2.	Basis of Presentation and Revenue Recognition Policy

The interim financial information included in this report is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods reflected herein. These interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, omit certain information and note disclosures that would be necessary to present the statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The interim condensed consolidated financial statements should be read in conjunction with the Company's current year SEC filings, as well as the Company's consolidated financial statements for the year ended

December 31, 2020,

which are included in the Company's Annual Report on Form

-K for the fiscal year ended

December 31, 2020 (

the

“2020

Form

-K”), filed with the SEC on

March 10, 2021.

The results of operations for the

three

months ended

March 31, 2021

in this Quarterly Report on Form

-Q are

not

necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of

December 31, 2020

was prepared using information from the audited consolidated balance sheet contained in the

2020

Form

-K; however, it does

not

include all disclosures required by U.S. GAAP for annual consolidated financial statements.

Net sales includes revenue from products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Our customer contracts have a single performance obligation: transfer control of products to customers. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring control of products. All revenue is recognized when we satisfy our performance obligations under the applicable contract. We recognize revenue in connection with transferring control of the promised products to the customer, with revenue being recognized at the point in time when the customer obtains control of the products, which is generally when title passes to the customer upon delivery to a

third

party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements, at which time a receivable is created for the invoice sent to the customer. Shipping and handling activities are performed prior to the customer obtaining control of the goods, and are accounted for as fulfillment activities and are

not

a promised good or service. Shipping and handling charges billed to customers are included in revenue. Shipping and handling costs, associated with the distribution of the Company's product to the customers, are recorded in cost of goods sold and are recognized when control of the product is transferred to the customer, which is generally when title passes to the customer upon delivery to a

third

party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements. We estimate product returns based on historical return rates and estimate rebates based on contractual agreements. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. Sales taxes and value added taxes in foreign and domestic jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales. The Company manufactures certain private label goods for customers and has determined that control does

not

pass to the customer at the time of manufacture, based upon the nature of the private labelling. The Company has determined as of

March 31, 2021

that it had

material contract assets, and concluded that its contract liabilities (primarily rebates) had the right of offset against customer receivables. As of

March 31, 2021,

we had contract liabilities of

$113,000

as a result of customer advance payments of orders in connection with the COVID-

pandemic. See Note

and Note

of these Notes to Condensed Consolidated Financial Statements (Unaudited) for information on revenue disaggregated by type and by geographic region.