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 June 30, 2017

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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post 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]

As of July 31, 2017, 2,114,886 shares of Class A Common Stock and 773,616 shares of Class B Common Stock were outstanding.

PART I

ITEM 1. FINANCIAL STATEMENTS

HICKOK INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

	(Unaudited)
	June 30, 2017		September 30, 2016
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents	$	1,030,560	$	3,060,734
Accounts receivable-less allowance for doubtful accounts		8,702,023		1,354,199
Costs in Excess of Billings and estimated costs		3,106,868
Inventories-less allowance for obsolete inventory		3,896,865		3,308,799
Prepaid Expenses and other current assets		715,740		43,085
Total Current Assets		17,452,056		7,766,817
PROPERTY, PLANT AND EQUIPMENT:
Land		233,479		233,479
Buildings and Leasehold Improvements		2,028,914		1,448,978
Machinery and Equipment		5,236,781		3,392,734
Total Property, Plant and Equipment		7,499,174		5,075,191
Less accumulated depreciation		3,974,633		3,771,268
Property, Plant and Equipment, Net		3,524,541		1,303,923
OTHER ASSETS:
Goodwill		2,409,048		1,777,656
Intangibles, net of accumulated amortization		2,330,914		1,250,909
Deferred income taxes-less valuation allowance of $500,000		3,330,600		3,330,600
Other non-current assets		3,250		4,850
Total Non-Current Other Assets		8,073,812		6,364,015
Total Assets	$	29,050,409	$	15,434,755

See accompanying notes to consolidated financial statements

2

HICKOK INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

	(Unaudited)
	June 30, 2017			September 30, 2016
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Convertible notes payable - related party	$	200,000		$	-
Short-term financing - related party		-			250,000
Notes payable - related party		142,726			379,761
Bank Debt - Current		500,000			-
Leases payable		42,896			59,369
Accounts payable		3,324,482			733,388
Billings in Excess of Costs & Earnings		647,276
Accrued payroll and related expenses		838,458			301,054
Accrued expenses		1,362,390			593,378
Accrued income taxes		77,744			31,000
Deferred revenue		503,646			-
Total Current Liabilities		7,639,618			2,347,950
LONG-TERM LIABILITIES:
Notes payable - related party		3,861,766			4,388,901
Bank Debt		7,700,000			-
Leases payable		151,208			144,997
Convertible notes payable - related party		-			200,000
Deferred revenue		377,735			-
Total Long-Term Liabilities		12,090,709			4,733,898
STOCKHOLDERS' EQUITY
Common shares - no par value
Class A 10,000,000 shares authorized, 2,130,681 and 2,090,394 shares issued		2,246,369			2,108,651
Class B 2,500,000 convertible shares authorized, 779,283 shares issued		710,272			710,272
Preferred 1,000,000 shares authorized, no shares outstanding		-			-
Contributed capital		1,741,901			1,741,901
Treasury shares		(264,841	)		(253,341	)
Class A - 15,795 shares
Class B - 5,667 and 667 shares
Retained earnings		4,886,381			4,045,424
Total Stockholders' Equity		9,320,082			8,352,907
Total Liabilities and Stockholders' Equity	$	29,050,409		$	15,434,755

See accompanying notes to consolidated financial statements

3

HICKOK INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
TOTAL SALES	$	7,220,626		$	1,530,244		$	12,923,867		$	3,953,740
COSTS AND EXPENSES:
Cost of Sales		4,191,480			769,430			7,933,969			2,204,495
Product Development		179,840			258,406			636,166			777,889
Selling, General and Administrative Expenses		1,808,920			507,326			3,354,796			1,488,461
Interest Charges		66,695			4,843			165,656			8,179
Legal matter		-			-			(50,000	)		-
Other income		(5,205	)		(1,666	)		(11,177	)		(5,556	)
Total Costs and Expenses		6,241,730			1,538,339			12,029,410			4,473,468
Income (Loss) before Provision for Income Taxes		978,896			(8,095	)		894,457			(519,728	)
Provision for Income Taxes		37,373			-			53,500			-
Net Income (Loss)	$	941,523		$	(8,095	)	$	840,957		$	(519,728	)
Earnings (Loss) Per Common Share - Basic	$	0.33		$	(0.00	)	$	0.29		$	(0.32	)
Earnings (Loss) Per Common Share - Diluted	$	0.31		$	(0.00	)	$	0.28		$	(0.32	)
Weighted Average Shares of Common Stock Outstanding - Basic		2,880,719			1,638,215			2,870,349			1,638,215
Weighted Average Shares of Common Stock Outstanding - Diluted		3,044,440			1,638,215			2,962,430			1,638,215

See accompanying notes to consolidated financial statements

4

HICKOK INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

	Nine Months Ended
	June 30
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers	$	15,510,323		$	4,261,359
Cash paid to suppliers and employees		(13,874,832	)		(4,542,057	)
Interest paid		(176,219	)		(7,329	)
Interest received		4,049			632
Income taxes paid		(51,500	)		-
Net Cash Provided by (Used in) Operating Activities		1,411,821			(287,395	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in purchase of business		(10,250,000	)
Capital Expenditures		(314,530	)		(26,435	)
Net Cash Used in Investing Activities		(10,564,530	)		(26,435	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Related Party Notes		(764,170	)		-
Payments on related party short-term financing		(250,000	)
Borrowing on short-term financing		-			250,000
Borrowing on bank debt		8,500,000			-
Payment on bank debt		(300,000	)
Payments on capital lease		(51,795	)		(26,524	)
Purchase of Class B shares		(11,500	)		-
Net Cash Provided by Financing Activities		7,122,535			223,476
Decrease in Cash and Cash Equivalents		(2,030,174	)		(90,354	)
Cash and Cash Equivalents at Beginning of Period		3,060,734			346,405
Cash and Cash Equivalents at End of Period	$	1,030,560		$	256,051

See accompanying notes to consolidated financial statements

5

HICKOK INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

	Nine Months Ended
	June 30
	2017			2016
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income (Loss)	$	840,957		$	(519,728	)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization		353,693			94,500
Loss on disposal of assets		2,667			-
Non-cash share-based compensation expense		129,832			-
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in accounts receivable		(2,586,456	)		307,619
Decrease (Increase) in excess of billing		873,956			-
Decrease (Increase) in inventories		6,437			(22,161	)
Decrease (Increase) in prepaid expenses and other assets		(610,393	)		58,856
Increase (Decrease) in accounts payable		864,476			(107,043	)
Increase (Decrease) in billings in excess of costs and earnings		52,732			(35,063	)
Increase (Decrease) in accrued payroll and related expenses		211,454			(64,375	)
Increase (Decrease) in accrued expenses		344,341			-
Increase (Decrease) in accrued income taxes		46,744			-
Increase (Decrease) in deferred revenue		881,381			-
Total Adjustments		570,864			232,333
Net Cash Provided by Operating Activities	$	1,411,821		$	(287,395	)

See accompanying notes to consolidated financial statements

6

HICKOK INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2017

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ended September 30, 2017. 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 September 30, 2016.

During the nine-month period ended June 30, 2017, there have been no changes to our significant accounting policies as determined in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

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 September 30, 2016. The Company completed the acquisition of certain assets of Air Enterprises Acquisition, LLC in Akron, Ohio on June 1, 2017. The acquired business, which will continue to operate under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. The significant accounting policies as a result of the acquisition of this business are disclosed below.

Revenue Recognition:

Revenue from contracts is recognized on the percentage-of-completion method measured by the percentage of costs incurred to date to total estimated costs for each contract. Contract costs include all direct costs and allocations of indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which it is determined a loss will be incurred. As long-term contracts extend over one or more years, revisions in costs and profits estimated during the work are reflected in the accounting period in which the facts requiring the changes become known.

Because of the inherent uncertainties in estimating costs, it is at least reasonably possible the estimates of costs and revenue will change in the next year. Revenue earned on contracts in progress in excess of billings are classified as an asset. Amounts billed in excess of revenue earned are classified as a liability. The length of the contracts varies, but is typically three to six months.

Revenue relating to replacement parts is recognized upon the shipment of goods or rendering of services to customers.

Deferred Commissions:

Commissions are earned based on the percentage-of-completion of the contract. Commissions are paid upon receipt of payment for units shipped.

Product Warranties:

The Company provides a warranty for its customer air handling business covering parts for 12 months from startup or 18 months from shipment, whichever comes first. The warranty reserve is maintained at a level which, in management’s judgment, is adequate to absorb potential warranties incurred. The amount of the reserve is based on management’s knowledge of the contracts and historical trends. Because of the uncertainties involved in the contracts, it is reasonably possible that management’s estimates may change in the near term. However, the amount of change that is reasonably possible cannot be precisely estimated at this time.

7

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 $117,750 and $10,000 at June 30, 2017 and September 30, 2016.

4.  INVENTORY

Inventory is valued at the lower of cost (first-in, first-out) or market and consist of:

	June 30, 2017		September 30, 2016
Raw materials and component parts	$	2,760,341	$	1,730,563
Work-in-process		592,670		438,447
Finished products		543,854		1,139,789
Inventories, net of reserve	$	3,896,865	$	3,308,799

The reserve for inventory obsolescence was $561,087 and $235,592 at June 30, 2017 and September 30, 2016, respectively.

5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Intangible assets relate to the purchase of businesses on June 1, 2017 and July 1, 2016. Goodwill is not amortized, but will be reviewed on an annual basis for impairment. Amortization of other intangibles is being amortized on a straight-line basis over period ranging from one year to 15 years. Intangible assets are as follows:

	June 30, 2017			September 30, 2016
Customer List: Backlog	$	1,970,000		$	1,280,000
Non-Compete Agreements		200,000			0
Trademarks		340,000			0
Other Intangibles		2,510,000			1,280,000
Accumulated Amortization		(179,086	)		(29,091	)
Other Intangibles, Net	$	2,330,914		$	1,250,909

Amortization of other intangibles was:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Intangible Amortization	$	91,813	$	-	$	149,995	$	-

6.  PROPERTY, PLANT AND EQUPMENT, NET

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

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Depreciation Expense	$	86,293	$	31,500	$	203,698	$	94,500

8

7.  BANK DEBT

The Company entered into a Credit Agreement on June 1, 2017 with JPMorgan Chase Bank, N.A. as lender (the “Credit Agreement”). The Credit Agreement is comprised of a revolving facility in the amount of $8,000,000, 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 as defined in the Credit Agreement) and a term A loan in the amount of $2,000,000, payable in consecutive monthly installments of $41,667 commencing on July 1, 2017.

The revolving facility includes a $3 million sublimit for the issuance of letters of credit.  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 ata 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 June 1, 2021. 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, including fixed charge coverage ratio and senior funded indebtedness to EBITDA ratio financial covenants.

In connection with entering into the Credit Agreement, the Company made a onetime prepayment of a portion of the outstanding principal under outstanding promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of $500,000.  The Company will not be required to make any of the scheduled quarterly payments due under these notes for the remainder of calendar 2017. 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:

	Current June 30, 2017		Total June 30, 2017		Total September 30, 2016
Term Debt	$	500,000	$	2,000,000	$	-
Revolving Debt		-		6,200,000		-
Total Bank Debt				8,200,000		-
Less: Current Portion				500,000
Non-Current Bank Debt				7,700,000

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.

There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible Loan. On December 20, 2016, management entered into Amendment No. 5 of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

● Continues to provide approximately $467,000 of liquidity to meet on going working capital requirements;

● Continues to allow $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.34%; and

● Extends the due date of the loan agreement from December 30, 2016 to December 30, 2017.

The outstanding balance on the Convertible Loan as of June 30, 2017, and September 30, 2016 was $200,000.

9

As part of the Convertible Loan Agreement between the Company and Roundball, the parties entered into a Warrant Agreement, dated December 30, 2012, whereby the Company issued a warrant to Roundball to purchase, at its option, up to 100,000 shares of Class A Common Stock of the Company at an exercise price of $2.50 per share, subject to certain anti-dilution and other adjustments. The warrant agreement, as amended, expires December 30, 2017.

Short-Term Financing
On June 3, 2016, management entered into an unsecured revolving credit agreement with First Francis Company Inc. First Francis Company Inc. became a major shareholder of the Company on July 1, 2016 when the Company completed the acquisition of Federal Hose Manufacturing, LLC. The agreement provides for a revolving credit facility of $250,000 with interest at 4.0% per annum and is unsecured. Each loan made under the credit arrangement will be due and payable in full on the expiration date of the revolver note. In addition, the agreement generally allows for borrowing based on an amount equal to eighty percent of eligible accounts receivables or $250,000. The revolving line of credit expired on May 31, 2017.

The Company had $250,000 outstanding borrowings on the credit facility at September 30, 2016. At June 30, 2017, the outstanding balance was $0.

Notes Payable – Related Party

Notes payable - related parties is a result of the acquisition of a business on July 1, 2016 and consists of the following:

	Current June 30, 2017		Total June 30, 2017		Total September 30, 2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	81,254	$	1,639,206	$	2,000,000
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		61,472		2,365,286		2,768,662
	$	142,726		4,004,492		4,768,662
Less current portion				142,726		379,761
			$	3,861,766	$	4,388,901

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9. EARNINGS PER COMMON SHARE

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

	Three Months Ended June 30,					Nine Months Ended June 30,
	2017		2016			2017		2016
Earnings (Loss) Per Share - Basic
Net Income (Loss)	$	941,523	$	(8,095	)	$	840,957	$	(519,728	)
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Earnings (Loss) Per Share - Basic	$	0.33	$	(0.00	)	$	0.29	$	(0.32	)
Earnings (Loss) Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Warrants, Options and Convertible Notes		163,721		-			92,081		-
Weighted average shares of common stock -Diluted		3,044,440		1,638,215			2,962,430		1,638,215
Earnings (Loss) Per Share - Diluted	$	0.31	$	(0.00	)	$	0.28	$	(0.32	)

10. ACQUISITIONS

The Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition, LLC on June 1, 2017 for $10,250,000. The acquired business will continue to operate under the name Air Enterprises (“AE”). AE manufactures custom air handling units under fixed price contracts. Its customers are typically in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and span all across the United States and worldwide. AE has one operating location in Northeastern Ohio. 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:

Accounts Receivable	$	4,761,368
Inventory		594,503
Costs in excess of billings and estimated costs		3,980,824
Fixed Assets		2,112,120
Prepaid and Other Assets		53,110
Intangibles Assets		1,230,000
Goodwill		631,392
Total Assets Acquired	$	13,363,317
Accounts Payable	$	1,726,618
Billings in Excess of costs and earnings		594,545
Accrued Payroll and related expenses		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed	$	3,113,317
Net Assets Acquired	$	10,250,000

Acquisition related costs were approximately $0.3 million for the three and nine months ended June 30, 2017.

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11. SEGMENT AND RELATED INFORMATION 

The Company operates three reportable segments: 1) commercial air handling, 2) test and measurement and 3) industrial hose. The Company's management evaluates segment performance based primarily on operating earnings before taxes.. Depreciation expense on assets used in manufacturing are considered part of each segment's operating performance. Depreciation expense on non-manufacturing assets is included in selling, general and administrative expenses.

Commercial Air Handling:
This segment manufactures custom air handling units under fixed price contract to customers in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and across the United States and worldwide.

Test and Measurement:
This segment consists of diagnostic tools and equipment sold to the automotive industry and indicators and gauges sold primarily to companies in the aircraft and locomotive industries. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

Industrial Hose:
This segment consists primarily of flexible metal and silicone hose products designed and manufactured or distributed primarily to the trucking industry and other industrial end-users. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

Information by industry segment is set forth below: 

	Three Months Ended						Nine Months Ended
	June 30						June 30
	2017			2016			2017			2016
Sales
Commercial Air Handling	$	3,343,945		$	-		$	3,343,945		$	-
Test and Measurement		2,452,854			1,530,244			5,049,991			3,953,740
Industrial Hose		1,423,827			-			4,529,931			-
Total Sales	$	7,220,626		$	1,530,244		$	12,923,867		$	3,953,740
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		607,471			-			607,471			-
Test and Measurement (1)		880,600			(8,095	)		(19,446	)		(519,728	)
Industrial Hose		(509,175	)		-			306,433			-
Income (Loss) Before Provision for Income Taxes	$	978,896		$	(8,095	)	$	894,458		$	(519,728	)

(1) Certain Expenses such as corporate general and administrative expenses, acquisition related expense and interest expense are included in the Test and Measurement division.

12. RECENTLY ISSUED ACCOUNTING STANDARDS

The Company did not incur any material impact to its financial condition or results of operations due to the adoption of any new accounting standards during the periods reported.

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RESULTS OF OPERATIONS.

The following discussion is intended to assist in the understanding of Hickok’s financial position at June 30, 2017 and September 30, 2016, results of operations for the three and nine months ended June 30, 2017 and 2016, and cash flows for the nine months ended June 30, 2017 and 2016, 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 September 30, 2016.

Summary

The Company has historically operated two divisions: 1) indicators and gauges that sell primarily to companies in the aircraft and locomotive industries and 2) automotive diagnostic tools and equipment that sell to OEMs and the aftermarket. These divisions are now being reported as the Test and Measurement segment. In July 2016, the Company expanded its markets with the acquisition of a manufacturer of flexible metal hose for use in heavy truck, drilling, and grain handling, as well as silicone hose sold to these same industries. The acquisition of this business resulted in a new segment for the Company, referred to as the Industrial Hose division. In June 2017, the Company expanded its markets further with the acquisition of a manufacturer of commercial air handling for customers in the health care, university, research, pharmaceutical and industrial manufacturing market segments. The acquisition of this business resulted in a new segment for the Company, referred to as the Commercial Air Handling division.

Results of Operations – Three Months Ended June 30, 2017 and 2016

Sales for the fiscal quarter ended June 30, 2017 increased to $7.2 million, an increase of approximately $5.7 million and 372% from sales of $1.5 million in the same fiscal quarter of the prior year. This increase in sales was primarily attributable to the addition of our Commercial Air Handling division on June 1, 2017 and the Industrial Hose division acquired July 1, 2016.

Cost of products sold in the fiscal quarter ended June 30, 2017 was $4.2 million or 58% of sales compared to $ 0.8 million or 50% of sales in the same fiscal quarter of the prior year. The increase in costs was associated with higher sales for the quarter in all three divisions. Gross margin (sales less costs of products sold) was approximately 42% for the third fiscal quarter of 2017 compared to 50% for the same fiscal quarter of 2016.

Product development expenditures were $0.2 million in the fiscal quarter ended June 30, 2017, which was a modest decrease from $0.3 million in same fiscal quarter of the prior year. Product development expenditures relate to the Test and Measurement division. The current level of product development expenses is expected to continue for the balance of the fiscal year. Management believes current resources will be sufficient to maintain current product development commitments and to continue to develop a reasonable flow of new products for both the OEM and aftermarket customers.

Selling, general and administrative expenses in the fiscal quarter ended June 30, 2017 were $1.8 million or 25% of sales compared to $0.5 million or 33% of sales, respectively, in the same fiscal quarter of the prior year. The increase in selling, general and administrative expenses was primarily related to costs related to the addition of the Commercial Air Handling division and the Industrial Hose division. In addition, the Company incurred higher sales expenses in support of higher sales and higher depreciation expenses related to fixed assets acquired with and intangibles allocated due to the purchase of the Commercial Air Handling division.

Interest charges in the fiscal quarter ended June 30, 2017 were approximately $67 thousand compared to $5 thousand in the same fiscal quarter of the prior year. The current year interest expense is primarily due to the recording of interest expense on bank debt related to the acquisitions on June 1, 2017 and notes related to the acquisition of a business on July 1, 2016.

Other income was $5 thousand in the fiscal quarter ended June 30, 2017 compared with $2 thousand in the same fiscal quarter of the prior year. Other income consists primarily of interest income on cash and cash equivalents and proceeds from the sale of scrap metal shavings.

13

Income tax expense is expected to be minimal as the Company believes it will be able to utilize the majority of the net operating loss and research and development credit carryforwards before they expire; however, there are certain limitations to the use of these tax credits that are expected to result in a small amount of alternative minimum tax. In addition, the Company expects to pay state and local income tax.

Net income in the fiscal quarter ended June 30, 2017 was $0.9 million or $0.31 per diluted share as compared to the net loss of $8 thousand or $0.00 per diluted share in the same fiscal quarter of the prior year.

Results of Operations – Nine Months Ended June 30, 2017 and 2016

Sales for the nine months ended June 30, 2017 increased to $12.9 million, an increase of approximately $8.9 million and 227% from sales of $4.0 million in the same period a year ago. This increase in sales was attributable to the addition of our Commercial Air Handling division on June 1, 2017 and the Industrial Hose division acquired July 1, 2016. Sales from our Test and Measurement division increased $1.1 million due to strong sales in the third fiscal quarter 2017 from emissions and OEMs.

Cost of products sold in the nine months ended June 30, 2017 was $7.9 million or 61% of sales compared to $2.2 million or 56% of sales in the same period a year ago. The increase in costs was associated with higher sales for the quarter in all three divisions. Gross margin (sales less costs of products sold) was approximately 39% for the nine months ended June 30, 2017 compared to 44% for the same period in 2016.

Product development expenditures in the nine months ended June 30, 2017 were $0.6 million or 5% of sales compared to $0.8 million or 20%, respectively, in the same period a year ago. The current level of product development expenses is expected to continue for the balance of the fiscal year. Management believes current resources will be sufficient to maintain current product development commitments and to continue to develop a reasonable flow of new products for both the OEM and aftermarket customers.

Selling, general and administrative expenses in the nine months ended June 30, 2017 were $3.4 million or 26% of sales compared to $1.5 million or 38%, respectively, in the same period a year ago. The increase in selling, general and administrative expenses was primarily related to costs related to the addition of the Commercial Air Handling division and the Industrial Hose division. In addition, the Company incurred higher sales expenses in support of higher sales and higher depreciation expenses related to fixed assets acquired with and intangibles allocated due to the purchase of the Commercial Air Handling division.

Interest charges in the nine-month period ended June 30, 2017 were $166 thousand compared to $8 thousand in the same period a year ago. The current year interest expense is primarily due to the recording of interest expense on bank debt related to the acquisitions on June 1, 2017 and notes related to the acquisition of a business on July 1, 2016.

Other income was $11 thousand in the nine-month period ended June 30, 2017 compared with $6 thousand in the same period a year ago. Other income consists primarily of interest income on cash and cash equivalents and proceeds from the sale of scrap metal shavings.

Income tax expense is expected to be minimal as the Company believes it will be able to utilize the majority of the net operating loss and research and development credit carryforwards before they expire; however, there are certain limitations to the use of these tax credits that are expected to result in a small amount of alternative minimum tax. In addition, the Company expects to pay state and local income tax.

Net income in the nine-month period ended June 30, 2017 was $0.8 million or $0.28 per diluted share as compared to the net loss of $0.5 million or ($0.32) per diluted share in the same period a year ago.

Liquidity and Capital Resources

Total current assets at June 30, 2017 increased to approximately $17.5 million from $7.8 million at September 30, 2016, an increase of $9.7 million. The increase in current assets is due to an increase in accounts receivable of $7.3 million, costs in excess of billings of $3.9 million, inventories of $0.6 million, and prepaid expenses and other assets of approximately $0.7 million, respectively. The increase in these assets is primarily a result of the acquisition of the Commercial Air Handling division on June 1, 2017. The increases in current assets were offset by a decrease in cash of approximately $2.0 million. The decrease in cash and cash equivalents was due cash used towards the purchase of the Commercial Air Handling division.

Cash provided by operating activities for the nine months ended June 30, 2017 was approximately $1.4 million and was adequate to fund the Company's operations as well as capital expenditures of approximately $0.3 million.

14

Capital expenditures were needed for building improvements as well as for tooling, machinery and equipment for product manufacturing. Cash flow used in investing activities of $10.6 million was primarily used for the purchase of the Commercial Air Handling division for $10.3 million.

Cash provided by financing activities of approximately $7.1 million was primarily related to the $8.5 million borrowing on the bank debt in connection with the purchase of the Commercial Air Handling division, offset by payment of the short-term financing of $0.3 million, payment of approximately $0.8 million for the related party notes, and $0.3 million repayment against the revolving credit facility with JPMorgan Chase Bank, N.A.

The Company entered into a Credit Agreement on June 1, 2017 with JPMorgan Chase Bank, N.A. as lender (the “Credit Agreement”). The Credit Agreement is comprised of a revolving facility in the amount of $8.0 million, subject to a borrowing base and a term A loan in the amount of $2.0 million, payable in consecutive monthly installments of $41,667 commencing on July 1, 2017. The Credit Agreement includes customary representations and warranties and applicable reporting requirements and covenants, including fixed charge coverage ratio and senior funded indebtedness to EBITDA ratio financial covenants. Management believes the Company is in compliance with debt covenants.

In addition to the Credit Agreement, the Company has several borrowing arrangements as discussed in Note 8 of this Quarter Report on Form 10-Q, including Convertible Notes Payable and outstanding notes related to the Company’s acquisition of its Industrial Hose division in 2016. The Convertible Notes provide liquidity to the Company for working capital. In December 2016, the Company entered into Amendment No. 5 of the Convertible Loan Agreement. The Convertible Loan Agreement, as amended, is between the Company and a major shareholder who is also affiliated with two Directors, as discussed in Note 4 of the Company’s Annual Report on Form 10-K for the year ended September 30, 2016. The amended Convertible Loan:

● Continues to provide approximately $467,000 of liquidity to meet on going working capital requirements;

● Continues to allow $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.34%; and

● Extends the due date of the loan agreement from December 30, 2016 to December 30, 2017.

The outstanding balance on the Convertible Loan as of June 30, 2017 and September 30, 2016 is $200,000.

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 has $1.8 million available to borrow on the revolving credit facility at June 30, 2017. Management believes the Company has adequate liquidity for working capital, capital expenditures and other strategic initiatives.

Off-Balance Sheet Arrangements

Hickok has no 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 Pronouncements

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 Form 10-K for the year ended September 30, 2016.

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 (a) the Company's ability to effectively integrate Federal Hose and Air Enterprises and manage the larger operations of the combined businesses, (b) the Company's dependence upon a limited number of customers and the automotive industry, (c) the highly competitive industry in which the Company operates, which includes several competitors with greater financial resources and larger sales organizations, (d) the acceptance in the marketplace of new products and/or services developed or under development by the Company including automotive diagnostic products and indicating instrument products, (e) the ability of the Company to further establish distribution and a customer base in the automotive aftermarket, (f) the Company's ability to capitalize on market opportunities including state automotive emissions programs and OEM tool programs, (g) the Company's ability to obtain cost effective financing and (h) the Company's ability to satisfy its interest payments.

15

ITEM 3. MARKET RISK

The Company is exposed to certain market risks from transactions that are entered into during the normal course of business. The Company has not entered into derivative financial instruments for trading purposes. The Company's primary market risks are exposure related to interest rate risk and equity market fluctuations. The Company's debt subject to interest rate risk relates to funds available under Credit Agreement with JPMorgan Chase Bank (“Chase Bank”). The Company had an outstanding balance on the revolving credit facility with Chase Bank of $6.2 million and an outstanding balance on the term A loan of $2.0 million. Interest for borrowings under the Credit Agreement accrue at prime rate or a LIBOR plus an applicable margin. In addition to floating rate debt under the Credit Agreement, the Company has fixed rate debt. At June 30, 2017, the Company has outstanding amounts of $0.2 million related to convertible notes that bear interest at 0.34%. The Company also outstanding amounts of $1.6 million and $2.4 million related to promissory notes with a related party, both of which bears interest at a rate of 4.0% per annum. The Company believes that the market risk relating to interest rate movements is minimal.

ITEM 4. CONTROLS AND PROCEDURES

As of June 30, 2017, 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 June 30, 2017 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 controls over financial reporting during the fiscal quarter ended June 30, 2017 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.

None.

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.

16

ITEM 6. EXHIBITS

2.1	Asset Purchase Agreement, dated June 1, 2017, by and among Hickok Acquisition A LLC, Air Enterprises Acquisition, LLC, A. Malachi Mixon III and William M. Weber (incorporated by reference to Exhibit 21 to the Company’s Form 8-K filed with the Commission on June 5, 2017).
10.1	Credit Agreement, dated June 1, 2017, among Hickok Incorporated, Hickok Acquisition A LLC, Supreme Electronics Corp., Federal Hose Manufacturing LLC, Waekon Corporation, Hickok Operating LLC and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Commission on June 5, 2017.)
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.

17

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 August 2017, 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)

 18

EX-31.1

Exhibit 31.1

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

I, Brian 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/ B. Powers

B. Powers

Chief Executive Officer

August 14, 2017

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/ K. J, Marek

K. J. Marek

Vice President, Finance
and Chief Financial Officer

August 14, 2017

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 June 30, 2017 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/ B. Powers

B. Powers

Chief Executive Officer

August 14, 2017

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 ending June 30, 2017 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/ K. J. Marek

K. J. Marek

Chief Financial Officer

August 14, 2017

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document Information [Line Items]
Entity Registrant Name	HICKOK INC
Entity Central Index Key	0000047307
Trading Symbol	hicka
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		773,616
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		2,114,886

XML

Consolidated Balance Sheet (Current Period Unaudited) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
CURRENT ASSETS:
Cash and Cash Equivalents	$ 1,030,560	$ 3,060,734
Accounts receivable-less allowance for doubtful accounts	8,702,023	1,354,199
Costs in Excess of Billings and estimated costs	3,106,868
Inventories-less allowance for obsolete inventory	3,896,865	3,308,799
Prepaid Expenses and other current assets	715,740	43,085
Total Current Assets	17,452,056	7,766,817
PROPERTY, PLANT AND EQUIPMENT:
Land	233,479	233,479
Buildings and Leasehold Improvements	2,028,914	1,448,978
Machinery and Equipment	5,236,781	3,392,734
Total Property, Plant and Equipment	7,499,174	5,075,191
Less accumulated depreciation	3,974,633	3,771,268
Property, Plant and Equipment, Net	3,524,541	1,303,923
OTHER ASSETS:
Goodwill	2,409,048	1,777,656
Intangibles, net of accumulated amortization	2,330,914	1,250,909
Deferred income taxes-less valuation allowance of $500,000	3,330,600	3,330,600
Other non-current assets	3,250	4,850
Total Non-Current Other Assets	8,073,812	6,364,015
Total Assets	29,050,409	15,434,755
CURRENT LIABILITIES:
Convertible notes payable - related party	200,000
Short-term financing - related party		250,000
Notes payable, related parties, current and non-current	142,726	379,761
Bank Debt - Current	500,000
Leases payable	42,896	59,369
Accounts payable	3,324,482	733,388
Billings in Excess of Costs & Earnings	647,276
Accrued payroll and related expenses	838,458	301,054
Accrued expenses	1,362,390	593,378
Accrued income taxes	77,744	31,000
Deferred revenue	503,646
Total Current Liabilities	7,639,618	2,347,950
LONG-TERM LIABILITIES:
Notes payable, related parties, non-current	3,861,766	4,388,901
Bank Debt	7,700,000
Leases payable	151,208	144,997
Convertible notes payable - related party		200,000
Deferred revenue	377,735
Total Long-Term Liabilities	12,090,709	4,733,898
STOCKHOLDERS' EQUITY
Preferred 1,000,000 shares authorized, no shares outstanding
Contributed capital	1,741,901	1,741,901
Treasury shares	(264,841)	(253,341)
Retained earnings	4,886,381	4,045,424
Total Stockholders' Equity	9,320,082	8,352,907
Total Liabilities and Stockholders' Equity	29,050,409	15,434,755
Common Class A [Member]
STOCKHOLDERS' EQUITY
Common stock	2,246,369	2,108,651
Common Class B [Member]
STOCKHOLDERS' EQUITY
Common stock	$ 710,272	$ 710,272

XML

Consolidated Balance Sheet (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands	Jun. 30, 2017	Sep. 30, 2016
Deferred income taxes - valuation allowance	$ 500,000	$ 500,000
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common Class A [Member]
Class of common stock, par value (in dollars per share)	$ 0	$ 0
Class of common stock, shares authorized (in shares)	10,000,000	10,000,000
Class of common stock, shares issued (in shares)	2,130,681	2,090,394
Treasury shares (in shares)	15,795	15,795
Common Class B [Member]
Class of common stock, par value (in dollars per share)	$ 0	$ 0
Class of common stock, shares authorized (in shares)	2,500,000	2,500,000
Class of common stock, shares issued (in shares)	779,283	779,283
Treasury shares (in shares)	5,667	667

XML

Consolidated Statement of Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Total sales	$ 7,220,626	$ 1,530,244	$ 12,923,867	$ 3,953,740
Costs and expenses:
Cost of Sales	4,191,480	769,430	7,933,969	2,204,495
Product Development	179,840	258,406	636,166	777,889
Selling, General and Administrative Expenses	1,808,920	507,326	3,354,796	1,488,461
Interest Charges	66,695	4,843	165,656	8,179
Legal matter			(50,000)
Other income	(5,205)	(1,666)	(11,177)	(5,556)
Total Costs and Expenses	6,241,730	1,538,339	12,029,410	4,473,468
Income (Loss) before Provision for Income Taxes	978,896	(8,095)	894,457	(519,728)
Provision for Income Taxes	37,373		53,500
Net Income (Loss)	$ 941,523	$ (8,095)	$ 840,957	$ (519,728)
Earnings (Loss) Per Common Share - Basic (in dollars per share)	$ 0.33	$ 0	$ 0.29	$ (0.32)
Earnings (Loss) Per Common Share - Diluted (in dollars per share)	$ 0.31	$ 0	$ 0.28	$ (0.32)
Weighted Average Shares of Common Stock Outstanding - Basic (in shares)	2,880,719	1,638,215	2,870,349	1,638,215
Weighted Average Shares of Common Stock Outstanding - Diluted (in shares)	3,044,440	1,638,215	2,962,430	1,638,215

XML

Consolidated Statement of Cash Flow (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers	$ 15,510,323	$ 4,261,359
Cash paid to suppliers and employees	(13,874,832)	(4,542,057)
Interest paid	(176,219)	(7,329)
Interest received	4,049	632
Income taxes paid	(51,500)
Net Cash Provided by (Used in) Operating Activities	1,411,821	(287,395)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in purchase of business	(10,250,000)
Capital Expenditures	(314,530)	(26,435)
Net Cash Used in Investing Activities	(10,564,530)	(26,435)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Related Party Notes	(764,170)
Payments on related party short-term financing	(250,000)
Borrowing on short-term financing		250,000
Borrowing on bank debt	8,500,000
Payment on bank debt	(300,000)
Payments on capital lease	(51,795)	(26,524)
Net Cash Provided by Financing Activities	7,122,535	223,476
Decrease in Cash and Cash Equivalents	(2,030,174)	(90,354)
Cash and Cash Equivalents at Beginning of Period	3,060,734	346,405
Cash and Cash Equivalents at End of Period	1,030,560	256,051
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income (Loss)	840,957	(519,728)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization	353,693	94,500
Loss on disposal of assets	2,667
Non-cash share-based compensation expense	129,832
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in accounts receivable	(2,586,456)	307,619
Decrease (Increase) in excess of billing	873,956
Decrease (Increase) in inventories	6,437	(22,161)
Decrease (Increase) in prepaid expenses and other assets	(610,393)	58,856
Increase (Decrease) in accounts payable	864,476	(107,043)
Increase (Decrease) in billings in excess of costs and earnings	52,732	(35,063)
Increase (Decrease) in accrued payroll and related expenses	211,454	(64,375)
Increase (Decrease) in accrued expenses	344,341
Increase (Decrease) in accrued income taxes	46,744
Increase (Decrease) in deferred revenue	881,381
Total Adjustments	570,864	232,333
Net Cash Provided by Operating Activities	1,411,821	(287,395)
Common Class B [Member]
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of Class B shares	$ (11,500)

XML

Note 1 - Basis of Presentation

9 Months Ended

Jun. 30, 2017

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 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. 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

and

nine

months ended

June 30, 2017

are

not

necessarily indicative of the results that

may

be expected for the year ended

September 30, 2017.

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

September 30, 2016.

During the

nine

-month period ended

June 30, 2017,

there have been

no

changes to our significant accounting policies as determined in our Annual Report on Form

10

-K for the fiscal year ended

September 30, 2016.

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2017

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

September 30, 2016.

The Company completed the acquisition of certain assets of Air Enterprises Acquisition, LLC in Akron, Ohio on

June 1, 2017.

The acquired business, which will continue to operate under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. The significant accounting policies as a result of the acquisition of this business are disclosed below.

Revenue Recognition:

Revenue from contracts is recognized on the percentage-of-completion method measured by the percentage of costs incurred to date to total estimated costs for each contract. Contract costs include all direct costs and allocations of indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which it is determined a loss will be incurred. As long-term contracts extend over

one

or more years, revisions in costs and profits estimated during the work are reflected in the accounting period in which the facts requiring the changes become known.

Because of the inherent uncertainties in estimating costs, it is at least reasonably possible the estimates of costs and revenue will change in the next year. Revenue earned on contracts in progress in excess of billings are classified as an asset. Amounts billed in excess of revenue earned are classified as a liability. The length of the contracts varies, but is typically

three

to

six

months.

Revenue relating to replacement parts is recognized upon the shipment of goods or rendering of services to customers.

Deferred Commissions:

Commissions are earned based on the percentage-of-completion of the contract. Commissions are paid upon receipt of payment for units shipped.

Product Warranties:

The Company provides a warranty for its customer air handling business covering parts for

12

months from startup or

18

months from shipment, whichever comes first. The warranty reserve is maintained at a level which, in management’s judgment, is adequate to absorb potential warranties incurred. The amount of the reserve is based on management’s knowledge of the contracts and historical trends. Because of the uncertainties involved in the contracts, it is reasonably possible that management’s estimates

may

change in the near term. However, the amount of change that is reasonably possible cannot be precisely estimated at this time.

XML

Note 3 - Accounts Receivable

9 Months Ended

Jun. 30, 2017

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

$117,750

and

$10,000

at

June 30, 2017

and

September 30, 2016.

XML

Note 4 - Inventory

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

4.

  INVENTORY

Inventory is valued at the lower of cost (

first

-in,

first

-out) or market and consist of:

	June 30 , 2017		September 30, 2016
Raw materials and component parts	$	2,760,341	$	1,730,563
Work-in-process		592,670		438,447
Finished products		543,854		1,139,789
Inventories, net of reserve	$	3,896,865	$	3,308,799

The reserve for inventory obsolescence was

$561,087

and

$235,592

at

June 30, 2017

and

September 30, 2016,

respectively.

XML

Note 5 - Goodwill and Other Intangible Assets, Net

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5.

GOODWILL AND OTHER INTA

NGIBLE ASSETS, NET

Intangible assets relate to the purchase of businesses on

June 1, 2017

and

July 1, 2016.

Goodwill is

not

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

one

year to

15

years. Intangible assets are as follows:

	June 30, 2017			September 30, 2016
Customer List: Backlog	$	1,970,000		$	1,280,000
Non-Compete Agreements		200,000			0
Trademarks		340,000			0
Other Intangibles		2,510,000			1,280,000
Accumulated Amortization		(179,086	)		(29,091	)
Other Intangibles, Net	$	2,330,914		$	1,250,909

Amortization of other intangibles was:

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Intangible Amortization	$	91,813	$	-	$	149,995	$	-

XML

Note 6 - Property, Plant and Equipment, Net

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6.

  PROPERTY, PLANT AND EQUPMENT,

NET

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

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Depreciation Expense	$	86,293	$	31,500	$	203,698	$	94,500

XML

Note 7 - Bank Debt

9 Months Ended

Jun. 30, 2017

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 (the “Credit Agreement”). The Credit Agreement is comprised of a revolving facility in the amount of

$8,000,000,

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 as defined in the Credit Agreement) and a term A loan in the amount of

$2,000,000,

payable in consecutive monthly installments of

$41,667

commencing on

July 1, 2017.

The revolving facility includes a

$3

million sublimit for the issuance of letters of credit.  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

June 1, 2021.

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, including fixed charge coverage ratio and senior funded indebtedness to EBITDA ratio financial covenants.

In connection with entering into the Credit Agreement, the Company made a onetime prepayment of a portion of the outstanding principal under outstanding promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of

$500,000.

  The Company will

not

be required to make any of the scheduled quarterly payments due under these notes for the remainder of calendar

2017.

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:

	Current June 30, 2017		Total June 30 , 2017		Total September 30, 2016
Term Debt	$	500,000	$	2,000,000	$	-
Revolving Debt		-		6,200,000		-
Total Bank Debt				8,200,000		-
Less: Current Portion				500,000
Non-Current Bank Debt				7,700,000

XML

Note 8 - Notes Payable

9 Months Ended

Jun. 30, 2017

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.

There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible Loan. On

December 20, 2016,

management entered into Amendment

No.

5

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

● Continues to provide approximately $467,000 of liquidity to meet on going working capital requirements;

● Continues to allow $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.34%; and

● Extends the due date of the loan agreement from December 30, 2016 to December 30, 2017.

The outstanding balance on the Convertible Loan as of

June 30, 2017,

and

September 30, 2016

was

$200,000

.

As part of the Convertible Loan Agreement between the Company and Roundball, the parties entered into a Warrant Agreement, dated 

December 30, 2012,

whereby the Company issued a warrant to Roundball to purchase, at its option, up to

100,000

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

$2.50

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

December 30, 2017.

Short-Term Financing

On

June 3, 2016,

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

July 1, 2016

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

$250,000

with interest at

4.0%

per annum and is unsecured. Each loan made under the credit arrangement will be due and payable in full on the expiration date of the revolver note. In addition, the agreement generally allows for borrowing based on an amount equal to

eighty

percent of eligible accounts receivables or

$250,000.

The revolving line of credit expired on

May 31, 2017.

The Company had

$250,000

outstanding borrowings on the credit facility at

September 30, 2016.

At

June 30, 2017,

the outstanding balance was

$0.

Notes Payable – Related Party

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

July 1, 2016

and consists of the following:

	Current June 30, 2017		Total June 30 , 2017		Total September 30 , 2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	81,254	$	1,639,206	$	2,000,000
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		61,472		2,365,286		2,768,662
	$	142,726		4,004,492		4,768,662
Less current portion				142,726		379,761
			$	3,861,766	$	4,388,901

XML

Note 9 - Earnings Per Common Share

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

9.

EARNINGS PER COMMON SHARE

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

	Three Months Ended June 30,					Nine Months Ended June 30,
	2017		2016			2017		2016
Earnings (Loss) Per Share - Basic
Net Income (Loss)	$	941,523	$	(8,095	)	$	840,957	$	(519,728	)
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Earnings (Loss) Per Share - Basic	$	0.33	$	(0.00	)	$	0.29	$	(0.32	)
Earnings (Loss) Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Warrants, Options and Convertible Notes		163,721		-			92,081		-
Weighted average shares of common stock - Diluted		3,044,440		1,638,215			2,962,430		1,638,215
Earnings (Loss) Per Share - Diluted	$	0.31	$	(0.00	)	$	0.28	$	(0.32	)

XML

Note 10 - Acquisitions

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

10

.

ACQUISITIONS

The Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition, LLC on

June 1, 2017

for

$10,250,000.

The acquired business will continue to operate under the name Air Enterprises (“AE”). AE manufactures custom air handling units under fixed price contracts. Its customers are typically in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and span all across the United States and worldwide. AE has

one

operating location in Northeastern Ohio. 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:

Accounts Receivable	$	4,761,368
Inventory		594,503
Costs in excess of billings and estimated costs		3,980,824
Fixed Assets		2,112,120
Prepaid and Other Assets		53,110
Intangibles Assets		1,230,000
Goodwill		631,392
Total Assets Acquired	$	13,363,317
Accounts Payable	$	1,726,618
Billings in Excess of costs and earnings		594,545
Accrued Payroll and related expenses		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed	$	3,113,317
Net Assets Acquired	$	10,250,000

Acquisition related costs were approximately

$0.3

million for the

three

and

nine

months ended

June 30, 2017.

XML

Note 11 - Segment and Related Information

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11.

SEGMENT AND RELATED INFORMATION

 

The Company operates

three

reportable segments:

1

) commercial air handling,

2

) test and measurement and

3

) industrial hose. The Company's management evaluates segment performance based primarily on operating earnings before taxes.. Depreciation expense on assets used in manufacturing are considered part of each segment's operating performance. Depreciation expense on non-manufacturing assets is included in selling, general and administrative expenses.

Commercial Air Handling

:

This segment manufactures custom air handling units under fixed price contract to customers in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and across the United States and worldwide.

Test and Measurement

:

This segment consists of diagnostic tools and equipment sold to the automotive industry and indicators and gauges sold primarily to companies in the aircraft and locomotive industries. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

Industrial

Hose:

This segment consists primarily of flexible metal and silicone hose products designed and manufactured or distributed primarily to the trucking industry and other industrial end-users. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

Information by industry segment is set forth below:

 

	Three Months Ended						Nine Months Ended
	June 30						June 30
	2017			2016			2017			2016
Sales
Commercial Air Handling	$	3,343,945		$	-		$	3,343,945		$	-
Test and Measurement		2,452,854			1,530,244			5,049,991			3,953,740
Industrial Hose		1,423,827			-			4,529,931			-
Total Sales	$	7,220,626		$	1,530,244		$	12,923,867		$	3,953,740
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		607,471			-			607,471			-
Test and Measurement (1)		880,600			(8,095	)		(19,446	)		(519,728	)
Industrial Hose		(509,175	)		-			306,433			-
Income (Loss) Before Provision for Income Taxes	$	978,896		$	(8,095	)	$	894,458		$	(519,728	)

( 1 ) Certain Expenses such as corporate general and administrative expenses, acquisition related expense and interest expense are included in the Test and Measurement division.

XML

Note 12 - Recently Issued Accounting Standards

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

12

. RECENTLY ISSUED ACCOUNTING STANDARDS

The Company did

not

incur any material impact to its financial condition or results of operations due to the adoption of any new accounting standards during the periods reported.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition:

Revenue from contracts is recognized on the percentage-of-completion method measured by the percentage of costs incurred to date to total estimated costs for each contract. Contract costs include all direct costs and allocations of indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which it is determined a loss will be incurred. As long-term contracts extend over

one

or more years, revisions in costs and profits estimated during the work are reflected in the accounting period in which the facts requiring the changes become known.

Because of the inherent uncertainties in estimating costs, it is at least reasonably possible the estimates of costs and revenue will change in the next year. Revenue earned on contracts in progress in excess of billings are classified as an asset. Amounts billed in excess of revenue earned are classified as a liability. The length of the contracts varies, but is typically

three

to

six

months.

Revenue relating to replacement parts is recognized upon the shipment of goods or rendering of services to customers.

Commissions, Policy [Policy Text Block]

Deferred Earned Commissions:

Commissions are earned based on the percentage-of-completion of the contract. Commissions are paid upon receipt of payment for units shipped.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties:

The Company provides a warranty for its customer air handling business covering parts for

12

months from startup or

18

months from shipment, whichever comes first. The warranty reserve is maintained at a level which, in management’s judgment, is adequate to absorb potential warranties incurred. The amount of the reserve is based on management’s knowledge of the contracts and historical trends. Because of the uncertainties involved in their contracts, it is reasonably possible that management’s estimates

may

change in the near term. However, the amount of change that is reasonable possible cannot be precisely estimated at this time.

XML

Note 4 - Inventory (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30 , 2017		September 30, 2016
Raw materials and component parts	$	2,760,341	$	1,730,563
Work-in-process		592,670		438,447
Finished products		543,854		1,139,789
Inventories, net of reserve	$	3,896,865	$	3,308,799

XML

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

9 Months Ended

Jun. 30, 2017

Notes Tables

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

	June 30, 2017			September 30, 2016
Customer List: Backlog	$	1,970,000		$	1,280,000
Non-Compete Agreements		200,000			0
Trademarks		340,000			0
Other Intangibles		2,510,000			1,280,000
Accumulated Amortization		(179,086	)		(29,091	)
Other Intangibles, Net	$	2,330,914		$	1,250,909

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Intangible Amortization	$	91,813	$	-	$	149,995	$	-

XML

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

9 Months Ended

Jun. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Depreciation Expense	$	86,293	$	31,500	$	203,698	$	94,500

XML

Note 7 - Bank Debt (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	Current June 30, 2017		Total June 30 , 2017		Total September 30, 2016
Term Debt	$	500,000	$	2,000,000	$	-
Revolving Debt		-		6,200,000		-
Total Bank Debt				8,200,000		-
Less: Current Portion				500,000
Non-Current Bank Debt				7,700,000

XML

Note 8 - Notes Payable (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Related Party Transactions [Table Text Block]

	Current June 30, 2017		Total June 30 , 2017		Total September 30 , 2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.	$	81,254	$	1,639,206	$	2,000,000
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022.		61,472		2,365,286		2,768,662
	$	142,726		4,004,492		4,768,662
Less current portion				142,726		379,761
			$	3,861,766	$	4,388,901

XML

Note 9 - Earnings Per Common Share (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

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

	Three Months Ended June 30,					Nine Months Ended June 30,
	2017		2016			2017		2016
Earnings (Loss) Per Share - Basic
Net Income (Loss)	$	941,523	$	(8,095	)	$	840,957	$	(519,728	)
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Earnings (Loss) Per Share - Basic	$	0.33	$	(0.00	)	$	0.29	$	(0.32	)
Earnings (Loss) Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		2,880,719		1,638,215			2,870,349		1,638,215
Warrants, Options and Convertible Notes		163,721		-			92,081		-
Weighted average shares of common stock - Diluted		3,044,440		1,638,215			2,962,430		1,638,215
Earnings (Loss) Per Share - Diluted	$	0.31	$	(0.00	)	$	0.28	$	(0.32	)

XML

Note 10 - Acquisitions (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

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

Accounts Receivable	$	4,761,368
Inventory		594,503
Costs in excess of billings and estimated costs		3,980,824
Fixed Assets		2,112,120
Prepaid and Other Assets		53,110
Intangibles Assets		1,230,000
Goodwill		631,392
Total Assets Acquired	$	13,363,317
Accounts Payable	$	1,726,618
Billings in Excess of costs and earnings		594,545
Accrued Payroll and related expenses		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed	$	3,113,317
Net Assets Acquired	$	10,250,000

XML

Note 11 - Segment and Related Information (Tables)

9 Months Ended

Jun. 30, 2017

Notes Tables

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

	Three Months Ended						Nine Months Ended
	June 30						June 30
	2017			2016			2017			2016
Sales
Commercial Air Handling	$	3,343,945		$	-		$	3,343,945		$	-
Test and Measurement		2,452,854			1,530,244			5,049,991			3,953,740
Industrial Hose		1,423,827			-			4,529,931			-
Total Sales	$	7,220,626		$	1,530,244		$	12,923,867		$	3,953,740
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		607,471			-			607,471			-
Test and Measurement (1)		880,600			(8,095	)		(19,446	)		(519,728	)
Industrial Hose		(509,175	)		-			306,433			-
Income (Loss) Before Provision for Income Taxes	$	978,896		$	(8,095	)	$	894,458		$	(519,728	)

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Note 3 - Accounts Receivable (Details Textual) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Allowance for Doubtful Accounts Receivable	$ 117,750	$ 10,000

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Note 4 - Inventory (Details Textual) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Inventory Valuation Reserves	$ 561,087	$ 235,592

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Note 4 - Inventory - Inventory (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Raw materials and component parts	$ 2,760,341	$ 1,730,563
Work-in-process	592,670	438,447
Finished products	543,854	1,139,789
Inventories, net of reserve	$ 3,896,865	$ 3,308,799

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Note 5 - Goodwill and Other Intangible Assets, Net (Details Textual)	9 Months Ended
	Jun. 30, 2017
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	1 year
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	15 years

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Note 5 - Goodwill and Other Intangible Assets, Net - Summary of Intangible Assets (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Other Intangibles	$ 2,510,000	$ 1,280,000
Accumulated Amortization	(179,086)	(29,091)
Other Intangibles, Net	2,330,914	1,250,909
Customer Lists [Member]
Customer List: Backlog	1,970,000	1,280,000
Noncompete Agreements [Member]
Customer List: Backlog	200,000	0
Trademarks [Member]
Customer List: Backlog	$ 340,000	$ 0

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Note 5 - Goodwill and Other Intangible Assets, Net - Amortization of Other Intangibles (Details) - USD ($)			3 Months Ended		9 Months Ended
	Jun. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Intangible Amortization	$ 179,086	$ 29,091
Other Intangible Assets [Member]
Intangible Amortization			$ 91,813		$ 149,995

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Note 6 - Property, Plant and Equipment, Net - Depreciation Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Depreciation Expense	$ 86,293	$ 31,500	$ 203,698	$ 94,500

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Note 7 - Bank Debt (Details Textual) - USD ($)	Jun. 01, 2017	Jun. 30, 2017
Long-term Debt		$ 2,000,000
Line of Credit [Member] | First Francis [Member]
Repayments of Notes Payable	$ 500,000
J P Morgan Chase Bank [Member]
Long-term Debt	2,000,000
Debt Instrument, Periodic Payment	$ 41,667
J P Morgan Chase Bank [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.25%
J P Morgan Chase Bank [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, Percent of Eligible Inventory	50.00%
Line of Credit Facility, Maximum Borrowing Capacity	$ 8,000,000
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, 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

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Note 7 - Bank Debt - Summary of Loan Balances (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Long-term Line of Credit	$ 6,200,000
Long-term Debt	2,000,000
Term Debt	500,000
Non-Current Bank Debt	7,700,000
Loans Payable [Member]
Long-term Debt	$ 8,200,000

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Note 8 - Notes Payable (Details Textual) - USD ($)	Jun. 03, 2016	Jun. 30, 2017	Dec. 20, 2016	Sep. 30, 2016	Dec. 30, 2012	Dec. 30, 2011
Line of Credit Facility, Fair Value of Amount Outstanding		$ 200,000		$ 200,000
Long-term Line of Credit		6,200,000
Roundball LLC [Member] | Amendment No. 5 [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 250,000
Debt Instrument, Interest Rate, Stated Percentage			0.34%
Working Capital Funding			$ 467,000
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					100,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 2.50
First Francis [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 250,000
Line of Credit Facility, Interest Rate During Period	4.00%
Line of Credit Facility, Maximum Borrowing Capacity, Percentage of Accounts Receivable	80.00%
Long-term Line of Credit		$ 0		$ 250,000
Director [Member] | Roundball LLC [Member] | Convertible Notes Payable [Member]
Line of Credit Facility, Maximum Borrowing Capacity						$ 250,000
Debt Instrument, Interest Rate, Stated Percentage						0.25%
Working Capital Funding						$ 467,000

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Note 8 - Notes Payable - Notes Due to Related Parties (Details) - USD ($)	Jun. 30, 2017	Sep. 30, 2016
Notes payable, related parties, current and non-current	$ 142,726	$ 379,761
Notes payable, related parties, non-current	3,861,766	4,388,901
First Francis [Member]
Notes payable, related parties, current and non-current	4,004,492	4,768,662
Notes payable, related parties, current and non-current	142,726	379,761
Notes payable, related parties, non-current	3,861,766	4,388,901
First Francis [Member] | Promissory Note 1 [Member]
Notes payable, related parties, current and non-current	1,639,206	2,000,000
Notes payable, related parties, current and non-current	81,254
First Francis [Member] | Promissory Note 2 [Member]
Notes payable, related parties, current and non-current	2,365,286	$ 2,768,662
Notes payable, related parties, current and non-current	$ 61,472

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Note 8 - Notes Payable - Notes Due to Related Parties (Details) (Parentheticals) - First Francis [Member]	9 Months Ended
	Jun. 30, 2017 USD ($)
Promissory Note 1 [Member]
Notes payable, quarterly payment	$ 60,911
Notes payable, interest rate	4.00%
Notes payable, face value	$ 2,000,000
Promissory Note 2 [Member]
Notes payable, quarterly payment	$ 84,321
Notes payable, interest rate	4.00%
Notes payable, face value	$ 2,768,662

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Note 9 - Earnings Per Common Share - Summary of Earnings Per Share Calculation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings (Loss) Per Share - Basic
Net Income (Loss)	$ 941,523	$ (8,095)	$ 840,957	$ (519,728)
Earnings (Loss) Per Share - Basic (in dollars per share)	$ 0.33	$ 0	$ 0.29	$ (0.32)
Earnings (Loss) Per Share - Diluted
Weighted average shares of common stock outstanding - Basic (in shares)	2,880,719	1,638,215	2,870,349	1,638,215
Warrants, Options and Convertible Notes (in shares)	163,721		92,081
Weighted average shares of common stock -Diluted (in shares)	3,044,440	1,638,215	2,962,430	1,638,215
Earnings (Loss) Per Share - Diluted (in dollars per share)	$ 0.31	$ 0	$ 0.28	$ (0.32)

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Note 10 - Acquisitions (Details Textual) - Air Enterprises [Member] - USD ($)		3 Months Ended	9 Months Ended
	Jun. 01, 2017	Jun. 30, 2017	Jun. 30, 2017
Business Combination, Consideration Transferred	$ 10,250,000
Business Combination, Acquisition Related Costs		$ 300,000	$ 300,000

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Note 10 - Acquisitions - Summary Assets Acquired and Liabilities Assumed (Details) - USD ($)	Jun. 30, 2017	Jun. 01, 2017	Sep. 30, 2016
Goodwill	$ 2,409,048		$ 1,777,656
Air Enterprises [Member]
Accounts Receivable		$ 4,761,368
Inventory		594,503
Costs in excess of billings and estimated costs		3,980,824
Fixed Assets		2,112,120
Prepaid and Other Assets		53,110
Intangibles Assets		1,230,000
Goodwill		631,392
Total Assets Acquired		13,363,317
Accounts Payable		1,726,618
Billings in Excess of costs and earnings		594,545
Accrued Payroll and related expenses		325,950
Accrued Expense		424,671
Lease Payable		41,533
Total Liabilities Assumed		3,113,317
Net Assets Acquired		$ 10,250,000

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Note 11 - Segment and Related Information (Details Textual)	9 Months Ended
	Jun. 30, 2017
Number of Reportable Segments	3

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Note 11 - Segment and Related Information - Information by Industry Segment (Details) - USD ($)		3 Months Ended		9 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Sales		$ 7,220,626	$ 1,530,244	$ 12,923,867	$ 3,953,740
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		978,896	(8,095)	894,458	(519,728)
Operating Segments [Member] | Commercial Air Handling [Member]
Sales		3,343,945		3,343,945
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		607,471		607,471
Operating Segments [Member] | Test and Measurement [Member]
Sales		2,452,854	1,530,244	5,049,991	3,953,740
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling	[1]	880,600	(8,095)	(19,446)	(519,728)
Operating Segments [Member] | Industrial Hose [Member]
Sales		1,423,827		4,529,931
Income (Loss) Before Provision for Income Taxes
Commercial Air Handling		$ (509,175)		$ 306,433

[1] Certain Expenses such as corporate general and administrative expenses, acquisition related expense and interest expense are included in the Test and Measurement division.