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, 2018,

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%;

●

Expand the rights available to Roundball under the Roundball Option to include the option, exercisable by Roundball in its sole discretion, and subject to requisite shareholder approval thereof and the terms and conditions set forth therein, to purchase up to

75,000

shares of Class B Common Stock of the Company at the Conversion Price; and

●

Extends the due date of the loan agreement from

December 30, 2018

December 30, 2019.

The outstanding balance on the Convertible Loan as of

December 31, 2018

and

2017,

respectively 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, 2019.

Notes Payable – Related Party

July 1, 2016,

the Company entered into

two

separate promissory notes with First Francis Company Inc. (“First Francis”) in connection with the acquisition of Federal Hose Manufacturing (“Federal Hose”). In connection with acquisition of CAD effective

July 1, 2018

and the amendment to the Credit Agreement on

July 5, 2018,

the Company and First Francis entered into an amendment to the Promissory Note dated

July 1, 2016

with original principal in the amount of

$2,000,000,

and an amendment to the Promissory Note dated

July 1, 2016

with original principal in the amount of

$2,768,662

(as amended, the “Promissory Notes”), each issued by the Company to First Francis. The Promissory Notes each were amended to increase the interest rate from

4.0%

per annum to

6.25%

per annum. In addition, the Promissory Note with original principal amount of

$2,768,662

was amended to provide a conversion option commencing

July 5, 2019

which allows First Francis to convert the Promissory Note, in whole in part with respect to a maximum amount of

$648,000,

into shares of the Company’s Class B common stock at the price of

$6.48

per share (subject to adjustment), subject to shareholder approval. First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company.

Notes Payable – Seller Note

Effective

July 1, 2018,

the Company completed the acquisition of 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), which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement entered into in connection with the acquisition (the “Share Purchase Agreement”). The Seller Note bears interest at a rate of

four

percent (

) per annum and is payable in full

later than

June 30, 2023 (

the “Maturity Date”). The Maturity Date, with respect to any then-outstanding portion of the original principal amount which is subject to an indemnification claim by the Company (asserted in accordance with the terms of the Share Purchase Agreement) pending as of the date thereof, will be automatically extended until such time as any claim relating to such disputed amount is

longer pending, pursuant to the terms of the Seller Note and subject to additional conditions set forth therein and in the Share Purchase Agreement. The Company is

not

permitted to prepay any amounts due and owing under the Seller Note. Payment of the Seller Note is secured by a

second

-priority security interest in the assets of the Company. Interest accrued on the original principal amount becomes due and payable in arrears beginning

September 30, 2018,

and subsequent interest is due on the

first

day of each calendar quarter thereafter up to and including

June 30, 2019.

The Company is required to make quarterly principal payments, the amount of which will be calculated based on a

four

(

) year amortization schedule, beginning on

September 30, 2019

and continuing on the last day of each calendar quarter thereafter up to and including the Maturity Date.

Notes Payable

Notes payable consist of the following:

	December 31, 2018		December 31, 2017

In connection with the Federal Hose 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 beginning on October 31, 2016.	$	1,485,061	$	1,639,206

In connection with the Federal Hose 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 beginning on October 31, 2016.		2,157,004		2,365,286

In connection with the CAD acquisition, the Company entered into a promissory note on July 1, 2018 for a $9,000,000 loan due to the Loudermilks, payable in quarterly installments beginning September 30, 2018.		9,000,000		-

Total notes payable		12,642,065		4,004,492

Less current portion		1,555,663		352,727

Notes payable – non-current portion	$	11,086,402	$	3,651,765

Principal payments on the notes payable are as follows for the years ended

December 31:

	Related Party Note		Seller Note

2019	$	430,663	$	1,125,000
2020		458,217		2,250,000
2021		487,234		2,250,000
2022		2,265,957		2,250,000
2023		-		1,125,000
Total principal payments	$	3,642,071	$	9,000,000