| Summary of Significant Accounting Policies and Organization | NOTE
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (A)
Organization and Basis of Presentation Max
Sound Corporation (the "Company") was incorporated in Delaware on December 9, 2005, under the name 43010, Inc. The Company
business operations are focused primarily on developing and launching audio technology software. Effective
March 1, 2011, the Company filed with the State of Delaware a Certificate of Amendment of Certificate of Incorporation changing
our name from So Act Network, Inc. to Max Sound Corporation. On
August 9, 2016 the Company has moved a level down from OTCQB to OTC Pink Current Information where it is within the continued
standards and pricing requirements as found in Section 2 of the OTCQB Eligibility Standards . It
is management's opinion, however, that all material adjustments (consisting of normal and recurring adjustments) have been made
which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative
of the results to be expected for the year. (B)
Use of Estimates In
preparing financial statements in conformity with generally accepted accounting principles, management is required 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 revenues and expenses during the reported period. Actual results could differ from
those estimates. (C)
Cash and Cash Equivalents For
purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of twelve months
or less at the time of purchase to be cash equivalents. As of December 31, 2017 and December 31, 2016, the Company had no cash
equivalents. (D)
Property and Equipment Property
and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense
as incurred. Depreciation is provided using the straight-line method over the estimated useful life of three to five years. (E)
Research and Development The
Company has adopted the provisions of FASB Accounting Standards Codification No. 350, Intangibles - Goodwill & Other . (F)
Concentration of Credit Risk The
Company at times has cash in banks in excess of FDIC insurance limits. The Company had $0 in excess of FDIC insurance limits as
of December 31, 2017 and December 31, 2016. (G)
Revenue Recognition The
Company recognized revenue on arrangements in accordance with FASB Codification Topic 605, “Revenue Recognition” (“ASC
Topic 605”). Under ASC Topic 605, revenue is recognized only when the price is fixed and determinable, persuasive evidence
of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company
has not yet commenced revenue generating activities. (H)
Identifiable Intangible Assets ASC
350 prescribes a two-step process for impairment testing of goodwill and intangibles with indefinite lives, which is performed
annually, as well as when an event triggering impairment may have occurred. ASC 350 also allows preparers to qualitatively assess
goodwill impairment through a screening process, which would permit companies to forgo Step 1 of their annual goodwill impairment
process. This qualitative screening process will hereinafter be referred to as "Step 0". Goodwill and intangible assets
deemed to have an indefinite life are tested for impairment on an annual basis, or earlier when events or changes in circumstances
suggest the carrying amount may not be fully recoverable. The Company has elected to perform its annual assessment on its
of intangible assets. For the year ended December 31, 2016 the balance of the intangible assets is $0. For the year ended December
31, 2017 and 2016, $0 and $1,008,035, respectively, impairment loss has been recorded due to a change in business model, this
being significantly impacted by the impairment of Liquid Spins assets, as digital music sales are no longer relevant in today’s
market for the following assets:
Cost,
net Impairment
Loss Amortization
for year ended December 31, 2016 Balance
as of December 31, 2016
Trademarks $ 7,500,000 $ (7,434,782 ) (65,219 ) —
Distribution
rights 7,372,561 (7,372,561 ) — —
Licensing
Rights 1,923,401 (1,904,037 ) (19,364 ) —
Other 275 (272 ) (2 ) —
$ 16,796,237 (16,711,652 ) (84,585 ) — As
of December 31, 2017 and December 31, 2016, $0 and $869,581, respectively, of costs related to registering a trademark and acquiring
technology rights [audio technology known as Max Audio Technology (MAXD)] have been capitalized. It has been determined that the
trademark and technology rights have an indefinite useful life and are not subject to amortization. However, the trademark and
technology rights will be reviewed for impairment annually or more frequently if impairment indicators arise. As a result of this
review, the Company recorded an impairment loss of $804,363 and $6,630,419 that is recorded as impairment loss on intangible asset
for the year ended December 31, 2016 and 2015, respectively. On
November 15, 2012, the Company acquired the rights to assets and audio technology known as Liquid Spins, Inc. through a share
exchange, whereby the Company issued 24,752,475 shares of common stock for their rights in Liquid Spins technology. As of December
31, 2017 and December 31, 2016, $0 and $0, respectively, of costs related to this intangible remain capitalized. The technology
was placed in service on August 23, 2013 with a useful life of 10 years. During 2015, the Company reviewed the intangible asset
for impairment and determined that certain items had been impaired due to obsolescence. During 2015 fiscal year, a $7,372,562
impairment loss was recorded against certain Distribution Rights acquired during 2012 fiscal year. On
May 19, 2014, the Company entered into an agreement with VSL Communications to acquire the rights to intellectual property titled
“Optimized Data Transmission System and Method” (“ODT”) through a cash payment of $500,000 in addition
to a share issuance, whereby the Company issued 10,000,000 shares of common stock, valued at $1,000,000 ($0.10/share). In exchange,
the Company received a perpetual, exclusive, worldwide license to the ODT technology for all fields of use. In addition, the Company
issued 1,000,000 shares of common stock, valued at $120,000 ($0.12/share), as compensation for the introduction and identification
of a seller based on the agreement dated April 10, 2014. As of December 31, 2017 and December 31, 2016, $0 and $187,830, respectively,
of costs related to the “ODT” intangible asset remains capitalized. The technology will be reviewed for impairment
annually or more frequently if impairment indicators arise. As a result of this review, the Company recorded an impairment loss
of $173,412 for the year ended December 31, 2016 and $1,432,170 that is recorded as impairment loss on intangible asset for the
year ended December 31, 2016 for total impairment loss of $1,620,000. In connection with this agreement, the Company is obligated
to make an additional five (5) payments totaling $1,000,000 to be made every 30 days, with the thirty (30) day periods to be waived
if fund raising occurs on an anticipated faster time line. The payments of additional cash are contingent on the following funding
criteria:
● The
Company shall pay set increments of cash based on a percentage of gross funds received through funds raised.
● The
Company shall pay 20% of such monies as soon as they are received. In
connection with the acquisition agreements entered on May 19, 2014 to acquire “Optimized Data Transmission System and Method”
(“ODT”), we recorded a liability and expensed $1,096,501 royalty cost for funds raised through December 31, 2016 The
Company shall act as the exclusive agent to facilitate and negotiate any opportunities on behalf of ODT to Companies, Organizations
and other qualified entities. Upon any closing, ODT shall receive 50% of gross dollars and the Company shall receive the other
50% at the time of a completion of any transaction opportunity, including legal settlements after subtracting applicable contingent
legal fees. The term of the agreement is for the life of the acquired intellectual property. As a result of this review, the Company
recorded an impairment loss of $6,630,419 on intangible asset during the year ended December 31, 2016 On
August 11, 2014, the Company and VSL simultaneously filed trade secret and patent infringement actions against Google, Inc.
and its subsidiaries, YouTube, LLC and On2 Technologies, Inc., relating to proprietary and patented technology owned by
Vedanti Systems Limited, a subsidiary of VSL. The patent infringement complaint was brought in U.S. District Court for
the District of Delaware and the trade secret suit was filed in Superior Court of California, County of Santa Clara.
The lawsuits contend that, in 2010, while Google was in discussions with Vedanti about the possibility of acquiring Vedanti's
patented digital video streaming techniques and other proprietary methods, Google gained access to and received technical
guidance regarding Vedanti’s proprietary codec, a computer program capable of encoding and decoding a digital data
stream or signal. The complaints allege that soon after the two companies initiated negotiations, Google began
implementing Vedanti's technology into its own WebM/VP8 video codec without informing Vedanti, and without compensating
Vedanti for its use. Plaintiffs are seeking a permanent injunction against Google, compensatory damages, as well as
treble damages. As exclusive agent to VSL to enforce all rights with respect to the subject technology, the Company has hired
Grant & Eisenhofer, PA to represent the Company and VSL in the suits. On November 24, 2015 the District Court entered an
order granting the Google defendants’ motion to dismiss. The Company timely filed its notice of appeal with the appeals
court on February 22, 2016. The two issues on appeal are, (i) whether the district court erred by granting the Google
defendants’ motion to dismiss the Company’s lawsuit on the ground that the Company lacked standing to sue the
Google defendants for infringement of the 339 patent, and (ii) whether the district court erred by denying the
Company’s motion for leave to amend the complaint and add as a party VSL, a former licensee of the 339 patent to cure
any defect in prudential standing to the extent VSL is a necessary party. These cases will be vigorously prosecuted and the
Company believes it has a good likelihood of success. On
May 22, 2014, the Company entered into a five (5) year agreement to acquire the rights to intellectual property titled “Engineered
Architecture” (“EA Technology”) through a cash payment of $50,000 in addition to a share issuance, whereby the
Company issued 4,000,000 shares of common stock, valued at $394,000 ($0.0985/share). In exchange, the Company received for the
term of the agreement, the exclusive worldwide right to use the EA Technology. As of December 31, 2017 and December 31, 2016,
$0 and $29,901, respectively of costs related to this intangible remains capitalized. The technology will be reviewed for impairment
annually or more frequently if impairment indicators arise. As a result of this review, the Company recorded an impairment loss
of $$29,901 and $268,223 on intangible asset for the year ended December 31, 2016 and 2015, respectively. In
connection with this agreement, the Company is obligated to make an additional five (5) payments totaling $500,000 to be made
every 30 days, with the thirty (30) day periods to be waived if fund raising occurs on an anticipated faster time line. The payments
of additional cash are contingent on the following funding criteria:
● The
Company shall pay set increments of cash based on a percentage of gross funds received through funds raised.
● The
Company shall pay 10% of such monies as soon as they are received. In
connection with funds raised through December 31, 2016, the Company recorded a liability and expensed $548,255 as royalty cost,
related to the 10% fee, as of December 31, 2016, $40,000 has been paid. The remaining liability as of December 31, 2016, is $528,423
and is included in accounts payable. During the year ended December 31, 2016 the Company write off $1,615,081 of accounts payable
related to royalty payable as other income. What
the Company had been accruing for VSL and Attia litigation's has been released as the Attia's terminated their agreement and have
since signed a new agreement which eliminates all past amounts due, and the VSL agreement automatically terminated on 12.20.16
when VSL was dissolved by its owner therefore releasing any past amounts due. The
Company shall act as the exclusive agent to facilitate and negotiate any opportunities on behalf of EA Technology to Companies,
Organizations and other qualified entities. Upon any closing, EA shall receive 50% of gross dollars and the Company shall receive
the other 50% at the time of a completion of any transaction opportunity, including legal settlements after subtracting applicable
contingent legal fees. In the event the Company sublicenses EA to other entities, profits shall be split evenly 50%/50%. (H)
Impairment of Long-Lived Assets and Intangible Assets with Definite Life The
Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal
of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets, such as technology rights, be reviewed for impairment
annually, or whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer
be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows
expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value
of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or
disposable value. The Company recorded $0 and $1,008,035 in impairment of the intangible asset for the year ended December 31,
2017 and the year ended December 31, 2016, respectively. As of December 31, 2016 the intangible assets were fully impaired. (I)
Loss Per Share In
accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” The
computation of basic and diluted loss per share for the twelve months ended December 31, 2017 and 2016 excludes the common stock
equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:
December
31, 2017 December
31, 2016
Stock
Warrants (Exercise price - $0.25 - $.52/share) 19,220,690 19,970,690
Stock
Options (Exercise price - $0.00250/share) 95,332,500 2,866,652
Convertible
Debt (Exercise price - $0.0006 - $.004810/share) 8,399,417,649 785,426,924
Series
A Convertible Preferred Shares ($0.0/share) 125,000,000 125,000,000
Total 8,763,970,809 933,264,266 The
Company’s obligations to issue shares upon conversion of its outstanding convertible notes, the exercise of stock options
and warrants and conversion of its preferred stock (the “Convertible Instruments”) at current market prices for its
common stock exceeds by the 6,672,932,498 authorized but unissued shares of Common Stock as of the date of this report (the “Potentially
Issuable Shares”). While it is uncertain whether the Company would receive requests to issue all of the Potentially Issuable
Shares and the number of such shares fluctuates based on the market price of the Company’s common stock, the Company may
increase the number of its authorized shares of common stock or effectuate a recapitalization, or a combination of both, in order
to make available additional shares of its Common Stock for the Potentially Issuable Shares. Such action would require shareholder
approval. Until such time as the Company has a sufficient number of shares of its Common Stock for issuance to cover the Potentially
Issuable Shares, the Company could be subject to penalties and damages to the holders of the Convertible Instruments in the event
it does not deliver the Potentially Issuable Shares upon request by a holder of the Convertible Instruments. Furthermore, the
lack of available shares of common stock may be deemed a default under one or more of the Convertible Instruments. (K)
Income Taxes The
Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC
740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date. On
December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several
key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction
of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the
tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and
liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC
staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB
118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment
date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are
expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items
to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect
to complete our analysis within the measurement period in accordance with SAB 118. The
net deferred tax liability in the accompanying balance sheets includes the following amounts of deferred tax assets and liabilities:
2017 2016
Deferred
tax liability: $— $—
Deferred
tax asset
Temporary
differences
Net
Operating Loss Carryforward 13,279,653
Valuation
allowance (13,279,653 )
Net
deferred tax asset — —
Net
deferred tax liability $ — $ — The
provision for income taxes has been computed as follows:
2017 2016
Expected
income tax recovery (expense) at the statuary rate of 34% $ — $ 3,803,664
Tax
effect of expenses that are not deductible for income tax purposes (net of other amounts deductible for tax purposes) 760,099
Tax
effect of differences in the timing of deductibility of items for income tax purposes: (5,331,784 )
Utilization
of non-capital tax losses to offset current taxable income — —
Change
in valuation allowance 8,375,349
Provision
for income taxes $ — $ — The
valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This
is necessary due to the Company’s continued operating losses and the uncertainty of the Company’s ability to offset
future taxable income through 2036. The
net change in the valuation allowance for the year ended December 31, 2017 and 2016 was an increased/ (decreased) of $_______
and $8,375,349, respectively. The
components of income tax expense related to continuing operations are as follows:
2017 2016
Federal
Current $ — $ —
Deferred — —
$ — $ —
State
and Local
Current $ — $ —
Deferred — —
$ — $ — The
Company's federal income tax returns are no longer subject to examination by the IRS for the years prior to 2012, and the related
state income tax returns are no longer subject to examination by state authorities for the years prior to 2011. (K)
Business Segments The
Company operates in one segment and therefore segment information is not presented. (L)
Recent Accounting Pronouncements In
January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the
Definition of a Business (ASU 2017-01), which revises the definition of a business and provides new guidance in evaluating
when a set of transferred assets and activities is a business. This guidance will be effective for us in the first quarter of
2018 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the
adoption of ASU 2016-15 on its Financial Statements. In
January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04,
an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair
value up to the amount of goodwill allocated to that reporting unit. This guidance will be effective for us in the first quarter
of 2020 on a prospective basis, and early adoption is permitted. The Company has not yet determined the potential effects of the
adoption of ASU 2016-15 on its Financial Statements. In
January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016-01,
which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current
guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation
and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance
assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new
standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should
apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period
in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for
financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income.
The Company is currently evaluating the impact of adopting this guidance. In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations
by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.
Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes
Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from
leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability)
and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments
in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. We are currently evaluating the impact of adopting ASU No. 2016-02 on our financial statements. In
March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is
a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or
services before they are transferred to the customer and provides additional guidance about how to apply the control principle
when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08
is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December
15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial
statements. In
March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for
simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the
income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of
cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15,
2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an
entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the
fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the
same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding
requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of
a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments
related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet
the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess
tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be
applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the
statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently
evaluating the impact of adopting ASU No. 2016-09 on our financial statements. In
April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations
and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability
of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended
by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years.
In May 2016, the FASB issued ASU 2016-12 “Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements
and Practical Expedients,” which amends the guidance on transition, collectability, non-cash consideration, and the presentation
of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or
substantially all) of the revenue must have been recognized under legacy GAAP. In addition, ASU 2016-12 clarifies how an entity
should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue
if an arrangement does not meet the standard’s contract criteria. The standard allows for both retrospective and modified
retrospective methods of adoption. The Company has not yet determined the impact of ASU 2016-10 on its financial statements. In
June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements," which requires companies
to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a broader
range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual reporting
periods, and interim periods therein, beginning after December 15, 2019 (fiscal year 2021 for the Company). The Company has not
yet determined the potential effects of the adoption of ASU 2016-13 on its Financial Statements. In
August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which aims to
eliminate diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of
cash flows under Topic 230, Statement of Cash Flows, and other Topics. ASU 2016-15 is effective for annual reporting periods,
and interim periods therein, beginning after December 15, 2017 (fiscal year 2019 for the Company). The Company has not yet determined
the potential effects of the adoption of ASU 2016-15 on its Financial Statements. In
November 2016, the FASB issued ASU No. 2016-18, ("ASU 2016-18") Statement of Cash Flows (Topic 230): Restricted
Cash. In
January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other
(Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment
test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets
and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed
in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill
impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on
our Consolidated Financial Statements. In
January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments
in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as
acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual
periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting
this guidance on our Consolidated Financial Statements. In
July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic
815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments
(or embedded features) with down round features. When determining whether certain financial instruments should be classified as
liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument
is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified
instruments. As
a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as
a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified
financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize
the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available
to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are
now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with
Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize
the indefinite deferral of certain provisions of Topic 480 tha |
