| Summary of Significant Accounting Policies | NOTE
2 - Summary of Significant Accounting Policies Restated Unaudited
Interim Financial Information The
accompanying restated condensed consolidated balance sheet as of March 31, 2024, and the condensed consolidated statements of operations
and comprehensive loss and cash flows for the three months ended March 31, 2024 and 2023 are unaudited. The unaudited interim condensed
consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion
of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s
financial position as of March 31, 2024 and the results of operations and cash flows for the three months ended March 31, 2024 and 2023.
The financial data and other information disclosed in these notes to the condensed consolidated financial statements related to these
three months periods are unaudited. The results of operations for the three months ended March 31, 2024 are not necessarily indicative
of the results to be expected for the year ending December 31, 2024 or for any other interim period or other future year. The restatement of the financial
statement is related to correction for four errors: 1.) the Company’s error in the selection of the proper accounting standard
for its investment in equity securities after discovering that it had omitted certain facts and circumstances that are indicative of
the Company’s intent for the investment including the duration and strategic purpose for the investment that are critical to the
selection of the right accounting standard, consequently the Company is accounting for the investment using the cost method versus the
fair value method, 2.) the Company’s error in classification of its convertible notes and convertible bonds as non-current liabilities;
Management’s review of the terms of the note and bond indicated that there was less than one operating period before their respective
maturities; accordingly, they have been reclassified to current liabilities; in connection with the reclassification, the Company also
recognized an early redemption loss and accrued default interest expense, 3.) the Company reversed an erroneous entry that setoff and
balance receivable from a related party against a loan owed to a third party; therefore, the balances are stilled owed by the related
party, and there is still a loan outstanding to a third party, and 4.) the Company also reclassified its temporary interest-free loans:
these debts were previously erroneously classified as other payables, but have been reclassified as short-term loans to reflect the nature
of the loans. Principle
of Consolidation Aerkomm consolidates the accounts
of its subsidiaries, Aircom, Aircom Seychelles, Aircom HK, Aircom Japan, Aircom Taiwan, Aerkomm Taiwan, Beijing Yatai, Aerkomm Malta,
MEPA Labs, and Mesh Technology Taiwan. All significant intercompany accounts and transactions have been eliminated in consolidation. Restatement of Financial Statements The Company has restated the accompanying
unaudited condensed consolidated financial statements and related disclosure for the quarter ended March 31, 2024, that were previously
included in the Form 10-Q filed with the SEC on May 29, 2024. The restatement is related to correction to the Company’s accounting
for certain debt previously characterized as long-term debt, as short-term debt instead. Also, due to the Company’s evidence indicating
an intention to hold an investment for more than one year, the Company has reclassified the investment from short-term to long-term.
Consequently, the valuation method has been adjusted from market value (used for short-term investments) to cost (used for long-term
investments). In addition, a correction has been made to reclassify other receivable-related party loans to short-term loan-others, based
on the confirmation letter. In addition, The Credit Enhanced Zero Coupon Convertible Bonds have been redeemed by the bond holder and
early redemption loss and default interest expenses are accrued. The Company determined that these changes have a material impact on
the as filed financial statements for the quarter ended March 31, 2024 (the “Relevant Period”), and as a result, the restatement
of the Relevant Periods is required. Consolidated Balance
Sheets (Restated)
As of March 31, 2024
As Adjustment As restated
(Unaudited) (Unaudited)
Assets
Current Assets
Cash $ 103,756 $ $ 103,756
Short-term investment 3,649,315 (2,539,336 ) 1,109,979
Account receivable - related parties - -
Inventories, net 170,892 170,892
Prepaid expenses 199,050 199,050
Other receivable - related parties 1,520,862 939,555 2,460,417
Other receivable 293,198 293,198
Other current assets 66,779 66,779
Total Current Assets 6,003,852 (1,599,781 ) $ 4,404,071
Long-term Investment 4,087,065 721,046 4,808,111
Property and Equipment
Cost 5,410,830 5,410,830
Accumulated depreciation (3,145,708 ) (3,145,708 )
2,265,122 2,265,122
Prepayment for land 38,814,576 38,814,576
Prepayment for equipment –
internal use 322,812 322,812
Net Property and Equipment 41,402,510 41,402,510
Other Assets
Prepayment for equipment and intangible assets – customer
projects – related parties 2,073,448 2,073,448
Prepayment for equipment and intangible assets – customer
projects 8,465,922 8,465,922
Restricted cash 15,019 15,019
Intangible asset, net 12,576,483 12,576,483
Goodwill 4,573,819 4,573,819
Right-of-use assets, net 191,307 191,307
Deposits 531,097 531,097
Total Other Assets 28,427,095 28,427,095
Total Assets $ 79,920,522 (878,735 ) $ 79,041,787
Liabilities
and Stockholders’ Equity
Current Liabilities
Short-term loans $ 164,671 $ 5,958,013 $ 6,122,684
Convertible long-term bonds payable - current - 3,052,538 3,052,538
Convertible long-term notes payable - current - 23,173,200 23,173,200
Accounts payable 1,897,820 1,897,820
Accrued expenses 8,390,567 8,390,567
Other payable – related parties 741,842 741,842
Other payable 13,616,753 (4,969,515 ) 8,647,238
Prepayment from customer – related parties 6,154,989 6,154,989
Long-term loan - current 2,720,296 (2,718,337 ) 1,959
Lease liability – current 170,500 170,500
Total Current Liabilities 33,857,438 24,495,899 58,353,337
Long-term Liabilities
Convertible long-term bonds payable 200,000 200,000
Convertible long-term notes) payable 23,173,200 (23,173,200 ) -
Prepayments from customer – non-current 762,000 762,000
Lease liability – non-current 100,329 100,329
Restricted stock deposit liability 1,000 1,000
Total Long-term Liabilities 24,236,529 (23,173,200 ) 1,063,329
Total Liabilities $ 58,093,967 1,322,699 $ 59,416,666
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023 - - -
Common stock, $0.001 par value, 90,000,000 shares authorized, 17,813,451 shares (excluding 149,162 unvested restricted shares) issued and outstanding as of March 31, 2024 17,813 - 17,813
Additional paid in capital 104,205,425 - 104,205,425
Subscribed capital - - -
Accumulated deficits (81,315,073 ) (2,247,204 ) (83,562,277 )
Accumulated other comprehensive loss (1,081,610 ) 45,770 (1,035,840 )
Total Stockholders’ Equity 21,826,555 (2,201,434 ) 19,625,121
Total Liabilities and Stockholders’
Equity $ 79,920,522 $ (878,735 ) $ 79,041,787 Consolidated Statements
of Operations and Comprehensive Loss (Restated)
As of March 31, 2024
As Adjustment As restated
(Unaudited) (Unaudited)
Net sales 18,480 18,480
Service income - related party 34,775 34,775
Total Revenue 53,255 53,255
Cost of sales 38,116 38,116
Gross Profit 15,139 15,139
Operating expenses 5,066,442 41,660 5,108,102
Loss from Operations (5,051,303 ) (41,660 ) (5,092,963 )
Unrealized investment gain (loss) 672 - 672
Foreign currency exchange gain (loss) (688,595 ) - (688,595 )
Interest expense (840,837 ) 554,206 (286,631 )
Other gain (loss), net (12,656 ) - (12,656 )
Net Non-Operating Loss (1,541,416 ) 554,206 (987,210 )
Loss Before Income Taxes (6,592,719 ) 512,546 (6,080,173 )
Income Tax Expense 2,400
Net Loss (6,595,119 ) 512,546 (6,082,573 )
Change in foreign currency translation adjustments (747,027 ) 77,791 (669,236 )
Total Comprehensive Loss $ (7,342,146 ) 590,337 (6,751,809 )
Basic (0.37 ) (0.34 )
Diluted (0.37 ) (0.34 ) Consolidated Statements
of Cash Flows (Restated)
For the
As Adjustment As restated
(Unaudited) (Unaudited)
Cash Flows from Operating Activities
Net loss $ (6,595,119 ) $ 512,546 $ (6,082,573 )
Adjustments to reconcile net loss to net cash provided
by (used) for operating activities:
Depreciation and amortization 506,980 506,980
Stock-based compensation 633,048 633,048
Unrealized investment (gains) loss (672 ) (672 )
Interest expense of bonds issuance costs 216,942 (216,942 ) -
Interest expense on repayment of long term loan 383,239 (383,239 ) -
Amortization of discount and bonds issuance costs
Changes in operating assets and liabilities:
Accounts receivable 41,088 41,088
Prepaid expenses and other current assets (703,222 ) (567,983 ) (1,271,205 )
Deposits 3,418 3,418
Accounts payable (2,497 ) (2,497 )
Accrued expenses and other current liabilities 3,029,865 (409,351 ) 2,620,514
Operating lease liability 14,401 14,401
Net Cash Used in Operating Activities (2,472,529 ) (1,064,969 ) (3,537,498 )
Cash Flows from Investing Activities
Prepayment for land (346,070 ) (346,070 )
Proceeds from disposal of long-term investment - -
Disbursement for other receivable – related parties loans - (331,375 ) (331,375 )
Purchase of property and equipment (11,275 ) (11,275 )
Net Cash Used in Investing Activities (357,345 ) (331,375 ) (688,720 )
Cash Flows from Financing Activities
Proceeds from short-term loan 32,414 378,026 410,440
Repayment of short-term loan - 939,555 939,555
Repayment of long-term bond payable (7,330,000 ) 78,763 (7,251,237 )
Repayment of long-term loan (3,086 ) (3,086 )
Proceeds from subscribed capital (5,004,000 ) (5,004,000 )
Proceeds from issuance of common stock 6,558,000 6,558,000
Payment on finance lease liability (2,826 ) (2,826 )
Net Cash Used in Financing Activities (5,749,498 ) 1,396,345 (4,353,153 )
Net Decrease in Cash and Restricted Cash (8,579,372 ) (8,579,372 )
Cash and Restricted Cash, Beginning of Period 7,428,702 7,428,702
Foreign Currency Translation Effect on Cash 1,269,445 1,269,445
Cash and Restricted Cash, End of Period $ 118,775 $ - $ 118,775 Consolidated Balance Sheets (Restated)
As of December 31, 2023
As Adjustment As restated
Assets
Current Assets
Cash $ 4,202,797 $ $ 4,202,797
Short-term investment 3,804,850 (2,647,975 ) 1,156,875
Account receivable – related parties 41,088 41,088
Inventories, net 170,892 170,892
Prepaid expenses 158,171 158,171
Other receivable – related parties 1,167,749 979,752 2,147,501
Other receivable 122,024 122,024
Other current assets 65,937 65,937
Total Current Assets 9,733,508 (1,668,223 ) 8,065,285
Long-term investment 4,261,920 751,894 5,013,814
Property and Equipment, net
Cost 5,436,657 5,436,657
Accumulated depreciation (3,085,789 ) (3,085,789 )
2,350,868 2,350,868
Prepayment for land 40,114,286 40,114,286
Prepayment for equipment – internal use 324,866 324,866
Net Property and Equipment 42,790,020 42,790,020
Other Assets
Prepayment for equipment and intangible assets –
customer projects – related party 2,076,138 - 2,076,138
Prepayment for equipment and intangible assets – customer projects 8,326,017 8,326,017
Restricted cash 3,225,905 3,225,905
Intangible asset, net 13,024,692 13,024,692
Goodwill 4,573,819 4,573,819
Right-of-use assets, net 221,417 221,417
Deposits 534,515 534,515
Total Other Assets 31,982,503 31,982,503
Total Assets $ 88,767,951 $ (916,329 ) $ 87,851,622
Liabilities and Stockholders’ Equity
Current Liabilities
Short-term loan – related parties $ - $ - $ -
Short-term loan 132,257 5,579,987 5,712,244
Convertible long-term bonds payable – current - 10,303,775 10,303,775
Convertible long-term note payable – current - 23,173,200 23,173,200
Accounts payable 1,900,317 1,900,317
Accrued expenses 5,995,972 5,995,972
Other payable – related parties 726,802 726,802
Other payable 12,617,277 (4,560,165 ) 8,057,112
Prepayment from customer – related parties 6,534,908 6,534,908
Long-term loan – current 5,045 5,045
Lease liability – current 168,433 168,433
Total Current Liabilities 28,081,011 34,496,797 62,577,808
Long-term Liabilities
Convertible long-term bonds payable 9,648,155 (9,448,155 ) 200,000
Convertible long-term note payable 23,173,200 (23,173,200 ) -
Long-term loan - - -
Prepayments from customer – non-current 762,000 762,000
Lease liability – non-current 120,932 120,932
Restricted stock deposit liability 1,000 1,000
Total Long-term Liabilities 33,705,287 (32,621,355 ) 1,083,932
Total Liabilities 61,786,298 1,875,442 63,661,740
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2023 and 2022 - - -
Common stock, $0.001 par value, 90,000,000 shares authorized, 16,720,451 shares (excluding 149,162 unvested restricted shares) issued and outstanding as of December 31, 2023 and 9,720,003 shares (excluding 149,162 unvested restricted shares) issued and outstanding as of December 31, 2022 16,720 16,720
Additional paid in capital 97,015,470 97,015,470
Subscribed capital 5,004,000 - 5,004,000
Accumulated deficits (74,719,954 ) (2,759,750 ) (77,479,704 )
Accumulated other comprehensive loss (334,583 ) (32,021 ) (366,604 )
Total Stockholders’ Equity 26,981,653 (2,791,771 ) 24,189,882
Total Liabilities and Stockholders’ Equity $ 88,767,951 $ (916,329 ) $ 87,851,622 Reclassifications
of Prior Year Presentation Certain
prior year balance sheet, and cash flow statement amounts have been reclassified for consistency with the current year presentation.
These reclassifications had no effect on the reported results of operations. Use
of Estimates The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes. Actual results may differ from these estimates. Concentrations
of Credit Risk Financial
instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash in banks. As
of March 31, 2024 and December 31, 2023, the total balance of cash in bank exceeding the amount insured by the Federal Deposit Insurance
Corporation (FDIC) for the Company was approximately $0 and $0, respectively. The balance of cash deposited in foreign financial
institutions exceeding the amount insured by local insurance is approximately $94,000 and $7,246,000 as of March 31, 2024 and December
31, 2023, respectively. The
Company performs ongoing credit evaluation of its customers and requires no collateral. An allowance for doubtful accounts is provided
based on a review of the collectability of accounts receivable. The Company determines the amount of allowance for doubtful accounts
by examining its historical collection experience and current trends in the credit quality of its customers as well as its internal credit
policies. Actual credit losses may differ from management’s estimates. Investment
in Equity Securities According
to FASB issued Accounting Standards Updates 2016-01 (ASU 2016-01), it requires equity investments (except those accounted for under the
equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair
value being recorded in current period earnings, impacting the net income. For the investments in equity securities without readily determinable
fair values, the investments may be recorded at cost, subject to impairment, and adjusted through net income for observable price changes. Holdings
of marketable equity securities with no significant influence over the investee are accounted for using cost method. Marketable equity
security costs are initially recognized at fair value plus transaction costs which are directly attributable to the acquisition. The
cost of the securities sold is based on the weighted average cost method. Stock dividends from the investment are included to recalculate
the cost basis of the investment based on the total number of shares. Accounts
receivable The
Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which requires the Company to estimate all expected credit
losses for financial assets measured at amortized cost basis, including trade receivables, based on historical experience, current market
conditions and supportable forecasts. The Company’s accounts receivable are carried at the amounts invoiced to customer. The risk
of credit loss is mitigated by the Company’s credit evaluation process. Receivables are presented as net of an allowance for credit
losses. Allowances for expected credit losses are determined based on an assessment of historical experience, the current economic conditions,
future expectations of economic conditions, future expectation regarding customer solvency, and other collection factors. The Company
will apply adjustments for specific factors and current economic conditions as needed at each reporting date. As of March 31, 2024 and
December 31, 2023, the Company had $0 and $41,088 Account Receivable. Therefore, allowances for expected credit losses were $0 as of
March 31, 2024 and December 31, 2023. Inventories Inventories
are recorded at the lower of weighted-average cost or net realizable value. The Company assesses the impact of changing technology on
its inventory on hand and writes off inventories that are considered obsolete. Property
and Equipment Property
and equipment are stated at cost less accumulated depreciation. When value impairment is determined, the related assets are stated at
the lower of fair value or book value. Significant additions, renewals and betterments are capitalized. Maintenance and repairs are expensed
as incurred. Depreciation
is computed by using the straight-line and double declining methods over the following estimated service lives: ground station equipment
- 5 years, computer equipment - 3 to 5 years, furniture and fixtures - 5 years, satellite equipment - 5 years, vehicles - 5 to 6 years
and lease improvement - 5 years or remaining lease term, whichever is shorter. Upon
sale or disposal of property and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts,
with any gain or loss credited or charged to income in the period of sale or disposal. The
Company reviews the carrying amount of property and equipment for impairment when events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. It determined that there was no impairment loss for the three months ended March
31, 2024. 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 election by class of underlying asset
not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases
generally on a straight-line basis over the lease term. Goodwill
and Purchased Intangible Assets The
Company’s goodwill represents the amount by which the total purchase price paid exceeded the estimated fair value of net assets
acquired from acquisition of subsidiaries. The Company tests goodwill for impairment on an annual basis, or more often if events or circumstances
indicate that there may be impairment. As
Aerkomm is currently still in the development stage and will not start generating revenue until after late 2024. Management has evaluated
that the potential benefits of the acquisitions before the year 2023 are limited and uncertain, and due to this reason, management has
decided to impair goodwill that generated from 2022 and prior periods with total of $4,561,037 in 2023. After the impair measurement,
the net goodwill is $4,573,819. Purchased
intangible assets with finite life are amortized on the straight-line basis over the estimated useful lives of respective assets. Purchased
intangible assets with indefinite life are evaluated for impairment when events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Purchased intangible asset consists of satellite system software and is amortized over
10 years. Fair
Value of Financial Instruments The
Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization
of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair
value. The three levels of the hierarchy consist of the following: Level
1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company
has the ability to access at the measurement date. Level
2 - Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets
that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full
term of the instrument. Level
3 - Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants
could use in pricing the asset or liability at the measurement date, including assumptions. The
carrying amounts of our cash and restricted cash, accounts receivable, other receivable, prepaid expenses, accounts payable, short-term
loan, accrued expense, accrued unpaid salaries, prepayment from customer, and other payable approximated their fair value due to the
short-term nature of these financial instruments. The Company’s short-term investment is classified within Level 1 of the fair
value hierarchy on March 31, 2024. The Company’s long-term bonds payable, long-term note payable and lease payable approximated
the carrying amount as its interest rate is considered as approximate to the current rate for comparable loans and leases, respectively.
Our long-term investment approximated its carrying amount based upon management’s best estimate due to its restricted nature. There
were no outstanding derivative financial instruments as of March 31, 2024 and December 31, 2023. Revenue
Recognition The
Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which
generally occurs upon the transfer of control in accordance with the contractual terms and conditions of the sale. The Company’s
revenue for the three months ended March 31, 2024 composed of the sales of ground antenna unit and test support to a related party. The
majority of the Company’s revenue is recognized at a point in time when product is shipped, or service is provided to the customer.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes
estimates for variable consideration. The Company adopted the provisions of ASU 2014-09 Revenue from Contracts with Customers (Topic
606) and the principal versus agent guidance within the new revenue standard. As such, the Company identifies a contract with a customer,
identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance
obligation in the contract and recognizes revenue when (or as) the Company satisfies a performance obligation. Customers may make payments
to the Company either in advance or in arrears. If payment is made in advance, the Company will recognize a contract liability under
prepayments from customers until which point the Company has satisfied the requisite performance obligations to recognize revenue. Stock-based
Compensation The
Company adopted the modified prospective method to measure stock-based compensation expense. Under the modified prospective method, stock-based
compensation expense recognized during the period is based on the portion of the share-based payment awards granted after the effective
date and ultimately expected to vest during the period. Stock-based compensation expense recognized in the Company’s statement
of income is based on the vesting terms and the estimated fair value of the award at grant date. As stock-based compensation expense
recognized in the statement of income is based on awards ultimately expected to vest, it is reduced for estimated forfeiture. Forfeitures
are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The
Company uses the Black-Scholes option pricing model in its determination of fair value of share-based payment awards on the date of grant.
Such option pricing model is affected by assumptions based on a number of highly complex and subjective variables. Income
Taxes Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based
on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Adjustments to prior
period’s income tax liabilities are added to or deducted from the current period’s tax provision. The
Company follows FASB guidance on uncertain tax positions and has analyzed Its filing positions in all the federal, state and foreign
jurisdictions where it is required to file income tax returns, as well as all open tax years in those jurisdictions. The Company files
income tax returns in the US federal, state and foreign jurisdictions where it conducts business. It is not subject to income tax examinations
by US federal, state and local tax authorities for years before 2018. The Company believes that its income tax filing positions and deductions
will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on its consolidated
financial position, results of operations, or cash flows. Therefore, no reserves for uncertain tax positions have been recorded. The
Company does not expect its unrecognized tax benefits to change significantly over the next twelve months. The
Company’s policy for recording interest and penalties associated with any uncertain tax positions is to record such items as a
component of income before taxes. Penalties and interest paid or received, if any, are recorded as part of other operating expenses in
the consolidated statement of operations. Foreign
Currency Transactions Foreign
currency transactions are recorded in U.S. dollars at the exchange rates in effect when the transactions occur. Exchange gains or losses
derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current
income. At the end of each period, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates
with the resulting gains or losses recognized in income for the period. Translation
Adjustments If
a foreign subsidiary’s functional currency is the local currency, translation adjustments will result from the process of translating
the subsidiary’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported
under other comprehensive loss as a separate component of stockholders’ equity. Earnings
(Loss) Per Share Basic
earnings (loss) per share is computed by dividing income available to common shareholders by the weighted average number of shares of
common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders
by the weighted-average number of shares of common outstanding during the period increased to include the number of additional shares
of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities
include stock warrants and outstanding stock options, shares to be purchased by employees under the Company’s employee stock purchase
plan. The Company had 6,500,900 and 2,011,867 common stock equivalents, primarily stock options and warrants, for the three months ended
March 31, 2024 and 2023, respectively. For the fiscal three months ended March 31, 2024 and 2023, the assumed exercise of the Company’s
common stock equivalents were not included in the calculation as the effect would be anti-dilutive. |
