Note 11 - Blockchain Software Application Platform Development Costs

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

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

11. Blockchain software application platform development costs

In

February 2018,

the Company entered into a technical development contract with an unrelated entity to develop a blockchain technology-based platform application for internal use by the Company. Total amount of the contract was

US$4.5

million. In

March 2018,

the Company entered into a

RMB3.0

million (approximately

US$0.42

million) social network-based software application development contract with another unrelated entity, which software application the Company had further combined into the current under developing blockchain technology-based platform. These

two

blockchain technology-based applications are named OMG and Bo!News, respectively. As of

March 31, 2020

and

December 31, 2019,

in accordance with ASC

350

-

40

“Intangibles-Goodwill and Other-Internal-Use Software”, the Company capitalized approximately

US$4.18

million and

US$3.88

million development costs in the aggregate under these

two

contracts, respectively. As of the date hereof, the Company is in the process of further developing and adjusting its blockchain-powered applications on the blockchain infrastructure platform to make the platform a better synergism with the current business and client base. The Company had originally scheduled to complete the adjustments and upgrades of Bo!News, to launch the OMG for trial by the end of

May 2020,

and to complete the integration of BO!News and OMG for commercial release by the end of

2020.

However, due to the COVID-

19

outbreak in China during the

first

fiscal quarter of

2020,

the Company currently anticipates that the commercial releasing schedule will likely be postponed for

1

to

2

months.

According to the development contracts the Company signed with the counter parties, the Company will

not

bear any development risk related loss unless the counter party has

no

fault during the development and the causes for failure is considered reasonable as agreed by both parties. In the latter case, the related development loss will be shared by both parties based on further negotiations. As of the date hereof, the Company has

not

been aware of any technical risks or other factors that

may

lead to any failure or partial failure of these development projects.