UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-~~10-QQ

~~[X]~~~~QUARTERLY~~ ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~June~~September 30,~~, 201~~7 2023

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

For the transition period fromNot Applicable toNot Applicable

Commission file number:~~0-147~~000-000147

~~HICKOK INCORPORATED~~CRAWFORD UNITED CORPORATION

(Exact name of registrant as specified in its charter)

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

	10514 Dupont Avenue, Suite 200, Cleveland, Ohio	44108
(Address of principal executive offices)	(~~Address of principal executive offices)~~Zip Code)	~~(Zip Code)~~

Registrant's telephone number(216) ~~541-8060~~243-2614

Securities registered pursuant to Section 12(b) of the Act: None.

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

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).Yes ~~[X]~~☒ No ~~[ ]~~☐

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ~~[ ]~~☐ No ~~[X]~~☒

As of ~~July~~October 31, ~~2017, 2,114,886~~2023, 2,778,892 shares of Class A Common Stock and ~~773,616~~731,848 shares of Class B Common Stock were outstanding.

	(Unaudited)
	*September 30,*			*December 31,*
	*2023*			*2022*
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,549,468		$	1,247,627
Accounts receivable less allowance for doubtful accounts		24,463,040			21,884,807
Contract assets		3,219,772			3,284,301
Inventories less allowance for obsolete inventory		20,649,773			20,176,142
Investments		640,931			657,971
Prepaid expenses and other current assets		1,143,835			1,522,516
Total Current Assets		51,666,819			48,773,364
Property, plant and equipment, net		14,426,506			15,213,443
Operating right of use asset, net		8,841,145			9,524,280
OTHER ASSETS:
Goodwill		16,453,049			16,231,938
Intangibles, net of accumulated amortization		8,567,902			9,492,560
Other non-current assets		122,243			362,489
Total Non-Current Other Assets		25,143,194			26,086,987
Total Assets	$	100,077,664		$	99,598,074

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Notes payable – current	$	811,546		$	1,303,972
Bank debt – current		11,974,749			222,222
Leases payable – current		1,671,484			1,705,224
Accounts payable		11,346,508			14,017,973
Unearned revenue		6,573,441			4,354,868
Accrued income taxes		209,154			1,239,289
Accrued expenses		3,740,624			3,224,188
Total Current Liabilities		36,327,506			26,067,736
LONG-TERM LIABILITIES:
Notes payable		681,082			1,846,405
Bank debt		-			19,224,318
Leases payable		7,420,732			8,060,152
Deferred income taxes		1,384,558			1,384,558
Total Long-Term Liabilities		9,486,372			30,515,433
STOCKHOLDERS' EQUITY
Class A common shares - 10,000,000 shares authorized, 2,832,966 issued at September 30, 2023 and 2,791,449 issued at December 31, 2022		8,654,668			7,351,563
Class B common shares - 2,500,000 shares authorized, 914,283 shares issued at September 30, 2023 and December 31, 2022		1,465,522			1,465,522
Contributed capital		1,741,901			1,741,901
Treasury shares		(2,237,027	)		(2,125,252	)
Class A common shares – 54,074 shares held at September 30, 2023 and 47,412 shares held at December 31, 2022
Class B common shares – 182,435 shares held at September 30, 2023 and December 31, 2022
Retained earnings		44,638,722			34,581,171
Total Stockholders' Equity		54,263,786			43,014,905
Total Liabilities and Stockholders' Equity	$	100,077,664		$	99,598,074

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2023*			*2022*			*2023*			*2022*

Total Sales	$	33,641,513		$	32,189,623		$	110,058,884		$	95,094,396
Cost of Sales		24,732,181			25,879,820			80,158,123			75,649,696
Gross Profit		8,909,332			6,309,803			29,900,761			19,444,700

Operating Expenses:
Selling, general and administrative expenses		4,612,364			4,310,125			15,332,161			13,672,173
Operating Income		4,296,968			1,999,678			14,568,600			5,772,527

Other (Income) and Expenses:
Interest charges		294,825			331,156			1,030,729			746,237
(Gain) loss on investments		135,522			101,370			17,040			535,439
Other (income) expense, net		(599	)		(195,046	)		(345,569	)		(508,108	)
Total Other (Income) and Expenses		429,748			237,480			702,200			773,568
Income before Provision for Income Taxes		3,867,220			1,762,198			13,866,400			4,998,959

Provision for Income Taxes		1,052,484			507,653			3,808,850			1,507,275
Net Income	$	2,814,736		$	1,254,545		$	10,057,550		$	3,491,684

Net Income Per Common Share - Basic	$	0.80		$	0.36		$	2.87		$	1.01

Net Income Per Common Share - Diluted	$	0.80		$	0.36		$	2.86		$	1.01

Weighted Average Shares of Common Stock Outstanding
Basic		3,510,740			3,476,087			3,506,920			3,458,437
Diluted		3,536,697			3,476,087			3,519,672			3,458,437

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

Balance at June 30, 2023	$	8,430,351	$	1,465,522	$	1,741,901	$	(2,237,027	)	$	41,823,986	$	51,224,732
Share-based compensation expense		224,317		-		-		-			-		224,317
Net Income		-		-		-		-			2,814,736		2,814,736
Balance at September 30, 2023	$	8,654,668	$	1,465,522	$	1,741,901	$	(2,237,027	)	$	44,638,722	$	54,263,786

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

Balance at June 30, 2022	$	7,311,949	$	1,465,522	$	1,741,901	$	(2,121,822	)	$	30,256,907	$	38,654,457
Share-based compensation expense		19,807		-		-		-			-		19,807
Net Income		-		-		-		-			1,254,545		1,254,545
Balance at September 30, 2022	$	7,331,756	$	1,465,522	$	1,741,901	$	(2,121,822	)	$	31,511,452	$	39,928,809

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

Balance at December 31, 2022	$	7,351,563	$	1,465,522	$	1,741,901	$	(2,125,252	)	$	34,581,171	$	43,014,905
Share-based compensation expense		1,153,105		-		-		-			-		1,153,105
Stock issuance		150,000		-		-		-			-		150,000
Repurchase of shares		-		-		-		(111,775	)		-		(111,775	)
Net Income		-		-		-		-			10,057,550		10,057,550
Balance at September 30, 2023	$	8,654,668	$	1,465,522	$	1,741,901	$	(2,237,027	)	$	44,638,722	$	54,263,786

	*COMMON SHARES*								*COMMON SHARES*
	*ISSUED*				*TREASURY SHARES*				*OUTSTANDING*
	*CLASS A*		*CLASS B*		*CLASS A*		*CLASS B*		*CLASS A*			*CLASS B*

Balance at December 31, 2022		2,791,449		914,283		47,412		182,435		2,744,037			731,848
Stock awards (forfeits) issued to directors and officers		34,200		-		-		-		34,200			-
Stock issuance		7,317		-		-		-		7,317			-
Repurchase of shares		-		-		6,662		-		(6,662	)		-
Balance at September 30, 2023		2,832,966		914,283		54,074		182,435		2,778,892			731,848

	*COMMON SHARES -*
	*NO PAR VALUE*
					*CONTRIBUTED*		*TREASURY*			*RETAINED*
	*CLASS A*		*CLASS B*		*CAPITAL*		*SHARES*			*EARNINGS*		*TOTAL*
Balance at December 31, 2021	$	5,393,823	$	1,465,522	$	1,741,901	$	(1,981,113	)	$	28,019,768	$	34,639,901
Share-based compensation expense		937,921		-		-		-			-		937,921
Issuance for acquisition		1,000,012		-		-		-			-		1,000,012
Repurchase of shares		-		-		-		(140,709	)		-		(140,709	)
Net Income		-		-		-		-			3,491,684		3,491,684
Balance at September 30, 2022	$	7,331,756	$	1,465,522	$	1,741,901	$	(2,121,822	)	$	31,511,452	$	39,928,809

	*COMMON SHARES*								*COMMON SHARES*
	*ISSUED*				*TREASURY SHARES*				*OUTSTANDING*
	*CLASS A*		*CLASS B*		*CLASS A*		*CLASS B*		*CLASS A*			*CLASS B*
Balance at December 31, 2021		2,720,787		914,283		41,844		182,435		2,678,943			731,848
Stock awards (forfeits) issued to directors and officers		32,200		-		-		-		32,200			-
Acquisition		38,462		-		-		-		38,462			-
Repurchase of shares		-		-		5,366		-		(5,366	)		-
Balance at September 30, 2022		2,791,449		914,283		47,210		182,435		2,744,239			731,848

	*Nine Months Ended September 30,*
	*2023*			*2022*
Cash Flows from Operating Activities
Net Income	$	10,057,550		$	3,491,684
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,156,558			2,800,279
Loss on investments in equity securities		17,040			535,439
Amortization of right of use assets		1,267,360			1,054,699
Loss on disposal of assets		59,237			15,370
Non-cash share-based compensation expense		1,153,105			937,921
Changes in assets and liabilities:
Accounts receivable		(2,578,233	)		(2,858,971	)
Inventories		(621,222	)		(3,877,729	)
Contract assets		64,529			112,121
Prepaid expenses & other assets		618,927			(82,071	)
Accounts payable		(2,671,465	)		2,598,799
Lease liabilities		(673,160	)		(600,510	)
Other current liabilities		(1,097,923	)		749,110
Unearned revenue		2,218,573			1,293,953
Total adjustments		913,326			2,678,409
Net Cash Provided by Operating Activities		10,970,876			6,170,094
Cash Flows from Investing Activities
Cash paid for business acquisitions		-			(4,331,739	)
Capital expenditures		(1,394,192	)		(533,581	)
Net Cash (Used in) Investing Activities		(1,394,192	)		(4,865,320	)
Cash Flows from Financing Activities
Payments on notes		(1,657,749	)		(3,331,091	)
Payments on bank debt		(14,246,403	)		(4,535,000	)
Borrowings on bank debt		6,741,084			8,115,202
Payments on contingent liability		-			(750,000	)
Share repurchase		(111,775	)		(140,709	)
Net Cash Used in Financing Activities		(9,274,843	)		(641,597	)
Net Increase in cash and cash equivalents		301,841			663,178
Cash and cash equivalents at beginning of period		1,247,627			1,494,415
Cash and cash equivalents at end of period	$	1,549,468		$	2,157,591
Supplemental disclosures of cash flow information
Interest Paid	$	1,002,952		$	736,334
Supplemental disclosures of noncash financing and investing activity
Additions to ROU assets obtained from new operating lease liabilities	$	457,317		$	380,298
Purchase accounting adjustment to Goodwill for a change in inventory	$	147,591		$	-
Purchase accounting adjustment to Goodwill for a change in fixed assets	$	73,520		$	-
Issuance of Class A common shares in business acquisition	$	-		$	1,000,012
Issuance of Class A common shares for capital expenditures	$	150,000		$	-

~~HICKOK INCORPORATED~~
CRAWFORD UNITED CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~JUNE~~September 30, ~~2017~~2023

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form ~~10-Q~~10-Q and Article 8 of Regulation ~~S-X.~~S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Crawford United Corporation and its wholly-owned subsidiaries (the “Company”). Significant intercompany transactions and balances have been eliminated in the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain prior period financial information has been reclassified to conform to the current presentation. Operating results for the three and nine months ended ~~June~~September 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the year ended ~~September 30, 2017.~~December 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form ~~10-K~~10-K for the year ended ~~September 30, 2016.~~December 31, 2022.

During the ~~nine-month~~nine-month period ended ~~June~~September 30, ~~2017,~~2023 there have been no changes to ~~our~~the Company's significant accounting ~~policies as determined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016.~~policies.

The Company’s Summary of Significant Accounting Policies is provided with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form ~~10-K~~10-K for the year ended ~~September 30, 2016.~~December 31, 2022.

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 reflects 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 became effective for the Company ~~completed~~on January 1, 2023 and did not have a material impact on the ~~acquisition~~Company’s results of operations and internal controls on reporting.

Use of Estimates in the Preparation 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 ~~Air Enterprises Acquisition, LLC in Akron, Ohio on June 1, 2017. The acquired business, which will continue to operate under~~contingencies at the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. The significant accounting policies as a resultdate of the ~~acquisition~~financial statements, and the reported amounts of ~~this business are disclosed below.~~revenue and expenses during the reporting period. Actual results could differ from those estimates.

~~Revenue Recognition:~~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 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.

As defined in FASB ASC 820, "Fair Value Measurements", fair value is ~~recognized~~the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the ~~percentage-of-completion method measured by~~examination of 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 madeinputs used in the ~~period in which it~~valuation techniques, the Company is ~~determined a loss~~required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be ~~incurred. As long-term contracts extend over~~ classified and disclosed in one of the following three categories:

* Level 1: Quoted market prices in active markets for identical assets or ~~more years, revisions~~liabilities.

* Quoted prices for similar assets or liabilities in ~~costs and profits estimated during~~active markets;

* Quoted prices for identical assets or similar assets or liabilities in inactive markets;

* Inputs other than quoted prices that are observable for the ~~work~~asset or liability;

* Inputs that are ~~reflected in the accounting period in which the facts requiring the changes become known.~~derived principally from or corroborated by observable market data by correlation or other means.

~~Because~~A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following is a description of the ~~inherent uncertainties in estimating costs, it is~~valuation methodologies used for the Company's instruments measured at ~~least reasonably possible~~fair value, including the ~~estimates~~general classification of ~~costs and revenue will change in~~such instruments pursuant to 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.valuation hierarchy.

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

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

* Stock: The Company provides a warranty for its customer 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 reservestock market value is based on ~~management’s knowledge~~valuation of ~~the contracts~~market quotes from independent active market sources 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.~~considered a level 1 investment.

3~~. ACCOUNTS RECEIVABLE~~The balance of accounts receivable, net was $24,463,040, $21,884,807, and $18,387,744 at September 30, 2023, December 31, 2022 and December 31, 2021, respectively.

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 ~~$117,750 and $10,000~~$177,891, $143,631and $75,930 at ~~June 30, 2017 and~~ September 30, ~~2016.~~2023, December 31, 2022 and December 31, 2021, respectively.

Inventory is valued at the lower of cost ~~(first-in, first-out)~~(first-in, first-out) or ~~market~~net realizable value and ~~consist~~consists of:

Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is tested annually for impairment, or more frequently if indicators of impairment are identified.

For the identified reporting units, impairment testing was performed as of December 31, 2022 using an income approach based on management’s determination of the prospective financial information, with consideration given to the uncertainty in the global economy and aerospace and defense industry, particularly the commercial sector. The results of this test indicated fair value exceeded carrying value for all reporting units and no indefinite-lived intangible assets or goodwill was determined to be impaired. There have been no impairment indicators identified during the three or nine-month periods ended September 30, 2023.

Goodwill increased by $0.2 million from $16.2 million at December 31, 2022 to $16.5 million at September 30, 2023. The increase in Goodwill was driven by a purchase accounting adjustment to Goodwill, recorded in the second quarter, for Knitting Machinery Company of America (KMC). Goodwill increased by $1.8 million from $14.4 million at December 31, 2021 to $16.2 million at December 31, 2022. The increase in Goodwill was driven by the addition of $2.0 million in the Industrial and Transportation Products segment related to the acquisitions of Reverso Pumps & Separ America and KMC and in the first and second quarters of 2022, respectively. These increases were partially offset by a decrease of $0.2 million related to a purchase accounting adjustment for Global-Tek, also in the Industrial and Transportation Products segment.

The ~~reserve for inventory obsolescence was $561,087 and $235,592 at June 30, 2017 and September 30, 2016, respectively.~~

~~Intangible~~Company's intangible assets ~~relate to the purchase of businesses on June 1, 2017 and July 1, 2016. Goodwill is not amortized, but will be reviewed on an annual basis for impairment. Amortization of other intangibles is~~have primarily been generated via acquisitions. Intangibles are being amortized on a straight-line basis over ~~period~~periods ranging from one ~~year~~ to 15 years.

$315,302 and $316,729 for the three months ended September 30, 2023 and 2022, respectively and $945,907 and $956,853 for the nine months ended September 30, 2023 and 2022, respectively.

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

During the second quarter of 2023, the Company issued 7,317 Class A Common Shares, valued at $150,000, to Air Power Dynamics, LLC in an arms-length exchange for an aerospace tooling machine. Air Power Dynamics, LLC is controlled by Ambassador Edward Crawford, who is the chairman of the Company's board.

Depreciation expense ~~was:~~was $806,639 and $597,320 for the three months ended September 30, 2023 and 2022, respectively and $2,177,123 and $1,778,566 for the nine months ended September 30, 2023 and 2022, respectively.

7. Investments in equity securities are valued based on quotes stock prices in active markets, thus Level 1 in the fair value hierarchy, and summarized in the table below:

The Company ~~entered into~~is party to a Credit Agreement ~~on June 1, 2017~~ with JPMorgan Chase Bank, N.A. as lender ~~(the~~(as amended, the “Credit Agreement”). The Company entered into a sixth amendment to the Credit Agreement on June 12, 2023. The most significant change in the amended Credit Agreement was the discontinued use of LIBOR as a reference rate, with the adoption of the Federal Reserve Bank of New York's Secured Overnight Financing Rate (SOFR) as the primary reference rate. This change was anticipated and aligns with the US Dollar LIBOR panel ceasing on June 30, 2023.

The Credit Agreement, both before and after the execution of the sixth amendment, is comprised of a revolving facility in the amount of ~~$8,000,000, subject to a borrowing base (determined based~~$30,000,000 that matures on ~~80% of Eligible Accounts, plus 50% of Eligible Progress Billing Accounts, plus 50% of Eligible Inventory, minus Reserves as defined~~June 1, 2024. A Term Loan A matured December 1, 2022, and was paid in full on January 4, 2023.

The revolving facility under the Credit ~~Agreement) and a term A loan in the amount of $2,000,000, payable in consecutive monthly installments of $41,667 commencing on July 1, 2017.~~

~~The revolving facility~~Agreement includes a $3 million sublimit for the issuance of letters of ~~credit.~~credit thereunder. Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or ~~LIBOR~~SOFR (previously LIBOR) plus applicable margins of (i) ~~0.00%~~(0.25%) for Prime Rate loans and (ii) ~~2.00%~~1.75% for ~~LIBOR~~SOFR (previously LIBOR) loans. ~~The maturity date of the revolving facility is June 1, 2020. Interest for borrowings under the term A loan accrues ata 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 A 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. The financial covenants ~~including~~under the Credit Agreement include a minimum fixed charge coverage ratio, ~~and~~a maximum senior funded ~~indebtedness~~debt to EBITDA ratio ~~financial covenants.~~and a maximum total funded debt to EBITDA ratio.

~~In connection with entering into the Credit Agreement, the Company made a onetime prepayment of a portion~~Bank debt balances consist of the ~~outstanding principal under outstanding~~following:

The Company had $18.0 million and $10.7 million available to borrow on the revolving credit facility at September 30, 2023 and December 31, 2022, respectively.

The Company had two separate promissory notes ~~held by~~with First Francis Company Inc. (“First Francis”), which were originally issued in July 2016 in connection with the acquisition of Federal Hose Manufacturing (“Federal Hose”) and which were amended in July 2018 in connection with acquisition of CAD Enterprises, Inc. (“CAD”). The first promissory note was issued with original principal in the amount of ~~$500,000.~~$2,000,000, and the second was issued with original principal in the amount of $2,768,662. The ~~Company will not be required to make any~~promissory notes each had an interest rate of 6.25% per annum, which was increased from 4.00% per annum as part of the ~~scheduled~~July 2018 amendments.

In connection with the Komtek Forge acquisition, on January 15, 2021, the Company refinanced the outstanding First Francis promissory notes in the aggregate amount of $2,077,384, including accrued interest payable through the refinance date and combined this amount with an existing First Francis promissory note carried by Komtek Forge in the amount of $1,702,400 into one note for a combined $3,779,784 loan due to First Francis Company, payable in quarterly ~~payments due under these notes for~~installments beginning April 15, 2021. The interest rate on the ~~remainder of calendar 2017.~~refinanced loan remained at 6.25% per annum. First Francis is owned by Edward Crawford and Matthew Crawford, ~~who~~both of whom serve on the Board of Directors of the Company.

On December 30, 2011, management entered into a Convertible Loan Agreement (“Convertible Loan”) with Roundball, LLC (“Roundball”). The Convertible Loan provides approximately $467,000 of liquidity to meet on- going 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.

There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible Loan. On December 20, 2016, management entered into Amendment No. 5 of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

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

As part of the Convertible Loan Agreement between the Company and Roundball, the parties entered into a Warrant Agreement, dated December 30, 2012, 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, as amended, expires December 30, 2017.

~~Short-Term Financing~~
~~On June 3, 2016, management entered into an unsecured revolving credit agreement with First Francis Company Inc. First Francis Company Inc. became a major shareholder of the Company on~~ Effective July 1, ~~2016 when~~ 2018, the Company completed the acquisition of ~~Federal Hose Manufacturing, LLC.~~all of the issued and outstanding shares of capital stock of CAD. Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of $21 million, $12 million of which was payable in cash at closing, with the remainder paid in the form of a subordinated promissory note issued by the Company in favor of a Seller (the “Seller Note”). The ~~agreement provides for a revolving credit facility~~Seller Note had an interest rate of ~~$250,000 with interest at 4.0%~~four percent (4.00%) per annum and ~~is unsecured. Each~~the loan ~~made under the credit arrangement will be due and payable~~was paid in full on the expiration date of the revolver note. In addition, the agreement generally allows for borrowing based on an amount equal to eighty percent of eligible accounts receivables or $250,000. The revolving line of credit expired on MayMarch 31, ~~2017.~~

~~The Company had $250,000 outstanding borrowings on the credit facility at September 30, 2016. At June 30, 2017, the outstanding balance was $0.~~
2023.

Notes payable ~~- related parties is a result of the acquisition of a business on July 1, 2016 and~~ consists of the following:

The Company has operating leases for facilities, vehicles and equipment. These leases have remaining terms of under one year to 11 years, some of which include options to extend the leases for up to 10 years.

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

Effective January 10, 2022, Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation (the “Company”), completed the acquisition (the “Reverso Transaction”) of substantially all the assets of Reverso Pumps, Inc., a Florida corporation and developer, designer, manufacturer, seller and distributor of oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems (“Reverso”), pursuant to an Asset Purchase Agreement (the “Reverso Asset Purchase Agreement”) entered into and effective January 10, 2022 by and among Reverso Pumps, the Seller, the seller parties named therein and the Seller Parties’ representatives named therein. Upon the closing of the Transaction, the assets were transferred and assigned to Reverso Pumps in exchange for approximately $2.6 million in cash.

Additionally, effective on January 10, 2022, Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), a Delaware limited liability company and indirect wholly-owned subsidiary of the Company, completed the acquisition (the “Separ Transaction,” and with the Reverso Transaction, the “Transactions”) of substantially all the assets of Separ of the Americas, LLC, a Florida limited liability company and developer, designer, manufacturer, seller and distributor of oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems (“Separ”) pursuant to an Asset Purchase Agreement (the “Separ Asset Purchase Agreement,” and together with the Reverso Asset Purchase Agreement, the “Purchase Agreements”) by and among Separ America, the Seller, the seller parties named therein and the Seller Parties’ representative named therein. Upon the closing of the Transaction, the assets were transferred and assigned to Separ America in exchange for approximately $1.6 million in cash.

The Company reports operations for two business segments: (1) Commercial Air Handling Equipment and (2) Industrial and Transportation Products. The identification of our operating segments is based on guidance in ASC 280-10-50-1. The Company's management evaluates segment performance based primarily on segment operating profit. Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses. The Company does not allocate corporate costs to the respective segments.

Both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment may engage in business activities from which they may recognize revenues and incur expenses relating to transactions with other components of the Company. The operating results for both the Commercial Air Handling Equipment segment and the Industrial and Transportation Products segment are reviewed regularly by our chief operating decision maker and is considered in making decisions about resources to be allocated to the segment in assessing its performance. Financial information for both segments is available in internal reports that are prepared on a monthly basis.

The Commercial Air Handling Equipment segment was added June 1, 2017, when the Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC ~~on June 1, 2017 for $10,250,000.~~in Akron, Ohio. The acquired business, ~~will continue to operate~~which operates under the name Air Enterprises, ~~(“AE”). AE manufactures~~is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling ~~units under fixed price contracts.~~solutions. Its customers are typically in the health care, ~~university, research,~~education, pharmaceutical and industrial manufacturing ~~market segments, and span all across~~markets in the United ~~States~~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 ~~worldwide. AE has one operating location~~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 ~~Northeastern Ohio. The purchase price was assigned~~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 ~~book value~~field and assembled on-site.

The Industrial and Transportation Products segment was added July 1, 2016, when the Company purchased the assets of the ~~net~~Federal Hose Manufacturing, LLC ("Federal Hose") of Painesville, Ohio. Federal Hose manufactures flexible interlocking metal hoses and the distribution of silicone and hydraulic 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 Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc.(“CAD”) in Phoenix, Arizona on July 1, 2018. CAD provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions. Utilizing state-of-the-art machining and welding technologies, CAD is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels. CAD’s quality certifications include ISO 9001:2015/AS9100D, as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, and TIG/E-Beam welding. The Company added the distribution of marine hose to this segment through the acquisition of the assets ~~acquired with the excess over the book value assigned to intangible assets~~of MPI Products, Inc. (“MPI”) on January 2, 2020. MPI specializes in rubber and ~~goodwill and has been allocated to the following accounts:~~

~~Acquisition related costs were approximately $0.3 million~~plastic marine hose for the ~~three~~recreational boating industry. MPI offers certified products that meet marine industry standards and ~~nine months ended June 30, 2017.~~regulations. Effective April 19, 2019, the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”). DG is in the business of developing and commercializing marketing and data analytic technology applications. The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC), in Worcester, Massachusetts on January 15, 2021. Komtek Forge LLC is a supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics, alternative energy, petrochemical and defense industries. The Company purchased all of the membership interests of Global-Tek-Manufacturing LLC (“Global-Tek”), in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology LLC (name later changed to Global-Tek Colorado LLC or “Global-Tek Colorado”) in Longmont, Colorado on March 2, 2021. Global-Tek and Global-Tek Colorado specialize in providing customers with highly engineered manufacturing solutions, including CNC machining, anodizing, electro polishing and laser marking for customers in the defense, aerospace and medical device markets. The Company purchased substantially all of the assets of Emergency Hydraulics LLC (“Emergency Hydraulics”), in Ocala, Florida on July 1, 2021. Emergency Hydraulics provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles. The Company purchased substantially all of the assets of Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), in Davie, Florida on January 10, 2022. Reverso Pumps develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems.

~~11.~~~~SEGMENT AND RELATED INFORMATION~~The Company purchased substantially all of the assets of Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), in Davie, Florida on January 10, 2022. Separ America develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems. The Company purchased substantially all of the assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”), in Cleveland, Ohio and Greenville, Ohio on May 1, 2022. Knitting Machinery specializes in manufacturing hose reinforcement machinery for the plastic, rubber and silicone industries.

The ~~Company operates three~~factors used to determine the Company’s reportable ~~segments: 1) commercial~~segments follow the guidance of ASC 280-10-50-21 and 50-10-22 and include consideration of the type of products or services delivered, the customers and end markets served, the appliable revenue recognition methodology and the length of time it takes to deliver products or services to customers. The Commercial Air Handling Equipment segment was identified as a reportable segment consisting of Air Enterprises, because Air Enterprises is strategically and operationally different from our other companies in several ways. First, Air Enterprises sells equipment to end customers and our other businesses that fall into the Industrial and Transportation Products segment sell products and components to end customers, not equipment. Second, the Commercial Air Handling Equipment segment delivers custom air handling ~~2) test~~solutions to customers which is different than the Industrial and ~~measurement~~Transportation Products segment which delivers manufactured metal, silicone, hydraulic and 3) industrial hose. The Company's management evaluates segment performance based primarily on operating earnings before taxes.. 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 selling, generalmarine hoses, complex engineered components, highly engineered forgings, highly engineered and ~~administrative expenses.~~

machined parts and data analytic technology applications. Third, the Commercial Air Handling:
~~This~~ Equipment segment serves customers primarily in the health care and education end markets while the Industrial and Transportation Products segment delivers products to customers in the heavy-duty truck manufacturing, agricultural, industrial, petrochemical, aerospace, defense, industrial gas turbine, medical prosthetics, alternative energy and emergency vehicle end markets. Fourth, the Commercial Air Handling Equipment segment recognizes revenue primarily over time while the Industrial and Transportation Products segment recognizes revenue primarily at a point in time. Fifth, the Commercial Air Handling Equipment segment manufactures custom air handling ~~units under fixed price contract~~solutions for customers over a period of three to eighteen months from the time the order is received to the time the air handling solution is delivered to the end customer as compared to the Industrial and Transportation Products segment which sells and delivers products to customers much more quickly, often within 30 days or less. For the reasons previously mentioned, Air Enterprises is strategically and operationally different than the other businesses owned by the Company and management finds it useful to include this business in the ~~health care, university, research, pharmaceutical~~Commercial Air Handling Segment which is separate and ~~industrial manufacturing market segments,~~distinct from all of our other businesses that reside in the Industrial and ~~across the United States and worldwide.~~Transportation Products segment.

~~Test and Measurement~~:
~~This segment consists of diagnostic tools and equipment sold~~Corporate costs not allocated 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~~segments:

Costs incurred at corporate headquarters do not directly relate to the ~~aftermarket using a variety~~two reportable segments and thus are not allocated. The nature of ~~distribution methods.~~

~~Industrial~~ ~~Hose:~~
~~This segment consists primarily of flexible metal and silicone hose products designed and manufactured or distributed primarily to~~these costs has remained consistent, but the ~~trucking industry and other industrial end-users. These products are sold to original equipment manufacturers and to~~dollar values have increased which coincides with the ~~aftermarket using a variety of distribution methods.~~Company's growth.

~~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.~~

~~RESULTS~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF ~~OPERATIONS~~FINANCIAL CONDITION AND RESULTS

The following discussion is intended to assist in the understanding of ~~Hickok’s~~the Company's financial position at ~~June 30, 2017 and~~ September 30, ~~2016,~~2023 and December 31, 2022, results of operations for the three and nine ~~months~~month periods ended ~~June~~September 30, ~~2017~~2023 and ~~2016,~~2022, and cash flows for the three and nine ~~months~~month periods ended ~~June~~September 30, ~~2017~~2023 and ~~2016,~~2022, and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and ~~with~~within the Company’s Annual Report on Form 10-K for the year ended ~~September 30, 2016.~~December 31, 2022.

The Company ~~has historically operated two divisions: 1) indicators~~purchased substantially all of the operating assets of Reverso Pumps, Inc, (“Reverso Pumps”) and ~~gauges that sell primarily to companies~~Separ of the Americas, LLC, (“Separ America”), both located in Davie, Florida on January 10, 2022.

The Company purchased substantially all of the operating assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”) located in Cleveland, Ohio and Greenville, Ohio on May 1, 2022.

Accordingly, in light of the timing of these transactions, the Company’s results for the Nine Months Ended September 30, 2023 include the added results of operations of Reverso Pumps, Separ America and Knitting Machinery in the ~~aircraft~~Industrial and ~~locomotive industries and 2) automotive diagnostic tools and equipment that sell to OEMs and the aftermarket. These divisions are now being reported as the Test and Measurement~~Transportation Products segment. In July 2016, the Company expanded its markets with the acquisition of a manufacturer of flexible metal hose for use in heavy truck, drilling, and grain handling, as well as silicone hose sold to these same industries. The acquisition of this business resulted in a new segmentConversely, our results for the ~~Company, referred to as~~Nine Months Ended September 30, 2022 do not include the ~~Industrial Hose division. In June 2017, the Company expanded its markets further with the acquisition~~full results of ~~a manufacturer~~operations of ~~commercial air handling for customers in the health care, university, research, pharmaceutical~~Knitting Machinery, Reverso Pumps and ~~industrial manufacturing market segments. The acquisition of this business resulted in a new segment for the Company, referred to as the Commercial Air Handling division.~~Separ America.

Results of Operations– – Three Months Ended ~~June~~September 30,~~, 2017~~ 2023 and ~~2016~~2022

Sales for the ~~fiscal~~ quarter ended ~~June~~September 30, ~~2017~~2023 (“current quarter”) increased to ~~$7.2~~$33.6 million, an increase of approximately ~~$5.7~~$1.5 million ~~and 372%~~or 4.5% from sales of ~~$1.5~~$32.2 million induring the same fiscal quarter of the prior year. This increase in sales was primarily attributable to the addition of our Commercial Air Handling division on June 1, 2017 and the Industrial Hose division acquired July 1, 2016.

~~Cost of products sold in the fiscal quarter ended June 30, 2017 was $4.2 million or 58% of sales compared to $ 0.8 million or 50% of sales in the same fiscal~~ quarter of the prior year. The increase in ~~costs was associated with higher~~ sales for the quarter ended September 30, 2023 was exclusively driven by organic growth, including price increases of percentages typically in ~~all three divisions. Gross margin (sales less costs~~the low single digits, as well as increased volume, in both of ~~products sold) was approximately 42%~~the Company's reportable segments. Discussion regarding segment performance is included in the sections below.,

Cost of sales for the ~~third fiscal~~current quarter ~~of 2017~~was $24.7 million compared to ~~50%~~$25.9 million for the same ~~fiscal~~ quarter of ~~2016.~~

~~Product development expenditures were $0.2 million~~the prior year, a decrease of $(1.1)1 or 4.4%, which is directly attributable to efficiency efforts at our manufacturing facilities and certain supplier cost reductions largely tied to freight and raw material price normalization. Gross margin was 26.5% in the ~~fiscal~~current quarter ~~ended June 30, 2017, which was a modest decrease from $0.3 million in~~compared to 19.6% for the same ~~fiscal~~ quarter of the prior year. ~~Product development expenditures relate~~In addition to the ~~Test~~aforementioned factors, the 690 basis point increase is also attributable to price increases and ~~Measurement division. The current level~~the increased sales base allowing for better absorption of ~~product development expenses is expected to continue for~~fixed costs. During the ~~balance~~third quarter of 2023, the ~~fiscal year. Management believes current resources will be sufficient to maintain current product development commitments and to continue to develop a reasonable flow of new products for both~~inflationary headwinds from the ~~OEM and aftermarket~~prior year substantially subsided, with the resultant elevated raw material prices largely being shared with customers.

Selling, general and administrative expenses (SG&A) in the ~~fiscal~~current quarter ~~ended June 30, 2017~~ were ~~$1.8~~$4.6 million, ~~or 25%~~compared to $4.3 million, in the same quarter of last year. Selling, general and administrative expenses were consistent as a percentage of sales, with the increased expense incurred to support the Company's growth.

Interest charges in the current quarter were $0.3 million compared to $0.3 million in the same quarter of the prior year. Total debt outstanding has decreased; however, interest expense has remained flat because of interest rate increases, which aligns with the macroeconomic environment. Average total debt (including notes) and average interest rates for the current quarter were $15.4 million and 7.0%, respectively, compared to $25.9 million and 4.1%, respectively, in the same period of last year.

Loss on investment in the current and prior year quarter was $0.1 million. The change is the result of market price changes in the Company's investments in marketable securities. There were no significant changes in the Company's investment strategy or portfolio compared to the prior year.

The Company recognized other income of $0.2 million in the prior year quarter, resulting from incentives that Global-Tek received from the government of Puerto Rico that did not occur in the third quarter of 2023.

Income tax expense in the current quarter was $1.1 million compared to $0.5 million ~~or 33% of sales, respectively,~~ in the same ~~fiscal~~ quarter of the prior year. Tax expense is higher compared to the same quarter of the prior year primarily because of higher pre-tax income.

Net income in the current quarter was $2.8 million, or $0.80 per diluted share, as compared to net income of $1.3 million, or $0.36 per diluted share, for the same quarter of the prior year because of the factors noted above.

Sales in the Commercial Air Handling Equipment segment for the quarter ended September 30, 2023 increased to $12.7 million, an increase of approximately $1.2 million, or 10.8%, from sales of $11.5 million during the same period of the prior year. This increase was primarily attributable to an increase in demand for clean air solutions following the COVID-19 pandemic, and the Company continues to work through a strong backlog of orders.

Segment operating profit in the Commercial Air Handling Equipment segment for the current quarter was $3.3 million, or 26.2%, compared to $1.5 million, or 13.3% in the same quarter of the prior year, an increase of $1.8 million or 1,300 basis points. The improved segment operating profit and segment operating margin were primarily a function of the increased revenue base, combined with lessened input costs and a factory that has implemented several efficiency and continuous improvement initiatives. Segment selling, general and administrative costs have remained consistent as compared to the third quarter of last year.

Sales in the Industrial and Transportation Products segment for the quarter ended September 30, 2023 increased to $20.9 million, an increase of approximately $0.2 million, or 1.0%, from sales of $20.7 million during the same period of the prior year. By design, this segment is diversified and operates across several industries. The growth in the current quarter was primarily the result of increased demand for aerospace components, which is consistent with increased travel in 2023 following the COVID-19 pandemic. Also contributing to the increase were price increases, which offset certain elevated ongoing input costs

Segment operating profit in the Industrial and Transportation Products segment for the current quarter was $1.9 million, or 9.3% , compared to $1.1 million, or 5.5%, in the same quarter of the prior year, an increase of $0.8 million or 380 basis points. The improved segment operating profit and segment operating margin were primarily a function of the increased revenue base, combined with the pass-through of certain increased costs attributable to inflation. Segment selling, general and administrative costs have remained consistent as compared to the third quarter of last year.

Sales for the nine months ended September 30, 2023 (“current year-to-date period”) increased to $110.1 million, an increase of $15.0 million or 15.7% from sales of $95.1 million during the same year-to-date period of the prior year. The increase in ~~selling, general and administrative expenses~~sales for the nine months ended September 30, 2023 was ~~primarily related~~almost exclusively driven by organic growth, including price increases of percentages typically in the low single digits, as well as increased volume, in both of the Company's reportable segments. Discussion regarding segment performance is included in the sections below.

Cost of sales for the nine months ended September 30, 2023 was $80.2 million compared to ~~costs related~~$75.6 million for the same period of the prior year, an increase of $4.5 million or 6.0%, which is directly attributable to the ~~addition of the Commercial Air Handling division and the Industrial Hose division. In addition, the Company incurred higher~~ sales ~~expenses in support of higher sales and higher depreciation expenses related to fixed assets acquired with and intangibles allocated due to the purchase of the Commercial Air Handling division.~~

~~Interest charges~~increase. Gross margin was 27.2% in the ~~fiscal quarter ended June 30, 2017 were approximately $67 thousand~~current year-to-date period compared to ~~$5 thousand in~~19.6% for the same ~~fiscal quarter~~period of the prior year. The 760 basis point increase was primarily attributable to an increased sales base allowing for better absorption of fixed costs, normalization of increased raw materials and logistics costs attributable to inflation, and several plant efficiency initiatives. During the nine months ended September 30, 2023, the inflationary headwinds from the prior year substantially subsided, with resultant elevated prices largely being shared with customers, combined with direct cost management programs which have resulted in savings.

Selling, general and administrative expenses (SG&A) in the current ~~year~~year-to-date period were $15.3 million, compared to $13.7 million, in the prior year-to-date period. Selling, general and administrative expenses are consistent as a percentage of sales, with the increased expenses incurred to support the Company's rapid sales growth.

Interest charges in the current year-to-date period were approximately $1.0 million compared to $0.7 million in the prior year-to-date period. Total debt outstanding decreased, thus the comparability in interest expense ~~is primarily due~~was directly attributable to interest rate increases, which align with the ~~recording of~~macroeconomic environment. Average total debt (including notes) and average interest ~~expense on bank debt related~~rates for the most recent nine-month period were $19.3 million and 6.7%, respectively, compared to ~~the acquisitions on June 1, 2017~~$27.0 million and ~~notes related to the acquisition of a business on July 1, 2016.~~

~~Other income was $5 thousand in the fiscal quarter ended June 30, 2017 compared with $2 thousand~~3.2%, respectively, in the same ~~fiscal quarter~~period of last year.

Loss on investment in the current year-to-date period was immaterial, compared to a loss of $0.5 million in the prior ~~year. Other~~year-to-date period. The change is the result of market price changes in the Company's investments in marketable securities. There have been no significant changes in the Company's investment strategy or portfolio as compared to the prior year-to-date period.

The Company recognized other income ~~consists primarily~~ of ~~interest income on cash~~$0.3 million in the current and ~~cash equivalents and proceeds~~prior year-to-date periods, resulting from recurring incentives that Global-Tek received from the ~~sale~~government of ~~scrap metal shavings.~~Puerto Rico.

Income tax expense ~~is expected~~in the current year-to-date period was $3.8 million compared to ~~be minimal as~~$1.5 million in the ~~Company believes it will be able to utilize the majority~~same period of the ~~net operating loss and research and development credit carryforwards before they expire; however, there are certain limitations~~prior year. Tax expense was higher compared to the ~~use~~prior year-to-date period primarily because of ~~these tax credits that are expected to result in a small amount of alternative minimum tax. In addition, the Company expects to pay state and local income tax.~~higher pre-tax income.

Net income in the ~~fiscal quarter ended June 30, 2017~~current year-to-date period was ~~$0.9~~$10.1 million, or ~~$0.31~~$2.86 per diluted share, as compared to ~~the~~ net ~~loss~~income of ~~$8 thousand~~$3.5 million, or ~~$0.00~~$1.01 per diluted share, infor the same ~~fiscal quarter~~period of the prior ~~year.~~year because of the factors noted above.

~~Results of Operations~~ ~~– Nine Months Ended June 30, 2017 and 2016~~Commercial Air Handling Segment

Sales in the Commercial Air Handling Equipment segment for the nine months ended ~~June~~September 30, ~~2017~~2023 increased to ~~$12.9~~$43.6 million, an increase of approximately ~~$8.9~~$8.8 million, ~~and 227%~~or 25.1%, from sales of ~~$4.0~~$34.9 million during the same period of the prior year. This increase was primarily attributable to an increase in demand for clean air solutions following the COVID-19 pandemic. More specifically, pandemic-related restrictions were lifted, allowing for the on-site access necessary to complete installations for certain hospital and university customers. The Company continues to work through a strong backlog of orders.

Segment operating profit in the Commercial Air Handling Equipment segment for the current year-to-date period was $10.7 million, or 24.6%, compared to $4.5 million, or 12.8% in the same year-to-date period of the prior year, an increase of $6.3 million or 1,180 basis points. The improved segment operating profit and segment operating margin were primarily a function of the increased revenue base, combined with lessened input costs and a factory that has implemented several efficiency, cost management and continuous improvement initiatives. Segment selling, general and administrative costs have remained consistent compared to the prior year-to-date period.

Sales in the Industrial and Transportation Products segment for the nine months ended September 30, 2023 increased to $66.4 million, an increase of approximately $6.2 million or 10.3%, from sales of $60.2 million during the same period of the prior year. The increase in sales for the nine months ended September 30, 2023 was primarily driven by increased sales across the Company's portfolio. Significantly contributing to the sales growth was an increase of approximately $3.7 million and $1.2 million in the Company's sales of aerospace tooling and forged aerospace products, respectively, stemming from the re-emergence of the travel industry. Also contributing to the sales improvement was growth of approximately $1.9 million in sales of the Company's machined defense parts, which largely aligns with the factory's return to historical sales volumes. Offsetting these increases was a decrease of approximately $0.9 million for the Company's digital marketing entity. Sales of boating products have increased $0.3 million, fueled by strong demand in the first half of the year as orders placed during the pandemic were still being fulfilled.

Segment operating profit in the Industrial and Transportation Products segment for the current year-to-date period was $7.7 million, 11.7%, compared to $4.3 million, or 7.1%, in the same period of the prior year, an increase of $3.5 million or 460 basis points. The improved segment operating profit and segment operating margin were primarily a function of increased revenue from aerospace and defense sales and related improved segment gross margin. The segment gross margin improvement was the result of improved absorption of fixed costs due to the growth in sales volume, the pass-through of certain increased costs attributable to inflation and certain efficiency initiatives. Segment selling, general and administrative costs have increased consistent with the sales increase compared to the prior year-to-date period.

The Company’s credit agreement, by and between the Company and JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”), provides for a revolving credit facility of up to $30.0 million. At September 30, 2023, there was approximately $18.0 million of borrowing availability, which has increased in recent quarters as the Company generated cash, and used that cash to pay down debt. As the Credit Agreement reaches maturity in June 2024, the Company believes it is well positioned to negotiate a new or extended credit facility which will provide financial flexibility to fund not only working capital, but acquisitions and other strategic initiatives.

Operating Activities. Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments impact reported cash flows. Net cash provided by operating activities was $11.0 million for the nine months ended September 30, 2023, compared to $6.2 million net cash provided by operating activities for the prior year period. The improvement in cash flow from operations is most directly attributable to the increase in net income. Despite its growing sales base, the Company invested $3.3 million less in inventory during the nine months ended September 30, 2023 compared to the prior year period. Partially offsetting these improvements was a use of $2.7 million on accounts payable during the nine months ended September 30, 2023 compared to proceeds of $2.6 million in the prior year period. The Company maintains strict oversight of disbursements, and this change is largely the result of invoice timing. Similarly resulting from timing, the Company has an unearned revenue balance $0.9 million higher than in the prior year period.

Investing Activities. Cash used in investing activities for the nine months ended September 30, 2023 was $1.4 million, compared to cash used in investing activities of $4.9 million in the prior year period. Cash used in investing activities for the period ended September 30, 2023 was for capital expenditures in the normal course of business. Cash used in investing activities for the period ended September 30, 2022 was for the acquisitions of Knitting Machinery Corporation, Reverso Pumps and Separ America in the Industrial and Transportation Products segment as well as capital expenditures in the normal course of business.

Financing Activities. Cash used in financing activities was approximately $9.3 million for the nine months ended September 30, 2023, compared to cash used in financing activities of $0.6 million in the same period a year ago. This increase in sales was attributable to the addition of our Commercial Air Handling division on June 1, 2017 and the Industrial Hose division acquired July 1, 2016. Sales from our Test and Measurement division increased $1.1 million due to strong salesBeginning in the ~~third fiscal quarter 2017 from emissions and OEMs.~~

~~Cost~~second half of products sold in the nine months ended June 30, 2017 was $7.9 million or 61% of sales compared to $2.2 million or 56% of sales in the same period a year ago. The increase in costs was associated with higher sales for the quarter in all three divisions. Gross margin (sales less costs of products sold) was approximately 39% for the nine months ended June 30, 2017 compared to 44% for the same period in 2016.

Product development expenditures in the nine months ended June 30, 2017 were $0.6 million or 5% of sales compared to $0.8 million or 20%, respectively, in the same period a year ago. The current level of product development expenses is expected to continue for the balance of the fiscal year. Management believes current resources will be sufficient to maintain current product development commitments and to continue to develop a reasonable flow of new products for both the OEM and aftermarket customers.

Selling, general and administrative expenses in the nine months ended June 30, 2017 were $3.4 million or 26% of sales compared to $1.5 million or 38%, respectively, in the same period a year ago. The increase in selling, general and administrative expenses was primarily related to costs related to the addition of the Commercial Air Handling division and the Industrial Hose division. In addition,2022, the Company ~~incurred higher sales expenses in support of higher sales and higher depreciation expenses related~~has utilized cash flow from operations to ~~fixed assets acquired with and intangibles allocated due to~~pay down its total debt. In the ~~purchase of the Commercial Air Handling division.~~

~~Interest charges in the nine-month~~prior year period, ended June 30, 2017 were $166 thousand compared to $8 thousand in the same period a year ago. The current year interest expense is primarily due to the recording of interest expense on bank debt related to the acquisitions on June 1, 2017 and notes related to the acquisition of a business on July 1, 2016.

Other income was $11 thousand in the nine-month period ended June 30, 2017 compared with $6 thousand in the same period a year ago. Other income consists primarily of interest income on cash and cash equivalents and proceeds from the sale of scrap metal shavings.

~~Income tax expense is expected to be minimal as~~ the Company ~~believes it will be able to utilize the majority of the net operating loss and research and development~~borrowed on its revolving credit carryforwards before they expire; however, there are certain limitations to the use of these tax credits that are expected to result in a small amount of alternative minimum tax. In addition, the Company expects to pay state and local income tax.

Net income in the nine-month period ended June 30, 2017 was $0.8 million or $0.28 per diluted share as compared to the net loss of $0.5 million or ($0.32) per diluted share in the same period a year ago.

Total current assets at June 30, 2017 increased to approximately $17.5 million from $7.8 million at September 30, 2016, an increase of $9.7 million. The increase in current assets is due to an increase in accounts receivable of $7.3 million, costs in excess of billings of $3.9 million, inventories of $0.6 million, and prepaid expenses and other assets of approximately $0.7 million, respectively. The increase in these assets is primarily a result of the acquisition of the Commercial Air Handling division on June 1, 2017. The increases in current assets were offset by a decrease in cash of approximately $2.0 million. The decrease in cash and cash equivalents was due cash used towards the purchase of the Commercial Air Handling division.

~~Cash provided by operating activities for the nine months ended June 30, 2017 was approximately $1.4 million and was adequate~~facility to fund the ~~Company's operations as well as capital expenditures of approximately $0.3 million.~~

Capital expenditures were needed for building improvements as well as for tooling, machinery and equipment for product manufacturing. Cash flow used in investing activities of $10.6 million was primarily used for the purchase of the Commercial Air Handling division for $10.3 million.

Cash provided by financing activities of approximately $7.1 million was primarily related to the $8.5 million borrowing on the bank debt in connection with the purchase of the Commercial Air Handling division, offset by payment of the short-term financing of $0.3 million, payment of approximately $0.8 million for the related party notes, and $0.3 million repayment against the revolving credit facility with JPMorgan Chase Bank, N.A.acquisitions noted above.

The Company ~~entered into a Credit Agreement~~is actively managing its business to generate cash flow. We believe that cash and availability on ~~June 1, 2017 with JPMorgan Chase Bank, N.A. as lender (the “Credit Agreement”). The Credit Agreement is comprised of a~~our revolving credit facility in the amount of $8.0 million, subject to a borrowing base and a term A loan in the amount of $2.0 million, payable in consecutive monthly installments of $41,667 commencing on July 1, 2017. The Credit Agreement 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. Management believes the Company is in compliance with debt covenants.

In addition to the Credit Agreement, the Company has several borrowing arrangements as discussed in Note 8 of this Quarter Report on Form 10-Q, including Convertible Notes Payable and outstanding notes related to the Company’s acquisition of its Industrial Hose division in 2016. The Convertible Notes provide liquidity to the Company for working capital. In December 2016, the Company entered into Amendment No. 5 of the Convertible Loan Agreement. The Convertible Loan Agreement, as amended, is between the Company and a major shareholder who is also affiliated withtwo Directors, as discussed in Note 4 of theCompany’s Annual Report on Form 10-K for the year ended September 30, 2016.The amended Convertible Loan:

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

~~The Company expects positive cash flow from operations~~ to be sufficient to fund working capital needs and service principal and interest payments due related to the bank debt and notes ~~payable. In addition,~~payable until the anticipated execution of a new or extended credit facility. Based on a combination of increased profitability and decreased debt levels, the Company ~~has $1.8 million available~~believes it is well positioned to ~~borrow~~negotiate a new or extended credit facility to support ongoing operations as well as growth initiatives. Notwithstanding the Company's expectations, if the Company's operating results decrease as the result of pressures on the ~~revolving~~business due to, for example, supply chain interruptions or delays, increases in material, freight or labor costs, inflationary pressures, currency or interest rate fluctuations, regulatory issues, a downturn in general economic conditions, or the Company's failure to execute its business plans, the Company may require additional financing, or may be unable to comply with its obligations under the credit facility, ~~at June 30, 2017. Management believes~~and its lenders could demand repayment of any amounts outstanding under the Company’s credit facility. Similarly, and while also not expected, it is possible that some or all of these factors could make it difficult to secure a new or extended credit agreement, and there is no assurance that the Company ~~has adequate liquidity~~will be able to do so on attractive terms or at all. See Note 8 and 9 to the consolidated financial statements for ~~working capital, capital expenditures and other strategic initiatives.~~further information on the Company's total debt.

From time to time, the Company enters into performance and payment bonds in the ordinary course of business. These bonds are secured by certain assets of the Company until the Company’s completion of certain contractual requirements. At September 30, 2023, the Company had secured performance and payment bonds in the amount of $8.5 million as surety on completion of the requirements of certain commercial air handling contracts. The Company has no other off-balance sheet arrangements (as defined in Regulation S-K Item 303 paragraph (a)(4)(ii)) 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~~expenditure or capital resources.)

Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions which affect amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate the accounting policies and estimates that are used to prepare financial statements. Management has made their best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe that there is great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed below. On a regular basis, critical accounting policies are reviewed with the Audit Committee of the Board of Directors.

Revenue Recognition: We recognize revenue with respect to customer orders when our obligations under the contract terms are satisfied and control of the product transfers to the customer, typically upon shipment. Revenue from certain contracts in the Commercial Air Handling Equipment segment is accounted for over time, when products are manufactured or services are performed, as ~~presented~~control transfers under these arrangements. We follow a cost-based input method, since there is no objective output measure that would fairly depict the transfer of control over the life of the performance obligation. Progress on the performance obligation is measured by the proportion of actual costs incurred to the total costs expected to complete the contract. Costs included in ~~Notes~~the measure of progress include direct labor and third-party. This cost-based method of revenue recognition requires the Company to ~~Consolidated Financial Statements~~make estimates of costs to complete its projects on an ongoing basis. Significant judgment is required to evaluate assumptions related to these estimates. The effect of revisions to estimates related to the transaction price or costs to complete a project are recorded on a cumulative catch-up basis. Certain contracts may be terminated by the customer; however, in the event of termination, most contracts require payment for services rendered through the date of termination.

Allowance for Obsolete and ~~Management’s Discuss~~Slow-Moving Inventory: Inventories are valued using the first-in, first-out (“FIFO”) method; stated at the lower of cost or net realizable value; and ~~Analysis~~are reduced by an allowance for obsolete and slow-moving inventories. The allowance is estimated based on management’s review of ~~Financial Condition~~inventories on hand with minimal sales activity, which is compared to estimated future usage and ~~Results~~sales. Inventories identified by management as slow-moving or obsolete are reserved for based on estimated selling prices less disposal costs. Though we consider these allowances adequate and proper, changes in economic conditions in specific markets in which we operate could have a material effect on allowances required.

Business Combinations: Business combinations are accounted for using the purchase method of ~~Operations~~accounting under ASC 805, “Business Combinations.” This method requires the Company to record assets and liabilities of the businesses acquired at their estimated fair values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Determining the fair value requires management to make estimates and assumptions including discount rates, rates of return on assets, and long-term sales growth rates.

Goodwill and Indefinite Lived Intangible Assets: As referenced by ASC 350 “Intangibles- Goodwill and other” (“ASC 350”), management performs its impairment test for goodwill and intangible assets at least annually or more frequently, if impairment indicators arise at the reporting unit level. Our reporting units have been identified at the individual company component level, with each individual subsidiary operating company constituting its own reporting unit. For 2022 management performed qualitative and quantitative testing for each individual company with a goodwill balance other than those companies that were newly acquired within one year.

Our goodwill impairment analysis utilizes a qualitative approach that compares the carrying amount of the reporting unit to its estimated fair value. To the extent that the qualitative approach indicates that it is more likely than not that the carrying amount is less than the reporting unit's fair value, we apply a quantitative approach as a secondary step. In applying the quantitative approach, we use an income approach to estimate the fair value of the reporting unit. The income approach uses a number of factors, including future business plans and actual and forecasted operating results. The significant assumptions employed under this method include discount rates; revenue growth rates, including assumed terminal growth rates; and operating margins used to project future cash flows for the operating company. The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows of the individual company. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. We believe we incorporate reasonable assumptions into our analysis of goodwill impairment testing for a reporting unit, such that actual experience would need to be materially out of the range of expected assumptions in order for an impairment to remain undetected.

In conducting our 2022 annual goodwill impairment analysis, we determined that the goodwill for CAD Enterprises at December 31, 2022 was $7.3 million. In our qualitative assessment of CAD Enterprises, we noted a decline in revenue from $30.1 million in 2019 to $18.9 million in 2020, $18.3 million in 2021 and $15.5 million in 2022 and a decline in after-tax income margin from 5.8% in 2019 to -4.6% in 2020, -0.5% in 2021, and -3.4% in 2022 and thus determined to conduct a quantitative assessment of CAD Enterprises. The quantitative assessment of CAD Enterprises confirmed that the estimated fair value exceeded carrying value by 12.2 percent, and thus no impairment existed at December 31, 2022. The key assumptions used to estimate fair value included discount rates; revenue growth rates, including assumed terminal growth rates; and after-tax income margins used to project future cash flows for CAD Enterprises. The discount rate used to estimate fair value was 10% and was based on estimates of capital costs and management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows for CAD Enterprises. Our revenue growth rate for the 9-year period in the discounted cash flow model was 10.2% per year, which reflects management’s assessment of estimated future orders for CAD Enterprises based in part on a Long-Term-Agreement (“LTA”) with the Company’s largest customer, a $7.5 million incremental purchase order with this customer, our previous revenue history including actual revenues of $30.1 million in 2019 before the onset of the COVID-19 pandemic, and a continued business rebound in the aerospace industry. The assumed terminal growth rate for CAD Enterprises was 3% based on management’s assessment of long-term growth rates for the Aerospace industry. The after-tax income margins used to project future margins for the Company were based on the historical margins for CAD Enterprises prior to the COVID-19 pandemic. In 2019, CAD Enterprises earned a debt-free after-tax income margin of 16.6%. The discounted cash flow model used to estimate fair value assumes a debt-free after-tax income margin of 17.3% in 2027, or year 5 of the forecast period and expanding margins to 17.5% in the terminal year. This is based on management’s assessment of our ability to grow SG&A expenses at a slower rate than revenues as the Company achieves more scale. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. Potential events and circumstances including global conflicts, materials shortages, inability to increase prices to keep pace with expenses, onset of a global pandemic, departure of key employees and loss of a key customer could negatively affect the key assumptions used for the recent fair value test and are similar to the risk factors noted in Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended ~~September 30, 2016.~~December 31, 2022.

In conducting our 2022 annual goodwill impairment analysis, we determined that the goodwill for Global-Tek Manufacturing and Global-Tek Colorado at December 31, 2022 was $1.9 million. In our qualitative assessment of Global-Tek Manufacturing and Global-Tek Colorado, we noted a decline in revenue from $9.2 million in 2021 to $6.5 million in 2022 and a decline in after-tax income margin from 17.3% in 2021 to -3.3% in 2022 and thus determined to conduct a quantitative assessment of Global-Tek Manufacturing and Global-Tek Colorado. The quantitative assessment of Global-Tek Manufacturing and Global-Tek Colorado confirmed that the estimated fair value exceeded carrying value by 23.3%, and thus no impairment existed at December 31, 2022. The key assumptions used to estimate fair value included discount rates; revenue growth rates, including assumed terminal growth rates; and after-tax income margins used to project future cash flows for Global-Tek Manufacturing and Global-Tek Colorado. The discount rate used to estimate fair value was 10% and was based on estimates of capital costs and management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows for Global-Tek Manufacturing and Global-Tek Colorado. Our revenue growth rate for the 9-year period in the discounted cash flow model was 6.5% per year, which reflects management’s assessment of estimated future orders for Global-Tek Manufacturing and Global-Tek Colorado based on our previous revenue history including actual revenues of $9.2 million in 10 months of operations after the acquisition in 2021 before the untimely passing of the General Manager. The assumed terminal growth rate for Global-Tek Manufacturing and Global-Tek Colorado was 3% based on management’s assessment of long-term growth rates for the Aerospace and Defense industries. The after-tax income margins used to project future margins for the Company were based on the historical margins for Global-Tek Manufacturing and Global-Tek Colorado prior to the untimely passing of the General Manager. In 2021, Global-Tek Manufacturing and Global-Tek Colorado earned an debt-free after-tax income margin of 16.4%. The discounted cash flow model used to estimate fair value assumes an after-tax income margin of 6.2% in 2027, or year 5 of the forecast period and expanding margins to 7.8% in the terminal year. This is based on management’s assessment of our ability to grow SG&A expenses at a slower rate than revenues as the Company achieves more scale. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. Potential events and circumstances including global conflicts, materials shortages, inability to increase prices to keep pace with expenses, onset of a global pandemic, departure of key employees and loss of a key customer could negatively affect the key assumptions used for the recent fair value test and are similar to the risk factors noted in Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Income Taxes: In accordance with ASC 740, “Income Taxes” (“ASC 740”), we account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities and are measured using the currently enacted tax rates. Specifically, we measure gross deferred tax assets for deductible temporary differences and carryforwards, such as operating losses and tax credits, using the applicable enacted tax rates and apply the more likely than not measurement criterion. Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual annual effective income tax rates and related income tax liabilities may differ materially from our interim estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known.

Inflationary economic conditions during the past few years have increased, the Company’s costs of producing its products. While these inflationary conditions have stabilized during 2023, the Company's costs have remained elevated, and may increase further if inflationary economic conditions persist. The Company’s products are manufactured using various metals and other commodity-based materials including steel, aluminum, rubber and silicone. Freight and labor costs also are significant elements of the Company’s production costs. Inflationary economic have elevated increase these various costs. If the Company is unable to continue mitigating cost increases through customer pricing actions, alternative supply arrangements or other cost reduction initiatives, the Company's profitability may be adversely affected.

This press release contains forward-looking statements ~~relating to~~within the ~~business~~meaning of the ~~Company.~~“Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements made regarding the Company’s future results. Generally, these statements can be identified by the use of words such as “guidance,” “outlook,” “believes,” “estimates,” “anticipates,” “expects,” “forecasts,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements, or other statements made by the Company, are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors (including, but not limited to, those specified below) which are difficult to predict and, in many instances, are beyond the control of the Company. As a result, actual results of the Company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) shortages in supply or increased costs of necessary products, components or raw materials from the Company’s suppliers; (b) availability shortages or increased costs of freight and labor for the Company and/or its suppliers; (c) actions that governments, businesses and individuals take in response to public health crises, such as the COVID-19 pandemic, including mandatory business closures and restrictions on onsite commercial interactions; (d) conditions in the global and regional economies and economic activity, including slow economic growth or recession, inflation, currency and credit market volatility, reduced capital expenditures and changes in government trade, fiscal, tax and monetary policies; (e) adverse effects from evolving geopolitical conditions, such as the military conflict in Ukraine and Israel; (f) the Company's ability to effectively integrate ~~Federal Hose and Air Enterprises~~acquisitions, and manage the larger operations of the combined businesses, ~~(b)~~(g) the Company's dependence upon a limited number of customers and the ~~automotive~~aerospace industry, ~~(c)~~(h) the highly competitive ~~industry~~industries in which the Company operates, which includes several competitors with greater financial resources and larger sales organizations, (d) the acceptance in the marketplace of new products and/or services developed or under development by the Company including automotive diagnostic products and indicating instrument products, (e) the ability of the Company to further establish distribution and a customer base in the automotive aftermarket, (f)(i) the Company's ability to capitalize on market opportunities ~~including state automotive emissions programs and OEM tool programs, (g)~~in certain sectors, (j) the Company's ability to obtain cost effective financing and ~~(h)~~(k) the Company's ability to satisfy obligations under its ~~interest payments.~~

financing arrangements, and the other risks described in “Item 1A. Risk Factors” in our Annual Report Form 10-K and the Company’s subsequent filings with the SEC.

~~The Company~~This item is ~~exposed~~not applicable 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 relates to funds available under Credit Agreement with JPMorgan Chase Bank (“Chase Bank”). The Company had an outstanding balance on the revolving credit facility with Chase Bank of $6.2 million and an outstanding balance on the term A loan of $2.0 million. Interest for borrowings under the Credit Agreement accrue at prime rate or a LIBOR plus an applicable margin. In addition to floating rate debt under the Credit Agreement, the Company has fixed rate debt. At June 30, 2017, the Company has outstanding amounts of $0.2 million related to convertible notes that bear interest at 0.34%. The Company also outstanding amounts of $1.6 million and $2.4 million related to promissory notes withas a ~~related party, both of which bears interest at a rate of 4.0% per annum. The Company believes that the market risk relating to interest rate movements is minimal.~~smaller reporting company.

AsEvaluation of ~~June 30, 2017, an evaluation was performed, under~~disclosure controls and procedures.

Under the supervision of and with the participation of ~~the Company's~~our management, including ~~the Company's Chief Executive Officer along with the Company's Vice President, Finance~~our chief executive officer and ~~Chief Financial Officer, of~~chief financial officer, we evaluated 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'sour disclosure controls and procedures as(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 June 30, 2017 to ensure that information required to be disclosed by the Company in reports that it files and submits15(d)-15(e) under the Exchange ~~Act is (1) recorded, processed, summarized~~Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer 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~~chief financial officer have concluded that, as ~~appropriate to allow timely decisions regarding required disclosure.~~ of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

There ~~were~~have been no changes in the ~~Company's~~Company’s internal ~~controls~~control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the ~~fiscal~~ quarter ended ~~June~~September 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

~~None.~~At the time of filing this Quarterly Report on Form 10-Q, there were no material legal proceedings pending or threatened against the Company.

There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2022.

The following table discloses shares repurchased by the Company during the quarter ended September 30, 2023.

During the quarter ended September 30, 2023, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, each as defined in Item 408 of Regulation S-K.

*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.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned as of ~~the 14~~^th ~~day of August 2017,~~November 2, 2023, thereunto duly authorized.

	(Unaudited)
	June 30, 2017		September 30, 2016
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	1,030,560	$	3,060,734
Accounts receivable-less allowance for doubtful accounts		8,702,023		1,354,199
Costs in Excess of Billings and estimated costs		3,106,868
Inventories-less allowance for obsolete inventory		3,896,865		3,308,799
Prepaid Expenses and other current assets		715,740		43,085
Total Current Assets		17,452,056		7,766,817

PROPERTY, PLANT AND EQUIPMENT:
Land		233,479		233,479
Buildings and Leasehold Improvements		2,028,914		1,448,978
Machinery and Equipment		5,236,781		3,392,734
Total Property, Plant and Equipment		7,499,174		5,075,191
Less accumulated depreciation		3,974,633		3,771,268
Property, Plant and Equipment, Net		3,524,541		1,303,923

OTHER ASSETS:
Goodwill		2,409,048		1,777,656
Intangibles, net of accumulated amortization		2,330,914		1,250,909
Deferred income taxes-less valuation allowance of $500,000		3,330,600		3,330,600
Other non-current assets		3,250		4,850
Total Non-Current Other Assets		8,073,812		6,364,015

Total Assets	$	29,050,409	$	15,434,755

	(Unaudited)
	June 30, 2017			September 30, 2016
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Convertible notes payable - related party	$	200,000		$	-
Short-term financing - related party		-			250,000
Notes payable - related party		142,726			379,761
Bank Debt - Current		500,000			-
Leases payable		42,896			59,369
Accounts payable		3,324,482			733,388
Billings in Excess of Costs & Earnings		647,276
Accrued payroll and related expenses		838,458			301,054
Accrued expenses		1,362,390			593,378
Accrued income taxes		77,744			31,000
Deferred revenue		503,646			-
Total Current Liabilities		7,639,618			2,347,950

LONG-TERM LIABILITIES:
Notes payable - related party		3,861,766			4,388,901
Bank Debt		7,700,000			-
Leases payable		151,208			144,997
Convertible notes payable - related party		-			200,000
Deferred revenue		377,735			-
Total Long-Term Liabilities		12,090,709			4,733,898
STOCKHOLDERS' EQUITY
Common shares - no par value
Class A 10,000,000 shares authorized, 2,130,681 and 2,090,394 shares issued		2,246,369			2,108,651
Class B 2,500,000 convertible shares authorized, 779,283 shares issued		710,272			710,272
Preferred 1,000,000 shares authorized, no shares outstanding		-			-
Contributed capital		1,741,901			1,741,901
Treasury shares		(264,841	)		(253,341	)
Class A - 15,795 shares
Class B - 5,667 and 667 shares
Retained earnings		4,886,381			4,045,424
Total Stockholders' Equity		9,320,082			8,352,907

Total Liabilities and Stockholders' Equity	$	29,050,409		$	15,434,755

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
TOTAL SALES	$	7,220,626		$	1,530,244		$	12,923,867		$	3,953,740

COSTS AND EXPENSES:
Cost of Sales		4,191,480			769,430			7,933,969			2,204,495
Product Development		179,840			258,406			636,166			777,889
Selling, General and Administrative Expenses		1,808,920			507,326			3,354,796			1,488,461
Interest Charges		66,695			4,843			165,656			8,179
Legal matter		-			-			(50,000	)		-
Other income		(5,205	)		(1,666	)		(11,177	)		(5,556	)

Total Costs and Expenses		6,241,730			1,538,339			12,029,410			4,473,468
Income (Loss) before Provision for Income Taxes		978,896			(8,095	)		894,457			(519,728	)
Provision for Income Taxes		37,373			-			53,500			-

Net Income (Loss)	$	941,523		$	(8,095	)	$	840,957		$	(519,728	)

Earnings (Loss) Per Common Share - Basic	$	0.33		$	(0.00	)	$	0.29		$	(0.32	)
Earnings (Loss) Per Common Share - Diluted	$	0.31		$	(0.00	)	$	0.28		$	(0.32	)

Weighted Average Shares of Common Stock Outstanding - Basic		2,880,719			1,638,215			2,870,349			1,638,215
Weighted Average Shares of Common Stock Outstanding - Diluted		3,044,440			1,638,215			2,962,430			1,638,215

	Nine Months Ended
	June 30
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers	$	15,510,323		$	4,261,359
Cash paid to suppliers and employees		(13,874,832	)		(4,542,057	)
Interest paid		(176,219	)		(7,329	)
Interest received		4,049			632
Income taxes paid		(51,500	)		-
Net Cash Provided by (Used in) Operating Activities		1,411,821			(287,395	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in purchase of business		(10,250,000	)
Capital Expenditures		(314,530	)		(26,435	)
Net Cash Used in Investing Activities		(10,564,530	)		(26,435	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Related Party Notes		(764,170	)		-
Payments on related party short-term financing		(250,000	)
Borrowing on short-term financing		-			250,000
Borrowing on bank debt		8,500,000			-
Payment on bank debt		(300,000	)
Payments on capital lease		(51,795	)		(26,524	)
Purchase of Class B shares		(11,500	)		-
Net Cash Provided by Financing Activities		7,122,535			223,476

Decrease in Cash and Cash Equivalents		(2,030,174	)		(90,354	)
Cash and Cash Equivalents at Beginning of Period		3,060,734			346,405
Cash and Cash Equivalents at End of Period	$	1,030,560		$	256,051

	Nine Months Ended
	June 30
	2017			2016
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income (Loss)	$	840,957		$	(519,728	)

ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Depreciation and amortization		353,693			94,500
Loss on disposal of assets		2,667			-
Non-cash share-based compensation expense		129,832			-

CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in accounts receivable		(2,586,456	)		307,619
Decrease (Increase) in excess of billing		873,956			-
Decrease (Increase) in inventories		6,437			(22,161	)
Decrease (Increase) in prepaid expenses and other assets		(610,393	)		58,856
Increase (Decrease) in accounts payable		864,476			(107,043	)
Increase (Decrease) in billings in excess of costs and earnings		52,732			(35,063	)
Increase (Decrease) in accrued payroll and related expenses		211,454			(64,375	)
Increase (Decrease) in accrued expenses		344,341			-
Increase (Decrease) in accrued income taxes		46,744			-
Increase (Decrease) in deferred revenue		881,381			-
Total Adjustments		570,864			232,333
Net Cash Provided by Operating Activities	$	1,411,821		$	(287,395	)

	June 30,2017		September 30, 2016		*September 30,*		*December 31,*
					*2023*		*2022*
Raw materials and component parts	$	2,760,341	$	1,730,563	$	4,394,288	$	2,892,820
Work-in-process		592,670		438,447		4,886,432		5,158,252
Finished products		543,854		1,139,789		11,985,900		13,483,017

Inventories, net of reserve	$	3,896,865	$	3,308,799
Total inventory					$	21,266,620	$	21,534,089
Less: inventory reserves						616,847		1,357,947
Net inventory					$	20,649,773	$	20,176,142

	June 30, 2017			September 30, 2016
Customer List: Backlog	$	1,970,000		$	1,280,000
Non-Compete Agreements		200,000			0
Trademarks		340,000			0
Other Intangibles		2,510,000			1,280,000
Accumulated Amortization		(179,086	)		(29,091	)
Other Intangibles, Net	$	2,330,914		$	1,250,909

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016

Intangible Amortization	$	91,813	$	-	$	149,995	$	-


	*Amortization in future periods*
2023		315,303
2024		1,261,210
2025		1,261,210
2026		933,345
2027		817,298

					*UNREALIZED*			*REALIZED*
	*BALANCE*		*ACQUISITIONS,*		*GAINS*			*GAINS*			*BALANCE*
	AT		*DISPOSITIONS*		*(LOSSES)*			*(LOSSES)*			*AT END*
	*BEGINNING*		*AND*		*INCLUDED*			*INCLUDED*			OF
	*OF YEAR*		*SETTLEMENTS*		*IN EARNINGS*			*IN EARNINGS*			*PERIOD*
December 31, 2022	$	1,518,244	$	-	$	(860,273	)	$	-		$	657,971

Year-to-date September 30, 2023		657,971		-		29,244			(46,284	)		640,931

	Current June 30, 2017		Total June 30, 2017		Total September 30, 2016
Term Debt	$	500,000	$	2,000,000	$	-
Revolving Debt		-		6,200,000		-
Total Bank Debt				8,200,000		-
Less: Current Portion				500,000
Non-Current Bank Debt				7,700,000

	Current June 30, 2017		Total June 30, 2017		Total September 30, 2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	81,254	$	1,639,206	$	2,000,000

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		61,472		2,365,286		2,768,662

	$	142,726		4,004,492		4,768,662

Less current portion				142,726		379,761

			$	3,861,766	$	4,388,901

	Three Months Ended June 30,					Nine Months Ended June 30,

	2017		2016			2017		2016

Earnings (Loss) Per Share - Basic
Net Income (Loss)	$	941,523	$	(8,095	)	$	840,957	$	(519,728	)
Weighted average shares of common stockoutstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Earnings (Loss) Per Share - Basic	$	0.33	$	(0.00	)	$	0.29	$	(0.32	)

Earnings (Loss) Per Share - Diluted
Weighted average shares of common stockoutstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Warrants, Options and Convertible Notes		163,721		-			92,081		-
Weighted average shares of common stock -Diluted		3,044,440		1,638,215			2,962,430		1,638,215
Earnings (Loss) Per Share - Diluted	$	0.31	$	(0.00	)	$	0.28	$	(0.32	)

Cash Consideration Transferred	$	3,951,392
Seller Transaction Costs		230,359
Total Consideration	$	4,181,751

Accounts Receivable		466,887
Inventory		1,308,822
Fixed Assets		64,710
Prepaid and Other Assets		64,080
Intangible Assets: Customer List & Trademarks		1,300,000
Goodwill		1,572,913
Total Assets Acquired	$	4,777,412

Accounts Payable	$	542,359
Accrued Expense		53,302
Total Liabilities Assumed	$	595,661
Total Fair Value	$	4,181,751

Acquisition transaction costs incurred were:	$	124,825

Cash Consideration Transferred	$	250,000
Fair Value of Stock Consideration		1,000,012
Total Consideration	$	1,250,012

Cash	$	100,000
Accounts Receivable		155,932
Inventory		517,270
Fixed Assets		90,603
Intangible Assets		150,000
Goodwill		645,372
Total Assets Acquired	$	1,659,177

Accounts Payable	$	33,694
Deferred Revenue		375,471
Total Liabilities Assumed	$	409,165
Total Fair Value		1,250,012

Acquisition transaction costs incurred were:	$	30,479

	*Nine Months ended*				*Nine Months ended*
	*September 30, 2023*				*September 30, 2022*
	*Sales*		*Net Income*		*Sales*		*Net Income*
Acquired Companies:
Reverso Pumps (acquired January 10, 2022)	$	4,987,873	$	863,978	$	3,930,057	$	663,070
Separ America (acquired January 10, 2022)		1,942,594		617,175		1,440,788		247,346
Knitting Machinery (acquired May 1, 2022)		229,080		19,014		818,108		73,195
Subtotal Acquired Companies	$	7,159,547	$	1,500,167		6,188,953		983,611

All Other Companies		102,899,337		8,557,383		88,905,443		2,508,073
Total	$	110,058,884	$	10,057,550	$	95,094,396	$	3,491,684

Accounts Receivable	$	4,761,368
Inventory		594,503
Costs in excess of billings and estimated costs		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
Billings in Excess of costs and earnings		594,545
Accrued Payroll and related expenses		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed	$	3,113,317

Net Assets Acquired	$	10,250,000

~~2.1~~	~~Asset Purchase~~10.1	Sixth Amendment Agreement, dated June ~~1, 2017, by and among Hickok Acquisition A LLC, Air Enterprises Acquisition, LLC, A. Malachi Mixon III and William M. Weber (incorporated by reference~~12, 2023, to ~~Exhibit 21 to the Company’s Form 8-K filed with the Commission on June 5, 2017).~~
~~10.1~~	Credit Agreement ~~dated June 1, 2017,~~ among ~~Hickok Incorporated, Hickok Acquisition A~~Crawford United Corporation, Crawford AE LLC, Supreme Electronics Corp., Federal Hose Manufacturing LLC, Data Genomix LLC, Waekon Corporation, ~~Hickok Operating~~CAD Enterprises, Inc., Crawford United Acquisition Company, LLC, and JPMorgan Chase Bank, ~~N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on June 5, 2017.)~~N.A
	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*	Inline XBRL Instance
	101.SCH*	Inline XBRL Taxonomy Extension Schema
	101.CAL*	Inline XBRL Taxonomy Extension Calculation
	101.DEF*	Inline XBRL Extension Definition
	101.LAB*	Inline XBRL Taxonomy Extension Labels
	101.PRE*	Inline XBRL Taxonomy Extension Presentation
	104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)


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




/s/ ~~Kelly~~Jeffrey J. ~~Marek~~ Salay	Vice President and Chief Financial Officer
~~Kelly~~Jeffrey J. ~~Marek~~Salay	~~Officer (Principal~~(Principal Accounting and Financial Officer)