| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business
Combinations The
Company accounts for acquisitions that qualify as business combinations by applying the acquisition method according to Accounting Standards
Codification (“ASC”) 805, Business Combinations (“ASC 805”). Transaction costs related to the acquisition of
a business are expensed as incurred and excluded from the fair value of consideration transferred. The identifiable assets acquired,
liabilities assumed, and noncontrolling interests in an acquired entity are recognized and measured at their estimated fair values. The
excess of the fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed, and
noncontrolling interests in an acquired entity, net of the fair value of any previously held interest in the acquired entity, is recorded
as goodwill. Such valuations require management to make significant estimates and assumptions. VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Principles
of Consolidation The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States
of America or (“U.S. GAAP”) as found in the Accounting Standards Codification (“ASC”), the Accounting Standards
Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the US Securities
and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. We have eliminated all intercompany accounts and transactions upon consolidating our subsidiaries. Segment
Reporting The
Company identifies operating segments as components of an enterprise about which separate discrete financial information is available
for evaluation by the operating decision-makers, or decision-making group, in deciding how to allocate resources and assess performance.
The Company’s decision-making group is the senior executive management team. The Company and the decision-making group view the
Company’s operations and manage its business as one operating segment with different product offerings. All long-lived assets of
the Company reside in the U.S., the U.K., and the Netherlands. Use
of Estimates The
preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and
assumptions that affect the reported amounts of assets and liabilities in the consolidated financial statements. Significant accounting
estimates reflected in the Company’s consolidated financial statements include the useful lives of property, plant, and equipment,
the useful lives of right-of-use assets, the useful lives of intangible assets, impairment of long-lived assets, allowance for accounts
receivable doubtful accounts, allowance for inventory obsolescence reserve, allowance for deferred tax assets, valuation of warranty
reserves, contingent consideration liabilities, and the accrual of potential liabilities. These estimates also affect the reported revenues
and expenses during the reporting periods. Actual results could differ from estimates, and any such differences may be material to our
financial statements. Risks
and Uncertainties The
future impacts of the Russia-Ukraine war, the novel coronavirus (“COVID-19”) pandemic, and their residual effects include
economic uncertainty, an inflationary environment, currency fluctuations, disruption within the global supply chain, and labor markets
worldwide industries remain uncertain. These circumstances have created prevalent uncertainty and risk. The impact of these issues on
our business will vary by geographic market and discipline. In response to potential reductions in revenue, we may take actions to align
our cost structure with changes in customer demand and manage our working capital. However, there can be no assurance as to the effectiveness
of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in
client creditworthiness, and other developments. We monitor the circumstances mentioned above to assess direct material adverse effects
on our business, financial condition, or results of operations. Therefore, these impacts may change accounting estimates and assumptions
over time. Interim period results are not necessarily indicative of the expected results for the full fiscal year. Cash
and Cash Equivalents The
Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash
equivalents. The Company did not have cash equivalents as of December 31, 2022, and 2021. VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentrations The
Company does not have any off-balance-sheet concentrations of credit risk. Credit risk is that the counterparty will default on its contractual
obligations, resulting in a company’s financial loss. The Company’s credit risk is primarily attributable to its cash and
accounts receivables. The Company’s policy is to maintain its cash with high-credit quality financial institutions to limit its
risk of loss exposure. Financial instruments potentially subject the Company to credit risk concentration consisting of cash deposits.
The Federal Deposit Insurance Corporation (“FDIC”) insures accounts held within the United States up to $ 250,000 85,000 100,000 On
December 31, 2022, and 2021, the Company had approximately $ 24.5 35.2 Management
assesses their credit quality for customers, considering their financial position and historical experience. During the year ended December
31, 2022, the Company recorded sales to a single customer of $ 3,436,000 12% 8,511,000 25% On
December 31, 2022, and 2021, the Company recorded accounts receivable of approximately $ 1,138,000 ( 19% )
and $ 4,204,000 ( 46% ),
respectively, to a single customer in excess of 10% of the Company’s total consolidated accounts receivable. Accounts
Receivable and Allowance for Doubtful Accounts The
Company extends credit to its customers in the ordinary course of business. Further, the Company regularly reviews outstanding receivables
and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the
Company makes judgments regarding its customer’s ability to make required payments, prevailing economic conditions, previous experience,
and other factors. As these factors’ financial situation changes, circumstances develop, or additional information becomes available,
adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for credit losses, and losses have
been within its expectations. Inventories Inventories
consist of raw materials, work-in-process, and finished goods and are recorded at the lower of cost, on a first-in, first-out basis,
or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable
completion, disposal, and transportation costs. The Company evaluates inventory balances and either writes down obsolete inventory or
records a reserve for slow-moving or excess inventory based on net realizable value analysis. Property
and Equipment Property
and equipment are presented at cost at the date of acquisition, less depreciation. Depreciation is computed using the straight-line method
over estimated useful asset lives, ranging from 1 14 Goodwill Goodwill
represents the excess cost of an acquired business over the fair value of the identifiable tangible, and intangible assets acquired and
liabilities assumed in a business combination under the acquisition method of accounting under ASC 805 “Business Combinations”
(see Note 4). Goodwill is not amortized but, per ASC 350, is tested for impairment annually. Goodwill is also tested for impairment between
annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below
its carrying amount. Judgment determines if an indicator of impairment has occurred during a year. When testing goodwill for impairment,
we may assess qualitative factors for some or all of our reporting units to determine whether it is more likely than not (that is, a
likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively,
we may bypass this qualitative assessment for some or all of our reporting units and perform step 1 of the two-step goodwill impairment
test. If we perform step 1 and the reporting unit’s carrying amount exceeds its fair value, we will perform step 2 to measure such
impairment. We have completed our annual impairment test and recorded $- 0 9,189,000 VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Intangible
Assets Patents
and licenses: Patents
and licenses, measured initially at purchase cost, are included in intangible assets on the Company’s balance sheet and are amortized
on a straight-line basis over their estimated useful lives of 18.5 20 535,000 668,000 Other
intangible assets: The
Company’s remaining intangible assets include the trade names, technology, and customer lists acquired in its acquisition of IMT,
Vislink, and Mobile Viewpoint Corporate B.V. (“MVP”). A third-party appraiser determined the value of these acquired assets
for these business combinations. Absent an indication of fair value from a potential buyer or similar specific transactions, we have
determined that using the methods employed provided a reasonable estimate in reporting the values assigned. The
Company amortizes intangible asset costs over their useful lives of 3 15 985,000 480,000 Warranty
Reserve Although
the Company tests its product under its quality programs and processes, its warranty obligation is affected by product failure rates
and service delivery costs incurred in correcting a product failure. Required revisions to the estimated warranty liability will occur
should actual product failure rates or service costs differ from the Company’s estimates, where applicable, based on limited historical
data. The
claims made during the year ended December 31, 2022, and 2021 were ordinary and customary. The warranty reserve is included in accrued
expenses on the accompanying consolidated balance sheets and the cost of components in the accompanying consolidated statement of operations. SCHEDULE
OF PRODUCT WARRANTY LIABILITY
Warranty Reserve
December 31, 2020 $ 283,000
Warranty reserve expense —
Warranty claims settled, and true-up of accrual (152,000 )
December 31, 2021 $ 131,000
Warranty reserve expense 98,000
Warranty claims settled, and true-up of accrual (117,000 )
December 31, 2022 $ 112,000 Shipping
and Handling Costs The
Company invoices its shipping and handling charges to the customer, and we net these charges against the respective costs within general
and administrative expenses. For the years ended December 31, 2022, and 2021, the shipping and handling costs incurred were $ 796,000 581,000 Common
Stock Purchase Warrants and Other Derivative Financial Instruments The
Company assesses the classification of its freestanding derivatives at each reporting date to determine whether a change in classification
between assets and liabilities is required. The Company classifies common stock purchase warrants and other freestanding financial instruments
as equity if the contracts (i) require physical settlement or net-share settlement in common stock or (ii) give the Company a choice
of net-cash settlement or settlement in common stock (physical settlement or net-share settlement). The Company classifies the following
contracts as either an asset or a liability: contracts that (i) require net-cash settlement (including a requirement to net cash settle
the contract if an event occurs and if that event is outside the control of the Company), (ii) give the counterparty a choice of net-cash
settlement or settlement in common stock (physical settlement or net-share settlement) or (iii) contain reset provisions. VISLINK
TECHNOLOGIES, INC AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Treasury
Stock Treasury
stock is recorded at cost upon the repurchasing of common shares. The cost method is used upon the re-issuance of shares. Under U.S.
GAAP, the excess of the acquisition cost over the re-issuance price of the treasury stock, if any, is recorded to additional paid-in
capital, limited to the amount previously credited to additional paid-in capital if any. The Company charges the accumulated deficit
for any excess. Revenue
Recognition We
account for the Company’s operating results under ASC Topic 606, adopted on January 1, 2019. It is a comprehensive revenue recognition
model that requires recognition when the Company transfers control of the promised goods or services to our customers at an amount that
reflects the consideration we expect to receive. The application of ASC Topic 606 requires us to use more judgment and make more estimates
than under previously issued guidance. The
Company generates all its revenue from contracts with customers. The Company recognizes revenue when we satisfy a performance obligation
by transferring control of the promised goods or services to a customer in an amount that reflects the consideration we expect to receive
in exchange for those services. Revenue
Recognition (continued) The
Company determines revenue recognition through the following steps: 1.
Identification of the contract, or contracts, with a customer. 2.
Identification of the performance obligations in the contract. 3.
Determination of the transaction price. 4.
Allocation of the transaction price to the performance obligations in the contract; and 5.
Recognition of revenue when, or as, we satisfy a performance obligation. At
contract inception, the Company assesses the goods and services promised in our customer contracts and identifies a performance obligation
for each. To determine the performance obligations, the Company considers all the products and services promised in the contract regardless
of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction of the performance obligation
is not subject to significant judgment. We measure revenue as the consideration we expect to receive in exchange for transferring goods
and services. The value-added sales taxes and other charges we collect concurrent with revenue-producing activities are excluded from
income. Remaining
Performance Obligations The
remaining performance obligations, or backlog, represent the aggregate amount of the transaction price allocated to the remaining obligations
that the Company has not performed under its customer contracts. The Company has elected to use the optional exemption in ASC 606-10-50-14,
which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of
one year or less. Research
and Development Expenses As
the Company performs research, design, and development activities, we charge these costs to research and development expenses in the
Consolidated Statements of Operations and Comprehensive Loss. These expenses consist primarily of salary and benefit expenses, including
stock-based compensation and payroll taxes for employees’ and contractors’ costs engaged in research, design, development
activities, prototypes, facilities, and travel costs. VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Leases We
determine if an arrangement is a lease at inception. We recognize lease expense for lease payments on a straight-line basis over the
lease term. The Company includes operating leases as ROU assets as “Right of use assets, operating leases” in the consolidated
balance sheets. For lease liabilities, operating lease liabilities are included in “Operating lease obligations, current”
and “Operating lease liabilities, net of current portion” in the consolidated balance sheets. We recognize Operating lease
ROU assets and liabilities on the commencement date based on the present value of lease payments for all leases with a term longer than
12 months. No lease and non-lease components are separated for all our real estate contracts. There
were no capital leases, now titled “finance leases” under ASC 842, in the Company’s lease portfolio as of December
31, 2022. The ROU assets and related lease liabilities recorded under ASC 842 are calculated based on the present value of the lease
payments using (1) the rate implicit in the lease or (2) the lessee’s incremental borrowing rate (“IBR”), defined as
the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease
payments in a comparable economic environment. As most of our leases do not provide an implicit rate, we determined our incremental borrowing
rates based on an analysis of prior collateralized borrowings over similar terms of the lease payments at the commencement date to estimate
the IBR under ASC 842. Stock-Based
Compensation The
Company accounts for stock compensation with persons classified as employees for accounting purposes under ASC 718 “Compensation-Stock
Compensation,” which recognizes awards at fair value on the date of grant and recognition of compensation over the service period
for awards expected to vest. The fair value of stock options is determined using the Black-Scholes Option Pricing Model, and the fair
value of common stock issued for services is determined based on the Company’s stock price on the issuance date. The
expansion of Topic 718 fell under ASU 2018-07 to include share-based payment transactions for acquiring goods and services from nonemployees.
The measurement date for equity-classified nonemployee share-based payment awards is no longer at the earlier date at which a commitment
for performance by the counterparty is reached or the date at which the counterparty’s performance is complete. Instead, the grant
date is now considered the measurement date. Under today’s guidance, the measurement of nonemployee share-based payment awards
with performance conditions is at the lowest aggregate fair value, often resulting in a zero value. The new ASU aligns the accounting
for nonemployee share-based payment awards with performance conditions with accounting for employee share-based payment awards under
Topic 718 by requiring entities to consider the probability of satisfying performance conditions. Current guidance requires entities
to use the contractual term to measure the nonemployee share-based payment awards. The new ASU allows entities to make an award-by-award
election to use the expected duration (consistent with employee share-based payment awards) or the contractual term for nonemployee awards. Stock-Option
Awards — Time-based and performance-based Under
ASC Topic 718, the compensation cost is measured based on an award’s fair value at the grant’s date for the time vested option
award using the Black Scholes-Merton formula as a valuation technique. The Company used the U.S. Treasury note’s rate over the
expected option term for the risk-free rate. Employees’ expected term represents the period that options granted are expected to
be outstanding using the simplified method. The Company’s historical share option exercise experience does not provide a reasonable
basis for estimating the expected term. For nonemployee options, the expected term is the entire term of the option. Expected volatility
is based on the average weekly share price changes over the shorter expected term or the period from the Nasdaq Capital Markets Exchange
placement to the grant’s date. The Company estimates forfeiture and volatility using historical information. The risk-free interest
rate is based on the implied yield on U.S. Treasury zero-coupon issues over the options’ equivalent lives. The
Company has not paid dividends on its common stock, and no assumption of dividend payment(s) is made in the model. For employee equity-classified
awards, compensation cost is recognized over the employee’s requisite service period with a corresponding credit to additional
paid-in capital. The employee’s requisite service period begins at the service inception date and ends when the requisite service
has been provided. Restricted
Stock Unit Awards (“RSUs”) — Time-Based Under
ASC 718, the exercise price for RSUs is determined using the fair market value of the Company’s common stock on the grant date.
For an award with graded vesting subject only to a service condition (e.g., time-based vesting), ASC 718-10-35-8 provides an accounting
policy choice between graded vesting attribution or straight-line attribution. The Company elects the graded vesting method, recognizing
compensation expense for only the portion of awards expected to vest. Forfeitures of time-based units and awards are recognized as they
occur. Stock-based compensation costs are calculated using the closing stock price on the grant date to estimate the fair value of time-based
restricted stock units. VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Stock-Based
Compensation (continued Restricted
Stock Unit Awards (“RSUs”) — Performance-Based The
accruals of compensation cost for an award with a performance condition are related to that performance condition’s probable outcome.
Under ASC 718, a “performance condition” is the achievement of a specified target that is defined by referring to the employer’s
operations or activities, such as an option that vests if the employer’s growth rate increases by a certain amount or there are
the attainments of regulatory approval for a product. There is an accrual of compensation cost upon the likely achievement of the performance
condition, and there is no accrual if the accomplishment of the performance condition is not probable. The exercise price for RSUs is
determined using the fair market value of the Company’s common stock on the grant date. Stock-based compensation costs are calculated
using the closing stock price on the grant date to estimate performance-based restricted stock units’ fair value. Impairment
and Abandonment Right-of-use
operating lease abandonment: Management
decided to vacate the Billerica, MA facility as part of the Company’s cost savings strategy implemented in the third quarter
of the fiscal year 2022. The economic environment of the location precluded the action of sub-letting, and management determined the
(leased facility) to be abandoned as of September 30, 2022. Under ASC 360, leased space abandonment is an impairment indicator, and
the Company assessed the lease right-of-use (“ROU”) assets for impairment. The Company considered approximately $ 131,000 43,000 88,000 0 Income
Taxes Under
ASC 740, as part of our consolidated financial statements, we must estimate our income tax provision (benefit) in each jurisdiction in
which we operate. The Company uses the asset and liability method of accounting for income taxes. The recognition of deferred income
tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases fall under this method. Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years these temporary differences are expected to be
recovered or settled. The recognition of the effect on deferred tax assets and liabilities of a change in tax rates in income is in the
period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which management cannot
conclude that it is more likely than not that such deferred tax assets will be realized. The Company will file income tax returns in
the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company recognizes the impact of an uncertain tax position
in its financial statements if, in management’s judgment, it is more likely than not sustainable upon audit based upon the position’s
technical merits. It involves identifying potential uncertain tax positions, evaluating applicable tax laws, and assessing whether the
liability for uncertain tax positions is necessary. The Company’s policy is to classify assessments, if any, for tax-related interest
expense and penalties as general and administrative expenses. Advertising
Costs Advertising
costs are charged to operations as incurred. Advertising costs amounted to approximately $ 1,038,000 139,000 Sales
Tax and Value-Added Taxes The
Company accounts for sales taxes and value-added taxes imposed on its goods and services on a net basis. VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Loss
Per Share The
Company reports loss per share under ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting
earnings per share. The basic loss per share calculation divides the net loss allocable to common stockholders by the weighted-average
shares of common stock outstanding during the period without considering common stock equivalents. The diluted loss per share calculation
is calculated by adjusting the weighted-average shares of common stock outstanding for the dilutive effect of common stock equivalents,
including stock options and warrants, outstanding for the period as determined using the treasury stock method. Common stock equivalents
are excluded from the diluted net loss per share calculation because their effect would be anti-dilutive. Therefore, basic and diluted
net loss per share applicable to common stockholders is the same for periods with a net loss. The
following table illustrates the anti-dilutive potential common stock equivalents excluded from the calculation of loss per share (in
thousands): SCHEDULE
OF ANTI-DILIUTIVE POTENTIAL COMMON STOCK EQUIVALENTS EXCLUDE FROM THE CALCULATION OF LOSS PER SHARE
2022 2021
For the Years Ended
December 31,
2022 2021
Anti-dilutive potential common stock equivalents excluded from the calculation of loss per share:
Stock options 828 1,553
Warrants 9,175 9,210
Total 10,003 10,763 Foreign
Currency and Other Comprehensive (Gains) Losses We
record gains or losses resulting from foreign currency transactions in foreign currency income or loss except for the effect of exchange
rates on long-term inter-company transactions that are considered long-term investments that are accumulated and credited or charged
to other comprehensive income. We have two foreign subsidiaries, one in the United Kingdom and the other in the Netherlands, and their
functional currencies are British Pounds and Euros, respectively. The translation from the respective foreign currency to United States
Dollars (“US Dollars”) is performed for balance sheet accounts using current exchange rates at the balance sheet date and
for income statement accounts using an average exchange rate for the years ending December 31, 2022, and 2021, respectively. We included
gains or losses from such translation as a separate component of accumulated other comprehensive (loss) income. Transaction
gains and losses are recognized in our operations’ results based on the difference between the foreign exchange rates on the transaction
date and the reporting date. The foreign currency exchange gains and losses are a component of general and administrative expenses in
the accompanying Condensed Consolidated Statements of Operations. The
Company has recognized foreign exchange gains and losses and changes in accumulated comprehensive income approximately as follows: SCHEDULE
OF FOREIGN EXCHANGE AND CHANGE IN ACCUMULATED COMPREHENSIVE INCOME
2022 2021
For the years ended
December 31,
2022 2021
Net foreign exchange transactions:
(Gains) Losses $ 24,000 $ 100,000
Net foreign exchange transactions: Losses $ 24,000 $ 100,000
Accumulated comprehensive income:
Unrealized (gains) losses on currency translation adjustment $ 1,040,000 $ 445,000
Accumulated comprehensive income: Unrealized losses on
currency translation adjustment $ 1,040,000 $ 445,000 The
exchange rates adopted for the foreign exchange transactions are quoted on OANDA, a Canadian-based foreign exchange company, and an internet
website providing currency conversion, online retail foreign exchange trading, foreign currency transfers, and forex information. The
Company translated amounts from British Pounds into United States Dollars and Euros to British Pounds at the following exchange rates
for the respective periods:
● As
of December 31, 2022 – £ 1.208970 1.00 1.069850 1.00
● The
average exchange rate for the year ended December 31, 2022 – £ 1.236579 1.00 1.052082 1.00
● As
of December 31, 2021 – £ 1.351043 1.00 0.839362 1.00
● The
average exchange rate for the year ended December 31, 2021 – £ 1.375369 1.00 0.850858 1.00 VISLINK
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (continued) Fair
Value of Financial Instruments and Fair Value Measurements The
authoritative guidance for fair value measurements under topic ASC 820, “Fair Value Measurements and Disclosures,” establishes
a three-tier fair value hierarchy, prioritizing the inputs used in measuring fair value. These tiers include:
● Level
1 is observable inputs such as quoted prices in active markets.
● Level
2 is defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable; and
● Level
3 is defined as unobservable inputs in which little or no market data exists, requiring an
entity to develop its assumptions. Our
financial instruments include cash equivalents, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses,
and short-term debt. Fair value estimates of these instruments are made at a specific point in time based on relevant market information.
These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined
with precision. The carrying amount of cash equivalents, accounts receivable, prepaid expenses and other assets, accounts payable, and
accrued expenses are generally considered representative of their respective fair values because of the short-term nature of those instruments. In
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements
for Fair Value Measurement. The new guidance modifies the disclosure requirements on fair value measurements in Topic 820. The amendments
in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years beginning after December
15, 2019. Effective January 1, 2020, the Company adopted the provisions of ASU 2018-13. The adoption had no material impact on the Company’s
consolidated financial statements or related financial statement disclosures. The following table presents the Company’s assets and liabilities measured at fair value on a non-recurring basis on December 31, 2022, consistent with the fair value hierarchy provisions. The asset impairment is a non-recurring level 3 measurement. SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON NON-RECURRING BASIS
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
Assets (non-recurring):
Abandonment of right-of-use operating leases — — 88,000 88,000
$ — $ — $ 88,000 $ 88,000
Liabilities:
Other $ — $ — $ — $ —
$ — $ — $ — $ — The
Company did not have reportable assets and liabilities under ASC Topic 820 disclosure requirements for the year ended December 31, 2021.
See Note 13 for additional disclosure regarding the Company’s warrants liabilities accounted for at fair value. Redeemable
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