What changed in this filing

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Item 1A. Risk Factors

2023-03-10 compared with 2022-03-14 · 204 added, 218 removed, 200 unchanged (68% of the section changed)

1A – RISK FACTORS

should carefully consider the following risk factors and all the other information contained in this annual report and our other filings

in evaluating our business and investment in our common stock.

We have not disclosed general risk factors that may be applicable to any

for-profit organization, such as general economic conditions, interest rates, labor supply and technological changes.

Investors are cautioned

to take into consideration the specific risk factors we have disclosed below and general risk factors before making an investment decision.

should carefully consider the following risk factors and all the other information contained in this annual report in evaluating our

business and investment in our common stock.

We have not disclosed general risk factors that may be applicable to any for-profit organization,

such as general economic conditions, interest rates, labor supply and technological changes.

If any of these risks occur, our business,

financial condition, results of operations and prospects could be materially and adversely affected.

In that case, the market price of

our common stock could decline and you could lose all or part of your investment.

Additional risks and uncertainties not presently known

to us or that we currently deem immaterial may also materially harm our business, operating results and financial condition and could

result in a complete loss of your investment.

Relating to Our Business – Sales and Competition

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lines may be more diversified, or who are not as reliant on the sales generated by their respective flexible gas piping products.

risks relating to our TracPipe ® and CounterStrike ® flexible gas piping business – in particular loss

of distributors or sales channels, technological changes, loss of our key personnel involved in the flexible gas piping product line,

increases in commodity prices, particularly in stainless steel and polyethylene – could damage our business, competitive position,

results of operations or financial condition.

face intense competition in all of our markets.

risks relating to our TracPipe ® and CounterStrike ® flexible gas piping business – in particular,

loss of distributors or sales channels, technological changes, loss of our key personnel involved in the flexible gas piping product

line, increases in commodity prices, particularly in stainless steel, copper, and polyethylene – could damage our business, competitive

position, results of operations or financial condition.

face intense competition in all our markets.

markets for flexible metal hose are intensely competitive.

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less than our current or future products or could potentially render our products noncompetitive or obsolete.

Our prior success has

been due to our ability to develop new products and product improvements, and establish and maintain an effective distribution network

which to some extent came at the expense of several competing manufacturers.

Our business, competitive position, results of operations

or financial condition could be negatively impacted if we are unable to maintain and develop our competitive products.

Our prior success has been

due to our ability to develop new products and product improvements and establish and maintain an effective distribution network which

to some extent came at the expense of several competing manufacturers.

Our business, competitive position, results of operations or financial

condition could be negatively impacted if we are unable to maintain and develop our competitive products.

may not retain our independent sales organizations.

all of the Company’s products and product lines are sold by outside sales organizations.

These independent sales organizations

or sales representatives are geographically dispersed in certain territorial markets across the U.S., Canada and elsewhere.

all the Company’s products and product lines are sold by outside sales organizations.

These independent sales organizations or

sales representatives are geographically dispersed in certain territorial markets across the U.S., Canada and elsewhere.

These outside

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with such outside sales organizations for the exclusive representation or distribution of our products, but such agreements are generally

for terms of one year or less.

terminable on short notice.

At the expiration of the agreement, the agent or distributor may elect to represent a different manufacturer.

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business may be subject to the impact of Brexit.

Company’s main operating subsidiary, Omega Flex Limited, is headquartered in Banbury, England in the U.K.

The result of the referendum

held by the U.K.

to withdraw from the European Union (“Brexit”) had created a level of uncertainty regarding the final terms

of that withdrawal for a number of years, until an agreement was reached on December 24, 2020, by the U.K.

Company’s main operating subsidiary outside of the U.S., Omega Flex Limited, is headquartered in Banbury, England in the U.K.

result of the referendum held by the U.K.

to withdraw from the European Union (“Brexit”) had created a level of uncertainty

regarding the final terms of that withdrawal for a number of years, until an agreement was reached on December 24, 2020, by the U.K.

and the European Union.

an agreement was reached, uncertainty still exists, and adherence to the new rules regarding border and customs controls could increase

costs on materials imported into the U.K.

While an agreement was reached, uncertainty still exists, and adherence to the new rules regarding border and

customs controls could increase costs on materials imported into the U.K.

and finished goods exported from the U.K.

In addition, it is possible that logistical delays

created by those controls could delay shipments of materials and supplies into the Banbury manufacturing plant and could also affect

our ability to ship goods to customers outside of the U.K., into the European Union, Africa, and the Near East.

Most of the business

of Omega Flex Limited is domestic and should therefore not be unduly disrupted.

However, the macroeconomic effects of Brexit on the economies

and the European Union remain partially unknown, and those effects could dampen economic activity and the overall demand

for the Company’s products in those markets.

However, it is not expected that increased costs, logistical delays, nor possible

economic declines in those markets would be material to the Company.

In addition, it is

possible that logistical delays created by those controls could delay shipments of materials and supplies into the Banbury manufacturing

plant and could also affect our ability to ship goods to customers outside of the U.K., into the European Union, Africa, and the Near

Most of the business of Omega Flex Limited is within the U.K.

and should therefore not be unduly disrupted.

However, the macroeconomic

effects of Brexit on the economies of the U.K.

and the European Union remain partially unknown, and those effects could dampen economic

activity and the overall demand for the Company’s products in those markets.

However, it is not expected that increased costs,

logistical delays, nor possible economic declines in those markets would be material to the Company.

business may be subject to macroeconomic effects caused by increased trade tariffs and reduced international trade.

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Our ability to convince customers to expand their

use of our products or renew their agreements with us are directly correlated to our direct engagement with such customers.

use of our products or renew their agreements with us is directly correlated to our direct engagement with such customers.

To the extent

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degree we have experienced in the past.

international operations subject it to a variety of risks and challenges, including:

international operations are subject to a variety of risks and challenges, including:

economic or geopolitical conditions in each country or region;

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uncertainty around the world;

laws and regulations imposed by other countries on foreign operations, including the Foreign Corrupt Practices Act, the

Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual

limitations on our ability to sell our products in certain foreign markets, and the risks and costs of non-compliance.

example, in response to the rapidly developing conflict between Russia and Ukraine, the U.S.

has imposed and may further impose, and

other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia,

and such sanctions or actions could cut off or impede the flow of raw materials for our products, including minerals that are used in

our stainless steel and copper alloys.

with laws and regulations imposed on foreign operations, including the U.S.

Foreign Corrupt Practices Act, the U.K.

import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our

ability to sell our products in certain foreign markets, and the risks and costs of non-compliance.

example, in response to the continuing conflict between Russia and Ukraine, the U.S.

has imposed and may further impose, and other countries

may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia, and such sanctions

or actions could cut off or impede the flow of raw materials for our products, including minerals, such as nickel, that are used in our

stainless steel and copper alloys.

Additionally, further escalation of geopolitical tensions could have a broader impact that extends

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Relating to Our Business – Manufacturing and Operations

manufacturing plant(s) may be damaged or destroyed.

manufacturing plants may be damaged, destroyed or disrupted.

majority of the Company’s manufacturing capacity is currently located in Exton, Pennsylvania, where we own two manufacturing facilities

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where we rent a manufacturing facility.

scale the Company also manufactures product in Houston, Texas.

scale the Company also manufactures products in Houston, Texas.

We do not have any operational manufacturing capacity for flexible metal

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If one of the manufacturing facilities were destroyed or damaged in a significant

manner, we would likely experience a delay or some interruption of our flexible metal hose operations.

This could lead to a reduction

in sales volume if customers were to purchase their requirements from our competitors, claims for breach of contract by certain customers

with contracts for delivery of flexible metal hose by a certain date, and costs to replace our destroyed or damaged manufacturing capacity.

The fittings and accessories for the flexible metal hose are manufactured for us by suppliers not located in Exton, Pennsylvania, and

the Company also has outside warehouses which contain finished goods inventory.

Disruption of or damage to our supply of these items

could damage our business, competitive position, results of operations or financial condition.

manner or otherwise disrupted for more than a short time, we would likely experience a delay or some interruption of our flexible metal

hose operations.

This could lead to a reduction in sales volume if customers were to purchase their requirements from our competitors,

claims for breach of contract by certain customers with contracts for delivery of flexible metal hose by a certain date, and costs to

replace our destroyed or damaged manufacturing capacity.

The fittings and accessories for the flexible metal hose are manufactured for

us by suppliers not located in Exton, Pennsylvania, and the Company also has outside warehouses which contain finished goods inventory.

Disruption of or damage to our supply of these items could damage our business, competitive position, results of operations or financial

are dependent on certain raw materials and supplies that could be subject to volatile price escalation .

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and other installations that require that the metal hose be isolated from the environment.

Finally, we also purchase our proprietary

brass and stainless steel fittings used with the flexible metal hose that provide a mechanical means of attaching the hose to an assembly

Finally, we also purchase brass and stainless

steel for our proprietary fittings used with the flexible metal hose that provide a mechanical means of attaching the hose to an assembly

We attempt to limit the effects of volatile raw material prices, and to ensure adequate and timely supply of material, by

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Transactions in excess of the pre-arranged commitments are conducted at current market prices at the Company’s

The Company has identified multiple qualified vendors to produce or manufacture our critical purchase requirements.

does however tend to rely on one or two sources for each or our primary components to leverage the relationship and pricing.

We have identified multiple qualified vendors to produce or manufacture our critical purchase requirements.

The Company does,

however, tend to rely on one to three sources for each or our primary components to leverage the relationship and pricing.

there is no assurance that the Company would be able to eliminate all or most of the adverse effects of a sudden increase in the cost

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we were to lose the services of one or more of our senior management team, we may not be able to execute our business strategy.

future success depends in a large part upon the continued service of key members of our senior management team.

The senior executives

are critical to the development of our products and our strategic direction and have a keen knowledge of business operations and processes.

future success depends in large part upon the continued service of key members of our senior management team.

The senior executives are

critical to the development of our products and our strategic direction and have a keen knowledge of business operations and processes.

Their unique abilities, experience and expertise cannot be easily duplicated or replaced.

As much as possible, senior executives strive

to educate and develop other layers of staff and succession planning, but the loss of any of our senior management could seriously harm

our business.

Although, as much as possible, senior executives

strive to educate and develop other layers of staff for succession planning purposes, and the recent retirement of senior executives

and transition of their roles has gone smoothly, the loss of any of our senior management could seriously harm our business.

Relating to Our Business – Legal

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The Company has continued to receive repeat pattern Claims relating to our flexible gas piping products, although

the pace of the new Claims has generally declined over the last several years.

While the Company does not believe the Claims have legal

merit, and has successfully defended itself vigorously against such Claims, there is no guarantee that the pace of claims will not increase

the pace of new Claims has generally declined over the last several years.

While the Company does not believe the Claims have legal merit,

and has successfully defended itself vigorously against such Claims, there is no guarantee that the pace of claims will not increase

Any significant increase in the number of Claims, the financial magnitude of Claims brought against the Company, the costs

of defending the Claims, particularly under higher retentions of the Company’s current product liability insurance policies, could

have a detrimental impact on the Company’s business, competitive position, results of operations or financial condition, perhaps

have a detrimental and material impact on the Company’s business, competitive position, results of operations or financial condition.

we are not able to protect our intellectual property rights, we may not be able to compete as effectively.

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methods or other features that provide an advantage over our competitors.

The intellectual property rights are sometimes subject to infringement

Intellectual property rights are sometimes subject to infringement

or misappropriation by other organizations, and failing an amiable resolution, we may be forced to resort to legal proceedings to protect

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business may be subject to the supply and availability of fuel gas supplies and infrastructure.

increasing debate on the effect of human activities on climate change, there has been a focus on transitioning energy and heating in

buildings away from fossil fuels, such as natural gas and liquid propane.

increasing awareness of the effect of human activities on climate change, there has been a focus on transitioning energy and heating

in buildings away from fossil fuels, such as natural gas and liquid propane, mainly to electric.

Several municipalities in the U.S.

have announced policy decisions

to move away from fossil fuel applications in the future, including prohibiting the new installation of appliances fueled by natural

gas or liquid propane.

Although there are significant technical and economic hurdles, it is possible that a large scale movement, in

individual cities and states or on a federal level, away from fossil fuels may increase in the future.

Such moves could reduce the demand

for our flexible gas piping products that carry natural gas or liquid propane from the building’s meter to the gas-fired appliance,

which represent a major part of the Company’s sales and net profits.

As a result, it is possible in the future that proposals to

limit or eliminate the use of fossil fuels could adversely impact the financial results of the Company, perhaps materially.

announced policy decisions to move away from fossil fuel applications in the future, including prohibiting the new installation of appliances

fueled by natural gas or liquid propane.

Although there are significant technical and economic hurdles, it is possible that a large scale

movement, in individual cities and states or on a federal level, away from fossil fuels may increase in the future.

Such moves could

reduce the demand for our flexible gas piping products that carry natural gas or liquid propane from the building’s meter to the

gas-fired appliance, which represent a major part of the Company’s sales and net profits.

As a result, it is possible in the future

that proposals to limit or eliminate the use of fossil fuels could adversely impact the financial results of the Company, perhaps materially.

TracPipe ® and CounterStrike ® flexible gas piping products are used to convey fuel gas, primarily natural

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may substantially increase our debt in the future or be restricted from accessing funds.

are currently not carrying any long-term debt, although the Company has a line of credit facility available for use as described in Note

5, Line of Credit, to the Consolidated Financial Statements included in this report.

We may consider borrowing funds for purposes of

working capital, capital purchases, research and development, potential acquisitions, and business development.

If we do use credit facilities,

interest costs associated with any such borrowings and the terms of the loan could potentially adversely affect our profitability.

Additionally,

the current line of credit has debt covenants associated with it which may restrict the level of borrowing the Company may take on.

of access to financing, or desirable terms or at all, could damage our business, competitive position, results of operations or financial

in the method pursuant to which the LIBOR rates are determined and potential phasing out of LIBOR and adoption of SOFR after 2021 may

are currently not carrying any long-term debt, although the Company has a line of credit facility available for use as described in

Note 6, Line of Credit and Other Borrowings, to the Consolidated Financial Statements included in this report.

We may consider borrowing funds for

purposes of working capital, capital purchases, research and development, potential acquisitions, and business development.

use credit facilities, interest costs associated with any such borrowings and the terms of the loan could potentially adversely

affect our profitability.

Additionally, the current line of credit has debt covenants associated with it which may restrict the

level of borrowing the Company may incur.

Lack of access to financing or to reasonable terms could damage our business, competitive

position, results of operations or financial condition.

in the method pursuant to which the SOFR rates are determined and potential phasing out of LIBOR and adoption of SOFR after 2022 may

affect our financial results.

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The purchasers of new or remodeled construction

generally finance the construction or acquisition of the residential, commercial, or industrial buildings, and any increase in the interest

rates on such financing will raise the acquisition cost of the potential purchaser.

While interest rates are currently low, there is

no guarantee that will remain the case in the future.

If costs increase significantly, a higher amount of potential buyers may not be

generally finance the construction or acquisition of the residential, commercial, or industrial buildings, and increases in the interest

rates on such financing raise the acquisition cost of the potential purchaser.

Interest rates have been increasing and there is no guarantee

that they will not continue to increase in the future.

If costs continue to increase, a higher number of potential buyers may not be

able to support the level of financing under a higher interest rate environment.

Increased acquisition costs may lead to a decline in

the demand for new or remodeled construction, and as a result may also lead to a reduced demand for our products used in construction

industry, which could damage our business, competitive position, results of operations or financial condition.

Increased acquisition costs may lead to a continued

decline in the demand for new or remodeled construction, and as a result may also lead to a continued, reduced demand for our products

used in the construction industry, which could damage our business, competitive position, results of operations or financial condition.

business may be subject to cyclical demands.

demand for our products may be subject to cyclical demands in the markets in which we operate.

Our customers who use our products in

industrial and commercial applications are generally manufacturing capital equipment for their customers.

Similarly, our TracPipe ®

and CounterStrike ® flexible gas piping products are used primarily in residential construction, both in single-family

buildings, and in larger multi-unit buildings.

Should there be any change in factors that affect the rate of new residential construction,

our growth rate would likely be impacted.

To the extent that interest rates increase, in conjunction with an economic cycle or as part

of the general economic conditions in the U.S.

or abroad, the demand for our products in such applications may decrease as well, which

could damage our business, competitive position, results of operations or financial condition.

demand for our products may be subject to cyclical demand in the markets in which we operate.

Our customers who use our products in industrial

and commercial applications are generally manufacturing capital equipment for their customers.

Similarly, our TracPipe ® and

CounterStrike ® flexible gas piping products are used primarily in residential construction, both in single-family buildings,

and in larger multi-unit buildings.

Should there be any change in factors that affect the rate of new residential construction, our growth

rate would likely be impacted.

To the extent that interest rates increase, in conjunction with an economic cycle or as part of the general

economic conditions in the U.S.

or abroad, the demand for our products in such applications may decrease as well, which could damage

our business, competitive position, results of operations or financial condition.

business may be subject to seasonal or weather related factors.

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and in the other geographic markets in which we are present decline in the winter

months due to the inability to dig foundations, problems at the job site relating to snow, or generally due to low temperatures and stormy

As the rate of construction activity declines during the winter, the demand for our corrugated stainless steel tubing may also

decrease or remain static.

months due to the inability to dig foundations, challenges at the job site relating to snow, or generally due to low temperatures and

stormy weather.

As the rate of construction activity declines during the winter, the demand for our corrugated stainless steel tubing

may also decrease or remain static.

business may be subject to the impact of currency volatility.

Company has operations in the U.K., and does business transactions elsewhere in the world outside of the U.S.

While the magnitude of

these transactions outside of the U.S.

have thus far not been significant, and typically not in currencies of high volatility, it is

possible that they could be material.

Company has operations in the U.K.

and France, and does business transactions elsewhere in the world outside of the U.S.

While the magnitude

of these transactions outside of the U.S.

have thus far not been significant, and typically not in currencies of high volatility, it

is possible that they could be material.

Events such as Brexit, as described above, or other instances of political and economic turmoil

or uncertainty, could create a weakened British Pound (“BP”) in comparison to other currencies.

A weakened BP would in turn

have a direct negative impact on the Company’s financial statements, as we would experience losses when settling transactions in

other currencies, and experience unfavorable results due to the translation of financial statements with a lower exchange rate.

2020 and 2021 there was not any notable impact due to currency volatility on the financial statements, but going forward, it is possible

that the BP, other currencies that we engage in, or even the U.S.

Dollar may weaken, and materially impact the financial position, operations,

and liquidity of the Company.

cyberattack or other computer system breach could harm us.

recent years, the topic of cybersecurity, or the lack thereof, has been an issue of high concern.

The Company currently maintains a robust

firewall and other safeguards to either prevent or detect against nefarious actors looking to breach or infiltrate our data and has backup

systems in place.

The Company’s website is housed and maintained by a third party who maintain their own controls.

currently has a very low volume of sales coming through the internet, and processes very few credit card transactions.

While it currently

appears that the Company has a low level of risk related to cybercrime, the vulnerability still exists and could affect the Company negatively.

COVID-19 pandemic affected and may continue to affect the business.

ongoing global outbreak of coronavirus, which was declared a pandemic by the World Health Organization on March 11, 2020, and a national

emergency by the President of the U.S.

on March 13, 2020, has caused and is continuing to cause business slowdowns and shutdowns and

turmoil in the financial markets both in the U.S.

The Company is monitoring the impact of the COVID-19 pandemic on its business,

including how it has impacted and will impact the Company’s employees, customers, suppliers, and distribution channels.

pandemic, as well as the quarantines and other governmental and non-governmental restrictions that have been imposed throughout the world

in an effort to contain or mitigate the spread of the coronavirus, has created significant volatility, uncertainty and economic disruption

which affected and may continue to affect the Company’s business.

For example, governmental authorities in several jurisdictions

have and had ordered the cessation of all business activity that is and was deemed non-essential and, although the Company’s business

has to date been deemed essential in many affected markets, there is a risk that these shutdown orders will be extended or expanded,

or that similar shutdown orders will be implemented in other regions.

Company is currently navigating through this unprecedented crisis without any government support from the U.S.

Small Business Administration’s

Paycheck Protection Program (“PPP”), and the nature and magnitude of the COVID-19 pandemic’s ultimate impact on the

Company will depend on numerous evolving factors, future developments and cascading effects of the coronavirus pandemic that the Company

is not able to predict, including:

the duration and severity of the COVID-19 pandemic and the international actions and business restrictions

that are being undertaken and implemented as a result of it;

governmental, business and other responses to the COVID-19 pandemic, including

the promotion of “social distancing,” the issuance of shelter in place orders and restrictions on the Company’s operations,

and the possibility that government officials may mandate that the Company provide products or services;

potential disruptions in the

Company’s supply chain;

the impact of the COVID-19 pandemic on the Company’s ability to execute its short-term and long-term

business strategies and initiatives;

the extent to which forced remote working arrangements reduce the Company’s ability to manage

its business effectively;

the extent to which staffing shortages due to members of the Company’s workforce being quarantined or

exposed to the coronavirus may be detrimental to the Company’s operations;

and the Company’s ability to maintain current

levels of skilled headcount without the proceeds of a loan under the PPP (a “PPP Loan”) as a source of additional liquidity.

Furthermore, while the Company timely returned the proceeds of a PPP Loan in 2020 that it initially received out of an abundance of caution

in reliance on U.S.

Treasury Department and Small Business Administration guidance that companies were able to do so without penalty,

as the COVID-19 pandemic unfolds, federal or state governments (including government agencies such as the Treasury Department, the Small

Business Administration or the Securities and Exchange Commission) could promulgate new statutes, regulations, guidance or relief measures,

or rescind or modify existing statutes, regulations, guidance or relief measures, in a way that is detrimental to the Company or its

business, including as a result of the Company’s prior application for a loan under the PPP.

addition, while the Company cannot predict the magnitude of the impact that the COVID-19 pandemic will have on its customers and suppliers

or their financial conditions, any material effect on the Company’s customers or suppliers could adversely impact the Company.

For example, the Company’s customers or suppliers may themselves assert, or attempt to terminate various agreements and arrangements

with us on the basis of, contractual force majeure provisions, and any termination of a significant commercial agreement may adversely

harm our operations.

Additionally, the COVID-19 pandemic and related travel restrictions and other containment efforts have had a significant

impact on the travel industry, which may result in reduced demand for products.

The impact of the COVID-19 pandemic may also exacerbate

other risk factors in this Item 1A, any of which could have a material effect on the Company.

For example, the risks associated with

potential cybersecurity threats may be magnified given the increase in the number of Company employees working remotely using personal

electronic devices and home internet connections.

extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as information

is rapidly evolving with respect to the duration and severity of the COVID-19 pandemic.

At this point, the Company cannot reasonably

estimate the duration and severity of the COVID-19 pandemic or its overall impact on the Company’s business.

or uncertainty, could create a weakened British Pound (“BP”) or Euro in comparison to other currencies.

A weakened BP or

Euro would in turn have a direct negative impact, as we would experience losses when settling transactions in other currencies, and experience

unfavorable results due to the translation of financial statements with a lower exchange rate.

During 2022 and 2021 there was not any

notable impact due to currency volatility, but going forward, it is possible that the BP, Euro, and other currencies that we engage in

may materially impact the financial position, operations, and liquidity of the Company.

cyber security incident or other technology disruption could harm us.

face certain security threats and technology disruptions, including threats to our information technology (“IT”) infrastructure,

attempts to gain access to our or our customers’ proprietary or confidential information, threats of terrorism events, and failures

of our technology tools and systems.

Our IT networks and related systems are critical to the operation of our business and essential

to our ability to successfully perform day-to-day operations.

Cybersecurity threats, which include, but are not limited to, computer

viruses, spyware, and malware, attempts to access information, denial of service attacks and other electronic security breaches, are

persistent and evolve quickly.

In general, such threats have increased in frequency, scope, and potential impact in recent years.

a variety of technological tools and systems, including both company-owned IT and technological services provided by outside parties,

support our critical functions.

These technologies, as well as our products, are subject to failure and the user’s inability to

have such technologies properly supported, updated, expanded, or integrated into other technologies and, in certain cases, may contain

open source and third-party software which may unbeknownst to us contain defects or viruses that pose unintended risks.

if not effectively mitigated or controlled, could materially harm our business or reputation.

While we believe that we have implemented

appropriate measures and controls, there can be no assurance that such actions will be sufficient to prevent disruptions to critical

systems, unauthorized release of confidential information or corruption of data.

security measures we have implemented may become subject to third-party security breaches, employee error, malfeasance, faulty password

management or other irregularities.

For example, third parties may attempt to fraudulently induce employees or customers into disclosing

usernames, passwords, or other sensitive information, which may in turn be used to access our IT systems.

These security systems cannot

provide absolute security.

To the extent we were to experience a breach of our systems and were unable to protect sensitive data, such

a breach could materially damage business partner and customer relationships and curtail or otherwise impact the use of our IT systems.

Moreover, if a security breach of our IT systems affects our computer systems or results in the release of personally identifiable or

other sensitive information of customers, business partners, employees and other third parties, our reputation and brand could be materially

damaged, use of our products and services could decrease, and we could be exposed to a risk of loss, litigation, and potential liability.

Such an event could require significant management attention and resources, negatively impact our reputation among our customers and

the public, which could have a material adverse effect on our business, financial condition, and results of operations.

ongoing COVID-19 pandemic may adversely affect the business.

Company has not yet seen a material impact from the COVID-19 pandemic on its business, financial position, liquidity, or ability to service

customers or maintain critical operations.

However, some parts of the world are continuing to see a rise in COVID-19 cases and hospitalizations,

and it is possible that new, more virulent strains and variants of COVID-19 may emerge and lead governments and private sectors to re-institute

quarantine and trade restrictions, which could adversely impact market conditions.

The Company will continue to monitor the impact of

the COVID-19 pandemic on its business, including how it has impacted and will impact the Company’s employees, customers, suppliers,

and distribution channels.

The Company could face liquidity shortages, weaker product demand from its customers, disruptions in its supply

chain, and/or staffing shortages in its workforce in the future due to the direct and indirect effects of the COVID-19 pandemic.

impact of the COVID-19 pandemic may also exacerbate other risk factors in this Item 1A, any of which could have a material effect on

For example, the risks associated with potential cybersecurity threats may be magnified given the increase in the number

of Company employees working remotely using personal electronic devices and home internet connections.

other general and macroeconomic issues may impact the business.

wars, natural disasters, infectious disease outbreaks (see Pandemic above) or terrorist acts could also cause significant damage or disruption

to our operations, employees, facilities, systems, suppliers, supply chain, distributors, resellers, or customers in the U.S.

and internationally

for extended periods of time and could also affect demand for our products.

wars, natural disasters, infectious disease outbreaks (see COVID-19 pandemic above), active shooter or other workplace violence, or terrorist

acts could also cause significant damage or disruption to our operations, employees, facilities, systems, suppliers, supply chain, distributors,

resellers, or customers in the U.S.

and internationally for extended periods of time and could also affect demand for our products.

Associated with Our Common Stock

concentration of ownership of our common stock could impact its market price.

December 31, 2021, approximately 70% of the issued and outstanding common stock is owned or controlled by inside affiliated parties to

the Company, with the largest being:

concentration of ownership of our common stock could impact on its market price.

of December 31, 2022, approximately 68% of our issued and outstanding common stock was owned or controlled by certain of our directors

and officers and their respective affiliates, with the largest holders being:

The Estate of John E.

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Reed, Kevin R.

Hoben and Mark F.

currently serves on the Board of Directors, where he presides as Vice Chairman.

Reed currently serves as Vice Chairman of the Board of Directors.

Hoben and Mr.

Albino also serve on the Board of Directors,

Hoben being the Chairman of the Board, and both are officers of the Company.

This concentration of ownership may have the effect

of reducing the volume of trading of the common stock on the NASDAQ.

A decrease in trading volume could result in lower prices for the

common stock because there is not a sufficient supply of shares to create a vibrant market for our shares on the NASDAQ, or inversely

could drive the common stock price higher when demand exceeds supply.

concentration of ownership of common stock could exert significant influence over matters requiring shareholder approval, including takeover

of their significant ownership of our common stock, our officer and directors and their respective affiliates may, as a practical matter,

be able to exert influence over matters requiring approval by our shareholders, including the election of directors and the approval

of mergers or other business combinations.

This concentration also could have the effect of delaying or preventing a change in control

of the Company.

Albino also serve

on the Board of Directors, with Mr.

Hoben being the Chairman of the Board and Chief Executive Officer of the Company.

This concentration

of ownership may have the effect of reducing the volume of trading of the common stock on the NASDAQ.

A decrease in trading volume could

result in lower prices for the common stock because there is not a sufficient supply of shares to create a vibrant market for our shares

on the NASDAQ, or inversely could drive the common stock price higher when demand exceeds supply.

concentration of ownership of common stock could exert significant influence over matters requiring approval by our shareholders, including

the election of directors and the approval of mergers or other business combinations.

This concentration also could have the effect of

delaying, preventing, or deterring a change in control of the Company.

1B – UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors