What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 179 added, 227 removed, 541 unchanged (43% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

in Thousands, Except Share Amounts)

September 30,

in Thousands, except Common Stock par value)

Current Assets:

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Deferred Taxes

Long Term Taxes Payable

Tax Payable Long Term

Other Long Term Liabilities

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authorized 20,000,000 shares:

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

September 30, 2021 and December 31, 2020

10,153,633 shares issued at March 31, 2022 and December 31, 2021, respectively, and 10,094,322 outstanding at March 31, 2022 and December 31, 2021, respectively

Treasury Stock

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CONSOLIDATED STATEMENTS OF INCOME

in Thousands except per Share Data and Share Amounts)

For the three months ended

For the nine months ended

September 30,

in Thousands, except per Common Share data)

For the three-months

ended March 31,

Cost of Goods Sold

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Operating Profit

Interest Income (Expense)

Other Income (Expense)

Interest Income

Other (Loss) Income

Income Before Income Taxes

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in Thousands)

For the three months ended

For the nine months ended

September 30,

For the three-months

ended March 31,

Other Comprehensive Income (Loss):

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in Thousands, Except Share Amounts)

the three months ended September 30, 2021

Stock Outstanding

Comprehensive

Noncontrolling

Shareholders’

Cumulative Translation Adjustment

the three months ended September 30, 2020

Stock Outstanding

Comprehensive

Noncontrolling

Shareholders’

Cumulative Translation Adjustment

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

in Thousands, Except Share Amounts)

the nine months ended September 30, 2021

Stock Outstanding

Common Stock Outstanding

Paid In Capital

Retained Earnings

Comprehensive

Income (Loss)

Noncontrolling

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Cumulative Translation Adjustment

the nine months ended September 30, 2020

Stock Outstanding

Dividends Declared

March 31, 2022

Common Stock Outstanding

Paid In Capital

Retained Earnings

Comprehensive

Income (Loss)

Noncontrolling

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January 1, 2021

Beginning balance, value

Cumulative Translation Adjustment

Dividends Declared

March 31, 2021

Ending balance, value

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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in Thousands)

For the nine months ended

September 30,

For the three-months

ended March 31,

Cash Flows from Operating Activities:

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Adjustments to Reconcile Net Income to

Net Cash (Used In) Provided by Operating Activities:

Non-Cash Compensation

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Other Liabilities

Net Cash Provided by Operating Activities

Net Cash (Used In) Provided by Operating Activities

Cash Flows from Investing Activities:

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Net Cash Used in Financing Activities

Net Increase in Cash and Cash Equivalents

Net Decrease in Cash and Cash Equivalents

Translation effect on cash

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Cash paid for Income Taxes

Cash paid for Interest

Declared Dividends

Supplemental Schedule of Non-Cash Investing and Financing Activities:

Additions to Right-Of-Use Assets obtained from new operating Lease Liabilities

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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(collectively the “Company”).

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

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

31, 2022 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions

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Actual amounts could differ significantly from these estimates.

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.

Company applies the requirements of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) .

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:

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As a result, the Company has a legal right to payment upon shipment of the

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

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

considerations of Topic 606 include the following:

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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:

Also under Topic 606, to ensure that the related 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.

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forecasts, when appropriate, and credit risk characteristics.

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

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,254,000 and $ 1,410,000 as of March

31, 2022 and December 31, 2021, respectively.

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the fair value of the Units.

Additionally, the liabilities for the Units are adjusted to market value over time from the grant dates

to the related maturity dates.

Further details of the Plan are provided in Note 6.

The liabilities for the Units are adjusted to market value over time from the grant dates to the related

maturity dates.

The Company recognizes the reversal of any previously recognized compensation expense on forfeited nonvested Units in

the period the Units are forfeited.

Further details of the Plan are provided in Note 6, Stock-Based Compensation Plans, to the condensed

consolidated financial statements included in this report.

Liability Reserves

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As explained more fully under Note 5, Commitments and Contingencies,

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 claims.

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:

to the condensed 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 claims.

Company applies 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.

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

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

of March 31, 2022 and December 31, 2021, 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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Consequently, basic, and dilutive earnings per share are the same.

and liabilities denominated in foreign currencies, most of which relate to the Company’s United Kingdom subsidiary whose functional

currency is British pound sterling, are translated into U.S.

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 income are translated into U.S.

The condensed consolidated

statements of income 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’ equity.

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

in which they occur.

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 condensed consolidated statements

of income 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

Under this method the Company records

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

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

March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law making several changes to the Internal

Revenue Code.

The changes include, but are not limited to:

increasing the limitation on the amount of deductible interest expense, allowing

companies to carryback certain net operating losses, and increasing the amount of net operating loss carryforwards that corporations

can use to offset taxable income.

The tax law changes in the CARES Act did not have a material impact on the Company’s income tax

Comprehensive Income

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 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.

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

the quarters ended March 31, 2022 and 2021, respectively, the components of other comprehensive income consisted solely of foreign currency

translation adjustments.

Concentrations

Company has one significant customer which represented more than 10% of the Company’s Accounts Receivable on March 31, 2022.

customers represented more than 10% of the Company’s Accounts Receivable on December 31, 2021.

That same customer represented more

than 10% of the Company’s total Net Sales for the three months ended March 31, 2022 and 2021.

Geographically, the Company has a

significant amount of sales in the United States versus internationally .

These concentrations are consistent with those discussed in

detail in the Company’s December 31, 2021 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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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 condensed consolidated financial statements.

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

September 30,

(Amounts in Thousands)

The Company adopted this new

guidance in 2021, and it did not have a material impact on its condensed consolidated financial statements.

SCHEDULE OF INVENTORIES, NET OF RESERVES

net of reserves of $ 839,000 and $ 505,000 on March 31, 2022 and December 31, 2021, respectively, consisted of the following:

(in thousands)

Finished Goods

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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 .

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

Company borrowed the full amount of its capacity on the line of $ 15,000,000 at the prime rate of 3.25 %.

The Company repaid this amount

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 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.

On April 7, 2020,

the Company received a loan from the U.S.

Small Business Administration (“SBA”) to fund the Company’s request for a

loan under the SBA’s Paycheck Protection Program (“PPP” and “PPP Loan”) created as part of the recently

enacted CARES Act administered by the SBA.

In connection with the PPP Loan, the Company entered into a promissory note filed as Exhibit

10.2 attached to Form 10-Q for the quarter ended June 30, 2020.

Pursuant to the terms of the PPP Loan, the Company received total proceeds

of $ 2,453,000 from the Bank at an interest rate of just below 1 % per annum.

After the issuance of the PPP Loan, the U.S.

Treasury Department

issued new guidance on the PPP program, and advised that publicly traded companies that had access to other sources of financing may

not be appropriate candidates for the PPP Loans, and provided a grace period until May 7, 2020 for such companies to repay the previously

issued PPP Loans.

Accordingly, in light of this guidance, the Company repaid the PPP Loan by May 7, 2020.

as stated above, borrowings under our line of credit facility bear interest at variable rates based on LIBOR.

Currently, the Federal

Reserve Bank is considering options and transitioning away from LIBOR, and as such, has formed the Alternative Rates Committee (ARRC).

The ARRC selected the Secured Overnight Financing Rate (SOFR) as an appropriate replacement.

SOFR is based on transactions in the overnight

repurchase markets, which reflects a transaction-based rate on a large number of transactions, better reflecting current financing costs.

Discussions are ongoing with the Bank with regards to transitioning the rate for the Line from LIBOR to another appropriate rate such

of March 31, 2022 and December 31, 2021, the Company had no outstanding borrowings on its line of credit and was in compliance with all

debt covenants.

stated above, borrowings under our line of credit facility bear interest at variable rates based on LIBOR.

Currently, the Federal Reserve

Bank is considering options and transitioning away from LIBOR, and as such, has formed the Alternative Rates Committee (ARRC).

selected the Secured Overnight Financing Rate (SOFR) as an appropriate replacement.

SOFR is based on transactions in the overnight repurchase

markets, which reflects a transaction-based rate on a large number of transactions, better reflecting current financing costs.

are ongoing with the Bank with regards to transitioning the rate for the Line from LIBOR to another appropriate rate such as SOFR.

COMMITMENTS AND CONTINGENCIES

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The net present value of

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

the retirement payments associated with these agreements is $ 423,000 on March 31, 2022, of which $ 375,000 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.

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The cash surrender

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,

value of such policies (included in Other Long Term Assets) amounts to $ 1,615,000 at March 31, 2022 and $ 1,651,000 at December 31, 2021.

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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arrangements are currently indeterminable due to the variable nature and timing of possible events required to incur such obligations.

disclosed in detail in Note 7, under the caption “Leases”, the Company has several lease obligations in place that will be

paid out over time.

Most notably, the Company leases a facility in Banbury, England that serves the manufacturing, warehousing and distribution

as provided in Item 7 under the “Tabular Disclosure of Contractual Obligations and Off-Balance Sheet Arrangements”, of the

Company’s December 31, 2020 Form 10-K, the Company has numerous purchase obligations in place for the forthcoming year, largely

related to the Company’s core material inventory components.

disclosed in detail in Note 7, Leases, to the condensed consolidated financial statements included in this report, the Company has several

lease obligations in place that will be paid out over time.

Most notably, the Company leases a facility in Banbury, England that serves

the manufacturing, warehousing, and distribution functions.

as provided in Item 7 under “Liquidity and Capital Resources”, of the Company’s December 31, 2021 Form 10-K, the Company

has numerous purchase obligations in place for the forthcoming year, largely related to the Company’s core material inventory components.

Contingencies:

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a variety of factors, including a higher number of Claims, higher legal costs, and higher insurance deductibles or retentions.

September 2017, a putative class action case was filed against the Company and other parties in Missouri state court.

The Company successfully

removed the case to federal court, and in August 2020, the court granted the defendants’ joint summary judgement motion, and dismissed

The parties have fully resolved the plaintiffs appeal of that decision, and the case has been dismissed by the plaintiffs,

thus concluding the matter.

Company was made aware of a potential legal liability regarding a legal dispute in the U.K., in which the Company’s subsidiary,

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

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.

An additional payment of £ 110,000 was made on January

5, 2022, which was recorded as an accrued liability as of December 31, 2021 and represented the remaining amount of the liability as

part of the final arrangement.

This matter is now closed.

Company has in place commercial general liability insurance policies that cover most Claims, which are subject to deductibles or retentions,

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The aggregate maximum exposure for all current open Claims

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.

as of March 31, 2022 is estimated to not exceed approximately $ 8,850,000 , 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

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is currently unable to estimate the ultimate liability, if any, that may result from the pending litigation, or potential litigation

from future claims or claims that have not yet come to our attention, and accordingly, the liability in the condensed consolidated financial

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 September 30, 2021 and December 31, 2020 were $ 709,000 and $ 642,000 ,

respectively, and are included in Other Liabilities.

STOCK BASED PLANS

from future claims or claims that have not yet come to our attention, and accordingly, the liability in the Consolidated Financial Statements

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

The liabilities recorded on the Company’s books as of March 31, 2022 and December 31, 2021 were $ 289,000 and $ 262,000 , respectively,

and are included in Other Liabilities.

STOCK BASED COMPENSATION PLANS

On April 1, 2006, the Company adopted the Omega Flex, Inc.

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Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, at an amount equal to the

closing price of the Company’s common stock on the grant date, but are recorded at fair value using the Black-Sholes method as

described below.

closing price of the Company’s common stock on the grant date but are recorded at fair value using the Black-Sholes method as described

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

Upon vesting, the Units

represent a contractual right of payment for the value of the Unit and therefore are stated as liabilities in accordance with Topic 718.

The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless

an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment.

The amount to be paid

to the participant on the maturity date is dependent on the type of Unit granted to the participant.

Upon vesting, the Units represent

a contractual right of payment for the value of the Unit and therefore are stated as liabilities in accordance with Topic 718 .

will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable

event occurs under the terms of the Plan prior to one year, which would allow for earlier payment.

The amount to be paid to the participant

on the maturity date is dependent on the type of Unit granted to the participant.

Units may be Full Value, in which the value of each Unit at the maturity date, will equal the closing price of the Company’s

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per unit on grant date, using historical volatility.

In February 2021, the Company paid $ 1,214,000 for the 7,750 fully vested and matured

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

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.

In February 2022, the Company paid $ 838,000 for 5,450 fully vested and matured units

that were granted during 2018, including their respective earned dividend values.

In March 2022, the Company paid $ 295,000 for 1,870

fully vested units that were granted during 2018, 2019 and 2020, including their respective earned dividend values.

As of March 31, 2022,

the Company had 6,693 unvested units outstanding.

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

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

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.

FASB ASC Topic 718, Compensation - Stock Compensation , 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 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

During the three months ended March 31, 2022 and 2021, no awards were forfeited.

total Phantom Stock related liability as of March 31, 2022 was $ 1,573,000 of which $ 827,000 is included in Other Liabilities, as it is

expected to be paid within the next twelve months, and the balance of $ 746,000 is included in Other Long Term Liabilities.

Phantom Stock related liability as of December 31, 2021 was $ 2,427,000 of which $ 1,156,000 was included in Other Liabilities, and the

balance of $ 1,271,000 was included in Other Long Term Liabilities.

to the Phantom Stock Plan, in accordance with FASB ASC Topic 718, Compensation - Stock Compensation , the Company recorded compensation

expense of approximately $ 280,000 and $ 441,000 for the three months ended March 31, 2022 and 2021, 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 as of March 31, 2022:

SUMMARY OF NONVESTED PHANTOM STOCK UNITS

Weighted Average Grant Date Fair Value

Number of Phantom Stock Unit Awards:

Nonvested at December 31, 2020

Nonvested at September 30, 2021

Nonvested on December 31, 2021

Nonvested on March 31, 2022

Phantom Stock Unit Awards Expected to Vest

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.

total unrecognized compensation costs calculated on March 31, 2022 are $ 783,000 which will be recognized through February of 2025.

Company will recognize the related expense over the weighted average period of 1.6 years.

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

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Company also has operations in other locations that are leased, as well as other leased assets.

In conjunction with the new guidance

for leases, as defined by the FASB with ASU 2016-02, Leases (Topic 842), the Company has described the existing leases, which

are all classified as operating leases, pursuant to the below.

In conjunction with the guidance for

leases, as defined by the FASB with ASU 2016-02, Leases (Topic 842), the Company has described the existing leases, which are

all classified as operating leases, pursuant to the below.

the U.S., the Company leases a facility in Houston, Texas, which currently provides manufacturing, stocking, and sales operations, with

the lease term running through October 2024 .

Additionally, the Company leases its corporate office space in Middletown, Connecticut,

with the lease term expiring in June 2022 .

the lease term running through October 2024 and a facility in Malvern, Pennsylvania, which was recently consummated, effective January

1, 2022, with a 3-year term ending in December 2024 , that provides warehousing.

Additionally, the Company leases its corporate office

space in Middletown, Connecticut, with the lease term expiring in June 2022 .

the U.K., the Company leases a facility in Banbury, England, which serves manufacturing, warehousing, and other operational functions.

The lease in Banbury was effective April 1, 2006 and had a 15-year term which ended in March 2021.

A new lease for Banbury was recently

consummated, effective April 1, 2021, with a 15-year term ending in March 2036.

The lease in Banbury has a 15-year term ending in March 2036.

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

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

March 31, 2022, the Company has recorded right-of-use assets of $ 3,481,000 , and a lease liability of $ 3,481,000 , of which $ 450,000 is

reported as a current liability.

On December 31, 2021, the Company had recorded right-of-use assets of $ 3,374,000 , and a lease liability

of $ 3,373,000 , of which $ 383,000 was reported as a current liability.

The respective weighted average remaining lease term and discount

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:

rate are approximately 11.99 years and 1.05 % as of March 31, 2022.

expense for the operating leases was approximately $ 135,000 and $ 96,000 for the three months ended March 31, 2022 and 2021, respectively.

minimum lease payments, inclusive of interest, under non-cancelable leases as of March 31, 2022 is as follows:

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Twelve Months Ending September 30,

(Amounts in thousands)

Twelve Months Ending March 31,

Operating Leases

(in thousands)

Total Minimum Lease Payments

SHAREHOLDERS’ EQUITY

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.

of March 31, 2022 and December 31, 2021, 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

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forth in the following table:

OF REGULAR QUARTER DIVIDEND PAYMENTS

OF DIVIDEND PAYMENTS

Dividend Declared

1 unchanged sentence

Price Per Share

September 15, 2021

October 4, 2021

March 29, 2022

1 unchanged sentence

December 9, 2021

January 5, 2021

December 30, 2021

September 15, 2021

October 4, 2021

June 24, 2020

July 13, 2020

March 24, 2021

24 unchanged sentences

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

The legal and accounting fees are to be repaid to the Company by the three affiliated shareholders, and the remaining 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 amount 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 duties.

SUBSEQUENT EVENTS

1 unchanged sentence

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.

Company’s attention that would impact the condensed consolidated financial statements for the period ended March 31, 2022.

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