NOTES PAYABLE

Convertible Notes Payable

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 29, 2017,

management entered into Amendment

No.

of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

●

Continues to provide approximately

$467,000

of liquidity to meet on going working capital requirements;

●

Continues to allow

$250,000

of borrowing on the agreement at the Company's discretion at an interest rate of

0.34%;

and

●

Extends the due date of the loan agreement from

December 30, 2017

December 30, 2018.

The outstanding balance on the Convertible Loan as of

June 30, 2018,

and

December 31, 2017

was

$200,000.

As part of the Convertible Loan, the parties entered into a Warrant Agreement, dated

December 30, 2012 (

as amended to date, the “Warrant Agreement”), whereby the Company issued a warrant to Roundball to purchase, at its option, up to

100,000

shares of Class A Common Stock of the Company at an exercise price of

$2.50

per share, subject to certain anti-dilution and other adjustments. The Warrant Agreement, as amended, expires

December 30, 2018.

Short-Term Financing

June 3, 2016,

management entered into a revolving credit agreement with First Francis. First Francis became a major shareholder of the Company on

July 1, 2016

when the Company completed the acquisition of Federal Hose Manufacturing, LLC. The agreement provides for a revolving credit facility of

$250,000

with interest at

4.0%

per annum. Each loan made under the credit arrangement will be due and payable 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

May 31, 2017.

Notes Payable – Related Party

Notes payable - related parties is a result of the acquisition of a business on

July 1, 2016

and consists of the following:

	June 3 0 , 2018		December 31, 2017

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	1,577,734	$	1,639,206

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, including interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		2,283,762		2,365,286

Total notes payable – related party		3,861,496		4,004,492

Less current portion		432,910		352,727

Notes payable – related party non-current portion	$	3,428,586	$	3,651,765