The information set forth in this Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in our revenue and profitability, (ii)
prospective business opportunities and (iii) our strategy for financing our
business. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes", "anticipates", "intends"
or "expects". These forward-looking statements relate to our plans, liquidity,
ability to complete financing and purchase capital expenditures, growth of our
business including entering into future agreements with companies, and plans to
successfully develop and obtain approval to market our product. We have based
these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial
needs.
Although we believe that our expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of our
knowledge of our business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this Quarterly Report should not be regarded as a
representation by us or any other person that our objectives or plans will be
achieved.
We assume no obligation to update these forward-looking statements to reflect
actual results or changes in factors or assumptions affecting forward-looking
statements.
Our revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: the risk of significant natural
disaster, the inability of our company to insure against certain risks,
inflationary and deflationary conditions and cycles, currency exchange rates,
and changing government regulations domestically and internationally affecting
our products and businesses.
You should read the following discussion and analysis in conjunction with the
Financial Statements and Notes attached hereto, and the other financial data
appearing elsewhere in this Quarterly Report.
US Dollars are denoted herein by "USD", "$" and "dollars".
As used in this Quarterly Report, "we," "our," "us" and the "Company" refer to
EZRaider Co., a Florida corporation, and its subsidiaries, unless the context
requires otherwise.
Impact of COVID-19 Outbreak
The ongoing COVID-19 global and national health emergency has caused significant
disruption in the international and United States economies and financial
markets. In March 2020, the World Health Organization declared the COVID-19
outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines,
cancellation of events and travel, business and school shutdowns, reduction in
business activity and financial transactions, labor shortages, supply chain
interruptions and overall economic and financial market instability. The
COVID-19 pandemic has the potential to significantly impact the Company's supply
chain and other service providers.
In addition, a severe prolonged economic downturn could result in a variety of
risks to the business, including weakened demand for products and services and a
decreased ability to raise additional capital when needed on acceptable terms,
if at all. As the situation continues to evolve, the Company will continue to
closely monitor market conditions and respond accordingly.
Overview and Recent Developments
The Company was incorporated in the State of Florida on January 26, 2012, to
develop an e-waste recycling business. The Company was not successful in its
efforts and ceased those operations.
Effective as of September 3, 2021, we changed our name from E-Waste Corp. to
EZRaider Co. On September 14, 2021, the Company entered into an Agreement and
Plan of Merger with EZRaider Global, Inc., a Nevada corporation ("EZ Global"),
and our wholly-owned subsidiary, E-Waste Acquisition Corp., a Delaware
corporation, pursuant to which E-Waste Acquisition Corp. merged with and into EZ
Global, and EZ Global became a wholly-owned subsidiary of the Company (the
"Merger"). At the effective time of the Merger, all of the outstanding shares of
capital stock of EZ Global were exchanged for 28,550,000 shares of our common
stock. Following the Merger, we discontinued our prior activities and continued
the existing business operations of EZ Global, and its wholly-owned subsidiary,
EZ Raider, LLC, a Washington limited liability company ("EZ LLC"), as our main
business focus.
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EZ Global is the exclusive distributor in the United States of electric-powered,
tactical manned vehicles, known as "EZRaider Vehicles," that are manufactured
and designed by D.S Raider Ltd., a company incorporated under the laws of Israel
("D.S Raider"). EZ Global obtained these exclusive rights to import, sell and
distribute EZRaider Vehicles in the United States for all recreational and
military (non-federal) markets from D.S Raider pursuant to an Authorized
Exclusive Distribution Agreement, dated September 12, 2019, by and among D.S
Raider, EZ LLC and EZRaider Global (the "Distribution Agreement"), which was
renewed by a Renewal of Exclusive Distribution Agreement, dated September 2,
2021.
Effective as of September 14, 2021, the exercise prices of warrants to purchase
1,100,000 shares of the Company's common stock held by Star V Partners LLC,
warrants to purchase 1,050,000 shares of the Company's common stock held by Maso
Capital Investments Limited, and warrants to purchase 2,850,000 shares of the
Company's common stock held by Blackwell Partners LLC - Series A, were reduced
from $4.50 per share to $1.00 per share due to the triggering of anti-dilution
rights in these warrants.
On December 30, 2021, EZ Global and D.S Raider entered into a memorandum of
understanding (the "Memorandum") which, among other things, amended certain
terms of the Share Purchase Agreement dated February 21, 2021, by and among EZ
Global, D.S Raider, and the shareholders of D.S Raider (as previously amended on
March 30, 2021 and August 31, 2021) (the "Share Purchase Agreement").
Specifically, under the Memorandum, the exclusive right of EZ Global to acquire
100% of the capital stock of D.S Raider was extended until March 15, 2022 (which
date was later further extended until March 31, 2022) (the "Exclusivity Date").
Following the expiration of the Exclusivity Date, the Company has been
evaluating its options with respect to the acquisition of D.S Raider.
In addition, pursuant to the Memorandum, D.S Raider also extended the exclusive
rights granted to EZ Global under the Distribution Agreement through January 31,
2023, subject to EZ Raider (i) securing $1,600,000 of purchase orders for
EZRaider Vehicles for the 2022 year (the "Purchase Orders") by December 31,
2021; (ii) making the required payment of $800,000, representing 50% of the
purchase price for the Purchase Orders (the "Down Payment") by January 17, 2022;
and (iii) placing the Purchase Orders. The Memorandum also granted D.S Raider
the right, at its sole discretion, to terminate the Distribution Agreement and
keep the balance of the Down Payment, if EZ Global failed to secure the Purchase
Orders, pay for the secured Purchase Order within 7 days from receipt of notice
of readiness for shipping of such Purchase Orders, or consummate an already
placed Purchase Order. EZ Global paid the required $800,000 Down Payment on
January 13, 2022, placed the Purchase Orders in accordance with the terms of the
Memorandum, and paid the balance for the Purchase Orders on June 10th, 2022 (as
further discussed below).
On February 14, 2022, the Company changed its fiscal year from February 28/29 to
December 31.
On March 15, 2022, the Company entered into amendments to certain unsecured 6%
promissory notes (the "Note Amendments") with three investors that had purchased
these notes from the Company on December 31, 2021. Pursuant to the Note
Amendments, the Company issued 12,500 shares of common stock to these investors
in consideration for the extension of the maturity dates of the promissory notes
until July 8, 2022.
On March 15, 2022, EZ Global and Konrad Koss entered into Amendment No. 2 to the
6% unsecured promissory note in the principal amount of $200,000 (the "Second
Amendment") originally issued to Mr. Koss on March 12, 2020, as previously
amended on July 11, 2021. Pursuant to the Second Amendment, the interest rate on
the principal amount of the note was increased from 6% to 7.5% per annum, and
the maturity date was extended until September 16, 2022.
On March 15, 2022, EZ Global and Konrad Koss entered into Amendment No. 1 to the
6% unsecured promissory note in the principal amount of $50,000 (the "First
Amendment") originally issued to Mr. Koss on September 22, 202021. Pursuant to
the First Amendment, the interest rate on the principal amount of the note was
increased from 6% to 7.5%, and the maturity date was extended until September
16, 2022.
On May 22, 2022, EZ Global and D.S Raider entered into a Distribution Letter
Agreement (the "May 2022 Distribution Letter"), which amended certain terms set
forth in the Distribution Agreement and the Memorandum, as follows: (i) subject
to EZ Global's full and complete satisfaction of the terms and conditions in the
May 2022 Distribution Letter, D.S Raider agreed to waive its right to terminate
the Distribution Agreement for nonpayment of amounts due under the terms of the
Memorandum, and agreed that the terms of the Distribution Agreement will prevail
and replace EZ Global's rights as set forth in the Memorandum; (ii) the
Distribution Agreement will continue to be in full force and effect throughout
through January 31, 2023; (iii) EZ Global is required to satisfy all of its
obligations under the Distribution Agreement and, in addition, to pay the
outstanding balance due for prior orders in the amount of $103,625.50 (the
"Balance Payment"). The parties also waived and relinquished all claims related
to the distribution rights set forth in the Memorandum. On June 10th, 2022, EZ
Global paid the Balance Payment pursuant to the May 2022 Distribution Letter.
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On May 27, 2022, the Company issued a secured convertible promissory note (the
"Crone Note") to the Crone Law Group, P.C., the Company's legal counsel (the
"Crone"), in the principal amount of $220,253.50 (the "Principal Amount"). The
Crone Note was issued to Crone to secure repayment of unpaid legal fees owed to
Crone by the Company as of April 30, 2022. The Crone Note bears interest at a
rate of 10% per annum, which will increase to 15% upon the occurrence of an
event of default, and has a maturity date of April 30, 2023(the "Maturity
Date"). The terms of the Crone Note provide that the Principal Amount shall be
adjusted on an ongoing basis to reflect any additional accrued and unpaid legal
fees incurred by the Company and/or any payments made by the Company to Crone.
The Crone Note may be prepaid in whole or in part without premium or penalty.
Crone may convert any amounts due under the Crone Note, at any time following
the date of the issuance, into shares of the Company's common stock at the
conversion price of $1.00 per share, subject to a 4.99% beneficial ownership
limitation. In addition, on June 22, 2022, the Company issued Crone 100,000
shares of common stock in consideration for accepting the Crone Note and waiving
interest on accrued and unpaid legal fees through April 30, 2022.
On June 7, 2022, EZ LLC and Cooper Dubois (the "Lender") entered into amendment
No. 1 (the "Dubois Amendment") to the convertible promissory note originally
issued by the Company to the Lender on January 8, 2021, in the original
principal amount of $500,000.00, with the interest rate of 8% per annum (the
"Dubois Note"). Pursuant to the Dubois Amendment (i) the maturity date of the
Dubois Note was extended from January 7, 2022 to January 7, 2023 (the "Maturity
Date"); (ii) Lender has the right to convert all or a portion of the principal
and interest due under the Dubois Note into shares of common stock of the
Company; (iii) the conversion price will be the lesser of a 35% discount to the
pricing of financial raise completed to close the proposed acquisition of D.S.
Raider, or $1.00 per share; (iv) the Company agreed to guarantee the re-payment
of the Dubois Note; (v) Borrower may prepay the Dubois Note in whole or in part
upon 15 days prior written notice.
Also, on June 7, 2022, the Lender assigned all his rights under the Dubois Note,
as amended by the Dubois Amendment, to CD EZR Holdings, LLC (the "Assignee")
pursuant to an Assignment of the Convertible Promissory Note (the "Assignment").
In connection with the Dubois Amendment and the Assignment, on June 7, 2022, the
Company issued a warrant to Assignee to purchase 810,384 shares of the Company's
common stock at the exercise price of $2.50 per share, exercisable until January
8, 2026 (the "Dubois Warrant"). The Dubois Warrant is exercisable for cash, or
on a cashless basis, has piggyback registration rights, and provides for the
acceleration exercise rights to the Company, subject to conditions that the
Company closes its acquisition of D.S Raider and maintains during the time
period stated in the Warrant the closing price in excess of $6.00 per share. The
number of shares to be received upon exercise of the Dubois Warrant and the
exercise price are subject to adjustment in the event of a distribution of
assets, subdivision of combination of common stock, consummation of a merger or
other fundamental transaction, or other dilutive issuance.
On June 10, 2022, the Company entered into a Securities Purchase Agreement (the
"Purchase Agreement") with AJB Capital Investments, LLC, a Delaware limited
liability company (the "Investor"), pursuant to which, on that date (the
"Closing Date"), the Company sold and issued to the Investor a 12% secured
promissory note (the "AJB Note") in the principal amount of $880,000 (the "AJB
Financing"). Pursuant to the Purchase Agreement, the Company agreed that, until
the sooner of the 12-month anniversary of the Closing Date, or all amounts due
under the AJB Note have been fully paid or converted, it will not, without
Investor's written consent, change the nature of its business, sell or acquire
any material assets, or enter into any variable rate debt transaction. In
addition, the Company agreed that, for as long as the AJB Note is outstanding,
(a) the Investor will have the right of first refusal to participate in up to
100% of any subsequent offering of the Company's securities, and (b) if the
Company issues any securities upon terms more favorable than those provided to
the Investor, the terms of the securities issued to the Investor will be
adjusted accordingly.
The AJB Note bears interest at a rate of 12% per annum and has a stated maturity
date of December 10, 2022 (the "AJB Maturity Date"). Interest accrues monthly
and is payable on the first date of each month, with the final payment due on
the AJB Maturity Date. The AJB Maturity Date may be extended by the Company for
up to an additional 6 months, in which case the interest will be increased to
15% per annum. Any amount of principal or interest not paid when due will bear
interest at the lesser of 18% per annum, or the maximum rate permitted by law.
The AJB Note may be prepaid in whole or in part by the Company without penalty.
Commencing 180 days after the Closing Date, at any time following an Event of
Default (as defined in the AJB Note), amounts due under the AJB Note will be
convertible into shares of the Company's common stock (the "Conversion Shares")
at a conversion price (the "Conversion Price") equal the lowest trading price of
the Company's common stock during the 20 days prior to either (a) the date of
issuance of the Note, or (b) the date of conversion of the AJB Note, subject to
a 4.99% conversion limitation. The Conversion Price is subject to adjustment
upon the occurrence of any merger, consolidation, distribution, or other
dilutive issuance by the Company.
As an additional incentive for the Investor to purchase the AJB Note, on the
Closing Date, the Company issued the Investor an incentive fee of 302,500 shares
of the Company's common stock (the "Commitment Shares"), valued at $2.00 per
share. The Company may redeem up to 165,000 of the Commitment Shares, for an
aggregate price of $1.00 in total, if the total outstanding amount due under the
AJB Note is fully repaid within 6 months from the Closing Date. At the
Investor's request, the Company will issue additional shares to the Investor
following the 6-month anniversary of the Closing Date in order to maintain the
agreed-upon aggregate value for the incentive fee of $605,000.
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On the Closing Date, the Company also issued the Investor a 5-year warrant (the
"AJB Warrant") to purchase up to 800,000 shares of the Company's common stock
(the "Warrant Shares"), at an exercise price of $3.00 per share (the "Exercise
Price"). The AJB Warrant is exercisable for cash, or on a cashless basis,
subject to a 4.99% beneficial ownership limitation. The number of Warrant Shares
and Exercise Price are subject to adjustment in the event of a distribution of
assets, subdivision of combination of common stock, the consummation of a merger
or other fundamental transaction, or other dilutive issuance.
In connection with the issuance of the AJB Note, on June 10, 2022, the Company
and Investor entered into a Security Agreement (the "Security Agreement"),
pursuant to which, as further inducement for the Investor to purchase the AJB
Note, the Company granted the Investor a security interest in all of the
Company's assets to secure the prompt payment and performance in full of all of
Company's obligations under the AJB Note. The security interest will be
discharged upon full repayment or conversion of all amounts due under the AJB
Note. The Company and Investor also entered into Registration Rights Agreement,
pursuant to which the Company agreed to (a) file a registration statement on
Form S-1 (the "Registration Statement") to register for resale the Commitment
Shares, the Conversion Shares, and the Warrant Shares (the "Registrable
Securities") within 90 days of the Closing Date, (b) have the Registration
Statement declared effective by the SEC within 180 days of the Closing Date, and
(c) keep such Registration Statement effective until the Investor has sold all
the Registrable Securities.
On July 11, 2022, the Company repaid $25,687.50, representing the outstanding
principal amount and the accrued interest due under the 6% unsecured promissory
note, originally issued on December 2, 2021, as amended on March 15, 2022, to
Lynda N. Simmons Trust dated 2/9/2011 Peter A. Reichard, TTEE. Also on July 11,
2022, the Company paid $3,516, the total amount of interest accrued on the
outstanding principal amount of the two 6% unsecured promissory notes,
originally issued on December 8, 2021, as amended on March 15, 2022, to each of
(i) Martin Fox and (ii) Initio, Inc. On July 8, 2022, the Company entered into
Amendment No. 2 to these promissory notes with each of Martin Fox and Initio,
Inc. pursuant to which, the maturity date of each note was extended to September
8, 2022.
Results of Operations
Three-Month Period Ended June 30, 2022 Compared to Three-Month Period Ended June
30, 2021
Revenues
Revenues from operations were $215,328 for the three months ended June 30, 2022,
as compared to $389,631 for the three months ended June 30, 2021. This increase
was primarily due to sale of product.
Cost of Revenue
Cost of revenues was $53,082 for the three months ended June 30, 2022, as
compared to $167,542 for the three months ended June 30, 2021. This decrease was
primarily due to lower costs associated with products sold due to lower shipping
costs to import during the global supply chain squeeze. Gross profits were
$162,246 and $222,089 for the three months ended June 30, 2022 and 2021,
respectively. Gross profit margin increased to 75% from 57% for the three months
ended June 30, 2022 and 2021, respectively. The increase was primarily due to
higher margins associated with the mix of products sold, namely higher margin
accessories and machines.
Operating Expenses
Operating expenses increased 78% to $433,491 for the three months ended June 30,
2022, as compared to $243,137 for the three months ended June 30, 2021. This
increase was primarily due to an increase in professional fees, salary expense,
and general administrative expenses attributable to general business operations.
Other Expenses
The Company's other expenses increased to $5,417,001 for the three months ended
June 30, 2022, as compared to other expenses of $23,296 during the three months
ended June 30, 2021. The primary reason for this increase was due to warrants
issued to debt holders for interest expense on the outstanding debt and slightly
offset by gain on forgiveness on PPP loan.
Due to the described factors above, we had a net loss of $5,688,246 and $44,344
for the three months ended June 30, 2022 and 2021, respectively.
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Six-Month Period Ended June 30, 2022 Compared to Six-Month Period Ended June 30,
2021
Revenues
Revenues from operations were $631,567 for the six months ended June 30, 2022,
as compared to $560,379 for the six months ended June 30, 2021. This increase
was primarily due to sale of product.
Cost of Revenue
Cost of revenues was $355,522 for the six months ended June 30, 2022, as
compared to $284,627 for the six months ended June 30, 2021. This increase was
primarily due to higher costs associated with products sold due to higher
shipping costs to import during the global supply chain squeeze. Gross profits
were $276,045 and $275,752for the six months ended June 30, 2022 and 2021,
respectively. Gross profit margin decreased to 44% from 49% for the six months
ended June 30, 2022 and 2021, respectively. The decrease was primarily due to
lower margins associated with the mix of products sold, namely higher margin
accessories and machines.
Operating Expenses
Operating expenses increased 113% to $832,904 for the six months ended June 30,
2022, as compared to $390,286 for the six months ended June 30, 2021. This
increase was primarily due to an increase in professional fees, salary expense,
and general administrative expenses attributable to general business operations.
Other Expenses
The Company's other expenses increased to $5,436,092 for the six months ended
June 30, 2022, as compared to other expenses of $36,386 during the six months
ended June 30, 2021. The primary reason for this increase was due to warrants
issued to debt holders for interest expense on the outstanding debt and slightly
offset by gain on forgiveness on PPP loan.
Due to the described factors above, we had a net loss of $5,992,951 and $150,920
for the six months ended June 30, 2022 and 2021, respectively.
Liquidity and Capital Resources
For the six months ended June 30, 2022, net cash used in operations of
$1,073,118 was the result of a net loss of $5,992,951, depreciation expense of
$19,712, warrants issued for interest expense of $4,829,289, amortization of
debt discount of $96,175 stock issued for services of $41,000, stock issued as
debt issuance cost of $472,501, gain on forgiveness of PPP loan of $13,215, bad
debt recovery of $43,069, a decrease in accounts receivable of $42,760, increase
in prepaid expense of $1,122,703, and a decrease in inventory of $255,508. These
were offset by an increase of accounts payable of $211,297 and a decrease in
accounts payable - related party of $11,000, an increase in accrued interest
payable of $46,521, and an increase in deferred revenue of $95,058.
For the six months ended June 30, 2021, net cash used in operations of $285,242
was the result of a net loss of $150,920, depreciation expense of $41,476, an
increase in accounts receivable of $57,399, and a decrease in inventory of
$309,641. These were offset by a increase of accounts payable of $155,270 and
increase in deferred revenue of $35,972.
Net cash used in investing activities was $500,000 for the six months ended June
30, 2021, which was attributable to $500,000 investment in D.S. Raider.
Net cash provided by financing activities was $880,360 for the six months ended
June 30, 2022, which was attributable to advances from related party of $423,
repayment of note payable of $29,565, partially offset by common stock issued
for cash and collection of subscription receivable of $200,002.
Net cash provided by financing activities was $2,968,637 for the six months
ended June 30, 2021, reflecting repayment of advances to related party of
$150,530, repayment of note payable of $8,211, and proceeds from note payable of
$3,110,956.
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Liquidity, Going Concern and Management's Plans
These condensed consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
These consolidated financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the six
months ended June 30, 2022 the Company had:
? Net loss of $5,992,951; and
? Net cash used in operations was $1,073,118.
Additionally, at June 30, 2022, the Company had:
? Accumulated deficit of $8,787,743
? Stockholders' equity of $2,324,065; and
? Working capital deficit of $1,587,642.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of
liquidity and capital requirements. The Company has cash on hand of $173,043 on
June 30, 2022.
The Company expects business operations to generate sufficient revenues and
positive cash flows from operations to meet its current obligations. However,
the Company may seek to raise debt or equity-based capital at favorable terms,
though such terms are not certain. Currently, the Company expects to incur
losses from operations and have negative cash flows from operating activities
for the near-term.
If the Company does not obtain additional capital, the Company will be required
to reduce the scope of its business development activities or cease operations.
The Company continues to explore obtaining additional capital financing and the
Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company's ability to continue
as a going concern within the twelve-month period subsequent to the date that
these consolidated financial statements are issued. The consolidated financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. Accordingly, the consolidated
financial statements have been prepared on a basis that assumes the Company will
continue as a going concern and which contemplates the realization of assets and
satisfaction of liabilities and commitments in the ordinary course of business.
Management's strategic plans include the following:
? Pursuing additional capital raising opportunities;
? Investing in the development and growth of EZ Global's electric vehicles
business;
? Identifying and pursuing additional acquisitions, including the acquisition of
D.S Raider; and
? Identifying unique market opportunities that represent potential positive
short-term cash flow.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America, and
make estimates and assumptions that affect our reported amounts of assets,
liabilities, revenue and expenses, and the related disclosures of contingent
liabilities. We base our estimates on historical experience and other
assumptions that we believe are reasonable in the circumstances. Actual results
may differ from these estimates.
The following critical accounting policies affect our more significant estimates
and assumptions used in preparing our consolidated financial statements.
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Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from
outstanding customer balances. Credit is extended to customers based on an
evaluation of their financial condition and other factors. Interest is not
accrued on overdue accounts receivable. The Company does not require collateral.
Management periodically assesses the Company's accounts receivable and, if
necessary, establishes an allowance for estimated uncollectible amounts. The
Company provides an allowance for doubtful accounts based upon a review of the
outstanding accounts receivable, historical collection information and existing
economic conditions. Accounts determined to be uncollectible are charged to
operations when that determination is made.
When a client is invoiced, the amount is recorded as an asset in Accounts
Receivable and as Deferred Revenue in Current Liabilities. When payment is
received the amount is moved to Cash on the balance sheet.
Inventory
Inventory consists of components held for assembly and finished goods held for
resale. Inventory is valued at lower of cost or net realizable value on a
first-in, first-out basis. The Company's policy is to record a reserve for
technological obsolescence or slow-moving inventory items. The Company only
carries finished goods to be shipped to customers. All existing inventory is
considered current and usable.
The Company recorded no reserve for slow-moving or obsolete inventory for the
three months ended as of June 30, 2022.
Equity securities without a readily determinable fair value
Certain equity securities are carried at cost as these securities did not have a
readily determinable fair value. There were no observable price changes in
orderly transactions for the identical or a similar investment of the same
issuer as of June 30, 2022.
Recent Accounting Pronouncements
The recent accounting standards that have been issued or proposed by Financial
Accounting Standard Board (FASB) or other standard setting bodies that do not
require adoption until a future date are not expected to have a material impact
on the financial statement upon adoption.
The recent accounting pronouncements are described in Note 2 to the condensed
consolidated financial statement appearing elsewhere in this report.
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