| Principal Activities, Basis of Presentation and Organization | 1. Principal Activities,
Basis of Presentation and Organization Principal
Activities CBAK
Energy Technology, Inc. ("CBAK" or the "Company") is a corporation formed in the State of Nevada on October 4, 1999 as Medina
Copy, Inc. The Company changed its name to Medina Coffee, Inc. on October 6, 1999 and subsequently changed its name to China BAK
Battery, Inc. on February 14, 2005. CBAK and its subsidiaries (hereinafter, collectively referred to as the "Company") are principally
engaged in the manufacture, commercialization and distribution of a wide variety of standard and customized lithium ion (known
as "Li-ion" or "Li-ion cell") high power rechargeable batteries. Prior to the disposal of BAK International Limited ("BAK International")
and its subsidiaries (see below), the batteries produced by the Company were for use in cellular telephones, as well as various
other portable electronic applications, including high-power handset telephones, laptop computers, power tools, digital cameras,
video camcorders, MP3 players, electric bicycles, hybrid/electric vehicles, and general industrial applications. After the disposal
of BAK International and its subsidiaries on June 30, 2014, the Company will focus on the manufacture, commercialization and distribution
of high power lithium ion rechargeable batteries for use in cordless power tools, light electric vehicles, hybrid electric vehicles,
electric cars, electric busses, uninterruptable power supplies and other high power applications. The
shares of the Company traded in the over-the-counter market through the Over-the-Counter Bulletin Board from 2005 until May 31,
2006, when the Company obtained approval to list its common stock on The NASDAQ Global Market, and trading commenced that same
date under the symbol "CBAK". Effective
November 30, 2018, the trading symbol for common stock of the Company, which trades on the Nasdaq Global Market, was changed from
CBAK to CBAT. Basis
of Presentation and Organization On
November 6, 2004, BAK International, a non-operating holding company that had substantially the same shareholders as Shenzhen
BAK Battery Co., Ltd ("Shenzhen BAK"), entered into a share swap transaction with the shareholders of Shenzhen BAK for the purpose
of the subsequent reverse acquisition of the Company. The share swap transaction between BAK International and the shareholders
of Shenzhen BAK was accounted for as a reverse acquisition of Shenzhen BAK with no adjustment to the historical basis of the assets
and liabilities of Shenzhen BAK. On
January 20, 2005, the Company completed a share swap transaction with the shareholders of BAK International. The share swap transaction,
also referred to as the "reverse acquisition" of the Company, was consummated under Nevada law pursuant to the terms of a Securities
Exchange Agreement entered by and among CBAK, BAK International and the shareholders of BAK International on January 20, 2005.
The share swap transaction has been accounted for as a capital-raising transaction of the Company whereby the historical financial
statements and operations of Shenzhen BAK are consolidated using historical carrying amounts. Also
on January 20, 2005, immediately prior to consummating the share swap transaction, BAK International executed a private placement
of its common stock with unrelated investors whereby it issued an aggregate of 1,720,087 shares of common stock for gross proceeds
of $17,000,000. In conjunction with this financing, Mr. Xiangqian Li, the Chairman and Chief Executive Officer of the Company
("Mr. Li"), agreed to place 435,910 shares of the Company's common stock owned by him into an escrow account pursuant to an Escrow
Agreement dated January 20, 2005 (the "Escrow Agreement"). Pursuant to the Escrow Agreement, 50% of the escrowed shares were to
be released to the investors in the private placement if audited net income of the Company for the fiscal year ended September
30, 2005 was not at least $12,000,000, and the remaining 50% was to be released to investors in the private placement if audited
net income of the Company for the fiscal year ended September 30, 2006 was not at least $27,000,000. If the audited net income
of the Company for the fiscal years ended September 30, 2005 and 2006 reached the above-mentioned targets, the 435,910 shares
would be released to Mr. Li in the amount of 50% upon reaching the 2005 target and the remaining 50% upon reaching the 2006 target. Under
accounting principles generally accepted in the United States of America ("US GAAP"), escrow agreements such as the one established
by Mr. Li generally constitute compensation if, following attainment of a performance threshold, shares are returned to a company
officer. The Company determined that without consideration of the compensation charge, the performance thresholds for the year
ended September 30, 2005 would be achieved. However, after consideration of a related compensation charge, the Company determined
that such thresholds would not have been achieved. The Company also determined that, even without consideration of a compensation
charge, the performance thresholds for the year ended September 30, 2006 would not be achieved. While
the 217,955 escrow shares relating to the 2005 performance threshold were previously released to Mr. Li, Mr. Li executed a further
undertaking on August 21, 2006 to return those shares to the escrow agent for the distribution to the relevant investors. However,
such shares were not returned to the escrow agent, but, pursuant to a Delivery of Make Good Shares, Settlement and Release Agreement
between the Company, BAK International and Mr. Li entered into on October 22, 2007 (the "Li Settlement Agreement"), such shares
were ultimately delivered to the Company as described below. Because the Company failed to satisfy the performance threshold for
the fiscal year ended September 30, 2006, the remaining 217,955 escrow shares relating to the fiscal year 2006 performance threshold
were released to the relevant investors. As Mr. Li has not retained any of the shares placed into escrow, and as the investors
party to the Escrow Agreement are only shareholders of the Company and do not have and are not expected to have any other relationship
to the Company, the Company has not recorded a compensation charge for the years ended September 30, 2005 and 2006. At
the time the escrow shares relating to the 2006 performance threshold were transferred to the investors in fiscal year 2007, the
Company should have recognized a credit to donated shares and a debit to additional paid-in capital, both of which are elements
of shareholders' equity. This entry is not material because total ordinary shares issued and outstanding, total shareholders'
equity and total assets do not change; nor is there any impact on income or earnings per share. Therefore, previously filed consolidated
financial statements for the fiscal year ended September 30, 2007 will not be restated. This share transfer has been reflected
in these financial statements by reclassifying the balances of certain items as of October 1, 2007. The balances of donated shares
and additional paid-in capital as of October 1, 2007 were credited and debited by $7,955,358 respectively, as set out in the consolidated
statements of changes in shareholders' equity. In
November 2007, Mr. Li delivered the 217,955 shares related to the 2005 performance threshold to BAK International pursuant to
the Li Settlement Agreement; BAK International in turn delivered the shares to the Company. Such shares (other than those issued
to investors pursuant to the 2008 Settlement Agreements, as described below) are now held by the Company. Upon receipt of these
shares, the Company and BAK International released all claims and causes of action against Mr. Li regarding the shares, and Mr.
Li released all claims and causes of action against the Company and BAK International regarding the shares. Under the terms of
the Li Settlement Agreement, the Company commenced negotiations with the investors who participated in the Company's January 2005
private placement in order to achieve a complete settlement of BAK International's obligations (and the Company's obligations
to the extent it has any) under the applicable agreements with such investors. Beginning
on March 13, 2008, the Company entered into settlement agreements (the "2008 Settlement Agreements") with certain investors in
the January 2005 private placement. Since the other investors have never submitted any claims regarding this matter, the Company
did not reach any settlement with them. Pursuant
to the 2008 Settlement Agreements, the Company and the settling investors have agreed, without any admission of liability, to
a settlement and mutual release from all claims relating to the January 2005 private placement, including all claims relating
to the escrow shares related to the 2005 performance threshold that had been placed into escrow by Mr. Li, as well as all claims,
including claims for liquidated damages relating to registration rights granted in connection with the January 2005 private placement.
Under the 2008 Settlement Agreement, the Company has made settlement payments to each of the settling investors of the number
of shares of the Company's common stock equivalent to 50% of the number of the escrow shares related to the 2005 performance threshold
these investors had claimed; aggregate settlement payments as of June 30, 2015 amounted to 73,749 shares. Share payments to date
have been made in reliance upon the exemptions from registration provided by Section 4(2) and/or other applicable provisions of
the Securities Act of 1933, as amended. In accordance with the 2008 Settlement Agreements, the Company filed a registration statement
covering the resale of such shares which was declared effective by the SEC on June 26, 2008. Pursuant
to the Li Settlement Agreement, the 2008 Settlement Agreements and upon the release of the 217,955 escrow shares relating to the
fiscal year 2006 performance threshold to the relevant investors, neither Mr. Li or the Company have any obligations to the investors
who participated in the Company's January 2005 private placement relating to the escrow shares. As of June 30, 2018, the Company
had not received any claim from the other investors who have not been covered by the "2008 Settlement Agreements" in the January
2005 private placement. As
the Company has transferred the 217,955 shares related to the 2006 performance threshold to the relevant investors in fiscal year
2007 and the Company also have transferred 73,749 shares relating to the 2005 performance threshold to the investors who had entered
the "2008 Settlement Agreements" with us in fiscal year 2008, pursuant to "Li Settlement Agreement" and "2008 Settlement Agreements",
neither Mr. Li nor the Company had any remaining obligations to those related investors who participated in the Company's January
2005 private placement relating to the escrow shares. On
August 14, 2013, Dalian BAK Trading Co., Ltd was established as a wholly owned subsidiary of China BAK Asia Holding Limited ("BAK
Asia") with a registered capital of $500,000 (Note 19(i)). Pursuant to CBAK Trading's articles of association and relevant PRC
regulations, BAK Asia was required to contribute the capital to CBAK Trading on or before August 14, 2015. On March 7, 2017, the
name of Dalian BAK Trading Co., Ltd was changed to Dalian CBAK Trading Co., Ltd ("CBAK Trading"). On August 5, 2019, CBAK Trading's
registered capital was increased to $5,000,000. Up to the date of this report, the Company has contributed $1,100,000 to CBAK
Trading in cash. On
December 27, 2013, Dalian BAK Power Battery Co., Ltd was established as a wholly owned subsidiary of BAK Asia with a registered
capital of $30,000,000. Pursuant to CBAK Power's articles of association and relevant PRC regulations, BAK Asia was required to
contribute the capital to CBAK Power on or before December 27, 2015. On March 7, 2017, the name of Dalian BAK Power Battery Co.,
Ltd was changed to Dalian CBAK Power Battery Co., Ltd ("CBAK Power"). On July 10, 2018, CBAK Power's registered capital was increased
to $50,000,000. Up to the date of this report, the Company has contributed $29,999,978 to CBAK Power through injection of a series
of patents and cash. On
May 4, 2018, CBAK New Energy (Suzhou) Co., Ltd ("CBAK Suzhou") was established as a 90% owned subsidiary of CBAK Power with a
registered capital of RMB10,000,000 (approximately $1.5 million). The remaining 10% equity interest was held by certain employees
of CBAK Suzhou. Pursuant to CBAK Suzhou's articles of association, each shareholder is entitled to the right of the profit distribution
or responsible for the loss according to its proportion to the capital contribution. Pursuant to CBAK Suzhou's articles of association
and relevant PRC regulations, CBAK Power was required to contribute the capital to CBAK Suzhou on or before December 31, 2019.
Up to the date of this report, the Company has contributed RMB9.0 million (approximately $1.3 million), and the other shareholders
have contributed RMB784,000 ($115,414) to CBAK Suzhou through injection of a series of cash. CBAK Suzhou is intended to be engaged
in development and manufacture of new energy high power battery packs. The
Company's condensed consolidated financial statements have been prepared under US GAAP. These
condensed consolidated financial statements are unaudited. In the opinion of management, all adjustments and disclosures necessary
for a fair presentation of these condensed consolidated financial statements, which are of a normal and recurring nature, have
been included. The results reported in the condensed consolidated financial statements for any interim periods are not necessarily
indicative of the results that may be reported for the entire year. The following (a) condensed consolidated balance sheet as
of December 31, 2018, which was derived from the Company's audited financial statements, and (b) the unaudited condensed consolidated
financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been
condensed or omitted pursuant to those rules and regulations, though the Company believes that the disclosures made are adequate
to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and accompanying footnotes of the Company for the year ended December 31, 2018. The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
estimates. This basis of accounting differs in certain material respects from that used for the preparation of the books of account
of the Company's principal subsidiaries, which are prepared in accordance with the accounting principles and the relevant financial
regulations applicable to enterprises with limited liability established in the PRC or Hong Kong. The accompanying consolidated
financial statements reflect necessary adjustments not recorded in the books of account of the Company's subsidiaries to present
them in conformity with US GAAP. After
the disposal of BAK International Limited and its subsidiaries, namely Shenzhen BAK, Shenzhen BAK Power Battery Co., Ltd (formerly
BAK Battery (Shenzhen) Co., Ltd.) ("BAK Battery"), BAK International (Tianjin) Ltd. ("BAK Tianjin"), Tianjin Chenhao Technological
Development Limited (a subsidiary of BAK Tianjin established on May 8, 2014,"Tianjin Chenhao"), BAK Battery Canada Ltd. ("BAK
Canada"), BAK Europe GmbH ("BAK Europe") and BAK Telecom India Private Limited ("BAK India"), effective on June 30, 2014, and
as of December 31, 2018 and June 30, 2019, the Company's subsidiaries consisted of: i) China BAK Asia Holdings Limited ("BAK Asia"),
a wholly owned limited liability company incorporated in Hong Kong on July 9, 2013; ii) Dalian CBAK Trading Co., Ltd. ("CBAK Trading"),
a wholly owned limited company established on August 14, 2013 in the PRC; iii) Dalian CBAK Power Battery Co., Ltd. ("CBAK Power"),
a wholly owned limited liability company established on December 27, 2013 in the PRC; and iv) CBAK New Energy (Suzhou) Co., Ltd.
("CBAK Suzhou"), a 90% owned limited liability company established on May 4, 2018 in the PRC. The
Company continued its business and continued to generate revenues from sale of batteries via subcontracting the production to
BAK Tianjin and BAK Shenzhen, former subsidiaries before the completion of construction and operation of its facility in Dalian.
BAK Tianjin and BAK Shenzhen are now suppliers of the Company, and the Company does not have any significant benefits or liability
from the operating results of BAK Tianjin and BAK Shenzhen except the normal risk with any major supplier. As
of the date of this report, Mr. Xiangqian Li is no longer a director of BAK International and BAK Tianjin. He remained as a director
of Shenzhen BAK and BAK Shenzhen. On
and effective March 1, 2016, Mr. Xiangqian Li resigned as Chairman, director, Chief Executive Officer, President and Secretary
of the Company. On the same date, the Board of Directors of the Company appointed Mr. Yunfei Li as Chairman, Chief Executive Officer,
President and Secretary of the Company. On March 4, 2016, Mr. Xiangqian Li transferred 3,000,000 shares to Mr. Yunfei Li for a
price of $2.4 per share. After the share transfer, Mr. Yunfei Li held 3,000,000 shares or 17.3% and Mr. Xiangqian Li held 760,557
shares at 4.4% of the Company's outstanding stock, respectively. As of June 30, 2019, Mr. Yunfei Li held 5,535,185 shares or 14.98%
of the Company's outstanding stock, and Mr. Xiangqian Li held none of the Company's outstanding stock. The
Company had a working capital deficiency, accumulated deficit from recurring net losses and short-term debt obligations as of
December 31, 2018 and June 30, 2019. These factors raise substantial doubts about the Company's ability to continue as a going
concern. In
June and July 2015, the Company received advances of approximately $9.8 million from potential investors. On September 29, 2015,
the Company entered into a Debt Conversion Agreement with these investors. Pursuant to the terms of the Debt Conversion Agreement,
each of the creditors agreed to convert existing loan principal of $9,847,644 into an aggregate 4,376,731 shares of common stock
of the Company ("the Shares") at a conversion price of $2.25 per share. Upon receipt of the Shares on October 16, 2015, the creditors
released the Company from all claims, demands and other obligations relating to the Debts. As such, no interest was recognized
by the Company on the advances from investors pursuant to the supplemental agreements with investors and the Debt Conversion Agreement. In
June 2016, the Company received further advances in the aggregate of $2.9 million from Mr. Jiping Zhou and Mr. Dawei Li. These
advances were unsecured, non-interest bearing and repayable on demand. On July 8, 2018, the Company received further advances
of $2.6 million from Mr. Jiping Zhou. On July 28, 2016, the Company entered into securities purchase agreements with Mr. Jiping
Zhou and Mr. Dawei Li to issue and sell an aggregate of 2,206,640 shares of common stock of the Company, at $2.5 per share, for
an aggregate consideration of approximately $5.52 million. On August 17, 2016, the Company issued these shares to these two investors. On
February 17, 2017, the Company signed investment agreements with eight investors (including Mr. Yunfei Li, the Company's CEO,
and seven of the Company's existing shareholders) whereby the investors agreed to subscribe new shares of the Company totaling
$10 million. Pursuant to the investment agreements, in January 2017, eight investors paid the Company a total of $2.06 million
as earnest money which need to be returned to the investors after the investment amount was delivered. Mr. Yunfei Li agrees to
subscribe new shares of the Company totaled $1,120,000 and paid the earnest money of $225,784 in January 2017. On April 1, April
21, April 26 and May 10, 2017, the Company received $1,999,910, $3,499,888, $1,119,982 and $2,985,497 from these investors, respectively.
On May 31, 2017, the Company entered into a securities purchase agreement with these investors, pursuant to which the Company
agreed to issue an aggregate of 6,403,518 shares of common stock to these investors, at a purchase price of $1.50 per share, for
an aggregate price of $9.6 million, among which 746,018 shares issued to Mr. Yunfei Li. On June 22, 2017, the Company issued the
shares to the investors. From
January to March 2019, according to the investment agreements and agreed by the investors, the Company returned partial earnest
money of $769,298 (approximately RMB5.2 million) to these investors. As
of June 30, 2019, the Company had aggregate interest-bearing bank loans of approximately $20.8 million, due in 2019 to 2021, in
addition to approximately $77.7 million of other current liabilities. As
of June 30, 2019, the Company had unutilized committed banking facilities of $19.3 million. On
January 7, 2019, each of Mr. Dawei Li and Mr. Yunfei Li entered into an agreement with CBAK Power and Tianjin New Energy whereby
Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $3.5 million (RMB23,980,950) and $1.7 million (RMB11,647,890)
(totaled $5.2 million, the "First Debt") to Mr. Dawei Li and Mr. Yunfei Li, respectively. On
January 7, 2019, the Company entered into a cancellation agreement with Mr. Dawei Li and Mr. Yunfei Li. Pursuant to the terms
of the cancellation agreement, Mr. Dawei Li and Mr. Yunfei Li agreed to cancel the First Debt in exchange for 3,431,373 and 1,666,667
shares of common stock of the Company, respectively, at an exchange price of $1.02 per share. Upon receipt of the shares, the
creditors released the Company from any claims, demands and other obligations relating to the First Debt. On
April 26, 2019, each of Mr. Jun Lang, Ms. Jing Shi and Asia EVK Energy Auto Limited ("Asia EVK") entered into an agreement with
CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $0.3
million (RMB2,225,082), $0.1 million (RMB 912,204) and $5.3 million (RMB35,406,036) (collectively $5.7 million, the "Second Debt")
to Mr. Jun Lang, Ms. Jing Shi and Asia EVK, respectively. On
April 26, 2019, the Company entered into a cancellation agreement with Mr. Jun Lang, Ms. Jing Shi and Asia EVK (the creditors).
Pursuant to the terms of the Cancellation Agreement, the creditors agreed to cancel the Second Debt in exchange for 300,534, 123,208
and 4,782,163 shares of common stock of the Company, respectively, at an exchange price of $1.1 per share. Upon receipt of the
shares, the creditors will release the Company from any claims, demands and other obligations relating to the Second Debt. On
June 28, 2019, each of Mr. Dawei Li and Mr.Yunfei Li entered into an agreement with CBAK Power to loans approximately $1.5 million
(RMB10,000,000) and $2.6 million (RMB18,000,000) respectively to CBAK Power for a terms of six months (collectively $4.1 million,
the "Third Debt"). The loan was unsecured, non-interest bearing and repayable on demand. On
July 16, 2019, each of Asia EVK and Mr. Yunfei Li entered into an agreement with CBAK Power and Dalian Zhenghong Architectural
Decoration and Installation Engineering Co. Ltd. (the Company's construction contractor) whereby Dalian Zhenghong Architectural
Decoration and Installation Engineering Co. Ltd. assigned its rights to the unpaid construction fees owed by CBAK Power of approximately
$2.9 million (RMB20,000,000) and $0.4 million (RMB2,813,810) (collectively $3.3 million, the "Fourth Debt") to Asia EVK and Mr.
Yunfei Li, respectively. On
July 26, 2019, the Company entered into a cancellation agreement with Mr. Dawei Li, Mr. Yunfei Li and Asia EVK (the creditors).
Pursuant to the terms of the cancellation agreement, Mr. Dawei Li, Mr. Yunfei Li and Asia EVK agreed to cancel the Third Debt
and Fourth Debt in exchange for 1,384,717, 2,938,067 and 2,769,435 shares of common stock of the Company, respectively, at an
exchange price of $1.05 per share. Upon receipt of the shares, the creditors will release the Company from any claims, demands
and other obligations relating to the Third Debt and Fourth Debt. The cancellation agreement contains customary representations
and warranties of the creditors. The creditors do not have registration rights with respect to the shares. On
July 24, 2019, the Company entered into a securities purchase agreement (the "Purchase Agreement") with Atlas Sciences, LLC (the
"Lender"), pursuant to which we issued a promissory note (the "Note") to the Lender. The Note has an original principal amount
of $1,395,000, bears interest at a rate of 10% per annum and will mature 12 months after the issuance, unless earlier paid or
redeemed in accordance with its terms. The Company received proceeds of $1,250,000 after an original issue discount of $125,000
and payment of Lender's expenses of $20,000. The
Company is currently expanding its product lines and manufacturing capacity in its Dalian plant, which requires more funding to
finance the expansion. The Company plans to raise additional funds through banks borrowings and equity financing in the future
to meet its daily cash demands, if required. However,
there can be no assurance that the Company will be successful in obtaining further financing. The Company expects that it will
be able to secure more potential orders from the new energy market, especially from the electric car market. The Company believes
that with the booming future market demand in high power lithium ion products, it can continue as a going concern and return to
profitability. The
accompanying condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a
going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business.
The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty
related to the Company's ability to continue as a going concern. Revenue
Recognition The
Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed
under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii)
determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenues when (or as) we satisfy the performance obligation. Revenues
from product sales are recognized when the customer obtains control of the Company's product, which occurs at a point in time,
typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if
the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial. Revenues
from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts
with the Company's customers. Product
revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the categories: discounts
and returns. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified
as reductions of accounts receivable as the amount is payable to the Company's customer. Recently
Issued Accounting Standards In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure
all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement
of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the
impact that the standard will have on its consolidated financial statements and related disclosures. In
January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the
goodwill impairment test, which requires a hypothetical purchase price allocation. 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. The guidance
should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15,
2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,
2017. The Company currently intends to adopt this guidance for the fiscal year beginning January 1, 2020, and does not anticipate
that the adoption of this guidance will have a material impact on its financial statements or disclosures because the Company
does not currently have any recorded goodwill. In
June 2018, the FASB issued ASU 2018-07, "Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting," which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services
from non-employees. An entity should apply the requirements of ASC 718 to non-employee awards except for specific guidance on
inputs to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based
payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing
share-based payment awards. The new guidance is effective for SEC filers for fiscal years, and interim reporting periods within
those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities). Early adoption is permitted.
The Company is evaluating the effects of the adoption of this guidance and currently believes that it will impact the accounting
of the share-based awards granted to non-employees. |
