This management's discussion and analysis should be read in conjunction with the consolidated financial statements and notes included elsewhere in this report on Form 10-K. All amounts described in this section are in thousands, except percentages, periods of time, and share and per share data. This management's discussion and analysis, as well as other sections of this report on Form 10-K, may contain "forward-looking statements" that involve risks and uncertainties, including statements regarding our plans, future events, objectives, expectations, estimates, forecasts, assumptions or projections. Any statement that is not a statement of historical fact is a forward-looking statement, and in some cases, words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plan," "seek," and similar expressions identify forward-looking statements. These statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the anticipated outcomes or results, and undue reliance should not be placed on these statements. These risks and uncertainties include, but are not limited to, the matters discussed under the caption "Risk Factors" in Item 1A of this report and other risks and uncertainties discussed in filings made with theSecurities and Exchange Commission (including risks described in subsequent reports on Form 10-Q, Form 10-K, Form 8-K, and other filings).Liquidmetal Technologies, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. OVERVIEW We are a materials technology company that develops and commercializes products made from amorphous alloys. Our Liquidmetal® family of alloys consists of a variety of proprietary bulk alloys and composites that utilize the advantages offered by amorphous alloy technology. We design, develop, and sell custom products and parts from bulk amorphous alloys to customers in various industries. We also partner with third-party manufacturers and licensees to develop and commercializeLiquidmetal alloy products. Amorphous alloys are, in general, unique materials that are distinguished by their ability to retain a random atomic structure when they solidify, in contrast to the crystalline atomic structure that forms in other metals and alloys when they solidify.Liquidmetal alloys are proprietary amorphous alloys that possess a combination of performance, processing, and potential cost advantages that we believe will make them preferable to other materials in a variety of applications. The amorphous atomic structure of bulk alloys enables them to overcome certain performance limitations caused by inherent weaknesses in crystalline atomic structures, thus facilitating performance and processing characteristics superior in many ways to those of their crystalline counterparts. We believe the alloys and the molding technologies we employ can result in components for many applications that exhibit exceptional dimensional control and repeatability that rivals precision machining, excellent corrosion resistance, brilliant surface finish, high strength, high hardness, high elastic limit, alloys that are non-magnetic, and the ability to form complex shapes common to the injection molding of plastics. All of these characteristics are achievable from the molding process, so design engineers often do not have to select specific alloys to achieve one or more of the characteristics as is the case with crystalline materials. We believe these advantages could result inLiquidmetal alloys supplanting high-performance alloys, such as titanium and stainless steel, and other incumbent materials in a wide variety of applications. Moreover, we believe these advantages could enable the introduction of entirely new products and applications that are not possible or commercially viable with other materials. Our revenues are derived from i) selling our bulk amorphous alloy custom products and parts for applications which include, but are not limited to, non-consumer electronic devices, medical products, automotive components, and sports and leisure goods? ii) selling tooling and prototype parts such as demonstration parts and test samples for customers with products in development? and iii) product licensing and royalty revenue. Our cost of sales consists primarily of the costs of manufacturing, which include raw alloy and direct labor costs. Selling, general, and administrative expenses currently consist primarily of salaries and related benefits, travel, consulting and professional fees, depreciation and amortization, insurance, office and administrative expenses, and other expenses related to our operations. Research and development expenses represent salaries, related benefits expenses, consulting and contract services, expenses incurred for the design and testing of new processing methods, expenses for the development of sample and prototype products, and other expenses related to the research and development ofLiquidmetal bulk alloys. Costs associated with research and development activities are expensed as incurred. We plan to enhance our competitive position by improving our existing technologies and developing advances in amorphous alloy technologies. We believe that our research and development efforts will focus on the discovery of new alloy compositions, the development of improved processing technology, and the identification of new applications for our alloys. InJuly 2019 , the Company adopted the 2019 Restructuring Plan pursuant to which the Company elected to wind down its prior manufacturing operations at the Company'sLake Forest, CA facility and seek to outsource the manufacture of parts utilizing the Company's technology through domestic and international manufacturing partners. In connection with the 2019 Restructuring Plan, the Company reduced its management staff and shifted its business strategy from internal manufacture of parts and products for customers toward the use and reliance of outsourced manufacturers, including Yihao, aChina -based company that is an affiliate of our largest beneficial stockholder and Chairman,Professor Li . 22
--------------------------------------------------------------------------------
Table of Contents SIGNIFICANT TRANSACTIONS Yihao Manufacturing Agreement OnJanuary 12, 2022 ,Liquidmetal Technologies entered into a manufacturing agreement ("Manufacturing Agreement") withDongguan Yihao Metal Materials Technology Co. Ltd. ("Yihao") to become the primary outsourced manufacturer of the Company's products. Under the Manufacturing Agreement, which has a term of five years, Yihao has agreed to serve as a non-exclusive contract manufacturer for amorphous alloy parts offered and sold by the Company at prices determined on a "cost-plus" basis. Yihao is an affiliate of Dongguan Eontec Co. Ltd. and Professor Lugee Li, our Chairman and largest beneficial owner of the Company's capital stock. Liquidmetal Golf License OnJanuary 13, 2022 , our Liquidmetal Golf subsidiary entered into a sublicense agreement ("LMG Sublicense Agreement") withAmorphous Technologies Japan, Inc. ("ATJ"), a newly formed Japanese entity that was established byTwins Corporation , a sporting goods company operating inJapan . Under the agreement, LMG granted to ATJ a nonexclusive worldwide sublicense to the Company's amorphous alloy technology and related trademarks to manufacture and sell golf clubs and golf related products. The LMG Sublicense Agreement has a term of three years and provides for the payment of a running royalty to LMG of 3% of the net sales price of licensed products.
Manufacturing Facility Purchase and Lease
OnFebruary 16, 2017 , we purchased a 41,000 square foot manufacturing facility (the "Facility") located inLake Forest, CA , where operations commenced duringJuly 2017 . The purchase price for the Facility was$7,818 . As a result of the 2019 Restructuring Plan, we have discontinued manufacturing operations in the Facility. OnJanuary 23, 2020 , 20321Valencia, LLC , aDelaware limited liability company and our wholly owned subsidiary, entered into a lease agreement (the "Facility Lease") pursuant to which we leased toMatterHackers, Inc. , aDelaware corporation ("Tenant"), an approximately 32,534 square foot portion of the Facility. The lease term is for 5 years and 2 months and is scheduled to expire onApril 30, 2025 . The base rent payable under the Facility Lease is$32,534 per month initially and is subject to periodic increases up to a maximum of approximately$54,000 per month. Tenant will pay approximately 79% of common operating expresses. The Facility Lease has other customary provisions, including provisions relating to default and usage restrictions. The Facility Lease grants to Tenant a right to extend the lease for one additional 60-month period at market rental value. 2016 Purchase Agreement OnMarch 10, 2016 , we entered into a Securities Purchase Agreement (the "2016 Purchase Agreement") withLiquidmetal Technology Limited , aHong Kong company (the "Investor"), which is controlled by our Chairman, Professor Lugee Li ("Professor Li"). The 2016 Purchase Agreement provided for the purchase by the Investor of a total of 405,000,000 shares of our common stock for an aggregate purchase price of$63,400 . The transaction occurred in multiple closings, with the Investor having purchased 105,000,000 shares at a purchase price of$8,400 (or$0.08 per share) at the initial closing onMarch 10, 2016 , and the remaining 200,000,000 shares at$0.15 per share and 100,000,000 shares at$0.25 per share for an aggregate purchase price of$55,000 onOctober 26, 2016 . In addition to the shares issuable under the 2016 Purchase Agreement, we issued to the Investor a warrant to acquire 10,066,809 shares of common stock (of which the right to exercise 2,609,913 of the warrant shares vested onMarch 10, 2016 and the right to exercise the remaining 7,456,896 warrant shares vested onOctober 26, 2016 , all at an exercise price of$0.07 per share). The warrant will expire on the tenth anniversary of its issuance date. The 2016 Purchase Agreement also provided that, with certain limited exceptions, if we issue any shares of common stock at any time through the fifth anniversary of the 2016 Purchase Agreement, the Investor will have a preemptive right to subscribe for and to purchase at the same price per share (or at market price, in the case of issuance of shares pursuant to stock options) the number of shares necessary to maintain its ownership percentage of our issued shares of common stock. Eontec License Agreement OnMarch 10, 2016 , in connection with the 2016 Purchase Agreement, we entered into a Parallel License Agreement (the "License Agreement") with DongGuan Eontec Co., Ltd., aHong Kong corporation ("Eontec") pursuant to which we each entered into a cross-license of our respective technologies. Our Chairman,Professor Li , is also the Chairman of Eontec. 23
--------------------------------------------------------------------------------
Table of Contents
The License Agreement provides for the cross-license of certain patents, technical information, and trademarks between us and Eontec. In particular, we granted to Eontec a paid-up, royalty-free, perpetual license to our patents and related technical information to make, have made, use, offer to sell, sell, export, and import products in certain geographic areas outside ofNorth America andEurope . In turn, Eontec granted to us a paid-up, royalty-free, perpetual license to Eontec's patents and related technical information to make, have made, use, offer to sell, sell, export, and import products in certain geographic areas outside of specified countries inAsia . The license granted by us to Eontec is exclusive (including to the exclusion of us) in the countries ofBrunei ,Cambodia ,China (P.R.C and R.O.C.),East Timor ,Indonesia ,Japan ,Laos ,Malaysia ,Myanmar ,Philippines ,Singapore ,South Korea ,Thailand , andVietnam . The license granted by Eontec to us is exclusive (including to the exclusion of Eontec) inNorth America andEurope . The cross-licenses are non-exclusive in geographic areas outside of the foregoing exclusive territories.
Beyond the License Agreement, we collaborate with Eontec to accelerate the commercialization of amorphous alloy technology. This includes but is not limited to developing technologies to reduce the cost of amorphous alloys, working on die cast machine technology platforms to pursue broader markets, sharing knowledge to broaden our intellectual property portfolio, and utilizing Eontec's volume production capabilities as a third party contract manufacturer.
Eutectix Business Development Agreement
OnJanuary 31, 2020 , the Company entered into a Business Development Agreement (the "Agreement") withEutectix LLC , aDelaware limited liability company ("Eutectix"), which provides for collaboration, joint development efforts, and the manufacturing of products based on the Company's proprietary amorphous metal alloys. Under the Agreement, the Company has licensed to Eutectix specified equipment owned by the Company, including two injection molding machines, two diecasting machines, and other machines and equipment, all of which will be used to make product for Company customers and Eutectix customers. The licensed machines and equipment represent substantially all of the machinery and equipment then held by the Company. The Company has also licensed to Eutectix various patents and technical information related to the Company's proprietary technology. Under the Agreement, Eutectix will pay the Company a royalty of six percent (6%) of the net sales price of licensed products sold by Eutectix, and Eutectix will also manufacture for the Company product ordered by the Company. The Agreement has a term of five years, subject to renewal provisions and the ability of either party to terminate earlier upon specified circumstances. Apple License Transaction OnAugust 5, 2010 , we entered into a license transaction with Apple pursuant to which (i) we contributed substantially all of our intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary,Crucible Intellectual Property, LLC ("CIP"), (ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to us a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use. Under the agreements relating to the license transaction with Apple, we were obligated to contribute to CIP all intellectual property that we developed throughFebruary 2016 . We are also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction. Swatch Group License InMarch 2009 , we entered into a license agreement withSwatch Group, Ltd. ("Swatch") under which Swatch was granted a non-exclusive license to our technology to produce and market watches and certain other luxury products. InMarch 2011 , this license agreement was amended to grant Swatch exclusive rights as to watches, but non-exclusive as to Apple. We will receive royalty payments over the life of the contract on allLiquidmetal products produced and sold by Swatch. The license agreement with Swatch will expire on the expiration date of the last licensed patent. 24
--------------------------------------------------------------------------------
Table of Contents RESULTS OF OPERATIONS For the years ended December 31, 2021 2020 in 000's % of Revenue in 000's % of Revenue Revenue: Products$ 790 $ 925 $ (135 ) Licensing and royalties 21 64 (43 ) Total revenue 811 989 (178 ) Cost of sales 628 77 % 621 63 % 7 Gross profit 183 23 % 368 37 % (185 ) Selling, marketing, general and administrative 4,160 513 % 3,798 384 % 362 Research and development 84 10 % 110 11 % (26 ) Gain on disposal of long-lived assets - 0 % (35 ) -4 % 35 Total operating expense 4,244 3,873 371 Operating loss (4,061 ) (3,505 ) (556 ) Lease income 529 484 45 Interest and investment income 154 378 (224 ) Net loss$ (3,378 ) $ (2,643 ) $ (735 )
(a) Year Ended
Revenue and operating expenses
Revenue. Total revenue decreased by
Cost of sales. Cost of sales was$628 , or 77% of total revenue, for the year endedDecember 31, 2021 , an increase from$621 , or 63% of total revenue, for the year endedDecember 31, 2020 . The increase in our cost of sales was primarily driven by lower product revenues with lower gross profit percentages. Once we are able to sustain and increase shipments of routine, commercial products and parts through our contract manufacturers, we expect our cost of sales percentages to decrease, stabilize, and be more predictable. Gross profit. Our gross profit decreased by$185 from$368 as ofDecember 31, 2020 to$183 as ofDecember 31, 2021 . Our gross margin percentage decreased from 37% as ofDecember 31, 2020 to 23% as ofDecember 31, 2021 . Our gross profit percentages have fluctuated and may continue to fluctuate based on production volumes and quoted production prices per unit and may not be representative of our future business. If we are able to sustain and increase shipments of routine, commercial products and parts through future orders to third party contract manufacturers, we expect our gross profit percentages to stabilize, increase, and be more predictable. Selling, marketing, general, and administrative expenses. Selling, marketing, general, and administrative expenses increased by$362 to$4,160 , or 513% of revenue, for the year endedDecember 31, 2021 from$3,798 , or 384% of revenue, for the year endedDecember 31, 2020 . The increase in expenses was primarily attributable to stock base compensation and severance expense in connection with the separation agreements the Company entered into with our former COO and Vice President of Finance, Dr.Bruce Bromage and Mr.Bryce Van , respectively. Research and development expenses. Research and development expenses decreased by$26 to$84 , or 10% of revenue, for the year endedDecember 31, 2021 , from$110 , or 11% of revenue, for the year endedDecember 31, 2020 . The decrease in expense was mainly due to reductions in employee compensation, and associated development initiatives from headcount reductions associated with the 2019 Restructuring Plan. Going forward, we will continue to perform research and development of newLiquidmetal alloys and related processing capabilities, albeit on a reduced basis. 25
--------------------------------------------------------------------------------
Table of Contents
Gain on disposal of fixed assets. During the year endedDecember 31, 2020 , the Company recorded gains on the disposal of fixed assets of$35 . There were no disposals during the year endedDecember 31, 2021 . Operating loss. Operating loss increased by$556 from$3,505 for the year endedDecember 31, 2020 to$4,061 for the year endedDecember 31, 2021 . Fluctuations in our operating loss are primarily attributable to variations in operating expenses, as discussed above. We continue to invest in our technology infrastructure to expedite the adoption of our technology, but we have experienced long sales lead times for customer adoption of our technology. Until that time when we can either (i) increase our revenues with shipments of routine, commercial products and parts through third party contract manufacturers or (ii) obtain significant licensing revenues, we expect to continue to have operating losses for the foreseeable future.
Non-operational income and expenses
Interest and investment income. Interest and investment income relates to interest earned from our cash deposits and investments in debt securities for the respective periods. Interest and investment income was$154 and$378 for the years endedDecember 31, 2021 and 2020, respectively. The decrease during 2021 is due to higher overall yields on debt securities as a result of the global economic recovery from the COVID-19 pandemic during 2021. Lease income. Lease income relates to straight-line rental income received under the Facility Lease. Such amounts were$529 and$484 for the years endedDecember 31, 2021 and 2020, respectively. Net loss. Our annual net losses of$3,378 as ofDecember 31, 2021 and$2,643 as ofDecember 31, 2020 are primarily reflective of operating expenses associated with our on-going business as well as non-operational income, discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities
Cash used in operating activities totaled$2,730 for the year endedDecember 31, 2021 and$2,330 for the year endedDecember 31, 2020 . The cash was primarily used to fund operating expenses related to our business and product development efforts.
Cash provided by (used in) investing activities
Cash provided by investing activities totaled$5,307 for the year endedDecember 31, 2021 and cash used in investing activities totaled$15,799 for the year endedDecember 31, 2020 . Cash used in investing activities primarily consist of purchases of debt securities in line with our investment strategy.
Cash provided by financing activities
Cash provided by financing activities totaled
Financing arrangements and outlook
The Company has a relatively limited history of selling bulk amorphous alloy products and components on a mass-production scale. Furthermore, the ability of contract manufacturers to produce the Company's products in desired quantities and at commercially reasonable prices is uncertain and is dependent on a variety of factors that are outside of the Company's control, including the nature and design of the component, the customer's specifications, and required delivery timelines. These factors have previously required that the Company engage in equity sales under various stock purchase agreements to support its operations and strategic initiatives. However, as ofDecember 31, 2021 , the Company had$4,091 in cash and restricted cash, as well as$22,119 in investments in debt securities. The Company views this total of$26,210 as readily available sources of liquidity in the event needed to advance the Company's existing strategy, and/or pursue an alternative strategy. As such, the Company anticipates that its current capital resources, when considering expected losses from operations, will be sufficient to fund the Company's operations for the foreseeable future. 26
--------------------------------------------------------------------------------
Table of Contents
OFF-BALANCE SHEET ARRANGEMENTS
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity, or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to our Company, or that engages in leasing, hedging, or research and development arrangements with our Company. As ofDecember 31, 2021 , the Company did not have any off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of consolidated financial statements in conformity with accounting principles generally accepted inthe United States requires us to make estimates and assumptions that affect 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. These estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We believe that the following accounting policies are the most critical to our consolidated financial statements since these policies require significant judgment or involve complex estimates that are important to the portrayal of our financial condition and operating results:
• We recognize revenue pursuant to applicable accounting standards including
FASB ASC Topic 606 ("ASC 606"), Revenue from Contracts with Customers. ASC
606 summarizes certain points in applying generally accepted accounting
principles to revenue recognition in financial statements and provides
guidance on revenue recognition issues in the absence of authoritative
literature addressing a specific arrangement or a specific industry.
Our revenue recognition policy complies with the requirements of ASC 606. As
a majority of our sales revenue continues to be recognized when products are
shipped, and there was no change in the recognition model historically
applied to active license and royalty contracts under the new revenue standard, there was no adjustment to the opening balance of retained earnings. The impact to our results of operations is not material, on an
on-going basis, because the analysis of our contracts under the new revenue
standard supports a recognition model consistent with our previous revenue
recognition model. Revenue on the majority of our contracts will continue to
be recognized over time because of the continuous transfer of control to the
customer.
Products: Product revenues are primarily generated from the sale and
prototyping of molds and bulk alloy products. Revenue is recognized when i)
persuasive evidence of an arrangement exists, ii) delivery has occurred,
iii) the sales price is fixed or determinable, iv) collection is probable
and v) all obligations have been substantially performed pursuant to the
terms of the arrangement. When we receive consideration, or such
consideration is unconditionally due, from a customer prior to transferring
goods or services to the customer under the terms of a sales contract, we
record deferred revenue, which represents a contract liability. We will
recognize deferred revenue as products revenue after it has transferred
control of the goods or services to the customer and all revenue recognition
criteria are met. Such amounts are not expected to be material on an ongoing
basis.
Licensing and royalties: License revenue arrangements in general provide for
the grant of an exclusive or non-exclusive right to manufacture and/or sell
products covered by patented technologies owned or controlled by us. The
intellectual property rights granted may be perpetual in nature, extending
until the expiration of the related patents, or can be granted for a defined
period of time. Licensing revenues that are one-time fees upon the granting
of the license are recognized when i) the license term begins in a manner
consistent with the nature of the transaction and the earnings process is
complete, ii) when collectability is reasonably assured or upon receipt of
an upfront fee, and iii) when all other revenue recognition criteria have
been met. Pursuant to the terms of these agreements, we have no further
obligation with respect to the grant of the license. Licensing revenues that
are related to royalties are recognized as the royalties are earned over the
related period.
Practical Expedients and Exemptions: We generally expense sales commissions
when incurred because the amortization period would have been one year or
less. These costs are recorded within selling, marketing, general and
administrative expenses. We do not disclose the value of unsatisfied
performance obligations for (i) contracts with an original expected length
of one year or less and (ii) contracts for which we recognize revenue at the
amount for which it has the right to invoice for services performed. 27
--------------------------------------------------------------------------------
Table of Contents
• We value our long-lived assets at the lower of cost or fair market value. We
review long-lived assets to be held and used in operations for impairment
whenever events or changes in circumstances indicate that the carrying value
of an asset may be impaired. These evaluations may result from significant
decreases in the overall market outlook for our technology or the market
price of an asset, a significant adverse change in the extent or manner in
which an asset is being used in its physical condition, a significant
adverse change in legal factors or in the business climate that could affect
the value of an asset, as well as economic or operational analyses. If we
concludes that the carrying value of certain assets will not be recovered
based on expected undiscounted future cash flows, an impairment write-down
is recorded to reduce the assets to their estimated fair value. Fair value
is determined via market, cost and income based valuation techniques, as appropriate. The fair value is measured on a nonrecurring basis using a
combination of quoted prices for similar assets in active markets and other
unobservable adjustments to historical cost (Level 3) inputs. No cash
impairment charges were recorded for the years ended
• We record valuation allowances to reduce our deferred tax assets to the
amounts deemed more likely than not of being realized. While we consider
taxable income in assessing the need for a valuation allowance, in the event
we determine we would be able to realize our deferred tax assets in the
future in excess of the net recorded amount, an adjustment would be made and
income increased in the period of such determination. Likewise, in the event
we determine we would not be able to realize all or part of our deferred tax
assets in the future, an adjustment would be made and charged to income in
the period of such determination.
• We account for share-based compensation in accordance with the fair value
recognition provisions of FASB ASC Topic 718, Share-based Payment, which
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the consolidated financial statements
based on their fair values. The fair value of stock options is calculated by
using the Black-Scholes option pricing formula that requires estimates for
expected volatility, expected dividends, the risk-free interest rate and the
term of the option. If any of the assumptions used in the Black-Scholes
model change significantly, share-based compensation expense may differ
materially in the future from that recorded in the current period.
• Our inventory is stated at the lower of cost or estimated net realizable
value. The cost of inventories is determined on the basis of
weighted-average cost. We perform an analysis of our inventory balances at
least quarterly to determine if the carrying amount of inventories exceeds
their net realizable value. The analysis of estimated net realizable value
is based on customer orders, market trends and historical pricing. If the
carrying amount exceeds the estimated net realizable value, the carrying
amount is reduced to the estimated net realizable value.
• We invest excess funds in debt securities to maximize investment yield,
while maintaining liquidity and minimizing credit risk. Debt securities are
carried at fair value and consist primarily of investments in obligations of
the United States Treasury, various
certificates of deposits. We classify our investments in debt securities as
available-for-sale with all unrealized gains or losses included as part of
other comprehensive income. We evaluate our debt securities with unrealized
losses on a quarterly basis for potential other-than-temporary impairments
in value. As a result of these assessments, we did not recognize any
other-than-temporary impairment losses considered to be credit related for
the years endedDecember 31, 2021 and 2020.
RECENT ACCOUNTING PRONOUNCEMENTS
Financial Instruments- Credit Losses
InJune 2016 , the FASB issued an accounting standards update which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This update replaces the existing incurred loss impairment model with an expected loss model (referred to as the Current Expected Credit Loss model, or "CECL"). The standard update, and its related amendments, will become effective for the fiscal year beginning onJanuary 1, 2023 . The Company is in the process of assessing the impact of this standard update, and its related amendments, on its consolidated financial statements, but is not expecting it will have a material impact on the Company's consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its
28
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source