Note I - Resalable Software Licenses Rights

12 Months Ended

Dec. 31, 2020

Research, Development, and Computer Software Disclosure [Text Block]

NOTE I

—

RESALABLE SOFTWARE LICENSES

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.

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 cash flows 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 to zero. A total of

$843,888

(prior to the impairment charge) was expensed during

2019.

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 greater of the

two

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

$14,920

and

$40,404

was charged to cost of sales during the years ended

December 31, 2020

and

2019,

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

$121,118

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

$58,882

and

$73,802

as of

December 31, 2020

and

2019,

respectively.

The Company has classified the balance as non-current until a larger deployment occurs.

Estimated minimum amortization expense based on straight line amortization of the software license rights for each of the next

five

years and thereafter approximates the following:

Years ending December 31
2021	$	18,000
2022		18,000
2023		18,000
2024		4,882
Total	$	58,882