| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview Elite
Pharmaceuticals, Inc. (the “Company” or “Elite”) was incorporated on October 1, 1997 under the laws of the State
of Delaware, and its wholly-owned subsidiary Elite Laboratories, Inc. (“Elite Labs”) was incorporated on August 23, 1990
under the laws of the State of Delaware. On January 5, 2012, Elite Pharmaceuticals was reincorporated under the laws of the State of
Nevada. Elite Labs engages primarily in researching, developing, licensing, manufacturing, and sales of generic, oral dose pharmaceuticals.
The Company is equipped to manufacture controlled-release products on a contract basis for third parties and itself, if and when the
product candidates are approved. These products include drugs that cover therapeutic areas for allergy, bariatric, attention deficit
and infection. Research and development activities are performed with an objective of developing product candidates that will secure
marketing approvals from the United States Food and Drug Administration (“FDA”), and thereafter, commercially exploiting
such products. Principles
of Consolidation The
accompanying audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States (“GAAP”). The audited consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary, Elite Labs. All significant intercompany accounts and transactions have been eliminated in consolidation. Basis
of Presentation The
preparation of financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) requires
management to make certain estimates and assumptions affecting amounts reported in our consolidated financial statements. We have identified
investment valuation, revenue recognition and the recognition of capital gains incentive fee expense as our most critical accounting
estimates. We continuously evaluate our estimates, including those related to the matters described below. These estimates are based
on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances.
Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting
policies and estimates follows. Use
of Estimates The
preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenues and expenses
during the reporting period. Such management estimates and assumptions include, but are not limited to, standalone selling price for
each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for
deferred commissions, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based
compensation expense and income taxes. Actual results could differ from those estimates. Segment
Information Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification 280 (“ASC 280”), Segment Reporting, establishes
standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group,
in deciding how to allocate resources and in assessing performance. The
Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial performance and the results
of operations of the segments prepared in accordance with GAAP when making decisions about allocating resources and assessing performance
of the Company. The
Company has determined that its reportable segments are products whose marketing approvals were secured via an Abbreviated New Drug
Application (“ANDA”) and products whose marketing approvals were secured via a New Drug Application (“NDA”).
ANDA products are referred to as generic pharmaceuticals and NDA products are referred to as branded pharmaceuticals. During fiscal
year ended March 31, 2024 and 2023, the Company has paused further development of NDAs and has not engaged in business activities.
Accordingly during March 31, 2024 and 2023, results the Company has only engaged in business activities in a single operating
segment. There
are currently no intersegment revenues. Asset information by operating segment is not presented below since the chief operating decision
maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation
of the Company’s consolidated financial statements. Please see Note 15 for further details. ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Revenue
Recognition The
Company generates revenue from manufacturing and licensing fees and sales of generic pharmaceuticals bearing the Elite label to pharmaceutical
distributors for pharmacies and institutions. Manufacturing fees include the development of pain management products, manufacturing of
a line of generic pharmaceutical products with approved ANDA, through the manufacture of formulations and the development of new products.
Revenues earned from the sale of Elite label products are recorded at their net realizable value which consists of gross amounts invoiced
reduced by contractual reductions, including, without limitation, chargebacks, discounts and program rebates, as applicable. Licensing
fees include the commercialization of products either by license and the collection of royalties, or the expansion of licensing agreements
with other pharmaceutical companies, including co-development projects, joint ventures and other collaborations. Under
ASC 606, Revenue from Contacts with Customers Nature
of goods and services The
following is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature,
timing of satisfaction of performance obligations, and significant payment terms for each, as applicable: a)
Manufacturing Fees The
Company is equipped to manufacture controlled-release products on a contract basis for third parties, if, and when, the products are
approved. These products include products using controlled-release drug technology. The Company also develops and markets (either on
its own or by license to other companies) generic and proprietary controlled-release pharmaceutical products. The
Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms of
the contract, at which time the performance obligation is deemed to be completed. The Company is primarily responsible for fulfilling
the promise to provide the product, is responsible to ensure that the product is produced in accordance with the related supply agreement
and bears risk of loss while the inventory is in-transit to the commercial partner. Revenue is measured as the amount of consideration
the Company expects to receive in exchange for transferring products to a customer. b)
License Fees The
Company enters into licensing and development agreements, which may include multiple revenue generating activities, including milestones
payments, licensing fees, product sales and services. The Company analyzes each element of its licensing and development agreements in
accordance with ASC 606 to determine appropriate revenue recognition. The terms of the license agreement may include payment to the Company
of licensing fees, non-refundable upfront license fees, milestone payments if specified objectives are achieved, and/or royalties on
product sales. If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative
standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone
selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable
through past transactions, the Company estimates the standalone selling price taking into account available information such as market
conditions and internally approved pricing guidelines related to the performance obligations. The
Company recognizes revenue from non-refundable upfront payments at a point in time, typically upon fulfilling the delivery of the associated
intellectual property to the customer. For those milestone payments which are contingent on the occurrence of particular future events
(for example, payments due upon a product receiving FDA approval), the Company determined that these need to be considered for inclusion
in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method.
As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone. Given the inherent
uncertainty of the occurrence of future events, the Company will recognize revenue from the milestone when there is not a high probability
of a reversal of revenue, which typically occurs near or upon achievement of the event. ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Significant
management judgment is required to determine the level of effort required under an arrangement and the period over which the Company
expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance
obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make
such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. When
determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before
or significantly after performance, resulting in a significant financing component. Applying the practical expedient in ASC 606-10-32-18,
the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations
under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing
component as of March 31, 2024. In
accordance with ASC 606-10-55-65, royalties are recognized when the subsequent sale of the customer’s products occurs. c)
Sale of product under the Elite label The
Company began direct sales of products under the Company’s own label on April 1, 2023. License agreements will remain in place
for select products. With this transition, however, a large portion of the manufacturing and license fees now reported will be replaced
with revenues from sales of Elite labeled pharmaceutical products to distributors for pharmacies and institutions. The
Company recognizes revenue when the customer obtains control of the Company’s product based on the contractual shipping terms,
at which time the performance obligation is deemed to be completed. The Company is primarily responsible for fulfilling the promise to
deliver the product and bears risk of loss while the inventory is in-transit to the purchaser. Revenue is measured as the amount of consideration
earned from the sale of Elite labeled pharmaceutical products are recorded at their net realizable value which consists of gross amounts
invoiced reduced by contractual reductions, including, without limitation, chargebacks, discounts and program rebates, as applicable. The Company provides for
chargebacks to wholesalers for sales to various end-customers to include, but not limited to, hospitals, group purchasing organizations,
and pharmacies. Chargebacks represent the difference between the price the wholesaler pays and the price that the end-customer pays for
a product. The company’s estimate for chargebacks is developed based upon management’s assumption of anticipated product returns, other
rebates, as well as historical information. Disaggregation
of revenue In
the following table, revenue is disaggregated by type of revenue generated by the Company. The Company recognizes revenue at a point
in time for all performance obligations. During fiscal year ended March 31, 2024 and 2023, the Company has paused further
development of NDAs and has not engaged in business activities. Accordingly during March 31, 2024 and 2023, results the Company has
only engaged in business activities in a single operating segment. The table also includes a reconciliation of the disaggregated
revenue with the reportable segments: SCHEDULE
OF DISAGGREGATION OF REVENUE
For
the Years Ended March 31,
2024 2023
NDA:
Manufacturing fees $ — $ —
Licensing
fees $ — $ —
Total
NDA revenue — —
ANDA:
Manufacturing
fees $ 54,120,731 $ 29,187,573
Licensing
fees 2,504,397 4,967,541
Total
ANDA revenue 56,625,128 34,155,114
Total
revenue $ 56,625,128 $ 34,155,114 Selected
information on reportable segments and reconciliation of operating income by segment to income from operations before income taxes are
disclosed within Note 15. Cash Cash
consists of cash on deposit with banks and money market instruments. The Company places its cash with high-quality, U.S. financial institutions
and, to date has not experienced losses on any of its balances. Restricted
Cash As
of March 31, 2024, and March 31, 2023, the Company had $ 432,832 412,434 ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Accounts
Receivable and Allowance for Expected Credit Losses Accounts
receivable are comprised of balances due from customers, net of estimated allowances for expected credit losses, and other contractual
deductions, including, without limitation, chargebacks, discounts and program rebates. In determining collectability, historical trends
are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. The
allowance for expected credit losses is based on the probability of future collection under the current expected credited loss (“CECL”)
impairment model under Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement
of Credit Losses on Financial Assets, which was adopted by the Company on April 1, 2023, as discussed below within Recently Adopted Accounting
Pronouncements. Under the CECL impairment model, the Company determines its allowance by applying a loss-rate method based on an aging
schedule using the Company’s historical loss rate. The Company also considers reasonable and supportable current information in
determining its estimated loss rates, such as external forecasts, macroeconomic trends or other factors including customers’ credit
risk and historical loss experience. The adequacy of the allowance is evaluated on a regular basis. Account balances are written off
after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance.
Changes in the allowance are recorded as adjustments to credit losses in the period incurred. Prior
to April 1, 2023, trade receivables were presented net of allowance for expected credit losses based on the credit risk of specific clients,
past collection history, and management’s evaluation of other risks. Expected credit losses stemming from unbilled receivables
expected to be billed between March 31, 2024 and March 31, 2028 include additional risk premiums estimated based on factors such as projected
inflation, projected decreases in GDP, and projected unemployment. The
amendments were effective on April 1, 2023 for the Company, and must be applied using a modified retrospective approach with a cumulative-effect
adjustment through retained earnings as of the beginning of the fiscal year upon adoption as required. While the standard modifies the
measurement of the allowance for credit losses, it does not alter the credit risk of our trade or unbilled receivables. The
impact of applying the CECL methodology upon adoption effective on April 1, 2023 was immaterial to the Company’s consolidated financial
statements. The
Company’s quantitative allowance for credit loss estimates under CECL was determined using the loss rate method, which is impacted
by certain forecasted economic factors. In addition to the Company’s quantitative allowance for credit losses, the Company also
incorporates qualitative adjustments that may relate to unique risks, changes in current economic conditions that may not be reflected
in quantitatively derived results, or other relevant factors to further inform the Company’s estimate of the allowance for credit
losses. Additionally,
due to the expansion of the time horizon over which the Company is required to estimate future credit losses, the Company may experience
increased volatility in its future provisions for credit losses. Factors that could contribute to such volatility include, but are not
limited to, changes in the composition and credit quality of customer base, economic conditions and forecasts, the allowance for credit
loss models that are used, the data that is included in the models, the associated qualitative allowance framework, and the Company’s
estimation techniques. With
the exception of an estimated allowance of $ 236,276 Inventory Inventory
is recorded at the lower of cost or net realizable value on specific identification by lot number basis. Long-Lived
Assets The
Company periodically evaluates the fair value of long-lived assets, which include property and equipment and intangibles, whenever events
or changes in circumstances indicate that its carrying amounts may not be recoverable. Property
and equipment are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective
assets which range from three forty years Upon
retirement or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting
gain or loss, if any, is recognized in income. ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Intangible
Assets The
Company capitalizes certain costs to acquire intangible assets; if such assets are determined to have a finite useful life they are amortized
on a straight-line basis over the estimated useful life. Costs to acquire indefinite lived intangible assets, such as costs related to
ANDAs are capitalized accordingly. The
Company tests its intangible assets for impairment at least annually (as of March 31st) and whenever events or circumstances change that
indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has
occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future
cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change
in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates. During
the year ended March 31, 2023, the Company determined indicators of impairment occurred and recorded impairment expense of $ 292,807 The
following table summarizes the Company’s intangible assets as of and for the periods ended March 31, 2024 and March 31, 2023: SCHEDULE
OF INTANGIBLE ASSETS
March 31, 2024
Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value
Patent application costs - $ 289,039 $ — $ — $ — $ 289,039
ANDA acquisition costs Indefinite 6,052,189 — — — 6,052,189
$ 6,341,228 $ — $ — $ — $ 6,341,228
March 31, 2023
Estimated Useful Life Gross Carrying Amount Additions Impairment losses Accumulated Amortization Net Book Value
Patent application costs - $ 465,684 $ — $ (176,645 ) $ — $ 289,039
ANDA acquisition costs Indefinite 6,168,351 — (116,162 ) — 6,052,189
$ 6,634,035 $ — $ (292,807 ) $ — $ 6,341,228
* Patent
application costs were incurred in relation to the Company’s abuse deterrent opioid
technology. Amortization of the patent costs will begin upon the issuance of marketing authorization
by the FDA. Amortization will then be calculated on a straight-line basis through the expiry
of the related patent(s). Research
and Development Research
and development expenditures are charged to expenses as incurred. Contingencies Occasionally,
the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision
for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.
If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated
financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments
about future events and can rely heavily on estimates and assumptions. On
August 17, 2023, Elite filed a paragraph IV certification with its ANDA to generic Oxycontin and after Elite got acceptance of the ANDA
by the FDA on September 19, 2023, Elite sent the patentee and NDA holder a Notice Letter as required under the Hatch-Waxman Act. On November
14, 2023, a patent infringement suit was filed in the District Court of New Jersey by Purdue Pharma. Elite obtained agreement with Purdue
to stay the litigation for six months. Elite’s launch of a generic Oxycontin will depend on the approval by the FDA and the outcome
of various litigations involving Purdue or the expiry of the patents listed on the Orange Book. As of the date of filing of this Annual Report on Form 10-K, the results of
such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out
of any such matters will have a material adverse effect on its business, financial condition or results of operations. ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Income
Taxes Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled. Where applicable, the Company records a valuation allowance to reduce
any deferred tax assets that it determines will not be realizable in the future. The
Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such
tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position.
These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution The
Company operates in multiple tax jurisdictions within the United States of America. The Company remains subject to examination in all
tax jurisdiction until the applicable statutes of limitation expire. As of March 31, 2024, a summary of the tax years that remain subject
to examination in our major tax jurisdictions are: United States – Federal, 2020 and forward, and State, 2019 and forward. The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and
penalties as a component of income tax expense. The
Company did not have any unrecognized tax positions for the years ended March 31, 2024 and 2023. Warrants
and Preferred Shares The
accounting treatment of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt Distinguishing Liabilities from Equity Derivatives and Hedging Stock-Based
Compensation The
Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation In
accordance with the Company’s Director compensation policy and certain employment contracts, director’s fees and a portion
of employee’s salaries are to be paid via the issuance of shares of the Company’s Common Stock (“Common Stock”),
in lieu of cash, with the valuation of such share being calculated on a quarterly basis and equal to the average closing price of the
Company’s Common Stock. The Company records earned but unissued stock-based compensation in accrued expenses. Sale
of ANDA During
the year ended March 31, 2023, the Company entered into an agreement with Pyros Pharmaceuticals, Inc. (“Pyros”) pursuant
to which the Company sold to Pyros its rights in and to the Company’s approved abbreviated new drug applications (ANDAs) for its
generic Sabril drug (the “Sabril Product”). The Company sold its rights to Pyros for $ 1,000,000 In
conjunction with the sale of its Sabril Product to Pyros, the Company executed a Manufacturing and Supply Agreement (the “Pyros
Agreement”) with Pyros. Under the terms of the Pyros Agreement, the Company will receive an agreed-upon price per drug for the
manufacturing and packaging of Sabril over a term of three years. Revenue per the Pyros Agreement will be recognized as control of the
manufactured and supplied drugs is transferred to Pyros (at the time of delivery). Earnings
Per Share Attributable to Common Shareholders The
Company follows ASC 260, Earnings Per Share As
the average market price of Common Stock for the years ended March 31, 2024 and 2023 did not exceed the exercise price of the warrants,
the potential dilution from the warrants converting into 79,008,661 ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) The
following is the computation of earnings per share applicable to common shareholders for the periods indicated: SCHEDULE
OF EARNINGS (LOSS) PER SHARE APPLICABLE TO COMMON SHAREHOLDERS
2024 2023
For the Years Ended March 31,
2024 2023
Numerator
Net income - basic $ 20,108,631 $ 3,561,846
Effect of dilutive instrument on net income — (415,126 )
Net income - diluted $ 20,108,631 $ 3,146,720
Denominator
Weighted average shares of Common Stock outstanding - basic 1,015,443,363 1,012,911,346
Dilutive effect of stock options 7,782,260 —
Weighted average shares of Common Stock outstanding - diluted 1,023,225,623 1,012,911,346
Net income per share
Basic $ 0.02 $ 0.00
Diluted $ 0.02 $ 0.00 As
the average market price of Common Stock for the year ended March 31, 2024 did not exceed the exercise price of the stock options, the
potential dilution from the stock options converting into 647,946 Fair
Value of Financial Instruments ASC
820, Fair Value Measurements and Disclosures ASC
820 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. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs). The
fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value
hierarchy under ASC 820 are described as follows:
● Level
1 – Unadjusted quoted prices in active markets for identical assets or liabilities
that are accessible at the measurement date.
● Level
2 – Inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices
for similar assets or liabilities in active markets; quoted prices for identical or similar
assets or liabilities in markets that are not active; inputs other than quoted prices that
are observable for the asset or liability; and inputs that are derived principally from or
corroborated by observable market data by correlation or other means.
● Level
3 – Inputs that are unobservable for the asset or liability. ELITE
PHARMACEUTICALS, INC. AND SUBSIDIARY NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (AUDITED) Measured
on a Recurring Basis The
following table presents information about the Company’s liabilities measured at fair value on a recurring basis, aggregated by
the level in the fair value hierarchy within which those measurements fell: SCHEDULE
OF LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
Derivative financial instruments - warrants, Fair value Derivative
financial instruments - warrants, Fair value Derivative financial instruments - warrants, Fair value Derivative financial instruments - warrants, Fair value
Amount at Fair Value Measurement Using
Fair Value Level 1 Level 2 Level 3
March 31, 2024
Liabilities
Derivative financial instruments - warrants $ 6,298,008 $ — $ — $ 6,298,008
March 31, 2023
Liabilities
Derivative financial instruments - warrants $ 521,711 $ — $ — $ 521,711 See
Note 11 for specific inputs used in determining fair value. The
carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and other
current assets, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
Based upon current borrowing rates with similar maturities the carrying value of long-term debt, and related party loans payable approximates
fair value. Non-Financial
Assets that are Measured at Fair Value on a Non-Recurring Basis Non-financial
assets such as intangible assets, and property and equipment are measured at fair value only when an impairment loss is recognized. The
Company did not record an impairment charge during the year ended March 31, 2024. The Company recorded impairment of approximately $ 0.3 Treasury
Stock The
Company records treasury stock at the cost to acquire it and includes treasury stock as a component of shareholders’ equity. Right-of-Use
Asset and Lease Liability In
February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”), which modifies lease accounting
for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees
for those leases classified as operating leases and finance leases under previous accounting standards and disclosing key information
about leasing arrangements. A
lessee should recognize the lease liability to make lease payments and the right-of-use asset representing its right to use the underlying
asset for the lease term. For operating leases and finance leases, a right-of-use asset and a lease liability are initially measured
at the present value of the lease payments by discount rates. The Company’s lease discount rates are generally based on its incremental
borrowing rate, as the discount rates implicit in the Company’s leases is readily determinable. Operating leases are included in
operating lease right-of-use assets and lease liabilities in the consolidated balance sheets. Finance leases are included in property
and equipment and lease liability in our consolidated balance sheets. Lease expense for operating expense payments is recognized on a
straight-line basis over the lease term. Interest and amortization expenses are recognized for finance leases on a straight-line basis
over the lease term. For
the leases with a term of twelve months or less, a lessee is permitted to make an accounting policy |
