(

)

Basis of Presentation

The interim condensed consolidated financial statements of UFP Technologies, Inc. (the “Company”) presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form

-Q and do

not

include all the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended

December 31, 2017,

included in the Company's

2017

Annual Report on Form

-K, as filed with the Securities and Exchange Commission.

The condensed consolidated balance sheet as of

September 30, 2018,

the condensed consolidated statements of income for the

three

- and

nine

-month periods ended

September 30, 2018

and

2017,

and the condensed consolidated statements of cash flows for the

nine

-month periods ended

September 30, 2018

and

2017

are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. The condensed consolidated balance sheet as of

December 31, 2017

has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does

not

include all of the information and footnotes required for complete annual financial statements.

The 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 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.

The results of operations for the

three

- and

nine

-month periods ended

September 30, 2018,

are

not

necessarily indicative of the results to be expected for the entire fiscal year ending

December

31,

2018.

Recent Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

No.

2014

09,

Revenue from Contracts with Customers

, which was subsequently updated (“Accounting Standards Codification (ASC)

606”

). The Company adopted ASC

606

January 1, 2018.

See Note

for further details.

February 2016,

the FASB issued ASU

No.

2016

02,

“

Leases (ASC

842

” and issued subsequent amendments to the initial guidance in

January 2018

within ASU

No.

2018

and in

July 2018

within ASU Nos.

2018

and

2018

11.

The standard requires lessees to recognize leases on the balance sheet as a right-of-use asset and a lease liability, other than leases that meet the definition of a short-term lease. The liability will be equal to the present value of the lease payments. The asset will be based on the liability, subject to adjustment. Currently, under existing U.S. generally accepted accounting principles, the Company does

not

recognize on the balance sheet a right-of-use asset or lease liability related to its operating leases. For income statement purposes, the leases will continue to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) and finance leases will result in a front-loaded expense pattern (similar to current capital leases). The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after

December

15,

2018.

Early adoption is permitted. The standard allows an entity to elect to have a date of initial application as of the beginning of the period of adoption. The standard provides for the option to elect a package of practical expedients upon adoption. The Company intends to adopt the standard on

January

2019

and continues to assess its lease population and its option to elect certain practical expedients as defined in the new standard. The Company expects expanded financial statement note disclosure in addition to recognizing a right-of-use asset and lease liability for its operating leases on the balance sheet. The Company continues to evaluate the impacts of the pending adoption. As such, the Company’s preliminary assessments are subject to change.

January 2017,

the FASB issued ASU

No.

2017

04,

Intangibles—Goodwill and Other (ASC

350

), Simplifying the Test for Goodwill Impairment

. The guidance removes Step

of the goodwill impairment test and eliminates the need to determine the fair value of individual assets and liabilities to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance will be applied prospectively, and is effective for annual and interim goodwill impairment tests in fiscal years beginning after

December

15,

2019.

Early adoption is permitted for any impairment tests performed on testing dates after

January

2017.

The Company does

not

believe adoption will have a material impact on its financial condition or results of operations.

Revisions

Certain revisions have been made to the

December 31, 2017

Condensed Consolidated Balance Sheet to conform to the current year presentation relating to a reclassification of deferred revenue. The reclassification resulted in an increase in deferred revenue and a decrease in accrued expenses in the amount of approximately

$297,000.

In addition, certain revisions have been made to the Condensed Consolidated Statements of Cash Flows for the

nine

-month period ended

September 30, 2017,

also due to a reclassification of deferred revenue. The reclassification resulted in an increase to the change in deferred revenue and a decrease in the change in accrued expenses in the amount of approximately

$104,000.

These revisions had

impact on previously reported net income and are deemed immaterial to the previously issued financial statements.