UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark one)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the fiscal year ended December 31, 2019

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ______________ to ______________

For the fiscal year ended December 31, 2018

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 000-30185

Amerinac Holding Corp.

(Exact name of registrant as specified in its charter)

Delaware

20-4763096

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

5936 State Route 159

Chillicothe, Ohio

45601

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (614)-836-1050

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
None
	Securities registered pursuant to section 12(g) of the Act:
Common Stock		OTC:BB; OTC:Pink

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark~~to ifsection ~~the~~12(g) ~~registrant is a well-known seasoned issuer, as defined in Rule 405~~ of the ~~Securities~~ Act~~. Yes o No x~~:

~~Indicate~~Common byStock, ~~check~~par ~~mark~~value ~~if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act~~$0. ~~Yes o No x~~001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Note-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No o☐

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~submitted electronically every Interactive Data File required to be submitted pursuant to ~~item~~Rule 405 of ~~Regulation~~Regulations S-KT (~~229~~232.405 of this chapter) isduring ~~not contained herein, and will not be contained, to~~ the ~~best~~preceding of12 ~~registrant’s~~months ~~knowledge, in definitive proxy~~ (or ~~information~~for ~~statements~~such ~~incorporated~~shorter byperiod ~~reference~~that ~~in Part III of~~ the ~~Form~~registrant ~~10-K~~was orrequired ~~any amendment~~ to ~~this~~submit ~~Form~~such ~~10-K~~files). xYes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one)~~

Large accelerated filer o☐ Accelerated filer o☐ Non-accelerated filer ox Smaller reporting company x ~~(Do not check if a smaller reporting company)~~ Emerging growth company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x ☒ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s second quarter ending June 30, ~~2018~~2019 was $11,~~023~~577,~~670~~960.

Note. - If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. NA o Yes x No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as the latest practicable date: as of March 1825, ~~2019~~2020: ~~313~~311,636.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Pat II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None

TABLE OF CONTENTS

		Page
PART I
INTRODUCTORY NOTE		3
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	85
ITEM 2.	PROPERTIES	1310
ITEM 3.	LEGAL PROCEEDINGS	1310
ITEM 4.	MINE SAFETY DISCLOSURE	1310
PART II
ITEM 5.	MARKET FOR AMERINAC HOLDING CORP.’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1411
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF PLAN OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 6.	SELECTED FINANCIAL DATA – omitted pursuant to item (301)(c) of Regulation S-K
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF PLAN OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK – omitted pursuant to item 305(e) of Regulation S-K
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH THE ACCOUTANTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	2115
ITEM 9A.	CONTROLS AND PROCEDURES	2115
ITEM 9B.	OTHER INFORMATION	2116
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERANCE	2217
ITEM 11.	EXECUTIVE COMPENSATION	2419
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	2520
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	2621
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	2621
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	2723
SIGNATURES		2824
EXHIBITS		2925

Table of Contents

PART I

INTRODUCTORY NOTE

FORWARD-LOOKING STATEMENTS

This Form 10-K contains “forward-looking statements” relating to the Company which represent the Company’s current expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “anticipate”, “intend”, “could”, “estimate”, or “continue” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, and the ability of the Company to continue its growth strategy and the Company’s competition, certain of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, or any of the other risks herein occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

ITEM 1. BUSINESS

Organizational History

Amerinac Holding Corp. (“Amerinac” or the “Company”) was previously known as Precision Aerospace Components Inc. (“Precision”) and Jordan 1 Holdings Company (“Jordan 1”) and was incorporated in Delaware on December 28, 2005. Jordan 1 is the successor to Gasel Transportation Lines, Inc. (“Gasel”), a corporation that was organized under the laws of the State of Ohio on January 27, 1988.

Gasel was a trucking company that filed for bankruptcy in the Southern District of Ohio, Eastern Division, in May 2003. On December 12, 2005, a final plan of reorganization was approved by the court and the bankruptcy proceeding was dismissed.

Subsequent to December 30, 2005, Jordan 1 did not engage in any business activity until July 20, 2006 when it entered into an exchange agreement (the “Exchange Agreement”) pursuant to which the Company acquired all of the equity of Delaware Fastener Acquisition Corp., a Delaware corporation (“DFAC”), pursuant to an exchange agreement with the stockholders of DFAC. Contemporaneously, DFAC acquired the assets, subject to certain liabilities, of Freundlich Supply Company, Inc. (“Freundlich Supply”) pursuant to an asset purchase agreement (the “Asset Purchase Agreement”) dated May 24, 2006 among DFAC, Freundlich Supply, and Michael Freundlich. The purchase of the assets was financed by the proceeds from the sale by the Company of its securities pursuant to a securities purchase agreement (the “Securities Purchase Agreement”). As a result of the Exchange Agreement, DFAC became a wholly-owned subsidiary of the Company. Upon completion of the foregoing transactions, the Company changed its name to Precision Aerospace Components, Inc. and DFAC changed its name to Freundlich Supply Company, Inc. (“Freundlich”). On March 13, 2009, Precision formed Tiger-Tight Corp., a Delaware corporation, as a wholly-owned subsidiary to serve as the exclusive North American master distributor of the Tiger-Tight locking washer.

On March 25, 2012, Precision formed two-wholly owned subsidiaries, Apace Acquisition I, Inc., a Delaware corporation, and Apace Acquisition II, Inc., a Delaware corporation. On May 25, 2012, the Company acquired the assets and certain of the liabilities of Fastener Distribution and Marketing Company, Inc., which was comprised of two fastener distribution companies, Aero-Missile Components, Inc., a Pennsylvania corporation and Creative Assembly Systems, Inc., an Ohio corporation. Apace Acquisition I, Inc. acquired all of the assets of Aero-Missile Components, Inc. and subsequently changed its name to Aero-Missile Components, Inc. Apace Acquisition II, Inc. acquired all of the assets of Creative Assembly Systems, Inc. and subsequently changed its name to Creative Assembly Systems, Inc.

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On January 16, 2015, Precision Group Holding, LLC (“PGH” or “Holdings”) and Capital Partners III L.P (“C3”) refinanced the outstanding debt of the Company and purchased approximately 31,116 newly issued shares of restricted Common Stock of the Company and C3 was granted 3,200 shares of restricted common stock of the Company, collectively representing approximately 86.22% of the outstanding shares of Common Stock of the Company. On June 6, 2016, the shareholders of the Company approved a resolution to increase authorized shares of Common Stock from 100,000,000 shares to 800,000,000 so as to be able to issue the additional shares of Common Stock to PGH and C3. Also on June 6, 2016, the shareholders of the Company approved a resolution to deauthorize its Preferred A, B, and C stock. Effective June 30, 2016, the Company issued 174,028 and 85,096 shares of restricted common stock to PGH and C3, respectively, resulting in the collective ownership of 98.1%. On October 18, 2016, the Company completed a 1-for-2500 reverse stock split. No fractional shares were issued. Shareholders received $0.02 in consideration for each “pre-split” share of a fractional share. On November 22, 2016, the shareholders of the Company approved a resolution to decrease the number of authorized shares of common stock from 800,000,000, par value $0.001 per share to 1,500,000, par value $0.001 per share.

In the first quarter of 2016, Precision’s wholly owned subsidiary, Freundlich, was merged into Aero-Missile Components, Inc. (“Aero-Missile”) and Precision’s wholly owned subsidiary, Tiger-Tight Corp. (“Tiger-Tight”) was merged into Creative Assembly Systems, Inc. (“Creative Assembly” or “CAS”).

On April 28, 2017, the Company and Aero-Missile entered into an Asset Purchase Agreement (the “Aero-Missile Asset Purchase Agreement”) with Apollo Aerospace LLC (“Apollo”) pursuant to which Aero-Missile sold substantially all of its assets to Apollo and Apollo assumed certain liabilities of Aero-Missile (the “Asset Sale”) for an aggregate purchase price of $10.5 million paid by Apollo to Aero-Missile. The purchase price was subject to a working capital adjustment and $1.0 million being held in escrow (of which $500,000 was received in April 2018 and $500,000 was received in November 2018) to secure the indemnification obligations of the Company and Aero-Missile. During the third quarter of 2017, it was determined that $22,500 was owed by the Company to Apollo, under the terms of the working capital adjustment. Pursuant to the Aero-Missile Asset Purchase Agreement, the Company and Aero-Missile were required to change their corporate names. On May 1, Aero-Missile changed its name to “PolyAero Inc.” and on June 28, 2017, the Company changed its name to “Amerinac Holding Corp.”

Simultaneous with the sale of Asset Sale, the Company repaid all amounts owing to C3. The total amount repaid was $4 million plus accrued interest of $42,389. In addition, the Company purchased the 96,697 shares of common stock of the Company owned by C3 for an aggregate purchase price of $900,000 that was mutually agreed to by the Company and C3.

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On April 28, 2017, the balance of the proceeds of the Asset Sale, totaling $4,557,611, were used to partially pay down the principal balance of the WBCC Revolving Loan. Although the WBCC Revolving Loan was senior to the amounts owed to C3, WBCC consented to the early repayment of these loans in full.

All financial results of Aero-Missile are classified as discontinued operations for the purposes of this annual report.

On July 12, 2017, the Company entered into an Asset Purchase Agreement (the “Prime Asset Purchase Agreement”) with Prime Metals & Alloys, Inc., a Delaware corporation, (“Prime Metals”) pursuant to which Prime Metals Acquisition LLC, a Delaware limited liability company subsidiary of Amerinac (“PMAL”) would purchase all of the assets of Prime Metals for an aggregate purchase price of $9.6 million pursuant to an order of the Bankruptcy Court approving the sale under Section 363 of the Bankruptcy Code. Pursuant to an order of the Bankruptcy Court, the Company paid a deposit of $0.5 million to be held in escrow. The deposit was credited to the purchase price at Closing. On March 2, 2017, Prime Metals filed a voluntary petition for relief under chapter 11 of title of the United States Code (as amended, the “Bankruptcy Code”) in the United States Bankruptcy Court for the Western District of Pennsylvania (the “Bankruptcy Court”) at case no. 17-70164-JAD.

On August 17, 2017, PMAL purchased substantially all of the assets of Prime Metals for $9.6 million in cash pursuant to the Prime Asset Purchase Agreement. To finance the purchase of the assets, on August 17, 2017, PMAL entered into a Credit Agreement (the “Credit Agreement”) with SummitBridge National Investments V LLC (“Summit”) pursuant to which Summit made Loans to PMAL: (1) a Term Loan in the amount of $4,500,000 (“Summit Term Loan A”) and (2) a Term Loan in the amount of $3,500,000 (“Summit Term Loan B”) (collectively, the “Summit Loans”). In addition, in consideration for Summit making the Summit Loans, PMAL issued to SBN V PMA LLC, an affiliate of Summit (“SBN”), membership interests in PMAL equal to 25% of the equity ownership of PMAL (the “SBN Membership Interests”).

The Company guaranteed payment of the Summit Loans pursuant to a Guaranty Agreement made by the Company as of the Effective Date.

The Credit Agreement also contained customary covenants, representations and warranties of the parties, including, among others (1) the grant by PMAL to Summit of a security interest on all of the assets of PMAL, (2) a pledge with respect to the equity interests in PMAL owned by the Company, and (3) an unconditional and irrevocable guaranty by the Company of the performance by PMAL of the obligations under the Credit Agreement. In addition, until all amounts under the Summit Loans were paid in full, PMAL agreed to comply with certain financial covenants that require PMAL to meet pre-established financial ratios.

On July 17, 2017, the Company completed the closing of a private placement (the “Private Placement”) with approximately 17 accredited investors (the “Investors”), pursuant to which the Company sold to the Investors a total of 75,500 shares of restricted common stock (the “Shares”) of the Company at a purchase price of $40.00 per share, and total consideration of $3.02 million.

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On September 28, 2017, the Company sold an additional 15,750 Shares at a purchase price of $40.00 per share, and total consideration of $630,000 to 5 Investors.

Effective May 8, 2018, PGH made a pro-rata, in-kind distribution of 196,743 Shares of common stock of the Company to its members for no consideration and ceased to be a shareholder of the Company.

On August 31, 2018 (the “Refinancing Date”), PMAL entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Berkshire Bank (“Berkshire Bank”) establishing: 1) a new revolving credit facility in an aggregate principal amount of up to $6.0 million (the “Berkshire Revolving Loan”), 2) a term loan in the amount of $3.5 million (“Berkshire Term Loan A”) and 3) a term loan in the amount of $1.5 million (“Berkshire Term Loan B”). Borrowings under the Berkshire Revolving Loan may be used to finance working capital and other general corporate purposes. The Berkshire Revolving Loan had a borrowing base of approximately $2.3 million on December 31, 2018 of which the Company had drawn $1,092,058.

On August 31, 2018, pursuant to the Loan and Security Agreement, PMAL used an amount of $7,678,814 under the Loan and Security Agreement to fully repay the Summit Loans. Pursuant to the terms of the Summit Loans and because PMAL repaid the Summit Loans within thirty-six (36) months of the origination of the Summit Loans, the SBN Membership Interests were reduced from 25% to 20% of PMAL as of September 1, 2018.

Overview of Business

Amerinac Holding Corp. (“Amerinac” or the “Company”) was incorporated in Delaware on December 28, 2005. The Company distributes high-quality, predominantly domestically-manufactured, technically complex, nut and bolt products and a proprietary locking washer product that are used primarily for industrial/commercial applications that require a high level of certified and assured quality. Additionally, the Company manufactures specialty stainless steel, and related products for steel mills, steel forging operations, and various metal fabrication facilities.

The Company’s operations are carried out through its wholly-owned distribution subsidiary Creative Assembly ~~and its majority-owned subsidiary~~Systems, ~~PMAL~~Inc. ~~Until~~(“Creative ~~April~~Assembly” ~~28,~~or ~~2017,~~“CAS”) ~~the~~and ~~Company’s operations were also carried out through~~ its wholly-owned ~~distribution~~manufacturing subsidiary, ~~Aero-Missile~~Prime Metals Acquisition LLC (“PMAL”). Creative Assembly is a value- added distributor of proprietary and specialty fasteners primarily serving the heavy truck, automotive, transportation, and infrastructure industries. Creative Assembly’s products are manufactured, by others, to exacting specifications and are made from materials that provide the strength and reliability required for their industrial applications. Aero-Missile had stocking distributor relationships with a number of United States fastener manufacturers. Aero-Missile predominantly sold to all levels of the aviation industry original equipment manufacturers, maintenance and repair organizations, and other distributors, as well as to the United States Department of Defense.

PMAL manufactures specialty ingot and electrode products which are supplied for investment castings, forging, ring rolling, and plate production. PMAL also manufactures shot products and master alloys which are sold to other melt shops, and provides manufacturing support services. The flexible manufacturing operations at PMAL enable the Company to offer a wide range of product grades in customer specific order quantities. The primary grade types include stainless steels, tool steels, nickel-based grades, cobalt based grades and some nonferrous alloys. The Company also offers toll conversion melting services.

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Industry Overview and Competition

The fastener distribution industry is highly fragmented. No one company holds a dominant position. This is primarily caused by the varied uses of fasteners and the size of the industry. Amerinac competes with the numerous fastener distributors which serve as authorized stocking distributors for one or more of the manufacturers in the Company’s supplier base. Amerinac believes that the depth of its inventory represents a competitive advantage. As a stocking distributor, the Company has employed a business model of maintaining levels of inventory on hand or on order with its suppliers that can satisfy its customers’ projected needs. The demanding quality, inspection, tracking and re-inspection requirements, part certifications and customer qualifications imposed on distributors of industrial fasteners by major consumers create a barrier to entry.

In addition to competing against other distributors, the company believes it faces competition from end users creating their own supply chain management.

The company believes its competitive attributes are as follows:

	·	The Company’s quality system is certified to Rev. C, AS9120:2009 and ISO 9001:2008 quality measures. Since quality is an important measure of industrial suppliers, the Company strives to maintain its quality system to the highest standards in the industry.
	•	The Company’s quality system is certified to Rev. C, AS9100D, ISO 9001:2015 and PED quality measures. Since quality is an important measure of industrial suppliers, the Company strives to maintain its quality system to the highest standards in the industry.
	·	As an authorized stocking distributor for the premier domestic manufacturers, the Company is able to maintain relationships with customers not generally available to the industry. Many manufacturers in the past several years have consolidated their network of authorized distributors.
	•	As an authorized stocking distributor for the premier domestic manufacturers, the Company is able to maintain relationships with customers not generally available to the industry. Many manufacturers in the past several years have consolidated their network of authorized distributors.

The steel foundry industry is a diverse industry. This is primarily caused by the varied sizes and shapes of metal produced, as well as, the numerous grades and quality of steel required for the end use applications. PMAL competes with the numerous mills in the United States and internationally. PMAL’s customers sell products into automotive, aerospace, medical device, as well as other industries. PMAL believes that its nimble and flexible production capabilities, and consistent high level of quality, provide competitive advantages. PMAL believes that the fixed costs needed for new entrants to the steel foundry market create very significant barriers to entry.

Suppliers

No supplier represented more than 10% of product distributed for the year ending December 31, ~~2018~~2019. ~~AVK~~No supplier represented ~~approximately~~more ~~14.3~~than 10% of product distributed for the year ending December 31, ~~2017~~2018. Amounts owing to AVK outstanding at December 31, ~~2018~~2019 and ~~2017~~2018 represented 11.89% and 1711.8% of accounts payable, respectively. For nearly all suppliers, the Company looks to have secondary supply outlets. However, manufacturing issues with any supplier could cause temporary disruptions to the Company.

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Customers

At December 31, ~~2018~~2019, Remelt Sources, Inc., ~~AMG-Vanadium, PACCAR and~~ Universal Stainless & Alloys Products, ~~receivables~~AMG-Vanadium, PACCAR and Eastham Forge were 2019.98%, 1516.02%, 14.9%, 13.3% and 1311.7% of total receivables, respectively. At December 31, ~~2017~~2018, ~~Universal Stainless & Alloys Products,~~ Remelt Sources, Inc., ~~PACCAR~~AMG-Vanadium, ~~Ametek~~PACCAR and ~~Eastham~~Universal ~~Forge~~Stainless & Alloys Products receivables were 1720.09%, 15.2%, ~~13.5~~14%, ~~10.3%~~ and ~~10.2~~13% of total receivables, respectively.

For the year ending December 31, ~~2018~~2019, Remelt Sources, Inc., AMG-Vanadium, PACCAR, ~~Ametek~~ and Universal Stainless & Alloys Products accounted for 1720.63%, ~~16.2~~17%, 1416.07%, ~~13.8%~~ and 1211.41% of sales, respectively. For the year ending December 31, ~~2017~~2018, ~~PACCAR~~Remelt Sources, Inc., AMG-Vanadium, PACCAR, Ametek and ~~Remelt~~Universal ~~Sources,~~Stainless ~~Inc.~~& Alloys Products accounted for 2217.86%, 16.2%, 14%, 13.78% and 1312.24% of sales, respectively.

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Employees

As of December 31, ~~2018~~2019, the Company had 7984 employees, of whom 24 were part-time. We believe our employee relations are very good.

ITEM 1A. RISK FACTORS

An investment in our securities involves a high degree of risk. We are subject to various risks that may materially harm our business, financial condition and results of operations. An investor should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our securities. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline. You should only purchase our securities if you can afford to suffer the loss of your entire investment.

RISKS RELATED TO OUR BUSINESS

Fluctuations in our operating results and announcements and developments concerning our business affect our stock price.

Our quarterly operating results, the number of stockholders desiring to sell their shares, changes in general economic conditions and the financial markets, the execution of new contracts and the completion of existing agreements and other developments affecting us, could cause the market price of our common stock to fluctuate substantially.

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We may not be able to obtain necessary additional capital which could adversely impact our operations.

Unless the Company can increase its investment in inventory and meet operational expenses with the existing sources of funds we have available, we may need access to additional financing to grow our sales. Such additional financing, whether from external sources or related parties, may not be available if needed or on favorable terms. Our inability to obtain adequate financing will adversely affect the Company’s pace of business operations or could create liquidity and cash flow problems. This could be materially harmful to our business and may result in a lower stock price.

We could fail to attract or retain key personnel, which could be detrimental to our operations.

Our success largely depends on the efforts and abilities of key executives, employees and consultants. The loss of the services of a key executive, employee or consultant could materially harm our business because of the cost and time necessary to replace and train a replacement. Such a loss would also divert management attention away from operational issues. To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract the sufficient number and quality of staff.

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If we make any acquisitions, they may disrupt or have a negative impact on our business.

If we make acquisitions, we could have difficulty integrating the acquired companies’ personnel and operations with our own. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the affect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:

·• the difficulty of integrating acquired products, services or operations; ·• the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; ·• the difficulty of incorporating acquired rights or products into our existing business; ·• difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities; ·• difficulties in maintaining uniform standards, controls, procedures and policies; ·• the potential impairment of relationships with employees and customers as a result of any integration of new management personnel; ·• the potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; ·• the effect of any government regulations which relate to the business acquired; and ·• potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing or sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.

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Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with these acquisitions, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

We are dependent on a few major industries.

We are dependent on the stainless steel fabrication and trucking industries for a majority of our revenue and, as a result, our business will be negatively impacted by any decline in those industries.

Our business or operations could be adversely affected by events outside of our control, such as natural disasters, wars or health epidemics.

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was been declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Company’s customers and revenue, labor workforce, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company, including, inventories, property and equipment, and accounts receivable and unbilled receivables.

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RISKS RELATING TO OUR COMMON STOCK

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board or OTC:Pink listing which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board or OTC:Pink, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board or OTC:Pink. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board or OTC:Pink. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

If the number of record holders of our common stock stays below 300, we may choose to terminate registration of our common stock and suspend our SEC reporting obligations limiting the ability of stockholders to sell their securities in the secondary market.

As of December 31, ~~2018~~2019, we have only 5754 record holders of our common stock. We may choose to file a Form 15 with the SEC, which would suspend our SEC reporting obligations until the number of record holders of our common stock exceeded 300. Suspending our reporting obligations could adversely affect the liquidity and price of our common stock.

Our common stock may be affected by limited trading volume and the price of our shares may fluctuate significantly, which cumulatively may affect shareholders’ ability to sell shares of our common stock

There has been a limited public market for our common stock. A more active trading market for our common stock may not develop. An absence of an active trading market could adversely affect our shareholders’ ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These factors may negatively impact shareholders’ ability to sell shares of the Company’s common stock.

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Because we are currently subject to the “penny stock” rules, our investors may have difficulty in selling their shares of our common stock.

“Penny Stock” is shares of stock:

·• With a price of less than $5.00 per share; ·• That are not traded on a “recognized” national exchange; ·• Whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ listed stock must still have a price of not less than $5.00 per share); or ·• Of issuers with net tangible assets less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $10.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.

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Our Common Stock is presently deemed to be Penny Stock.

Our stock is currently subject to the SEC’s penny stock rules, (Rule 3a51-1 promulgated under the Securities Exchange Act of 1934) which impose additional sales practice requirements and restrictions on broker-dealers that sell our stock to persons other than established customers and institutional accredited investors. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.

Broker-dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Because of the speculative nature of penny stocks, Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Exchange Act and the rules thereunder. These SEC rules provide, among other things, that a broker-dealer must (1) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (2) furnish the customer a disclosure document describing the risks of investing in penny stocks; (3) disclose to the customer the current market quotation, if any, for the penny stock; and (4) disclose to the customer the amount of compensation the firm and its broker will receive for the trade.

According to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

·• Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; ·• Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; ·• “Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; ·• Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and ·• The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

This may make it more difficult for investors to sell their shares due to suitability requirements.

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The protection provided by the federal securities laws relating to forward looking statements does not presently apply to issuers of Penny Stock Shares. Our shares are Penny Stock shares.

Although the federal securities law provides a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, as long as our shares continue to be a Penny Stock, we will not have the benefit of this safe harbor protection in the event of any proceeding based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results and stockholders could lose confidence in our financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each year, and to include a management report assessing the effectiveness of our internal control over financial reporting in each Annual Report on Form 10-K.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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As a result, we cannot assure you that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future or that we can effectively remediate our reported weaknesses. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to timely meet our reporting obligations and cause investors to lose confidence in our reported financial information.

In ~~2019~~2020, the Company anticipates engaging an outside consultant to properly test the Company’s internal controls and provide a report to help the Company outlining the steps necessary for the Company to have effective internal controls. ~~The~~Over the past few years, the Company has proactively ~~begun~~taken ~~taking~~ steps to improve internal controls and governance, including but not limited to separation of certain financial reporting duties.

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ITEM 2. PROPERTIES

Our principal executive office and distribution center for Creative Assembly is located at 5936 State Route 159 Chillicothe, Ohio. The space is leased by the Company for approximately $6,417 per month until September 2022. The principal manufacturing center for PMAL is located at 101 Innovation Drive, Homer City, Pennsylvania. The Homer City facility is owned by PMAL. Our Texas facility is leased ~~under~~by anthe ~~operating~~Company ~~lease~~for ~~that~~$19,676 isper ~~less~~month ~~than~~until ~~three~~June ~~years in duration~~2024. In total, the Company occupies three (3) locations ranging in size throughout the United States for use as warehouse space. All of the space we currently occupy is sufficient for our present and anticipated needs. Management expects no material change in lease expenses through ~~2019~~2020.

ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR AMERINAC HOLDING CORP.’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock currently trades on the OTC: BB ~~and~~or OTC: Pink under the trading symbol “PAOS”. As of December 31, 2019, the Company was authorized to issue 1,500,000 shares of common stock with a $0.001 par value. As of December 31, 2019, there were 54 holders of record of the Company’s common stock and 313,636 shares issued and outstanding.

The following table sets forth the highest and lowest bid prices for the common stock for each calendar quarter and subsequent interim period since January 1, 2017 as reported on the web site Nasdaq.com. It represents inter-dealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions.

	PRICES
	HIGH		LOW
2017
First Quarter	$	50.00	$	50.00
Second Quarter	$	90.00	$	25.00
Third Quarter	$	57.50	$	57.50
Fourth Quarter	$	57.50	$	57.50
2018
First Quarter	$	57.50	$	57.50
Second Quarter	$	57.50	$	57.50
Third Quarter	$	57.50	$	57.50
Fourth Quarter	$	57.50	$	57.50

As of December 31, 2018, the Company was authorized to issue 1,500,000 shares of common stock with a $0.001 par value. As of December 31, 2018, there were 57 holders of record of the Company’s common stock and 313,636 shares issued and outstanding.

Dividends

Amerinac has not declared or paid cash dividends on its common stock since its inception and does not anticipate paying such dividends in the foreseeable future. The payment of dividends may be made at the discretion of the Board and will depend upon, among other factors, the Company’s operations, its capital requirements, and its overall financial condition.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis should be read in conjunction with the ~~Consolidated~~consolidated ~~Financial~~financial ~~Statements~~statements, and the ~~Notes~~notes thereto included herein. The information contained below includes statements of the Company’s or management’s beliefs, expectations, goals and plans. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. For a discussion of forward-looking statements, see the information set forth in the Introductory Note to this Annual Report under the caption “Forward Looking Statements” which information is incorporated herein by reference.

A description of the Company’s operations and marketplace is contained in Section 1 of this report.

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Liquidity and Capital Resources

In ~~2018~~2019, the Company had $1,~~451~~650,~~253~~264 of operating cash flow, versus $~~635~~1,~~492~~451,253 of ~~negative~~ operating cash flow in ~~2017~~2018 due to increased profitability after noncash adjustments. Cash flows from investing activities was ($3,492,766) in 2019 versus 735,620 in 2018, primarily because of the repurchase of the non-controlling interests in PMAL. Purchases of property and equipment ~~decreased~~increased from $~~296~~264,~~600~~380 in ~~2017~~2018 to $~~264~~492,~~380~~766 in ~~2018~~2019 as the Company made several investments in upgraded equipment. The Company’s net cash flow provided by (used in) ~~provided by~~ financing activity was ($21,~~174~~539,~~988)~~638 in ~~2018~~2019 versus 1($2,~~297~~174,~~099~~988) in ~~2017~~2018, which is primarily the result of the ~~repayment~~draw on the CAS revolving loan and PMAL revolving loan to repurchase the non-controlling interests of SBN V PMA LLC, and the ~~Summit~~payment ~~Loans~~on notes in the prior year. The ~~Working~~working ~~Capital~~capital of the Company was $43,~~948~~858,~~521~~072 for ~~2018~~2019 and $4,~~853~~948,~~998~~521 for ~~2017~~2018 due to an increase in our lines of credit to repurchase the non-controlling interests in PMAL, which was offset by an increase in inventory.

Management believes that the company has appropriate liquidity to continue operations for at least twelve months from the date of this report.

~~Securities~~11 ~~Purchase~~Table ~~Agreement~~of Contents

OnPMAL ~~January~~Berkshire 15, 2015, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement) with C3, pursuant to which the Company authorized the issuance and sale to C3 of (1) a Senior Secured Note issued by the Company in the amount of $5,500,000 (“Note A”), (2) a Subordinated Secured Note issued by the Company in the amount of $3,500,000 (“Note B”), and (3) 3,200 shares of unregistered Common Stock for a loan from C3. In addition, in partial consideration for providing the two loans the Company issued 20,730 shares of unregistered Common Stock to C3 at the Second Closing that, together with the initial issuance of 3,200 shares, caused C3 to have received 8% of the total Common Stock of the Company after the Second Closing (collectively, the “Granted Equity”). In addition, the Company issued C3 shares of unregistered Common Stock pursuant to the Stock Purchase Agreement (the “Purchased Equity”). The issuance and sale of the Granted Equity was a private placement exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The proceeds were utilized to pay down the loan from a prior lender.Loans

~~Note~~On AAugust ~~accrued~~31, at2018, ~~11%~~PMAL ~~interest~~entered ~~per~~into ~~annum,~~a ~~with~~Loan ~~10%~~and ~~payable~~Security ~~monthly~~Agreement (the “PMAL Loan and 1%Security ~~accruing~~Agreement”) towith ~~the~~Berkshire ~~outstanding~~Bank ~~balance~~(“Berkshire ofBank”) ~~Note~~establishing: A,1) ~~payable~~a atnew ~~maturity.~~revolving ~~Note~~credit Afacility ~~had~~in aan ~~Maturity~~aggregate ~~Date~~principal amount of ~~January~~up ~~16,~~to ~~2020~~$6.0 ~~Note~~million A(the ~~carried~~“PMAL ~~with~~Revolving itLoan”), ~~industry~~2) ~~standard~~a ~~prepayment~~term ~~penalties~~loan in the amount of $3.5 ~~Note~~million (“Berkshire Term Loan A”) ~~was~~and ~~secured~~3) ~~against~~a ~~all~~term ofloan in the ~~assets~~amount of $1.5 million (“Berkshire Term Loan B”). Borrowings under the ~~Company~~PMAL Revolving Loan may be used to finance working capital and ~~its~~other ~~Subsidiaries~~general corporate purposes. ~~Note~~On AAugust 16, 2019, the PMAL Loan and Security Agreement was ~~repaid~~amended into ~~full~~permit ona ~~April~~one-time ~~28,~~cash ~~2017~~distribution of $1.5 million, ~~with~~which was used to partially fund the ~~proceeds~~Company’s repurchase of the ~~Aero-Missile~~SBN ~~sale~~Membership Interests.

~~Note~~Borrowings Bunder ~~accrued~~the atPMAL ~~14%~~Revolving Loan bear interest ~~per~~at ~~annum~~a rate equal to the Intercontinental Exchange Benchmark Administration Ltd. ~~Note~~London BInterbank ~~had~~Offered aRate ~~Maturity~~(“ICE ~~Date~~LIBOR”) ofrate ~~January~~plus 163.25%, ~~2020~~which was 4.95% ~~Note~~at BDecember ~~carried~~31, ~~with~~2019. itBerkshire ~~industry~~Term ~~standard~~Loan ~~prepayment~~A ~~penalties.~~and ~~Note~~Berkshire Term Loan B ~~was~~bear ~~secured~~interest ~~against~~at ~~all~~ICE ofLIBOR ~~the~~rate ~~assets~~plus of4.25%, ~~the~~which ~~Company~~was 5.95% ~~Note~~at BDecember ~~was~~31, ~~repaid~~2019. inThe ~~full~~Company onpaid ~~April~~a 28total of $98,353 ~~2017~~and $33,618 ~~with~~in interest on the ~~proceeds~~PMAL ofRevolving Loan during the ~~Aero-Missile~~years ~~sale~~ended December 31, 2019 and 2018, respectively.

The ~~Company~~outstanding ~~granted~~principal C3amount aof ~~put~~any ~~right~~borrowings under the ~~Securities~~PMAL ~~Purchase~~Revolving ~~Agreement~~Loan ~~for~~will ~~the~~be ~~Common~~due ~~Stock~~and C3payable ~~has~~on ~~received~~August ~~(whether~~21, by2021, ~~purchase~~subject orto ~~grant)~~an atearlier ~~any~~maturity ~~time~~date ~~after~~upon ~~the~~an ~~earlier~~event ~~to occur~~ of ~~(1)~~default (the ~~fifth~~“PMAL ~~(5th~~Revolving )Credit ~~anniversary~~Maturity ofDate”). ~~the~~Berkshire ~~closing~~Term ofLoan ~~the~~A ~~Securities~~has ~~Purchase~~a ~~Agreement~~maturity ~~for~~date ~~Common~~the ~~Stock~~earlier of (~~for~~i) ~~Granted~~August ~~Equity)~~31, ~~(2)~~2023 ~~the~~or ~~seventh~~ (~~7th~~ii) ~~anniversary of~~ the ~~closing~~PMAL ofRevolving ~~the~~Credit ~~Securities~~Maturity ~~Purchase~~Date. ~~Agreement~~Berkshire ~~(for~~Term ~~Purchased~~Loan ~~Equity),~~B ~~(3)~~has ~~payment~~a inmaturity ~~full~~date of the ~~amounts~~earlier ~~owed~~of ~~under~~(i) ~~Note~~August ~~A and Note B~~31, 2023 or (4ii) ~~upon~~the anPMAL ~~Event~~Revolving ofCredit ~~Default,~~Maturity asDate. ~~defined~~The inprincipal ~~the~~balance ~~Securities~~of ~~Purchase~~Berkshire ~~Agreement.~~Term ~~The~~Loan ~~put~~A ~~right~~shall ~~may~~ be ~~exercised~~paid byin C3equal ~~for~~monthly ~~all~~installments ~~or a portion~~ of ~~the~~$41,667 ~~Common~~commencing ~~Stock~~on atOctober an1, ~~agreed~~2018. ~~upon~~Any ~~valuation~~unpaid ofprincipal ~~the~~and ~~Company.~~interest Onshall ~~April~~be ~~28,~~due ~~2017,~~on the ~~Company~~maturity ~~repurchased~~date. ~~the~~The ~~96,697~~principal ~~shares~~balance of ~~Common~~Berkshire ~~Stock~~Term ofLoan ~~the~~B ~~Company~~shall ~~owned~~be bypaid C3in ~~for~~equal anmonthly ~~aggregate~~installments ~~purchase price~~ of $~~900~~8,~~000.~~334 ~~Accordingly~~commencing on October 1, ~~the~~2018. C3Any ~~put~~unpaid ~~right~~principal ~~was~~and ~~cancelled.~~interest shall be due on the maturity date.

15The ~~Table~~PMAL Loan and Security Agreement contains usual and customary covenants for financings of ~~Contents~~this type, including, among other things: (i) requirements to deliver financial statements, other reports and notices; (ii) restrictions on indebtedness; (iii) restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; (iv) restrictions on liens; (v) restrictions on making certain payments; (vi) restrictions on investments; (vii) restrictions on asset dispositions and other fundamental changes; and (viii) restrictions on transactions with affiliates.

~~SummitBridge~~The ~~Loans~~PMAL Loan and Security Agreement contains certain financial covenants, including a cash flow coverage ratio and a tangible net worth require covenant. Under the cash flow coverage covenant, PMAL shall maintain a quarterly cash flow coverage ratio of not less than 1.20 to 1.00. Under the tangible net worth covenant, PMAL shall maintain a tangible net worth of no less than $4.1 million. The tangible net worth amount required shall increase annually on each June 30 by 50% of PMAL’s prior year’s undistributed net income. As of December 31, 2019, PMAL was in compliance with both of these covenants.

OnThe ~~August~~obligations ~~17,~~of ~~2017 (the “~~PMAL ~~Purchase~~under ~~Date”),~~the PMAL ~~purchased~~Loan ~~substantially~~and ~~all~~Security ~~of the assets of Prime Metals for $9.6 million in cash pursuant to the Prime Asset Purchase~~ Agreement. Toare ~~finance~~secured ~~the~~by ~~purchase~~liens ofand ~~the~~security ~~assets,~~interests on ~~August~~all ~~17,~~assets ~~2017,~~of PMAL. ~~entered~~Amerinac ~~into~~is ~~the~~a ~~Credit~~secured ~~Agreement~~guarantor (of the ~~“Summit Credit Agreement”) with SummitBridge National Investments V LLC (“Summit”) pursuant to which Summit made loans to~~ PMAL: ~~(1) Summit Term~~ Loan A and ~~(2)~~Security ~~Summit~~Agreement, ~~Term~~and ~~Loan~~has B.pledged Inits ~~addition,~~equity in ~~consideration for Summit making the loans,~~ PMAL ~~issued to SBN V PMA LLC, an affiliate of Summit (“SBN”), the SBN Membership Interests~~.

~~Summit~~CAS ~~Term~~Berkshire Loan A accrued each month at either 17.5% interest per annum (with 12.5% payable monthly and 5.0% accruing to the outstanding balance of Summit Term Loan A, payable at maturity) or 17.0% interest per annum, payable monthly. The Company paid a total of $516,375 in interest on Summit Term Loan A for the year ended December 31, 2018. Summit Term Loan A had a Maturity date of August 17, 2020. Any prepayments of principal during the period from the PMAL Purchase Date through the day before the one year anniversary of the PMAL Purchase Date were subject to a fee payable to Summit equal to the interest that would have accrued on the principal amount prepaid from the date of such prepayment through the day before the one year anniversary of the PMAL Purchase Date with the exception that such fee would not be chargeable to PMAL if the specific prepayment resulted solely from the operating cash flow of PMAL. Summit Term Loan A would have begun amortizing on the thirteenth (13) month following the PMAL Purchase Date. Summit Term Loan A was secured against all of the assets of PMAL.

~~Summit~~On ~~Term~~July ~~Loan B accrued each month at either 17.5% interest per annum (with 14.0% payable monthly and 3.5% accruing to the outstanding balance of Summit Term Loan B~~15, ~~payable at maturity) or 17.0% interest per annum~~2019, ~~payable~~CAS ~~monthly.~~entered ~~The~~into ~~Company paid~~ a ~~total of $367,614 in interest on Summit Term~~ Loan Band ~~for~~Security Agreement (the ~~year~~“CAS ~~ended December 31, 2018. Summit Term~~ Loan Band ~~had~~Security aAgreement”) ~~Maturity~~with ~~date~~Berkshire ofBank ~~August~~establishing ~~17, 2020. Any prepayments of principal during the period from the Effective Date through the day before the one year anniversary of the PMAL Purchase Date were subject to~~ a ~~fee~~new ~~payable~~revolving tocredit ~~Summit~~facility ~~equal~~in toan ~~the~~aggregate ~~interest that would have accrued on the~~ principal amount ~~prepaid from the date~~ of ~~such~~up ~~prepayment through the day before the one year anniversary of the PMAL Purchase Date with the exception that such fee would not be chargeable~~ to ~~PMAL~~$6.0 ifmillion (the ~~specific~~“CAS ~~prepayment~~Revolving ~~resulted~~Loan”). ~~solely~~Borrowings ~~from~~under the ~~operating~~CAS ~~cash~~Revolving ~~flow of PMAL. Summit Term~~ Loan Bmay ~~began~~be ~~amortizing~~used ~~on the second month following the PMAL Purchase Date pursuant~~ to anfinance ~~amendment~~working ~~executed~~capital ~~on August 31, 2017 by Summit~~ and ~~PMAL.~~other ~~Summit~~general ~~Term~~corporate ~~Loan B was secured against all of the assets of PMAL~~purposes.

~~The~~On ~~Company~~August ~~guaranteed~~16, ~~payment~~2019, ofthe ~~Summit~~CAS ~~Term~~ Loan A and ~~Summit~~Security ~~Term~~Agreement ~~Loan~~was Bamended ~~pursuant~~ to permit a ~~Guaranty~~one-time ~~Agreement~~cash ~~made~~distribution byof $1.5 million which was used to partially fund the Company’s asrepurchase of the ~~PMAL~~SBN ~~Purchase~~Membership ~~Date~~Interests.

~~PMAL~~12 ~~has~~Table ~~granted SBN a put right under the operating agreement for PMAL for the SBN Membership Interests. On August 31, 2018, the operating agreement for PMAL was amended to provide that on the earlier~~ of November 30, 2021 or the date of a change in control of PMAL, SBN has the right but not the obligation to require PMAL to repurchase all of the SBN Membership Interests at market equity value (“Market Equity Value”). Market Equity Value shall be equal to the higher of (i) value of PMAL implied by a sale, (ii) 4.5 x EBITDA for the trailing twelve months plus cash, less all outstanding funded indebtedness or (iii) fair market value as determined by mutual agreement between PMAL and SBN, or failing that by an independent firm mutually agreed to. SBN has granted PMAL a call right under the operating agreement for PMAL for the SBN Membership Interests. On the August 17, 2021, PMAL has the right but not the obligation to require SBN to sell all of the SBN Membership Interests at Market Equity Value. The Company has accounted for this in accordance with ASC 480-10-55-59, as a redeemable non-controlling interest. At acquisition $400,000 was recorded as SBN’s PMAL equity ownership. This amount, plus SBN’s pro rata net income allocation is reflected before stockholders’ equity as Redeemable Non-controlling Interest. Due to the SBN Membership Interests, Summit is considered a related party by the Company.Contents

16Borrowings ~~Table~~under ofthe ~~Contents~~CAS Revolving Loan bear interest at a rate equal to the ICE LIBOR rate plus 3.00%, which was 4.70% at December 31, 2019.

The ~~Summit~~outstanding ~~Credit~~principal ~~Agreement~~amount ~~also contained customary covenants, representations and warranties~~ of ~~the~~any ~~parties,~~borrowings ~~including,~~under ~~among others (1)~~ the ~~grant~~CAS byRevolving ~~PMAL~~Loan towill ~~Summit~~be ofdue aand ~~security~~payable ~~interest~~ on ~~all~~July of15, ~~the assets of PMAL~~2022, ~~(2)~~subject ~~a pledge with respect~~ to ~~the~~an ~~equity~~earlier ~~interests~~maturity indate ~~PMAL~~upon ~~owned by the Company, and (3)~~ an ~~unconditional~~event ~~and irrevocable guaranty by the Company~~ of ~~the performance by PMAL of the obligations under the Summit Credit Agreement~~default. InAny ~~addition,~~unpaid ~~until~~principal ~~all amounts under Summit Term Loan A~~ and ~~Summit~~interest ~~Term~~shall ~~Loan~~be Bdue ~~were~~on ~~paid~~the inmaturity ~~full, PMAL agreed to comply with certain financial covenants that required PMAL to meet pre-established financial ratios~~date.

~~Berkshire~~The ~~Loans~~CAS Loan and Security Agreement contains usual and customary covenants for financings of this type, including, among other things: (i) requirements to deliver financial statements, other reports and notices; (ii) restrictions on indebtedness; (iii) restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; (iv) restrictions on liens; (v) restrictions on making certain payments; (vi) restrictions on investments; (vii) restrictions on asset dispositions and other fundamental changes; and (viii) restrictions on transactions with affiliates.

OnThe ~~August~~CAS ~~31,~~Loan ~~2018~~and ~~(the~~Security ~~“Refinancing~~Agreement ~~Date”),~~contains ~~PMAL~~certain ~~entered~~financial ~~into~~covenants, including a ~~Loan~~cash ~~and~~flow ~~Security~~coverage ~~Agreement~~ratio ~~(the~~and ~~“Loan~~a ~~and~~tangible ~~Security~~net ~~Agreement”)~~worth ~~with~~requirement ~~Berkshire~~covenant. ~~Bank~~Under ~~(“Berkshire~~the ~~Bank”)~~cash ~~establishing:~~flow 1)coverage acovenant, ~~new~~CAS ~~revolving~~shall ~~credit~~maintain ~~facility~~a inquarterly ancash ~~aggregate~~flow ~~principal~~coverage ~~amount~~ratio of upnot less than 1.20 to $61.000. ~~million~~Under (the ~~“Berkshire~~tangible ~~Revolving~~net ~~Loan”)~~worth covenant, 2)CAS ashall ~~term~~maintain ~~loan~~a intangible ~~the~~net ~~amount~~worth of no less than $31.50 million. ~~(“Berkshire~~The ~~Term~~tangible ~~Loan~~net ~~A”)~~worth ~~and~~amount 3)required ashall ~~term~~increase ~~loan~~annually inon ~~the~~each ~~amount~~June 30 by 50% of ~~$1.5~~CAS’s ~~million~~prior ~~(“Berkshire~~years ~~Term~~undistributed ~~Loan~~net ~~B”)~~income. ~~Borrowings~~As ~~under~~of ~~the~~December ~~Berkshire~~31, ~~Revolving~~2019, ~~Loan~~the ~~may~~Company bewas ~~used~~in tocompliance ~~finance~~will ~~working~~all ~~capital~~covenants ~~and~~under ~~other~~the ~~general~~CAS ~~corporate~~Loan ~~purposes~~and Security Agreement.

OnThe ~~August~~obligations ~~31, 2018, pursuant to the Loan and Security Agreement, PMAL used an amount~~ of ~~$7,678,814~~CAS under the CAS Loan and Security Agreement toare ~~fully~~secured ~~repay~~by ~~the~~liens ~~Summit~~and ~~Loans.~~security ~~Pursuant~~interests toon ~~the~~all ~~terms~~assets of ~~the~~CAS. ~~Summit~~The ~~Loans~~Company ~~and~~is ~~because~~a ~~PMAL~~secured ~~repaid~~guarantor ~~the Summit Loans within thirty-six (36) months~~ of the ~~origination~~CAS ofLoan ~~the~~and ~~Summit~~Security ~~Loans~~Agreement, ~~the~~and ~~SBN~~has ~~Membership~~pledged ~~Interests~~its ~~were~~equity ~~reduced~~in ~~from 25% to 20% of PMAL as of September 1, 2018~~CAS.

Borrowings under the Berkshire Revolving Loan bear interest at a rate equal to the Intercontinental Exchange Benchmark Administration Ltd. London Interbank Offered Rate (“ICE LIBOR”) rate plus 3.25%, which was 5.59% at December 31, 2018. Berkshire Term Loan A and Berkshire Term Loan B bear interest at ICE LIBOR rate plus 4.25%, which was 6.59% at December 31, 2018. The Company paid a total of $30,618 in interest on the Berkshire Revolving Loan during the year ended December 31, 2018. The Company paid a total of $76,213 in interest on the Berkshire Term Loan A during the year ended December 31, 2018. The Company paid a total of $32,982 in interest on the Berkshire Term Loan B during the year ended December 31, 2018.

17 Table of Contents

The outstanding principal amount of any borrowings under the Berkshire Revolving Loan will be due and payable on August 21, 2021, subject to an earlier maturity date upon an event of default (the “Berkshire Revolving Credit Maturity Date”). Berkshire Term Loan A has a maturity date the earlier of (i) August 31, 2023 or (ii) the Berkshire Revolving Credit Maturity Date. Berkshire Term Loan B has a maturity date the earlier of (i) August 31, 2023 or (ii) the Berkshire Revolving Credit Maturity Date. The principal balance of Berkshire Term Loan A shall be paid in equal monthly installments of $41,667 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date. The principal balance of Berkshire Term Loan B shall be paid in equal monthly installments of $8,334 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date.

The Loan and Security Agreement contains usual and customary covenants for financings of this type, including, among other things: (i) requirements to deliver financial statements, other reports and notices; (ii) restrictions on indebtedness; (iii) restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; (iv) restrictions on liens; (v) restrictions on making certain payments; (vi) restrictions on investments; (vii) restrictions on asset dispositions and other fundamental changes; and (viii) restrictions on transactions with affiliates.

The Loan and Security Agreement contains certain financial covenants, including a cash flow coverage ratio and a tangible net worth require covenant. Under the cash flow coverage covenant, PMAL shall maintain a quarterly cash flow coverage ratio of not less than 1.20 to 1.00. Under the tangible net worth covenant, PMAL shall maintain a tangible net worth of no less than $3.1 million. The tangible net worth amount required shall increase annually on each June 30 by 50% of PMAL’s prior year’s undistributed net income. As of December 31, 2018, PMAL was in compliance with both of these covenants.

The obligations of PMAL under the Loan and Security Agreement are secured by liens and security interests on all assets of PMAL. Amerinac is a secured guarantor of the Loan and Security Agreement, and has pledged its equity in PMAL.

Results of Operations

~~During~~The Company’s aggregate sales increased by 3% in 2019 over 2018. During 2019, the CAS sales compared to ~~2017~~2018 sales were up approximately 3437.92%. The main driver of sales has been related to the growth in our heavy truck market and the addition of new customers.

~~The~~PMAL ~~Company’s~~sales ~~aggregate~~were ~~sales~~$28,330,608 ~~increased~~and by$31,452,408 ~~134%~~for in2019 and 2018, ~~over~~respectively ~~2017~~as ~~due~~PMAL tohad ~~the~~a ~~acquisition~~larger mix of ~~Prime~~tolling ~~Metals~~revenue in ~~the~~2019. ~~middle~~Tolling ofrevenue ~~2017.~~is ~~PMAL~~less ~~sales~~per ~~were~~each ~~$31,452,408~~equivalent ~~for~~heat ~~2018.~~because PMAL ~~sales~~does ~~were~~not ~~$9,725,660~~purchase ~~from~~the ~~August 17~~metal, ~~2017~~which toremains ~~December~~the ~~31,~~property ~~2017~~of the customer.

18In ~~Table~~2019, ofthe ~~Contents~~Company experienced normal lead times for product deliveries. While the Company believes that its supply chain will continue to operate without major interruption, the Company’s management periodically assesses each supplier.

InGross ~~2018~~profit margins, ~~the~~were ~~Company~~17.4% ~~experienced~~and ~~normal~~17.9% ~~lead~~for ~~times~~2019 ~~for~~and ~~product~~2018, ~~deliveries~~respectively. ~~While~~Operating ~~the~~expenses ~~Company~~in ~~believes~~2019 ~~that~~increased ~~its~~by ~~supply~~4.6% ~~chain~~compared ~~will~~to ~~continue~~2018 due to ~~operate~~normal ~~without~~variation ~~major~~in ~~interruption~~cost. In 2019, ~~the~~PMAL ~~Company’s~~operating ~~management~~expenses ~~periodically~~were ~~assesses~~$2,354,664 ~~each~~and ~~supplier~~Creative Assembly operating expenses were $1,817,444. In 2018, PMAL operating expenses were $2,376,301 and Creative Assembly operating expenses were $1,688,634.

~~Gross~~Interest ~~profit~~cost ~~margins,~~was ~~were~~down ~~17.9~~56% ~~and 19.3% for 2018 and 2017, respectively. Operating expenses~~ in ~~2018~~2019 ~~increased by 35.0%~~ compared to ~~2017.~~2018 ~~The~~because ~~primary reason for~~ the ~~increase~~Company inrefinanced ~~operating~~Summit ~~expenses~~Term ~~was~~Loan ~~due~~A toand ~~the~~Summit ~~acquisition~~Term ofLoan ~~Prime~~B ~~Metals~~with inlower ~~the~~interest ~~middle~~financing ofmidway ~~2017.~~through In 2018,. ~~PMAL~~Interest ~~operating~~expense ~~expenses~~in ~~were~~2019 ~~$2,376,301~~ and ~~Creative~~2018 ~~Assembly~~was ~~operating expenses were~~ $1516,~~688,634.~~352 ~~In 2017, PMAL operating expenses were $991,659~~ and ~~Creative Assembly operating expenses were~~ $21,~~396~~176,~~178.~~469, ~~The PMAL operating expenses increased in 2018 over 2017 because the Company owned and operated for an entire 12-month period during 2018~~respectively. ~~The Creative Assembly operating expenses decreased in 2018 because of decreased general and administrative costs as Creative Assembly was able to share some costs with PMAL during 2018.~~

~~Interest~~13 ~~cost~~Table ~~was up 35.8% in 2018 compared to 2017, as a result~~ of ~~the high interest rate of Summit Term Loan A and Summit Term Loan B. Interest expense in 2018 and 2017 was $1,176,469 and $866,361, respectively.~~Contents

Off-Balance Sheet Arrangements

None.

~~ITEM~~Critical ~~7A.~~Accounting ~~DISCLOSURES~~Policies ~~ABOUT~~and ~~MARKET RISK~~Estimates

~~Critical~~Our ~~Accounting~~consolidated ~~Policies~~financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require us to make certain estimates, judgments and ~~Estimates~~assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonably based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. To the extent there are material differences between these estimates, judgments and assumptions and actual results, our consolidated financial statements will be affected.

~~Our~~In ~~Consolidated~~many ~~Financial~~cases, ~~Statements~~the ~~are prepared in accordance with~~ accounting ~~principles~~treatment ~~generally~~of ~~accepted~~a inparticular ~~the~~transaction ~~United~~is ~~States~~specifically ofdictated ~~America~~by (“GAAP~~”).~~ ~~These~~and ~~accounting~~does ~~principles~~not require usmanagement’s tojudgment ~~make~~in ~~certain~~its ~~estimates, judgments and assumptions~~application. WeThere ~~believe~~are ~~that~~also ~~the~~areas ~~estimates,~~in ~~judgments and assumptions upon~~ which wemanagement’s ~~rely~~judgment ~~are~~in ~~reasonably~~selecting ~~based~~among ~~upon information~~ available toalternatives uswould atnot ~~the~~produce ~~time~~a ~~that~~materially ~~these~~different ~~estimates, judgments and assumptions are made~~result. ~~These~~Our ~~estimates,~~senior ~~judgments~~management ~~and~~has ~~assumptions~~reviewed ~~can~~these ~~affect~~critical ~~the~~accounting ~~reported~~policies ~~amounts of assets~~ and ~~liabilities~~related asdisclosures. ofSee ~~the~~notes ~~date~~to ofconsolidated ~~the~~ financial statements, aswhich ~~well~~contain asadditional ~~the~~information ~~reported~~regarding ~~amounts~~our ofaccounting ~~revenue~~policies and ~~expenses~~other ~~during~~disclosures ~~the~~required ~~periods~~by ~~presented~~GAAP. ~~To the extent there are material differences between these estimates, judgments and assumptions and actual results, our financial statements will be affected.~~

InThe ~~many~~following ~~cases,~~are the ~~accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management~~Company’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed these critical accounting policies ~~and related disclosures. See Notes to Consolidated Financial Statements, which contain additional information regarding our accounting policies and other disclosures required by GAAP.~~:

19• ~~Table~~Inventory - For the Company’s distribution subsidiary (Creative Assembly), inventories are carried at the lower of ~~Contents~~cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon the age of the respective part and the knowledge of future demand of inventory on hand as well as other market conditions and events. For the Company’s manufacturing subsidiary (PMAL) inventories are carried at the lower of cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon knowledge of future demand of inventory on hand as well as other market conditions and events. • Accounts Receivable Allowance - Accounts receivable are recorded net of provisions for doubtful accounts. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable. The amount of the allowance is based on an analysis of the Company’s prior collection experience, customer credit worthiness, and current economic trends. The Company determines receivables to be past due based on the payment terms of original invoices. Interest is not typically charged on past due receivables. Accounts are written off against the allowance when deemed uncollectable. • Unbilled Services - The Company recognizes revenue on its tolling services as those services are performed. Unbilled services represent the revenue recognized but not yet invoiced. • Revenue Recognition - Revenue is recognized when control transfers to our customers via shipment of products or delivery of services. Shipping and handling costs are considered fulfillment activities and as such are not accounted for as separate performance obligations. We measure revenue as the amount of consideration we expect to be entitled to receive in exchange for those goods or services, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components if the good or serve is transferred and payment is received within one year. We estimate product returns based on historical experience and record them on a gross basis. Substantially all of Creative Assembly customer returns relate to products that are returned under warranty obligations underwritten by manufacturers. Substantially all of PMAL customer returns relate to products which do not meet customer requirements and are replaced by the Company. We occasionally receive advance payments to secure product to be delivered in future periods. These advance payments are recorded as deferred revenue, and revenue is recognized as our performance obligations are satisfied throughout the term of the applicable contract. We may also purchase metal on our customer’s behalf, sell the unprocessed metal to our customer, and then process and ship the material, charging a processing fee at the time of shipment. For these specific non-tolling arrangements in which we purchase metal for a customer, a single performance obligation exists, and as a result, amounts invoiced to our customers for the metal purchased on their behalf is recorded as deferred revenue until the metal is processed and shipped. • Income Taxes - In the preparation of consolidated financial statements, the Company estimates anticipated income taxes. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. The Company evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character, amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing probable exposures related to tax matters. The Company’s tax returns are subject to audit by Federal, state and local taxing authorities that could challenge the company’s tax positions. The Company believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. • Goodwill and Intangible Assets - We make estimates, assumptions, and judgments when valuing goodwill and other intangible assets such as customer lists in connection with the initial purchase price allocation of any acquired operations, as well as when evaluating the recoverability of our goodwill and other intangible assets on an ongoing basis. These estimates are based upon a number of factors, including historical experience, market conditions, and information obtained from the management of any acquired operations. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected attrition rates, discount rates, anticipated growth in revenue from the acquired customers and acquired technology, and the expected use of the acquired assets. These factors are also considered in determining the useful life of acquired intangible assets. The amounts and useful lives assigned to identified intangible assets impact the amount and timing of future amortization expense.

~~The~~14 ~~following~~Table ~~are~~of ~~the Company’s critical accounting policies:~~Contents

· Inventory - For the Company’s distribution subsidiary (Creative Assembly), inventories are carried at the lower of cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon the age of the respective part and the knowledge of future demand of inventory on hand as well as other market conditions and events. For the Company’s manufacturing subsidiary (PMAL) inventories are carried at the lower of cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon knowledge of future demand of inventory on hand as well as other market conditions and events. · Sales and Accounts Receivable Allowances - allowance for sales returns and allowance for doubtful accounts - In determining the adequacy of the allowances for sales returns and doubtful accounts, the Company considers a number of factors including the history of sales to each customer, any items returned by customer, aging of the receivable portfolio, customer payment trends, and financial condition of the customer, industry conditions and overall credibility of the customer. Actual amounts could differ significantly from our estimates. · Income Taxes - In the preparation of consolidated financial statements, the Company estimates anticipated income taxes. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. The Company evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character, amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing probable exposures related to tax matters. The Company’s tax returns are subject to audit and local taxing authorities that could challenge the company’s tax positions. The Company believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. · Goodwill and Intangible Assets - We make estimates, assumptions, and judgments when valuing goodwill and other intangible assets such as customer lists in connection with the initial purchase price allocation of any acquired operations, as well as when evaluating the recoverability of our goodwill and other intangible assets on an ongoing basis. These estimates are based upon a number of factors, including historical experience, market conditions, and information obtained from the management of any acquired operations. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected attrition rates, discount rates, anticipated growth in revenue from the acquired customers and acquired technology, and the expected use of the acquired assets. These factors are also considered in determining the useful life of acquired intangible assets. The amounts and useful lives assigned to identified intangible assets impact the amount and timing of future amortization expense.

· Reedemable non-controlling interest - Non-controlling interests that are not subject to redemption rights are classified in permanent equity. Redeemable non-controlling interests are classified outside of permanent equity on the consolidated balance sheets. The Company accounted for the put right granted to SBN as a redeemable non-controlling interest in accordance with ASC 480-10-55-59. At acquisition $400,000 was recorded as SBN’s PMAL equity ownership. This amount, plus SBN’s pro rata net income allocation is reflected before stockholder’s equity as Redeemable Non-Controlling Interest for the year ending December 31, 2018. The C3 put liability, which was cancelled as part of the Company’s repurchase of C3’s equity in 2017, was carried on the balance sheet at the fair value of the put option. The fair value was determined based on a Level 3 fair market value approach in accordance with FASB’s “ASC 820 – Fair Value Measurements.” The technique used was a multiple of earnings before interest, taxes, depreciation and amortization. The Company subtracted the total outstanding debt and added back the available cash to arrive at the fair value of the put option.

20 Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Amerinac Holding Corp. ~~and Subsidiaries~~

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Amerinac Holding Corp. and Subsidiaries (the “Company”) as of December 31, ~~2018~~2019 and ~~2017~~2018, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the two -year period ended December 31, ~~2018~~2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018~~2019 and ~~2017~~2018, and the results of its operations and its cash flows for each of the years in the two -year period ended December 31, ~~2018~~2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Friedman LLP FRIEDMAN LLP We have served as the Company’s auditor since 2009. Marlton, New Jersey March 2630, ~~2019~~2020

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Table of Contents

AMERINAC HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2018			2017
	2019			2018
ASSETS
Current assets:
Cash	$	~~360~~57,~~283~~419		$	~~348~~360,~~398~~283
Accounts receivable (net of allowance for doubtful accounts of $78,753 as of December 31, 2018 and 2017.)		3,801,166			2,825,846
Accounts receivable (net of allowance for doubtful accounts of $78,753 as of December 31, 2019 and 2018.)		3,804,699			3,670,293
Inventories (net of reserve for obsolesence of $151,009 and $338,260 as of December 31, 2018 and 2017, respectively)		5,580,942			3,483,809
Unbilled receivables		418,629			130,873
Escrow receivable		-			1,000,000
Inventories (net of reserve for obsolesence of $169,060 and $151,009 as of December 31, 2019 and 2018.)		7,056,547			5,580,942
Other current assets		~~230~~155,~~985~~037			~~336~~230,~~509~~985
Total current assets		911,~~973~~492,~~376~~331			79,~~994~~973,~~562~~376
Property, land and equipment - net		6,~~125~~004,~~183~~844			6,~~241~~125,~~706~~183
Other assets:
Customer lists - net of amortization		1,~~708~~509,~~084~~083			1,~~907~~708,~~083~~084
Deferred tax asset		358,686			-
Right-of-use asset		1,092,253			-
Deferred tax asset		356,453			358,686
Goodwill		54,993			54,993
Other		5165,~~917~~593			51,917
Total other assets		23,~~173~~078,~~680~~375			2,~~013~~173,~~993~~680
Total	$	1820,~~272~~575,~~239~~550		$	1618,~~250~~272,~~261~~239
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit	$	1,092,058		$	-
Lines of credit	$	3,280,654		$	1,092,058
Accounts payable and accrued expenses		3,~~275~~283,~~011~~856			23,~~624~~275,~~937~~011
Notes payable - short term - related party		-			515,627
Notes payable, net- short term		600,000			600,000
Note payable - short term		600,000			-
Finance leases payable - short term		49,662			43,435
Capital leases payable - short term		43,435			-
Operating leases payable - short term		255,533			-
Income taxes payable		14164,~~351~~554			-14,351
Total current liabilities		57,~~024~~634,~~855~~259			35,~~140~~024,~~564~~855
Long-term liabilities:
Notes payable - related party		-			7,026,130
Notes payable, net of current portion		3,539,671			4,069,990
Notes payable, net		4,069,990			-
Finance leases payable - net of current portion		79,214			113,358
Capital leases payable		113,358			-
Operating leases payable - net of current portion		877,899			-
Total long-term liabilities		4,~~183~~496,~~348~~784			74,~~026~~183,~~130~~348
Total liabilities		912,~~208~~131,~~203~~043			109,~~166~~208,~~694~~203
Commitments and contingencies
Redeemable non-controlling interest		~~757,778~~-			~~453~~757,~~377~~778
Stockholders' equity:
Common stock, $.001 par value; 1,500,000 shares authorized, 313,636 and 297,386 issued and outstanding at December 31, 2018 and 2017, respectively.		313			297
Common stock, $.001 par value; 1,500,000 shares authorized, 313,636 issued and outstanding at December 31, 2019 and 2018, respectively.		313			313
Additional paid-in capital		1614,~~383~~836,~~599~~466			1516,~~733~~383,~~615~~599
Accumulated deficit		(86,~~077~~392,~~654~~272	)		(108,~~103~~077,~~722~~654	)
Total stockholders' equity		8,~~306~~444,~~258~~507			58,~~630~~306,~~190~~258
Total liabilities and stockholders' equity	$	1820,~~272~~575,~~239~~550		$	1618,~~250~~272,~~261~~239

The accompanying notes are an integral part of these consolidated financial statements.

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AMERINAC HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	FOR THE YEARS
	FOR THE YEARS ENDED
	ENDED DECEMBER 31,
	DECEMBER 31,
	2018			2017
	2019			2018
Net revenue	$	4344,~~154~~388,~~422~~579		$	1843,~~372~~154,~~663~~422
Cost of goods sold		3536,~~409~~655,~~954~~590			1435,~~821~~409,~~653~~954
Gross profit		7,~~744~~732,~~468~~989			37,~~551~~744,~~010~~468
Operating expenses:
General and administrative expenses		4,~~082~~327,~~130~~557			24,~~594~~082,~~391~~130
Professional and consulting fees		~~395~~356,~~067~~173			~~721~~395,~~446~~067
Total operating expenses		4,~~477~~683,~~197~~730			34,~~315~~477,~~837~~197
Income before other (expense) income		3,~~267~~049,~~271~~259			~~235~~3,~~173~~267,271
Other (expense) income:
Interest		(1516,~~176,469~~352	)		(~~866~~1,~~361~~176,469	)
Change in fair value of put option		-			(213,000	)
Other income		-			82,712
Gain on sale		-			2,974,584
Total other (expense) income		(516,352	)		(1,093,757	)
Other income		82,712			26,391
Income before provision for income taxes		2,532,907			2,173,514
Total other (expense) income		(1,093,757	)		1,921,614
Income tax (expense) benefit		(847,525	)		342,789
Income from continuing operations before
Net income		1,685,382			2,516,303
provision for income taxes		2,173,514			2,156,787
Non-controlling interest share of net income		-			490,235
Income tax benefit (expense)		342,789			(731	)
Income before discontinued operations		2,516,303			2,156,056
Income from discontinued operations, net		-			984,717
Net income		2,516,303			3,140,773
Non-controlling interest share of net income
from continuing operations		490,235			53,377
Net income attributable to Amerinac Holding
Corp. shareholders	$	21,~~026~~685,~~068~~382		$	32,~~087~~026,~~396~~068
Basic and diluted earnings per share applicable to common stockholders:
Continuing operations		6.81			7.53
Earnings per share	$	5.37		$	6.81
Discontinued operations		-			3.53
Earnings per share		6.81			11.05
Weighted average shares outstanding:
Basic and diluted		~~297~~313,~~431~~636			~~279~~297,~~298~~431

The accompanying notes are an integral part of these consolidated financial statements.

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AMERINAC HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~CASH~~STOCKHOLDERS' ~~FLOWS~~EQUITY

YEARS ENDED DECEMBER 31, ~~2018~~2019 AND ~~2017~~2018

	2018			2017
	Common Stock						Additional			Accumulated
CASH FLOWS FROM OPERATING ACTIVITIES
	Shares			Amount			Paid-in Capital			(Deficit)			Total
Net income	$	2,516,303		$	3,140,773
Balance, January 1, 2018		297,386		$	297		$	15,733,615		$	(10,103,722	)	$	5,630,190
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net income attributable to Amerinac Holding Corp. shareholders		-			-			-			2,026,068			2,026,068
Depreciation and amortization		758,496			285,489
Stock compensation		16,250			16			649,984			-			650,000
Amortization of deferred financing fees		117,922			301,901
Balance, December 31, 2018		313,636		$	313		$	16,383,599		$	(8,077,654	)	$	8,306,258
Gain on sale		-			(2,974,584	)
Balance, January 1, 2019		313,636		$	313		$	16,383,599		$	(8,077,654	)	$	8,306,258
Stock compensation		50,000			12,567
Net income attributable to Amerinac Holding Corp. shareholders		-			-			-			1,685,382			1,685,382
Increase in deferred taxes		(358,686	)		-
Purchase of non-controlling interest net of deferred taxes of $695,089		-			-			(1,547,133	)		-			(1,547,133	)
Income from discontinued operations		-			984,717
Balance, December 31, 2019		313,636		$	313		$	14,836,466		$	(6,392,272	)	$	8,444,507
Change in fair value put option		-			213,000
Change in allowance for doubtful accounts		-			34,806
Net loss on debt extinguishment		69,722			-
Inventory writedown and reserve		(187,251	)		249,180
Changes in assets and liabilities:
Increase in accounts receivable		(975,320	)		(2,140,231	)
Increase in inventory		(1,909,882	)		(1,935,928	)
Decrease (increase) in other current assets		105,524			(255,224	)
Increase in other assets		-			(45,119	)
Increase in income taxes payable		14,351			(22,100	)
Decrease in shareholder put option		-			(687,000	)
Increase in accounts payable and accrued expenses		1,250,074			1,607,974
Net cash provided by (used in) operating activities of continuing operations		1,451,253			(1,229,779	)
Net cash provided by operating activities of discontinued operations		-			594,287
Net cash provided by (used in) operating activities		1,451,253			(635,492	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale, net of escrow		-			9,500,000
Acquisition of business		-			(9,600,000	)
Proceeds from escrow receivable from sale		1,000,000			-
Purchase of property and equipment		(264,380	)		(296,600	)
Net cash provided by (used in) investing activities		735,620			(396,600	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (payments) on line of credit		1,092,058			(5,339,199	)
Net proceeds (payments) on notes payable		4,640,955			(4,000,000	)
Payments on capital leases		(21,800	)		-
Net (payments) proceeds on notes payable - related party		(7,886,201	)		7,886,201
Proceeds from issuance of stock, net		-			3,650,097
Purchase of treasury stock		-			(900,000	)
Net cash (used in) provided by financing activities		(2,174,988	)		1,297,099
INCREASE IN CASH		11,885			265,007
CASH - BEGINNING OF YEAR		348,398			83,391
CASH - END OF YEAR	$	360,283		$	348,398
Cash paid during the period for:
Interest	$	1,127,087		$	733,008
Income taxes	$	1,546		$	-
Non-cash financing activities:
Stock issued for payment of debt	$	-		$	85,600
Acquisition of equipment through capital lease	$	178,593		$	-
Stock issued for accrued bonus	$	600,000		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents

AMERINAC HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~CASH ~~EQUITY~~FLOWS

YEARS ENDED DECEMBER 31, ~~2018~~2019 AND ~~2017~~2018

	Common Stock						Additional		Accumulated
	2019			2018
	Shares			Amount			Paid-in Capital		(Deficit)			Total
CASH FLOWS FROM OPERATING ACTIVITIES
Balance, January 1, 2017		298,867		$	299		$	12,070,996	$	(13,191,118	)	$	(1,119,823	)
Net income	$	1,685,382		$	2,516,303
Net income attributable to Amerinac Holding Corp. shareholders		-			-			-		3,087,396			3,087,396
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation		3,966			4			12,563		-			12,567
Depreciation and amortization		829,556			758,496
Cancellation of shares		(96,697	)		(97	)		97		-			-
Amortization of deferred financing fees		73,273			117,922
Issuance of common stock		91,250			91			3,649,959		-			3,650,050
Stock compensation		-			50,000
Balance, December 31, 2017		297,386		$	297		$	15,733,615	$	(10,103,722	)	$	5,630,190
Non-cash lease expense		184,890			-
Net income attributable to Amerinac Holding Corp. shareholders		-			-			-		2,026,068			2,026,068
Deferred income taxes		697,322			(358,686	)
Stock compensation		16,250			16			649,984		-			650,000
Net loss on debt extinguishment		-			69,722
Balance, December 31, 2018		313,636		$	313		$	16,383,599	$	(8,077,654	)	$	8,306,258
Inventory reserve		18,051			(187,251	)
Changes in assets and liabilities:
Increase in accounts receivable		(134,406	)		(975,320	)
Increase in unbilled receivables		(287,756	)
Increase in inventory		(1,493,656	)		(1,909,882	)
Decrease in other current assets		75,948			105,524
Increase in other assets		(13,676	)		-
Decrease in operating leases payable		(153,337	)		-
Increase in income taxes payable		150,203			14,351
Increase in accounts payable and accrued expenses		18,470			1,250,074
Net cash provided by operating activities		1,650,264			1,451,253
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from escrow receivable from sale		-			1,000,000
Purchase of minority interest		(3,000,000	)		-
Purchase of property and equipment		(492,766	)		(264,380	)
Net cash (used in) provided by investing activities		(3,492,766	)		735,620
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds on lines of credit		2,185,005			1,092,058
Payments on notes payable		(600,000	)		4,640,955
Payments on finance leases		(45,367	)		(21,800	)
Payments on notes payable - related party		-			(7,886,201	)
Net cash provided by (used in) financing activities		1,539,638			(2,174,988	)
(DECREASE) INCREASE IN CASH		(302,864	)		11,885
CASH - BEGINNING OF YEAR		360,283			348,398
CASH - END OF YEAR	$	57,419		$	360,283
Cash paid during the period for:
Interest	$	446,332		$	1,127,087
Income taxes	$	-		$	1,546
Non-cash financing activities:
Operating lease asset obtained in exchange for operating lease obligation	$	1,286,768		$	-
Reclassification of deferred rent with adoption of ASC 842	$	9,625		$	-
Acquisition of equipment through finance lease	$	17,450		$	178,593
Stock issued for accrued bonus	$	-		$	600,000
Deferred tax asset recognized with acquisition of non-controllong interest	$	695,089		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents

AMERINAC HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2018~~2019

1. SUMMARY OF BUSINESS

Amerinac Holding Corp. and Subsidiaries (the “Company”) distributes high-quality, predominantly domestically-manufactured, technically complex, nut and bolt products and a proprietary locking washer product that are used primarily for industrial/commercial applications that require a high level of certified and assured quality. Additionally, the Company manufactures specialty stainless steel, and related products for steel mills, steel forging operations, and various metal fabrication facilities.

The Company’s operations are carried out through its wholly-owned distribution subsidiary Creative Assembly Systems, Inc (“Creative Assembly” or “CAS”) and its ~~majority~~wholly-owned manufacturing subsidiary, Prime Metals Acquisition LLC, a Delaware limited liability company (“PMAL”). ~~Until April 28, 2017, the Company’s operations were also carried out through its wholly-owned distribution subsidiary, Aero-Missile Components, Inc. (“Aero-Missile”).~~ Creative Assembly is a value-added distributor of proprietary and specialty fasteners primarily serving the heavy truck, automotive, transportation, and infrastructure industries. Aero-Missile had stocking distributor relationships with a number of United States fastener manufacturers. Aero-Missile predominantly sold to all levels of the aviation industry original equipment manufacturers, maintenance and repair organizations, and other distributors, as well as to the United States Department of Defense.

On April 28, 2017, the Company and Aero-Missile entered into an Asset Purchase Agreement (the “Aero-Missile Asset Purchase Agreement”) with Apollo Aerospace LLC (“Apollo”) pursuant to which Aero-Missile sold substantially all of its assets to Apollo and Apollo assumed certain liabilities of Aero-Missile (the “Asset Sale”) for an aggregate purchase price of $102.5 ~~million~~SUMMARY ~~paid~~OF bySIGNIFICANT ~~Apollo~~ACCOUNTING to Aero-Missile. The purchase price was subject to a working capital adjustment and $1.0 million being held in escrow (of which $500,000 was received in April 2018 and $500,000 was received in November 2018) to secure the indemnification obligations of the Company and Aero-Missile. During the third quarter of 2017, it was determined that $22,500 was owed by the Company to Apollo, under the terms of the working capital adjustment. Pursuant to the Aero-Missile Asset Purchase Agreement, the Company and Aero-Missile were required to change their corporate names. On May 1, 2017, Aero-Missile changed its name to “PolyAero Inc.” and on June 28, 2017, the Company changed its name to “Amerinac Holding Corp.”POLICIES

Simultaneous with the sale of Asset Sale, the Company repaid all amounts owing to C3 Capital Partners III, L.P. (“C3”). The total amount repaid was $4 million plus accrued interest of $42,389. In addition, the Company purchased the 96,697 shares of common stock of the Company owned by C3 for an aggregate purchase price of $900,000 that was mutually agreed to by the Company and C3.

All financial results of Aero-Missile are classified as discontinued operations for the purposes of this these consolidated financial statements.

F-6 Table of Contents

On July 12, 2017, the Company entered into an Asset Purchase Agreement (the “Prime Asset Purchase Agreement”) with Prime Metals & Alloys, Inc., a Delaware corporation, (“Prime Metals”) pursuant to which PMAL would purchase all of the assets of Prime Metals for an aggregate purchase price of $9.6 million pursuant to an order of the Bankruptcy Court approving the sale under Section 363 of the Bankruptcy Code. Pursuant to an order of the Bankruptcy Court, the Company paid a deposit of $0.5 million to be held in escrow. The deposit was credited to the purchase price at closing. On March 2, 2017, Prime Metals filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (as amended, the “Bankruptcy Code”) in the United States Bankruptcy Court for the Western District of Pennsylvania (the “Bankruptcy Court”) at case no. 17-70164-JAD.

On August, 17, 2017, PMAL purchased substantially all of the assets of Prime Metals for $9.6 million in cash pursuant to the Prime Asset Purchase Agreement. To finance the purchase of the assets, on August 17, 2017, PMAL entered into a Credit Agreement (the “Credit Agreement”) with SummitBridge National Investments V LLC (“Summit”) pursuant to which Summit made loans to PMAL: (1) a Term Loan in the amount of $4,500,000 (“Summit Term Loan A”) and (2) a Term Loan in the amount of $3,500,000 (“Summit Term Loan B”) (collectively, the “Summit Loans”). In addition, in consideration for Summit making the loans, PMAL issued to SBN V PMA LLC, an affiliate of Summit (“SBN”), membership interests in PMAL equal to 25% of the equity ownership of PMAL (the “SBN Membership Interests”).

The Company guaranteed payment of the Summit Loans pursuant to a Guaranty Agreement made by the Company.

On July 17, 2017, the Company completed the closing of a private placement with approximately 17 accredited investors (the “Investors”), pursuant to which the Company sold to the Investors a total of 75,500 shares of restricted common stock (the “Shares”) of the Company at a purchase price of $40.00 per share, and total consideration of $3.02 million.

On September 28, 2017, the Company sold an additional 15,750 Shares at a purchase price of $40.00 per share, and total consideration of $630,000 to 5 Investors.

F-7 Table of Contents

2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly ~~and majority~~ -owned subsidiaries. All inter-company accounts have been eliminated. ~~All financial results of Aero-Missile are presented as discontinued operations for purposes of this annual report.~~

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates relate to the useful lives and impairment considerations of long-lived and intangible assets, reserves for inventory and accounts receivable, ~~estimate~~going ofconcern ~~the~~considerations, ~~valuation~~discount ~~allowance~~rates ~~against~~in ~~deferred~~connection ~~tax~~with right-of-use assets, ~~going concern considerations~~ and the valuation of redeemable non-controlling interest.

Cash and Cash Equivalents

For purposes of the consolidated ~~statement~~statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. From time to time, cash balances may exceed the federal deposit insurance limits.

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Table of Contents

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded net of ~~reserves for sales returns and allowances and net of~~ provisions for doubtful accounts. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable. The amount of the allowance is based on an analysis of the Company’s prior collection experience, customer credit worthiness, and current economic trends. Based on management’s review of accounts receivable, the Company carries an allowance for doubtful accounts of $78,753 as of December 31, ~~2018~~2019 and ~~2017, respectively~~2018. The Company determines receivables to be past due based on the payment terms of original invoices. Interest is not typically charged on past due receivables. Accounts are written off against the allowance when deemed uncollectable.

~~F-8~~Unbilled ~~Table of Contents~~Services

The Company recognizes revenue on its tolling services as those services are performed. Unbilled services represent the revenue recognized but not yet invoiced.

Inventory

For the Company’s distribution subsidiary, Creative Assembly, inventories consist only of finished goods and are carried at the lower of cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon the age of the respective part and the knowledge of future demand of inventory on hand as well as other market conditions and events. Management believes that the longer a part sits on the shelf the higher the likelihood that it will not sell in the future. This belief is not unique to the fastener industry. While management constantly assesses viability of a part within the customer base, it also believes that a reserve should be carried to reflect product that is aging out, as opposed to product that management identified based on a specific event. At the end of ~~2018~~2019, the Company had more than 4,000 unique part numbers on hand that had carrying value. Management believes that the two methods, specific identification and reserve based on age, to analyzing inventory will reflect the appropriate balance sheet value. As of December 31, ~~2018~~2019 and December 31, ~~2017~~2018, the inventory reserve for Creative Assembly was $6886,~~160~~211 and $~~194~~68,~~555~~160, respectively.

For the Company’s manufacturing subsidiary, PMAL, management believes volatility in the broader metal markets will have an impact on all aspects of raw material, work in process, and finished goods inventory. Management actively seeks to minimize inventory working capital, and increase inventory turns to eliminate any impacts from market fluctuations. As of December 31, ~~2018~~2019, the Company’s manufacturing subsidiary had more than 500 unique metal chemistries it produced, but keeps minimal finished inventory on hand.

For PMAL, inventories are carried at the lower of cost on an average cost basis, or net realizable value. When necessary, management records an inventory reserve for estimated obsolescence or unmarketable inventory based upon knowledge of future demand of inventory on hand as well other market conditions and events. As of December 31, ~~2018~~2019 and December 31, ~~2017~~2018, the inventory reserve for PMAL was $82,849 ~~and $143,705, respectively~~.

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Table of Contents

The Company’s inventory consists of the following:

	December 31, 2018			December 31, 2017
	December 31, 2019			December 31, 2018
Raw Materials	$	2,~~133~~614,~~311~~029		$	12,~~548~~133,~~531~~311
Finished Goods		34,~~598~~611,~~640~~578			23,~~273~~598,~~538~~640
Reserves		(~~151~~169,~~009~~060	)		(~~338~~151,~~260~~009	)
Total	$	57,~~580~~056,~~942~~547		$	35,~~483~~580,~~809~~942

Property, Land and Equipment

Property, land and equipment are stated at cost less accumulated depreciation and amortization. The Company computes depreciation and amortization using the straight-line method over the estimated useful lives of the assets acquired as follows:

Leasehold improvements	5 years **
Furniture and fixtures	7 years
Equipment and other	3-10 years
Building	30 years

_____________

** Shorter of life or lease term.

F-9 Table of Contents

The carrying amount of all long-lived assets is evaluated periodically to determine whether adjustment to the useful life or to the unamortized balance is warranted. Such evaluation is based principally on the expected utilization of the long-lived assets.

Income Taxes

The Company provides for income taxes under ASC Topic 740-10. ASC Topic 740-10 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Temporary differences relate primarily to different accounting methods used for depreciation and amortization of property and equipment and ~~deferred compensation~~goodwill.

ASC Topic 740-10 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

ASC Topic 740-10 clarifies the accounting for uncertainty in income tax positions, as defined. It requires, among other matters, that the Company recognize in our consolidated financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company analyzes the filing positions in all of the federal and state jurisdictions where the Company is required to file income tax returns, as well as all open tax years in these jurisdictions. As of December 31, ~~2018~~2019, the Company did not record any unrecognized tax benefits. The Company’s policy, if it had unrecognized benefits, is to recognize accrued interest and penalties related to unrecognized tax benefits as interest expense and other expense, respectively.

~~The~~F-8 ~~Tax~~Table Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. Under the guidance of ASC 740, “Income Taxes” (“ASC 740”), the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which cannot be fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act have not been completed as of December 31, 2018 and 2017 and, therefore, considers its accounting for the tax effects of the Tax Act on its deferred tax assets and liabilities to be complete as of December 31, 2018 and 2017.Contents

F-10 Table of Contents

Revenue Recognition

InThe ~~May~~Company ~~2014,~~accounts ~~the~~for ~~Financial~~revenue ~~Accounting~~recognition ~~Standards~~in ~~Board~~accordance ~~(“FASB”)~~with ~~issued~~ASC ~~Accounting~~Topic ~~Standards~~606 ~~Update 2014-09, “Revenue from Contracts with Customers”~~ (“~~ASU~~ASC ~~2014-09~~606”). ~~This~~The ~~update~~core ~~outlines~~principle aof ~~new~~ASC ~~comprehensive~~606 ~~revenue~~is ~~recognition model that supersedes most current revenue recognition guidance and requires companies~~ to recognize revenue towhen ~~depict the transfer of~~ promised goods or services are transferred to customers in an amount that reflects the consideration tothat ~~which~~is ~~the~~expected ~~entity expects~~ to be ~~entitled~~received ~~in exchange~~ for those goods or services. ~~The~~ASC ~~FASB~~606 ~~has~~defines ~~issued~~a ~~several~~five-step ~~updates~~process to ~~ASU~~achieve ~~2014-09,~~this ~~which~~core ~~collectively with ASU 2014-09~~principle, ~~represent~~which ~~the~~includes; ~~FASB Accounting Standards Codification Topic 606~~ (~~“ASC 606”~~1). OnIdentifying ~~January~~contracts 1,with ~~2018~~customers, we(2) ~~adopted~~Identifying ~~ASC~~performance ~~606~~obligations ~~for~~within ~~all~~those contracts, ~~using~~(3) Determining the ~~modified~~transaction ~~retrospective method~~price, ~~which~~(4) ~~means~~Allocating the ~~historical~~transaction ~~periods~~price ~~are~~to ~~presented under~~ the ~~previous~~performance ~~revenue~~obligation ~~standards~~in ~~with~~ the ~~cumulative~~contract, ~~net~~which ~~income~~may ~~effect~~include ~~being~~an ~~adjusted~~estimate ~~through retained earnings. The adoption~~ of ~~ASC~~variable ~~606~~consideration, ~~did~~and ~~not~~(5) ~~have~~Recognizing arevenue ~~material~~when ~~effect~~or onas ~~our~~each ~~consolidated~~performance ~~financial~~obligation ~~statements~~is satisfied.

The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes; (1) Identifying contracts with customers, (2) Identifying performance obligations within those contracts, (3) Determining the transaction price, (4) Allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) Recognizing revenue when or as each performance obligation is satisfied.

Revenue primarily consists of sales of fasteners, specialty ingot products and master alloys and tolling services. We generate our revenue primarily from the sale of finished products and tolling services to customers, therefore, the significant majority of our contracts are short-term in nature and have a single performance obligation to deliver products or services, in which our performance obligation is satisfied when control of the product is transferred to the customer or the service is performed. Some contracts contain a combination of product sales and services which are distinct and accounted for as separate performance obligations. Our performance obligations for services are satisfied when the services are rendered within the arranged service period. Tolling revenue is recognized when the tolling service is completed.

Revenue is recognized when control transfers to our customers via shipment of products or delivery of services. Shipping and handling costs are considered fulfillment activities and as such are not accounted for as separate performance obligations. We measure revenue as the amount of consideration we expect to be entitled to receive in exchange for those goods or services, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. The Company applied the practical expedient available under ASC 606 to disregard determining significant financing components if the good or serve is transferred and payment is received within one year.

~~Product~~We ~~Returns~~estimate product returns based on historical experience and record them on a gross basis. Substantially all of Creative Assembly customer returns relate to products that are returned under warranty obligations underwritten by manufacturers. Substantially all of PMAL customer returns relate to products which do not meet customer requirements and are replaced by the Company.

We ~~estimate~~occasionally receive advance payments to secure product ~~returns~~to ~~based~~be ondelivered ~~historical~~in ~~experience~~future periods. These advance payments are recorded as deferred revenue, and ~~record~~revenue ~~them~~is onrecognized aas ~~gross~~our ~~basis.~~performance ~~Substantially~~obligations ~~all~~are satisfied throughout the term of ~~Creative~~the ~~Assembly~~applicable ~~Systems~~contract. We may also purchase metal on our customer’s ~~returns~~behalf, ~~relate~~sell the unprocessed metal to ~~products~~our ~~that~~customer, ~~are~~and ~~returned~~then ~~under~~process ~~warranty~~and ~~obligations~~ship ~~underwritten~~the bymaterial, ~~manufacturers.~~charging ~~Substantially~~a ~~all~~processing offee ~~Prime~~at ~~Metals~~the ~~Acquisition~~time ~~LLC~~of ~~customer~~shipment. ~~returns~~For ~~relate~~these tospecific ~~products~~non-tolling arrangements in which dowe ~~not~~purchase ~~meet~~metal for a customer, ~~requirements~~a single performance obligation exists, and ~~are~~as ~~replaced~~a byresult, amounts invoiced to our customers for the metal purchased on their behalf is recorded as deferred revenue until the metal is processed and shipped. The Company did not record any deferred revenue as of December 31, 2019 or December 31, 2018.

F-119 Table of Contents

WeFair ~~occasionally~~Value receive advance payments to secure product to be delivered in future periods. These advance payments are recorded as deferred revenue, and revenue is recognized as our performance obligations are satisfied throughout the term of the applicable contract. We may also purchase metal on our customer’s behalf, sell the unprocessed metal to our customer, and then process and ship the material, charging a processing fee at the time of shipment. For these specific non-tolling arrangements in which we purchase metal for a customer, a single performance obligation exists, and as a result, amounts invoiced to our customers for the metal purchased on their behalf is recorded as deferred revenue until the metal is processed and shipped. The Company did not record any deferred revenue as of December 31, 2018 or December 31, 2017.Measurements

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of the financial instruments.

The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.

Fair Value of Financial Assets and Liabilities

In accordance with the authoritative guidance for fair value measurements and the fair value election for financial assets and financial liabilities, a fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy was established that draws a distinction between market participant assumptions based on the following:

i)	observable inputs such as quoted prices in active markets (Level 1)
ii)	inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2)
iii)	unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, unbilled receivables, accounts payable and accrued liabilities approximate fair value because of the immediate or short-term maturity of the financial instruments.

The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.

Stock Based Compensation

The Company accounts for stock-based awards to recipients in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, to be measured and recognized in the consolidated financial statements based on a grant date fair value over the requisite service period.

FLong-12Lived ~~Table~~Assets ~~of Contents~~Impairment

Long Lived Assets Impairment

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. When it becomes apparent that indicators such as a significant decrease in the market value of the long-lived asset group or if material differences between operating results and the Company’s forecasted expectations occur, then an impairment analysis is performed.

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Table of Contents

If indicators arise, an initial determination of recoverability is performed based on an estimate of the undiscounted future cash flows resulting from the use of the asset and its eventual disposition compared with the carrying value. If the carrying value of the asset group exceeds the undiscounted cash flows, a measurement of an impairment loss for long-lived assets is performed. The impairment charge is the excess of the carrying value of the asset group over the fair value, as determined utilizing appropriate valuation techniques.

Goodwill and Intangible Assets

We make estimates, assumptions, and judgments when valuing goodwill and other intangible assets such as customer lists in connection with the initial purchase price allocation of any acquired operations, as well as when evaluating the recoverability of our goodwill and other intangible assets on an ongoing basis. These estimates are based upon a number of factors, including historical experience, market conditions, and information obtained from the management of any acquired operations. Critical estimates in valuing certain intangible assets include, but are not limited to, historical and projected attrition rates, discount rates, anticipated growth in revenue from the acquired customers and acquired technology, and the expected use of the acquired assets. These factors are also considered in determining the useful life of acquired intangible assets. The amounts and useful lives assigned to identified intangible assets impact the amount and timing of future amortization expense.

~~Concentration~~Earnings ofper ~~Credit~~Common ~~Risk~~Share

AtBasic ~~December~~earnings ~~31,~~per ~~2018,~~share ~~Remelt~~is ~~Sources,~~calculated ~~Inc.,~~by ~~AMG-Vanadium,~~dividing ~~PACCAR~~net ~~and~~profit ~~Universal~~attributable ~~Stainless~~to &common ~~Alloys~~stockholders ~~Products~~by ~~receivables~~the ~~were~~weighted ~~20.9%,~~average ~~15.0%,~~number ~~14%~~of ~~and~~outstanding ~~13%~~common ofshares ~~total~~during ~~receivables,~~the ~~respectively~~year. AtBasic ~~December~~earnings ~~31,~~per ~~2017,~~share ~~Universal~~excludes ~~Stainless~~any &dilutive ~~Alloys~~effects ~~Products~~of options, ~~Remelt~~warrants ~~Sources,~~and ~~Inc.,~~other ~~PACCAR~~stock-based compensation, ~~Ametek~~which ~~and~~are ~~Eastham~~included ~~Forge~~in ~~were~~diluted ~~17.0%,~~earnings ~~15.2%,~~per 13share.5% When a company is in a loss situation, ~~10.3%~~all outstanding dilutive shares are excluded from the calculation of diluted earnings because their inclusion would be antidilutive; and 10the basic and fully diluted common shares outstanding are stated to be the same.2% There were no dilutive shares as of ~~total~~December ~~receivables~~31, ~~respectively~~2019 and 2018.

For the year ending December 31, 2018, Remelt Sources, Inc., AMG-Vanadium, PACCAR, Ametek and Universal Stainless & Alloys Products accounted for 17.6%, 16.2%, 14.0%, 13.8% and 12.4% of sales, respectively. For the year ending December 31, 2017, PACCAR, AMG-Vanadium and Remelt Sources, Inc. accounted for 22.8%, 14.7% and 13.2% of sales, respectively.

No other customers represented more than 10% of total sales in 2018 or 2017, or outstanding accounts receivable as of December 31, 2018 and 2017.

F-13 Table of Contents

Concentration of Suppliers

No supplier represented more than 10% of product distributed for the year ending December 31, 2018. AVK represented approximately 14.3% of product distributed for the year ending December 31, 2017. Amounts owing to AVK outstanding at December 31, 2018 and 2017 represented 11.8% and 17% of accounts payable, respectively. For nearly all suppliers, the Company looks to have secondary supply outlets. However, manufacturing issues with any supplier could cause temporary disruptions to the Company.

Earnings (Loss) per Common Share

Basic earnings (loss) per share is calculated by dividing net profit attributable to common stockholders by the weighted average number of outstanding common shares during the year. Basic earnings (loss) per share excludes any dilutive effects of options, warrants and other stock-based compensation, which are included in diluted earnings per share. When a company is in a loss situation, all outstanding dilutive shares are excluded from the calculation of diluted earnings because their inclusion would be antidilutive; and the basic and fully diluted common shares outstanding are stated to be the same. The following table shows the calculation of diluted shares:

The following table shows the amounts used in computing earnings per share (EPS) and the effect on income and the weighted average number of shares of dilutive potential common stock.

	December 31,
	2018		2017
Net income available to common stockholders used in basic EPS and diluted EPS	$	2,026,068	$	3,087,396
Weighted average number of common shares used in bnasic EPS		297,431		279,298
Weighted average number of Common shares used in dilutive EPS		297,431		279,298
EPS
Basic		6.81		11.05
Diluted		6.81		11.05

___________

** Weighted average number of common shares and dilutive potential common stock used in diluted EPS (When a company is in a loss situation, all outstanding potentially dilutive shares are excluded from the calculation of diluted earnings because their inclusion would be antidilutive; and the basic and fully diluted common shares outstanding are stated to be the same). There are no dilutive or potentially dilutive shares issued or outstanding as of December 31, 2018 or 2017.

F-14 Table of Contents

Redeemable Non-Controlling Interest

Non-controlling interests that are not subject to redemption rights are classified in permanent equity. Redeemable non-controlling interests are classified outside of permanent equity on the consolidated balance sheets.

OnReclassification ~~August 17, 2017, PMAL purchased substantially all~~ of ~~the~~Prior ~~assets~~Year of Prime Metals for $9.6 million in cash pursuant to the Prime Asset Purchase Agreement. To finance the purchase of the assets, PMAL entered into the Credit Agreement with Summit pursuant to which Summit made loans to PMAL: (1) Summit Term Loan A and (2) Summit Term Loan B. In addition, in consideration for Summit making the loans, PMAL issued to the SBN the SBN Membership Interests. The SBN Membership Interests represented 25% ownership of PMAL. Pursuant to the terms of the Summit Loans and because PMAL repaid the Summit Loans within thirty-six (36) months of the origination of the Summit Loans, the SBN Membership Interests were reduced from 25% to 20% as of September 1, 2018.Presentation

~~PMAL~~Certain ~~has~~prior ~~granted~~year ~~SBN~~amounts ahave ~~put~~been ~~right~~reclassified ~~under the operating agreement~~ for ~~PMAL~~consistency ~~for~~with the ~~SBN~~current ~~Membership~~period ~~Interests~~presentation. OnThese ~~August~~include ~~31, 2018,~~ the ~~operating~~presentation ~~agreement for PMAL was amended to provide that on the earlier~~ of ~~November 30, 2021 or~~ the ~~date~~Company’s ofunbilled ~~a change in control of PMAL, SBN has the right but not the obligation to require PMAL to repurchase all of the SBN Membership Interests at market equity value (“Market Equity Value”)~~receivables. ~~Market~~None ~~Equity Value shall be equal to the higher~~ of ~~(i)~~these ~~value~~reclassifications of PMAL implied by a sale, (ii) 4.5 x EBITDA for the trailing twelve months plus cash, less all outstanding funded indebtedness or (iii) fair market value as determined by mutual agreement between PMAL and SBN, or failing that by an independent firm mutually agreed to. SBN has ~~granted~~had ~~PMAL~~ a ~~call~~material ~~right~~impact ~~under~~on the ~~operating~~consolidated ~~agreement~~financial ~~for~~statements ~~PMAL for the SBN Membership Interests. On August 17, 2021, PMAL has the right but not the obligation to require SBN to sell all~~ of the ~~SBN Membership Interests at Market Equity Value~~Company.

~~The Company has accounted for this in accordance with ASC 480~~F-~~10-55-59,~~11 asTable a redeemable non-controlling interest. At acquisition $400,000 was recorded as SBN’s PMAL equity ownership. This amount, plus SBN’s pro rata net income allocation is reflected before stockholders’ equity as Redeemable Non-Controlling interest. The redeemable non-controlling interest was reduced for the reduction in membership interests during the year. In connection with the refinancing on August 31, 2018 and the respective reduction from 25% to 20% noted above, the Company recognized a loss on the extinguishment of approximately $255,556 related to the unamortized debt discount with the Summit Loans, which was offset by approximately $185,834 of a gain associated with the reduction from the adjustment to the redeemable non-controlling interest, resulting in a net $69,722 loss on debt extinguishment recorded in other income on the accompanying consolidated statements of income. SBN’s pro-rata net income allocation was made at a rate of 25% through August 31, 2018 and 20% commencing September 1, 2018 in accordance with the reduction in membership interests.Contents

Recently Adopted Authoritative Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard is effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 and used the effective date as the date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elects the ‘package of practical expedients’, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. Under this elected package of practical expedients, the Company does not separate non-lease components from the lease component. Therefore, all lease and non-lease components are combined and accounted for as a single lease component. On adoption, the Company recognized additional operating lease liabilities of approximately $251,000 with ROU assets of approximately $242,000, net of a reclassification adjustment of deferred rent, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

In June 2018, the FASB, issued ASU No. 2018-07 to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance in ASC 505-50. The guidance is effective for public business entities in annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including in an interim period for which financial statements have not been issued, but not before an entity adopts ASC 606. This was adopted on January 1, 2019 and did not have a material impact on the Company’s financial position and results of operations.

Recent Accounting Pronouncements

In ~~November~~June ~~2015~~2016, the FASB issued ASU ~~No. 2015~~2016-1713, ~~Income~~Financial ~~Taxes~~Instruments – Credit Losses (Topic ~~740~~326): ~~Balance~~Measurement ~~Sheet~~of ~~Classifications~~Credit ofLosses ~~Deferred~~on ~~Taxes~~Financial Instruments, which ~~requires~~adds ~~that~~a ~~deferred~~new ~~tax~~Topic ~~liabilities~~326 ~~and~~to ~~assets~~the beCodification ~~classified~~and asremoves ~~noncurrent~~the inthresholds athat ~~classified~~companies ~~statement~~apply ofto ~~financial~~measure ~~position.~~credit ~~The~~losses ~~current~~on ~~requirement~~financial ~~that~~instruments ~~deferred~~measured ~~tax~~at ~~liabilities~~amortized ~~and~~cost, ~~assets~~such ofas aloans, ~~tax-paying~~receivables, ~~component~~and ofheld-to-maturity andebt ~~entity~~securities. beThe ~~offset~~guidance ~~and~~in ~~presented~~ASU as2016-13 ~~a single amount~~ is ~~not~~effective ~~affected~~for by“public ~~this~~business ~~amendment.~~entities,” ~~The~~as ~~new~~defined, ~~guidance~~that isare ~~effective~~SEC filers for fiscal years, and for interim periods within those fiscal years, beginning after December 15, ~~2016~~2022. The Company ~~has~~is ~~adopted~~currently evaluating the impact of this new standard ~~beginning~~on inits ~~the~~consolidated ~~year~~financial ~~ending~~statements ~~December~~and ~~31,~~related ~~2017~~disclosures.

F-1512 Table of Contents

In ~~July~~May ~~2015~~2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. ~~2015~~2016-1113, ~~Inventory~~Financial Instruments—Credit Losses (Topic ~~330~~326): ~~Simplifying the~~ Measurement of ~~Inventory~~Credit Losses on Financial Instruments, which ~~requires~~introduced ~~inventory~~the toexpected becredit ~~measured~~losses atmethodology for the ~~lower~~measurement of credit losses on financial assets measured at amortized cost orbasis, ~~net~~replacing ~~realizable~~the ~~value~~previous incurred loss methodology. ~~Net~~The ~~realizable~~amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the ~~estimated~~amortized ~~selling~~cost ~~prices~~basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the ~~ordinary~~fair ~~course~~value ofoption ~~business~~for certain financial assets previously measured at amortized cost basis. For those entities, ~~less~~the ~~reasonably~~targeted ~~predictable~~transition ~~costs~~relief will increase comparability of ~~completion,~~financial ~~disposal~~statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, ~~and~~the ~~transportation~~targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ~~The~~ASU ~~guidance~~2019-05 is effective for ~~fiscal~~the ~~years,~~Company for annual and interim reporting periods ~~within those years,~~ beginning ~~after~~ December 15, ~~2016~~2022. The Company ~~has~~is ~~adopted~~currently evaluating the impact of this new standard ~~beginning~~on inits ~~the~~consolidated ~~year~~financial ~~ending~~statements ~~December~~and ~~31,~~related ~~2017~~disclosures.

In ~~February~~January ~~2016~~2017, the FASB issued ASU ~~2016~~No. 2017-0204, ~~“Leases~~Intangibles-Goodwill and Other (Topic ~~842~~350)”, which ~~affects~~includes ~~any~~provisions ~~entity~~intended ~~that~~to ~~enters~~simplify ~~into~~the atest ~~lease~~for ~~(as~~goodwill ~~that term is defined in ASU 2016-02), with some specified scope exceptions~~impairment. The ~~main~~standard ~~difference~~is ~~between~~effective ~~the~~for ~~guidance~~annual inperiods ~~ASU~~beginning ~~2016-02~~after ~~and~~December ~~current~~15, ~~GAAP~~2019, iswith ~~the~~early ~~recognition~~adoption ofpermitted ~~lease~~for ~~assets~~interim ~~and~~or ~~lease~~annual ~~liabilities~~goodwill byimpairment ~~lessees~~tests ~~for~~performed ~~those~~on ~~leases~~testing ~~classified~~dates asafter ~~operating~~January ~~leases~~1, ~~under current GAAP~~2017. ~~Under~~The ~~ASU~~Company ~~2016-02,~~does ~~lessees~~not ~~and~~expect ~~lessors are required to recognize and measure leases at~~ the ~~beginning~~adoption of ~~the~~this ~~earliest~~standard ~~period~~to ~~presented~~have ~~using~~ a ~~modified~~significant ~~retrospective~~impact ~~approach,~~on ~~which~~its ~~includes~~financial aposition ~~number~~and ofresults ~~optional practical expedients. We are currently evaluating the potential impact~~ of ~~this guidance, which will be effective for us beginning in 2019~~operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU simplifies accounting for income taxes by removing the following exceptions: (1) exception to the incremental approach for intraperiod tax allocation, (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments, and (3) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also improves financial statement preparers’ application of income tax related guidance for franchise taxes that are partially based on income; transactions with a government that result in a step up in the tax basis of goodwill; separate financial statements of legal entities that are not subject to tax; and enacted changes in tax laws in interim periods. The ASU is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted for public business entities for periods for which financial statements have not been issued. An entity that elects early adoption in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption should adopt all the amendments in the same period. The Company is still evaluating the impact of this ASU on the Company’s consolidated financial statements.

There have been no other accounting pronouncements that have been issued but not yet implemented that the Company believes will materially impact the consolidated financial statements.

3.F-13 ~~ACQUISITION~~Table ~~AND~~of ~~BUSINESS COMBINATION~~Contents

~~On July 12, 2017, the Company and PMAL entered into an Asset Purchase Agreement with Prime Metals~~3. On August 17, 2017, PMAL purchased substantially all of the assets of Prime Metals for a purchase price of $9.6 million. The assets and liabilities of PMAL were recorded at their respective fair values as of the closing date of the acquisition, and the following table summarizes these values based on the balance sheet at August 17, 2017 and the Purchase Price Allocation performed as of December 31, 2017.CONCENTRATIONS

~~The~~Concentration ~~following~~of ~~summarizes~~Credit ~~the purchase price allocation:~~Risk

Purchase Price	$	9,600,000
Accounts Receivable		681,251
Inventory		693,603
Other current assets		23,053
Machinery & Equipment		2,747,100
Intangibles – customer list		1,990,000
Real Estate – building and land		3,410,000
Total		9,545,007
Goodwill		54,993

Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and trade receivables. Concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company’s customer base and their dispersion across geographic areas principally within the United States. The Company routinely addresses the financial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not require its customers to post collateral.

FAt December 31, 2019, Remelt Sources, Inc., Universal Stainless & Alloys Products, AMG-Vanadium, PACCAR and Eastham Forge were 19.8%, 16.2%, ~~Table~~14.9%, 13.3% and 11.7% of ~~Contents~~total receivables, respectively. At December 31, 2018, Remelt Sources, Inc., AMG-Vanadium, PACCAR and Universal Stainless & Alloys Products receivables were 20.9%, 15%, 14% and 13% of total receivables, respectively.

~~Acquisition~~For ~~costs~~the ~~were~~year ~~approximately~~ending ~~$170~~December 31,~~000~~ 2019, ~~which~~Remelt ~~are~~Sources, ~~included~~Inc., inAMG-Vanadium, ~~general~~PACCAR and ~~administrative~~Universal ~~expenses~~Stainless in& ~~2017~~Alloys Products accounted for 20.3%, ~~The~~17%, ~~goodwill~~16.7% and ~~intangibles~~11.1% ~~above~~of ~~are~~sales, ~~amortizable~~respectively. For the year ending December 31, 2018, Remelt Sources, Inc., AMG-Vanadium, PACCAR, Ametek and ~~deductible~~Universal Stainless & Alloys Products accounted for ~~tax~~17.6%, ~~purposes~~16.2%, 14%, 13.8% and 12.4% of sales, respectively.

~~The~~No ~~following~~other ~~unaudited~~customers ~~pro~~represented ~~forma~~more ~~information~~than ~~does~~10% ~~not~~of ~~purport~~total tosales ~~present~~in ~~what~~2019 ~~the~~or ~~Company’s actual results would have been had the acquisition occurred on January 1~~2018, ~~2017,~~or ~~nor~~outstanding isaccounts ~~the~~receivable ~~financial~~as ~~information indicative~~ of ~~the results of future operations. The following table represents the unaudited consolidated pro forma results of operations for the years ending~~ December 31, ~~2017~~2019 asand ~~if the acquisition had occurred on January 1, 2017~~2018.

	Twelve Months Ended
Pro Forma	December 31, 2017
Net Sales		33,203,966
Operating expenses		4,935,058
Loss before taxes		(351,091	)
Net loss		(351,822	)

Concentration of Suppliers

~~The~~No ~~Company’s~~supplier ~~consolidated~~represented ~~financial~~more ~~statements~~than 10% of product distributed for the year ending December 31, ~~2017~~2019. ~~include~~No ~~the~~supplier ~~actual~~represented ~~results~~more ofthan ~~PMAL~~10% ~~since~~of ~~the~~product ~~date~~distributed offor the ~~acquisition~~year onending ~~August~~December 1731, ~~2017~~2018. ~~The~~Amounts ~~year~~owing ~~ended~~to AVK outstanding at December 31, ~~2017,~~2019 ~~pro~~and ~~forma~~2018 ~~results~~represented ~~above~~11.9% ~~include~~and a11.8% ~~year~~ of ~~pro~~accounts ~~forma~~payable, ~~results for PMAL~~respectively. For ~~the~~nearly ~~year~~all ~~ended December 31~~suppliers, ~~2017,~~ the ~~PMAL~~Company ~~operations~~looks ~~had~~to ahave ~~net~~secondary ~~income~~supply ~~before~~outlets. ~~taxes of $213~~However,~~509~~ ~~that~~manufacturing ~~was~~issues ~~included~~with inany ~~the~~supplier ~~Company’s~~could ~~consolidated~~cause ~~statement~~temporary ofdisruptions ~~income,~~to ~~which~~the ~~consisted of approximately $9,695,504 in revenues and $9,481,995 in expenses and interest~~Company.

4.F-14 ~~DISCONTINUED~~Table ~~OPERATIONS~~of Contents

~~The~~4. ~~financial results of our Aero-Missile business~~PROPERTY, ~~sold~~LAND onAND April 28, 2017, for the year ended December 31, 2017 is presented as discontinued operations, net of income taxes on our consolidated statements of income. The following table presents financial results of the Aero-Missile business:EQUIPMENT

	Period Ended April 28,
	2017
Net Revenue	$	5,752,020
Cost of goods sold		3,960,793
Gross profit		1,791,227
Operating expenses:
General and administrative expenses		444,362
Professional and consulting fees		56,796
Total operating expenses		501,158
Income before other income (expense)		1,290,069
Other income (expense)
Interest expense – net		(299,427)
Other expense		(5,925	)
Total other income (expense)		(305,352	)
Income before provision for income taxes		984,717
Provision for state income taxes		-
Net Income (loss) of discontinued operations		984,717

The Company’s 220,000 square foot facility is located at 101 Innovation Drive, Homer City, PA. The facility is located on approximately 38 acres and was purchased in 2007. The facility houses the manufacturing operations of PMAL. The useful life of the building is estimated to be 30 years. The useful life of the machinery and equipment is estimated to range from 3 to 10 years. Depreciation was $630,556 and $559,496 for the years ending December 31, 2019 and 2018, respectively.

F-17 Table of Contents

	December 31, 2019			December 31, 2018

Land, buildings and improvements	$	3,419,779		$	3,419,779
Equipment		3,974,047			3,463,829
Total		7,393,826			6,883,608
Less accumulated depreciation		(1,388,982	)		(758,425	)
Net property, land and equipment	$	6,004,844		$	6,125,183

5.As ~~PROPERTY~~described in Note 9, ~~LAND~~the ~~AND~~Company ~~EQUIPMENT~~has $7,570,152 in notes secured against the property, plant and equipment.

~~The Company’s 220,000 square foot facility is located at 101 Innovation Drive, Homer City, PA~~5. ~~The~~ACCOUNTS ~~facility~~PAYABLE isAND ~~located~~ACCRUED on approximately 38 acres and was purchased in 2007. The facility houses the manufacturing operations of PMAL. The useful life of the building is estimated to be 30 years. The useful life of the machinery and equipment is estimated to range from 3 to 10 years. Depreciation was $559,496 and $198,344 for the years ending December 31, 2018 and 2017.EXPENSES

	December 31, 2018			December 31, 2017
Land, buildings and improvements	$	3,419,779		$	3,410,000
Equipment		3,463,829			3,030,635
Total		6,883,608			6,440,635
Less accumulated depreciation		(758,425	)		(198,929	)
Net property, land and equipment	$	6,125,183		$	6,241,706

Accounts payable and accrued expenses consists of the following as of December 31, 2019 and December 31, 2018:

As described in Note 1, the Company has $5,762,048 in notes secured against the property, plant and equipment.

	December 31, 2019		December 31, 2018
Accounts payable	$	2,839,425	$	3,060,269
Interest		40,455		35,805
Salaries and bonus		357,976		116,930
Other		46,000		62,007
	$	3,283,856	$	3,275,011

6. ~~ACCOUNTS~~GOODWILL ~~PAYABLE~~ AND ~~ACCRUED~~INTANGIBLE ~~EXPENSES~~ASSETS

Accounts payable and accrued expenses consists of the following as of December 31, 2018 and December 31, 2017:

	December 31, 2018		December 31, 2017
Accounts payable	$	3,060,269	$	1,763,213
Interest		35,805		115,445
Salaries and bonus		116,930		673,088
Other		62,007		73,191
	$	3,275,011	$	2,624,937

F-18 Table of Contents

7. GOODWILL AND INTANGIBLE ASSETS

Information regarding our acquired intangible assets was as follows:

Customer lists		$	1,990,000
Goodwill		$	54,993

The customer lists are estimated to have a useful life of 10 years. As of December 31, ~~2018~~2019, the value, net of amortization, of the customer list was $1,~~708~~509,~~084~~083.

Amortization expense for the years ended December 31, ~~2018~~2019 through ~~2022~~2027 is $199,000 per year. ~~The Company will continue to expense $199,000 annually until 2027.~~ For the years ended December 31, ~~2018~~2019 and ~~2017~~2018, $199,000 ~~and~~was ~~$82,917 were~~ amortized, ~~respectively~~each year.

~~8. LONG~~F-~~TERM~~15 ~~DEBT~~Table ~~AND~~of ~~LINE OF CREDIT~~ Contents

~~SummitBridge~~7. ~~Loans~~LEASES

On August 17, 2017 (the “PMAL Purchase Date”), PMAL purchased substantially all of the assets of Prime Metals for $9.6 million in cash pursuant to the Prime Asset Purchase Agreement. To finance the purchase of the assets, on August 17, 2017, PMAL entered into the Credit Agreement with Summit (the “Summit Credit Agreement”) pursuant to which made loans to PMAL: (1) Summit Term Loan A and (2) Summit Term Loan B. In addition, in consideration for Summit making the loans, PMAL issued to SBN, the SBN Membership Interests.

Summit Term Loan A accrued each month at either 17.5% interest per annum (with 12.5% payable monthly and 5.0% accruing to the outstanding balance of Summit Term Loan A, payable at maturity) or 17.0% interest per annum, payable monthly. Summit Term Loan A had a Maturity date of August 17, 2020. Summit Term Loan A was secured against all of the assets of PMAL.

Summit Term Loan B accrued each month at either 17.5% interest per annum (with 14.0% payable monthly and 3.5% accruing to the outstanding balance of Summit Term Loan B, payable at maturity) or 17.0% interest per annum, payable monthly. Summit Term Loan B has a Maturity date of August 17, 2020. Summit Term Loan B was secured against all of the assets of PMAL.

The Company guaranteed payment of the Summit Loans pursuant to a Guaranty Agreement made by the Company as of the PMAL Purchase Date.

PMAL has granted SBN a put right under the operating agreement for PMAL for the SBN Membership Interests. On August 31, 2018, the operating agreement for PMAL was amended to provide that on the earlier of November 30, 2021 or the date of a change in control of PMAL, SBN has the right but not the obligation to require PMAL to repurchase all of the SBN Membership Interests at market equity value (“Market Equity Value”). Market Equity Value shall be equal to the higher of (i) value of PMAL implied by a sale, (ii) 4.5 x EBITDA for the trailing twelve months plus cash, less all outstanding funded indebtedness or (iii) fair market value as determined by mutual agreement between PMAL and SBN, or failing that by an independent firm mutually agreed to. SBN has granted PMAL a call right under the operating agreement for PMAL for the SBN Membership Interests. On August 17, 2021, PMAL has the right but not the obligation to require SBN to sell all of the SBN Membership Interests at Market Equity Value.

F-19 Table of Contents

The Company has accounted for this in accordance with ASC 480-10-55-59, as a redeemable non-controlling interest. At acquisition $400,000 was recorded as SBN’s PMAL equity ownership. This amount, plus SBN’s pro rata net income allocation is reflected before stockholders’ equity as Redeemable Non-Controlling interest. Due to the SBN Membership Interests, Summit is considered a related party of the Company for the purposes of these consolidated financial statements. Pursuant to the terms of the Summit Loans and because PMAL repaid the Summit Loans within thirty-six (36) months of the origination of the Summit Loans with the proceeds from the Berkshire Loans below, the SBN Membership Interests were reduced from 25% to 20% of PMAL as of September 1, 2018. In connection with the refinancing on August 31, 2018, as mentioned below, and the respective reduction from 25% to 20% noted above, the Company recognized a loss on the extinguishment of approximately $255,556 related to the unamortized debt discount with the Summit Loans, which was offset by approximately $185,834 of a gain associated with the reduction from the adjustment to the redeemable non-controlling interest, resulting in a net $69,722 loss on debt extinguishment recorded in other income on the accompanying consolidated statements of income. SBN’s pro-rata net income allocation was made at a rate of 25% through August 31, 2018 and 20% commencing September 1, 2018 in accordance with the reduction in membership interests.

The following table shows the value of the non-controlling interests (“NCI”):

Value of NCI at January 1, 2018	$	453,377
PMAL Income from January 1, 2018 to December 31, 2018 attributable to NCI		490,235
Reduction in NCI on September 1, 2018		(185,834	)
Value of NCI at December 31, 2018		757,778

Berkshire Loans

On August 31, 2018 (the “Refinancing Date”), PMAL entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Berkshire Bank establishing: 1) a new revolving credit facility in an aggregate principal amount of up to $6.0 million (the “Berkshire Revolving Loan”), 2) a term loan in the amount of $3.5 million (“Berkshire Term Loan A”) and 3) a term loan in the amount of $1.5 million (“Berkshire Term Loan B”). Borrowings under the Berkshire Revolving Loan may be used to finance working capital and other general corporate purposes. The Company recorded a debt discount of $209,045 as part of the origination fees of the Berkshire Revolving Loan, Berkshire Term Loan A and Berkshire Term Loan B. The unamortized portion of the fees was $180,010 at December 31, 2018 and is recorded net with outstanding note payable in the consolidated balance sheets. The Berkshire Revolving Loan had a borrowing base of approximately $2.3 million on December 31, 2018 of which the Company had drawn $1,092,058.

F-20 Table of Contents

On August 31, 2018, pursuant to the Loan and Security Agreement, PMAL used an amount of $7,678,814 under the Loan and Security Agreement to fully repay the Summit Loans.

The outstanding principal amount of any borrowings under the Berkshire Revolving Loan will be due and payable on August 21, 2021, subject to an earlier maturity date upon an event of default (the “Revolving Credit Maturity Date”). Berkshire Term Loan A has a maturity date the earlier of (i) August 31, 2023 or (ii) the Revolving Credit Maturity Date. Berkshire Term Loan B has a maturity date the earlier of (i) August 31, 2023 or (ii) the Revolving Credit Maturity Date. The principal balance of Berkshire Term Loan A shall be paid in equal monthly installments of $41,667 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date. The principal balance of Berkshire Term Loan B shall be paid in equal monthly installments of $8,334 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date.

The Loan and Security Agreement contains certain financial covenants, including a cash flow coverage ratio and a tangible net worth requirement. Under the cash flow coverage covenant, PMAL shall maintain a quarterly cash flow coverage ratio of not less than 1.20 to 1.00. Under the tangible net worth covenant, PMAL shall maintain a tangible net worth of no less than $3.1 million. The tangible net worth amount required shall increase annually on each June 30 by 50% of PMAL’s prior year’s undistributed net income. As of December 31, 2018, PMAL was in compliance with the covenants contained within the Loan and Security Agreement.

The table below represents the future minimum repayments of the Berkshire Terms Loan A and Berkshire Term Loan B as of December 31, 2018.

Years ending December 31,	Term Loans Minimum Amortization
2019		600,000
2020		600,000
2021		3,650,000
Total	$	4,850,000

F-21 Table of Contents

9. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company ~~has~~determines ~~two~~if ~~leased~~a ~~facilities,~~contract ~~which~~contains ~~are~~a ~~office,~~lease ~~manufacturing~~at ~~and warehouse space~~inception. InUS ~~some~~GAAP ~~cases~~requires that the Company’s isleases ~~responsible~~be ~~for~~evaluated ~~real estate taxes, utilities,~~ and ~~repairs~~classified ~~under~~as ~~the~~operating ~~terms~~or offinance ~~certain~~leases offor ~~the~~financial ~~operating~~reporting ~~leases~~purposes. ~~Our~~The ~~Texas~~classification ~~facility~~evaluation ~~lease~~begins ~~calls~~at ~~for~~the ~~payments~~commencement ~~until~~date ~~expiration in February 2019 totaling $7,067,~~ and isthe ~~currently~~lease ~~operating~~term onused ain ~~month~~the toevaluation ~~month~~includes ~~basis.~~the ~~We are currently negotiating a long~~non-~~term~~cancellable ~~lease~~period for awhich ~~larger~~the ~~facility~~Company inhas ~~Texas.~~the ~~Our~~right ~~Ohio~~to ~~facility~~use ~~calls~~the ~~for~~underlying ~~lease payments until expiration on September 30~~asset, ~~2022~~together ~~totaling~~with ~~$288,750.~~renewal ~~The~~option ~~annual~~periods ~~payments~~when ~~are~~the ~~$77,000~~exercise ~~for each~~ of the ~~years~~renewal ~~2019,~~option ~~2020~~is ~~and~~reasonably ~~2021~~certain and ~~$57,750~~failure ~~for~~to ~~2022.~~exercise ~~Rent~~such ~~expense~~option ~~was~~will ~~$113,300~~result ~~and~~in ~~$191,007~~an ~~for~~economic penalty. All of the ~~years~~Company’s ~~ending~~real ~~December~~estate ~~31,~~leases ~~2018~~are ~~and~~classified ~~2017,~~as ~~respectively.~~operating leases.

~~Capital~~Most ~~Leases~~real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional four to five years. The exercise of lease renewal options is at the Company’s discretion. The Company evaluates renewal options at lease inception, and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

~~The~~Leases ~~below~~recorded ~~chart~~on ~~shows~~the ~~our~~consolidated ~~obligations~~balance ~~under~~sheet ~~current~~consist ~~capital~~of ~~leases~~the following:

	December 31, 2018
Leases	Classification on the Balance Sheet		December 31, 2019
Obligations under capital leases	$	156,793
Assets
Less: current portion		43,435
Operating lease ROU assets	Right-of-use asset		$	1,092,253
Long-term portion	$	113,358
Finance lease ROU assets	Property, land and equipment, net		$	153,307
Liabilities
Current
Operating	Operating leases payable – short term		$	255,533
Finance	Finance leases payable – short term		$	49,662
Noncurrent
Operating	Operating leases payable – net of current portion		$	877,899
Finance	Finance leases payable – net of current portion		$	79,214

The Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

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Table of Contents

The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of December 31, 2019 are:

December 31,

2019

Weighted average remaining lease term

49.3 months

Weighted average discount rate

5.63

The components of lease expense, included in general and administrative expenses and interest expense on the consolidated statements of income, are as follows:

	Year Ended December 31, 2019

Operating lease cost:
Operating lease cost	$	238,449
Finance lease cost:
Amortization of ROU assets		28,473
Interest expense		7,222
Total lease cost	$	373,717

Supplemental disclosures of cash flow information related to leases for the year ended December 31, 2019 were as follows:

Cash paid for operating lease obligations was $209,058. Operating lease asset obtained for operating lease obligation was $1,277,143, net of a reclassification adjustment of deferred rent of $9,625.

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2019:

2020	$	313,115
2021		313,115
2022		287,448
2023		236,115
2024		118,058
Total undiscounted future minimum lease payments		1,267,851
Less: Imputed interest		134,419
Present value of operating lease obligations	$	1,133,432

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Table of Contents

The Company has two leased facilities, which are office, manufacturing and warehouse space. In some cases the Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases. Under the elected package of practical expedients, the Company does not separate non-lease components from the lease component. Therefore, all lease and non-lease components are combined and accounted for as single lease component. The lease on our facility in Texas expired in February 2019. In May 2019, we entered into a new lease for a new Texas facility that commenced on May 1, 2019 and recorded a right of use asset and corresponding lease liability in the second quarter of 2019.

Disclosures under ASC 840

Operating lease expense was $113,300 for the year ending December 31, 2018.

The table below presents the future minimum repayments of operating lease obligations for the Company as of December 31, 2018.

Years ending December 31,	Operating lease obligations
2019	$	84,067
2020		77,000
2021		77,000
2022		57,750
Total	$	295,817

Finance and Capital Leases

The below chart shows our obligations under finance and capital leases:

	Finance Leases December 31, 2019		Capital Leases December 31, 2018
Obligations under finance and capital leases	$	128,876	$	156,793
Less: current portion		49,662		43,435
Long-term portion	$	79,214	$	113,358

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Table of Contents

Future minimum repayments

The table below presents the future minimum repayments of ~~capital~~finance lease obligations for the Company as of December 31, ~~2018.~~2019:

Years ending December 31,	~~Capital~~Finance lease obligations as of December 31, 2019
2019	$	43,435
2020	$	54,981
2020		45,634
2021		53,661
2021		46,618
2022		26,178
2022		21,106
2023		2,786
Total	$	156,793
Total future minimum repayments inclusive of interest		137,606
Interest		8,730
Total principal repayments	$	128,876

~~F-22~~The ~~Table~~table below presents the future minimum repayments of ~~Contents~~capital lease obligations for the Company as of December 31, 2018:

Litigation

Years ending December 31,	Capital lease obligations as of December 31, 2018
2019	$	50,199
2020		50,199
2021		48,878
2022		21,396
Total future minimum repayments inclusive of interest		170,672
Interest		13,879
Total principal repayments	$	156,793

~~The~~F-19 ~~Company~~Table ~~is subject to the possibility~~ of claims and lawsuits arising in the normal course of business. In the opinion of management, the Company liability, if any, under existing claims, asserted or unasserted, would not have a material adverse effect on the Company’s consolidated financial position or results of operations.Contents

The Company’s weighted average remaining lease term and weighted average discount rate for finance leases as of December 31, 2019 are:

December 31,

2019

Weighted average remaining lease term

31 months

Weighted average discount rate

5.00

8. COMMITMENTS AND CONTINGENCIES

Employment Agreements

On November 10, 2017, John Wachter was appointed Chief Executive Officer of the Company. In connection with his appointment, the Company and Mr. Wachter entered into a written employment agreement (the “Wachter Employment Agreement”) for an initial three-year term, which provides for the following compensation terms for Mr. Wachter. Pursuant to the Wachter Employment Agreement, Mr. Wachter will receive a base salary of $100,000 per year, subject to increase, but not decrease, at the discretion of the Board. Mr. Wachter is eligible for a cash and stock bonus equal to ten to twenty percent of the Company’s pre-tax profits over established pre-tax targets, at the end of each respective annual period.

In addition, the Wachter Employment Agreement also provides for certain payments and benefits in the event of a termination of his employment under specific circumstances. If, during the term of the Wachter Employment Agreement, his employment is terminated by the Company other than for “cause” or by Mr. Wachter for “good reason” (each as defined in the Wachter Employment Agreement), he would be entitled to (1) a lump sum payment equal to two times his base salary at the rate in effect immediately prior to the termination date, and (2) any unpaid portion of any cash bonus for the annual period preceding the annual period in which such termination occurs that was earned but not paid.

On November 10, 2017, William J. Golden was appointed Chief Financial Officer of the Company. Mr. Golden remains the Company’s General Counsel. In connection with his appointment, the Company and Mr. Golden entered into a written employment agreement (the “Golden Employment Agreement”) for an initial three-year term, which provides for the following compensation terms for Mr. Golden. Pursuant to the Golden Employment Agreement, Mr. Golden will receive a base salary of $100,000 per year, subject to increase, but not decrease, at the discretion of the Board. Mr. Golden is eligible for a cash and stock bonus equal to ten to twenty percent of the Company’s pre-tax profits over established pre-tax targets, at the end of each respective annual period.

In addition, the Golden Employment Agreement also provides for certain payments and benefits in the event of a termination of his employment under specific circumstances. If, during the term of the Golden Employment Agreement, his employment is terminated by the Company other than for “cause” or by Mr. Golden for “good reason” (each as defined in the Golden Employment Agreement), he would be entitled to (1) a lump sum payment equal to two times his base salary at the rate in effect immediately prior to the termination date, and (2) any unpaid portion of any cash bonus for the annual period preceding the annual period in which such termination occurs that was earned but not paid.

Litigation

The Company is subject to the possibility of claims and lawsuits arising in the normal course of business. In the opinion of management, the Company liability, if any, under existing claims, asserted or unasserted, would not have a material adverse effect on the Company’s consolidated financial position or results of operations.

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Table of Contents

9. LONG-TERM DEBT AND LINES OF CREDIT

SummitBridge Loans

On August, 17, 2017, PMAL purchased substantially all of the assets of Prime Metals for $9.6 million in cash. To finance the purchase of the assets, PMAL entered into a credit agreement with SummitBridge National Investments V LLC (“Summit”) pursuant to which Summit made loans to PMAL: (1) a Term Loan in the amount of $4.5 million (“Summit Term Loan A”) and (2) a Term Loan in the amount of $3.5 million (“Summit Term Loan B”) (collectively, the “Summit Loans”). In addition, in consideration for Summit making the loans, PMAL issued membership interests representing 25% ownership of PMAL to an affiliate of Summit, SBN V PMA LLC (“SBN”) (the “SBN Membership Interests”). Pursuant to the terms of the Summit Loans and because PMAL repaid the Summit Loans within thirty-six (36) months of the origination of the Summit Loans, the SBN Membership Interests were reduced from 25% to 20% of PMAL as of September 1, 2018.

Summit Term Loan A accrued each month at either 17.5% interest per annum (with 12.5% payable monthly and 5.0% accruing to the outstanding balance of Term Loan A, payable at maturity) or 17.0% interest per annum, payable monthly. Summit Term Loan A had a Maturity date of August 17, 2020. Summit Term Loan A was secured against all of the assets of PMAL.

Summit Term Loan B accrued each month at either 17.5% interest per annum (with 14.0% payable monthly and 3.5% accruing to the outstanding balance of Term Loan B, payable at maturity) or 17.0% interest per annum, payable monthly. Term Loan B had a Maturity date of August 17, 2020. Summit Term Loan B was secured against all of the assets of PMAL.

PMAL granted SBN a put right under the operating agreement for PMAL for the SBN Membership Interests. On August 31, 2018, the operating agreement for PMAL was amended to provide that on the earlier of November 30, 2021 or the date of a change in control of PMAL, SBN has the right but not the obligation to require PMAL to repurchase all of the SBN Membership Interests at market equity value (“Market Equity Value”). Market Equity Value shall be equal to the higher of (i) value of PMAL implied by a sale, (ii) 4.5 x EBITDA for the trailing twelve months plus cash, less all outstanding funded indebtedness or (iii) fair market value as determined by mutual agreement between PMAL and SBN, or failing that by an independent firm mutually agreed to. SBN has granted PMAL a call right under the operating agreement for PMAL for the SBN Membership Interests. On August 17, 2021, PMAL has the right but not the obligation to require SBN to sell all of the SBN Membership Interests at Market Equity Value.

The Company accounted for this in accordance with ASC 480-10-55-59, as a redeemable non-controlling interest. At acquisition $400,000 was recorded as SBN’s PMAL equity ownership. This amount, plus SBN’s pro rata net income allocation was reflected before stockholders’ equity as Redeemable Non-Controlling interest. Due to the SBN Membership Interests, Summit was considered a related party of the Company for the purposes of these consolidated financial statements. Pursuant to the terms of the Summit Loans and because PMAL repaid the Summit Loans within thirty-six (36) months of the origination of the Summit Loans, the SBN Membership Interests were reduced from 25% to 20% of PMAL as of September 1, 2018. SBN’s pro-rata net income allocation was made at a rate of 25% through August 31, 2018 and 20% commencing September 1, 2018 in accordance with the reduction in membership interests.

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Table of Contents

Effective July 1, 2019, the Company and SBN entered into a Membership Interest Redemption Agreement pursuant to which the Company purchased the remaining SBN Membership Interests from SBN for a purchase price of $3,000,000 cash. SBN also waived its share of income for all of 2019. The Company adjusted additional paid-in capital downward by $1,547,133, net of deferred taxes of $695,089, to reflect the difference between the purchase price and the balance sheet value of the non-controlling interests.

The Membership Interest Redemption Agreement contains a look-back provision that entitles SBN to receive additional compensation in the event the Company sells PMAL or its assets in a subsequent transaction within three hundred and sixty-five (365) days following the repurchase. Such additional compensation would be equal to the difference between what SBN received in the repurchase and what the SBN Membership Interests would be worth at the subsequent transaction date.

The following table shows the value of the non-controlling interests (“NCI”) for the year ended December 31, 2019:

Value of NCI at January 1, 2019	$	757,778
PMAL income from January 1, 2019 to June 30, 2019 attributable to NCI		313,951
Value of NCI at June 30, 2019		1,071,729
Purchase of NCI on July 1, 2019		(757,778	)
Transfer of PMAL income allocated to SBN to Amerinac Holding Corp.		(313,951	)
Value of NCI at December 31, 2019	$	-

The following table shows the value of the NCI for the year ended December 31, 2018:

Value of NCI at January 1, 2018	$	453,377
PMAL income from January 1, 2018 to December 31, 2018 attributable to NCI		490,235
Reduction in NCI on September 1, 2018		(185,834	)
Value of NCI at December 31, 2018	$	757,778

PMAL Berkshire Loans

On August 31, 2018, PMAL entered into a Loan and Security Agreement (the “PMAL Loan and Security Agreement”) with Berkshire Bank (“Berkshire Bank”) establishing: 1) a new revolving credit facility in an aggregate principal amount of up to $6.0 million (the “Berkshire Revolving Loan”), 2) a term loan in the amount of $3.5 million (“Berkshire Term Loan A”) and 3) a term loan in the amount of $1.5 million (“Berkshire Term Loan B”). Borrowings under the Berkshire Revolving Loan may be used to finance working capital and other general corporate purposes. The Berkshire Revolving Loan had a borrowing base of approximately $3.4 million on December 31, 2019 of which the Company had drawn $2,293,972.

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Table of Contents

On August 31, 2018, pursuant to the PMAL Loan and Security Agreement, PMAL used an amount of $7,678,814 under the Loan and Security Agreement to fully repay the Summit Loans. On August 16, 2019, the PMAL Loan and Security Agreement was amended to permit a one-time cash distribution of $1.5 million which was used to partially fund the Company’s repurchase of the SBN Membership Interests.

The outstanding principal amount of any borrowings under the Berkshire Revolving Loan will be due and payable on August 21, 2021, subject to an earlier maturity date upon an event of default (the “Revolving Credit Maturity Date”). Berkshire Term Loan A has a maturity date the earlier of (i) August 31, 2023 or (ii) the Revolving Credit Maturity Date. Berkshire Term Loan B has a maturity date the earlier of (i) August 31, 2023 or (ii) the Revolving Credit Maturity Date. The principal balance of Berkshire Term Loan A shall be paid in equal monthly installments of $41,667 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date. The principal balance of Berkshire Term Loan B shall be paid in equal monthly installments of $8,334 commencing on October 1, 2018. Any unpaid principal and interest shall be due on the maturity date.

The PMAL Loan and Security Agreement contains usual and customary covenants for financings of this type, including, among other things: (i) requirements to deliver financial statements, other reports and notices; (ii) restrictions on indebtedness; (iii) restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; (iv) restrictions on liens; (v) restrictions on making certain payments; (vi) restrictions on investments; (vii) restrictions on asset dispositions and other fundamental changes; and (viii) restrictions on transactions with affiliates.

The PMAL Loan and Security Agreement contains certain financial covenants, including a cash flow coverage ratio and a tangible net worth requirement. Under the cash flow coverage covenant, PMAL shall maintain a quarterly cash flow coverage ratio of not less than 1.20 to 1.00. Under the tangible net worth covenant, PMAL shall maintain a tangible net worth of no less than $4.1 million. The tangible net worth amount required shall increase annually on each June 30 by 50% of PMAL’s prior year’s undistributed net income. As of December 31, 2019, PMAL was in compliance with the covenants contained within the PMAL Loan and Security Agreement.

The obligations of PMAL under the PMAL Loan and Security Agreement are secured by liens and security interests on all assets of PMAL. Amerinac is a secured guarantor of the PMAL Loan and Security Agreement, and has pledged its equity in PMAL.

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Table of Contents

The ~~Compensation~~table ~~Committee~~below ~~adopted~~represents ~~a 2017-2019 Amerinac Holding Corp. Executive Bonus Plan (~~the ~~“Executive~~future ~~Bonus~~minimum ~~Plan”),~~repayments ~~which is subject to and governed by the terms~~ of the ~~2017~~Berkshire ~~Amerinac~~Terms ~~Holding~~Loan ~~Corp.~~A ~~2017~~and ~~Equity~~Berkshire ~~Incentive~~Term ~~Plan~~Loan ~~(the~~B ~~“2017~~as ~~Equity Plan”). Certain key employees will participate in the Executive Bonus Plan. The Executive Bonus Plan is designed to (i) offer variable compensation primarily in equity~~ of ~~the~~December ~~Company~~31, ~~if executives achieve annual target growth amounts and (ii) align the incentives of executives and shareholders~~2019.

The Company will fund the annual corporate bonus pool with no more than 20% of the excess, if any, of the Company’s yearly earnings before taxes minus a threshold amount. For 2018 and 2019, the threshold amounts will be $1,250,000 and $1,750,000, respectively.

Years ending December 31,	Term Loans Minimum Amortization
2020	$	600,000
2021		3,650,000
Total		4,250,000
Unamortized debt and financing cost		(110,329	)
Total (net of unamortized debt and financing cost)	$	4,139,671

~~Pursuant~~As toof December 31, 2019, the ~~Executive~~principal ~~Bonus~~balance ~~Plan,~~of ~~awards~~Term ~~are~~Loan ~~paid~~A ~~out~~was in$2,875,000 aand ~~mix~~the principal balance of ~~cash~~Term ~~and~~Loan ~~equity~~B was $1,375,000. ~~with~~As noof ~~less~~December ~~than~~31, ~~60%~~2018, the principal balance of ~~corporate~~Term ~~bonus~~Loan ~~pool~~A towas be$3,375,000 inand the ~~form~~principal balance of ~~newly~~Term ~~issued~~Loan ~~restricted~~B ~~common~~was ~~stock~~$1,475,000. ~~subject~~The tototal ~~the~~amount ~~discretion~~ of ~~the~~unamortized ~~Compensation~~debt ~~Committee~~financing ofcost ~~the~~was ~~Board~~$110,329 and $180,010 at December 31, 2019 and December 31, 2018, respectively. ~~All~~For ~~awards~~the ~~will~~years beended ~~subject~~December to31, ~~threshold~~2019 ~~performance~~and 2018, the Company amortized $69,681 and ~~high-water~~$29,035 ~~marks~~in debt financing cost, respectively.

~~The~~CAS ~~Company~~Berkshire issued 7,500 shares pursuant to the Executive Bonus Plan to Mr. Wachter on December 31, 2018, valued at $300,000 for bonus accrued in 2017. The Company issued 7,500 shares pursuant to the Executive Bonus Plan to Mr. Golden on December 31, 2018, valued at $300,000 for bonus accrued in 2017. As of December, 31, 2018, the Company had accrued $103,000 in bonus for Mssrs. Wachter and Golden. In addition, the Company issued 625 shares to both Mr. Lamb and Mr. Garruto at the conclusion of their first year of service on the Board of Directors on December 31, 2018 pursuant to their independent director agreements, valued at $25,000 each. On December 21, 2018, Mssrs. Lamb and Garruto were re-elected to the Board for an additional 1-year term. At the end of the 2019 term, they will each receive $25,000 in stock. Loan

On July 15, 2019, CAS entered into a Loan and Security Agreement (the “CAS Loan and Security Agreement”) with Berkshire Bank establishing a new revolving credit facility in an aggregate principal amount of up to $6.0 million (the “CAS Revolving Loan”). Borrowings under the CAS Revolving Loan may be used to finance working capital and other general corporate purposes. The CAS Revolving Loan had a borrowing base of approximately $2.7 million on December 31, 2019 of which the Company had drawn $1,026,180. This amount is reflected net of an unamortized discount of $39,498 on the Company’s consolidated balance sheet. For the year ended December 31, 2019, the Company amortized $3,592 in debt financing cost.

On August 16, 2019, the CAS Loan and Security Agreement was amended to permit a one-time cash distribution of $1.5 million which was used to partially fund the Company’s repurchase of the SBN Membership Interests.

Borrowings under the CAS Revolving Loan bear interest at a rate equal to the ICE LIBOR rate plus 3.00%, which was 4.70% at December 31, 2019.

The outstanding principal amount of any borrowings under the CAS Revolving Loan will be due and payable on July 15, 2022, subject to an earlier maturity date upon an event of default. Any unpaid principal and interest shall be due on the maturity date.

The CAS Loan and Security Agreement contains usual and customary covenants for financings of this type, including, among other things: (i) requirements to deliver financial statements, other reports and notices; (ii) restrictions on indebtedness; (iii) restrictions on dividends, distributions and redemptions of equity and repayment of subordinated indebtedness; (iv) restrictions on liens; (v) restrictions on making certain payments; (vi) restrictions on investments; (vii) restrictions on asset dispositions and other fundamental changes; and (viii) restrictions on transactions with affiliates.

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Table of Contents

The CAS Loan and Security Agreement contains certain financial covenants, including a cash flow coverage ratio and a tangible net worth requirement covenant. Under the cash flow coverage covenant, CAS shall maintain a quarterly cash flow coverage ratio of not less than 1.20 to 1.00. Under the tangible net worth covenant, CAS shall maintain a tangible net worth of no less than $1.0 million, as amended on August 16, 2019. The tangible net worth amount required shall increase annually on each June 30 by 50% of CAS’s prior years undistributed net income. As of December 31, 2019, the Company was in compliance will all covenants under the CAS Loan and Security Agreement.

The obligations of CAS under the CAS Loan and Security Agreement are secured by liens and security interests on all assets of CAS. The Company is a secured guarantor of the CAS Loan and Security Agreement, and has pledged its equity in CAS.

LIBOR Rate

To the extent that the PMAL Loan and Security Agreement and the CAS Loan and Security Agreement extend beyond 2021, the interest rates for these obligations might be subject to change based on recent regulatory changes.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. The interest rates for borrowings under the PMAL Loan and Security Agreement and the CAS Loan and Security Agreement are based on the ICE LIBOR rate.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities. The future of LIBOR at this time is uncertain. If LIBOR ceases to exist, we may need to renegotiate any agreements extending beyond 2021 that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established, which may have an adverse effect on the Company.

10. SEGMENT RESULTS

The Company manages its operations in two business segments which are defined as follows:

·• The Company’s Creative Assembly subsidiary, which includes all distribution of proprietary and specialty fasteners primarily serving the heavy truck, automotive, transportation, and infrastructure industries. ·• The Company’s PMAL subsidiary, which includes all our manufacturing of specialty ingot, electrode products, shot products, and master alloys in addition to toll conversion melting services.

F-24 Table of Contents

Segment information for the year ended December 31, 2018 is as follows:

	Creative Assembly		PMAL
Net Revenue	$	11,702,014	$	31,452,408
Cost of goods sold		9,406,969		26,002,985
Gross profit		2,295,045		5,449,423
Operating expenses:
General and administrative expenses		1,615,628		2,142,175
Professional and consulting fees		73,006		234,126
Total operating expenses		1,688,634		2,376,301
Income before other income (expense) of reportable segments above	$	606,411	$	3,073,122

Below is the Segment reconciliation to total net income:

Income from segments above	$	3,679,533
Non-allocated expenses
Interest expense – net		(1,176,469	)
General and administrative expense		(412,262	)
Other income (expense)		82,712
Total non-allocated expenses		(1,506,019	)
Income from continuing operations before provision for income taxes and non-controlling interest		2,173,514
Income tax benefit		342,789
Non-controlling interest		(490,235	)
Net Income attributable to Amerinac Holding Corp Shareholders	$	2,026,068

Segment information for the year ended December 31, 2017 is as follows:

	Creative Assembly			PMAL
Net Revenue	$	8,677,159		$	9,695,504
Cost of goods sold		6,798,992			8,022,661
Gross profit		1,878,167			1,672,843
Operating expenses:
General and administrative expenses		2,003,504			590,887
Professional and consulting fees		392,674			328,772
Total operating expenses		2,396,178			919,659
Income before other income (expense) of reportable segments above	$	(518,011	)	$	753,184

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Table of Contents

Segment information for the year ended December 31, 2019 is as follows:

	Creative Assembly		PMAL
Net revenue	$	16,057,971	$	28,330,608

Cost of goods sold		13,275,133		23,380,457

Gross profit		2,782,838		4,950,151

Operating expenses:
General and administrative expenses		1,744,238		2,122,352
Professional and consulting fees		73,206		232,312
Total operating expenses		1,817,444		2,354,664

Income before other income (expense)	$	965,394	$	2,595,487

Below is the Segment reconciliation to total net income:

Income from segments above	$	~~235~~3,~~173~~560,881
Non-allocated expenses
Interest expense - net		(866,361	)
Interest expense		(516,352	)
Change in fair value put option		(213,000	)
General and administrative expense		(511,622	)
Gain on sale		2,974,584
Total non-allocated expenses		(1,027,974	)
Other income (expense)		26,391
Income before provision for income taxes		2,532,907
Total non-allocated expenses		1,921,614
Income tax expense		(847,525	)
Income from continuing operations before provision for income taxes and non-controlling interest		2,156,787
Net income attributable to Amerinac Holding Corp Shareholders	$	1,685,382
Provision for income taxes		(731	)
Non-controlling interest		(53,377	)
Income before discontinued operations		2,102,679
Income from discontinued operations, net		984,717
Net Income attributable to Amerinac Holding Corp Shareholders	$	3,087,396

Segment ~~asset~~ information asfor ofthe year ended December 31, 2018 ~~and 2017~~ is ~~listed~~as ~~below~~follows:

	December 31, 2018		December 31, 2017
	Creative Assembly		PMAL
Assets
Net revenue	$	11,702,014	$	31,452,408
PMAL	$	12,982,588	$	12,356,392
Cost of goods sold		9,406,969		26,002,985
Creative Assembly		4,526,530		2,698,882
Gross profit		2,295,045		5,449,423
Corporate		763,121		1,194,987
Operating expenses:
Total assets	$	18,272,239	$	16,250,261
General and administrative expenses		1,615,628		2,142,175
Professional and consulting fees		73,006		234,126
Total operating expenses		1,688,634		2,376,301
Income before other income (expense)	$	606,411	$	3,073,122

11. INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due. Our current effective tax rate is lower than the Federal and state effect rate primarily due to the reversal of significant timing differences (i.e. inventory reserve) upon the asset sale at our Aero-missile subsidiary in 2017. For 2018, our current effective tax rate is lower than the Federal and state effect rate primarily to the release of a portion of the valuation allowance.

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Below is the Segment reconciliation to total net income:

Income from segments above	$	3,679,533

Non-allocated expenses
Interest expense		(1,176,469	)
General and administrative expense		(412,262	)
Other income (expense)		82,712
Total non-allocated expenses		(1,506,019	)

Income before provision for income taxes and non-controlling interest		2,173,514

Income tax benefit		342,789
Non-controlling interest		(490,235	)

Net income attributable to Amerinac Holding Corp Shareholders	$	2,026,068

Segment asset information as of December 31, 2019 and 2018 is listed below:

	December 31, 2019		December 31, 2018
Assets
PMAL	$	14,615,627	$	12,982,588
Creative Assembly		5,498,560		4,526,530
Corporate		461,363		763,121
Total assets	$	20,575,550	$	18,272,239

11. INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due.

Significant components of the income tax provision are as follows:

	For the years ended December 31,
	2018			2017
	2019			2018
Current income tax
Federal	$	-		$	-
State		15(150,~~897~~203	)		~~731~~(15,897	)
City		-			-
Total current income tax		(150,203	)		(15,897	)
Total Current income tax		15,897			731
Deferred income tax
Non current income tax
Federal		(509,858	)		358,686
Federal		(358,686	)		-
State		(187,464	)		-
State		-			-
Total deferred income tax		(697,322	)		358,686
City		-			-
Total income tax (expense) benefit	$	(847,525	)	$	342,789
Total non current income tax		(358,686	)		-
Total income tax (benefit)	$	(342,789	)	$	731

The Company has an accumulated deficit of approximately $86.14 million and there are approximately $2.95 million and $30.2 million of net operating losses available to be used against Federal and state taxable income, respectively, which are subject to certain Section 382 limitations as a result of the change in control in January 2015. ~~Benefits for income taxes were due to carryback of Federal operating losses.~~

A reconciliation of the statutory tax rate to the effective tax rate is as follows:

	For the years ended December 31,
	2018			2017
Expected federal statutory rate		21.0	%		34.0	%
Increase (decrease) in taxes resulting from:
State and local income taxes, net of federal benefit		0.9	%		0.0	%
Permanent difference - amortization and disallowable expenses		11.8	%		16.0	%
Reduction in federal tax rate		0.0	%		(13.0	)%
Change in valuation allowance		(56.6	)%		(37.0	)%
Other		7.1	%		0.0	%
Effective income tax rate		(15.8	)%		0.0	%

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~~The~~A ~~Company’s~~reconciliation ~~deferred~~of ~~tax~~the ~~assets~~statutory ~~and~~tax ~~liability~~rate ~~relates~~ to ~~a temporary timing difference in long-term assets. With~~ the ~~deferred~~effective tax ~~asset~~rate ~~for~~is ~~December~~as ~~31, 2018 and 2017 consisting of~~follows:

Deferred Tax Assets:
	For the years ended December 31,
	December 31, 2018
	2019			2018
	Gross			Effective Tax Rate			Tax Asset (Liability)
Expected federal statutory rate		21.0	%		21.0	%
Depreciation and amortization		(1,165,604	)		29	%		(338,025	)
Increase (decrease) in taxes resulting from:
Decrease in inventory value		151,009			29	%		43,793
State and local income taxes, net of federal benefit		13.0	%		0.9	%
Federal and state NOL		3,143,616			29	%		911,648
Permanent differences		0.1	%		11.8	%
Total		2,129,021						617,416
Change in valuation allowance		-	%		(56.6	)%
Less valuation allowance		(892,172	)					(258,730	)
Other		(0.6	)%		7.1	%
Net Deferred Tax Assets	$	1,236,849					$	358,686
Effective income tax rate		33.5	%		(15.8	)%

	December 31, 2017
Depreciation and amortization		(365,842	)	29	%		(106,094	)
Decrease in inventory value		302,334		29	%		87,677
Federal and state NOL		3,705,121		29	%		1,074,485
Total		3,641,613					1,056,068
Less valuation allowance		(3,641,613	)				(1,056,068	)
Net Deferred Tax Assets	$	-				$	-

The Company’s deferred tax assets and liability relates to a temporary timing difference in long-term assets, with the deferred tax asset for December 31, 2019 and 2018 consisting of:

The components of the net deferred income tax assets as of December 31, 2019 and 2018 are as follows:

	2019			2018
Deferred income tax assets:
Net operating loss carryforwards	$	789,650		$	881,778
Bonus accruals		59,830			29,870
Section 754 assets		153,218			-
Inventory reserves		52,409			43,793
Total deferred income tax assets		1,055,107			955,441
Valuation allowance		(258,730	)		(258,730	)
Subtotal		796,377			696,711
Deferred income tax liability - depreciation and amortization		(439,924	)		(338,025	)
Net deferred tax assets	$	356,453		$	358,686

There were no significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded in the Company’s consolidated financial statements for the year ended December 31, 2019. Additionally, there were no interest or penalties outstanding as of or for each of the years ended December 31, 2019 and 2018.

The federal and state tax returns for the years ending December 31, 2016, 2017, and 2018 have been filed, but are still open to examination.

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There were no significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded in the Company’s consolidated financial statements for the year ended December 31, 201812. ~~Additionally,~~RELATED ~~there were no interest or penalties outstanding as of or for each of the years ended December 31, 2018 and 2017.~~PARTIES

~~The~~Board ~~federal~~ and ~~state~~Executive ~~tax returns for the years ending December 31, 2015, 2016, and 2017 have been filed, but are still open to examination.~~Compensation

12The Compensation Committee adopted a 2017-2019 Amerinac Holding Corp. ~~EQUITY~~Executive ~~INCENTIVE~~Bonus ~~PLAN~~Plan (the “Executive Bonus Plan”), which is subject to and governed by the terms of the 2017 Amerinac Holding Corp. 2017 Equity Incentive Plan (the “2017 Equity Plan”). The 2017 Equity Plan provides for an aggregate of 100,000 shares of common stock to be available for awards. Certain key employees will participate in the Executive Bonus Plan. The Executive Bonus Plan is designed to (i) offer variable compensation primarily in equity of the Company if executives achieve annual target growth amounts and (ii) align the incentives of executives and shareholders.

The ~~Amerinac~~Company ~~Holding~~will ~~Corp.~~fund ~~2017 Equity Incentive Plan (~~the ~~“Equity~~annual ~~Plan”)~~corporate ~~was~~bonus ~~approved~~pool bywith ano ~~majority~~more ofthan ~~Shareholders~~20% of the ~~Company on November 10~~excess, ~~2017~~if ~~and the Board on October 30~~any, ~~2017. The 2017 Equity Plan provides for an aggregate~~ of ~~100,000~~the ~~shares~~Company’s ofyearly ~~common~~earnings ~~stock~~before totaxes beminus ~~available~~a ~~for~~threshold ~~awards~~amount. ~~Concurrently,~~For ~~the~~2018 ~~Precision Aerospace Components, Inc. 2011 Omnibus Incentive Plan was cancelled~~ and ~~superseded by the Equity Plan. The Company issued 7~~2019,~~500~~ ~~shares pursuant to~~ the ~~Executive~~threshold ~~Bonus~~amounts ~~Plan~~were ~~to Mr. Wachter on December 31~~$1, ~~2018 (see Note 9 above) for 2017 accrued bonuses. The Company issued 7~~250,~~500~~000 ~~shares~~and ~~pursuant to the Executive Bonus Plan to Mr. Golden on December 31~~$1,750,000, ~~2018 (see Note 9 above) for 2017 accrued bonuses~~respectively.

AsPursuant ofto ~~December~~the 31Executive Bonus Plan, ~~2018~~awards are paid out in a mix of cash and equity, with no less than 60% of corporate bonus pool to be in the ~~Company~~form ~~had~~of ~~accrued~~newly ~~$103~~issued restricted common stock,~~000~~ ~~for~~subject ~~bonus~~to ~~for~~the ~~executives~~discretion ~~related~~of the Compensation Committee of the Board. All awards will be subject to ~~service~~threshold ~~performed~~performance inand ~~2018~~high-water marks.

13The Company issued 7,500 shares pursuant to the Executive Bonus Plan to Mr. ~~STOCKHOLDERS~~Wachter ~~EQUITY~~on December 31, 2018, valued at $300,000 for bonus accrued in 2017. The Company issued 7,500 shares pursuant to the Executive Bonus Plan to Mr. Golden on December 31, 2018, valued at $300,000 for bonus accrued in 2017.

~~Share~~As ~~based~~of ~~payments~~December, 31, 2018, the Company had accrued $103,000 in bonus for Mssrs. Wachter and Golden. On March 25, 2019, the Board authorized the payment of these bonuses to be in cash and the bonuses were paid on April 12, 2019.

As ~~part~~ of ~~compensation~~December, ~~for~~31, ~~board service~~2019, ~~Mssrs.~~the ~~Lamb~~Company ~~and~~had ~~Garruto~~accrued ~~receive~~ $25193,000 ~~each~~ in ~~stock~~bonus for ~~each year of service. For the approximate year of service from November 10, 2017 to December 21, 2018, the~~ Mssrs. ~~Lamb~~Wachter and ~~Garruto each received 625 shares~~Golden. ~~On December 21, 2018, Mssrs. Lamb and Garruto were re-elected to the Board for an additional 1-year term. At the end of the 2019 term, they will each receive $25,000 in stock.~~

~~Private~~In ~~Placement~~addition, the Company issued 625 shares to both Mr. Lamb and Mr. Garruto at the conclusion of their first year of service on the Board of Directors on December 31, 2018 pursuant to their independent director agreements, valued at $25,000 each. In return for their service during the 2019 term, they are each set to receive $25,000 in stock during 2020, which has been accrued for as of December 31, 2019. On December 27, 2019, Mssrs. Lamb and Garruto were re-elected to the Board for an additional 1-year term under the same terms.

On July 17, 2017, the Company completed the closing of a private placement (the “Private Placement”) with approximately 17 accredited investors, pursuant to which the Company sold to the Investors a total of 75,500 shares of restricted common stock of the Company at a purchase price of $4013.00 ~~per~~REVISION ~~share,~~OF ~~and~~PRIOR ~~total~~PERIOD ~~consideration~~IMMATERIAL ~~of $3.02 million.~~MISSTATEMENT

OnDuring the three and nine months ended September 2830, ~~2017~~2019 (third quarter of 2019), the Company ~~sold~~incorrectly anrecorded ~~additional~~the ~~15,750~~deferred ~~Shares~~tax atbenefit aresulting ~~purchase~~from ~~price~~the repurchase of ~~$40.00~~the ~~per~~NCI ~~share~~discussed in Note 9, ~~and~~as ~~total~~well ~~consideration~~as ofthe ~~$630,000~~related tocurrent 5income ~~Investors~~tax provision. As such the Company has revised these amounts to accurately reflect the transactions.

The Shares of common stock have not been registered under the Securities Act and may not be transferred or resold unless the transfer or resale is registered or unless exemptions from the registration requirements of the Securities Act and applicable state laws are available.

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The tables below present the impact of the revision in the Company’s unaudited condensed consolidated financial statements:

	For the Three Months Ended September 30, 2019
	As Previously Reported			Adjustments		As Revised
Unaudited Condensed Consolidated Statement of Income:
Income tax expense	$	(535,431	)	$	190,067	$	(345,364	)
Net income		31,866			190,067		221,933
Net income attributable to Amerinac Holding Corp shareholders		345,817			190,067		535,884
Basic and diluted earnings per share applicable to common stock holders:
Earnings per share	$	1.10		$	0.61	$	1.71

	For the Nine Months Ended September 30, 2019
	As Previously Reported			Adjustments		As Revised
Unaudited Condensed Consolidated Statement of Income:
Income tax expense	$	(996,951	)	$	190,067	$	(806,884	)
Net income		1,362,664			190,067		1,552,731
Net income attributable to Amerinac Holding Corp shareholders		1,362,664			190,067		1,552,731
Basic and diluted earnings per share applicable to common stock holders:
Earnings per share	$	4.34		$	0.61	$	4.95

	September 30, 2019
	As Previously Reported			Adjustment			As Revised
Unaudited Condensed Consolidated Balance Sheet
Deferred tax asset	$	-		$	431,567		$	431,567
Total other assets		2,830,901			431,567			3,262,468
Total assets		20,617,728			431,567			21,049,295
Income taxes payable		402,802			(203,775	)		199,027
Total current liabilities		8,233,827			(203,775	)		8,030,052
Deferred tax liability		249,814			(249,814	)		-
Total long-term liabilities		4,957,201			(249,814	)		4,707,387
Total liabilities		13,191,028			(453,589	)		12,737,439
Additional paid-in capital		14,141,377			695,089			14,836,466
Accumulated deficit		(6,714,990	)		190,067			(6,524,923	)
Total stockholders’ equity	$	7,426,700		$	885,156		$	8,311,856

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14. SUBSEQUENT EVENTS

SummitBridge National Investments VI LLC Purchase and Sale Agreement and Business Combination

On March 20, 2020 (the “Effective Date”), USAC Ross LLC (“USAC Ross”) and USAC WA LLC (“USAC WA”), both wholly owned Delaware limited liability company subsidiaries of the Company entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) by and among SummitBridge National Investments VI LLC (“SummitBridge VI”) and ABTV, in its capacity as court-appointed receiver ordered by the Court of Common Pleas of Chester County, Pennsylvania on March 6, 2020 in the Matter of SummitBridge National Investments VI LLC v. Advanced Metals Group, LLC et al., Case No. 2020-02461-MJ. USAC Ross and USAC WA were formed as wholly-owned single member limited liability companies by the Company on March 3, 2020 and had no operations prior to this transaction.

Pursuant to the Purchase and Sale Agreement, USAC Ross purchased all the personal property of Advanced Metals Group, LLC, Advanced Aluminum Castings, LLC, Advanced Iron Castings, LLC, Ross Aluminum Castings, LLC, US Castings, LLC, PFRE Properties, LLC, BFRE Properties, LLC, Oberdorfer, LLC, Mabry Acquisition Company Ltd., MFRE Properties Ltd., USCRE Properties, LLC and RCRE, LLC (collectively, the “Debtors”) located in the State of Ohio, in addition to real property owned by RCRE, LLC in the State of Ohio. Pursuant to the Purchase and Sale Agreement, USAC WA purchased all of the personal property of the Debtors located in the State of Washington, in addition to real property owned by USCRE, Properties, LLC in the State Washington. The purchase price paid by USAC Ross and USAC WA was $6,167,000. The acquisition will be accounted for as a business combination. As of the date of the issuance of the Company’s consolidated financial statements, the Company has not completed the purchase price allocation.

Prior to the transaction, the Debtors were precision aluminum castings manufacturers located in Ohio and Washington. The Debtors offered multiple casting processes as well as in-house heat treating, machining, powder coating and non-destructive testing. The Debtor’s products are used in defense, aerospace, heavy truck, marine and commercial applications. The Debtors were ITAR, AS9100, NADCAP and ISO 9001 certified.

To finance the purchase of the assets, on the Effective Date, USAC Ross and USAC WA entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with SummitBridge VI pursuant to which SummitBridge VI made a two year term loan in the amount of $6,167,000 to USAC Ross and USAC WA (the “USAC Term Loan”).

The USAC Term Loan has a maturity date of March 20, 2022. The USAC Term Loan will begin amortizing on the thirteenth (13) month following the Effective Date pursuant to a seven (7) year amortization schedule with the balance due on the maturity date. The USAC Term Loan is secured against all of the assets of USAC Ross and USAC WA. The USAC Term Loan may be prepaid in whole or in part at any time without any fee, charge or penalty.

The USAC Term Loan bears an interest rate of 9% interest per annum, payable monthly, beginning the first (1) month after the Effective Date. On the 16-month anniversary of the Effective Date, the interest rate on the USAC Term Loan will increase to 15% interest per annum, payable monthly. If the USAC Term Loan is prepaid in full on or before the nine (9) month anniversary of the Effective Date, the principal amount will be reduced by $500,000. If the USAC Term Loan is prepaid in full on or before the ten (10) month anniversary of the Effective Date, the principal amount will be reduced by $400,000. If the USAC Term Loan is prepaid in full on or before the eleven (11) month anniversary of the Effective Date, the principal amount will be reduced by $300,000. If the USAC Term Loan is prepaid in full before the twelve (12) month anniversary of the Effective Date, the principal amount will be reduced by $200,000. If the USAC Term Loan is prepaid in full on or before the sixteen (16) month anniversary of the Effective Date, the principal amount will be reduced by $100,000.

The Company has guaranteed payment of the USAC Term Loan pursuant to a guaranty agreement made by the Company as of the Effective Date.

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The Loan and Security Agreement also contains customary covenants, representations and warranties of the parties, including, among others (1) the grant by USAC Ross and USAC WA to SummitBridge VI of a security interest on all of the assets of USAC Ross and USAC WA, and (2) an unconditional and irrevocable guaranty by the Company of the performance by USAC Ross and USAC WA of the obligations under the Loan and Security Agreement. In addition, until all amounts under the USAC Term Loan are paid in full, USAC Ross and USAC WA have agreed to comply with certain financial covenants that require USAC Ross and USAC WA to meet pre-established financial ratios.

The foregoing summary of the Purchase and Sale Agreement, Loan and Security Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in their entirety by, the full text of such agreements.

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on January 1, 2019, nor is the financial information indicative of the results of future operations. The following table represents the unaudited consolidated pro forma results of operations for the year ended December 31, 2019 as if the acquisition had occurred on January 1, 2019.

	Twelve Months Ended
Pro Forma	December 31, 2019
Net sales	$	64,290,764
Operating expenses		6,621,707
Income before taxes		3,128,358
Net income	$	2,280,833

The following table represents the unaudited consolidated pro forma balance sheet information for the year ended December 31, 2019 as if the acquisition had occurred on January 1, 2019.

	December 31, 2019
Pro Forma
Accounts receivable - net	$	5,518,783
Inventories - net		11,196,416
Property, land and equipment - net		11,697,297
Total assets		32,743,357
Total liabilities	$	27,584,962

COVID-19

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Company’s customers and revenue, labor workforce, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company, including, inventories, property and equipment, accounts receivable and unbilled receivables.

Stock Repurchase

In the first quarter of 2020, the Company purchased 2,000 shares of common stock of the Company from a shareholder for the price of $65.00 per share of common stock. The shares were subsequently cancelled.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

~~(A)~~Conclusion ~~Evaluation~~Regarding the Effectiveness of Disclosure Controls and Procedures

WeUnder ~~carried~~the ~~out~~supervision anand ~~evaluation~~ with the participation of our ~~chief~~management, including our principal executive officer and ~~chief~~principal financial officer, ~~required~~we byconducted ~~Rules~~an ~~13a-15~~evaluation ~~and~~as ~~15d-15~~ of ~~the~~December ~~Securities~~31, ~~Exchange~~2019 ~~Act~~ of ~~1934 (~~the ~~“Exchange~~effectiveness ~~Act”)~~ of the ~~effectiveness~~design and operation of our disclosure controls and procedures, as such term is defined inunder ~~Rules~~Rule 13a-15(e) ~~and~~promulgated ~~15d-15(e)~~ under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our ~~chief~~principal executive officer and ~~chief~~principal financial officer concluded that our disclosure controls and procedures were not effective atas of December 31, 2018 so as to ensure that the information relating to our company required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer, to allow timely decisions regarding required disclosures due to the existence of material weaknesses2019.

~~The~~Management’s ~~material~~Annual ~~weaknesses~~Report ~~are~~on asInternal ~~follows:~~Control over Financial Reporting

·Our Amanagement ~~lack~~is ofresponsible ~~sufficient~~for ~~resources~~establishing ~~including a solely designated chief financial officer~~ and anmaintaining ~~insufficient~~adequate ~~level~~internal ofcontrol ~~monitoring~~over ~~and~~financial ~~oversight~~reporting, ~~which~~as ~~restricted~~such ~~the~~term ~~Company’s~~is ~~ability~~defined toin ~~gather,~~Rules ~~analyze~~13a-15(f) and ~~report~~15d-15(f) ~~information~~under ~~relative to~~ the ~~financial~~Securities ~~statement~~Exchange ~~assertions~~Act inof a1934. ~~timely~~Under ~~manner,~~the ~~including~~supervision ~~insufficient documentation~~ and ~~review~~with ofthe ~~selection~~participation of ~~generally~~management, ~~accepted~~including ~~accounting~~our ~~principles.~~principal ·executive ~~The~~officer ~~limited~~and ~~size~~principal offinancial ~~the~~officer, ~~accounting~~we ~~department~~conducted ~~makes it impractical to achieve~~ an ~~appropriate~~evaluation ~~level~~ of ~~segregation~~the effectiveness of ~~duties.~~our ~~Specifically,~~internal ~~due~~control toover ~~lack~~financial ofreporting ~~personnel,~~based ~~effective~~on ~~controls~~the ~~were~~2013 ~~not~~framework ~~designed~~in ~~and~~Internal ~~implemented~~Control to— ~~ensure~~Integrated ~~accounting~~Framework ~~functions~~issued ~~were~~by ~~properly~~the ~~segregated.~~Committee ·of ~~Due~~Sponsoring toOrganizations ~~a lack~~ of ~~adequate~~the ~~staffing~~Treadway ~~within~~Commission (the ~~finance~~“COSO ~~department~~Framework”). ~~and~~Based ~~adequate~~on ~~staffing~~this ~~within~~evaluation ~~operational~~under ~~departments that provide information to~~ the ~~finance~~COSO ~~department~~Framework, wemanagement ~~did~~concluded ~~not~~that ~~establish~~our ~~and~~internal ~~maintain~~control ~~effective controls~~ over ~~certain of our period-end~~ financial ~~close and~~ reporting ~~processes.~~was ~~Specifically,~~not effective ~~controls~~as ~~were not designed and implemented to ensure that journal entries were properly prepared with sufficient support or documentation or were reviewed and approved to ensure the accuracy and completeness~~ of ~~the~~December ~~journal~~31, ~~entries recorded~~2019.

~~The~~Because ~~Company~~of ~~may~~its ~~add~~inherent ~~additional~~limitations, ~~personnel~~internal ~~and~~control ~~procedures,~~over ~~which~~financial wereporting ~~believe~~may ~~will~~not ~~remedy~~prevent ~~these~~or ~~weaknesses~~detect inmisstatements. ~~disclosure~~Projections ~~controls~~of ~~and~~any ~~procedures~~evaluation inof effectiveness to future periods. ~~However,~~are ~~there~~subject ~~are~~to nothe ~~assurances~~risk wethat ~~will~~controls bemay ~~able~~become toinadequate ~~devote~~because ~~the~~of ~~necessary~~changes ~~capital~~in toconditions, ~~hire~~or that the ~~additional~~degree ~~personnel~~of ~~and~~compliance ~~institute~~with the ~~additional~~policies or procedures may deteriorate. All internal control systems, ~~policies~~no ~~and~~matter ~~procedures~~how well designed, have inherent limitations. Therefore, even those systems determined to ~~the~~be ~~level~~effective ~~necessary~~can provide only reasonable assurance with respect to financial statement preparation and presentation. InBecause ~~that~~of ~~event~~the inherent limitations of internal control, there ~~are~~is noa ~~assurances~~risk that ~~the~~ material ~~weaknesses~~misstatements ~~described~~may ~~above~~not ~~will~~ be prevented or detected on a timely ~~remediated~~basis orby ~~not~~internal ~~result~~control inover ~~errors~~financial inreporting. ~~our~~However, these inherent limitations are known features of the financial ~~statements~~reporting inprocess. ~~future~~Therefore, ~~periods~~it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

~~(B)~~15 ~~Management’s~~Table ~~Annual~~of ~~Report on Internal Controls Over Financial Reporting~~Contents

~~Our~~As ~~management~~of isDecember ~~responsible~~31, ~~for establishing and maintaining adequate internal control over financial reporting~~2019, asmanagement ~~defined~~has innot ~~Rules~~completed ~~13a-15(f)~~an ~~and~~effective ~~15d-15(f)~~assessment of the ~~Exchange~~Company’s ~~Act.~~internal ~~Internal~~ control over financial reporting isbased aon ~~process designed to provide reasonable assurance regarding~~ the ~~reliability~~2013 Committee of ~~financial~~Sponsoring ~~reporting~~Organizations ~~and~~(COSO) ~~the~~framework. ~~preparation~~Management ofhas ~~financial~~concluded ~~statements~~that inas ~~accordance with GAAP. Because~~ of ~~its~~December ~~inherent~~31, ~~limitations~~2019, our internal control over financial reporting ~~may~~was not ~~prevent~~effective orto detect ~~misstatements.~~the ~~Also,~~inappropriate ~~projection~~application of ~~any~~U.S. ~~evaluation~~GAAP. ofManagement ~~effectiveness~~identified ~~to future periods is subject to~~ the ~~risk~~following ~~that~~material ~~controls~~weaknesses ~~may~~set ~~become~~forth ~~inadequate~~below ~~because of changes~~ in ~~conditions,~~our orinternal ~~that~~control ~~the~~over ~~degree~~financial ~~of compliance with the policies or procedures may deteriorate~~reporting.

~~Our~~1. ~~management~~We ~~has~~did ~~conducted,~~not ~~with~~perform ~~the~~an ~~participation~~effective ofrisk ~~our~~assessment ~~chief~~or ~~executive~~monitor ~~officer~~internal ~~and~~controls ~~chief~~over financial ~~officer,~~reporting. an2. ~~assessment~~A lack of ~~our~~sufficient ~~internal~~resources ~~control~~including ~~over~~a solely designated chief financial ~~reporting~~officer asand an insufficient level of ~~December~~monitoring 31and oversight, ~~2018.~~which ~~Management~~restricted the Company’s ~~assessment~~ability ofto ~~internal~~gather, ~~control~~analyze ~~over~~and report information relative to the financial ~~reporting~~statement ~~was~~assertions ~~conducted~~in ~~using~~a ~~the~~timely ~~criteria~~manner, ~~set~~including ~~forth~~insufficient bydocumentation ~~the~~and ~~Committee~~review of ~~Sponsoring~~selection ~~Organizations~~of generally accepted accounting principles. 3. The limited size of the ~~Treadway~~accounting ~~Commission~~department inmakes ~~Internal~~it ~~Control-Integrated~~impractical ~~Framework~~to achieve an appropriate level of ~~2013~~segregation of duties. ~~Our~~Specifically, ~~management~~due ~~has~~to ~~concluded~~lack ~~that~~of personnel, aseffective controls were not designed and implemented to ensure accounting functions were properly segregated. 4. Due to a lack of ~~December~~adequate ~~31,~~staffing ~~2018~~within the finance department and adequate staffing within operational departments that provide information to the finance department, ~~internal~~we did not establish and maintain effective controls over certain of our period-end financial close and reporting ~~are~~processes. ~~not~~Specifically, effective. controls were not designed and implemented to ensure that journal entries were properly prepared with sufficient support or documentation or were reviewed and approved to ensure the accuracy and completeness of the journal entries recorded.

The Company expects improvements to be made in 2020 as the Company grows in size given recent acquisitions and the Company is able to dedicate more resources to the financial and accounting function. The Company plans to further remediate the material weaknesses identified above as its resources permit.

This Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only the management’s report in this Report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2019 that would have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below is certain information concerning each of the directors and executive officers of the Company:

Name	Age	Position	With Company Since
John Wachter	3738	Chairman of the Board, CEO	2015
William J. Golden	4243	Secretary and Director, CFO	2015
Saverio Garruto	7071	Director	2017
William Lamb	5758	Director	2017

The Company’s directors are elected at the annual meeting of stockholders and hold office until their successors are elected. The Company’s officers are appointed by the Board of Directors and are subject to employment agreements, if any, approved and ratified by the Board. On December 2127, ~~2018~~2019, William J. Golden, John Wachter, Saverio Garruto and William Lamb were reelected to the Board.

John Wachter

Mr. Wachter is one of the founders of Polymathes Capital LLC (“Polymathes Capital”). Polymathes Capital is located in Princeton, New Jersey. Previously, Mr. Wachter was an equity analyst for a hedge fund. Mr. Wachter also serves as Chairman of Epolin Chemicals LLC, a specialty chemical manufacturer located in Newark, New Jersey. Mr. Wachter is a graduate of Princeton University.

Mr. Wachter is CEO, Chairman of the Board of Directors and a member of the Company’s Audit Committee.

William J. Golden

Mr. Golden is one of the founders of Polymathes Capital. Mr. Golden is an attorney admitted to practice law in the States of New York and New Jersey, and the Commonwealth of Pennsylvania. From 2006 to 2008, he was an attorney in the financial restructuring department of Cadwalader, Wickersham & Taft, an international law firm based in New York, New York. Mr. Golden is a graduate of Princeton University, the London School of Economics and Political Science and the Fordham University School of Law.

Mr. Golden serves as CFO, Secretary of the Board and a member of the Company’s Audit and Compensation Committee.

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Saverio Garruto

Mr. Garruto is a certified public accountant, possessing over forty years of experience in accounting and consulting. He is a retired audit partner with CohnReznick, which he joined in 1998. He is experienced with the Sarbanes-Oxley Act for public companies. Mr. Garruto currently serves on the Board of Trustees of the Kessler Foundation. He graduated from Fairleigh Dickinson University in 1970 and did his post-graduate work at Rutgers University.

Mr. Garruto serves as the Chairman of the Company’s Audit Committee and a member of the Company’s Compensation Committee.

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William Lamb

Mr. Lamb is the owner and operator of The ABC Insert Company, a custom manufacturer of pharmaceutical packaging components that he purchased in 2010. In 1999, he was a founding shareholder of The Philadelphia Trust Company, a depositary trust company and private bank based in Philadelphia. Mr. Lamb graduated from Saint Joseph’s University in 1983.

Mr. Lamb serves as the Chairman of the Company’s Compensation Committee.

Code of Ethics and Committee Charters

The Audit Committee Charter is available on the Company’s website.

Code of Ethics

The Code of Ethics applies to the Company’s directors, officers and employees. It is available on the Company’s website.

Audit Committee

The Audit Committee makes such examinations as are necessary to monitor the corporate financial reporting and the external audits of the Company, to provide to the Board of Directors (the “Board”) the results of its examinations and recommendations derived there from, to outline to the Board improvements made, or to be made, in internal control, to nominate independent auditors and to provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require Board attention. Saverio Garruto is the current chair.

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Compensation Committee

The compensation committee is authorized to review and make recommendations to the Board regarding all forms of compensation to be provided to the executive officers and directors of the Company, including stock compensation and bonus compensation to all employees. Officers of the Company serving on the Compensation committee do not participate in discussions regarding their own compensation.

Nominating Committee

The Company does not have a Nominating Committee and the full Board acts in such capacity.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s directors and executive officers and persons who beneficially own more than ten percent (10%) of a registered class of its equity securities, file with the SEC reports of ownership and changes in ownership of its common stock and other equity securities. Executive officers, directors, and greater than ten percent (10%) beneficial owners are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports that they file. Based solely upon a review of the copies of such reports furnished to us or written representations that no other reports were required, the Company believes that all filing requirements applicable to its executive officers, directors and greater than ten percent (10%) beneficial owners were met for events in ~~2017~~2018 and ~~2018~~2019.

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ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the Company’s principal executive officer and all of the other executive officers with annual compensation exceeding $100,000, who served during the years ~~2017~~2018 and ~~2018~~2019, for services in all capacities to the Company:

SUMMARY COMPENSATION TABLE

Name & Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)
John Wachter	~~2018~~2019	$	100,000	$	5396,~~628~~500	$	-	$	-	$	-	$	-	$	-
CEO and Director (1)	~~2017~~2018	$	16100,~~667~~000	$	-53,628	$	~~300,000~~-	$	-	$	-	$	-	$	-
William J. Golden	~~2018~~2019	$	100,000	$	5396,~~628~~500	$	-	$	-	$	-	$	-	$	-
CFO and General Counsel (1)	~~2017~~2018	$	16100,~~667~~000	$	-53,682	$	~~300,000~~-	$	-	$	-	$	-	$	-
Vic Mondo	2018	$	-	$	-	$	-	$	-	$	-	$	-	$	-
CAS President (2)	2017	$	195,000	$	60,000	$	-	$	-	$	-	$	-	$	-

~~____________~~ _________

(1)	Mr. Wachter and Mr. Golden served as directors of the Company, but without compensation for their director services.
(2)	Mr. Mondo resigned on December 29, 2017.

(1)	Mr. Wachter and Mr. Golden served as directors of the Company, but without compensation for their director services.

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Compensation of Directors

Messrs. Wachter and Golden do not receive compensation for their role as Directors of the Company. Messrs. Garruto and Lamb received 625 shares of common stock of the Company upon the completion of their first-year term in 2018. In return for their service during the 2019 term, they are each set to receive $25,000 in stock during 2020.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

(a) The following table sets forth certain information with respect to the beneficial ownership of the Common Stock of the Company, for each person who is known by the Company to beneficially own more than 5 percent of the Company’s Common Stock (its only voting securities) as of March 1825, ~~2019~~2020:

TITLE OF CLASS	BENFICIAL OWNER (1)	AMOUNT OF BENEFICIAL OWNERSHIP		PERCENT OF CLASS
COMMON STOCK	John Wachter		59,114		1819.90	%
	William J. Golden		59,613		19.01	%
	Christopher R. Dewey		30,174		9.67	%
	Seamus Lamb		3028,099		9.60	%
	Francis Shields		29,511		9.45	%
	John R. Whitman Trust		19,674		6.3	%
	Wynnefield Reporting Persons (2)		25,000		8.0	%

_____________

(2)	The “Wynnefield Reporting Persons” are Wynnefield Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I, Wynnefield Small Cap Value Offshore Fund, Ltd., Wynnefield Capital, Inc., Wynnefield Capital Management, LLC, Wynnefield Capital, Inc., Nelson Obus and Joshua H. Landes.

(b) The following table sets forth certain information with respect to the beneficial ownership of the Common Stock of the Company by (i) each of the Company’s Directors, (ii) each of the Company’s Named Executive Officers, and (iii) all directors and executive officers as a group, as of December 31, ~~2018~~2019.

TITLE OF CLASS	BENFICIAL OWNER (1)	AMOUNT OF BENEFICIAL OWNERSHIP		PERCENT OF CLASS
COMMON STOCK	John Wachter, CEO and Director		59,114		1819.90	%
	William Golden, CFO, General Counsel and Director		59,613		19.01	%
	Saverio Garruto, Director		625		0.2	%
	William Lamb, Director		625		0.2	%
	All Directors and Executive Officers as a Group		119,977		38.35	%

_____________

(1)	Except where otherwise indicated, the address of the beneficial owner is deemed to be the same address as the Company

As of March 1825, ~~2019~~2020, the date used to calculate the tables above, the Company had ~~313~~311,636 shares of Common Stock outstanding.

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Securities Authorized for Issuance Under Equity Compensation Plans

The Amerinac Holding Corp. 2017 Equity Incentive Plan (the “Equity Plan”) was approved by a majority of Shareholders of the Company on November 10, 2017 and the Board on October 30, 2017. The 2017 Equity Plan provides for an aggregate of 100,000 shares of common to be available for awards, of which 85,000 shares are still available for issue. ~~Concurrently, the Precision Aerospace Components, Inc. 2011 Omnibus Incentive Plan was cancelled and superseded by the Equity Plan.~~

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As of December 31, ~~2018~~2019, Mr. Wachter serves as Chief Executive Officer of the Company. Mr. Golden serves as Chief Financial Officer and General Counsel.

As of November 10, 2017, Messrs. Garruto and Lamb serve as the Company’s independent directors.

For the year ~~2017~~2018, management bonus compensation was $~~600~~103,000. ~~The~~which ~~entire amount~~ was paid in ~~stock,~~cash ~~and~~on ~~will~~April be12, ~~restricted~~2019. For the year ~~2018~~2019, ~~management~~the ~~bonus compensation was $103,000 to be paid in cash. The~~ Company accrued $~~103~~193,000 in bonus at December 31, ~~2018~~2019.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed or to be billed for professional services rendered by our independent registered public accounting firms for the audit of our annual consolidated financial statements, review of the unaudited condensed consolidated financial statements included in our quarterly reports and other fees that are normally provided by the accounting firms in connection with statutory and regulatory filings or engagements for the years ended December 31, ~~2017~~2018 and ~~2018~~2019 were approximately $~~110~~94,000 for ~~2017~~2018 and approximately $94104,000 for ~~2018~~2019.

Audit Related Fees

There were no aggregate fees billed or to be billed for audit related services by the Company’s independent registered public accounting firms that are reasonably related to the performance of the audit or review of our consolidated financial statements, other than those previously reported in this Item 14, and includes $0 during 2018 and $~~60,000~~0 during ~~2017~~2019.

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Tax Fees

The aggregate fees billed for ~~professional services rendered by the Company’s independent registered public accounting firms for~~ tax compliance, tax advice and tax planning for the years ended December 31, ~~2017~~2018 and ~~2018~~2019 were $2025,000 and $~~25,000~~0.

All Other Fees

No fees were billed for products and services provided the Company’s independent registered public accounting firms for the years ended December 31, ~~2017~~2018 and ~~2018~~2019.

Audit Committee

Our Audit Committee implemented pre-approval policies and procedures for our engagement of the independent auditors for both audit and permissible non-audit services. Under these policies and procedures, all services provided by the independent auditors must be approved by the Audit Committee or Board of Directors prior to the commencement of the services, subject to certain de-minimis non-audit service (as described in Rule 2-01(c)(7)(C) of Regulation S-X) that do not have to be pre-approved as long as management promptly notifies the Audit Committee of such service and the Audit Committee or Board of Directors approves it prior to the service being completed. All of the services provided by our independent auditors have been approved in accordance with our pre-approval policies and procedures.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Listed in the Exhibit Index following the signature page hereof.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AMERINAC HOLDING CORP.
Date: March 26, 2019	By:	/s/ John Wachter
Date: March 30, 2020	By:	/s/ John Wachter
		John Wachter Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ John Wachter	Chairman of the Board of Directors	March 2630, ~~2019~~2020
John Wachter	and Chief Executive Officer
/s/ William J. Golden	Chief Financial Officer and Director	March 2630, ~~2019~~2020
William J. Golden
/s/ Saverio Garruto	Director	March 2630, ~~2019~~2020
Saverio Garruto
/s/ William Lamb	Director	March 2630, ~~2019~~2020
William Lamb

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Exhibits:

EXHIBIT NO.

3.1	Certificate of Incorporation	Incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 8-K as filed with the United states Securities and Exchange Commission on July 27, 2006

3.2	By-laws	Incorporated by reference to Exhibit 3.2 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on July 27, 2006

3.3	Series A Preferred Stock Statement of Designations	Incorporated by reference to Exhibit 4.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on December 17, 2012

3.4	Series B Preferred Stock Certificate of Designation	Incorporated by reference to Exhibit 3.4 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on July 27, 2006

3.5	Series C Preferred Stock Statement of Designations	Incorporated by reference to Exhibit 4.2 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on December 17, 2012

3.6	Restated Certificate of Incorporation	Incorporated by reference to Exhibit 3.5 to the Company’s Report on Form 10-K as filed with the United States Securities and Exchange Commission on March 31, 2010

10.1	Asset Purchase Agreement by and among Fastener Distribution and Marketing Company, Inc., Aero-Missile Components, Inc., Creative Assembly Systems, Inc., Precision Aerospace Components, Inc., Apace Acquisition I, Inc., and Apace Acquisition II, Inc.,	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on June 1, 2012

10.2	Loan and Security Agreement by and between Precision Aerospace Components, Inc.(parent-obligor), Freundlich Supply Company, Inc., Tiger-Tight Corp., Apace Acquisition I, Inc., Apace Acquisition II, Inc. (borrowers), Newstar Business Credit, LLC (administrative agent), and the Lenders from Time to Time (lenders)	Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on June 1, 2012

10.3	Shareholder Agreement by and among Precision Aerospace Components, Inc., C3 Capital Partners III, L.P., and Precision Group Holdings LLC	Incorporated by reference to Exhibit 4.1 to the Company’s Report on Form 8-K/A as filed with the United States Securities and Exchange Commission on August 18, 2015

10.4	Stock Purchase Agreement by and among Precision Aerospace Components, Inc., Andrew S. Prince, Donald Barger and David Walters, C3 Capital Partners III, L.P. and Precision Group Holdings LLC	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K/A as filed with the United States Securities and Exchange Commission on August 18, 2015

10.5	Securities Purchase Agreement by and among C3 Capital Partners III, L.P. (purchaser) and Precision Aerospace Components, Inc., Freundlich Supply Company, Inc., Tiger-Tight Corp., Aero-Missile Components, Inc., Creative Assembly Systems, Inc. (issuers)	Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on August 18, 2015

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10.6	Credit Agreement between Precision Aerospace Components, Inc. as Borrower and Webster Business Credit Corporation, as Lender	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on September 1, 2015

10.7	Precision Aerospace Components, Inc. 2011 Omnibus Incentive Plan	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q/A as filed with the United States Securities and Exchange Commission on Aug. 16, 2011

10.8	Asset Purchase Agreement by and among Prime Metals & Alloys, Inc. and Prime Metals Acquisition LLC	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on August 22, 2017

10.9	Credit Agreement by and between Prime Metals Acquisition LLC and SummitBridge National Investments V LLC	Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on August 22, 2017

10.10	Amerinac Holding Corp. Equity Incentive Plan	Incorporated by reference to Exhibit A to the Company’s Schedule 14C as filed with the Securities and Exchange Commission on October 30, 2017

10.11	Loan and Security Agreement Prime Metals Acquisition LLC and Berkshire Bank	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on September 10, 2018

10.12	Purchase and Sale Agreement between SummitBridge National Investments VI LLC, ABTV, in its Capacity as Court-Appointed Receiver Ordered by the Court of Common Pleas of Chester County, Pennsylvania and USAC Ross LLC and USAC WA LLC	Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K as filed with the United States Securities and Exchange Commission on March 26, 2020
10.13	Loan and Security Agreement by and among USAC Ross LLC, USAC WA LLC and SummitBridge National Investments VI LLC	Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K as filed the United States Securities and Exchange Commission on March 26, 2020
31.1	Certification By Chief Executive Officer pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith
31.2	Certification By Principal Financial Officer pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith
32.1	Certification by Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Provided herewith
101	Interactive data files pursuant to Rule 405 of Regulation S-T	Provided herewith

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