13.	RECENTLY ISSUED ACCOUNTING STANDARDS

In the normal course of business, management evaluates all new accounting pronouncements issued by the FASB to determine the potential impact they

may

have on the Company’s Condensed Consolidated Financial Statements. Based upon this review, except as noted below, management does

not

expect any of the recently issued accounting pronouncements, which have

not

already been adopted, to have a material impact on the Company’s Condensed Consolidated Financial Statements.

Recently Adopted

January 2017,

the FASB issued Accounting Standard Update (“ASU”)

2017

04,

“Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment.” This guidance simplifies the subsequent measurement of goodwill and eliminates the

two

-step goodwill impairment test. Under the new guidance, an annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should

not

exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective prospectively for fiscal years 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 has early adopted ASU

2017

and will apply the guidance at its next annual impairment testing date or at an earlier date if a triggering event occurs.

March 2016,

the FASB issued ASU

2016

09,

“Improvements to Employee Share-Based Payment Accounting,” which amends Accounting Standards Codification (“ASC") Topic

718,

Compensation – Stock Compensation. ASU

2016

simplifies 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. The Company has adopted the guidance in this ASU in the

first

quarter of fiscal year

2017

on a prospective basis as permitted by the new standard. There has been

impact on the income taxes line item of the Company’s Condensed Consolidated Statements of Operations related to excess tax benefits upon vesting or settlement,

impact to its cash flow presentation and

impact to the computation of diluted earnings per share. Under the new guidance, the company has elected to account for forfeitures as they occur. Due to the Spin-off and related change to the Company’s equity incentive plans, this election did

not

result in an adjustment to the Company’s stock-based compensation expense. The adoption of ASU

2016

did

not

have a material impact on the Company’s Condensed Consolidated Financial Statements.

July 2015,

the FASB issued ASU

2015

11,

“Inventory (Topic

330

): Simplifying the Measurement of Inventory.” This update requires inventory within the scope of the standard to be measured at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in this update do

not

apply to inventory that is measured using last-in,

first

-out or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using FIFO or average cost. The guidance in this ASU became effective for the Company in the

first

quarter of fiscal year

2017.

The adoption of ASU

2015

did

not

have a material impact on the Company’s

Condensed Consolidated Financial Statements.

Not

Yet Adopted

May 2017,

the FASB issued ASU

2017

09,

“Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting.” ASU

2017

clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under ASU

2017

09,

an entity will

not

apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU

2017

will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after

December

15,

2017.

Early adoption is permitted. ASU

2017

is effective for the Company beginning in fiscal

2018.

The Company does

not

expect its pending adoption of ASU

2017

to have a material impact on its

Condensed Consolidated Financial Statements.

January 2017,

the FASB issued ASU

2017

01,

“Business Combinations (Topic

805

): Clarifying the Definition of a Business.” ASU

2017

provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) does

not

constitute a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is

not

a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is

not

met, the amendments in ASU

2017

(i) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (ii) remove the evaluation of whether a market participant could replace missing elements. This update is effective for annual and interim periods beginning after

December 15, 2017,

which will require the Company to adopt these provision in the

first

quarter of fiscal

2018

using a prospective approach. The Company does

not

expect its pending adoption of ASU

2017

to have a material impact on its

Condensed Consolidated Financial Statements.

August 2016,

the FASB issued ASU

2016

15,

“Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments.” This update provides clarification regarding how certain cash receipts and cash payment are presented and classified in the statement of cash flows. ASU

2016

addresses

eight

specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for annual and interim periods beginning after

December 15, 2017,

which will require the Company to adopt these provisions in the

first

quarter of fiscal

2018

using a retrospective approach. Early adoption is permitted. The Company does

not

expect its pending adoption of ASU

2016

to have a material impact on its

Condensed Consolidated Financial Statements.

February 2016,

the FASB issued ASU

2016

02,

“Leases” in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. ASU

2016

requires that a lessee should recognize 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 on the balance sheet. ASU

2016

is effective for fiscal years beginning after

December 15, 2018 (

including interim periods within those periods), using a modified retrospective approach, and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of the ASU on its

Condensed Consolidated Financial Statements.

January 2016,

the FASB issued ASU

2016

01,

“Recognition and Measurement of Financial Assets and Financial Liabilities,” which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The standard is effective for interim and annual periods beginning after

December 15, 2017,

and early adoption is generally

not

permitted. The Company is currently in the process of evaluating the impact of adoption of the ASU on its

Condensed Consolidated Financial Statements.

May 2014,

the FASB issued ASU

2014

09,

“Revenue from Contracts with Customers.” The core principle behind ASU

2014

is that an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering goods and services. This model involves a

five

-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when the entity satisfies the performance obligations. This ASU allows

two

methods of adoption; a full retrospective approach where historical financial information is presented in accordance with the new standard, and a modified retrospective approach where this ASU is applied to the most current period presented in the financial statements. In

August 2015,

the FASB issued ASU

2015

“Revenue from Contracts with Customers: Deferral of the Effective Date,” which deferred the effective date of ASU

2014

to annual reporting periods beginning after

December 15, 2017,

with earlier application permitted as of annual reporting periods beginning after

December 15, 2016.

March 2016,

the FASB issued ASU

2016

08,

“Revenue from Contracts with Customers (Topic

606

): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarified the revenue recognition implementation guidance on principal versus agent considerations and is effective during the same period as ASU

2014

09.

April 2016,

the FASB issued ASU

2016

10,

“Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing,” which clarified the revenue recognition guidance regarding the identification of performance obligations and the licensing implementation and is effective during the same period as ASU

2014

May 2016,

the FASB issued ASU

2016

11,

“Revenue Recognition (Topic

605

) and Derivatives and Hedging (Topic

815

): Rescission of SEC Guidance Because of Accounting Standards Updates

2014

and

2014

Pursuant to Staff Announcements at the

March

2016

EITF Meeting.” The purpose of ASU

2016

is to rescind from the FASB Accounting Standards Codification certain SEC paragraphs as a result of

two

SEC Staff Announcements at the

March 3, 2016

meeting. For public entities, the amendments in ASU

2016