| SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES The Company Gentex Corporation, including its wholly-owned subsidiaries (the "Company"), is a leading supplier of digital vision, connected car, dimmable glass, and fire protection technologies. The Company’s largest business segment involves designing, developing, manufacturing, marketing, and supplying automatic-dimming rearview and non-dimming mirrors and various electronic modules for the automotive industry. The Company ships its product to all of the major automotive producing regions worldwide, which it supports with numerous sales, engineering and distribution locations worldwide. A substantial portion of the Company’s net sales and accounts receivable result from transactions with domestic and foreign automotive manufacturers and Tier 1 suppliers. The Company also designs, develops, manufactures, markets, and supplies dimmable aircraft windows for the aviation industry and commercial smoke alarms and signaling devices for the fire protection products industry. The Company does not require collateral or other security for trade accounts receivable. Significant accounting policies of the Company not described elsewhere are as follows: Consolidation The consolidated financial statements include the accounts of Gentex Corporation and all of its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Cash Equivalents Cash equivalents consist of funds invested in bank accounts and money market funds that have daily liquidity. Allowance For Doubtful Accounts The Company reviews a monthly aging report of all accounts receivable balances starting with invoices outstanding over sixty days. In addition, the Company monitors information about its customers through a variety of sources including the media, and information obtained through ongoing interaction between Company personnel and the customer. Based on the evaluation of the above information, the Company estimates its allowances related to customer receivables on historical credit and collections experience, customers current financial condition and the specific identification of other potential problems, including the economic climate and impact the supply chain constraints has had on specific customers. Actual collections can differ, requiring adjustments to the allowances, but historically such adjustments have not been material. The following table presents the activity in the Company’s allowance for doubtful accounts: Beginning Net Net Additions/Deductions Ending Year Ended December 31, 2023: Allowance for Doubtful Accounts $ 2,967,095 $ — $ (301,892) $ 2,665,203 Year Ended December 31, 2022: Allowance for Doubtful Accounts $ 3,176,205 $ — $ (209,110) $ 2,967,095 Year Ended December 31, 2021: Allowance for Doubtful Accounts $ 3,464,747 $ — $ (288,542) $ 3,176,205 The Company’s allowance for doubtful accounts primarily relates to financially distressed automotive customers. The Company continues to work with these financially distressed customers in collecting past due balances. Investments Available for sale securities The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, and for its non-financial assets and liabilities subject to fair value measurements. ASC 820 provides a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that permit, or in some cases, require estimates of fair-market value. This standard also expanded financial statement disclosure requirements about a company’s use of fair-value measurements, including the effect of such measurement on earnings. The cost of securities sold is based on the specific identification method. The Company determines the fair value of its government securities, asset-backed securities, corporate bonds, and certain municipal bonds by utilizing monthly valuation statements that are provided by its broker. The broker determines the investment valuation by utilizing the bid price in the market and also refers to third party sources to validate valuations, and as such are classified as Level 2 assets. The Company's certificates of deposit are classified as available for sale, and are considered as Level 1 assets. These investments are carried at amortized cost, which approximates fair value. On October 4, 2023, the Company entered into a Stock Purchase Agreement to acquire up to 3,137,500 shares of VOXX International Corporation ("VOXX") Class A Common Stock. The Company agreed to purchase the shares in two tranches: (1) on October 6, 2023, the Company purchased 1,568,750 shares of Class A Common Stock at a price of $10 per share, and (2) on January 5, 2024, the Company purchased 1,568,750 shares of Class A Common Stock at a price of $10 per share. The VOXX shares held by the Company are publicly traded and have a readily determinable fair market value and are considered Level 1 assets. The investment is accounted for in accordance with ASC 321, Investments - Equity Securities, with changes in fair value recorded in Investment income, net in consolidated statements of income. No significant changes in fair value related to the commitment to purchase the second tranche occurred between October 4, 2023 and December 31, 2023. Technology Investments The Company also periodically makes strategic investments in the non-marketable debt or equity securities of non-consolidated third parties ("technology investments"). Such technology investments totaled approximately $128.0 million at December 31, 2023, of which $124.6 million and $3.4 million are recorded in long-term investments and short-term investments on the consolidated balance sheet, and $65.5 million as of December 31, 2022, of which $61.7 million and $3.8 million are recorded in long-term investments and short-term investments on the consolidated balance sheet. Depending on the form of investment, and the degree of influence the Company has over the investee, the Company primarily accounts for the technology investments in accordance with ASC 321, Investments- Equity Securities or ASC 323 – Investments – Equity Method and Joint Venture . The Company accounts for equity securities in non-controlled affiliates through which the Company exercises significant influence but do not have control over the investee under the equity method, with the Company’s share of the earnings or losses of non-controlled affiliates recognized within Other (loss) income, net in the Company's consolidated statement of income . All other technology investments that the Company holds are primarily accounted for under the measurement alternative of ASC 321. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. A summary of the Company’s most significant technology investments is below: Adasky - Adasky is an Israeli based leading developer and manufacturer of intelligent, high-resolution thermal sensing systems for vehicle safety and perception applications and smart city roadway solutions. During 2023, the Company invested approximately $46.5 million in Adasky, which resulted in an approximately 27% ownership stake in Adasky. These investments included approximately $25 million related to preferred shares of Adasky accounted for using the measurement alternative and $21.5 million for common shares of Adasky accounted for using the equity method. As of December 31, 2023, the carrying value of the Company’s investments in Adasky was $45.8 million. Green Marbles - GreenMarbles is a leading provider of sustainable solutions for integration into properties. On June 3, 2022, the Company obtained an approximate 20% equity share in GreenMarbles for $25.0 million, consisting of $20.0 million of cash investment and the issuance of $5.0 million worth of Gentex common stock. The Company accounts for its investment in GreenMarbles using the equity method. As of December 31, 2023 and 2022, the carrying value of the investment in GreenMarbles was $22.6 million and $24.4 million, respectively. Simplenight - Simplenight provides drivers and vehicle occupants with access to enhanced mobile capability for booking personalized entertainment and lifestyle experiences in addition to everyday purchases. During the years ended December 31, 2023 and 2022, the Company made investments of $7.5 million and $7.5 million in Simplenight, respectively, and as of December 31, 2023, the Company has an approximately 30% ownership interest in Simplenight primarily accounted for using the measurement alternative. As of December 31, 2023 and 2022, the carrying value of the Company’s investments in Simplenight was $20.9 million and $12.9 million. Solace Power - Solace Power is a Canada-based company specializing in wireless power solutions. On December 12, 2023, the Company purchased a 13% equity interest in Solace Power, which is accounted for using the measurement alternative. Assets or liabilities that have recurring fair value measurements are shown below as of December 31, 2023 and December 31, 2022: Fair Value Measurements at Reporting Date Using Total as of Quoted Prices in Significant Other Significant Description December 31, 2023 (Level I) (Level 2) (Level 3) Cash & Cash Equivalents $ 226,435,019 $ 226,435,019 $ — $ — Short-Term Investments: Certificate of Deposit 994,013 $ 994,013 — — Corporate Bonds 1,943,886 — 1,943,886 — Government Securities 4,759,507 — 4,759,507 — Municipal Bonds 1,726,658 — 1,726,658 — Other 1,465,388 1,465,388 — — Long-Term Investments: Asset-backed Securities 27,146,504 — 27,146,504 — Certificate of Deposit 748,358 748,358 — — Corporate Bonds 65,404,340 — 65,404,340 — Government Securities 6,227,129 — 6,227,129 — Municipal Bonds 56,336,921 — 56,336,921 Common Stock 18,610,519 18,610,519 — — Total $ 411,798,242 $ 248,253,297 $ 163,544,945 $ — Fair Value Measurements at Reporting Date Using Total as of Quoted Prices in Significant Other Significant Description December 31, 2022 (Level I) (Level 2) (Level 3) Cash & Cash Equivalents $ 214,754,638 $ 214,754,638 $ — $ — Restricted Cash 4,000,000 $ 4,000,000 — — Short-Term Investments: Certificate of Deposit 1,736,163 $ 1,736,163 — — Corporate Bonds 5,473,341 — 5,473,341 — Government Securities 4,423,041 — 4,423,041 — Municipal Bonds 5,174,773 — 5,174,773 — Other 2,347,602 1,093,602 1,254,000 — Long-Term Investments: Asset-backed Securities 18,829,696 — 18,829,696 — Certificate of Deposit 238,925 238,925 — — Corporate Bonds 36,310,477 — 36,310,477 — Government Securities 36,532,634 — 36,532,634 — Municipal Bonds 48,430,166 48,430,166 — Common Stock 293,300 293,300 — — Total $ 378,544,756 $ 222,116,628 $ 156,428,128 $ — The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of December 31, 2023 and 2022: Unrealized 2023 Cost Gains Losses Market Value Short-Term Investments: Certificate of Deposit $ 1,000,000 $ — $ (5,987) $ 994,013 Corporate Bonds 1,976,195 — (32,309) 1,943,886 Government Securities 4,754,495 21,141 (16,129) 4,759,507 Municipal Bonds 1,749,038 — (22,380) 1,726,658 Other 1,465,388 — — 1,465,388 Long-Term Investments: Asset-backed Securities 26,923,803 331,847 (109,146) 27,146,504 Certificate of Deposit 750,000 (1,642) 748,358 Corporate Bonds 66,214,398 748,471 (1,558,529) 65,404,340 Government Securities 6,217,774 10,675 (1,320) 6,227,129 Municipal Bonds 58,261,615 811,128 (2,735,822) 56,336,921 Common Stock 17,324,886 1,328,446 (42,813) 18,610,519 Total $ 186,637,592 $ 3,251,708 $ (4,526,077) $ 185,363,223 Unrealized 2022 Cost Gains Losses Market Value Short-Term Investments: Certificate of Deposit $ 1,750,256 $ — $ (14,093) $ 1,736,163 Corporate Bonds 5,571,417 — (98,076) 5,473,341 Government Securities 4,476,613 — (53,572) 4,423,041 Municipal Bonds 5,223,500 — (48,727) 5,174,773 Other 2,347,602 — — 2,347,602 Long-Term Investments: Asset-backed Securities 19,151,229 — (321,533) 18,829,696 Certificate of Deposit 250,000 — (11,075) 238,925 Corporate Bonds 40,410,206 — (4,099,729) 36,310,477 Government Securities 39,637,461 — (3,104,827) 36,532,634 Municipal Bonds 53,476,883 235,713 (5,282,430) 48,430,166 Common Stock 292,638 662 — 293,300 Total $ 172,587,805 $ 236,375 $ (13,034,062) $ 159,790,118 Unrealized losses on investments as of December 31, 2023 are as follows: Aggregate Unrealized Losses Aggregate Fair Value Less than one year $ 126,074 $ 13,449,592 Greater than one year 4,400,003 76,966,258 Total $ 4,526,077 $ 90,415,850 Unrealized losses on investments as of December 31, 2022 are as follows: Aggregate Unrealized Losses Aggregate Fair Value Less than one year $ 4,816,103 $ 77,701,146 Greater than one year 8,217,959 76,643,586 Total $ 13,034,062 $ 154,344,732 Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments . The guidance modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The Company utilized the guidance provided by ASC 326 to determine whether any of the available-for-sale debt securities held by the Company were impaired. No investments were considered to be impaired during the years presented. The Company has the intention and current ability to hold its debt investments until the amortized cost basis has been recovered. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. No investments were considered to be other-than-temporarily impaired in 2023 and 2022. Fixed income securities as of December 31, 2023, have contractual maturities as follows: Due within one year $ 9,953,308 Due between one and five years 94,519,794 Due over five years 60,814,214 $ 165,287,316 Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, investments, accounts receivable, accounts payable, and short and long-term debt. The Company’s estimate of the fair values of these financial instruments approximates their carrying amounts at December 31, 2023 and 2022. Inventories Inventories include material, direct labor and manufacturing overhead and are valued at the lower of cost or net realizable value. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Inventories consisted of the following as of December 31, 2023 and 2022: 2023 2022 Raw materials $ 283,126,566 $ 304,184,004 Work-in-process 46,343,955 45,512,275 Finished goods 73,002,507 54,663,991 Total Inventory $ 402,473,028 $ 404,360,270 Estimated inventory allowances for slow-moving and obsolete inventories are based on current assessments of future demands, market conditions, evaluation of longer lead times for certain electronic components and related management initiatives. If market conditions or customer requirements change and are less favorable than those projected by management, inventory allowances are adjusted accordingly. Allowances for slow-moving and obsolete inventories (which are included, net, in the above inventory values) were $10.3 million and $10.0 million at December 31, 2023 and 2022, respectively. Plant and Equipment Plant and equipment is stated at cost. Depreciation and amortization are computed for financial reporting purposes using the straight-line method, with estimated useful lives of 7 to 30 years for buildings and improvements, and 3 to 10 years for machinery and equipment. Depreciation expense was approximately $73.6 million, $74.9 million and $76.8 million in 2023, 2022 and 2021, respectively. Impairment or Disposal of Long-Lived Assets The Company reviews long-lived assets, including property, plant and equipment and other intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analysis in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets . ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. Patents The Company’s policy is to capitalize costs incurred to obtain patents. The cost of patents is amortized over their useful lives. The cost of patents in process is not amortized until issuance. The Company periodically obtains intellectual property rights, in the ordinary course of business, and the cost of the rights are amortized over their useful lives. Goodwill and Intangible Assets Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company reviews goodwill for impairment during the fourth quarter on an annual basis or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company performs an impairment review for its Automotive and Other reporting units, which have been determined to be the Company’s reportable segments, using either a qualitative approach or quantitative approach which utilizes a fair value method that incorporates certain assumptions and judgments. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. The Company performs a qualitative assessment (step 0) to determine whether it is more likely than not that a reporting unit's fair value is less than its carrying amount. If not, no further goodwill impairment testing is performed. If so, the Company performs a step 1 test to determine the fair value of the reporting unit using an income approach to estimate the fair value of each of its reporting units and a market valuation approach to further support this analysis. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered to be impaired. However, if the fair value of the reporting unit is less than its carrying amount, an impairment change is recorded as the excess of the reporting unit's carrying value over its fair value. The assumptions included in the impairment tests require judgment and changes to these inputs could impact the results of the calculations which could result in an impairment charge in future periods if the carrying amount of the reporting unit exceeds its calculated fair value. For the qualitative assessment performed, management considers factors such as macro-economic conditions, industry and market considerations, overall financial performance, and other Company-specific events, amongst other factors, in making the determination as to whether it is more likely than not that a reporting unit's fair value is less than its carrying amount. Other than management's internal projections of future cash flows, the primary assumptions used in the step 1 impairment test is the weighted-average cost of capital and long-term growth rates. Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying business, there are significant judgments in determining the expected future cash flows attributable to a reporting unit. There have been no impairment charges recorded currently or in prior periods in which goodwill existed. Indefinite lived intangible assets are also subject to annual impairment testing or more frequently if indicators of impairment are identified. Management's judgment and assumptions are required in determining the underlying fair value of the indefinite lived intangible assets. While the Company believes the judgments and assumptions used in determining fair value are reasonable, different assumptions could change the estimated fair values and, therefore, impairment charges could be required, which could be material to the consolidated financial statements. The Company performs a qualitative assessment (step 0) to determine whether it is more likely than not that an intangible asset's fair value is less than its carrying amount. If not, no further impairment testing over the indefinite lived intangible assets is performed. The indefinite lived intangible assets were not impaired as a result of the annual test prepared by management for either period presented. As part of recent acquisitions, the Company acquired Indefinite lived in-process research and development ("IPR&D") intangible assets. These IPR&D assets are not amortized, but are tested for impairment annually, or more frequently when indicators of potential impairment exist, until the completion or abandonment of the associated research and development efforts. Upon completion of the projects, the assets will be amortized over the expected economic life of the asset, which will be determined on that date. Should the project be determined to be abandoned, and if the asset developed has no alternative use, the full value of the asset will be charged to expense. Refer to Note 10, "Goodwill and Intangible Assets" for information regarding the impairment testing performed in calendar year 2023. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers . Accordingly, revenue is recognized in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services when it transfers those goods or services to customers. Sales are shown net of returns, which have not historically been significant. The Company does not generate sales from arrangements with multiple deliverables. The Company generally receives purchase orders from customers on an annual basis in the ordinary course of business. Typically, such purchase orders provide the annual terms, including pricing, related to a particular vehicle model. Purchase orders generally do not specify quantities. The Company recognizes revenue based on the pricing terms included in such annual purchase orders. As part of certain agreements, entered into in the ordinary course of business, the Company is asked to provide customers with annual price reductions. Such amounts are subject to estimate and are accrued as a reduction of revenue as control of the products is transferred to the customer under standard commercial terms. For any shipments of product that may be subject to retroactive price adjustments that are then being negotiated, the Company records revenue based on the Company’s best estimate of the amount of consideration to which the entity will be entitled in exchange for transferring the promised goods to the customer. The Company's best estimate requires significant judgment based on historical results and expected outcomes of ongoing negotiations with customers. The Company's approach is to consider these adjustments to the contract price as variable consideration which is estimated based on the then most likely price amount. In addition, the Company has ongoing adjustments to pricing arrangements with customers based on the related content, the cost of Company products and other commercial factors. Such pricing accruals are adjusted as they are settled with customers. Refer to Note 11, "Revenue" , for further information. Advertising and Promotional Materials All advertising and promotional costs are expensed as incurred and amounted to approximately $3.4 million, $3.3 million and $1.8 million, in 2023, 2022 and 2021, respectively. Repairs and Maintenance Major renewals and improvements of property and equipment are capitalized, and repairs and maintenance are expensed as incurred. The Company incurred expenses relating to the repair and maintenance of plant and equipment of approximately $31.0 million, $27.9 million and $24.2 million, in 2023, 2022 and 2021, respectively. Self-Insurance The Company is self-insured for a portion of its risk on workers’ compensation and employee medical costs. The arrangements provide for stop loss insurance to manage the Company’s risk. Such costs are accrued based on known claims and an estimate of incurred, but not reported ("IBNR") claims. IBNR claims are estimated using historical lag information and other data provided by claims administrators. This estimation process is subjective, and to the extent that future results differ from original estimates, adjustments to recorded accruals may be necessary. Product Warranty The Company periodically incurs product warranty costs. Any liabilities associated with product warranty are estimated based on known facts and circumstances and are not significant at December 31, 2023, 2022 and 2021. The Company does not offer extended warranties on its products. Income Taxes The provision for income taxes is based on the earnings reported in the consolidated financial statements. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in deductible or taxable amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates. The Company applies the provisions of ASC 740, Income Taxes , as it relates to uncertainty in income taxes recognized in the Company’s consolidated financial statements. A threshold of more likely than not to be sustained upon examination is applied to uncertain tax positions. The Company deems the estimates related to this provision to be reasonable, however, no assurance can be given that the final outcome of these matters will not vary from what is reflected in the historical income tax provisions and accruals. Leases The Company has operating leases for corporate offices, warehouses, vehicles, and other equipment, which are included within " Patents and other assets Year ending December 31, 2024 $ 1,857,325 2025 1,091,917 2026 545,291 2027 242,712 Thereafter 3,846 Total future minimum lease payments $ 3,741,091 Less imputed interest (170,876) Total $ 3,570,215 Earnings Per Share The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends, which are considered participating securities under ASC 260, Earnings Per Share . The Company allocates earnings to participating securities and computes earnings per share using the two-class method. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common shares and participating securities based on their respective weighted average shares outstanding for the period. The following table sets forth the computation of basic and diluted net income per common share under the two-class method for each of the last three years: 2023 2022 2021 Basic Earnings Per Share Net Income $ 428,403,272 $ 318,757,352 $ 360,797,232 Less: Allocated to participating securities 6,352,424 4,875,057 5,591,992 Net Income available to common shareholders $ 422,050,848 $ 313,882,295 $ 355,205,240 Basic weighted average shares outstanding 229,405,479 230,825,293 235,526,911 Net Income per share - Basic $ 1.84 $ 1.36 $ 1.51 Diluted Earnings Per Share Allocation of Net Income used in basic computation $ 422,050,848 $ 313,882,295 $ 355,205,240 Reallocation of undistributed earnings 6,341 5,299 17,014 Net Income available to common shareholders — Diluted $ 422,057,189 $ 313,887,594 $ 355,222,254 Number of shares used in basic computation 229,405,479 230,825,293 235,526,911 Additional weighted average dilutive common stock equivalents 314,719 394,196 1,077,103 Diluted weighted average shares outstanding 229,720,198 231,219,489 236,604,014 Net income per share — Diluted $ 1.84 $ 1.36 $ 1.50 For the years ended December 31, 2023, 2022 and 2021, 1,441,812 shares, 1,842,602 shares, and 200,037 shares, respectively, related to stock option plans were not included in diluted average common shares outstanding because they were anti-dilutive. Comprehensive Income (Loss) Comprehensive income (loss) reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the Company, comprehensive income represents net income adjusted for unrealized gains and losses on available for sale investments and foreign currency translation adjustments that are further detailed in Note 9 , "Comprehensive Income", for more information. Foreign Currency Translation The financial position and results of operations of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at the exchange rate in effect at year-end. Income statement accounts are translated at the average rate of exchange in effect during the year. The resulting translation adjustment is recorded as a separate component of shareholders’ investment. Gains and losses arising from re-measuring foreign currency transactions into the appropriate currency are included in the determination of net income. Stock-Based Compensation Plans The Company accounts for stock-based compensation using the fair value recognition provisions of ASC 718, Compensation - Stock Compensation . As described more fully in Note 5, "Stock-Based Compensation Plans", the Company provides, or has provided, compensation benefits under an omnibus incentive plan, two other stock option plans, another restricted stock plan, and two employee stock purchase plans. The Company utilizes the Black-Scholes model to estimate the value of the stock options, which requires the input of assumptions. These assumptions include estimating (a) the length of time employees will retain their vested stock options before exercising them (“expected term”), (b) the volatility of the Company’s common stock price over the expected term, (c) the number of options that will ultimately not complete their vesting requirements (“forfeitures”) and (d) expected dividends. Changes in the assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amounts recognized on the consolidated statements of operations. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 differ from those estimates. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. Recent Accounting Standards In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Improvements to Reportable Segment Disclosures . This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retr |
