10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q 

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

For the quarterly period ended March 31, 2019

OR

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

For the transition period from Not Applicable to Not Applicable

Commission file number: 0-147

HICKOK INCORPORATED 

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

Registrant's telephone number (216) 541-8060

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 every Interactive Data File required to be submitted  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 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]

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

As of April 30, 2019, 2,158,806 shares of Class A Common Stock and 596,848 shares of Class B Common Stock were outstanding.

1

PART I

ITEM 1. FINANCIAL STATEMENTS

HICKOK INCORPORATED

CONSOLIDATED BALANCE SHEET

	(Unaudited)
	March 31, 2019		December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	2,692,129	$	5,057,626
Accounts receivable less allowance for doubtful accounts		11,167,985		9,835,262
Costs and estimated earnings in excess of billing		2,481,632		2,083,349
Inventories-less allowance for obsolete inventory		5,334,994		5,497,982
Prepaid Expenses and other current assets		767,465		818,609
Total Current Assets		22,444,205		23,292,828
PROPERTY, PLANT AND EQUIPMENT:
Land and Improvements		257,205		257,205
Buildings and Leasehold Improvements		1,816,376		1,709,165
Machinery and Equipment		13,560,114		13,343,878
Total Property, Plant and Equipment		15,633,695		15,310,248
Less accumulated depreciation		2,406,734		2,006,133
Property, Plant and Equipment, Net		13,226,961		13,304,115
Operating Right of Use Asset, Net		9,725,871		-
OTHER ASSETS:
Goodwill		9,582,202		9,582,202
Intangibles, net of accumulated amortization		4,238,611		4,332,202
Other non-current assets		95,263		95,263
Total Non-Current Other Assets		13,916,076		14,009,667
Total Assets	$	59,313,113	$	50,606,610

See accompanying notes to consolidated financial statements

2

HICKOK INCORPORATED

CONSOLIDATED BALANCE SHEET

	(Unaudited)
	March 31, 2019			December 31, 2018
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Convertible notes payable	$	200,000		$	200,000
Notes payable		2,124,892			1,555,663
Bank Debt		1,333,333			1,333,333
Leases payable		671,991			13,800
Accounts payable		4,242,459			5,169,819
Unearned revenue		2,972,412			5,257,797
Accrued payroll and related expenses		892,712			1,358,669
Accrued expenses		2,324,532			1,606,429
Accrued income taxes		1,054,719			360,239
Total Current Liabilities		15,817,050			16,855,749
LONG-TERM LIABILITIES:
Notes payable		10,411,998			11,086,402
Bank Debt		7,563,061			8,194,679
Deferred Income Taxes		1,701,653			1,701,653
Leases payable		9,157,675			2,642
Total Long-Term Liabilities		28,834,387			20,985,376
STOCKHOLDERS' EQUITY
Preferred shares, no par value - 1,000,000 shares authorized, no shares issued and outstanding
Common shares, no par value		-			-
Class A common shares - 10,000,000 shares authorized, 2,158,806 and 2,123,809 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		2,865,159			2,641,300
Class B common shares - 2,500,000 shares authorized, 596,848 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		710,272			710,272
Contributed capital		1,741,901			1,741,901
Treasury shares		(1,905,780	)		(1,905,780	)
Class A common shares - 37,208 shares held at March 31, 2019 and December 31, 2018
Class B common shares – 182,435 shares held at March 31, 2019 and December 31, 2018
Retained earnings		11,250,124			9,577,792
Total Stockholders' Equity		14,661,676			12,765,485
Total Liabilities and Stockholders' Equity	$	59,313,113		$	50,606,610

See accompanying notes to consolidated financial statements

3

HICKOK INCORPORATED

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

	Three Months Ended March 31,
	2019			2018
Total Sales	$	21,836,087		$	11,878,700
Cost of Sales		17,006,199			8,860,259
Gross Profit		4,829,888			3,018,441
Operating Expenses:
Product development costs		-			123,029
Selling, general and administrative expenses		2,258,817			2,252,327
Operating Income		2,571,071			643,085
Other (Income) and Expenses:
Interest charges		266,073			85,933
Other (income) expense, net		(23,874	)		58,816
Total Other (Income) and Expenses		242,199			144,749
Income before Provision for Income Taxes		2,328,872			498,336
Provision for Income Taxes		583,414			124,584
Net Income	$	1,745,458		$	373,752
Net Income Per Common Share - Basic	$	0.63		$	0.13
Net Income Per Common Share - Diluted	$	0.55		$	0.11
Weighted Average Shares of Common Stock Outstanding
Basic		2,755,265			2,911,057
Diluted		3,178,420			3,269,853

See accompanying notes to consolidated financial statements

4

HICKOK INCORPORATED 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	COMMON SHARES - NO PAR VALUE
	CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS			TOTAL
Balance at December 31, 2017	$	2,246,367	$	710,272	$	1,741,901	$	(264,841	)	$	5,964,082		$	10,397,781
Share-based compensation expense		394,933		-		-		-			-			394,933
Proceeds from sale of business		-		-		-		(1,640,939	)					(1,640,939	)
Net Income		-		-		-		-			3,613,710			3,613,710
Balance at December 31, 2018	$	2,641,300	$	710,272	$	1,741,901	$	(1,905,780	)	$	9,577,792		$	12,765,485
Share-based compensation expense		223,859		-		-		-			-			223,859
Cumulative effect of accounting change		-		-		-		-			(73,126	)		(73,126	)
Net Income		-		-		-		-			1,745,458			1,745,458
Balance at March 31, 2019	$	2,865,159	$	710,272	$	1,741,901	$	(1,905,780	)	$	11,250,124		$	14,661,676

5

HICKOK INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

	Three Months Ended March 31,
	2019			2018
Cash Flows from Operating Activities
Net Income	$	1,745,458		$	373,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		494,192			359,981
Non-cash share-based compensation expense		223,859			236,167
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable		(1,332,723	)		493,837
Decrease (Increase) in inventories		162,988			(2,460	)
Decrease (Increase) in costs and estimated earnings in excess of billings		(398,283	)		(787,440	)
Decrease (Increase) in prepaid expenses & other assets		51,144			(120,791	)
Increase (Decrease) in accounts payable		(927,360	)		(41,352	)
Increase (Decrease) in accrued payroll and related expenses		(465,957	)		(74,152	)
Increase (Decrease) in accrued expenses		733,969			(131,060	)
Increase (Decrease) in accrued income taxes		694,480			45,228
Increase (Decrease) in unearned revenue		(2,285,385	)		(32,754	)
Total adjustments		(3,049,076	)		(54,796	)
Net Cash Provided (Used) by Operating Activities	$	(1,303,618	)	$	318,956
Cash Flows from Investing Activities
Capital expenditures		(323,447	)		(62,586	)
Net Cash (Used in) Investing Activities	$	(323,447	)	$	(62,586	)
Cash Flows from Financing Activities
Payments on notes		(105,175	)		(37,434	)
Payments on bank debt		(1,083,334	)		(1,975,000	)
Borrowings on bank debt		451,716			173,614
Payments on finance lease		(1,639	)		(13,514	)
Net Cash Provided by (Used in) Financing Activities	$	(738,432	)	$	(1,852,334	)
Net Increase (decrease) in cash and cash equivalents		(2,365,497	)		(1,595,964	)
Cash and cash equivalents at beginning of quarter		5,057,626			2,444,110
Cash and cash equivalents at end of quarter	$	2,692,129		$	848,146
Supplemental disclosures of cash flow information
Interest Paid	$	190,462		$	156,413
Income Taxes Paid	$	-		$	74,560

See accompanying notes to consolidated financial statements

6

HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MARCH 31, 2019

1.  BASIS OF PRESENTATION

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 and Article 8 of Regulation 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 Hickok Incorporated 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. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 

During the three-month period ended March 31, 2019, there have been no changes to our significant accounting policies other than the adoption of the new standard for leases, as discussed in Note 2 below.

Reclassifications

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

2.  SUMMARY OF SIGNIFICANT ACCOUNTING 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 for the year ended December 31, 2018.

Recently Adopted Accounting Standards
The Company did not incur any material impact to its results of operations due to the adoption of any new accounting standards during the periods reported. The adoption of the new standard for leases did have a material impact on consolidated balance sheets as disclosed below and in Note 9.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The new standard is effective for fiscal years and interim periods within those years, beginning on or after December 15, 2018, with early adoption permitted. The adoption of this new standard on January 1, 2019 resulted in assets of $9.7 million recorded as Operating Right of Use Assets, net, and additional lease liabilities of $9.8 million.  The Company also recorded an adjustment to retained earnings resulting from the cumulative effect of the change in accounting of ($0.1) million.  See Note 9 for further information.

7

Recently Issued Accounting Standards

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

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2019 with early adoption permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

 3.  ACCOUNTS RECEIVABLE 

The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The reserve for doubtful accounts was $35,750 and $35,000 at March 31, 2019 and December 31, 2018, respectively.

4.  INVENTORY

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

	March 31, 2019		December 31, 2018
Raw materials and component parts	$	1,987,221	$	2,313,664
Work-in-process		1,736,430		1,209,117
Finished products		1,893,087		2,201,693
Total inventory	$	5,616,738		5,724,474
Less: inventory reserves		281,744		226,492
Net inventory	$	5,334,994	$	5,497,982

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5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Intangible assets relate to the purchase of businesses. Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is not amortized but is reviewed on an annual basis for impairment. Amortization of intangibles is being amortized on a straight-line basis over period ranging from one year to 15 years. Intangible assets are as follows:

	March 31, 2019		December 31, 2018
Customer list intangibles	$	4,970,000	$	4,970,000
Non-compete agreements		200,000		200,000
Trademarks		340,000		340,000
Total intangible assets		5,510,000		5,510,000
Less: accumulated amortization		1,271,389		1,177,798
Intangible assets, net	$	4,238,611	$	4,332,202

Amortization of intangibles assets was: $93,591 and $217,257 for the three months ended March 31, 2019 and 2018, respectively.

6.  PROPERTY, PLANT AND EQUIPMENT, NET

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

	March 31, 2019		December 31, 2018
Land	$	257,205	$	257,205
Buildings and improvements		1,816,376		1,709,165
Machinery & equipment		13,560,114		13,343,879
Total property, plant & equipment		15,633,695		15,310,248
Less: accumulated depreciation		2,406,734		2,006,133
Property plant & equipment, net	$	13,226,961	$	13,304,115

Depreciation expense was $400,601 and $139,746 for the three months ended March 31, 2019 and 2018, respectively.

7.  BANK DEBT 

The Company entered into a Credit Agreement on June 1, 2017 with JPMorgan Chase Bank, N.A. as lender, which was subsequently amended in connection with funding the acquisition of CAD Enterprises, Inc. (“CAD”) on July 5, 2018 (as amended, the “Credit Agreement”). As amended, the Credit Agreement is comprised of a revolving facility in the amount of $12,000,000, subject to a borrowing base (determined based on 80% of Eligible Accounts, plus 50% of Eligible Progress Billing Accounts, plus 50% of Eligible Inventory, minus Reserves, each as defined in the Credit Agreement) and a term A loan in the amount of $6,000,000. Outstanding borrowings on the term A loan are payable in consecutive monthly installments, which currently amount to $111,111 per month.  

The revolving facility under the Credit Agreement includes a $3 million sublimit for the issuance of letters of credit thereunder.  The Credit Agreement also provides for a separate credit line for borrowings of up to an aggregate of $1,000,000 for capital expenditures until July 5, 2019, at which time any outstanding capital expenditure borrowings will be converted into a term loan maturing at the earlier of five years after such conversion or the termination of the revolving credit facility.  Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.00% for Prime Rate loans and (ii) 2.00% for LIBOR loans. The maturity date of the revolving facility is June 1, 2020. Interest for borrowings under the term A loan accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.25% for Prime Rate loans and (ii) 2.25% for LIBOR loans. The maturity date of the term A loan is December 1, 2022. 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 under the Credit Agreement include a minimum fixed charge coverage ratio, a maximum senior funded debt to EBITDA ratio and a maximum total funded debt to EBITDA ratio.

9

Bank debt balances consist of the following: 

	March 31, 2018		December 31, 2018
Term debt	$	5,111,111	$	5,444,444
Revolving debt		3,879,452		4,184,158
Total Bank debt		8,990,563		9,628,602
Less: current portion		1,333,333		1,333,333
Non-current bank debt		7,657,230		8,295,269
Less: unamortized debt costs		94,169		100,590
Net non-current bank debt	$	7,563,061	$	8,194,679

8. NOTES PAYABLE

Convertible Notes Payable - Related Party

The Company is party to a Convertible Loan Agreement (as amended, “Convertible Loan”) with Roundball, LLC (“Roundball”). The Convertible Loan provides approximately $467,000 of liquidity to meet  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 0.34%.  Borrowings under the Convertible Loan mature December 30, 2019.  Roundball, a major shareholder of the Company, is an affiliate of Steven Rosen and Matthew Crawford, who serve on the Board of Directors of the Company.

The Convertible Loan provides Roundball with the option to elect to convert amounts outstanding under the Convertible Loan into Class A Common Shares at a conversion price of $1.43 per Class A Common Share. In December 2018, the Convertible Loan was amended to provide Roundball with the option to elect to convert, subject to shareholder approval which was obtained on May 10, 2019, a portion of the indebtedness into Class B Common Shares at a conversion price of $1.43 per Class B Common Share, up to a maximum amount of 75,000 Class B Common Shares.

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

In connection with the Convertible Loan, 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 expires on December 30, 2019.

Notes Payable – Related Party

The Company has two separate outstanding promissory notes 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. The first promissory note was issued with original principal in the amount of $2,000,000, and the second was issued with original principal in the amount of $2,768,662. The promissory notes each have an interest rate of 6.25% per annum, which was increased from 4.0% per annum as part of the July 2018 amendments. In addition, the promissory note with original principal amount of $2,768,662 was amended in July 2018 to provide for a conversion option commencing July 5, 2019 which allows 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 which was obtained on May 10, 2019. First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company. 

10

Notes Payable – Seller Note

Effective July 1, 2018, the Company completed the acquisition of CAD for 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 (4%) per annum and is payable in full no 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 no 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 became 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 the quarter ending June 30, 2019.  The Company is required to make quarterly principal payments, the amount of which will be calculated based on a four (4) 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 consists of the following:

	March 31, 2019		December 31, 2018
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. The remaining balance of the note shall be payable in full on July 1, 2022.	$	1,440,544	$	1,485,061
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. The remaining balance of the note shall be payable in full on July 1, 2022.		2,096,346		2,157,004
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. No principal payments will be made until September 2019.		9,000,000		9,000,000
Total notes payable – related party		12,536,890		12,642,065
Less current portion		2,124,892		1,555,663
Notes payable – related party non-current portion	$	10,411,998	$	11,086,402

9. LEASES

On January 1, 2019, the Company adopted ASU 2016-02 “Leases (Topic 842),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP.

The Company has operating and finance leases for facilities, vehicles and equipment. These leases have remaining terms of 2 years to 15 years, some of which include options to extended the leases for up to 10 years.

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Supplemental balance sheet information related to leases:

	March 31, 2019			December 31, 2018
Operating leases:
Operating lease right-of-use assets	$	9,725,871		$	-
Other current liabilities		659,830			-
Operating lease liabilities		9,157,675			-
Total operating lease liabilities	$	9,817,505		$	-
Weighted Average Remaining Lease Term
Operating Leases (in years)		11.5 years			-
Weighted Average Discount Rate
Operating Leases		5.0	%		-

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10. EARNINGS PER COMMON SHARE 

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

	Three Months Ended March 31,
	2019		2018
Earnings Per Share - Basic
Net Income	$	1,745,458	$	373,752
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Earnings Per Share - Basic	$	0.63	$	0.13
Earnings Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Warrants, Options and Convertible Notes		423,155		358,796
Weighted average shares of common stock -Diluted		3,178,420		3,269,853
Earnings Per Share - Diluted	$	0.55	$	0.11

11. ACQUISITIONS

Effective July 1, 2018, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD, pursuant to the Share Purchase Agreement.  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 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. 

CAD manufactures high end components for the aerospace industry and has one operating location in Phoenix, Arizona. The purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

Cash	$	790,417
Accounts Receivable		2,221,635
Inventory		2,098,732
Fixed Assets		10,867,500
Prepaid and Other Assets		35,264
Intangibles Assets		3,000,000
Goodwill		7,326,289
Total Assets Acquired	$	26,339,837
Accounts Payable	$	1,846,247
Accrued Payroll and related expenses		224,139
Accrued Expense		518,816
Deferred Income Taxes		2,750,635
Total Liabilities Assumed	$	5,339,837
Net Assets Acquired	$	21,000,000

12. DISPOSITIONS  

Effective June 1, 2018, the Company completed the sale (the “Sale”) of certain assets comprising its Test and Measurement business segment (the “Test and Measurement Segment”) to Hickok Waekon, LLC, an Ohio limited liability company (“Buyer”), pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) by and among Buyer, the Company, Supreme Electronics Corp., a Mississippi corporation and wholly-owned subsidiary of the Company (“Supreme”), Waekon Corporation, an Ohio corporation and wholly-owned subsidiary of the Company (“Waekon Corporation”), and Robert L. Bauman, who was a director of the Company. Prior to the effectiveness of the Sale, Supreme and Waekon Corporation owned certain of the assets used in the operation of the Test and Measurement Segment and were primarily responsible for the operation thereof.

13

Upon the closing of the Sale, all of the issued and outstanding shares of capital stock of the Company then-owned, directly or indirectly, by Mr. Bauman or his affiliate, equaling approximately 21,413 shares of Class A Common Stock of the Company and 176,768 shares of Class B Common Stock of the Company, were transferred and assigned to the Company. The shares constituted the consideration received by the Company in the Sale.  Based upon the share price at closing, the value of the proceeds received was approximately $1.6 million.  The net assets sold were approximately $2.7 million.  The Company recorded a loss on sale of approximately $1.2 million in the second quarter of 2018.

13. SEGMENT AND RELATED INFORMATION  

The Company operates three reportable business segments: (1) Aerospace Components, (2) Commercial Air Handling, (3) and Industrial Hose.  The Company operated the Test and Measurement business segment through June 1, 2018, at which time it was sold to Hickok Waekon, LLC. The Company's management evaluates segment performance based primarily on operating income. Certain corporate costs are allocated to the segments and interest expense directly related to financing the acquisition of a business is allocated to that segment, respectively.  Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses.

Aerospace Components:
The Aerospace Components segment was added July 1, 2018, when the Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc. (“CAD”) in Phoenix, Arizona. This segment manufactures precision components primarily for customers in the aerospace industry.  This segment provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions.  Utilizing state-of-the-art machining and welding technologies, this segment is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels.  Our quality certifications include ISO 9001:2015/AS9100D, as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, TIG/E-Beam welding.

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

Industrial Hose: 

The Industrial Hose segment was added July 1, 2016, when the Company purchased the assets of the Federal Hose Manufacturing, LLC in Painesville, Ohio. This business segment includes the manufacture of 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.

Test and Measurement: 

The Test and Measurement segment is the legacy business that was started in 1910 when the Company was founded, and was sold June 1, 2018. This business segment included electronic testing products designed and manufactured for the automotive and trucking industries and includes indicators and gauges for the locomotive and aircraft industries. The automotive diagnostic products are sold to original equipment manufacturers and to the aftermarket under several brand names and through a variety of distribution methods. In the aircraft industry, primary customers are manufacturers of commercial, military and personal airplanes. In the locomotive industry, indicators and gauges are sold to manufacturers and servicers of railroad equipment and locomotives.

14

Information by industry segment is set forth below: 

	Three Months Ended
	March 31
	2019			2018
Sales
Commercial Air Handling	$	11,744,561		$	9,115,937
Test and Measurement		274,032			1,071,847
Industrial Hose		1,797,091			1,690,916
Aerospace Components		8,020,403			-
Total Sales	$	21,836,087		$	11,878,700
Gross Profit
Commercial Air Handling	$	3,001,933		$	2,147,125
Test and Measurement		45,214			475,026
Industrial Hose		525,735			396,290
Aerospace Components		1,257,006			-
Total Gross Profit	$	4,829,888		$	3,018,441
Operating Income
Commercial Air Handling	$	1,782,987		$	880,106
Test and Measurement		45,214			(110,031	)
Industrial Hose		248,291			140,012
Aerospace Components		759,609			-
Unallocated Corporate General		(265,030	)		(267,002	)
Total Operating Income	$	2,571,071		$	643,085
Income Before Provision for Income Taxes
Commercial Air Handling	$	1,782,696		$	865,205
Test and Measurement		45,214			(128,949	)
Industrial Hose		192,479			100,189
Aerospace Components		562,956			-
Loss on sale of business		-			-
Unallocated Corporate General & Other		(254,473	)		(338,109	)
Income Before Provision for Income Taxes	$	2,328,872		$	498,336

14. SUBSEQUENT EVENTS

On April 19, 2019, the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”), pursuant to the terms of an Asset Purchase Agreement (the “Asset Purchase Agreement”) entered into by and between Hickok Operating LLC, an Ohio limited liability company and wholly-owned subsidiary of the Company (“Hickok Operating”), and DG on the date thereof. DG is in the business of developing and commercializing marketing and data analytic technology applications, which applications include, but are not limited to, anglrjobs, topplr, anglrlegal and anglrads.

On May 10, 2019, the shareholders approved the issuance of shares of Class B Common Stock of the Company in connection with the conversion of indebtedness outstanding under loan agreements with First Francis Company Inc. and Roundball LLC.  See Note 8, Notes Payable.

15

RESULTS OF OPERATIONS.

The following discussion is intended to assist in the understanding of the Company's financial position at March 31, 2019 and December 31, 2018, results of operations for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018, and should be read in conjunction with the consolidated financial statements and related notes included elsewhere this Quarterly Report on Form 10-Q and with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 

Items Affecting the Comparability of our Financial Results

Effective June 1, 2018, Hickok Incorporated completed the sale of certain assets comprising its Test and Measurement business segment to Hickok Waekon, LLC, an Ohio limited liability company (“Buyer”). In connection with the transaction, the Company agreed to take commercially reasonable efforts to change its name to one or more names that do not include “Hickok” or “Waekon” or any derivation thereof. The Company is in the process of changing its name and ticker symbol and expects this process to be complete in the near future. The Company does not expect the name change to have an impact on the trading of the stock.

Effective July 1, 2018, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc., (“CAD”). The results of this acquisition are reported under the Aerospace Components segment.

Accordingly, in light of the timing of these transactions, the Company’s results for the quarter ended on March 31, 2019 include operations in the Aerospace Components segment, but not the Test and Measurement segment. Conversely, our results for the quarter ended March 31, 2018 include operations in the Test and Measurement segment, but not the Aerospace Components segment.

Results of Operations – Three Months Ended March 31, 2019 and 2018

Sales for the quarter ended March 31, 2019 (“current quarter”) increased to $21.8 million, an increase of approximately $9.9 million or 84% from sales of $11.9 million during the same quarter of the prior year. This increase in sales was primarily attributable to results from the Aerospace Components segment acquired on July 1, 2018, as well as stronger sales in the Commercial Air Handling segment.

Cost of sales for the current quarter was $17.0 million compared to $8.9 million, an increase of $8.1 million or 92% from the same quarter of the prior year.  Gross profit was $4.8 million in the current quarter compared to $3.0 million, an increase of $1.8 million from the same quarter of the prior year.  The increase in cost of sales and gross profit was attributable to the addition of the Aerospace Components segment and stronger performance in the Commercial Air Handling segment.

There were no product development expenditures during the current quarter as those expenditures historically were related to the Test and Measurement segment which was divested in June 2018. The company had $0.1 million of product and development expenditures in the first quarter of 2018.

Selling, general and administrative expenses (SG&A) in the current quarter were $2.3 million, or 10% of sales, compared to $2.3 million, or 19% of sales in the first quarter of last year. Selling, general and administrative expenses decreased as a percentage of sales due to the sale of the Test and Measurement segment.

Interest charges in the current quarter were approximately $0.3 million compared to $0.1 million in the same quarter of the prior year. The increase in interest expense was primarily related to the increase in outstanding debt for the quarter resulting from the acquisition of the Aerospace Components segment.

Other income, net was $24 thousand in the current quarter compared to $58 thousand other expense, net in the same quarter of the prior year.  Other (income) expense, net was comprised of rental income, gains and losses on the disposal of assets, legal settlements and other miscellaneous charges.

Income tax expense in the current quarter was $0.6 million compared to $0.1 million in the same quarter of the prior year. Tax expense in the current period is recorded at the Company’s expected effective tax rate of 25%.

Net income in the current quarter was $1.7 million or $0.55 per diluted share as compared to the net income of $0.4 million or $0.11 per diluted share for the same quarter of the prior year.

16

Liquidity and Capital Resources

As described further in Note 11 to our consolidated financial statements, effective July 1, 2018, we completed the CAD acquisition for 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, which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses.  In connection with that transaction, we amended our credit agreement to, among other things, increase the maximum availability under our revolving credit facility to $12 million, and to increase the amount of our term loan to $6 million. We also amended our promissory notes payable to First Francis to increase the interest rate payable from 4.0% to 6.25%, and to provide First Francis with the right to convert up to $648,000 principal amount of one note into shares of Class B Common shares at a conversion price of $6.48 per share, subject to shareholder approval which was obtained on May 10, 2019. Subsequently, we also amended our outstanding convertible loan with Roundball to provide Roundball with the option to convert, subject to shareholder approval which was obtained on May 10, 2019, a portion of the indebtedness into Class B Common Shares at a conversion price of $1.43 per Class B Common Share, up to a maximum amount of 75,000 Class B Common Shares.

Total current assets at March 31, 2019 decreased to $22.4 million from $23.3 million at December 31, 2018, a decrease of $0.9 million. The decrease in current assets is comprised of the following: a decrease in cash of $2.4 million and a decrease in inventories of $0.2 million, offset by an increase in accounts receivable of $1.3 million and an increase in costs in excess of billings of $0.4 million. Fluctuations in accounts receivable and costs and estimated earnings in excess of billing related to the Commercial Air Handling division are dependent upon progress billing milestones for contracts.

Total current liabilities at March 31, 2019 decreased to $15.8 million from $16.9 million at December 31, 2018, a decrease of $1.1 million.  The decrease in current liabilities is comprised of the following: the decrease in billings in excess of costs and earnings (included in unearned revenue on the balance sheet) of $2.2 million; decrease in accounts payable of $0.9 million; and a decrease in accrued payroll of $0.5 million, offset by an increase in current in current portion of notes payable of $0.6 million; an increase accrued income tax payable of $0.7 million; and an increase in leases payable of $0.7 million.  The increase in leases payable is related to the adoption of the new lease accounting standard adopted January 1, 2019 as discussed in Note 1 and Note 9 of the notes to the consolidated financial statements. 

Cash used by operating activities for the three months ended March 31, 2019 was approximately $1.3 million, compared to cash provided by operating activities of $0.3 million in the same period a year ago. Cash used by operating activities for the current quarter is comprised of the following: net income of $1.7 million and adjustments for non-cash items of $0.7 million, offset by cash used for working capital adjustments of $3.7 million.  The primary uses of working capital were the increase in accounts receivable of $1.3 million and the decrease in billings in excess of costs and earnings (included in unearned revenue) of $2.2 million. Fluctuations in accounts receivable and costs and estimated earnings in excess of billing related to the Commercial Air Handling division are dependent upon progress billing milestones for contracts.

Cash used in investing activities for the three months ended March 31, 2019 of $0.3 million, compared to cash used in investing activities of $0.1 million in the same period a year ago. Cash used in investing activities was for capital expenditures in the normal course of business.

Cash used by financing activities was approximately $0.7 million for the three months ended March 31, 2019, compared to cash used by financing activities of $1.9 million in the same period a year ago. Cash used by financing activities for the current quarter was primarily related to: $0.1 million payments against notes and $0.6 million net payments against bank debt.

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, the Company had $7.9 million available to borrow on the revolving credit facility at March 31, 2019. See Note 7 of the notes to the consolidated financial statements. Management believes the Company has adequate liquidity for debt service, working capital, capital expenditures and other strategic initiatives.

Off-Balance Sheet Arrangements

The Company has a secured performance and payment bond in the amount of $1.6 million as surety on completion of the requirements of a commercial air handling contract. 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 or capital resources.

Critical Accounting Policies

The Company’s critical accounting policies are as presented in Notes to Consolidated Financial Statements and Management’s Discuss and Analysis of Financial Condition and Results of Operations in our Annual Report Form 10-K for the year ended December 31, 2018.

17

Forward-Looking Statements

The foregoing discussion includes forward-looking statements relating to the business of the Company. 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:  the Company's ability to effectively integrate acquisitions and manage the larger operations of the combined businesses, the Company's dependence upon a limited number of customers and the aerospace industry, the highly competitive industries in which the Company operates, which includes several competitors with greater financial resources and larger sales organizations, the Company's ability to capitalize on market opportunities in certain sectors,  the Company's ability to obtain cost effective financing and the Company's ability to satisfy obligations under its financing arrangements, as well as the risks described from time to time in the Company’s reports as filed with the Securities and Exchange Commission. Except to the extent required by law, the Company does not undertake and specifically declines any obligation to review or update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments or otherwise. 

ITEM 3. MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

As of March 31, 2019, an evaluation was performed, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Company's management, including the Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, concluded that the Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") were effective as of March 31, 2019 to ensure that information required to be disclosed by the Company in reports that it files and submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (2) is accumulated and communicated to the Company's management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company's internal control over financial reporting during the quarter ended March 31, 2019 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 PROCEEDINGS. 

Hickok AE LLC (dba Air Enterprises), a wholly owned subsidiary of Hickok Incorporated, was named as a defendant in a lawsuit filed in Superior Court in Quebec, Canada by Carmichael Engineering Ltd. of Quebec (“Carmichael”). Carmichael’s lawsuit seeks payment of invoices for materials and services it allegedly provided to Air Enterprises prior to the Company’s acquisition and relating to a third-party cooling system. A trial date has been set for April 2020. The Company believes the claims have been improperly brought against Hickok. The Company denies the allegations and will vigorously defend the claims asserted against it. The Company cannot predict the outcome of the above matters or estimate the possible loss or range of loss, if any. Management believes that the allegations are without merit and that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flow of the Company.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

18

ITEM 6. EXHIBITS

31.1	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer.
32.1	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation
101.DEF*	XBRL Extension Definition
101.LAB*	XBRL Taxonomy Extension Labels
101.PRE*	XBRL Taxonomy Extension Presentation

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

19

SIGNATURES

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 May 2019, thereunto duly authorized.

SIGNATURE:	TITLE
/s/ Brian E. Powers	Chairman, President and Chief
Brian E. Powers	Executive Officer
	(Principal Executive Officer)
/s/ Kelly J. Marek	Vice President and Chief Financial
Kelly J. Marek	Officer (Principal Accounting and Financial Officer)

20

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Brian E. Powers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hickok Incorporated (the "registrant");

2. 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;

3. 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 registrant as of, and for, the periods presented in this report;

4. The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.

By:

/s/ Brian E. Powers

Brian E. Powers

President and Chief Executive Officer

May 14, 2019

EX-31.2

 Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Kelly J. Marek, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hickok Incorporated (the "registrant");

2. 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;

3. 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 registrant as of, and for, the periods presented in this report;

4. The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.

By:

/s/ Kelly J, Marek

Kelly J. Marek

Vice President and Chief Financial Officer

May 14, 2019

EX-32.1

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, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Brian Powers, 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:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Brian E. Powers

Brian E. Powers

President and Chief Executive Officer

May 14, 2019

EX-32.2

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 March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kelly J. Marek, 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:

1. the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kelly J. Marek

Kelly J. Marek

Vice President and Chief Financial Officer

May 14, 2019

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document Information [Line Items]
Entity Registrant Name	HICKOK INC
Entity Central Index Key	0000047307
Trading Symbol	hicka
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		596,848
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		2,158,806

XML

Consolidated Balance Sheet (Current Period Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and Cash Equivalents	$ 2,692,129	$ 5,057,626
Accounts receivable less allowance for doubtful accounts	11,167,985	9,835,262
Costs and estimated earnings in excess of billing	2,481,632	2,083,349
Inventories-less allowance for obsolete inventory	5,334,994	5,497,982
Prepaid Expenses and other current assets	767,465	818,609
Total Current Assets	22,444,205	23,292,828
PROPERTY, PLANT AND EQUIPMENT:
Land and Improvements	257,205	257,205
Buildings and Leasehold Improvements	1,816,376	1,709,165
Machinery and Equipment	13,560,114	13,343,878
Total Property, Plant and Equipment	15,633,695	15,310,248
Less accumulated depreciation	2,406,734	2,006,133
Property, Plant and Equipment, Net	13,226,961	13,304,115
Operating Right of Use Asset, Net	9,725,871
OTHER ASSETS:
Goodwill	9,582,202	9,582,202
Intangibles, net of accumulated amortization	4,238,611	4,332,202
Other non-current assets	95,263	95,263
Total Non-Current Other Assets	13,916,076	14,009,667
Total Assets	59,313,113	50,606,610
CURRENT LIABILITIES:
Convertible notes payable	200,000	200,000
Notes payable, current	2,124,892	1,555,663
Bank Debt	1,333,333	1,333,333
Leases payable	671,991	13,800
Accounts payable	4,242,459	5,169,819
Unearned revenue	2,972,412	5,257,797
Accrued payroll and related expenses	892,712	1,358,669
Accrued expenses	2,324,532	1,606,429
Accrued income taxes	1,054,719	360,239
Total Current Liabilities	15,817,050	16,855,749
LONG-TERM LIABILITIES:
Notes payable	10,411,998	11,086,402
Bank Debt	7,563,061	8,194,679
Deferred Income Taxes	1,701,653	1,701,653
Leases payable	9,157,675	2,642
Total Long-Term Liabilities	28,834,387	20,985,376
STOCKHOLDERS' EQUITY
Preferred shares, no par value - 1,000,000 shares authorized, no shares issued and outstanding	0	0
Contributed capital	1,741,901	1,741,901
Treasury shares	(1,905,780)	(1,905,780)
Retained earnings	11,250,124	9,577,792
Total Stockholders' Equity	14,661,676	12,765,485
Total Liabilities and Stockholders' Equity	59,313,113	50,606,610
Common Class A [Member]
STOCKHOLDERS' EQUITY
Common shares	2,865,159	2,641,300
Common Class B [Member]
STOCKHOLDERS' EQUITY
Common shares	$ 710,272	$ 710,272

XML

Consolidated Balance Sheet (Current Period Unaudited) (Parentheticals) - $ / shares $ / shares in Thousands	Mar. 31, 2019	Dec. 31, 2018
Preferred shares, par value (in dollars per share)	$ 0	$ 0
Preferred shares, authorized (in shares)	1,000,000	1,000,000
Preferred shares, issued (in shares)	0	0
Preferred shares, outstanding (in shares)	0	0
Common Class A [Member]
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, authorized (in shares)	10,000,000	10,000,000
Common shares, issued (in shares)	2,158,806	2,123,809
Common shares, outstanding (in shares)	2,158,806	2,123,809
Treasury shares, issued (in shares)	37,208	37,208
Common Class B [Member]
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, authorized (in shares)	2,500,000	2,500,000
Common shares, issued (in shares)	596,848	596,848
Common shares, outstanding (in shares)	596,848	596,848
Treasury shares, issued (in shares)	182,435	182,435

XML

Consolidated Statement of Income (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Total sales	$ 21,836,087	$ 11,878,700
Cost of Sales	17,006,199	8,860,259
Gross Profit	4,829,888	3,018,441
Operating Expenses:
Product development costs		123,029
Selling, general and administrative expenses	2,258,817	2,252,327
Operating Income	2,571,071	643,085
Other (Income) and Expenses:
Interest charges	266,073	85,933
Other (income) expense, net	(23,874)	58,816
Total Other (Income) and Expenses	242,199	144,749
Income before Provision for Income Taxes	2,328,872	498,336
Provision for Income Taxes	583,414	124,584
Net Income	$ 1,745,458	$ 373,752
Net Income Per Common Share - Basic (in dollars per share)	$ 0.63	$ 0.13
Net Income Per Common Share - Diluted (in dollars per share)	$ 0.55	$ 0.11
Weighted Average Shares of Common Stock Outstanding
Basic (in shares)	2,755,265	2,911,057
Diluted (in shares)	3,178,420	3,269,853

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Common Class B [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2017	$ 2,246,367	$ 710,272	$ 1,741,901	$ (264,841)	$ 5,964,082	$ 10,397,781
Share-based compensation expense	394,933					394,933
Proceeds from sale of business				(1,640,939)		(1,640,939)
Net Income					3,613,710	3,613,710
Balance at Dec. 31, 2018	2,641,300	710,272	1,741,901	(1,905,780)	9,577,792	12,765,485
Share-based compensation expense	223,859					223,859
Net Income					1,745,458	1,745,458
Cumulative effect of accounting change					(73,126)	(73,126)
Balance at Mar. 31, 2019	$ 2,865,159	$ 710,272	$ 1,741,901	$ (1,905,780)	$ 11,250,124	$ 14,661,676

XML

Consolidated Statement of Cash Flow (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows from Operating Activities
Net Income	$ 1,745,458	$ 373,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	494,192	359,981
Non-cash share-based compensation expense	223,859	236,167
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable	(1,332,723)	493,837
Decrease (Increase) in inventories	162,988	(2,460)
Decrease (Increase) in costs and estimated earnings in excess of billings	(398,283)	(787,400)
Decrease (Increase) in prepaid expenses & other assets	51,144	(120,791)
Increase (Decrease) in accounts payable	(927,360)	(41,352)
Increase (Decrease) in accrued payroll and related expenses	(465,957)	(74,152)
Increase (Decrease) in accrued expenses	733,969	(131,060)
Increase (Decrease) in accrued income taxes	694,480	45,228
Increase (Decrease) in unearned revenue	(2,285,385)	(32,754)
Total adjustments	(3,049,076)	(54,796)
Net Cash Provided (Used) by Operating Activities	(1,303,618)	318,956
Cash Flows from Investing Activities
Capital expenditures	(323,447)	(62,586)
Net Cash (Used in) Investing Activities	(323,447)	(62,586)
Cash Flows from Financing Activities
Payments on notes	(105,175)	(37,434)
Payments on bank debt	(1,083,334)	(1,975,000)
Borrowings on bank debt	451,716	173,614
Payments on finance lease	(1,639)	(13,514)
Net Cash Provided by (Used in) Financing Activities	(738,432)	(1,852,334)
Net Increase (decrease) in cash and cash equivalents	(2,365,497)	(1,595,964)
Cash and cash equivalents at beginning of quarter	5,057,626	2,444,110
Cash and cash equivalents at end of quarter	2,692,129	848,146
Supplemental disclosures of cash flow information
Interest Paid	190,462	156,413
Income Taxes Paid		$ 74,560

XML

Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Basis of Accounting [Text Block]

1.

  BASIS OF PRESENTATION

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 and Article

8

of Regulation 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 Hickok Incorporated 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. Operating results for the

three

months ended

March 31, 2019

are

not

necessarily indicative of the results that

may

be expected for the year ended

December 31, 2019.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form

10

-K for the year ended

December 31, 2018. 

During the

three

-month period ended

March 31, 2019,

there have been

no

changes to our significant accounting policies other than the adoption of the new standard for leases, as discussed in Note

2

below.

Reclassifications

Certain prior year amounts were reclassified to conform to the current year presentation, including transaction costs related to acquisitions that were reclassified from selling, general and administrative to other (income) expenses as these costs are

not

considered as operating costs. These reclassifications have

no

effect on the financial position or results of operations reported as of and for the periods presented.

XML

Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2.

  SUMMARY OF SIGNIFICANT ACCOUNTING 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 for the year ended

December 31, 2018.

Recently Adopted Accounting Standards

The Company did

not

incur any material impact to its results of operations due to the adoption of any new accounting standards during the periods reported. The adoption of the new standard for leases did have a material impact on consolidated balance sheets as disclosed below and in Note

9.

In

February 2016,

the FASB issued ASU

2016

-

02

“Leases (Topic

842

),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does

not

require transition accounting for leases that expire prior to the date of initial application. The new standard is effective for fiscal years and interim periods within those years, beginning on or after

December 15, 2018,

with early adoption permitted. The adoption of this new standard on

January 1, 2019

resulted in assets of

$9.7

million recorded as Operating Right of Use Assets, net, and additional lease liabilities of

$9.8

million.  The Company also recorded an adjustment to retained earnings resulting from the cumulative effect of the change in accounting of (

$0.1

) million.  See Note

9

for further information.

Recently Issued Accounting Standards

In

January 2017,

FASB issued ASU

2017

-

04,

"Intangibles-Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment." ASU

2017

-

04

eliminates the

second

step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value,

not

to exceed the total amount of goodwill allocated to the reporting unit. The standard, which should be applied prospectively, is effective for fiscal years and interim periods within those years beginning on or after

December 15, 2019.

Early adoption is permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for fiscal years and interim periods within those fiscal years beginning on or after

December 15, 2019

with early adoption permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

XML

Note 3 - Accounts Receivable

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

 

3.

  ACCOUNTS RECEIVABLE

 

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

$35,750

and

$35,000

at

March 31, 2019

and

December 31, 2018,

respectively.

XML

Note 4 - Inventory

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

4.

  INVENTORY

Inventory is valued at the lower of cost (

first

-in,

first

-out) or net realizable value and consists of:

	March 3 1 , 201 9		December 31, 201 8
Raw materials and component parts	$	1,987,221	$	2,313,664
Work-in-process		1,736,430		1,209,117
Finished products		1,893,087		2,201,693
Total inventory	$	5,616,738		5,724,474
Less: inventory reserves		281,744		226,492
Net inventory	$	5,334,994	$	5,497,982

XML

Note 5 - Goodwill and Other Intangible Assets, Net

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Intangible assets relate to the purchase of businesses. Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is

not

amortized but is reviewed on an annual basis for impairment. Amortization of intangibles is being amortized on a straight-line basis over period ranging from

one

year to

15

years. Intangible assets are as follows:

	March 3 1 , 201 9		December 31, 201 8
Customer list intangibles	$	4,970,000	$	4,970,000
Non-compete agreements		200,000		200,000
Trademarks		340,000		340,000
Total intangible assets		5,510,000		5,510,000
Less: accumulated amortization		1,271,389		1,177,798
Intangible assets, net	$	4,238,611	$	4,332,202

Amortization of intangibles assets was:

$93,591

 and 

$217,257

for the

three

months ended

March 31, 2019

and

2018,

respectively.

XML

Note 6 - Property, Plant and Equipment, Net

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6.

  PROPERTY, PLANT AND EQUIPMENT, NET

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

	March 3 1 , 201 9		December 31, 201 8
Land	$	257,205	$	257,205
Buildings and improvements		1,816,376		1,709,165
Machinery & equipment		13,560,114		13,343,879
Total property, plant & equipment		15,633,695		15,310,248
Less: accumulated depreciation		2,406,734		2,006,133
Property plant & equipment, net	$	13,226,961	$	13,304,115

Depreciation expense was

$400,601

 and

$139,746

for the

three

months ended

March 31, 2019

and

2018,

respectively.

XML

Note 7 - Bank Debt

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

7.

  BANK DEBT 

The Company entered into a Credit Agreement on

June 1, 2017

with JPMorgan Chase Bank, N.A. as lender, which was subsequently amended in connection with funding the acquisition of CAD Enterprises, Inc. (“CAD”) on

July 5, 2018 (

as amended, the “Credit Agreement”). As amended, the Credit Agreement is comprised of a revolving facility in the amount of

$12,000,000,

subject to a borrowing base (determined based on

80%

of Eligible Accounts, plus

50%

of Eligible Progress Billing Accounts, plus

50%

of Eligible Inventory, minus Reserves, each as defined in the Credit Agreement) and a term A loan in the amount of

$6,000,000.

Outstanding borrowings on the term A loan are payable in consecutive monthly installments, which currently amount to

$111,111

per month.  

The revolving facility under the Credit Agreement includes a

$3

million sublimit for the issuance of letters of credit thereunder.  The Credit Agreement also provides for a separate credit line for borrowings of up to an aggregate of

$1,000,000

for capital expenditures until

July 5, 2019,

at which time any outstanding capital expenditure borrowings will be converted into a term loan maturing at the earlier of

five

years after such conversion or the termination of the revolving credit facility.  Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i)

0.00%

for Prime Rate loans and (ii)

2.00%

for LIBOR loans. The maturity date of the revolving facility is

June 1, 2020.

Interest for borrowings under the term A loan accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i)

0.25%

for Prime Rate loans and (ii)

2.25%

for LIBOR loans. The maturity date of the term A loan is

December 1, 2022.

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 under the amended Credit Agreement include a minimum fixed charge coverage ratio, a revised maximum senior funded debt to EBITDA ratio and a new maximum total funded debt to EBITDA ratio.

In connection with entering into the Credit Agreement in

2017,

the Company made a

one

-time prepayment of a portion of the outstanding principal under promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of

$500,000.

  First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company.   

Bank debt balances consist of the following: 

	March 3 1 , 2018		December 31, 201 8
Term debt	$	5,111,111	$	5,444,444
Revolving debt		3,879,452		4,184,158
Total Bank debt		8,990,563		9,628,602
Less: current portion		1,333,333		1,333,333
Non-current bank debt		7,657,230		8,295,269
Less: unamortized debt costs		94,169		100,590
Net non-current bank debt	$	7,563,061	$	8,194,679

XML

Note 8 - Notes Payable

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

8.

NOTES PAYABLE

Convertible Notes Payable

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.

The Convertible Loan provides Roundball with the option to elect to convert amounts outstanding under the Convertible Loan into Class A Common Shares at a conversion price of

$1.43

per Class A Common Share. In

December 2018,

the Convertible Loan was amended to provide Roundball with the option to elect to convert, subject to shareholder approval which was obtained on

May 10, 2019

[SK1]

 ), a portion of the indebtedness into Class B Common Shares at a conversion price of

$1.43

per Class B Common Share, up to a maximum amount of

75,000

Class B Common Shares.

The outstanding balance on the Convertible Loan as of

March 31, 2019

and

December 31, 2018,

respectively was

$200,000.

In connection with the Convertible Loan, 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 expires

December 30, 2019.

Notes Payable – Related Party

The Company has

two

separate outstanding promissory notes 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. The

first

promissory note was issued with original principal in the amount of

$2,000,000,

and the

second

was issued with original principal in the amount of

$2,768,662.

The promissory notes each have an interest rate of

6.25%

per annum, which was increased from

4.0%

per annum as part of the

July 2018

amendments. In addition, the promissory note with original principal amount of

$2,768,662

was amended in

July 2018

to provide for a conversion option commencing

July 5, 2019

which allows 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 which was obtained on

May 10, 2019.

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 CAD for 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 (

4%

) per annum and is payable in full

no

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

no

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 became 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 the quarter ending

June 30, 2019. 

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

four

(

4

) 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 consists of the following:

	March 3 1 , 201 9		December 31, 201 8
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. The remaining balance of the note shall be payable in full on July 1, 2022.	$	1,440,544	$	1,485,061
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. The remaining balance of the note shall be payable in full on July 1, 2022.		2,096,346		2,157,004
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. No principal payments will be made until September 2019.		9,000,000		9,000,000
Total notes payable – related party		12,536,890		12,642,065
Less current portion		2,124,892		1,555,663
Notes payable – related party non-current portion	$	10,411,998	$	11,086,402

XML

Note 9 - Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

9.

LEASES

On

January 1, 2019,

the Company adopted ASU

2016

-

02

“Leases (Topic

842

),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP.

The Company has operating and finance leases for facilities, vehicles and equipment. These leases have remaining terms of

2

years to

15

years, some of which include options to extended the leases for up to

10

years.

Supplemental balance sheet information related to leases:

	March 3 1 , 201 9			December 31, 201 8
Operating leases:
Operating lease right-of-use assets	$	9,725,871		$	-
Other current liabilities		659,830			-
Operating lease liabilities		9,157,675			-
Total operating lease liabilities	$	9,817,505		$	-
Weighted Average Remaining Lease Term
Operating Leases (in years)		13.5 years			-
Weighted Average Discount Rate
Operating Leases		5.0	%		-

XML

Note 10 - Earnings Per Common Share

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

10

. EARNINGS PER COMMON SHARE

 

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

	Three Months Ended March 31,
	2019		2018
Earnings Per Share - Basic
Net Income	$	1,745,458	$	373,752
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Earnings Per Share - Basic	$	0.63	$	0.13
Earnings Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Warrants, Options and Convertible Notes		423,155		358,796
Weighted average shares of common stock -Diluted		3,178,420		3,269,853
Earnings Per Share - Diluted	$	0.55	$	0.11

XML

Note 11 - Acquisitions

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

1

1

. ACQUISITIONS

Effective

July 1, 2018,

the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD, pursuant to the Share Purchase Agreement.  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 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. 

CAD manufactures high end components for the aerospace industry and has

one

operating location in Phoenix, Arizona. The purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

Cash	$	790,417
Accounts Receivable		2,221,635
Inventory		2,098,732
Fixed Assets		10,867,500
Prepaid and Other Assets		35,264
Intangibles Assets		3,000,000
Goodwill		7,326,289
Total Assets Acquired	$	26,339,837
Accounts Payable	$	1,846,247
Accrued Payroll and related expenses		224,139
Accrued Expense		518,816
Deferred Income Taxes		2,750,635
Total Liabilities Assumed	$	5,339,837
Net Assets Acquired	$	21,000,000

XML

Note 12 - Dispositions

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

1

2

. DISPOSITIONS

  

Effective

June 1, 2018,

the Company completed the sale (the “Sale”) of certain assets comprising its Test and Measurement business segment (the “Test and Measurement Segment”) to Hickok Waekon, LLC, an Ohio limited liability company (“Buyer”), pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) by and among Buyer, the Company, Supreme Electronics Corp., a Mississippi corporation and wholly-owned subsidiary of the Company (“Supreme”), Waekon Corporation, an Ohio corporation and wholly-owned subsidiary of the Company (“Waekon Corporation”), and Robert L. Bauman, who was a director of the Company. Prior to the effectiveness of the Sale, Supreme and Waekon Corporation owned certain of the assets used in the operation of the Test and Measurement Segment and were primarily responsible for the operation thereof.

Upon the closing of the Sale, all of the issued and outstanding shares of capital stock of the Company then-owned, directly or indirectly, by Mr. Bauman or his affiliate, equaling approximately

21,413

shares of Class A Common Stock of the Company and

176,768

shares of Class B Common Stock of the Company, were transferred and assigned to the Company. The shares constituted the consideration received by the Company in the Sale.  Based upon the share price at closing, the value of the proceeds received was approximately

$1.6

million.  The net assets sold were approximately

$2.7

million.  The Company recorded a loss on sale of approximately

$1.2

million in the

second

quarter of

2018.

XML

Note 13 - Segment and Related Information

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

3

. SEGMENT AND RELATED INFORMATION

  

The Company operates

three

reportable business segments: (

1

) Aerospace Components, (

2

) Commercial Air Handling, (

3

) and Industrial Hose.  The Company operated the Test and Measurement business segment through

June 1, 2018,

at which time it was sold to Hickok Waekon, LLC. The Company's management evaluates segment performance based primarily on operating income. Certain corporate costs are allocated to the segments and interest expense directly related to financing the acquisition of a business is allocated to that segment, respectively.  Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses.

Aerospace Components:

The Aerospace Components segment was added

July 1, 2018,

when the Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc. (“CAD”) in Phoenix, Arizona. This segment manufactures precision components primarily for customers in the aerospace industry.  This segment provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions.  Utilizing state-of-the-art machining and welding technologies, this segment is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels.  Our quality certifications include ISO

9001:2015/AS9100D,

as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, TIG/E-Beam welding.

Commercial Air Handling:

The Commercial Air Handling segment was added

June 1, 2017,

when the Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC in Akron, Ohio. The acquired business, which operates under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. Its customers are typically in the health care, education, pharmaceutical and industrial manufacturing markets in the United States. This segment also sells to select international markets. The custom air handling units are constructed of non-corrosive aluminum, resulting in sustainable, long-lasting, and energy efficient solutions with life expectancies of

50

years or more. These products are distributed through a network of sales representatives, based on relationships with health care networks, building contractors and engineering firms. The custom air handling equipment is designed, manufactured and installed under the brand names FactoryBilt® and SiteBilt®. FactoryBilt® air handling solutions are designed, fabricated and assembled in a vertically integrated process entirely within the Akron, Ohio facility. SiteBilt® air handling solutions are designed and fabricated in Akron, but are then crated and shipped to the field and assembled on-site.

Industrial Hose:

 

The Industrial Hose segment was added

July 1, 2016,

when the Company purchased the assets of the Federal Hose Manufacturing, LLC in Painesville, Ohio. This business segment includes the manufacture of 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.

Test and Measurement:

 

The Test and Measurement segment is the legacy business that was started in

1910

when the Company was founded, and was sold

June 1, 2018.

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

Information by industry segment is set forth below:

 

	Three Months Ended
	March 31
	2019			2018
Sales
Commercial Air Handling	$	11,744,561		$	9,115,937
Test and Measurement		274,032			1,071,847
Industrial Hose		1,797,091			1,690,916
Aerospace Components		8,020,403			-
Total Sales	$	21,836,087		$	11,878,700
Gross Profit
Commercial Air Handling	$	3,001,933		$	2,147,125
Test and Measurement		45,214			475,026
Industrial Hose		525,735			396,290
Aerospace Components		1,257,006			-
Total Gross Profit	$	4,829,888		$	3,018,441
Operating Income
Commercial Air Handling	$	1,782,987		$	880,106
Test and Measurement		45,214			(110,031	)
Industrial Hose		248,291			140,012
Aerospace Components		759,609			-
Unallocated Corporate General		(265,030	)		(267,002	)
Total Operating Income	$	2,571,071		$	643,085
Income Before Provision for Income Taxes
Commercial Air Handling	$	1,782,696		$	865,205
Test and Measurement		45,214			(128,949	)
Industrial Hose		192,479			100,189
Aerospace Components		562,956			-
Loss on sale of business		-			-
Unallocated Corporate General & Other		(254,473	)		(338,109	)
Income Before Provision for Income Taxes	$	2,328,872		$	498,336

XML

Note 14 - Subsequent Events

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

1

4

. SUBSEQUENT EVENTS

On

April 19, 2019,

the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”), pursuant to the terms of an Asset Purchase Agreement (the “Asset Purchase Agreement”) entered into by and between Hickok Operating LLC, an Ohio limited liability company and wholly-owned subsidiary of the Company (“Hickok Operating”), and DG on the date thereof. DG is in the business of developing and commercializing marketing and data analytic technology applications, which applications include, but are

not

limited to, anglrjobs, topplr, anglrlegal and anglrads.

On

May 10, 2019,

the shareholders approved the issuance of shares of Class B Common Stock of the Company in connection with the conversion of indebtedness outstanding under loan agreements with First Francis Company Inc. and Roundball LLC.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

The Company did

not

incur any material impact to its results of operations due to the adoption of any new accounting standards during the periods reported. The adoption of the new standard for leases did have a material impact on consolidated balance sheets as disclosed below and in Note

9.

In

February 2016,

the FASB issued ASU

2016

-

02

“Leases (Topic

842

),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does

not

require transition accounting for leases that expire prior to the date of initial application. The new standard is effective for fiscal years and interim periods within those years, beginning on or after

December 

15,

2018,

with early adoption permitted. The adoption of this new standard on

January 1, 2019

resulted in assets of

$9.7

million recorded as Operating Right of Use Assets, net, and additional lease liabilities of

$9.8

million. The Company also recorded an adjustment to retained earnings resulting from the cumulative effect of the change in accounting of (

$0.1

) million. See Note

9

for further information.

Recently Issued Accounting Standards

In

January 2017,

FASB issued ASU

2017

-

04,

"Intangibles-Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment." ASU

2017

-

04

eliminates the

second

step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value,

not

to exceed the total amount of goodwill allocated to the reporting unit. The standard, which should be applied prospectively, is effective for fiscal years and interim periods within those years beginning on or after

December 15, 2019.

Early adoption is permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for fiscal years and interim periods within those fiscal years beginning on or after

December 15, 2019

with early adoption permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

XML

Note 4 - Inventory (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 3 1 , 201 9		December 31, 201 8
Raw materials and component parts	$	1,987,221	$	2,313,664
Work-in-process		1,736,430		1,209,117
Finished products		1,893,087		2,201,693
Total inventory	$	5,616,738		5,724,474
Less: inventory reserves		281,744		226,492
Net inventory	$	5,334,994	$	5,497,982

XML

Note 5 - Goodwill and Other Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	March 3 1 , 201 9		December 31, 201 8
Customer list intangibles	$	4,970,000	$	4,970,000
Non-compete agreements		200,000		200,000
Trademarks		340,000		340,000
Total intangible assets		5,510,000		5,510,000
Less: accumulated amortization		1,271,389		1,177,798
Intangible assets, net	$	4,238,611	$	4,332,202

XML

Note 6 - Property, Plant and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 3 1 , 201 9		December 31, 201 8
Land	$	257,205	$	257,205
Buildings and improvements		1,816,376		1,709,165
Machinery & equipment		13,560,114		13,343,879
Total property, plant & equipment		15,633,695		15,310,248
Less: accumulated depreciation		2,406,734		2,006,133
Property plant & equipment, net	$	13,226,961	$	13,304,115

XML

Note 7 - Bank Debt (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Debt [Table Text Block]

	March 3 1 , 2018		December 31, 201 8
Term debt	$	5,111,111	$	5,444,444
Revolving debt		3,879,452		4,184,158
Total Bank debt		8,990,563		9,628,602
Less: current portion		1,333,333		1,333,333
Non-current bank debt		7,657,230		8,295,269
Less: unamortized debt costs		94,169		100,590
Net non-current bank debt	$	7,563,061	$	8,194,679

XML

Note 8 - Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Related Party Transactions [Table Text Block]

	March 3 1 , 201 9		December 31, 201 8
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. The remaining balance of the note shall be payable in full on July 1, 2022.	$	1,440,544	$	1,485,061
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. The remaining balance of the note shall be payable in full on July 1, 2022.		2,096,346		2,157,004
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. No principal payments will be made until September 2019.		9,000,000		9,000,000
Total notes payable – related party		12,536,890		12,642,065
Less current portion		2,124,892		1,555,663
Notes payable – related party non-current portion	$	10,411,998	$	11,086,402

XML

Note 9 - Leases (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Lessee, Operating and Finance Lease, Assets and Liabilities [Table Text Block]

	March 3 1 , 201 9			December 31, 201 8
Operating leases:
Operating lease right-of-use assets	$	9,725,871		$	-
Other current liabilities		659,830			-
Operating lease liabilities		9,157,675			-
Total operating lease liabilities	$	9,817,505		$	-
Weighted Average Remaining Lease Term
Operating Leases (in years)		13.5 years			-
Weighted Average Discount Rate
Operating Leases		5.0	%		-

XML

Note 10 - Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31,
	2019		2018
Earnings Per Share - Basic
Net Income	$	1,745,458	$	373,752
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Earnings Per Share - Basic	$	0.63	$	0.13
Earnings Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,755,265		2,911,057
Warrants, Options and Convertible Notes		423,155		358,796
Weighted average shares of common stock -Diluted		3,178,420		3,269,853
Earnings Per Share - Diluted	$	0.55	$	0.11

XML

Note 11 - Acquisitions (Tables)

3 Months Ended

Mar. 31, 2019

CAD Enterprises, Inc. [Member]

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash	$	790,417
Accounts Receivable		2,221,635
Inventory		2,098,732
Fixed Assets		10,867,500
Prepaid and Other Assets		35,264
Intangibles Assets		3,000,000
Goodwill		7,326,289
Total Assets Acquired	$	26,339,837
Accounts Payable	$	1,846,247
Accrued Payroll and related expenses		224,139
Accrued Expense		518,816
Deferred Income Taxes		2,750,635
Total Liabilities Assumed	$	5,339,837
Net Assets Acquired	$	21,000,000

XML

Note 13 - Segment and Related Information (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended
	March 31
	2019			2018
Sales
Commercial Air Handling	$	11,744,561		$	9,115,937
Test and Measurement		274,032			1,071,847
Industrial Hose		1,797,091			1,690,916
Aerospace Components		8,020,403			-
Total Sales	$	21,836,087		$	11,878,700
Gross Profit
Commercial Air Handling	$	3,001,933		$	2,147,125
Test and Measurement		45,214			475,026
Industrial Hose		525,735			396,290
Aerospace Components		1,257,006			-
Total Gross Profit	$	4,829,888		$	3,018,441
Operating Income
Commercial Air Handling	$	1,782,987		$	880,106
Test and Measurement		45,214			(110,031	)
Industrial Hose		248,291			140,012
Aerospace Components		759,609			-
Unallocated Corporate General		(265,030	)		(267,002	)
Total Operating Income	$	2,571,071		$	643,085
Income Before Provision for Income Taxes
Commercial Air Handling	$	1,782,696		$	865,205
Test and Measurement		45,214			(128,949	)
Industrial Hose		192,479			100,189
Aerospace Components		562,956			-
Loss on sale of business		-			-
Unallocated Corporate General & Other		(254,473	)		(338,109	)
Income Before Provision for Income Taxes	$	2,328,872		$	498,336

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)		3 Months Ended
	Jan. 01, 2019	Mar. 31, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset		$ 9,725,871
Operating Lease, Liability, Total		9,817,505
Cumulative Effect on Retained Earnings, Net of Tax, Total		$ (73,126)
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset	$ 9,700,000
Operating Lease, Liability, Total	9,800,000
Cumulative Effect on Retained Earnings, Net of Tax, Total	$ 100,000

XML

Note 3 - Accounts Receivable (Details Textual) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Accounts Receivable, Allowance for Credit Loss, Ending Balance	$ 35,750	$ 35,000

XML

Note 4 - Inventory - Inventory (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Raw materials and component parts	$ 1,987,221	$ 2,313,664
Work-in-process	1,736,430	1,209,117
Finished products	1,893,087	2,201,693
Total inventory	5,616,738	5,724,474
Less: inventory reserves	281,744	226,492
Net inventory	$ 5,334,994	$ 5,497,982

XML

Note 5 - Goodwill and Other Intangible Assets, Net (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Amortization of Intangible Assets, Total	$ 93,591	$ 217,257
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	1 year
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	15 years

XML

Note 5 - Goodwill and Other Intangible Assets, Net - Summary of Intangible Assets (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Other intangibles, gross	$ 5,510,000	$ 5,510,000
Less: accumulated amortization	1,271,389	1,177,798
Intangible assets, net	4,238,611	4,332,202
Customer-Related Intangible Assets [Member]
Other intangibles, gross	4,970,000	4,970,000
Noncompete Agreements [Member]
Other intangibles, gross	200,000	200,000
Trademarks [Member]
Other intangibles, gross	$ 340,000	$ 340,000

XML

Note 6 - Property, Plant and Equipment, Net (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Depreciation, Total	$ 400,601	$ 139,746

XML

Note 6 - Property, Plant and Equipment, Net - Schedule of Property, Plant, and Equipment (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Property Plant and Equipment, Gross	$ 15,633,695	$ 15,310,248
Less: accumulated depreciation	2,406,734	2,006,133
Property plant & equipment, net	13,226,961	13,304,115
Land [Member]
Property Plant and Equipment, Gross	257,205	257,205
Building and Building Improvements [Member]
Property Plant and Equipment, Gross	1,816,376	1,709,165
Machinery and Equipment [Member]
Property Plant and Equipment, Gross	$ 13,560,114	$ 13,343,879

XML

Note 7 - Bank Debt (Details Textual) - USD ($)				3 Months Ended
	Jul. 05, 2019	Jul. 05, 2018	Jun. 01, 2017	Mar. 31, 2019
Line of Credit [Member] | First Francis [Member]
Repayments of Notes Payable			$ 500,000
J P Morgan Chase Bank [Member] | Term Debt [Member]
Long-term Debt, Total		$ 6,000,000
Debt Instrument, Periodic Payment, Total				$ 111,111
J P Morgan Chase Bank [Member] | Term Debt [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.25%
J P Morgan Chase Bank [Member] | Term Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
J P Morgan Chase Bank [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 12,000,000
Line of Credit Facility, Percent of Eligible Accounts		80.00%
Line of Credit Facility, Percent of Eligible Progress Billing Accounts		50.00%
Line of Credit Facility, Percent of Eligible Inventory		50.00%
Line of Credit Facility, Commitment Fee Percentage		0.25%
J P Morgan Chase Bank [Member] | Revolving Credit Facility [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		0.00%
J P Morgan Chase Bank [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.00%
J P Morgan Chase Bank [Member] | Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000,000
J P Morgan Chase Bank [Member] | Credit Line for Capital Expenditures [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 1,000,000
J P Morgan Chase Bank [Member] | Credit Line for Capital Expenditures [Member] | Maximum [Member] | Forecast [Member]
Debt Instrument, Term	5 years

XML

Note 7 - Bank Debt - Summary of Loan Balances (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Total Bank Debt	$ 8,990,563	$ 9,628,602
Less: current portion	1,333,333	1,333,333
Non-current bank debt	7,657,230	8,295,269
Less: unamortized debt costs	94,169	100,590
Net non-current bank debt	7,563,061	8,194,679
Term Debt [Member]
Total Bank Debt	5,111,111	5,444,444
Line of Credit [Member]
Total Bank Debt	$ 3,879,452	$ 4,184,158

XML

Note 8 - Notes Payable (Details Textual)	Dec. 29, 2018 USD ($)	Jul. 05, 2018 USD ($) $ / shares	Jul. 01, 2018 USD ($)	Jun. 03, 2016	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jul. 01, 2016 USD ($)	Dec. 30, 2012 $ / shares shares	Dec. 30, 2011 USD ($)
Line of Credit Facility, Fair Value of Amount Outstanding					$ 200,000	$ 200,000
CAD Enterprises, Inc. [Member]
Debt Instrument, Face Amount					9,000,000	9,000,000
Business Combination, Consideration Transferred, Total		$ 21,000,000	$ 21,000,000
Payments to Acquire Businesses, Gross		$ 12,000,000	$ 12,000,000
Promissory Note 1 [Member]
Debt Instrument, Face Amount					2,000,000	2,000,000
Promissory Note 2 [Member]
Debt Instrument, Face Amount					$ 2,768,662	$ 2,768,662
Seller Note [Member] | CAD Enterprises, Inc. [Member]
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Roundball LLC [Member] | Amendment No. 7 [Member]
Working Capital Funding	$ 1.43
Roundball LLC [Member] | Amendment No. 7 [Member] | Common Class B [Member]
Debt Instrument, Convertible, Number of Equity Instruments	75,000
Roundball LLC [Member] | Amendment No. 1 [Member] | Warrant to Purchase Class A Common Stock [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares								100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares								$ 2.50
First Francis [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Interest Rate During Period				4.00%
First Francis [Member] | Promissory Note 1 [Member]
Debt Instrument, Face Amount							$ 2,000,000
First Francis [Member] | Promissory Note 2 [Member]
Debt Instrument, Interest Rate, Stated Percentage		6.25%
Debt Instrument, Face Amount							$ 2,768,662
First Francis [Member] | Common Class B [Member] | Promissory Note 2 [Member]
Debt Instrument, Convertible Option, Maximum Debt Convertible		$ 648,000
Debt Instrument, Convertible, Stock Price Trigger | $ / shares		$ 6.48
Director [Member] | Roundball LLC [Member] | Convertible Notes Payable [Member]
Working Capital Funding									$ 467,000
Line of Credit Facility, Maximum Borrowing Capacity									$ 250,000
Debt Instrument, Interest Rate, Stated Percentage									0.25%

XML

Note 8 - Notes Payable - Notes Due to Related Parties (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Total notes payable – related party	$ 12,536,890	$ 12,642,065
Less current portion	2,124,892	1,555,663
Notes payable – related party non-current portion	10,411,998	11,086,402
CAD Enterprises, Inc. [Member]
Notes payable, related parties	9,000,000	9,000,000
Promissory Note 1 [Member] | First Francis [Member]
Notes payable, related parties	1,440,544	1,485,061
Promissory Note 2 [Member] | First Francis [Member]
Notes payable, related parties	$ 2,096,346	$ 2,157,004

XML

Note 8 - Notes Payable - Notes Due to Related Parties (Details) (Parentheticals) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CAD Enterprises, Inc. [Member]
Notes payable, face value	$ 9,000,000	$ 9,000,000
Promissory Note 1 [Member]
Notes payable, face value	2,000,000	2,000,000
Promissory Note 2 [Member]
Notes payable, face value	$ 2,768,662	$ 2,768,662

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Note 9 - Leases (Details Textual)	3 Months Ended
	Mar. 31, 2019
Lessee, Operating and Finance Lease, Renewal Term	10 years
Minimum [Member]
Operating and Finance Lease, Remaining Term	2 years
Maximum [Member]
Operating and Finance Lease, Remaining Term	15 years

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Note 9 - Leases - Lease Assets and Liabilities (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset	$ 9,725,871
Other current liabilities	659,830
Operating lease liabilities	9,157,675
Operating Lease, Liability, Total	$ 9,817,505
Operating Leases (in years) (Year)	13 years 182 days
Operating Leases	5.00%

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Note 10 - Earnings Per Common Share - Summary of Earnings Per Share Calculation (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Income	$ 1,745,458	$ 373,752
Weighted average shares of common stock outstanding - Basic (in shares)	2,755,265	2,911,057
Earnings Per Share - Basic (in dollars per share)	$ 0.63	$ 0.13
Warrants, Options and Convertible Notes (in shares)	423,155	358,796
Weighted average shares of common stock -Diluted (in shares)	3,178,420	3,269,853
Earnings Per Share - Diluted (in dollars per share)	$ 0.55	$ 0.11

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Note 11 - Acquisitions (Details Textual) - CAD Enterprises, Inc. [Member] - USD ($)	Jul. 05, 2018	Jul. 01, 2018
Business Combination, Consideration Transferred, Total	$ 21,000,000	$ 21,000,000
Payments to Acquire Businesses, Gross	$ 12,000,000	$ 12,000,000

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Note 11 - Acquisitions - Summary Assets Acquired and Liabilities Assumed of CAD Enterprises (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018	Jul. 01, 2018
Goodwill	$ 9,582,202	$ 9,582,202
CAD Enterprises, Inc. [Member]
Cash			$ 790,417
Accounts Receivable			2,221,635
Inventory			2,098,732
Fixed Assets			10,867,500
Prepaid and Other Assets			35,264
Intangibles Assets			3,000,000
Goodwill			7,326,289
Total Assets Acquired			26,339,837
Accounts Payable			1,846,247
Accrued Payroll and related expenses			224,139
Accrued Expense			518,816
Deferred Income Taxes			2,750,635
Total Liabilities Assumed			5,339,837
Net Assets Acquired			$ 21,000,000

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Note 12 - Dispositions (Details Textual) - Certain Assets from Test and Measurement business segment Sold Under an Asset Purchase Agreement to Hickock Waekon, LLC [Member] $ in Millions	Jun. 01, 2018 USD ($) shares
Disposal Group, Including Discontinued Operation, Consideration	$ 1.6
Disposal Group, Excluding Discontinued Operation, Net Assets Sold	2.7
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal	$ (1.2)
Director and His Affiliate [Member] | Common Class A [Member]
Disposal Group, Excluding Discontinued Operation, Consideration, Shares | shares	21,413
Director and His Affiliate [Member] | Common Class B [Member]
Disposal Group, Excluding Discontinued Operation, Consideration, Shares | shares	176,768

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Note 13 - Segment and Related Information (Details Textual)	3 Months Ended
	Mar. 31, 2019
Number of Reportable Segments	3

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Note 13 - Segment and Related Information - Information by Industry Segment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Sales	$ 21,836,087	$ 11,878,700
Gross profit	4,829,888	3,018,441
Operating income	2,571,071	643,085
Income (loss) before provision for income taxes	2,328,872	498,336
Operating Segments [Member] | Commercial Air Handling [Member]
Sales	11,744,561	9,115,937
Gross profit	3,001,933	2,147,125
Operating income	1,782,987	880,106
Income (loss) before provision for income taxes	1,782,696	865,205
Operating Segments [Member] | Test and Measurement [Member]
Sales	274,032	1,071,847
Gross profit	45,214	475,026
Operating income	45,214	(110,031)
Income (loss) before provision for income taxes	45,214	(128,949)
Operating Segments [Member] | Industrial Hose [Member]
Sales	1,797,091	1,690,916
Gross profit	525,735	396,290
Operating income	248,291	140,012
Income (loss) before provision for income taxes	192,479	100,189
Operating Segments [Member] | Aerospace [Member]
Sales	8,020,403
Gross profit	1,257,006
Operating income	759,609
Income (loss) before provision for income taxes	562,956
Corporate, Non-Segment [Member]
Operating income	(265,030)	(267,002)
Income (loss) before provision for income taxes	(254,473)	(338,109)
Consolidation, Eliminations [Member]
Income (loss) before provision for income taxes