8.	RESALABLE SOFTWARE LICENSE RIGHTS

November 11, 2015,

the Company entered into a license agreement for the rights to all software and documentation regarding the technology currently known as or offered under the FingerQ name. The license agreement grants the Company the exclusive right to reproduce, create derivative works and distribute copies of the FingerQ software and documentation, create new FingerQ related products, and grant sub-licenses of the licensed technology to end users. The license rights have been granted to the Company in perpetuity, with a stated number of end-user resale sub-licenses allowed under the contract for a total of

$12,000,000.

The Company initially determined the software license rights to be a finite lived intangible asset, and estimated that the software license rights shall be economically used over a

-year period, with a weighting towards the beginning years of that time-frame. The license rights were acquired during the

fourth

quarter of

2015,

but the usage of such rights in the Company’s products was

not

generally available until

January 2017.

Accordingly, amortization began in the

first

quarter of

2017.

Through

December 31, 2018,

the license rights were amortized over the greater of the following amounts:

) an estimate of the economic use of such license rights,

) the amount calculated by the straight line method over

ten

years or

) the actual cost basis of sales usage of such rights. After re-evaluation of the expected timeline of future license transactions, commencing

January 1, 2019,

the Company changed its amortization methodology to the greater of the straight-line methodology or actual unit cost per license sold based on net remaining software licenses as of

January 1, 2019.

The Company categorized the amortization expense under Cost of Sales as it more closely reflected the nature of the license right arrangement and the use of the technology.

During the

fourth

quarter of

2019,

the Company re-evaluated the recoverability of the carrying amount of the balance of license rights, and concluded that there were

significant undiscounted cashflows expected to be generated from the future sale of the license rights. Accordingly, an impairment charge of

$6,957,516

was recorded in the

fourth

quarter of

2019,

which reduced the carrying amount of the FingerQ license rights down to zero. Throughout the year, the Company attempted to sell the technology into the mobile market in Asia, but due to, among other things, the trade tension between the US and China, management concluded that the future amortization would

not

represent an accurate cost to the ongoing business, without corresponding revenue. A total of

$281,074

and

$176

was charged to cost of sales during the

three

month period ended

March 31, 2019

for amortization and the cost basis of the actual sales, respectively.

December 31, 2015,

the Company purchased

third

-party software licenses in the amount of

$180,000

in anticipation of a large pending deployment that has yet to materialize. The Company is amortizing the total cost over the same methodology described above with the greatest of the

two

approaches being the actual unit cost per license sold. A total of

$5,028

and

$25,954

was charged to cost of sales during the

three

month periods ended

March 31, 2020

and

March 31, 2019,

respectively. Since the license purchase, the actual per unit cost (actual usage) of such license rights in the cumulative amount of

$111,226

has been charged to cost of sales, with a carrying balance of

$68,774

and

$73,802

as of

March 31, 2020

and

December 31, 2019,

respectively.