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operating agreement setting forth the Manager’s rights with respect to the allocation |
shares it owns, including the right to receive profit allocations from us, and the supplemental |
put provision relating to the Manager’s right to cause us to purchase the allocation |
shares it owns. 103 Off-Balance |
Sheet Arrangements We |
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, |
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Critical |
Accounting Policies The |
following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in |
conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including |
the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that |
are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial |
condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial |
condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the |
need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting |
estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future |
events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting |
policies involve the most significant estimates and judgments used in the preparation of our financial statements: Revenue |
Recognition and Cost of Revenue We |
record revenue in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers.” Revenue is recognized to depict |
the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled |
in exchange for those goods or services. ASC 606 also requires additional disclosure about the nature, amount, timing, and uncertainty |
of revenue and cash flows arising from customer purchase orders, including significant judgments. Retail |
and Appliances Segment We collect payment for special-order models including |
tax and partial payment for non-special orders from the customer at the time the order is placed. We do not incur incremental costs obtaining |
purchase orders from customers, however, if we did, because all contracts are less than a year in duration, any contract costs incurred |
would be expensed rather than capitalized. Performance |
Obligations – The revenue that we recognize arises from orders we receive from customers. Our performance obligations under the |
customer orders correspond to each sale of merchandise that we make to customers under the purchase orders; as a result, each purchase |
order generally contains only one performance obligation based on the merchandise sale to be completed. Control of the delivery transfers |
to customers when the customer can direct the use of, and obtain substantially all the benefits from, our products, which generally occurs |
when the customer assumes the risk of loss. The transfer of control generally occurs at the point of pickup, shipment, or installation. |
Once this occurs, we have satisfied our performance obligation and we recognize revenue. Transaction |
Price ‒ We agree with customers on the selling price of each transaction. This transaction price is generally based on the agreed |
upon sales price. In our contracts with customers, we allocate the entire transaction price to the sales price, which is the basis for |
the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that we collect concurrently |
with revenue-producing activities are excluded from revenue. Cost |
of revenue includes the cost of purchased merchandise plus freight and any applicable delivery charges from the vendor to us. Substantially |
all sales are to individual retail consumers (homeowners), builders and designers. The large majority of customers are homeowners and |
their contractors, with the homeowner being key in the final decisions. We have a diverse customer base with no one client accounting |
for more than 10% of total revenue. Customer |
deposits ‒ We record customer deposits when payments are received in advance of the delivery of the merchandise. We expect that |
substantially all of the customer deposits will be recognized within six months as the performance obligations are satisfied. 104 Construction |
Segment We |
recognize revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration |
we expect to be entitled to in exchange for those goods or services. We account for a contract when we have approval and commitment from |
both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability |
of consideration is probable. A |
contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance |
obligation is satisfied. Since most contracts are bundled to include both material and installation services, we combine these items |
into one performance obligation as the overall promise to transfer the individual goods or services is not separately identifiable from |
other promises in the contract and, therefore, is not distinct. We do offer assurance-type warranties on certain of our installed products |
and services that do not represent a separate performance obligation and, as such, do not impact the timing or extent of revenue recognition. For |
any contracts that are not complete at the reporting date, we recognize revenue over time, because of the continuous transfer of control |
to the customer as work is performed at the customer’s site and, therefore, the customer controls the asset as it is being installed. |
We utilize the output method to measure progress toward completion for the value of the goods and services transferred to the customer |
as we believe this best depicts the transfer of control of assets to the customer. Additionally, external factors such as weather, and |
customer delays may affect the progress of a project’s completion, and thus the timing and amount of revenue recognition, cash |
flow, and profitability from a particular contract may be adversely affected. An |
insignificant portion of sales, primarily retail sales, is accounted for on a point-in-time basis when the sale occurs. Sales taxes, |
when incurred, are recorded as a liability and excluded from revenue on a net basis. Contracts |
can be subject to modification to account for changes in contract specifications and requirements. We consider contract modifications |
to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most contract modifications |
are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the |
context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on |
the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment |
to revenue on a cumulative catch-up basis. All |
contracts are billed either contractually or as work is performed. Billing on long-term contracts occurs primarily on a monthly basis |
throughout the contract period whereby we submit progress invoices for customer payment as work is performed. On some contracts, the |
customer may withhold payment on an invoice equal to a percentage of the invoice amount, which will be subsequently paid after satisfactory |
completion of each project. This amount is referred to as retainage and is common practice in the construction industry, as it allows |
for customers to ensure the quality of the service performed prior to full payment. The retention provisions are not considered a significant |
financing component. Cost |
of revenues earned include all direct material and labor costs and those indirect costs related to contract performance. We |
record a contract asset when we have satisfied our performance obligation prior to billing and a contract liability when a customer payment |
is received prior to the satisfaction of our performance obligation. The difference between the beginning and ending balances of contract |
assets and liabilities primarily results from the timing of our performance and the customer’s payment. At times, we have a right |
to payment from previous performance that is conditional on something other than passage of time, such as retainage, which is included |
in contract assets or contract liabilities, as determined on a contract-by-contract basis. Automotive |
Supplies Segment We collect payment for internet and phone orders, |
including tax, from the customer at the time the order is shipped. Customers placing orders with a purchase order through the EDI (Electronic |
Data Interface) are allowed to purchase on credit and make payment after receipt of product on the agreed upon terms. Performance |
Obligations – The revenue that we recognize arises from orders we receive from contracts with customers. Our performance obligations |
under the customer orders correspond to each sale of merchandise that we make to customers and each order generally contains only one |
performance obligation based on the merchandise sale to be completed. Control of the delivery transfers to customers when the customer |
can direct the use of, and obtain substantially all the benefits from, our products, which generally occurs when the customer assumes |
the risk of loss. The transfer of control generally occurs at the point of shipment of the order. Once this occurs, we have satisfied |
our performance obligation and it recognizes revenue. 105 Transaction |
Price ‒ We agree with customers on the selling price of each transaction. This transaction price is generally based on the agreed |
upon sales price. In our contracts with customers, we allocate the entire transaction price to the sales price, which is the basis for |
the determination of the relative standalone selling price allocated to each performance obligation. Any sales tax that we collect concurrently |
with revenue-producing activities are excluded from revenue. Cost |
of revenues includes the cost of purchased merchandise plus freight, warehouse salaries, tariffs, and any applicable delivery charges from |
the vendor to us. We had two major customers who represent a significant portion of revenue in the automotive segment. These two |
customers represented 39.4% of total revenue in the automotive segment for the year ended December 31, 2022. Warranties |
vary and are typically 90 days to consumers and manufacturing defect warranty to are available to resellers. At times, depending on the |
product, we can also offer a warranty up to 12 months. Goodwill Goodwill |
represents the excess of purchase price over the fair value of the net assets acquired. We evaluate goodwill for impairment annually, |
or more frequently if an event occurs or circumstances that indicate the goodwill is not recoverable. When impairment indicators are |
identified, we may elect to perform an optional qualitative assessment to determine whether it is more likely than not that the fair |
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