What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-05 · 125 added, 104 removed, 660 unchanged (26% of the section changed)

2 unchanged sentences

in Thousands, except Common Stock par value)

September 30,

Current Assets:

30 unchanged sentences

authorized 20,000,000 shares:

10,153,633 and 10,094,322 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

10,153,633 shares issued and 10,094,322 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

Treasury Stock

11 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

September 30,

Cost of Goods Sold

7 unchanged sentences

Income Tax Expense

Net Income attributable to the Noncontrolling Interest

Net (Income) Loss attributable to the Noncontrolling Interest

Net Income attributable to Omega Flex, Inc.

6 unchanged sentences

For the three months ended

For the six months ended

Other Comprehensive Income (Loss):

For the nine months ended

September 30,

Other Comprehensive (Loss):

Foreign Currency Translation Adjustment

Other Comprehensive Income (Loss)

Other Comprehensive (Loss)

Comprehensive Income

Comprehensive Income Attributable to the Noncontrolling Interest

Comprehensive (Income) Loss Attributable to the Noncontrolling Interest

Total Comprehensive Income

2 unchanged sentences

in Thousands, Except Share Amounts)

the three months ended June 30, 2022

the three months ended September 30, 2022

Common Stock Outstanding

5 unchanged sentences

Shareholders’

April 1, 2022

Cumulative Translation Adjustment

Dividends Declared

June 30, 2022

the three months ended June 30, 2021

September 30, 2022

the three months ended September 30, 2021

Common Stock Outstanding

5 unchanged sentences

Shareholders’

April 1, 2021

Cumulative Translation Adjustment

Dividends Declared

June 30, 2021

September 30, 2021

Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

in Thousands, Except Share Amounts)

the six months ended June 30, 2022

the nine months ended September 30, 2022

Common Stock Outstanding

8 unchanged sentences

Dividends Declared

June 30, 2022

the six months ended June 30, 2021

September 30, 2022

the nine months ended September 30, 2021

Common Stock Outstanding

9 unchanged sentences

Dividends Declared

June 30, 2021

September 30, 2021

Ending balance, value

2 unchanged sentences

in Thousands)

For the six months ended

For the nine months ended

September 30,

Cash Flows from Operating Activities:

4 unchanged sentences

Depreciation and Amortization

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

Provision for Losses on Accounts Receivable, net of

write-offs and recoveries

Deferred Taxes

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(collectively the “Company”).

The Company’s Condensed Consolidated Financial Statements for the quarter ended June

The Company’s Condensed Consolidated Financial Statements for the quarter ended September

30, 2022 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions

147 unchanged sentences

forecasts, when appropriate, and credit risk characteristics.

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,162,000 and $ 1,410,000 as of June 30,

reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,229,000 and $ 1,410,000 as of September

30, 2022 and December 31, 2021, respectively.

22 unchanged sentences

The Units follow a vesting

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

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

In accordance with FASB ASC Topic 718, Compensation

5 unchanged sentences

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.

Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year cliff vesting

following the grant date, with full value paid upon maturity.

Additionally, for grants made starting January 1, 2023, upon retirement

at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate on

a pro-rata basis, 1/3 per year from the grant date.

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

12 unchanged sentences

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.

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.

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

all of the fair value of the underlying asset.

The underlying

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

the lease term.

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

of June 30, 2022 and December 31, 2021, each of the Company’s leases are classified as operating leases.

of September 30, 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.

67 unchanged sentences

Comprehensive Income

the three and six months ended June 30, 2022 and 2021, respectively, the components of other comprehensive income consisted solely of

foreign currency translation adjustments.

the three and nine months ended September 30, 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 June 30, 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 six months ended June 30, 2022 and 2021 and for the three months ended June 30,

However, for the three months ended June 30, 2022, no customer represented more than 10% of the Company’s total Net Sales.

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 has one significant customer which represented more than 10% of the Company’s Accounts Receivable on September 30, 2022.

No 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 and nine months ended September 30, 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

28 unchanged sentences

guidance in 2021, and it did not have a material impact on its Condensed Consolidated Financial Statements.

net of reserves of $ 1,274,000 and $ 505,000 on June 30, 2022 and December 31, 2021, respectively, consisted of the following:

net of reserves of $ 78,000 and $ 505,000 on September 30, 2022 and December 31, 2021, respectively, consisted of the following:

SCHEDULE OF INVENTORIES, NET OF RESERVES

September 30,

(in thousands)

14 unchanged sentences

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.

of June 30, 2022 and December 31, 2021, the Company had no outstanding borrowings on its line of credit and was in compliance with all

debt covenants.

of September 30, 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.

24 unchanged sentences

The net present value of

the retirement payments associated with these agreements is $ 389,000 on June 30, 2022, of which $ 341,000 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 $ 382,000 on September 30, 2022, of which $ 334,000 is included in Other Long

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

benefit payments over the next twelve months.

3 unchanged sentences

The cash surrender

value of such policies (included in Other Long Term Assets) amounts to $ 1,532,000 at June 30, 2022 and $ 1,651,000 at December 31, 2021.

value of such policies (included in Other Long Term Assets) amounts to $ 1,509,000 at September 30, 2022 and $ 1,651,000 at December 31,

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

34 unchanged sentences

The aggregate maximum exposure for all current open Claims

as of June 30, 2022 is estimated to not exceed approximately $ 7,382,000 , which represents the potential costs that may be incurred over

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

From time to time, depending upon the nature of

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

although this is not common.

as of September 30, 2022 is estimated to not exceed approximately $ 7,840,000 , 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

2 unchanged sentences

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

for Claims, to the extent not expected to be covered by the Company’s insurance policies.

The liabilities recorded on the Company’s

books as of June 30, 2022 and December 31, 2021 were $ 2,497,000 and $ 262,000 , respectively, and are included in Other Liabilities.

Statements primarily represents an accrual for legal costs for services previously rendered, outstanding settlements for Claims not yet

paid, and anticipated settlements for Claims within the Company’s remaining retention under its insurance policies.

The liabilities

recorded on the Company’s books as of September 30, 2022 and December 31, 2021 were $ 3,513,000 and $ 262,000 , respectively, and

are included in Other Liabilities.

STOCK-BASED COMPENSATION PLANS

7 unchanged sentences

interest in the Company

■ shareholder

voting rights

incidents of ownership to the Company’s common stock

Units are granted to participants upon the recommendation of the Company’s CEO, and the approval of the Compensation Committee.

Units are granted to participants upon the recommendation of the Company’s President, and the approval of the Compensation Committee.

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

1 unchanged sentence

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 .

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

common stock as of the maturity date;

or Appreciation Only , in which the value of each Unit at the maturity date will be equal

to the closing price of the Company’s common stock at the maturity date minus the closing price of the Company’s common

stock at the grant date.

December 9, 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock

dividend declared by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the

common stock dividend.

Grants made on or after January

1, 2023, will fully vest three-years from 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 the Units granted in a particular award have fully vested, unless a specified event occurs under the terms of the Plan,

which would allow for earlier payment.

The value of each Unit at the maturity date will equal the closing price of the Company’s

common stock as of the maturity date ( Full Value ).

2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared

by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the common stock dividend.

The dividend equivalent will be paid at the same time the underlying phantom stock units are paid to the participant.

addition, the Plan has been amended and restated, for all grants made starting January 1, 2023, to set the vesting method to three-year

cliff vesting following the grant date, with full value paid upon maturity.

Additionally, for grants made starting January 1, 2023, upon

retirement at age 67 or greater, and with one year of continuous service prior to retirement, vesting of the issued grant(s) would accelerate

on a pro-rata basis, 1/3 per year from the grant date.

certain circumstances, the Units may be immediately vested upon the participant’s death or disability.

15 unchanged sentences

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

As of June 30, 2022,

the Company had 6,693 unvested units outstanding.

On August 19, 2022,

the Company granted an additional 1,022 Full Value Units with a fair value of $ 113.63 per unit on grant date, using historical

In August 2022, the Company paid $ 107,000 for the 950 fully vested and matured units that were granted during August 2018,

including their respective earned dividend values.

As of September 30, 2022, the Company had 6,653 unvested units outstanding.

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

8 unchanged sentences

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

During the three and six months ended June 30, 2022 and 2021, no awards were forfeited.

total Phantom Stock related liability as of June 30, 2022 was $ 1,426,000 of which $ 696,000 is included in Other Liabilities, as it is

expected to be paid within the next twelve months, and the balance of $ 730,000 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.

During the three and nine months ended September 30, 2022, no awards were forfeited.

However, for the three and nine months

ended September 30, 2021, a reversal of $ 56,000 of previously recognized compensation expense was recognized on 1,212 nonvested forfeited

total Phantom Stock related liability as of September 30, 2022 was $ 1,238,000 of which $ 656,000 is included in Other Liabilities, as

it is expected to be paid within the next twelve months, and the balance of $ 582,000 is included in Other Long Term Liabilities.

total 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 $ 132,000 and $ 477,000 for the six months ended June 30, 2022 and 2021, respectively.

The company recorded compensation

income of approximately $ 148,000 for the three months ended June 30, 2022 and compensation expense of $ 36,000 for the three months ended

June 30, 2021, respectively.

Compensation income or expense for a given period largely depends upon fluctuations in the Company’s

following table summarizes information about the Company’s nonvested phantom stock Units as of June 30, 2022:

expense of approximately $ 51,000 and $ 579,000 for the nine months ended September 30, 2022 and 2021, respectively.

The company recorded

compensation income of approximately $ 81,000 for the three months ended September 30, 2022 and compensation expense of $ 102,000 for the

three months ended September 30, 2021, respectively.

Compensation income or 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 and for the nine months ended September

SUMMARY OF NONVESTED PHANTOM STOCK UNITS

Average Grant Date Fair Value

Weighted Average Grant Date Fair Value

Number of Phantom Stock Unit Awards:

Nonvested on December 31, 2021

Nonvested on June 30, 2022

Nonvested on September 30, 2022

Phantom Stock Unit Awards Expected to Vest

total unrecognized compensation costs calculated on June 30, 2022 are $ 544,000 which will be recognized through February of 2025.

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

total unrecognized compensation costs calculated on September 30, 2022 are $ 469,000 which will be recognized through August of 2025.

The Company will recognize the related expense over the weighted average period of 1.4 years.

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

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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 and a facility in Malvern, Pennsylvania, which was recently consummated, effective January

the lease term running through October 2024 and a facility in Malvern, Pennsylvania, which was consummated, effective January 1, 2022,

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

Additionally, the Company extended its operating lease

agreement for its corporate office space in Middletown, Connecticut, with the lease term ending in June 2027 .

Additionally, the Company extended its operating lease agreement

for its corporate office space in Middletown, Connecticut, with the lease term ending in June 2027 .

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

1 unchanged sentence

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

June 30, 2022, the Company has recorded right-of-use assets of $ 3,445,000 , and a lease liability of $ 3,446,000 , of which $ 461,000 is

reported as a current liability.

September 30, 2022, the Company has recorded right-of-use assets of $ 3,095,000 , and a lease liability of $ 3,099,000 , of which $ 431,000

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

1 unchanged sentence

The respective weighted average remaining lease term and discount

rate are approximately 11.23 years and 1.06 % as of June 30, 2022.

expense for the operating leases was approximately $ 130,000 and $ 265,000 for the three and six months ended June 30, 2022 and $ 108,000

and $ 204,000 for the three and six months ended June 30, 2021.

minimum lease payments, inclusive of interest, under non-cancelable leases as of June 30, 2022 are as follows:

rate are approximately 11.01 years and 1.05 % as of September 30, 2022.

expense for the operating leases was approximately $ 119,000 and $ 384,000 for the three and nine months ended September 30, 2022 and $ 108,000

and $ 312,000 for the three and nine months ended September 30, 2021.

minimum lease payments, inclusive of interest, under non-cancelable leases as of September 30, 2022 are as follows:

OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Twelve Months Ending June 30,

Twelve Months Ending September 30,

Operating Leases

(in thousands)

Total Minimum Lease Payments

Minimum Lease Payments

SHAREHOLDERS’ EQUITY

of June 30, 2022 and December 31, 2021, the Company had authorized 20,000,000 common stock shares with par value of $ 0.01 per share.

of September 30, 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

3 unchanged sentences

OF DIVIDEND PAYMENTS

Dividend Declared

Dividend Paid

Price Per Share

September 30, 2022

October 24, 2022

June 24, 2022

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During this period, no events came to the

Company’s attention that would impact the Condensed Consolidated Financial Statements for the period ended June 30, 2022.

Company’s attention that would impact the Condensed Consolidated Financial Statements for the period ended September 30, 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