NOTES PAYABLE

Convertible Notes Payable

December 30, 2011,

management entered into a Convertible Loan Agreement (“Convertible Loan”) with Roundball, LLC (“Roundball”). The Convertible Loan provides approximately

$467,000

of liquidity to meet on- going working capital requirements of the Company and allows

$250,000

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

0.25%.

Roundball, a major shareholder of the Company, is an affiliate of Steven Rosen and Matthew Crawford, Directors of the Company.

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

December 30, 2012 (

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

100,000

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

$2.50

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

December 30, 2019.

December 11, 2019,

Roundball provided notice to the Company of its exercise of the Conversion Option and exercised the Warrants. On

December 18, 2019,

the Company issued

75,000

Class B Shares and

251,489

shares of the Company's Class A common stock (the “Class A Shares”) to Roundball following the Company's receipt on

December 11, 2019,

of a notice from Roundball of its exercise of the Conversion Option in respect of

$466,880

of the principal and interest amount outstanding under the Promissory Note between the Company and Roundball, thereupon retiring all outstanding debt incurred and accrued interest under the Promissory Note.

December 11, 2019,

Roundball exercised the Warrants for

100,000

of the Company's Class A Shares at an exercise price of

$2.50

per share, resulting in an aggregate exercise price of

$250,000.

The outstanding balance on the Convertible Loan as of

December 31, 2020

and

2019,

respectively was

and

$200,000.

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 to the Credit Agreement. 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.

July 9, 2019,

First Francis exercised its option to convert

$648,000

of existing indebtedness into

100,000

Class B Common Shares of the Company. First Francis is owned by Matthew Crawford, who serves on the Board of Directors of the Company, and Edward Crawford, who served on the Board of Directors of the Company until

June 17, 2019.

Notes Payable

–

Seller Note

Effective

July 1, 2018,

the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD. Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of

$21

million,

$12

million of which was payable in cash at closing, with the remainder paid in the form of a subordinated promissory note issued by the Company in favor of a Seller (the “Seller Note), which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement entered into in connection with the acquisition (the “Share Purchase Agreement”). The Seller Note bears interest at a rate of

four

percent (

) per annum and is payable in full

later than

June 30, 2023 (

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

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

not

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

second

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

September 30, 2018,

and subsequent interest is due on the

first

day of each calendar quarter thereafter up to and including

June 30, 2023.

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

four

(

) year amortization schedule, beginning on

September 30, 2019

and continuing on the last day of each calendar quarter thereafter up to and including the Maturity Date. The holders of the Seller Note and the Company agreed to defer the quarterly principal payment due

June 30, 2020

until

June 30, 2023;

quarterly interest was paid on the Seller Note.

Paycheck Protection Program Notes

The Company applied for and was approved for a loan in the amount of

$3,679,383

(the “PPP Loan”) on

April 10, 2020

pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On

May 5, 2020,

the Company instructed JPMorgan to repay in full the Promissory Note pursuant to the Paycheck Protection Program under the CARES Act. On

June 4, 2020,

Federal Hose and CAD each entered into unsecured loans with First Federal Savings and Loan Association of Lakewood, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), in the amounts of

$253,071

and

$1,200,766,

respectively (the “PPP Loans”).

The PPP Loans each have a

two

-year term and bear interest at a rate of

1.00%

per annum. Monthly principal and interest payments are deferred until

seven

months after the date of the loan, and will begin

January 4, 2021,

in monthly installments based on the principal balance of the PPP Loan outstanding following the deferral period and taking into consideration any remaining unforgiven portion of the PPP Loan. The PPP Loans

may

be prepaid at any time prior to maturity with

prepayment penalties. The loans contain events of default and other provisions customary for a loan of this type. The PPP Loans

may

be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. Federal Hose and CAD each intend to use their entire respective PPP Loan amounts for qualifying expenses and to apply for forgiveness of the loans in accordance with the terms of the CARES Act. The PPP Loans

may

be forgivable, partially or in full, if certain conditions are met, principally based on having been disbursed for permissible purposes and on maintaining certain average levels of employment and payroll as required by the CARES Act. Federal Hose and CAD intend to use the loan proceeds only for permissible purposes, and as of

December 31, 2020

have used all proceeds from the PPP Loans to retain employees and maintain payroll. The PPP Loans are unsecured and guaranteed by the U.S. Small Business Administration. The Company received notice of forgiveness from First Federal Savings and Loan Association of Lakewood of

100%

of the CAD and Federal Hose PPP loans on

January

22,2021

and

January 29, 2021,

respectively.

Notes Payable

Notes payable consist of the following:

	December 31, 2020		December 31, 2019

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016	$	1,108,829	$	1,302,776

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016.		941,867		1,248,380

In connection with the CARES Act, Federal Hose entered into a promissory note on June 4, 2020 for a $253,071 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installments to begin January 4, 2021. Any unforgiven portion of the note is payable on or before June 4, 2022.		253,071		-

In connection with the CARES Act, CAD entered into a promissory note on June 4, 2020 for a $1,200,766 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installment to begin January 4, 2021. Any unforgiven portion of the note is payable on or before June 4, 2022.		1,200,766		-

In connection with the CAD acquisition, the Company entered into a promissory note on July 1, 2018 for a $9,000,000 loan due to the Loudermilks, payable in quarterly installments beginning September 30, 2018.		6,187,500		7,875,000

Total notes payable		9,692,033		10,426,156

Less current portion		2,782,479		2,749,459

Notes payable – non-current portion	$	6,909,554	$	7,676,697

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

December 31:

	Related Party Notes		Seller Note		PPP Loans		Total Principal Payments

2021		532,479		2,250,000		-		2,782,479
2022		1,518,217		2,250,000		1,453,837		5,222,054
2023		-		1,687,500		-		1,687,500
2024		-		-		-		-
Total principal payments	$	2,050,696	$	6,187,500	$	1,453,837		9,692,033