EXHIBIT 99.2

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2016 AND 2015

AND

INDEPENDENT AUDITORS
REPORT



LOGO



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED
FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2016 AND 2015

AND

INDEPENDENT AUDITORS
REPORT



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2016 and 2015

TABLE OF CONTENTS



|                                                |  |      |       | 
|----------------------------------------------- |  | ---- | ----- | 
|                                                |  | Page |      
|                                                | 
|Independent Auditors Report                    |  |      | 1     | 
|                                                | 
|Consolidated Financial Statements:              |  |      |       | 
|                                                | 
|Consolidated Balance Sheets                     |  |      | 2     | 
|                                                | 
|Consolidated Statements of Income               |  |      | 3     | 
|                                                | 
|Consolidated Statements of Stockholders Equity |  |      | 4     | 
|                                                | 
|Consolidated Statements of Cash Flows           |  |      | 5     | 
|                                                | 
|Notes to Consolidated Financial Statements      |  |      | 6 -16 | 

This is a copy of the Companys annual financial statements reproduced

from an electronic file. An original copy of this document

is available at the Companys office.



---

LOGO

INDEPENDENT AUDITORS REPORT

To the Board of Directors

Galaxy Tool Holding Corporation

Winfield, KS

Report on the Consolidated Financial
Statements

We have audited the accompanying consolidated financial statements of Galaxy Tool Holding Corporation and Subsidiary, which comprise the
consolidated balance sheets as of December 31, 2016 and 2015, and the related consolidated statements of income, stockholders equity and cash flows for the years then ended and the related notes to consolidated financial statements.

Managements Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Galaxy Tool Holding
Corporation and Subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Allen, Gibbs & Houlik, L.C.



LOGO

April 30, 2018



LOGO



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GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 2016 and 2015



|                                                                    |  |      |            |  |      |   |            | 
|------------------------------------------------------------------- |  | ---- | ---------- |  | ---- | - | ---------- | 
|                                                                    |  | 2016 |            |  | 2015 |  
|ASSETS                                                              |  |      |            |  |      |   |            | 
|CURRENT ASSETS                                                      |  |      |            |  |      |   |            | 
|Cash and cash equivalents                                           |  | $    | 516,890    |  |      | $ | 1,520,315  | 
|Accounts receivable less allowance for doubtful accounts of $10,000 |  |      | 3,285,228  |  |      |   | 2,215,789  | 
|Inventories                                                         |  |      | 1,698,602  |  |      |   | 4,030,681  | 
|Income taxes receivable                                             |  |      |           |  |      |   |           | 
|Prepaid expenses                                                    |  |      | 136,206    |  |      |   | 119,609    | 
|                                                                    |  |      |            |  |      |   |            | 
|Total current assets                                                |  |      | 5,636,926  |  |      |   | 7,886,394  | 
|                                                                    |  |      |            |  |      |   |            | 
|PROPERTY, PLANT AND EQUIPMENT                                       |  |      |            |  |      |   |            | 
|Land                                                                |  |      | 9,000      |  |      |   | 9,000      | 
|Buildings and improvements                                          |  |      | 7,311,412  |  |      |   | 7,274,404  | 
|Machinery and equipment                                             |  |      | 14,346,285 |  |      |   | 14,687,783 | 
|Computer hardware and software                                      |  |      | 1,108,564  |  |      |   | 703,831    | 
|Office furniture and fixtures                                       |  |      | 158,943    |  |      |   | 163,287    | 
|                                                                    |  |      |            |  |      |   |            | 
|                                                                    |  |      | 22,934,204 |  |      |   | 22,838,305 | 
|Less accumulated depreciation                                       |  |      | 9,221,207  |  |      |   | 8,266,012  | 
|                                                                    |  |      |            |  |      |   |            | 
|Net property and equipment                                          |  |      | 13,712,997 |  |      |   | 14,572,293 | 
|                                                                    |  |      |            |  |      |   |            | 
|OTHER ASSETS                                                        |  |      |            |  |      |   |            | 
|Goodwill                                                            |  |      | 3,302,091  |  |      |   | 3,302,091  | 
|Customer list, net                                                  |  |      |           |  |      |   | 103,033    | 
|                                                                    |  |      |            |  |      |   |            | 
|                                                                    |  |      | 3,302,091  |  |      |   | 3,405,124  | 
|                                                                    |  |      |            |  |      |   |            | 
|                                                                    |  | $    | 22,652,014 |  |      | $ | 25,863,811 | 
|                                                                    |  |      |            |  |      |   |            | 



---

|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                                                                                                  |  | 2016 |             |   | 2015 |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|CURRENT LIABILITIES                                                                                                                                                                                                               |  |      |             |   |      |   |             |  
|Current maturities of long-term debt                                                                                                                                                                                              |  | $    | 1,292,826   |   |      | $ | 1,538,501   |  
|Revolving
line-of-credit                                                                                                                                                                                                          |  |      | 4,500,000   |   |      |   | 5,000,000   |  
|Accounts payable                                                                                                                                                                                                                  |  |      | 1,866,696   |   |      |   | 2,517,991   |  
|Accrued expenses                                                                                                                                                                                                                  |  |      | 1,962,996   |   |      |   | 1,987,365   |  
|Deferred revenue                                                                                                                                                                                                                  |  |      | 103,835     |   |      |   | 1,223,920   |  
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                                                                                                         |  |      | 9,726,353   |   |      |   | 12,267,777  |  
|LONG-TERM LIABILITIES                                                                                                                                                                                                             |  |      |             |   |      |   |             |  
|Long-term debt, less current maturities                                                                                                                                                                                           |  |      | 9,548,143   |   |      |   | 10,211,824  |  
|Deferred income taxes                                                                                                                                                                                                             |  |      | 2,493,000   |   |      |   | 2,617,000   |  
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|Total liabilities                                                                                                                                                                                                                 |  |      | 21,767,496  |   |      |   | 25,096,601  |  
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|STOCKHOLDERS EQUITY                                                                                                                                                                                                              |  |      |             |   |      |   |             |  
|Preferred stock, Series A, par value $.01 per share; 5,000,000 shares authorized and 4,111,907
shares issued and outstanding, total liquidation preference of outstanding shares of $13,265,060; net of offering costs of $83,200 |  |      | 4,028,707   |   |      |   | 4,028,707   |  
|Preferred stock, Series B, par value $.01 per share; 5,000,000 shares authorized and 4,438,093
shares issued and outstanding, total liquidation preference of outstanding shares of $7,228,213; net of offering costs of $300,000 |  |      | 4,138,093   |   |      |   | 4,138,093   |  
|Preferred stock, Series C, par value $.01 per share; 1,000,000 shares authorized and 927,480
shares issued and outstanding, total liquidation preference of outstanding shares of $7,890,707                                      |  |      | 3,246,178   |   |      |   | 3,246,178   |  
|Preferred stock, Series D, par value $.01 per share; 1,000,000 shares authorized and 333,799 in
2013 and 1,000,000 shares issued and outstanding, total liquidation preference of outstanding shares of $7,714,983                |  |      | 4,105,731   |   |      |   | 4,105,731   |  
|Preferred stock, Series E, par value $.01 per share; 200,000 shares authorized and 144,259 shares
issued and 55,741 outstanding, total liquidation preference of outstanding shares of $16,993,489                                |  |      | 10,520,000  |   |      |   | 10,520,000  |  
|Common stock, Class A, par value $.01 per share; 200,000 shares authorized and 92,657 shares
issued and outstanding                                                                                                               |  |      | 927         |   |      |   | 927         |  
|Common stock, Class B, par value $.01 per share; 50,000 shares authorized and 48,093 shares
issued and outstanding                                                                                                                |  |      | 481         |   |      |   | 481         |  
|Common stock, Class C, par value $.01 per share; 1,000 shares authorized and 1,000 shares
issued and outstanding; issued for no consideration                                                                                     |  |      |            |   |      |   |            |  
|Additional paid-in capital                                                                                                                                                                                                        |  |      | 99,000      |   |      |   | 99,000      |  
|Retained earnings (deficit)                                                                                                                                                                                                       |  |      | (18,203,121 | ) |      |   | (18,320,429 | )
|Excess of consideration paid over consideration contributed by continuing stockholder
interests                                                                                                                                   |  |      | (7,051,478  | ) |      |   | (7,051,478  | )
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|Total stockholders equity                                                                                                                                                                                                        |  |      | 884,518     |   |      |   | 767,210     |  
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  
|                                                                                                                                                                                                                                  |  | $    | 22,652,014  |   |      | $ | 25,863,811  |  
|                                                                                                                                                                                                                                  |  |      |             |   |      |   |             |  

The accompanying notes are an integral part

of these consolidated financial statements.



2



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GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended December 31, 2016 and 2015



|                                    |  |      |            |   |      |   |             |  
|----------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | -
|                                    |  | 2016 |            |   | 2015 |  
|Net sales                           |  | $    | 25,741,258 |   |      | $ | 27,991,484  |  
|Cost of goods sold                  |  |      | 21,356,407 |   |      |   | 26,303,936  |  
|                                    |  |      |            |   |      |   |             |  
|Gross profit                        |  |      | 4,384,851  |   |      |   | 1,687,548   |  
|Goodwill impairment loss            |  |      |           |   |      |   | 5,377,000   |  
|General and administrative expenses |  |      | 3,272,500  |   |      |   | 4,105,636   |  
|                                    |  |      |            |   |      |   |             |  
|Operating profit (loss)             |  |      | 1,112,351  |   |      |   | (7,795,088  | )
|Interest expense                    |  |      | 1,119,043  |   |      |   | 2,212,132   |  
|                                    |  |      |            |   |      |   |             |  
|Loss before income taxes            |  |      | (6,692     | ) |      |   | (10,007,220 | )
|Income tax (benefit) expense        |  |      | (124,000   | ) |      |   | 1,423,188   |  
|                                    |  |      |            |   |      |   |             |  
|Net income (loss)                   |  | $    | 117,308    |   |      | $ | (11,430,408 | )
|                                    |  |      |            |   |      |   |             |  

The accompanying notes are an integral part

of these consolidated financial statements.



3



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GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

For the Years Ended December 31, 2016 and 2015



|                                                   |  |                 |           |  |             |   |           |                          |  |   |                           |  |  |                                                                                          |           |  |         |   |            |         |  |   |     |  |  |       |     |  |  |   |        |  |  |   |             |   |  |   |            |   |  |   |             |  
|-------------------------------------------------- |  | --------------- | --------- |  | ----------- | - | --------- | ------------------------ |  | - | ------------------------- |  |  | ---------------------------------------------------------------------------------------- | --------- |  | ------- | - | ---------- | ------- |  | - | --- |  |  | ----- | --- |  |  | - | ------ |  |  | - | ----------- | - |  | - | ---------- | - |  | - | ----------- | -
|                                                   |  | Preferred Stock |           |  | CommonStock |   |           | AdditionalPaid-inCapital |  |   | RetainedEarnings(Deficit) |  |  | Excess ofConsiderationPaid overConsiderationContributed byContinuingStockholderInterests |           |  |         |  
|                                                   |  | Series A        |           |  | Series B    |   |           | Series C                 |  |   | Series D                  |  |  | Series E                                                                                 |           |  | Class A |   |            | Class B |  |   |     |  |  | Total |    
|Balance, December 31, 2014                         |  | $               | 4,028,707 |  |             | $ | 4,138,093 |                          |  | $ | 3,246,178                 |  |  | $                                                                                        | 4,105,731 |  |         | $ |           |         |  | $ | 927 |  |  | $     | 481 |  |  | $ | 99,000 |  |  | $ | (6,890,021  | ) |  | $ | (7,051,478 | ) |  | $ | 1,677,618   |  
|Non-cash distribution in equity to debt
conversion |  |                 |          |  |             |   |          |                          |  |   |                          |  |  |                                                                                          |          |  |         |   | 10,520,000 |         |  |   |     |  |  |       |     |  |  |   |        |  |  |   |             |   |  |   |            |   |  |   | 10,520,000  |  
|Net loss                                           |  |                 |          |  |             |   |          |                          |  |   |                          |  |  |                                                                                          |          |  |         |   |           |         |  |   |    |  |  |       |    |  |  |   |       |  |  |   | (11,430,408 | ) |  |   |           |   |  |   | (11,430,408 | )
|                                                   |  |                 |           |  |             |   |           |                          |  |   |                           |  |  |                                                                                          |           |  |         |   |            |         |  |   |     |  |  |       |     |  |  |   |        |  |  |   |             |   |  |   |            |   |  |   |             |  
|Balance, December 31, 2015                         |  |                 | 4,028,707 |  |             |   | 4,138,093 |                          |  |   | 3,246,178                 |  |  |                                                                                          | 4,105,731 |  |         |   | 10,520,000 |         |  |   | 927 |  |  |       | 481 |  |  |   | 99,000 |  |  |   | (18,320,429 | ) |  |   | (7,051,478 | ) |  |   | 767,210     |  
|Net income                                         |  |                 |          |  |             |   |          |                          |  |   |                          |  |  |                                                                                          |          |  |         |   |           |         |  |   |    |  |  |       |    |  |  |   |       |  |  |   | 117,308     |   |  |   |           |   |  |   | 117,308     |  
|                                                   |  |                 |           |  |             |   |           |                          |  |   |                           |  |  |                                                                                          |           |  |         |   |            |         |  |   |     |  |  |       |     |  |  |   |        |  |  |   |             |   |  |   |            |   |  |   |             |  
|Balance, December 31, 2016                         |  | $               | 4,028,707 |  |             | $ | 4,138,093 |                          |  | $ | 3,246,178                 |  |  | $                                                                                        | 4,105,731 |  |         | $ | 10,520,000 |         |  | $ | 927 |  |  | $     | 481 |  |  | $ | 99,000 |  |  | $ | (18,203,121 | ) |  | $ | (7,051,478 | ) |  | $ | 884,518     |  
|                                                   |  |                 |           |  |             |   |           |                          |  |   |                           |  |  |                                                                                          |           |  |         |   |            |         |  |   |     |  |  |       |     |  |  |   |        |  |  |   |             |   |  |   |            |   |  |   |             |  

The accompanying notes are an integral part

of these consolidated financial statements.



4



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GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2016 and 2015



|                                                                                  |  |      |            |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | -
|                                                                                  |  | 2016 |            |   | 2015 |  
|Cash flows from operating activities:                                             |  |      |            |   |      |   |             |  
|Net income (loss)                                                                 |  | $    | 117,308    |   |      | $ | (11,430,408 | )
|Adjustments to reconcile net income (loss) to net cash from operating activities: |  |      |            |   |      |   |             |  
|Depreciation                                                                      |  |      | 2,016,742  |   |      |   | 2,118,528   |  
|Amortization                                                                      |  |      | 103,033    |   |      |   | 730,251     |  
|Goodwill impairment                                                               |  |      |           |   |      |   | 5,377,000   |  
|Deferred income tax (benefit) expense                                             |  |      | (124,000   | ) |      |   | 2,060,000   |  
|Loss (gain) on sale of equipment                                                  |  |      | 78,091     |   |      |   | (1,271      | )
|Change in operating assets and liabilities:                                       |  |      |            |   |      |   |             |  
|Accounts receivable                                                               |  |      | (1,069,439 | ) |      |   | 1,890,319   |  
|Prepaid expenses                                                                  |  |      | (16,597    | ) |      |   | (21,408     | )
|Inventories                                                                       |  |      | 2,332,079  |   |      |   | (626,640    | )
|Income taxes                                                                      |  |      |           |   |      |   | 71,076      |  
|Accounts payable and accrued expenses                                             |  |      | (675,664   | ) |      |   | (115,540    | )
|Deferred revenue                                                                  |  |      | (1,120,085 | ) |      |   | 395,335     |  
|                                                                                  |  |      |            |   |      |   |             |  
|Net cash from operating activities                                                |  |      | 1,641,468  |   |      |   | 447,242     |  
|                                                                                  |  |      |            |   |      |   |             |  
|Cash flows from investing activities:                                             |  |      |            |   |      |   |             |  
|Purchase of property, plant and equipment                                         |  |      | (1,289,037 | ) |      |   | (943,160    | )
|Proceeds from sale of property, plant and equipment                               |  |      | 53,500     |   |      |   | 3,500       |  
|                                                                                  |  |      |            |   |      |   |             |  
|Net cash from investing activities                                                |  |      | (1,235,537 | ) |      |   | (939,660    | )
|                                                                                  |  |      |            |   |      |   |             |  
|Cash flows from financing activities:                                             |  |      |            |   |      |   |             |  
|Net (payments) borrowings on revolving credit agreement                           |  |      | (500,000   | ) |      |   | 2,949,750   |  
|Principal payments on long-term debt                                              |  |      | (909,356   | ) |      |   | (1,406,566  | )
|                                                                                  |  |      |            |   |      |   |             |  
|Net cash from financing activities                                                |  |      | (1,409,356 | ) |      |   | 1,543,184   |  
|                                                                                  |  |      |            |   |      |   |             |  
|Change in cash                                                                    |  |      | (1,003,425 | ) |      |   | 1,050,766   |  
|Cash at beginning of year                                                         |  |      | 1,520,315  |   |      |   | 469,549     |  
|                                                                                  |  |      |            |   |      |   |             |  
|Cash at end of year                                                               |  | $    | 516,890    |   |      | $ | 1,520,315   |  
|                                                                                  |  |      |            |   |      |   |             |  
|Supplemental disclosure of cash flow information:                                 |  |      |            |   |      |   |             |  
|Interest paid                                                                     |  | $    | 1,059,323  |   |      | $ | 2,009,845   |  
|                                                                                  |  |      |            |   |      |   |             |  
|Debt to equity conversion (non-cash)                                              |  | $    |           |   |      | $ | 10,520,000  |  
|                                                                                  |  |      |            |   |      |   |             |  
|Tax refund                                                                        |  | $    |           |   |      | $ | 637,356     |  
|                                                                                  |  |      |            |   |      |   |             |  

The accompanying notes are an integral part

of these consolidated financial statements.



5



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|1. | BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------------------------------

Business
OperationsGalaxy Tool Holding Corporation and Subsidiary (d/b/a Galaxy Technologies) is in the business of manufacturing and designing precision tools and parts, fabricating steel and aluminum assemblies, and producing secondary equipment
for the customers in the aerospace industry. Additionally, the Company serves customers in the plastic products industry with manufacturing and repairing injection and blow molds and designing component parts and secondary equipment. The
Companys customers are located throughout the United States and internationally. The Company is headquartered in Winfield, Kansas, where it has a manufacturing facility.

Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of Galaxy Tool Holding
Corporation and its wholly-owned subsidiary, Galaxy Technologies, Inc. (Company). All material intercompany related party balances and transactions have been eliminated in the consolidation.

Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities, (2) disclosures such as contingencies, and (3) the reported amounts of revenues and expenses
included in such financial statements. Actual results could differ from those estimates.

Cash and Cash EquivalentsFor
purposes of reporting the statements of cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less, to
be cash equivalents. The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Accounts Receivable, TradeTrade receivables are carried at original invoice amount less an estimate made for doubtful receivables
based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customers financial condition, credit history,
and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received.

A trade receivable is considered to be past due if any portion of the receivable balance is outstanding for more than 30 to 60 days, depending
on the customer. Interest is not charged on past due accounts.

InventoriesInventories are stated at the lower of cost or
market, with cost determined by the first-in, first-out (FIFO) method. Work-in-process
includes material, labor, and allocable factory overhead costs.

Property, Plant and EquipmentProperty, plant and equipment
are carried at cost. Depreciation is computed using the straight-line method, using estimated useful lives. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in income for the



6



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|1. | BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------------------------------



period. The cost of maintenance and repairs is charged to income as incurred; significant
renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

Customer
ListThe Company amortizes acquired customer list, using a straight-line method, over a 7 1⁄2 year period.

GoodwillGoodwill is not amortized, but is subject to an annual impairment test, as well as when an event triggering impairment may
have occurred. The Company has elected to perform its annual analysis during the fourth quarter.

Impairment of Long-Lived
AssetsLong-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to estimated future net cash flows (undiscounted and without interest charges) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairment losses
recognized for the years ending December 31, 2016 or 2015.

Deferred RevenueDeferred revenue represents deposits and
progress billings on jobs in progress.

Income TaxesDeferred tax assets and liabilities are recognized for temporary
differences and loss carryforwards. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. When applicable, deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion of all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company recognizes the financial statement effects of a tax position only when it believes it can more likely than not sustain the position
upon an examination by the relevant tax authority.

Revenue RecognitionRevenue is recognized upon shipment of goods. Shipping
and handling charges are included in revenue. Shipping and handling costs are included in cost of goods sold.

Advertising
CostsThe Company expenses costs of advertising as they are incurred. Advertising expense for the years ended December 31, 2016 and 2015 was $17,105 and $32,043, respectively.



7



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|1. | BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------------------------------

|
|



Accounting Policies not yet Adopted - The FASB issued a new accounting standard,
Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. accounting principles. The core principle of the new standard is to recognize revenues when promised goods or services are
transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new accounting standard defines a five step process to achieve this core principle and, in doing so,
more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. accounting principles. The standard is first effective for the Company with its 2019 year.

The FASB issued new accounting standard, InventorySimplifying the Measurement of Inventory, which will require the Company to
report inventory at lower of cost or net realizable value. The Standard is first effective for the Company with its 2017 year.

The FASB
recently issued a new accounting standard, Leases. This new standard will include substantial changes for accounting by lessees; existing operating leases and all new leases, unless immaterial, will require balance sheet recognition. The
standard is first effective for the Company with its 2020 year, with early adoption permitted.

The FASB recently issued a new accounting
standard, Credit Losses, (also known as CECL) requires the measurement of expected credit losses (allowance for doubtful accounts) be based on historical experience AND current conditions and reasonable and supportable forecasts to determine
the collectability of reported amounts. The standard is expected to be effective for the Company with its 2021 year.

The Company is
currently evaluating the impact of the pending adoption of these new standards.

Subsequent EventsSubsequent events have been
evaluated through April 30, 2018, which is the date the financial statements were available to be issued.



|2. | RESTATEMENT
|-- | -----------

The financial statements for the year ending December 31, 2016 have
been restated to conform presentation. The only effect of the restatement was $18,649 reclassed from sales to general and administrative on the consolidated statement of income.



|3. | BUSINESS ACQUISITION
|-- | --------------------

On August 22, 2008, the Company acquired 100% of the stock of
Galaxy Tool Corporation and its subsidiary, Encompass Tool & Machine, Inc., under the terms of a stock purchase agreement. The stock purchase transaction was accounted for in accordance with EITF Issue
No. 88-16, Basis in Leveraged Buyout Transactions, and EITF Issue No. 90-12, Allocating Basis in Individual Assets and Liabilities for Transactions
Within the Scope of EITF IssueNo.88-16. The aggregate purchase price was allocated to the assets and liabilities of the Company based upon an allocation of their
respective carryover and fair market values. The carryover interest on the transaction was 38.6%. The portion of the acquisition



8



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|3 | BUSINESS ACQUISITION (CONTINED)
|- | -------------------------------



recognized at fair value was 61.4%. The caption consideration paid over consideration
contributed by continuing stockholder interests within the equity section of the accompanying balance sheets represents the difference between the fair value and the carrying value of the 38.6% carryover interest.



|4. | INVENTORIES
|-- | -----------

Inventories consist of the following at December 31:



|                                |  |      |           |  |      |   |           | 
|------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                |  | 2016 |           |  | 2015 |  
|Raw materials                   |  | $    | 128,723   |  |      | $ | 222,045   | 
|Work-in-process
parts and labor |  |      | 1,569,879 |  |      |   | 3,808,636 | 
|                                |  |      |           |  |      |   |           | 
|                                |  | $    | 1,698,602 |  |      | $ | 4,030,681 | 
|                                |  |      |           |  |      |   |           | 

Due to higher than expected costs related to several projects, management conducted a thorough review of all work-in-process jobs. As a result, a provision for inventory losses of $75,000 and $265,881 is included in
work-in-process as of December 31, 2016 and 2015, respectively. This was based on the Companys best estimates of product sales prices and expected remaining
costs to complete a job. It is at least reasonably possible that the estimates used by the Company to determine its provision for inventory losses will be materially different from the actual amounts or results. These differences could result in
materially higher than expected inventory provisions, which could have a materially adverse effect on the Companys results of operations and financial condition in the near term.



|5. | DEPRECIATION
|-- | ------------

Depreciation expense for the years ended December 31, based on useful
lives shown below, consists of:



|                               |  |      |           |  |      |   |           |              |  |              
|------------------------------ |  | ---- | --------- |  | ---- | - | --------- | ------------ |  | -------------
|                               |  | 2016 |           |  | 2015 |   |           | Useful Lives
|Building and improvements      |  | $    | 208,810   |  |      | $ | 222,186   |              |  | 40 years     
|Machinery and equipment        |  |      | 1,752,306 |  |      |   | 1,843,379 |              |  | 3 to 10 years
|Computer hardware and software |  |      | 30,820    |  |      |   | 35,184    |              |  | 3 to 10 years
|Office furniture and equipment |  |      | 24,806    |  |      |   | 17,779    |              |  | 3 to 10 years
|                               |  |      |           |  |      |   |           |              |  |              
|                               |  | $    | 2,016,742 |  |      | $ | 2,118,528 |              |  |              
|                               |  |      |           |  |      |   |           |              |  |              



9



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|6. | INTANGIBLE ASSETS
|-- | -----------------

The net values for intangible assets at December 31 were as
follows:



|              |  |                     |           |  |                         |   |            |                   |  |   |                     |  |  |                         |           |  |                   |   |            |   |  |   |         | 
|------------- |  | ------------------- | --------- |  | ----------------------- | - | ---------- | ----------------- |  | - | ------------------- |  |  | ----------------------- | --------- |  | ----------------- | - | ---------- | - |  | - | ------- | 
|              |  | 2016                |           |  | 2015                    |  
|              |  | GrossCarryingAmount |           |  | AccumulatedAmortization |   |            | Net CarryingValue |  |   | GrossCarryingAmount |  |  | AccumulatedAmortization |           |  | Net CarryingValue |  
|Customer list |  | $                   | 5,476,880 |  |                         | $ | (5,476,880 | )                 |  | $ |                    |  |  | $                       | 5,476,880 |  |                   | $ | (5,373,847 | ) |  | $ | 103,033 | 
|              |  |                     |           |  |                         |   |            |                   |  |   |                     |  |  |                         |           |  |                   |   |            |   |  |   |         | 

Amortization expense of the customer list for the years ended December 31, 2016 and 2015 was $103,033 and
$730,251, respectively.

Goodwill of $8,679,091 was recognized with the acquisition as described in Note 3. The value of goodwill is
evaluated for impairment annually. During 2015, a goodwill impairment loss of $5,377,000 was recognized, reducing the carrying value of goodwill to $3,302,091 at December 31, 2016 and 2015. Due to market conditions within the industries in
which the Company operates, operating profits and cash flows were lower than expected. Based on that trend, the projected cash flows for the Company were revised. No impairment was taken during the year ending December 31, 2016.



|7. | REVOLVING LINE-OF-CREDIT AND LONG-TERM DEBT
|-- | -------------------------------------------

Revolving Line-of-CreditThe Company has a
revolving line of credit agreement with a shareholder of the Company that expires August 22, 2019. Under the agreement, the Company may borrow up to $5,000,000. The unpaid principal balance carried an interest rate of LIBOR plus 8% with a
minimum interest rate of 10% per annum through September 30, 2015. Starting October 1, 2015, the interest rate was modified to LIBOR plus 4.5% with a minimum of 6.5%. The interest rate as of December 31, 2016 was 6.5%. This revolving line-of-credit is also subject to an unused revolving commitment fee of 1% each month prior to the maturity date, as well as the terms and conditions that are outlined in the
security agreement applicable to the subordinated notes payable shown below. At December 31, 2016, $500,000 was available to be drawn on the line-of-credit.



10



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|7. | REVOLVING LINE-OF-CREDIT AND LONG-TERM DEBT (CONTINUED)
|-- | -------------------------------------------------------



Long-term debt at December 31 consists of the following:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |      |           |  |      |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 2016 |           |  | 2015 |  
|Subordinated notes payable to a stockholder of the Company; interest at the greater of 13.5% or a
floating rate equal to the LIBOR plus 9.5%. Effective October 1, 2015, interest was adjusted to the greater of 10.0% or a floating rate equal to the LIBOR plus 6.0% (the rate was 10.0% at December 31, 2016); due in full in August 22,
2019. The loan is collateralized by substantially all assets of the Company. The note is subordinated to the bank debt. Under the terms of the subordinated note payable agreement, the Company is subject to certain restrictions, which include, but
are not limited to, making equity distributions; limitations on indebtedness, capital expenditures, management fees and leases; and restrictions on investments. The note also contains a clause that, as permitted under the subordination agreement,
requires the Company to prepay the outstanding amount based on excess cash flow, as defined in the agreement. The note also provides for an exit fee of $1,857,212 plus 8.6% per annum of the greater of the outstanding principal balance or $4,250,000,
payable upon any change of control that occurs prior to the payoff of the amounts due under the note. |  | $    | 5,000,000 |  |      | $ | 5,000,000 | 
|Note payable to a bank, due in monthly payments of $33,680 including interest at 4.50% through
maturity in February of 2020. The loan is collateralized by equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      | 1,857,128 |  |      |   | 2,168,527 | 
|Note payable to a bank, due in monthly payments of $26,005 including interest at 4.50% through
maturity in October of 2019. The loan is collateralized by a building.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |      | 2,052,061 |  |      |   | 2,264,914 | 
|Note payable to a bank; due in monthly payments of $28,017 through January 2016 when the monthly
payment changed to $14,577 (with remaining balance due on maturity) including interest at 4.50% through maturity in December of 2018. The loan is collateralized by equipment, accounts receivable, and inventory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      | 792,281   |  |      |   | 940,956   | 
|Note payable to a bank; due in monthly payments of $38,681 through January 2016 when the monthly
payment was changed to $8,869 (with remaining balance due on maturity) including interest at 4.50% through maturity in April of 2017. The loan is collateralized by equipment, accounts receivable, and inventory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |      | 482,015   |  |      |   | 593,283   | 



11



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|7. | REVOLVING LINE-OF-CREDIT AND LONG-TERM DEBT (CONTINUED)
|-- | -------------------------------------------------------



|                                                                                                                                                                                                                                                                                                                       |  |      |            |  |      |   |            | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- |  | ---- | - | ---------- | 
|                                                                                                                                                                                                                                                                                                                       |  | 2016 |            |  | 2015 |  
|Note payable to a bank; due in monthly payments of $16,164 through January 2016 when the monthly
payment was changed to $7,583 (with remaining balance due on maturity) including interest at 4.50%, through maturity in September 2018. The loan is collateralized by equipment, accounts receivable, and inventory.  |  | $    | 411,956    |  |      | $ | 490,280    | 
|Note payable to a bank; due in monthly payments of $9,448 through January 2016 when the monthly
payment changed to $4,518 (with the remaining balance due on maturity) including interest at 4.50% through maturity in September of 2018. The loan is collateralized by equipment, accounts receivable, and inventory. |  |      | 245,528    |  |      |   | 292,365    | 
|                                                                                                                                                                                                                                                                                                                       |  |      |            |  |      |   |            | 
|                                                                                                                                                                                                                                                                                                                       |  |      | 10,840,969 |  |      |   | 11,750,325 | 
|Less current maturities                                                                                                                                                                                                                                                                                                |  |      | 1,292,826  |  |      |   | 1,538,501  | 
|                                                                                                                                                                                                                                                                                                                       |  |      |            |  |      |   |            | 
|                                                                                                                                                                                                                                                                                                                       |  | $    | 9,548,143  |  |      | $ | 10,211,824 | 
|                                                                                                                                                                                                                                                                                                                       |  |      |            |  |      |   |            | 

Annual maturities of long-term debt at December 31, 2016, are as follows:



|                         |  |   |            | 
|------------------------ |  | - | ---------- | 
|Year ending December 31, |  |   |           
|2017                     |  | $ | 1,292,826  | 
|2018                     |  |   | 1,765,236  | 
|2019                     |  |   | 6,953,638  | 
|2020                     |  |   | 829,269    | 
|2021                     |  |   |           | 
|                         |  |   |            | 
|                         |  | $ | 10,840,969 | 
|                         |  |   |            | 

At December 31, 2015, the Company converted $10.52 million of the subordinated note with a
stockholder to 144,259 shares of cumulative non-voting preferred Series E stock yielding 17.75%.

The notes payable above to a bank contain certain restrictive covenants common to these arrangements.



12



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|8. | INCOME TAX
|-- | ----------

Deferred Income TaxesNet deferred tax assets (liabilities)
consist of the following at December 31:



|                                                     |  |      |            |   |      |   |            |  
|---------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                     |  | 2016 |            |   | 2015 |  
|Deferred tax assets (liabilities):                   |  |      |            |   |      |   |            |  
|Accounts receivable                                  |  | $    | 4,000      |   |      | $ | 4,000      |  
|Contributions                                        |  |      |           |   |      |   | 7,000      |  
|Accrued expenses                                     |  |      | 48,000     |   |      |   | 71,000     |  
|NOL carryforwards (Kansas) expire beginning in 2021  |  |      |           |   |      |   | 560,000    |  
|State credit carryforwards expire beginning in 2026  |  |      | 715,000    |   |      |   | 715,000    |  
|NOL carryforwards (federal) expire beginning in 2034 |  |      |           |   |      |   | 2,379,000  |  
|Customer list                                        |  |      |           |   |      |   | (41,000    | )
|Property, plant, and equipment                       |  |      | (2,545,000 | ) |      |   | (2,651,000 | )
|                                                     |  |      |            |   |      |   |            |  
|                                                     |  |      | (1,778,000 | ) |      |   | 1,044,000  |  
|Less valuation allowance                             |  |      | (715,000   | ) |      |   | (3,661,000 | )
|                                                     |  |      |            |   |      |   |            |  
|Deferred tax (liabilities) assets                    |  | $    | (2,493,000 | ) |      | $ | (2,617,000 | )
|                                                     |  |      |            |   |      |   |            |  

At December 31, 2016 and 2015, the Company has federal capital loss carryforwards approximating $0 and
$6,998,000, state capital loss carryforwards approximating $0 and $9,325,000 respectively, and state tax credits totaling $715,000. In 2015, management determined that such carryforwards may expire before they are utilized, and has established a
valuation allowance to offset these tax assets. The current year decrease in the valuation allowance was $2,946,000 due to the net operating losses being eliminated in the debt to equity conversion.

Income Tax Expense (Benefit)Income tax expense (benefit) for the years ended December 31 is comprised of the following:



|         |  |      |          |   |      |   |           |  
|-------- |  | ---- | -------- | - | ---- | - | --------- | -
|         |  | 2016 |          |   | 2015 |  
|Current  |  | $    |         |   |      | $ | (636,812  | )
|Deferred |  |      | (124,000 | ) |      |   | 2,060,000 |  
|         |  |      |          |   |      |   |           |  
|Total    |  | $    | (124,000 | ) |      | $ | 1,423,188 |  
|         |  |      |          |   |      |   |           |  

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income
tax rate to pretax income from operations because of state taxes, nondeductible expenses, change in the valuation allowance and tax credits.



|9. | EMPLOYEE BENEFIT PLAN
|-- | ---------------------

The Company has a defined contribution plan covering all
employees meeting the eligibility requirements of the plan. The Company contributes a discretionary percentage of employee contributions as determined annually by the Board of Directors. Retirement plan matching expense for the years ended
December 31, 2016 and 2015 was $45,168 and $58,734, respectively.



13



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|10. | OPERATING LEASES
|--- | ----------------

The Company leases equipment under operating leases expiring in years
through 2019. Total rent expense under all operating leases amounted to $211,545 and $301,974 for the years ended December 31, 2016 and 2015, respectively.

The following is a schedule of future minimum rental payments required under the operating leases as of December 31, 2016:



|                         |  |   |         | 
|------------------------ |  | - | ------- | 
|Year Ending December 31, |  |   |        
|2017                     |  | $ | 172,745 | 
|2018                     |  |   | 64,731  | 
|2019                     |  |   | 35,040  | 
|                         |  |   |         | 
|                         |  | $ | 272,516 | 
|                         |  |   |         | 



|11. | COMMON AND PREFERRED STOCK
|--- | --------------------------

Common stock consists of Class A, B and C shares.
Class A and B shares are voting. Class C shares are non-voting. Upon a triggering event, such as a letter of intent to sell the Company, failure to meet certain EBITDA levels, or a default under the
loan agreements, the Class B shares may become Class A shares at the option of the holder. Upon corporate liquidation or dissolution, after preferred shareholders receive their liquidation value, the remaining proceeds are divided between
Class A and B shares, except that the proceeds allocated to Class B shares are allocated in part to Class C shares based on certain internal rates of return earned by one of the principal stockholders on his preferred and common stock
investment in the Company.

Preferred stock consists of series A, B, C, D and E shares carried at the original issue price of $1 per
share for Series A and B, $3.50 for Series C, $12.30 for Series D and $100 for Series E. All shares are designated as nonvoting. However, a majority of Series A, C, D and E shareholders must approve certain corporate matters of significance,
including amendments to the Articles of Incorporation, share issuances or redemptions, asset or stock sales or mergers, hiring of a Chief Executive Officer and change in number of board members. Dividends on the shares are payable when and if
declared by the board. Dividends compound annually and are cumulative. Dividend rates are 15% on Series A shares, 6% on Series B, 15% on Series C and 6% on Series D (prior to February 28, 2013 the dividend rate was 17.5% on Series D) and
17.75% of Series E. Series E shares have first priority in liquidation or dissolution, receiving their original issuance price plus unpaid dividends. Series D shares have second priority in liquidation or dissolution, receiving their original
issuance price plus unpaid dividends. Series C shares have third priority receiving 1.5 times their original issuance price plus unpaid dividends; followed by Series A shares and lastly Series B shares, both of which receive their original issue
price plus unpaid dividends. Dividend payments receive the same priority with Series C dividends payable only if Series D accumulated dividends have been paid, Series A after Series C dividends are paid and Series B after Series A
dividends are paid.



14



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|11. | COMMON AND PREFERRED STOCK (CONTINUED)
|--- | --------------------------------------



All shares may be redeemed at the holders option after six years from the date of
issuance. The redemption dates are August 2014 for Series A and B shares, August 2016 for Series C or D shares and December 2021 for Series E, or after satisfaction of all amounts due under loans extended to the Company by the holders (see Note
7). Redemption is mandatory in the case of a qualified public offering of the Companys common stock.

The agreement between the
stockholders also provides for various rights of electing the members of the Companys Board of Directors and requires consents as to the sale of the Company.

In connection with the acquisition discussed in Note 3, the Company issued warrants to an outside entity for investment banker services to
allow the entity to purchase 5,389 Class A common shares for $1 per share. No value was ascribed to the warrants. The warrants expire in August 2020.

At December 31, 2015, $10.52 million of debt was converted to 144,259 shares of preferred Series E stock.



|12. | FAIR VALUE MEASUREMENTS
|--- | -----------------------

Fair value measurements apply to all assets and liabilities
that are being measured and reported on a fair value basis. This enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the
information used to determine fair values. U.S. accounting principles require that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level1 Inputs - Quoted prices in active markets for identical assets or liabilities.

Level2 Inputs - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or
liabilities in active markets; quoted prices for similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets of
liabilities.

Level3 Inputs - Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.

Financial assets and liabilities measured at fair value on a nonrecurring
basis including the following:

Goodwill - Goodwill is subject to an annual impairment test. When the carrying value of assets
exceeds the fair values goodwill assets are adjusted. This is considered Level 3 in the valuation hierarchy.

As discussed in Note 6,
during fiscal 2015, the Company incurred $5,377,000 of goodwill impairment. The carrying value remaining for goodwill was $3,302,091 at December 31, 2016 and 2015.



15



---

GALAXY TOOL HOLDING CORPORATION

AND SUBSIDIARY

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS



|13. | MAJOR CUSTOMERS
|--- | ---------------

Sales to major customers and accounts receivable balances for the
years ended December 31 are as follows:



|           |  |                 |    |   |                                            |  |   |                 |  |  |                                            |   |  |  |    |  
|---------- |  | --------------- | -- | - | ------------------------------------------ |  | - | --------------- |  |  | ------------------------------------------ | - |  |  | -- | -
|           |  | 2016            |    |   | 2015                                       | 
|           |  | Percent ofSales |    |   | Percent ofAccountsReceivable atDecember 31 |  |   | Percent ofSales |  |  | Percent ofAccountsReceivable atDecember 31 |  
|Customer A |  |                 | 25 | % |                                            |  | 4 | %               |  |  | 5                                          | % |  |  | 9  | %
|Customer B |  |                 | 12 | % |                                            |  | 4 | %               |  |  | 9                                          | % |  |  | 0  | %
|Customer C |  |                 | 8  | % |                                            |  | 2 | %               |  |  | 7                                          | % |  |  | 17 | %
|Customer D |  |                 | 7  | % |                                            |  | 0 | %               |  |  | 12                                         | % |  |  | 17 | %



|14. | RELATED PARTIES
|--- | ---------------

The Company pays a management service fee to a stockholder. In August
2010, the Company and stockholder entered into an agreement deferring payment until the Board decides payments may resume; however, the fee continues to accrue. Total expense for the years ended December 31, 2016 and 2015 was $225,000. Included
in accrued expenses at December 31, 2016 and 2015 are fees of $1,458,750 and $1,233,750, respectively, that remain payable.

As
discussed in Note 7, the Company has a line-of-credit and a subordinated note payable with the same stockholder. Interest expense for the years ended December 31,
2016 and 2015 was $824,706 and $1,847,169, respectively, on these agreements.



|15. | SELF-FUNDED INSURANCE PLAN
|--- | --------------------------

During 2016, the Company started a partially self-funded
insurance plan for employee medical coverage. The Plan has stop-loss insurance that limits the Companys losses during the policy period to $40,000 per person or an aggregate stop-loss of 100% up to $1,100,000.



16