What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-14 compared with 2021-03-08 · 252 added, 534 removed, 55 unchanged (93% of the section changed)

1 unchanged sentence

report contains forward-looking statements, which are subject to inherent uncertainties.

These uncertainties include, but are

not limited to, variations in weather, changes in the regulatory environment, customer preferences, general economic conditions,

increased competition, the outcome of outstanding litigation, and future developments affecting environmental matters.

these are difficult to predict, and many are beyond the ability of the Company to control.

These uncertainties include, but are not limited

to, variations in weather, changes in the regulatory environment, customer preferences, general economic conditions, increased competition,

the outcome of outstanding litigation, and future developments affecting environmental matters.

All of these are difficult to predict,

and many are beyond the ability of the Company to control.

statements in this Annual Report on Form 10-K that are not historical facts, but rather reflect the Company’s current expectations

concerning future results and events, constitute forward-looking statements within the meaning of the Private Securities Litigation

Reform Act of 1995.

concerning future results and events, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform

The words “believes”, “expects”, “intends”, “plans”, “anticipates”,

“hopes”, “likely”, “will”, and similar expressions identify such forward-looking statements.

Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the

actual results, performance or achievements of the Company, or industry results, to differ materially from future results, performance

or achievements expressed or implied by such forward-looking statements.

are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s view only as of

the date of this Form 10-K.

The Company undertakes no obligation to update the result of any revisions to these forward-looking

statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated

events, conditions or circumstances.

Company is a leading manufacturer of flexible metal hose, and is currently engaged in a number of different markets, including

construction, manufacturing, transportation, petrochemical, pharmaceutical and other industries.

Company’s business is managed as a single operating segment that consists of the manufacture and sale of flexible metal

hose and accessories.

The Company’s products are concentrated in residential and commercial construction, and general industrial

markets, with a comprehensive portfolio of intellectual property and patents issued in various countries around the world.

Company’s primary product, flexible gas piping, is used for gas piping within residential and commercial buildings.

its flexibility and ease of use, the Company’s TracPipe ® and TracPipe ® CounterStrike ®

flexible gas piping, along with its fittings distributed under the trademarks AutoSnap ® and AutoFlare ® ,

allows users to substantially cut the time required to install gas piping, as compared to traditional methods.

forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results,

performance or achievements of the Company, or industry results, to differ materially from future results, performance or achievements

expressed or implied by such forward-looking statements.

are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s view only as of the date

of this Form 10-K.

The Company undertakes no obligation to update the result of any revisions to these forward-looking statements which

may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions,

or circumstances.

Company is a leading manufacturer of flexible metal hose and is currently engaged in a number of different markets, including construction,

manufacturing, transportation, petrochemical, pharmaceutical and other industries.

Company’s business is managed as a single operating segment that consists of the manufacture and sale of flexible metal hose, fittings,

and accessories.

The Company’s products are concentrated in residential and commercial construction, and general industrial markets,

with a comprehensive portfolio of intellectual property and patents issued in various countries around the world.

The Company’s

newest product line MediTrac ® corrugated medical tubing is used for piping medical gases (oxygen, nitrogen, nitrous

oxide, carbon dioxide, and medical vacuum) in health care facilities.

Building on the recognized strengths and strategies employed

in the flexible gas piping market, MediTrac ® can be used in place of rigid copper pipe, and due to its long continuous

lengths and flexibility, it can be installed approximately five times faster than rigid copper pipe, saving on installation labor

and construction schedules.

The Company’s products are manufactured at its Exton, Pennsylvania and Houston, Texas facilities

in the U.S., and in Banbury, Oxfordshire in the UK.

A majority of the Company’s sales across all industries are generated

through independent outside sales organizations such as sales representatives, wholesalers and distributors, or a combination

The Company has a broad distribution network in North America and to a lesser extent in other global markets.

primary product, flexible gas piping, is used for gas piping within residential and commercial buildings.

Through its flexibility and

ease of use, the Company’s TracPipe ® and TracPipe ® CounterStrike ® flexible gas piping,

along with its fittings distributed under the trademarks AutoSnap ® and AutoFlare ® , allows users to substantially

cut the time required to install gas piping, as compared to traditional methods.

The Company’s newest product line MediTrac ®

corrugated medical tubing is used for piping medical gases (oxygen, nitrogen, nitrous oxide, carbon dioxide, and medical vacuum)

in health care facilities.

Building on the recognized strengths and strategies employed in the flexible gas piping market, MediTrac ®

can be used in place of rigid copper pipe, and due to its long continuous lengths and flexibility, it can be installed approximately

five times faster than rigid copper pipe, saving on installation labor and construction schedules.

The Company’s products are manufactured

at its Exton, Pennsylvania and Houston, Texas facilities in the U.S., and in Banbury, Oxfordshire in the U.K.

A majority of the Company’s

sales across all industries are generated through independent outside sales organizations such as sales representatives, wholesalers

and distributors, or a combination of both.

The Company has a broad distribution network in North America and to a lesser extent in other

global markets.

IN FINANCIAL CONDITION

1 unchanged sentence

The primary reason for the increase in cash related to income generated from operations during 2021.

This was partially

offset by dividend payments during 2020 totaling $11,306,000, as detailed in Note 6, Shareholders’ Equity, to the

Consolidated Financial Statements included in this report.

Further, the Company used funds for the purchase of inventory in anticipation

of stronger customer demand.

This was partially offset

by dividend payments during 2021 totaling $14,867,000, as detailed in Note 6, Shareholders’ Equity, to the Consolidated Financial

Statements included in this report.

See the Company’s Consolidated Cash Flow Statement for further details regarding the change

receivable were $20,077,000 and $17,047,000 as of December 31, 2020 and December 31, 2019, respectively, increasing $3,030,000

The increase was largely related to the increase in sales over the last several months of 2020 in comparison to 2019,

thus increasing the amounts to be collected within terms.

earnings were $35,769,000 and $27,165,000 at December 31, 2020 and December 31, 2019, respectively, increasing $8,604,000 or 31.7%.

was $15,565,000 and $11,510,000 as of December 31, 2021 and December 31, 2020, respectively, increasing $4,055,000 or 35.2%.

is mainly the result of the purchase of inventory in anticipation of stronger customer demand and to ensure enough materials on hand

because of sporadic supply chain issues.

Commissions and Sales Incentives were $7,183,000 and $4,348,000 as of December 31, 2021 and December 31, 2020, respectively, increasing

$2,835,000 or 65.2%.

The increase is the result of higher sales which allowed for many of our customers to achieve growth tiers as defined

within their sales incentive agreements.

earnings were $50,053,000 and $35,769,000 as of December 31, 2021 and December 31, 2020, respectively, increasing $14,284,000 or 39.9%.

The increase was primarily due to an increase in net income during the year, as provided on the Company’s Consolidated Statement

of Operations, partially offset by dividend payments made during 2020, as discussed in detail in Note 6, Shareholders’ Equity,

to the Consolidated Financial Statements included in this report.

of Operations, partially offset by dividends declared during 2021, as discussed in detail in Note 6, Shareholders’ Equity, to the

Consolidated Financial Statements included in this report.

OF OPERATIONS

3 unchanged sentences

Company reported comparative results from operations for the twelve-month periods ended December 31, 2021 and 2020 as follows:

Twelve-months

ended December 31,

Twelve-months ended December 31,

(dollars in thousands)

Operating Profit

The Company’s sales for the full year of 2020 were $105,796,000, reflecting a decrease of $5,564,000, or 5.0%,

compared to $111,360,000 in 2019.

The decrease in sales resulted mostly from a decrease in unit volume, which was in some measure

impacted by the COVID-19 pandemic, partially offset by a mild increase to selling prices that was necessary to help offset a rise

in material commodity costs.

The Company’s gross profit margins were 62.9% and 63.3% for the twelve-months ended December 31, 2020 and 2019,

respectively.

The Company was able to maintain margins similar to prior year levels despite COVID-19 disruptions, such as increased

costs to sanitize the factory and equipment, inefficiencies from staggered work shifts and overtime costs due to employees being

quarantined, as well as unabsorbed overhead.

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost

of marketing programs such as advertising, trade shows and related communication costs, and freight.

Selling expense was $16,580,000

and $19,032,000 for 2020 and 2019, respectively, representing a decrease of $2,452,000, or 12.9%.

The most significant reduction

relates to atypical consulting costs identified during 2019, attributable to the Company’s new product, MediTrac ®

flexible medical gas piping.

The Company also experienced decreases in travel and advertising during 2020, mostly related

to restrictions stemming from the pandemic.

Commissions were also down due to the decrease in sales.

Conversely, the Company expanded

its sales related staffing resources.

For the same periods, selling expense as a percentage of net sales was 15.7% and 17.1%,

respectively.

The Company’s sales for the full year of 2021 were $130,011,000, reflecting an increase of $24,215,000, or 22.9%, compared

to $105,796,000 in 2020.

The increase in sales resulted mostly from an increase in unit volume, which was in some measure impacted by

the COVID-19 pandemic in the previous year, as well as increases to selling prices that were necessary to help offset rising material

commodity costs.

The Company’s gross profit margins were 62.7% and 62.9% for the years ended December 31, 2021, and 2020, respectively.

The Company was able to maintain margins similar to prior year levels despite rising material commodity costs which were mainly offset

by increases to selling prices.

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing

programs such as advertising, trade shows and related communication costs, and freight.

Selling expense was $20,429,000 and $16,580,000

for 2021 and 2020, respectively, representing an increase of $3,849,000, or 23.2%.

The most significant increases included commissions

and freight, driven by the increase in sales.

In addition, sales personnel were added in France and advertising, trade shows and travel

returned to more expected levels as these were restricted in the previous year due to the COVID-19 pandemic.

For the same annual periods,

selling expense as a percentage of net sales was consistent at 15.7%.

and Administrative Expenses .

1 unchanged sentence

executive and finance personnel, legal and accounting, insurance, and corporate general and administrative services.

administrative expenses were $19,117,000 and $24,818,000 for the years ended December 31, 2020 and 2019, respectively, decreasing

$5,701,000, or 23% between periods.

Legal and product liability defense costs decreased $5,158,000, associated primarily with

one class action case which was dismissed during 2020, as explained in detail in Note 10, Commitments and Contingencies, of the

Consolidated Financial Statements to this report.

Professional fees and director related fees were also lower.

Those items were

softened by an increase to incentive compensation, which although not significant in total, was derived from two notable yet mostly

offsetting components.

There was an increase in the incentive compensation component which is aligned with profitability;

there was a reduction in expense pertaining to equity awards which move in relation to the Company’s stock price, as detailed

in Note 11, Stock Based Compensation Plans.

As a percentage of net sales, general and administrative expenses were 18.1% and 22.3%

for the twelve-months ended December 31, 2020 and 2019, respectively.

Engineering expenses consist of development expenses associated with the development of new products, and costs

related to enhancements of existing products and manufacturing processes.

Engineering expenses decreased $515,000 or 10.9% between

periods, being $4,200,000 and $4,715,000 for the years ended December 31, 2020 and 2019, respectively.

The decrease was primarily

attributable to a reduction in experimental materials that diminished after the work was completed on various promising applications

during 2019, and to a lesser extent travel.

As a percentage of net sales for the year, engineering expenses were 4.0% in 2020

and 4.2% in 2019.

Reflecting all of the factors mentioned above, operating profits increased $4,731,000, or 21.6%, between periods,

reflecting a profit of $26,653,000 in 2020, as compared to $21,922,000 in 2019.

Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt

amounts outstanding on its line of credit.

The Company recorded interest expense of $39,000 for 2020, compared to interest income

of $876,000 for 2019.

The reduction in interest income was largely due to the lower cash balance and thus reduced investment,

mostly resulting from the $35,330,000 special dividend paid in December 2019.

Additionally, the Company had borrowed $15,000,000

on its line of credit for a portion of the second quarter of 2020 to ensure liquidity during the COVID-19 crisis.

Earning potential

on short-term liquid investments has also diminished in comparison to this time last year.

General and administrative

expenses were $21,430,000 and $19,117,000 for the years ended December 31, 2021 and 2020, respectively, increasing $2,313,000, or 12.1%

between periods.

Incentive compensation was derived from two notable yet partly offsetting components.

There was an increase in the incentive

compensation component which is aligned with profitability;

however, this was partially offset by a reduction in expense pertaining to

stock based compensation which moves in relation to the Company’s stock price, as detailed in Note 11, Stock Based Compensation

Other items increasing from the previous year include legal and product liability expenses and director fees.

As a percentage

of net sales, general and administrative expenses were 16.5% and 18.1% for the twelve-months ended December 31, 2021 and 2020, respectively.

Engineering expenses consist of development expenses associated with the development of new products, and costs related

to enhancements of existing products and manufacturing processes.

Engineering expenses increased $410,000 or 9.8% between periods, being

$4,610,000 and $4,200,000 for the years ended December 31, 2021 and 2020, respectively.

The increase was primarily attributable to an

increase in staffing, mainly in the U.K., and certification and qualification expenses.

As a percentage of net sales for the year, engineering

expenses were 3.6% in 2021 and 4.0% in 2020.

Reflecting all of the factors mentioned above, operating profits increased $8,409,000, or 31.6%, between periods, reflecting

a profit of $35,062,000 in 2021, as compared to $26,653,000 in 2020.

Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts

outstanding on its line of credit.

The Company recorded interest income of $35,000 for 2021, compared to interest expense of $39,000

The decrease in interest expense and increase in interest income was largely due to the interest expense incurred on the borrowings

of $15,000,000 on its line of credit for a portion of the second quarter of 2020 to ensure liquidity during the COVID-19 pandemic.

were no borrowings on its line of credit during 2021.

Income (Expense) .

Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions within

our foreign subsidiaries, and therefore tends to fluctuate with the strengthening and or weakening of the British Pound.

recognized other expense of $53,000 during 2020 and other income of $56,000 during 2019.

Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions within our

foreign subsidiaries, and therefore tends to fluctuate with the strengthening and or weakening of the British Pound.

The Company recognized

other income of $21,000 during 2021 and other expense of $53,000 during 2020.

Tax Expense .

Income tax expense was $8,862,000 for 2021, compared to $6,594,000 for 2020.

The $1,165,000 or 21.5% increase

in tax expense was largely the result of the increase in income before taxes.

The effective tax rate for both periods was similar

at approximately 24% to 25% of income before taxes.

The $2,268,000 or 34.4% increase in tax

expense was largely the result of the increase in income before taxes.

The effective tax rate for both periods was similar at approximately

25% of income before taxes.

Twelve-months

4 unchanged sentences

ended December 31,

in thousands)

(dollars in thousands)

Operating Profit

The Company’s sales for the full year of 2019 were $111,360,000, reflecting an increase of $3,047,000, or 2.8%,

over $108,313,000 in 2018.

The increase in sales resulted mostly from an increase in selling prices necessary to help offset a

rise in the Company’s material costs.

The Company’s gross profit margins increased between the two periods, at 63.3% and 61.0% for the twelve-months

ended December 31, 2019 and 2018, respectively.

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost

of marketing programs such as advertising, trade shows and related communication costs, and freight.

Selling expense was $19,032,000

and $17,117,000 for 2019 and 2018, respectively, representing a year over year increase of $1,915,000, or 11.2%.

A majority of

the additional expense relates to atypical consulting costs attributable to the Company’s new product, MediTrac ®

flexible medical gas piping, increasing $977,000 over last year.

The Company has also expanded its sales related staffing

resources, and recognized an increase in commissions during the year, largely driven by the increase in sales.

Travel expenses,

partially associated with the increase in staffing, were also higher.

For the same periods, selling expense as a percentage of

net sales was 17.1% and 15.8%, respectively.

The Company’s sales for the full year of 2020 were $105,796,000, reflecting a decrease of $5,564,000, or 5.0%, compared

to $111,360,000 in 2019.

The decrease in sales resulted mostly from a decrease in unit volume, which was in some measure impacted by

the COVID-19 pandemic, partially offset by a mild increase to selling prices that was necessary to help offset a rise in material commodity

The Company’s gross profit margins were 62.9% and 63.3% for the twelve-months ended December 31, 2020 and 2019, respectively.

The Company was able to maintain margins like prior year levels despite COVID-19 disruptions, such as increased costs to sanitize the

factory and equipment, inefficiencies from staggered work shifts and overtime costs due to employees being quarantined, as well as unabsorbed

Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing

programs such as advertising, trade shows and related communication costs, and freight.

Selling expense was $16,580,000 and $19,032,000

for 2020 and 2019, respectively, representing a decrease of $2,452,000, or 12.9%.

The most significant reduction relates to atypical

consulting costs identified during 2019, attributable to the Company’s new product, MediTrac ® flexible medical gas

The Company also experienced decreases in travel and advertising during 2020, mostly related to restrictions stemming from the

Commissions were also down due to the decrease in sales.

Conversely, the Company expanded its sales related staffing resources.

For the same periods, selling expense as a percentage of net sales was 15.7% and 17.1%, respectively.

and Administrative Expenses .

1 unchanged sentence

executive and finance personnel, legal and accounting, insurance, and corporate general and administrative services.

administrative expenses were $24,818,000 and $17,800,000 for the years ended December 31, 2019 and 2018, respectively, increasing

$7,018,000, or 39.4% between periods.

Legal and product liability defense costs increased $4,659,000, associated primarily with

one class action case which was dismissed during 2020, as explained in detail in Note 10, Commitments and Contingencies, of the

Consolidated Financial Statements to this report.

There was also a $1,390,000 increase in incentive compensation.

was primarily created by an increase in the value of prior equity awards driven by the surge in the Company’s stock price

however, the impact of the equity awards was partially offset by a decrease in the incentive compensation component

which is aligned with profitability.

Other professional fees also expanded by $780,000.

As a percentage of net sales, general

and administrative expenses were 22.3% and 16.4% for the twelve-months ended December 31, 2019 and 2018, respectively.

Engineering expenses consist of development expenses associated with the development of new products, and costs

related to enhancements of existing products and manufacturing processes.

Engineering expenses decreased $98,000 or 2.0% between

periods, being $4,715,000 and $4,813,000 for the years ended December 31, 2019 and 2018, respectively.

The Company had ramped

up spending on experimental materials during 2018, a majority of which related to the new MediTrac ® products, as

well as increases in certification and qualification costs.

During 2019, the Company had additional staffing and consulting related

General and administrative

expenses were $19,117,000 and $24,818,000 for the years ended December 31, 2020 and 2019, respectively, decreasing $5,701,000, or 23%

between periods.

Legal and product liability defense costs decreased $5,158,000, associated primarily with one class action case which

was dismissed during 2020, as explained in detail in Note 10, Commitments and Contingencies, of the Consolidated Financial Statements

to this report.

Professional fees and director related fees were also lower.

Those items were softened by an increase to incentive compensation,

which although not significant in total, was derived from two notable yet mostly offsetting components.

There was an increase in the

incentive compensation component which is aligned with profitability;

however, there was a reduction in stock based compensation expense

which moves in relation to the Company’s stock price, as detailed in Note 11, Stock Based Compensation Plans.

As a percentage of

net sales, general and administrative expenses were 18.1% and 22.3% for the twelve-months ended December 31, 2020 and 2019, respectively.

Engineering expenses consist of development expenses associated with the development of new products, and costs related

to enhancements of existing products and manufacturing processes.

Engineering expenses decreased $515,000 or 10.9% between periods, being

$4,200,000 and $4,715,000 for the years ended December 31, 2020 and 2019, respectively.

The decrease was primarily attributable to a

reduction in experimental materials that diminished after the work was completed on various promising applications during 2019, and to

a lesser extent travel.

As a percentage of net sales for the year, engineering expenses were 4.0% in 2020 and 4.2% in 2019.

Reflecting all of the factors mentioned above, operating profits decreased $4,444,000, or 16.9%, between periods,

reflecting a profit of $21,922,000 in 2019, as compared to $26,366,000 in 2018.

Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt

amounts outstanding on its line of credit.

There was $876,000 of interest income recorded during 2019 and $488,000 in 2018.

Reflecting all of the factors mentioned above, operating profits increased $4,731,000, or 21.6%, between periods, reflecting

a profit of $26,653,000 in 2020, as compared to $21,922,000 in 2019.

Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts

outstanding on its line of credit.

The Company recorded interest expense of $39,000 for 2020, compared to interest income of $876,000

The reduction in interest income was largely due to the lower cash balance and thus reduced investment, mostly resulting from

the $35,330,000 special dividend paid in December 2019.

Additionally, the Company had borrowed $15,000,000 on its line of credit for

a portion of the second quarter of 2020 to ensure liquidity during the COVID-19 crisis.

Earning potential on short-term liquid investments

has also diminished in comparison to this time last year.

Income (Expense) .

Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions within

our foreign subsidiaries, and therefore tends to fluctuate with the strengthening and or weakening of the British Pound.

recognized other income of $56,000 during 2019 and other expense of $126,000 during 2018.

Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions within our

foreign subsidiaries, and therefore tends to fluctuate with the strengthening and or weakening of the British Pound.

The Company recognized

other expense of $53,000 during 2020 and other income of $56,000 during 2019.

Tax Expense .

Income tax expense was $6,594,000 for 2020, compared to $5,429,000 for 2019.

The $1,022,000 or 15.8% decrease

in tax expense was largely the result of the decrease in income before taxes.

A lower rate was in effect during both 2019 and

2018 attributable to the Tax Cuts and Jobs Act enacted at the end of 2017.

The Act reduced the U.S.

federal tax rate from 35%

to 21%, effective for the Company’s 2018 tax year.

The Company’s tax provision also reflects other changes as a result

of the Act, including the impact of the Global Intangible Low Taxed Income provisions, and changes effecting the deductibility

of certain executive compensation.

The $1,165,000 or 21.5% increase in tax

expense was largely the result of the increase in income before taxes.

The effective tax rate for both periods was similar at approximately

24% to 25% of income before taxes.

AND CONTINGENCIES

1 unchanged sentence

IMPACT OF KNOWN TRENDS OR UNCERTAINTIES

Company’s operations are sensitive to a number of market and extrinsic factors, any one of which could materially adversely

affect the Company’s business, competitive position, results of operations or financial condition in any given year.

Item 1A, Risk Factors, for a detailed description.

ACCOUNTING POLICIES AND USE OF ESTIMATES

2, Significant Accounting Policies, to the Consolidated Financial Statements included in this report, includes a summary of the

significant accounting policies and methods used in the preparation of our Consolidated Financial Statements.

preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets

and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting

The most significant estimates and assumptions relate to revenue recognition and related sales incentives, accounts receivable

allowances, investment valuations, inventory valuations, goodwill valuation, product liability reserve, phantom stock and accounting

for income taxes.

Actual amounts could differ significantly from these estimates.

critical accounting policies and significant estimates and assumptions are described in more detail as follows:

regard to revenue recognition, the Company applies the requirements of Accounting Standards Update 2014-09, Revenue from Contracts

with Customers (Topic 606) .

The standard requires revenue to be recognized in a manner to depict the transfer of goods or

services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.

principle of Topic 606 was achieved through applying the following five-step approach:

Identification

of the contract, or contracts, with a customer — a contract with a customer exists when the Company enters into

an enforceable contract with a customer, typically a purchase order initiated by the customer, that defines each party’s

rights regarding the goods to be transferred and identifies the payment terms related to these goods.

Identification

of the performance obligations in the contract — performance obligations promised in a contract are identified based

on the goods that will be transferred to the customer that are distinct, whereby the customer can benefit from the goods on

their own or together with other resources that are readily available from third parties or from us.

Persuasive evidence of

an arrangement for the sale of product must exist.

The Company ships product in accordance with the purchase order and standard

terms as reflected within the Company’s order acknowledgments and sales invoices.

Determination

of the transaction price —the transaction price is determined based on the consideration to which the Company will

be entitled in exchange for transferring goods to the customer.

This would be the agreed upon quantity and price per product

type in accordance with the customer purchase order, which is aligned with the Company’s internally approved pricing

of the transaction price to the performance obligations in the contract — if the contract contains a single performance

obligation, the entire transaction price is allocated to the single performance obligation.

This applies to the Company as

there is only one performance obligation to ship the goods.

of revenue when, or as, the Company satisfies a performance obligation — the Company satisfies performance obligations

at a point in time when control of the goods transfers to the customer.

Determining the point in time when control transfers

requires judgment.

Indicators considered in determining whether the customer has obtained control of a good include:

Company has a present right to payment

customer has legal title to the goods

Company has transferred physical possession of the goods

customer has the significant risks and rewards of ownership of the goods

customer has accepted the goods

is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control

of the goods has transferred to the customer.

The indicators are a list of factors that are often present if a customer has control

of the goods.

Company has typical, unmodified FOB shipping point terms.

As the seller, the Company can determine that the shipped goods meet

the agreed-upon specifications in the contract or customer purchase order (e.g.

items, quantities, and prices) with the buyer,

so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86.

As a result, the Company has a legal right to

payment upon shipment of the goods.

upon the above, the Company has concluded that transfer of control substantively transfers to the customer upon shipment.

considerations of Topic 606 include the following:

Costs - costs to obtain a contract (e.g.

customer purchase order) include sales commissions.

Under Topic 606, these costs

may be expensed as incurred for contracts with a duration of one year or less.

The majority of the Company’s customer

purchase orders are fulfilled (e.g.

goods are shipped) within two days of receipt.

- the Company does not offer customers to purchase a warranty separately.

Therefore there is not a separate performance

The Company does account for warranties as a cost accrual and the warranties do not include any additional distinct

services other than the assurance that the goods comply with agreed-upon specifications.

There is no impact of warranties

under Topic 606 upon the financial reporting of the Company.

Goods - from time to time, the Company provides authorization to customers to return goods.

If deemed to be material,

the Company would record a “right of return” asset for the cost of the returned goods which would reduce cost

Rebates (Promotional Incentives) - volume rebates are variable (dependent upon the volume of goods purchased by our eligible

customers) and, under Topic 606, must be estimated and recognized as a reduction of revenue as performance obligations are

satisfied (e.g.

upon shipment of goods).

Also under Topic 606, to ensure that revenue recognized would not be probable of

a significant reversal, the four following factors are considered:

amount of consideration is highly susceptible to factors outside the Company’s influence.

uncertainty about the amount of consideration is not expected to be resolved for a long period of time.

Company’s experience with similar types of contracts is limited.

contract has a large number and broad range of possible consideration amounts.

it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal

However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue

based upon estimates of the eligible products expected to be sold.

disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment

that consists of the manufacture and sale of flexible metal hose.

Most of the Company’s transactions are very similar in

nature, contract, terms, timing, and transfer of control of goods.

As indicated within Note 2, Significant Accounting Policies,

to the Consolidated Financial Statements included in this report, under the caption “Significant Concentration”, the

majority of the Company’s sales were geographically contained within North America, with the remainder scattered internationally.

All performance assessments and resource allocations are generally based upon the review of the results of the Company as a whole.

Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash

Cash equivalents include investments in an institutional money market fund, which invests in U.S.

Treasury bills,

notes and bonds, and/or repurchase agreements, backed by such obligations.

Carrying value approximates fair value.

Cash and cash

equivalents are deposited at various area banks, which at times may exceed federally insured limits.

The Company monitors the

viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various

institutions during times of risk.

The Company has not experienced any losses related to these cash balances, and believes its

credit risk to be minimal.

Receivable and Provision for Doubtful Accounts

accounts receivables are stated at amortized cost, net of allowances for credit losses, and adjusted for any write-offs.

maintains allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of

its receivables considering current market conditions and estimates for supportable forecasts when appropriate.

The estimate is

a result of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future

expectations in estimating credit losses in its receivable portfolio.

For accounts receivables, the Company uses historical loss

experience rates and applies them to a related aging analysis while also considering customer and/or economic risk where appropriate.

Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity

of credit losses that could materially affect the provision for credit losses and, as a result, net earnings.

The allowances consider

numerous quantitative and qualitative factors that include receivable type, historical loss experience, delinquency trends, collection

experience, current economic conditions, estimates for supportable forecasts, when appropriate, and credit risk characteristics.

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $1,124,000 and $1,433,000 as of

December 31, 2020 and 2019, respectively.

Company invests excess funds in liquid interest earning instruments including U.S.

Treasury bills and bank time deposits, with

maturities typically of one year or less.

These investments are stated at fair value, which approximates amortized cost, and are

classified as available-for-sale in accordance with ASC Topic 320, Investments – Debt and Equity Securities .

Company did not have any investments as of December 31, 2020 and 2019.

are valued at the lower of cost or net realizable value.

The cost of inventories is determined by the first-in, first-out (FIFO)

The Company generally considers inventory quantities beyond two years of non-usage, measured on a historical usage basis,

to be excess inventory and reduces the gross carrying value of inventory accordingly.

accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 350, Intangibles – Goodwill and Other

(ASU 2017-04) , using the simplified method as adopted, the Company performed an annual impairment test as of December 31,

This analysis did not indicate any impairment of goodwill.

the duration and severity of the COVID-19 pandemic could result in future goodwill impairment charges.

While we have concluded

that a triggering event did not occur during 2020, a prolonged pandemic could impact the Company’s results of operations

in a manner significant enough to trigger an impairment test.

Compensation Plans

2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units

(Units) to certain key employees, officers or directors.

The Units each represent a contractual right to payment of compensation

in the future based upon the market value of the Company’s common stock.

The Units follow a vesting schedule of three years

from the grant date, and are then paid upon maturity.

In accordance with FASB ASC Topic 718, Stock Compensation , the Company

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

Further details of the

Plan are provided in Note 11, Stock-Based Compensation Plans, to the Consolidated Financial Statements included in this report.

Liability Reserves

liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing

The Company uses the most current available data to estimate claims.

As explained more fully under Note 10, Commitments

and Contingencies, to the Consolidated Financial Statements included in this report for various product liability claims covered

under the Company’s general liability insurance policies, the Company must pay certain defense and settlement costs within

its deductible or self-insured retention limits, ranging primarily from $25,000 to $2,000,000 per claim, depending on the terms

of the policy in the applicable policy year, up to an aggregate amount.

The Company is vigorously defending against all known

January 1, 2019, the Company adopted the requirements of FASB ASU 2016-02, Leases (Topic 842) which defines a lease as

any contract that conveys the right to use a specific asset for a period of time in exchange for consideration.

Leases are classified

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

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 term.

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

As of 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.

are some exceptions, which the Company has elected in its accounting policies.

For leases with terms of twelve months or less,

or below the Company’s general capitalization policy threshold, the Company has elected an accounting policy to not recognize

lease assets and lease liabilities for all asset classes.

The Company recognizes lease expense for such leases generally on a

straight-line basis over the lease term.

Company determines if a contract is a lease at the inception of the arrangement.

The Company reviews all options to extend, terminate,

or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain

to be exercised.

Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for

In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining

if the component should be included in the lease liability.

For purposes of calculating the present value of the lease obligations,

the Company utilizes the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes

its incremental borrowing rate at the time of the lease agreement.

permitted under ASU 2018-11, the Company elected the optional transition method to adopt the new leases standard.

Under this new

transition method, the Company initially applied the new leases standard at the adoption date of January 1, 2019 and would have

recognized a cumulative-effect adjustment, if appropriate, to the opening balance of retained earnings in the period of adoption.

No cumulative-effect adjustment was recognized.

impact of the adoption of this new standard resulted in an increase to the Company’s operating lease assets and liabilities

on January 1, 2019 of approximately $800,000.

The implementation did not have a material impact on our consolidated statements

of income and statements of cash flows.

Value of Financial and Nonfinancial Instruments

Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures .

The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures

about fair value measurements.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer

a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of

observable inputs and minimize the use of unobservable inputs.

The standard creates a fair value hierarchy which prioritizes the

inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1 inputs are quoted prices

(unadjusted) in active markets for identical assets or liabilities;

Level 2 inputs are inputs other than quoted prices included

within Level 1 that are observable for the asset or liability, either directly or indirectly;

and Level 3 inputs are unobservable

inputs that reflect the Company’s own assumptions about the assumptions market 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 .

per Common Share

earnings per share have been computed using the weighted-average number of common shares outstanding.

For the periods presented,

there are no dilutive securities.

Consequently, basic and dilutive earnings per share are the same.

and liabilities denominated in foreign currencies, most of which relate to the Company’s U.K.

subsidiary whose functional

currency is the British Pound, are translated into U.S.

dollars at exchange rates prevailing on the balance sheet dates.

The Statements

of Operations are translated into U.S.

dollars at average exchange rates for the period.

Adjustments resulting from the translation

of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’

Exchange gains and losses resulting from foreign currency transactions are included in the statements of income (other

expense) in the period in which they occur.

Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes .

Under this method the Company

recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to

be recovered or settled.

The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income

in the period that includes the enactment date.

A valuation allowance is provided for deferred tax assets if it is more likely

than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is

FASB ASC Topic 740, Income Taxes , clarifies the criteria that an individual tax position must satisfy for some or all of

the benefits of that position to be recognized in a company’s financial statements.

This guidance prescribes a recognition

threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return,

in order for those tax positions to be recognized in the financial statements.

Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions.

These provisions provide

guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions.

Company reflected the effects of the Tax Cuts and Jobs Act (the “Act”) in its financial statements.

This included

the change in the US corporate tax rate from 35% to 21% and a provision related to previously deferred taxes on earnings of the

Company’s foreign subsidiary.

The Company’s tax provision also reflects other changes as a result of the Act, including

the impact of the Global Intangible Low Taxed Income (“GILTI”) provisions, and changes affecting the deductibility

of certain executive compensation.

Company’s operations are sensitive to a number of market and extrinsic factors, any one of which could materially adversely affect

the Company’s business, competitive position, results of operations or financial condition in any given year.

See Item 1A, Risk

Factors, for a detailed description.

AND CAPITAL RESOURCES

Historically,

the Company’s primary cash needs have been related to working capital items, which the Company has largely funded through

cash generated from operations.

the Company’s primary cash needs have been related to working capital items, which the Company has largely funded through cash

generated from operations.

of December 31, 2021, the Company had a cash balance of $32,913,000.

Additionally, the Company has a $15,000,000 line of credit

available, as discussed in detail in Note 5, which had no borrowings outstanding against it as of December 31, 2020.

31, 2019, the Company had a cash balance of $16,098,000, with no borrowings against the line of credit.

provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities,

such as those included in working capital.

Additionally, the Company has a $15,000,000 line of credit available,

as discussed in detail in Note 5, which had no borrowings outstanding against it as of December 31, 2021.

On December 31, 2020, the Company

had a cash balance of $23,633,000, with no borrowings against the line of credit.

provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such

as those included in working capital.

2021, the Company’s cash provided from operating activities was $25,149,000, compared to $19,310,000 of cash provided during 2020,

and $16,041,000 of cash provided during 2019.

This illustrates an increase of $3,269,000 during 2020, versus a decrease

during 2019 of $5,017,000.

This illustrates an increase of $5,839,000 during 2021, versus an increase during 2020

of $3,269,000.

For details of the operating cash flows refer to the consolidated statements of cash flows in Item 8.

Financial Statements and Supplementary Data on page 40.

a general trend, the Company tends to deplete cash early in the year, as significant payments are typically made for accrued promotional

incentives, incentive compensation, and taxes.

Cash has then historically shown a tendency to be restored and accumulated during

the latter portion of the year.

However, as described previously, during December 2019, the Company liquidated its investments

to support the payment of a special dividend to shareholders totaling $35,330,000, as outlined in Note 6, Shareholders’

Equity, to the Consolidated Financial Statements included in this report.

used in investing activities during 2020 was $564,000, all related to various capital expenditure projects.

provided by investing activities during 2019 was $13,719,000, with most of the transactions related to the purchase and/or sale

of short-term investments.

During December 2019, the Company liquidated its all of its existing short-term investments to support

the payment of a special dividend to shareholders.

In total, cash proceeds from the sale of short-term investments during 2019

was $70,882,000.

Inversely, cash used for the purchase of the short-term investments during 2019 was $55,938,000.

Cash was also

used to purchase capital expenditures of $1,225,000, mostly related to the new MediTrac ® products.

2018, the Company used $16,868,000 of cash for investing activities.

A majority of the cash was used for the purchase of short-term

During 2018, the Company purchased $35,099,000 of short-term investments, and inversely received $20,155,000 of cash

from net proceeds from the sale of short-term investments.

The Company also used $1,924,000 of cash for capital expenditures during

2018, mainly related to capital projects designated for the new MediTrac ® products.

Financial Statements

and Supplementary Data on page 37.

a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically

made for accrued promotional incentives, incentive compensation, and taxes.

Cash has then historically shown a tendency to be restored

and accumulated during the latter portion of the year.

However, as previously disclosed, during December 2019, the Company liquidated

its investments to support the payment of a special dividend to shareholders totaling $35,330,000.

used in investing activities during 2021 and 2020 was $971,000 and $564,000 respectively, all related to various capital expenditure

provided by investing activities during 2019 was $13,719,000, with most of the transactions related to the purchase and/or sale of short-term

During December 2019, the Company liquidated all its existing short-term investments to support the payment of a special

dividend to shareholders.

In total, cash proceeds from the sale of short-term investments during 2019 was $70,882,000.

Inversely, cash

used for the purchase of the short-term investments during 2019 was $55,938,000.

Cash was also used to purchase capital expenditures

of $1,225,000, mostly related to the new MediTrac ® products.

financing activities relate to dividend payments, which are detailed in Note 6, Shareholders’ Equity.

Dividend payments

for 2020, 2019, and 2018 amounted to $11,306,000, $46,028,000 and $9,775,000, respectively.

2019 included the payment of a special

dividend, which is primarily why the cash outflow in that year is higher.

Each of these dividends are outlined in Note 6, Shareholders’

Equity, to the Consolidated Financial Statements included in this report.

Also, see Note 5, Line of Credit and Other Borrowings,

for a description of borrowings and repayments during the second quarter of 2020.

The Company had no borrowings or payments on

its line of credit during 2019 or 2018.

believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated

cash needs for at least the next twelve months.

Our future capital requirements will depend upon many factors including our rate

of revenue growth, the timing and extent of any expansion efforts, the potential for investments in, or the acquisition of any

complementary products, businesses or supplementary facilities for additional capacity, and the COVID-19 pandemic.

Dividend payments for 2021,

2020, and 2019 amounted to $14,867,000, $11,306,000, and $46,028,000, respectively.

2019 included the payment of a special dividend,

which is primarily why the cash outflow in that year is higher.

Dividend payments are outlined in Note 6, Shareholders’ Equity,

to the Consolidated Financial Statements included in this report.

Also, see Note 5, Line of Credit and Other Borrowings, for a description

of borrowings and repayments during the second quarter of 2020.

The Company had no borrowings or payments on its line of credit during

2021 or 2019.

believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs

for at least the next twelve months.

Our future capital requirements will depend upon many factors including our rate of revenue growth,

the timing and extent of any expansion efforts, the potential for investments in, or the acquisition of any complementary products, businesses

or supplementary facilities for additional capacity, and the COVID-19 pandemic.

Company’s primary contractual obligations as of December 31, 2021, which are due over the next twelve months are summarized in

the following table and are more fully explained in Notes to the Consolidated Financial Statements.

Contractual Obligations (in thousands)

Operating Lease Obligations

Purchase Obligations

Other Long-Term Liabilities

Total Contractual Cash Obligations

explained in Note 11, Stock Based Compensation Plans, to the Consolidated Financial Statements included in this report, the Company is

obligated to make payments to plan participants.

Due to the uncertain nature of the payments, due to numerous variables, including the

potential change in stock price, and employment status of participants and any applicable forfeitures, the amounts are not disclosed

in the above table.

The liability associated with this plan as of December 31, 2021, which is anticipated to be paid within the next

year is $1,156,000.

ACCOUNTING PRONOUNCEMENTS

1 unchanged sentence

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate

Reform on Financial Reporting .

The ASU applies to all entities that have contracts, hedging relationships, and other transactions

that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The ASU provides

optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference

rate reform if certain criteria are met.

The expedients and exceptions provided by the ASU do not apply to contract modifications

made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as

of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the

hedging relationship.

The ASU is effective for all entities as of March 12, 2020 through December 31, 2022.

The impact of the

adoption of ASU 2020-04 did not have a material impact on the Company’s Consolidated Financial Statements.

Facilitation of the Effects of Reference Rate Reform

on Financial Reporting .

The ASU applies to all entities that have contracts, hedging relationships, and other transactions that reference

LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The ASU provides optional expedients and

exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain

criteria are met.

The expedients and exceptions provided by the ASU do not apply to contract modifications made and hedging relationships

entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity

has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The ASU is effective for

all entities as of March 12, 2020 through December 31, 2022.

The impact of the adoption of ASU 2020-04 did not have a material impact

on the Company’s Consolidated Financial Statements.

December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intraperiod allocation,

and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing

deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others.

The amendments in ASU 2019-12

are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein.

Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have

not yet been issued.

The Company is currently evaluating the impact of adopting this new guidance on its Consolidated Financial

Statements and does not expect the impact to be significant.

Sheet Obligations or Arrangements

DISCLOSURE OF CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Obligation and Commercial Commitments

Company’s primary contractual obligations as of December 31, 2020 are summarized in the following table and are more fully

explained in Notes to the Consolidated Financial Statements.

Payments Due by Period

(in thousands)

Contractual Obligations

Operating Lease Obligations

Purchase Obligations

Other Long-Term Liabilities

Total Contractual Cash Obligations

explained in Note 11, Stock Based Compensation Plans, to the Consolidated Financial Statements included in this report, the Company

is obligated to make payments to plan participants.

Due to the uncertain nature of the payments, due to numerous variables, including

the potential change in stock price, and employment status of participants and any applicable forfeitures, the amounts are not

disclosed in the above table.

The liability associated with this plan as of December 31, 2020 was $3,331,000, of which $1,378,000

is anticipated to be paid within the next year, and the remainder thereafter.

removes certain exceptions for recognizing deferred taxes for equity method investments, performing intraperiod allocation, and calculating

income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes

for goodwill and allocating taxes to members of a consolidated group, among others.

The amendments in ASU 2019-12 are effective for public

business entities for fiscal years beginning after December 15, 2020, including interim periods therein.

Early adoption of the standard

is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

The Company adopted

this new guidance, and it did not have a material impact on its Consolidated Financial Statements.

7A - QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Company does not engage in the purchase or trading of market risk sensitive instruments.

The Company does not presently have any

positions with respect to hedge transactions such as forward contracts relating to currency fluctuations.

No market risk sensitive

instruments are held for speculative or trading purposes.

The Company does not presently have any positions

with respect to hedge transactions such as forward contracts relating to currency fluctuations.

No market risk sensitive instruments

are held for speculative or trading purposes.

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-K

Item 7. Management’s Discussion and Analysis