■ Named Executive Officers: The Compensation Committee (“Committee”) recommended an increase in the base salary for Mr. Powers to $240,000 effective October 1, 2018. The Committee also recommended an increase in the base salary for Kelly J. Marek, Chief Financial Officer, to $135,000 effective October 1, 2018. The Board approved the Committee’s recommendation in both cases. In January 2018, May 2018, and January 2019, Mr. Powers and Mrs. Marek were granted stock awards under the 2013 Omnibus Equity Plan based upon their performance. The Company believes the most effective compensation program rewards executives’ contribution in achieving and exceeding goals of the Company, and aligns executives’ interests with those of the stockholders. Moreover, the Company believes a successful compensation structure will help the Company attract and retain superior employees in key positions.

■ Profit Sharing Plans: Bonus distributions under the Company’s profit-sharing plans are determined by the Compensation Committee based on factors such as the employee’s influence on Company results, performance during the preceding years (with emphasis on the previous year) and the employee’s anticipated long-term contribution to corporate goals. No bonuses were earned by or paid to the Named Executive Officers for fiscal 2018.

■ 2013 Omnibus Equity Plan: Under the Company’s 2013 Omnibus Equity Plan, the Compensation Committee has the authority to grant the following types of awards to employees, executive officers, non-employee Directors and consultants: stock options, stock appreciation rights, restricted shares, restricted share ~~range~~units, performance shares and Class A Common Shares. Upon a termination of ~~high~~service with the Company, unvested awards generally terminate or are forfeited, except upon a termination of service as a result of death, disability or retirement, in which case awards held by a participant become immediately vested and, ~~low bids (Over-The-Counter Pink Sheets)~~in the case of stock options or stock appreciation rights, such participant, or such participant’s estate as applicable, will be able to exercise the options for the ~~Registrant's~~period of time stated in the 2013 Omnibus Equity Plan or as otherwise stated in the agreement governing his or her award. Except as otherwise provided in the 2013 Omnibus Equity Plan or a specific award agreement, upon a “change in control” (as defined under the Plan) all awards generally become fully exercisable, vested, earned and payable. Restricted share awards granted to the Named Executive Officers during fiscal 2019 and 2018 are scheduled to vest in one-third annual increments beginning on the first anniversary of the date of grant.

There were 14,334 Class A Common Shares outstanding under equity awards issued to the Named Executive Officers of the Company as of December 31, 2019. The following table shows, for the ~~periods indicated.~~ named executive officers, outstanding equity awards held by such officers at December 31, 2019:

The ~~Over-The-Counter Pink Sheet prices reflect inter-dealer prices without retail mark-up, mark-down or commissions and may not represent actual transactions. Data was supplied by Nasdaq.~~following table sets forth the compensation paid to non-employee Directors during the fiscal year ended December 31, 2019:

~~Table of Contents~~

■ Generally: For the fiscal year ended December 31, 2019, both employee and non-employee Directors received no fees for attending any Board, Committee or Special Planning meetings held during the year. Each non-employee Director was awarded 3,000 shares of Class A Common Stock on January 5, 2019 under the 2013 Omnibus Equity Plan, with the exception of Luis E. Jimenez, who was nominated to the Board on March 13, 2019. No other compensation was paid to the Company’s Directors.

■ 2013 Omnibus Equity Plan: Under the Company’s 2013 Omnibus Equity Plan, the Compensation Committee of the Board has the authority to grant stock awards to members of the Board. During the fiscal year ended December 31, 2019, there were an aggregate of 12,000 Class A Common Shares awarded to the non-employee Directors of the Company under the 2013 Omnibus Equity Plan.

~~b) HOLDERS~~ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information as of December 31, 2019 with respect to equity compensation plans (including individual compensation arrangements) under which Common Shares of the Company are authorized for issuance under compensation plans previously approved and not previously approved by shareholders of the Company.

The 2013 Omnibus Equity Plan is the Company’s share-based award program for covered employees, consultants and Directors. The plan provides the Company with flexibility to grant a variety of share-based awards, including the following: (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted share units, (v) performance shares and (vi) Class A Common Shares. Those who will be eligible for awards under the Amended and Restated 2013 Equity Plan include employees who provide services to the Company and its affiliates, executive officers, non-employee Directors and consultants designated by the Compensation Committee.

The following table sets forth, as of April 24, 2020 (unless otherwise noted), the beneficial ownership of the Company’s Common Shares by:

Unless otherwise noted, the shareholders listed in the table below have sole voting and investment powers with respect to the Common Shares beneficially owned by them. The address of each Director, nominee for Director, and executive officer is 10514 Dupont Avenue, Suite 200, Cleveland, Ohio 44108. As of ~~November 30, 2017,~~April 24, 2020, there were ~~approximately 173 shareholders of record of the Company's outstanding~~2,537,629 Class A Common Shares and ~~6 holders of record of the Company's outstanding Class B Common Shares.~~

~~In fiscal 2017, 2016 and 2015~~ ~~the Company paid no dividends on either of its Class A or Class B Common Shares. Pursuant to the Company's Amended Articles of Incorporation, no dividends may be paid on~~771,848 Class B Common Shares until cash dividends of ten cents per share per fiscal year are paid on Class A Common Shares. Any determination to pay cash dividends in the future will be at the discretion of the Board of Directors after taking into account various factors, including the Company's financial condition, results of operations and current and anticipated cash needs.

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

The Company historically operated two divisions: 1) indicators and gauges that sell primarily to companies in the aircraft and locomotive industries and 2) automotive diagnostic tools and equipment that sell to original equipment manufacturers, (OEMs). and the aftermarket. These divisions are now being reported as the Test and Measurement segment. The Company now operates in three reportable segments described in the reportable segment information below.

~~Management continues to monitor its expense reduction initiatives implemented and revised from time to time.~~ ~~The Company recently reduced employee count and expenses and replaced several internal functions with external service providers.~~

The Company is required to report segment information disclosures based on how management evaluates operating performance and resource allocations. The Company has determined that it has three reportable segments: 1) Test and ~~Measurement, 2) Industrial Hose, and 3) Commercial Air Handling.~~

~~The Test and Measurement segment is the legacy business that existed prior to 2016. This business segment includes electronic testing products designed and~~ manufactured for the automotive and trucking industries. It also includes indicators and gauges for the locomotive and aircraft industries. The automotive diagnostic products are sold to original equipment manufacturers and to the aftermarket under several brand names and through a variety of distribution methods. In the aircraft industry, primary customers are manufacturers of commercial, military and personal airplanes. In the locomotive industry, indicators and gauges are sold to manufacturers and servicers of railroad equipment and locomotives.

The Industrial Hose segment was started on July 1, 2016, when the Company purchased the assets of the Federal Hose business in Painesville, Ohio. This business segment includes the manufacture of flexible interlocking metal hoses and the distribution of silicone hoses. Metal hoses are sold primarily to major heavy-duty truck manufacturers and major aftermarket suppliers in North America. Metal hoses are also sold into the agricultural, industrial and petrochemical markets. Silicone hoses are distributed to a number of industries in North America, including agriculture and general industrial markets.

~~The Commercial Air Handling segment was added on June 1, 2017, when the Company purchased certain assets and assu~~med certain liabilities of Air Enterprises Acquisition LLC in Akron, Ohio. The acquired business, which operates under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. Its customers are typically in the health care, education, pharmaceutical and industrial manufacturing markets in the United States. This segment also sells to select international markets. The custom air handling units are constructed of non-corrosive aluminum, resulting in sustainable, long-lasting, and energy efficient solutions with life expectancies of 50 years or more. These products are distributed through a network of sales representatives, based on relationships with health care networks, building contractors and engineering firms. The custom air handling equipment is designed, manufactured and installed under the brand names FactoryBilt® and SiteBilt®. FactoryBilt® air handling solutions are designed, fabricated and assembled in a vertically integrated process entirely within the Akron, Ohio facility. SiteBilt® air handling solutions are designed and fabricated in Akron, but are then crated and shipped to the field and assembled on-site.

Sales for the fiscal year ended September 30, 2017 increased to $23.8 million, an increase of approximately 258% from fiscal 2016 sales of $6.6 million. This increase in sales was mainly attributable to recognizing 12 months of sales in 2017 of industrial hose manufactured and distributed by Industrial Hose segment which was acquired on July 1, 2016, compared to three months recognized in 2016 and recording four months of sales in 2017 of commercial air handling units designed and installed by Commercial Air Handling segment which was acquired on June 1, 2017. The Test and Measurement segment recorded increased sales of indicators, gauges and automotive diagnostics tools of $6.6 million in 2017 compared to $4.8 million in 2016.

In fiscal 2017, cost of sales was $15.8 million with a gross margin of 34% compared to cost of sales of $4.3 million and gross margin of 35% in fiscal 2016. The dollar increase was mainly attributable to recognizing 12 months of ~~sales in 2017 from the Industrial Hose segment compared to three months recognized in 2016 and recording four months of sales in 2017 from the Commercial Air Handling segment.~~

Product development expenditures in fiscal 2017 were $0.8 million or 3% of sales compared to $1.0 million or 16% respectively, in fiscal 2016. The percentage decrease between fiscal 2017 and 2016 was due primarily to acquisitions of the Industrial Hose and Commercial Air Handling business segments in 2016 and 2017, respectively. Product development expenditures relate solely to the Test and Measurement segment. The dollar decrease between fiscal 2017 and 2016 was primarily due to employee reductions. Product development salaries were $0.5 million in 2017 compared to $0.7 million in 2016. Management believes current resources will be sufficient to maintain current product development commitments and to continue to develop a reasonable flow of new diagnostic products for both the OEM and aftermarket customers.

~~Selling,~~ general and administrative (SG&A) expenses were $4.5 million which was 22% of sales in fiscal 2017, $1.9 million or 29% of sales in fiscal 2016 and $1.7 million or 30% of sales in fiscal 2015. SG&A expenditures in fiscal 2017 were approximately 125% higher than the amount spent in fiscal 2016. The increase, both in dollars and as a percentage of sales, is primarily attributable to recognizing 12 months of expenses in 2017 from the Industrial Hose segment compared to three months recognized in 2016 and four months of expenses in 2017 from the Commercial Air Handling segment.

~~Interest charges were $0.3 million in fiscal 2017 compared with $0.1 million in fiscal 2016 and $657 in fiscal 2015. The increase interest expense in fiscal 2017 is primarily due the JP~~ ~~Morgan Chase term loan and revolving credit facility entered into on June 1, 2017 related to the acquisition of the Commercial Air Handling segment.~~

~~The Company had deferred tax assets net of a valuation allowance of $2.8 million as~~ of September 30, 2017. Pending tax reform proposals in the United States Congress would, if enacted, result in a reduction in corporate income tax rates. Such a reduction could have the effect of reducing the amount of potential tax savings that could be obtained through the utilizations of these deferred tax assets. In the event that it is determined that the value of the Company’s deferred tax assets has been reduced, the Company will be required to recognize a valuation allowance with respect to that reduction, which will have an effect of reducing net income during the period in which it is recognized.

~~Income tax~~ expense in fiscal 2017 was $0.8 million with an effective tax rate of 35.5%, compared to negative $3.3 million in fiscal 2016, which represented a tax benefit resulting from a decrease in the valuation allowance on deferred income taxes. It is anticipated that the effective tax rate in the near future will be similar to 2017 as the Company believes it will be able to utilize the majority of the net operating loss and research and development credit carryforwards before they expire. The deferred tax benefits begin to expire in fiscal 2018 and are available through 2038.

~~Net~~ income in fiscal 2017 was $1.4 million, or $0.49 per share as compared to $4.6 million, or $2.38 per share in fiscal 2016. The Company recognized a net loss of $0.1 million, or $0.07 per share in fiscal 2015. The decrease in net income in fiscal 2017 versus fiscal 2016 was attributed to a legal settlement of $2.7 million and recovery of income taxes of $3.3 million in 2016.

~~The Company has available a net operating loss~~ carryforward of approximately $3.0 million and research and development and other tax credit carryforwards of approximately $2.1 million that begin to expire in fiscal 2018. The Company's deferred tax asset of $3.2 million has been offset by a valuation allowance of $0.5 million. Because of the uncertainties involved with this significant estimate, it is reasonably possible that the Company's estimate may change.

Sales for the fiscal year ended September 30, 2016 increased to $6.6 million, an increase of approximately 14% from fiscal 2015 sales of $5.9 million. This increase in sales was primarily attributable to higher product sales of approximately $0.8 million. Product sales were $6.4 million in fiscal 2016 compared to $5.6 million in fiscal 2015. This increase in sales was volume-driven and attributable primarily to a $1.8 million increase of sales in industrial hose manufactured and distributed by the Industrial Hose segment which was acquired on July 1, 2016, offset by decreases in product sales in the Test and Measurement segment. Within the Test and Measurement segment, OEM product sales decreased approximately $0.8 million and aftermarket product sales decreased approximately $0.2 million and was volume driven, offset in part by an increase in emission product sales of approximately $0.1 million. Sales of indicator products declined by approximately $0.1 million and was volume related. Fiscal 2015 benefited from a large order from a Tier 1 Supplier to a large OEM with no similar order in 2016. The decrease in service sales in fiscal 2016 was volume related and attributable to lower chargeable repair sales.

Cost of sales of $4.3 million and gross margin of 35% were recognized in fiscal 2016 compared to cost of sales and gross margin of $3.2 million and 46% respectively, in fiscal 2015. The increase in the cost of sales between 2016 and 2015 was due primarily to product mix and cost specifics of the products sold after the acquisition of the Industrial Hose segment on July 1, 2016, which represented 26% of the sales for the fiscal year 2016. The company also experienced product specific technical issues on chargeable repairs in fiscal 2016.

~~Product~~ development expenditures during fiscal 2016 were $1.0 million or 16% of sales compared to $1.0 million or 18% of sales in fiscal 2015. The percentage decrease between fiscal 2016 and 2015 was due primarily to the increase in sales volume during 2016.

~~App~~roximately 66% of the dollar increase of selling, general and administrative expense in fiscal 2016, or $0.2 million represents marketing and administrative expenses incurred by the Industrial Hose segment which was acquired on July 1, 2016. Product sales other than Industrial Hose segment sales declined during fiscal 2016 contributing to the percentage increase.

~~The legal settlement in fiscal 2016 was $2~~.3 million and represents the proceeds received (after legal fees) for claims against BP Exploration & Product, Inc. for damages arising out of the BP Deepwater Horizon Oil Disaster. The settlement funds are for economic and property damages that were the result of the 2010 explosion on the Deepwater Horizon Oil Rig and subsequent oil spill in the Gulf of Mexico.

~~Income taxes in fiscal 2016 were a negative $3~~.3 million, representing a tax benefit resulting from a decrease in the valuation allowance on deferred income taxes of $3.3 million. Income taxes in fiscal 2015 were $0 which includes an increase in the valuation allowance on deferred income taxes of $0.1 million.

~~The increase in net income in fiscal 2016 versus fiscal 2015 was primarily due to the decrease of the valuation allowance on the deferred tax asset of~~ ~~$3.3 million and the legal settlement for claims against BP Exploration & Product, Inc. for damages arising out of the BP Deepwater Horizon Oil Disaster of $2.3 million.~~

Current assets of $15.4 million at September 30, 2017 were 2.7 times current liabilities and the total of cash and cash equivalents and receivables was 1.6 times current liabilities. These ratios compare to 3.3 and 1.9 respectively at the end of fiscal 2016. Cash and cash equivalents were $1.0 million at September 30, 2017 and $3.1 million at September 30, 2016. Total current assets increased by approximately $7.7 million from the previous year end due primarily to an increase in inventory, accounts receivable, costs in excess of billings and prepaid expenses of approximately $0.5 million, $7.2 million, $1.6 million, and $0.3 million, respectively. The increases were offset by a decrease in cash and cash equivalents of $2.1 million. The increases in inventory, accounts receivable, costs in excess of billings and prepaid expenses was due primarily to the acquisition of the Commercial Air Handling segment on June 1, 2017. The decrease in cash and cash equivalents was due primarily to the 2016 receipt of the legal settlement from BP Exploration & Product, Inc. for damages arising out of the BP Deepwater Horizon Oil Disaster.

Working capital at September 30, 2017 was $9.6 million as compared to $5.4 million a year ago. The increase of $4.2 million was due primarily to the increase in current assets as described above offset in part by increases in leases and notes payable, bank debt, trade accounts payable, accrued payroll and related expenses, accrued expenses, accrued taxes other than income taxes, billings in excess of costs and deferred revenue of approximately $0.2 million, $0.5 million, $0.8 million, $0.4 million, $0.6 million, $0.1 million, $0.4 million and $0.8 million, respectively. The increase in current liabilities, slightly offset by a decrease in notes payable related party of $0.4 million, was also due to the acquisition of the Commercial Air Handling segment on June 1, 2017.

~~Cash provided by operating activities in fiscal 2017 was $2.7 million compared to $2.5 million in fiscal 2016, and was adequate to fund the Company~~’s capital expenditures of $0.3 million. A significant portion of the capital expenditures were made to upgrade the IT infrastructure and facilities at the Hickok Corporate offices in Cleveland. The primary reason for the positive cash flow from operations was the increase in net income and increase in working capital resulting from the acquisition of the Commercial Air Handling segment.

~~Cash provided by operating activities in fiscal 2016 was $2.5 million and was adequate to fund the Company's investing activities including modest capital~~ expenditures for tooling, machinery and equipment for product manufacturing and IT infrastructure. The primary reason for the positive cash flow from operations was due to net proceeds of $2.3 million for claims against BP Exploration & Product, Inc. for damages arising out of the BP Deepwater Horizon Oil Disaster.

~~The Company used $10.6 million in investing activities in fiscal 2017. $10.3 million in cash was paid for the acquisition of the Commercial Air Handling segment on June 1, 2017 when the Company~~ entered into a Credit Agreement with JPMorgan Chase Bank, N.A. comprised of a revolving facility in the amount of $8.0 million and a term loan in the amount of $2.0 million. The term loan is payable in consecutive monthly installments of $41,667 commencing on July 1, 2017. Amounts outstanding under the term loan bear interest at variable interest rates tied to the prime rate or LIBOR, and the maturity date of the term loan is June 1, 2021. The revolving facility includes a $3.0 million sublimit for letters of credit. Amounts outstanding under the credit facility bear interest at variable rates tied to the prime rate or LIBOR and mature on June 1, 2020. The Company’s obligations under the Credit Agreement are secured by a blanket lien on all of the assets of the Company and its subsidiary. The Credit Agreement also includes customary representations, warranties, reporting requirements and covenants, including fixed charge coverage ratio and senior funded indebtedness to EBITDA financial covenants. See Note 7 of the Financial Statements.

In connection with entering into the Credit Agreement with JPMorgan Chase Bank, N.A., the Company made a onetime prepayment of a portion of the outstanding principal under outstanding promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of $0.5. The Company made cash payments of $1.8 million on the revolver and term loan during fiscal 2017, and had $5.0 million outstanding and $3.0 million available on the revolving facility and $1.9 million outstanding on the term loan at September 30, 2017. The Company was in compliance with all debt covenants at September 30, 2017.

~~In June 2016, management entered into an unsecured revolving credit agreement with First Francis, owner of Federal Hose, w~~herein, pursuant to an Agreement and Plan of Merger, First Francis became a major shareholder of the Company on July 1, 2016 when the Company completed the acquisition of Federal Hose. Mr. Edward Crawford and Mr. Matthew Crawford are the shareholders of First Francis and serve on the Board of directors of Hickok Incorporated. Matthew Crawford is the son of Edward Crawford. The Company had $0.3 million outstanding borrowings on the credit facility at September 30, 2016. The outstanding balance of $0.3 million plus accrued interest was paid in full in October 2016. The revolving line of credit expired on May 31, 2017.

~~In connection with the acquisition of Federal Hose on July 1, 2016, the Company also issued to First Francis. two promissory notes in the ag~~gregate principal amount of $4.8 million, bear interest at a rate of 4.0% per annum, are amortized over a ten-year period, and will be full due six years after the issue date. The Company made cash payments of $1.0 million on the promissory notes during fiscal 2017. At September 30, 2017, the outstanding balance on these notes was $4.0 million.

~~In December 2016, management entered into Amendment No. 5 of the Convertible Loan Agreement which provides up to $0.5 million of liquidity to meet on going workin~~g capital requirements. The Convertible Loan Agreement, as amended, is between the Company and a major shareholder who is also affiliated with two Directors, as discussed in Note 4 to the Company's financial statements. This amended agreement modified the terms of the previously amended agreement by extending the due date of the loan agreement from December 30, 2016 to December 30, 2017 and continues to allow $0.3 million of borrowing on the agreement at the Company's discretion. At September 30, 2017 and 2016, the outstanding balance on the loan was $0.2 million, respectively.

~~Management continues to tightly control expenses and will take~~ ~~actions as deemed necessary to maintain the necessary liquidity. Management believes the Company has adequate liquidity for working capital, capital expenditures and other strategic initiatives.~~

The Company has a secured performance and payment bond in the amount of $1.6 million as surety on completion of the requirements of a commercial air handling contract scheduled to complete in January 2018. The Company has no other off-balance sheet arrangements (as defined in Regulation S-B Item 303 paragraph (a)(2)) that have or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Over the past five years, inflation has had a minimal effect on the Company because of low rates of inflation and the Company's policy minimizing the acceptance of long-term fixed rate contracts without provisions permitting adjustment for inflation.

This report contains “forward-looking statements” within the meaning of the securities laws, for which we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as “expect,” “anticipate,” “intend,” “may,” “plan,” “will,” “should,” “could,” “would,” “assume,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” “seek,” and similar expressions, as well as statements in the future tense. We have based these forward-looking statements on our current expectations and projections about future events, based on information currently available to us. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or means by, which such performance or results will be achieved.

~~Forward-looking statements are subject to risks, uncertainties and assumptions~~. Unforeseen developments could cause actual performance or results to differ substantially from those expressed in or suggested by the forward-looking statements. Management does not assume responsibility for the accuracy or completeness of these forward-looking statements. There is no regulation requiring an update of any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations.

The Company is exposed to certain market risks from transactions that are entered into during the normal course of business. The Company has not entered into derivative financial instruments for trading purposes. The Company's primary market risks are exposure related to interest rate risk and equity market fluctuations. The Company's debt subject to interest rate risk was the funds available from the JPMorgan Chase term loan and revolving credit agreement and the First Francis convertible note agreement and revolving credit agreement. The Company had an outstanding balance on the JPMorgan Chase Bank term loan at September 30, 2017, of $1.9 million which is subject to a rate of interest of the Prime Rate plus 0.25%. In addition, the Company had an outstanding balance on the JPMorgan Chase Bank revolving credit agreement at September 30, 2017, of $5.0 million which is subject to a rate of interest equal to the Prime Rate. The Company had an outstanding balance on the Roundball convertible note at September 30, 2017, of $0.2 million which is subject to a fixed rate of interest of 0.34%. In addition, the Company also issued to First Francis Company Inc. a promissory note in the principal amount of $2.8 million with $2.4 million outstanding at September 30, 2017 and a promissory note in the principal amount of $2.0 million with $1.6 million outstanding at September 30, 2017, each of which is secured by all of the assets of Hickok and certain of its subsidiaries, bears interest at a rate of 4.0% per annum, is amortized over a ten year period, and will be fully due six years after the issue date. These promissory notes contain customary provisions regarding acceleration of the Company's obligations as a result of an event of default. The First Francis revolving credit agreement Company balance of $0.3 million plus accrued interest was paid in October 2016. As a result, the Company believes that the market risk relating to interest rate movements is minimal.

~~The following pages contain the Financial Statements and Supplementary Data as specified for Item 8 of Part II of Form 10-K.~~

~~SHAREHOLDERS AND BOARD OF DIRECTORS~~
~~HICKOK INCORPORATED~~
~~CLEVELAND, OHIO~~

~~We have audited the accompanying consolidated balance sheets of HICKOK INCORPORATED as of September~~ 30, 2017 and 2016, and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the three-year period ended September 30, 2017. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board~~ (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hickok Incorporated as of September 30, 201~~7 and 2016, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2017 in conformity with accounting principles generally accepted in the United States of America.

~~CONSOLIDATED STATEMENT~~S ~~OF INCOME~~
~~HICKOK INCORPORATED~~
~~FOR THE YEARS ENDED SEPTEMBER 30~~

~~CONSOLIDATED STATEMENT~~S ~~OF STOCKHOLDERS' EQUITY~~
~~HICKOK INCORPORATED~~
~~FOR TH~~~~E YEARS ENDED SEPTEMBER 30~~

~~CONSOLIDATED STATEMENT~~S OF ~~CASH FLOW~~
~~HICKOK INCORPORATED~~
~~FOR THE YEARS ENDED SE~~~~PTEMBER 30~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~
~~HICKOK~~ ~~INCORPORATED~~
~~SEPTEMBER 30, 2017, 2016 AND 2015~~outstanding.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-K and Article 8 of Regulation S-X. ~~In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.~~

~~Principles of Consolidation~~
The consolidated financial statements include the accounts of Hickok Incorporated and its wholly-owned domestic subsidiaries. Significant intercompany transactions and balances have been eliminated in the financial statements.

~~Certain prior year amounts were reclassified to conform to the current year~~’s presentation, including transaction costs related to acquisitions that were reclassified from selling, general and administrative to other (income) expenses as these costs are not considered as operating costs. These reclassifications have no effect on the financial position or results of operations reported as of and for the periods presented.

~~New Accounting Standards~~
~~The Company did not incur any material impact to its financial condition or results of operations due to the adoption of any new accounting standards during the periods reported.~~

~~In May 2017, the Financial~~ Accounting Standards Board (FASB), issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. This ASU is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." ASU 2017-04 eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The standard, which should be applied prospectively, is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2017-04 on our consolidated financial statements.

In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments." The amendments in this update provide guidance on eight specific cash flow issues, thereby reducing the diversity in practice in how certain transaction are classified in the consolidated statements of cash flows. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-15 on our consolidated financial statements. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.* Less than one percent.

~~Table of Contents~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard will be effective for fiscal years beginning after December 31, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the ~~consolidated financial statements.~~

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU 2016-09) a new standard that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from the other income tax cash flows. The standard also allows the Company to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flow statements, and provides an accounting policy election to account for forfeitures as they occur. The new standard is effective for the Company beginning October 1, 2017, with early adoption permitted. This new standard is not expected to have a significant impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued (ASU 2016-02) a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The new standard will be effective for the Company beginning January 1, 2019, with early adoption permitted. We are evaluating the impact this standard will have to our financial statements.

In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as Accounting Standards Update (ASU) 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that “an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.” The update is effective for financial statement periods beginning after December 15, 2017, with early adoption prohibited. We are continuing to assess the impact of adopting ASU 2014-09 on our financial position, results of operations, and related disclosures, and we have not yet determined the full impact that the standard will have on our reported revenue or results of operations, but expect to use the modified retrospective approach, under which the cumulative effect of initially applying the new guidance is recognized as an adjustment to the opening balance of retained earnings upon adoption effective January 1, 2018. We currently believe that the adoption of ASU No. 2014-09 will not significantly change the recognition of revenues associated with product sales when performance obligations are met at a point in time as products are shipped. The Company will continue to assess the impact of the new standard in relation to performance obligations for commercial air handling units, which are measured over time using the cost-to-cost percentage completion method, as well as to the new required disclosures, along with industry trends and additional interpretive guidance, and it may adjust its implementation plan accordingly. We do not expect the adoption of ASU 2014-09 to have a material impact on our consolidated financial statements.

~~Concentration of Credit Risk~~
The Company sells its products and services primarily to customers in the United States of America and to a lesser extent overseas. All sales are made in U.S. dollars. The Company extends normal credit terms to its customers. With the acquisitions of Federal Hose in July 2016 and Air Enterprises in June 2017, the Company has greatly expanded its customer base into a wide array of industries. In fiscal 2017, there were no sales to any one customer greater than 10% of consolidated sales of the Company. Sales to one customer in the automotive industry approximated $1.3 million in 2016 and $2.2 million in 2015.

~~Use of Estimates in the Prepa~~~~ration of Financial Statements~~
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts of certain assets and liabilities and disclosure of contingencies at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

~~Table of Contents~~

~~Fair~~ ~~Value of Financial Instruments~~
Accounting for "Financial Instruments" requires the Company to disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable, and convertible notes payable. The carrying amounts reported in the consolidated balance sheet for assets and liabilities qualifying as financial instruments is a reasonable estimate of fair value.

~~Revenue Recognition~~
The Company records sales as manufactured items are shipped to customers on an FOB shipping point arrangement, at which time title passes and the earnings process is complete. The Company primarily records service sales as the items are repaired. The customer does not have a right to return merchandise unless defective or warranty related and there are no formal customer acceptance provisions. Sales returns and allowances were immaterial during each of the three years in the periods ending September 30, 2017, 2016 and 2015.

Revenue from contracts is recognized on the percentage-of-completion method measured by the percentage of costs incurred to date to total estimated costs for each contract. Contract costs include all direct costs and allocations of indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which it is determined a loss will be incurred. As long-term contracts extend over one or more years, revisions in costs and profits estimated during the work are reflected in the accounting period in which the facts requiring the changes become known.

Because of the inherent uncertainties in estimating costs, it is at least reasonably possible the estimates of costs and revenue will change in the next year. Revenue earned on contracts in progress in excess of billings are classified as an asset. Amounts billed in excess of revenue earned are classified as a liability. The length of the contracts varies, but is typically three to six months.

R~~evenue relating to replacement parts is recognized upon the shipment of goods or rendering of services to customers.~~

~~Unearned Revenue~~

~~Unearned revenue consists of customer deposits and costs and estimated earnings in excess of billings related to the Commercial Air Handling segment.~~

~~Deferred Commissions~~

~~Commissions are earned based on the percentage-of completion of the contract. Commissions are paid upon receipt of payment for units shipped.~~

~~Product Warranties~~

~~The Company provides a warranty for its cu~~stom air handling business covering parts for 12 months from startup or 18 months from shipment, whichever comes first. The warranty reserve is maintained at a level which, in management’s judgment, is adequate to absorb potential warranties incurred. The amount of the reserve is based on management’s knowledge of the contracts and historical trends. Because of the uncertainties involved in the contracts, it is reasonably possible that management’s estimates may change in the near term. However, the amount of change that is reasonably possible cannot be precisely estimated at this time.

The Company warrants certain products against defects for primarily 12 months. The both warranty expense and reserve amounts are immaterial during each of the three years in the periods ending September 30, 2017, 2016 and 2015.

~~Product Development Costs~~
Product development costs, which include engineering production support for the test and measurement business segment, are expensed as incurred. Research and development performed for customers represents no more than 1% of sales in each year. The arrangements do not include a repayment obligation by the Company.

~~Cash and Cash Equivalents~~
The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. From time to time the Company maintains cash balances in excess of the FDIC limits.

~~Table of Contents~~

~~Accounts Receivable~~
~~The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.~~

~~Inventory~~
Inventory is valued at the lower of cost (first-in, first-out) or market. The Company establishes reserves for excess and obsolete inventory based upon historical inventory usage trends and other information.

~~Property, Plant and Equipment~~
Property, plant and equipment are carried at cost. Maintenance and repair costs are expensed as incurred. Additions and betterments are capitalized. The depreciation policy of the Company is generally as follows:

Class

Method

Estimated Useful Lives (years)

Buildings & Improvements

Straight-line
10 to 40
Machinery and equipment

Straight-line
3 to 10
Tools and dies

Straight-line
3

~~Valuation of Long-Lived Assets~~
Long-lived assets such as property, plant and equipment and software are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the total of the expected future undiscounted cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying value of the asset.

~~Shipping and Handling Costs~~
~~Shipping and handling costs are classified as cost of product sold.~~

~~Income Taxes~~
The provision for income taxes is computed on domestic financial statement income. Where transactions are included in the determination of taxable income in a different year, deferred income tax accounting is used.

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus any change in deferred taxes during the year. Deferred taxes result from differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

~~Income per Common Share~~
~~Income per common share information is computed on the weighted average number of shares outstanding during each period.~~

3.	~~ACCOUNTS RECEIVABLE~~

The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The reserve for doubtful accounts was ~~$10,275 and $10,000 at September 30, 2017 and 2016, respectively.~~

~~Table of Contents~~

4.(1)

~~INVENTORIES~~Pursuant to Rule 13d-3 under the Exchange Act (“Rule 13d-3”), a person is deemed to be a beneficial owner of a security if he or she has or shares voting or investment power with respect to such security or has the right to acquire beneficial ownership within 60 days. Accordingly, the amounts shown throughout this Amendment No. 1 to the Annual Report on Form 10-K do not purport to represent beneficial ownership, except as determined in accordance with Rule 13d-3.

~~Inventory is~~ ~~valued at the lower of cost (first-in, first-out) or market and consist of the following at September 30:~~

2017

2016

Raw materials and component parts
$ 2,659,171 $ 2,022,092
Work-in-process
370,506 438,447
Finished products
1,301,338 1,083,852
Total Inventory 4,331,015 3,544,391
Less: Inventory reserves
473,252 235,592
Net Inventory
$ 3,857,763 $ 3,308,799

(2)
Daughter of the late Robert D. Hickok.

5.(3)

~~GOODWILL AND OTHER INTA~~~~NGIBLE ASSETS~~Shares are held by the Aplin Family Trust.

Intangible assets relate to the purchase of businesses on June 1, 2017 and July 1, 2016. Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is not amortized, but is reviewed on an annual basis for impairme~~nt. Amortization of other intangible assets is calculated on a straight-line basis over periods ranging from one year to 15 years. Intangible assets at September 30 are as follows:~~

2017

2016

Customer List: Backlog
$ 1,970,000 $ 1,280,000
Non-Compete Agreements
200,000 -
Trademarks
340,000 -
Total Other Intangibles 2,510,000 1,280,000
Less: Accumulated Amortization
396,344 29,091
Other Intangibles, Net
$ 2,113,656 $ 1,250,909

~~Amortization of other intangibles~~ ~~was $367,253, $29,091 and $0 for the fiscal years ended September 30, 2017, 2016 and 2015, respectively.~~

(4)
The ownership of 112,752 Class A Common Shares and 118,042 Class B Common Shares held by the Aplin Family Trust are attributed to Mrs. Elliott pursuant to the SEC’s rules.

6.(5)

~~PROPERTY, PLANT AND EQUPMENT,~~ ~~NET~~Shares acquired in October 2018.

Property, plant and equipment are recorded at cost and depreciated over their useful lives. Maintenance and repair costs are expenses as incurred. Property, plant and equipment at September 30 are as follows:

2017

2016

Land
$ 233,479 $ 233,479
Buildings and Improvements
2,195,915 1,448,978
Machinery & Equipment
5,075,204 3,392,734
Total Property, Plant & Equipment 7,504,598 5,075,191
Less: Accumulated Depreciation
4,119,788 3,771,268
Property Plant & Equipment, Net
$ 3,384,810 $ 1,303,923

~~Table of Contents~~

~~Depreciation expense, including depreciation on capitalized leases, amounted to $350,641, $133,422, and $68,686 for the fiscal years ended September 30, 2017, 2016 and 2015, respectively.~~

(6)
According to Schedule 13D/A filed January 13, 2015 with the Securities and Exchange Commission ("SEC"), Roundball, The Three Bears Trust, Matthew V. Crawford, and Steven H. Rosen have shared voting and dispositive power over 693,285 shares of the Company’s Class A Common Shares, including 20,000 of the Company's Class B Common Shares, rights to acquire Class A Common Shares through a warrant agreement, and rights to convert outstanding debt into Class A Common Shares. Subsequent to January 13, 2015, Roundball exercised the warrants to acquire Class A Common Shares and converted the outstanding debt into Class A and Class B Common Shares, pursuant to the conversion rights, as amended. The beneficial ownership of 672,407 Class A Common Shares held by Roundball is attributable to Mr. Matthew V. Crawford, Three Bears Trust, and Mr. Rosen pursuant to the SEC’s rules.

7. (7)

~~BANK DEBT~~The beneficial ownership of 170,000 Class B Common Shares held by Roundball is attributed to Mr. Matthew V. Crawford, Three Bears Trust, and Mr. Rosen pursuant to the SEC’s rules.

~~The Company,~~ entered into a Credit Agreement on June 1, 2017 with JPMorgan Chase Bank, N.A. as lender (the “Credit Agreement”). The Credit Agreement is comprised of a revolving facility in the amount of $8,000,000, subject to a borrowing base (determined based on 80% of Eligible Accounts, plus 50% of Eligible Progress Billing Accounts, plus 50% of Eligible Inventory, minus Reserves as defined in the Credit Agreement) and a term loan in the amount of $2,000,000, payable in consecutive monthly installments of $41,667 commencing on July 1, 2017.

~~The revolving facility includes a $3 million sublimit for the issuance of letters of credit.~~ Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.00% for Prime Rate loans and (ii) 2.00% for LIBOR loans. The maturity date of the revolving facility is June 1, 2020. Interest for borrowings under the term loan accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.25% for Prime Rate loans and (ii) 2.25% for LIBOR loans. The maturity date of the term loan is June 1, 2021. The Credit Agreement includes a commitment fee on the unused portion of the revolving facility of 0.25% per annum payable quarterly. The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants, including fixed charge coverage ratio and senior funded indebtedness to EBITDA ratio financial covenants.

In connection with entering into the Credit Agreement, the Company made a onetime prepayment of a portion of the outstanding principal under outstanding promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of $500,000. The Company will not be required to make any of the scheduled quarterly payments due under these notes for the remainder of calendar 2017. First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company.

~~Bank debt~~ ~~balances consist of the following at September 30:~~

2017

2016

Term Debt
$ 1,875,000 $ -
Revolving Debt
5,044,486 -
Total Bank Debt
6,919,486 -
Less: Current Portion
500,000 -
Non-Current Bank Debt
6,419,486 -
Less: Unamortized Debt Costs
44,663 -
Net Non-Current Bank Debt
$ 6,374,823 $ -

~~The Company had $3.0 million available to borrow on the revolving credit facility at September 30, 2017.~~ ~~The minimum principal payments due on the term loan until it matures in 2021 are $500,000 in 2018, $ 500,000 in 2019, $500,000 in 2020, and $375,000 in 2021.~~

~~Table of Contents~~

(8)	Includes 1,000 Class A Common Shares which may be acquired upon the exercise of immediately exercisable options.

8.(9)

~~NOTES PAYABLE~~According to Schedule 13D/A filed January 18, 2011 with the SEC, the following reporting persons have shared voting and shared dispositive power over 51,114 shares of the Company's Class A Common Shares: Intrinsic Value Capital, L.P., Glaubman & Rosenberg Partners, LLC, Glaubman & Rosenberg Advisors, LLC, Joseph Hain and Kirin Smith. According to Form 4 filed December 27, 2019, Kirin Smith has sole voting and dispositive power over an additional 16,935 such shares (for a total, combined with the above mentioned 51,114 shares, of 68,049 Class A Common Shares). In addition, there are 2,000 Class A Common Shares which may be acquired by Mr. Smith upon the exercise of immediately exercisable options.

(10)	First Francis Company Inc. is owned and controlled 49% by Mr. Edward Crawford and 51% by Mr. Matthew Crawford. The table assumes that Messrs. Edward and Matthew Crawford share the beneficial ownership of the Company stock in accordance with their ownership of First Francis Company Inc.

(11)	Includes 17,334 Class A Common Shares which the Directors and the Executive Officers of the Company have the right to acquire upon the exercise of immediately exercisable options and unvested restricted stock awards.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

During the fiscal year ended December 31, 2019, no transactions were proposed or occurred that are required to be disclosed pursuant to Item 404 of Regulation S-K under the Exchange Act, except as follows:

■Convertible ~~Notes Payable~~

Loan Agreement with Roundball, LLC: On December 30, 2011, management entered into a Convertible

Loan Agreement (“~~Convertible Loan”)~~ with ~~Roundball, LLC (“Roundball”).~~Roundball. The Convertible Loan Agreement provides approximately $467,000 of liquidity to meet ~~on- going~~ongoing working capital requirements of the Company and allows $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.25%. Roundball, a major shareholder of the Company, is an affiliate of Steven Rosen and Matthew Crawford, Directors of the Company.

T~~here~~There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible ~~Loan.~~Loan Agreement. On December ~~20, 2016,~~29, 2018, management entered into Amendment No. 57 of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

●

Continues to provide approximately $467,000 of liquidity to meet on going working capital requirements;

●

Continues to allow $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.34%; ~~and~~

●

E~~xtends~~Expands the rights available to Roundball under the Roundball Conversion Option (the “Conversion Option”) to include the option, exercisable by Roundball in its sole discretion, and subject to requisite shareholder approval thereof and the terms and conditions set forth therein, to purchase up to 75,000 shares of Class B Common Stock of the Company at the Conversion Price; and

●

Extends the due date of the loan agreement from December 30, ~~2016~~2018 to December 30, ~~2017.~~2019.

~~The outstanding balance on the Convertible Loan as of~~ ~~September 30, 2017, and September 30, 2016 was $200,000, respectively.~~

As part of the Convertible Loan, ~~Agreement between the Company and Roundball~~, the parties entered into a Warrant Agreement, dated December 30, 2012 (as amended to date, the “Warrant Agreement”), whereby the Company issued a warrant to Roundball to purchase, at its option, up to 100,000 shares of Class A Common Stock of the Company at an exercise price of $2.50 per share, subject to certain anti-dilution and other adjustments. The ~~warrant agreement,~~Warrant Agreement, as amended, ~~expires~~expired December 30, ~~2017.~~2019.

~~Short-Term Financing~~
On ~~June 3, 2016, management entered into~~December 11, 2019, Roundball provided notice to the Company of its exercise of the Conversion Option and exercised the Warrants. On December 18, 2019, the Company issued 75,000 Class B Shares and 251,489 shares of the Company’s Class A common stock (the “Class A Shares”) to Roundball following the Company’s receipt on December 11, 2019, of a notice from Roundball of its exercise of the Conversion Option in respect of $466,880 of the principal and interest amount outstanding under the Promissory Note between the Company and Roundball, thereupon retiring all outstanding debt incurred and accrued interest under the Promissory Note.

On December 11, 2019, Roundball exercised the Warrants for 100,000 of the Company’s Class A Shares at an ~~unsecured revolving credit agreement~~exercise price of $2.50 per share, resulting in an aggregate exercise price of $250,000.

The outstanding balance on the Convertible Loan as of December 31, 2019 and 2018, respectively was $0 and $200,000.

■ Promissory Notes Issued to First Francis Company Inc.: The Company has two separate outstanding promissory notes with First Francis Company Inc. (“First ~~Francis Company Inc. became a major shareholder of the Company on~~Francis”), which were originally issued in July 1, 2016 ~~when the Company completed~~in connection with the acquisition of Federal Hose Manufacturing ~~Company, LLC.~~(“Federal Hose”) and which were amended in July 2018 in connection with acquisition of CAD. The ~~agreement provides for a revolving credit facility~~first promissory note was issued with original principal in the amount of ~~$250,000~~$2,000,000, and the second was issued with original principal in the amount of $2,768,662. The promissory notes each have an interest atrate of 6.25% per annum, which was increased from 4.0% per annum ~~and is unsecured. Each loan made under the credit arrangement will be due and payable in full on the expiration date~~as part of the ~~revolver note.~~July 2018 amendments to the Credit Agreement. In addition, the ~~agreement generally~~promissory note with original principal amount of $2,768,662 was amended in July 2018 to provide for a conversion option commencing July 5, 2019 which allows ~~for borrowing based on an~~First Francis to convert the promissory note, in whole in part with respect to a maximum amount ~~equal~~of $648,000, into shares of the Company’s Class B common stock at the price of $6.48 per share (subject to ~~eighty percent of eligible accounts receivables or $250,000. The revolving line of credit expired~~adjustment), subject to shareholder approval which was obtained on May ~~31, 2017.~~

~~The Company had $250,000 outstanding borrowings~~10, 2019. On July 9, 2019, First Francis exercised its option to convert $648,000 of existing indebtedness into 100,000 Class B Common Shares of the Company. First Francis is owned by Matthew Crawford, who serves on the ~~credit facility at September 30, 2016. At September 30, 2017,~~Board of the ~~outstanding balance was $0.~~Company, and Edward Crawford, who retired as an executive officer and resigned from the Board of the Company in June 2019.

~~Notes Payable~~ ~~– Related Party~~

No~~tes payable - related parties is a result of the acquisition of a business~~■ Federal Hose. The Company purchased Federal Hose on July 1, 2016 ~~and consists~~from First Francis, an entity owned by Matthew Crawford, who serves on the Board of the ~~following~~Company, and Edward Crawford, who served on the Board until June 17, 2019. The Merger Agreement provided that the Company acquire all of the membership interests of Federal Hose in exchange for an aggregate of (i) 911,250 Class A Common Shares; (ii) 303,750 Class B Common Shares; and (iii) $4,768,662 in certain promissory notes issued by the Company, which bear interest at ~~September 30:~~an annual rate of 4% payable quarterly, are subject to redemption over a mandatory 10-year amortization schedule and are required to be fully redeemed within six years of their issuance date. In connection with this transaction, the Company also entered into a ten-year lease agreement with Edward Crawford for use of a facility in Painesville, Ohio, out of which the Federal Hose business is operated. The Company, through its Federal Hose subsidiary, paid rent to Edward Crawford during fiscal year 2019 in the amount of $15,000 per month under the lease agreement.

2017

2016

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.
$ 1,639,206 $ 2,000,000

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.
2,365,286 2,768,662

Total notes payable – related party 4,004,492 4,768,662

Less current portion
245,086 379,761

Notes payable – related party non-current portion $ 3,759,406 $ 4,388,901

~~Table of Contents~~

Total
Principal
Payments

Year Ending, September 30:

2018
$ 245,086
2019
437,067
2020
454,813
2021
473,281
2022
2,394,245
Total principal payments $ 4,004,492

■ Fluid Routing Systems (FRS). During the fiscal year ended December 31, 2019, the Company, through Federal Hose and in connection with the operation of the Industrial Hose segment, purchased an aggregate total of $312,131 of extruded rubber hose and thermal-plastic hose and fittings from Fluid Routing Systems, Inc. (“FRS”), a distributor of hydraulic hose parts and components and wholly-owned subsidiary of Park-Ohio. In April, 2019, the Company entered into a lease agreement with FRS to rent 7,500 square feet for $36,000 per annum for the purpose of warehousing and distributing hoses. The term of the lease is five years. Edward F. Crawford and Matthew V. Crawford (or their respective affiliates) are the record and/or beneficial owners of shares of capital stock of Park-Ohio (a publicly-traded holding company). Matthew V. Crawford is an executive officer and member of the Board of Directors thereof; Edward F. Crawford retired as an executive officer and resigned from the Board of Directors in June 2019.

■HydraPower Dynamics: During the fiscal year ended December 31, 2019 the Company, through Federal Hose and in connection with the operation of the Industrial Hose segment, purchased an aggregate total of $539,598 of silicone hose from HydraPower, a distributor of silicone hose parts and components and wholly-owned subsidiary of Park-Ohio. Edward F. Crawford and Matthew V. Crawford (or their respective affiliates) are the record and/or beneficial owners of shares of capital stock of Park-Ohio (a publicly-traded holding company). Matthew V. Crawford is an executive officer and member of the Board of Directors thereof; Edward F. Crawford retired as an executive officer and resigned from the Board of Directors in June 2019.

■ Arizona Cast Turbine, LLC. During the fiscal year ended December 31, 2019, the Company, through CAD Enterprises and in connection with the operation of the Aerospace Components segment, purchased an aggregate total of $2,749,913 of castings from Arizona Cast Turbine, LLC (“ACT”), a closely-held entity in which Edward F. Crawford and Matthew V. Crawford, or certain entities affiliated therewith, own a minority equity interest, which was sold in June 2019. CAD’s casting supply relationship with ACT pre-dates the Company’s acquisition of the Aerospace Components segment.

■ KT Acquisition LLC (Komtek Forge): During the fiscal year ended December 31, 2019, the Company, through CAD Enterprises and in connection with the operation of the Aerospace Components segment, purchased an aggregate total of $368,788 of forgings from KT Acquisition LLC d/b/a Komtek Forge (“Komtek”), a private trust of which Edward F. Crawford is trustee. CAD’s forging supply relationship with Komtek pre-dates the Company’s acquisition of the Aerospace Components segment.

■ Supply Technologies: During the fiscal year ended December 31, 2019, the Company, through Air Enterprises and CAD Enterprises and in connection with the operation of the Commercial Air Handling and Aerospace Components segments, purchased an aggregate total of $379,785 of supplies with Supply Technologies, a wholly-owned subsidiary of Park-Ohio that specialized in supplier selection and management, planning, implementing, and managing the physical flow of product for customers. Edward F. Crawford and Matthew V. Crawford (or their respective affiliates) are the record and/or beneficial owners of shares of capital stock of Park-Ohio (a publicly-traded holding company). Matthew V. Crawford is an executive officer and member of the Board of Directors thereof; Edward F. Crawford retired as an executive officer and resigned from the Board Directors in June 2019.

Director Independence

The Board has determined that Steven H. Rosen, Chairman of the Audit Committee, satisfies the criteria adopted by the SEC to serve as “audit committee financial expert” and all three members of such Committee are independent directors. In addition, the Board has a Compensation Committee made up of two independent directors. The Board has determined that all remaining directors are independent except for Mr. Brian E. Powers, who is currently employed by the Company. The determinations of independence described above were made using the definition for independence of directors under NASDAQ listing standards. Set forth below is the membership of the various committees at December 31, 2019 with the number of meetings held during the fiscal year ended December 31, 2019 in parentheses:

9Audit Committee (.3)

Matthew V. Crawford

Steven H. Rosen

Kirin M. Smith

~~LEASES~~Compensation Committee (1)

Matthew V. Crawford

Luis E. Jimenez

~~Operating~~
~~The Company leases two facilities including one from a related party and certain vehicles and equipment under operating leases expiring through June 30, 2026.~~

~~The Company's minimum commitment under these operating leases is as follows:~~

Facility

Equipment

2018
$ 588,271 $ 73,864
2019
592,353 66,933
2020
596,477 59,017
2021
600,642 6,296
2022
604,848 -
Thereafter
1,283,628 -
Total minimum lease payments
$ 4,266,219 $ 206,110

~~Table of Contents~~

~~Rental expense was $361,539, $57,767 and $11,382 for the fiscal years ending September 30, 2017, 2016 and 2015, respectively.~~

~~Capital~~

September 30, 2017

September 30, 2016

Capital lease obligation on computer equipment and software, payable in monthly installments of $2,059 including interest at approximately 1.04% per annum through December, 2017.
$ 2,059 $ 28,828

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $3,888 including interest at approximately 6.57% per annum, through February, 2021.
139,339 175,538

Capital lease obligation on manufacturing equipment, payable in monthly installments of $891 including interest at approximately 6.99% per annum, through February, 2020.
24,455 -

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $633 including interest at approximately 10.68% per annum, through July 2019.
12,072 -
Total capital lease obligations 177,925 204,366
Less current portion
56,610 59,369
Capital lease obligations non current portion $ 121,315 $ 144,997

~~Capital Lease Obligations~~

Year Ending

Total
Minimum
Lease
Payment

Less
Amount
Representing
Interest

Present
Value of
Minimum
Lease
Obligation

2018
$ 66,998 $ 10,388 $ 56,610
2019
63,039 6,374 56,665
2020
51,999 2,697 49,302
2021
15,551 203 15,348
2022
- - -
$ 197,587 $ 19,662 $ 177,925

~~Table of Contents~~

~~The fixed assets related to the capital leases are as follows:~~

2017

2016

Cost
$ 304,724 $ 247,811
Depreciation
82,527 27,673
Net Book Value
$ 222,197 $ 220,138

~~Commitments and Contingencies~~
From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have an adverse effect on its business, financial condition or results of operations.

10. ~~SHAREHOLDERS’ EQUITY~~

~~There are 10,000,000 Class A Shares and 2,500,000 Class B Shares authorized, as well as 1,000,000 Serial Preferred Shares.~~

~~Unissued shares of Class A common stock (~~832,233 shares in 2017 and 2016, respectively) are reserved for the share-for-share conversion rights of the Class B common stock, stock options under the Directors Plans, conversion rights of the Convertible Promissory Note and available warrants. The Class A shares have one vote per share and the Class B shares have three votes per share, except under certain circumstances such as voting on voluntary liquidation, sale of substantially all the assets, etc. Dividends up to $.10 per year, noncumulative, must be paid on Class A shares before any dividends are paid on Class B shares.

11.~~STOCK~~ ~~COMPENSATION~~

The Company's 2013 Omnibus Equity Plan was approved and adopted by an affirmative vote of a majority of the Company's Class A and Class B Shareholders and provides for the grant of the following types of incentive awards: stock options, stock appreciation rights, restricted shares, restricted share units, performance shares and Class A Common Shares. Those who will be eligible for awards under the 2013 Omnibus Plan include employees who provide services to the Company and its affiliates, executive officers, non-employee Directors and consultants designated by the Compensation Committee. The Plan has 150,000 Class A Common Shares reserved for issuance. The Class A Common Shares may be either authorized, but unissued, common shares or treasury shares. Share-based awards of 36,333 were granted under the 2013 Omnibus Equity Plan as of September 30, 2017.

The Company's expired Outside Directors Stock Option Plans (collectively the "Directors Plans"), have provided for the automatic grant of options to purchase up to 5,000 shares of Class A Common Stock over a three-year period to members of the Board of Directors who were not employees of the Company, at the fair market value on the date of grant. The options are exercisable for up to 10 years. All options granted under the Directors Plans became fully exercisable on March 8, 2015.

~~Non-cash compensation expense related to stock option plans for fiscal years ended September 30, 2017, 2016 and 2015 was $129,832, $0 and $543 respectively.~~

~~Table of Contents~~

~~Transactions involving the Directors Plans are summarized as follows:~~

Weighted
Average
Exercise

Weighted
Average
Exercise

Weighted
Average
Exercise

2017

Price

2016

Price

2015

Price

Option Shares

Directors Plans:

Outstanding October 1,
5,000 $ 3.540 6,000 $ 3.440 22,000 $ 5.300
Granted
- - - - - -
Canceled/expired
- $ 2.925 (1,000 ) $ 2.925 (16,000 ) $ 6.000
Exercised
- - - - - -
Outstanding September 30,
5,000 $ 3.540 5,000 $ 3.540 6,000 $ 3.440
Exercisable September 30,
5,000 $ 3.540 5,000 $ 3.540 6,000 $ 3.440

~~The following is a summary of the range of exercise prices for stock options outstanding and exercisable under the Directors Plans at September 30, 2017.~~

Directors Plans

Outstanding
Stock
Options

Weighted
Average
Exercise Price

Weighted
Average
Remaining
Life

Number of
Stock
Options
Exercisable

Weighted
Average
Exercise
Price

Range of exercise prices:

$ 2.925 4,000 $ 2.925 5.3 4,000 $ 2.925
$ 6.00 1,000 $ 6.000 3.5 1,000 $ 6.000
5,000 $ 3.540 5,000 $ 3.540

The Company accounts for Share-Based Payments under the modified prospective method for its stock options. Compensation cost for fixed based awards is measured at the grant date, and the Company uses the Black-Scholes option pricing model to determine the fair value estimates for recognizing the cost of employee and director services received in exchange for an award of equity instruments. The Black-Scholes option pricing model requires the use of subjective assumptions which can materially affect the fair value estimates. Director's stock options under the expired Outside Directors Stock Option Plans are exercisable over a three-year period. The fair value of stock option grants to Directors is amortized over the three-year vesting period

12.~~INCOME TAXES~~

~~A reconciliation of the provision (recovery) of income taxes to the statutory federal income tax rate is as follows:~~

2017

2016

2015

Income (Loss) Before Provision for (Recovery of) Income Taxes
$ 2,188,760 $ 1,333,248 $ (122,377 )
Statutory rate
34 % 34 % 34 %
Tax at statutory rate 744,178 453,304 (41,608 )
Permanent differences
5,465 1,000 900
Research and development and other credits - net
(77,220 ) (47,400 ) (48,500 )
Valuation allowance
- (3,681,100 ) 82,200
State Tax
130,560 - -
State Net Operating Loss
(174,223 ) - -
Transaction Costs
95,849 - -
Other
55,755 (25,404 ) 7,008
Provision for (recovery of) income taxes
$ 780,364 $ (3,299,600 ) $ -

~~Table of Contents~~

~~Deferred tax assets (liabilities) as of September 30 consist of the following:~~

2017

2016

Inventories
$ 291,338 $ 302,600
Bad debts
21,171 3,400
Accrued liabilities
88,817 77,700
Prepaid expense
(73,120 ) (8,900 )
Depreciation and amortization
220,967 93,000
Research and development and other credit carryforwards
2,179,462 2,019,700
Net operating loss carryforward
520,087 1,303,000
Directors stock option plan
41,537 40,100
Net deferred tax asset 3,290,259 3,830,600
Valuation allowance
(500,000 ) (500,000 )
Total
$ 2,790,259 $ 3,330,600

The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

~~Valuation Reserve~~
The valuation reserve remained at $0.5 million at September 30, 2017, due to the likelihood that the Company will be profitable enough to utilize the majority of the net operating loss and research and development and other credit carryforwards.

~~Because of the uncertainties involved with this significant estimate, it is reasonably possible that the Company’s estimate may change in the near term.~~

~~Net Operating Loss Carryforwards:~~

~~The Company has federal and state net operating loss (NOL) and research and development (R&D) and other credit carryforwards for tax purposes which expire as follows:~~

Tax Year Expires

NOLS

R& D
& Other
Credits

2018
$ - $ 44,980
2019
- 166,019
2020
- 190,072
2021
- 126,620
2022
- 48,573
2023
- 107,172
2024
- 156,392
2025
- 155,394
2026
- 139,885
2027
- 154,991
2028
- 152,732
2029
- 68,676
2030
- 31,081
2031
302,190 44,712
2032
999,973 59,085
2033
1,155,716 71,062
2034
472,315 73,198
2035
99,688 76,429
2036
- 73,315
2037
- 117,000
2038 and beyond
- 114,074
$ 3,029,882 $ 2,179,462

~~Table of Contents~~

13.	~~EARNINGS PER COMMON SHARE~~

~~The following table sets forth the computation of basic and diluted earnings per share.~~

2017

2016

2015

Basic Income (Loss) Per Share

Income (Loss) available to common stockholders
$ 1,408,396 $ 4,632,848 $ (122,377 )
Shares denominator
2,874,926 1,943,625 1,638,215
Per share amount
$ 0.49 $ 2.38 $ (0.07 )

Effect of Dilutive Securities

Average shares outstanding
2,874,926 1,943,625 1,638,215
Options and warrants under convertible note
194,151 16,496 -
3,069,077 1,960,121 1,638,215
Diluted Income (Loss) Per Share

Income (Loss) available to common stockholders
$ 1,408,396 $ 4,632,848 $ (122,377 )
Per share amount
$ 0.46 $ 2.36 $ (0.07 )

~~Included in the computation of diluted earnings per share in fiscal 2017 and 2016 were options, warrants and underlying shares related to the convertible notes.~~

Options and warrants to purchase 5,000 and 100,000 shares of common stock respectively during fiscal 2015 at prices ranging from $2.50 to $6.00 per share were outstanding but were not included in the computation of diluted earnings per share because the option's and warrant's effect was antidilutive or the exercise price was greater than the average market price of the common share.

14.	~~EMPLOYEE BENEFIT PLANS~~

~~The Company has 401(k) Savings and Retirement Plan~~s covering all full-time employees. Company contributions to the plans, including matching of employee contributions, are at the Company's discretion. For fiscal years ended September 30, 2017, 2016 and 2015, the Company made matching contributions to the plans in the amount of $39,249, $14,412 and $15,045, respectively. The Company does not provide any other postretirement benefits to its employees.

~~Table of Contents~~

15.	~~ACQUISITIONS~~

~~The Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC on June 1, 2017 for $10,250,000. The acquired business, which operates under the name Air~~ Enterprises, manufactures custom air handling units under fixed price contracts. Its customers are typically in the health care, universities, research, pharmaceutical and industrial manufacturing market segments, and span all across the United States and worldwide. Air Enterprises has one operating location in Northeastern Ohio. The purchase price was assigned to the fair value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

Accounts Receivable
$ 4,761,368
Inventory
594,503
Costs in excess of billings
3,980,824
Fixed Assets
2,112,120
Prepaid and Other Assets
53,110
Intangibles Assets
1,230,000
Goodwill
631,392
Total Assets Acquired
$ 13,363,317

Accounts Payable
$ 1,726,618
Costs in excess of billings
594,545
Accrued Payroll
325,950
Accrued Expense
424,671
Lease Payable
41,533
Total Liabilities Assumed
$ 3,113,317
Net Assets Acquired
$ 10,250,000

The Company purchased Federal Hose Manufacturing LLC on July 1, 2016 for $5,851,531 in exchange for the issuance of 911,250 shares of Class A stock for $847,463, 303,750 shares of Class B Stock for $235,406, and issuance of promissory notes payable to First Francis Company Inc. for $4,768,662. The purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill.

~~The purchase price has been allocated to the following accounts:~~

Cash
$ 30,097
Accounts Receivable - trade
834,720
Inventory
1,755,879
Prepaid Expenses
9,909
Fixed Assets
769,000
Customer List
1,280,000
Goodwill
1,777,656
Total Assets Acquired
$ 6,457,261
Accounts Payable
$ 475,513
Accrued Payroll
14,725
Accrued Expenses
115,725
Total Liabilities Assumed
$ 605,730
Net Assets Acquired
$ 5,851,531

Acquisition related costs included in Other Expense, Net in the consolidated statements of income were $281,909 in 2017, $211,951 in 2016, and $71,939 in 2015, respectively. Also, see Note 4, Bank Debt and Note 5, Notes Payable regarding further information regarding the acquisitions and the loan agreements and notes issued in connection with such acquisitions.

~~Table of Contents~~

16.	~~SEGMENT AND RELATED INFORMATION~~

~~The Company~~ operates three reportable segments: 1) commercial air handling, 2) test and measurement and 3) industrial hose. The Company's management evaluates segment performance based primarily on income (loss) before the provision for income taxes. Non-operating items such as marketing and general administrative expenses, interest income and interest expense are included in administrative and other expenses. Depreciation expense on assets used in manufacturing are considered part of each segment's operating performance. Depreciation expense on non-manufacturing assets is included in administrative and other expenses.

~~Commercial Air Handling~~:
This segment manufactures custom air handling units under fixed price contract to customers in the health care, universities, research, pharmaceutical and industrial manufacturing market segments, and across the United States and worldwide.

~~Test and Measurement~~:
This segment consists of diagnostic tools and equipment sold to the automotive industry and indicators and gauges sold primarily to companies in the aircraft and locomotive industries. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

~~Industrial~~ ~~Hose:~~
This segment consists primarily of flexible metal and silicone hose products designed and manufactured or distributed primarily to the trucking industry and other industrial end-users. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution method.

~~Information by industry segment is set forth below:~~

Years Ended September 30,

2017

2016

2015

Net Sales

Commercial Air Handling
$ 11,190,844 $ - $ -
Test and Measurement
6,610,684 4,884,778 5,852,924
Industrial Hose
6,015,207 1,761,002 -
$ 23,816,735 $ 6,645,780 $ 5,852,924
Income (Loss) Before Provision for Income Taxes

Commercial Air Handling
$ 1,424,878 $ - $ -
Test and Measurement
1,859,936 143,021 940,016
Industrial Hose
595,939 166,075 -
General Corporate Expenses
(1,691,993 ) 1,024,152 (1,062,393 )
$ 2,188,760 $ 1,333,248 $ (122,377 )

~~Table of Contents~~

~~Geographical Information~~
~~Included in the consolidated financial statements are the following amounts related to geographic locations:~~

Years Ended September 30,

2017

2016

2015

Revenue:

United States of America
$ 22,735,947 $ 6,492,423 $ 5,678,888
Australia
4,112 60,412 20,043
Canada
419,625 59,653 75,612
England
- 25,789 21,822
Mexico
315,869 6,976 26,902
Poland
316,666 - -
Other
24,515 527 29,657
$ 23,816,735 $ 6,645,780 $ 5,852,924

~~All export sales to Australia, Canada, England, Mexico, and other foreign countries are made in~~ ~~US Dollars.~~

17. ~~QUARTERLY DATA (UNAUDITED)~~

First

Second

Third

Fourth

Net Sales

2017
$ 2,356,926 $ 3,346,315 $ 7,220,626 $ 10,892,868
2016
$ 1,376,872 $ 1,046,624 $ 1,530,244 $ 2,692,040
2015
1,162,218 1,091,182 1,804,614 1,794,910

Gross Profit

2017
583,238 1,377,514 3,029,146 3,034,379
2016
636,351 352,080 760,814 561,720
2015
362,105 381,991 807,794 1,132,731

Net Income (Loss)

2017
(313,706 ) 213,140 941,523 567,439
2016
(47,189 ) (464,444 ) (8,095 ) 5,152,576
2015
(270,656 ) (276,663 ) 109,631 315,311

Net Income (Loss) per Common Share

Basic

2017
(0.11 ) 0.07 0.33 0.20
2016
(0.03 ) (0.28 ) (0.01 ) 1.81
2015
(0.17 ) (0.17 ) 0.07 0.19
Diluted

2017
(0.11 ) 0.07 0.31 0.18
2016
(0.03 ) (0.28 ) (0.01 ) 1.77
2015
(0.17 ) (0.17 ) 0.07 0.19

1~~8. SUBSEQUENT EVENTS~~

In preparing these financial statements, subsequent events were evaluated through the time the financial statements were issued. Financial statements are considered issued when they are widely distributed to all shareholders and other financial statement users, or filed with the Securities and Exchange Commission. In accordance with applicable accounting standards, all material subsequent events have been either recognized in the financial statements or disclosed in the notes to the financial statements.

Hickok AE LLC (dba Air Enterprises), a wholly owned subsidiary of Hickok Incorporated, was named as a defendant in a lawsuit filed on November 6, 2017 in Superior Court in Quebec, Canada by Carmichael Engineering Ltd. of Quebec (“~~Carmichael”). Carmichael’s lawsuit seeks payment of invoices for materials and services it allegedly provided to Air Enterprises prior to the Company’s acquisition and relating to a third-pary cooling system.~~ The Company believes the claims have been improperly brought against Hickok. The Company denies the allegations and will vigorously defend the claims brought against it. The Company cannot predict the outcome of the above matters or estimate the possible loss or range of loss, if any. Management believes that the allegations are without merit and that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flow of the Company.

~~Table of Contents~~

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

~~Not Applicable.~~

~~ITEM 9A. CONTROLS AND PROCEDURES.~~

~~As of September 30, 201~~7, an evaluation was performed, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Company's management, including the Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, concluded that the Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of September 30, 2017 to ensure that information required to be disclosed by the Company in reports that it files and submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (2) is accumulated and communicated to the Company's management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company's internal controls over financial reporting during the fourth fiscal quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes policies and procedures that (1) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorization of the Company's management and directors, and (3) provide reasonable assurance regarding prevention or the timely detection of unauthorized acquisition, use or disposal of the company's assets that could have a material effect on the financial statements.

~~Management, including the Company's Chief Executive Officer along with the~~ Company's Vice President, Finance and Chief Financial Officer, does not expect that the Company's internal controls will prevent or detect all errors and all fraud. An internal control system no matter how well designed and operated can provide only reasonable, not absolute, assurance that the objectives of the system are 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~Table of Contents~~

~~MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING~~

The management of Hickok Incorporated is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Under the supervision and with the participation of management, including the Company's Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of September 30, 2017, as required by Rule 13a-15(c) of the Securities Exchange Act of 1934, as amended. In making this assessment, we used the criteria set forth in the framework in Internal Control-Integrated Framework (1992) for Small Public Companies issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework for Small Public Companies, our management concluded that our internal control over financial reporting was effective as of September 30, 2017.

This annual 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 rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

~~/s/ B. E. Powers~~

~~B. E. Powers~~
~~Chief Executive Officer~~

~~/s/~~ ~~K. J. Marek~~

~~K. J. Marek~~
~~Chief Financial Officer~~

~~December 21, 2017~~

~~Table of Contents~~

~~ITEM 9B. OTHER INFORMATION.~~

~~None.~~

~~PART III~~

~~ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.~~

The information required by this Item 10 as to the Directors of the Company is incorporated herein by reference to the information set forth under the caption "Information Concerning Nominees for Directors" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 13, 2018, since such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A. Information required by this Item 10 as to the Executive Officers of the Company is included in Part I of this Annual Report on Form 10-K. Information required by this Item as to the Audit Committee, the Audit Committee financial expert, the procedures for recommending nominees to the Board of Directors and compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the information set forth under the captions "Information Regarding Meetings and Committees of the Board of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 13, 2018.

The Company has historically operated under informal ethical guidelines, under which the Company's principal executive, financial, and accounting officers, are held accountable. In accordance with these guidelines, the Company has always promoted honest, ethical and lawful conduct throughout the organization and has adopted a written Code of Ethics for the Chief Executive Officer and Chief Financial Officer. In addition, the Company adopted and the Board of Directors approved a written Code of Business Conduct for all officers and employees. The Company also implemented a system to address the "Whistle Blower" provision of the Sarbanes-Oxley Act of 2002.

~~ITEM 11. EXECUTIVE COMPENSATION.~~

The information required by this Item 11 is incorporated by reference to the information set forth under the caption "Executive Compensation" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on ~~March 13, 2018, since such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A.~~

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

~~The i~~nformation required by this Item 12 is incorporated by reference to the information set forth under the captions "Principal Shareholders" and "Share Ownership of Directors and Officers" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 13, 2018, since such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A.

~~ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.~~

~~The information required by this Item 13 is incorporated by reference to the information set forth under the caption "Transactions with~~ Management" in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 13, 2018, since such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the end of the Company's fiscal year pursuant to Regulation 14A.

~~Table of Contents~~

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

~~The information required by this Item 14 is incorporated by reference~~During the fiscal years ended December 31, 2019 and 2018, Meaden & Moore, Ltd. provided various audit services and non-audit services to the ~~information set~~Company. Set forth ~~under~~below are the ~~caption "Independent Public Accountants"~~aggregate fees billed for these services:

	FY 2019		FY 2018
Audit Fees	$	100,100	$	95,500
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		32,000		56,200
Totals	$	132,100	$	151,700

■

Audit Fees: Fees for audit services include fees associated with the audit of the Company’s annual financial statements and for the reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q. Audit fees also include fees associated with providing consents included with, and assistance with and review of, documents filed with the SEC.

■

Audit-Related Fees: There were no Audit-Related Fees.

■

Tax Fees: Tax Fees are for assistance in the preparation of various tax forms and schedules.

■

All Other Fees: Other Fees are for services provided in connection with business transactions.

The Board has a policy to assure the ~~Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held~~ ~~on March 13, 2018, since such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the end~~independence of the ~~Company's fiscal year pursuant~~Company’s independent registered public accounting firm. It is the policy of the Audit Committee of the Board to ~~Regulation 14A.~~approve all engagements of the Company’s independent auditor to render audit and non-audit services prior to the initiation of such services. All services listed above were preapproved by the Audit Committee.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

~~(a) (1) FINANCIAL STATEMENTS~~

~~The following Consolidated Financial Statements of the Registrant and its subsidiaries are included in Part II, Item 8:~~

~~Report of Independent Registered Public Accounting Firm~~	16
~~Consolidated Balance Sheet - As of September 30, 2017 and 2016~~	17
~~Consolidated Statement of Income - Years Ended September 30, 2017, 2016 and 2015~~	19
~~Consolidated Statement of Stockholders' Equity - Years Ended September 30, 2017, 2016 and 2015~~	20
~~Consolidated Statement of Cash Flows - Years Ended September 30, 2017, 2016 and 2015~~	21
~~Notes to Consolidated Financial Statements~~	23

~~(a) (2) FINANCIAL STATEMENT SCHEDULES~~

~~The following Consolidated Financial Statement Schedules of the Registrant and its subsidiaries are included in Item 15 hereof.~~

~~SEQUENTIAL PAGE~~

~~Report of Independent Registered Public Accounting Firm as to Schedules~~

~~Schedule II - Valuation and Qualifying Accounts~~

All other Schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

(a) (3) EXHIBITS

Reference is made to the Exhibit Index set forth herein.

~~Table of Contents~~

EXHIBIT INDEX

EXHIBIT NO.:		DOCUMENT
31.1	Rule 13a-14(a)/15d-14(a)Certification by the Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a)Certification by the Chief Financial Officer.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~HICKOK INCORPORATED~~CRAWFORD UNITED CORPORATION

By: /s/ Brian E. Powers
Brian E. Powers
Chairman, President and Chief Executive Officer
Date: ~~December 21, 2017~~ April 29, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the ~~21s~~t29th day of ~~December, 2017:~~April 2020:

	SIGNATURE:	TITLE

	/s/ Brian E. Powers	Chairman, President and Chief
	Brian E. Powers	Executive Officer
		(Principal Executive Officer)


	/s/ Kelly J. Marek	Vice President and Chief
	Kelly J. Marek	Financial Officer
		(Principal Financial and Accounting Officer)
~~/s/ Robert L. Bauman~~	~~Director~~
~~Robert L. Bauman~~

~~/s/ Edward F. Crawford~~	~~Director~~
~~Edward F. Crawford~~

/s/ Matthew V. Crawford	Director
	Matthew V. Crawford


	/s/ Luis E. Jimenez	Director
	Luis E. Jimenez


	/s/ Steven H. Rosen	Director
	Steven H. Rosen


	/s/ Kirin M. Smith	Director
	Kirin M. Smith

~~Table of Contents~~

~~EXHIBIT INDEX~~

~~EXHIBIT NO.:~~

~~DOCUMENT~~

~~2(a)~~	Agreement and Plan of Merger, dated January 8, 2016, by and among First Francis Company Inc., Federal Hose Manufacturing LLC, Edward F. Crawford, Matthew V. Crawford, the Company and Federal Hose Merger Sub, Inc. (incorporated herein by reference ~~to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 12, 2016).~~
~~3(a)~~	~~Amended and Restated Articles of Incorporation. (incorporated herein by reference to the appropriate exhibit to the Company's Form 10-K as filed with the Commission on January 14, 2013).~~
~~3(b)~~	~~Amended and Restated Code of Regulations. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 12, 2016).~~
~~10(a)~~	Convertible Promissory Note, dated April 9, 2014, issued by the Company to Roundball in the principal amount of $100,000.00 (incorporated herein by reference to the appropriate exhibit to the Company's Form 10-K as filed with the Commission on January 13, 2015).
~~10(b)~~	Convertible Promissory Note, dated May 2, 2014, issued by the Company to Roundball in the principal amount of $100,000.00 (incorporated herein by reference to the appropriate exhibit to the Company's Form 10-K as filed with the Commission on January 13, 2015).
~~10(c)~~	Hickok Incorporated 2010 Outside Directors Stock Option Plan (incorporated herein by reference to Appendix A of the Company's definitive proxy statement for its 2010 annual meeting of shareholders as filed with the Commission on January 26, 2010).**
~~10(d)~~	Hickok Incorporated 2013 Omnibus Equity Plan (incorporated herein by reference to Appendix A of the Company's definitive proxy statement for its 2013 annual meeting of shareholders as filed with the Commission on January 28, 2013).**
~~10(e)~~	Convertible Loan Agreement, dated December 30, 2011, among the Company, the Investors, and solely with respect to Section 3 thereof, Robert L. Bauman (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012) effective through December 30, 2012.
~~10(f)~~	Convertible Promissory Note, dated December 30, 2011, issued by the Company to Roundball in the principal amount of $466,879.87 (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012).
~~10(g)~~	Convertible Promissory Note, dated December 30, 2011, issued by the Company to the Aplin Trust in the principal amount of $208,591.20 (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012) effective through December 30, 2012.
~~10(h)~~	Registration Rights Agreement, dated December 30, 2011, among the Company and the Investors (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012).
~~10(i)~~	Voting Agreement, dated December 30, 2011, among the Company, the Investors and the Class B Shareholders of the Company (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012) effective through December 30, 2012.
~~10(j)~~	Subscription Agreement, dated December 30, 2011, between the Company and Roundball (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012) effective through December 30, 2012.
~~10(k)~~	Form of Employment Agreement (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 5, 2012).**
~~10(l)~~	Amendment No. 1 to Convertible Loan Agreement, dated December 30, 2012, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 4, 2013) effective through December 30, 2013.
~~10(m)~~	Warrant Agreement, dated December 30, 2012, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 4, 2013) effective through December 30, 2015.
~~10(n)~~	Amendment No. 2 to Convertible Loan Agreement, dated December 30, 2013, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 2, 2014) effective through December 30, 2014.

~~Table of Contents~~

~~10(o)~~	Amendment No. 3 to Convertible Loan Agreement, dated December 31, 2014, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 6, 2015) effective through December 30, 2015.
~~10(p)~~	Amendment No. 1 to Registration Rights Agreement, dated December 31, 2014, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on January 6, 2015).
~~10(q)~~	Amendment No. 4 to Convertible Loan Agreement, dated December 30, 2015, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on December 30, 2015 effective through December 30, 2016.
~~10(r)~~	Amendment No. 1 to Warrant Agreement, dated December 30, 2015, by and between the Company and Roundball, LLC. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K as filed with the Commission on December 30, 2015) effective through December 30, 2016.
~~10(s)~~	~~Revolving Credit Agreement, dated June 3, 2016 between the Company and First Francis Company~~ ~~Inc. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K filed with the Commission on June 7, 2016).~~
~~10(t)~~	~~Revolver Credit Promissory Note, dated June 3, 2016, between the Company and First Francis Company~~ ~~Inc. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K filed with the Commission on June 7, 2016).~~
~~10(u)~~	~~Revolving Credit Promissory Note, dated June 27, 2016, between the Company and First Francis Company~~ ~~Inc. (incorporated herein by reference to the appropriate exhibit to the Company's Form 8-K filed with the Commission on June 30, 2016).~~
~~10(v~~)	~~Amendment No. 5~~ to Convertible Loan Agreement, dated December 20, 2016, by and between the Company and Roundball, LLC. effective through December 30, 2017 (incorporated herein by reference to the appropriate exhibit to the Company’s Form 8-K filed with the Commission on December 27, 2016).
~~10(w~~)	~~Amendment No. 2~~ to Warrant Agreement, dated December 20, 2016, by and between the Company and Roundball, LLC. effective through December 30, 2017 (incorporated herein by reference to the appropriate exhibit to the Company’s Form 8-K filed with the Commission on December 27, 2016).
~~10(x)~~	Credit Agreement, dated June 1, 2017, among Hickok Incorporated, Hickok Acquisition A LLC, Supreme Electronics Corp., Federal Hose Manufacturing LLC, Waekon Corporation, Hickok Operating LLC and JPMorgan Chase Bank, N.A. ~~(incorporated herein by reference to the appropriate exhibit to the Company’s Form 8-K filed with the Commission on June 5, 2017).~~
~~10(y)~~	~~Asset Purchase Agreement dated June 1, 2017, among Hickok Acquisition A LLC, Air Enterprises Acquisition LLC, A. Malachi Mixon, III and William M. Weber (incorporated herein by reference to the appropriate exhibit to the Company’s Form 8-K filed with the Commission on June 5, 2017).~~
11	~~Computation of Net Income Per Common Share.~~
14	~~Hickok Incorporated Financial Code of Ethics for the Chief Executive Officer and Specified Financial Officers.~~
21	~~Subsidiaries of the Registrant.~~
23	~~Consent of Independent Registered Public Accounting Firm.~~
~~31.1~~	~~Rule 13a-14(a)/15d-14(a)Certification by the Chief Executive Officer.~~
~~31.2~~	~~Rule 13a-14(a)/15d-14(a)Certification by the Chief Financial Officer.~~
~~32.1~~	~~Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~32.2~~	~~Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
101.INS*	~~XBRL Instance~~
101.SCH*	~~XBRL Taxonomy Extension Schema~~
101.CAL*	~~XBRL Taxonomy Extension Calculation~~
101.DEF*	~~XBRL Extension Definition~~
101.LAB*	~~XBRL Taxonomy Extension Labels~~
101.PRE*	~~XBRL Taxonomy Extension Presentation~~

*XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

**Management contract, compensation plan or arrangement.

~~The following pages contain the Consolidated Financial Statement Schedules as specified for Item 8 of Part II of Form 10-K.~~

~~Table of Contents~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS TO CONSOLIDATED SCHEDULES~~

~~To the Shareholders and Board of Directors~~
~~Hickok Incorporated~~
~~Cleveland, Ohio~~

~~We have audited the consolidated financial statements of HICKOK INCORPORATED (the "Co~~mpany") as of September 30, 2017 and 2016, and for each of the years in the three-year period ended September 30, 2017, and have issued our report thereon dated December 20, 2017; such consolidated financial statements and report are included in Part II, Item 8 of this Form 10-K. Our audits also included the consolidated financial statement schedules ("schedules") of the Company listed in Part IV, Item 15. These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

~~/s/ Meaden& Moore, Ltd.~~

~~MEADEN& MOORE, Ltd.~~
~~Certified Public Accountants~~

~~December 20, 2017~~
~~Cleveland, Ohio~~

~~Table of Contents~~

~~HICKOK INCORPORATED~~

~~SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS~~

~~Additions~~

~~Description~~

~~Balance~~

~~Beginning~~

~~of Period~~

~~Charged to~~

~~Costs and~~

~~Expenses~~

~~Charged~~

~~to Other~~

~~Accounts~~

~~Deductions~~

~~Balance at~~

~~End of Period~~

~~Deducted from Asset Accounts:~~

Year Ended September 30, 2015

Reserve for doubtful accounts
$ 10,000 $ (3,255 ) ⁽¹⁾ $ - ⁽²⁾ $ (3,255 )⁽³⁾ $ 10,000
Reserve for inventory obsolescence
$ 363,500 $ (47,045 ) ⁽⁵⁾ $ - $ 64,955 ⁽⁴⁾ $ 251,500
Reserve for product warranty
$ 9 $ 12,555 $ - $ 12,564 $ -
Valuation allowance for deferred taxes
$ 4,166,700 $ 82,200 $ - $ - $ 4,248,900

Year Ended September 30, 2016

Reserve for doubtful accounts
$ 10,000 $ (1,784 ) ⁽¹⁾ $ - ⁽²⁾ $ (1,784 ) $ 10,000
Reserve for inventory obsolescence
$ 251,500 $ 82,292 ⁽⁵⁾ $ - $ (98,200 ) $ 235,592
Reserve for product warranty
$ - $ 8,912 $ - $ 8,912 $ -
Valuation allowance for deferred taxes
$ 4,248,900 $ (3,681,100 ) $ 67,800 ⁽⁶⁾ $ - $ 500,000

Year Ended September 30, 2017

Reserve for doubtful accounts
$ 10,000 $ 275 ⁽¹⁾ $ ⁽²⁾ $ - ⁽³⁾ $ 10,275
Reserve for inventory obsolescence
$ 235,592 $ 284,352 ⁽⁵⁾ $ - $ (37,297 )⁽⁴⁾ $ 473,252
Reserve for product warranty
$ - $ - $ - $ - $ 0
Valuation allowance for deferred taxes
$ 500,000 $ - $ - $ - $ 500,000

~~(1) Classified as bad debt expense~~

~~(2) Recoveries on accounts charged off in prior years~~

~~(3) Accounts charged off during year as uncollectible~~

~~(4) Inventory charged off during the year as obsolete~~

~~(5) Reduction in inventory obsolescence reserve~~

~~(6) Recovery of net operating loss reserve~~

Ohio	34-0288470
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10514 Dupont Avenue, Cleveland, Ohio	44108
(Address of principal executive offices)	(Zip Code)

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~ ☐
Non-accelerated filer ~~[ ]~~ ☒	Smaller reporting company ~~[X]~~☒
	Emerging growth company ~~[ ]~~☐

~~PART I.~~	4
~~ITEM 1. BUSINESS~~ PART III.	4
~~ITEM 1A. RISK FACTORS~~	6
~~ITEM 1B. UNRESOLVED STAFF COMMENTS~~	8
~~ITEM 2. PROPERTIES~~	8
~~ITEM 3. LEGAL PROCEEDINGS~~	9
~~ITEM 4. MINE SAFETY DISCLOSURES~~	9
~~ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT~~	9

~~PART II.~~	9
~~ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~	9
~~ITEM 6. SELECTED FINANCIAL DATA~~	10
~~ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~	11
~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~	15
~~ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~	15
~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~	16
~~CONSOLIDATED BALANCE SHEETS ASSETS~~	17
~~CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY~~	18
~~CONSOLIDATED STATEMENTS OF INCOME~~	19
~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~	20
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~	21
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~	23
1. ~~BASIS OF PRESENTATION~~	23
~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~	23
~~3. ACCOUNTS RECEIVABLE~~	26
~~4. INVENTORIES~~	27
~~5. GOODWILL AND OTHER INTANGIBLE ASSETS~~	27
6. ~~PROPERTY, PLANT AND EQUIPMENT~~	27
~~7. BANK DEBT~~	28
~~8. NOTES PAYABLE~~	29
~~9. LEASES~~	30
~~10. SHAREHOLDERS’ EQUITY~~	32
~~11. STOCK COMPENSATION~~	32
~~12. INCOME TAXES~~	33
~~13. EARNINGS PER COMMON SHARE~~	35
~~14. EMPLOYEE BENEFIT PLANS~~	35
~~15. ACQUISITIONS~~	36
~~16. SEGMENT AND RELATED INFORMATION~~	37
~~17. QUARTERLY DATA (UNAUDITED)~~	39
~~18. SUBSEQUENT EVENTS~~	39
~~ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~	39
~~ITEM 9A. CONTROLS AND PROCEDURE~~S	39
~~ITEM 9B. OTHER INFORMATIO~~N	41

~~PART III.~~	41
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	41 4
ITEM 11. EXECUTIVE COMPENSATION	41 5
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	41 7
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	41 10
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	42 12

PART IV.	13

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	13

~~PART IV.~~ EXHIBIT INDEX	42 14
SIGNATURES
~~ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES~~	42
~~SIGNATURES~~	43
~~EXHIBIT INDEX~~	44
~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS TO CONSOLIDATED SCHEDULES~~	46
~~SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS~~	47 15


~~LOCATION~~	~~SIZE~~	~~DESCRIPTION~~	~~OWNED OR~~ L~~EASED~~
~~Cleveland, Ohio~~	~~37,000 Sq. Ft.~~	~~Two-story brick construction; used for corporate administrative headquarters, marketing and product development with limited manufacturing.~~	~~Owned~~

~~Greenwood, Mississippi~~	~~63,000 Sq. Ft.~~	~~One-story modern concrete block construction; used for manufacturing instruments, test equipment, and fastening systems products.~~	~~Leased, with annual renewal options extending through 2061.~~

~~Painesville, Ohio~~	~~50,000 Sq. Ft~~.	~~One-story modern~~ ~~metal and concrete~~ ~~block; used for manufacturing flexible metal hose and administration.~~	~~Leased, through 2026.~~

~~Akron, OH~~	~~100,000~~ ~~Sq. Ft.~~	~~Two-story modern concrete block construction; used for design and manufacturing air handling units and administration~~	~~Leased through 2024, with renewal options extending through 2034.~~

~~OFFICE~~	~~OFFICER~~	~~AGE~~
~~Chairman~~ ~~and Chief Executive Officer~~	~~Brian E. Powers~~	54
~~Vice President~~ ~~Finance and Chief Financial Officer~~	~~Kelly J. Marek~~	47

Name; Principal Position	Year	Salary	Bonus⁽¹⁾	Restricted Stock Awards⁽²⁾	Stock Option Awards	All Other Compensation	Total
Brian Powers	Fiscal Year Ended December 31, 2019	$240,000	$60,000	$ 62,400	-	-	$362,400
President and Chief Executive Officer	Fiscal Year Ended December 31, 2018	$210,833	-	$112,582	-	-	$323,415
Kelly J. Marek	Fiscal Year Ended December 31, 2019	$135,000	$5,000	$31,200	-	-	$171,200
Chief Financial Officer	Fiscal Year Ended December 31, 2018	$120,417	-	$35,000	-	-	$155,417

	Option Awards			Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable (#)	Number of Securities Underlying Unexercised Options Unexercis-able (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have not Vested (#)	Market Value of Shares or Units of Stock That Have not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have not Vested ($)
Brian E. Powers	-	-			10,334	$90,807	-	-

Kelly J. Marek	-	-			4,000	$37,400	-	-

Name	Fees Earned or Paid in Cash		Stock Awards ⁽¹⁾		Total

Edward F. Crawford ⁽²⁾	$	-	$	31,200	$	31,200
Matthew V. Crawford		-		31,200		31,200
Luis E. Jimenez		-		-		-
Steven H. Rosen ⁽³⁾		-		31,200		31,200
Kirin M. Smith ⁽⁴⁾		-		31,200		31,200

	September 30, 2017				September 30, 2016
	HIGH		LOW		HIGH		LOW
First Quarter	$	3.44	$	1.40	$	1.35	$	0.75
Second Quarter		5.00		1.75		1.96		1.00
Third Quarter		5.90		2.75		2.35		1.40
Fourth Quarter		9.50		4.50		2.00		1.40

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)

Equity compensation plans approved by security holders (1)		3,000	$	2.925		271,000
Equity compensation plans not approved by security holders		-	$	N/A		-

Total		3,000				271,000

	2017			2016			2015			2014			2013

	(In Thousands of Dollars, except per share amounts)

Net Sales	$	23,817		$	6,646		$	5,853		$	6,306		$	6,466
Net Income (Loss)	$	1,408		$	4,633		$	(122	)	$	8		$	139

Working Capital	$	9,611		$	5,419		$	2,797		$	2,809		$	2,442

Total Assets	$	25,962		$	15,435		$	3,867		$	3,700		$	3,505

Long-term Debt	$	10,256		$	4,534		$	540		$	435		$	-0-

Total Stockholders' Equity	$	9,888		$	8,353		$	2,637		$	2,759		$	2,748

Net Income (Loss) Per Share
Basic	$	0.49		$	2.38		$	(0.07	)	$	0.01		$	0.09
Stockholders' Equity
Per Share:	$	3.44			4.30			1.61		$	1.68			1.68
Return on Sales		5.9	%		69.7	%		(2.1	%)		0.1	%		2.1	%
Return on Assets		5.4	%		30.0	%		(3.2	%)		0.2	%		4.0	%
Return on Equity		14.2	%		55.5	%		(4.6	%)		0.3	%		5.1	%
Closing Stock Price	$	9.40		$	1.80		$	1.00		$	2.11		$	2.04

	September 30, 2017		September 30, 2016
CURRENT ASSETS:
Cash and Cash Equivalents	$	934,506	$	3,060,734
Accounts receivable less allowance for doubtful accounts		8,549,596		1,354,199
Costs and estimated earnings in excess of billings		1,639,519		-
Inventories less allowance for obsolete inventory		3,857,763		3,308,799
Prepaid Expenses and other current assets		433,033		43,085
Total Current Assets		15,414,417		7,766,817

PROPERTY, PLANT AND EQUIPMENT:
Land		233,479		233,479
Buildings and Leasehold Improvements		2,195,915		1,448,978
Machinery and Equipment		5,075,203		3,392,734
Total Property, Plant and Equipment		7,504,597		5,075,191
Less accumulated depreciation		4,119,787		3,771,268
Property, Plant and Equipment, Net		3,384,810		1,303,923

OTHER ASSETS:
Goodwill		2,255,912		1,777,656
Intangibles, net of accumulated amortization		2,113,656		1,250,909
Deferred income taxes less valuation allowance		2,790,259		3,330,600
Other non-current assets		3,250		4,850
Total Non-Current Other Assets		7,163,077		6,364,015
Total Assets	$	25,962,304	$	15,434,755

	September 30, 2017			September 30, 2016
CURRENT LIABILITIES:
Convertible notes payable - related party	$	200,000		$	-
Notes payable - related party		245,086			629,761
Bank debt - current		500,000			-
Leases payable		56,610			59,369
Accounts payable		1,497,799			733,388
Unearned revenue		1,282,947			-
Accrued payroll and related expenses		676,502			301,054
Accrued income taxes		69,933			31,000
Accrued expenses		1,290,364			593,378
Total Current Liabilities		5,819,241			2,347,950

LONG-TERM LIABILITIES:
Notes payable - related party		3,759,406			4,388,901
Bank debt		6,374,823			-
Leases payable		121,315			144,997
Convertible notes payable - related party		-			200,000
Total Long-Term Liabilities		10,255,544			4,733,898
STOCKHOLDERS' EQUITY
Preferred 1,000,000 shares authorized, no shares outstanding		-			-
Common shares - no par value
Class A 10,000,000 shares authorized, 2,130,681 issued (2,090,394 issued in 2016)		2,246,367			2,108,651
Class B 2,500,000 convertible shares authorized, 779,283 shares issued (2017 and 2016		710,272			710,272
Contributed capital		1,741,901			1,741,901
Treasury shares		(264,841	)		(253,341	)
Class A - 15,795 shares (2017 and 2016)
Class B -5,667 shares (667 in 2016)
Retained earnings		5,453,820			4,045,424
Total Stockholders' Equity		9,887,519			8,352,907

Total Liabilities and Stockholders' Equity	$	25,962,304		$	15,434,755

	2017			2016			2015
Total Sales	$	23,816,735		$	6,645,780		$	5,852,924
Cost of Sales		15,792,458			4,334,815			3,168,303
Gross Profit		8,024,277			2,310,965			2,684,621

Operating Expenses:
Product development costs		795,957			1,050,157			1,015,414
Selling, general and administrative expenses		4,546,383			1,933,986			1,727,021

Operating Income (Loss)		2,681,937			(673,178	)		(57,814	)

Other (Income) and Expenses:
Interest charges		282,648			59,386			657
Legal settlement		(50,000	)		(2,270,567	)		-
Other expense, net		260,529			204,755			63,906
Total Other (Income) and Expenses		493,177			(2,006,426	)		64,563
Income (Loss) before Provision for Income Taxes		2,188,760			1,333,248			(122,377	)

Provision for (Recovery of) Income Taxes:
Current		86,966			31,000			(82,200	)
Deferred		693,398			(3,330,600	)		82,200
Total Provision for (Recovery of) Income Taxes		780,364			(3,299,600	)		-
Net Income (Loss)	$	1,408,396		$	4,632,848		$	(122,377	)

Net Income (Loss) Per Common Share - Basic	$	0.49		$	2.38		$	(0.07	)

Net Income (Loss) Per Common Share - Diluted	$	0.46		$	2.36		$	(0.07	)

Weighted Average Shares of Common Stock Outstanding – Basic		2,874,926			1,943,625			1,638,215

Weighted Average Shares of Common Stock Outstanding - Diluted		3,069,077			1,960,121			1,638,215

	2017			2016			2015


Cash Flows from Operating Activities
Net Income (loss)	$	1,408,396		$	4,632,848		$	(122,377	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		720,872			153,422			68,686
Non-cash professional service expense		7,884			-			-
Loss (gain) on disposal of assets		13,386			-			-
Non-cash share-based compensation expense		129,832			-			543
Deferred income taxes		693,398			(3,330,600	)		-
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable		(2,434,029	)		582,075			70,714
Decrease (Increase) in inventories		45,539			373,593			(212,316	)
Decrease (Increase) in costs in excess of billings		2,341,305			-			-
Decrease (Increase) in prepaid expenses & other assets		(335,159	)		78,843			(74,030	)
Increase (Decrease) in accounts payable		(962,207	)		(39,886	)		152,204
Increase (Decrease) in accrued payroll and related expenses		49,498			118,792			35,051
Increase (Decrease) in accrued expenses		224,674			(86,201	)		101,497
Increase (Decrease) in accrued income taxes		38,933			31,000			-
Increase (Decrease) in deferred revenue / billings in excess of costs		688,402			-			-
Total adjustments		1,222,328			(2,118,962	)		142,349

Net Cash Provided by (Used in) Operating Cash Activities		2,630,724			2,513,886			19,972

Cash Flows from Investing Activities
Cash paid for acquisition		(10,250,000	)		-			-
Capital expenditures		(332,794	)		(36,209	)		(64,894	)
Decrease in deposits		-			-			1,000

Net Cash Provided by (Used in) Investing Activities		(10,582,794	)		(36,209	)		(63,894	)

				COMMON SHARES - NO PAR VALUE
	RETAINED EARNINGS			CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			TOTAL

Balance at October 1, 2014	$	(465,047	)	$	1,261,188	$	474,866	$	1,741,358	$	(253,341	)	$	2,759,024

Share-based compensation expense		-			-		-		543		-			543

Net Loss		(122,377	)		-		-		-		-			(122,377	)

Balance at September 30, 2015	$	(587,424	)	$	1,261,188	$	474,866	$	1,741,901	$	(253,341	)	$	2,637,190

Purchase of business partially financed by issuance of Class A and Class B Shares		-			847,463		235,406		-		-			1,082,869

Net Income		4,632,848			-		-		-		-			4,632,848

Balance at September 30, 2016	$	4,045,424		$	2,108,651	$	710,272	$	1,741,901	$	(253,341	)	$	8,352,907

Professional services expense		-			7,884		-		-		-			7,884
Share-based compensation expense		-			129,832		-		-		-			129,832
Repurchase of Class B Shares		-			-		-		-		(11,500	)		(11,500	)

Net Income		1,408,396			-		-		-		-			1,408,396

Balance at September 30, 2017	$	5,453,820		$	2,246,367	$	710,272	$	1,741,901	$	(264,841	)	$	9,887,519

Class	Method	Estimated Useful Lives (years)

Buildings & Improvements	Straight-line		10	to	40
Machinery and equipment	Straight-line		3	to	10
Tools and dies	Straight-line			3

	2017		2016

Raw materials and component parts	$	2,659,171	$	2,022,092
Work-in-process		370,506		438,447
Finished products		1,301,338		1,083,852
Total Inventory		4,331,015		3,544,391
Less: Inventory reserves		473,252		235,592
Net Inventory	$	3,857,763	$	3,308,799

	2017		2016

Customer List: Backlog	$	1,970,000	$	1,280,000
Non-Compete Agreements		200,000		-
Trademarks		340,000		-
Total Other Intangibles		2,510,000		1,280,000
Less: Accumulated Amortization		396,344		29,091
Other Intangibles, Net	$	2,113,656	$	1,250,909

	2017		2016

Term Debt	$	1,875,000	$	-
Revolving Debt		5,044,486		-
Total Bank Debt		6,919,486		-
Less: Current Portion		500,000		-
Non-Current Bank Debt		6,419,486		-
Less: Unamortized Debt Costs		44,663		-
Net Non-Current Bank Debt	$	6,374,823	$	-

	2017		2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	1,639,206	$	2,000,000

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		2,365,286		2,768,662

Total notes payable – related party		4,004,492		4,768,662

Less current portion		245,086		379,761

Notes payable – related party non-current portion	$	3,759,406	$	4,388,901

	Total Principal Payments
Year Ending, September 30:
2018	$	245,086
2019		437,067
2020		454,813
2021		473,281
2022		2,394,245
Total principal payments	$	4,004,492

	Facility		Equipment

2018	$	588,271	$	73,864
2019		592,353		66,933
2020		596,477		59,017
2021		600,642		6,296
2022		604,848		-
Thereafter		1,283,628		-
Total minimum lease payments	$	4,266,219	$	206,110

	September 30, 2017		September 30, 2016
Capital lease obligation on computer equipment and software, payable in monthly installments of $2,059 including interest at approximately 1.04% per annum through December, 2017.	$	2,059	$	28,828

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $3,888 including interest at approximately 6.57% per annum, through February, 2021.		139,339		175,538

Capital lease obligation on manufacturing equipment, payable in monthly installments of $891 including interest at approximately 6.99% per annum, through February, 2020.		24,455		-

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $633 including interest at approximately 10.68% per annum, through July 2019.		12,072		-
Total capital lease obligations		177,925		204,366
Less current portion		56,610		59,369
Capital lease obligations non current portion	$	121,315	$	144,997

Year Ending	Total Minimum Lease Payment		Less Amount Representing Interest		Present Value of Minimum Lease Obligation
2018	$	66,998	$	10,388	$	56,610
2019		63,039		6,374		56,665
2020		51,999		2,697		49,302
2021		15,551		203		15,348
2022		-		-		-
	$	197,587	$	19,662	$	177,925

	2017		2016
Cost	$	304,724	$	247,811
Depreciation		82,527		27,673
Net Book Value	$	222,197	$	220,138

			Weighted Average Exercise					Weighted Average Exercise					Weighted Average Exercise
	2017		Price		2016			Price		2015			Price
Option Shares
Directors Plans:
Outstanding October 1,		5,000	$	3.540		6,000		$	3.440		22,000		$	5.300
Granted		-		-		-			-		-			-
Canceled/expired		-	$	2.925		(1,000	)	$	2.925		(16,000	)	$	6.000
Exercised		-		-		-			-		-			-
Outstanding September 30,		5,000	$	3.540		5,000		$	3.540		6,000		$	3.440
Exercisable September 30,		5,000	$	3.540		5,000		$	3.540		6,000		$	3.440

Directors Plans		Outstanding Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Life		Number of Stock Options Exercisable		Weighted Average Exercise Price
Range of exercise prices:
$	2.925		4,000	$	2.925		5.3		4,000	$	2.925
$	6.00		1,000	$	6.000		3.5		1,000	$	6.000
			5,000	$	3.540				5,000	$	3.540

	2017			2016
Inventories	$	291,338		$	302,600
Bad debts		21,171			3,400
Accrued liabilities		88,817			77,700
Prepaid expense		(73,120	)		(8,900	)
Depreciation and amortization		220,967			93,000
Research and development and other credit carryforwards		2,179,462			2,019,700
Net operating loss carryforward		520,087			1,303,000
Directors stock option plan		41,537			40,100
Net deferred tax asset		3,290,259			3,830,600
Valuation allowance		(500,000	)		(500,000	)
Total	$	2,790,259		$	3,330,600

Tax Year Expires	NOLS		R& D & Other Credits
2018	$	-	$	44,980
2019		-		166,019
2020		-		190,072
2021		-		126,620
2022		-		48,573
2023		-		107,172
2024		-		156,392
2025		-		155,394
2026		-		139,885
2027		-		154,991
2028		-		152,732
2029		-		68,676
2030		-		31,081
2031		302,190		44,712
2032		999,973		59,085
2033		1,155,716		71,062
2034		472,315		73,198
2035		99,688		76,429
2036		-		73,315
2037		-		117,000
2038 and beyond		-		114,074
	$	3,029,882	$	2,179,462

Accounts Receivable	$	4,761,368
Inventory		594,503
Costs in excess of billings		3,980,824
Fixed Assets		2,112,120
Prepaid and Other Assets		53,110
Intangibles Assets		1,230,000
Goodwill		631,392
Total Assets Acquired	$	13,363,317

Accounts Payable	$	1,726,618
Costs in excess of billings		594,545
Accrued Payroll		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed	$	3,113,317
Net Assets Acquired	$	10,250,000

Cash	$	30,097
Accounts Receivable - trade		834,720
Inventory		1,755,879
Prepaid Expenses		9,909
Fixed Assets		769,000
Customer List		1,280,000
Goodwill		1,777,656
Total Assets Acquired	$	6,457,261
Accounts Payable	$	475,513
Accrued Payroll		14,725
Accrued Expenses		115,725
Total Liabilities Assumed	$	605,730
Net Assets Acquired	$	5,851,531

Years Ended September 30,	2017			2016		2015

Net Sales
Commercial Air Handling	$	11,190,844		$	-	$	-
Test and Measurement		6,610,684			4,884,778		5,852,924
Industrial Hose		6,015,207			1,761,002		-
	$	23,816,735		$	6,645,780	$	5,852,924
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling	$	1,424,878		$	-	$	-
Test and Measurement		1,859,936			143,021		940,016
Industrial Hose		595,939			166,075		-
General Corporate Expenses		(1,691,993	)		1,024,152		(1,062,393	)
	$	2,188,760		$	1,333,248	$	(122,377	)

	First			Second			Third			Fourth

Net Sales
2017	$	2,356,926		$	3,346,315		$	7,220,626		$	10,892,868
2016	$	1,376,872		$	1,046,624		$	1,530,244		$	2,692,040
2015		1,162,218			1,091,182			1,804,614			1,794,910

Gross Profit
2017		583,238			1,377,514			3,029,146			3,034,379
2016		636,351			352,080			760,814			561,720
2015		362,105			381,991			807,794			1,132,731

Net Income (Loss)
2017		(313,706	)		213,140			941,523			567,439
2016		(47,189	)		(464,444	)		(8,095	)		5,152,576
2015		(270,656	)		(276,663	)		109,631			315,311

Net Income (Loss) per Common Share
Basic
2017		(0.11	)		0.07			0.33			0.20
2016		(0.03	)		(0.28	)		(0.01	)		1.81
2015		(0.17	)		(0.17	)		0.07			0.19
Diluted
2017		(0.11	)		0.07			0.31			0.18
2016		(0.03	)		(0.28	)		(0.01	)		1.77
2015		(0.17	)		(0.17	)		0.07			0.19

Year Ended September 30, 2015
Reserve for doubtful accounts	$	10,000	$	(3,255	) ⁽¹⁾	$	-	⁽²⁾	$	(3,255	)⁽³⁾	$	10,000
Reserve for inventory obsolescence	$	363,500	$	(47,045	) ⁽⁵⁾	$	-		$	64,955	⁽⁴⁾	$	251,500
Reserve for product warranty	$	9	$	12,555		$	-		$	12,564		$	-
Valuation allowance for deferred taxes	$	4,166,700	$	82,200		$	-		$	-		$	4,248,900