What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 124 added, 141 removed, 644 unchanged (29% of the section changed)

2 unchanged sentences

in Thousands, Except Share Amounts)

September 30,

Current Assets:

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authorized 20,000,000 shares:

10,153,633 shares issued and 10,094,322 outstanding at both June 30, 2021 and December 31, 2020

10,153,633 shares issued and 10,094,322 outstanding at both

September 30, 2021 and December 31, 2020

Treasury Stock

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CONSOLIDATED STATEMENTS OF INCOME

in Thousands except Earnings per Common Share)

in Thousands except per Share Data and Share Amounts)

For the three months ended

For the six months ended

For the nine months ended

September 30,

Cost of Goods Sold

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Income Tax Expense

Net (Income) Loss attributable to the Noncontrolling Interest

Net (Income) attributable to the Noncontrolling Interest

Net Income attributable to Omega Flex, Inc.

6 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

September 30,

Other Comprehensive Income (Loss):

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Comprehensive Income

Comprehensive (Income) Loss Attributable to the Noncontrolling Interest

Comprehensive (Income) Attributable to the Noncontrolling Interest

Total Comprehensive Income

2 unchanged sentences

in Thousands, Except Share Amounts)

the three months ended June 30, 2021

Common Stock Outstanding

Paid In Capital

Retained Earnings

the three months ended September 30, 2021

Stock Outstanding

Comprehensive

Income (Loss)

Noncontrolling

Shareholders’

April 1, 2021

Cumulative Translation Adjustment

Dividends Declared

June 30, 2021

the three months ended June 30, 2020

Common Stock Outstanding

Paid In Capital

Retained Earnings

the three months ended September 30, 2020

Stock Outstanding

Comprehensive

Income (Loss)

Noncontrolling

Shareholders’

April 1, 2020

Cumulative Translation Adjustment

Dividends Declared

June 30, 2020

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

in Thousands, Except Share Amounts)

the six months ended June 30, 2021

Common Stock Outstanding

Paid In Capital

Retained Earnings

the nine months ended September 30, 2021

Stock Outstanding

Comprehensive

Income (Loss)

Noncontrolling

2 unchanged sentences

Cumulative Translation Adjustment

Dividends Declared

June 30, 2021

the six months ended June 30, 2020

Common Stock Outstanding

Paid In Capital

Retained Earnings

the nine months ended September 30, 2020

Stock Outstanding

Comprehensive

Income (Loss)

Noncontrolling

2 unchanged sentences

Cumulative Translation Adjustment

Dividends Declared

June 30, 2020

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

in Thousands)

For the six-months ended

For the nine months ended

September 30,

Cash Flows from Operating Activities:

2 unchanged sentences

Depreciation and Amortization

Provision for Losses on Accounts Receivable, net of write-offs and recoveries

Provision for Losses on Accounts Receivable, net of

write-offs and recoveries

Deferred Taxes

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(collectively the “Company”).

The Company’s condensed consolidated financial statements for the quarter ended June

The Company’s condensed consolidated financial statements for the quarter ended September

30, 2021 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions

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forecasts, when appropriate, and credit risk characteristics.

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,143,000 and $ 1,124,000 as of June 30,

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,230,000 and $ 1,124,000 as of September

30, 2021 and December 31, 2020, respectively.

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The Units follow a vesting

schedule of six years from the grant date, and are then paid upon maturity.

schedule of three years from the grant date, and are then paid upon maturity.

In accordance with FASB ASC Topic 718, Compensation

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as a finance lease, formerly called a capital lease, if any of the following criteria are met:

The lease transfers ownership of the underlying asset to the

lessee by the end of the lease term.

The lease grants the lessee an option to purchase the underlying

asset that the lessee is reasonably certain to exercise.

The lease term is for the major part of the remaining economic

life of the underlying asset.

The present value of the sum of lease payments and any residual

value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.

The underlying asset is of such a specialized nature that it

is expected to have no alternative use to the lessor at the end of the lease term.

lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

lease term is for the major part of the remaining economic life of the underlying asset.

present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of

the fair value of the underlying asset.

underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease

any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases.

of June 30, 2021 and December 31, 2020, each of the Company’s leases are classified as operating leases.

of September 30, 2021 and December 31, 2020, each of the Company’s leases are classified as operating leases.

finance and operating leases are reflected on the balance sheet as lease or “right-of-use” assets and lease liabilities.

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participants would use in pricing the asset or liability.

The Company relies upon Level 1 inputs in determining the fair value of investments

and the fair value of the Company’s reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles

- Goodwill and Other .

The Company relies upon Level 1 inputs in determining the fair value of the

Company’s reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other .

per Common Share

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Comprehensive Income

the three and six months ended June 30, 2021 and 2020, respectively, the components of other comprehensive income consisted solely of

foreign currency translation adjustments.

the three and nine months ended September 30, 2021 and 2020, the components of other comprehensive income consisted solely of foreign

currency translation adjustments.

Concentration

Company has one significant customer which represented more than 10 % of the Company’s Accounts Receivable at June 30, 2021 and

December 31, 2020.

That same customer represented more than 10 % of the Company’s total Net Sales for the three and six months ended

June 30, 2021 and 2020.

Company has one significant customer which represented more than 10 % of the Company’s Accounts Receivable at September 30, 2021

and December 31, 2020.

That same customer represented more than 10 % of the Company’s total Net Sales for the three and nine months

ended September 30, 2021 and 2020.

Geographically, the Company has a significant amount of sales in the United States versus internationally.

concentrations are consistent with those discussed in detail in the Company’s December 31, 2020 Form 10-K.

These concentrations are consistent with those discussed in detail in the Company’s December 31, 2020 Form 10-K.

Company evaluates all events or transactions through the date of the related filing that may have a material impact on its condensed

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this new guidance, and it did not have a material impact on its condensed consolidated financial statements.

net of reserves of $ 445,000 and $ 407,000 at June 30, 2021 and December 31, 2020, respectively, consisted of the following:

net of reserves of $ 703,000 and $ 407,000 as of September 30, 2021 and December 31, 2020, respectively, consisted of the following:

OF INVENTORIES, NET OF RESERVES

(dollars in thousands)

September 30,

(Amounts in Thousands)

Finished Goods

6 unchanged sentences

The Company established a line of credit facility in the maximum

amount of $ 15,000,000 ,

maturing on December

1, 2022 , with funds available for working capital

purposes and other cash needs.

The loan is unsecured.

loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 0.75% to

plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime Rate up to Prime Rate plus 0.50% (for borrowings with

no fixed term other than the December 1, 2022 maturity date), depending upon the Company’s then existing financial ratios.

the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of 0.85%.

The Company is also required to pay on a quarterly

basis an unused facility fee of 10 basis points of the average unused balance of the note.

The Company may terminate the line at any

time during the five-year term, as long as there are no amounts outstanding .

amount of $ 15,000,000 , maturing on December 1, 2022 , with funds available for working capital purposes and other cash needs.

is unsecured.

The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR

plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime Rate up to Prime Rate plus 0.50% (for borrowings

with no fixed term other than the December 1, 2022 maturity date), depending upon the Company’s then existing financial ratios.

Currently, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate

The Company is also required to pay on a quarterly basis an unused facility fee of 10 basis points of the average unused balance

The Company may terminate the line at any time during the five-year term, as long as there are no amounts outstanding.

the quarter ended June 30, 2020, in an effort to ensure liquidity and secure all available resources during the COVID-19 pandemic, the

2 unchanged sentences

in full prior to the end of such quarter, and as of December 31, 2020, had no borrowings on its line of credit.

As of June 30, 2021,

the Company had no outstanding borrowings on its line of credit.

Company was in compliance with all debt covenants as of June 30, 2021 and December 31, 2020.

As of September 30, 2021,

the Company also had no outstanding borrowings on its line of credit.

Company was in compliance with all debt covenants as of September 30, 2021 and December 31, 2020.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the U.S.

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The net present value of

the retirement payments associated with these agreements is $ 466,000 at June 30, 2021, of which $ 418,000 is included in Other Long Term

Liabilities, and the remaining current portion of $ 48,000 is included in Other Liabilities, associated with the applicable retirement

the retirement payments associated with these agreements is $ 460,000 at September 30, 2021, of which $ 412,000 is included in Other Long

Term Liabilities, and the remaining current portion of $ 48,000 is included in Other Liabilities, associated with the applicable retirement

benefit payments over the next twelve months.

3 unchanged sentences

The cash surrender

value of such policies (included in Other Long Term Assets) amounts to $ 1,622,000 at June 30, 2021 and $ 1,556,000 at December 31, 2020.

value of such policies (included in Other Long Term Assets) amounts to $ 1,625,000 at September 30, 2021 and $ 1,556,000 at December 31,

addition to the above, the Company has other contractual employment and or change of control agreements in place with key employees,

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fourth quarter of 2020 and made a payment of £ 320,000 accordingly.

A nominal liability remains at June 30, 2021 and December 31,

A nominal liability remains at September 30, 2021 and December

31, 2020 approximating any outstanding amounts that may potentially be due as part of the final arrangement.

6 unchanged sentences

The aggregate maximum exposure for all current open Claims

as of June 30, 2021 is estimated to not exceed approximately $ 6,500,000 , which represents the potential costs that may be incurred over

time for the Claims within the applicable insurance policy deductibles or retentions.

From time to time, depending upon the nature of

a particular case, the Company may decide to spend in excess of a deductible or retention to enable more discretion regarding the defense,

although this is not common.

as of September 30, 2021 is estimated to not exceed approximately $ 7,300,000 , which represents the potential costs that may be incurred

over time for the Claims within the applicable insurance policy deductibles or retentions.

From time to time, depending upon the nature

of a particular case, the Company may decide to spend in excess of a deductible or retention to enable more discretion regarding the

defense, although this is not common.

It is possible that the results of operations or liquidity of the Company, as well as the Company’s

3 unchanged sentences

statements primarily represents an accrual for legal costs for services previously rendered, and outstanding or anticipated settlements

The liabilities recorded on the Company’s books at June 30, 2021 and December 31, 2020 were $ 252,000 and $ 642,000 ,

The liabilities recorded on the Company’s books at September 30, 2021 and December 31, 2020 were $ 709,000 and $ 642,000 ,

respectively, and are included in Other Liabilities.

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described below.

The Units follow a vesting schedule, with a maximum vesting of six years after the grant date.

The Units follow a vesting schedule, with a maximum vesting of three years after the grant date.

Upon vesting, the Units

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units that were granted during 2017, including their respective earned dividend values.

As of June 30, 2021, the Company had 9,872 unvested

units outstanding.

In August 2021, the Company paid $ 195,000 for

the 1,250 fully vested and matured units that were granted during August 2017, including their respective earned dividend values.

August 25, 2021, the Company granted an additional 808 Full Value Units with a fair value of $ 144.81 per unit on grant date, using

historical volatility.

On August 27, 2021, 1,212 unvested Full Value Units were forfeited.

As of September 30, 2021, the Company

had 8,358 unvested units outstanding.

Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units.

3 unchanged sentences

of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award.

718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures

differ from those estimates in order to derive the Company’s best estimate of awards ultimately to vest.

represent only the unvested portion of a surrendered Unit and are typically estimated based on historical experience.

Based on an analysis

of the Company’s historical data, which has limited experience related to any stock-based plan forfeitures, the Company applied

a 0 % forfeiture rate to Plan Units outstanding in determining its Plan Unit compensation expense as of June 30, 2021.

total Phantom Stock related liability as of June 30, 2021 was $ 2,593,000 of which $ 1,182,000 is included in Other Liabilities, as it

is expected to be paid within the next twelve months, and the balance of $ 1,411,000 is included in Other Long Term Liabilities.

31, 2020, the total Phantom Stock liability was $ 3,331,000 , with $ 1,378,000 in Other Liabilities, and $ 1,953,000 included in Other Long

Term Liabilities.

718 requires forfeitures either to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures

differ from those estimates to derive an estimate of awards ultimately to vest or to recognize the effect of any forfeited awards for

which the requisite vesting period is not completed in the period that the award is forfeited.

Company recognizes the reversal of any previously recognized compensation expense on forfeited awards in the period that the award is

For the three and nine months ended September 30, 2021, the reversal of $ 56,000 of previously recognized compensation expense

was recognized on 1,212 nonvested forfeited Units.

total Phantom Stock related liability as of September 30, 2021 was $ 2,500,000 of which $ 1,254,000 is included in Other Liabilities, as

it is expected to be paid within the next twelve months, and the balance of $ 1,246,000 is included in Other Long Term Liabilities.

December 31, 2020, the total Phantom Stock liability was $ 3,331,000 , with $ 1,378,000 in Other Liabilities, and $ 1,953,000 included in

Other Long Term Liabilities.

to the Phantom Stock Plan, in accordance with Topic 718, the Company recorded compensation expense of approximately $ 579,000 and $ 1,406,000

for the six months ended June 30, 2021 and 2020, respectively, and $ 36,000 and $ 608,000 for the three-months, respectively.

expense for a given period largely depends upon fluctuations in the Company’s stock price.

following table summarizes information about the Company’s nonvested phantom stock Units at June 30, 2021:

for the nine months ended September 30, 2021 and 2020, respectively, and $ 102,000 and $ 1,264,000 for the three months ended, respectively.

Compensation expense for a given period largely depends upon fluctuations in the Company’s stock price.

following table summarizes information about the Company’s nonvested phantom stock Units at September 30, 2021:

OF NONVESTED PHANTOM STOCK UNITS

Weighted Average

Grant Date Fair Value

Weighted Average Grant Date Fair Value

Number of Phantom Stock Unit Awards:

Nonvested at December 31, 2020

Nonvested at June 30, 2021

Nonvested at September 30, 2021

Phantom Stock Unit Awards Expected to Vest

total unrecognized compensation costs calculated at June 30, 2021 are $ 1,059,000 which will be recognized through February of 2024 .

Company will recognize the related expense over the weighted average period of 1.3 years .

total unrecognized compensation costs calculated at September 30, 2021 are $ 968,000 which will be recognized through August of 2024 .

The Company will recognize the related expense over the weighted average period of 1.2 years.

the U.S., the Company owns its two main operating facilities located in Exton, Pennsylvania.

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addition to property rentals, the Company also has lease agreements in place for various fleet vehicles and equipment with various lease

June 30, 2021, the Company has recorded right-of-use assets of $ 3,571,000 ,

and a lease liability of $ 3,573,000 ,

of which $ 404,000 is

reported as a current liability.

September 30, 2021, the Company has recorded right-of-use assets of $ 3,464,000 , and a lease liability of $ 3,462,000 , of which $ 404,000

is reported as a current liability.

At December 31, 2020, the Company had recorded right-of-use assets of $ 493,000 , and a lease liability

of $ 499,000 , of which $ 247,000 is reported as a current liability.

of $ 499,000 , of which $ 247,000 was reported as a current liability.

The respective weighted average remaining lease term and discount

rate are approximately 13.43 years and 1.1 % as of June 30, 2021.

expense for the operating leases was approximately $ 108,000 and $ 204,000 for the three and six months ended June 30, 2021 and $ 74,000

and $ 149,000 for the three and six months ended June 30, 2020.

minimum lease payments, inclusive of interest, under non-cancelable leases as of June 30, 2021 is as follows:

rate are approximately 13.03 years and 1.1 % as of September 30, 2021.

expense for the operating leases was approximately $ 108,000 and $ 312,000 for the three and nine months ended September 30, 2021 and $ 76,000

and $ 225,000 for the three and nine months ended September 30, 2020.

minimum lease payments, inclusive of interest, under non-cancelable leases as of September 30, 2021 is as follows:

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Twelve Months Ending June 30,

Operating Leases

(in thousands)

Minimum Lease Payments

Twelve Months Ending September 30,

(Amounts in thousands)

Total Minimum Lease Payments

SHAREHOLDERS’ EQUITY

of June 30, 2021 and December 31, 2020, the Company had authorized 20,000,000 common stock shares with par value of $ 0.01 per share.

of September 30, 2021 and December 31, 2020, the Company had authorized 20,000,000 common stock shares with par value of $ 0.01 per share.

For both periods, the total number of outstanding shares was 10,094,322 , shares held in Treasury was 59,311 , and total shares issued

6 unchanged sentences

Price Per Share

September 15, 2021

October 4, 2021

March 24, 2021

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January 3, 2020

addition to the above dividend amounts, there were dividends approved by the Company’s foreign subsidiary during September 2021,

which amounted to an outlay of cash of $ 129,000 to the foreign subsidiary’s noncontrolling interest.

should be noted that from time to time, the Board may elect to pay special dividends, in addition to or in lieu of the regular quarterly

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First, legal and accounting fees of

$ 117,000 were paid on behalf of three affiliated shareholders for the filing of a registration statement with the SEC (Form S-3) which

allowed for the resale of up to 300,000 shares of common stock owned by the affiliated shareholders.

The legal and accounting fees are

to be repaid to the Company by the three affiliated shareholders, and that amount is reported in Other Current Assets.

Legal services

for the Form S-3 and for other legal services were performed by a firm which formerly employed one member of the board.

Second, on occasion

the Company shares a small portion of services with its former parent Mestek, Inc., mostly related to board meeting expenses.

the Company is aware of transactions between a few service providers which employ individuals with associations to Omega Flex employees.

In all cases, these transactions have been determined to be independent transactions with no indication that they are influenced by the

related relationships.

Other than as disclosed above, the Company is currently not aware of any RPTs between the Company and any of its

current directors or officers outside the scope of their normal business functions or expected contractual duties.

$ 117,000 were paid on behalf of three affiliated shareholders during the first two quarters of 2021 for the filing of a registration

statement with the SEC (Form S-3) which allowed for the resale of up to 300,000 shares of common stock owned by the affiliated shareholders.

The legal and accounting fees are to be repaid to the Company by the three affiliated shareholders, and that amount is reported in Other

Current Assets.

Legal services for the Form S-3 and for other legal services were performed by a firm which formerly employed one member

of the board.

Second, on occasion the Company shares a small portion of services with its former parent Mestek, Inc., mostly related

to board meeting expenses.

Finally, the Company is aware of transactions between a few service providers which employ individuals with

associations to Omega Flex employees.

In all cases, these transactions have been determined to be independent transactions with no indication

that they are influenced by the related relationships.

Other than as disclosed above, the Company is currently not aware of any RPTs

between the Company and any of its current directors or officers outside the scope of their normal business functions or expected contractual

SUBSEQUENT EVENTS

evaluated all events or transactions that occurred through the date of this filing.

During this period, no events came to the Company’s

attention that would impact the condensed consolidated financial statements for the period ended June 30, 2021.

Company evaluated all events or transactions that occurred through the date of this filing.

During this period, no events came to the

Company’s attention that would impact the condensed consolidated financial statements for the period ended September 30, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements