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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 Or

 TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from ________________________ to ______________________

 Commission file
 number

 000-51372

 Omega
Flex, Inc.

 (Exact
name of registrant as specified in its charter)

 Pennsylvania

 23-1948942

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 Creamery Way, Exton, PA

 19341

 (Address
 of principal executive offices)

 (Zip
 Code)

 (610) 524-7272

 Registrant's
telephone number, including area code

 Not
Applicable

 (Former
name, former address, and former fiscal year, if changed since last report)

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 stock, par value $0.01 per share

 OFLX

 NASDAQ
 Global Market

 Securities
registered pursuant to section 12(g) of the Act:

 Not
applicable

 (Title
of class)

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer",
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

 Large
accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging Growth
Company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act Yes
No

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of voting and non-voting shares of common stock held by non-affiliates of the registrant as of June 30, 2023,
the last business day of the second quarter of 2023, was $ 344,436,584.

 The
number of shares of common stock outstanding as of March 1, 2024 was 10,094,322.

 DOCUMENTS
INCORPORATED BY REFERENCE

 The
information required by Part III (Items 10, 11, 12, 13, and 14) is incorporated by reference from the registrant's definitive proxy
statement (to be filed pursuant to Regulation 14A no later than 120 days after December 31, 2023, or April 29, 2024) for the 2024 annual
meeting of shareholders.

 Omega
 Flex, Inc.

 TABLE
 OF CONTENTS

 Page

 Cautionary Note Regarding Forward-Looking Statements

 Item
 1.

 Business

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [Reserved]

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures about Market Risks

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item
 10.

 Directors, Executive Officers, and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Party Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 Item
 15.

 Exhibits and Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 - 2 -

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 Certain
statements in this Annual Report on Form 10-K ("annual report" or "report") of Omega Flex, Inc. that are not
historical facts — but rather reflect our current expectations concerning future results and events — constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believes," "expects,"
"intends," "plans," "anticipates," "intends," "estimates," "potential,"
"continues," "hopes," "likely," "will," and similar expressions, or the negative of these
terms, identify such forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject
to risks and uncertainties. Important factors that could cause the actual results, performance or achievements of Omega Flex,
Inc., or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking
statements are set forth in Part I, Item 1A. Risk Factors, and other parts of this annual report.

 Readers
are cautioned not to place undue reliance on these forward-looking statements, which reflect management's view only as of the date
of this annual report. We undertake no obligation to update or revise any forward-looking statements, whether to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events, conditions, or circumstances, except as required by law.
In addition, certain sections of this annual report contain information obtained from independent industry sources and other sources
that we have not independently verified.

 Unless
otherwise indicated or the context otherwise requires, all references in this annual report to the terms "Omega Flex," the
"Company," "us," "we", and "our" refer to Omega Flex, Inc. and its subsidiaries.

 PART
I

 Item
1 - BUSINESS

 Overview
of the Company

 The
Company is a leading manufacturer of flexible metal hose, which is used in a variety of ways to carry gases and liquids within their
particular applications. Some of the more prominent uses include:

 carrying
 fuel gases within residential and commercial buildings;

 carrying
 gasoline and diesel gasoline products (both above and below the ground) in a double containment
 piping to contain any possible leaks, which is used in automotive and marina refueling, and
 fueling for back-up generation;

 using
 copper-alloy corrugated piping in medical or health care facilities to carry medical gases
 (oxygen, nitrogen, vacuum) or pure gases for pharmaceutical applications; and

 industrial
 applications where the customer requires the piping to have both a degree of flexibility
 and/or an ability to carry corrosive compounds or mixtures, or to carry at both very high
 and very low (cryogenic) temperatures.

 The
Company's business is managed as a single operating segment that consists of the manufacture and sale of flexible metal hose (also
described as corrugated tubing), as well as the sale of the Company's related proprietary fittings and a vast array of accessories.

 The
Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania and Houston, Texas in the United States (U.S.), and
in Banbury, Oxfordshire in the United Kingdom (U.K.). The Company primarily sells its products through distributors, wholesalers and
to original equipment manufacturers ("OEMs") throughout North America and Europe, and to a lesser extent other global markets.

 - 3 -

 Industry
Overview

 The
flexible metal hose industry is highly fragmented and diverse, with more than eight companies producing flexible metal hose in the U.S.,
and at least that many in Europe and Asia. Because of its simple and ubiquitous nature, flexible metal hose has been applied to a number
of different applications across a broad range of industries.

 The
major market categories for flexible metal hose include (1) automotive, (2) aerospace, (3) residential, commercial, and institutional
construction, and (4) general industrial. Omega Flex participates in the latter two markets for flexible metal hose. The residential
and commercial construction market utilizes corrugated stainless steel tubing (CSST) primarily for flexible gas piping, double containment
piping for conveying diesel fuel and gasoline from a storage tank to a dispenser or back-up generator. The Company produces corrugated
copper tubing for medical gases in medical care facilities, including hospitals, clinics, dental and veterinary offices, and long-term
care facilities. The general industrial market includes all the processing industries, the most important of which include primary steel,
petrochemical, pharmaceutical, and specialty applications for the transfer of fluids at both extremely low and high temperatures, (such
as the conveying of cryogenic liquids) and a highly fragmented OEM market, as well as the maintenance and repair market.

 None
of our competitors appear to be dominant in more than one market. We believe that we are a leading supplier of flexible metal hose in
each of the U.S. markets in which we participate. Our assessment of our overall competitive position is based on several factors. The
flexible gas piping market in the U.S. is currently concentrated in the residential housing market. Based on the reports issued by the
national trade groups on housing construction, the level of acceptance of flexible gas piping in the construction market, and the average
usage of flexible gas piping in a residential building, we believe that we can estimate with a reasonable level of accuracy the size
of the total gas piping market. In addition, the Company is a member of an industry trade group comprised of the largest manufacturers
of CSST in the U.S., which compiles and distributes sales volume statistics for its members relative to flexible gas piping. Based on
our sales and the statistics described above, the Company believes it can estimate its position within that market. For other applications,
industry trade groups collect, and report data related to these markets, and we can then compare and estimate our status within that
group as a whole. In addition, the customer base for the products that we sell, and the identity of the manufacturers aligned with those
customers is fairly well known, which again allows the Company to extract information and estimate its market position. Lastly, the term
"leading" implies a host of factors other than sales volume and market share position. It includes the range and capability
of the product line, history of product development and new product launches, all of which information is in the public domain. Based
on all this information, the Company is reasonably confident that it is indeed a leader in the major U.S. market segments in which it
participates.

 Development
of Business

 Incorporated
in 1975 under the name of Tofle America, Inc., the Company was originally established as the subsidiary of a Japanese manufacturer of
flexible metal hose. For a number of years, the Company was a manufacturer of flexible metal hose that was sold primarily to customers
using the hose for incorporation into finished assemblies for industrial applications. The Company later changed its name to Omega Flex,
Inc., and in 1996, the Company was acquired by Mestek, Inc. (Mestek).

 In
2005, Mestek distributed its equity ownership in our common stock to Mestek shareholders and the shares of our common stock started trading
on The NASDAQ Stock Market LLC under the stock symbol "OFLX."

 Over
the years, most of the Company's business has been concentrated in North America, but the Company also has foreign subsidiaries
located in the U.K. and France, which are largely focused on European and other international markets. The Company also has a U.S. subsidiary
which owns the Company's Exton, Pennsylvania real estate.

 - 4 -

 Overview
of Current Business

 Strategy

 The
Company's strategy has been, and continues to be, focused on its core strengths in the development, manufacture, and sale of flexible
metal hose for use in a variety of applications. We believe the Company is uniquely situated to exploit its capabilities in this area
due to its long experience in engineering and bringing new products to market, and its proprietary rotary process, which permits the
Company to manufacture flexible metal hose with superior quality and efficiency as compared to its competitors. The Company's strategy
is to develop flexible metal products in new and developing markets that would recognize and compensate for the value-added propositions
that each product brings to that industry. Typically, this would involve a new flexible metal hose that replaces traditional rigid products,
and thereby improves the quality of the installed product, increases installation efficiency, and provides an overall cost and time savings.
Examples of such products are our flexible gas piping sold under the TracPipe CounterStrike trademarks,
our MediTrac corrugated medical gas tubing, our DoubleTrac double-containment piping, and DEF-Trac
 flexible piping. In each instance, we believe that the products we bring to market offer customers superior quality, expanded applications
due to the products' flexibility, and reduced total costs. The Company seeks to protect its investments in product development
by obtaining patent protection for new and unique features of its products.

 Sales,
Products and Customers

 We
sell our products to customers scattered across a wide and diverse set of industries ranging from construction to pharmaceutical with
close to 10,800 customers on record. These sales channels include sales through independent sales representatives, distributors, OEM,
and direct sales. We utilize various distribution companies in the sale of our TracPipe and Counterstrike flexible
gas piping, and these distribution customers in the aggregate represent a significant portion of our business. In particular, the Company
has one significant distribution customer, whose various branches had sales in the range of 12% to 14% of total sales during the periods
of 2021 to 2023 and was 19% of the Company's accounts receivable balance over the last two years. All of this business is done
on a purchase order basis for immediate resale commitments or stocking, and there are no long-term purchase commitments. In the event
we were to lose an account, we would not expect any long-term reduction in our sales due to the broad end-user acceptance of our products.
We would anticipate that in the event of a loss of any one or more distributors, that after an initial transition period, the sales of
our products would resume at or near their historical levels. Furthermore, in the case of certain national distribution chains, which
is the case regarding the Company's largest customer noted above, and other distributors, it is possible that there would continue
to be purchasing activity from one or more regional or branch distribution customers. We sell our products within North America, primarily
in the U.S. and Canada, and we also sell our products internationally, primarily in Europe through our manufacturing facility located
in Banbury, U.K. Our sales outside of North America were in the range of 4% to 7% of our total sales during the last three years, with
most of the sales occurring in the U.K. and elsewhere in Europe. We do not have a material portion of our long-lived assets located outside
of the U.S.

 As
mentioned previously, we sell our products primarily through independent outside sales organizations, including independent sales representatives,
distributors, fabricating distributors, wholesalers, and OEMs. We have a limited internal sales function that sells our products to key
accounts, including OEMs and distributors of bulk hose. We believe that within each geographic market in which the independent sales
representative, distributor or wholesaler is located that our outside sales organizations are the first or second most successful outside
sales organization for the particular product line within that geographic area.

 TracPipe

 The
Company has had the most success within the residential construction industry with its flexible gas piping products, TracPipe,
which was introduced in 1997, and its more robust counterpart TracPipe CounterStrike, which came to market
in 2004. Partnered with the development of our AutoFlare and AutoSnap fittings and accessories, both
have enjoyed wide acceptance due to their reliability and durability. In late 2023, we discontinued the AutoSnap fitting,
due to overwhelming market acceptance of the AutoFlare fitting. Within the residential construction industry, the flexible
gas piping products that we offer, and similar products offered by our competitors have sought to overcome the use of black iron pipe
that has traditionally been used by the construction industry in the U.S. and Canada for the piping of fuel gases within a building.
Prior to the introduction of the first CSST system in 1989, nearly all construction in the U.S. and Canada used traditional black iron
pipe for gas piping. However, the advantages of CSST in areas subject to high incidence and likelihood of seismic events had been first
demonstrated in Japan. In seismic testing, the CSST was shown to withstand the stresses on a piping system created by the shifting and
movement of an earthquake better than rigid pipe. The advantages of CSST over the traditional black iron pipe also include lower overall
installation costs because it can be installed in long uninterrupted lines within the building.

 - 5 -

 The
flexibility of the tube allows it to be bent by hand without any tools when a change in direction in the line is required. In contrast,
black iron pipe requires that each bend in the pipe have a separate fitting attached. This requires the installer to thread the ends
of the black iron pipe, apply an adhesive to the threads, and then screw on the fitting, all of which is labor intensive and costly,
including testing and rework if the work is not done properly. As a result of these advantages, the Company estimates that CSST now commands
over one-half of the market for fuel gas piping in new and remodeled residential construction in the U.S., and the use of rigid iron
pipe, and to a lesser degree copper tubing, accounts for the remainder of the market. The Company plans to continue its growth trend
by demonstrating its advantages against other technologies, in both the residential and commercial markets, in both the U.S. and overseas
in geographic areas that have access to natural gas distribution systems.

 CounterStrike

 As
previously mentioned, in 2004, the Company introduced a new brand of flexible gas piping sold under the registered trademark "CounterStrike ".
CounterStrike is designed to be more resistant to damage from transient electrical arcing. In a lightning strike, the
electrical energy of the lightning can energize all metal systems and components in a building. This electrical energy, in attempting
to reach ground, may arc between metal systems that have different electrical resistance, and arcing can cause damage to the metal systems.
In standard CSST systems, an electrical bond between the CSST and the building's grounding electrode would address this issue,
but lightning is an extremely powerful and unpredictable force. CounterStrike CSST is designed to be electrically conductive
and therefore disperse the energy of any electrical charge over the entire surface of the CounterStrike line. In 2007,
the Company introduced a new version of CounterStrike CSST that was tested to be even more resistant to damage from electrical
arcing than the original version, and substantially more effective than standard CSST products. As a result of its robust performance,
the new version of CounterStrike has been widely accepted in the market, and thus during 2011, the Company made the decision
to sell exclusively CounterStrike within the U.S. This move demonstrated the Company's commitment to innovation
and safety, and further enhanced its leadership in the marketplace.

 DoubleTrac

 In
2008, the Company introduced its first double containment piping product – DoubleTrac. DoubleTrac
double containment piping has earned stringent industry certifications for its ability to safely contain and convey liquid fuels. DoubleTrac
 received certification from Underwriters Laboratory, the testing and approval agency, that our product is fully compliant with
UL 971A, which is the product standard in the U.S. for metallic underground fuel piping, ULc S679 which is the product standard in Canada
for metallic underground fuel piping, as well as approvals from other relevant state agencies that have more stringent testing procedures
for the product. Additionally, DoubleTrac is fully compliant with UL 1369, which is the bi-national U.S. and Canada standard for
aboveground piping for flammable and combustible liquids. DoubleTrac is one of a select few piping systems having listings and approvals
for both belowground and aboveground piping systems. Similar to our flexible gas piping, DoubleTrac provides advantages
over older rigid pipe technologies. DoubleTrac is made and can be installed in long continuous runs, eliminating the
need for manually assembling rigid pipe junctions at the end of a pipe or at a turn in direction. In addition, DoubleTrac
has superior performance in terms of its ability to safely convey fuel from the storage tank to the dispenser, primarily because DoubleTrac
 is essentially a zero permeation piping system, far exceeding the most stringent government regulations. Originally designed for
applications involving automotive fueling stations running from the storage tank to the fuel dispenser, the ability of DoubleTrac
 to handle a variety of installation challenges has broadened its applications to include refueling at marinas, fuel lines for back-up
generators, and corrosive liquids at waste treatment plants. In short, in applications where double containment piping is required to
handle potentially contaminating fluids or corrosive fluids, DoubleTrac is engineered to handle those demanding applications.

 - 6 -

 DEF-Trac

 DEF-Trac,
a complementary product which is very similar to DoubleTrac, was brought to the marketplace in 2011. DEF-Trac
 piping is specifically engineered to handle the demanding requirements for diesel emissions fluid (DEF). Federal regulations require
all diesel engines to use DEF to reduce the particulate contaminants from the diesel combustion process. However, DEF is highly corrosive
and cannot be pre-mixed with diesel fuel. This requires that new diesel trucks and automobiles must have separate tanks built into the
vehicle so that the diesel emissions fluid can be injected into the catalytic converter after the point of combustion. Similarly, a large
portion of fueling stations carrying diesel fuel are now also selling DEF through a separate dispenser. In addition to being highly corrosive,
DEF also has a high freezing temperature, requiring a heat trace in the piping in applications in northern areas of the U.S. DEF-Trac
 flexible piping is uniquely suited to handle all of these challenges, as the stainless steel inner core is corrosion resistant,
and DEF-Trac also comes with options for heat trace that is extruded directly into the wall of the product. In summary,
DEF-Trac provides a complete solution to the demanding requirements of this unique application, as such, DEF-Trac
 has been met with wide acceptance from the industry that was searching for a solution to the new environmental requirement. The
advantageous market position of DEF-Trac has leveraged the penetration of DoubleTrac into the broader
market for automotive fueling applications.

 MediTrac
 Corrugated Medical Tubing

 In
2019, the Company commercialized MediTrac corrugated medical tubing ("CMT"), following its 2018 launch with
several beta sites. Developed for the healthcare industry, the product can be used in hospitals, ambulatory care centers, dental, physician
and veterinary clinics, laboratories, and any facility that uses medical gases (oxygen, nitrogen, carbon dioxide, etc.). Made from a
copper alloy with an exterior fire-retardant jacket, MediTrac is made and sold in long continuous-length rolls. MediTrac
 CMT's flexible nature and storage in rolls allows it to be transported to and installed in health care facilities much more
easily and quickly than traditional medical grade rigid copper pipe, which generally comes in 20 foot long sections. MediTrac
 CMT is unrolled from a spool and installed in a medical facility in one long continuous length and is bent by hand when a change
in direction is needed. The long lengths and ability to change direction with ease eliminates labor that would otherwise be needed to
braze connections to straight sections of copper pipe or elbows or tees for changes in direction, while increasing installation efficiency
and operational safety and minimizing downtime for healthcare facilities. Easy to assemble axial swaged brass fittings connect with all
K, L and DWV medical tubing that is sized from " to 2" in diameter and provides a leak-tight seal using ordinary
hand tools. The patented fitting also prevents tampering or disassembly using a tamper-proof sleeve that is required by the Health Care
Facilities Code (NFPA 99 – 2018 edition). Rated at 185 psig, MediTrac CMT can deliver the necessary volume of gas
wherever it is needed across a facility. A recent case study comparing the installation of rigid copper pipe and MediTrac
CMT showed that MediTrac CMT increases installation efficiency by a factor of five (i.e., a 500% increase in efficiency).
By reducing the number of joints and brazed connections, MediTrac CMT also reduces possible contamination into the medical
gas system along with the fire risk associated with brazing. MediTrac CMT is currently listed at UL 1365 and has an ASTM
E84 rating of 25/50 and meets all 2018 requirements of the Health Care Facilities Code (NFPA 99 – 2018). MediTrac
CMT also meets Canadian standard Z7396.1, Medical Gas Pipeline Systems.

 In
2020, the MediTrac product line experienced increased sales in use and acceptance in the marketplace resulting from its
ability to be quickly and safely installed to meet the unprecedented crisis caused by the COVID-19 pandemic. Numerous medical institutions
and emergency medical centers used MediTrac CMT to quickly install medical gas lines in tent hospitals or in converted
facilities to handle the surging demand. For example, MediTrac medical gas piping was installed in a City of New York
temporary hospital located in Central Park and in the Cleveland Clinic for patients with COVID-19 infections and in need of supplemental
oxygen treatments. On September 25, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a waiver allowing the use of
CMT in new and existing healthcare facilities based on the provisions in NFPA 99 – 2018, allowing MediTrac CMT
to be installed in all facilities in the U.S.

 - 7 -

 Additional
Market Applications

 In
addition to the flexible gas piping and other previously described markets, our flexible metal hose is used in a wide variety of other
applications. Our involvement in these markets is important because just as the flexible gas piping applications have sprung from our
expertise in manufacturing metal hose, other applications may also evolve from our participation in the industry. Flexible metal hose
is used in a wide variety of industrial and processing applications where the characteristics of the flexible hose in terms of its flexibility,
and its ability to absorb vibration and thermal expansion and contraction, have substantial benefits over rigid piping. For example,
in certain pharmaceutical processing applications, the process of developing the specific pharmaceutical may require rapid freezing of
various compounds through the use of liquefied gases, such as liquefied nitrogen, helium or hydrofluorocarbons. The use of flexible metal
tubing is particularly appropriate in these types of applications. Flexible metal hose can accommodate the thermal expansion caused by
the liquefied gases carried through the hose, and the total length of the hose will not significantly vary. In contrast, fixed or rigid
metal pipe would expand and contract along its length as the liquid gases passed through it, causing stresses on the pipe junctions that
would over time cause fatigue and failure. Alternatively, within certain industrial or commercial applications using steam, either as
a heat source or in the industrial process itself, the pumps used to transfer the liquid or steam within the system are subject to varying
degrees of vibration. Additionally, flexible metal hoses can also be used as connections between the pump and the intake of the fluids
being transferred to eliminate the vibration effects of the pumps on the piping transfer system. All of these areas provide opportunities
for the flexible metal hose arena, and thus the Company continues to participate in these markets, as it seeks new innovative solutions
which will generate additional revenue streams for the future.

 In
each instance, whether the application is for CSST for fuel gases, flexible metal hose for handling specialty chemicals or gases, flexible
double containment piping, unique industrial applications requiring the ability to withstand wide variations in temperature and vibration,
or copper alloyed CMT for medical facilities, all of our success rests on our metal hose. Most of our flexible metal hoses range in diameter
from 1/4" to 2" while certain applications require diameters of up to 16". All of our smaller diameter pipe (2"
inner diameter and smaller) are made by a proprietary process that is known as the rotary process. The proprietary process that we use
to manufacture our annular hose is the result of a long-term development effort begun in 1995. Through continuous improvement over the
years, we have developed and fine-tuned the process so that we can manufacture annular flexible metal hose on a high speed, continuous
process. We believe that our own rotary process for manufacturing annular corrugated metal hose is the most cost efficient method in
the industry, and that our rotary process provides us with a significant advantage in many of the industries in which we participate.
As a result, we can generally provide our product on a demand basis. Over the years, the Company has had great success in achieving on-time
delivery performance to the scheduled ship date. The quick inventory turnover reduces our costs for in-process inventory, and further
contributes to our gross profit levels. We have also improved our productivity on a historical basis.

 Markets
and Competition

 There
are approximately eight manufacturers of flexible metal hose in the U.S., and at least that many in Europe and Asia. The U.S. manufacturers
include Titeflex Corporation, Ward Manufacturing, Microflex Inc., Hose Master, Pennflex, and several smaller privately held companies.
No one manufacturer, as a general rule, participates in more than two of the major market categories, automotive, aerospace, residential
and commercial construction, and general industrial, with most concentrating on just one. We estimate that we are at or near the top
position of the two major categories in which we participate regarding U.S. market share. In the flexible gas piping market, the U.S.
market is currently concentrated in the residential housing market. Based on the reports issued by the national trade groups on housing
construction, the level of acceptance of flexible gas piping in the construction market, and the average usage of flexible gas piping
in a residential building, as well as through our sales position within that market, we can estimate with a high level of accuracy the
size of the total gas piping market. In addition, the Company is a member of an industry trade group, which compiles and distributes
sales statistics for its members relative to flexible gas piping. For other applications, industry trade groups collect and report on
the size of the relevant market, and we can estimate our percentage of the relevant market based on our sales as compared to the market
as a whole. The larger of our two markets, the construction industry, has seen a modest decrease in the number of residential housing
starts in 2023, as compared to the previous year. As discussed elsewhere, black iron pipe or copper tubing was historically used by all
builders of commercial and residential buildings until the advent of flexible gas piping and changes in the relevant building codes.
Since that time, flexible gas piping has taken an increasing share of the total amount of fuel gas piping used in construction.

 - 8 -

 Due
to the number of applications in which flexible metal hose may be used, and the number of companies engaged in the manufacture and sale
of flexible metal hose, the general industrial market is very fragmented, and we estimate that no one company has a predominant market
share of the business over other competitors. In the market for double containment piping, we compete primarily against rigid pipe systems
that are more costly to install than DoubleTrac double containment piping. For medical tubing applications, the main
competitor is medical grade (Type K or Type L) rigid copper pipe. MediTrac CMT is the only corrugated medical tubing
in the U.S. that is approved to the stringent requirements of UL 1365. The general industrial markets within Europe are very mature and
tend to offer opportunities that are interesting to us in niche markets or during periods in which a weak dollar increases the demand
for our products on a competitive basis. Such has been the case for several years and has created new relationships for us. Currently,
we are not heavily engaged in the manufacture of flexible metal hose for the aerospace or automotive markets, but we continue to review
opportunities in all markets for our products to determine appropriate applications that will provide growth potential and high margins.
In some cases, where the product offering is considered a commodity, price is the overriding competing factor. In other cases, a proprietary
product offering, or superior performance will be the major factors with pricing being secondary, and in some cases, an even lesser factor.
Most of our sales are to distributors and wholesalers, and our relationships with these customers are on an arms-length basis in that
neither we nor the customers are so dependent on the other to yield any significant business advantage. See Note 2, Significant Accounting
Policies — Significant Concentrations, to the Consolidated Financial Statements included in this report for additional details.
From our perspective, we can maintain a steady demand for our products due to broad acceptance of our products by end users, regardless
of which distributor or wholesaler sells the product.

 Resources
and Raw Materials

 We
use various materials in the manufacture of our products, primarily stainless steel for our flexible metal hose and plastics for our
jacketing material on TracPipe CounterStrike flexible gas piping and DoubleTrac double
containment piping, as well as a copper alloy for our MediTrac CMT. We also purchase all of our proprietary fittings
for use with the TracPipe and CounterStrike flexible gas piping, DoubleTrac double containment
piping, and MediTrac CMT. We have multiple sources qualified for all of our major raw materials and components. Nickel
is a prime material in stainless steel which the Company utilizes to manufacture CSST, and copper is a key component of the Company's
brass fittings and our MediTrac CMT. Fortunately, the Company was able to maintain reasonably stable margins during 2023.
This was mainly accomplished by implementing our own pricing actions to help offset the upward movements in the respective material markets.
We believe that with our purchase commitments for stainless steel, polyethylene and for our proprietary fittings, we have adequate sources
of supply for these raw materials and components. Like most other manufacturers, we had sporadic supply chain issues in 2023, but we
believe our multiple suppliers have sufficient raw materials and capacity minimizing any potential disruption. We believe that the supply
sufficiency of stainless steel will continue until there is a reduction in global capacity, such as mine closures, which would then cause
constriction. Volatility in the commodities marketplace and competitive conditions in the sale of our products could potentially restrict
us from passing along raw materials or component part price increases to our customers.

 Business
Seasonality

 The
demand for our flexible piping products that are related to construction activity including TracPipe and Counterstrike
 CSST, DoubleTrac piping and MediTrac CMT, may be affected by the construction industry's
demand, which generally tightens during the winter months of each year due to cold and inclement weather. Accordingly, sales are usually
higher in the spring, summer, and fall.

 Government
Regulations, Including Environmental Regulations

 The
Company believes that its businesses and operations, including its manufacturing plants and equipment, are in substantial compliance
with all applicable government laws and regulations, including those related to environmental, consumer protection, international trade,
labor and employment, human rights, tax, anti-bribery, and competition matters. Any additional measures to maintain compliance are not
expected to materially affect the Company's capital expenditures (including expenditures for environmental control facilities),
competitive position, financial position, or results of operations.

 - 9 -

 Various
legislative and administrative regulations applicable to the Company in the matters noted above have become effective or are under consideration
in many parts of the world. To date, such developments have not had a substantial adverse impact on the Company. However, if new or amended
laws or regulations impose significant operational restrictions and compliance requirements upon the Company or its products, the Company's
business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted. Refer
to Item 1A. Risk Factors for further information.

 Human
Capital

 We
believe that our employees are the foundation of the innovative ideas necessary for the advancement of our products, and success of our
Company. Our employees are the conduits to successful relationships with our customers, vendors, and various business partners, as well
as the custodians of the safe and efficient operation of our assets ending with a highly satisfied customer. The Company fosters a collaborative,
inclusive, and safety-minded work environment, with a focus on ingenuity. We seek to identify the most highly qualified talent for our
organization, enabling us to execute our strategic objectives of providing the most innovative and technologically advanced flexible
metal hose products on the market. To attract and retain employees, the Company offers competitive wages across all levels, and maintains
a superior package of employee benefits, including medical insurance, life insurance, and retirement and savings programs, for all employees,
as well as executive compensation plans as described in our proxy statement.

 As
of December 31, 2023, the Company had 168 employees. Most of our employees are located in our manufacturing facilities in Exton, Pennsylvania,
which contain our factory personnel, engineering, finance, human resources and most of our sales staff. Our factory workforce in Exton,
Pennsylvania, is not party to a collective bargaining agreement. A small number of employees work at our facility in Houston, Texas.
A number of individual sales personnel are also scattered across the U.S. We also maintain a manufacturing facility in Banbury, U.K.,
which contains employees of similar functions to those in the U.S., but on a much smaller scale, as well as a small presence in France.
The sales personnel in England and France handle all sales and service for our products in Europe, most notably the U.K., and most of
our transactions with other international territories.

 We
are committed to fostering a work environment in which all employees treat each other with dignity and respect. This commitment extends
to providing equal employment and advancement opportunities based on merit and experience. We continually strive to attract a diverse
workforce by partnering with local organizations to identify potential candidates to advance and strengthen our human capital management
program.

 Intellectual
Property

 We
have a comprehensive portfolio of intellectual property including over 120 patents issued in various countries around the world and trademarks
registered around the world such as OmegaFlex, AutoFlare, TracPipe, CounterStrike, DoubleTrac, and MediTrac.
We also have several patent applications pending in the U.S. and internationally covering improvements to our CounterStrike
 and MediTrac products. Finally, and as mentioned above, our unique rotary process for manufacturing flexible metal hose has
been developed over a number of years and constitutes a valuable trade secret.

 Available

 You
may learn more about our Company by visiting our website at www.omegaflex.com. Among other things, you can access our filings with the
SEC on our website free of charge. These filings include proxy statements, annual reports (Form 10-K), quarterly reports (Form 10-Q),
and current reports (Form 8-K), as well as Section 16 reports filed by our officers and directors (Forms 3, 4 and 5). All of these reports
will be available on our website as soon as reasonably practicable after we file the reports with the SEC. In addition, we have made
available on our website under the heading "Compliance" the charters for the Audit, Compensation and Nominating/Governance
Committees of our Board of Directors and our Code of Business Conduct and Ethics. We intend to make available on our website any future
amendments or waivers to our Code of Business Conduct and Ethics. The SEC maintains a website at www.sec.gov that also contains
the Company's various reports, proxy, and information statements and other filings. The information contained on or accessible
through the websites referred to above is not incorporated by reference in, or otherwise a part of, this annual report, and any references
to these websites are intended to be inactive textual references only.

 - 10 -

 Item
1A – RISK FACTORS

 You
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. 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.

 Risk
Relating to Our Business – Sales and Competition

 We
are primarily dependent on one product line for most of our sales.

 Most
of our sales are derived from the sale of TracPipe and CounterStrike flexible gas piping systems, including
Autoflare fittings and a variety of accessories. Sales of our flexible metal hose for other applications represent a
small portion of our overall sales and income. Any event or circumstance that adversely affects our TracPipe or CounterStrike
 flexible gas piping could have a greater impact on our business and financial results than if our business were more evenly distributed
across several different product lines. The effects of such an adverse event or circumstance would be magnified in terms of our company
as a whole as compared to one or more competitors whose product lines may be more diversified, or who are not as reliant on the sales
generated by their respective flexible gas piping products. Therefore, 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.

 We
face intense competition in all our markets.

 The
markets for flexible metal hose are intensely competitive. There are a number of competitors in all markets in which we operate, and
generally none of these markets have one dominant competitor. One or more of our competitors may develop technologies and products that
are more effective, or which may cost less than our current or future products or could potentially render our products noncompetitive
or obsolete. Volumes of competing low price imports has increased, and may continue to increase, negatively affecting our earnings. 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.

 We
may not retain our independent sales organizations.

 Almost
all our 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 sales organizations
are independent of us and are typically owned by the individual principals of such firms. We enter into agreements with such outside
sales organizations for the exclusive representation or distribution of our products, but such agreements are generally terminable on
short notice. At the expiration of the agreement, the agent or distributor may elect to represent a different manufacturer. As a result,
we have no ability to control which flexible metal hose manufacturer any such sales organization may represent or carry. The competition
to retain quality outside sales organizations is also intense between manufacturers of flexible metal hose since it is these sales organizations
that generally can direct the sales volume to distributors and, ultimately, contractors and installers in important markets across the
country, and in other countries in which we operate. The failure to obtain the best outside sales organization within a particular geographic
market can limit our ability to generate sales of our products. While we currently have a fully developed sales and distribution network
of superior outside sales organizations, there can be no assurance that any one or more of the outside sales organizations will elect
to remain with us, or that our competitors will not be able to disrupt our distribution network by causing one or more of our sales representatives
to drop our product lines. Our business, competitive position, results of operations or financial condition could be negatively impacted
if we cannot maintain adequate sales and distribution networks.

 - 11 -

 We
are dependent on wholesale distribution channels for a significant portion of our business.

 Of
the various sales channels that we use to sell our products, a significant portion of such sales are made through our wholesale stocking
distributors. These and other distributors purchase our products, and stock the goods in warehouses for resale, either to their own local
branches or to end users. Because of the breadth and penetration of the distribution networks, and the range of complementary products
they offer for sale, these wholesale distributors can sell large amounts of our products to end users across the U.S. and Canada. The
decision by a major wholesaler distributor to stop distributing our products such as TracPipe and CounterStrike
 flexible gas piping, and to distribute a competitive flexible gas piping product, could significantly affect our business, competitive
position, results of operations or financial condition.

 Certain
of our competitors may have greater resources, or they may acquire greater resources.

 Some
of our competitors have substantially more resources than are available to us as a stand-alone company. For example, in the CSST market,
two of our competitors are divisions of large corporations with revenues measured in the billions of dollars. These competitors may be
able to devote substantially greater resources to the development, manufacture, distribution, and sale of their products than would be
available to us as a stand-alone company. One or more competitors may acquire several other competitors, or may be acquired by a larger
entity, and through a combination of resources be able to devote additional resources to their businesses. These additional resources
could be devoted to product development, reduced costs in an effort to obtain market share, greater flexibility in terms of profit margin
as part of a larger business organization, increased investment in plant, machinery, distribution and sales concessions. As a stand-alone
company, the resources that may be devoted by us to meet any potential developments by larger, well-financed competitors may be limited.

 Our
business may be subject to the impact of Brexit.

 Our
main operating subsidiary outside of the U.S., Omega Flex Limited, is headquartered in Banbury, England in the U.K. The U.K. withdrew
from the European Union ("Brexit") in 2020. While an agreement with the European Union was reached in 2021, 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. However, most of the business of Omega Flex Limited is within the U.K.
and should therefore not be unduly disrupted. To mitigate these impacts of Brexit, the Company formed a legal entity in France in 2022.
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 our products in those markets.

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

 Recent
events have caused various governments around the world to impose increased trade tariffs on imported goods. These increased tariffs
may cause the cost of materials to rise and may add additional expense on exported goods. However, we do not believe that increased tariffs
will materially affect our sales or gross profits, as most of the raw materials and supplies used to manufacture our products are sourced
domestically in the U.S. Further, exports of our flexible gas piping products from our Exton, Pennsylvania facility are primarily to
Canada, which recently agreed to a revised North American trade treaty, and to a lesser extent to the Caribbean and South America. Sales
to Europe, Asia and Africa are primarily handled from our U.K and France facilities, which are not affected by U.S. trade tariffs and
retaliatory tariffs but may be subject to other constraints as discussed in the Brexit risk factor, above.

 Our
international sales subject us to additional risks that can adversely affect our business, operating results, and financial condition.

 During
2023 and 2022, we derived 4% to 5% of our revenue from sales to customers located outside the U.S. Our ability to convince customers
to expand their use of our products or renew their agreements with us is directly correlated to our direct engagement with such customers.
To the extent that we are unable to engage with non-U.S. customers effectively, we may be unable to grow sales to international customers
to the same degree we have experienced in the past.

 - 12 -

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

 general
 economic or geopolitical conditions in each country or region;

 the
 effects of a widespread outbreak of an illness or disease, or any other public health crisis,
 including the COVID-19 pandemic, in each country or region;

 economic
 uncertainty around the world; and

 compliance
 with laws and regulations imposed on foreign operations, including the U.S. Foreign Corrupt
 Practices Act, the U.K. 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.

 For
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
into other markets where we do business. Any of these risks could adversely affect our international sales, reduce our international
revenues, or increase our operating costs, adversely affecting our business, financial condition, or operating results.

 Risk
Relating to Our Business – Manufacturing and Operations

 Our
manufacturing plants may be damaged, destroyed or disrupted.

 The
majority of our manufacturing capacity is currently located in Exton, Pennsylvania, where we own two manufacturing facilities which are
in close proximity to each other, and in Banbury, England in the U.K. where we lease a manufacturing facility. On a smaller scale we
also have manufacturing operations in Houston, Texas. We do not have any operational manufacturing capacity for flexible metal hose outside
of these locations. We cannot replicate our manufacturing methods at a supplier's facility due to the confidential and proprietary
nature of our manufacturing process. If one of the manufacturing facilities were destroyed or damaged in a significant 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 at our manufacturing facilities, and we also have 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.

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

 As
a manufacturer of flexible metal hose, we must use certain raw materials in the manufacture of the hose. The primary raw material is
stainless steel that is used in the forming of the hose, and various other steel products used in the wire braid overlay over some flexible
metal hoses for additional strength and durability, as well as copper alloy for MediTrac CMT. We also use polyethylene
in pellet form for the forming and extrusion of a polyethylene jacket over CSST for use in fuel gas applications, underground installations,
and other installations that require that the metal hose be isolated from the environment. 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
or junction. We attempt to limit the effects of volatile raw material prices, and to ensure adequate and timely supply of material, by
committing to annual purchase contracts for the bulk of our steel and polyethylene requirements, and for our fitting requirements. The
contracts typically represent a significant portion of our annual planned usage and are set at a designated fixed price or a range of
prices. These agreements sometimes require us to accept delivery of the commodity in the quantities committed, at the agreed upon prices.
Transactions in excess of the pre-arranged commitments are conducted at current market prices at our discretion. We have identified multiple
qualified vendors to produce or manufacture our critical purchase requirements. Although we tend to rely on more than one source for
each or our primary components to leverage the relationship and pricing, there is no assurance that we would be able to eliminate all
or most of the adverse effects of a sudden increase in the cost of materials or key components, or that the loss of one or more of our
key sources would not lead to higher costs or a disruption in our business, which could damage our business, competitive position, results
of operations or financial condition.

 - 13 -

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

 Our
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. 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 members of our current senior management could seriously harm our business.

 Risk
Relating to Our Business – Legal

 Susceptibility
to litigation and significant legal costs or settlements.

 In
the ordinary and normal conduct of our business, we are subject to periodic lawsuits, investigations, and claims (collectively, the "Claims").
We have continued to receive repeat pattern Claims relating to our flexible gas piping products, although the pace of new Claims has
generally declined. While we do not believe the Claims have legal merit, and have successfully defended against
such Claims, we cannot predict whether the pace of Claims will increase or subside. Any significant increase in the number of Claims,
the financial magnitude of Claims brought against us, the costs of defending the Claims, particularly under higher retentions of our
current product liability insurance policies, could have a detrimental and material impact on our business, competitive position, results
of operations or financial condition.

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

 We
possess a wide array of intellectual property rights, including patents, trademarks, copyrights, and applications for the above, as well
as trade secrets, manufacturing know-how, and other proprietary information. Certain of these intellectual property rights form the basis
of our competitive advantage in the marketplace through a superior product design, a superior business process, superior manufacturing
methods or other features that we believe provide an advantage over our competitors. 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 our rights in such intellectual property.

 In
the past, we needed to protect our company and resort to legal action, in one instance regarding a trade secret, and other instances
where we sued flexible gas pipe competitors for infringement of one or more of our U.S. patents covering our various piping and/or fitting
products. In each instance, we received favorable rulings, thus solidifying the validity of our intellectual property. Although we had
past success, the results we may obtain from resorting to any such legal proceedings are never assured, and it is possible that an adverse
decision may be delivered in any particular proceeding. As a result, we may not be able to retain the exclusive rights to utilize and
practice such intellectual property rights, and one or more of our competitors could utilize and practice such intellectual property
rights. This development may lessen our competitive advantage vis- -vis one or more competitors, and lead to a reduction in sales
volume in one or more product lines, a reduction in profit margin in such product lines, or both, which would damage our business, competitive
position, results of operations or financial condition.

 - 14 -

 Risk
Relating to Our Business – General and Macroeconomic

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

 With
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. Some states and 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 our 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 our financial results, perhaps materially.

 Our
TracPipe and CounterStrike flexible gas piping products are used to convey fuel gas, primarily natural
gas, but also propane, within a building from the exterior wall of the building to any gas-fired appliances within the building. Because
those products are used in the transmission of fuel gas, the applications are limited to geographic areas where such fuel gas is available.
Certain geographic areas of the U.S. and other countries do not have the infrastructure to make natural gas available. Other types of
fuel gas may be used in areas where there are no natural gas pipelines, but these alternate fuel gas sources have other distribution
issues that may constrict their availability. Our prospects for future growth of the TracPipe and CounterStrike
 products are largely limited to those areas that have natural gas transmission lines available for use in residences and commercial
buildings.

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

 We
are currently not carrying any long-term debt, although we have 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. 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
we may incur. Lack of access to financing or to reasonable terms could damage our business, competitive position, results of operations
or financial condition.

 Our
credit facility bears a variable rate of interest that is based on the Secured Overnight Financing Rate ("SOFR"), which may
have consequences for us that cannot be reasonably predicted and may adversely affect our liquidity, financial condition, and earnings.

 Borrowings
under our credit facility bear interest at a rate per annum of either, at our election, (i) Term SOFR plus a margin or (ii) the Prime
Rate plus a margin, with the applicable margin depending on specified financial ratios. Since the initial publication of SOFR, daily
changes in the rate have, on occasion, been more volatile than daily changes in comparable benchmark or market rates, and SOFR over time
may bear little or no relation to the historical actual or historical indicative data. As of December 31, 2023, we had no outstanding
borrowings under this credit facility. If we were to borrow under this credit facility, it is possible that the volatility of SOFR could
result in higher borrowing costs for us and could adversely affect our liquidity, financial condition, or earnings.

 Our
business may be subject to varying demands based on market interest rates.

 Our
TracPipe and CounterStrike flexible gas piping products are used in the construction industry, both in
residential, commercial, and industrial segments, for the piping of fuel gas within a building. The demand for new or remodeled construction
in the construction industry – and in particular the residential construction industry – is susceptible to fluctuations in
interest rates charged by banks and other financial institutions as well as consumer demand. The purchasers of new or remodeled construction
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 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.

 - 15 -

 Our
business may be subject to cyclical demands.

 The
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.

 Our
business may be subject to seasonal or weather related factors.

 The
demand for our products may be affected by factors relating to seasonal demand for the product, or a decline in demand due to inclement
weather. Our TracPipe and CounterStrike flexible gas piping products are installed in new or remodeled
buildings, including homes, apartment buildings, office buildings, warehouses, and other commercial or industrial buildings. Generally,
the rate of new or remodeled buildings in the U.S. and in the other geographic markets in which we are present decline in the winter
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.

 Our
business may be subject to the impact of currency volatility.

 We
have 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") 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 2023 and 2022 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 our financial position, operations, or liquidity.

 A
cybersecurity incident or other technology disruption could harm us.

 We
face certain cybersecurity 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, 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. Further, 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 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. These 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.

 - 16 -

 The
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, or results of operations.

 A
pandemic, like COVID-19 pandemic, may adversely affect our business.

 The
COVID-19 pandemic created significant uncertainty and adversely impacted many industries throughout the global economy. Although we have
not seen a material impact from the COVID-19 pandemic on our business, financial position, liquidity, or ability to service customers
or maintain critical operations, the extent to which a future pandemic may impact our business is difficult to predict, and it is dependent
on many factors over which we have no control. Such factors include, but are not limited to, the duration and severity of the pandemic;
government restrictions on businesses and individuals; potential significant adverse impacts on our employees, customers, suppliers,
or service providers; the impact on U.S. and global economies, and the timing and rate of economic recovery.

 In
case of a future pandemic, we could face liquidity shortages, weaker product demand from our customers, disruptions in our supply chain,
and/or staffing shortages in our workforce due to the direct and indirect effects of a pandemic.

 Various
other general and macroeconomic issues may impact the business.

 Conflicts,
wars, natural disasters, infectious disease outbreaks (such as COVID-19 pandemic), 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.

 Risks
Associated with Our Common Stock

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

 As
of December 31, 2023, approximately 65% 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. Reed, Stewart B. Reed, and Kevin
R. Hoben. Stewart B. Reed currently serves as Vice Chairman of the Board of Directors, and Mr. Hoben serves as the Executive Chairman
of the Board. 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.

 This
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 our company.

 - 17 -

 Item
1B – UNRESOLVED STAFF COMMENTS

 None.

 Item
1C – CYBERSECURITY

 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. We have implemented security measures and controls to mitigate risks to our IT networks and related systems, including the
risks of disruption, release of confidential information, and corruption of data. This includes a variety of technological tools and
systems, including both company-owned IT and technology services provided by outside parties to support our critical functions, and in
particular, the following:

 External
 port penetration testing;

 Security
 violation report reviewed routinely for any abnormalities;

 Ongoing
 employee training and testing on cyber risks;

 Site
 assessment, procedural review and testing in connection with cyber insurance renewals; and

 Routine server back-up.

 In
terms of governance, the Company employs an IT director, with over 20 years of relevant experience, who supervises our other IT employees
and is also responsible for our outside technology services. Our IT director reports directly to our President and reviews cybersecurity
assessments with our President on at least a monthly basis. Our President is responsible for escalating any cybersecurity matters as
appropriate, in consultation with our General Counsel. Our Board of Directors is ultimately responsible for oversight of cybersecurity
risk management and receives regular reports from, and engages in regular dialogue with, Company management.

 While
we believe we have implemented appropriate measures and controls for our business, there can of course be no assurance that cyber incidents
will be prevented or of their severity if they occur. To date, to our knowledge, there have been no incidents materially affecting the
Company, but a material incident could result in disruption of critical IT networks and systems, impeding our operations, release of
confidential information, and/or corruption of data. Such an incident could damage our reputation and brand and our future sales and
could expose us to potential liability. See Item 1A. Risk Factors - A cyber security incident or other technology disruption could harm
us.

 Item
2 - PROPERTIES

 The
Company owns two facilities in Exton, Pennsylvania, which is located approximately one hour west of Philadelphia, Pennsylvania. These
facilities contain approximately 113,000 square feet of manufacturing and office space. The Company leases an additional facility located
near its Exton facilities, which provides another 11,000 square feet of space, used for warehousing. Most of the manufacturing of flexible
metal hose is performed at the Exton facilities. In the U.S., the Company also leases a facility in Houston, Texas, which contains manufacturing,
stocking and sales operations, and a corporate office located in Middletown, Connecticut. In the U.K., the Company leases a facility
in Banbury, England, which manufactures products and serves sales, warehousing, and operational functions as well.

 Additionally,
the Company, with a lease commencement date of January 1, 2024, leases a facility in West Chester, Pennsylvania, providing approximately
28,000 square feet of warehousing and storage, quality control, distribution, and corporate office space. See Note 14. Subsequent Events
to the Consolidated Financial Statements included in this report.

 Item
3 - LEGAL PROCEEDINGS

 See
legal proceedings disclosure in Note 7, Commitments and Contingencies, to the Consolidated Financial Statements included in this report.

 Item
4 – MINE SAFETY DISCLOSURES

 Not
applicable.

 - 18 -

 PART
II

 Item
5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Common
Stock

 Our
common stock is listed on the NASDAQ Global Market, under the symbol OFLX. The number of shareholders of record as of December 31, 2023,
based on inquiries of the registrant's transfer agent, was 276. For this purpose, shareholders whose shares are held by brokers
on behalf of such shareholders (shares held in "street name") are not separately counted or included in that total.

 Shareholder
Return Performance Presentation

 The
Shareholder Return Performance Presentation shall not be deemed to be "soliciting material" or subject to Regulations 14A
or 14C of the Securities and Exchange Commission or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") and shall not be deemed incorporated by reference by any general statement incorporating by reference this annual report
into any filing under the Securities Act of 1933 or under the Exchange Act, and shall not otherwise be deemed filed under such Acts.

 The
following graph shows the changes on a cumulative basis in the total shareholder return on the Omega Flex common stock and compares those
changes in shareholder return with the total return on the S&P 500 Index and the total return on the S&P 500 Building Products
Index. The graph begins with a base value of $100 on December 31, 2018, and shows the cumulative changes over the last five years, ending
on December 31, 2023. The graph assumes $100 was invested on December 31, in each of the three alternatives, and that all dividends have
been reinvested.

 Company / Index

 Base
Period
12/31/18

 Indexed Returns – Year Ending

 12/18

 12/19

 12/20

 12/21

 12/22

 12/23

 Omega Flex, Inc.

 100.00

 207.03

 284.40

 249.39

 185.51

 142.20

 S&P 500

 100.00

 131.49

 155.68

 200.37

 164.08

 207.21

 S&P Building Products

 100.00

 148.31

 188.25

 276.48

 215.38

 274.41

 Dividends

 The
Company currently has a policy of paying regular quarterly dividends, which is expected to continue. In addition, the Company may pay
special dividends from time to time. Further details regarding dividends are contained in Note 12, Shareholders' Equity to the
Consolidated Financial Statements included in this report.

 The
Board, in its sole discretion, has a general policy of reviewing the cash needs of the Company from time to time, and based on results
of operations, financial condition and capital expenditure plans, possible acquisitions, as well as other factors that the Board may
consider relevant, determine on a quarterly basis whether to declare a regular quarterly dividend, or a special dividend.

 Item
6 – [RESERVED]

 - 19 -

 Item
7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 You
should read the following discussion and analysis of our financial condition and results of operations together with our consolidated
financial statements and related notes included in this annual report. This discussion contains forward-looking statements based upon
current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under the section titled "Risk Factors" or in other
parts of this annual report. See "Cautionary Note Regarding Forward-Looking Statements" in this annual report. Our historical
results are not necessarily indicative of the results that may be expected for any period in the future.

 Overview

 The
Company is a leading manufacturer of flexible metal hose and is currently engaged in a number of different markets, including construction,
manufacturing, transportation, petrochemical, pharmaceutical and other industries.

 The
Company's business is managed as a single operating segment that consists of the manufacture and sale of flexible metal hose, fittings,
and accessories. The Company's products are concentrated in residential and commercial construction, and general industrial markets,
with a comprehensive portfolio of intellectual property and patents issued in various countries around the world. The Company's
primary product, flexible gas piping, is used for gas piping within residential and commercial buildings. Through its flexibility and
ease of use, the Company's TracPipe and TracPipe CounterStrike flexible gas piping,
along with its fittings distributed under the trademark AutoFlare, allows users to substantially cut the time required
to install gas piping, as compared to traditional methods. The Company's newest product line MediTrac corrugated
medical tubing ("CMT") is used for piping medical gases (oxygen, nitrogen, nitrous oxide, carbon dioxide, and medical vacuum)
in health care facilities. Building on the recognized strengths and strategies employed in the flexible gas piping market, MediTrac
 CMT can be used in place of rigid copper pipe, and due to its long continuous lengths and flexibility, it can be installed approximately
five times faster than rigid copper pipe, saving on installation labor and construction schedules. The Company's products are manufactured
at its Exton, Pennsylvania and Houston, Texas facilities in the U.S., and in Banbury, Oxfordshire in the U.K. A majority of the Company's
sales across all industries are generated through independent outside sales organizations such as sales representatives, wholesalers
and distributors, or a combination of both. The Company has a broad distribution network in North America and to a lesser extent in other
global markets.

 Changes
in Financial Condition

 The
Company's cash balance of $46,356,000 as of December 31, 2023 increased $8,653,000 (23.0%) from a $37,703,000 balance at December
31, 2022. The primary reason for the increase in cash is due to income generated from operations during 2023. This was partially offset
by dividend payments during 2023 totaling $13,124,000, as detailed in Note 12, Shareholders' Equity, to the Consolidated Financial
Statements included in this report. See the Company's Consolidated Statements of Cash Flows for further details regarding the change
in cash.

 Accounts
Receivable were $15,361,000 and $17,503,000 as of December 31, 2023 and December 31, 2022, respectively, decreasing $2,142,000 or 12.2%.
This is mostly timing related, associated with greater cash collections resulting from higher sales during the fourth quarter of the
previous year versus the current quarter.

 Inventory
was $15,597,000 and $17,764,000 as of December 31, 2023 and December 31, 2022, respectively, decreasing $2,167,000 or 12.2%. The decrease
is mainly the result of lower inventory required to be on hand as the supply chain environment has recently stabilized and due to lower
raw material costs.

 Other
Liabilities were $4,390,000 and $7,530,000 as of December 31, 2023 and December 31, 2022, respectively. The decrease of $3,140,000 or
41.7% mainly relates to the payment of an accrual for legal and product liability matters associated with two cases provided for in the
previous year, which were resolved through settlement.

 - 20 -

 Retained
earnings were $68,493,000 and $60,954,000 as of December 31, 2023 and December 31, 2022, respectively, increasing $7,539,000 or 12.4%.
The increase was primarily due to an increase from net income during the year, as provided on the Company's Consolidated Statements
of Operations, partially offset by dividends declared during 2023, as discussed in detail in Note 12, Shareholders' Equity, to
the Consolidated Financial Statements included in this report.

 Results
of Operations

 Twelve
months ended December 31, 2023 vs. twelve months ended December 31, 2022

 The
Company reported comparative results from operations for the twelve month periods ended December 31, 2023 and 2022 as follows:

 Twelve-months ended December 31,

 (dollars in thousands)

 2023

 %

 2022

 %

 Net Sales

 $
 111,465

 100.0
 %

 $
 125,487

 100.0
 %

 Gross Profit

 $
 68,365

 61.3
 %

 $
 78,305

 62.4
 %

 Operating Profit

 $
 25,799

 23.1
 %

 $
 31,016

 24.7
 %

 Net
Sales. The Company's sales for the full year of 2023 were $111,465,000, reflecting a decrease of $14,022,000, or 11.2%, compared
to $125,487,000 in 2022. The decrease in sales is mainly due to lower sales unit volumes as a result of the overall market being suppressed
because of, among other factors, a decline in housing starts.

 Gross
Profit. The Company's gross profit margins were 61.3% and 62.4% for the years ended December 31, 2023, and 2022, respectively.
The decline in gross profit margin is mainly due to an increase in the provision for excess inventories for MediTrac CMT
products. Higher amounts of materials for MediTrac CMT products were initially purchased for cost considerations and
because of longer required lead times. Also, lower production, which caused lower absorption of factory labor and overhead costs, contributed
to the lower gross profit margin. Lower raw material costs, mainly for strip, partly offset the above referenced reasons for the decline
in gross profit margin.

 Selling
Expenses. Selling expenses consist primarily of employee salaries and associated overhead costs, commissions, and the cost of marketing
programs such as advertising, trade shows and related communication costs, and freight. Selling expenses were $20,993,000 and $21,931,000
for 2023 and 2022, respectively, representing a decrease of $938,000, or 4.3%. The decreases are mostly related to commissions and freight.
In the previous year, commissions increased partly because of a shift of more shipments from third party warehouses, whose shipments
are subject to commission, compared to those directly from the manufacturing facilities, whose shipments are not subject to commission.
Freight costs decreased because of lower sales volumes and lower carrier rates. These decreases were partially offset by higher staffing
related costs and travel. As a percentage of net sales, selling expenses were 18.8% and 17.5% for the twelve months ended December 31,
2023 and 2022, respectively.

 General
and Administrative Expenses. General and administrative expenses consist primarily of employee salaries, benefits for administrative,
executive and finance personnel, legal and accounting, insurance, and corporate general and administrative services. General and administrative
expenses were $17,705,000 and $20,625,000 for the years ended December 31, 2023 and 2022, respectively, decreasing $2,920,000, or 14.2%
between periods. Product liability reserves and expenses were lower by $3,010,000, associated primarily with two cases, which were provided
for in the previous year and subsequently resolved through settlement. There also was a decrease in the incentive compensation component
which is aligned with profitability. These were partly offset by increases in staffing related costs, umbrella insurance premiums, and
stock based compensation, which moves in relation to the Company's stock price, as detailed in Note 8, Stock Based Compensation
Plans. As a percentage of net sales, general and administrative expenses were 15.9% and 16.4% for the twelve months ended December 31,
2023 and 2022, respectively.

 - 21 -

 Engineering
Expenses. Engineering expenses consist of development expenses associated with the development of new products, and costs related
to enhancements of existing products and manufacturing processes. Engineering expenses decreased $865,000 or 18.3% between periods, being
$3,868,000 and $4,733,000 for the years ended December 31, 2023 and 2022, respectively, mainly associated with decreases in staffing
related costs. As a percentage of net sales for the year, engineering expenses were 3.5% in 2023 and 3.8% in 2022.

 Operating
Profit. Reflecting all the factors mentioned above, operating profits decreased $5,217,000, or 16.8%, between periods, reflecting
a profit of $25,799,000 in 2023, as compared to $31,016,000 in 2022.

 Interest
Income. Interest income is recorded on cash investments, and interest expense is recorded at times when the Company has debt amounts
outstanding on its line of credit. The Company recorded interest income of $1,700,000 for 2023, compared to $174,000 for 2022. The increase
in interest income was mainly due to the increase in interest rates during 2023. There were no borrowings on its line of credit during
2023 or 2022.

 Other
Income (Expense). Other income (expense) primarily consists of foreign currency exchange gains (losses) on transactions settled in
currencies other than the Company's local currency, typically related to the Company's foreign U.K. and France subsidiaries.
The Company recognized other income of $46,000 during 2023 and other expense of $211,000 during 2022.

 Income
Tax Expense. Income tax expense was $6,825,000 for 2023, compared to $7,327,000 for 2022. The $502,000 or 6.9% decrease in tax expense
was largely the result of the decrease in income before taxes. The effective tax rate for 2023 and 2022 was at approximately 25% and
24% of income before taxes, respectively.

 Twelve
months ended December 31, 2022 vs. twelve months ended December 31, 2021

 For
a comparison of our results of operations for the twelve months ended December 31, 2022 vs. twelve months ended December 31, 2021, see
"Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 10, 2023.

 Commitments
and Contingencies

 See
Note 7, to the Consolidated Financial Statements included in this report for a detailed description of commitments and contingencies.

 Liquidity
and Capital Resources

 Historically,
the Company's primary cash needs have been related to working capital items, which the Company has largely funded through cash
generated from operations.

 As
of December 31, 2023, the Company had a cash balance of $46,356,000. Additionally, the Company has a $15,000,000 line of credit available,
as discussed in detail in Note 6, Line of Credit and Other Borrowings, which had no borrowings outstanding against it as of December
31, 2023. As of December 31, 2022 and December 31, 2021, the Company had cash balances of $37,703,000 and $32,913,000, respectively,
with no borrowings against the line of credit.

 Operating
Activities

 Cash
provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such
as those included in working capital.

 For
2023, the Company's cash provided from operating activities was $23,422,000, compared to $15,246,000 of cash provided during 2022,
and $25,149,000 of cash provided during 2021. This illustrates an increase of $8,176,000 during 2023, versus a decrease during 2022 of
$9,903,000. For details of the operating cash flows refer to the Consolidated Statements of Cash Flows in the Company's Consolidated
Financial Statements.

 - 22 -

 As
a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically
made for accrued promotional incentives, incentive compensation, and taxes. Cash has then historically shown a tendency to be restored
and accumulated during the latter portion of the year.

 Investing
Activities

 Cash
used in investing activities during 2023, 2022, and 2021 was $1,642,000, $942,000, and $971,000 respectively, all related to various
capital expenditure projects.

 Financing
Activities

 All
financing activities relate to dividend payments, which are detailed in Note 12, Shareholders' Equity, in the Consolidated Financial
Statements included in this report. Dividend payments for 2023, 2022, and 2021 amounted to $13,124,000, $9,489,000, and $14,867,000,
respectively. The Company had no borrowings or payments on its line of credit during 2023, 2022, or 2021 as described in Note 6, Line
of Credit and Other Borrowings.

 Liquidity

 We
believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs
for at least the next twelve months. Our future capital requirements will depend upon many factors including our rate of revenue growth,
the timing and extent of any expansion efforts, the potential for investments in, or the acquisition of any complementary products, businesses,
or supplementary facilities for additional capacity.

 The
Company's primary contractual obligations as of December 31, 2023, which are due over the next twelve months, are summarized in
the following table and are more fully explained in Notes to the Consolidated Financial Statements.

 Contractual Obligations

 Total

 Operating Lease Obligations*

 $

 Purchase Obligations

 12,316

 Other Liabilities

 Total Contractual Obligations

 $
 12,895

*Includes the estimated current portion of the West Chester, Pennsylvania lease, with a lease commencement date of January 1, 2024. See
Note 14, Subsequent Events, in the Consolidated Financial Statements for additional details.

 As
explained in Note 8, Stock Based Compensation Plans, to the Consolidated Financial Statements included in this report, the Company is
obligated to make payments to plan participants. Due to the uncertain nature of the payments, due to numerous variables, including the
potential change in stock price, and employment status of participants and any applicable forfeitures, the amounts are not disclosed
in the above table. The liability associated with this plan as of December 31, 2023, which is anticipated to be paid within the next
year, is $206,000.

 Future
Impact of Known Trends or Uncertainties

 The
Company's operations are sensitive to a number of market and extrinsic factors, any one of which could materially adversely affect
the Company's business, competitive position, results of operations or financial condition in any given year. See Item 1A, Risk
Factors, for a detailed description.

 - 23 -

 Critical
Accounting Policies and Estimates

 Note
2, Significant Accounting Policies, to the Consolidated Financial Statements included in this report, includes a summary of the significant
accounting policies and methods used in the preparation of our Consolidated Financial Statements.

 Our
discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which
have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, revenue
recognition and related sales incentives, provisions for credit losses, inventory reserves, valuation of goodwill, product liability
reserves, valuation of phantom stock, and accounting for income taxes. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe our judgments related
to these accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions or conditions.

 Revenue
Recognition

 The
Company's accounting policy relating to revenue recognition reflects the impact of the adoption of Accounting Standards Codification
("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which is discussed further in the Notes
to the Consolidated Financial Statements. As a result of the adoption of ASC 606, the Company records revenue based upon a five-step
approach. The Company sells goods on typical, unmodified free on board (FOB) shipping point terms. As the seller, it can be determined
that the shipped goods meet the agreed-upon specifications in the contract or customer purchase order (e.g., items, quantities, and prices)
with the buyer, so customer acceptance would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal
right to payment upon shipment of the goods. Based upon the above, the Company has concluded that transfer of control substantively transfers
to the customer upon shipment. Other than standard product warranty provisions, the sales arrangements provide for no other post-shipment
obligations. The Company offers rebates and other sales incentives, promotional allowances, or discounts to certain customers, typically
related to purchase volume, and are classified as a reduction of revenue and recorded at the time of sale. The Company periodically evaluates
whether an allowance for sales returns is necessary. Historically, the Company has experienced minimal sales returns. If it is believed
there are to be material potential sales returns, the Company will provide the necessary provision against sales.

 Provision
for Credit Losses

 The
Company maintains allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of
its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result
of the Company's ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in
estimating credit losses in its receivable portfolio. For accounts receivable, the Company uses historical loss experience rates and
applies them to a related aging analysis while also considering customer and/or economic risk where appropriate. Determination of the
proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could
materially affect the provision for credit losses and, as a result, net earnings. The allowances consider numerous quantitative and qualitative
factors that include receivable type, historical loss experience, delinquency trends, collection experience, current economic conditions,
estimates for supportable forecasts, when appropriate, and credit risk characteristics. Changes in allowances may occur in the future
as the above referenced quantitative and qualitative factors change.

are valued at the lower of cost or net realizable value. The cost of inventories is determined by the first-in, first-out (FIFO) method.
The Company generally considers inventory quantities beyond two years of usage, measured on a historical usage basis, to be excess inventory
and reduces the carrying value of inventory accordingly. These reductions to the inventory carrying values are estimates, which could
vary significantly, either favorably or unfavorably, from actual amounts if future economic conditions, sales levels, or competitive
conditions change.

 - 24 -

 Goodwill

 In
accordance with Financial Accounting Standards Board ("FASB") ASC Topic 350, Intangibles – Goodwill and Other (ASU
2017-04), using the simplified method as adopted, the Company performed an annual impairment test as of December 31, 2023. This test
did not indicate any impairment of goodwill as the Company's estimated fair value of the reporting unit exceeded carrying value.
The test may be performed more frequently if we believe indicators of impairment might exist. These indicators may include changes in
macroeconomic and industry conditions, overall financial performance, and other relevant entity-specific events.

Liability Reserves

liability reserves represent the estimated unpaid amounts under the Company's insurance policies with respect to existing claims.
The Company uses the most current available data to estimate claims. As explained more fully under Note 7, Commitments and Contingencies,
to the Consolidated Financial Statements included in this report for various product liability claims covered under the Company's
general liability insurance policies, the Company must pay certain defense and settlement costs within its deductible or self-insured
retention limits, ranging primarily from $250,000 to $3,000,000 per claim, depending on the terms of the policy and the applicable policy
year, up to an aggregate amount. The Company is vigorously defending against all known claims. It is possible that the Company may incur
increased litigation costs in the future due to a variety of factors, including a higher number of claims, higher legal costs, and higher
insurance deductibles or retentions. Litigation is subject to many uncertainties and management is unable to predict the outcome of the
pending suits and claims. From time to time, depending upon the nature of a particular case, the Company may decide to spend more than
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 ability to procure reasonably priced insurance, could be adversely
affected by the pending litigation, potentially materially. The Company 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 Consolidated Financial Statements primarily represents an accrual for legal costs for services
previously rendered, settlements for Claims not yet paid, and anticipated settlements for claims within the Company's remaining
retention under its insurance policies.

 Stock
Based Compensation Plans

 In
2006, the Company adopted a Phantom Stock Plan (the "Plan"), which allows the Company to grant phantom stock units ("Units")
to certain key employees, officers, or directors. The Units each represent a contractual right to payment of compensation in the future
based upon the market value of the Company's common stock and are accordingly recorded as liabilities. The Units follow a vesting
schedule over three years from the grant date and are then paid upon maturity. In accordance with FASB ASC Topic 718, Compensation
- Stock Compensation ("Topic 718"), the Company uses the Black-Scholes option pricing model as its method for determining
the fair value of the Units. 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.

 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. The Company does not believe the amended and restated plan will have a material impact
upon compensation expense.

 Further
details of the Plan are provided in Note 8, Stock Based Compensation Plans, to the Consolidated Financial Statements included in this
report. Any significant changes in the Company's stock price may have a material impact upon the valuation of the Units.

 - 25 -

 Income
Taxes

 The
Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company recorded
tax expense and related deferred taxes and tax benefits.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes
the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either
expire before the Company is able to realize the benefit, or that future deductibility is uncertain. The Company's accounting for
deferred tax consequences represents the best estimate of those future events. Changes in estimates, due to unanticipated events or otherwise,
could have a material effect on the financial condition and results of operations of the Company. The Company continually evaluates its
deferred tax assets to determine if a valuation allowance is required.

 Recent
Accounting Pronouncements

 In
March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation
of the Effects of Reference Rate Reform on Financial Reporting, updated in December 2022 by ASU No. 2022-06, Deferral of Sunset
Date of Topic 848. The ASUs apply to all entities that have contracts, hedging relationships, and other transactions that reference
LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs provide optional expedients and
exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain
criteria are met. The expedients and exceptions provided by the ASUs do not apply to contract modifications made and hedging relationships
entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity
has elected certain optional expedients for and that are retained through the end of the hedging relationship. ASU 2020-04, as updated
by ASU 2022-06, is effective for all entities as of March 12, 2020, through December 31, 2024. The impact of the adoption did not have
a material impact on the Company's Consolidated Financial Statements.

 In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU expands
public entities tax disclosures including improving disclosures surrounding the company's rate reconciliation, cash taxes paid,
and disaggregation of income tax expense (or benefit) from continuing operations. The amendment is effective for annual periods beginning
after December 15, 2024. The Company is in the process of evaluating the impact of ASU No. 2023-09 on its Consolidated Financial Statements.

 Item
7A - QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

 The
Company does not engage in the purchase or trading of market risk sensitive instruments. The Company does not presently have any positions
with respect to hedge transactions such as forward contracts relating to currency fluctuations. No market risk sensitive instruments
are held for speculative or trading purposes.

 - 26 -

 Item
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Omega Flex, Inc.

 Index to Consolidated Financial Statements

 Page

 Report of Independent Registered Public Accounting Firm – Financial Statements (PCAOB ID: 49)

 Report of Independent Registered Public Accounting Firm – Internal Control over Financial Reporting (PCAOB ID: 49)

 Financial
 Statements:

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

 Notes to the Consolidated Financial Statements

 to 50

 - 27 -

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Shareholders and the Board of Directors of Omega Flex, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of Omega Flex, Inc. and its subsidiaries (the Company) as of December 31, 2023
and 2022, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively,
the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

 We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 11, 2024,
expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

liability claims

 As
described in Notes 2 and 7 of the financial statements, the Company is subject to periodic lawsuits, investigations and claims,
primarily relating to potential lightning damage to its flexible gas piping products (the "Claims"). The Company accrues
an estimated product liability reserve related to the resolution cost of the Claims for which management believes a loss is probable
of occurring, and the amount of the loss is reasonably estimable and also discloses the aggregate maximum exposure for all open
Claims. As of December 31, 2023, the Company accrued a product liability reserve of $947,000 and disclosed that the aggregate
maximum exposure for all current open Claims is estimated not to exceed $3,724,000. Due to the uncertainty of potential costs to be
incurred related to the Claims, and the uncertainty of the ultimate outcome of each of the individual Claims, management applies significant judgments
and estimates in determining the probability that a loss has been incurred and the amount to accrue for such loss.

 - 28 -

 We
identified the accrual and disclosure of the Claims as a critical audit matter due to the significant judgments made by management when
assessing the probability of a loss as well as the ultimate resolution costs of the Claims. Auditing management's estimates and
assumptions required a high degree of auditor judgment and increased audit effort due to the impact these assumptions have on the accrued
product liability reserves and disclosures.

 Our
audit procedures related to the Claims included the following, among others:

 We
 obtained an understanding of the relevant controls related to management's evaluation
 of the Claims for accrual and disclosure and tested such controls for design and operating
 effectiveness, including controls around management's evaluation of the probability
 that a loss has been incurred and management's estimate of the amount of the loss.

 We
 tested the accuracy and completeness of the underlying data that served as the basis for
 management's estimates of the probability that a loss has been incurred and the amount
 of the loss, including payment activity, relevant insurance coverage, lawsuit or claim status,
 and any settlement activity.

 We
 evaluated the methods and assumptions used by management to develop the estimate of the probability
 a loss has been incurred on individual product liability claims and the amount of such loss
 through consideration of historical claim and loss experience as well as current claim status.

 We
 performed confirmation procedures with the Company's external legal counsel to corroborate
 management's assertions regarding claim information, claim status, the probability
 the Company has incurred a loss, and the estimated amount of any potential loss. These confirmation
 procedures were also used to test the completeness and accuracy of the underlying source
 data that served as the basis of management's estimates.

 We
 tested claim and settlement payment activity occurring subsequent to year-end to assess the
 reasonableness of management's estimates and disclosures.

 /s/
RSM US LLP

 We
have served as the Company's auditor since 2010.

 Blue
Bell, Pennsylvania

 March
11, 2024

 - 29 -

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Shareholders and the Board of Directors of Omega Flex, Inc.

 Opinion
on the Internal Control Over Financial Reporting

 We
have audited Omega Flex, Inc.'s (the Company) internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission in 2013.

 We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2023
consolidated financial statements of the Company and our report dated March 11, 2024 expressed an unqualified opinion.

 Basis
for Opinion

 The
Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting in the accompanying Management's Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.

 Definition
and Limitations of Internal Control Over Financial Reporting

 A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

 /s/
 RSM US LLP

 Blue
Bell, Pennsylvania

 March
11, 2024

 - 30 -

 OMEGA
FLEX, INC. AND SUBSIDIARIES

BALANCE SHEETS

 December
31,

 (Dollars
in Thousands, except Common Stock par value)

 2023

 2022

 ASSETS

 Current Assets:

 Cash and Cash Equivalents

 $
 46,356

 $
 37,703

 Accounts Receivable - less allowances of $ 1,126 and $ 1,111, respectively

 15,361

 17,503

 Inventories - Net

 15,597

 17,764

 Other Current Assets

 2,874

 2,785

 Total Current Assets

 80,188

 75,755

 Right-Of-Use Assets - Operating

 2,940

 3,205

 Property and Equipment - Net

 8,951

 8,404

 Goodwill - Net

 3,526

 3,526

 Deferred Taxes

 Other Long Term Assets

 4,440

 5,871

 Total Assets

 $
 100,234

 $
 97,684

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current Liabilities:

 Accounts Payable

 $
 2,090

 $
 2,290

 Accrued Compensation

 3,198

 3,782

 Accrued Commissions and Sales Incentives

 4,428

 4,996

 Dividends Payable

 3,332

 3,232

 Taxes Payable

 Lease Liability - Operating

 Other Liabilities

 4,390

 7,530

 Total Current Liabilities

 18,082

 22,386

 Lease Liability - Operating, net of current portion

 2,492

 2,763

 Deferred Taxes

 -

 Tax Payable Long Term

 Other Long Term Liabilities

 Total Liabilities

 21,382

 26,511

 Commitments and Contingencies (Note 7)

 -

 -

 Shareholders' Equity:

 Omega Flex, Inc. Shareholders' Equity:

 Common Stock – par value $ 0.01 share: authorized 20,000,000 shares: 10,153,633 shares issued and 10,094,322 shares outstanding as of December 31, 2023 and December 31, 2022, respectively

 Treasury Stock

 ( 1
)

 ( 1
)

 Paid-in Capital

 Retained Earnings

 68,493

 60,954

 Accumulated Other Comprehensive Loss

 ( 930
)

 ( 1,103
)

 Total Omega Flex, Inc. Shareholders' Equity

 78,689

 70,977

 Noncontrolling Interest

 Total Shareholders' Equity

 78,852

 71,173

 Total Liabilities and Shareholders' Equity

 $
 100,234

 $
 97,684

 See
accompanying Notes which are an integral part of the Consolidated Financial Statements.

 - 31 -

 OMEGA
FLEX, INC. AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

 For
the years ended December 31,

 (Amounts
in Thousands, except per Common Share Data)

 2023

 2022

 2021

 Net Sales

 $
 111,465

 $
 125,487

 $
 130,011

 Cost of Goods Sold

 43,100

 47,182

 48,480

 Gross Profit

 68,365

 78,305

 81,531

 Selling Expense

 20,993

 21,931

 20,429

 General and Administrative Expense

 17,705

 20,625

 21,430

 Engineering Expense

 3,868

 4,733

 4,610

 Operating Profit

 25,799

 31,016

 35,062

 Interest Income

 1,700

 Other Income (Expense)

 ( 211
)

 Income Before Income Taxes

 27,545

 30,979

 35,118

 Income Tax Expense

 6,825

 7,327

 8,862

 20,720

 23,652

 26,256

 Less: Net Loss (Income) – Noncontrolling Interest

 ( 30
)

 ( 61
)

 Net Income attributable to Omega Flex, Inc.

 $
 20,763

 $
 23,622

 $
 26,195

 Basic and Diluted Earnings per Common Share

 $
 2.06

 $
 2.34

 $
 2.60

 Cash Dividends Declared per Common Share

 $
 1.31

 $
 1.26

 $
 1.18

 Basic and Diluted Weighted Average Shares Outstanding

 10,094

 10,094

 10,094

 See
accompanying Notes which are an integral part of the Consolidated Financial Statements.

 - 32 -

 OMEGA
FLEX, INC.

STATEMENTS OF COMPREHENSIVE INCOME

 For
the years ended December 31,

 (Dollars
in Thousands)

 2023

 2022

 2021

 $
 20,720

 $
 23,652

 $
 26,256

 Other Comprehensive Income (Loss):

 Foreign Currency Translation Adjustment

 ( 299
)

 ( 52
)

 Other Comprehensive Income (Loss)

 ( 299
)

 ( 52
)

 Comprehensive Income

 20,903

 23,353

 26,204

 Comprehensive Loss (Income) Attributable to the Noncontrolling Interest

 ( 7
)

 ( 58
)

 Total Other Comprehensive Income

 $
 20,936

 $
 23,346

 $
 26,146

 See
accompanying Notes which are an integral part of the Consolidated Financial Statements.

 - 33 -

 OMEGA
FLEX, INC. AND SUBSIDIARIES

STATEMENTS OF SHAREHOLDERS' EQUITY

 For
the years ended December 31, 2023, 2022 and 2021

 (Amounts
in Thousands, Except Share Amounts)

 Common Stock Outstanding

 Common
 Stock

 Treasury
 Stock

 Paid In Capital

 Retained Earnings

 Accumulated
 Other
 Comprehensive
 Income (Loss)

 Noncontrolling
 Interest

 Shareholders'
 Equity

 December 31, 2020

 $

 $
 ( 1
)

 $

 $
 35,769

 $
 ( 778
)

 $

 $
 46,377

 -

 -

 -

 -

 26,195

 -

 26,256

 Cumulative Translation Adjustment

 ( 49
)

 ( 3
)

 ( 52
)

 Dividends Declared

 ( 11,911
)

 ( 129
)

 ( 12,040
)

 December 31, 2021

 $

 $
 ( 1
)

 $

 $
 50,053

 $
 ( 827
)

 $

 $
 60,541

 -

 -

 -

 -

 23,622

 -

 23,652

 Cumulative Translation Adjustment

 ( 276
)

 ( 23
)

 ( 299
)

 Dividends Declared

 ( 12,721
)

 ( 12,721
)

 December 31, 2022

 $

 $
 ( 1
)

 $

 $
 60,954

 $
 ( 1,103
)

 $

 $
 71,173

 Balance

 $

 $
 ( 1
)

 $

 $
 60,954

 $
 ( 1,103
)

 $

 $
 71,173

 -

 -

 -

 -

 20,763

 -

 ( 43
)

 20,720

 Cumulative Translation Adjustment

 Dividends Declared

 ( 13,224
)

 ( 13,224
)

 December 31, 2023

 $

 $
 ( 1
)

 $

 $
 68,493

 $
 ( 930
)

 $

 $
 78,852

 Balance

 $

 $
 ( 1
)

 $

 $
 68,493

 $
 ( 930
)

 $

 $
 78,852

 See
accompanying Notes which are an integral part of the Consolidated Financial Statements.

 - 34 -

 OMEGA
FLEX, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

 For
the years ended December 31,

 (Dollars
in Thousands)

 2023

 2022

 2021

 Cash Flows from Operating Activities:

 $
 20,720

 $
 23,652

 $
 26,256

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

 Non-Cash Compensation Expense

 Non-Cash Lease Expense

 Depreciation and Amortization

 1,099

 1,096

 1,020

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

 ( 301
)

 Deferred Taxes

 ( 1,337
)

 Provision for Inventory Reserves

 1,107

 Changes in Assets and Liabilities:

 Accounts Receivable

 2,182

 3,396

 ( 943
)

 1,227

 ( 2,578
)

 ( 4,185
)

 Other Assets

 1,344

 ( 4,429
)

 ( 509
)

 Accounts Payable

 ( 205
)

 ( 1,002
)

 Accrued Compensation

 ( 590
)

 ( 3,194
)

 1,582

 Accrued Commissions and Sales Incentives

 ( 572
)

 ( 2,179
)

 2,835

 Lease Liabilities

 ( 461
)

 ( 475
)

 ( 335
)

 Other Liabilities

 ( 3,916
)

 1,869

 ( 2,992
)

 Net Cash Provided by Operating Activities

 23,422

 15,246

 25,149

 Cash Flows from Investing Activities:

 Capital Expenditures

 ( 1,642
)

 ( 942
)

 ( 971
)

 Net Cash Used In Investing Activities

 ( 1,642
)

 ( 942
)

 ( 971
)

 Cash Flows from Financing Activities:

 Dividends Paid

 ( 13,124
)

 ( 9,489
)

 ( 14,867
)

 Net Cash Used In Financing Activities

 ( 13,124
)

 ( 9,489
)

 ( 14,867
)

 Net Increase in Cash and Cash Equivalents

 8,656

 4,815

 9,311

 Translation effect on cash

 ( 3
)

 ( 25
)

 ( 31
)

 Cash and Cash Equivalents - Beginning of Year

 37,703

 32,913

 23,633

 Cash and Cash Equivalents - End of Year

 $
 46,356

 $
 37,703

 $
 32,913

 Supplemental Disclosure of Cash Flow Information

 Cash paid for Income Taxes

 $
 6,057

 $
 8,678

 $
 9,602

 Cash paid for Interest

 $
 -

 $
 -

 $
 -

 Declared Dividend

 $
 3,332

 $
 3,232

 $
 -

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

 $

 $

 $
 3,261

 See
accompanying Notes which are an integral part of the Consolidated Financial Statements.

 - 35 -

 OMEGA
FLEX, INC.

 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS

 1.
 BASIS OF PRESENTATION AND CONSOLIDATION

 Basis
of Presentation

 The
accompanying Consolidated Financial Statements include the accounts of Omega Flex, Inc. and its subsidiaries (collectively the "Company").
The Company's audited Consolidated Financial Statements for the years ended December 31, 2023, 2022 and 2021 have been prepared
in accordance with accounting standards set by the Financial Accounting Standards Board (FASB) and Article 5 of Regulation S-X. Certain
amounts from prior years have been reclassified to conform to current year presentation. All material intercompany accounts and transactions
have been eliminated in consolidation.

 Description
of Business

 The
Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within
their particular applications. The Company's business is controlled as a single operating segment that consists of the manufacture
and sale of flexible metal hose and accessories. These applications include carrying fuel gases within residential and commercial buildings;
gasoline and diesel gasoline products (both above and below the ground) in a double containment piping to contain any possible leaks,
which is used in automotive and marina refueling, and fueling for back-up generation; and medical gases in health care facilities. The
Company's flexible metal piping is also used to carry other types of gases and fluids in a number of industrial applications where
the customer requires the piping to have both a degree of flexibility and/or an ability to carry corrosive compounds or mixtures, or
to carry at both very high and very low (cryogenic) temperatures.

 The
Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania and Houston, Texas, in the U.S., and in Banbury, Oxfordshire
in the U.K., and sells its products through distributors, wholesalers and to OEMs throughout North America, and in certain European markets.

 2.
 SIGNIFICANT ACCOUNTING POLICIES

 Use
of Estimates

 The
preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as
of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management develops,
and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed
to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates.

 Revenue
Recognition

 The
Company applies the requirements of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
Topic 606, 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.

 - 36 -

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

 Identification
 of the contract, or contracts, with a customer — a contract with a customer exists
 when the Company enters into an enforceable contract with a customer, typically a purchase
 order initiated by the customer, that defines each party's rights regarding the goods
 to be transferred and identifies the payment terms related to these goods.

 Identification
 of the performance obligations in the contract — performance obligations promised
 in a contract are identified based on the goods that will be transferred to the customer
 that are distinct, whereby the customer can benefit from the goods on their own or together
 with other resources that are readily available from third parties or from us. Persuasive
 evidence of an arrangement for the sale of product must exist. The Company ships products
 in accordance with the purchase order and standard terms as reflected within the Company's
 order acknowledgments and sales invoices.

 Determination
 of the transaction price —the transaction price is determined based on the consideration
 to which the Company will be entitled in exchange for transferring goods to the customer.
 This would be the agreed upon quantity and price per product type in accordance with the
 customer purchase order, which is aligned with the Company's internally approved pricing
 guidelines.

 Allocation
 of the transaction price to the performance obligations in the contract — if the
 contract contains a single performance obligation, the entire transaction price is allocated
 to the single performance obligation. This applies to the Company as there is only one performance
 obligation to ship the goods.

 Recognition
 of revenue when, or as, the Company satisfies a performance obligation — the Company
 satisfies performance obligations at a point in time when control of the goods transfers
 to the customer. Determining the point in time when control transfers requires judgment.
 Indicators considered in determining whether the customer has obtained control of a good
 include:

 The
 Company has a present right to payment

 The
 customer has legal title to the goods

 The
 Company has transferred physical possession of the goods

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

 The
 customer has accepted the goods

 It
is important to note that the indicators are not a set of conditions that must be met before the Company can conclude that control of
the goods has transferred to the customer. The indicators are a list of factors that are often present if a customer has control of the
goods.

 The
Company has typical, unmodified FOB shipping point terms. As the seller, the Company can determine that the shipped goods meet the agreed-upon
specifications in the contract or customer purchase order (e.g., items, quantities, and prices) with the buyer, so customer acceptance
would be deemed a formality, as noted in ASC 606-10-55-86. As a result, the Company has a legal right to payment upon shipment of the
goods.

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

 Other
considerations of Topic 606 include the following:

 Contract
 Costs - costs to obtain a contract (e.g. customer purchase order) include sales commissions.
 Under Topic 606, these costs may be expensed as incurred for contracts with a duration of
 one year or less. The majority of the Company's customer purchase orders are fulfilled
 (e.g. goods are shipped) within two days of receipt.

 Warranties
 - the Company does not offer a warranty as a separate component for customers to purchase.
 A warranty is generally included with each purchase, providing assurance that the goods comply
 with agreed-upon specifications, and the cost is therefore accrued accordingly, but contracts
 do not include any requirement for additional distinct services. Therefore, there is not
 a separate performance obligation, and there is no impact of warranties under Topic 606 upon
 the financial reporting of the Company.

 Returned
 Goods - from time to time, the Company provides authorization to customers to return
 goods. If deemed to be material, the Company would record a "right of return"
 asset for the cost of the returned goods which would reduce cost of sales.

 - 37 -

 Volume
 Rebates (Promotional Incentives) - volume rebates are variable (dependent upon the volume
 of goods purchased by our eligible customers) and, under Topic 606, must be estimated and
 recognized as a reduction of revenue as performance obligations are satisfied (e.g. upon
 shipment of goods). Also under Topic 606, to ensure that the related revenue recognized would
 not be probable of a significant reversal, the four following factors are considered:

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

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

 The
 Company's experience with similar types of contracts is limited.

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

 If
it was concluded that the above factors were in place for the Company, it would support the probability of a significant reversal of
revenue. However, as none of the four factors apply to the Company, promotional incentives are recorded as a reduction of revenue based
upon estimates of the eligible products expected to be sold.

 Regarding
disaggregated revenue disclosures, as previously noted, the Company's business is controlled as a single operating segment that
consists of the manufacture and sale of flexible metal hose. Most of the Company's transactions are very similar in nature, contract,
terms, timing, and transfer of control of goods. As indicated in this Note 2, Significant Accounting Policies, in these Consolidated
Financial Statements, under the caption "Significant Concentrations", the majority of the Company's sales were geographically
contained within North America, with the remainder scattered internationally. All performance assessments and resource allocations are
generally based upon the review of the results of the Company as a whole.

 Cash
Equivalents

 The
Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents.
Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes, and bonds, and/or
repurchase agreements, backed by such obligations, and in U.S. Treasury bills and certificates of deposit. Carrying value approximates
fair value except for U.S. Treasury bills and certificates of deposit where amortized cost approximates fair value. Cash and cash equivalents
are deposited at various area banks, which at times may exceed federally insured limits. The Company monitors the viability of the banking
institutions carrying their assets on a regular basis and has the ability to transfer cash to various institutions during times of risk.
The Company has not experienced any losses related to these cash balances and believes its credit risk to be minimal.

 Accounts
Receivable and Provision for Credit Losses

 All
accounts receivable is stated at amortized cost, net of allowances for credit losses, and adjusted for any write-offs. The Company maintains
allowances for credit losses, which represent an estimate of expected losses over the remaining contractual life of its receivables considering
current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of the Company's ongoing
assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in its
receivable portfolio. For accounts receivable, the Company uses historical loss experience rates and applies them to a related aging
analysis while also considering customer and/or economic risk where appropriate. Determination of the proper amount of allowances requires
management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision
for credit losses and, as a result, operating profit. The allowances consider numerous quantitative and qualitative factors that include
receivable type, historical loss experience, delinquency trends, collection experience, current economic conditions, estimates for supportable
forecasts, when appropriate, and credit risk characteristics.

 The
reserve for credit losses, which include future credits, discounts, and doubtful accounts, was $ 1,126,000 and $ 1,111,000 as of December
31, 2023 and 2022, respectively.

 - 38 -

are valued at the lower of cost or net realizable value. The cost of inventories is determined by the first-in, first-out (FIFO) method.
The Company generally considers inventory quantities beyond two years of usage, measured on a historical usage basis, to be excess inventory
and reduces the carrying value of inventory accordingly.

 Property
and Equipment

 Property
and equipment are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated
useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed
of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other
income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized.

 Goodwill

 In
accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other, using the simplified method as adopted, the Company
performed an annual impairment test as of December 31, 2023. This analysis did not indicate any impairment of goodwill.

 Stock-Based
Compensation Plans

 In
2006, the Company adopted a Phantom Stock Plan (the "Plan"), which allows the Company to grant phantom stock units ("Units")
to certain key employees, officers, or directors. The Units each represent a contractual right to payment of compensation in the future
based upon the market value of the Company's common stock and are accordingly recorded as liabilities. The Units follow a vesting
schedule over three years from the grant date and are then paid upon maturity. In accordance with FASB ASC Topic 718, Compensation
- Stock Compensation, the Company uses the Black-Scholes option pricing model as its method for determining the fair value of the
Units. 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.

 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 payment 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.

 Further
details of the Plan are provided in Note 8, Stock-Based Compensation Plans, to the Consolidated Financial Statements included in this
report.

Liability Reserves

liability reserves represent the estimated unpaid amounts under the Company's insurance policy deductibles or self-insured retention
limits, with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully
under Note 7, Commitments and Contingencies, to the Consolidated Financial Statements included in this report for various product liability
claims covered under the Company's general liability insurance policies, the Company must pay certain defense and settlement costs
within its deductible or self-insured retention limits, ranging primarily from $ 250,000 to $ 3,000,000 per claim, depending on the terms
of the policy and the applicable policy year, up to an aggregate amount. The Company is vigorously defending against all known claims.

 - 39 -

 Leases

 The
Company applies the requirements of FASB ASC Topic 842, Leases 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:

 1.
 The
 lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

 2.
 The
 lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably
 certain to exercise.

 3.
 The
 lease term is for the major part of the remaining economic life of the underlying asset.

 4.
 The
 present value of the sum of lease payments and any residual value guaranteed by the lessee
 equals or exceeds substantially all of the fair value of the underlying asset.

 5.
 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.

 For
any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases. As
of December 31, 2023 and 2022, each of the Company's leases is classified as an operating lease.

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

 There
are some exceptions which the Company has elected in its accounting policies. For leases with terms of twelve months or less, or below
the Company's general capitalization policy threshold, the Company has elected an accounting policy to not recognize lease assets
and lease liabilities for all asset classes. The Company recognizes lease expense for such leases generally on a straight-line basis
over the lease term.

 The
Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate,
or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain to
be exercised. Certain leases contain non-lease components, such as common area maintenance, which are generally accounted for separately.
In general, the Company will assess if non-lease components are fixed and determinable, or variable, when determining if the component
should be included in the lease liability. For purposes of calculating the present value of the lease obligations, the Company utilizes
the implicit interest rate within the lease agreement when known and/or determinable, and otherwise utilizes its incremental borrowing
rate at the time of the lease agreement.

 Fair
Value of Financial and Nonfinancial Instruments

 The
Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting
standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable
inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level
2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company's own assumptions about the assumptions market
participants would use in pricing the asset or liability. The Company relies upon Level 1 inputs in determining the fair value of the
Company's reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other.

 - 40 -

 Advertising
Expense

 Advertising
costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated statement of operations.
Such charges aggregated $ 913,000, $ 976,000, and $ 877,000 for the years ended December 31, 2023, 2022, and 2021, respectively.

 Research
and Development Expense

 Research
and development expenses are charged to operations as incurred. Such charges totaled $ 433,000, $ 653,000, and $ 627,000 for the years ended
December 31, 2023, 2022 and 2021, respectively and are included in engineering expense in the accompanying consolidated statements of
operations.

 Shipping
Costs

 Shipping
costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $ 2,740,000,
$ 3,548,000, and $ 3,814,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

 Earnings
per Common Share

 Basic
earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there
are no dilutive securities. Consequently, basic and diluted earnings per share are the same.

 Currency
Translation

 Assets
and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet
dates. The assets and liabilities denominated in foreign currencies relate to the Company's U.K. subsidiary whose functional currency
is the British Pound and the U.K. subsidiary's France subsidiary whose functional currency is the Euro. The Consolidated Statements
of Operations are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of
financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders'
equity. Exchange gains and losses resulting from foreign currency transactions are included in the statements of operations in the period
in which they occur.

 Income
Taxes

 The
Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company records
tax expenses, related deferred taxes and tax benefits, and uncertainties in tax positions.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes
the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either
expire before the Company is able to realize the benefit, or that future deductibility is uncertain.

 The
FASB ASC Topic 740, Income Taxes, clarifies the criteria that an individual tax position must satisfy for some or all of the benefits
of that position to be recognized in a company's financial statements. This guidance prescribes a recognition threshold of more-likely
than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions
to be recognized in the financial statements.

 - 41 -

 The
Company follows the provisions of FASB ASC Subtopic 740-10 relative to accounting for uncertainties in tax positions. These provisions
provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions.

 Effective
January 1, 2022, as a result of changes made by the Tax Cuts and Jobs Act of 2017, the Company is required to capitalize certain research
and development expenses for tax purposes, and amortize those expenses over a five year period, resulting in a deferred tax asset for
the capitalized amounts.

 Other
Comprehensive Income

 For
the years ended December 31, 2023, 2022 and 2021, respectively, the components of other comprehensive income consisted solely of foreign
currency translation adjustments.

 Significant
Concentrations

 One
customer represented 12% to 14% of sales during each of the fiscal years in the period from 2021 to 2023, and that same customer accounted
for approximately 19% of the accounts receivable balance over the last two years. No other customer represented more than 10% of accounts
receivable or sales. Geographically, North America accounted for approximately 93% to 96% of the Company's sales during the last
three years. The remaining portion of sales for each respective year was scattered among other countries, with the U.K. being the Company's
most dominant market outside North America.

 Subsequent
Events

 The
Company evaluates all events or transactions through the date of the related filing that may have a material impact on its Consolidated
Financial Statements. Refer to Note 14, Subsequent Events.

 Recent
Accounting Pronouncements

 In
March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation
of the Effects of Reference Rate Reform on Financial Reporting, updated in December 2022 by ASU No. 2022-06, Deferral of Sunset
Date of Topic 848. The ASUs apply to all entities that have contracts, hedging relationships, and other transactions that reference
LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs provide optional expedients and
exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain
criteria are met. The expedients and exceptions provided by the ASUs do not apply to contract modifications made and hedging relationships
entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity
has elected certain optional expedients for and that are retained through the end of the hedging relationship. ASU 2020-04, as updated
by ASU 2022-06, is effective for all entities as of March 12, 2020, through December 31, 2024. The impact of the adoption did not have
a material impact on the Company's Consolidated Financial Statements.

 In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU expands
public entities tax disclosures including improving disclosures surrounding the company's rate reconciliation, cash taxes paid,
and disaggregation of income tax expense (or benefit) from continuing operations. The amendment is effective for annual periods beginning
after December 15, 2024. The Company is in the process of evaluating the impact of ASU No. 2023-09 on its Consolidated Financial Statements.

 - 42 -

 3.
 INVENTORIES

 Inventories,
net of reserves of $ 692,000 and $ 571,000 as of December 31, 2023 and 2022, respectively, consisted of the following:

 SCHEDULE OF
INVENTORIES, NET OF RESERVES

 2023

 2022

 December 31,

 2023

 2022

 Finished Goods

 $
 6,161

 $
 6,744

 Raw Materials

 9,436

 11,020

 Inventories - Net

 $
 15,597

 $
 17,764

 See
Note 5, Other Long Term Assets, for details on inventories which are estimated to be used beyond the next twelve months.

 4.
 PROPERTY AND EQUIPMENT

 Property
and equipment consisted of the following As of December 31:

 SCHEDULE
OF PROPERTY AND EQUIPMENT

 2023

 2022

 Depreciation and Amortization Est.
 Useful Lives

 Land

 $
 1,205

 $
 1,205

 Buildings

 6,640

 6,640

 39 Years

 Leasehold Improvements

 3 - 10 Years (Lesser of Life or Lease)

 Equipment

 17,143

 15,448

 3 - 10 Years

 Property and Equipment - Gross

 25,391

 23,689

 Accumulated Depreciation

 ( 16,440
)

 ( 15,285
)

 Property and Equipment - Net

 $
 8,951

 $
 8,404

 The
above amounts include capital related items of $ 1,349,000 and $ 535,000 as of December 31, 2023 and 2022, respectively, which had not
yet been placed in service by the Company, and therefore no depreciation was recorded in the related periods for those assets. Depreciation
and amortization expense was approximately $ 1,099,000, $ 1,096,000, and $ 1,020,000 for the years ended December 31, 2023, 2022 and 2021,
respectively.

 5.
 OTHER LONG TERM ASSETS

 Other
long term assets were as follows as of December 31:

 SCHEDULE
OF OTHER LONG TERM ASSETS

 2023

 2022

 $
 2,620

 $
 4,261

 Cash surrender value of life insurance policies

 1,681

 1,546

 Other

 Other Long Term Assets

 $
 4,440

 $
 5,871

 The
Company maintains inventories, net of reserves of $ 1,000,000 and $ 0 as of December 31, 2023 and 2022, respectively, which are estimated
to be used beyond the next twelve months, mainly for the corrugated medical tubing ("CMT") products. Higher amounts of materials
for the CMT products were initially purchased for cost considerations and because of longer required lead times.

 The
Company has obtained and is the beneficiary of life insurance policies with respect to past employees.

 - 43 -

 6.
 LINE OF CREDIT AND OTHER BORROWINGS

 On
July 3, 2023, the Company agreed to an Amended and Restated Loan Agreement with Santander Bank, N.A. (the "Bank"), and a
Second Amended and Restated Committed Revolving Line of Credit Note to the Bank (both documents together, the "Facility").
The Facility is an unsecured revolving credit facility in the maximum amount of $ 15,000,000, with a $ 1,000,000 letter of credit sublimit,
expiring June 1, 2028, with funds available for working capital and other corporate purposes. The interest rate payable on any borrowings
is either the Term SOFR Reference Rate or the Bank's Prime Rate, as specified by the Company, plus the Applicable Margin. The Applicable
Margin for the Term SOFR Reference Rate is plus 0.75% to plus 1.75%, and for Prime Rate, up to plus 0.50%, depending upon the Company's
then existing specified financial ratios. As of December 31, 2023, the Company's ratio would allow for the most favorable rate
under the Facility's ranges or 6.09%. 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 and an annual commitment fee of $ 5,000 due and payable on each anniversary date of the
Facility. The Company may terminate the Facility at any time as long as there are no amounts outstanding and may prepay any borrowings.
Prior to this, the Company had been operating in adherence with the December 1, 2017 agreement, as discussed below.

 On
December 1, 2017, the Company agreed to an Amended and Restated Revolving Line of Credit Note (the "Line") and Third Amendment
to the Loan Agreement with the Bank. The Company established a line of credit facility in the maximum amount of $ 15,000,000, maturing
on December 1, 2022, with funds available for working capital purposes and other cash needs. The Line was unsecured and extended through
the effective date of the Facility of July 3, 2023. The loan agreement provided for the payment of any borrowings under the agreement
at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime
Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than to the effective date of the Facility of July 3, 2023),
depending upon the Company's then existing financial ratios. The Company was also required to pay on a quarterly basis an unused
facility fee of 10 basis points of the average unused balance of the note.

 As
of December 31, 2023 and as of December 31, 2022, the Company had no outstanding borrowings on the Facility or the Line, as applicable,
and was in compliance with all debt covenants.

 7.
 COMMITMENTS AND CONTINGENCIES

 Commitments

 Under
a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each
of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company's
indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements.
Under the terms of the agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in
connection with claims arising by reason of these individuals' roles as officers and directors. The Company has obtained directors'
and officers' insurance policies to fund certain obligations under the indemnity agreements.

 The
Company has salary continuation agreements with past employees. These agreements provide for monthly payments to each of the employees
or their designated beneficiary upon the employee's retirement or death. The payment benefits range from $ 1,000 to $ 3,000 per month
with the term of such payments limited to 15 years after the employee's retirement. The agreements also provide for survivorship
benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount
of which is dependent on the length of company service at the date of termination. The net present value of the retirement payments associated
with these agreements is $ 326,000 as of December 31, 2023, of which $ 278,000 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. The December 31, 2022 liability of $ 357,000 had $ 309,000 reported in Other Long Term Liabilities, and a current portion
of $ 48,000 in Other Liabilities.

 In
addition to the above, the Company has other contractual employment and or change of control agreements in place with key employees,
as previously disclosed and noted in the Exhibit Index to this Form 10-K. Obligations related to these arrangements are currently indeterminable
due to the variable nature and timing of possible events required to incur such obligations.

 - 44 -

 As
disclosed in detail in Note 10, Leases, to the Consolidated Financial Statements included in this report, the Company has several lease
obligations in place that will be paid over time. Most notably, the Company leases a facility in Banbury, England that serves the manufacturing,
warehousing, and distribution functions.

 Lastly,
the Company has numerous contractual obligations in place for the forthcoming year, mainly related to purchase obligations for the Company's
raw material inventories, totaling $ 12,895,000.

 Contingencies

 In
the ordinary and normal conduct of the Company's business, it is subject to lawsuits, investigations, and claims (collectively,
the "Claims"). The Claims generally relate to potential lightning or other electrical damage to our flexible gas piping products
and may result in legal and product liability related expenses. The Company does not believe the Claims have legal merit and vigorously
defends them. It is possible that the Company may incur increased litigation costs in the future due to a variety of factors, including
a higher number of Claims, higher legal and expert costs, and higher insurance deductibles or self-insured retention limits (or "retentions").

 The
Company has in place commercial general liability insurance policies that cover most Claims, which are subject to deductibles or retentions,
ranging primarily from $ 250,000 to $ 3,000,000 per claim (depending on the terms of the policy and the applicable policy year), up to
an aggregate amount. Litigation is subject to many uncertainties and management is unable to predict the outcome of the pending suits
and claims. The potential liability for a given claim could range from zero to a maximum of $ 3,000,000, depending upon the circumstances,
and insurance deductible or retention in place for the respective claim year. The aggregate maximum exposure for all current open Claims
as of December 31, 2023 is estimated to not exceed approximately $ 3,724,000, 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
ability to procure reasonably priced insurance, could be adversely affected by the pending litigation, potentially materially. The Company
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 Consolidated Financial Statements
primarily represents an accrual for legal costs for services previously rendered, outstanding settlements for Claims not yet paid, and
anticipated, probable, settlements for Claims within the Company's remaining retention under its insurance policies. The liabilities
recorded in the Company's books as of December 31, 2023 and December 31, 2022 were $ 947,000 and $ 3,848,000, respectively, and are
included in Other Liabilities.

 8.
 STOCK BASED COMPENSATION PLANS

 Phantom
Stock Plan

 Plan
Description. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the "Plan"). The
Plan authorizes the grant of up to one million units of phantom stock to employees, officers, or directors of the Company. The phantom
stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value
of the Company's common stock. The Units are not shares of the Company's common stock, and a recipient of the Units does
not receive any of the following:

 ownership
 interest in the Company;

 shareholder
 voting rights; and

 other
 incidents of ownership to the Company's common stock

 - 45 -

 The
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
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. The Units follow a vesting schedule, with a maximum vesting of three years after the grant date. 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 FASB ASC Topic 718, Compensation - Stock Compensation.
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. Units granted with value at the maturity date
equal to the closing price of the Company's common stock as of the maturity date are defined as Full Value Units. Unless stated
otherwise, all Units described herein are Full Value Units.

 In
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 Units outstanding as of the record date of the common stock dividend. The dividend
equivalent will be paid at the same time the underlying Units are paid to the participant.

 In
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 payment 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.

 In
certain circumstances, the Units may be immediately vested upon the participant's death or disability. All Units granted to a participant
are forfeited if the participant is terminated from their relationship with the Company or its subsidiary for "cause," which
is defined under the Plan. If a participant's employment or relationship with the Company is terminated for reasons other than
for "cause," then any vested Units will be paid to the participant upon termination. However, Units granted to certain "specified
employees" as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination.

 Grants
of Units. As of December 31, 2022, the Company had 6,653 nonvested and unmatured Units outstanding. In February 2023, the Company
paid $ 673,000 for 5,120 fully vested and matured Units that were granted during 2019, including their respective earned dividend values.
On March 8, 2023, the Company granted an additional 2,536 Units with a fair value of $ 108.47 per Unit on grant date, using historical
volatility. In March 2023, 597 unvested Units were forfeited. On August 25, 2023, the Company granted an additional 1,500 Units with
a fair value of $ 76.04 per Unit on grant date, using historical volatility. In September 2023, the Company paid $ 133,000 for 1,508 fully
vested and matured Units that were granted during 2019, and $ 72,000 for the 575 fully vested and matured Units that were granted during
2020, 2021, and 2022, including their respective earned dividend values. In October 2023, the Company paid $ 132,000 for 1,149 fully vested
and matured Units that were granted during 2020 and 2021, including their respective earned dividend values. In December 2023, the Company
paid $ 96,000 for 1,125 fully vested and matured Units that were granted during 2020, including their respective earned dividend values.
As of December 31, 2023, the Company had 6,440 nonvested and unmatured Units outstanding.

 The
Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line
method of attributing the value of the stock based compensation expense relating to the Units. The compensation expense (including adjustment
of the liability to its fair value) from the Units is recognized over the vesting and maturity periods of each grant.

 The
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.

 The
Company recognizes the reversal of any previously recognized compensation expense on forfeited awards in the period that the award is
forfeited. For the year ended December 31, 2023, a reversal of $ 22,000 of previously recognized compensation expense was recognized on
 597 nonvested forfeited Units. However, for the year ended December 31, 2022, no awards were forfeited.

 - 46 -

 The
total liability related to the Units as of December 31, 2023 was $ 530,000 of which $ 206,000 is included in Other Liabilities, as it is
expected to be paid within the next twelve months, and the balance of $ 324,000 is included in Other Long Term Liabilities. The total
liability related to the Units as of December 31, 2022 was $ 1,343,000 of which $ 665,000 was included in Other Liabilities, and the balance
of $ 678,000 was included in Other Long Term Liabilities.

 Related
to the Plan, in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, the Company recorded compensation expense
of approximately $ 292,000, $ 156,000, and $ 506,000 for the years ended December 31, 2023, 2022 and 2021, respectively. Compensation expense
or income for a given period largely depends upon fluctuations in the Company's stock price.

 The
following table summarizes information about the Company's nonvested and unmatured Units as of and for the year ended December
31, 2023:

 SUMMARY OF NONVESTED PHANTOM STOCK UNITS

 Units

 Weighted Average Grant Date Fair Value

 Number of Units:

 Nonvested and Unmatured as of December 31, 2022

 6,653

 $
 129.09

 Granted

 4,036

 $
 96.42

 Vested

 ( 3,652
)

 $
 120.40

 Forfeited

 ( 597
)

 $
 147.37

 Canceled

 —

 —

 Nonvested and Unmatured as of December 31, 2023

 6,440

 $
 111.85

 Units Expected to Vest and Mature

 6,440

 $
 111.85

 The
total unrecognized compensation costs calculated as of December 31, 2023 were $ 316,000 which will be recognized through August of 2026.
The Company will recognize the related expense over the weighted average period of 1.5 years.

 9.
 INCOME TAXES

 Income
tax expense consisted of the following:

 SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

 December 31,

 2023

 2022

 2021

 Federal Income Tax:

 Current

 $
 5,279

 $
 7,453

 $
 7,197

 ( 1,156
)

 State Income Tax:

 Current

 1,126

 1,062

 ( 173
)

 Foreign Income Tax:

 Current

 ( 3
)

 ( 130
)

 ( 7
)

 ( 2
)

 Income Tax Expense

 $
 6,825

 $
 7,327

 $
 8,862

 Pre-tax
income included foreign income of $ 458,000, $ 437,000, and $ 1,500,000 in 2023, 2022 and 2021, respectively.

 - 47 -

 Total
income tax expense differed from statutory income tax expense, computed by applying the U.S. federal income tax rate of 21 % to earnings
before income tax, as follows:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

 December 31,

 2023

 2022

 2021

 Computed Statutory Income Tax Expense

 $
 5,785

 $
 6,505

 $
 7,362

 State Income Tax, Net of Federal Tax Benefit

 Foreign Tax Rate Differential

 ( 37
)

 ( 9
)

 ( 29
)

 Valuation Allowance

 -

 -

 Executive Compensation Limitation

 Foreign Derived Intangible Income Deduction

 ( 93
)

 ( 98
)

 ( 107
)

 Research Credit

 -

 ( 171
)

 ( 59
)

 Other - Net

 Income Tax Expense

 $
 6,825

 $
 7,327

 $
 8,862

 A
deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax
and financial reporting purposes. The components of and changes in the net deferred tax assets (liabilities) which give rise to this
deferred income tax (expense) benefit for the years ended December 31, 2023 and 2022 are as follows:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

 December 31,

 2023

 2022

 Deferred Tax Assets:

 Compensation Assets

 $

 $

 Inventory Valuation

 Accounts Receivable Valuation

 Deferred Litigation Costs

 Capitalized Research Costs

 Accrued Product Liability

 Foreign Net Operating Losses

 Valuation Allowance for Loss Carryover

 ( 176
)

 ( 78
)

 Other

 Compensation Liabilities

 Total Deferred Assets

 $
 2,116

 $
 2,868

 Deferred Tax Liabilities:

 Prepaid Expenses

 ( 612
)

 ( 592
)

 Depreciation and Amortization

 ( 1,315
)

 ( 1,359
)

 Total Deferred Liabilities

 $
 ( 1,927
)

 $
 ( 1,951
)

 Total Deferred Tax Asset

 $

 $

 Management
believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that
the deferred tax assets will be realized except for a carryover of foreign operating losses incurred by one of its foreign subsidiaries.
Due to the uncertainty of future income in the foreign subsidiary, the Company has recognized a valuation allowance related to the foreign
operating losses carrying forward.

 The
Company is currently subject to audit by the Internal Revenue Service for the calendar years ended 2020 through 2022. The Company and
its Subsidiaries' state income tax returns are subject to audit for the calendar years ended 2019 through 2022.

 As
of December 31, 2023, the Company had no liability for unrecognized tax benefits related to various federal and state income tax matters.

 - 48 -

 10.
 LEASES

 In
the U.S., the Company owns its two main operating facilities located in Exton, Pennsylvania. In addition to the owned facilities, the
Company also has operations in other locations that are leased, as well as other leased assets. In conjunction with the guidance for
leases, as defined by FASB ASC Topic 842, Leases, the Company has described the existing leases, which are all classified as operating
leases, pursuant to the below.

 In
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, with a three year term ending in December 2024,
that provides warehousing. Additionally, the Company has an operating lease agreement for its corporate office space in Middletown, Connecticut,
with the lease term ending in June 2027.

 In
the U.K., the Company leases a facility in Banbury, England, which serves manufacturing, warehousing, and other operational functions.
 The lease in Banbury has a 15-year term ending in March 2036.

 With
a lease commencement date of January 1, 2024, the Company leased a facility in West Chester, Pennsylvania providing approximately 28,000
square feet of warehousing and storage, quality control, distribution, and corporate office space. See Note 14. Subsequent Events to
the Consolidated Financial Statements included in this report.

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

 As
of December 31, 2023, the Company has right-of-use assets of $ 2,940,000, and a lease liability of $ 2,946,000, of which $ 454,000 is reported
as a current liability. As of December 31, 2022, the Company recorded right-of-use assets of $ 3,205,000, and a lease liability of $ 3,210,000,
of which $ 447,000 was reported as a current liability. The respective weighted average remaining lease term and discount rate are approximately
 10.57 years and 1.07 % as of December 31, 2023.

 Rent
expense for operating leases was $ 467,000, $ 504,000, and $ 421,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

 Future
minimum lease payments under non-cancelable leases as of December 31, 2023 are as follows:

 SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

 Twelve Months Ending December 31,

 Operating Leases

 2024

 $

 2025

 2026

 2027

 2028

 Thereafter

 1,541

 Total Future Minimum Lease Payments

 3,100

 Less: Interest

 Lease Liability

 2,946

 Less: Current Portion of Lease Liability

 Lease Liability – Net of Current Portion

 $
 2,492

 - 49 -

 11.
 EMPLOYEE BENEFIT PLANS

 Defined
Contribution and 401(K) Plans

 The
Company maintains a qualified non-contributory profit-sharing plan (the "Plan") covering all eligible employees. There were
$ 484,000, $ 474,000, and $ 441,000 of contributions accrued for the Plan in 2023, 2022 and 2021 respectively, which were charged to expense
in those respective years.

 Contributions
to the Plan are defined as three percent ( 3 %) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six
percent ( 6 %) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA).
Participant balances vest over six years.

 The
Company also maintains a savings and retirement plan qualified under Internal Revenue Code Section 401(k) for all employees. Employees
are eligible to participate in the Plan the first day of the month following date of hire. Participants may elect to have up to fifty
percent ( 50 %) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code. After completing one year of service,
the Company contributed an additional amount equal to 50 % of all employee contributions, up to a maximum of 6 % of an employee's
gross wages. Contributions are funded on a current basis. Contributions to the Plan charged to expense for the years ended December 31,
2023, 2022 and 2021 were $ 330,000, $ 319,000, and $ 315,000, respectively. The participant's Company contribution vests ratably over
six years.

 12.
 SHAREHOLDERS' EQUITY

 As
of December 31, 2023 and December 31, 2022, the Company had 20,000,000 shares of common stock, with par value of $ 0.01 per share, authorized.
For both periods, the total number of outstanding shares was 10,094,322, shares held in Treasury was 59,311, and total shares issued
was 10,153,633.

 During
2023, 2022, and 2021, upon approval of the Board of Directors (the "Board") the Company has declared and paid regular quarterly
dividends, as set forth in the following table:

 SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS

 Dividend Declared

 Dividend Paid

 Date

 Price Per Share

 Date

 Amount

 December 6, 2023

 $
 0.33

 January 4, 2024

 $
 3,332,000

 September 11, 2023

 $
 0.33

 October 6, 2023

 $
 3,331,000

 June 13, 2023

 $
 0.33

 July 7, 2023

 $
 3,332,000

 March 28, 2023

 $
 0.32

 April 24, 2023

 $
 3,229,000

 December 7, 2022

 $
 0.32

 January 4, 2023

 $
 3,232,000

 September 30, 2022

 $
 0.32

 October 24, 2022

 $
 3,231,000

 June 10, 2022

 $
 0.32

 July 5, 2022

 $
 3,230,000

 March 29, 2022

 $
 0.30

 April 25, 2022

 $
 3,028,000

 December 9, 2021

 $
 0.30

 December 30, 2021

 $
 3,029,000

 September 15, 2021

 $
 0.30

 October 4, 2021

 $
 3,028,000

 June 9, 2021

 $
 0.30

 July 6, 2021

 $
 3,028,000

 March 24, 2021

 $
 0.28

 April 14, 2021

 $
 2,827,000

 In
addition to the above dividend amounts, there were dividends approved by the Company's foreign subsidiary during September 2021
which amounted to an outlay of cash of $ 129,000 to the foreign subsidiary's noncontrolling interest.

 It
should be noted that from time to time, the Board may elect to pay special dividends, in addition to or in lieu of the regular quarterly
dividends, depending upon the financial condition of the Company. The most recent special dividend was declared and paid in December
2019.

 13. RELATED
PARTY TRANSACTIONS

 From
time to time, the Company may have related party transactions ("RPTs"). RPTs represent any transaction between the Company
and any Company employee, director or officer, or any related entity, or relative, etc. The Company performs a review of transactions
each year to determine if any RPTs exist, and if so, determines if the related parties act independently of each other in a fair transaction.
Through this investigation the Company noted a limited number of RPTs. In all cases, these RPTs have been determined to be arms length
transactions with no indication that they are influenced by the related relationships.

 14. SUBSEQUENT
EVENTS

 The
Company evaluated all events or transactions that occurred through the date of this filing. During this period, one event came to the
Company's attention that would impact the Consolidated Financial Statements as of and for the period ended December 31, 2023. With
a lease commencement date of January 1, 2024, the Company leased a facility in West Chester, Pennsylvania providing approximately 28,000
square feet of warehousing and storage, quality control, distribution, and corporate office space.

 - 50 -

 Item
9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

 None.

 Item
9A – CONTROLS AND PROCEDURES

 (a)
 Evaluation
 of Disclosure Controls and Procedures.

 We
evaluated, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 ("Exchange Act"), as amended, as of December 31, 2023, the end of the period covered by this report
on Form 10-K. Based on this evaluation, our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal
financial officer) have concluded that our disclosure controls and procedures were effective as of December 31, 2023. Disclosure controls
and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms
and (ii) is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate,
to allow timely decisions regarding required disclosures.

 (b)
 Management's
 Report on Internal Control Over Financial Reporting.

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act and is a process designed by, or under
the supervision of, our principal executive and principal financial officers and effected by our management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles and includes those policies and procedures that:

 Pertain
 to the maintenance of records that in reasonable detail accurately and fairly reflect the
 transactions and dispositions of our assets;

 Provide
 reasonable assurance that transactions are recorded as necessary to permit preparation of
 financial statements in accordance with generally accepted accounting principles, and that
 receipts and expenditures of the Company are being made only in accordance with authorizations
 of our management and directors; and

 Provide
 reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
 use or disposition of the Company's assets that could have a material effect on the
 financial statements.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

 Our
management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023. In making
this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations (COSO) in the
 Internal Control-Integrated Framework (2013).

 Based
on the assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December
31, 2023, based on criteria in the Internal Control-Integrated Framework (2013) issued by COSO.

 The
Company's independent registered public accounting firm, RSM US LLP, audited the effectiveness of the Company's internal
control over financial reporting as of December 31, 2023. RSM US LLP's report on the effectiveness of the Company's internal
control over financial reporting as of December 31, 2023, is included in this annual report.

 (c)
Changes in Internal Control over Financial Reporting.

 There
were no changes in our internal control over financial reporting during the most recent quarter ended December 31, 2023, that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 Item
9B – OTHER INFORMATION

 None.

 Item
9C - DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 - 51 -

 PART
III

 With
respect to Items 10 through 14, the Company will file with the Securities and Exchange Commission, within 120 days after December 31,
2023, a definitive proxy statement relating to the Company's annual meeting of shareholders (the "2024 Proxy Statement").

 Item
10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 The
Company has adopted a Code of Business Conduct and Ethics ("Code") applicable to its principal executive officer and principal
financial officer, its directors, and all other employees generally. A copy of the Code may be found at the Company's website www.omegaflex.com.
Any changes to or waivers from this Code will be disclosed on the Company's website as well as in appropriate filings with the
Securities and Exchange Commission.

 Item
11 - EXECUTIVE COMPENSATION

 Item
12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 Item
13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Item
14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

 PART
IV

 Item
15 – EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

 (a) The
following documents are filed as part of this Form 10-K:

 1.
 Exhibits.
 See Index to Exhibits on pages 58 through 60.

 2.
 Consolidated
 Financial Statements. See Index to Consolidated Financial Statements on page 30. Financial
 statement schedules have been omitted because they are not required, not applicable, not
 present in amounts sufficient to require submission of the schedule, or the required information
 is otherwise included.

 - 52 -

 EXHIBIT

 Those
documents followed by a parenthetical notation are incorporated herein by reference to previous filings with the Securities and Exchange
Commission, under Commission File No. 000-51372, as set forth below.

 Exhibit
 No.

 Description

 Reference
 Key

 3.1

 Amended and Restated Articles of Incorporation of Omega Flex, Inc.

 (A)

 3.2

 Amended and Restated By-laws of Omega Flex, Inc.

 (F)

 4.1

 Description of Common Stock

 (B)

 10.1

 Indemnification and Insurance Matters Agreement dated July 29, 2005 between Omega Flex, Inc. and Mestek, Inc.

 (A)

 10.2

 *

 Form of Indemnification Agreements entered into between Omega Flex, Inc. and its Directors and Officers and the Directors of its wholly-owned subsidiaries.

 (C)

 10.3

 *

 Schedule of Directors/Officers with Indemnification Agreements as of December 31, 2023

 **

 10.4

 *

 Employment Agreement dated December 15, 2008 between Omega Flex, Inc. and Kevin R. Hoben

 (D)

 10.5

 *

 Amendment No. 1 to the Employment Agreement dated January 1, 2014 between Omega Flex, Inc. and Kevin R. Hoben

 (E)

 10.6

 Amended and Restated Committed Revolving Line of Credit Note dated December 1, 2017 by Omega Flex, Inc. to Santander Bank, N.A. in the principal amount of $15,000,000.

 (K)

 10.7

 Loan and Security Agreement dated December 17, 2009 between Omega Flex, Inc. and Sovereign Bank, N.A.

 (G)

 10.8

 First Amendment dated December 30, 2010 to the Loan and Security Agreement between Omega Flex, Inc. and Sovereign Bank, N.A.

 (H)

 10.9

 Second Amendment dated December 29, 2014 to the Loan and Security Agreement between Omega Flex, Inc. and Santander Bank, N.A., (as successor in interest to Sovereign Bank, N.A.)

 (I)

 10.10

 Third Amendment dated December 1, 2017 to the Loan and Security Agreement between Omega Flex, Inc. and Santander Bank, N.A., (as successor in interest to Sovereign Bank, N.A.)

 (K)

 10.11

 Amended and Restated Loan Agreement dated July 3, 2023, between Omega Flex, Inc. and Santander Bank, N.A.

 (N)

 10.12

 Second Amended and Restated Committed Revolving Line of Credit Note dated July 3, 2023, by Omega Flex, Inc. to Santander Bank, N.A.

 (N)

 10.13

 *

 Phantom Stock Plan dated December 11, 2006.

 (J)

 - 53 -

 10.14

 *

 First Amendment to the Omega Flex, Inc. 2006 Phantom Stock Plan

 (G)

 10.15

 *

 Omega Flex, Inc. 2006 Phantom Stock Plan (as amended and restated effective January 1, 2023).

 (L)

 10.16

 *

 Form of Phantom Stock Agreement entered into between Omega Flex, Inc. and its directors, officers and employees (for grants made prior to January 1, 2023).

 (J)

 10.17

 *

 Form of Phantom Stock Agreement entered into between Omega Flex, Inc. and its directors, officers and employees (for grants made on or after January 1, 2023).

 (L)

 10.18

 *

 Schedule of Phantom Stock Agreements between Omega Flex, Inc. and its directors and officers as of December 31, 2023.

 **

 10.19

 *

 Form of Change of Control Agreement entered into between Omega Flex, Inc. and certain officers and employees.

 (M)

 10.20

 *

 Schedule of Change of Control Agreements between Omega Flex, Inc. and certain officers and employees as of December 31, 2023.

 **

 19.1

 Insider Trading Policies and Procedures

 **

 21.1

 List of Subsidiaries

 **

 23.1

 Consent of RSM US LLP

 **

 31.1

 Certification of Chief Executive Officer of Omega Flex, Inc. pursuant to Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended

 **

 31.2

 Certification of Chief Financial Officer of Omega Flex, Inc. pursuant to Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended

 **

 32.1

 Certification of Chief Executive Officer and Chief Financial Officer of Omega Flex, Inc. pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 ***

 97.1

 Policy Relating to Recovery of Erroneously Awarded Compensation

 **

 101.1NS

 **

 101.SCH

 **

 101.CAL

 **

 101.DEF

 **

 101.LAB

 **

 101.PRE

 **

 Cover

 - 54 -

 Reference Key

 (A)

 Filed
 as an Exhibit to the Registration Statement on Form 10-12G filed on June 22, 2005.

 (B)

 Filed
 as an Exhibit to the Annual Report on Form 10-K filed March 9, 2020.

 (C)

 Filed
 as an Exhibit to the Quarterly Report on Form 10-Q filed May 4, 2020.

 (D)

 Filed
 as an Exhibit to the Annual Report on Form 10-K filed March 18, 2009.

 (E)

 Filed
 as an Exhibit to the Current Report on Form 8-K/A filed July 24, 2014.

 (F)

 Filed
 as an Exhibit to the Current Report on Form 8-K filed September 15, 2021.

 (G)

 Filed
 as an Exhibit to the Annual Report on Form 10-K filed March 17, 2010.

 (H)

 Filed
 as an Exhibit to the Annual Report on Form 10-K filed March 10, 2011.

 (I)

 Filed
 as an Exhibit to the Current Report on Form 8-K filed December 29, 2014.

 (J)

 Filed
 as an Exhibit to the Annual Report on Form 10-K filed April 2, 2007.

 (K)

 Filed
 as an Exhibit to the Current Report on Form 8-K filed December 5, 2017.

 (L)

 Filed
 as an Exhibit to the Quarterly Report on Form 10-Q filed November 7, 2022.

 (M)

 Filed
 as an Exhibit to the Current Report on Form 8-K filed March 1, 2019.

 (N)

 Filed
 as an Exhibit to the Current Report on Form 8-K filed July 5, 2023.

 *

 Management
 contract, compensatory plan, or arrangement

 **

 Filed
 herewith

 ***

 Furnished
 herewith

 Item
16 – Form 10-K Summary

 None.

 - 55 -

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 OMEGA FLEX, INC.

 Date:

 By:

 /s/
 Dean W. Rivest

 Dean
 W. Rivest

 Chief
 Executive Officer (Principal Executive Officer)

 Date:

 By:

 /s/
 Matthew F. Unger

 Matthew
 F. Unger, Vice President Finance,

 Chief
 Financial Officer (Principal Financial Officer)

 Date:

 By:

 /s/
 Luke S. Hawk

 Luke
 S. Hawk

 Financial
 Controller

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Date:

 By:

 /s/
 James M. Dubin

 James
 M. Dubin, Director

 Date:

 By:

 /s/
 David K. Evans

 David
 K. Evans, Director

 Date:

 By:

 /s/
 J. Nicholas Filler

 J.
 Nicholas Filler, Director

 Date:

 By:

 /s/
 Derek W. Glanvill

 Derek
 W. Glanvill, Director

 Date:

 By:

 /s/
 Kevin R. Hoben

 Kevin
 R. Hoben, Director

 Date:

 By:

 /s/
 Edwin B. Moran

 Edwin
 B. Moran, Director

 Date:

 By:

 /s/
 Stewart B. Reed

 Stewart
 B. Reed, Director

 Date:

 By:

 /s/
 Dean W. Rivest

 Dean
 W. Rivest, Director

 - 56 -