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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38785

STRYVE FOODS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	87-1760117
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Post Office Box 864

Frisco, TX 75034

(Address of principal executive offices)

(972) 987-5130

(Issuer’s telephone number)

5801 Tennyson Parkway, Suite 275

Plano, TX 75024

(Former address of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	SNAX	The NASDAQ Stock Market LLC
Warrants, each exercisable for one share of Class A common stock at an exercise price of $11.50 per share	SNAXW	The NASDAQ Stock Market LLC

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At May 8, 2023, 25,881,391 shares of the registrant’s Class A common stock, $0.0001 par value, and 6,145,995 shares of the registrant’s Class V common stock, $0.0001 par value, were issued and outstanding.

STRYVE FOODS, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2023

TABLE OF CONTENTS

	Page
Part I. Financial Information	1
Item 1. Unaudited Condensed Consolidated Financial Statements	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Changes in Stockholders’ Equity	3
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	30
Part II. Other Information	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	32
Part III. Signatures	33

i

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2023			2022
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	376,872		$	623,163
Accounts receivable, net		2,978,345			2,488,693
Inventory, net		8,250,978			8,258,642
Prepaid expenses and other current assets		1,476,647			1,550,717
Total current assets		13,082,843			12,921,215
Property and equipment, net		8,374,135			8,816,573
Right of use asset, net		4,911,128			5,009,954
Goodwill		8,450,000			8,450,000
Intangible asset, net		4,301,441			4,362,024
TOTAL ASSETS	$	39,119,547		$	39,559,766
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	4,354,407		$	3,009,875
Accrued expenses		2,028,435			1,727,555
Current portion of lease liability		321,920			327,915
Line of credit, net of debt issuance costs		1,652,101			1,046,101
Current portion of long-term debt		890,260			969,421
Total current liabilities		9,247,123			7,080,867
Long-term debt, net of current portion, net of debt issuance costs		5,639,000			3,696,578
Lease liability, net of current portion		4,650,513			4,734,128
Financing obligation - related party operating lease		7,500,000			7,500,000
Deferred tax liability, net		1,555			1,555
Deferred stock compensation liability		275,351			89,828
Warrant liability		12,375			20,625
TOTAL LIABILITIES		27,325,917			23,123,581
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding		—			—
Class A common stock - $0.0001 par value, 400,000,000 shares authorized, 25,881,391 and 25,727,783 shares issued and outstanding, respectively		2,588			2,572
Class V common stock - $0.0001 par value, 200,000,000 shares authorized, 6,145,995 and 6,299,603 shares issued and outstanding		615			630
Additional paid-in-capital		133,684,599			133,684,599
Accumulated deficit		(121,894,172	)		(117,251,616	)
TOTAL STOCKHOLDERS' EQUITY		11,793,630			16,436,185
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	39,119,547		$	39,559,766

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2023			2022
SALES, net	$	4,646,253		$	7,420,554
COST OF GOODS SOLD (exclusive of depreciation shown separately below)		3,683,002			6,296,626
GROSS PROFIT		963,251			1,123,928
OPERATING EXPENSES
Selling expenses		1,969,010			4,026,055
Operations expense		513,589			1,230,384
Salaries and wages		2,163,152			2,585,899
Depreciation and amortization expense		551,656			444,366
Total operating expenses		5,197,407			8,286,704
OPERATING LOSS		(4,234,156	)		(7,162,776	)
OTHER (EXPENSE) INCOME
Interest expense		(398,945	)		(188,494	)
Change in fair value of Private Warrants		8,250			45,314
Other expense		(14,374	)		—
Total other (expense) income		(405,069	)		(143,180	)
NET LOSS BEFORE INCOME TAXES		(4,639,225	)		(7,305,956	)
Income tax expense		3,331			7,786
NET LOSS	$	(4,642,556	)	$	(7,313,742	)
Loss per common share:
Basic and diluted	$	(0.15	)	$	(0.25	)
Weighted average shares outstanding:
Basic and diluted		31,282,710			29,758,343

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE MONTHS ENDED MARCH 31, 2023

(Unaudited)

	Class A Common Stock				Class V Common Stock						Additional		Accumulated
	Shares		Amount		Shares			Amount			Paid-in-Capital		Deficit			Total
BALANCE, JANUARY 1, 2023		25,727,783	$	2,573		6,299,603		$	630		$	133,684,599	$	(117,251,616	)	$	16,436,185
Exchange of Class B units and Class V shares for Class A shares		153,608		15		(153,608	)		(15	)		—		—			—
Net loss		—		—		—			—			—		(4,642,556	)		(4,642,556	)
BALANCE, MARCH 31, 2023		25,881,391	$	2,588		6,145,995		$	615		$	133,684,599	$	(121,894,172	)	$	11,793,630

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE MONTHS ENDED MARCH 31, 2022

(Unaudited)

	Class A Common Stock				Class V Common Stock				Additional			Accumulated
	Shares		Amount		Shares		Amount		Paid-in-Capital			Deficit			Total
BALANCE, JANUARY 1, 2022		8,633,755	$	863		11,502,355	$	1,150	$	100,551,257		$	(84,111,171	)	$	16,442,099
PIPE Investment		2,496,934		250		—		—		32,310,937			—			32,311,187
Prefunded Warrants converted into Class A Common Stock		1,443,557		144		—		—		(69	)		—			75
Post closing adjustment of Business Combination Agreement		—		—		—		—		(238,089	)		—			(238,089	)
Issuance of restricted stock awards		108,500		11		—		—		36,698			—			36,709
Net loss		—		—		—		—		—			(7,313,742	)		(7,313,742	)
BALANCE, MARCH 31, 2022		12,682,746	$	1,268		11,502,355	$	1,150	$	132,660,734		$	(91,424,913	)	$	41,238,239

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,642,556	)	$	(7,313,742	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		491,072			383,782
Amortization of intangible assets		60,584			60,584
Amortization of debt issuance costs		40,145			—
Amortization of right-of-use asset		98,826			48,598
Bad debt expense		73,219			55,309
Stock based compensation expense		185,524			327,759
Change in fair value of Private Warrants		(8,250	)		(45,314	)
Changes in operating assets and liabilities:
Accounts receivable		(562,872	)		(757,632	)
Inventory		7,664			(6,030,711	)
Vendor deposits		—			4,193
Prepaid expenses and other current assets		74,068			68,854
Accounts payable		1,344,535			(334,513	)
Accrued liabilities		300,881			(546,460	)
Operating lease obligations		(89,610	)		(47,871	)
Net cash used in operating activities		(2,626,771	)		(14,127,164	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for purchase of equipment		(48,635	)		(693,329	)
Net cash used in investing activities		(48,635	)		(693,329	)
CASH FLOWS FROM FINANCING ACTIVITIES
PIPE capital raise		—			32,311,187
Exercise of Prefunded Warrants		—			75
Post closing adjustment of Business Combination Agreement		—			(238,089	)
Borrowings on long-term debt		2,000,000			—
Repayments on long-term debt		(30,125	)		(4,843,403	)
Borrowings on short-term debt		3,360,187			—
Repayments on short-term debt		(2,900,947	)		(2,000,000	)
Net cash provided by financing activities		2,429,115			25,229,770
Net change in cash and cash equivalents		(246,291	)		10,409,277
Cash and cash equivalents at beginning of period		623,163			2,217,191
Cash and cash equivalents at end of period	$	376,872		$	12,626,468
SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	398,945		$	222,458
NON-CASH INVESTING AND FINANCING ACTIVITY:
Non-cash commercial premium finance borrowing	$	291,339		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

STRYVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2023

(Unaudited)

Note 1 - Organization and Description of Business

Stryve Foods, Inc. (“Stryve” or the “Company”) is an emerging healthy snacking company which manufactures, markets and sells highly differentiated healthy snacking products. The Company offers convenient snacks that are lower in sugar and carbohydrates and higher in protein than other snacks. The Company is headquartered in Plano, TX and recently changed its mailing address to a post office box while it navigates a potential office relocation for its corporate staff. The Company has manufacturing operations in Madill, Oklahoma and fulfillment operations in Frisco, Texas.

Note 2 - Liquidity

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

The Company has historically funded its operations with cash flow from operations, equity capital raises, and note payable agreements from investors, in addition to bank loans. The Company's principal uses of cash have been debt service, capital expenditures, working capital, and funding operations. The Company incurred net losses of approximately $4.6 million during the three months ended March 31, 2023. Cash used in operating activities was approximately $2.6 million for the three months ended March 31, 2023. As of March 31, 2023, the Company has working capital excluding cash and debt of $6.3 million which compares to the $7.6 million as of December 31, 2022 and has approximately $7.8 million of indebtedness.

Late in the third quarter of 2022, the Company secured a term loan in the maximum amount of $6.0 million, with $4.0 million being advanced upon execution and up to two additional $1.0 million advances available to the Company subject to performance hurdles. Additionally, the Company secured an asset based line of credit with a $15.0 million credit limit subject to accounts receivable and inventory balances. The term loan and asset based line of credit were secured in order to augment the Company's liquidity, as needed, through the execution of management's plan. The Company had drawn $4.0 million of the term loan and $3.8 million (net of repayments) of the asset based line of credit as of March 31, 2023. See Note 5 for a description of the asset based line of credit and Note 6 for a description of the term loan.

In late 2022, the Company invested more heavily into its inventories than its sales volumes would indicate as being required. Given that prevailing beef prices were rising at the time, this investment in inventory was driven in part by opportunistic commodity beef purchases made towards the end of the third quarter of 2022 to secure attractive pricing ahead of the ramp in prices. While this endeavor helped to insulate the Company from the increased commodity market in the fourth quarter of 2022, it came at a cost of dedicating a portion of its liquidity. The Company has also experienced a slower sell-through of its rationalized slow-moving, and obsolete inventory than expected due to many other consumer packaged goods companies conducting similar inventory management and rationalization programs at the same time creating a surplus of goods in the channels commonly used to sell off this type of rationalized, slow-moving, or obsolete inventory. Additionally, as previously mentioned, in the fourth quarter of 2022 and early in the first quarter of 2023, the Company experienced irregular order patterns from its retail and distribution customers due to what it believes to be working capital management activities not specific to the Company's products in which retailers and distributors may have sought to bring down their inventory levels broadly.

In 2023, the Company has had to make significant investments in its working capital to support increased distribution with marquee retailers coming online in the second quarter of the year. Many of these distribution resets have been secured in large part due to the new packaging design. Accordingly, the Company has had to build and project continuing to build net new inventories to support these upcoming resets.

The investment in inventory ahead of sales has put pressure on the Company's liquidity position given the structure and terms of its credit facilities and has required it to seek external financing. While the Company anticipates the increased volumes will result in improved financial results and a significantly narrowed cash loss, it does anticipate continued growth which, depending on the rate of growth, may require more external financing. Ultimately, these conditions, events, and general uncertainty around the current state of the capital markets has raised substantial doubt about the Company's ability to continue as a going concern.

6

On April 19, 2023, the Company issued an aggregate of $4,089,000 in principal amount of secured promissory notes to select accredited investors carrying a 12% accrued interest rate to help support the working capital and growth needs of the business. The aggregate principal amount of the notes is inclusive of $1,195,000 from related parties. These notes have a maturity date of December 31, 2023.

While this most recent financing has provided the Company with liquidity to support its near-term goals, given its maturity date, the Company is still evaluating several different strategies to enhance its liquidity position. These strategies may include, but are not limited to, pursuing additional actions under the Company's business reorganization plan, and seeking additional financing from both the public and private markets through the issuance of equity or debt securities. The outcome of these matters cannot be predicted with any certainty at this time. If capital is not available to the Company when, and in the amounts needed, it could be required to delay, scale back, or abandon some of its operations, which could materially harm its business, financial condition and results of operations.

Notwithstanding the foregoing, the Company has examined spending throughout its business and identified ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The Company has also sought to optimize its channel strategy and rationalize its customer and product portfolio to eliminate sales that detract from its profitability goals. The Company also anticipates reducing its inventory levels throughout 2023 which would be a near-term source of liquidity.

The Company has prepared cash flow forecasts which indicate that based on its expected operating losses and cash consumption due to growth in working capital, it believes that absent an infusion of sufficient capital there is substantial doubt about its ability to continue as a going concern for twelve months after the date the condensed consolidated financial statements for the quarter ended March 31, 2023 are issued. The Company's plan includes the items noted above as well as securing external financing which may include raising debt or equity capital. These plans are not entirely within the Company's control including its ability to raise sufficient capital on favorable terms, if at all.

Note 3 - Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, these interim financial statements do not include all information and footnotes required under GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of results of operations, balance sheet, cash flows, and shareholders' equity for the periods presented. The unaudited condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2022. The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted.

Prior period reclassifications

Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period presentation. Specifically, the presentation of changes in operating lease right-of-use assets and operating lease liabilities to conform with the current period presentation on the condensed consolidated statements of cash flows.

7

Use of Estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Accounting estimates and assumptions discussed herein are those that management considers to be the most critical to an understanding of the condensed consolidated financial statements because they inherently involve significant judgments and uncertainties. Estimates are used for, but not limited to revenue recognition, allowance for doubtful accounts and customer allowances, useful lives for depreciation and amortization, standard costs of inventory, provisions for inventory obsolescence, impairments of goodwill and long-lived assets, incremental borrowing rate for leases, warrant liabilities and valuation allowances for deferred tax assets. All of these estimates reflect management’s judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions persist longer or deteriorate further than expected, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of assets among other effects.

Going Concern

In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

Determining the extent to which conditions or events raise substantial doubt about the Company's ability to continue as a going concern and the extent to which mitigating plans sufficiently alleviate any such substantial doubt requires significant judgment and estimation by us. The Company's significant estimates related to this analysis may include identifying business factors such as size, growth and profitability used in the forecasted financial results and liquidity. Further, the Company makes assumptions about the probability that management's plans will be effectively implemented and alleviate substantial doubt and its ability to continue as a going concern. The Company believes that the estimated values used in its going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. See Note 2, Liquidity, for more information about the Company's going concern assessment.

Accounts Receivable and Allowance for Doubtful Accounts, Returns, and Deductions

Accounts receivable are customer obligations due under normal trade terms. The Company records accounts receivable at their net realizable value, which requires management to estimate the collectability of the Company’s receivables. Judgment is required in assessing the realization of these receivables, including the credit worthiness of each counterparty and the related aging of past due balances. Management provides for an allowance for doubtful accounts equal to the estimated uncollectable amounts, in addition to a general provision based on historical experience. Management provides for the customer accommodations based upon a general provision of a percentage of sales in addition to known deductions. As of March 31, 2023, and December 31, 2022, the allowance for doubtful accounts and returns and deductions totaled $190,579 and $117,360, respectively. Total bad debt expense for the three months ended March 31, 2023 and 2022, was $73,219 and $55,309, respectively.

Concentration of Credit Risk

The balance sheet items that potentially subject the Company to concentrations of credit risk are primarily cash and accounts receivable. The Company continuously evaluates the credit worthiness of its customers’ financial condition and generally does not require collateral. The Company maintains cash balances in bank accounts that may, at times, exceed Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. The Company incurred no losses from such accounts and management considers the risk of loss to be minimal.

For the three months ended March 31, 2023 and 2022, the following customers and vendors represented more than 10% of consolidated sales and purchases, respectively.

	2023	2022
Customer A	23%	—
Customer B	14%	12%
Customer C	11%	11%
Customer D	—	23%
Vendor A	—	20%
Vendor B	—	11%

8

As of March 31, 2023 and 2022, the following customers and vendors represented more than 10% of accounts receivable and accounts payable balances, respectively.

	2023	2022
Customer A	37%	—
Customer B	11%	—
Customer C	11%	14%
Customer D	—	20%
Customer E	10%	—
Customer F	—	28%
Vendor A	—	13%
Vendor B	—	13%

Revenue Recognition Policy

The Company manufactures and markets a broad range of protein snack products through multiple distribution channels. The products are offered through branded and private label items. Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers:

(1)Identification of the contract with a customer

(2)Identification of the performance obligations in the contract

(3)Determination of the transaction price

(4)Allocation of the transaction price to the performance obligations in the contract

(5)Recognition of revenue when, or as, the Company satisfies a performance obligation

The Company’s revenue derived from the sale of branded and private label products is considered variable consideration as the contract includes discounts, rebates, incentives and other similar items. Generally, revenue is recognized at the point in time when the customer obtains control of the product, which may occur upon either shipment or delivery of the product. The payment terms of the Company’s contracts are generally net 30 to 60 days, although early pay discounts are offered to customers.

The Company regularly experiences customer deductions from amounts invoiced due to product returns, product shortages, and delivery nonperformance penalty fees. This variable consideration is estimated using the expected value approach based on the Company’s historical experience, and it is recognized as a reduction to the transaction price in the same period that the related product sale is recognized.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to customers. Revenue is recognized when the Company satisfies its performance obligations under the contract by transferring the promised product to its customer.

The Company’s contracts generally do not include any material significant financing components.

9

Performance Obligations

The Company has elected the following practical expedients provided for in ASC 606:

(1)The Company has excluded from its transaction price all sales and similar taxes collected from its customers.

(2)The Company has elected to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

(3)The Company has elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.

(4)The portfolio approach has been elected by the Company as it expects any effects would not be materially different in application at the portfolio level compared with the application at an individual contract level.

(5)The Company has elected not to disclose information about its remaining performance obligations for any contract that has an original expected duration of one year or less.

Neither the type of good sold nor the location of sale significantly impacts the nature, amount, timing, or uncertainty of revenue and cash flows.

Inventory

Inventories consist of raw materials, work in process, and finished goods, are stated at lower of cost or net realizable value determined using the standard cost method. The Company reviews the value of items in inventory and provides write-downs and write-offs of inventory for obsolete, damaged, or expired inventory. Write-downs and write-offs are included in cost of goods sold.

Debt Issuance Costs

Debt issuance costs are costs incurred to obtain new debt financing. Debt issuance costs are presented in the accompanying condensed consolidated balance sheet as a reduction in the carrying value of the debt and are accredited to interest expense using the effective interest method.

Leases

In accordance with FASB ASC Topic 842, Leases, the Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt, net of debt issuance costs and current maturities in the condensed consolidated balance sheets.