Note

– Bu

iness Acquisition

C Enterprises, Inc.

March 15, 2019,

through C Enterprises, Inc. (“C Enterprises”), its newly formed subsidiary, we purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. In consideration for the C Enterprises business and assets, we paid

$600,000

in cash and assumed certain liabilities. The acquisition was determined

not

to be material and was accounted for in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities were recorded at their estimated fair values in accordance with ASC

805,

Business Combinations. There were

intangible assets identified as part of the acquisition.

The results of C Enterprises’ operations subsequent to

March 15, 2019

have been included in the results of the Custom Cabling Manufacturing and Assembly segment (“Custom Cabling segment”) as well as in the consolidated statements of operations. Costs related to the acquisition of C Enterprises were approximately

$100,000

and have been expensed as incurred and categorized in selling and general expenses.

The following table summarizes the components of the purchase price at fair value at

March 15, 2019:

Cash consideration paid		$	600,000
Total purchase price		$	600,000

The following table summarizes the allocation of the estimated purchase price at fair value at

March 15, 2019:

Current assets	$	2,008,000
Fixed assets		30,000
Other assets		18,000
Non-interest bearing liabilities		(1,456,000	)
Net assets	$	600,000

Schroff

Technologies

International, Inc.

November 4, 2019,

we purchased the business of Schroff Technologies International, Inc. (“Schrofftech”), a Rhode Island-based manufacturer and marketer of intelligent thermal control systems used by telecommunications companies across the U.S. and Canada, and shrouds for small cell integration and installation. At the closing, in consideration for the Schrofftech business, we paid the sellers

million in cash, and, if certain financial targets are met by Schrofftech over a

two

-year period, agreed to pay additional cash earn-out payments of up to

$2.4

million.

The acquisition was accounted for as an acquisition of a business in accordance with the acquisition method of accounting. The acquired assets and assumed liabilities have been recorded at their estimated fair values. We determined the estimated fair values with the assistance of appraisals or valuations performed by an independent

third

-party specialist. Schrofftech serves the high growth wireless, telecom and cable markets. All manufacturing operations are performed at Schrofftech’s facilities in Rhode Island. The Schrofftech business allows us to diversify the types of services provided for our customers in the cable industry.

Although the closing occurred on

November 4, 2019,

the acquisition of Schrofftech is deemed to have become effective for financial accounting purposes as of

November 1, 2019.

Accordingly, Schrofftech’s financial results have been included in the results of the Custom Cabling segment for the

three

and

six

months ended

April 30, 2020

as well as in the consolidated statements of operations. Total costs related to the acquisition of Schrofftech were approximately

$151,000,

of which

$108,000

was incurred in fiscal

2019

and

$43,000

was incurred in the

six

months ended

April 30, 2020.

All acquisition-related costs have been expensed as incurred and categorized in selling and general expenses. For the

three

months ended

April 30, 2020,

Schrofftech contributed revenue and pretax loss of

$1.1

million and

$95,000,

respectively. For the

six

months ended

April 30, 2020,

Schrofftech contributed revenue and pretax loss of

$2.3

million and

$13,000,

respectively.

The following table summarizes the components of the purchase price at fair values at

November 1, 2019:

Cash consideration paid	$	4,000,000
Earn-out liability		1,249,000
Total purchase price	$	5,249,000

The following table summarizes the allocation of the purchase price at fair value at

November 1, 2019:

Current assets	$	1,168,000
Fixed assets		58,000
Intangible assets		3,299,000
Goodwill		1,356,000
Non-interest bearing liabilities		(632,000	)
Net assets	$	5,249,000

The following unaudited pro forma financial information presents the combined operating results of the Company, C Enterprises, and Schrofftech as if both acquisitions had occurred as of the beginning of the earliest period presented. Pro forma data is subject to various assumptions and estimates and is presented for informational purposes only. This pro forma data does

not

purport to represent or be indicative of the consolidated operating results that would have been reported had the transaction been completed as described herein, and the data should

not

be taken as indicative of future consolidated operating results.

Unaudited pro forma financial information assuming the acquisition of C Enterprises and Schrofftech as of

November 1, 2018

is presented in the following table:

	Three Months Ended April 30,					Six Months Ended April 30,
	2020			2019		2020			2019

Revenue	$	10,390		$	18,901	$	22,804		$	35,100
Net (loss) income		(184	)		1,371		(158	)		2,744

(Loss) earnings per share
Basic	$	(0.02	)	$	0.15	$	(0.02	)	$	0.29
Diluted	$	(0.02	)	$	0.14	$	(0.02	)	$	0.28