Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. MD&A is organized as follows:
? Significant Accounting Policies - Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. ? Results of Operations - Analysis of our financial results comparing the year endedDecember 31, 2022 to 2021. ? Liquidity and Capital Resources - Analysis of changes in our cash flows, and discussion of our financial condition and potential sources of liquidity.
This report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Significant Accounting Policies
We have prepared our financial statements in conformity with accounting
principles generally accepted in
All of our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements, included elsewhere in this Annual Report. We have identified the following as our significant accounting policies and estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions, judgments or conditions.
We believe the following significant accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:
Use of Estimates - The financial statements are prepared in conformity with
accounting principles generally accepted in
6
Fair Value of Financial Instruments - Our short-term financial instruments, including cash, accounts receivable, accounts payable and other liabilities, consist primarily of instruments without extended maturities. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts.
Results of Operations
Years Ended
Revenue
For the year ended
Cost of Revenue
Cost of revenue includes finished goods purchase costs, production costs, raw material costs and freight in costs. Also included in cost of revenue are adjustments made to inventory carrying amounts, including markdowns to market.
For the year ended
7 Operating Expenses
For the year ended
This increase in operating expenses was primarily due to higher compensation
expenses in 2022. Office expenses and marketing fees also increased compared to
the same period last year. These increases were partially offset by lower
selling expenses for the year ended
Liquidity and Capital Resources
Liquidity
As of
Working Capital Needs
Our working capital requirements increase as demand grows for our products.
During the year ended
OFF BALANCE SHEET ARRANGEMENTS
None
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