What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-08-10 · 164 added, 177 removed, 316 unchanged (52% of the section changed)

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statements based on assumptions about our future business.

the second quarter of 2020, the Company fully utilized their expanded network of co-packers and implemented an upgraded set of

the third quarter of 2020, the Company fully utilized their expanded network of co-packers and implemented an upgraded set of

quality protocols.

We also launched our Reed’s Really Real Ginger Ale and Reed’s Wellness Shots.

In addition to our

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public equity offering, which closed on April 20, 2020, provided the Company with funds for working capital and general corporate

These funds will provide the support necessary to execute our 2020 strategy that includes driving growth while strategically

reducing operating costs.

These funds enabled us to initiate the implementation of our 2020 strategy that included driving growth while

strategically reducing operating costs.

Company remains focused on driving sales growth and improving margin.

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Considerations

the quarter ended June 30, 2020, the COVID-19 pandemic did not have a material net impact on our operating results.

In the future,

the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment

which negatively effects the consumers who purchase our products.

Based on the recent increase in demand for our products, we

believe that over the long term, there will continue to be strong demand for our products.

the quarter ended September 30, 2020, the COVID-19 pandemic did not have a material net impact on our operating results.

future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic

environment which negatively effects the consumers who purchase our products.

Based on the recent increase in demand for our products,

we believe that over the long term, there will continue to be strong demand for our products.

ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability

to protect our employees and our supply chain.

The Company has endeavored to follow the recommended actions of government and

health authorities to protect our employees.

For the three months ended June 30, 2020, we maintained the consistency of our operations

during the onset of the COVID-19 pandemic.

We will continue to innovate in managing our business, coordinating with our employees

and suppliers to do our part in the infection prevention and remain flexible in responding to our customers and suppliers.

the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example

an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our

June 30, 2020, the COVID-19 pandemic has not negatively impacted the Company’s liquidity position as of such date.

to customers in the second quarter were up 16% from the first quarter of the year.

Our working capital on June 30, 2020 improved

to $7,576, as compared to $3,173 on March 31, 2020.

Lastly, our unused borrowing capacity under our line of credit improved to

$6,704, as compared to $2,961 at March 31, 2020.

Through June 30, 2020, we continue to generate cash flows to meet our short-term

liquidity needs, and we expect to maintain access to the capital markets.

We have also not observed any material impairments of

our assets or a significant change in the fair value of our assets due to the COVID-19 pandemic.

The Company has endeavored to comply with the recommended actions of government

and health authorities to protect our employees.

For the six months ended September 30, 2020, we maintained the consistency of

our operations during the onset of the COVID-19 pandemic.

We will continue to innovate in managing our business, coordinating

with our employees and suppliers to do our part in the infection prevention and remain flexible in responding to our customers

and suppliers.

However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce

and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that

could negatively impact our operations.

September 30, 2020, in part due to our innovative response to the COVID-19 pandemic, the COVID-19 pandemic has not negatively

impacted the Company’s liquidity position as of such date.

Shipments to customers in the third quarter were up 14% from

the first quarter of the year and down slightly (2%) from the Second quarter of 2020, with fluctuations consistent with historical

seasonal patterns.

Through September 30, 2020, we continue to generate cash flows to meet our short-term liquidity needs,

and we expect to maintain access to the capital markets.

We have also not observed any material impairments of our assets or a

significant change in the fair value of our assets due to the COVID-19 pandemic.

additional information on risk factors related to the pandemic or other risks that could impact our results, please refer to “Risk

Factors” in Part II, Item 1A of this Form 10-Q.

of Operations – Three months ended June 30, 2020

following table sets forth key statistics for the three months ended June 30, 2020 and 2019, respectively, in thousands.

Months Ended June 30,

of Operations – Three months ended September 30, 2020

following table sets forth key statistics for the three months ended September 30, 2020 and 2019, respectively, in thousands.

Three Months Ended September 30,

Gross sales (A)

and other allowances (B)

Cost of goods produced

Promotional and other allowances (B)

Cost of goods produced (C)

% of Gross sales

% of Net sales

Cost of goods sold

– idle capacity (D)

% of Net sales

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% of Net sales

on sales of assets

Total Operating

Total Operating expenses

Loss from operations

Interest expense

and other expense

per share – basic and diluted

Interest expense and other expense

Loss per share – basic and diluted

Weighted average shares outstanding - basic & diluted

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performance in place of cost of goods sold.

Cost of goods sold – idle capacity:

Cost of goods sold – idle capacity consists of direct production costs in excess

of charges allocated to our finished goods in production.

Plant costs in excess of production allocations are expensed in the

period incurred rather than added to the cost of finished goods produced.

Plant costs include labor costs, production supplies,

repairs and maintenance, and inventory write-off.

Our charges for labor and overhead allocated to our finished goods are determined

on a market cost basis, which is lower than our actual costs incurred.

Cost goods sold – idle capacity is not a measure

that is recognized under GAAP and should not be considered as an alternative to cost of goods sold, which is determined in accordance

with GAAP, and should not be used alone as an indicator of operating performance in place of cost of goods sold.

Cost of Sales, and Gross Margins

following chart sets forth key statistics for the transition of the Company’s top line activity from the second quarter

of 2019 through the second quarter of 2020.

following chart sets forth key statistics for the transition of the Company’s top line activity through the third quarter

of 2020 and 2019.

part of the Company’s ongoing initiative to simplify and streamline operations by reducing the number of SKUs, the Company

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a result of our decision to focus on the core Reed’s and Virgil’s beverage brands and simplify operations by reducing

the overall number of SKUs that we offer, the Company’s core beverage volume for the quarter ended June 30, 2020, represents

the overall number of SKUs that we offer, the Company’s core beverage volume for the quarter ended September 30, 2020, represents

98% of all beverage volume.

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on our core brands increased $0.19 per case or 1% year over year, while volume grew 17% as compared to the same period last year.

as a percentage of gross sales decreased to 11% in the second quarter of 2020 from 12% in the same period last year.

net sales revenue grew 14% in the second quarter of 2020 to $10,853, compared to $9,480 in the same period last year.

as a percentage of gross sales decreased to 11% in the third quarter of 2020 from 14% in the same period last year.

net sales revenue grew 21% in the third quarter of 2020 to $10,562, compared to $8,740 in the same period last year.

of Goods Sold and Produced

of goods sold increased $658 during the second quarter of 2020 as compared to the same period last year.

As a percentage of net

sales, cost of goods sold in the second quarter of 2020 improved to 72% as compared to 76% for the same period last year.

total cost of goods per case decreased to $12.06 per case in the second quarter of 2020 from $12.25 per case for the same period

The cost of goods sold per case on core brands increased to $11.92 during the second quarter of 2020, from the $11.86

for the same period last year.

Then increase on core brands is driven by $198 reserve related to packing material from the transition

to the FDA mandated nutritional fact requirements disclosure.

We are continuing to work with suppliers and co-packers to improve

our processes and maximize cost efficiencies.

margin increased to 28% for the second quarter of 2020, compared to 24% during the same period last year.

Cost of goods sold increased $938 during

the third quarter of 2020 as compared to the same period last year.

As a percentage of net sales, cost of goods sold in the third

quarter of 2020 improved to 68% as compared to 71% for the same period last year.

The total cost of goods per case decreased

to $11.24 per case in the third quarter of 2020 from $11.34 per case for the same period last year.

The cost of goods sold

per case on core brands was $11.11 during the third quarter of 2020, compared to $11.29 and the third quarter of 2019.

Gross margin increased to 32% for the

third quarter of 2020, compared to 29% during the same period last year.

and Handling Expenses

and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after

Delivery and handling expenses increased by $44 in the second quarter of 2020 to $1,480 from $1,436 in the same period

Delivery and handling expenses increased by $306 in the third quarter of 2020 to $2,207 from $1,902 in the same period

last year, driven by increased volumes.

Delivery costs in the second quarter of 2020 were 14% of net sales and $2.27 per case,

Delivery costs in the third quarter of 2020 were 21% of net sales and $3.45 per case,

compared to 22% of net sales and $3.46 per case during the same period last year.

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expenses including personnel and contractor support.

selling and marketing expenses were $1,585 during the second quarter of 2020, compared to $3,194 during the same period last year.

As a percentage of net sales, selling and marketing costs decreased to 15% during the second quarter of 2020, as compared to 34%

selling and marketing expenses were $1,872 during the third quarter of 2020, compared to $2,508 during the same period last year.

As a percentage of net sales, selling and marketing costs decreased to 18% during the third quarter of 2020, as compared to 29%

during the same period last year.

The decrease represents a lapping of the “Fooled Your Mom” campaign in the second

The decrease represents a lapping of the “Fooled Your Mom” campaign in the third

quarter of 2019 and a lower level of digital advertising, event sampling and agency fees.

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and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional

General and administrative expenses decreased in the second quarter of 2020 to $1,348 from $1,749, a decrease of $401 over

General and administrative expenses decreased in the third quarter of 2020 to $1,583 from $2,470, a decrease of $887 over

the same period last year.

Decrease was driven by $365 for option forfeiture/expiration and lower personnel and travel related

Decrease was driven by a $643 decrease in severance expense, $214 decrease in stock option expense,

and a $74 decrease in professional and consulting fees, partially offset by a $44 increase in other general and administrative

from Operations

loss from operations was $1,434 for the second quarter of 2020, as compared to a loss of $4,106 in the same period last year driven

by increase gross profit and reductions in operating expenses discussed above.

The loss from operations was $2,276

for the third quarter of 2020, as compared to a loss of $4,378 in the same period last year driven by increase gross profit and

reductions in operating expenses discussed above.

and Other Expense

and other expense for the second quarter of 2020, consisted of $303 of interest expense and expenses related to the change in

fair value of our warrant liability of $13.

During the same period last year, interest expense was $294, and expense related to

the change in fair value of our warrant liability was $60.

and other expense for the third quarter of 2020, consisted of $322 of interest expense offset by the change in fair value of our

warrant liability of $8.

During the same period last year, interest and other expense consisted of $318 of interest expense offset

by the change in fair value of our warrant liability of $131.

addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.

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EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

forth below is a reconciliation of net loss to Modified EBITDA for the three months ended June 30, 2020 and 2019

forth below is a reconciliation of net loss to Modified EBITDA for the three months ended September 30, 2020 and 2019 (unaudited;

in thousands):

Months Ended June 30,

Modified EBITDA adjustments:

Depreciation and amortization

Interest expense

Stock option and other noncash compensation

Change in fair value of warrant liability

Months Ended September 30,

EBITDA adjustments:

Modified EBITDA

and amortization

option and other noncash compensation

in fair value of warrant liability

EBITDA adjustments

present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods

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in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

of Operations – Six months ended June 30, 2020

following table sets forth key statistics for the six months ended June 30, 2020 and 2019, respectively, in thousands.

Months Ended June 30,

of Operations – Nine months ended September 30, 2020

following table sets forth key statistics for the nine months ended September 30, 2020 and 2019, respectively, in thousands.

Nine Months Ended September 30,

Gross sales (A)

and other allowances (B)

Cost of goods produced

Promotional and other allowances (B)

Cost of goods produced (C)

% of Gross sales

% of Net sales

Cost of goods sold

– idle capacity (D)

Cost of goods sold – idle capacity (D)

% of Net sales

Delivery and handling

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% of Net sales

on sales of assets

Total Operating

Total Operating expenses

Loss from operations

Interest expense

and other expense

per share – basic and diluted

Interest expense and other expense

Loss per share – basic and diluted

Weighted average shares outstanding - basic & diluted

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Cost of Sales, and Gross Margins

following chart sets forth key statistics for the transition of the Company’s top line activity from the six-month period

ending June 30, 2019 through the six-month period ending June 30, 2020.

part of the Company’s ongoing initiative to simplify and streamline operations by reducing the number of SKUs, the Company

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a result of our decision to focus on the core Reed’s and Virgil’s beverage brands and simplify operations by reducing

the overall number of SKUs that we offer, the Company’s core beverage volume for the first six months of 2020, represents

the overall number of SKUs that we offer, the Company’s core beverage volume for the first nine months of 2020, represents

98% of all beverage volume.

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on our core brands increased $0.26 per case or 1% year over year, while volume grew 13% as compared to the same period last year.

as a percentage of gross sales decreased to 11% in the first six months of 2020 from 12% in the same period last year.

as a percentage of gross sales decreased to 11% in the first nine months of 2020 from 12% in the same period last year.

in our promotions was driven by lower promotional activity primarily due to the impacts of COVID-19 as promotional execution became

a lower priority at retail.

As a result, net sales revenue grew 14% in the first six months of 2020 to $20,376, compared to $17,929

As a result, net sales revenue grew 16% in the first nine months of 2020 to $30,938, compared to $26,669

in the same period last year.

of Goods Sold and Produced

of goods sold increased $1,366 during the first six months of 2020 as compared to the same period last year.

As a percentage of

net sales, cost of goods sold in the first six months of 2020 improved to 71% as compared to 73% for the same period last year.

total cost of goods per case increased to $11.99 per case in the first six months of 2020 from $11.83 per case in the same period

The increase is driven by utilization of higher costed inventory remaining from 2019 in the first quarter and a $198

reserve recorded related to packaging material from transition to the FDA mandated nutritional fact requirements disclosure.

cost of goods sold per case on core brands increased to $11.80 during the first six months of 2020, from the $11.07 for the same

period last year.

Cost of goods sold increased $2,304

during the first nine months of 2020 as compared to the same period last year.

As a percentage of net sales, cost of goods sold

in the first nine months of 2020 improved to 70% as compared to 73% for the same period last year.

The total cost of goods per case increased

to $11.73 per case in the first nine months of 2020 from $11.67 per case in the same period last year.

The increase is

driven by utilization of higher costed inventory remaining from 2019 in the first quarter and a $198 reserve recorded related

to packaging material from transition to the FDA mandated nutritional fact requirements disclosure.

The cost of goods sold per

case on core brands increased to $11.57 during the first nine months of 2020, from the $11.42 for the same period

We are continuing to work with suppliers and co-packers to improve our processes and maximize cost efficiencies.

margin increased to 29% for the first six months of 2020, compared to 27% during the same period last year.

margin increased to 30% for the first nine months of 2020, compared to 27% during the same period last year.

and Handling Expenses

and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after

Delivery and handling expenses increased by $277 in the first six months of 2020 to $2,743 from $2,466 in the same

Delivery and handling expenses increased by $581 in the first nine months of 2020 to $4,950 from $4,369 in the same

period last year, driven by increased volumes.

Delivery costs in the six months of 2020 were 13% of net sales and $2.27

per case, compared to 14% of net sales and $2.22 per case during the same period last year.

The per case rate increase was driven

by market forces impacted by COVID-19.

Delivery costs in the nine months of 2020 were 16% of net sales and $2.68 per case,

compared to 16% of net sales and $2.63 per case during the same period last year.

The per case rate increase was driven by market

forces impacted by COVID-19.

and Marketing Expenses

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expenses including personnel and contractor support.

selling and marketing expenses were $3,510 during the first six months of 2020, compared to $5,208 during the same period last

As a percentage of net sales, selling and marketing costs decreased to 17% during the first six months of 2020, as compared

selling and marketing expenses were $5,382 during the first nine months of 2020, compared to $7,718 during the same period last

As a percentage of net sales, selling and marketing costs decreased to 17% during the first nine months of 2020, as compared

to 29% during the same period last year.

The decrease represents a lapping of the “Fooled

Mom” campaign which ran in the second quarter of 2019 as well as the Catalina retail register coupon program, which has

yet to be used in 2020 and a lower level of digital advertising, event sampling and agency fees.

In addition, personnel and travel

related costs declined.

The decrease represents a lapping of the “Fooled Your Mom” campaign which

ran in the second quarter of 2019 as well as the Catalina retail register coupon program, which has yet to be used in 2020 and

a lower level of digital advertising, event sampling and agency fees.

In addition, personnel and travel related costs declined.

and Administrative Expenses

and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional

General and administrative expenses decreased in the first six months of 2020 to $3,295 from $4,120, a decrease of $825

General and administrative expenses decreased in the first nine months of 2020 to $4,872 from $6,557, a decrease of $1,685

over the same period last year.

The decrease was driven by forfeiture/expiration of options in the amount of $365, the lapping

of a $220 one-time final transition cost incurred in 2019 related to our plant sale and a reduction temp staffing of $146 and

lower personnel and travel related costs.

The decrease was driven by lower severance of $682, forfeiture/expiration of options in the amount

of $580, the lapping of a $220 one-time final transition cost incurred in 2019 related to our plant sale and a reduction professional

fees and consultants of $70, and lower personnel and travel related costs.

from Operations

loss from operations was $3,684 for the first six months of 2020, as compared to a loss of $6,987 in the same period last year

driven by increase gross profit and reductions in operating expenses discussed above.

The loss from operations was $5,960

for the first nine months of 2020, as compared to a loss of $11,365 in the same period last year driven by increase gross profit

and reductions in operating expenses discussed above.

and Other Expense

and other expense for the first six months of 2020, consisted of $639 of interest expense and expense related to the change in

fair value of our warrant liability of $7.

During the same period last year, interest expense was $629, and expense related to

the change in fair value of our warrant liability was $108.

and other expense for the first nine months of 2020, consisted of $961 of interest expense offset by the change in fair value

of our warrant liability of $1.

During the same period last year, interest and other expense consisted of $947 of interest expense

offset by the change in fair value of our warrant liability of $23.

addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.

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EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

forth below is a reconciliation of net loss to Modified EBITDA for the six months ended June 30, 2020 and 2019 (unaudited;

Months Ended June 30,

forth below is a reconciliation of net loss to Modified EBITDA for the nine months ended September 30, 2020 and 2019 (unaudited;

in thousands):

Nine Months Ended September 30,

Modified EBITDA adjustments:

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Change in fair value of warrant liability

EBITDA adjustments

Total EBITDA adjustments

Modified EBITDA

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assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

the six months ended June 30, 2020, the Company recorded a net loss of $4,330 and used cash in operations of $5,028.

30, 2020, we had a cash balance of $1,112 with borrowing capacity of $6,704, a stockholder’s equity of $2,866 and a working

capital of $2,257, compared to a cash balance of $913 with borrowing capacity of $3,235, stockholders’ equity of

$1,147 and a working capital of $4,885 at December 31, 2019.

For the nine months ended September 30, 2020,

the Company recorded a net loss of $6,920 and used cash in operations of $6,768.

As of September 30, 2020, we had a cash

balance of $875 with borrowing capacity of $3,037, a stockholder’s equity of $558 and a negative working capital

of $207, compared to a cash balance of $913 with borrowing capacity of $3,235, stockholders’ equity of $1,147 and

a working capital of $4,885 at December 31, 2019.

April 2020, the Company conducted a public offering of 15,333,334 shares of its common stock at $0.375 per share, resulting in

net proceeds to the Company of $5,310.

On April 20, 2020, the Company was granted

a loan (the “PPP loan”) from City National Bank in the aggregate amount of $770, pursuant to the Paycheck Protection

Program (the “PPP”) under the CARES Act.

The PPP loan agreement is dated April 20,

2020, matures on April 20, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is

payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S.

Small Business Administration.

term may be extended to April 20, 2025, if mutually agreed to by the Company and lender.

We applied ASC 470, Debt , to account

for the PPP loan.

The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties.

Funds from the PPP loan

may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health

care benefits, qualifying rent and debt obligations, and qualifying utilities.

The Company intends to use the entire loan amount

for qualifying expenses.

Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying

The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, we

cannot assure that such forgiveness of any portion of the PPP loan will occur.

As for the potential loan forgiveness, once the

PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven

and a gain on extinguishment would be recorded.

The terms of the PPP loan provide for customary events of default including, among

other things, payment defaults, breach of representations and warranties, and insolvency events.

The Company was in compliance

with the terms of the PPP loan as of June 30, 2020.

April 20, 2020, the Company received loan proceeds in the amount of $770 pursuant to the Paycheck Protection Program under the

Coronavirus Aid, Relief and Economic Security Act (the “Cares Act”) (see Note 8).

PPP loan agreement is dated April 20, 2020, matures on April 20, 2022, bears interest at a rate of 1% per annum, with the first

six months of interest deferred, is payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S.

Business Administration.

The loan term may be extended to April 20, 2025, if mutually agreed to by the Company and lender.

applied ASC 470, Debt , to account for the PPP loan.

The PPP loan may be prepaid at any time prior to maturity with no prepayment

Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying

payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities.

intends to use the entire loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the loan may be

forgiven if they are used for qualifying expenses.

The Company intends to apply for forgiveness of the PPP loan with respect to

these qualifying expenses, however, we cannot assure that such forgiveness of any portion of the PPP loan will occur.

potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would

be reduced by the amount forgiven and a gain on extinguishment would be recorded.

The terms of the PPP loan provide for customary

events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events.

The Company was in compliance with the terms of the PPP loan as of September 30, 2020.

Historically,

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Accounting Policies and Estimates

Company recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”).

The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount

expected to be collected.

ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms

of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations

in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance

obligations, and (5) recognizing revenue as each performance obligation is satisfied.

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities, disclosures 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.

Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory

obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term tangible and intangible

assets, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments

issued for services.

Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers

The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services

to customers at the amount expected to be collected.

ASC 606 creates a five-step model that requires entities to exercise judgment

when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying

our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction

price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis