| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation The
accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted
in the United States of America (U.S. GAAP) for interim financial information, and pursuant to the instructions to Form 10-Q and Article
10 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statement presentation. However, the Company believes that the disclosures
are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting primarily of
normal recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the three- and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2022. The unaudited interim financial statements should be read in conjunction with the Company’s
financial statements and related notes as of and for the year ended December 31, 2021, as disclosed in the Company’s prospectus,
dated March 31, 2022, filed with the SEC in accordance with Rule 424(b) of the Securities Act on April 4, 2022 (the “Prospectus”)
in connection with the Company’s initial public offering. Unless
otherwise noted, all references to shares and shareholders in the accompanying financial statements have been restated retrospectively,
to reflect the equity structure of the C corporation as of the beginning of the first period presented. Liquidity
and Capital Resources The
Company has sustained recurring losses and has negative cash flows from operations for the nine months ended September 30, 2022. Historically,
the Company’s growth has been funded through a combination of sales of equity interests, third party debt, and working capital
loans. The Company’s sales for the nine months ended September 2022 increased 79% over sales for the nine months ended September
30, 2021, as product demand continued to rise. On April 1, 2022, the Company completed an initial public offering and listing of its
shares on the Nasdaq Stock Market (IPO). Proceeds from the IPO, net of costs, totaled $14,772,487, of which approximately $2,464,000
was used to pay down principal and accrued interest on high interest-bearing debt, which will help to improve monthly cash flows going
forward. The remaining proceeds will be used, in part, to stock inventory to keep up with demand and to build in-house assembly lines
to improve the cash-flow cycle, side-stepping the four-month turnaround that the Company currently experiences from suppliers in China.
In the first half of 2022, a distribution warehouse was set up in Indiana to better service customers throughout the U.S. and an assembly
facility was leased in Redmond, Oregon for future expansion of the in-house assembly lines. Additionally, management has secured a secondary
source for lithium iron phosphate cells used in its batteries that is based in Denmark, should supply disruption issues with China arise.
Management believes that these factors will contribute to achieving operating efficiency and profitability. However, there can be no
assurance that the Company will be successful in achieving its objectives, including achieving operating efficiency and profitability. The
Company believes that as a result of the IPO, it currently has sufficient cash to meet its funding requirements for at least twelve months
after the date of the issuance of these financial statements. However, the Company has experienced and continues to experience negative
operating margins. The Company expects that it may need to raise additional capital in the future to expand its presence in the marketplace
and achieve operating efficiencies, and to accomplish its long-term business plan over the next several years. There can be no assurance
as to the availability or terms upon which such financing and capital might be available. Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could vary materially from the estimates
that were used. The Company’s significant accounting estimates include the carrying value of accounts receivable and inventory,
the depreciable lives of fixed assets, and stock-based compensation. Future
events, including the extent and the duration of the COVID-19-related economic impacts and their effects, cannot be predicted with certainty
and, accordingly, the Company’s accounting estimates require the exercise of judgment. Cash
and Cash Equivalents The
Company considers all cash amounts which are not subject to withdrawal restrictions or penalties and all highly liquid investments purchased
with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains its cash balances
with high-quality financial institutions located in the United States. Accounts are secured by the Federal Deposit Insurance Corporation
(“FDIC”) up to $250,000 per institution. At times, balances may exceed federally insured limits. The Company has not experienced
any losses in such accounts and management believes that the Company is not exposed to any significant credit risk with respect to its
cash and cash equivalents. As of September 30, 2022, cash balances exceeded FDIC limits by $ 1,064,880 Accounts
Receivable Accounts
receivable are recorded at the invoiced amount, are due within a year or less, and generally do not bear any interest. The Company performs
ongoing credit evaluations of its customers and generally requires no collateral. An allowance for uncollectible accounts is recorded
to reduce accounts receivable to the estimated amount that will be collected. The allowance is based upon management’s review of
the accounts receivable aging and specific identification of potentially uncollectible balances. Recoveries of accounts previously written
off and adjustments to the allowance for uncollectible accounts are recorded as adjustments to bad debt expense. The allowance for doubtful
accounts totaled $19,604 as of September 30, 2022. There was no allowance for doubtful accounts as of December 31, 2021, as management
believed all outstanding amounts to be fully collectible. Customer
Deposits As
of September 30, 2022 and December 31, 2021, the Company had customer deposits totaling $ 161,791 436,648 Inventory Inventory
is stated at the lower of cost (first in, first out) or net realizable value and consists of batteries and accessories, resale items,
components, and related landing costs. The Company began in-house assembly in 2021 and as of September 30, 2022 and December 31, 2021,
inventory consisted of finished assemblies totaling $2,436,475 and $985,537, respectively, and raw materials (inventory components, parts,
and packaging) totaling $2,599,582 and $1,066,343, respectively. The valuation of inventory includes fixed production overhead costs
based on normal capacity of the assembly warehouse. The
Company periodically reviews its inventory for evidence of slow-moving or obsolete inventory and provides for an allowance when considered
necessary. The Company determined that no such reserve was necessary as of September 30, 2022 or December 31, 2021. The Company prepays
for inventory purchases from foreign suppliers. Prepaid inventory totaled $268,663 and $1,081,225 at September 30, 2022 and December
31, 2021, respectively, and included inventory in transit where title had passed to the Company but had not yet been physically received. Vendor
and Foreign Concentrations of Inventory Suppliers During
the three months ended September 30, 2022 and 2021, approximately 91% and 92%, respectively, of inventory purchases were made from foreign
suppliers in China and Hong Kong. During the nine months ended September 30, 2022 and 2021, approximately 92% and 93%, respectively,
of inventory purchases were made from foreign suppliers in China and Hong Kong. Any adverse change in either the economic or political
conditions abroad could negatively impact the Company’s supply chain. The inability to obtain product to meet sales demand could
adversely affect results of operations. However, the Company has secured a secondary source for lithium iron phosphate cells used in
its batteries from a supplier in Denmark, enabling the Company to source materials outside of China in the event it becomes necessary
to do so. Property
and Equipment Property
and equipment are stated at cost less depreciation calculated on the straight-line basis over the estimated useful lives of the related
assets as follows: Schedule of estimated useful lives
Vehicles
and transportation equipment 5 7
Office
furniture and equipment 3 7
Manufacturing
equipment 3 10
Warehouse
equipment 3 10
QA
equipment 3 10
Tooling
and molds 5 10 Leasehold
improvements are amortized over the shorter of the lease term or their estimated useful lives. Betterments,
renewals, and extraordinary repairs that extend the lives of the assets are capitalized; other repairs and maintenance charges are expensed
as incurred. The cost and related accumulated depreciation and amortization applicable to assets retired are removed from the accounts,
and the gain or loss on disposition is recognized in the Statements of Operations. Leases The
Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets represent the Company’s
right to use an underlying asset during the lease term, and operating lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. Operating leases are included in ROU assets, current operating
lease liabilities, and long-term operating lease liabilities on the Company’s Balance Sheets. The Company does not have any finance
leases. Lease
ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease
term at commencement date calculated using the Company’s incremental borrowing rate applicable to the lease asset, unless the implicit
rate is readily determinable. ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives
received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the
Company will exercise that option. Leases with a term of 12 months or less are not recognized on the Company’s Balance Sheet. The
Company’s leases do not contain any residual value guarantees. Lease expense for minimum lease payments is recognized on a straight-line
basis over the lease term. The
Company accounts for lease and non-lease components as a single lease component for all its leases. Impairment
of Long-Lived Assets Long-lived
assets consist primarily of property and equipment. When events or circumstances indicate the carrying value of a long-lived asset may
be impaired, the Company estimates the future undiscounted cash flows to be derived from the use and eventual disposition of the asset
to assess whether or not a potential impairment exists. If the carrying value exceeds the estimate of future undiscounted cash flows,
the impairment is calculated as the excess of the carrying value of the asset over the estimate of its fair value. Fair value is determined
primarily using the estimated cash flows discounted at a rate commensurate with the risk involved. No long-lived asset impairment was
recognized during the three months or nine months ended September 30, 2022 and 2021. Product
Warranties The
Company sells the majority of its products to customers along with conditional repair or replacement warranties. The Company’s
branded DC mobile chargers are warrantied for two years from the date of sale and its branded VPR 4EVER Classic and Platinum batteries
are warrantied at gradually lesser levels over a twelve-year period from date of sale. The Company determines its estimated liability
for warranty claims based on the Company’s experience of the amount of claims actually made. Management estimates no liability
as of September 30, 2022 and December 31, 2021 because, historically, there have been very few claims and costs for repairs or replacement
parts have been nominal. It is possible that the Company’s estimate of a liability for product liability claims will change in
the near term. Liability
for Refunds The
Company does not have a formal return policy but does accept returns under its warranty policies. Returns have historically been minimal.
However, during 2020 the Company sold discontinued products and recorded a liability for refunds. As of December 31, 2020, the liability
totaled $58,000. During the three months and nine months ended September 30, 2021, the Company issued credits totaling $8,628 and $58,000,
respectively, which were included in the refund liability as of December 31, 2020. As of December 31, 2021, all allowable discontinued
products had been returned and the Company had no further refund liability. Revenue is recorded net of this amount. Any returns of discontinued
product are not added back to inventory and therefore related costs are nominal and not recorded as an asset. Revenue
Recognition The
Company’s revenue is generated from the sale of products consisting primarily of batteries and accessories. The Company recognizes
revenue when control of goods or services is transferred to its customers in an amount that reflects the consideration it is expected
to be entitled to in exchange for those goods or services. To determine revenue recognition, the Company performs the following five
steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine
the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize
revenue when (or as) the performance obligation(s) are satisfied. Revenue is recognized upon shipment or delivery to the customer, as
that is when the customer obtains control of the promised goods and the Company’s performance obligation is considered satisfied.
As such, accounts receivable is recorded at the time of shipment or will call, when the Company’s right to the consideration becomes
unconditional and the Company determines there are no uncertainties regarding payment terms or transfer of control. Concentration
of Major Customers A
customer is considered a major customer when net revenue attributable to the customer exceeds 10% of total revenue for the period or
outstanding receivable balances exceed 10% of total receivables. During
the three months ended September 30, 2022, sales to two customers totaled $220,300 and $174,636, respectively, comprising approximately
16% and 13% of total sales, respectively. There were no accounts receivable for these customers as of September 30, 2022. During the
nine months ended September 30, 2022, sales to two customers totaled $1,264,344 and $552,477, respectively, comprising approximately
22% and 10%, respectively, of total sales. Accounts receivables for these customers totaled $7,486 and $0, respectively, representing
approximately 3% of total accounts receivable as of September 30, 2022. Accounts receivable from two additional customers totaled $47,758
and $43,031, representing approximately 17% and 15%, respectively, of total accounts receivables as of September 30, 2022. During
the three months ended September 30, 2021, sales to one customer totaled $132,870, comprising approximately 10% of total sales. Accounts
receivable for this customer totaled $104,562, representing approximately 14% of total accounts receivable as of September 30, 2021.
During the nine months ended September 30, 2021, sales to two customers totaled $440,036 and $370,134, respectively, comprising approximately
14% and 12%, respectively, of total sales. Accounts receivable from these customers totaled $97,127 and $104,562, respectively, representing
approximately 13% and 14%, respectively, of total accounts receivable as of September 30, 2021. Accounts receivable from one additional
customer totaled $104,405, representing approximately 14% of total accounts receivable as of September 30, 2021. Shipping
and Handling Costs Shipping
and handling fees billed to customers are classified on the Statement of Operations as “Sales, net” and totaled $6,133 and
$5,839 during the three months ended September 30, 2022 and 2021, respectively and $17,514 and $20,812 during the nine months ended September
30, 2022 and 2021, respectively. Shipping and handling costs for shipping product to customers totaled $54,840 and $23,664 during the
three months ended September 30, 2022 and 2021, respectively, and $137,497 and $73,393 during the nine months ended September 30, 2022
and 2021, respectively, and are classified in selling, general and administrative expense in the accompanying Statements of Operations. Advertising
and Marketing Costs The
Company expenses advertising and marketing costs as incurred. Advertising and marketing expense totaled $93,364 and $11,025 for the three
months ended September 30, 2022 and 2021, respectively and $164,118 and $46,550 for the nine months ended September 30, 2022 and 2021,
respectively, and is included in selling, general and administrative expense in the accompanying Statements of Operations. Research
and Development Research
and development costs are expensed as incurred. Research and development costs charged to expense amounted to $39,180 and $3,205 for
the three months ended September 30, 2022 and 2021, respectively and $145,401 and $14,917 for the nine months ended September 30, 2022
and 2021, respectively, and are included in selling, general and administrative expenses in the accompanying Statements of Operations. Income
Taxes From
January 1, 2017 to October 31, 2021, the Company was not subject to federal or state income taxes since it was a limited liability company
taxed as an S corporation. The Company’s taxable income or losses were allocated to its members in accordance with their respective
ownership percentages. Therefore, no provision or liability for federal income taxes was included in the accompanying financial statements
for the relevant periods in 2021. Certain states impose minimum franchise taxes on entities taxed as an S corporation. Accordingly, the
accompanying financial statements include provisions for state franchise tax fees. Effective
November 1, 2021, the Company converted from an LLC to a C corporation and, as a result, became subject to corporate federal and state
income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of exiting assets and liabilities and their respective tax basis. Deferred tax assets, including
tax loss and credit carryforwards, and liabilities are measured using the enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that included the enactment date. Deferred income tax expense represents
the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not
be realized. On
March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The Cares Act is an emergency
economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort
to curtail the effect of COVID-19. The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic. Some of the more
significant provisions are removal of certain limitations on utilization of net operating losses, increasing the loss carryback period
for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the
previously enacted Tax Cuts and Jobs Act. As of September 30, 2022 and December 31, 2021, the Company has not recorded any income tax
provision/(benefit) resulting from the CARES Act, mainly due to the Company’s history of net operating losses. On
December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”). The CAA includes provisions
extending certain CARES Act provisions and adds coronavirus relief, tax and health extenders. The Company will continue to evaluate the
impact of the CAA and its impact on its financial statements in 2022 and beyond. Fair
Value of Financial Instruments The
Company accounts for its financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurement Level
1: Level
2: Level
3: The
Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, short-term
revolving loans, shareholder promissory notes, and long-term debt. The fair value of cash and cash equivalents, accounts receivable,
accounts payable, and short-term revolving loans approximates their respective carrying values because of the short-term nature of those
instruments. The fair value of the shareholder promissory notes, convertible notes, and long-term debt approximates their respective
carrying values because the interest rate approximates market rates available to the Company for similar obligations with the same maturities. Segment
Reporting The
Company currently operates in one reportable segment. An operating segment is defined as a component of an enterprise for which discrete
financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”) to evaluate performance
and make operating decisions. The Company has identified its CODM as the Chief Executive Officer. Basic
and Diluted Net Loss Per Share The
basic net loss per share is calculated by dividing the net loss by the weighted average number of shares outstanding during the period.
Diluted earnings or loss per share adjusts the basic earnings or loss per share for the potentially dilutive impact of securities (e.g.,
options and warrants). We
calculate basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented.
In periods of a net loss position, basic and diluted weighted average common shares are the same. For the diluted earnings per share
calculation, we adjust the weighted average number of common shares outstanding to include dilutive stock options, warrants, unvested
restricted stock units and shares associated with the conversion of any convertible notes or preferred stock, when applicable. We use
the if-converted method for calculating any potential dilutive effect of convertible notes and convertible preferred stock on diluted
net loss per share. The
following shows the amounts used in computing net loss per share: Schedule of net loss per share
Three
Months Ended September 30, Nine
Months Ended September 30,
2022 2021 2022 2021
Net loss $ (1,279,304 ) $ (352,776 ) $ (6,067,193 ) $ (730,403 )
Weighted
average common shares outstanding – basic and diluted 6,802,464 2,653,464 5,913,763 2,602,952
Basic
and diluted net loss per share $ (0.19 ) $ (0.13 ) $ (1.03 ) $ (0.28 ) As
of September 30, 2022 and December 31, 2021, the Company has outstanding warrants and options convertible into 1,717,936 and 740,431
shares of common stock, respectively. The following table sets forth the number of shares excluded from the computation of diluted loss
per share, as their inclusion would have been anti-dilutive. Schedule of anti-dilutive shares
Three
Months Ended September 30, Nine
Months Ended September 30,
2022 2021 2022 2021
Stock
options 859,500 — 859,500 —
Warrants 858,436 — 858,436 —
1,717,936 — 1,717,936 — Stock-Based
Compensation The
Company accounts for stock-based compensation in accordance with ASC 718, “Compensation—Stock Compensation”, which
requires compensation costs to be recognized at grant date fair value over the requisite service period of each of the awards. The Company
recognizes forfeitures of awards as they occur. The
fair value of stock options is determined using the Black-Scholes-Merton option pricing model. In order to calculate the fair value of
the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected
dividend yield and expected life. Changes to assumptions could cause significant adjustments to the valuation. New
Accounting Pronouncements In
May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic
470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity
(Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options
(a consensus of the Emerging Issues Task Force).” ASU 2021-04 requires issuers to account for modifications or exchanges of freestanding
equity-classified written call options that remain equity classified after the modification or exchange based on the economic substance
of the modification or exchange. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether
the transaction was done to issue equity, to issue or modify debt, or for other reasons. ASU 2021-04 is applied prospectively and is
effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company adopted this
standard in the first quarter of fiscal 2022, which did not have a material impact on the Company’s financial statements or disclosures. In
August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion
features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in
substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single
liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Similarly,
equity-classified convertible preferred stock instruments will be accounted for as single units of account in equity unless the conversion
feature needs to be bifurcated under Topic 815. The new guidance also made amendments to the earnings per share guidance in Topic 260,
Earnings Per Share, for convertible instruments, the most significant impact of which is requiring the use of the if-converted method
for diluted earnings per share calculation. Further, ASU 2020-06 made revisions to Subtopic 815-40, which provides guidance on how an
entity must determine whether a contract qualifies for a scope exception from derivative accounting. ASU 2020-06 is effective for fiscal
years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective
or a full retrospective approach. Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach.
Adoption of the new standard did not have a material impact on the Company’s financial statements or disclosures. In
January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint
Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.
The new guidance clarifies the interaction of accounting for the transition into and out of the equity method and the accounting for
measuring certain purchased options and forward contracts to acquire investments. ASU 2020-01 is effective for fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years. Effective January 1, 2021, the Company adopted ASU 2020-01.
The adoption of this guidance did not have an impact on the Company’s financial statements or disclosures. Accounting
Guidance Issued but Not Yet Adopted In
September 2022, the FASB issued ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier
Finance Program Obligations,” which is intended to enhance the transparency surrounding the use of supplier finance programs in
connection with the purchase of goods and services. Supplier finance programs may also be referred to as reverse factoring, payables
finance, or structured payables arrangements. The amendments in ASU 2022-04 require a buyer that uses supplier finance programs to disclose
sufficient qualitative and quantitative information about the program to allow a user of financial statements to understand the program’s
nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for all entities
for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods with those fiscal years, except
for the requirement to disclose roll forward information, which is effective prospectively for fiscal years beginning after December
15, 2023. The Company is currently evaluating the impact of this standard on our financial statements. In
June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject
to Contractual Sale Restrictions,” which amends the guidance in Topic 820, Fair Value Measurement In
March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and
Vintage Disclosures,” which addresses and amends areas identified by the FASB as part of its post-implementation review of the
accounting standard that introduced the current expected credit losses (“CECL”) model. The amendments eliminate the accounting
guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan
refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure
of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.
For entities, such as Expion360 Inc., that have not In
October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers.” ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination
to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, on the acquisition date as if the
acquirer had entered into the original contract at the same date and on the same terms as the acquiree. ASU 2021-08 is effective for
fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for public business entities. The
Company is currently evaluating the impact of this standard on our financial statements. In
June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU replaces the incurred loss impairment
methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range
of reasonable and supportable information for credit loss estimates on certain types of financial instruments, including trade receivables.
In addition, new disclosures are required. The ASU, as subsequently amended, is effective for the Company for fiscal years beginning
after Decembe |
