Note 2 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to record purchase price allocation for the Company's acquisitions, fair value measurements used in goodwill impairment tests, impairment estimations of long-lived assets, revenue recognition on cost-to-cost type contracts, allowances for uncollectible accounts, valuations of non-cash capital stock issuances, estimates of the incremental borrowing rate for long-term leases, fair value estimates and the valuation allowance on deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Orbital Energy Group, Inc. and its wholly owned subsidiaries Front Line Power Construction, LLC, Orbital Power, Inc., Eclipse Foundation Group, Orbital Solar Services, Gibson Technical Services, Inc., and GTS's wholly owned subsidiaries, IMMCO, Inc. and Full Moon Telecom, LLC hereafter referred to as the ‘‘Company.’’ Additionally, the following wholly owned subsidiaries are included in these financial statements as discontinued operations: Orbital Gas Systems, Ltd., Orbital Gas Systems, North America, Inc., and the following in 2020 only: CUI Holdings Inc.(formerly CUI, Inc.), CUI Japan, CUI-Canada, and CUI Properties, LLC. The primary assets and liabilities of CUI Holdings Inc. were sold or settled during 2019 and CUI Japan, and CUI-Canada were sold or settled in 2020. CUI Properties is a dormant administrative entity. Significant intercompany accounts and transactions have been eliminated in consolidation.

Variable Interest Entity

Orbital Solar Services entered into an agreement in 2021 to form OSS-JPOW Solar Services, LLC (OSS-JPOW), a partnership with Jingoli Power, LLC. Orbital Solar Services holds a controlling interest in OSS-JPOW and the portions of OSS-JPOW’s net earnings and equity not attributable to Orbital Solar Service’s controlling interest are shown separately as noncontrolling interests in the consolidated statements of operations and consolidated balance sheets. OSS-JPOW is considered a Variable Interest Entity (VIE) to Orbital Solar Services.

Orbital Solar Services, through its controlling interest in OSS-JPOW, has the power to direct the activities that significantly affect the economic performance of OSS-JPOW and the obligation to absorb losses or the right to receive benefits that could be significant to OSS-JPOW; therefore, Orbital Solar Services is considered the primary beneficiary and consolidates OSS-JPOW. During 2021, Jingoli Power, LLC did not make contributions to or distributions from OSS-JPOW. For the year ended December 31, 2021, $0.1 million of income was attributable to OSS-JPOW with $39 thousand allocated to non-controlling interest.

Company Conditions and Sources of Liquidity

The Company has experienced net losses and cash outflows from cash used in operating activities over the past years. As of and for the twelve months ended December 31, 2021, the Company had an accumulated deficit of $210.9 million, loss from continuing operations of $49.8 million, and net cash used in operating activities of $45.7 million.

As of December 31, 2021, the Company had Cash and cash equivalents of $26.9 million available for working capital needs and planned capital asset expenditures and a working capital deficit of approximately $33.3 million, including current maturities of debt. These factors initially raise substantial doubt about our ability to continue as a going concern, but this doubt has been alleviated by the Company’s plans to raise sufficient capital to meet our current obligations over the next twelve months, in addition to the expected recovery of our assets to satisfy liabilities in the normal course of business.

The Company has plans to access additional capital to meet its obligations for the twelve months from the date these financial statements are available to be issued. Historically, the Company has raised additional equity and debt financing to fund the expansion; refer to Note – 10 Stockholders’ Equity and Stock-Based Compensation and Note 7 — Notes Payable. The Company has also funded some of its capital expenditures through long-term financing with lenders and other investors as also described in further detail in Note 7 — Notes Payable. Our ability to raise the additional capital is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a price that is favorable to us. The Company currently has an effective S-3 shelf registration statement with $112 million of aggregate offering value available for the issuance of various types of securities, including common stock, preferred stock, debt securities and/or warrants. While management will look to continue funding future acquisitions, organic growth initiatives and continuing operations by raising additional capital from sources such as sales of its debt or equity securities or notes payable in order to meet operating cash requirements, there is no assurance that management’s plans will be successful.

As the Company continues its progression to build a full-service infrastructure services platform, a successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows through generating adequate revenue growth to support the Company’s cost structure. For the twelve months ended December 31, 2021, our revenues have increased by $61.5 million resulting in a 286% increase in revenue from the prior year. The significant increase in revenues during the year was primarily driven by the strategic acquisitions of Front Line Power Construction, LLC, Gibson Technical Services, IMMCO, Inc., and Full Moon Telecom, LLC made coupled with organic growth within Orbital Power Services. In addition, two large utility scale solar projects were awarded to Orbital Solar Systems during the twelve-month period ended December 31, 2021. We anticipate, based on currently proposed plans and assumptions relating to our operations, the Company to generate sufficient revenue growth required to achieve profitability and generate positive cash flows from operations over the next twelve months. No assurance can be made that we will be able to obtain profitability and positive cash flows from our continuing operations.

The Company plans to meet its obligations as they become due over the next twelve months by raising additional capital through equity and debt financing sources and expected positive cash flows generated from operations. Given the considerations, we believe the mitigating effect of management’s plans has alleviated any substantial doubt about the Company’s ability to continue as a going concern.

Discontinued Operations and Sales of Businesses

As part of the Company’s stated strategy to transform Orbital Energy Group into a diversified energy infrastructure services platform serving North American energy customers, the Company’s board of directors made the decision to divest of its Orbital Gas subsidiaries. The Orbital Gas subsidiaries provide proprietary gas measurement and sampling technologies and the integration of process control and measuring/sampling systems. They are legacy businesses that are not part of the Company’s strategy of  building an infrastructure services company serving the electric power, telecommunications and renewable markets. The disposition of the Orbital Gas subsidiaries will facilitate the Company’s restructuring and cost savings initiatives and are intended to realign and simplify its business structure and better position the Company for future growth and improved profitability. In the fourth quarter the Company recorded a $9.2 million impairment related to its U.K. operations to write the value of its investment in the U.K. operations to its expected realizable value of 3 million GBP ($4.1 million at December 31, 2021). Assets and liabilities held for sale are included in the Company's balance sheet and are described below. In 2020, the assets and liabilities of the Company's CUI-Canada and CUI Japan subsidiaries were sold as well. 

Selected data for these discontinued businesses consisted of the following:

Reconciliation of the Major Classes of Line Items Constituting Pretax Income from Discontinued Operations to the After-Tax Income from Discontinued Operations That Are Presented in the Statement of Operations

(In thousands)
	For the Year
	Ended December 31,
Major classes of line items constituting pretax profit (loss) of discontinued operations	2021			2020
Revenues	$	19,855		$	33,278
Cost of revenues		(14,193	)		(23,637	)
Selling, general and administrative expense		(8,550	)		(11,205	)
Depreciation and amortization		(1,638	)		(1,489	)
Research and development		(2	)		(45	)
(Provision) credit for bad debt		3			(13	)
Impairment of assets held for sale		(9,185	)		—
Gain on extinguishment of PPP loan		779			—
Interest expense		(2	)		(5	)
Other income and (expense)		228			(98	)
Pretax profit (loss) of discontinued operations related to major classes of pretax profit (loss)		(12,705	)		(3,214	)
Pretax gain on sale of certain power and electromechanical businesses		—			117
Total pretax income on discontinued operations		(12,705	)		(3,097	)
Income tax benefit		(1,334	)		(1,352	)
Total income from discontinued operations	$	(11,371	)	$	(1,745	)

Reconciliation of the Carrying Amounts of Major Classes of Assets and Liabilities of the Discontinued Operation to Total Assets and Liabilities of the Disposal Group Classified as Held for Sale

	As of December 31,		As of December 31,
(In thousands)	2021		2020
Carrying amounts of the major classes of assets included in discontinued operations:
Trade accounts receivables	$	2,996	$	2,798
Inventories		530		1,123
Prepaid expenses and other current assets		114		1,185
Contract assets		1,141		1,040
Assets held for sale, current portion		4,781		6,146
Property and equipment		42		4,311
Right of use assets - Operating leases		—		786
Other intangible assets		1,813		3,144
Deposits and other assets		43		1,285
Assets held for sale, noncurrent portion		1,898		9,526
Total assets of the disposal group classified as held for sale	$	6,679	$	15,672
Carrying amounts of the major classes of liabilities included in discontinued operations:
Accounts payable	$	1,657	$	953
Contract liabilities		1,414		1,937
Operating lease obligations, current portion		76		415
Accrued expenses		1,126		1,510
Notes payable - PPP, current portion		—		565
Liabilities held for sale, current portion		4,273		5,380
Operating lease obligations, less current portion		85		436
Notes payable - PPP, less current portion		—		207
Other long-term liabilities		9		187
Liabilities held for sale, noncurrent portion		94		830
Total liabilities held for sale	$	4,367	$	6,210

The assets and liabilities of the disposal group classified as held for sale are classified as current on the December 31, 2021 balance sheet because it is probable that the sale will occur and proceeds will be collected within one year.

Net cash (used) provided by operating activities of discontinued operations for 2021 and 2020 was ($3.2) million and $1.9 million, respectively.

Net cash provided by (used in) investing activities of discontinued operations for 2021 and 2020 was $0 and ($1.8) million, respectively.

Fair Value of Financial Instruments

Accounting Standards Codification (‘‘ASC’’) 820 ‘‘Fair Value Measurements and Disclosures’’ (‘‘ASC 820’’) defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the U.S., and enhances disclosures about fair value measurements. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

• Level 1 – Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date.

• Level 2 – Pricing inputs are quoted for similar assets, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes assets or liabilities valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.

• Level 3 – Pricing inputs are unobservable for the assets or liabilities; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company determines when a financial instrument transfers between levels based on management’s judgment of the significance of unobservable inputs used to calculate the fair value of the financial instrument.

Management believes the carrying amounts of the short-term financial instruments, including cash and cash equivalents, investment, note receivable, accounts receivable, contract assets, prepaid expense and other assets, accounts payable, accrued liabilities, contract liabilities, and other current liabilities reflected in the accompanying consolidated balance sheet approximate fair value at  December 31, 2021 and 2020 due to the relatively short-term nature of these instruments. The carrying value of the notes payable approximate fair value based on the proximity of the issuance to the balance sheet date and current market conditions, including the Company's $86.7 million Front Line Power seller notes, and $105 million syndicated term note debt issued in the three months ended December 31, 2021, which included a subscription agreement that was determined to be a financial instrument that is valued at fair value at inception and December 31, 2021. See Note 3 for fair value of financial instruments.

Cash and Cash Equivalents

Cash includes deposits at financial institutions with maturities of three months or less. The Company at times has cash in banks in excess of FDIC insurance limits and places its temporary cash investments with high credit quality financial institutions. The Company considers all highly liquid marketable securities with maturities of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents include money market funds, certificates of deposit and commercial paper. At December 31, 2021 and 2020, the Company had $2.3 million and $0.6 million, respectively, of cash and cash equivalents balances at domestic financial institutions that were covered under the FDIC insured deposits programs and $0.4 million and $0.2 million, respectively, at foreign financial institutions covered internationally. At December 31, 2021 and 2020, the Company held $2.1 million and $2.2, respectively, in foreign bank accounts. In addition to the Company's unrestricted cash and cash equivalents at December 31, 2021 and 2020, the Company has $0.2 million and $0.5 of current restricted cash and $1.0 million and $1.0 million, respectively, of long-term restricted cash on its balance sheet related to contract guarantees. Restricted cash is combined with other cash and cash equivalents in reconciling the change in cash on the Company's Consolidated Statements of Cash Flows.

(In thousands)	As of December 31,
	2021		2020
Cash and cash equivalents at beginning of year	$	3,046	$	23,351
Restricted cash at beginning of year		1,478		—
Cash, cash equivalents and restricted cash at beginning of year	$	4,524	$	23,351
Cash and cash equivalents at end of year	$	26,865	$	3,046
Restricted cash at end of year		1,176		1,478
Cash, cash equivalents and restricted cash at end of year	$	28,041	$	4,524

Investments and Notes Receivable

At December 31, 2021, the Company had a note receivable from Back Porch International that was originated as part of the divestiture of the Company's electromechanical components business. The note has an original stated value of $5 million, and is presented on the balance sheet as of December 31, 2021 and December 31, 2020 at its present value of $3.3 million and $3.5 million, respectively, including $2.5 million and $44 thousand of current maturities, respectively. The Company obtained a second note receivable in 2020 from Back Porch International for $0.1 million as payment for the Company's CUI Japan subsidiary. The second note receivable was paid in 2021. Subsequent to December 31, 2021, the Company received final payment on the note receivable.

Accounts Receivable and Allowance for Uncollectible Accounts

Accounts receivable consist of the receivables associated with revenue derived from service sales including present amounts due to contracts accounted for under fixed price, cost-to-cost, cost plus, or output method. An allowance for uncollectible accounts is recorded to allow for any amounts that may not be recoverable, based on an analysis of prior collection experience, customer credit worthiness and current economic trends. Based on management’s review of accounts receivable, an allowance for doubtful accounts of $1.5 million and $1.2 million at December 31, 2021 and 2020, respectively, is considered adequate. The reserve in both periods considers aged receivables that management believes should be specifically reserved for as well as historic experience with bad debts to determine the total reserve appropriate for each period. Receivables are determined to be past due based on the payment terms of original invoices. Payment terms and conditions vary by contract, and are within industry standards across our business lines. The Company routinely assesses the financial strength of its customers and, therefore, believes that its accounts receivable credit risk exposure is limited. 

Activity in the allowance for doubtful accounts for the years ended  December 31, 2021 and 2020 is as follows:

(In thousands)	For the Years ended December 31,
	2021			2020
Allowance for doubtful accounts, beginning of year	$	1,172		$	—
Bad debt expense		346			1,626
Deductions		(31	)		(454	)
Allowance for doubtful accounts, end of year	$	1,487		$	1,172

Retainage Receivables

At December 31, 2021, the Company had $1.5 million billed but not paid by customers under retainage provisions in contracts. These amounts are included as part of contract assets.

Inventories

Inventories consist of finished and unfinished products and are stated at the lower of cost or market through either the first-in, first-out (FIFO) method as a cost flow convention or through the moving average cost method.

At December 31, 2021, and 2020, inventory is presented on the balance sheet net of reserves. The Company provides reserves for inventories estimated to be excess, obsolete or unmarketable. The Company’s estimation process for assessing the net realizable value is based upon its known backlog, projected future demand, historical usage and expected market conditions. Inventory by category consists of:

(In thousands)	As of December 31,
	2021		2020
Finished goods	$	—	$	—
Raw materials		1,316		—
Work-in-process		19		—
Total inventories	$	1,335	$	—

Property and equipment, less accumulated depreciation

Land is recorded at cost and includes expenditures made to ready it for use. Land is considered to have an infinite useful life.

Buildings and improvements are recorded at cost.

Furniture, vehicles, and equipment are recorded at cost and include major expenditures, which increase productivity or substantially increase useful lives.

Leasehold improvements are recorded at cost and are depreciated over the lesser of the lease term or estimated useful life.

The cost of buildings, improvements, furniture, vehicles, and equipment is depreciated over the estimated useful lives of the related assets.

Depreciation is computed using the straight-line method for financial reporting purposes. The estimated useful lives for buildings, improvements, furniture, vehicles, and equipment are as follows:

	Estimated
	Useful
	Life (in years)
Leasehold improvements		5 to 10
Equipment		3 to 10

Maintenance, repairs and minor replacements are charged to expenses when incurred. When buildings, improvements, furniture, equipment and vehicles are sold or otherwise disposed of, the asset and related accumulated depreciation are removed and any gain or loss is included in the statement of operations.

Long-Lived Assets Including Finite-Lived Intangible Assets

Long-lived assets including finite-lived intangible assets are periodically reviewed for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. In performing the review for recoverability, the future cash flows expected to result from the use of the asset and its eventual disposition are estimated. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the long-lived asset, an impairment loss is recognized as the excess of the carrying amount over the fair value. Otherwise, an impairment loss is not recognized. Management estimates the fair value and the estimated future cash flows expected. Any changes in these estimates could impact whether there was impairment and the amount of the impairment.

No impairments were recognized on long-lived assets in 2021 or 2020 except in 2021, the Company wrote down the assets held for sale of its discontinued Orbital U.K. operations by $9.2 million based on an expected selling price of 3 million GBP ($4.1 million at December 31, 2021)

Identifiable Finite-lived Intangible Assets

Intangible assets are stated at cost net of accumulated amortization and impairment. Finite-lived intangible assets includes customer relationships, technology know how, software, noncompete agreements, order backlog, and trade name. The fair value for intangible assets acquired through acquisitions is measured at the time of acquisition utilizing the following inputs, as needed:

1. Inputs used to measure fair value are unadjusted quoted prices available in active markets for the identical assets or liabilities if available.

2. Inputs used to measure fair value, other than quoted prices included in 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in inactive markets. This includes assets and liabilities valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full life of the asset.

3. Inputs used to measure fair value are unobservable inputs supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

4. Expert appraisal and fair value measurement as completed by third-party experts.

	Estimated
	Useful
	Life (in years)
Finite-lived intangible assets
Order backlog		1
Customer Relationships- Front Line Power Construction		15
Trade name - Reach Construction Group		1
Customer relationships - Reach Construction Group, LLC		5
Non-compete agreements - Reach Construction Group, LLC		5
Customer Relationships - Gibson Technical Services		10
Customer Relationships - IMMCO		10
Technology- Know How		3
Non-compete agreements-GTS		5
Software, at cost		3 to 5

The Company amortizes the intangible assets that are subject to amortization on a straight line basis, which the company believes approximates the estimated consumption of their economic benefits. Intangible assets are reviewed for impairment and tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For instance, a significant change in business climate or a loss of a significant customer, among other things, may trigger the need for impairment testing of intangible assets. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value.

Indefinite-Lived Intangibles and Goodwill Assets

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, ‘‘Business Combinations,’’ where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.  The unit of accounting for goodwill is at a level of the entity referred to as a reporting unit. Goodwill is assigned to specific reporting units for purposes of the impairment assessments. As of December 31, 2021, the Company has five operating segments that are also considered reporting units for goodwill impairment testing. The five operating segments are, Front Line Power Construction, LLC, Orbital Power Inc., Eclipse Foundation Group, Orbital Solar Services, Gibson Technical Services, which includes  IMMCO, Inc. and Full Moon Telecom, LLC.

Annual Test. The Company tests for impairment of indefinite-lived intangibles and Goodwill in the second quarter of each year and whenever events or circumstances indicate that the carrying amount of Goodwill exceeds its fair value and may not be recoverable. The Company’s qualitative assessment for indefinite-lived assets at May 31, 2021, followed the guidance in ASC 350-30-35-18A and 18B. In addition, since the  May 31st assessment was the first year following the acquisition of Orbital Solar Services, the Company elected to perform a third-party quantitative review. Following the quantitative and qualitative review, no impairment was identified.

Under current accounting guidance, the Company is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The guidance includes a number of factors to consider in conducting the qualitative assessment. The Company tests for goodwill impairment in the second quarter of each year and whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable.

As detailed in ASC 350-20-35-3A, in performing its testing for Goodwill and indefinite lived intangible as of May 31, 2021, for the GTS reporting unit, management completed a qualitative analysis to determine whether it was more likely than not that the fair value of a reporting unit is less than its carrying amount, including Goodwill. To complete the qualitative review, management follows the steps in ASC 350-20-35-3C to evaluate the fair values of the Goodwill and indefinite lived intangible and considers all known events and circumstances that might trigger an impairment of Goodwill or the indefinite lived intangible. At interim dates, the Company reviewed for triggering events. The Company did not identify any triggering events and no impairments to goodwill or indefinite lived assets were recorded.

Accrued expenses

Accrued expenses are liabilities that reflect expenses on the statement of operations that have not been paid or recorded in accounts payable at the end of the period. At  December 31, 2021 and December 31, 2020, accrued expenses of $28.3 million and $4.4 million, respectively included the following components:

(In thousands)	As of December 31,
	2021		2020
Accrued compensation	$	6,369	$	1,180
Working capital adjustment on Front Line Power Construction acquisition		14,092		—
Accrued interest		2,902		200
Accrued taxes payable		102		83
Other accrued expenses		4,836		2,909
Total accrued expense	$	28,301	$	4,372

Financial instrument liability

The Company evaluates embedded conversion features pursuant to FASB Accounting Standards Codification No. 815 (‘‘FASB ASC 815’’), ‘‘Derivatives and Hedging,’’ which requires a periodic valuation of the fair value of derivative instruments and a corresponding recognition of liabilities associated with such derivatives. The Company has limited involvement with derivative instruments and does not trade them. In November 2021, the Company identified a subscription agreement with lenders of the $105 million syndicated debt agreement as a free standing financial instrument since it is legally separate from the credit agreement. The subscription provides the lenders with shares of the Company's common stock, which was recorded by the Company as additional debt discount to be amortized over the life of the loan. The subscription agreement also provided the lenders with protection from downside risk in the event that the Company issues shares prior to paying off the Front Line seller notes at a price lower than the price when the shares were issued to the lenders. This financial instrument liability was recorded by the Company at $0.9 million and was valued at loan inception on November 17, 2021 using the Black Scholes option pricing model. The value of the liability decreased to $0.8 million as of December 31, 2021 and the difference was recorded as income in other income for the fourth quarter of 2021. The Company did not own any derivative instruments in 2020.

Stock-Based Compensation

The Company records its stock-based compensation expense under its stock option plans and also issues stock for services. The Company accounts for stock-based compensation using FASB Accounting Standards Codification No. 718 (‘‘FASB ASC 718’’), ‘‘Compensation – Stock Compensation.’’ FASB ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related service period.

Stock bonuses and restricted stock units ("RSU"s) issued to employees are recorded at fair value using the market price of the stock on the date of grant and expensed over the service period or immediately if fully vested on date of issuance. Employee stock options are recorded at fair value using the Black-Scholes or binomial option pricing model. The underlying assumptions in the Black-Scholes and binomial option pricing models used by the Company are taken from publicly available sources including: (1) volatility and grant date stock price, which are sourced from historic stock price information; (2) the appropriate discount rates are sourced from the United States Federal Reserve; and (3) other inputs are determined based on previous experience and related estimates. With regards to expected volatility, the Company utilizes an appropriate period for historical share prices for Orbital Energy Group that best reflect the expected volatility for determining the fair value of its stock options.

See Note 10 Stockholders' Equity for additional disclosure and discussion of the employee stock plan and activity.

Common stock and stock options are also recorded on the basis of their fair value, as required by FASB ASC 718, which is measured as of the date required by FASB ASC 718. In accordance with FASB ASC 718, the stock options or common stock warrants are valued using the Black-Scholes or binomial option pricing model on the basis of the market price of the underlying common stock on the ‘‘valuation date,’’ which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the performance completion date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. Where expense must be recognized prior to a valuation date, the expense is computed based off an estimate of the fair value of the stock award as valued under the Black-Scholes option pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock up through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs.

Common stock issued to other than employees or directors subject to performance (performance based awards) require interpretation when the counterparty’s performance is complete based on delivery, or other relevant performance criteria in accordance with the relevant agreement. When performance is complete, the common stock is issued and the expense recorded on the basis of their value as required by FASB ASC 718 on the date the performance requirement is achieved.

Defined Contribution Plans

The Company has a 401(k) retirement savings plan that allows employees to contribute to the plan after they have completed 60 days of service and are 18 years of age. The Company matches the employee's contribution up to 6% of total compensation. GTS, Orbital Power, Inc., Orbital Solar Services, Front Line Power Construction, LLC, Eclipse Foundation, and Corporate made total employer contributions, net of forfeitures, of $0.6 million and $0.3 million for 2021 and 2020, respectively. In addition, in 2021 and 2020, the Company made contributions of $72 thousand and $145 thousand, respectively, associated with discontinued operations.

Revenue Recognition

The Electric Power segment provides full service building, maintenance and support to the electrical power distribution, transmission, substation, and emergency response sectors of North America through Front Line Power, Orbital Power Services and  Eclipse Foundation. The Telecommunications segment composed of Gibson Technical Services and subsidiaries provides technical implementation, design, maintenance, emergency and repair support services in the broadband, wireless, and outside plant and building technologies.  The Renewables segment, Orbital Solar Services, provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on utility scale solar and community solar construction.

For our construction contracts, revenue is generally recognized over time. Our fixed price and unit-price construction projects generally use a cost-to-cost input method or an output method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under the output method, progress towards completion is measured based on units of work completed based on the contractual pricing amounts.  Under the output method, revenue is determined by actual work achieved. For jobs under the output method, revenue is earned based on each unit in the contract completed. We construct comprehensive revenue calculations based on quantifiable measures of actual units completed multiplied by the agreed upon contract prices per item completed. Revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service.

The timing of revenue recognition also depends on the payment terms of the contract, as our performance does not create an asset with an alternative use to us. For those contracts where the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced or for which we have a right to payment for performance completed to date at all times throughout our performance, inclusive of a cancellation, we recognize revenue over time. As discussed above, these performance obligations use a cost-to-cost input method or output method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer. However, for those contracts for which we do not have a right, at all times, to payment for performance completed to date and we are not enhancing a customer-controlled asset, we recognize revenue at the point in time when control is transferred to the customer. 

For our service contracts, revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service. For our fixed price service contracts with specified service periods, revenue is generally recognized on a straight-line basis over such service period when our inputs are expended evenly, and the customer receives and consumes the benefits of our performance throughout the contract term.

For certain of our revenue streams, such as call-out repair and service work, and outage services, that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an input method as the customer receives and consumes the benefits of our performance completed to date.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.

Accounts Receivable, Contract Assets and Contract Liabilities

Accounts receivable are recognized in the period when our right to consideration is unconditional. We also assess our customers' ability and intention to pay, which is based on a variety of factors, including our historical payment experience with and the financial condition of our customers. Payment terms and conditions vary by contract, and are within industry standards across our business lines. Accounts receivable are recognized net of an allowance for doubtful accounts.

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our construction projects when revenue recognized under the output method or the input cost-to-cost method exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. Also included in contract assets are retainage receivables and amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to both scope and/or price or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders). Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the Consolidated Balance Sheets.

Contract liabilities from our construction contracts occur when amounts invoiced to our customers exceed revenues recognized under the input cost-to-cost or output method of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts and provision for future contract losses for those contracts estimated to close in a gross loss position. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognize such revenue.

Balances and activity in the current contract liabilities as of and for the years ended  December 31, 2021 and 2020 is as follows:

	For the Year Ended December 31,
	2021			2020
Total contract liabilities - January 1	$	4,873		$	—
Contract liability additions acquired through acquisition		100			3,349
Contract additions, net		6,371			1,524
Contract settlements		(3,140	)		—
Revenue recognized		(1,701	)		—
Total contract liabilities - December 31	$	6,503		$	4,873

Performance Obligations

Remaining Performance Obligations

Remaining performance obligations, represents the transaction price of contracts with customers for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts. As of December 31, 2021, the Company's remaining performance obligations are generally expected to be filled within the next 12 months. For the contracts that are greater than 12 months the Company has approximately $121.0 million in the aggregate of remaining performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021.  

Any adjustments to net revenues, cost of revenues, and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive program performance, and may result in an increase in operating income during the performance of individual performance obligations, if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks. Changes in estimates of net revenues, cost of revenues and the related impact to operating income are recognized on a cumulative catch-up basis in the period they become known, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. 

Performance Obligations Satisfied Over Time

To determine the proper revenue recognition method for our contracts satisfied over time, we evaluate whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to separate the single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period.

For most of our contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability (even if that single project results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. Less commonly, however, we may promise to provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We infrequently sell standard products with observable standalone sales. In cases where we do, the observable standalone sales are used to determine the standalone selling price. More frequently, we sell a customized customer specific solution, and in these cases we typically use the output method or the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

Variable Consideration

The nature of our contracts gives rise to several types of variable consideration. In rare instances, we include in our contract estimates, additional revenue for submitted contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. These amounts are included in our calculation of net revenue recorded for our contracts and the associated remaining performance obligations. Additionally, if the contract has a provision for liquidated damages in the case that the Company misses a timing target, or fails to meet any other contract benchmarks, the Company accounts for those estimated liquidated damages as variable consideration and will adjust revenue accordingly with periodic updates to the estimated variable consideration as the job progresses. Liquidated damages are recognized as variable consideration and are estimated based on the most likely amount that is deemed probable of realization.

Significant Judgments

Our contracts with certain customers may be subject to contract cancellation clauses. Contracts with other cancellation provisions may require judgment in determining the contract term, including the existence of material rights, transaction price and identifying the performance obligations and whether a contract should be accounted for over time or on a completed contract basis. Revenue is recognized for certain projects over time using cost-based input methods, in which significant judgement is required to evaluate assumptions including the amount of total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

At times, customers may request changes that either amend, replace or cancel existing contracts. Judgment is required to determine whether the specific facts and circumstances within the contracts require the changes to be accounted for as a separate contract or as a modification. Generally, contract modifications containing additional goods and services that are determined to be distinct and sold at their stand-alone selling price are accounted for as a separate contract. For contract modifications where goods and services are not determined to be distinct and sold at their stand-alone selling price, the original contract is updated and the required adjustments to revenue and contract assets, liabilities, and other accounts will be made accordingly.

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately rather than together may require significant judgment. For, example, we consider many of our contracts that coordinate multiple products into an integrated system to be a single performance obligation, while the same products would be considered separate performance obligations if not so integrated.

In contracts where there are timing differences between when we transfer a promised good or service to the customer and when the customer pays for that good or service, we have determined that, our contracts do not include a significant financing component.

The following table presents our revenues disaggregated by timing of revenue recognition:

(In thousands)	For the Year Ended December 31, 2021
	Telecommunications		Electric Power		Renewables		Total
Revenues recognized at point in time	$	1,812	$	—	$	—	$	1,812
Revenues recognized over time		25,987		43,599		11,550		81,136
Total revenues	$	27,799	$	43,599	$	11,550	$	82,948

(In thousands)	For the Year Ended December 31, 2020
	Telecommunications		Electric Power		Renewables		Total
Revenues recognized at point in time	$	—	$	—	$	—	$	—
Revenues recognized over time		—		8,482		13,005		21,487
Total revenues	$	—	$	8,482	$	13,005	$	21,487

The following table presents our revenues disaggregated by region:

(In thousands)	For the Year Ended December 31, 2021
	Telecommunications		Electric Power		Renewables		Total
North America	$	25,446	$	43,599	$	11,550	$	80,595
Other		2,353		—		—		2,353
Total revenues	$	27,799	$	43,599	$	11,550	$	82,948

(In thousands)	For the Year Ended December 31, 2020
	Telecommunications		Electric Power		Renewables		Total
North America	$	—	$	8,482	$	13,005	$	21,487
Total revenues	$	—	$	8,482	$	13,005	$	21,487

Advertising

The costs incurred for producing and communicating advertising are charged to operations as incurred. Advertising expense for the years ended  December 31, 2021 and 2020 were $0.5 million and $41 thousand, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method of FASB Accounting Standards Codification No. 740 (‘‘FASB ASC 740’’), ‘‘Income Taxes.’’ Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that management believes it is more likely than not that such deferred tax assets will not be realized.

Valuation allowances have been established against all domestic based deferred tax assets and U.K. based deferred tax assets due to uncertainties in the Company’s ability to generate sufficient taxable income in future periods to make realization of such assets more likely than not. In future periods, tax benefits and related domestic and U.K. deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. In addition, the Company has provided for a partial valuation allowance in Canada. The Company has not provided for valuation allowances on deferred tax assets in any other jurisdiction.

The Company recognizes interest and penalties, if any, related to its tax positions in income tax expense.

Orbital Energy Group files consolidated income tax returns with its U.S. based subsidiaries for federal and many state jurisdictions in addition to separate subsidiary income tax returns in Japan, the United Kingdom and Canada. After the sale of CUI Japan in September 2020, and the final disposition of CUI-Canada assets and liabilities, the Company will only be required to file returns in the U.S. and the United Kingdom. As of December 31, 2021, the Company is not under examination by any income tax jurisdiction. The Company is no longer subject to U.S. examination for years prior to 2017.

Net Loss per Share

In accordance with FASB Accounting Standards Codification No. 260 (‘‘FASB ASC 260’’), ‘‘Earnings per Share,’’ basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of diluted shares outstanding during the period calculated using the treasury stock method. Due to the Company’s net loss in 2021 and 2020, the assumed exercise of stock options using the treasury stock method would have had an antidilutive effect and therefore all options for each of the two years were excluded from the calculation of diluted net loss per share. Accordingly, diluted net loss per share is the same as basic net loss per share for 2021 and 2020. 

The following table summarizes the number of stock options outstanding:

	As of December 31,
	2021		2020
Options, outstanding		237,985		790,648

Any common shares issued as a result of stock options would come from newly issued common shares as granted under our equity incentive plans.

The following is the calculation of basic and diluted earnings per share:

	For the Years Ended December 31,
(In thousands, except dollars per share)	2021			2020
Continuing operations:
Loss from continuing operations, net of income taxes	$	(49,843	)	$	(25,702	)
Discontinued operations:
Income from discontinued operations, net of income taxes		(11,371	)		(1,745	)
Net loss	$	(61,214	)	$	(27,447	)
Basic and diluted weighted average number of shares outstanding		58,348,489			29,937,863
Loss from continuing operations per common share - basic and diluted	$	(0.86	)	$	(0.86	)
Earnings from discontinued operations - basic and diluted		(0.19	)		(0.06	)
Loss per common share - basic and diluted	$	(1.05	)	$	(0.92	)

Foreign Currency Translation

The financial statements of the Company's foreign offices have been translated into U.S. dollars in accordance with FASB ASC 830, ‘‘Foreign Currency Matters’’ (FASB ASC 830). All balance sheet accounts have been translated using the exchange rate in effect at the balance sheet date. Statement of Operations amounts have been translated using an appropriately weighted average exchange rate for the year. The translation gains and losses resulting from the changes in exchange rates during 2021 and 2020 have been reported in accumulated other comprehensive income (loss), except for gains and losses resulting from the translation of short-term intercompany receivables and payables, which are included in earnings for the period.

Segment Reporting

Operating segments are defined in accordance with ASC 280-10 as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The measurement basis of segment profit or loss is income (loss) from operations. Management has identified five operating segments based on the activities of the Company in accordance with ASC 280-10. These operating segments have been aggregated into three reportable segments. The three reportable segments are Electric Power, Telecommunications, and Renewables and an Other category. The Electric Power segment consists of Front Line Power Construction, LLC based in Houston, Texas, Orbital Power Services based in Dallas, Texas, and Eclipse Foundation Group based in Gonzales, Louisiana. The segment provides comprehensive solutions to customers in the electric power industries. Front Line Power, LLC is a Houston-based full-service electrical infrastructure service company that provides construction, maintenance, and emergency response services for customers since 2010. Services performed by Orbital Power Services generally include the design, installation, upgrade, repair and maintenance of electric power transmission and distribution infrastructure and substation facilities as well as emergency restoration services, including the repair of infrastructure damaged by inclement weather. Eclipse Foundation Group, which began operations in January 2021, is a drilled shaft foundation construction company that specializes in providing services to the electric transmission and substation, industrial, communication towers and disaster restoration market sectors, with expertise in water, marsh and rock terrains.

The Telecommunications segment is made up of Gibson Technical Services, Inc. (“GTS”) (acquired April 13, 2021) GTS is an Atlanta-based telecommunications company providing diversified telecommunications services nationally since 1990 and is the parent of the following companies:

o IMMCO, Inc. (acquired July 28, 2021), which includes two Indian subsidiaries and is an Atlanta-based, full-service telecom engineering and network design company providing diversified engineering services and customized software solutions to a global customer base since 1992.

o Full Moon Telecom, LLC (acquired October 22, 2021) a Florida-based telecommunications services provider that offers an extensive array of wireless services capabilities and experience including Layer 2/Layer 3 Transport, Radio Access Network ("RAN") Integrations, test and turn-up of Small Cell systems and Integration/Commissioning of Distributed Antenna ("DAS") systems.

The Renewables segment consists of Orbital Solar Services based in Sanford, North Carolina. Orbital Solar Services provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on utility-scale solar construction. The Company serves a wide variety of project types, including commercial, substation, solar farms and public utility projects.

The Other category is made up primarily of the Company's corporate activities. This category does not include any operating segments and does not generate revenue. In addition, Orbital’s integrated operations and common administrative support for its operating units require that certain allocations be made to determine segment profitability, including allocations of shared and indirect costs (e.g., insurance costs) and general and administrative costs such as stock bonuses, and professional fees, including audit fees. Certain corporate costs are not allocated and include corporate employees’ salaries and benefits, Board of Director fees and costs, certain legal fees, due diligence costs related to prospective acquisitions, and regulatory costs associated with being a publicly traded company. Unallocated corporate expenses and costs associated with discontinued operations are included in the all-other category.

The following information represents segment activity as of and for the year ended December 31, 2021:

(In thousands)	Telecommunications		Electric Power			Renewables			Other			Total
Revenues from external customers	$	27,799	$	43,599		$	11,550		$	—			82,948
Depreciation and amortization (1)		2,326		5,969			2,931			1,684			12,910
Interest expense		50		3,129			349			4,809			8,337
Income (loss) from operations		43		(13,215	)		(19,043	)		(20,576	)		(52,791	)
Segment assets (2)		80,800		273,726			28,324			28,459			411,309
Other intangibles assets, net		28,571		106,377			7,708			—			142,656
Goodwill		23,742		70,151			7,006			—			100,899
Expenditures for segment assets (3)		1,615		5,905			118			846			8,484

The following information represents segment activity as of and for the year ended December 31, 2020:

(In thousands)	Telecommunications		Electric Power			Renewables			Other			Total
Revenues from external customers	$	—	$	8,482		$	13,005		$	—		$	21,487
Depreciation and amortization (1)		—		433			3,278			1,530			5,241
Interest expense		—		18			332			948			1,298
Loss from operations		—		(4,942	)		(5,479	)		(11,610	)		(22,031	)
Segment assets (2)		—		7,554			28,271			30,220			66,045
Other intangibles assets, net		—		—			10,550			3			10,553
Goodwill				—			7,006			—			7,006
Expenditures for segment assets (3)		—		1,567			17			123			1,707

(1) For the years ended December 31, 2021 and 2020, depreciation and amortization totals included $1.6 million and $1.5 million, respectively that were classified in income from discontinued operations on the Consolidated Statements of Operations in the Other segment. For the year ended December 31, 2021 depreciation and amortization totals included $0.4 million that was classified as cost of revenues in the Telecommunications segment, $4.0 million that was classified as cost of revenues in the Electric Power segment and $54 thousand that was classified as cost of revenue in the Renewables segment. For the year ended December 31, 2020 depreciation and amortization totals included $0.4 million that was classified as cost of revenues in the Electric Power segment and $68 thousand that was classified as cost of revenue in the Renewables segment. 

(2)	Other category includes assets held for sale of the discontinued Orbital Gas subsidiaries.
(3)	Includes purchases of property and equipment and purchases of other intangible assets.

The following information represents revenue by country:

	For the Years Ended December 31,
(In thousands)	2021				2020
USA	$	80,595	97	%	$	21,487	100	%
All Others		2,353	3	%		—	0	%
Total	$	82,948	100	%	$	21,487	100	%

The Company's long-lived assets are located in the U.S.

Adoption of new accounting standards

On January 1, 2021, the Company adopted ASU No. 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASU 2020-04 provides optional expedients and exceptions related to contract modifications and hedge accounting to address the transitions from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance permits an entity to consider contract modification due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. ASU 2020-04 also temporarily allows hedge relationships to continue without de-designation upon changes due to reference rate reform. The standard is effective upon issuance and can be applied as of March 12, 2020 through December 31, 2022. There is not a material effect on the Company's financial statements due to the Company not having any current financial instruments that are affected by this new guidance.

On January 1, 2021, the Company adopted ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. ASU 2020-01 clarifies the interaction between accounting standards related to equity securities, equity method investments, and certain derivatives, and is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The amendments in ASU 2020-01 are effective for the Company's 2021 fiscal year, including interim periods. The new guidance does not currently have a material impact on the Company's consolidated financial statements due to the Company currently not having any equity-method investments or any derivative instruments.

On January 1, 2021, the Company adopted ASU 2019-12, Simplifying the Accounting for Income Taxes, which is guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC 740 and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for the Company's 2021 fiscal year, including interim periods. The ASU does not have a material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements

On  October 28, 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This guidance will require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. This standard was designed to provide consistent recognition and measurement guidance for revenue contracts with customers. Legacy guidance requires entities to record contract assets and contract liabilities acquired to be recorded at fair value. The amendments will be effective for the Company beginning for fiscal years beginning after  December 15, 2022. Early adoption is allowed. If an entity early adopts, the entity would be required to apply the new guidance to all acquisitions made in the year of the early adoption. The Company is still reviewing the standard and as of the reporting date of this filing has not elected to early adopt.