment
|
$ | 6,251,000 | $ | 5,801,000 |
5 - 8 years
|
||||
Capital Lease Machinery and Equipment
|
5,261,000 | 4,503,000 |
5 - 8 years
|
||||||
Tools and Instruments
|
5,009,000 | 3,968,000 |
1.5 - 7 years
|
||||||
Automotive Equipment
|
59,000 | 55,000 |
5 years
|
||||||
Furniture and Fixtures
|
257,000 | 232,000 |
5 - 8 years
|
||||||
Leasehold Improvements
|
646,000 | 612,000 |
Term of Lease
|
||||||
Computers and Software
|
357,000 | 318,000 |
4-6 years
|
||||||
Total Property and Equipment
|
17,840,000 | 15,489,000 | |||||||
Less: Accumulated Depreciation
|
(11,317,000 | ) | (9,606,000 | ) | |||||
Property and Equipment, net
|
$ | 6,523,000 | $ | 5,883,000 |
December 31,
|
December 31,
|
||||||||
2013
|
2012
|
||||||||
Customer Relationships
|
$ | 5,815,000 | $ | 5,815,000 |
5 to 14 years
|
||||
Trade Names
|
770,000 | 770,000 |
20 years
|
||||||
Technical Know-how
|
660,000 | 660,000 |
10 years
|
||||||
Non-Compete
|
50,000 | 50,000 |
5 years
|
||||||
Professional Certifications
|
15,000 | 15,000 |
.25 to 2 years
|
||||||
Total Intangible Assets
|
7,310,000 | 7,310,000 | |||||||
Less: Accumulated Amortization
|
(2,584,000 | ) | (1,421,000 | ) | |||||
Intangible Assets, net
|
$ | 4,726,000 | $ | 5,889,000 |
For the year ending
|
Amount
|
|||
December 31, 2014
|
$ | 1,163,000 | ||
December 31, 2015
|
1,163,000 | |||
December 30, 2016
|
1,163,000 | |||
December 31, 2017
|
617,000 | |||
December 31, 2018
|
102,000 | |||
Thereafter
|
518,000 | |||
Total
|
$ | 4,726,000 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Revolving credit note payable to PNC Bank N.A. ("PNC")
|
$ | 12,029,000 | $ | 15,667,000 | ||||
Term loan, PNC
|
1,948,000 | 3,748,000 | ||||||
Capital lease obligations
|
1,787,000 | 2,060,000 | ||||||
Notes payable to sellers of WMI
|
732,000 | 1,376,000 | ||||||
Junior subordinated notes
|
1,000,000 | 1,000,000 | ||||||
Subtotal
|
17,496,000 | 23,851,000 | ||||||
Less: Current portion of notes and capital obligations
|
(14,969,000 | ) | (19,211,000 | ) | ||||
Notes payable and capital lease obligations, net of current portion
|
$ | 2,527,000 | $ | 4,640,000 |
|
(i)
|
a $20,000,000 revolving loan (includes inventory sub-limit of $12,500,000) and
|
|
(ii)
|
a $1,948,000 term loan.
|
For the year ending
|
Amount
|
|||
December 31, 2014
|
$ | 1,800,000 | ||
December 31, 2015
|
148,000 | |||
PNC Term Loan Payable
|
1,948,000 | |||
Less: Current portion
|
(1,800,000 | ) | ||
Long-term portion
|
$ | 148,000 |
For the year ending
|
Amount
|
|||
December 31, 2014
|
$ | 569,000 | ||
December 31, 2015
|
569,000 | |||
December 31, 2016
|
466,000 | |||
December 31, 2017
|
315,000 | |||
December 31, 2018
|
144,000 | |||
Total future minimum lease payments
|
2,063,000 | |||
Less: imputed interest
|
(276,000 | ) | ||
Less: current portion
|
(449,000 | ) | ||
Total Long Term Portion
|
$ | 1,338,000 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Former Welding Stockholders
|
$ | 732,000 | $ | 1,376,000 | ||||
Less: Current Portion
|
(691,000 | ) | (644,000 | ) | ||||
Total long-term portion
|
$ | 41,000 | $ | 732,000 |
For the year ending
|
Amount
|
|||
December 31, 2014
|
$ | 691,000 | ||
December 31, 2015
|
41,000 | |||
Former WMI Stockholders Notes Payable
|
732,000 | |||
Less: Current portion
|
(691,000 | ) | ||
Long-term portion
|
$ | 41,000 |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Accounts Payable
|
$ | 5,142,000 | $ | 5,713,000 | ||||
Accrued Expenses
|
793,000 | 697,000 | ||||||
Due to Decimal sellers | 277,000 | - | ||||||
Due to NTW sellers
|
411,000 | 411,000 | ||||||
Accrued Interest
|
84,000 | 138,000 | ||||||
Accrued Payroll
|
118,000 | 99,000 | ||||||
401K payable
|
30,000 | 19,000 | ||||||
$ | 6,855,000 | $ | 7,077,000 |
Plant Avenue
|
Fifth Avenue
|
Lamar Street
|
Reith Street
|
|||||||||||||||||
For the year ending
|
Annual Rent
|
Annual Rent
|
Annual Rent
|
Annual Rent
|
Total Rents
|
|||||||||||||||
December 31, 2014
|
$ | 614,000 | $ | 664,000 | $ | 360,000 | $ | 36,000 | $ | 1,674,000 | ||||||||||
December 31, 2015
|
633,000 | 684,000 | 360,000 | - | $ | 1,677,000 | ||||||||||||||
December 31, 2016
|
- | 704,000 | 360,000 | - | $ | 1,064,000 | ||||||||||||||
December 31, 2017
|
- | 725,000 | 360,000 | - | $ | 1,085,000 | ||||||||||||||
December 31, 2018
|
- | 747,000 | 300,000 | - | $ | 1,047,000 | ||||||||||||||
Thereafter
|
- | 6,601,000 | - | $ | 6,601,000 | |||||||||||||||
Total Rents
|
$ | 1,247,000 | $ | 10,125,000 | $ | 1,740,000 | $ | 36,000 | $ | 13,148,000 |
For the year ending
|
Amount
|
|||
December 31, 2014
|
$ | 71,000 | ||
December 31, 2015
|
56,000 | |||
Total future minimum lease payments
|
127,000 | |||
Less: current portion
|
(71,000 | ) | ||
Total Long-Term Portion
|
$ | 56,000 |
2013
|
2012
|
|||||||
Current
|
||||||||
Federal
|
$ | 1,135,000 | $ | 1,093,000 | ||||
State
|
339,000 | 354,000 | ||||||
Prior year overaccruals
|
||||||||
Federal
|
(185,000 | ) | - | |||||
State
|
(223,000 | ) | - | |||||
Total Expense
|
1,066,000 | 1,447,000 | ||||||
Deferred Tax Benefit
|
(1,236,000 | ) | - | |||||
Net (Benefit) Expense for Income Taxes
|
$ | (170,000 | ) | $ | 1,447,000 |
2013
|
2012
|
|||||||
Federal Tax Rate
|
34 | % | 34 | % | ||||
Effect of State Taxes
|
6 | % | 8 | % | ||||
State Franchise Taxes
|
1 | % | 0 | % | ||||
Net Operating Loss Carry Forward
|
0 | % | -9 | % | ||||
Permanent Differences
|
-3 | % | 0 | % | ||||
Prior Year over accrual - Federal
|
-5 | % | 0 | % | ||||
Prior Year Over Accrual - State
|
-4 | % | 0 | % | ||||
Change in Valuation Allowance
|
-35 | % | 0 | % | ||||
Others
|
1 | % | 3 | % | ||||
Total
|
-5 | % | 36 | % |
December 31,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Deferred tax assets:
|
||||||||
Current:
|
||||||||
Bad debts
|
313,000 | 282,000 | ||||||
Inventory - 263A adjustment
|
729,000 | 569,000 | ||||||
Account payable, accrued expenses and reserves
|
9,000 | 9,000 | ||||||
Total current deferred tax asset before valuation allowance
|
1,051,000 | 860,000 | ||||||
Valuation Allowance
|
- | (860,000 | ) | |||||
Total current deferred tax asset after valuation allowance
|
$ | 1,051,000 | $ | - | ||||
Non- Current
|
||||||||
Capital loss carry forwards
|
$ | 1,088,000 | $ | 1,088,000 | ||||
Section 1231 loss carry forward
|
4,000 | 86,000 | ||||||
Stock based compensation - options and restricted stock
|
521,000 | 506,000 | ||||||
Capitalized engineering costs
|
503,000 | 447,000 | ||||||
Deferred rent
|
453,000 | 423,000 | ||||||
Amortization - NTW Transaction
|
475,000 | 138,000 | ||||||
Lease Impairment
|
51,000 | 85,000 | ||||||
Deferred gain on sale of real estate
|
194,000 | 209,000 | ||||||
Total deferred tax assets before valuation allowance
|
3,289,000 | 2,982,000 | ||||||
Valuation allowance
|
(1,092,000 | ) | (1,409,000 | ) | ||||
Total deferred tax assets after valuation allowance
|
2,197,000 | 1,573,000 | ||||||
Deferred tax liabilities:
|
||||||||
Property and equipment
|
(1,497,000 | ) | (997,000 | ) | ||||
Goodwill - NTW Transaction
|
(7,000 | ) | - | |||||
Amortization - Welding Transaction
|
(508,000 | ) | (576,000 | ) | ||||
Total Deferred Tax Liability
|
(2,012,000 | ) | (1,573,000 | ) | ||||
Net deferred tax asset
|
$ | 1,236,000 | $ | - |
2013
|
2012
|
|||||||
Risk-free interest rates
|
0.71 - 1.75 | % | 0.66 - 0.73 | % | ||||
Expected life
|
5 | 5 | ||||||
Expected volatility
|
25 | % | 25 | % | ||||
Dividend yield
|
5.6 | % | - | |||||
Weighted-average grant date fair value per share
|
$ | 0.83 | $ | 1.31 |
Options
|
Wtd. Avg. Exercise Price
|
|||||||
Balance, December 31, 2011
|
306,316 | $ | 10.27 | |||||
Granted during the period
|
21,000 | 5.61 | ||||||
Exercised during the period
|
- | - | ||||||
Terminated/Expired during the period
|
- | - | ||||||
Balance, December 31, 2012
|
327,316 | $ | 10.27 | |||||
Granted during the period
|
113,247 | 6.85 | ||||||
Exercised during the period
|
(18,523 | ) | 4.50 | |||||
Terminated/Expired during the period
|
- | - | ||||||
Balance, December 31, 2013
|
422,040 | $ | 9.34 | |||||
Exercisable at December 31, 2013
|
340,838 | $ | 10.05 |
Range of Exercise Prices
|
Remaining Number Outstanding
|
Wtd. Avg. Life
|
Wtd. Avg. Exercise Price
|
|||||||
$0.00 - 5.00 | 275,535 |
2 years
|
$ | 4.40 | ||||||
$5.01 - 90.00 | 132,597 |
6 years
|
7.45 | |||||||
$90.01 - 100.00 | 5,888 |
1 years
|
92.18 | |||||||
$100.01 - 110.00 | 833 |
1 years
|
108.00 | |||||||
$110.01 - 170.00 | 3,529 |
1 years
|
111.89 | |||||||
$170.01 - 200.00 | 3,958 |
1 years
|
181.00 | |||||||
422,340 |
3 years
|
$ | 9.34 | |||||||
Warrants
|
Wtd. Avg. Exercise Price
|
|||||||
Balance, December 31, 2011
|
19,865 | $ | 99.26 | |||||
Granted during the period
|
118,585 | 6.30 | ||||||
Exercised during the period
|
- | - | ||||||
Terminated/Expired during the period
|
(19,615 | ) | 99.97 | |||||
Balance, December 31, 2012
|
118,835 | $ | 99.26 | |||||
Granted during the period
|
- | - | ||||||
Exercised during the period
|
- | - | ||||||
Terminated/Expired during the period
|
(250 | ) | 43.60 | |||||
Balance, December 31, 2013
|
118,585 | $ | 6.30 | |||||
Exercisable at December 31, 2013
|
118,835 | $ | 6.30 |
Exercise Price
|
Warrants
|
Wtd. Avg. Life
|
Wtd. Avg. Exercise Price
|
|||||||
$6.30 | 118,585 |
3 years
|
$ | 6.30 | ||||||
118,585 |
3 years
|
$ | 6.30 |
Year Ended December 31,
|
|||||||||
2013
|
2012
|
||||||||
AIM
|
|||||||||
Net Sales
|
$ | 34,997,000 | $ | 42,075,000 | |||||
Gross Profit
|
6,305,000 | 8,218,000 | |||||||
Pre Tax Income
|
2,368,000 | 3,260,000 | |||||||
Assets
|
21,889,000 | 24,673,000 | |||||||
WMI
|
|||||||||
Net Sales
|
13,630,000 | 14,907,000 | |||||||
Gross Profit
|
3,482,000 | 4,030,000 | |||||||
Pre Tax Loss
|
(203,000 | ) | 1,138,000 | ||||||
Assets
|
11,619,000 | 10,818,000 | |||||||
NTW
|
|||||||||
Net Sales
|
14,206,000 | 7,233,000 | |||||||
Gross Profit
|
5,448,000 | 2,610,000 | |||||||
Pre Tax Income
|
1,905,000 | 796,000 | |||||||
Assets
|
11,318,000 | 14,410,000 | |||||||
Corporate
|
|||||||||
Net Sales
|
- | - | |||||||
Gross Profit
|
- | - | |||||||
Pre Tax Loss
|
(501,000 | ) | (1,199,000 | ) | |||||
Assets
|
9,647,000 | 13,200,000 | |||||||
Consolidated
|
|||||||||
Net Sales
|
62,833,000 | 64,215,000 | |||||||
Gross Profit
|
15,235,000 | 14,858,000 | |||||||
Pre Tax Income
|
3,569,000 | 3,995,000 | |||||||
Provision for Taxes
|
(170,000 | ) | 1,447,000 | ||||||
Net Income
|
3,739,000 | 2,548,000 | |||||||
Elimination of Assets
|
(4,301,000 | ) | (9,945,000 | ) | |||||
Assets
|
50,172,000 | 53,156,000 |
1)
|
ACKNOWLEDGMENT OF BALANCE.
Obligor acknowledges that the most recent statement of account sent to Obligor with respect to the Obligations is correct.
|
2)
|
MODIFICATIONS.
The Loan Agreement be and hereby is modified as follows:
|
|
(a)
|
The following definitions in Section 1.2 of the Loan Agreement are hereby deleted, and are replaced to read as follows:
|
|
(b)
|
The following definition is hereby added to Section 1.2 of the Loan Agreement to read as follows:
|
3)
|
GUARANTOR’S RATIFICATION
. Air Industries Group, a corporation organized under the laws of the State of Nevada (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation) hereby reaffirms its continuing obligations under the terms of that certain Guaranty and Suretyship Agreement dated August 24, 2007 executed by Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation, (the “Guaranty”), and acknowledges that (i) it has read this Agreement, (ii) the Obligations under the Loan Agreement are secured by the Guaranty, and (iii) it makes such reaffirmation with full knowledge of the terms thereof.
|
4)
|
CONSENT TO MERGER.
Notwithstanding anything to the contrary in the Loan Agreement and/or any Other Document, the Lenders hereby consent to the merger of Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation, with and into Air Industries Group, a corporation organized under the laws of the State of Nevada.
|
5)
|
ACKNOWLEDGMENTS.
Borrower acknowledges and represents that:
|
6)
|
PRECONDITIONS
. As a precondition to the effectiveness of any of the modifications, consents, or waivers contained herein, the Borrower agrees to:
|
7)
|
MISCELLANEOUS.
This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without reference to that state’s conflicts of law principles. This Agreement, the Loan Agreement and the Other Documents constitute the sole agreement of the parties with respect to the subject matter thereof and supersede all oral negotiations and prior writings with respect to the subject matter thereof. No amendment of this Agreement, and no waiver of any one or more of the provisions hereof shall be effective unless set forth in writing and signed by the parties hereto. The illegality, unenforceability or inconsistency of any provision of this Agreement shall not in any way affect or impair the legality, enforceability or consistency of the remaining provisions of this Agreement, the Loan Agreement or the Other Documents. This Agreement, the Loan Agreement and the Other Documents are intended to be consistent. However, in the event of any inconsistencies among this Agreement, the Loan Agreement and/or any of the Other Documents, the terms of this Agreement, then the Loan Agreement, shall control. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed an original, but all such counterparts shall together constitute one and the same agreement.
|
8)
|
DEFINITIONS.
The terms used herein and not otherwise defined or modified herein shall have the meanings ascribed to them in the Loan Agreement. The terms used herein and not otherwise defined or modified herein or defined in the Loan Agreement shall have the meanings ascribed to them by the Uniform Commercial Code as enacted in State of New York.
|
ATTEST:
|
AIR INDUSTRIES MACHINING, CORP.
|
By:
/
s/ Scott Glassman
|
By:
/s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
ATTEST:
|
WELDING METALLURGY, INC. (as successor
|
by merger with WMS Merger Corp.)
|
|
By:
/
s/ Scott Glassman
|
By:
/s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: Vice President
|
ATTEST:
|
NASSAU TOOL WORKS, INC.
|
(formerly known as NTW Operating Inc.)
|
|
By:
/
s/ Scott Glassman
|
By:
/s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
ATTEST:
|
AIR INDUSTRIES GROUP
|
By:
/
s/ Scott Glassman
|
By:
/s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
PNC BANK, NATIONAL ASSOCIATION
|
|
Lender and as Agent
|
|
By:
/s/ Jonathan Luptak
|
|
Name: JONATHAN LUPTAK
|
|
Title: Associate Vice President
|
1)
|
ACKNOWLEDGMENT OF BALANCE.
Obligor acknowledges that the most recent statement of account sent to Obligor with respect to the Obligations is correct.
|
2)
|
MODIFICATIONS.
The Loan Agreement be and hereby is modified as follows:
|
(a)
|
Miller Stuart Inc., a corporation organized under the laws of the State of New York, is hereby added as a borrowing entity under the Loan Agreement and the Other Documents and is added to the definition of “Borrower” in the Loan Agreement and the Other Documents.
|
(b)
|
The following definitions in Section 1.2 of the Loan Agreement are hereby deleted, and are replaced to read as follows:
|
(c)
|
The following definitions are hereby added to Section 1.2 of the Loan Agreement to read as follows:
|
(d)
|
Section 13.1 of the Loan Agreement is hereby deleted in its entirety and replaced with a new Section 13.1 to read as follows:
|
3)
|
GUARANTOR’S RATIFICATION
. Air Industries Group, a corporation organized under the laws of the State of Nevada (as successor by merger with Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation) hereby reaffirms its continuing obligations under the terms of that certain Guaranty and Suretyship Agreement dated August 24, 2007 executed by Air Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation, (the “Guaranty”), and acknowledges that (i) it has read this Agreement, (ii) the Obligations under the Loan Agreement are secured by the Guaranty, and (iii) it makes such reaffirmation with full knowledge of the terms thereof.
|
4)
|
CONSENT TO ACQUISITION.
Notwithstanding anything to the contrary in the Loan Agreement and/or any Other Document, the Lenders hereby consent to the acquisition by WM of all of the stock of Miller Stuart Inc., a New York corporation, from Arthur Hoffer, as Seller, (the “MS Acquisition”)
provided
,
however
, that the Borrower provides to the Agent for review copies of all acquisition documentation (including, but not limited to, the applicable Stock Purchase Agreement and all UCC and other searches against the MS and the Seller) and other materials evidencing the MS Acquisition, all in form and substance acceptable to the Agent (collectively, the “MS Acquisition Documents”).
|
5)
|
ACKNOWLEDGMENTS.
Borrower acknowledges and represents that:
|
6)
|
PRECONDITIONS
. As a precondition to the effectiveness of any of the modifications, consents, or waivers contained herein, the Borrower agrees to:
|
7)
|
MISCELLANEOUS.
This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without reference to that state’s conflicts of law principles. This Agreement, the Loan Agreement and the Other Documents constitute the sole agreement of the parties with respect to the subject matter thereof and supersede all oral negotiations and prior writings with respect to the subject matter thereof. No amendment of this Agreement, and no waiver of any one or more of the provisions hereof shall be effective unless set forth in writing and signed by the parties hereto. The illegality, unenforceability or inconsistency of any provision of this Agreement shall not in any way affect or impair the legality, enforceability or consistency of the remaining provisions of this Agreement, the Loan Agreement or the Other Documents. This Agreement, the Loan Agreement and the Other Documents are intended to be consistent. However, in the event of any inconsistencies among this Agreement, the Loan Agreement and/or any of the Other Documents, the terms of this Agreement, then the Loan Agreement, shall control. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts. Each such counterpart shall be deemed an original, but all such counterparts shall together constitute one and the same agreement.
|
8)
|
DEFINITIONS.
The terms used herein and not otherwise defined or modified herein shall have the meanings ascribed to them in the Loan Agreement. The terms used herein and not otherwise defined or modified herein or defined in the Loan Agreement shall have the meanings ascribed to them by the Uniform Commercial Code as enacted in State of New York.
|
ATTEST:
|
AIR INDUSTRIES MACHINING, CORP.
|
By:/s/ Scott Glassman
|
By: /s/ Dario Peragallo
|
Name: SCOTT GLASSMAN
|
Name: DARIO PERAGALLO
|
Title: Secretary
|
Title: President
|
ATTEST:
|
WELDING METALLURGY, INC. (as successor
|
by merger with WMS Merger Corp.)
|
|
By: s/ Scott Glassman
|
By: /s/ Gary Settoducato
|
Name: SCOTT GLASSMAN
|
Name: GARY SETTODUCATO
|
Title: Secretary
|
Title: President
|
ATTEST:
|
NASSAU TOOL WORKS, INC.
|
(formerly known as NTW Operating Inc.)
|
|
By: s/ Scott Glassman
|
By /s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
ATTEST:
|
AIR INDUSTRIES GROUP
|
By: s/ Scott Glassman
|
By: /s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
ATTEST:
|
MILLER STUART INC.
|
By: Kristie Ciaccio
|
By: /s/ Peter Rettaliata
|
Name: KRISTIE CIACCIO
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
PNC BANK, NATIONAL ASSOCIATION
|
|
Lender and as Agent
|
|
By: /s/ Jonathan Luptak
|
|
Name: JONATHAN LUPTAK
|
|
Title: Associate Vice President
|
$20,000,000 | December 20, 2013 |
ATTEST:
|
AIR INDUSTRIES MACHINING, CORP.
|
By:/s/ Scott Glassman
|
By/s/ Dario Peragallo
|
Name: SCOTT GLASSMAN
|
Name: DARIO PERAGALLO
|
Title: Secretary
|
Title: President
|
ATTEST:
|
WELDING METALLURGY, INC. (as successor
|
by merger with WMS Merger Corp.)
|
|
By:/s/ Scott Glassman
|
By: /s/ Gary Settoducato
|
Name: SCOTT GLASSMAN
|
Name: GARY SETTODUCATO
|
Title: Secretary
|
Title: President
|
ATTEST:
|
NASSAU TOOL WORKS, INC.
|
(formerly known as NTW Operating Inc.)
|
|
By:/s/ Scott Glassman
|
By:/s/ Peter Rettaliata
|
Name: SCOTT GLASSMAN
|
Name: PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
ATTEST:
|
MILLER STUART INC.
|
By:/s/ Kristie Ciaccio
|
By:/s/ Peter Rettaliata
|
Name: KRISTIE CIACCIO
|
Name:
PETER RETTALIATA
|
Title: Secretary
|
Title: President
|
$1,947,603.50 | December 20, 2013 |
ATTEST:
By: /s/ Scott Glassman
Name: SCOTT GLASSMAN
Title: Secretary
|
AIR INDUSTRIES MACHINING, CORP.
By: /s/ Dario Peragallo
Name: DARIO PERAGALLO
Title: President
|
ATTEST: |
WELDING METALLURGY, INC. (as successor
by merger with WMS Merger Corp.)
|
By: /s/ Scott Glassman
Name: SCOTT GLASSMAN
Title: Secretary
|
By: /s/ Gary Settoducato
Name: GARY SETTODUCATO
Title: President
|
ATTEST:
By: /s/ Scott Glassman
Name: SCOTT GLASSMAN
Title: Secretary
|
NASSAU TOOL WORKS, INC.
(formerly known as NTW Operating Inc.)
By: /s/ Peter Rettaliata
Name: PETER RETTALIATA
Title: President
|
ATTEST:
By:
/s/ Kristie Ciaccio
Name: KRISTIE CIACCIO
Title: Secretary
|
MILLER STUART INC.
By: /s/ Peter Rettaliata
Name:
PETER RETTALIATA
Title: President
|
Name
|
Jurisdiction of Incorporation
|
Ownership
|
Gales Acquisition Group, Inc.
|
Delaware
|
100%
|
(Direct)
|
||
Air Industries Machining, Corp.
|
New York
|
100%
|
(Indirect)
|
||
Nassau Tool Works, Inc.
|
New York
|
100%
|
(Indirect)
|
||
Welding Metallurgy, Inc.
|
New York
|
100%
|
(Indirect)
|
Miller Stuart, Inc.
|
New York
|
100%
|
(Indirect)
|