NOTE

: RECENT ACCOUNTING PRONOUNCEMENTS

July 2018,

the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update, (“ASU”)

No.

2018

09,

(“ASU

2018

09”

), Codification Improvements. ASU

2018

was issued to update codification on multiple topics, and includes updates for technical corrections, clarifications and other minor improvements. ASU

2018

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2018,

with early adoption permitted. The adoption of this guidance on

January 1, 2019

did

not

have a material impact on the Company’s financial condition, results of operations, or cash flows.

July 2018,

the FASB issued ASU

No.

2018

10,

(“ASU

2018

10”

), Codification Improvements to Topic

842,

Leases. ASU

2018

was issued to update codification specific to Topic

842,

and includes updates for technical corrections, clarifications and other minor improvements. ASU

2018

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2018,

with early adoption permitted. The adoption of this guidance on

January 1, 2019

did

not

have a material impact on the Company’s financial condition, results of operations, or cash flows.

June 2016,

the FASB issued ASU

No.

2016

13,

(“ASU

2016

13”

), Accounting for Credit Losses (Topic

326

). ASU

2016

requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities. ASU

2016

is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2019,

with early adoption permitted. The Company is evaluating the new guidance, but does

not

expect it to have a material impact on its financial condition, results of operations, or cash flows.

February 2016,

the FASB issued ASU

No.

2016

02,

Leases (Topic

842

). This update seeks to increase the transparency and comparability among public entities by requiring filers to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that companies

may

elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The new standard was effective for public companies for annual periods beginning after

December

15,

2018,

and interim periods within those years, with early adoption permitted.

To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of

months or less, a lessee is permitted to make an accounting policy election by class of underlying asset to

not

recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. Accounting by lessors will remain mostly unchanged from current U.S. GAAP.

The adoption of this guidance on

January 1, 2019

did

not

have a material impact on the Company’s financial condition, results of operations, or cash flows. See Note M - Leases for additional adoption information and disclosures required by Accounting Standards Codification (“ASC”) Topic

842.

January 2016,

the FASB issued ASU

2016

01,

(“ASU

2016

01”

Financial Instruments - Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities

. The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure.

The provisions of ASU

2016

require, among other things, that the Company:

●

Categorize securities as equity securities or debt securities

●

Eliminate the classification of equity securities as trading or available for sale

●

Determine which securities have readily determinable fair values

●

Use the exit price notion when measuring the fair value of financial instruments for disclosure purposes

●

Consider the need for a valuation allowance related to a deferred tax asset on available-for-sale securities in combination with the Company’s other deferred tax assets, and

●

Recognize changes in the fair market value of equity securities in net income

ASU

2016

is effective for annual and interim periods beginning after

December

15,

2017.

With certain exceptions, early adoption was

not

permitted. The adoption of this guidance on

January 1, 2018,

did

not

have a significant impact on the Company’s financial condition or cash flows, but did impact the Company’s results of operations, as the current guidance requires changes in market value related to equity securities to be recognized in net income, rather than being recognized as other comprehensive income. Upon adoption, approximately

$7.4

million in accumulated changes in the fair market value of the Company’s equity securities, net of deferred tax, that were presented at

December 31, 2017

as Accumulated Other Comprehensive Income were reclassified to Retained Earnings.

With the exception of the new standards discussed above, there have been

recent accounting pronouncements or changes in accounting pronouncements during the

six

months ended

June 30, 2019,

as compared to the recent accounting pronouncements described in our Annual Report on Form

-K for the fiscal year ended

December

31,

2018,

that are of significance or potential significance to the Company.