The following management's discussion and analysis focuses on those factors that had a material effect on the Company's financial results of operations during the third quarter of 2021 and first nine months of 2021 as well as the same periods of 2020. It should be read in connection with the Company's condensed unaudited financial statements and notes thereto included in this Form 10-Q.

Impact of the COVID-19 Pandemic

The Company is continuing to closely monitoring the coronavirus (COVID-19) pandemic and its impact on its business. The outbreak and continuing spread of COVID-19 resulted in a substantial curtailment of business activities worldwide and caused weakened economic conditions, both nationally and globally. As part of efforts to contain the spread of COVID-19, state, local and foreign governments imposed various restrictions on the conduct of business and travel. Government restrictions, such as stay-at-home orders and quarantines and company remote work policies led to a significant number of business closures and slowdowns. Even though many of the government restrictions have been lifted, these business closures and slowdowns adversely impacted and will likely continue to adversely impact the Company directly, as well as caused its customers and suppliers to slow or stop production, which significantly disrupted the Company's sales, production and supply chain. For example, as a result of the COVID-19 pandemic, the Company began to experience decreased demand for its products and services during the year ended 2020 and into 2021 along with disruptions to its supply chain. Even thought demand for the Company's products and services has begun to return to pre-COVID-19 levels, the Company can not be assured that the increase in demand will continue or that it will be able to full fill this demand due to continued supply chain disruption which will likely have a material adverse impact on the Company's business, operating results and financial condition. The Company's facilities continue to operate and are doing so safely, having implemented social distancing and enhanced health and safety measures. The Company's leadership continues to address the situation and is adjusting as necessary. The Company also previously implemented necessary procedures to enable a significant portion of its employee base to work remotely. During the first nine months of 2021 most all of the Company's employees have returned to working at the Company's facilities. As the situation continues to evolve into a more prolonged pandemic, the Company expects the COVID-19 pandemic to have a significant adverse effect on economies and financial markets globally, potentially leading to a significant worldwide economic downturn, which could have a significant adverse effect on the Company's business, operating results and financial condition. To partially mitigate the negative impact of the COVID-19 pandemic, in 2020 the Company implemented cost reduction efforts including a reduction of its workforce, a decrease in the Company's contribution to its 401(k) retirement plan and the elimination of all non-essential expenditures. Refer to "Risk Factors" in our 2020 Annual Report on Form 10-K for more information on the potential effects of the ongoing COVID-19 pandemic on our future operating results.

Critical Accounting Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Therefore, the Company is required to make certain estimates, judgments and assumptions that the Company believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The accounting estimates, which the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results, include the following:

Trade Receivables. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by review of the current credit information. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same collection history that has occurred in the past especially given the unpredictability of any effects related to the COVID-19 pandemic. The general payment terms are net 30-45 days for domestic customers and net 30-90 days for foreign customers. A small percentage of the trade receivables balance is denominated in a foreign currency with no concentration in any given country. At the end of each reporting period, the Company analyzes the receivable balance for customers paying in a foreign currency. These balances are adjusted to each quarter or year-end spot rate in accordance with FASB ASC 830, Foreign Currency Matters. The Company also maintains a provision for any customer related returns based upon historical experience of actual returns and any specifically identified product issues, refunds or credits.

Inventories. Inventories are valued at the lower of cost or net realizable value using the last in, first out (LIFO) method. The Company monitors its inventory for obsolescence and records reductions from cost when required.


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Income Taxes. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets and liabilities are presented as long-term on a net basis. The Company follows the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses derecognition, classification, interest and penalties on income taxes, and accounting in interim periods.

Revenue recognition. Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including noncash consideration, consideration paid or payable to customers and significant financing components. While most of the Company's revenue is contracted with customers through one-time purchase orders and short-term contracts, the Company does have long-term arrangements with certain customers. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer.

Individually promised goods and services in a contract are considered a distinct performance obligation and accounted for separately if the customer can benefit from the individual good or service on its own or with other resources that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement. When an arrangement includes multiple performance obligations, the consideration is allocated between the performance obligations in proportion to their estimated standalone selling price. Costs related to products delivered are recognized in the period incurred, unless criteria for capitalization of costs are met. Costs of revenues consist primarily of direct labor, manufacturing overhead, materials and components. The Company does not incur significant upfront costs to obtain a contract. If costs to obtain a contract were to become material, the costs would be recorded as an asset and amortized to expense in a manner consistent with the related recognition of revenue.

The Company excludes governmental assessed and imposed taxes on revenue transactions that are invoiced to customers from revenue. The Company includes freight billed to customers in revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.

The timing of revenue recognition, billings and cash collections results in accounts receivable on the balance sheet.

Performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract's transaction price is allocated to each distinct performance obligation in proportion to its standalone selling price and recognized as revenue when, or as, the performance obligation is satisfied. The Company's various performance obligations and the timing or method of revenue recognition are discussed below:

The Company sells its products to both distributors and end-users. Each unit of product delivered under a customer order represents a distinct and separate performance obligation as the customer can benefit from each unit on its own or with other resources that are readily available to the customer and each unit of product is separately identifiable from other products in the arrangement.

The transaction price for the Company's products is the invoiced amount. The Company does not have variable consideration in the form of refunds, credits, rebates, price concessions, pricing incentives or other items impacting transaction price. The purchase order pricing in arrangements with customers is deemed to approximate standalone selling price; therefore, the Company does not need to allocate proceeds on a relative standalone selling price allocation between performance obligations. The Company applies the practical expedient in FASB ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. There are no material obligations that extend beyond one year.

Revenue is recognized when transfer of control occurs as defined by the terms in the customer agreement. The Company immediately recognizes incidental items that are immaterial in the context of the contract. The Company has also applied the practical expedient in FASB ASC 606-10-32-18 regarding the adjustment of the promised amount of consideration for the effects of a significant financing component when the customer pays for that good or service within one year or less, as the Company does not have any significant financing components in its customer arrangements as payment is received at or shortly after the point of sale, generally thirty to ninety days.


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The Company estimates returns based on an analysis of historical experience if the right to return products is granted to its customers. The Company does not record a return asset as non-conforming products are generally not returned. The Company's return policy does not vary by geography. The customer has no rotation or price protection rights. The Company is not under a warranty obligation except as described below.

Sales commissions. Sales commissions paid to sales representatives are eligible for capitalization as they are incremental costs that would not have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. The Company has elected to apply the practical expedient provided by FASB ASC 340-40-25-4 and recognize the incremental costs of obtaining contracts as an expense when incurred, as the amortization period of the assets that would have otherwise been recognized is one year or less. The Company records these costs in selling, general, and administrative expense.

Product warranty. The Company offers warranties on various products and services. These warranties are assurance type warranties that are not sold on a standalone basis; therefore, they are not considered distinct performance obligations. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the revenue is recognized for the product sale.

International revenue. The Company markets its products to numerous countries in North America, Europe, Latin America, Asia and other parts of the world. Foreign sales were approximately 28% of total sales during the first nine months of 2021 and 30% during the first nine months of 2020.





Results of Operations

Quarter Ended September 30, 2021 Compared to Quarter Ended September 30, 2020

Sales. The Company's 2021 third quarter sales of $4.7 million were $1.6 million or 51.3%, higher than the 2020 third quarter sales of $3.1 million. Chromaline's 2021 third quarter sales of $3.0 million increased by 44.1% from third quarter 2020 sales of $2.1 million while IKONICS Imaging sales increased from $893,000 in the third quarter of 2020 to $1.4 million in the third quarter of 2021, a 61.9% increase. DTX sales also increased by 32.1% in the third quarter of 2021 to $82,000 compared to $62,000 in the third quarter of 2020 while AMS sales grew from $129,000 in the third quarter of 2020 to $261,000 in the third quarter of 2021, a 102.6% increase. Chromaline, IKONICS Imaging, DTX, and AMS sales in third quarter of 2020 were negatively impacted by the slowdown in economic activity related to the COVID-19 pandemic. IKONICS Imaging sales in the third quarter of 2021 have also been favorably impacted by improved IKONART® sales.

Gross Profit. Gross profit was $1.6 million or 33.4% of sales, in the third quarter of 2021 compared to $874,000, or 27.9%, of sales for the same period in 2020. The Chromaline gross margin increased from 28.1% in the third quarter of 2020 to 29.7% in the third quarter of 2021 while the IKONICS Imaging gross margin increased from 44.0% in the third quarter of 2020 to 47.4% in the third quarter of 2021. The 2021 third quarter DTX gross margin was 55.1% compared to 46.6% for the the same period last year while the AMS gross margin improved from a negative 96.7% in the third quarter of 2020 to a negative 10.3% in the third quarter of 2021. All gross margins in 2020 were unfavorably impacted by lower sales volumes and lower production output caused by the COVID-19 pandemic.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.3 million or 47.9% of sales, in the third quarter of 2021 compared to $980.000, or 31.3% of sales, for the same period in 2020. Selling, general and administrative expenses for the third quarter of 2021 increased primarily due to approximately $1.1 million of professional service and stock compensation expenses related to the pending strategic business combination with TeraWulf, Inc.

Research and Development Expenses. Research and development expenses during the third quarter of 2021 were $135,000, or 2.8% of sales, and were similar to third quarter 2020 research and development expense of $137,000, or 4.4%, of sales.

Interest Expense. Interest expense for the third quarter of 2020 was $25,000 and was nominal in the third quarter of 2021.

Income Taxes. For the three months ended September 30, 2021 the effective tax rate was an expense of 3.0%, compared to a benefit of 0.5% for the three months ended September 30, 2020. The Company recorded income tax expense $26,000 and an expense of $7,000 for the three months ended September 30, 2021 and 2020, respectively.





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Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Sales. The Company's 2021 sales for the first nine months of $12.1 million were $2.9 million, or 31.1%, higher than the 2020 first nine months sales of $9.2 million as 2020 sales were negatively impacted by the slowdown in economic activity related to the COVID-19 pandemic. Chromaline 2021 sales for the first nine months of $7.3 million increased by 29.7% from 2020 first nine months sales of $5.6 million while IKONICS Imaging first nine month sales of $3.8 million in 2021 were $1.3 million, or 52.6% higher than sales for the first nine months of 2020. IKONICS Imaging sales in 2021 also benefitted from improved IKONART® sales. AMS sales in the first nine months of 2021 were $720,000 compared to $857,000 for the same period in 2020, a 15.9% decrease. For AMS sales, both the negative effect of the COVID-19 pandemic in 2020 and the recovery in 2021 has been delayed compared to IKONICS other business segments. DTX sales for the first nine months of 2021 of $244,000 increased by 9.0% over DTX sales for the first nine months of 2020.

Gross Profit. Gross profit was $4.0 million, or 33.2% of sales, in the first nine months of 2021 compared to $2.4 million, or 26.2% of sales, for the same period in 2020. The Chromaline gross margin increased from 23.7% in the first nine months of 2020 to 28.6% for the first nine months of 2021 while the IKONICS Imaging gross margin increased from 43.9% in the first nine months of 2020 to 48.6% in the first nine months of 2021. The 2021 DTX gross margin for the first nine months was 53.3% compared to 51.1% for the same period last year while the AMS gross margin improved from a negative 15.0% for the first nine months of 2020 to a negative 7.7% for the same period in 2021. All gross margins in 2020 were unfavorably impacted by lower sales volumes and lower production output caused by the COVID-19 pandemic.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $5.4 million, or 44.8% of sales, in the first nine months of 2021 compared to $4.0 million, or 43.1% of sales, for the same period in 2020. Selling, general and administrative expenses for the first nine months of 2021 include approximately $1.7 million of professional service and $200,000 of stock compensation expense related to the pending strategic business combination with TeraWulf, Inc. Selling, general and administrative expenses for the first nine months of 2020 were affected by $365,000 of one-time costs related to the Chief Executive Officer transition occurring in the first nine months of 2020. These costs include severance payments, a signing bonus, relocation expenses and executive search consulting expenses.

Research and Development Expenses. Research and development expenses during the first nine months of 2021 were $398,000, or 3.3% of sales, versus $521,000, or 5.7%, of sales for the same period in 2020. Research and development expenses in the first nine months of 2021 were favorably impacted by a reduction in staffing levels.

Interest Expense. Interest expense for the first nine months of 2021 and 2020 was $102,000 and $71,000, respectively. The interest expense increase for the first nine months of 2021 is due to the $82,000 write off of debts acquisition costs when the loan was repaid.

Income Taxes. For the first nine months of 2021, the Company realized an income tax expense of $6,000, or an effective tax rate of 0.3%, compared to a benefit of $232,000, or an effective tax rate of 10.9% for the nine months ended September 30, 2020. The primary driver of the change in the Company's effective tax rate is attributable to additional benefit from a net operating loss carryback claim recorded in the prior year.

Liquidity and Capital Resources

Outside of the building expansion, for which $3.4 million in financing was obtained during 2016 and the $1.2 million Paycheck Protection loan the Company received and was forgiven in 2020, the Company has financed its operations principally with funds generated from operations. These funds have historically been sufficient to cover the Company's normal operating expenditures, annual capital requirements, and research and development expenditures.

Cash was $1.5 million and $3.7 million at September 30, 2021 and December 31, 2020, respectively. Operating activities provided $565,000 in cash during the first nine months of 2021 compared to a use of cash of $630,000 during the same period in 2020. Cash provided by or used in operating activities is primarily the result of net losses adjusted for non-cash depreciation, amortization, stock based compensation, and certain changes in working capital components discussed in the following paragraph.

During the first nine months of 2021, trade receivables decreased by $244,000 due to improved collections. The Company believes that the quality of its receivables is high and that strong internal controls are in place to maintain proper collections. Inventories remained relatively flat with an increase of $5,000. Prepaid expenses and other assets increased by $58,000 reflecting the prepayment of insurance premiums. Accrued expenses increased $135,000 due to the timing of payroll. Accounts payable increased by $1.2 million mainly due to professional service expenses related to the pending strategic business combination with TeraWulf, Inc. Income taxes receivable decreased by $214,000 as the Company received payment during 2021 on a previously recorded income tax refund.

During the first nine months of 2020, trade receivables decreased by $1.0 million. This decrease was due primarily to a slowdown in sales of products and services during the first nine months of 2020, as a result of the aforementioned COVID-19 pandemic. The Company believes that the quality of its receivables is high and that strong internal controls are in place to maintain proper collections. Inventories decreased by $25,000 due to lower raw material levels. Prepaid expenses and other assets decreased by $746,000 reflecting a decrease in a receivable related to the reimbursement of 2019 medical insurance costs that the Company received from its stop-loss insurance carrier. Accrued expenses decreased $526,000, reflecting a decrease in the accrual for health insurance costs. Accounts payable decreased by $303,000 due to the Company's cost reduction efforts and a reduction in raw material purchases in anticipation of lower sales volumes. Income taxes receivable increased by $240,000 as the Company recognized an income tax benefit attributable to a net operating loss carryback claim.

During the first nine months of 2021, cash used in investing activities was $19,000. The Company's purchases of equipment of $14,000 were mainly for improvements to production and process capabilities. The Company incurred $10,000 in patent application costs that the Company records as an asset and amortizes upon successful completion of the application process. Additionally, the Company received $5,000 in proceeds from the sale of a vehicle.

During the first nine months of 2020, cash provided by investing activities was $2.1 million. Nine certificates of deposits totaling $2.2 million matured during the first nine months of 2020. The Company's purchases of equipment of $150,000 were mainly for improvements to production and process capabilities and to replace a vehicle. The Company received $18,000 in proceeds from the sale of a vehicle. Also, during the first nine months of 2020, the Company incurred $13,000 in patent application costs that the Company records as an asset and amortizes upon successful completion of the application process.


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During the first nine months of 2021, the Company received $34,000 from the issuance of 3,833 shares of common stock from the exercise of stock options. There were no exercises of stock options during the first nine months of 2020.

On April 1, 2016, the Company entered into a financing agreement (the "Financing Agreement") under which the Duluth Economic Development Authority (the "Issuer") agreed to sell $3,415,000 of its Tax Exempt Industrial Revenue Bonds, Series 2016 (IKONICS Project) (the "Bonds") to Wells Fargo Bank, National Association (the "Bank"), and the Bank agreed to lend to the Company the proceeds received from the sale of the Bonds (the "Loan"). Related to the Company's Loan, the Company made principal payments of $108,000 during the first nine months of 2020.

The Company was subject to certain customary covenants set forth in the Loan, including a requirement that the Company maintain a debt service coverage ratio of not less than 1.25 to 1.00. As of December 31, 2020, the Company was in compliance with the debt service coverage ratio loan covenant. During the first nine months of 2021, the Company was notified by the bank that per the loan agreement the bank will recall the loan on April 1, 2021. On April 1, 2021, the Company repaid the entire loan including principal amount of $2.7 million and interest of $6,100 with existing cash on hand.

On April 18, 2020, the Company entered into a loan pursuant to the Paycheck Protection Program under the CARES Act, as administered by the U.S. Small Business Administration (the "SBA"). The loan, in the principal amount of $1,214,500 (the "PPP Loan"), was disbursed by BMO Harris Bank National Association ("Lender") on April 22, 2020, pursuant to a Paycheck Protection Program Promissory Note and Agreement (the "Note and Agreement"). The entire PPP Loan was forgiven by the SBA and the Lender prior to the end of 2020.

During the third quarter of 2021, the Company renewed a bank line of credit providing for borrowings of up to $2,050,000 which expires December 31, 2021 if not renewed. The line of credit is collateralized by the Company's assets and bears interest at 0.85 percentage points over the highest Prime. The Company did not utilize this line of credit or its previous line of credit during the first nine months of 2021 or 2020, and there were no borrowings outstanding as of September 30, 2021 or December 31, 2020. There are no financial covenants related to the line of credit, and the Company may secure a similar line of credit when the current line of credit expires.

The Company believes that current financial resources, its line of credit, and cash generated from operations, along with the Company's capacity for additional debt and/or equity financing will be sufficient to fund current and anticipated business operations. However, the full extent of the effect of the COVID-19 pandemic on the Company's customers, supply chain and business cannot be reasonably assessed at this time and the Company expects its full year 2021 results of operations to be adversely affected. The Company implemented a plan to mitigate the impact of COVID-19 which includes permanent reductions to the Company's workforce, temporary reductions in board and officer compensation, temporary suspension of the Company's contribution to its 401(k) retirement plan and the elimination of all non-essential expenditures. The impact of COVID-19 on the Company's operating results will depend on future developments, which are highly uncertain and cannot be predicted, including governmental and business reactions to the pandemic.





Capital Expenditures

Through the first nine months of 2021, the Company incurred $14,000 of capital expenditures mainly for improvements to production and process capabilities.

The Company anticipates minimal capital expenditures for the remainder of 2021. Currently, the Company expects to fund its capital expenditures with existing cash and cash generated from operating activities.


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International Activity

The Company markets its products to numerous countries in North America, Europe, Latin America, Asia and other parts of the world. Foreign sales were approximately 28% of total sales during the first nine months of 2021 and 30% during the first nine months of 2020. The fluctuations of certain foreign currencies have not significantly impacted the Company's operations, as the Company's foreign sales are not concentrated in any one region of the world, although a strong U.S. dollar does make the Company's products less competitive internationally. The Company believes its vulnerability due to uncertainties in foreign currency fluctuations and general economic conditions in foreign countries is not significant.

The Company's foreign transactions are primarily negotiated, invoiced and paid in U.S. dollars, while a portion are transacted in Euros. The Company has not implemented an economic hedging strategy to reduce the risk of foreign currency translation or transaction exposures, as management does not believe this to be a significant risk based on the scope and geographic diversity of the Company's foreign operations. Furthermore, the impact of foreign exchange on the Company's balance sheet and operating results was not material in either 2021 or 2020.





Future Outlook

See the discussion under the heading "Impact of the COVID-19 Pandemic" above for the Company's discussion of the COVID-19 pandemic.

IKONICS has spent an average of approximately 5% of annual sales in research and development and has made capital expenditures related to new products and programs. The Company plans to maintain its efforts in these areas to expedite internal product development as well as to form technological alliances with outside entities to commercialize new product opportunities.

The Company is also continuing to pursue DTX-related business initiatives. In addition to making efforts towards growing the inkjet technology business, the Company offers a range of products for creating texture surfaces and has introduced a fluid for use in prototyping. The Company has been awarded European, Japanese, and United States patents on its DTX technologies. The Company has also modified its DTX technology to facilitate entry into the market for prototyping.

The Company continues to make progress on its AMS business. The Company has three long-term sales agreements in place for its technology with major aerospace companies. However, based on customer communications, the Company anticipates reduced order volume for 2021 due to the COVID-19 pandemic.

Both the Chromaline and IKONICS Imaging units operate in mature markets. Although these business units require aggressive strategies to grow market share, both are developing new products and business relationships that the Company believes will contribute to growth. Early in 2019, the Company introduced its new IKONART® product to positive reviews and is generating sales. IKONART® provides a new way to make custom reusable stencils for the creative arts markets. In addition to its traditional emphasis on domestic markets, the Company will continue efforts to grow its business internationally by attempting to develop new markets and expanding market share where it has already established a presence. However, the strong U.S. dollar has made international growth challenging.

Other future activities undertaken to expand the Company's business may include strategic partnerships, acquisitions, building improvements, equipment additions, new product development and marketing opportunities.

In entering into the merger agreement relating to our pending strategic business combination with TeraWulf, Inc., we agreed to certain covenants that place restrictions on our operations until the consummation of the transaction. These operating covenants may restrict our ability to complete some of the aforementioned future activities until we are no longer subject to them.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope, and in November 2018, issued ASU No. 2018-19 and in April 2019, issued ASU No. 2019-04 and in May 2019, issued ASU No. 2019-05, and in November 2019, issued ASU No. 2019-11, which amended the standard. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is still evaluating the impact of this ASU.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

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