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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/12/22 P&F Industries Inc. 10-Q 6/30/22 59:7M Toppan Merrill/FA2 |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 2.01M
2: EX-31.1 Certification -- §302 - SOA'02 HTML 24K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 23K
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5: EX-32.2 Certification -- §906 - SOA'02 HTML 19K
11: R1 Document and Entity Information HTML 70K
12: R2 Consolidated Balance Sheets HTML 139K
13: R3 Consolidated Balance Sheets (Parenthetical) HTML 35K
14: R4 Consolidated Statements of Operations and HTML 96K
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15: R5 Consolidated Statements of Shareholders' Equity HTML 74K
16: R6 Consolidated Statements of Cash Flows HTML 121K
17: R7 Business and Summary of Accounting Policies HTML 215K
18: R8 Acquisition HTML 50K
19: R9 Income (Loss) Per Share HTML 66K
20: R10 Stock-Based Compensation HTML 53K
21: R11 Fair Value Measurements HTML 24K
22: R12 Accounts Receivable and Allowance for Doubtful HTML 29K
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25: R15 Debt HTML 30K
26: R16 Subsequent Event HTML 20K
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28: R18 Business and Summary of Accounting Policies HTML 195K
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34: R24 Goodwill and Other Intangible Assets (Tables) HTML 113K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
| |
i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended i June 30, 2022
| |
i ☐ | 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 i 1-5332
i P&F INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
i Delaware |
| i 22-1657413 |
(State or other jurisdiction of |
| (I.R.S. Employer Identification Number) |
incorporation or organization) |
|
|
|
|
|
i 445 Broadhollow Road, Suite 100, i Melville, i New York |
| i 11747 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: ( i 631) i 694-9800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
i Class A common stock, $1.00 par value |
| i PFIN |
| i NASDAQ |
Indicate 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. i Yes ☒ No ☐
Indicate 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). i Yes ☒ No ☐
Indicate 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 ☐ | i Non-accelerated filer ☒ | Smaller reporting company i ☒ |
|
|
|
|
|
|
| Emerging growth company i ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for the complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
As of August 5, 2022, there were i 3,194,699 shares of the registrant’s Class A common stock outstanding.
P&F INDUSTRIES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
PAGE | ||
3 | ||
| | |
3 | ||
| | |
| Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021 | 3 |
| | |
| 5 | |
| | |
6 | ||
| | |
Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited) | 8 | |
| | |
| 10 | |
| | |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
| | |
32 | ||
| | |
33 | ||
| | |
33 | ||
| | |
33 | ||
| | |
33 | ||
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33 | ||
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33 | ||
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33 | ||
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33 | ||
| | |
33 | ||
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34 | ||
| | |
35 | ||
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | | ||||
|
| (unaudited) |
| (See Note 1) | ||
ASSETS | | | | | | |
CURRENT ASSETS | | | | | | |
| | | | | | |
Cash | | $ | i 431,000 | | $ | i 539,000 |
Accounts receivable — net | |
| i 10,418,000 | |
| i 7,550,000 |
Inventories | |
| i 24,610,000 | |
| i 24,021,000 |
Prepaid expenses and other current assets | |
| i 2,946,000 | |
| i 4,566,000 |
TOTAL CURRENT ASSETS | |
| i 38,405,000 | |
| i 36,676,000 |
| | | | | | |
PROPERTY AND EQUIPMENT | | | | | | |
Land | |
| i 507,000 | |
| i 507,000 |
Buildings and improvements | |
| i 3,902,000 | |
| i 3,605,000 |
Machinery and equipment | |
| i 27,057,000 | |
| i 25,675,000 |
| |
| i 31,466,000 | |
| i 29,787,000 |
Less accumulated depreciation and amortization | |
| i 22,525,000 | |
| i 21,707,000 |
NET PROPERTY AND EQUIPMENT | |
| i 8,941,000 | |
| i 8,080,000 |
| | | | | | |
GOODWILL | |
| i 4,822,000 | |
| i 4,447,000 |
| | | | | | |
OTHER INTANGIBLE ASSETS — net | |
| i 5,673,000 | |
| i 5,592,000 |
| | | | | | |
DEFERRED INCOME TAXES — net | |
| i 374,000 | |
| i 349,000 |
| | | | | | |
RIGHT-OF-USE ASSETS – OPERATING LEASES | | | i 3,718,000 | | | i 2,969,000 |
| | | | | | |
OTHER ASSETS — net | |
| i 69,000 | |
| i 77,000 |
| | | | | | |
TOTAL ASSETS | | $ | i 62,002,000 | | $ | i 58,190,000 |
See accompanying notes to consolidated financial statements (unaudited).
3
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | | ||||
|
| (unaudited) |
| (See Note 1) | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
| | | | | | |
CURRENT LIABILITIES | | | | | | |
| | | | | | |
Short-term borrowings | | $ | i 10,069,000 | | $ | i 5,765,000 |
Accounts payable | |
| i 2,337,000 | |
| i 2,920,000 |
Accrued compensation and benefits | |
| i 1,187,000 | |
| i 1,475,000 |
Accrued other liabilities | |
| i 1,484,000 | |
| i 1,078,000 |
Current lease liabilities – operating leases | | | i 921,000 | | | i 840,000 |
TOTAL CURRENT LIABILITIES | |
| i 15,998,000 | |
| i 12,078,000 |
| | | | | | |
Noncurrent lease liabilities – operating leases | | | i 2,855,000 | | | i 2,176,000 |
Other liabilities | |
| i 83,000 | |
| i 96,000 |
| | | | | | |
TOTAL LIABILITIES | |
| i 18,936,000 | |
| i 14,350,000 |
| | | | | | |
SHAREHOLDERS’ EQUITY | |
| | |
|
|
Preferred stock - $ i i 10 / par; authorized - i i 2,000,000 / shares; i i no / shares issued | |
| — | |
| — |
Common stock | |
| | |
|
|
Class A - $ i i 1 / par; authorized - i i 7,000,000 / shares; issued – i 4,467,000 at June 30, 2022, and i 4,453,000 at December 31, 2021 | |
| i 4,467,000 | |
| i 4,453,000 |
Class B - $ i i 1 / par; authorized - i i 2,000,000 / shares; i i no / shares issued | |
| i — | |
| i — |
Additional paid-in capital | |
| i 14,214,000 | |
| i 14,167,000 |
Retained earnings | |
| i 35,407,000 | |
| i 36,046,000 |
Treasury stock, at cost – i i 1,273,000 / shares at June 30, 2022 and December 31, 2021 | |
| ( i 10,213,000) | |
| ( i 10,213,000) |
Accumulated other comprehensive loss | |
| ( i 809,000) | |
| ( i 613,000) |
| | | | | | |
TOTAL SHAREHOLDERS’ EQUITY | |
| i 43,066,000 | |
| i 43,840,000 |
| | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | i 62,002,000 | | $ | i 58,190,000 |
See accompanying notes to consolidated financial statements (unaudited).
4
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
| | | | | | | | | | | | |
| | Three months | | Six months | ||||||||
| | ended June 30, | | ended June 30, | ||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
Net revenue | | $ | i 17,810,000 | | $ | i 13,589,000 | | $ | i 31,831,000 | | $ | i 27,535,000 |
Cost of sales | |
| i 12,174,000 | | | i 8,741,000 | | | i 21,684,000 | | | i 18,051,000 |
Gross profit | |
| i 5,636,000 | | | i 4,848,000 | | | i 10,147,000 | | | i 9,484,000 |
Selling, general and administrative expenses | |
| i 5,479,000 | | | i 5,458,000 | | | i 10,652,000 | | | i 10,449,000 |
Operating income (loss) | |
| i 157,000 | | | ( i 610,000) | | | ( i 505,000) | | | ( i 965,000) |
Other (expense) income | |
| ( i 16,000) | | | i 2,929,000 | | | ( i 16,000) | | | i 2,929,000 |
Interest (expense) income | | | ( i 86,000) | | | i 15,000 | | | ( i 138,000) | | | ( i 7,000) |
Income (loss) | | | i 55,000 | | | i 2,334,000 | | | ( i 659,000) | | | i 1,957,000 |
Income tax (expense) benefit | |
| ( i 76,000) | | | i 89,000 | | | i 20,000 | | | i 159,000 |
Net income (loss) | | $ | ( i 21,000) | | $ | i 2,423,000 | | $ | ( i 639,000) | | $ | i 2,116,000 |
| | | | | | | | | | | | |
Basic (loss) earnings per share | | $ | ( i 0.01) | | $ | i 0.76 | | $ | ( i 0.20) | | $ | i 0.67 |
Diluted (loss) earnings per share | | $ | ( i 0.01) | | $ | i 0.76 | | $ | ( i 0.20) | | $ | i 0.66 |
| | | | | | | | | | | | |
Weighted average common shares outstanding: | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Basic | |
| i 3,185,000 | | | i 3,181,000 | | | i 3,177,000 | | | i 3,175,000 |
Diluted | |
| i 3,185,000 | | | i 3,193,000 | | | i 3,177,000 | | | i 3,190,000 |
| | | | | | | | | | | | |
Net (loss) income | | $ | ( i 21,000) | | $ | i 2,423,000 | | $ | ( i 639,000) | | $ | i 2,116,000 |
Other comprehensive (loss) income - foreign currency translation adjustment | |
| ( i 146,000) | | | i 4,000 | | | ( i 196,000) | | | i 19,000 |
Total comprehensive (loss) income | | $ | ( i 167,000) | | $ | i 2,427,000 | | $ | ( i 835,000) | | $ | i 2,135,000 |
See accompanying notes to consolidated financial statements (unaudited).
5
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)
Three months ended June 30, 2022
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Accumulated | |
| | | | | Class A common | | Additional | | | | | | | | | | other | |||||
| | | | | stock, $1 par | | paid-in | | Retained | | Treasury stock | | comprehensive | |||||||||
|
| Total |
| Shares |
| Amount |
| capital |
| earnings |
| Shares |
| Amount |
| loss | ||||||
Balance, April 1, 2022 | | $ | i 43,181,000 |
| i 4,453,000 | | $ | i 4,453,000 | | $ | i 14,176,000 | | $ | i 35,428,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 663,000) |
| |
| | | | | | | | | | | | | | | | | | | | |
Net loss | |
| ( i 21,000) |
| i — | |
| i — | |
| i — | |
| ( i 21,000) |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Exercise of Stock Options | | | i 40,000 | | i 7,000 | | | i 7,000 | | | i 33,000 | | | i — | | i — | | | i — | | | i — |
| |
| | | | | | | | | | | | | | | | | | | | |
Restricted common stock compensation | |
| i 12,000 |
| i 7,000 | |
| i 7,000 | |
| i 5,000 | |
| i — |
| i — | |
| i — | |
| i — |
| |
| | | | | | | | | | | | | | | | | | | | |
Stock-based compensation | |
| — |
| i — | |
| i — | |
| i — | |
| i — |
| i — | |
| i — | |
| i — |
| |
| | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | |
| ( i 146,000) |
| i — | |
| i — | |
| i — | |
| i — |
| i — | |
| i — | |
| ( i 146,000) |
| |
| | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2022 | | $ | i 43,066,000 |
| i 4,467,000 | | $ | i 4,467,000 | | $ | i 14,214,000 | | $ | i 35,407,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 809,000) |
Three months ended June 30, 2021
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Accumulated | |
| | | |
| Class A common |
| Additional | | | | | | | | |
| other | |||||
| | | |
| stock, $1 par |
| paid-in |
| Retained |
| Treasury stock |
| comprehensive | |||||||||
|
| Total |
| Shares |
| Amount |
| capital |
| earnings |
| Shares |
| Amount |
| loss | ||||||
Balance, April 1, 2021 | | $ | i 41,261,000 |
| i 4,453,000 | | $ | i 4,453,000 | | $ | i 14,134,000 | | $ | i 33,449,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 562,000) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income | |
| i 2,423,000 |
| i — | |
| i — | |
| i — | |
| i 2,423,000 |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Restricted common stock compensation | |
| i 14,000 |
| i — | |
| i — | |
| i 14,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation | |
| i 1,000 |
| i — | |
| i — | |
| i 1,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | |
| i 4,000 |
| i — | |
| i — | |
| i — | |
| i — |
| i — | |
| i — | |
| i 4,000 |
| | | | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2021 | | $ | i 43,703,000 |
| i 4,453,000 | | $ | i 4,453,000 | | $ | i 14,149,000 | | $ | i 35,872,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 558,000) |
See accompanying notes to consolidated financial statements (unaudited).
6
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)
Six months ended June 30, 2022
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Accumulated | |
| | | | | Class A common | | Additional | | | | | | | | | | other | |||||
| | | | | stock, $1 par | | paid-in | | Retained | | Treasury stock | | comprehensive | |||||||||
|
| Total |
| Shares |
| Amount |
| capital |
| earnings |
| Shares |
| Amount |
| loss | ||||||
Balance, January 1, 2022 | | $ | i 43,840,000 |
| i 4,453,000 | | $ | i 4,453,000 | | $ | i 14,167,000 | | $ | i 36,046,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 613,000) |
| | | | | | | | | | | | | | | | | | | | | | |
Net loss | |
| ( i 639,000) |
| i — | |
| i — | |
| i — | |
| ( i 639,000) |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Exercise of Stock Options | | | i 40,000 | | i 7,000 | | | i 7,000 | | | i 33,000 | | | i — | | i — | | | i — | | | i — |
| | | | | | | | | | | | | | | | | | | | | | |
Restricted common stock compensation | |
| i 20,000 |
| i 7,000 | |
| i 7,000 | |
| i 13,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation | |
| i 1,000 |
| i — | |
| i — | |
| i 1,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | |
| ( i 196,000) |
| i — | |
| i — | |
| i — | |
| i — |
| i — | |
| i — | |
| ( i 196,000) |
| | | | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2022 | | $ | i 43,066,000 |
| i 4,467,000 | | $ | i 4,467,000 | | $ | i 14,214,000 | | $ | i 35,407,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 809,000) |
Six months ended June 30, 2021
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Accumulated | |
| | | | | Class A common | | Additional | | | | | | | | | | other | |||||
| | | | | stock, $1 par | | paid-in | | Retained | | Treasury stock | | comprehensive | |||||||||
|
| Total |
| Shares |
| Amount |
| capital |
| earnings |
| Shares |
| Amount |
| loss | ||||||
Balance, January 1, 2021 | | $ | i 41,538,000 |
| i 4,428,000 | | $ | i 4,428,000 | | $ | i 14,144,000 | | $ | i 33,756,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 577,000) |
| | | | | | | | | | | | | | | | | | | | | | |
Net income | |
| i 2,116,000 |
| i — | |
| i — | |
| i — | |
| i 2,116,000 |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Restricted common stock compensation | |
| i 27,000 |
| i 25,000 | |
| i 25,000 | |
| i 2,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Stock-based compensation | |
| i 3,000 |
| i — | |
| i — | |
| i 3,000 | |
| i — |
| i — | |
| i — | |
| i — |
| | | | | | | | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | |
| i 19,000 |
| i — | |
| i — | |
| i — | |
| i — |
| i — | |
| i — | |
| i 19,000 |
| | | | | | | | | | | | | | | | | | | | | | |
Balance, June 30, 2021 | | $ | i 43,703,000 |
| i 4,453,000 | | $ | i 4,453,000 | | $ | i 14,149,000 | | $ | i 35,872,000 |
| ( i 1,273,000) | | $ | ( i 10,213,000) | | $ | ( i 558,000) |
See accompanying notes to consolidated financial statements (unaudited).
7
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| | | | | | |
| | Six months | ||||
| | ended June 30, | ||||
|
| 2022 |
| 2021 | ||
Cash Flows from Operating Activities: | | | | | | |
Net (loss) income | | $ | ( i 639,000) | | $ | i 2,116,000 |
| | | | | | |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | | | | | | |
| | | | | | |
Non-cash and other charges: | | | | | | |
Depreciation | |
| i 881,000 | | | i 902,000 |
Amortization of other intangible assets | |
| i 341,000 | | | i 316,000 |
Amortization of operating lease assets | | | i 471,000 | | | i 449,000 |
Amortization of debt issue costs | |
| i 8,000 | | | i 8,000 |
Amortization of consideration payable to a customer | |
| i 135,000 | | | i 135,000 |
Recovery of provision for losses on accounts receivable | |
| i 42,000 | | | i 59,000 |
Stock-based compensation | |
| i 1,000 | | | i 3,000 |
Stock-based compensation-options exercise | | | i 38,000 | | | i — |
Restricted stock-based compensation | |
| i 19,000 | | | i 27,000 |
Deferred income taxes | |
| ( i 20,000) | | | ( i 159,000) |
Gain (loss) on disposal of fixed assets | | | ( i 5,000) | | | i 7,000 |
Forgiveness of Paycheck Protection Program loan | | | i — | | | ( i 2,929,000) |
Changes in operating assets and liabilities, net of effects of acquisition | |
| | | | |
Accounts receivable | |
| ( i 2,276,000) | | | ( i 750,000) |
Inventories | |
| ( i 353,000) | | | ( i 895,000) |
Prepaid expenses and other current assets | |
| i 1,302,000 | | | i 414,000 |
Accounts payable | |
| ( i 778,000) | | | i 1,482,000 |
Accrued compensation and benefits | |
| i 681,000 | | | i 718,000 |
Accrued other liabilities and other current liabilities | | | ( i 524,000) | | | ( i 64,000) |
Operating lease liabilities | |
| ( i 461,000) | | | ( i 443,000) |
Other liabilities | |
| ( i 17,000) | | | ( i 28,000) |
Total adjustments | |
| ( i 515,000) | | | ( i 748,000) |
Net cash (used in) provided by operating activities | | | ( i 1,154,000) | | | i 1,368,000 |
See accompanying notes to consolidated financial statements (unaudited).
8
P&F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| | | | | | |
| | Six months | ||||
| | ended June 30, | ||||
|
| 2022 |
| 2021 | ||
Cash Flows from Investing Activities: |
| |
|
| |
|
Capital expenditures | | $ | ( i 923,000) | | $ | ( i 247,000) |
Purchase of net assets of the Jackson Gear Company business | |
| ( i 2,300,000) | | | i — |
Net cash used in investing activities | |
| ( i 3,223,000) | | | ( i 247,000) |
| | | | | | |
Cash Flows from Financing Activities: | |
| | | | |
Net proceeds (repayments) from short-term borrowings | |
| i 4,304,000 | | | ( i 1,004,000) |
Proceeds from exercise of stock options | | | i 2,000 | | | i — |
Net cash provided by (used in) financing activities | |
| i 4,306,000 | | | ( i 1,004,000) |
| | | | | | |
Effect of exchange rate changes on cash | |
| ( i 37,000) | | | ( i 4,000) |
Net (decrease) increase in cash | |
| ( i 108,000) | | | i 113,000 |
Cash at beginning of period | |
| i 539,000 | | | i 904,000 |
Cash at end of period | | $ | i 431,000 | | $ | i 1,017,000 |
| | | | | | |
Supplemental disclosures of cash flow information: | |
| | | | |
| | | | | | |
Cash paid for: | |
| | | | |
Interest | | $ | i 114,000 | | $ | i 19,000 |
Taxes | | $ | i 124,000 | | $ | i 12,000 |
Cash paid for amounts included in the measurement of operating lease liabilities | | $ | i — | | $ | i 6,000 |
| | | | | | |
Non-cash information: | |
| | | | |
Right of Use (“ROU”) assets recognized for new operating lease liabilities | | $ | i 987,000 | | $ | i 53,000 |
See accompanying notes to consolidated financial statements (unaudited).
9
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
iBasis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. In the opinion of the management of the Company, as defined below, these unaudited consolidated financial statements include all normal, recurring adjustments necessary to present fairly the information set forth therein. Results for interim periods are not necessarily indicative of results to be expected for a full year.
The consolidated balance sheet information as of December 31, 2021, was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). The unaudited consolidated financial statements contained herein should be read in conjunction with the 2021 Form 10-K.
The consolidated financial statements have been reported in U.S. dollars by translating asset and liability amounts of a foreign wholly-owned subsidiary at the closing exchange rate, equity amounts at historical rates and the results of operations and cash flow at the average of the prevailing exchange rates during the periods reported. As a result, the Company is exposed to foreign currency translation gains or losses. These gains or losses are presented in the Company’s consolidated financial statements as “Other comprehensive income (loss) - foreign currency translation adjustment.”
iPrinciples of Consolidation
The unaudited consolidated financial statements contained herein include the accounts of P&F Industries, Inc., and its subsidiaries (“P&F” or the “Company”). All significant intercompany balances and transactions have been eliminated.
iP&F, a Delaware corporation incorporated in 1963, conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech Machine, Inc. (“Hy-Tech”).
Florida Pneumatic
Florida Pneumatic directly, and through its wholly-owned subsidiaries Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”), and Jiffy Air Tool, Inc. (“Jiffy”) imports, manufactures, and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws, and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or a battery. Air tools, as they are more commonly referred to, generally offer better performance, and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately i 75 types of pneumatic hand tools, most of which are sold at prices ranging from $ i 50 to $ i 1,000, under the names “Florida Pneumatic”, “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatic’s hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers.
/ /10
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued)
The Company - Continued
Hy-Tech
Hy-Tech designs, manufactures, and markets industrial tools, systems, gearing, accessories, and a wide variety of replacement parts under various brands including ATP, NUMATX, and Thaxton. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $ i 300 to $ i 42,000.
Hy-Tech’s “Engineered Solutions” products are sold directly to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving the power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals industries, among others. Hy-Tech works directly with its industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names.
Hy-Tech’s “Power Transmission Group”, commonly referred to as “PTG”, produces spiral bevel and straight bevel gears along with a wide variety of other gearing. These products are sold direct to OEMs, end-users and gearbox repair companies. PTG works directly with its customer’s engineering departments to design or redesign gears or gearboxes to optimize a solution for functionality and manufacturability.
Nearly all of Hy-Tech brands are manufactured in the United States of America. Hy-Tech markets ATP branded impact sockets, striking wrenches and accessories that are imported from Italy and Asia.
Please refer to Note 2 for discussion related to the Company’s acquisition of the Jackson Gear Company business (“JGC”).
COVID-19
On March 11, 2020, the World Health Organization designated the recent novel coronavirus, or COVID-19, as a global pandemic. COVID-19 was first detected in Wuhan City, Hubei Province, China and continued to spread, significantly impacting various markets around the world, including the United States. Various policies and initiatives have been implemented to reduce the global transmission of COVID-19.
The COVID-19 virus and the resultant global economic down-turn had a negative impact on our fiscal 2021 results and continues to negatively impact the Company during the six-month period ended June 30, 2022. Additionally, we believe the on-going supply-chain crisis is related to the pandemic. Commencing in mid-2021 and continuing to date, although easing somewhat during the latter portion of the second quarter of 2022, we encountered severe shipping / receiving delays of inventory from our Asian suppliers, which has caused intermittent shortages of product. Further, the Company believes the COVID-19 global pandemic has been and continues to be the primary factor in the significant increases in the cost of international ocean freight. In addition, the COVID-19 pandemic had since mid-2020, caused many of the Company’s customers and potential customers to refuse or delay on-site visits, which is critical to generating revenue, easing somewhat during the second quarter of 2022. The Company believes that until the above issues subside, its business will likely continue to be adversely affected by COVID-19.
11
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 – BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued)
iGoing Concern Assessment
Management assesses going concern uncertainty to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued, which is referred to as the “look-forward period,” as defined in US GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, it considers various scenarios, forecasts, projections, estimates and makes certain key assumptions, including the timing and nature of projected cash expenditures, its ability to reduce, delay or curtail cash outflows and its ability to raise additional capital, if necessary, among other factors. Management has prepared estimates of operations covering the look-forward period and believes that sufficient funds will be generated from operations, working capital, and its existing credit facility to fund its operations. The Company has contingency plans in which it would further reduce or defer additional expenses and cash outlays, should operations weaken beyond current forecasts.
The impact of COVID-19 on the Company’s business has been considered in these assumptions; however, it is unclear what the full impact of COVID-19 will be in the future or when the Company believes a return to more normal operations may occur.
The accompanying consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business.
iCustomer Concentration
The Company had one customer that accounted for i 36.0% and i 35.9% of its consolidated accounts receivable at June 30, 2022, and December 31, 2021, respectively. Further, this customer accounted for i 27.1% and i 24.6%, respectively, of the Company’s consolidated revenue during the three and six-month periods ended June 30, 2022, and i 27.7% and i 27.4%, respectively, for the same periods in 2021. There was no other customer that accounted for more than 10% of our consolidated revenue or accounts receivable for all periods presented.
/ iManagement Estimates
The preparation of financial statements and related disclosures in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, accounts receivable reserve, inventory, goodwill, intangible assets and other long-lived assets, contingent consideration, income taxes and deferred taxes. Descriptions of these policies are discussed in the Company’s 2021 Form 10-K. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
Significant Accounting Policies
The Company’s significant accounting policies are described in “Note 1: Summary of Significant Accounting Policies” of our 2021 Form 10-K.
12
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued)
iLease Accounting
The Company adheres to the standards set forth in Accounting Standards Codification (“ASC”) 842, “Leases”. ASC Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases’ guidance.
If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.
The Company’s operating leases include vehicles, office space and the use of real property. The Company has not identified any new material finance leases during the three -month period ended June 30, 2022.
The Company considers any options to extend the term of a lease when measuring the Right-of-Use lease asset.
For the three and six-month periods ended June 30, 2022, the Company had $ i 240,000 and $ i 471,000, respectively, in operating lease expense, and $ i 225,000 and $ i 449,000, respectively, for the same three and six-month periods in 2021.
Effective March 1, 2022, the Company and the landlord of the facility located in Punxsutawney, PA. agreed to modify the lease related to the approximate i 42,000 square foot premises that was leased by Hy-Tech. This lease modification among other things, increased the rented space to approximately i 62,000 square feet, extended the lease termination date to February 2027, and provided two three-year options to renew. The cost per square foot for the additional space was equal to that of the original lease.
iThe following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of June 30, 2022:
| | | | |
|
| As of June 30, 2022 |
| |
2022 (excluding the six months ended June 30, 2022) | | $ | i 470,000 | |
2023 | |
| i 941,000 | |
2024 | |
| i 668,000 | |
2025 | |
| i 375,000 | |
2026 | | | i 240,000 | |
Thereafter | | | i 1,590,000 | |
Total operating lease payments | |
| i 4,284,000 | |
Less imputed interest | |
| ( i 508,000) | |
Total operating lease liabilities | | $ | i 3,776,000 | |
| | | | |
Weighted average remaining lease term | | | i 7.4 | years |
Weighted average discount rate | | | i 3.69 | % |
/ iRevenue Recognition
The Company’s revenue recognition policies are detailed in its 2021 Form 10-K. The following tables present the Company’s revenues recognized under ASC Topic 606, “Revenue from Contracts with Customers”, for the three and six-month periods ended June 30, 2022 and 2021.
13
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued)
Revenue Recognition - Continued
Florida Pneumatic
Florida Pneumatic markets its air tool products to four primary sectors within the pneumatic tool market: Automotive, Retail, Industrial and Aerospace. It also generates revenue from its Berkley products line, as well as a line of air filters and other OEM parts, which are reported as Other.
i
| | | | | | | | | | | | | | | | |
| | Three months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase (decrease) |
| |||||||||
|
| | |
| Percent of |
| | |
| Percent of |
| | |
| |
|
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
Automotive | | $ | i 3,853,000 | | i 30.4 | % | $ | i 3,782,000 | | i 35.3 | % | $ | i 71,000 | | i 1.9 | % |
Retail | | | i 4,826,000 | | i 38.1 | | | i 3,763,000 | | i 35.1 | | | i 1,063,000 | | i 28.2 | |
Industrial | |
| i 1,705,000 | | i 13.5 | | | i 1,303,000 | | i 12.3 | | | i 402,000 | | i 30.9 | |
Aerospace | |
| i 2,179,000 | | i 17.2 | | | i 1,734,000 | | i 16.2 | | | i 445,000 | | i 25.7 | |
Other | |
| i 103,000 | | i 0.8 | | | i 130,000 | | i 1.1 | | | ( i 27,000) | | ( i 20.8) | |
Total | | $ | i 12,666,000 | | i 100.0 | % | $ | i 10,712,000 | | i 100.0 | % | $ | i 1,954,000 | | i 18.2 | % |
| | | | | | | | | | | | | | | | |
| | Six months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase (decrease) |
| |||||||||
| | | | | Percent of | | | | | Percent of | | | | | | |
|
| Revenue |
| revenue |
| Revenue |
| revenue |
| $ |
| % |
| |||
Automotive | | $ | i 7,734,000 | | i 33.7 | % | $ | i 7,884,000 | | i 36.5 | % | $ | ( i 150,000) | | ( i 1.9) | % |
Retail | | | i 7,845,000 | | i 34.2 | | | i 7,553,000 | | i 34.9 | | | i 292,000 | | i 3.9 | |
Industrial | | | i 3,111,000 | | i 13.6 | | | i 2,662,000 | | i 12.3 | | | i 449,000 | | i 16.9 | |
Aerospace | |
| i 3,994,000 | | i 17.4 | | | i 3,262,000 | | i 15.1 | | | i 732,000 | | i 22.4 | |
Other | |
| i 263,000 | | i 1.1 | | | i 253,000 | | i 1.2 | | | i 10,000 | | i 4.0 | |
Total | | $ | i 22,947,000 | | i 100.0 | % | $ | i 21,614,000 | | i 100.0 | % | $ | i 1,333,000 | | i 6.2 | % |
Hy-Tech
Hy-Tech designs, manufactures, and sells a wide range of industrial products which are categorized as ATP for reporting purposes. In addition to Engineered Solutions, products and components manufactured for other companies under their brands are included in the OEM category in the table below. PTG revenue is comprised of products manufactured and sold by Hy-Tech’s gear business. NUMATX, Thaxton and other peripheral product lines, such as general machining, are reported as Other.
| | | | | | | | | | | | | | | | |
| | Three months ended June 30, |
| |||||||||||||
|
| 2022 |
| 2021 | | Increase (decrease) |
| |||||||||
| | |
| Percent of | | | |
| Percent of |
| | |
| |
| |
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
OEM | | $ | i 2,542,000 | | i 49.4 | % | $ | i 1,408,000 | | i 48.9 | % | $ | i 1,134,000 | | i 80.5 | % |
ATP | | | i 945,000 | | i 18.4 | | | i 779,000 | | i 27.1 | | | i 166,000 | | i 21.3 | |
PTG | | | i 1,583,000 | | i 30.8 | | | i 604,000 | | i 21.0 | | | i 979,000 | | i 162.1 | |
Other | |
| i 74,000 | | i 1.4 | | | i 86,000 | | i 3.0 | | | ( i 12,000) | | ( i 14.0) | |
Total | | $ | i 5,144,000 | | i 100.0 | % | $ | i 2,877,000 | | i 100.0 | % | $ | i 2,267,000 | | i 78.8 | % |
14
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES - (Continued)
Revenue Recognition - Continued
| | | | | | | | | | | | | | | | |
| | Six months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase |
| |||||||||
| | | | | Percent of | | | | | Percent of | | | | |
| |
|
| Revenue |
| revenue |
| Revenue |
| revenue |
| $ |
| % |
| |||
OEM | | $ | i 4,507,000 | | i 50.7 | % | $ | i 3,019,000 | | i 51.0 | % | $ | i 1,488,000 | | i 49.3 | % |
ATP | |
| i 1,687,000 | | i 19.0 | | | i 1,492,000 | | i 25.2 | | | i 195,000 | | i 13.1 | |
PTG | | | i 2,522,000 | | i 28.4 | | | i 1,250,000 | | i 21.1 | | | i 1,272,000 | | i 101.8 | |
Other | |
| i 168,000 | | i 1.9 | | | i 160,000 | | i 2.7 | | | i 8,000 | | i 5.0 | |
Total | | $ | i 8,884,000 | | i 100.0 | % | $ | i 5,921,000 | | i 100.0 | % | $ | i 2,963,000 | | i 50.0 | % |
iRecently Adopted Accounting Pronouncements
During the six-month period ended June 30, 2022, there were no accounting pronouncements or other authoritative guidance issued that the Company adopted.
iNOTE 2 - ACQUISITION
Effective January 15, 2022, through a wholly-owned subsidiary of Hy-Tech, the Company acquired (the “Acquisition”) substantially all the non-real estate assets comprising the business of JGC, a Pennsylvania-based corporation that manufactures and distributes custom gears and power transmission gear products. The purchase price consisted of an aggregate of approximately $ i 2.3 million in cash, which was funded by Revolver (as defined in Note 9) borrowings, and the assumption of certain payables. The Company has incorporated this business into its PTG business and believes that the Acquisition will provide added market exposure into the market for larger gears.
In connection with the Acquisition, the Company entered into the Consent, Joinder and Amendment No. 9 (“Amendment No. 9”) to the Second Amended and Restated Loan and Security Agreement (the “Credit Agreement”), with Capital One, National Association. Amendment No. 9, among other things, provided consent to the Acquisition.
i
| | | |
|
| Total | |
Total purchase price | | $ | i 2,300,000 |
iThe following table presents the purchase price allocation:
| | | |
Accounts receivable |
| $ | i 489,000 |
Inventories | |
| i 359,000 |
Machinery and equipment | |
| i 823,000 |
Customer relationships | | | i 450,000 |
Goodwill | |
| i 394,000 |
Liabilities assumed | |
| ( i 215,000) |
Total purchase price | | $ | i 2,300,000 |
The excess of the total purchase price over the fair value of the net assets acquired is currently being presented as goodwill. Goodwill is amortized over i 15 years for tax purposes, but not deductible for financial reporting purposes. All identifiable intangible assets subject to amortization are amortized over their useful lives for book purposes, and are amortized over i 15 years for tax purposes.
/15
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 2 – ACQUISITION - (Continued)
The following unaudited pro-forma combined financial information gives effect to the Acquisition as if the transaction was consummated on January 1, 2021. This unaudited pro-forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the Acquisition been completed as of January 1, 2021 (the beginning of the earliest period presented) or to project potential operating results as of any future date or for any future periods.
i
| | | | | | |
| | For the |
| For the | ||
| | three-month |
| six-month | ||
| | period ended |
| period ended | ||
|
|
| June 30,2021 | |||
Revenue | | $ | i 14,399,000 | | $ | i 28,855,000 |
Net income | | $ | i 2,398,000 | | $ | i 2,099,000 |
Earnings per share – basic | | $ | i 0.75 | | $ | i 0.66 |
Earnings per share – diluted | | $ | i 0.75 | | $ | i 0.66 |
iNOTE 3 -INCOME (LOSS) PER SHARE
Basic loss per common share is based only on the weighted average number of shares of Common Stock outstanding for the periods. Diluted loss per common share reflects the effect of shares of Common Stock issuable upon the exercise of options unless the effect on earnings is anti-dilutive.
Diluted loss per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of Common Stock. The average market value for the period is used as the assumed purchase price.
iThe following table sets forth the elements of basic and diluted loss per common share:
| | | | | | | | | | | | |
| | Three months ended | | Six months ended | ||||||||
| | June 30, | | |||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
Numerator for basic and diluted (loss) income per common share: | | | | | | | | | | | | |
Net (loss) income | | $ | ( i 21,000) | | $ | i 2,423,000 | | $ | ( i 639,000) | | $ | i 2,116,000 |
| | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | |
Denominator for basic (loss) income per share - weighted average common shares outstanding | |
| i 3,185,000 | | | i 3,181,000 | | | i 3,177,000 | | | i 3,175,000 |
Dilutive securities (1) | |
| i — | | | i 12,000 | | | i — | | | i 15,000 |
Denominator for diluted (loss) income per share - weighted average common shares outstanding | |
| i 3,185,000 | | | i 3,193,000 | | | i 3,177,000 | | | i 3,190,000 |
At June 30, 2022 and 2021, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period. The weighted average of anti-dilutive stock options outstanding was as follows:
| | | | | | | | |
| | Three months ended | | Six months ended | ||||
| | June 30, | | |||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 |
Weighted average anti-dilutive stock options outstanding |
| i 135,000 | | i 139,000 | | i 135,000 | | i 140,000 |
/16
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
iNOTE 4 – STOCK-BASED COMPENSATION
Stock Options
i
| | | | | | | | | | |
| | | | Weighted | | Weighted average | | | | |
| | | | average | | remaining | | Aggregate | ||
| | | | exercise | | contractual life | | Intrinsic | ||
|
| Option shares |
| price |
| (years) |
| Value | ||
Outstanding, January 1, 2022 |
| i 178,499 | | $ | i 6.76 |
| i 3.4 | | $ | i 60,643 |
Granted |
| i — | |
| i — | | — | | | — |
Exercised |
| i 41,809 | |
| i 4.74 |
| — | |
| i 38,046 |
Forfeited |
| i — | |
| i — |
| — | |
| — |
Expired |
| i 2,090 | |
| i 4.29 |
| — | |
| — |
Outstanding, June 30, 2022 |
| i 134,600 | | $ | i 7.42 |
| i 3.9 | | $ | — |
Vested, June 30, 2022 |
| i 134,600 | | $ | i 7.42 |
| i 3.9 | | $ | — |
On June 21, 2022, the Chief Financial Officer of the Company exercised i 41,809 options to purchase the Company’s Common Stock. The exercise price was $ i 4.74 per share and the closing price of the Company’s Common Stock was $ i 5.65. As permitted by the Company’s 2021 Stock Incentive Plan and approved in advance by the Compensation Committee of the Company’s Board of Directors, this transaction was completed by the executive officer remitting $ i 2,000 to the Company and satisfying the remaining portion of his exercise price and tax withholding and remittance obligations through the net settlement of options. The above resulted in the executive officer receiving i 7,163 shares of Common Stock.
Restricted Stock
On May 25, 2022, the Company granted i 1,250 restricted shares of its Common Stock to each non-employee member of its Board of Directors, totaling i 6,250 restricted shares. The Company determined that the fair value of these shares was $ i 5.50 per share, which was the closing price of the Company’s Common Stock on the date of the grant. These shares cannot be traded earlier than the first anniversary of the grant date. The Company ratably amortizes the total non-cash compensation expense of approximately $ i 34,000 to selling, general and administrative expenses through May 2023.
On February 16, 2021, the Company granted i 25,000 restricted shares of its Common Stock to its Chief Financial Officer. The Company determined that the fair value of these shares was $ i 6.36 per share, which was the closing price of the Company’s Common Stock on the date of the grant. The Company ratably amortizes over a i five-year vesting period the total non-cash compensation expense of approximately $ i 159,000, or $ i 32,000 per annum, to selling, general and administrative expenses.
/
iNOTE 5 – FAIR VALUE MEASUREMENTS
Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company is required to classify certain assets and liabilities based on the following hierarchy:
Level 1: Quoted prices for identical assets or liabilities in active markets that can be assessed at the measurement date.
Level 2: Inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.
17
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 5 – FAIR VALUE MEASUREMENTS – (Continued)
The guidance requires the use of observable market data if such data is available without undue cost and effort.
As of June 30, 2022, and December 31, 2021, the carrying amounts reflected in the accompanying consolidated balance sheets for current assets and current liabilities approximated fair value due to the short-term nature of these accounts.
Assets and liabilities measured at fair value on a non-recurring basis include goodwill and intangible assets. Such assets are reviewed quarterly for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3).
iNOTE 6 – ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
iAccounts receivable - net consists of:
| | | | | | |
|
|
| ||||
Accounts receivable | | $ | i 10,726,000 | | $ | i 7,817,000 |
Allowance for doubtful accounts, sales discounts and chargebacks | |
| ( i 308,000) | |
| ( i 267,000) |
| | $ | i 10,418,000 | | $ | i 7,550,000 |
/
iNOTE 7 – INVENTORIES
iInventories consist of:
| | | | | | |
|
|
| ||||
Raw material | | $ | i 2,102,000 | | $ | i 2,166,000 |
Work in process | |
| i 2,177,000 | |
| i 1,360,000 |
Finished goods | |
| i 20,331,000 | |
| i 20,495,000 |
| | $ | i 24,610,000 | | $ | i 24,021,000 |
/
iNOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
iChanges in the carrying amount of goodwill are as follows:
| | | |
Balance, January 1, 2022 |
| $ | i 4,447,000 |
Goodwill attributable to the acquisition of JGC business (See Note 2) | | | i 394,000 |
Currency translation adjustment | |
| ( i 19,000) |
Balance, June 30, 2022 | | $ | i 4,822,000 |
/18
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS – (Continued)
Other intangible assets
i
| | | | | | | | | | | | | | | | | | |
| | | ||||||||||||||||
|
| | |
| Accumulated |
| Net book |
| | |
| Accumulated |
| Net book | ||||
| | Cost | | amortization | | value | | Cost | | amortization | | value | ||||||
Other intangible assets: | | | | | | | | | | | | | | | | | | |
Customer relationships (1) | | $ | i 6,921,000 | | $ | i 3,812,000 | | $ | i 3,109,000 | | $ | i 6,495,000 | | $ | i 3,545,000 | | $ | i 2,950,000 |
Trademarks and trade names (1) | |
| i 2,167,000 | |
| i — | |
| i 2,167,000 | |
| i 2,187,000 | |
| i — | |
| i 2,187,000 |
Trademarks and trade names | |
| i 200,000 | |
| i 79,000 | |
| i 121,000 | |
| i 200,000 | |
| i 73,000 | |
| i 127,000 |
Engineering drawings | |
| i 330,000 | |
| i 261,000 | |
| i 69,000 | |
| i 330,000 | |
| i 254,000 | |
| i 76,000 |
Non-compete agreements (1) | |
| i 323,000 | |
| i 291,000 | |
| i 32,000 | |
| i 335,000 | |
| i 290,000 | |
| i 45,000 |
Patents | |
| i 1,286,000 | |
| i 1,111,000 | |
| i 175,000 | |
| i 1,286,000 | |
| i 1,079,000 | |
| i 207,000 |
Totals | | $ | i 11,227,000 | | $ | i 5,554,000 | | $ | i 5,673,000 | | $ | i 10,833,000 | | $ | i 5,241,000 | | $ | i 5,592,000 |
The weighted average amortization period in years for intangible assets was as follows:
| | | | |
|
|
| ||
Customer relationships |
| i 6.3 |
| i 6.7 |
Trademarks and trade names |
| i 9.0 |
| i 9.5 |
Engineering drawings |
| i 4.6 |
| i 5.1 |
Non-compete agreements |
| i 1.5 |
| i 2.0 |
Patents |
| i 4.3 |
| i 4.5 |
/Amortization expense of intangible assets subject to amortization was as follows:
i
| | | | | | | | | | | |
| Three months ended June 30, |
| Six months ended June 30, | ||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
| $ | i 164,000 | | $ | i 157,000 | | $ | i 341,000 | | $ | i 316,000 |
Amortization expense for the balance of 2022, and for each of the next five years and thereafter is estimated to be as follows:
| | | |
July 1,2022 through December 31, 2022 |
| $ | i 346,000 |
2023 | |
| i 688,000 |
2024 | |
| i 639,000 |
2025 | |
| i 606,000 |
2026 | |
| i 400,000 |
Thereafter | |
| i 827,000 |
| | $ | i 3,506,000 |
19
P&F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 9 – DEBT
In October 2010, the Company entered into a Loan and Security Agreement (“Credit Agreement”) with an affiliate of Capital One, National Association (“Capital One” or the “Bank”). The Credit Agreement, as amended and restated in April 2017 and further amended from time-to-time, among other things, provides the ability to borrow funds under a $ i 16,000,000 revolver line (“Revolver”), subject to certain borrowing base criteria. Additionally, there is a $ i 2,000,000 line of credit for capital expenditures (“Capex Loan”), with $ i 1,600,000 available for future borrowings. Revolver and Capex Loan borrowings are secured by the Company’s accounts receivable, inventory, equipment, and real property, among other things. P&F and certain of its subsidiaries are borrowers under the Credit Agreement, and their obligations are cross guaranteed by certain other subsidiaries. The Credit Agreement expires on February 8, 2024.
On April 12, 2022, we entered into Amendment No. 10 (“Amendment No. 10”) to the Credit Agreement, which among other things:
| ● | Increased the Revolving Commitment by $ i 2,000,000, to $ i 18,000,000 through June 30, 2022; |
| ● | Removed a $ i 10,000,000 cap on inventory availability through June 30, 2022; |
| ● | Prohibited any Capex Loans through June 30, 2022; and |
| ● | Implemented Secured Overnight Financing Rate (“SOFR”) as the new benchmark interest rate immediately, in lieu of London Interbank Offered Rate (“LIBOR”). |
Until the effective date of Amendment No. 10, at the Company’s option, Revolver borrowings would bear interest at either LIBOR or the Base Rate, as the terms are defined in the Credit Agreement, plus an Applicable Margin, as defined in the Credit Agreement. Additionally, the Company was subject to limitations on the number of LIBOR borrowings. As noted above, effective April 12, 2022, the Company began applying SOFR rates instead of LIBOR. The Company does not believe that this change from LIBOR to SOFR will have a significant effect on its consolidated financial statements.
The Company provides Capital One with monthly borrowing base certificates, and in certain circumstances, it is required to deliver monthly financial statements and certificates of compliance with various financial covenants. Should an event of default occur the interest rate would increase by i two percent per annum during the period of default, in addition to other remedies provided to Capital One.
At June 30, 2022, short-term or Revolver borrowing was $ i 10,069,000, compared to $ i 5,765,000 at December 31, 2021. (See Notes 2 and 6 for further discussion related to this increase). Applicable Margin Rates at June 30, 2022, were i 2.10% and i 1.10%, respectively, for SOFR and Base Rate borrowings. At December 31, 2021, these rates were i 1.50% and i 0.50%, respectively, for LIBOR and Base Rate borrowings. Additionally, at June 30, 2022, and December 31, 2021, there was $ i 7,000,000 and $ i 9,578,000, respectively, available to the Company under its Revolver arrangement.
The average balances of short-term borrowings from our Bank for the three and six-month periods ended June 30, 2022, were $ i 11,544,000 and $ i 10,855,000, respectively, and $ i 1,921,000 and $ i 2,043,000, respectively, for the same periods in 2021.
/
iNOTE 10 – SUBSEQUENT EVENT
On August 9, 2022, the Company’s Board of Directors declared a $ i 0.05 special dividend. This special dividend will be payable on August 29, 2022, to all shareholders of record as of the close of business on August 22, 2022. The Company estimates the total cash outlay to be approximately $ i 160,000.
/
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statement
The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of P&F Industries, Inc. and subsidiaries (“P&F”, or the “Company”). P&F and its representatives may, from time-to-time, make written or verbal forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission and in its reports to shareholders. Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “would,” “could,” “should,” and their opposites and similar expressions identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections. Any forward-looking statements contained herein, including those related to the Company’s future performance, are based upon the Company’s historical performance and on current plans, estimates and expectations. All forward-looking statements involve risks and uncertainties. These risks and uncertainties could cause the Company’s actual results for all or part the 2022 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company for a number of reasons including, but not limited to:
| ● | Risks related to the global outbreak of COVID-19 and other public health crises; |
| ● | Risks associated with sourcing from overseas; |
| ● | Disruption in the global capital and credit markets; |
| ● | Importation delays; |
| ● | Customer concentration; |
| ● | Unforeseen inventory adjustments or changes in purchasing patterns; |
| ● | Market acceptance of products; |
| ● | Competition; |
| ● | Price reductions; |
| ● | Exposure to fluctuations in energy prices; |
| ● | Exposure to fluctuations within the cost of raw materials; |
| ● | The strength of the retail economy in the United States and abroad; |
| ● | Risks associated with Brexit; |
| ● | Adverse changes in currency exchange rates; |
| ● | Interest rates; |
| ● | Debt and debt service requirements; |
| ● | Borrowing and compliance with covenants under our credit facility; |
| ● | Impairment of long-lived assets and goodwill; |
21
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
| ● | Retention of key personnel; |
| ● | Acquisition of businesses; |
| ● | Regulatory environment; |
| ● | Litigation and insurance; |
| ● | The threat of terrorism and related political instability and economic uncertainty; and |
| ● | Business disruptions or other costs associated with information technology, cyber-attacks, system implementations, data privacy or catastrophic losses, |
and those other risks and uncertainties described in its Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”), its Quarterly Reports on Form 10-Q, and its other reports and statements filed by the Company with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. The Company cautions you against relying on any of these forward-looking statements.
OVERVIEW
During the second quarter of 2022, significant factors that impacted our results of operations were the:
| ● | Ongoing negative impact of the COVID-19 pandemic on revenue, income, and supply chain. |
| ● | The acquisition of the Jackson Gear Company business. |
| ● | A stocking rollout to our largest retail customer. |
| ● | Weak customer mix at Hy-Tech. |
OUR BUSINESS
Florida Pneumatic
Florida Pneumatic directly, and through its wholly-owned subsidiaries Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”), and Jiffy Air Tool, Inc. (“Jiffy”) imports, manufactures, and markets pneumatic hand tools of its own design, primarily to the retail, industrial, automotive, and aerospace markets. Its products include sanders, grinders, drills, saws, and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or a battery. Air tools, as they are more commonly referred to, generally offer better performance, and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from $50 to $1,000, under the names “Florida Pneumatic”, “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatic’s hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers.
22
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued
OUR BUSINESS - Continued
Hy-Tech
Hy-Tech designs, manufactures, and markets industrial tools, systems, gearing, accessories and a wide variety of replacement parts under various brands including ATP, NUMATX, and Thaxton. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $300 to $42,000.
Hy-Tech’s “Engineered Solutions” products are sold directly to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving the power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals industries. Hy-Tech works directly with its industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names.
Hy-Tech’s Power Transmission Group, or PTG, is a custom gear, gearbox, and power transmission system manufacturer. In addition to manufacturing a broad range of standard and custom gears for manufacturers in a wide variety of industries, PTG reverse engineers existing gears as well as designs new gears, utilizing state-of-the-art technologies, including 3D imaging and Gleason Gear modeling software.
Effective January 15, 2022, through a wholly-owned subsidiary of Hy-Tech, we acquired substantially all the non-real estate assets comprising the business of Jackson Gear Company (“JGC”), a Pennsylvania-based corporation that manufactures and distributes custom gears and power transmission gear products. (See Note -2 for additional information). This business was consolidated into PTG. We believe this acquisition will provide added market exposure into the larger gears market.
ECONOMIC MEASURES
Much of our business is driven by the ebbs and flows of the general economic conditions in both the United States and, to a lesser extent, abroad. We focus on a wide array of customer types including, but not limited to, large retailers, aerospace manufacturers, large and small resellers of pneumatic tools and parts, and automotive related customers. We tend to track the general economic conditions of the United States, industrial production, and general retail sales.
A key economic measure relevant to us is the cost of the raw materials in our products. Key materials include metals, especially various types of steel and aluminum. Also important is the value of the United States Dollar (“USD”) in relation to the Taiwanese dollar (“TWD”), as we purchase a significant portion of our products from Taiwan. Purchases from Chinese sources are made in USD; however, if the Chinese currency, the Renminbi (“RMB”), were to be revalued against the USD, there could be a negative impact on the cost of our products. Additionally, we closely monitor the fluctuation in the Great British Pound (“GBP”) to the USD, and the GBP to TWD, both of which can have an impact on the consolidated results.
We consider tariffs a key economic measure, as a significant portion of products imported by Florida Pneumatic and to a lesser degree, Hy-Tech, are subject to these tariffs. Further, we monitor transportation costs, specifically ocean freight rates, which since early 2021 have become a key area.
Lastly, the cost and availability of a quality labor pool in the countries where products and components are manufactured, both overseas as well as in the United States, could materially affect our overall results.
OPERATING MEASURES
Key operating measures we use to manage our operations are orders; shipments; development of new products; customer retention; inventory levels and productivity. These measures are recorded and monitored at various intervals, including daily, weekly and monthly. To the extent these measures are relevant, they are discussed in the detailed sections below.
23
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued
FINANCIAL MEASURES
Key financial measures we use to evaluate the results of our business include various revenue metrics; gross margin; selling, general and administrative expenses; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; operating cash flows and capital expenditures; return on sales; return on assets; days’ sales outstanding and inventory turns. These measures are reviewed at monthly, quarterly and annual intervals and compared to historical periods as well as to established objectives. To the extent that these measures are relevant, they are discussed in detail below.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Descriptions of these policies are discussed in the 2021 Form 10-K, and in the notes to these consolidated financial statements. Certain of these accounting policies require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities, revenues and expenses. On an ongoing basis, we evaluate estimates, including, but not limited to those related to bad debts, inventory reserves, goodwill and intangible assets, warranty reserves, taxes and deferred taxes. We base our estimates on historical data and experience, when available, and on various other assumptions that are believed to be reasonable under the circumstances, the combined 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. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.
TRENDS AND UNCERTAINTIES
COVID-19 PANDEMIC
The COVID-19 virus and the resultant global economic down-turn had a negative impact on our fiscal 2021 results and continues to negatively impact certain sectors of the Company during 2022. Additionally, we believe that, while easing slightly, the on-going supply-chain crisis is related in large part to the pandemic. Further, we believe the COVID-19 global pandemic has been and continues to be the primary factor in the significant increases in the cost of international ocean freight and related matters. We believe that until the above issues improve, our business will likely continue to be adversely affected by the COVID-19 global pandemic.
BOEING/AEROSPACE
The Federal Aviation Administration (“FAA”) and the European Union Aviation Safety Agency (“EASA”) have lifted the grounding of the 737 MAX, however, China, which is a large market for Boeing, has not lifted the grounding on the 737 MAX aircraft. Boeing is currently holding completed 737 MAX aircraft destined for Chinese carriers. As a result of the aforementioned, and airline companies limiting deliveries of new aircraft, we believe production at Boeing of its 737 MAX aircraft is likely to remain below the production levels that existed prior to the grounding of certain Boeing aircraft and the COVID-19 pandemic.
INTERNATIONAL SUPPLY CHAIN
During the third and fourth quarters of 2021, and early 2022, we encountered severe delays in receiving inventory from our Asian suppliers, which led to intermittent shortages of inventory. It should be noted however that the international supply chain crisis has, as of late, begun to ease somewhat. Lastly, our ocean freight costs, which increased in some cases five-fold during the latter half of 2021 and for much of 2022, have begun to decline, but still well in excess of pre pandemic levels. This trend of higher costs and delayed deliveries has continued for most of 2022. We believe the major factors driving the above include:
| ● | Increased price of fuel; |
24
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued
INTERNATIONAL SUPPLY CHAIN - Continued
| ● | Shortage of shipping containers; |
| ● | Congestion at the ports in Asia and the United States; and |
| ● | Shortage of truck drivers in the United States. |
At the present time, we believe the above-mentioned supply chain disruptions will likely continue during the remainder of 2022. While we believe that most of these related costs associated with the items above have been, or will be, passed on to our customers throughout 2022, there is no assurance that any additional cost increases can be passed on in the future.
DOMESTIC TRANSPORTATION COSTS
Due to the shortage of truckers in the U.S. there has been both difficulty in moving goods from the ports to our facilities as well as arranging for pickups to deliver to our customers. In addition, we have seen an increase in the costs for these transportation services. It is unclear when or if this situation will abate. As such, these issues will affect the Company for the foreseeable future impacting our overall margins and possibly depressing sales.
IMPACT OF INFLATION/GEOPOLITCAL ISSUES
Increasing prices, most notably in freight/transportation, the cost of raw materials and labor had a material effect on our results of operations during the three and six-month periods ended June 30, 2022. We believe that the current and projected significant levels of inflation will continue to adversely impact our operating costs. As such, at the present time, we are unable to reasonably estimate the impact these issues will have on our results of operations for the remainder of 2022 and beyond.
During the six-month period ended June 30, 2022, we do not believe we were directly materially impacted by current geopolitical global events.
TECHNOLOGIES
We believe that over time, several newer technologies and features will have a greater impact on the market for our traditional pneumatic tool offerings. The impact of this evolution has been felt initially by the advent of advanced cordless operated hand tools in the automotive aftermarket. We continue to analyze the practicality of developing or incorporating more advanced technologies in our tool platforms.
Other than the aforementioned, or matters that may be discussed below, there are no major trends or uncertainties that had, or we could have reasonably expected to have a material impact on our revenue, nor was there any unusual or infrequent event, transaction or any significant economic change that materially affected our results of operations.
Unless otherwise discussed elsewhere in the Management’s Discussion and Analysis, we believe that our relationships with our key customers and suppliers remain satisfactory.
25
RESULTS OF OPERATIONS
REVENUE
The tables below provide an analysis of our net revenue for the three and six-month periods ended June 30, 2022 and 2021:
Consolidated
| | | | | | | | | | | | |
| | Three months ended June 30, | | |||||||||
| | | | | | Increase |
| |||||
|
| 2022 |
| 2021 |
| $ |
| % |
| |||
Florida Pneumatic | | $ | 12,666,000 | | $ | 10,712,000 | | $ | 1,954,000 | | 18.2 | % |
Hy-Tech | |
| 5,144,000 | |
| 2,877,000 | |
| 2,267,000 | | 78.8 | |
Consolidated | | $ | 17,810,000 | | $ | 13,589,000 | | $ | 4,221,000 | | 31.1 | % |
| | | | | | | | | | | | |
| | Six months ended June 30, | | |||||||||
| | | | | | Increase |
| |||||
|
| 2022 |
| 2021 |
| $ |
| % |
| |||
Florida Pneumatic | | $ | 22,947,000 | | $ | 21,614,000 | | $ | 1,333,000 | | 6.2 | % |
Hy-Tech | |
| 8,884,000 | |
| 5,921,000 | |
| 2,963,000 | | 50.0 | |
Consolidated | | $ | 31,831,000 | | $ | 27,535,000 | | $ | 4,296,000 | | 15.6 | % |
Florida Pneumatic
Florida Pneumatic markets its air tool products to four primary sectors within the pneumatic tool market; Automotive, Retail, Aerospace and Industrial. It also generates revenue from its Berkley products line, as well as a line of air filters and other OEM parts (“Other”).
| | | | | | | | | | | | | | | | |
| | Three months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase (decrease) |
| |||||||||
|
| | |
| Percent of |
| |
| Percent of |
| |
| | | ||
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
Automotive | | $ | 3,853,000 |
| 30.4 | % | $ | 3,782,000 |
| 35.3 | % | $ | 71,000 | | 1.9 | % |
Retail | |
| 4,826,000 |
| 38.1 | |
| 3,763,000 |
| 35.1 | |
| 1,063,000 | | 28.2 | |
Industrial | |
| 1,705,000 |
| 13.5 | |
| 1,303,000 |
| 12.3 | |
| 402,000 | | 30.9 | |
Aerospace | |
| 2,179,000 |
| 17.2 | |
| 1,734,000 |
| 16.2 | |
| 445,000 | | 25.7 | |
Other | |
| 103,000 |
| 0.8 | |
| 130,000 |
| 1.1 | |
| (27,000) | | (20.8) | |
Total | | $ | 12,666,000 |
| 100.0 | % | $ | 10,712,000 |
| 100.0 | % | $ | 1,954,000 | | 18.2 | % |
| | | | | | | | | | | | | | | | |
| | Six months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase (decrease) |
| |||||||||
|
| | |
| Percent of |
| |
| Percent of |
| |
| | | ||
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
Automotive | | $ | 7,734,000 |
| 33.7 | % | $ | 7,884,000 |
| 36.5 | % | $ | (150,000) | | (1.9) | % |
Retail | |
| 7,845,000 |
| 34.2 | |
| 7,553,000 |
| 34.9 | |
| 292,000 | | 3.9 | |
Industrial | |
| 3,111,000 |
| 13.6 | |
| 2,662,000 |
| 12.3 | |
| 449,000 | | 16.9 | |
Aerospace | |
| 3,994,000 |
| 17.4 | |
| 3,262,000 |
| 15.1 | |
| 732,000 | | 22.4 | |
Other | |
| 263,000 |
| 1.1 | |
| 253,000 |
| 1.2 | |
| 10,000 | | 4.0 | |
Total | | $ | 22,947,000 |
| 100.0 | % | $ | 21,614,000 |
| 100.0 | % | $ | 1,333,000 | | 6.2 | % |
26
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
REVENUE – Continued
Florida Pneumatic – Continued
When comparing the three-month periods ended June 30, 2022 and 2021, the most significant change in Florida Pneumatic’s revenue occurred within its Retail sector. The 28.2% increase was driven primarily by a stocking rollout to The Home Depot (“THD”) during the second quarter of 2022. These items effectively replaced certain tools that were discontinued. The increase in Industrial revenue was driven by among other things, slightly improved supply chain conditions, which in turn increased our in-stock inventory, allowing an increase in shipments, price increases that went into effect during the quarter, and better economic conditions this quarter, compared to the second quarter of 2021. Aerospace continued to show year-over-year improvement with revenue increasing 25.7% this quarter, compared to the second quarter of 2021, due primarily to an increase in orders from both our commercial aircraft and defense-related customers. Our Automotive revenue improved a modest 1.9% this quarter, compared to the same period a year ago. However, due to a previously disclosed change in distribution channel strategy, as well as changes in both economic and competitive factors, we believe that Automotive revenue could lessen in the future periods.
The 22.4%, or $732,000 increase in Florida Pneumatic’s Aerospace revenue during the six-month period ended June 30, 2022, compared to the same period in the prior year, is the most significant factor in analyzing the overall improvement in Florida Pneumatic’s year-to-date revenue. This improvement is being driven by increased orders from both the commercial and military markets. Its Industrial revenue for the six-month period ended June 30, 2022, grew 16.9% over the same period in 2021, due primarily to slightly improved supply chain conditions and price increases, both occurring during the second quarter of this year, and better economic conditions during most of the six-month period ended June 30, 2022, compared to the same period in 2021. Revenue for the Retail sector during the first six months of 2022 is 3.9% higher than the same period in 2021. This year-to-date improvement was driven by a stocking roll-out, which occurred during the second quarter of 2022, partially offset by a decline in the spray gun category.
Hy-Tech
Hy-Tech designs, manufactures, and sells a wide range of industrial products which are categorized as ATP for reporting purposes. In addition to Engineered Solutions, products and components manufactured for other companies under their brands are included in the OEM category in the table below. PTG revenue is comprised of products manufactured and sold by Hy-Tech’s gear business. NUMATX, Thaxton and other peripheral product lines, such as general machining, are reported as Other.
| | | | | | | | | | | | | | | | |
|
| Three months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase (decrease) |
| |||||||||
| | | |
| Percent of |
| | |
| Percent of |
| | |
| |
|
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
OEM | | $ | 2,542,000 |
| 49.4 | % | $ | 1,408,000 |
| 48.9 | % | $ | 1,134,000 | | 80.5 | % |
ATP | |
| 945,000 |
| 18.4 | |
| 779,000 |
| 27.1 | |
| 166,000 | | 21.3 | |
PTG | |
| 1,583,000 |
| 30.8 | |
| 604,000 |
| 21.0 | |
| 979,000 | | 162.1 | |
Other | |
| 74,000 |
| 1.4 | |
| 86,000 |
| 3.0 | |
| (12,000) | | (14.0) | |
Total | | $ | 5,144,000 |
| 100.0 | % | $ | 2,877,000 |
| 100.0 | % | $ | 2,267,000 | | 78.8 | % |
| | | | | | | | | | | | | | | | |
|
| Six months ended June 30, |
| |||||||||||||
| | 2022 | | 2021 | | Increase |
| |||||||||
| | | |
| Percent of |
| | |
| Percent of |
| | |
| |
|
| | Revenue | | revenue | | Revenue | | revenue | | $ | | % |
| |||
OEM | | $ | 4,507,000 | | 50.7 | % | $ | 3,019,000 | | 51.0 | % | $ | 1,488,000 | | 49.3 | % |
ATP | | | 1,687,000 | | 19.0 | | | 1,492,000 | | 25.2 | | | 195,000 | | 13.1 | |
PTG | | | 2,522,000 | | 28.4 | | | 1,250,000 | | 21.1 | | | 1,272,000 | | 101.8 | |
Other | | | 168,000 | | 1.9 | | | 160,000 | | 2.7 | | | 8,000 | | 5.0 | |
Total | | $ | 8,884,000 | | 100.0 | % | $ | 5,921,000 | | 100.0 | % | $ | 2,963,000 | | 50.0 | % |
27
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - (Continued)
REVENUE – Continued
Hy-Tech - Continued
Key factors driving the 80.5% growth in Hy-tech’s OEM product line revenue this quarter, compared to the same three-month period in 2021, were a significant increase in orders from a major customer, the easing of COVID-19 travel and visitation restrictions, and overall improvement in economic conditions this quarter compared to the same period a year ago. Revenue generated from the JGC, which was acquired in early 2022, was the major component of the $979,000 increase in our PTG product line revenue. (See Note 2- Acquisition, for further discussion). Our ATP revenue increased 21.3% this quarter over the same period in the prior year due primarily to improved economic conditions.
Hy-Tech’s six-month, year-over-year growth was mostly accomplished during the three-month period ended June 30, 2022. As such, factors contributing to this growth include increased orders from a major OEM customer, the JGC business acquisition, the easing of COVID-19 restrictions, and slight improvement in the general economic conditions.
GROSS MARGIN/PROFIT
| | | | | | | | | | | | | |
|
| Three months ended June 30, |
| Increase (decrease) |
| ||||||||
| | 2022 |
| 2021 | | Amount |
|
| % |
| |||
Florida Pneumatic | | $ | 4,771,000 | | $ | 4,165,000 | | $ | 606,000 |
| | 14.6 | % |
As percent of respective revenue | |
| 37.7 | % |
| 38.9 | % |
| (1.2) | % | pts | | |
Hy-Tech | | $ | 865,000 | | $ | 683,000 | | $ | 182,000 |
| | 26.6 | |
As percent of respective revenue | |
| 16.8 | % |
| 23.7 | % |
| (6.9) | % | pts | | |
Total | | $ | 5,636,000 | | $ | 4,848,000 | | $ | 788,000 |
| | 16.3 | % |
As percent of respective revenue | |
| 31.6 | % |
| 35.7 | % |
| (4.1) | % | pts | | |
Although Florida Pneumatic’s gross profit increased 14.6%, its consolidated gross margin declined 1.2 percentage points. This net decline was driven primarily due to a higher mix of lower gross margin Retail revenue. Related thereto, Florida Pneumatic continued to encounter higher ocean freight and product costs during the three-month period ended June 30, 2022, compared to the same three-month period in 2021. Partially offsetting the above were better than prior year gross margins in its Industrial, Automotive and Aerospace product lines. Hy-Tech’s gross profit declined 6.9 percentage points this quarter, compared to the same three-month period in 2021, due primarily to increased revenue attributable to low margin customers during the second quarter of 2022. Additionally, Hy-Tech’s PTG product line under absorbed its manufacturing overhead costs during the second quarter of 2022, as it is going through the process of integrating the JGC acquisition.
| | | | | | | | | | | | | |
|
| Six months ended June 30, |
| Increase (decrease) |
| ||||||||
| | 2022 |
| 2021 | | Amount |
|
| % |
| |||
Florida Pneumatic | | $ | 8,721,000 | | $ | 8,365,000 | | $ | 356,000 |
| | 4.3 | % |
As percent of respective revenue | |
| 38.0 | % |
| 38.7 | % |
| (0.7) | % | pts | | |
Hy-Tech | | $ | 1,426,000 | | $ | 1,119,000 | | $ | 307,000 |
| | 27.4 | |
As percent of respective revenue | |
| 16.1 | % |
| 18.9 | % |
| (2.8) | % | pts | | |
Total | | $ | 10,147,000 | | $ | 9,484,000 | | $ | 663,000 |
| | 7.0 | % |
As percent of respective revenue | |
| 31.9 | % |
| 34.4 | % |
| (2.5) | % | pts | | |
28
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - Continued
GROSS MARGIN/PROFIT - Continued
Florida Pneumatic’s gross profit improved by 4.3%, when comparing the six-month periods ended June 30, 2022 and 2021. Its gross margin however, declined by 0.7 percentage point. Primary factors affecting these results were primarily customer and product mix, with greater low margin Retail revenue, being partially offset by stronger gross margin for all other product lines. As discussed above, under absorption of PTG manufacturing overhead and product mix are the primary factors causing the 2.8 percentage points decline in Hy-Tech’s six-month gross margin, when compared to the same period a year ago. We are in the process of integrating the JGC business acquisition that occurred during the first quarter of this year. We expect to make significant progress on integration during the second half of 2022 and thus improve gross margin as well.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses (“SG&A”) include salaries and related costs, commissions, travel, administrative facilities costs, communications costs and promotional expenses for our direct sales and marketing staff, administrative and executive salaries and related benefits, legal, accounting, and other professional fees as well as general corporate overhead and certain engineering expenses.
During the second quarter of 2022, our SG&A was $5,479,000, compared to $5,458,000 incurred during the same three-month period in 2021. Key components to the net change are:
| i) | During the second quarter of 2021, we incurred approximately $288,000 in costs related to the May 2021 ransomware attack at our Florida Pneumatic subsidiary, where no such costs were incurred during the second quarter of 2022. |
| ii) | Our compensation expense increased $151,000. Compensation expense is comprised of base salaries and wages, accrued performance-based bonus incentives and associated payroll taxes and employee benefits. Several factors contributed to this increase, among them the staffing added in connection with the JGC acquisition, increased wages primarily related to retention incentives and annual wage adjustments and a net increase in companywide bonus/incentive/performance accruals. |
| iii) | We incurred increases this quarter, compared to the same quarter in 2021 in professional fees, stock-based compensation, and amortization of $47,000, $37,000, and $23,000, respectively. |
Our six-month 2022 total SG&A was $10,652,000, compared to $10,449,000 incurred during the same period in the prior year. Key components to the net change are:
| i) | Compensation expenses increased $316,000. Compensation expense is comprised of base salaries and wages, accrued performance-based bonus incentives and associated payroll taxes and employee benefits. Several factors contributed to this increase, among them the staffing added in connection with the JGC acquisition, increased wages primarily related to retention incentives and annual wage adjustments and increases in companywide bonus/incentive/performance accruals. |
| ii) | Professional fees and expenses increased $280,000, due primary to legal, accounting, and other fees incurred in connection with the JGC acquisition. Other expenses that contributed to the increase in professional fees were cyber security related costs and recruitment fees. |
| iii) | Our variable expenses decreased $253,000. Driving this decline were significantly lower advertising costs at Florida Pneumatic, caused by a change in a distribution channel strategy. |
29
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - Continued
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES – Continued
| iv) | Our computer-related expenses declined $248,000, when comparing the six-month periods ended June 30, 2022 and 2021. During the second quarter of 2021 we incurred approximately $288,000 in costs related to the May 2021 ransomware attack at our Florida Pneumatic subsidiary, where no such costs were incurred during the second quarter of 2022. |
| v) | Lastly, our general corporate expenses declined $61,000 this quarter, compared to the same period in 2021. |
OTHER EXPENSE (INCOME)
Other expense in 2022 consists primarily of adjustments to the fair value of certain assets.
On April 20, 2020, we received a Paycheck Protection Program (“PPP”) loan, in the amount of $2,929,000. Under the terms of the Coronavirus Aid, Relief, and Economic Security Act, (“CARES Act”), as amended, we were eligible to apply for forgiveness for all or a portion of the PPP loan. In February 2021, we filed an application for forgiveness with the lender, who approved this submission and submitted the application for forgiveness to the SBA. On June 9, 2021, we were advised that the SBA had approved our PPP loan forgiveness application and as such, the PPP loan and interest were forgiven in its entirety. Accordingly, the lender applied the funds and paid off PPP loan principal in its entirety and interest in full. In accordance with current accounting guidance this forgiveness of debt and related accrued interest was accounted for as Other Income in 2021.
INTEREST EXPENSE (INCOME)
| | | | | | | | | | | | |
|
| Three months ended June 31, |
| Increase (decrease) |
| |||||||
| | 2022 |
| 2021 | | Amount |
| % |
| |||
Interest expense attributable to: | | |
| | |
| | |
| |
| |
Short-term borrowings | | $ | 89,000 | | $ | 8,000 | | $ | 81,000 |
| 1,012.5 | % |
PPP loan | |
| — | |
| (27,000) | |
| 27,000 |
| 100.0 | |
Amortization expense of debt issue costs | |
| 4,000 | |
| 4,000 | |
| — |
| NA | |
Other | | | (7,000) | | | — | | | (7,000) | | NA | |
Total | | $ | 86,000 | | $ | (15,000) | | $ | 101,000 |
| 673.3 | % |
| | | | | | | | | | | | |
|
| Six months ended June 30, |
| Increase (decrease) |
| |||||||
| | 2022 |
| 2021 |
| Amount |
| % |
| |||
Interest expense attributable to: | | |
| | |
| | |
| |
| |
Short-term borrowings | | $ | 137,000 | | $ | 18,000 | | $ | 119,000 |
| 661.1 | % |
PPP loan | |
| — | |
| (19,000) | |
| 19,000 |
| 100.0 | |
Amortization expense of debt issue costs | |
| 8,000 | |
| 8,000 | |
| — |
| NA | |
Other | | | (7,000) | | | — | | | (7,000) | | NA | |
Total | | $ | 138,000 | | $ | 7,000 | | $ | 131,000 |
| 1,871.4 | % |
Our average short-term borrowings during the three and six-month periods ended June 30, 2022, increased significantly, when compared to the same periods in 2021. This increase was due primarily to our decision to increase safety stock levels of inventory, due primarily to delays and other supply chain issues, increased inventory related to the shipment of the stocking rollout that occurred during the second quarter of 2022, and the purchase and related costs associated with the acquisition in the first quarter of 2022 of the JGC business. Additionally, the Applicable Margins, as defined in the Credit Agreement with Capital One bank, NA, also increased. See Note 9-Debt for further discussion.
As discussed earlier, during the second quarter of 2021, we applied for and received forgiveness of the PPP loan. Accordingly, we recorded the reversal of associated interest expense.
30
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - Continued
INTEREST EXPENSE (INCOME) - Continued
Debt issue costs are associated with an amendment to the Credit Agreement. There were no amortizable debt issue costs incurred with Amendment No. 9, or Amendment No. 10 to the Credit Agreement.
Other interest relates to interest received in connection with federal income tax refunds received.
INCOME TAXES
At the end of each interim reporting period, we compute an effective tax rate based upon our estimated full year results. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Accordingly, the effective tax rate for the three and six-month periods ended June 30, 2022, were a tax expense of 138.2%, and a tax benefit of 3.0%, compared to a tax benefit of 3.8% and 8.1% for the same three and six-month periods in 2021. The effective tax rates for all periods presented were impacted primarily by state taxes, and non-deductible expenses. Impacting 2021’s effective tax benefit was the enactment of the CARES Act. Under the terms of the CARES Act, we applied for and were approved to treat the gain on the forgiveness of the PPP loan as non-taxable income. Accordingly, the gain resulting from the forgiveness of the PPP loan was not included in the computation of the 2021 effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
We monitor such metrics as days’ sales outstanding, inventory requirements, inventory turns, estimated future purchasing requirements and capital expenditures to project liquidity needs, as well as evaluate return on assets. Our primary sources of funds are operating cash flows, existing working capital and our Revolver Loan (“Revolver”) with our Bank.
We gauge our liquidity and financial stability by various measurements, some of which are shown in the following table:
| | | | | | |
|
|
| ||||
Working capital | | $ | 22,407,000 | | $ | 24,598,000 |
Current ratio | |
| 2.40 to 1 | |
| 3.04 to 1 |
Shareholders’ equity | | $ | 43,066,000 | | $ | 43,840,000 |
Credit facility
Our Credit Facility is discussed in detail in Note 9, to our Consolidated Financial Statements. Discussed therein, we and the Bank entered into an amendment that, among other things, increased the Revolver borrowing commitment by $2,000,000 to $18,000,000 through June 30, 2022. We believe the return to the $16,000,000 maximum Revolver borrowing amount will not impact future operations.
At June 30, 2022, there was $7,000,000 available to us under our Revolver arrangement.
Should the need arise whereby the current Credit Agreement is insufficient; we believe that the current Agreement could be expanded, and/or we could obtain additional funds based on the value of our real property.
Cash flows
For the six-month period ended June 30, 2022, cash used by operating activities was $1,154,000, compared to cash provided by operating activities during the six-month period ended June 30, 2021, of $1,368,000. At June 30, 2022, our consolidated cash balance was $431,000, compared to $539,000 at December 31, 2021. We operate under the terms and conditions of the Credit Agreement. As a result, all domestic cash receipts are remitted to Capital One lockboxes and therefore does not represent cash on hand.
31
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - Continued
LIQUIDITY AND CAPITAL RESOURCES – Continued
Our total debt to total book capitalization (total debt divided by total debt plus equity) on June 30, 2022, was 18.9%, compared to 11.6% on December 31, 2021.
During the six-month period ended June 30, 2022, we completed the JGC acquisition, with a purchase price of $2,300,000, plus acquisition expenses that included among other things, legal, accounting, and relocation expenses. (See Note 2).
During the six-month period ended June 30, 2022, we used $923,000 for capital expenditures, compared to $247,000 during the same period in the prior year. Capital expenditures currently planned for the remainder of 2022 are approximately $700,000, which we expect will be financed through the Credit Facility.
The major portion of these planned capital expenditures will be for new metal cutting equipment, tooling and information technology hardware and software, and the expansion of our Punxsutawney, PA facility as a result of the acquisition of JGC business (See Note 2).
Our liquidity and capital is primarily sourced from our credit facility, described in Note 9 – Debt, to our Consolidated Financial Statements, and cash from operations.
Customer concentration
Refer to Note 1 – Business and summary of accounting policies – Customer Concentration for a detailed discussion.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new accounting standards or pronouncements issued during the three and six-month periods ended June 30, 2022 that were applicable to us.
We do not believe that any recently issued, but not yet effective accounting standard, if adopted, will have a material effect on our consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.
32
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated, as of June 30, 2022, the effectiveness of the Company’s disclosure controls and procedures, which were designed to be effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of the Company’s disclosure controls and procedures as of June 30, 2022, the Company’s management, including its CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective at that date.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting, identified in connection with the evaluation required by Exchange Act Rule 13a-15(d), that occurred during our most recently completed fiscal quarter ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material changes to the legal proceedings’ disclosure described in our 2021 Form 10-K.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed under Part I, Item 1A “Risk Factors” in the 2021 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
See “Exhibit Index” immediately following the signature page.
33
SIGNATURE
Pursuant to the requirements 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.
| | |
| | P&F INDUSTRIES, INC. |
| | (Registrant) |
| | |
| | |
| | |
| | Chief Financial Officer |
Dated: August 12, 2022 | | (Principal Financial and Chief Accounting Officer) |
34
The following exhibits are either included in this report or incorporated herein by reference as indicated below:
Exhibit |
| Description of Exhibit |
10.1 | | |
| | |
10.2 | | |
| | |
31.1 |
| |
|
|
|
31.2 |
| |
|
|
|
32.1 |
| |
|
|
|
32.2 |
| |
|
|
|
101 |
| * Inline Interactive Data |
| | |
104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* | Attached as Exhibit 101 are the following, each formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Shareholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to consolidated financial statements. |
A copy of any of the foregoing exhibits to this Quarterly Report on Form 10-Q may be obtained, upon payment of the Registrant’s reasonable expenses in furnishing such exhibit, by writing to P&F Industries, Inc., 445 Broadhollow Road, Suite 100, Melville New York 11747, Attention: Corporate Secretary.
35
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 2/8/24 | ||||
| 12/31/22 | ||||
| 8/29/22 | ||||
| 8/22/22 | ||||
| Filed on: | 8/12/22 | |||
| 8/9/22 | ||||
| 8/5/22 | ||||
| For Period end: | 6/30/22 | |||
| 6/21/22 | 4 | |||
| 5/25/22 | 4, 8-K, DEF 14A | |||
| 4/12/22 | 8-K | |||
| 4/1/22 | ||||
| 3/1/22 | ||||
| 1/15/22 | ||||
| 1/1/22 | ||||
| 12/31/21 | 10-K | |||
| 6/30/21 | 10-Q | |||
| 6/9/21 | ||||
| 4/1/21 | 4 | |||
| 2/16/21 | 4 | |||
| 1/1/21 | ||||
| 4/20/20 | ||||
| 3/11/20 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/18/22 P&F Industries Inc. 8-K:1,2,9 4/12/22 12:1.2M Toppan Merrill/FA |