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

FORM 10-Q

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

For the quarterly period ended June 30, ~~2021~~2022

☐ 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: 000-000147

CRAWFORD UNITED CORPORATION

(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, Suite 200, Cleveland, Ohio	44108
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number (216) 243-2614

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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 ☒
	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 ☒

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

As of July ~~21, 2021, 2,677,058~~25, 2022, 2,744,239 shares of Class A Common ~~Shares~~Stock and 731,848 shares of Class B Common ~~Shares~~Stock were outstanding.

	(Unaudited)				(Unaudited)
	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,437,566	$	6,194,276	$	3,151,409	$	1,494,415
Accounts receivable less allowance for doubtful accounts		17,769,648		12,021,692		22,115,955		18,387,744
Contract assets		2,112,091		3,735,557		2,040,011		2,111,057
Inventories-less allowance for obsolete inventory		14,581,588		11,030,960		20,819,135		16,585,437
Investments		1,479,259		1,534,400		1,084,175		1,518,244
Refundable tax asset						604,815		1,316,595
Prepaid expenses and other current assets		1,153,091		657,496		1,782,820		1,112,068
Total Current Assets		40,533,243		35,174,381		51,598,320		42,525,560

Property, plant and equipment, net		15,361,850		11,290,783		14,966,382		15,609,202

Operating right of use asset, net		8,284,495		8,856,820		8,731,603		8,998,776

OTHER ASSETS:
Goodwill		14,183,954		11,505,852		16,157,277		14,404,618
Intangibles, net of accumulated amortization		9,294,360		7,558,309		10,146,440		9,336,564
Other non-current assets		97,617		106,638		113,511		88,591
Total Non-Current Other Assets		23,575,931		19,170,799		26,417,228		23,829,773
Total Assets	$	87,755,519	$	74,492,783	$	101,713,533	$	90,963,311

	(Unaudited)						(Unaudited)
	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES:
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Notes payable – current		2,925,607			2,782,479		$	2,968,833		$	2,946,885
Bank debt – current		1,333,333			1,333,333			777,778			1,444,444
Leases payable – current		1,149,104			1,136,300			1,687,313			1,241,681
Accounts payable		12,009,800			9,230,032			14,640,013			11,460,364
Unearned revenue		1,496,361			820,002			4,100,220			2,881,535
Contingent liability - current		750,000			0
Contingent liability – short term								750,000			750,000
Accrued expenses		2,133,889			2,242,924			3,694,103			3,136,690
Total Current Liabilities		21,798,094			17,545,070			28,618,260			23,861,599

LONG-TERM LIABILITIES:
Notes payable – long-term		5,754,221			5,455,717
Bank debt – long-term		16,305,142			12,174,428
PPP loans		0			1,453,837
Leases payable – long-term		7,367,122			7,901,357
Notes payable								2,222,888			4,275,377
Bank debt								21,661,715			16,175,436
Leases payable								7,280,843			7,985,628
Contingent liability – long-term								0			750,000
Deferred income taxes		2,429,828			2,429,828			3,275,370			3,275,370
Contingent liability – long-term		750,000			0
Total Long-Term Liabilities		32,606,313			29,415,167			34,440,816			32,461,811
STOCKHOLDERS' EQUITY
Class A common shares - 10,000,000 shares authorized, 2,718,787 issued at June 30, 2021 and 2,595,087 issued at December 31, 2020		5,365,581			3,896,705
Class B common shares - 2,500,000 shares authorized, 914,283 shares issued at June 30, 2021 and 954,283 at December 31, 2020		1,465,522			1,465,522
Class A common shares - 10,000,000 shares authorized, 2,791,449 issued at June 30, 2022 and 2,720,787 issued at December 31, 2021								7,311,949			5,393,823
Class B common shares - 2,500,000 shares authorized, 914,283 shares issued at June 30, 2022 and December 31, 2021								1,465,522			1,465,522
Contributed capital		1,741,901			1,741,901			1,741,901			1,741,901
Treasury shares		(1,979,085	)		(1,938,052	)		(2,121,822	)		(1,981,113	)
Class A common shares – 41,729 shares held at June 30, 2021 and 39,467 shares held at December 31, 2020
Class B common shares – 182,435 shares held at June 30, 2021 and December 31, 2020
Class A common shares – 47,210 shares held at June 30, 2022 and 41,844 shares held at December 31, 2021
Class B common shares – 182,435 shares held at June 30, 2022 and December 31, 2021
Retained earnings		26,757,193			22,366,470			30,256,907			28,019,768
Total Stockholders' Equity		33,351,112			27,532,546			38,654,457			34,639,901

Total Liabilities and Stockholders' Equity	$	87,755,519		$	74,492,783		$	101,713,533		$	90,963,311

	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021			2020		2022		2021		2022		2021

Total Sales	$	26,449,885	$	18,576,588	$	50,443,889		$	43,858,162	$	31,902,027	$	26,449,885	$	62,904,773	$	50,443,889
Cost of Sales		20,669,595		15,077,549		38,660,678			34,150,980		25,133,536		20,669,595		49,769,877		38,660,678
Gross Profit		5,780,290		3,499,039		11,783,211			9,707,182		6,768,491		5,780,290		13,134,897		11,783,211

Operating Expenses:
Selling, general and administrative expenses		3,660,493		2,968,519		7,337,954			6,038,513		4,392,964		3,660,493		9,362,048		7,337,954
Operating Income		2,119,797		530,520		4,445,257			3,668,669		2,375,527		2,119,797		3,772,849		4,445,257

Other (Income) and Expenses:
Interest charges		238,696		235,289		457,314			532,710		154,065		238,696		415,081		457,314
Other (income) expense, net		286,644		(12,394		(1,275,473	)		58,967		625,792		286,644		121,006		(1,275,473	)
Total Other (Income) and Expenses		525,340		222,895		(818,159	)		591,677		779,857		525,340		536,088		(818,159	)
Income before Provision for Income Taxes		1,594,457		307,625		5,263,416			3,076,992		1,595,670		1,594,457		3,236,761		5,263,416

Provision for Income Taxes		347,152		78,788		872,694			772,585		424,406		347,152		999,622		872,694
Net Income	$	1,247,305	$	228,837	$	4,390,722		$	2,304,407	$	1,171,264	$	1,247,305	$	2,237,139	$	4,390,722

Net Income Per Common Share - Basic	$	0.37	$	0.07	$	1.29		$	0.70	$	0.34	$	0.37	$	0.65	$	1.29

Net Income Per Common Share - Diluted	$	0.37	$	0.07	$	1.29		$	0.69	$	0.34	$	0.37	$	0.65	$	1.29

Weighted Average Shares of Common Stock Outstanding
Basic		3,408,906		3,317,665		3,400,917			3,314,573		3,464,765		3,408,906		3,449,465		3,400,917
Diluted		3,409,800		3,319,264		3,401,805			3,316,217		3,464,765		3,409,800		3,449,465		3,401,805

	COMMON SHARES - NO PAR VALUE													COMMON SHARES - NO PAR VALUE
	CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL		CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL

Balance at March 31, 2021	$	5,285,333	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	25,509,887	$	32,023,559
Balance at March 31, 2022														$	6,292,130	$	1,465,522	$	1,741,901	$	(2,046,822	)	$	29,085,643	$	36,538,374
Share-based compensation expense		14,333		0		0		0			0		14,333		19,807		-		-		-			-		19,807
Stock awards		65,915		0		0		0			0		65,915		0		-		-		-			-		0
Acquisition															1,000,012		0		0		0			0		1,000,012
Repurchase of shares															0		0		0		(75,000	)		0		(75,000	)
Net Income		0		0		0		0			1,247,305		1,247,305		-		-		-		-			1,171,264		1,171,264
Balance at June 30, 2021	$	5,365,581	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	26,757,193	$	33,351,112
Balance at June 30, 2022														$	7,311,949	$	1,465,522	$	1,741,901	$	(2,121,822	)	$	30,256,907	$	38,654,457

	COMMON SHARES ISSUED				TREASURY SHARES				COMMON SHARES OUTSTANDING
	CLASS A		CLASS B		CLASS A		CLASS B		CLASS A			CLASS B

Balance at March 31, 2022		2,752,987		914,283		44,210		182,435		2,708,777			731,848
Acquisition		38,462		0		0		0		38,462			0
Repurchase of shares		0		0		3,000		0		(3,000	)		0
Balance at June 30, 2022		2,791,449		914,283		47,210		182,435		2,744,239			731,848

	COMMON SHARES - NO PAR VALUE
	CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL

Balance at March 31, 2021	$	5,285,333	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	25,509,887	$	32,023,559
Share-based compensation expense		14,333		-		-		-			-		14,333
Stock awards		65,915		-		-		-			-		65,915
Net Income		-		-		-		-			1,247,305		1,247,305
Balance at June 30, 2021	$	5,365,581	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	26,757,193	$	33,351,112

	COMMON SHARES ISSUED					TREASURY SHARES				COMMON SHARES OUTSTANDING
	CLASS A		CLASS B			CLASS A		CLASS B		CLASS A		CLASS B

Balance at March 31, 2021		2,678,787		954,283			41,729		182,435		2,637,058		771,848
Share conversion		40,000		(40,000	)		0		0		40,000		(40,000	)
Balance at June 30, 2021		2,718,787		914,283			41,729		182,435		2,677,058		731,848

COMMON SHARES -
NO PAR VALUE

CLASS A

CLASS B

CONTRIBUTED
CAPITAL

TREASURY
SHARES

RETAINED
EARNINGS

TOTAL

Balance at March 31, 2020
$ 3,636,272 $ 1,465,522 $ 1,741,901 $ (1,905,780
)
$ 18,602,653 $ 23,540,568
Share-based compensation expense
19,292 0 0 0 0 19,292
Stock awards
211,050 0 0 0 0 211,050
Repurchase of shares
0 0 0 (29,032
)
0 (29,032
)
Net Income
0 0 0 0 228,837 228,837
Balance at June 30, 2020
$ 3,866,614 $ 1,465,522 $ 1,741,901 $ (1,934,812
)
$ 18,831,490 $ 23,970,715

COMMON SHARES
ISSUED

TREASURY SHARES

COMMON SHARES
OUTSTANDING

CLASS A

CLASS B

CLASS A

CLASS B

CLASS A

CLASS B

Balance at March 31, 2020
2,576,837 954,283 37,208 182,435 2,539,629 771,848
Stock awards
15,000 0 0 0 15,000 0
Repurchase of shares
0 0 1,727 0 (1,727
)
0
Balance at June 30, 2020
2,591,837 954,283 38,935 182,435 2,552,902 771,848

	COMMON SHARES - NO PAR VALUE														COMMON SHARES - NO PAR VALUE
	CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL			CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL

Balance at December 31, 2020	$	3,896,705	$	1,465,522	$	1,741,901	$	(1,938,052	)	$	22,366,470	$	27,532,546
Balance at December 31, 2021															$	5,393,823	$	1,465,522	$	1,741,901	$	(1,981,113	)	$	28,019,768	$	34,639,901
Share-based compensation expense		30,000		0		0		0			0		30,000			36,114		-		-		-			-		36,114
Stock awards		379,876		0		0		0			0		379,876			882,000		-		-		-			-		882,000
Issuance for acquisition		1,059,000		0		0		0			0		1,059,000			1,000,012		0		0		0			0		1,000,012
Repurchase of shares		0		0		0		(41,033	)		0		(41,033	)		0		0		0		(140,709	)		0		(140,709	)
Net Income		0		0		0		0			4,390,722		4,390,722			-		-		-		-			2,237,139		2,237,139
Balance at June 30, 2021	$	5,365,581	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	26,757,193	$	33,351,112
Balance at June 30, 2022															$	7,311,949	$	1,465,522	$	1,741,901	$	(2,121,822	)	$	30,256,907	$	38,654,457

	COMMON SHARES ISSUED				TREASURY SHARES				COMMON SHARES OUTSTANDING
	CLASS A		CLASS B		CLASS A		CLASS B		CLASS A			CLASS B

Balance at December 31, 2021		2,720,787		914,283		41,844		182,435		2,678,943			731,848
Stock awards		32,200		0		0		0		32,200			0
Acquisition		38,462		0		0		0		38,462			0
Repurchase of shares		0		0		5,366		0		(5,366	)		0
Balance at June 30, 2022		2,791,449		914,283		47,210		182,435		2,744,239			731,848

	COMMON SHARES - NO PAR VALUE
	CLASS A		CLASS B		CONTRIBUTED CAPITAL		TREASURY SHARES			RETAINED EARNINGS		TOTAL

Balance at December 31, 2020	$	3,896,705	$	1,465,522	$	1,741,901	$	(1,938,052	)	$	22,366,470	$	27,532,546
Share-based compensation expense		30,000		-		-		-			-		30,000
Stock awards		379,876		-		-		-			-		379,876
Issuance for acquisition		1,059,000		0		0		0			0		1,059,000
Repurchase of shares		0		0		0		(41,033	)		0		(41,033	)
Net Income		-		-		-		-			4,390,722		4,390,722
Balance at June 30, 2021	$	5,365,581	$	1,465,522	$	1,741,901	$	(1,979,085	)	$	26,757,193	$	33,351,112

	COMMON SHARES ISSUED					TREASURY SHARES				COMMON SHARES OUTSTANDING
	CLASS A		CLASS B			CLASS A		CLASS B		CLASS A			CLASS B

Balance at December 31, 2020		2,595,087		954,283			39,467		182,435		2,555,620			771,848
Stock awards		23,700		0			0		0		23,700			0
Acquisition		60,000		0			0		0		60,000			0
Stock conversion		40,000		(40,000	)		0		0		40,000			(40,000	)
Repurchase of shares		0		0			2,262		0		(2,262	)		0
Balance at June 30, 2021		2,718,787		914,283			41,729		182,435		2,677,058			731,848

COMMON SHARES -
NO PAR VALUE

CLASS A

CLASS B

CONTRIBUTED
CAPITAL

TREASURY
SHARES

RETAINED
EARNINGS

TOTAL

Balance at December 31, 2019
$ 3,599,806 $ 1,465,522 $ 1,741,901 $ (1,905,780
)
$ 16,527,083 $ 21,428,532
Share-based compensation expense
55,758 0 0 0 0 55,758
Stock awards
211,050 0 0 0 0 211,050
Repurchase of shares
0 0 0 (29,032
)
0 (29,032
)
Net Income
0 0 0 0 2,304,407 2,304,407
Balance at June 30, 2020
$ 3,866,614 $ 1,465,522 $ 1,741,901 $ (1,934,812
)
$ 18,831,490 $ 23,970,715

COMMON SHARES
ISSUED

TREASURY SHARES

COMMON SHARES
OUTSTANDING

CLASS A

CLASS B

CLASS A

CLASS B

CLASS A

CLASS B

Balance at December 31, 2019
2,576,837 954,283 37,208 182,435 2,539,629 771,848
Stock awards
15,000 0 0 0 15,000 0
Repurchase of shares
0 0 1,727 0 (1,727
)
0
Balance at June 30, 2020
2,591,837 954,283 38,935 182,435 2,552,902 771,848

	Six Months Ended June 30,
	2021			2020			Six Months Ended June 30,
							2022			2021
Cash Flows from Operating Activities
Net Income	$	4,390,722		$	2,304,407		$	2,237,139		$	4,390,722
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,518,494			1,237,997			1,855,257			1,518,494
Unrealized gain on investments in equity securities		(67,928	)		0
Unrealized loss (gain) on investments in equity securities								434,069			(67,928	)
Forgiveness of PPP loan		(1,453,837	)		0			0			(1,453,837	)
Amortization of right of use assets								647,471			572,326
Loss on disposal of assets								15,370			0
Non-cash share-based compensation expense		409,876			266,808			918,114			409,876
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable		(3,186,784	)		2,250,667			(3,100,400	)		(3,186,784	)
Decrease (Increase) in inventory		(1,781,567	)		(460,092	)
Decrease (Increase) in inventories								(2,219,722	)		(1,781,567	)
Decrease (Increase) in contract assets		1,623,466			(2,305,374	)		71,046			1,623,466
Decrease (Increase) in prepaid expenses & other assets		(205,280	)		57,510			(599,793	)		(205,280	)
Increase (Decrease) in accounts payable		1,462,832			2,427,507			2,603,596			1,462,832
Increase (Decrease) in lease liability								(639,452	)		(572,788	)
Increase (Decrease) in accrued expenses		(533,593	)		1,281,168			1,383,324			(533,131	)
Increase (Decrease) in unearned revenue		676,359			(1,276,516	)		843,202			676,359
Total adjustments		(1,537,962	)		3,479,675			2,212,082			(1,537,962	)
Net Cash Provided by Operating Activities	$	2,852,760		$	5,784,082		$	4,449,221		$	2,852,760

Cash Flows from Investing Activities
Cash paid for acquisition		(7,089,381	)		(9,400,000	)
Cash paid for business acquisitions								(4,331,739	)		(7,089,381	)
Sale of equity securities		123,069			0			0			123,069
Capital expenditures		(1,418,663	)		(193,059	)		(324,967	)		(1,418,663	)
Net Cash (Used in) Investing Activities	$	(8,384,975	)	$	(9,593,059	)	$	(4,656,706	)	$	(8,384,975	)

Cash Flows from Financing Activities
Payments on notes		(1,287,456	)		(808,850	)		(2,030,541	)		(1,287,456	)
Borrowings on notes		0			1,453,837
Payments on bank debt		(3,630,634	)		(3,427,080	)		(1,916,666	)		(3,630,634	)
Borrowings on bank debt		7,734,627			11,315,041			6,702,395			7,734,627
Payments on contingent liability								(750,000	)		0
Share repurchase		(41,033	)		(29,032	)		(140,709	)		(41,033	)

Net Cash Provided by Financing Activities	$	2,775,504		$	8,503,916		$	1,864,479		$	2,775,504
Net Increase (decrease) in cash and cash equivalents		(2,756,710	)		4,694,939			1,656,994			(2,756,710	)
Cash and cash equivalents at beginning of period		6,194,276			2,232,499			1,494,415			6,194,276
Cash and cash equivalents at end of period	$	3,437,566		$	6,927,438		$	3,151,409		$	3,437,566

Supplemental disclosures of cash flow information
Interest paid	$	362,353		$	477,332

Supplemental disclosures of noncash financing activity
Interest Paid							$	438,210		$	362,353
Supplemental disclosures of noncash financing and investing activity
Forgiveness of PPP loan	$	1,453,837		$	0		$	0		$	1,453,837

Supplemental disclosures of noncash investing activity
Issuance of Class A common shares in business acquisitions	$	1,059,000		$	0
Additions to ROU assets obtained from new operating lease liabilities							$	380,298		$	0
Issuance of Class A common shares in business acquisition							$	1,000,012		$	1,059,000

CRAWFORD UNITED CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, ~~2021~~2022

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Crawford United Corporation and its wholly-owned subsidiaries (the “Company”). Significant intercompany transactions and balances have been eliminated in the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the ~~fiscal~~ year ~~ended~~ending December 31, ~~2021.~~2022. 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 ~~fiscal~~ year ~~ended~~ending December 31, ~~2020.~~2021.

During the six-month period ended June 30, ~~2021,~~2022, there have been no changes to our 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 fiscal year ended December 31, ~~2020.~~2021.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard will be effective for smaller reporting companies for fiscal years beginning after December 15, ~~2022.~~ 2022.The Company is in the process of analyzing the impact to its financial statements.

Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts of certain assets and liabilities and disclosure of contingencies at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Accounting for "Financial Instruments" requires the Company to disclose estimated fair values of financial instruments. Financial instruments held by the Company include, among others, accounts receivable, accounts payable, and notes payable. The carrying amounts reported in the consolidated balance sheet for assets and liabilities qualifying as financial instruments is a reasonable estimate of fair value.

As defined in FASB ASC 820, "Fair Value Measurements", fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

* Level 1: Quoted market prices in active markets for identical assets or liabilities.

* Level 2: Inputs to the valuation methodology include: * Quoted prices for similar assets or liabilities in active markets;

* Quoted prices for identical assets or similar assets or liabilities in inactive markets;

* Inputs other than quoted prices that are observable for the asset or liability;

* Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Stock: The stock market value is based on valuation of market quotes from independent active market sources, and is considered a level 1 investment.

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 ~~$17,759~~$98,804 and ~~$19,973~~$75,930 at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

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

	June 30, 2021		December 31, 2020
					June 30, 2022		December 31, 2021
Raw materials and component parts	$	3,994,065	$	3,897,133	$	3,762,339	$	3,904,865
Work-in-process		4,445,012		3,449,252		4,434,122		3,949,647
Finished products		6,523,181		3,999,920		13,181,987		9,183,532
Total inventory	$	14,962,258	$	11,346,305	$	21,378,448	$	17,038,044
Less: inventory reserves		380,670		315,345		559,313		452,607
Net inventory	$	14,581,588	$	11,030,960	$	20,819,135	$	16,585,437

For the identified reporting units, ~~a Step~~ 1impairment ~~test~~testing was performed as of December 31, ~~2020~~2021 using an income approach based on management’s determination of the prospective financial information, with consideration given to the existing uncertainty in the global economy and aerospace and defense industry, particularly the commercial sector. The results of this test indicated the fair value exceeded carrying value for all reporting units tested. As a result of the impairment testing performed as of December 31, ~~2020,~~2021, no indefinite-lived intangible assets or goodwill was determined to be impaired. Management updated their assessment during the ~~second~~first quarter of fiscal ~~2021~~2022 and validated the assumptions used in the analyses performed as of December 31, ~~2020~~2021 and determined that the resulting conclusions remained appropriate as of June 30, ~~2021.~~2022.

Goodwill increased by $1.8 million from $14.4 million at December 31, 2021 to $16.2 million at June 30, 2022. The increase in Goodwill was driven by the addition of $1.9 million of Goodwill related to the acquisitions of Knitting Machinery Company of America, Reverso Pumps and Separ America in the Industrial and Transportation Products segment in the quarter, partially offset by a decrease of $0.2 million related to a purchase accounting adjustment to Goodwill for Global-Tek and Global-Tek Colorado, also in the Industrial and Transportation Products segment. Goodwill by reportable segment is as follows:

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

	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Customer list intangibles	$	8,741,000	$	7,700,000	$	9,316,000	$	8,741,000
Non-compete agreements		200,000		200,000		200,000		200,000
Trademarks		3,092,000		1,930,000		4,474,149		3,599,149
Total intangible assets		12,033,000		9,830,000		13,990,149		12,540,149
Less: accumulated amortization		2,738,640		2,271,691		3,843,709		3,203,585
Intangible assets, net	$	9,294,360	$	7,558,309	$	10,146,440	$	9,336,564

Amortization of intangibles assets was: ~~$261,025~~$320,895 and ~~$179,340~~$261,025 for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively and ~~$466,949~~$640,124 and ~~$358,682~~$466,949 for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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

	June 30, 2021		December 31, 2020
					June 30, 2022		December 31, 2021
Land	$	228,872	$	228,872	$	231,034	$	231,034
Buildings and improvements		2,740,383		2,061,887		2,955,118		2,961,431
Machinery & equipment		20,537,353		14,329,462		22,112,000		21,612,759
Total property, plant & equipment		23,506,608		16,620,221		25,298,152		24,805,224
Less: accumulated depreciation		8,144,758		5,329,438		10,331,770		9,196,022
Property plant & equipment, net	$	15,361,850	$	11,290,783	$	14,966,382	$	15,609,202

Depreciation expense was ~~$661,628~~$585,412 and ~~$425,769~~$661,628 for the three months ended June, ~~30, 2021~~2022 and ~~2020,~~2021, respectively and ~~$1,170,565~~$1,181,246 and ~~$860,453~~$1,170,565 for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~Unrealized gains were $67,928 in the~~ ~~first~~~~six~~ ~~months of~~ ~~2021~~ ~~compared to $0 in the same period of last year. Unrealized losses were $0 in the~~ ~~first~~~~six~~ ~~months of~~ ~~2021~~ ~~compared to $0 in the same period of last year. Realized gains were $152,748 in the~~ ~~first~~~~six~~ ~~months of~~ ~~2021~~ ~~compared to $0 in the same period of last year. Realized losses were $0 in the~~ ~~first~~~~six~~ ~~months of~~ ~~2021~~ ~~compared to $0 in the same period of last year.~~

Investments by fair value level in the hierarchy as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are as follows:

The Company entered into a Credit Agreement on June 1, 2017with JPMorgan Chase Bank, N.A. as lender, which was subsequently amended in connection with funding the acquisition of CAD Enterprises, Inc. (“CAD”) on July 5, 2018 ~~and further amended on~~ ~~September 30, 2019,~~ ~~December 30, 2019~~ ~~and~~ ~~March 2, 2021~~ (as amended, the “Credit Agreement”). ~~The~~ ~~March 2, 2021~~ ~~amendment increased the maximum borrowing amount under the revolving credit facility from $20,000,000 to $30,000,000.~~ As amended, the Credit Agreement is comprised of a revolving facility in the amount of ~~$30,000,000~~$12,000,000, subject to a borrowing base (determined based on 80% of Eligible Accounts, plus 50% of Eligible Progress Billing Accounts, plus 50% of Eligible Inventory, minus Reserves, each as defined in the Credit Agreement) and a term A loan in the amount of $6,000,000. Outstanding borrowings on the term A loan are payable in consecutive monthly installments, which currently amount to $111,111 per ~~month.~~month and a final payment of $222,223 on the maturity date. The Credit Agreement was amended on September 30, 2019 to expand the revolving loan amount from $12,000,000 to $20,000,000, subject to a borrowing base, and to extend the maturity of revolving facility from June 1, 2021 to June 1, 2024. The Credit Agreement was amended on December 30, 2019 to eliminate the borrowing base. The Credit Agreement was amended on March 2, 2021 to expand the revolving loan amount from $20,000,000 to $30,000,000.

The revolving facility under the Credit Agreement includes a $3 million sublimit for the issuance of letters of credit thereunder. Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) (0.25%) for Prime Rate loans and (ii) 1.75% for LIBOR loans. The maturity date of the revolving facility is June 1, 2024.Interest for borrowings under the term A loan accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.25% for Prime Rate loans and (ii) 2.25% for LIBOR loans. The maturity date of the term A loan is December 1, 2022. The Credit Agreement includes a commitment fee on the unused portion of the revolving facility of 0.25% per annum payable quarterly. The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants. The financial covenants under the Credit Agreement include a minimum fixed charge coverage ratio, a maximum senior funded debt to EBITDA ratio and a maximum total funded debt to EBITDA ratio. LIBOR is a common benchmark interest rate (or reference rate) used to set and make adjustments to interest rates for certain floating rate securities and other financial instruments. Financial institutions are discontinuing the use of LIBOR and adopting alternative reference rates including the Federal Reserve Bank of New York’s Secured Overnight Financing Rate (SOFR).

	June 30, 2021		December 31, 2020
					June 30, 2022		December 31, 2021
Term debt	$	2,111,111	$	2,777,778	$	777,778	$	1,444,444
Revolving debt		15,687,371		10,825,797		21,763,887		16,311,493
Total Bank debt		17,798,482		13,603,575		22,541,665		17,755,937
Less: current portion		1,333,333		1,333,333		777,778		1,444,444
Non-current bank debt		16,465,149		12,270,242		21,763,887		16,311,493
Less: unamortized debt costs		160,007		95,814		102,172		136,057
Net non-current bank debt	$	16,305,142	$	12,174,428	$	21,661,715	$	16,175,436

The Company had ~~$14.3~~$8.2 million and ~~$9.2~~$13.7 million available to borrow on the revolving credit facility at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The Company had two separate outstanding promissory notes with First Francis Company Inc. (“First Francis”), which were originally issued in July 2016in connection with the acquisition of Federal Hose Manufacturing (“Federal Hose”) and which were amended in July 2018in connection with acquisition of CAD. The first promissory note was issued with original principal in the amount of $2,000,000, and the second was issued with original principal in the amount of $2,768,662. The promissory notes each had an interest rate of 6.25% per annum, which was increased from 4.0% per annum as part of the July 2018amendments to the Credit Agreement.

In connection with the Komtek Forge acquisition, on January 15, 2021,the Company refinanced the outstanding First Francis promissory notes in the aggregate amount of $2,077,384, including accrued interest payable through the refinance date and combined this amount with an existing First Francis promissory note carried by Komtek Forge in the amount of $1,702,400 into one note for a combined $3,779,784 loan due to First Francis Company, payable in quarterly installments beginning April 15, 2021.The interest rate on the refinanced loan remained at 6.25% per annum. First Francis is owned by Edward Crawford and Matthew Crawford, both of whom serve on the Board of Directors of the Company.

Effective July 1, 2018, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD. Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of $21 million, $12 million of which was payable in cash at closing, with the remainder paid in the form of a subordinated promissory note issued by the Company in favor of a Seller (the “Seller Note”), which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement entered into in connection with the acquisition (the “Share Purchase Agreement”). The Seller Note bears interest at a rate of four percent (4%) per annum and is payable in full no later than June 30, 2023 (the “Maturity Date”). The Maturity Date, with respect to any then-outstanding portion of the original principal amount which is subject to an indemnification claim by the Company (asserted in accordance with the terms of the Share Purchase Agreement) pending as of the date thereof, will be automatically extended until such time as any claim relating to such disputed amount is no longer pending, pursuant to the terms of the Seller Note and subject to additional conditions set forth therein and in the Share Purchase Agreement. The Company is not permitted to prepay any amounts due and owing under the Seller Note. Payment of the Seller Note is secured by a second-priority security interest in the assets of CAD. Interest accrued on the original principal amount is due and payable in arrears on the first day of each calendar quarter up to and including June 30, 2023. The Company is required to make quarterly principal payments, the amount of which is calculated based on a four (4) year amortization schedule, on the last day of each calendar quarter up to and including the Maturity Date. The holders of the Seller Note and the Company agreed to defer the quarterly principal payment due June 30, 2020 until June 30, 2023; quarterly interest was paid on the Seller Note.

~~The Company applied for and was approved for a loan in the amount of $3,679,383 (the “PPP Loan”) on~~ ~~April 10, 2020~~ ~~pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On~~ ~~May 5, 2020,~~ ~~the Company instructed JPMorgan to repay in full the Promissory Note pursuant to the Paycheck Protection Program under the CARES Act. On~~ ~~June 4, 2020,~~ Federal Hose and CAD each entered into unsecured loans with First Federal Savings and Loan Association of Lakewood, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), in the amounts of $253,071 and $1,200,766, respectively (the “PPP Loans”). The Company received notice of forgiveness from First Federal Savings and Loan Association of Lakewood of ~~100%~~ ~~of the CAD and Federal Hose PPP loans on~~ ~~January 22, 2021~~ ~~and~~ ~~January 29, 2021~~ ~~respectively.~~

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

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

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,

	2021		2020		2021		2020		2022		2021		2022		2021

Earnings Per Share - Basic
Net Income	$	1,247,305	$	228,837	$	4,390,722	$	2,304,407	$	1,171,264	$	1,247,305	$	2,237,139	$	4,390,722
Weighted average shares of common stock outstanding - Basic		3,408,906		3,317,665		3,400,917		3,314,573		3,464,765		3,408,906		3,449,465		3,400,917
Earnings Per Share - Basic	$	0.37	$	0.07	$	1.29	$	0.70	$	0.34	$	0.37	$	0.65	$	1.29

Earnings Per Share - Diluted
Weighted average shares of common stock outstanding - Basic		3,408,906		3,317,665		3,400,917		3,314,573		3,464,765		3,408,906		3,449,465		3,400,917
Warrants, Options and Convertible Notes		894		1,599		888		1,644		0		894		0		888
Weighted average shares of common stock -Diluted		3,409,800		3,319,264		3,401,805		3,316,217		3,464,765		3,409,800		3,449,465		3,401,805
Earnings Per Share - Diluted	$	0.37	$	0.07	$	1.29	$	0.69	$	0.34	$	0.37	$	0.65	$	1.29

Effective January 15, 2021, the Company completed the acquisition of all of the issued and outstanding membership interests of KT Acquisition LLC (dba Komtek Forge, “Komtek”), a Massachusetts limited liability company and supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics. alternative energy, petrochemical, and defense industries, pursuant to a Membership Interest Purchase Agreement entered into as of January 15, 2021. The Company acquired Komtek in consideration of the payment by the Company of an aggregate purchase price of ~~$3.6~~$3.7 million, subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Membership Interest Purchase Agreement, which was comprised of cash, the issuance of 60,000 Class A common shares of the Company and the assumption of ~~approximately $1,702,000 of~~certain specified liabilities of the seller.

Cash Consideration Transferred			$	840,551
Assumed Debt				1,753,757
Fair Value of Stock Consideration				1,059,000
Total Consideration			$	3,653,308

Cash	$	75,701	$	75,701
Accounts Receivable		1,502,713		1,502,713
Inventory		1,595,859		1,595,859
Fixed Assets		434,197		434,197
Prepaid and Other Assets		280,258		280,258
Goodwill		832,306		832,306
Total Assets Acquired	$	4,721,034	$	4,721,034

Accounts Payable	$	843,817	$	843,817
Accrued Expense		223,909		223,909
Assumed debt		1,753,757
Total Liabilities Assumed	$	2,821,483	$	1,067,726

Equity Issuance	$	1,059,000

Net Assets Acquired	$	840,551
Total Fair Value			$	3,653,308

Acquisition transaction costs incurred were:	$	145,900	$	147,400

Goodwill has an assigned value of $0.8 million and represents the expected synergies generated by combining the operations of Komtek and the Company. The Company purchases forgings to manufacture products for customers in the Industrial and Transportation Products segment and the Komtek acquisition strengthens the Company’s supply chain.

Effective March 1, 2021, MTA Acquisition Company, LLC, a Delaware limited liability company (“~~MTA”~~Global-Tek Colorado”) and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the membership interests of Global-Tek-Manufacturing LLC, a Puerto Rico limited liability company and specialist in machining parts from wrought, rounds, castings or extrusions and providing in house anodizing and other finishing and assembly operations and substantially all of the assets of Machining Technology L.L.C., a Colorado limited liability company with CNC machining capability, pursuant to a Membership Interest and Asset Purchase Agreement entered into March 2, 2021 and effective as of March 1, 2021. The stock and assets were transferred and assigned to MTA in exchange for approximately $4.9 million in cash and the repayment of remaining outstanding indebtedness and transaction costs totaling ~~approximately $1.6~~$1.4 million, subject to customary post-closing adjustments. The Purchase Agreement also includes a post-closing “earnout” that provides for up to an aggregate of $1.5 million in additional consideration to the certain sellers (up to $750,000 per year) if specified performance targets are met in the two years following closing. If earned, the additional consideration is payable in cash or, at the election of each such seller, in Company common shares up to a maximum aggregate amount of 61,475 shares.

Goodwill has an assigned value of $1.9 million and represents the expected synergies generated by combining the operations of Global-Tek Colorado, Global-Tek-Manufacturing LLC and the Company. The Company utilizes machined parts for customers in the Industrial and Transportation Products segment and the acquisition of Global-Tek Colorado and Global-Tek-Manufacturing allows the Company to strengthen its supply chain. Intangible asset, trademark has an assigned value of $1.2 million which represents the expected value of the Global-Tek trade name in the market. Intangible asset, customer list has an assigned value of $1.0 million which represents the expected value of the list of the customers of Global-Tek to the Company.

Global-Tek has a contingent consideration of $1.5 million as of the acquisition date which represents $750 thousand of additional consideration per year for a period of two years following the acquisition date if specified performance targets are met. The additional consideration will be earned if Global-Tek achieves specified profitability targets and is payable either in cash or in common shares of the Company up to an aggregate maximum amount of 61,475 shares. The range of estimates for the outcome of the contingent consideration is between $0 and approximately $1.5 million. The maximum amount of the payment is the greater of the value of 61,475 common shares of the Company and $1.5 million. The first year performance target has been achieved by Global-Tek and was paid out in the second quarter of 2022 in the amount of $750 thousand.

Effective July 1, 2021, Crawford EH Acquisition Company, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the operating assets of Emergency Hydraulics LLC, (“Emergency Hydraulics”) a Florida limited liability company and provider of hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles, pursuant to an Asset Purchase Agreement entered into July 1, 2021. The acquired business is strategically important to the Company’s growing industrial hose platform and will expand its offerings and diversify its customer base in this important market segment. The assets were transferred and assigned to Emergency Hydraulics in exchange for approximately $0.3 million of repayment of remaining outstanding indebtedness and transaction costs.

Intangible asset, customer list has an assigned value of $0.5 million which represents the expected value of the list of the customers of Emergency Hydraulics to the Company.

Effective January 10, 2022, Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), a Delaware limited liability company and indirect wholly-owned subsidiary of Crawford United Corporation (the “Company”), completed the acquisition (the “Reverso Transaction”) of substantially all the assets of Reverso Pumps, Inc., a Florida corporation and developer, designer, manufacturer, seller and distributor of oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems (“Reverso”), pursuant to an Asset Purchase Agreement (the “Reverso Asset Purchase Agreement”) entered into and effective January 10, 2022 by and among Reverso Pumps, the Seller, the seller parties named therein and the Seller Parties’ representatives named therein. Upon the closing of the Transaction, the assets were transferred and assigned to Reverso Pumps in exchange for approximately $2.6 million in cash, subject to customary post-closing adjustments.

Additionally, effective on January 10, 2022, Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), a Delaware limited liability company and indirect wholly-owned subsidiary of the Company, completed the acquisition (the “Separ Transaction,” and with the Reverso Transaction, the “Transactions”) of substantially all the assets of Separ of the Americas, LLC, a Florida limited liability company and developer, designer, manufacturer, seller and distributor of oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems (“Separ”) pursuant to an Asset Purchase Agreement (the “Separ Asset Purchase Agreement,” and together with the Reverso Asset Purchase Agreement, the “Purchase Agreements”) by and among Separ America, the Seller, the seller parties named therein and the Seller Parties’ representative named therein. Upon the closing of the Transaction, the assets were transferred and assigned to Separ America in exchange for approximately $1.6 million in cash, subject to customary post-closing adjustments.

Goodwill has an assigned value of $1.4 million and represents the expected synergies generated by combining the operations of Reverso, Separ, and the Company. The Company sells marine hoses and related products and the acquisition of Reverso Pumps and Separ America will allow the Company to expand its offerings to customers in the strategically important marine and defense markets. Intangible assets, customer list and trademarks has an assigned value of $1.3 million which represents the expected value of the list of the customers and trademarks of Reverso Pumps and Separ America.

Effective May 1, 2022, Knitting Machinery Company of America, LLC, a Delaware limited liability company (“Knitting Machinery”) and indirect wholly-owned subsidiary of Crawford United Corporation, completed the acquisition of all of the operating assets of KMC Corp. dba Knitting Machinery Corp., a Delaware corporation and specialist in the manufacture of hose reinforcement machinery for the plastic, rubber and silicone industries pursuant to an Asset Purchase Agreement entered into as of May 1, 2022. The acquired business is strategically important to the Company’s growing industrial hose platform and will expand its offerings and diversify its customer base in this important market segment. The assets were transferred and assigned to Knitting Machinery in exchange for approximately $250,000 in cash and 38,462 Class A Common Shares valued at $1.0 million.

Goodwill has an assigned value of $0.4 million and represents the expected synergies generated by combining the operations of

KMC and the Company. The Company utilizes industrial hoses for customers in the Industrial and Transportation Products segment and the acquisition of KMC allows the Company to strengthen its supply chain. Intangible asset, trademark has an assigned value of $0.075 million which represents the expected value of the KMC trade name in the market. Intangible asset, customer list has an assigned value of $0.075 million which represents the expected value of the list of the customers of KMC to the Company.

Sales and net income information for the acquired companies, including Komtek Forge LLC (“Komtek”), Global-Tek Manufacturing LLC and Global-Tek Colorado LLC (“Global-Tek”), Emergency Hydraulics LLC (“EH”), Reverso Pumps LLC (“Reverso Pumps”), Separ America LLC (“Separ America”) and Knitting Machinery Company of America LLC (“Knitting Machinery”) since the respective acquisition dates for the six months ended June 30, 2022 and 2021 are provided below.

~~As of~~ ~~January 1, 2021,~~ ~~the~~The Company ~~elected to report~~reports operations for ~~two~~2 business segments: (1) Commercial Air Handling Equipment, ~~and~~ (2) Industrial and Transportation Products. The ~~decision to change from~~identification of our operating segments is based on guidance in ASC ~~three~~280 to -~~two~~10 ~~reportable business segments was the result of a board-level discussion and was deemed appropriate given the size of the Company.~~-50-1. The Company's management evaluates segment performance based primarily on operating income. Certain corporate costs are allocated to the segments and interest expense directly related to financing the acquisition of a business is allocated to that segment, respectively. Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses.

Both our Commercial Air Handling Equipment segment and our Industrial Transportation Products segment engage in business activities from which they may recognize revenues and incur expense, including revenue and expenses relating to transactions with other components of the Company. The operating results for both the Commercial Air Handling Equipment segment and the Industrial Transportation Products segment are reviewed regularly by our chief operating decision maker and is considered in making decisions about resources to be allocated to the segment in assessing its performance. Financial information for both segments is available in internal financial statements that are prepared on a monthly basis.

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

The Industrial and Transportation Products segment was added July 1, 2016, when the Company purchased the assets of the Federal Hose Manufacturing, LLC of Painesville, Ohio. This business segment includes the manufacture of flexible interlocking metal hoses and the distribution of silicone and hydraulic hoses. Metal hoses are sold primarily to major heavy-duty truck manufacturers and major aftermarket suppliers in North America. Metal hoses are also sold into the agricultural, industrial and petrochemical markets. Silicone hoses are distributed to a number of industries in North America, including agriculture and general industrial markets. The Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc.(“CAD”) in Phoenix, Arizona on July 1, 2018. CAD provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions. Utilizing state-of-the-art machining and welding technologies, this segment is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels. CAD’s quality certifications include ISO 9001:2015/AS9100D, as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, and TIG/E-Beam welding. The Company added the distribution of marine hose to this segment through the acquisition of the assets of MPI Products, Inc. (“MPI”) on January 2, 2020. MPI ~~specialized~~specializes in rubber and plastic marine hose for the recreational boating industry. MPI offers certified products that meet marine industry standards and regulations. Effective April 19, 2019, the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”). DG is in the business of developing and commercializing marketing and data analytic technology applications. The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC), in Worcester, Massachusetts on January 15, 2021. Komtek Forge LLC is a supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics, alternative energy, petrochemical and defense industries. The Company purchased all of the membership interests of Global-Tek-Manufacturing LLC (“Global-Tek”), in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology ~~L.L.C. (Machining Technologies),~~LLC (name later changed to Global-Tek Colorado LLC or “Global-Tek Colorado”) in Longmont, Colorado on March 2, 2021. Global-Tek and ~~Machining Technologies~~Global-Tek Colorado specialize in providing customers with highly engineered manufacturing solutions, including CNC machining, anodizing, electro polishing and laser marking for customers in the defense, aerospace and medical device markets. The Company purchased substantially all of the assets of Emergency Hydraulics LLC (“Emergency Hydraulics”), in Ocala, Florida on July 1, 2021. Emergency Hydraulics provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles. The company purchased substantially all of the assets of Crawford REV Acquisition Company LLC (name later changed to Reverso Pumps LLC or “Reverso Pumps”), in Davie, Florida on January 10, 2022. Reverso Pumps develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems.

The company purchased substantially all of the assets of Crawford SEP Acquisition Company LLC (name later changed to Separ America LLC or “Separ America”), in Davie, Florida on January 10, 2022. Separ America develops, designs, manufactures, sells and distributes oil change systems, fuel and oil transfer pumps, fuel primers, fuel polishing systems and engine flushing systems. The company purchased substantially all of the assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”), in Cleveland, Ohio and Greenville, Ohio on May 1, 2022. Knitting Machinery specializes in manufacturing hose reinforcement machinery for the plastic, rubber and silicone industries.

The factors used to determine the Company’s reportable segments follow the guidance of ASC 280-10-50-21 and 50-10-22 and include consideration of the type of products or services delivered, the customers and end markets served, the appliable revenue recognition methodology and the length of time it takes to deliver products or services to customers. The Commercial Air Handling Equipment segment was identified as a reportable segment consisting of Air Enterprises, because Air Enterprises is strategically and operationally different from our other companies in several ways. First, Air Enterprises sells equipment to end customers and our other businesses that fall into the Industrial and Transportation Products segment sell products and components to end customers, not equipment. Second, the Commercial Air Handling Equipment segment delivers custom air handling solutions to customers which is different than the Industrial and Transportation Products segment which delivers manufactured metal, silicone, hydraulic and marine hoses, complex engineered components, highly engineered forgings, highly engineered and machined parts and data analytic technology applications. Third, the Commercial Air Handling Equipment segment serves customers primarily in the health care and education end markets while the Industrial and Transportation Products segment delivers products to customers in the heavy-duty truck manufacturing, agricultural, industrial, petrochemical, aerospace, defense, industrial gas turbine, medical prosthetics, alternative energy and emergency vehicle end markets. Fourth, the Commercial Air Handling Equipment segment recognizes revenue primarily over time while the Industrial and Transportation Products segment recognizes revenue primarily at a point in time. Fifth, the Commercial Air Handling Equipment segment manufactures custom air handling solutions for customers over a period of three to eighteen months from the time the order is received to the time the air handling solution is delivered to the end customer as compared to the Industrial and Transportation Products segment which sells and delivers products to customers much more quickly, often within 30 days or less. For the reasons previously mentioned, Air Enterprises is strategically and operationally different than the other businesses owned by the Company and management finds it useful to include this business in the Commercial Air Handling Segment which is separate and distinct from all of our other businesses that reside in the Industrial and Transportation Products segment.

Corporate costs not allocated to the two primary business segments are aggregated here.

	Three Months Ended June 30, 2020 (1)										Six Months Ended June 30, 2022
	Commercial Air Handling		Industrial And Transportation Products			Corporate and Other			Consolidated		Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	11,848,816	$	6,727,772		$	0		$	18,576,588	$	23,403,254	$	39,501,519	$	0		$	62,904,773
Gross Profit		2,893,541		605,498			0			3,499,039		5,082,796		8,052,101		0			13,134,897
Operating Income		1,565,482		(872,867	)		(162,095	)		530,520		2,944,897		3,121,620		(2,293,668	)		3,772,849
Pretax Income		1,565,482		(1,154,315	)		(103,542	)		307,625		2,944,897		2,930,092		(2,638,228	)		3,236,761
Net Income		1,174,113		(870,177	)		(75,099	)		228,837		2,105,602		2,017,870		(1,886,333	)		2,237,139

~~The coronavirus (COVID-~~19~~) pandemic had a material adverse effect on the Company’s reported results for the~~ ~~three~~ ~~month and~~ ~~six~~ ~~month periods ended~~ ~~June 30, 2021.~~ The Company will continue to actively monitor the impact of the coronavirus pandemic, which is expected to negatively impact the Company’s business and results of operations for the remainder of fiscal year ~~2021~~ and possibly beyond. The extent to which the Company’s business and operations will be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which ~~may~~ ~~emerge concerning the severity of the outbreak; new and growing outbreaks of COVID-~~19 ~~or new strains of COVID-~~~~19;~~ ~~actions by government authorities to contain COVID-~~19 ~~or treat its impact, such as reimposed public health restrictions; efforts to combat COVID-~~~~19,~~ ~~such as vaccine development and distribution, among other things.~~

~~The Company purchased the operating assets of Emergency Hydraulics LLC in Ocala, Florida on~~ ~~July 1, 2021~~ None.for an aggregate purchase price of approximately $0.3 million. The acquired business provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles. The acquired business is strategically important to the Company’s growing industrial hose platform and will expand its offerings and diversify its customer base in this important market segment. The acquisition is expected to add approximately $2 million in annualized revenue to Crawford United and be immediately accretive to earnings

The following discussion is intended to assist in the understanding of the Company's financial position at June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, results of operations for the three ~~month~~ and six month periods ended June 30, ~~2021~~2022 and ~~2020,~~2021, and cash flows for the three ~~month~~ and six month periods ended June 30, ~~2021~~2022 and ~~2020,~~2021, and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. The coronavirus (COVID-19) pandemic ~~had a material adverse effect~~has disrupted our operations and affected our business, and may continue to do so, due to many factors, including imposition by government authorities of mandatory closures, work-from-home orders and social distancing protocols, increased employee absenteeism due to illness and/or quarantine requirements, and other restrictions that could materially adversely affect our ability to adequately staff and maintain our operation. The COVID-19 pandemic has also disrupted, and may continue to disrupt, our operations and facilities and to provide personal protective equipment for our employees. There may also be long-term negative effects on the ~~Company’s reported results for~~economic well being of our customers and in the ~~three month~~economies of affected countries. Even as government restrictions have been lifted and ~~six month periods ended June 30, 2021. The Company will continue to actively monitor~~economies gradually reopened, the ~~impact~~shape of the ~~COVID-19 pandemic, which is expected~~economic recovery remains uncertain and may continue to negatively impact ~~the Company’s business and~~our results of operations, ~~for the remainder of fiscal year 2021~~cash flows and possibly beyond, depending upon the pace at which pandemic-related restrictions are lifted, commercial activity resumes and the economy recovers. Many of our customers are considered “essential” and have remained operational during the pandemic, althoughfinancial position in some cases in a limited capacity. This, together with the overall economic downturn that has resulted from the pandemic, slowed demand in the first and second quarters of 2021. Nearly all of the Company’s facilities have remained operational. While there are some restrictions to the supply of materials and products and those restrictions may continue or expand, our supply chain has remained largely intact. The extent to which the Company’s business and operations will continue to be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the pandemic; new and growing outbreaks of COVID-19 or new strains of COVID-19; actions by government authorities to contain COVID-19 or treat its impact, such as reimposed public health restrictions; and efforts to combat COVID-19, such as vaccine distribution, among other things.subsequent quarters.

The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC “Komtek”), in Worcester, Massachusetts on January 15, 2021.

The Company purchased all of the membership interests of Global-Tek Manufacturing LLC (“Global-Tek”) in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology L.L.C. (“Machining Technology”), in Longmont, Colorado on March 2, 2021.

The Company purchased substantially all of the operating assets of Emergency Hydraulics LLC, (“Emergency Hydraulics”) in Ocala, Florida on July 1, 2021.

The Company purchased substantially all of the operating assets of Reverso Pumps, Inc, (“Reverso Pumps”) and Separ of the Americas, LLC, (“Separ America”), both located in Davie, Florida on January 10, 2022.

The Company purchased substantially all of the operating assets of KMC Corp. dba Knitting Machinery Corp. (“Knitting Machinery”) located in Cleveland, Ohio and Greenville, Ohio on May 1, 2022.

Accordingly, in light of the timing of these transactions, the Company’s results for the three ~~month~~ and six month periods ended on June 30, ~~2021~~2022 include the added results of operations of ~~Komtek, Global-Tek~~Emergency Hydraulics, Reverso Pumps, Separ America and ~~Machining Technology~~Knitting Machinery in the Industrial and Transportation Products segment. Conversely, our results for the three ~~month~~ and six month periods ended June 30, ~~2020~~2021 do not include the results of operations of Emergency Hydraulics, Reverso Pumps, Separ America and Knitting Machinery and also do not include a full six months of results for Komtek, Global-Tek and Machining Technology in the Industrial and Transportation Products segment.

Results of Operations – Three Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Sales for the quarter ended June 30, ~~2021~~2022 (“current quarter”) increased to ~~$26.4~~$31.9 million, an increase of approximately ~~$7.9~~$5.5 million or ~~42.4%~~21% from sales of ~~$18.6~~$26.4 million during the same quarter of the prior year. ~~This~~The increase in sales of $5.5 million from $26.4 million for the quarter ended June 30, 2021 to $31.9 million for the quarter ended June 30, 2022 was ~~primarily attributable to a recovery in demand as COVID-19 pandemic-related restrictions loosened and commercial activity~~driven by increased ~~in addition to~~sales from the acquisitions of ~~Komtek,~~Reverso and Separ of the Americas of $1.9 million, Emergency Hydraulics of $0.7 million and Knitting Machinery of $0.6 million. Additionally, there was increased demand for products sold by Air Enterprises of $1.9 million, MPI of $0.8 million, Federal Hose of $0.6 million and Data Genomix $0.5 million. These increases were partially offset by a decline in demand of $1.5 million attributable to Global-Tek Manufacturing and ~~Machining Technology.~~Global-Tek Colorado.

Cost of sales for the current quarter was ~~$20.7~~$25.1 million compared to ~~$15.1~~$20.7 million, an increase of ~~$5.6~~$4.5 million or ~~37.1%~~22% from the same quarter of the prior year. Gross profit was ~~$5.8~~$6.8 million in the current quarter compared to ~~$3.5~~$5.8 million, an increase of ~~$2.3~~$1.0 million from the same quarter of the prior year. The increase in cost of sales and gross profit was primarily attributable to ~~a recovery in demand as~~ the ~~COVID-19 pandemic eased,~~impact of the acquisitions of Reverso and Separ of the Americas, Emergency Hydraulics and Knitting Machinery in addition to ~~the acquisitions~~greater demand for products sold by Air Enterprises, MPI, Federal Hose and Data Genomix partially offset by a decrease in cost of ~~Komtek,~~sales and gross profit for Global-Tek Manufacturing and ~~Machining Technology.~~Global-Tek Colorado.

Selling, general and administrative expenses (SG&A) in the current quarter were ~~$3.7~~$4.4 million, or ~~13.9%~~14% of sales, compared to ~~$3.0~~$3.7 million, or ~~16.0%~~14% of sales in the ~~second~~same quarter of last year. Selling, general and administrative expenses ~~increased~~was flat as a percentage of sales due primarily to increased control over spending partially offset by an additional ~~$0.6~~$0.4 million of ~~expense~~Selling, general and administrative expenses in the current quarter as a result of the acquisitions of ~~Komtek, Global-Tek~~Reverso Pumps, Separ America, Emergency Hydraulics and ~~Machining Technology.~~Knitting Machinery.

Interest charges in the current quarter were approximately $0.2 million compared to $0.2 million in the same quarter of the prior year. Average total debt (including notes) and average interest rates for the current quarter were $29.0 million and 3.1% respectively, compared to $27.7 million and 2.9% ~~compared to $25.7 million and 3.4%~~ in the same period of last year.

Other expense, net was ~~$0.3~~$0.6 million in the current quarter compared to ~~$0.1~~$0.3 million ~~of other income, net~~ in the same quarter of the prior year. The increase in other expense, net is ~~primarily~~ driven by a loss of $0.6 million in the quarter related to investments in marketable securities compared to a loss of $0.2 million related to investments in marketable securities and $0.1 million of transaction costs ~~as a result~~in the same period of ~~the acquisitions of Komtek, Global-Tek and Machining Technology.~~last year.

Income tax expense in the current quarter was ~~$0.3~~$0.4 million compared to ~~$0.1~~$0.3 million in the same quarter of the prior year. Tax expense is ~~lower than~~higher compared to the ~~Company’s historical~~same quarter of the prior year despite similar levels of pre-tax income because a higher expected ~~effective~~state tax rate ~~of 25% primarily because~~was used in the ~~expected tax rate for Global-Tek in Puerto Rico is lower than 25%.~~current quarter.

Net income in the current quarter was $1.2 million or ~~$0.37~~$0.34 per diluted share as compared to ~~the~~ net income of ~~$0.2~~$1.2 million or ~~$0.07~~$0.37 per diluted share for the same quarter of the prior year because of the factors noted above.

Sales in the Commercial Air Handling Equipment segment for the quarter ended June 30, 2022 increased to $11.8 million, an increase of approximately $1.9 million or 18.8% from sales of $10.0 million during the same period of the prior year. This increase was primarily attributable to an increase in demand as COVID-19 pandemic-related restrictions were lifted and the on-site access necessary to complete the installation of commercial air handling units was restored for certain hospital and university customers.

Cost of sales in the Commercial Air Handling Equipment segment for the current quarter was $9.4 million compared to $7.9 million in the prior year, an increase of $1.4 million or 18.3%. Gross profit was $2.5 million in the current quarter compared to $2.0 million in the same period of last year, an increase of $0.5 million. Cost of sales as a percentage of sales was 79.3% in the current quarter compared to 79.6% in the prior year. The decrease in cost of sales as a percentage of sales in the current quarter was primarily attributable to cost savings and lower input costs in the current period compared to prior year.

Selling, general and administrative expenses (SG&A) in the Commercial Air Handling Equipment segment in the current quarter were $1.1 million, or 9.0% of sales, compared to $1.2 million, or 11.9% of sales, in the prior year.

There was no interest charge in the Commercial Air Handling Equipment segment for the current quarter or the same quarter of the prior year because there was no outstanding debt attributable to this segment during those periods.

Income tax expense in the Commercial Air Handling Equipment segment in the current year was $0.4 million compared to $0.2 million in the prior year an increase of $0.2 million that was primarily attributable to an increase in income before taxes.

Net income in the Commercial Air Handling Equipment segment for the current year was $1.0 million compared to net income of $0.6 million in the prior year due primarily to the factors noted above.

Sales in the Industrial and Transportation Products segment for the current quarter increased to $20.1 million, an increase of approximately $3.6 million or 21.7% from sales of $16.5 million during same period to the prior year. This increase was primarily driven by sales from the acquisitions of Reverso and Separ of the Americas of $1.9 million, Emergency Hydraulics of $0.7 million and Knitting Machinery of $0.6 million, MPI of $0.8 million, Federal Hose of $0.6 million and Data Genomix $0.5 million. These increases were partially offset by a decline in demand of $1.5 million attributable to Global-Tek Manufacturing and Global-Tek Colorado.

Cost of sales in the Industrial and Transportation Products segment for the current quarter was $15.7 million compared to $12.7 million in the prior year, an increase of $3.0 million or 23.7%. Gross profit was $4.3 million in the current quarter compared to $3.8 million in the same period of the prior year, an increase of $0.6 million. The increase in cost of sales and gross profit was primarily attributable to the impact of the acquisitions of Reverso and Separ of the Americas, Emergency Hydraulics and Knitting Machinery in addition to greater demand for products sold by MPI, Federal Hose and Data Genomix partially offset by a decrease in cost of sales and gross profit for Global-Tek Manufacturing and Global-Tek Colorado.

Selling, general and administrative expenses (SG&A) in the Industrial and Transportation Products segment in the current quarter were $2.5 million, or 12.3% of sales, compared to $2.4 million, or 14.6% of sales, in the prior year. Selling, general and administrative expenses decreased as a percentage of sales due primarily to increased control over spending partially offset by an additional $0.4 million of Selling, general and administrative expenses in the current quarter as a result of the acquisitions of Reverso Pumps, Separ America, Emergency Hydraulics and Knitting Machinery.

Other expense, net in the Industrial and Transportation Products segment was $0.1 million in the current year compared to $0.0 million of other income, net in the same period of the prior year. The increase in other expense, net was primarily attributable to an increase to a non-operating reserve.

Income tax expense in the current quarter was $0.4 million compared to $0.2 million in the same quarter of the prior year. Tax expense is higher compared to the same quarter of the prior year primarily driven by the increase in pre-tax income.

Net income in the Industrial and Transportation Products segment for the current quarter was $1.1 million compared to net income of $0.9 million in the same period of the prior year due primarily to the factors noted above.

Results of Operations – Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Sales for the six months ended June 30, ~~2021 (“current year~~2022 increased to ~~date”) were $50.4~~$62.9 million, an increase of approximately ~~$6.6~~$12.5 million or ~~15.0%~~24.7% from sales of ~~$43.9~~$50.4 million during the same period of the prior year. This increase in sales was primarily attributable to the impact of the acquisitions of Emergency Hydraulics, Reverso Pumps, Separ America Emergency Hydraulics and Knitting Machinery in addition to a full six months of earnings from Komtek, Global-Tek and Machining Technology as compared to the same period last year. The increase in sales of $12.5 million from $50.4 million for the six months ended June 30, 2021 to $62.9 million for the six months ended June 30, 2022 was driven by increased sales from the acquisitions of Komtek ($0.5 million), Emergency Hydraulics ($0.7 million), Reverso Pumps and Separ America ($3.4 million) and Knitting Machinery ($0.6 million) and a $9.2 million increase attributable to recovery in demand as COVID-19 pandemic-related restrictions loosened and commercial activity increased for Air Enterprises, Federal Hose, Data Genomix and MPI. These increases were partially offset by a decline in ~~addition~~demand of $1.9 million attributable collectively to ~~the acquisitions of Komtek,~~global-Tek Manufacturing, Global-Tek Colorado and ~~Machining Technology.~~CAD Enterprises.

Cost of sales for the ~~current year to date~~six-month period ending June 30, 2022 was ~~$38.7~~$49.8 million compared to ~~$34.2~~$38.7 million, inan increase of $11.1 million or 28.7% from the same period of the prior ~~year,~~year. Gross profit was $13.1 million in the six-month period ending June 30, 2022 compared to $11.8 million, an increase of ~~$4.5~~$1.4 million ~~or 13.2%. Gross profit was $11.8 million in the current year to date compared to $9.7 million in~~from the same period of the prior ~~year, an increase of $2.1 million.~~year. The increase in cost of sales and gross profit was primarily attributable to ~~a recovery in demand as~~ the ~~COVID-19 pandemic eased,~~impact of the acquisitions of Knitting Machinery, Emergency Hydraulics, Reverso Pumps and Separ America, in addition to ~~the acquisitions~~a full six months of earnings in 2022 from Komtek, Global-Tek and Machining Technology. In addition, cost of sales for Air Enterprises increased from $14.5 million in the first six months of 2021 to $18.3 million in the six months ended June 30, 2022, an increase of $3.8 million or 26.2% driven by increased demand for its products.

Selling, general and administrative expenses (SG&A) infor the ~~current year to date~~six months ending June 30, 2022 were ~~$7.3~~$9.4 million, or ~~14.6%~~15% of sales, compared to ~~$6.0~~$7.3 million, or ~~13.8%~~15% of sales in the same period of ~~the prior~~last year. Selling, general and administrative expenses increased ~~by $1.3 million~~ due ~~primarily~~ to ~~an additional $1.0~~$0.9 million of ~~expense as~~stock awards that were granted in the current six months compared to $0.3 million of stock awards during the same period of last year. An additional $0.9 million of Selling, general and administrative expenses in the current six month period were a result of the acquisitions of Reverso Pumps and Separ America, in addition to a full six months of expenses in 2022 for Komtek, Global-Tek and Machining Technology.

Interest charges in the ~~current year to date~~six months ended June 30, 2022 were approximately ~~$0.5~~$0.4 million compared to $0.5 million in the same period of the prior year. The interest expense decreased due to lower balances on the Company’s fixed rate notes payable. Average total debt (including notes) and average interest rates for the ~~current year~~most recent six-month period were $29.0 million and 2.9% compared to ~~date were~~ $26.9 million and 3.0%~~, compared to $26.2 million and 3.5%~~ in the same period of ~~the prior~~last year.

Other ~~income,~~expense, net was ~~$1.3~~$0.1 million in the ~~current year to date~~six-month period ending June 30, 2022 compared to ~~$0.1~~$1.3 million of other ~~expense,~~income, net in the same period of the prior year. The ~~increase~~decrease in other income is primarily driven by the forgiveness ~~in full during~~of the ~~first quarter of 2021 of the~~Company’s $1.5 million in ~~aggregate~~outstanding Payroll Protection Loans (“PPP Loans”) ~~accepted~~in full by ~~two of~~ the ~~Company’s subsidiaries,~~U.S. Small Business Administration in accordance with the terms of the CARES ~~Act.~~Act in the first quarter of 2021 as compared to no PPP Loan forgiveness in the first six months of 2022. The forgiveness of the PPP ~~loans is~~Loans was treated as ~~income.~~income in the first six months of 2021.

Income tax expense in the ~~current year to date~~six-month period ending June 30, 2022 was ~~$0.9~~$1.0 million compared to ~~$0.8~~$0.9 million in the same period of the prior year. Tax expense is higher in the six-month period ending June 30, 2022 compared to the same period of the prior year despite lower ~~than the Company’s historical expected effective~~pre-tax income because PPP Loan forgiveness is not taxable, which contributed to a lower tax rate ~~of 25% primarily because the expected tax rate for Global-Tek~~ in ~~Puerto Rico is lower than 25%.~~2021.

Net income infor the ~~current year to date~~six-month period ending June 30, 2022 was ~~$4.4~~$2.2 million or ~~$1.29~~$0.65 per diluted share as compared to the net income of ~~$2.3~~$4.4 million or ~~$0.69~~$1.29 per diluted share for the same period of the prior year.

Sales in the Commercial Air Handling Equipment segment for the six months ending June 30, 2022 increased to $23.4 million, an increase of approximately $4.7 million or 24.9% from sales of $18.7 million during the same period of the prior year. This increase was primarily attributable to an increase in demand as COVID-19 pandemic-related restrictions were lifted and the on-site access necessary to complete the installation of commercial air handling units was restored for certain hospital and university customers.

Cost of sales in the Commercial Air Handling Equipment segment for the six-month period ending June 30, 2022 was $18.3 million compared to $14.5 million in the same period of the prior year, an increase of $3.8 million or 26.6%. Gross profit was $5.1 million in the six-month period ending June 30, 2022 compared to $4.3 million in the prior year, an increase of $0.8 million. Cost of sales as a percentage of sales was 78.3% in the most recent six months compared to 77.3% in the same period of the prior year. The increase in cost of sales as a percentage of sales in the current year was primarily attributable to higher costs driven by supply chain disruptions in the most recent six-month period compared to prior year.

Selling, general and administrative expenses (SG&A) in the Commercial Air Handling Equipment segment in the six-month period ending June 30, 2022 were $2.1 million, or 9.1% of sales, compared to $2.4 million, or 12.6% of sales, in the same period of the prior year. The improvement in SG&A expenses as a percentage of net sales is driven by the impact of the fixed SG&A expenses over the higher revenue base in the 2022 period compared to the same period a year ago.

There was no interest charge in the Commercial Air Handling Equipment segment for the six-month period ending June 30, 2022 or in prior year because there was no outstanding debt attributable to this segment during those periods.

Income tax expense in the Commercial Air Handling Equipment segment in the six-month period ending June 30, 2022 was $0.8 million compared to $0.5 million in the prior year an increase of $0.3 million that was primarily attributable to an increase in income before taxes.

Net income in the Commercial Air Handling Equipment segment for the six-month period ending June 30, 2022 was $2.1 million compared to net income of $1.4 million in the same period of the prior year due primarily to the factors noted above.

Sales in the Industrial and Transportation Products segment for the six-months ended June 30, 2022 increased to $39.5 million, an increase of approximately $7.8 million or 24.6% from sales of $31.7 million during the same period of prior year. The increase for the six months ended June 30, 2022 was driven by increased sales from the acquisitions of Komtek ($0.5 million), Emergency Hydraulics ($0.7 million), Reverso Pumps and Separ America ($3.4 million) and Knitting Machinery ($0.6 million) and a $4.5 million increase attributable to recovery in demand as COVID-19 pandemic-related restrictions loosened and commercial activity increased for Federal Hose, Data Genomix and MPI. These increases were partially offset by a decline in demand of $1.9 million attributable collectively to Global-Tek Manufacturing, Global-Tek Colorado and CAD Enterprises.

Selling, general and administrative expenses (SG&A) in the Industrial and Transportation Products segment in the six-month period ending June 30, 2022 were $4.9 million, or 12.5% of sales, compared to $4.4 million, or 14.0% of sales, in the prior year.

The interest charge for the Industrial and Transportation Products segment for the current year was $0.4 million compared to $0.4 million in the prior year.

Other income, net in the Industrial and Transportation Products segment was $0.2 million in the six-month period ending June 30, 2022 compared to $0.0 million of other income, net in the prior year. The increase in other income, net was primarily attributable to Aerospace and Manufacturing grant income provided by the U.S. Department of Transportation in the current six-month period.

Income tax expense in the Industrial and Transportation Products segment in the six-month period ending June 30, 2022 was $0.9 million compared to $0.6 million in the prior year, an increase of $0.3 million that was attributable to an increase in income before taxes in the current period in addition to a higher expected state tax rate used in the current period.

Net income in the Industrial and Transportation Products segment for the six-month period ending June 30, 2022 was $2.0 million compared to net income of $2.1 million in the same period of prior year due primarily to the factors noted above.

As described further in Note 1112 to the Company’s consolidated financial statements, effective January ~~15, 2021,~~10, 2022, the Company completed the ~~Komtek acquisition~~Reverso Pumps and Separ America acquisitions for a purchase price of ~~$3.6~~$4.2 million, ~~which included the assumption of $1.7 million of debt and the issuance of $1.1 million of Class A common shares.~~subject to certain customary post-closing adjustments based on working capital.

As described further in Note 1112 to the Company’s consolidated financial statements, effective ~~March~~May 1, ~~2021,~~2022, the Company completed the ~~Global-Tek and Machining Technology~~Knitting Machinery acquisition for a purchase price of ~~$8.0~~$1.3 million, subject to certain customary post-closing adjustments based on working ~~capital and the achievement of future performance milestones.~~capital.

The Company’s credit agreement, dated as of June 1, 2017, by and between the Company and JPMorgan Chase Bank, N.A. as lender (as amended, the “Credit Agreement”), provides for a revolving credit facility. On March 2, 2021, the Company amended its Credit Agreement to increase availability under the revolving credit facility to $30.0 million from $20.0 million. The amendment to the loan agreement provided additional flexibility to fund acquisitions, working capital and other strategic initiatives.

Total current assets at June 30, ~~2021~~2022 increased to ~~$40.5~~$51.6 million from ~~$35.2~~$42.5 million at December 31, ~~2020,~~2021, an increase of ~~$5.3~~$9.1 million. The increase in current assets is comprised of the following: an increase of accounts receivable of ~~$5.7~~$3.7 million; an increase in cash of $1.7 million, an increase in inventory of ~~$3.6~~$4.2 million; an increase in contract assets of $0.1 million; and an increase in prepaid expenses and other assets of ~~$0.5~~$0.7 million; partially offset by a decrease in ~~cash of $2.8 million; a decrease in contract~~refundable tax assets of ~~$1.6 million;~~$0.7 million and a decrease in investments of ~~$0.1~~$0.4 million. The ~~increases~~increase in ~~inventory and~~ accounts receivable ~~were~~is driven ~~primarily~~ by the recent acquisitions of ~~Komtek, Global-Tek~~Reverso Pumps and ~~Machining Technology.~~Separ America in addition to an increase in new billings in the Commercial Air Handling segment for certain early-stage projects that have achieved billing milestones in advance of certain production milestones per their individual contract terms. Management estimates that these new projects in the Commercial Air Handling segment will be completed in the next 6 to 9 months. The Company is carrying ~~lower~~higher cash balances ~~due to funding the recent acquisitions~~in expectation of ~~Komtek, Global-Tek and Machining Technology.~~future bulk inventory purchases.

Total current liabilities at June 30, ~~2021~~2022 increased to ~~$21.8~~$28.6 million from ~~$17.5~~$23.9 million at December 31, ~~2020,~~2021, an increase of ~~$4.3~~$4.8 million. The increase in current liabilities is ~~comprised of~~primarily driven by the following: an increase in accounts payable of ~~$2.8 million; an increase in accrued expenses of $0.8 million;~~$3.2 million and an increase in unearned revenue of ~~$0.7 million; and an increase in contingent liabilities of $0.8~~$1.2 million.

Cash provided by operating activities for the six months ended June 30, ~~2021~~2022 was approximately ~~$2.9~~$4.4 million, compared to cash provided by operating activities of ~~$5.8~~$2.9 million in the same period a year ago. Cash provided by operating activities for the ~~six month period~~six-months ended June 30, 2022 is comprised of the following: net income of ~~$4.4~~$2.2 million; cash provided by adjustments for non-cash items of ~~$0.4~~$3.9 million; and cash used in working capital adjustments of ~~$1.9~~$1.7 million. The primary drivers of decreased working capital during the current ~~quarter~~six-month period were the increase in accounts receivable of ~~$3.2~~$3.1 million and the increase in right of ~~inventories~~use assets of ~~$1.8~~$0.4 million, partially offset by the decrease in ~~contract assets~~inventories of ~~$1.6~~$2.2 million, ~~and an~~the increase in accounts payable of ~~$1.5~~$2.6 million and the increase in deferred revenue of $0.8 million. Cash flows from operations were impacted by cash used in working capital adjustments including an increase in accounts receivable of $3.1 million in the first six months of 2022, driven primarily by an increase of $1.9 million in the Commercial Air Handling Equipment segment and an increase of $1.2 million in the Industrial and Transportation Products segment. The $1.9 million increase in accounts receivable in the Commercial Air Handling Equipment segment was the result of an increase in new sales with high upfront billing milestones. This is reflected in the increase of $2.4 million in billings in excess of costs and earnings. Days sales outstanding in the Commercial Air Handling Equipment segment were 76 days in the first six months of 2022 compared 73 days in fiscal year 2021 which management will continue to monitor but does not view as a significant change. The $1.2 million increase in accounts receivable in the Industrial and Transportation Products segment was driven primarily by an increase in days sales outstanding from 56 days in fiscal year 2021 to 60 days in the first six months of 2022. The Company added Reverso Pumps, Separ America and Knitting Machinery in 2022 and will closely monitor days sales outstanding for the companies in this segment. The rise in days sales outstanding has a negative impact on cashflow and management will continue to monitor the trend in future periods. The Company does not have a history of failure to collect payment from its customers and believes that it is reasonable to assume that materially all of its outstanding accounts receivable will be collectible barring unforeseen circumstances.

Cash used in investing activities for the six months ended June 30, ~~2021~~2022 was ~~$8.4~~$4.7 million, compared to cash used in investing activities of ~~$9.6~~$8.4 million in the same period a year ago. Cash used in investing activities was for the acquisitions of ~~Komtek, Global-Tek~~Knitting Machinery, Reverso Pumps and ~~Machining Technology~~Separ America in the Industrial and Transportation Products segment and capital expenditures in the normal course of business.

Cash provided by financing activities was approximately ~~$2.8~~$1.9 million for the six months ended June ~~30, 2021,~~30,2022, compared to cash provided by financing activities of ~~$8.5~~$2.8 million in the same period a year ago. Cash provided by financing activities for the ~~current quarter~~six months ended June 30, 2022 was primarily related to: ~~$7.7~~$4.8 million borrowings on bank debt related primarily to the ~~acquisitions~~acquisition of ~~Komtek, Global-Tek~~Reverso Pumps and ~~Machining Technology;~~Separ America partially offset by ~~cash used for $3.6 million in~~ payments on ~~bank debt~~notes payable of $2.0 million and ~~$1.3 million in payments on notes.~~a reduction of a contingent liability by $0.8 million.

The Company is actively managing its business to maintain cash flow and liquidity. We believe that cash and availability on our revolving credit facility to be sufficient to fund working capital needs and service principal and interest payments due related to the bank debt and notes payable. The Company had ~~$14.3~~$8.2 million available to borrow on the revolving credit facility at June 30, ~~2021.~~2022. Notwithstanding the Company's expectations, if the Company's operating results decrease as the result of pressures on the business due to, for example, the impact of the COVID-19 pandemic, currency fluctuations, regulatory issues, a downturn in general economic conditions, or the Company's failure to execute its business plans, the Company may require additional financing, or may be unable to comply with its obligations under the credit facility, and its lenders could demand repayment of any amounts outstanding under the Company’s credit facility. As the company cannot predict the duration or scope of the COVID-19 pandemic and its impact on the Company’s customers and suppliers, the negative financial impact to the Company’s results cannot be reasonably estimated, but could be material. In addition, see Note 78 of the notes to the consolidated financial statements.

From time to time, the Company enters into performance and payment bonds in the ordinary course of business. These bonds are secured by certain assets of the Company by the surety until the Company’s completion of the requirements of the commercial air handling contract. At June 30, ~~2021,~~2022, the Company ~~did not have any active surety bonds for which~~has secured performance and payment ~~had not been satisfied.~~bonds in the amount of $8.2 million as surety on completion of the requirements of certain commercial air handling contracts. The Company has no other off-balance sheet arrangements (as defined in Regulation S-K Item 303 paragraph (a)(4)(ii)) that have or are reasonably likely to have a material current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital ~~expenditures~~expenditure or capital resources.

Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions which affect amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate the accounting policies and estimates that are used to prepare financial statements. Management has made their best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe that there is great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed below. On a regular basis, critical accounting policies are reviewed with the Audit Committee of the Board of Directors.

Revenue Recognition: We recognize revenue with respect to customer orders when our obligations under the contract terms are satisfied and control of the product transfers to the customer, typically upon shipment. Revenue from certain contracts in the Commercial Air Handling Equipment segment is accounted for over time, when products are manufactured or services are performed, as ~~presented~~control transfers under these arrangements. We follow the input method, as we have determined that it allows us to make reasonably reliable estimates of revenue and costs of a contract.

Allowance for Obsolete and Slow-Moving Inventory: Inventories are valued using the first-in, first-out (“FIFO”) method; stated at the lower of cost or net realizable value; and are reduced by an allowance for obsolete and slow-moving inventories. The allowance is estimated based on management’s review of inventories on hand with minimal sales activity, which is compared to estimated future usage and sales. Inventories identified by management as slow-moving or obsolete are reserved for based on estimated selling prices less disposal costs. Though we consider these allowances adequate and proper, changes in ~~Notes~~economic conditions in specific markets in which we operate could have a material effect on allowances required.

Business Combinations: Business combinations are accounted for using the purchase method of accounting under ASC 805, “Business Combinations.” This method requires the Company to ~~Consolidated Financial Statements~~record assets and ~~Management’s Discuss~~liabilities of the businesses acquired at their estimated fair values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Determining the fair value requires management to make estimates and ~~Analysis~~assumptions including discount rates, rates of ~~Financial Condition~~return on assets, and ~~Results~~long-term sales growth rates.

Goodwill and Indefinite Lived Intangible Assets: As referenced by ASC 350 “Intangibles- Goodwill and other” (“ASC 350”), management performs its annual impairment test for goodwill and intangible assets at least annually or more frequently, if impairment indicators arise at the reporting unit level. Our reporting units have been identified at the individual company component level, with each individual subsidiary operating company constituting its own reporting unit. For 2021 management performed qualitative and quantitative testing for each individual company with a goodwill balance other than those companies that were newly acquired within one year.

Our goodwill impairment analysis utilizes a qualitative approach comparing carrying amount of ~~Operations~~the reporting unit to its estimated fair value. To the extent that the qualitative approach indicates that it is more likely than not that the carrying amount is less than its fair value, we apply a quantitative approach as a secondary step. In applying the quantitative approach, we use an income approach to estimate the fair value of the reporting unit. The income approach uses a number of factors, including future business plans and actual and forecasted operating results. The significant assumptions employed under this method include discount rates; revenue growth rates, including assumed terminal growth rates; and operating margins used to project future cash flows for the operating company. The discount rates utilized reflect market-based estimates of capital costs and discount rates adjusted for management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows of the individual company. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. We believe we incorporate reasonable assumptions into our analysis of goodwill impairment testing for a reporting unit, such that actual experience would need to be materially out of the range of expected assumptions in order for an impairment to remain undetected.

In conducting our 2021 annual impairment analysis, we determined that the goodwill for CAD Enterprises at December 31, 2021 was $7.3 million. In our qualitative assessment of CAD Enterprises, we noted a decline in revenue from $30.1 million in 2019 to $18.9 million in 2020 and $18.3 million in 2021 and a decline in after-tax income margin from 5.8% in 2019 to -4.6% in 2020 and -0.5% in 2021, and thus determined to conduct a quantitative assessment of CAD Enterprises. The quantitative assessment of CAD Enterprises confirmed that the estimated fair value exceeded carrying value by 9 percent, and thus no impairment existed at December 31, 2021. The key assumptions used to estimate fair value included discount rates; revenue growth rates, including assumed terminal growth rates; and after-tax income margins used to project future cash flows for CAD Enterprises. The discount rate used to estimate fair value was 10% and was based on estimates of capital costs and management’s assessment of a market participant’s view with respect to other risks associated with the projected cash flows for CAD Enterprises. Our revenue growth rate for the 9-year period in the discounted cash flow model was 10.5% per year, which reflects management’s assessment of estimated future orders for CAD Enterprises based in part on a Long-Term-Agreement (“LTA”) with the company’s largest customer, our previous revenue history including actual revenues of $30.1 million in 2019 before the onset of the COVID-19 pandemic, and a continued business rebound in the aerospace industry. The assumed terminal growth rate for CAD Enterprises was 3% based on management’s assessment of long-term growth rates for the Aerospace industry. The after-tax income margins used to project future margins for the company were based on the historical margins for CAD Enterprises prior to the COVID-19 pandemic. In 2019, CAD Enterprises earned an after-tax income margin of 5.8%. The discounted cash flow model used to estimate fair value assumes an after-tax income margin of 6.0% in 2026, or year 5 of the forecast period and expanding margins to 6.4% in the terminal year. This is based on management’s assessment of our ability to grow SG&A expenses at a slower rate than revenues as the company achieves more scale. Our estimates are based upon assumptions we believe to be reasonable, but which by nature are uncertain and unpredictable. Potential events and circumstances including global conflicts, materials shortages, inability to increase prices to keep pace with expenses, onset of a global pandemic, departure of key employees and loss of a key customer could negatively affect the key assumptions used for the recent fair value test and are similar to the risk factors noted in Item 1A, Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Income Taxes: In accordance with ASC 740, “Income Taxes” (“ASC 740”), we account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities and are measured using the currently enacted tax rates. Specifically, we measure gross deferred tax assets for deductible temporary differences and carryforwards, such as operating losses and tax credits, using the applicable enacted tax rates and apply the more likely than not measurement criterion Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective income tax rates. As a result, our actual annual effective income tax rates and related income tax liabilities may differ materially from our interim estimated effective tax rates and related income tax liabilities. Any resulting differences are recorded in the period they become known.

The foregoing discussion includes forward-looking statements relating to the business of the Company. Generally, these statements can be identified by the use of words such as “guidance,” “outlook,” “believes,” “estimates,” “anticipates,” “expects,” “forecasts,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could,” “would” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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 acquisitions, including the acquisitions of Komtek, Global-Tek and Machining Technology, and manage the larger operations of the combined businesses~~

~~(b) the~~ duration and scope of the COVID-19 pandemic, the resumption of operations by the Company’s customers, loosening of public health restrictions, or anany reimposed restrictions or tightening of public health restrictions which could impact the demand for the Company’s products; ~~(c) the Company’s inability to obtain needed~~(b) shortages in supply or increased costs of necessary products, components or raw materials from the Company’s suppliers; (c) availability shortages or increased costs of freight and labor for the Company and/or its suppliers; (d) actions that governments, businesses and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; (e) the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; (f) the pace of recovery when the COVID-19 pandemic subsides; (g) the Company's ability to effectively integrate acquisitions, and manage the larger operations of the combined businesses, (h) the Company's dependence upon a limited number of customers and the aerospace industry, (i) the highly competitive industry in which the Company operates, which includes several competitors with greater financial resources and larger sales organizations, (j) the Company's ability to capitalize on market opportunities in certain sectors, (k) the Company's ability to obtain cost effective financing and ~~(l)~~(k) the Company's ability to satisfy obligations under its financing arrangements, and the other risks described in “Item 1A. Risk Factors” in ~~this~~our Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s subsequent filings with the SEC.

As of June 30, ~~2021,~~2022, an evaluation was performed, under the supervision and with the participation of the ~~Company's~~Company’s management, including the ~~Company's~~Company’s Chief Executive Officer along with the ~~Company's Vice President, Finance and~~Company’s 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 Chief Financial Officer, concluded that the Company'sCompany’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")~~Act. Based upon that evaluation, the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were not effective as of June 30, ~~2021~~2022 due to ~~ensure that information required to be disclosed by~~ the ~~Company in reports that it files~~material weakness described below and ~~submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified~~discussed in the ~~Commission's rules~~Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its financial statements would not be prevented or detected on a timely basis.

In the course of preparing the Company’s financial statements included in the Form 10-K, management identified the following material weakness in internal control over financial reporting at the Company’s subsidiary CAD Enterprises Inc. (“CAD”):

In addition, management identified the following material weakness in internal control over financial reporting at the Company’s subsidiaries MPI Products, Inc. (“MPI”) and ~~forms, and (2) is accumulated and communicated~~Federal Hose Manufacturing LLC (“Federal Hose”);

These control deficiencies create a reasonable possibility that a material misstatement to the ~~Company's~~consolidated financial statements will not be prevented or detected on a timely basis, and therefore management concluded that the deficiencies represent a material weaknesses in internal control over financial reporting and the Company’s internal control over financial reporting was not effective as of December 31, 2021.

The Company is in the process of remediating the material weakness in order to strengthen internal controls at CAD, MPI and Federal Hose. The remediation plan includes the following:

• Hiring and training additional qualified personnel, new controllers were hired at CAD, MPI and Federal Hose;

• Ongoing enhancement of the timeliness, formality and rigor of CAD’s process for costing work-in-process inventory, including its ~~principal executive~~process for assigning, inputting, recording and ~~principal~~reviewing raw material costs and other standard costs;

• Ongoing enhancement of CAD’s training of employees with respect to appropriately and consistently recording direct labor time;

• Implementing a new accounting system at CAD that has certain built-in internal controls; and

• Ongoing enhancement of the training of financial ~~officer, as appropriate~~personnel at MPI and Federal Hose, and the timeliness, formality and rigor of processes at MPI and Federal Hose with respect to ~~allow timely decisions regarding required disclosure.~~ regular reconciliation of cash accounts with bank statements.

There ~~were~~have been no changes in the ~~Company's~~Company’s internal ~~controls~~control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the Company’s quarter ended June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company'sCompany’s internal control over financial reporting ~~is designed~~except for the remediation efforts with regard to ~~provide reasonable assurance regarding~~ the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes policies and procedures that (1) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorization of the Company's management and directors, and (3) provide reasonable assurance regarding prevention or the timely detection of unauthorized acquisition, use or disposal of the company's assets that could have a material ~~effect on the financial statements.~~weaknesses described above.

Management, including the Company's Chief Executive Officer along with the Company's Vice President, Finance and Chief Financial Officer, does not expect that the Company's internal controls will prevent or detect all errors and all fraud. An internal control system no matter how well designed and operated can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

*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.

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 10th day of August, ~~2021,~~2022, thereunto duly authorized.

	June 30, 2022			December 31, 2021
Commercial Air Handling Equipment Segment:
Beginning Balance	$	478,256		$	478,256
Acquisitions		0			0
Adjustments		0			0
Ending Balance	$	478,256		$	478,256

Industrial and Transportation Products Segment:
Beginning Balance	$	13,926,362		$	11,027,596
Acquisitions		1,922,513			2,898,766
Adjustments		(169,854	)		0
Ending Balance	$	15,679,021		$	13,926,362

Total Company:
Beginning Balance	$	14,404,618		$	11,505,852
Acquisitions		1,922,513			2,898,766
Adjustments		(169,854	)		0
Ending Balance	$	16,157,277		$	14,404,618

	June 30, 2021		December 31, 2020

Fair value of equity securities	$	1,479,259	$	1,534,400
Cost basis		826,224		949,293
Unrealized gain (loss) on equity securities	$	653,035	$	585,107

	BALANCE AT BEGINNING OF YEAR		ACQUISITIONS, DISPOSITIONS AND SETTLEMENTS		UNREALIZED GAINS (LOSSES) INCLUDED IN EARNINGS			REALIZED GAINS INCLUDED IN EARNINGS		BALANCE AT END OF PERIOD
December 31, 2021	$	1,534,400	$	19,698	$	(188,615	)	$	152,761	$	1,518,244

Year-to-date June 30, 2022		1,518,244		0		(434,069	)		0		1,084,175

	June 30, 2021		December 31, 2020

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,000,000 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016. Refinanced on January 15, 2021.	$	0	$	1,108,829

In connection with the Federal Hose acquisition, the Company entered into a promissory note on July 1, 2016 for a $2,768,662 loan due to First Francis Company, payable in quarterly installments beginning October 31, 2016. Refinanced on January 15, 2021.		0		941,867

In connection with the Komtek Forge acquisition, the Company refinanced the outstanding First Francis promissory notes, accrued interest payable through the refinance date and the assumed First Francis promissory note into one note on January 15, 2021 for a $3,779,784 loan due to First Francis Company, payable in quarterly installments beginning April 15, 2021.		3,617,328		0

In connection with the CARES Act, Federal Hose entered into a promissory note on June 4, 2020 for a $253,071 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installments scheduled to begin January 4, 2021. This note was fully forgiven on January 29, 2021.		0		253,071

In connection with the CARES Act, CAD entered into a promissory note on June 4, 2020 for a $1,200,766 loan due to First Federal Savings and Loan Association of Lakewood, with monthly principal and interest installments scheduled to begin January 4, 2021. This note was fully forgiven on January 22, 2021.		0		1,200,766

In connection with the CAD acquisition, the Company entered into a promissory note on July 1, 2018 for a $9,000,000 loan due to the Loudermilks, payable in quarterly installments beginning September 30, 2018.		5,062,500		6,187,500

Total notes payable		8,679,828		9,692,033

Less current portion		2,925,607		2,782,479

Notes payable – non-current portion	$	5,754,221	$	6,909,554

	June 30, 2022		December 31, 2021
In connection with the Komtek Forge acquisition, the Company refinanced the outstanding First Francis promissory notes, accrued interest payable through the refinance date and the assumed First Francis promissory note into one note on January 15, 2021 for a $3,779,784 loan due to First Francis Company, payable in quarterly installments beginning April 15, 2021.	$	2,941,721	$	3,284,762
In connection with the CAD acquisition, the Company entered into a promissory note on July 1, 2018 for a $9,000,000 loan due to the seller, payable in quarterly installments beginning September 30, 2018.		2,250,000		3,937,500
Total notes payable		5,191,721		7,222,262
Less current portion		2,968,833		2,946,885
Notes payable – non-current portion	$	2,222,888	$	4,275,377

	June 30, 2021			December 31, 2020
Operating leases:
Operating lease right-of-use assets, net	$	8,284,495		$	8,856,820

Other current liabilities		1,149,104			1,136,300
Operating lease liabilities		7,367,122			7,901,357
Total operating lease liabilities	$	8,516,226		$	9,037,657


Weighted Average Remaining Lease Term
Operating Leases (in years)		9.7			9.0

Weighted Average Discount Rate
Operating Leases		5.0	%		5.0	%

Cash Consideration Transferred	$	4,926,035
Seller Transaction Costs and Repayment of Indebtedness		1,398,394
Total Consideration	$	6,324,429

Accounts Receivable	$	1,058,460
Inventory		173,202
Fixed Assets		3,233,073
Prepaid and Other Assets		189,214
Intangibles Asset: Trademark		1,162,000
Intangible Asset: Customer List		1,041,000
Goodwill		1,896,607
Total Assets Acquired	$	8,753,556

Accounts Payable	$	473,119
Accrued Payroll and Other Expense		456,008
Contingent Liability		1,500,000
Total Liabilities Assumed	$	2,429,127

Total Fair Value	$	6,324,429


Acquisition transaction costs incurred were:	$	190,007

Accounts Receivable	$	1,058,459
Inventory		173,202
Fixed Assets		3,426,091
Prepaid and Other Assets		1,036
Intangibles Assets		2,203,000
Goodwill		1,813,598
Total Assets Acquired	$	8,675,386

Accounts Payable	$	473,119
Accrued Payroll and Other Expense		202,780
Contingent Liability		1,500,000
Total Liabilities Assumed	$	2,175,899

Net Assets Acquired	$	6,499,487

Acquisition transaction costs incurred were:	$	189,736

Assumption of Indebtedness	$	287,359

Accounts Receivable		79,843
Inventory		67,254
Intangible Assets: Customer List		478,649
Total Assets Acquired	$	625,746

Accounts Payable	$	338,387
Total Liabilities Assumed	$	338,387
Total Fair Value	$	287,359
Acquisition transaction costs incurred were:	$	36,204

Cash Consideration Transferred	$	3,973,375
Seller Transaction Costs		230,359
Total Consideration	$	4,203,734

Accounts Receivable		471,879
Inventory		1,349,115
Fixed Assets		255,000
Prepaid and Other Assets		47,632
Intangible Asset: Customer List & Trademark		1,300,000
Goodwill		1,378,191
Total Assets Acquired	$	4,801,817

Accounts Payable	$	542,359
Accrued Expense		55,724
Total Liabilities Assumed	$	598,083
Total Fair Value	$	4,203,734

Acquisition transaction costs incurred were:	$	124,825

Cash Consideration Transferred	$	250,000
Fair Value of Stock Consideration		1,000,012
Total Consideration	$	1,250,012

Cash	$	100,000
Accounts Receivable		155,932
Inventory		664,861
Fixed Assets		164,123
Intangible Assets		150,000
Goodwill		424,261
Total Assets Acquired	$	1,659,177

Accounts Payable	$	33,694
Deferred Revenue		375,471
Total Liabilities Assumed	$	409,165
Total Fair Value		1,250,012

Acquisition transaction costs incurred were:	$	8,951

	Six Months ended					Six Months ended
	June 30, 2022					June 30, 2021
	Sales		Net Income			Sales		Net Income
Acquired Companies:
Komtek (acquired January 15, 2021)	$	4,148,696		200,675		$	3,634,832	$	273,371
Global-Tek (acquired March 1, 2021)		3,154,086		(488,575	)		4,310,258		705,122
EH (acquired July 1, 2021)		656,068		69,543			0		0
Reverso Pumps (acquired January 10, 2022)		2,548,563		351,769			0		0
Separ America (acquired January 10, 2022)		869,739		234,595			0		0
Knitting Machinery (acquired May 1, 2022)		579,388		61,415			0		0
Subtotal Acquired Companies	$	11,956,540		429,422			7,945,090		978,493

All Other Companies		50,948,233		1,807,717			42,498,799		3,412,229
Total	$	62,904,773	$	2,237,139		$	50,443,889	$	4,390,722

	Three Months Ended June 30, 2022
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	11,845,380	$	20,056,647	$	-		$	31,902,027
Gross Profit		2,453,139		4,315,352		0			6,768,491
Operating Income		1,382,553		1,839,634		(846,660	)		2,375,527
Pretax Income		1,382,553		1,514,121		(1,301,004	)		1,595,670
Net Income		988,526		1,071,636		(888,898	)		1,171,264

	Three Months Ended June 30, 2021
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	9,972,545	$	16,477,340	$	0		$	26,449,885
Gross Profit		2,030,038		3,750,252		0			5,780,290
Operating Income		845,092		1,342,966		(68,261	)		2,119,797
Pretax Income		845,092		1,121,507		(372,142	)		1,594,457
Net Income		633,818		893,184		(279,697	)		1,247,305

	Six Months Ended June 30, 2021
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	18,737,644	$	31,706,245	$	0		$	50,443,889
Gross Profit		4,260,858		7,522,353		0			11,783,211
Operating Income		1,890,721		3,094,411		(539,875	)		4,445,257
Pretax Income		1,890,721		2,693,643		679,052			5,263,416
Net Income		1,418,040		2,099,368		873,314			4,390,722

	Six Months Ended June 30, 2020 (1)
	Commercial Air Handling		Industrial And Transportation Products			Corporate and Other			Consolidated
Sales	$	23,302,590	$	20,555,572		$	0		$	43,858,162
Gross Profit		5,941,342		3,765,841			0			9,707,182
Operating Income		3,185,251		541,737			(58,319	)		3,668,669
Pretax Income		3,160,286		(33,088	)		(50,206	)		3,076,992
Net Income		2,370,215		(30,679	)		(35,129	)		2,304,407

2.1
	Asset Purchase Agreement entered into as of May 1, 2022, by and among Knitting Machinery Company of America, LLC and the seller parties named therein (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on May 2, 2022).
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*	Inline XBRL Instance
101.SCH*	Inline XBRL Taxonomy Extension Schema
101.CAL*	Inline XBRL Taxonomy Extension Calculation
101.DEF*	Inline XBRL Extension Definition
101.LAB*	Inline XBRL Taxonomy Extension Labels
101.PRE*	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)


SIGNATURE:	TITLE
/s/ Brian E. Powers	President and Chief Executive Officer
Brian E. Powers	(Principal Executive Officer)




/s/ John P. Daly	Vice President and Chief Financial Officer
John P. Daly	(Principal Accounting and Financial Officer)