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UNITED
STATES FORM
10-Q For the quarterly period ended March 31,
2009 or
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 For
the transition
period from _____ to ____ _ . HICKOK
INCORPORATED
Ohio 34-0288470 (State
or other jurisdiction of incorporation or organization) (IRS
Employer Identification No.) 10514
Dupont Avenue, Cleveland, Ohio 44108 (Address
of principal executive offices) (Zip
Code) (Registrant's
telephone number, including area code) (216)
541-8060 Indicate
by check
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 is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or a
small reporting company. Item
1.
Financial Statements: HICKOK
INCORPORATED See
Notes to
Consolidated Financial Statements HICKOK
INCORPORATED Note:
Amounts derived from audited financial statements previously filed with
the Securities and Exchange Commission. See
Notes to Consolidated Financial Statements HICKOK
INCORPORATED HICKOK
INCORPORATED The
accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required
by generally accepted accounting principles for complete financial
statements.
In the opinion of management, all adjustments (consisting of normal
recurring
accruals) considered necessary for a fair presentation have been
included.
Operating results for the three month and six month periods ended March
31,
2009 are not necessarily indicative of the results that may be expected
for
the year ended September 30, 2009. For further information, refer to
the
consolidated financial statements and footnotes thereto included in the
Company's
annual report on Form 10-KSB for the year ended September 30, 2008.
Inventories
are
valued at the lower of cost or market and consist of the following:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________
(Exact name of registrant as specified in its charter)
Large accelerated filer [ ]
Accelerated
filer [
]
Non-accelerated
filer [ ]
Small
reporting
company [X]
CONSOLIDATED
INCOME STATEMENTS
(Unaudited)
March
31,
March
31,
Net
Sales
Product
Sales
Service
Sales
162,876
276,032
Total Net Sales
1,699,468
8,940,880
Costs
and Expenses
Cost
of Product Sold
1,076,347
4,900,003
Cost
of Service Sold
Product
Development
507,033
971,763
Marketing
and Administrative Expenses
1,825,563
Interest
Charges
3,004
2,545
6,790
Other
Income
Total Costs and Expenses
7,933,847
Income
<Loss> before Provision for Income Taxes
Provision
for (Recovery of) Income Taxes
Net
Income <Loss>
$<2,245,253>
$<474,456>
$<3,390,606>
$634,433
Earnings
per Common Share:
Net
Income <Loss>
$<1.80>
$<.38>
$<2.72>
$.51
Earnings
per Common Share Assuming Dilution:
Net Income <Loss>
$<1.80>
$<.38>
$<2.72>
$.49
Dividends
per Common Share
CONSOLIDATED
BALANCE SHEET
2009
(Unaudited)
2008
(Note)
2008
(Unaudited)
Assets
Current
Assets
Cash and Cash
Equivalents
Trade Accounts
Receivable-Net
850,763
Inventories
Deferred
Income
Taxes
Prepaid
Expenses
Refundable Income Taxes
-
6,000
-
Property,
Plant
and Equipment
Land
Buildings
Machinery and
Equipment
4,260,972
Less:
Allowance
for Depreciation
Other
Assets
Deferred
Income
Taxes
Deposits
Total
Assets
2009
(Unaudited)
2008
(Note)
2008
(Unaudited)
Liabilities
and Stockholders' Equity
Current
Liabilities
Short-term Financing
Trade
Accounts Payable
Accrued
Payroll
& Related Expenses
Accrued Expenses
Accrued Taxes Other Than Income
35,481
Accrued Income Taxes
Stockholders'
Equity
Class
A, $1.00
par value; authorized
3,750,000
shares; 793,229 shares outstanding (793,229, September 30, 2008 and
786,229, March 31, 2008)excluding 15,795 shares in treasury (15,795,
September 30, 2008 and
15,795, March
31, 2008)
Class
B, $1.00
par value; authorized
1,000,000
shares; 454,866 shares
outstanding
excluding 20,667
shares
in treasury
454,866
Contributed
Capital
Retained
Earnings
Total
Liabilities and Stockholders' Equity
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE
SIX MONTHS ENDED MARCH 31,
(Unaudited)
2009
2008
Cash
Flows from Operating Activities:
Cash
received from customers
$2,799,567
$12,555,462
Cash
paid to suppliers and employees
<3,990,253>
<7,954,306>
Interest
paid
-
<22,373>
Interest
received
17,356
41,936
Income
taxes <paid> refunded
<12,000>
<6,000>
Net
Cash Provided By <Used In> Operating Activities
<1,185,330>
4,614,719
Cash
Flows from Investing Activities:
Capital
expenditures
<34,674>
<41,305>
Proceeds
on
sale
of assets
-
2,000
Net
Cash Provided By <Used In> Investing Activities
<34,674>
<39,305>
Cash
Flows from Financing Activities:
Short-term
borrowings
-
888,000
Payments on short-term borrowings
-
<2,835,700>
Sale of Class A shares under option
-
126,889
Net
Cash
Provided By <Used In> Financing Activities
-
<1,820,811>
Net
increase
<decrease> in cash and cash equivalents
<1,220,004>
2,754,603
Cash
and cash
equivalents at beginning of year
1,992,558
601,979
Cash
and cash
equivalents at end of second quarter
$772,554
$3,356,582
See
Notes to Consolidated Financial Statements
2009
2008
Reconciliation
of Net Income <Loss> to Net Cash
Provided By <Used In> Operating Activities:
Net
Income <Loss>
$<3,390,606>
$634,433
Adjustments
to reconcile Net Income <Loss> to net cash
provided by operating activities:
Depreciation
85,716
110,646
Gain
on disposal of assets
-
<2,000>
Share-based
compensation expense
8,025
7,585
Deferred
income taxes
1,845,200
372,600
Changes
in assets and liabilities:
Decrease
<Increase> in accounts receivable
305,448
3,614,582
Decrease
<Increase> in inventories
89,932
1,771,609
Decrease
<Increase> in prepaid expenses
<23,409>
<104,196>
Decrease
<Increase> in refundable income taxes
6,000
-
Increase
<Decrease> in accounts payable
<77,106>
<1,778,354>
Increase
<Decrease> in accrued payroll and related expenses
33,553
85,356
Increase
<Decrease> in accrued expenses and accrued
taxes other than income
<68,083>
<91,542>
Increase
<Decrease> in accrued income taxes
-
<6,000>
Total
Adjustments
2,205,276
3,980,286
Net
Cash
Provided By <Used In> Operating Activities
$<1,185,330>
$4,614,719
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MARCH
31, 2009
1. Basis
of
Presentation
2009
2008
Components
Work-in-Process
Finished
Product
The
above amounts are net of reserve for obsolete inventory in the amount
of $262,254,
$188,000 and
$550,629 for the periods ended March 31, 2009, September 30, 2008 and
March 31, 2008 respectively.
3. Short-term
Financing
The
Company has a
credit agreement with its financial lender that provides for a secured
revolving credit facility of $1,000,000 with interest generally equal
to three percent per annum plus one month LIBOR. The agreement was
modified effective February 1, 2009 and is set to expire in February
2010. The agreement is secured by the Company's accounts receivable,
inventory, equipment and general intangibles. The credit agreement
contains affirmative
covenant requirements, tested on an annual basis, that require the
Company to maintain a tangible net worth of $8,000,000 and a pre-tax
interest coverage ratio of
not less than 3.0 to 1.0. In
addition, a borrowing base
addendum generally allows for borrowing based on an amount equal to
eighty five percent of eligible receivables, plus an amount equal to
the lesser of either forty percent of eligible inventory or $500,000. The revolving credit
facility is subject to a review by the Company's lender in February
2010. The
Company had no
outstanding borrowings under this loan facility at March 31, 2009.
The
Company's
previous credit
agreement with its financial lender provided for a secured revolving
credit
facility of $2,500,000 with interest generally equal to two and one
half
percent per annum plus one month LIBOR. The agreement was secured by
the
Company's accounts receivable, inventory, equipment and general
intangibles. The credit agreement
contained affirmative
covenant requirements, tested on an annual basis, that required the
Company to maintain a tangible net worth of $8,000,000 and a pre-tax
interest coverage ratio of
not less than 3.0 to 1.0. In
addition, a borrowing base
addendum generally allowed for borrowing based on an amount equal to
eighty five percent of eligible receivables, plus an amount equal to
the lesser of either forty percent of eligible inventory or $1,000,000.
The
revolving credit facility was subject to a review by the Company's
lender in 2010 but was modified effective
February 1, 2009. The
Company violated
the tangible net worth covenant and the pre-tax interest coverage ratio
covenant at September 30, 2008 due to the loss for the fiscal year and
obtained a
waiver from its financial lender.
4. Capital Stock, Treasury Stock, Contributed Capital and Stock Options
Under the Company's Key Employees Stock Option Plans (collectively the "Employee Plans"), incentive stock options, in general, are exercisable for up to ten years, at an exercise price of not less than the market price on the date the option is granted. Non-qualified stock options may be granted at such exercise price and such other terms and conditions as the Compensation Committee of the Board of Directors may determine. No options may be granted at a price less than $2.925. Options for 61,000 Class A shares were outstanding at March 31, 2009 (73,400 shares at September 30, 2008 and 73,400 shares at March 31, 2008) at prices ranging from $3.125 to $5.00 per share. Options for 1,600 shares at prices ranging from $3.125 to $3.55 were canceled during the three month period ended March 31, 2009. In addition, options for 10,800 shares at a price of $7.125 expired during the three month period ended December 31, 2008. Options for 14,450 shares at prices ranging from $3.125 to $10.50 per share were exercised during the three month period ended December 31, 2007. In addition, options for 5,300 shares expired during the three month period ended December 31, 2007, at a price of $10.50 per share. No other options were granted, exercised or canceled or expired during the three or six month periods presented under the Employee Plans. All options granted under the Employee Plans are exercisable at March 31, 2009.
The Company's Outside Directors Stock Option Plans (collectively the "Directors Plans"), have provided for the automatic grant of options to purchase up to 46,000 shares of Class A Common Stock to members of the Board of Directors who are not employees of the Company, at the fair market value on the date of grant. Options for 46,000 Class A shares were outstanding at March 31, 2009 (43,000 shares at September 30, 2008 and 51,000 shares at March 31, 2008) at prices ranging from $2.50 to $11.00 per share. Options for 5,000 and 6,000 shares were granted under the Directors Plans during each of the three month periods ended March 31, 2009 and March 31, 2008, at a price of $2.50 and $11.00 per share respectively. Options for 3,000 shares at prices ranging from $3.55 to $4.25 were exercised during the three month period ended March 31, 2008. In addition, options for 2,000 and 3,000 shares expired during the three month periods ended March 31, 2009 and March 31, 2008 at $7.125 and $12.25 per share respectively. All outstanding options under the Directors Plans become fully exercisable on February 26, 2012.
The following is a summary of the range of exercise prices for stock options outstanding and exercisable under the Employee Plans and the Directors Plans at March 31, 2009:
Employee
Plans
Outstanding Stock
Options Exercisable
Share Price
Range
of exercise prices:
$3.13
- - 3.55
$5.00
Directors
Plans |
|
Share Price |
Weighted
Average Remaining Life
|
Number
of Stock
Options Exercisable |
Weighted
Average Share
Price |
Range of exercise prices: | |||||
$2.50 - - 5.25 |
21,000
|
$3.91
|
5.9
|
16,000 |
$4.35 |
$6.45 - - 8.50 |
13,000
|
$7.39
|
4.1
|
13,000 |
$7.39 |
$10.50 - - 11.00 |
12,000
|
$10.75
|
8.5
|
6,000 |
$10.67 |
|
|
||||
46,000
|
$6.68
|
|
35,000 |
$6.56 |
|
|
|
The
Company accounts
for its stock options using Statement of Financial Standards SFAS No.
123(R),
Share-Based Payment, under the modified prospective method for
both
employees and non-employee Directors.
Compensation
cost for
fixed based awards are measured at the grant date, and the Company uses
the Black-Scholes option pricing model to determine the fair value
estimates for recognizing the cost of employee and director services
received in exchange for an award of equity instruments. The
Black-Scholes
option pricing model requires the use of subjective assumptions which
can materially affect the fair value estimates. Employee
stock
options
are immediately exercisable while
Director's stock options are exercisable
over a three year period. The fair value of stock option grants to
Directors is amortized over the three year vesting period. During the
three and the six month periods ended March 31, 2009 and 2008
respectively $3,903 and $8,025; $4,122
and $7,585 was
expensed as share-based compensation. The
following weighted-average
assumptions were used in the option pricing model for the three and six
month periods ended March 31, 2009 and 2008 respectively: a risk free
interest rate of 5.5% and
5.5%; an expected life of 10 and 10
years; an expected dividend
yield of 0.0% and 1.1%; and a volatility factor of .54 and .37.
5. Recently Issued Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. The Company adopted the provisions of this pronouncement effective October 1, 2008. The Company did not incur any material impact to its financial condition or results of operations due to the adoption of SFAS No. 157.
In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115. This statement permits an entity to choose to measure many financial instruments and certain other items at fair value. The fair value option established by SFAS No. 159 permits entities to choose to measure eligible items at fair value at specified election dates. Unrealized gains and losses on items for which the fair value option has been elected are to be recognized in earnings at each subsequent reporting date. The Company adopted the provisions of this pronouncement effective October 1, 2008. The Company did not incur any material impact to its financial condition or results of operations due to the adoption of SFAS No. 159.
6. Earnings per Common Share
Earnings per common share are based on the provisions of FAS Statement No. 128, "Earnings per Share." Accordingly, the adoption of this statement did not affect the Company's results of operations, financial position or liquidity. The effects of applying FAS No. 128 on earnings per share are as follows:
March 31, |
March 31, |
|
|
|
|
|
Basic Income <Loss> per Share | ||||
Income
<Loss> available to common stockholders |
$<2,245,253>
|
$<474,456>
|
$<3,390,606>
|
$634,433
|
Shares denominator |
1,248,095
|
1,239,203
|
1,248,095
|
1,232,786
|
Per share amount |
$<1.80>
|
$<.38>
|
$<2.72>
|
$.51
|
|
|
|
|
|
Effect of Dilutive Securities | ||||
Average shares outstanding |
1,248,095 |
1,239,203
|
1,248,095 |
1,232,786
|
Stock options |
-
|
-
|
-
|
62,584
|
|
|
|
|
|
1,248,095
|
1,239,203
|
1,248,095
|
1,295,370
|
|
Diluted Income <Loss> per Share | ||||
Income <Loss> available to common stockholders |
$<2,245,253>
|
$<474,456>
|
$<3,390,606>
|
$634,433
|
Per share amount |
$<1.80>
|
$<.38>
|
$<2.72>
|
$.49
|
|
|
|
|
7. Segment and Related Information
The Company adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which changes the way the Company reports the information about its operating segments.
The Company's four business units have a common management team and infrastructure that offer different products and services. The business units have been aggregated into two reportable segments: 1.) indicators and gauges and 2.) automotive related diagnostic tools and equipment.
Indicators
and Gauges
This
segment consists of products manufactured and sold primarily to
companies in the
aircraft and locomotive industry. Within the aircraft market, the
primary
customers are those companies that manufacture or service business and
pleasure
aircraft. Within the locomotive market, indicators and gauges are sold
to
both original equipment manufacturers and to operators of railroad
equipment.
Automotive
Diagnostic Tools and Equipment
This
segment consists primarily of products designed and manufactured to
support the
testing or servicing of automotive systems using electronic means to
measure
vehicle parameters. These products are sold to OEM's and to the
aftermarket
using several brand names and a variety of distribution methods.
Included
in this segment are products used for state required testing of vehicle
emissions. Also included in this segment are fastening control products
used primarily by large manufacturers to monitor and control the "nut
running
process" (the controlled tightening of threaded fasteners)in assembly
plants.
This equipment provides high quality joint control and documentation.
Information by industry segment is set forth below:
March 31, |
March 31, |
|
|
|
|
|||
Net Revenue | ||||||
Indicators and Gauges |
$496,566
|
$508,313
|
$952,156
|
$940,676
|
||
Automotive Diagnostic Tools and Equipment |
838,490
|
1,191,155
|
1,541,963 |
8,000,204
|
||
|
|
|
|
|||
$1,335,056
|
$1,699,468
|
$2,494,119
|
$8,940,880
|
|||
|
|
|
|
|||
Income (Loss) before provision for Income Taxes | ||||||
Indicators and Gauges |
$9,353
|
$18,804
|
$<72,338>
|
$109,683
|
||
Automotive Diagnostic Tools and Equipment |
<312,125>
|
<548,618>
|
<821,857>
|
1,721,914
|
||
General
Corporate Expenses |
<297,281> |
<217,042> |
<651,211> |
<824,564> |
||
|
|
|
|
|||
$<600,053>
|
$<746,856>
|
$<1,545,406>
|
$1,007,033
|
|||
|
|
|
|
|||
Asset Information | ||||||
Indicators and Gauges |
$863,131
|
$823,187
|
||||
Automotive Diagnostic Tools and Equipment |
2,563,476
|
2,985,843
|
||||
Corporate |
1,590,179
|
5,975,527
|
||||
|
|
|||||
$5,016,786
|
$9,784,557
|
|||||
|
|
|||||
Geographical Information | ||||||
Included in
the
consolidated financial statements are the following amounts related to geographical locations: |
||||||
Revenue: | ||||||
United States |
$1,273,130
|
$1,597,387
|
$2,390,217
|
$8,797,368
|
||
Australia |
- |
12,349 |
- |
12,349 |
||
Canada |
35,579
|
27,178
|
69,642
|
66,963
|
||
England |
23,501 |
55,472 | 23,501 |
55,472 |
||
Other foreign countries |
2,846
|
7,082
|
10,759
|
8,728
|
||
|
|
|
|
|||
$1,335,056
|
$1,699,468
|
$2,494,119
|
$8,940,880
|
|||
|
|
|
|
All
export sales to
Australia, Canada, England and other foreign countries are made in
United States of America Dollars.
Applicable to
Manufacturing Production Overhead (Wages) |
$866,000 |
|
Product
Development |
785,000 |
|
Marketing and
Administration |
1,429,000 |
|
|
||
Annual Total | $3,080,000 |
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Results
of Operations, Second Quarter (January 1, 2009 through March 31, 2009)
Fiscal
2009 Compared to Second Quarter Fiscal 2008
-----------------------------------------------------------------------------------------
Reportable Segment Information
The
Company has determined that it has two reportable segments: 1)
indicators and gauges and 2) automotive related diagnostic tools and
equipment. The indicators
and gauges segment consists of products manufactured and sold primarily
to
companies in the aircraft and locomotive industry. Within the aircraft
market,
the primary customers are those companies that manufacture or service
business, military and pleasure aircraft. Within the locomotive market,
indicators and
gauges are sold to original equipment manufacturers, servicers of
locomotives and operators of railroad equipment. Revenue in this
segment was $496,566
and $508,313
for the second quarter of fiscal 2009 and fiscal 2008, respectively and
$952,156
and $940,676
for the first six months of fiscal 2009 and fiscal 2008, respectively.
The automotive diagnostic tools and equipment segment consists primarily of products designed and manufactured to support the testing or servicing of automotive systems using electronic means to measure vehicle parameters. These products are sold to OEM's and to the aftermarket using several brand names and a variety of distribution methods. Included in this segment are products used for state required testing of vehicle emissions. Also included in this segment are fastening control products used primarily by large manufacturers to monitor and control the "nut running process" (the controlled tightening of threaded fasteners)in assembly plants. This equipment provides high quality joint control and documentation. Revenue in this segment was $838,490 and $1,191,155 for the second quarter of fiscal 2009 and fiscal 2008, respectively, and $1,541,963 and $8,000,204 for the first six months of fiscal 2009 and fiscal 2008, respectively. The decrease was due primarily to the completion of the California Evaporative Emissions Testing Program during fiscal 2008 and the negative effects of the current economic crisis on all of the Company's markets.
Results of Operations
Product
sales for the quarter ended March 31, 2009 were
$1,192,941 versus $1,536,592 for the quarter ended March 31, 2008. The
22% decrease
in product sales during the current quarter of approximately $344,000
was
volume related due primarily to decreased sales of automotive diagnostic
products, primarily, emissions
products of
approximately $217,000.
Sales of diagnostic
products to OEM's and aftermarket products decreased by approximately
$29,000 and $114,000 respectively. Indicator
products
increased by approximately $16,000. Management continues to be concerned
about the current economic conditions in the markets the Company serves
and anticipates product sales for the third quarter of fiscal 2009 to
increase only slightly above the sales levels from the second quarter.
Cost of product sold in the second quarter of fiscal 2009 was $866,161 (72.6% of product sales) as compared to $1,076,347 (70.0% of product sales) in the second quarter of fiscal 2008. The dollar decrease in the cost of product sold was due primarily to a lower sales volume. The increase in the cost of product sold percentage was due primarily to lower plant utilization and a change in product mix. The current cost of product sold percentage is expected to decrease moderately during the balance of the fiscal year due to cost cutting measures implemented January 1, 2009 along with additional personnel and wage reductions and other cost containment measures implemented May 1, 2009 and slightly increased product sales. For the quarter ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Cost of service sold in the second quarter of fiscal 2009 was $99,255 (69.8% of service sales) as compared to $185,037 (113.6% of service sales) in the second quarter of fiscal 2008. The dollar and percentage decrease was due primarily to a lower volume of warranty repairs, price increases for certain services, and cost reductions. The current cost of services sold percentage is anticipated to continue for the balance of the fiscal year due to price adjustments and cost cutting measures implemented January 1, 2009 along with additional personnel and wage reductions and other cost containment measures implemented May 1, 2009. For the quarter ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Product development expenses were $337,574 in the second quarter of fiscal 2009 (28.3% of product sales) as compared to $507,033 (33.0% of product sales) in the second quarter of fiscal 2008. The dollar and percentage decrease was due primarily to decreased labor costs and a decrease in research and experimental material of approximately $150,000 and $11,000 respectively. The current level of product development expenses is expected to decrease significantly for the balance of the fiscal year due to cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and further cost containment measures implemented May 1, 2009. For the quarter ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009. Management believes the current resources will be sufficient to maintain current product development commitments and continue to develop some new products for both OEM and Aftermarket customers.
Marketing and administrative expenses were $640,840 (48.0% of total sales) in the second quarter of 2009 versus $712,380 (41.9% of total sales) for the same period a year ago. The percentage increase was due primarily to the lower level of total sales for the current fiscal quarter. Marketing expenses were approximately $335,000 in the second quarter of fiscal 2009 versus $461,000 for the same period a year ago. Within marketing expenses, labor costs, travel expense, industry association dues and outside consulting expenses decreased by approximately $109,000, $7,000, $11,000 and 2,000 respectively. These decreases were offset in part by an increase in commissions and promotion of approximately $6,000 and $2,000 respectively. The dollar decrease in expenses for the current fiscal quarter was due primarily to cost cutting measures implemented January 1, 2009 in the form of personnel and wage reductions along with other cost containment measures. Administrative expenses were approximately $306,000 in the second quarter of fiscal 2009 versus $252,000 for the same period a year ago. The prior year benefited from the reversal of a previously recorded $187,000 bonus provision. The current quarter benefited from decreases in labor costs, professional fees, director fees and depreciation of approximately $86,000, $8,000, $16,000 and $6,000 respectively. The current level of marketing and administrative expenses is expected to decrease significantly for the balance of the fiscal year due to cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and other cost containment measures implemented May 1, 2009. For the quarter ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Interest expense was $948 in the second quarter of fiscal 2009 which compares with $3,004 in the second quarter of fiscal 2008. The decrease was due to interest charges on the lower credit facility unused portion during the second quarter of fiscal 2009. The credit facility was reduced from $2,500,000 to $1,000,000 on February 1, 2009. The current level of interest expense is expected to increase moderately for the third and fourth quarters of the year due to expected financing requirements of anticipated orders.
Other
income
was $9,669
in the second quarter of fiscal 2009 which compares with $37,477 in the
second
quarter of fiscal 2008. Other income consists primarily of interest
income
on cash and cash equivalents invested and the proceeds from the sale of
scrap metal shavings. The decrease is due primarily to a lower level of
cash available
for investment during the current period.
Income taxes in the second quarter of fiscal 2009 was $1,645,200 which compares with a recovery of income taxes of $272,400 in the second quarter of fiscal 2008. Management recorded a valuation allowance on the entire balance of deferred tax assets in the amount of $1,645,200 due to continued losses during the past three quarters, the current economic uncertainties, the negative effects of the current economic crisis on all of the Company's markets and concern that a more likely than not expiration of the Company's net operating loss and research and development credit carryforwards could occur before they can be used. During fiscal 2008 the recovery of income taxes was recorded at an effective tax rate of 37%.
The net loss in the second quarter of fiscal 2009 was $2,245,253 which compares with a net loss of $474,456 in the second quarter of fiscal 2008. The net loss for the current quarter was primarily the result of the increase in the valuation allowance of $1,645,200 and a lower sales volume.
Unshipped customer orders as of March 31, 2009 were $755,000 versus $957,000 at March 31, 2008. The decrease was due primarily to decreased orders in automotive diagnostic products of approximately $104,000, specifically, $186,000 for diagnostic products to the aftermarket which include emissions products offset in part by an increase in orders for automotive diagnostic products to automotive OEM's of approximately $82,000. In addition, indicator products decreased by approximately $98,000. The Company anticipates that most of the current backlog will be shipped in the last half of fiscal 2009.
Results
of
Operations, Six Months Ended March 31, 2009
Compared
to Six Months Ended March 31, 2008
Product sales for the six months ended March 31, 2009 were $2,256,772 versus $8,664,848 for the same period in fiscal 2008. The decrease in product sales during the first six months of the current fiscal year of approximately $6,408,000 was volume related due primarily to decreased sales of automotive diagnostic products, primarily, emission products of approximately $5,883,000. Sales of other automotive diagnostic products, primarily, OEM products and non-emission aftermarket products declined by approximately $183,000 and $393,000, respectively. Sales of indicator products increased by approximately $51,000. Management anticipates product sales for the third quarter to increase slightly above the sales levels of the current quarter and significantly in the fourth quarter of fiscal 2009 due to two anticipated large orders.
Service sales for the six months ended March 31, 2009 were $237,347 compared with $276,032 for the same period in fiscal 2008. The decrease was volume related and due primarily to a lower sales volume for chargeable repairs. The current level of service sales related to product repair sales is expected to continue for the balance of the fiscal year.
Cost of product sold was $1,653,348 or (73.3% of product sales) compared to $4,900,003 (56.6% of product sales) for the six months ended March 31, 2008. The dollar decrease in the cost of product sold was due primarily to a lower sales volume and expense reduction measures implemented in January 2009. The increase in the cost of product sold percentage was due primarily to lower plant utilization and a change in product mix. The current cost of product sold percentage is expected to decrease moderately during the balance of the fiscal year due to cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and other cost containment measures implemented May 1, 2009 and increased product sales. For the six month period ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Cost of service sold was $188,680 (79.5% of service sales) compared with $288,714 (105% of service sales) for the six months ended March 31, 2008. The dollar and percentage decrease was due primarily to a lower volume of warranty repairs, price increases for certain services,and expense reduction measures implemented in January 2009. The cost of services sold percentage is expected to continue for the balance of the fiscal year due to price adjustments and cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and other cost containment measures implemented May 1, 2009. For the six month period ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Product development expenses were $788,043 (34.9% of product sales) compared to $971,763 (11.2% of product sales) for the six months ended March 31, 2008. The dollar decrease was due primarily to decreased labor costs and research and experimental material of approximately $153,000 and $21,000 respectively. The percentage increase was due to lower product sales during the first six months of the current fiscal year. The current level of product development expenditures is expected to decrease significantly for the balance of the fiscal year due to cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and other cost containment measures implemented May 1, 2009. For the six month period ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009. Management believes the current resources will be sufficient to maintain current product development commitments and continue to develop some new products for both OEM and Aftermarket customers.
Marketing and administrative expenses were $1,431,817 for the six months ended March 31, 2009 (57.4% of total sales) versus $1,825,563 (20.4% of total sales) for the six months ended March 31, 2008. The percentage increase was primarily due to the decrease in the level of total sales during the first six months of the current fiscal year. Marketing expenses were approximately $758,000 during the first six months of the current fiscal year versus $949,000 for the same period a year ago. Within marketing expenses, decreases were in labor costs, commissions, royalties, industry association dues, travel expense, promotion expense, collection expense and advertising of approximately $108,000, $7,000, $4,000, $11,000, $15,000, $21,000, $4,000 and $9,000 respectively. Administrative expenses were approximately $674,000 during the first six months of the current fiscal year versus $877,000 for the same period a year ago. The dollar decrease was due primarily to decreases in labor costs, bonus provision, professional fees, directors fees and depreciation of approximately $89,000, $37,000, $12,000, $25,000 and $12,000 respectively. The current level of marketing and administrative expenses is expected to decrease significantly for the balance of the fiscal year due to cost cutting measures and wage reductions implemented January 1, 2009 along with additional personnel reductions and other cost containment measures implemented May 1, 2009. For the six month period ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
Interest expense was $2,545 for the six months ended March 31, 2009, and $6,790 for the same period in 2008. The decrease was primarily due to no short-term borrowing during the current fiscal year and interest charges on the lower credit facility unused portion during the second quarter of fiscal 2009. The credit facility was reduced from $2,500,000 to $1,000,000 on February 1, 2009. The current level of interest expense is expected to increase moderately for the third and fourth quarters of the year due to expected financing requirements of anticipated orders.
Other
income of
$24,908 for the six months ended March 31, 2009 compares with other
income of $58,986 in the same period last
year. Other
income consists primarily of interest
income
on cash and cash equivalents invested and the proceeds
from the sale of scrap metal shavings. The decrease is due primarily to
a
lower level of cash available for investment during the current six
month
period. The current level of other income is expected to decrease for
the
remainder of fiscal 2009 due to a lower level of cash and cash
equivalents invested in interest bearing accounts.
Income
taxes during the
first six months of fiscal 2009 was $1,845,200 which compares with
income taxes of $372,600 in the first six months of fiscal 2008. Management
recorded a valuation allowance on the entire balance of deferred tax
assets in the amount of $1,845,200 due
to continued losses during the past three quarters, the current
economic uncertainties,
the negative effects of the current economic crisis on all of the
Company's
markets and concern that a more likely than not expiration of the
Company's net operating loss and research and development credit
carryforwards could
occur before they can be used.
During
fiscal 2008
income taxes were recorded at an effective tax rate of 37%.
The net loss for the six months ended March 31, 2009 was $3,390,606 compared with net income of $634,433 for the six months ended March 31, 2008. The net loss for the first half of fiscal 2009 was primarily the result of the increase in the valuation allowance of $1,645,200 and a lower sales volume. Net income for the prior year was primarily the result of a higher sales volume due to the California Evaporative Emissions Testing Program.
In
December of 2008 management took steps to reduce non-direct product
related expenses throughout the Company in response to the economic
downturn and the
uncertainty in the markets the Company serves. The steps included a
substantial reduction in personnel, wage reductions for all personnel
and expenditure restrictions in most
aspects of the Company's operations. Management
took additional steps in April 2009 and made additional reductions in
personnel throughout the Company due to the continued decline in sales
to the markets the Company serves. The expected annual cost savings of
approximately $3,080,000 takes into consideration possible increases in
other expenses that may occur. The savings are expected to be realized
in equal amounts per month with similar impact on both future earnings
and cash flows. Beginning in January 2009 through April 2009 the
monthly
savings are expected to be approximately $191,000 per
month. During the period of May 2009 through September 2009 the monthly
savings
are expected to be approximately $257,000 per month. Major
expense
categories impacted are as follows:
Applicable to Manufacturing Production Overhead (Wages) |
$866,000 |
Product Development |
785,000 |
Marketing and Administration |
1,429,000 |
|
|
Annual Total |
$3,080,000 |
|
For the quarter ended March 31, 2009 the Company achieved the savings that were anticipated from the cost cutting measures implemented in January 2009.
The Company has available a net operating loss carryforward and research and development credit carryforwards that begin to expire in 2015. During fiscal 2009 the Company recorded additional deferred tax expense in the amount of $1,845,200 due to additional losses, deterioration of the markets the Company serves, economic uncertainty, and an increased likelihood of tax credits expiring before being utilized. The Company's entire deferred tax asset of $3,348,000 has been offset by a valuation allowance of $3,348,000. Because of the uncertainties involved with this significant estimate, it is reasonably possible that the Company's estimate may change.
Liquidity and Capital Resources
Total current assets were $4,322,711, $6,024,686 and $7,717,113 at March 31, 2009, September 30, 2008 and March 31, 2008, respectively. The decrease of approximately $3,394,000 from March to March was due primarily to the decrease in cash and cash equivalents, accounts receivable, deferred income taxes and prepaid expenses of approximately $2,584,000, $463,000, $355,000 and $67,000 respectively, offset in part by an increase in inventory of approximately $75,000. Cash and cash equivalents and accounts receivable decreased due to the lower sales volume in the most recent quarter. The decrease from September to March of approximately $1,702,000 was due primarily to the lower sales volume during the period. Cash and cash equivalents, accounts receivable and inventory declined by approximately $1,220,000, $305,000 and $90,000 respectively, offset in part by an increase in prepaid expenses of approximately $23,000. The decrease in cash and cash equivalents and accounts receivable was due primarily to the lower sales volume during the current six month period.
Working capital as of March 31, 2009 amounted to $3,795,700 as compared with $7,160,680 a year earlier. Current assets were 8.2 times current liabilities compared to 13.9 a year ago. The quick ratio was 2.5 compared to 7.8 a year ago.
Internally generated funds during the six months ended March 31, 2009 were a negative $1,185,330 and were not adequate to fund the Company's primary non-operating cash requirement consisting of capital expenditures of $34,674. The primary reason for the negative cash flow from operations was the net loss during the period. The Company believes that cash and cash equivalents, together with funds anticipated to be generated by operations and funds available under its credit agreement will provide the liquidity necessary to support its current and anticipated working capital and capital expenditure requirements through the end of fiscal 2009.
Shareholders' equity during the six months ended March 31, 2009 decreased by $3,382,581 which was the net loss during the period of $3,390,606 and $8,025 of share-based compensation expense.
The
Company has a
credit agreement with its financial lender that provides for a secured
revolving credit facility of $1,000,000 with interest generally equal
to three percent per annum plus one month LIBOR. The agreement was
modified effective February 1, 2009 and is set to expire in February
2010. The agreement is secured by the Company's accounts receivable,
inventory, equipment and general intangibles. The credit agreement
contains affirmative
covenant requirements, tested on an annual basis, that require the
Company to maintain a tangible net worth of $8,000,000 and a pre-tax
interest coverage ratio of
not less than 3.0 to 1.0. In
addition, a borrowing base
addendum generally allows for borrowing based on an amount equal to
eighty five percent of eligible receivables, plus an amount equal to
the lesser of either forty percent of eligible inventory or $500,000. The
revolving credit facility is subject to a review by the
Company's lender in February 2010. Management
believes a renewal
of the
credit facility can be negotiated at acceptable terms. The
Company had no
outstanding borrowings under this loan facility at March 31, 2009. During
fiscal 2009 the Company's business may require a
short-term increase in inventory
and accounts receivables.
Whenever there may be a requirement to increase inventory
in fiscal
2009 there will be a negative but temporary impact on liquidity. As
previously
noted, management has implemented expense reductions during the first
and
current quarter in response to the economic downturn and uncertainty in
the
markets the company serves. The Company has reduced headcount, product
development,
and marketing, administrative and sales related expenses in order to
appropriately
manage its working capital. The Company believes that internally
generated
funds and the revolving line of credit will provide sufficient
liquidity
to meet ongoing working capital requirements.
The
Company's
previous credit
agreement with its financial lender provided for a secured revolving
credit
facility of $2,500,000 with interest generally equal to two and one
half
percent per annum plus one month LIBOR. The agreement was secured by
the
Company's accounts receivable, inventory, equipment and general
intangibles. The credit agreement
contained affirmative
covenant requirements, tested on an annual basis, that required the
Company to maintain a tangible net worth of $8,000,000 and a pre-tax
interest coverage ratio of
not less than 3.0 to 1.0. In
addition, a borrowing base
addendum generally allowed for borrowing based on an amount equal to
eighty five percent of eligible receivables, plus an amount equal to
the lesser of either forty percent of eligible inventory or $1,000,000.
The
revolving credit facility was subject to a review by the Company's
lender in 2010 but was modified effective
February 1, 2009. The
Company violated
the tangible net worth covenant and the pre-tax interest coverage ratio
covenant at September 30, 2008 due to the loss for the fiscal year and
obtained a
waiver from its financial lender.
Critical Accounting Policies
Forward-Looking Statements
Item 4T. Controls and Procedures.
As
of March 31, 2009,
an evaluation was performed, under the supervision and with the
participation of the Company's management, including the Company's
Chief Executive Officer along with the Company's Senior Vice President,
Finance and Chief Financial Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures.
Based upon that evaluation, the Company's management, including the
Chief Executive Officer along with the Company's Senior Vice President,
Finance and Chief Financial Officer, concluded that the Company's
disclosure controls and procedures were effective as of March 31, 2009
in ensuring that information required to be disclosed by the Company in
the reports it
files and submits under the Exchange Act is (1) recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms, and (2) is accumulated and communicated
to the
Company's management, including its principal executive and principal
financial officer, as appropriate to allow timely decisions regarding
required disclosure.
There were no changes
in the Company's internal controls over financial reporting during the
second fiscal quarter ended March 31, 2009 that have materially
affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
Item
1. Legal
Proceeding.
The
Company was a
co-defendant in two suits related to aircraft product liability.
Attorneys for our insurance carrier sought and obtained our removal
from the (Sullivan v. Hawker Beechcraft Corp., et al) suit and a
Stipulation of Dismissal of Hickok Incorporated was
obtained in March 2009. The Company has not received any further
communications relative to the Richard J. Dengel v. Metro Aviation Inc.
case from the Montana Eighth District Court. The attorneys for our
insurance carrier have advised us that we can consider the case closed
pending any further communication.
In addition, the Company is the plaintiff
in a suit pursuing patent infringement against a competitor in the
emissions market. There
has been no other material developments in this legal proceeding since
the filing of Form 10-KSB for fiscal 2008. Management
believes that it is not currently possible to estimate the impact, if
any, that the ultimate resolution of the patent infringement matter
will have on the company's results of operations, financial position or
cash flows.
Item 4. Submission of Matters to a Vote of Security Holders.
At
the Company's
Annual Meeting of Shareholders held on February 25, 2009, the following
individuals were elected to the Board of Directors:
Robert
L. Bauman
T.
Harold Hudson
James
T. Martin
Michael
L. Miller
Hugh
S. Seaholm
1,598,494
39,325
Janet
H. Slade
For information on how the votes have been tabulated for the above, see the Company's definitive Proxy Statement used in connection with the Annual Meeting of Shareholders.
Item 6. Exhibits.
Exhibit
No. |
Description |
|
10 | Promissory Note Modification Agreement, dated
January 26,
2009, by and between the Company and National City Bank effective
through February 28, 2010. |
|
11 |
Statement
Regarding Computation of Earnings Per share and
Common Share Equivalents
|
|
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 |
In
accordance with
the
requirements of the Exchange Act, the registrant caused this report to
be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) |
||
Date:
May 14, 2009 |
/s/ R. L. Bauman | |
R.
L. Bauman,
Chief Executive Officer, President, and Treasurer |
||
Date:
May 14, 2009 |
/s/ G. M. Zoloty | |
G. M. Zoloty, Chief Financial Officer |
THIS PROMISSORY NOTE MODIFICATION AGREEMENT ("Modification") is made and entered into on January 26, 2009 but is effective as of February 1, 2009 by and among Hickok Incorporated (collectively "Borrower") and NATIONAL CITY BANK, A NATIONAL BANKING ASSOCIATION ("Bank").
WHEREAS, Bank agreed to lend to Borrower an amount not to exceed the sum of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) ("Loan"), which Loan was evidenced by a certain Commercial Note: Revolving Credit dated March 27, 2006 in the face amount of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) (as extended, amended or otherwise modified to date, the "Note") (the said Note and any other instrument or document given in connection with or to secure the Loan being collectively referred to as "Loan Documents").
WHEREAS, the parties hereto desire to modify the Note as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing promises and the covenants contained herein, the parties hereto agree as follows:
1. Liability of Borrower. Borrower hereby ratifies and reconfirms Borrower's obligations and all liability to Bank under the terms and conditions of the Loan Documents and acknowledges that Borrower has no defenses to or rights of set-off against Borrower's obligations and all liability to Bank thereunder. Borrower further acknowledges that Bank has performed all of Bank's obligations under the Loan Documents.
2. Modification. (a) The Note is hereby modified to provide that, effective as of February 1, 2009, the face amount of the Note shall be permanently decreased to the sum of One Million and 00/100 Dollars ($1,000,000.00).
(b) Commencing February 1, 2009, interest on the daily unpaid principal balance of the Note shall accrue at a fluctuating rate (the "One Month LIBOR Rate") which is equal to the sum of: (i) Three percent (3.00%) per annum (ii) One Month LIBOR, adjusted by Bank, as necessary, at the end of each Banking Day.
Additional Conditions: Subject Loans.
(ii) an amount equal to the lesser of either Forty percent (40%) of the then value (determined at the lower of cost or market on a first-in, first-out basis) of all Eligible Inventory or Five Hundred Thousand and 00/100 Dollars ($500,000.00),
(d) Prior payments have been made as evidenced by the books and records of Bank.
3. Ratification of Loan Documents. The Loan Documents are in all respects ratified and confirmed by the parties hereto and incorporated by reference herein, and each of the Loan Documents and this Modification shall be read, taken and construed as one and the same instrument. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Note. In the event of any conflict between the terms and provisions of this Modification and the terms and provisions of the Note, the terms and provisions of this Modification shall control.
4. Confession of Judgment. Borrower hereby authorizes any attorney at law to appear in any state or federal court of record in the United States of America after the maturity hereof (whether occurring by lapse of time or acceleration), to waive the issuance and service of process, to admit the maturity of the Note and the amount then appearing due, to confess judgment against Borrower in favor of the holder hereof for the amount then appearing due, together with interest and costs of suit, and thereupon to release all errors and to waive all rights of appeal and stay of execution. No judgment shall bar any subsequent judgment. Should any judgment be vacated for any reason, this warrant of attorney nevertheless may thereafter be used for obtaining additional judgments.
IN WITNESS WHEREOF, the undersigned have caused this Modification to be executed as of the day and year first above written.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
Hickok Incorporated
By: /s/ Gregory M. Zoloty
Gregory M. Zoloty
Its: Chief Financial Officer
NATIONAL CITY BANK, A NATIONAL BANKING
ASSOCIATION
By: /s/ R. W. Carpenter
Robert Carpenter
Its: Senior Vice President
FORM 10-Q
EXHIBIT 11
HICKOK
INCORPORATED
CONSOLIDATED STATEMENT OF COMPUTATION OF EARNINGS
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS
Three Months Ended |
Six Months Ended |
|
2009 |
2008 |
2009 |
2008 |
|
|
|
|
|
NET INCOME |
|
|
|
|
Net Income <loss> applicable to common shares for basic earnings per share |
$<2,245,253> |
$<474,456> |
$<3,390,606> |
$634,433 |
|
|
|
|
|
Net Income <loss> applicable to common shares for diluted earnings per share |
$<2,245,253> |
$<474,456> |
$<3,390,606> |
$634,433 |
|
|
|
|
|
SHARES OUTSTANDING |
|
|
|
|
Weighted average shares for basic earnings per share |
1,248,095 |
1,239,203 |
1,248,095 |
1,232,786 |
|
|
|
|
|
Net effect of dilutive stock options – based on the treasury stock method using year-end market price, if higher than average market price |
-* |
-* |
-* |
62,584 |
|
|
|
|
|
Total shares for diluted earnings per share |
1,248,095 |
1,239,203 |
1,248,095 |
1,295,370 |
|
|
|
|
|
Basic Earnings Per Common Share |
$ <1.80> |
$ <.38> |
$ <2.72> |
$ .51 |
|
|
|
|
|
Diluted Earnings Per Common Share |
$ <1.80> |
$ <.38> |
$ <2.72> |
$ .49 |
|
|
|
|
|
* Net effect of stock
options was antidilutive for the period.
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Robert L. Bauman, certify that:
I have reviewed this quarterly
report
on Form 10-Q of Hickok Incorporated (the "small business issuer");
Based on my knowledge, this report
does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the
financial statements, and other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business
issuer as of, and for,
the periods presented in this report;
The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a) Designed such
disclosure
controls and
procedures, or caused such disclosure controls and procedures to
be
designed under our supervision, to ensure that material information
relating to the small business issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
b) Designed such internal controls over
financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c) Evaluated the effectiveness of
the
small business issuer's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) Disclosed in this report any
change in the small business issuer's internal control over financial
reporting that occurred during the small business issuer's most recent
fiscal quarter
(the small business issuer's fourth fiscal quarter in the case of an
annual
report) that has materially affected, or is reasonably likely to
materially
affect, the small business issuer's internal control over financial
reporting;
and
The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
By:
/s/ R. L. Bauman
R. L. Bauman
Chief Executive
Officer
May 14, 2009
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Gregory M. Zoloty, certify that:
I have reviewed this quarterly
report
on Form 10-Q of Hickok Incorporated (the "small business issuer");
Based on my knowledge, this report
does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the
financial statements, and other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the small business
issuer as of, and for,
the periods presented in this report;
The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a) Designed such
disclosure
controls and
procedures, or caused such disclosure controls and procedures to
be
designed under our supervision, to ensure that material information
relating to the small business issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being
prepared;
b) Designed such internal controls over
financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c) Evaluated the effectiveness of
the
small business issuer's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) Disclosed in this report any
change in the small business issuer's internal control over financial
reporting that occurred during the small business issuer's most recent
fiscal quarter
(the small business issuer's fourth fiscal quarter in the case of an
annual
report) that has materially affected, or is reasonably likely to
materially
affect, the small business issuer's internal control over financial
reporting;
and
The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
By:
/s/ G. M. Zoloty
G. M. Zoloty
Senior Vice
President, Finance
and Chief Financial Officer
May 14, 2009
Form 10-Q
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Hickok Incorporated (the "Company") on form 10-Q for the period ending March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert L. Bauman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ R. L. Bauman
R. L. Bauman
Chief Executive Officer
May 14, 2009
Form 10-Q
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the
Quarterly Report of Hickok Incorporated (the "Company") on Form 10-Q
for the
period ending March 31, 2009 as filed with the Securities and
Exchange
Commission on the date hereof (the "Report"), I, Gregory M. Zoloty,
Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. section
1350,
as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
that:
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ G. M. Zoloty
G. M. Zoloty
Chief Financial Officer
May 14, 2009