Note 1 - Organization and Significant Accounting Policies
|9 Months Ended|
Dec. 26, 2020
|Notes to Financial Statements|
|Significant Accounting Policies [Text Block]||
1) Organization and Significant Accounting Policies
The condensed consolidated financial statements included herein have been prepared by Giga-tronics Incorporated (“Giga-tronics,” “Company” or “we”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated results of operations for the interim periods shown in this report are
notnecessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments (consisting of normal recurring entries) necessary to make the consolidated results of operations for the interim periods a fair statement of such operations. Please refer to the Company's Annual Report on Form
10-K for the year ended
March 28, 2020for a discussion of our significant accounting policies. During the
December 26, 2020,there were
nomaterial changes to these policies other than as disclosed below. For further information, refer to the consolidated financial statements and footnotes thereto, included in the Annual Report on Form
10-K, filed with the SEC for the year ended
March 28, 2020.
December 12, 2019,the Company completed a
fifteenreverse stock split of its common stock. All shares and per share amounts included in the financial statements have been adjusted to reflect the effect of the reverse stock split.
Principles of ConsolidationThe consolidated financial statements include the accounts of Giga-tronics and its wholly owned subsidiary, Microsource, Inc. (“Microsource”). All significant intercompany balances and transactions have been eliminated in consolidation.
Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
February 2016,the Financial Accounting Standards Board (“FASB”) issued ASU
842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or
notthe lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than
12months regardless of their classification. Leases with a term of
12months or less are accounted for similar to guidance for operating leases existing prior to ASC
842supersedes the previous leases standard, ASC
840Leases. The Company adopted ASC
March 31, 2019.The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In
July 2018,the FASB issued ASU
842): Targeted Improvements, which amends ASC Topic
842to provide another transition method, allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. The Company has
twolong term office leases; however, the New Hampshire lease is deemed immaterial upon adoption of ASC
842.The adoption of ASU
March 31, 2019resulted in the recognition of right-of-use assets of approximately
$1.4million, lease liabilities for operating leases of approximately
nomaterial impact to the Consolidated Statements of Operations or Cash Flows. See below for further information regarding the impact of the adoption of ASU
02on the Company's financial statements.
New Accounting Standards
June 2018,the FASB issued ASU
07,“Improvements to Nonemployee Share-Based Payment Accounting,” to simplify the accounting for share based transactions with nonemployees in which the grantor acquires goods or services to be used or consumed. Under the new standard, most of the guidance on recording share-based compensation granted to nonemployees are aligned with the requirements for share-based compensation granted to employees. This standard was effective in the
firstquarter of fiscal
2020,and early adoption is permitted. We do
notexpect the adoption of this standard to have a material impact on our consolidated financial statements.
February 2016,the FASB issued authoritative guidance under ASU
02requires lessees to recognize right-of-use assets and lease liabilities for most leases on the balance sheet and to provide expanded disclosures about leasing arrangements. The Company adopted the standard effective
2019using the optional transition method and did
notrestate comparative periods. There was
noeffect on accumulated deficit at adoption.
The Company has elected the package of practical expedients to (a)
notreassess whether expired or existing contracts are or contain leases, (b)
notreassess the lease classification for any expired or existing leases and (c)
notreassess the accounting for initial direct costs. As a result, leases classified as operating leases prior to adoption of the new lease standard remain as operating leases and leases classified as capital leases prior to adoption of the new lease standard are now finance leases.
The entire disclosure for all significant accounting policies of the reporting entity.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef