MNKD 2017 Annual Report

the statement of cash flows include cash and restricted cash equivalents. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods, using a retrospective transition method to each period presented. The Company early adopted ASU 2016-18 in the last quarter of 2017. As a result, restricted cash of approximately $4.4 million as of December 31, 2017 is included with cash and cash equivalents when reconciling the beginning and ending balances in the statements of cash flows. There were no restricted cash balances prior to 2017. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted. The Company early adopted ASU 2017-01 in the first quarter of 2017, and it did not result in a material impact on the Company’s consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU reduces both diversity in practice and cost and complexity when applying ASC 718 to a change in the terms or conditions of a share-based payment award. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements. In July 2017, the FASB issued ASU No. 2017-11, Earnings per Share (Topic 260) and Derivatives and Hedging (Topic 815): Accounting for Certain Financial Instruments with Down Round Provisions. This ASU addresses the complexity and cost of accounting for certain financial instruments with down round features that require fair value measurement of the entire instrument or conversion option and requires entities that present earnings per share in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods. The adoption of this standard is not expected to materially impact the Company’s consolidated financial statements. 3. Inventories Inventories consist of the following (in thousands): December 31, 2017 2016 Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 572 $ — Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,273 2,120 Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812 211 Total inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,657 $2,331 Work-in-process and finished goods as of December 31, 2017 and 2016 include conversion costs but not materials cost because the materials used in its production were previously written off. During the years ended December 31, 2017 and 2015, the Company recorded a write-down of inventory of approximately $3.0 million and $36.1 million, respectively, for inventory that was forecasted to become obsolete due to expiration which is recorded in costs of goods sold in the accompanying consolidated statements of operations. There was no write- down of inventory for the year ended December 31, 2016. 96