| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)
Basis of Presentation and Principles of Consolidation The
consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments)
have been made that are necessary to present fairly the financial position, the results of its operations and cash flows. The consolidated
financial statements include the accounts of the Company, and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation. (b)
Use of Estimates The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s significant
estimates include its accounts receivable, assessment of credit losses, fair value of stock options and warrants, valuation allowance
of deferred tax assets, useful lives of property and equipment, the recoverability of long-lived assets, revenue recognition, valuation
of prepayments, goodwill, and other intangible assets, inventories, cryptocurrencies, purchase price allocation of business combination,
right-of-use assets, and lease liabilities. Management makes these estimates using the best information available at the time the estimates
are made; however actual results could differ from those estimates. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (c)
Economic, Pandemic, Political, and Currency Exchange Risks All
the Company’s revenue-generating operations are conducted in Hong Kong and mainland China. Accordingly, the Company’s business,
financial condition and results of operations may be influenced by the political, economic, public health, and legal environments in
the PRC, and by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations
and significant risks that are not typically pertaining to the companies in North America and Western Europe. These include risks associated
with, among others, the political, economic, public health concerns with persistent outbreaks of COVID-19 infections in various regional
localities, and legal environments, geopolitical influences, and foreign currency exchange, notably in recent events, where the government’s
sudden interventions or modifications of the laws and regulations currently in effective could negatively impact the Company’s
operations and financial results. The
functional currency of the Company is primarily Chinese Renminbi Yuan (“RMB”), which is not freely convertible into foreign
currencies. The Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the
Company could post the same amount of profit for two comparable periods and yet, because of fluctuating exchange rates, record higher
or lower profit depending on exchange rate of RMB. RMB converted to U.S. dollars on the relevant dates. The exchange rate could fluctuate
depending on changes in the political and economic environment without notice. (d)
Cash and Cash Equivalents The
Company considers all highly liquid investments purchased and cash deposits with financial institutions with original maturities of three
months or less to be cash equivalents. The Company had no The
Company maintains its cash accounts at credit worthy financial institutions and closely monitors the movements of its cash positions.
As of December 31, 2022 and 2021, approximately $ 1.0 4.5 (e)
Accounts Receivable, Accounts Receivable–related parties, and Concentration of Risk Accounts
receivable are recognized and carried at carrying amount less an allowance for credit loss, if any. The Company maintains an allowance
for credit losses resulting from the inability of its customers to make required payments based on contractual terms. The Company reviews
the collectability of its receivables on a regular and ongoing basis according to historical trend, and estimates its provision for expected
credit losses on receivables aging analysis. The
Company estimates allowance for credit losses for the anticipation of future economic condition and credit risk indicators of customers,
including the potential impact of the COVID-19 pandemic on its customers’ businesses. After all attempts to collect a receivable
have failed, the receivable is written off against the allowance. In the event the Company recovers amounts previously reserved for,
the Company will reduce the specific allowance for credit losses. The balance of allowance for credit losses for the year ended December
31, 2022 has decreased approximately $ 1.8 TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS Accounts
receivable as at December 31, 2022 and 2021 are as follows: SCHEDULE
OF ACCOUNTS RECEIVABLE
December 31, December 31,
Accounts Receivable $ 20,159,165 $ 18,340,348
Allowance for credit losses (10,957,920 ) (11,582,186 )
Accounts Receivable, net $ 9,201,245 $ 6,758,162
Accounts Receivable - related parties $ 14,617,746 $ 16,032,134
Allowance for credit losses (14,526,375 ) (15,680,662 )
Accounts Receivable - related parties, net $ 91,371 $ 351,472 The
normal credit term is ranging from 1 month to 3 months after the customers’ acceptance of high-end data storage servers or software,
and completion of advertising and other services, and ranging from 1 month to 6 months after the customers’ acceptance of ads display
terminals. However, because of various factors of business cycle, the actual collection of outstanding accounts receivable may be beyond
the normal credit terms. The
allowance for credit losses at December 31, 2022 and 2021, totaled approximately $ 25.5 27.3 SCHEDULE
OF ALLOWANCES FOR CREDIT LOSSES
Balance at January 1, 2021 $ 21,217,406
Addition from acquisition of subsidiaries under common control 314,214
Increase in allowance for credit losses 5,134,350
Foreign exchange difference 596,878
Balance at December 31, 2021 $ 27,262,848
Decrease for balance due to transfer of a company (771,189 )
Increase in allowance for credit losses 674,664
Foreign exchange difference (1,682,028 )
Balance at December 31, 2022 $ 25,484,295 (f)
Advances to Suppliers Advances
to suppliers include but are not limited to cash deposits for the purchase of inventory items and super-computing server machines from
suppliers. (g)
Advances from Customers and Related Parties Advances
from customers and related parties represent cash received from customers and related parties as advance payments for the purchases of
the Company’s products and services. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (h)
Fair Value and Fair Value Measurement of Financial Instruments Management
has estimated that carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts receivable –
related parties, advances to suppliers, other current assets, other non-current assets, short-term bank loans, accounts payable, advances
from customers, advances from customers - related parties, other payables and accrued expenses, income taxes payable, and due to related
parties approximate their fair market value based on the short-term maturity of these instruments. (i)
Fair Value Accounting Financial
Accounting Standards Board (FASB) Accounting Standards Codifications (ASC) 820-10 “Fair Value Measurements and Disclosures”,
establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). As required by FASB ASC 820-10, assets are classified in their entirety
based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy under
FASB ASC 820-10 are described below:
Level
1 Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level
2 Quoted
prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term
of the asset or liability; and
Level
3 Prices
or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by
little or no market activity). TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (j)
Inventories, net Inventories
are valued at the lower of cost (weighted average basis) and net realizable value. Net realizable value is the expected selling price
in the ordinary course of business minus any costs of completion, disposal, and transportation to make the sale. The
Company performs an analysis of slow-moving or obsolete inventory periodically and any necessary valuation reserves, which could potentially
be significant, are included in the period in which the evaluations are completed. Any inventory impairment results in a new cost basis
for accounting purposes. (k)
Property, equipment and software Property,
equipment and software are stated at cost less accumulated amortization and depreciation. Amortization and depreciation is provided over
the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of property, equipment and software
are as follows: SCHEDULE
OF PROPERTY , EQUIPMENT AND SOFTWARE ESTIMATED USEFUL LIVES
Office buildings 20 50
Lease improvement Shorter of lease term or assets lives
Electronics equipment, furniture and fixtures 3 5
Motor vehicles 5
Purchased software 5
Media display equipment 5
Cryptocurrency mining machine 3 Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss are included in the Company’s
results of operations. (l)
Cryptocurrencies Cryptocurrencies
held, including Bitcoin and Ethereum, are accounted for as intangible assets with indefinite useful lives. An intangible asset with an
indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances
occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount
exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured.
If the carrying amount of the cryptocurrency exceeds its fair value, the Company recognizes an impairment loss in an amount equal to
that excess. Subsequent reversal of impairment losses is not permitted. There
are no cash flows from cryptocurrencies included in net cash used in operating activities since the revenue recognized from mining is
a noncash activity. The sales of cryptocurrencies are included within investing activities in the consolidated statements of cash flows
and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations.
The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. Upon
disposal of cryptocurrencies, the Company will evaluate whether the control of the cryptocurrencies is transferred in accordance with
ASC 610-20. The control over the cryptocurrencies disposed will transfer at the same time of the disposal, hence the cryptocurrencies
transferred will be derecognized at the same time of the disposal. The gain or loss on disposal is calculated as the difference between
the consideration allocated to each distinct cryptocurrency and its carrying amount. (m)
Business combination In
accordance with ASC 805, the Company applies acquisition method to account for business combination. The acquisition method requires
that the fair value of the underlying exchange transaction is used to establish a new accounting basis of the acquired entity upon the
acquirer taking control over the acquiree. Furthermore, because of obtaining control the acquirer is responsible and accountable for
all of the acquiree’s assets, liabilities and operations, the acquirer recognizes and measures the assets acquired and liabilities
assumed at their full fair values as of the date control is obtained, which may result in goodwill, when purchase consideration exceeds
the net of fair value of the assets acquired and liabilities assumed, or a bargain purchase gain, when the net of fair value of the assets
acquired and liabilities assumed exceeds the purchase consideration, regardless of the percentage ownership in the acquiree or how the
acquisition was achieved. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (n)
Disposal of subsidiary The
Company deconsolidates a subsidiary upon the loss of control, the related subsidiary’s assets (including goodwill), liabilities,
non-controlling interest and other components of equity are de-recognized. This may mean that amounts previously recognized in other
comprehensive income are reclassified to profit or loss. Any
consideration received is recognized at fair value. Any resultant gain or loss is recognized in the Statement of Operations. (o)
Long-term investment The
Company’s long-term investment consists of investments accounted for under the equity method and equity investments without readily
determinable fair value. Pursuant to ASC 321, equity investments, except for those accounted for under the equity method, those that
result in consolidation of the investee and certain other investments, are measured at fair value, and any changes in fair value are
recognized in earnings. For equity securities without readily determinable fair value and do not qualify for the existing practical expedient
in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) to estimate fair value using the net asset value per
share (or its equivalent) of the investment, the Company elected to measure those investments at cost, less any impairment, plus or minus
changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. For
equity investments that the Company elects to measure at cost, less any impairment, plus or minus changes resulting from observable price
changes, the Company makes a qualitative assessment considering impairment indicators to evaluate whether investments are impaired at
each reporting date. Impairment indicators considered include, but are not limited to, a significant deterioration in the earnings performance
or business prospects of the investee, including factors that raise significant concerns about the investee’s ability to continue
as a going concern, a significant adverse change in the regulatory, economic, or technologic environment of the investee and a significant
adverse change in the general market condition of either the geographical area or the industry in which the investee operates. If a qualitative
assessment indicates that the investment is impaired, the entity has to estimate the investment’s fair value in accordance with
the principles of ASC 820. For equity investments without readily determinable fair value, the Company uses Level 3 inputs of fair value
accounting in accordance with ASC 820-10 and recognizes impairment loss other than temporary in the statement of operations equal to
the difference between its initial investment and its proportional share of the net book value of the investee’s net assets which
approximates its fair value. For
impairment on equity investments without readily determinable fair value, the Company uses Level 3 inputs of fair value accounting in
accordance with ASC 820-10 and recognizes impairment loss in the statement of operations equal to the difference between its initial
investment and its proportional share of the net book value of investee’s net assets which approximates its fair value if those
are determined to be other than temporary. (p)
Impairment of Long-Lived Assets Long-lived
assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology
or other industry changes. Recoverability of assets to be held and used is determined by comparing their carrying amount with their expected
future net undiscounted future cash flows from the assets. If such assets are considered to be impaired, the impairment to be recognized
is measured by how much the carrying amount exceeds the fair value of the assets. There were impairment charges of approximately $ 1,468,000 no (q)
Operating leases - Right-of-use assets and lease liabilities The
Company accounts for lease under ASC 842 “Leases”, and also elects practical expedient not to separate non-lease component
from lease components in accordance with ASC 842-10-15-37 and instead to account for each separate lease component and the non-lease
components associated with that lease component as a single lease component. The Company also elects the practical expedient not to recognize
lease assets and lease liabilities for leases with a term of 12 months or less. The
Company recognized a lease liability and corresponding right-to-use asset based on the present value of minimum lease payments discounted
at the Company’s incremental borrowing rate. The Company records amortization and interest expense on a straight-line basis based
on lease terms and reduces lease liabilities upon making lease payments. (r)
Revenue Recognition In
accordance with the ASC 606, the Company recognizes revenues net of applicable taxes, when goods or services are transferred to customers
in an amount that reflects the consideration to which the Company expects to receive in exchange for those goods or services. The
Company generates its revenues primarily from five sources: (1) product sales, (2) software sales, (3) advertising, (4) crypto-currency
mining, and (5) other sales. Revenue is recognized when obligations under the terms of a contract with our customers are satisfied, generally,
upon delivery of the goods and services and receipts of cryptocurrencies from cryptocurrency mining pools. Although
our performance obligation in our contracts with the mining pool operator is the provision of computing power, we are not entitled to
any compensation for computing power provided when the pool operator is unsuccessful in placing a block to the blockchain. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS Revenue
- Products Product
revenues are generated primarily from the sale of Cloud-Application-Terminal based digital ads display terminals with integrated software
essential to the functionality of the hardware to our customers (inclusive of related parties) and high-end data storage servers. Although
manufacturing of the products has been outsourced to the Company’s Original Equipment Manufacturer (OEM) suppliers, the Company
has acted as the principal of the contract. The Company recognized the product sales at the point of delivery. The Company may from time
to time provide future unspecified software upgrades to the hardware products’ essential software, which is expected to be infrequent
and, free of charge. Non-software service is mainly the one-time training session provided to the customer to familiarize them with the
software operation upon the customer’s initial introduction to the software platform. The costs of providing infrequent software
upgrade and training are de minimis. As a result, the Company does not allocate transaction price to software upgrade and customer training.
Product sales are classified as “Revenue-Products” on the Company’s consolidated statements of operations. Revenue
- Software The
Company designs and develops software
products. Software development projects usually include developing software, integrating various isolated software systems into one,
and testing the system. The design and build services, together with the integration of the various elements, are generally determined
to be essential to the functionality of the delivered software. The contracted price is usually paid at the delivery of the software.
The Company usually provides non-software services including after-sale support, technical training. The technical training only occurs
at the introduction of the software. The software is highly specialized and stable, after-sale support and subsequent upgrade or enhancement
are infrequent. The Company has estimated the costs associated with the non-software performance obligations and concludes that these
obligations are de minimis to the overall contract. Therefore, the Company does not further allocate transaction price. The
Company usually completes the software support service in one-off and recognizes the revenue at the point of delivery of service
because the Company does not have an enforceable right to payment for performance completed to date. Revenues from software development
contracts are classified as “Revenue-Software” on the Company’s consolidated statements of operations. Revenue
- Advertising The
Company generates revenues primarily from providing advertising slots to customers to promote their businesses by broadcasting advertisements
on identifiable digital ads display terminals and vehicular ads display terminals in different geographic regions and locations through
a cloud-based new media sharing platform. The Company also contracts individuals to promote special events or for various occasions.
The Company is only obligated to broadcast the advertisements to the contracted digital ads display terminals, and therefore allocates
100% of the transaction price to advertisement broadcasting. The transaction price for advertisement broadcasting is fixed based on the
numbers of advertisement delivery and duration of the contract, and has no variable consideration, or significant financing component,
or subsequent price change, and is not refundable. The
Company recognizes the revenues, net of applicable taxes, from advertisement broadcasting contracts with customers over the contracted
advertising duration. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS Revenue
- Cryptocurrency mining The
Company has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power
to the mining pool. The contracts are terminable under certain circumstances. Both the Company and the mining pool operator have the
right to terminate the contract at any time, with or without clause, and without compensation. In exchange for providing computing power,
the Company is entitled to a fractional share of the fixed cryptocurrency awards the mining pool operator receives (less digital asset
transaction fees to the mining pool operator, if any.) for successfully adding a block to the blockchain. The Company’s fractional
share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power
contributed by all mining pool participants in solving the current algorithm. The contract first exists upon the successful placement
of a block on the blockchain by the pool operator because that is the point when the parties have performed their contract obligation
and neither party can unilaterally terminate the contract without compensating the other party. Providing
computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision
of providing such computing power is the only performance obligation in the Company’s contract with mining pool operator. The
transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value using the
quoted price from principal market of the related cryptocurrency on the date received, which is not materially different than the fair
value at the contract inception or at the time the Company has earned the award from the pools. The consideration is variable. Because
it is not probable that a significant reversal of cumulative revenue will not occur (ASC 606-10-32-11), the consideration is constrained
until the mining pool operator successfully places a block (by being the first to solve an algorithm), and the Company receives confirmation
of the consideration it will receive, at which time revenue is recognized. There is no financing component, nor allocation of transaction
price in these transactions. Revenue
- Other The
Company also reports other revenue which comprises revenue generates from System upgrade and technical support services, platform service
fee, and rental income. System
upgrade and technical support revenue is recognized when performance obligations are satisfied upon completion of the services. Platform
service fee is charged based on number of the display terminals used by the customers or a percentage of advertising revenue generated
by the display terminals. Platform service revenue is recognized on a monthly basis over the contract period. The
Company follows ASC 842 – Leases that requires lessor to identify the underlying assets and allocate rental income among considerations
in lease and non-lease components. The Company owns two units of office space renting out to a third party and TNM under non-cancelable
operating lease agreements with lease terms of two years starting from May 1, 2022 and four years starting from July 1, 2022, respectively.
The lease agreements have fixed monthly rental payments, and no non-lease component or option for lessees to purchase the underlying
assets. The Company collects monthly rental payments from the lessees, and has generated approximately $ 276,000 340,000 After
completion of the business acquisition on June 9, 2021, TNM became a subsidiary of the Company. The rental income from TNM has become
an intercompany revenue and been eliminated since June 9, 2021. TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE
OF ANNUAL MINIMUM RENTAL INCOME RECEIVED
Annual minimum rental income to be received in the next 5 years:
2023 264,615
2024 88,205
Total 352,820 Contract
balances The
Company records advances from customers when cash payments are received or due in advance of our performance. For the year ended December
31, 2022, 2021 and 2020, the Company recognized revenue of $ 232,000 141,000 256,000 Practical
expedients and exemptions The
Company generally expenses sales commissions if any incurred because the amortization period would have been one year or less. In many
cases, the Company is approached by customers for customizing software products for their specific needs without incurring significant
selling expenses. The
Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year
or less. (s)
Cost of Sales - advertising and cost of cryptocurrencies The
cost of sales for advertising revenue mainly comprises of direct costs of generating advertising revenue including lease expense for
the wall space, to where the ads display terminal to be installed, installation costs of ads display terminals, depreciation of display
termination, labor, and other related expenses. The
cost of sales for cryptocurrencies revenue consists primarily of direct costs of earning Bitcoin and Ethereum related to mining operations,
including mining platform fees, mining pool fees, mining facility rental fees, electric power costs, other utilities, depreciation of
mining machines, labor, insurance, and among other ancillary costs. (t)
Stock-based compensation The
Company applies ASC No. 718, “Compensation-Stock Compensation”, which requires that share-based payment transactions with
employees, such as share options, be measured based on the grant date fair value of the equity instrument and recognized as compensation
expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee
share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over
the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period. The
Company adopted ASU 2018-07, Compensation-Stock Compensation (Topic: 718): Improvements to Nonemployee Share-Based Payment Accounting
on January 1, 2019, to account for stock-based compensation to goods and services provided by the third parties. The fair value of the
equity awards to nonemployee are measured on the grant day. Under this guidance, compensation cost related to nonemployee share options
or similar equity instruments is recognized in the same period and in the same manner (i.e. capitalize or expense) the entity would if
it paid cash for the goods or services. The Company’s adoption of ASU 2018-07 has no material impact to the Company’s consolidated
financial statements, nor requirement for cumulative adjustment in retained earnings or other components of equity or net assets. During
the year ended December 31, 2022, 2021, and 2020, the Company recognized approximately $ 23,100 3,137,000 744,000 TAOPING
INC. NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS (u)
Foreign Currency Translation The
functional currency of the US and BVI companies is the United States dollar. The functional currency of the Company’s Hong Kong
subsidiaries is the Hong Kong dollar. The
functional currency of the Company’s wholly-owned PRC subsidiaries is the Chinese Renminbi Yuan, (“RMB”). RMB is not
freely convertible into foreign currencies. The Company’s PRC subsidiaries’ financial statements are maintained in the functional
currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional
currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Exchange gains
or losses arising from foreign currency transactions are included in the determination of net loss for the respective periods. For
financial reporting purposes, the financial statements of the Company have been translated into United States dollars. Assets and liabilities
are translated at exchange rates at the balance sheet dates, revenue and expenses are translated at average exchange rates, and equity
is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are
included in other comprehensive loss, a component of equity. The
exchange rates adopted are as follows: SCHEDULE
OF FOREIGN CURRENCY TRANSLATION
December 31, 2022 December 31, 2021
Year-end RMB to US$ exchange rate 6.8993 6.3588
Average yearly RMB to US$ exchange rate 6.7190 6.4505
Year-end HKD to US$ exchange rate 7.8077 7.7971
Average yearly HKD to US$ exchange rate 7.8302 7.7724 The
average yearly RMB to US$ exchange rate adopted for the year ended December 31, 2020 was 6.9044 No
representation is made that the RMB amounts and HKD amounts could have been, or could be, converted into United States dollars at the
rates used in translation. (v)
Research & Development Expenses The
Company follows the guidance in FASB ASC 985-20, Cost of Software to Be Sold, Leased or Marketed, regarding software development costs
to be sold, leased, or otherwise marketed. FASB
ASC 985-20-25 requires research and development costs for software development to be expensed as incurred until the software model is
technologically feasible. Technological feasibility is established when the enterprise has completed all planning, designing, coding,
testing, and identification of risks activities necessary to establish that the product can be pr |
