EXHIBIT 99.2

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

On December 15, 2015 the Company acquired Advanced Industrial Services, Inc. (“AIS”) and its affiliate subsidiary company based in York Pennsylvania. Advanced Industrial Services Inc. is a broad based industrial services provider that offers one-source expertise and capabilities in plant and equipment erection, relocation, and disassembly. Over the years it has been one of the market leaders in installing high precision equipment in a wide variety of industrial markets like automotive, printing & graphics, industrial automation, packaging, and chemicals among others. In addition, AIS has experience in installing industrial air filtration equipment, similar to the equipment sold by Cemtrex, Inc. through its existing business operations.

 

The Unaudited Pro Forma Financial Information, prepared by Cemtrex, Inc., gives effect to the Acquisition using the acquisition method of accounting, after giving effect to the pro forma adjustments discussed in the accompanying notes.  This financial information has been prepared from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of Cemtrex and AIS included elsewhere in this report.

 

The financial periods required to be presented in this Form 8K/A are based on our fiscal periods.  Cemtrex and AIS have different fiscal year ends.  For the purpose of presenting these pro forma financial statements, we used the financial statements for our fiscal years ended September 30, 2015 and 2014, as filed with the Securities and Exchange Commission (“SEC”) in our Annual Report on Form 10-K.  To meet the SEC’s pro forma requirements of combining operating results for AIS for the annual periods that ended within 93 days of the end of our latest annual fiscal period as filed with the SEC, we combined AIS’ transitional period ended December 14, 2015 (presented as a full twelve-month period) and the twelve-month period ended December 31, 2014.

 

The Pro Forma Combined Balance Sheet gives effect to the Acquisition as if it had occurred on September 30, 2015, combining the historical balance sheet of Cemtrex as of that date with the balance sheet of AIS Group as of December 14, 2015.  The Pro Forma Statements of Operations for the AIS’ transitional period ended December 14, 2015 (presented as a full twelve-month period) and the twelve-month period ended December 31, 2014 gives effect to the Acquisition as if it had occurred at the beginning of each respective period.

 

The Pro Forma Combined Financial Information is unaudited, and is not necessarily indicative of the consolidated results that actually would have occurred if the acquisition had been consummated at the beginning of the periods presented, nor does it purport to present the future financial position and results of operations for future periods.

 

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PRO-FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2014

 

   Cemtrex Inc.   Advanced
Industrial
Services, Inc.
   Consolidation
Adjustments
   Combined
Proforma
 
Revenues                    
Total revenues  $47,653,114   $21,229,536        $68,882,650 
                     
Cost of revenues                    
Total cost of revenues   32,057,846    14,165,313         46,223,159 
Gross profit   15,595,268    7,064,223         22,659,491 
                     
Operating expenses                    
Selling, general and administrative   12,582,072    5,678,663         18,260,735 
Total operating expenses   12,582,072    5,678,663         18,260,735 
Operating income/(loss)   3,013,196    1,385,560         4,398,756 
                     
Other income (expenses)                    
Interest and financing costs   (436,864)   (527,193)   (208,189)  (3)   (1,172,246)
Interest and other income, net   153,516    435,890         589,406 
Total other income, net   (283,348)   (91,303)        (582,840)
                     
Income/(loss) before income taxes   2,729,848    1,294,257         3,815,916 
Income tax benefit/(expense), net   60,962    -         60,962 
Net income/(loss) applicable to common stockholders  $2,668,886   $1,294,257        $3,876,878 
                     
Income/(loss) per common share                    
- basic  $0.39             $0.57 
- diluted  $0.39             $0.57 
                     
Weighted average common shares outstanding                    
- basic   6,776,587         317,460   (1)   6,776,587 
- diluted   6,776,587         317,460   (1)   6,776,587 

 

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PRO-FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2015

 

   Cemtrex Inc.   Advanced
Industrial
Services, Inc.
   Consolidation
Adjustments
   Combined
Proforma
 
Revenues                    
Total revenues  $56,887,389   $22,195,519        $79,082,908 
                     
Cost of revenues                    
Total cost of revenues   40,564,819    15,419,170         55,983,989 
Gross profit   16,322,570    6,776,349         23,098,919 
                     
Operating expenses                    
Selling, general and administrative   13,821,546    5,470,466         19,292,012 
Total operating expenses   13,821,546    5,470,466         19,292,012 
Operating income/(loss)   2,501,024    1,305,883         3,806,907 
                     
Other income (expenses)                    
Interest and financing costs   (496,281)   (532,050)   (209,191)  (3)   (1,237,522)
Interest and other income, net   834,290    80,970         915,260 
Total other income, net   338,009    (451,080)        (322,262)
                     
Income/(loss) before income taxes   2,839,033    854,803         3,484,645 
Income tax benefit/(expense), net   917    -         917 
Net income/(loss) applicable to common stockholders  $2,838,116   $854,803        $3,485,562 
                     
Income/(loss) per common share                    
- basic  $0.41             $0.49 
- diluted  $0.40             $0.47 
                     
Weighted average common shares outstanding                    
- basic   6,843,666         317,460   (1)   7,161,126 
- diluted   7,058,562         317,460   (1)   7,376,022 

 

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PRO-FORMA COMBINED BALANCE SHEET

September 30, 2015

 

   Cemtrex Inc.   Advanced
Industrial
Solutions, Inc.
   Acquisition
Adjustments
   Combined
Proforma
 
ASSETS                    
Current Assets                    
Cash & equivalents  $1,486,737   $112,586    -   $1,599,323 
Short-term investments   -    608,427    -    608,427 
Accounts receivable, net   4,771,044    3,211,997    -    7,983,041 
Costs & estimated earrings in excess of billings on uncompleted contracts   -    -    -    - 
Inventory -net  of allowance for inventory obsolescence   6,369,516    465,877    -    6,835,393 
Deferred costs   -    43,208    -    43,208 
Prepaid expenses & other current assets   893,792    551,292    -    1,445,084 
Total Current Assets   13,521,089    4,993,387    -    18,514,476 
                     
Property & equipment, net   8,142,523    1,623,760    4,902,142  1,2   14,668,425 
Goodwill   845,000    -    -    845,000 
Other   35,630    121,000    -    156,630 
Total Assets  $22,544,242   $6,738,147   $4,902,142   $34,184,531 
                     
LIABILITIES AND STOCKHOLDERS EQUITY                    
Current Liabilities                    
Accounts payable  $4,386,578   $748,311    -   $5,134,889 
Accrued expenses   309,130    568,177    -    877,307 
Accrued income taxes   73,746    7,150    -    80,896 
Billings in excess of costs and estimated earnings   -    260,330    -    260,330 
Short-term note payable to bank   2,129,711    2,196,288    -    4,325,999 
Convertible note payable   1,274,000    -    -    1,274,000 
Current portion of long-term liabilities   654,020    154,487    1,000,000  1   1,808,507 
Other liabilities   -    -    -    - 
Total Current Liabilities   8,827,185    3,934,743    1,000,000    13,761,928 
                     
Long term- Liabilities                    
Loan payable to bank   2,383,815    119,537    4,500,000  1   7,003,352 
Mortgage payable   4,088,618    -    -    4,088,618 
Loan payable to related party   119,055    -    -    119,055 
Notes payable to former shareholder   -    86,009    1,000,000  1   1,086,009 
Total Liabilities   15,418,673    4,140,289    6,500,000    26,058,962 
                     
Commitments & Contingencies                    
                     
Stockholders' Equity                    
Preferred stock, par value $0.001, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding   1,000    -    -    1,000 
Common stock, par value $0.001, 20,000,000 shares authorized, 7,158,087 shares issued and outstanding pre-acquisition, 7,475,547 post-acquisition   7,158    30,180    (29,862)  1   7,476 
Additional paid-in capital   1,020,444    129,072    870,610   1   2,020,126 
Retained Earnings   6,430,855    3,039,547    (3,039,547)  1   6,430,855 
Accumulated other comprehensive income   (333,888)   -    -    (333,888)
Treasury stock   -    (600,941)   600,941   1   - 
Total Stockholders' Equity   7,125,569    2,597,858    (1,597,858)   8,125,569 
                     
Total Liabilities & Stockholders' Equity   $22,544,242   $6,738,147   $4,902,142   $34,184,531 

 

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NOTES TO PRO-FORMA COMBINED FINANCIAL STATEMENTS (unaudited)

 

The pro-forma adjustments are preliminary and are based on our estimate of the fair value and useful lives of the assets acquired and have been prepared to illustrate the estimated effect of the acquisition.

 

In accordance with Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"), the total purchase consideration is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of December 15, 2015 (the acquisition date). The purchase price was allocated based on the information currently available, and may be adjusted after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and revisions of preliminary estimates.

 

The following notes explain the adjustments made:

 

1.To reflect the acquisition of AIS and the allocation of the purchase price on the basis of the fair values of the assets acquired and the liabilities assumed, the components of the purchase price and allocation to the assets and liabilities are as follows:

 

Cemtrex, Inc. common stock  $1,000,000 
Loans from bank   5,000,000 
Note payable   1,500,000 
Total Purchase Price  $7,500,000 

 

Cash  $112,586 
Short-term investments   608,427 
Accounts receivable, net   3,211,997 
Prepaid expenses   551,292 
Inventory, net   465,877 
Deferred costs   43,208 
Property, plant, and equipment, net   6,525,902 
Other   121,000 
Total Liabilities   (4,140,289)
Net assets acquired  $7,500,000 

 

2.Prior to completion of the purchase, the Company had the fixed assets of AIS evaluated by an independent third party and adjusted the value of those fixed assets to fair market value at the time of purchase.

 

3.The loans secured in order to purchase AIS carry variable interest rates based on the 30 day London Interbank Offered Rate (“LIBOR“). These proforma financial statement adjustments are based on the historical LIBOR rates and are not indicative of what these rates may be in the future.

 

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