2.	Summary of Significant Accounting Policies

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in

the United States of America (GAAP) and pursuant to the rules and regulations of the United States Securities Exchange Commission (SEC) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but

not

limited to, the allowance for doubtful accounts, slow-moving inventory reserves, depreciation, warranty costs, assumptions made in valuing equity instruments issued for services or acquisitions, deferred income taxes and related valuation allowance and the fair values of intangibles and goodwill. Actual results could materially differ from the estimates and assumptions used in the preparation of the Company’s consolidated financial statements.

Revenue Recognition

Revenues from the sale of the Company

’s products and services are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectability is reasonably assured. The Company generally ships products F.O.B. shipping point. There is

conditional evaluation on any product sold and recognized as revenue. Amounts billed in excess of revenue recognized are recorded as deferred revenue on the balance sheet.

The Company

’s sales are generally through distributors. There is

right of return provided for distributors. For sales of products made to distributors, the Company considers a number of factors in determining whether revenue is recognized upon transfer of title to the distributor, or when payment is received. These factors include, but are

not

limited to, whether the payment terms offered to the distributor are considered to be non-standard, the distributor’s history of adhering to the terms of its contractual arrangements with the Company, the level of inventories maintained by the distributor, whether the Company has a pattern of granting concessions for the benefit of the distributor, and whether there are other conditions that

may

indicate that the sale to the distributor is

not

substantive. The Company currently recognizes revenue primarily on the sell-in method with its distributors.

Revenue arrangements with multiple deliverables are divided into units of accounting if certain criteria are met, including whether the deliverable item(s) has (have) value to the customer on a stand-alone basis.

Revenue for each unit of accounting is recognized as the unit of accounting is delivered. Arrangement consideration is allocated to each unit of accounting based upon the relative estimated selling prices of the separate units of accounting contained within an arrangement containing multiple deliverables. Estimated selling prices are determined using vendor specific objective evidence of value (VSOE), when available, or an estimate of selling price when VSOE is

not

available for a given unit of accounting. Significant inputs for the estimates of the selling price of separate units of accounting include market and pricing trends and a customer’s geographic location. The Company accounts for training and installation, and service agreements and the collection, processing and testing of the umbilical cord blood and the storage as separate units of accounting.

Service revenue generated from contracts for providing maintenance of equipment is amortized over the life of the agreement.

Revenue generated from storage contracts is deferred and recorded ratably over the life of the agreement, up to

years. All other service revenue is recognized at the time the service is completed.

Revenues are net of normal discounts.

Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of

three

months or less at the time of purchase to be cash equivalents.

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents is maintained in checking accounts, money market funds and certificates of deposits with reputable financial institutions that

may

at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation. The Company has cash and cash equivalents of

$71,000,

$46,000

and

$104,000

December 31, 2017

and

June 30, 2017

and

2016,

respectively, in India. The Company has

not

experienced any realized losses on the Company’s deposits of cash and cash equivalents.

Foreign Currenc

y Translation

The Company

’s reporting currency is the US dollar. The functional currency of the Company’s subsidiaries in India is the Indian rupee (INR). Assets and liabilities are translated into US dollars at period end exchange rates. Revenue and expenses are translated at average rates of exchange prevailing during the periods presented. Cash flows are also translated at average exchange rates for the period, therefore, amounts reported on the consolidated statement of cash flows do

not

necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Equity accounts other than retained earnings are translated at the historic exchange rate on the date of investment. A translation loss of

$5,000

was recorded for the

six

months ended

December 31, 2017

and

$1,000

and

$32,000

for the years ended

June 30, 2017

and

2016,

respectively, as a component of other comprehensive income.

Goodwill, Intangible Assets and Impairment Assessments

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.

Intangible assets that are

not

considered to have an indefinite useful life are amortized over their useful lives, which generally range from

three

ten

years. Clinical protocols are

not

expected to provide economic benefit until they are introduced to the marketplace or licensed to an independent entity. Each period the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization.

For goodwill and indefinite-lived intangible assets (clinical protocols), the carrying amounts are periodically reviewed for impairment (at least annually) and whenever events or changes in circumstances indicate that the carrying value of these assets

may

not

be recoverable. According to Accounting Standard Codification (

ASC)

350,

Intangibles-Goodwill and Other

, the Company can opt to perform a qualitative assessment or a quantitative assessment; however, if the qualitative assessment determines that it is more likely than

not

(i.e., a likelihood of more than

percent) the fair value is less than the carrying amount, a quantitative assessment must be performed. If the quantitative assessment determines that the fair value is less than the carrying amount, the Company would perform an analysis (step

) to measure such impairment.

The Company performed a quant

itative assessment as of

April 1, 2017

and computed a fair value based on a combination of the income approach and market approach, which determined that the fair value exceeded the carrying amount. The Company also performed a qualitative assessment through

December 31, 2017.

Accordingly, there was

impairment of goodwill or the indefinite-lived intangible assets.

For the definite-lived intangible assets, there were

facts or changes in circumstances that indicated the carrying value

may

not

be recoverable.

As such,

assessment was required and there was

impairment of these assets. There was a

$310,000

impairment of the covenants

not

to compete intangible assets during the year ended

June 30, 2017

as the assumed revenues that were in the fair value estimate have been delayed due to the delay in the clinical trial.

Fair Value of Financial Instruments

In accordance with ASC

820,

Fair Value Measurements and Disclosures

, fair value is defined as the exit price, or the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes

three

levels of inputs that

may

be used to measure fair value:

Level

Quoted market prices in active markets for identical assets or liabilities.

Level

Other observable inputs other than Level

prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are

not

active; or other inputs that are observable or can be corroborated by observable market data.

Level

Unobservable inputs reflecting the reporting entity’s own assumptions.

The carrying values of cash and cash equivalents, accounts receivable

and accounts payable approximate fair value due to their short duration. The fair value of the Company’s derivative obligation liability is classified as Level

within the fair value hierarchy since the valuation model of the derivative obligation is based on unobservable inputs.

Accounts Receivable and Allowance for Doubtful Accounts

The Company

’s receivables are recorded when billed and represent claims against

third

parties that will be settled in cash. The carrying value of the Company’s receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The Company estimates the allowance for doubtful accounts based on historical collection trends, age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that a specific receivable balance

may

be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. A customer’s receivable balance is considered past-due based on its contractual terms. Past-due receivable balances are written-off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due.

Inventories

Inventories are stated at the lower of cost or

net realizable value and include the cost of material, labor and manufacturing overhead. Cost is determined on the

first

-in,

first

-out basis. The Company writes-down inventory to its estimated net realizable value when conditions indicate that the selling price could be less than cost due to physical deterioration, obsolescence, changes in price levels, or other causes, which it includes as a component of cost of revenues. Additionally, the Company provides valuation allowances for excess and slow-moving inventory on hand that are

not

expected to be sold to reduce the carrying amount of slow-moving inventory to its estimated net realizable value. The valuation allowances are based upon estimates about future demand from its customers and distributors and market conditions.

Because some of the Company

’s products are highly dependent on government and

third

-party funding, current customer use and validation, and completion of regulatory and field trials, there is a risk that the Company will forecast incorrectly and purchase or produce excess inventories. As a result, actual demand

may

differ from forecasts and the Company

may

be required to record additional inventory valuation allowances that could adversely impact its gross margins. Conversely, favorable changes in demand could result in higher gross margins when those products are sold.

Equipment

consisting of office furniture, computer, machinery and equipment is recorded at cost less accumulated depreciation and amortization. Repairs and maintenance costs are expensed as incurred. Depreciation for office furniture, computer, machinery and equipment is computed under the straight-line method over the estimated useful lives. Leasehold improvements are amortized under the straight-line method over their estimated useful lives or the remaining lease period, whichever is shorter. When equipment is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and the impact of any resulting gain or loss is recognized within Other income and (expenses) in the consolidated statement of operations for the period.

Warranty

The Company provides for the estimated cost of product warranties at the time revenue is recognized.

The Company’s warranty obligation is calculated based on estimated product failure rates, material usage and estimated service delivery costs incurred in correcting a product failure.

Debt Issue Costs

The Company amortizes debt issue costs to interest expense over the life of the associated debt instrument, using the straight-line method which approximates the interest rate method.

Debt Discount

The Company amortizes debt discount over the life of the associated debt instrument, using the straight-line method which approx

imates the interest rate method.

Derivative Financial Instruments

In connection with the sale of convertible debt and equity instruments, the Company

may

also issue freestanding warrants.

If freestanding warrants are issued and accounted for as derivative instrument liabilities (rather than as equity), the proceeds are

first

allocated to the fair value of those instruments. The remaining proceeds, if any, are then allocated to the convertible instrument, usually resulting in that instrument being recorded at a discount from its face amount. Derivative financial instruments are initially measured at their fair value using a Binomial Lattice Valuation Model and then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income.

Stock

Based Compensation

The Company has

three

stock-based compensation plans, which are described more fully in Note

10.

Valuation and

Amortization Method – The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The formula does

not

include a discount for post-vesting restrictions, as we have

not

issued awards with such restrictions.

Expected Term

– For options which the Company has limited available data, the expected term of the option is based on the simplified method. This simplified method averages an award’s vesting term and its contractual term. For all other options, the Company's expected term represents the period that the Company's stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior.

Expected Volatility

– Expected volatility is based on historical volatility. Historical volatility is computed using daily pricing observations for recent periods that correspond to the expected term of the options.

Expected Dividend

– The Company has

not

declared dividends and does

not

anticipate declaring any dividends in the foreseeable future. Therefore, the Company uses a

zero

value for the expected dividend value factor to determine the fair value of options granted.

Risk-Free Interest Rate

– The Company bases the risk-free interest rate used in the valuation method on the implied yield currently available on U.S. Treasury

zero

-coupon issues with the same expected term.

Estimated Forfeitures

– When estimating forfeitures, the Company considers voluntary and involuntary termination behavior as well as analysis of actual option forfeitures.

Research and Development

Research and development costs, consisting of salaries and benefits,

costs of clinical trials, costs of disposables, facility costs, contracted services and stock-based compensation from the engineering, regulatory, scientific and clinical affairs departments, that are useful in developing and clinically testing new products, services, processes or techniques, as well as expenses for activities that

may

significantly improve existing products or processes are expensed as incurred. Costs to acquire technologies that are utilized in research and development and that have

future benefit are expensed when incurred.

cquired In-Process Research and Development

Acquired in-pro

cess research and development (clinical protocols) that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have

not

reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, the Company will make a determination as to the then useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests clinical protocols for impairment at least annually, or more frequently if impairment indicators exist, by

first

assessing qualitative factors to determine whether it is more likely than

not

that the fair value of the clinical protocols intangible asset is less than its carrying amount. If the Company concludes it is more likely than

not

that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the clinical protocol intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results. The Company conducted the fiscal

2017

annual impairment assessment as of

April 1, 2017.

As the fair value exceeded book value, the Company concluded there was

impairment of the subject clinical protocol. As of

December 31, 2017,

through a qualitative approach, the Company has concluded there were

indicators of impairment.

Patent Costs

he costs incurred in connection with patent applications, in defending and maintaining intellectual property rights and litigation proceedings are expensed as incurred.

Credit Risk

Currently, the Company primarily manufactures and sells cellular processing systems and thermodynamic devices principally to the blood and cellular component processing industry and performs ongoing evaluations of the credit worthiness of the Company

’s customers. The Company believes that adequate

provisions for uncollectible accounts have been made in the accompanying consolidated financial statements.

To date, the Company has

not

experienced significant credit related losses.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decis

ion Maker (CODM), or decision-making group, whose function is to allocate resources to and assess the performance of the operating segments. The Company has identified its chief executive officer and chief operating officer as the CODM. In determining its reportable segments, the Company considered the markets and the products or services provided to those markets.

The Company has

two

reportable business segments:

●

The Clinical Development

Segment, is devel

ing autologous (utilizing the patient’s own cells) stem cell-based

therapeutics

that address significant unmet medical needs for applications within the

vascular, cardiology and orthopedic

markets.

●

The Device

Segment, engages in the development and commercialization of automated technologies for c

ell-based t

herapeutics

and bio-processing. The device division is operated through the Company’s ThermoGenesis subsidiary.

Income Taxes

The tax years

1999

2017

remain open to examination by the major taxing jurisdictions to which the Company is subject; however, there is

current examination. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been

interest or penalties charged to the Company in relation to the underpayment of income taxes. There were

unrecognized tax benefits during the periods presented.

The Company

’s estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities reflect the Company’s assessment of future tax consequences of transactions that have been reflected in the financial statements or tax returns for each taxing jurisdiction in which the Company operates. The Company bases the provision for income taxes on the Company’s current period results of operations, changes in deferred income tax assets and liabilities, income tax rates, and changes in estimates of uncertain tax positions in the jurisdictions in which the Company operates. The Company recognizes deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of assets and liabilities and for the expected benefits of using net operating loss and tax credit loss carryforwards. The Company establishes valuation allowances when necessary to reduce the carrying amount of deferred income tax assets to the amounts that the Company believes are more likely than

not

to be realized. The Company evaluates the need to retain all or a portion of the valuation allowance on recorded deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, the differences are expected to reverse. As the Company operates in more than

one

state, changes in the state apportionment factors, based on operational results,

may

affect future effective tax rates and the value of recorded deferred tax assets and liabilities. The Company records a change in tax rates in the consolidated financial statements in the period of enactment.

Income tax consequences that arise in connection with a business combination include identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination.

Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on the Company’s estimate of the appropriate tax basis that will be accepted by the various taxing authorities and its determination as to whether any of the acquired deferred tax liabilities could be a source of taxable income to realize the Company’s pre-existing deferred tax assets.

Net Loss per Share

Net loss per share is computed by dividing the net loss to common stockhold

ers by the weighted average number of common shares outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities consisted of the following at:

	December 31,		June 30,
	2017		2017		2016
Common stock equivalents of convertible debentures		--		--		3,676,471
Vested Series A warrants		404,412		404,412		404,412
Unvested Series A warrants (1)		698,529		698,529		698,529
Warrants – other		3,725,782		3,725,782		3,725,782
Stock options		1,156,027		397,388		104,378
Restricted stock units		416		59,694		63,566
Total		5,985,166		5,285,805		8,673,138

(

)

The unvested Series A warrants were subject to vesting based upon the amount of funds actually received by the Company in the

second

close of the

August 2015

financing which never occurred.

The warrants will remain outstanding but unvested until they expire in

February 2021.

Reclassifications

Certain reclassifications have been made to the prior year

’s consolidated financial statements to conform to the current year presentation. These reclassifications had

effect on previously reported results of consolidated operations or equity.

Recently Adopted Accounting

Standards

November 2016,

the Financi

al Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

2016

18,

“Restricted Cash”

, which clarifies guidance on the classification and presentation of restricted cash in the statement of cash flows. Under the ASU, changes in restricted cash and restricted cash equivalents would be included along with those of cash and cash equivalents in the statement of cash flows. As a result, entities would

longer present transfers between cash and cash equivalents and restricted cash and cash equivalents in the statement of cash flows. In addition, a reconciliation between the balance sheet and the statement of cash flows would be disclosed when the balance sheet includes more than

one

line item for cash/equivalents and restricted cash/equivalents. This ASU is effective

January 1, 2018,

with early adoption permitted. The Company has decided to early adopt this standard. As a result, the restricted cash of

$1,000,000

December 31, 2017

is included with cash and cash equivalents on the statement of cash flows. There was

restricted cash in prior periods.

March 2016,

the

FASB issued ASU

2016

09,

“

Compensation - Stock Compensation (Topic

718

): Improvements to Employee Share-Based Payment Accounting”.

ASU

2016

simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU

2016

effective

July 1, 2017.

The Company has elected to continue its current policy of estimating forfeitures rather than recognizing forfeitures when they occur. Adoption of the new standard did

not

have a material impact on the financial statements of the Company.

July 2015,

the FASB issued ASU

No.

2015

11,

“

Inventory: Simplifying the Measurement of Inventory

”, that requires inventory

not

measured using either the last in,

first

out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The Company adopted ASU

2015

effective

July 1, 2017.

Adoption of the new standard did

not

have a material impact on the financial statements of the Company.

Recently Issued Accounting

Standards

July 2

017,

the FASB issued ASU

No.

2017

11,

“

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging

(Topic

815

(Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

”. ASU

2017

allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity's own stock. As a result, financial instruments (or embedded conversion features) with down round features

may

longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share.

For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings.

ASU

2017

is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU

2017

can be applied using a full or modified retrospective approach. The Company has

not

yet determined the effect that ASU

2017

will have on its results of operations, statement of financial position or financial statement disclosures.

May 2017,

the FASB issued ASU

No.

2017

“Compensation-Stock Compensation (Topic

718

) Scope of Modification Accounting (ASU

2017

).”

ASU

2017

clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic

718.

The standard is effective for interim and annual reporting periods beginning after

December 15, 2017,

with early adoption permitted. The Company is currently evaluating the impact of its adoption of this standard on its financial statements.

January 2017,

the FASB issued ASU

2017

which removes Step

from the goodwill impairment test.

It is effective for annual and interim periods beginning after

December 15, 2019.

Early adoption is permitted for an interim or annual goodwill impairment test performed with a measurement date after

January 1, 2017.

The Company has

not

yet determined the effect that ASU

2017

will have on its results of operations, statement of financial position or financial statement disclosures.

March 2016,

the FASB issued ASU

No.

2016

06,

“

Derivatives and Hedging (Topic

815

): Contingent Put and Call Options in Debt Instruments

” (ASU

2016

). This new standard simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by removing the requirement to assess whether a contingent event is related to interest rates or credit risks. ASU

2016

is effective for annual periods beginning after

December 15, 2017,

and interim periods within fiscal years beginning after

December 15, 2018.

The adoption of this standard is

not

expected to have an impact on the Company’s financial position or results of operations.

February 2016,

the FASB issued ASU

2016

02,

“Leases (Topic

842

)”

. ASU

2016

requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. ASU

2016

is effective for fiscal years beginning after

December 15, 2018

and interim periods therein. The Company has

not

yet determined the effect that ASU

2016

will have on its results of operations, statement of financial position or financial statement disclosures.

May 2014,

the FASB issued ASU

No.

2014

09,

Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic

605,

Revenue Recognition and requires entities to recognize revenue in a way that depicts the transfer of promised 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. In

August 2015,

the FASB issued ASU

2015

14,

which defers by

one

year the effective date of ASU

2014

09.

Accordingly, this guidance is effective for interim and annual periods beginning after

December 15, 2017

with early adoption permitted for interim and annual periods beginning after

December 15, 2016.

March 2016,

the FASB issued ASU

2016

Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which finalizes its amendments to the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. This conclusion impacts whether an entity reports revenue on a gross or net basis. In

April 2016,

the FASB issued ASU

2016

Identifying Performance Obligations and Licensing, which finalizes its amendments to the guidance in the new revenue standard regarding the identification of performance obligations and accounting for the license of intellectual property. In

May 2016,

the FASB issued ASU

2016

Narrow-Scope Improvements and Practical Expedients, which finalizes its amendments to the guidance in the new revenue standard on collectability, noncash consideration, presentation of sales tax, and transition. In

December 2016,

the FASB issued ASU

2016

20,

Technical Corrections and Improvements to Topic

606,

Revenue from Contracts with Customers, which continues the FASB's ongoing project to issue technical corrections and improvements to clarify the codification or correct unintended applications of guidance. The amendments are intended to make the guidance more operable and lead to more consistent application. The amendments have the same effective date and transition requirements as the new revenue recognition standard. In

September 2017,

the FASB Issued ASU

2017

13,

Revenue Recognition (Topic

605

), Revenue from Contracts with Customers (Topic

606

), Leases (Topic

840

), and Leases (Topic

842

), which provides additional implementation guidance on the previously issued ASU

2014

09.

Overall, ASU

No.

2014

09,

as amended, provides for either full retrospective adoption or a modified retrospective adoption by which it is applied only to the most current period presented.

The Company will use the modified retrospective method to adopt the provisions of this standard effective

January 1, 2018,

which requires us to apply the new revenue standard to (i) all new revenue contracts entered into after

January 1, 2018

and (ii) all existing revenue contracts as of

January 1, 2018

through a cumulative adjustment to retained earnings. In accordance with this approach, our consolidated revenues for the periods prior to

January 1, 2018

will

not

be revised.

The Company does

not

expect to record a significant cumulative effect adjustment to its beginning retained earnings as a result of adoption of Topic

606.