6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of, October 2021

Commission File Number 001-35722

TAOPING INC.

(Translation of registrant’s name into English)

Unit 3102, 31/F, Citicorp Centre

18 Whitefield Road, Hong Kong

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXPLANATORY NOTE

Taoping Inc. (the “Company”) is furnishing this Form 6-K to provide the unaudited consolidated financial statements for the six months ended June 30, 2021 and 2020 and incorporate such financial statements into the Company’s registration statements referenced below.

This Form 6-K is hereby incorporated by reference into the registration statements of the Company on Form S-8 (Registration Numbers 333-256600 and 333-211363) and on Form F-3 (Registration Number 333-229323) to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

FORWARD-LOOKING INFORMATION

This Report on Form 6-K contains forward-looking statements and information relating to us that are based on the current beliefs, expectations, assumptions, estimates and projections of our management regarding our company and industry. When used in this report, the words “may”, “will”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to achieve or sustain profitability or reasonably predict our future results due to our limited operating history of providing blockchain technology and smart cloud services, our independent registered auditors’ substantial doubt about our ability to continue as a going concern, unfavorable economic conditions that may affect the level of technology and Out-of-Home advertising spending by our customers, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, uncertainties related to China’s legal system and economic, political and social events in China, the volatility of the securities markets, and other risks and uncertainties which are generally set forth under the heading, “Key information - Risk Factors” and elsewhere in our Annual Report on Form 20-F filed on April 30, 2021 (the “Annual Report”). Should any of these risks or uncertainties materialize, or should the underlying assumptions about our business and the commercial markets in which we operate prove incorrect, actual results may vary materially from those described as anticipated, estimated or expected in the Annual Report.

All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 26, 2021	TAOPING INC.
	By:	/s/ Jianghuai Lin
		Jianghuai Lin
		Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Unaudited Interim Consolidated Financial Statements as of June 30, 2021 and for the six months ended June 30, 2021 and 2020
99.2	Operating and Financial Review and Prospects in Connection with the Interim Consolidated Financial Statements for the six months ended June 30, 2021
99.3	Press Release dated October 26, 2021
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document
104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

EX-99.1

Exhibit 99.1

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

INDEX

Contents	Page(s)
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Comprehensive Loss	F-4
Consolidated Statements of Changes in Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7

F-1

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2021 AND DECEMBER 31, 2020

	NOTES	June 30, 2021			December 31, 2020
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	849,519		$	882,770
Restricted cash	2(e)		-			214,144
Accounts receivable, net	2(f)		2,707,994			4,264,257
Accounts receivable-related parties, net	2(f)		166,012			2,919,215
Advances to suppliers			10,950,271			3,177,678
Prepaid expenses	2(g)		9,891,376			24,635
Inventories, net	7		1,366,594			254,678
Cryptocurrencies, net	9		175,487			-
Loan receivable - related party	6(d)		-			519,331
Other current assets	12		2,629,046			173,026
TOTAL CURRENT ASSETS			28,736,299			12,429,734
Non-current accounts receivable, net	2(f)		-			1,839,230
Non-current accounts receivable-related parties, net	2(f)		-			1,323,196
Property, plant and equipment, net	8		18,599,830			10,851,899
Long-term investments	14		818,266			30,592
Right-of-use assets	2(n)		926,689			-
Other assets, non-current	12		3,790,167			4,302,000
TOTAL ASSETS		$	52,871,251		$	30,776,651
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans	10	$	5,949,005		$	6,210,176
Accounts payable			14,985,772			14,857,436
Accounts payable-related parties	6(c)		-			69,585
Advances from customers			653,804			315,924
Advances from customers-related parties			100,636			161,063
Amounts due to related parties	6(e)		3,380,197			137,664
Accrued payroll and benefit			222,086			231,598
Other payables and accrued expenses	16		4,991,801			6,636,097
Convertible note payable, net of debt discounts	15		689,502			1,180,908
Lease liability-current	13		418,546			-
TOTAL CURRENT LIABILITIES			31,391,349			29,800,451
Lease liability	13		580,917			-
TOTAL LIABILITIES			31,972,266			29,800,451
EQUITY
Ordinary shares, 2021 and 2020: par $0; authorized capital 100,000,000 shares; shares issued and outstanding, June 30, 2021:13,646,360 shares; December 31, 2020: 8,486,956 shares*;	18		154,316,011			131,247,787
Additional paid-in capital	18		26,914,305			15,643,404
Statutory reserve	17		14,044,269			14,044,269
Accumulated deficit			(206,310,884	)		(192,212,544	)
Accumulated other comprehensive income			23,675,886			23,612,413
Total equity (deficit) of the Company			12,639,587			(7,664,671	)
Non-controlling interest			8,259,398			8,640,871
Total Equity			20,898,985			976,200
TOTAL LIABILITIES AND EQUITY		$	52,871,251		$	30,776,651

* On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

The accompanying notes are an integral part of the unaudited consolidated financial statements

F-2

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

		Six Months Ended			Six Months Ended
	NOTES	June 30, 2021			June 30, 2020
		(Unaudited)			(Unaudited)
Revenue – Products		$	2,971,899		$	2,056,805
Revenue – Products-related parties	6(a)		67,612			217,813
Revenue – Software			1,621,534			1,049,377
Revenue – Advertising			576,310			-
Revenue – Cryptocurrency mining			814,772			-
Revenue – Other			319,429			371,381
Revenue – Other-related parties	6(a)(b)		54,021			41,974
TOTAL REVENUE			6,425,577			3,737,350
Cost – Products			2,696,207			1,970,154
Cost – Software			237,986			296,190
Cost – Advertising	2(p)		683,835			-
Cost – Cryptocurrency mining	2(p)		661,753			-
Cost – Other			7,555			4,001
TOTAL COST			4,287,336			2,270,345
GROSS PROFIT			2,138,241			1,467,005
Administrative expenses			13,606,688			7,064,286
Research and development expenses			2,260,274			1,802,747
Selling expenses			193,484			143,816
LOSS FROM OPERATIONS			(13,922,205	)		(7,543,844	)
Subsidy income			136,393			223,391
(Loss) from equity method investment			(578,619	)		-
Other income (loss), net			378,831			(302,336	)
Interest expense and debt discounts, net of interest income			(478,439	)		(387,761	)
Loss before income taxes			(14,464,039	)		(8,010,550	)
Income tax (expense) benefit	11		(871	)		69,858
NET LOSS			(14,464,910	)		(7,940,692	)
Less: Net loss attributable to the non- controlling interest	4		366,570			264,047
NET LOSS ATTRIBUTABLE TO THE COMPANY		$	(14,098,340	)	$	(7,676,645	)
Loss per share - Basic and Diluted*
Basic	5	$	(1.34	)	$	(1.12	)
Diluted	5	$	(1.34	)	$	(1.12	)
NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY*
Basic	5	$	(1.31	)	$	(1.08	)
Diluted	5	$	(1.31	)	$	(1.08	)

* On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

The accompanying notes are an integral part of the unaudited consolidated financial statements

F-3

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Net loss	$	(14,464,910	)	$	(7,940,692	)
Other comprehensive loss:
Foreign currency translation gain (loss)		44,523			(103,036	)
Comprehensive loss		(14,420,387	)		(8,043,728	)
Comprehensive loss attributable to the non- controlling interest		385,520			251,561
Comprehensive loss attributable to the Company	$	(14,034,867	)	$	(7,792,167	)

The accompanying notes are an integral part of the unaudited consolidated financial statements

F-4

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

													Accumulated
					Additional								other		Non-
	Ordinary shares*				Paid-in			Statutory		Accumulated			comprehensive		controlling
	Shares		Amount		Capital			Reserve		deficit			income		interest			Total
BALANCE AS AT JANUARY 1, 2021		8,486,956	$	131,247,787	$	15,643,404		$	14,044,269	$	(192,212,544	)	$	23,612,413	$	8,640,871		$	976,200
Stock-based payment for consulting fee (Note 18)		7,000		21,840		11,318,641			-		-			-		-			11,340,481
Conversion of convertible notes (Note 15)		598,034		1,745,930		(205,810	)		-		-			-		-			1,540,120
Issuance of common stock for financing (Note 18)		3,140,740		13,071,998		-			-		-			-		-			13,071,998
Employee stock incentive (Note 18)		200,000		2,792,000		158,070			-		-			-		-			2,950,070
Net loss for the year		-		-		-			-		(14,098,340	)		-		(366,570	)		(14,464,910	)
Foreign currency translation gain		-		-		-			-		-			63,473		(18,950	)		44,523
Common stock issued for business acquisition		1,213,630		5,436,456		-			-		-			-		-			5,436,456
Minority shareholders’ contribution		-		-		-			-		-			-		4,047			4,047
BALANCE AS AT JUNE 30, 2021 (unaudited)		13,646,360	$	154,316,011	$	26,914,305		$	14,044,269	$	(206,310,884	)	$	23,675,886	$	8,259,398		$	20,898,985

												Accumulated
					Additional							other			Non-
	Ordinary shares*				Paid-in		Statutory		Accumulated			comprehensive			controlling
	Shares		Amount		Capital		Reserve		deficit			income			interest			Total
BALANCE AS AT JANUARY 1, 2020		7,000,053	$	126,257,156	$	16,461,333	$	14,044,269	$	(174,517,769	)	$	23,022,845		$	9,340,551		$	14,608,385
Stock-based payment for consulting fee		46,667		186,000		16,185		-		-			-			-			202,185
Issued common stock		285,714		576,000		-		-		-			-			-			576,000
Issued convertible note beneficial conversion feature in connection with the private placement (Note 12)		-		-		165,580		-		-			-			-			165,580
Issued detachable warrant in connection with the private placement (Note 12)		-		-		11,580		-		-			-			-			11,580
Net loss for the year		-		-		-		-		(7,676,645	)		-			(264,047	)		(7,940,692	)
Foreign currency translation loss		-		-		-		-		-			(115,522	)		12,486			(103,036	)
Employee Stock Incentive		-		-		92,308		-		-			-			-			92,308
BALANCE AS AT JUNE 30, 2020 (unaudited)		7,332,434	$	127,019,156	$	16,746,986	$	14,044,269	$	(182,194,414	)	$	22,907,323		$	9,088,990		$	7,612,310

*   On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

The accompanying notes are an integral part of the unaudited consolidated financial statements

F-5

TAOPING INC.

(F/K/A CHINA INFORMATION TECHNOLOGY, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
OPERATING ACTIVITIES
Net loss	$	(14,464,910	)	$	(7,940,692	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses on accounts receivable and other current assets		6,697,608			5,875,044
Provision (reversal) for obsolete inventories		48,589			(15,255	)
Depreciation and amortization		2,713,008			1,605,201
(Gain) on sales of cryptocurrencies		(41,345	)		-
Impairment on cryptocurrencies		42,447			-
(Gain) on business acquisition		(12,345	)		-
Loss on equity method investment		578,620			-
Loss on disposal of equipment and inventories		44,705			50,428
Stock-based compensation for consulting services		2,142,892			204,443
Amortization of convertible note discount		257,430			163,833
Stock-based compensation to employees		2,950,070			92,308
Write-off of long aged payables		(330,991	)		-
Changes in operating assets and liabilities:
Accounts receivable		1,460,535			(1,225,284	)
Accounts receivable - related parties		744,732			803,982
Prepaid expenses		(701,611	)		-
Inventories		(1,193,956	)		27,762
Cryptocurrencies – mining		(814,772	)		-
Other non-current assets		-			342,269
Other current assets		(139,076	)		1,601,902
Advances to suppliers		(8,488,625	)		(1,685,458	)
Other payables and accrued expenses		(741,892	)		305,903
Advances from customers		322,214			(48,317	)
Advances from customers - related parties		(62,356	)		18,491
Amounts due to related parties		(140,447	)		-
Accounts payable to related party		(70,299	)		-
Accounts payable		(7,065,510	)		(1,283,642	)
Lease liability		(62,818	)		-
Income tax payable		-			(69,858	)
Net cash used in operating activities		(16,328,103	)		(1,176,940	)
INVESTING ACTIVITIES
Proceeds from sales of property and equipment		38,974			-
Purchases of property and equipment		(769,751	)		(150,470	)
Acquired cash in connection with a business acquisition		7,644			-
Proceeds from sales of cryptocurrencies		638,183			-
Repayment of loan receivable-related party		170,909			43,708
Net cash provided by (used in) investing activities		85,959			(106,762	)
FINANCING ACTIVITIES
Proceeds from short-term bank loans		4,172,283			4,029,193
Borrowings from related party		3,090,580			-
Repayment of short-term bank loans		(4,512,247	)		(5,696,201	)
Capital injected by minority shareholders in joint venture		4,047			-
Proceeds from issuance of convertible note, net of debt issuance costs		-			1,344,000
Proceeds from issuance of common stock, net of issuance cost		13,071,998			576,000
Net cash provided by financing activities		15,826,661			252,992
Effect of exchange rate changes on cash and cash equivalents		168,088			(4,092	)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(247,395	)		(1,034,802	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING		1,096,914			1,519,666
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING	$	849,519		$	484,864
Supplemental disclosure of cash flow information:
Cash paid during the year
Income taxes	$	-		$	-
Interest	$	195,469		$	346,042

	Six Months Ended		Six Months Ended
	June 30,2021		June 30, 2020
Reconciliation to amounts on consolidated balance sheets
Cash and cash equivalents	$	849,519	$	286,795
Restricted cash		-		198,069
Total cash, cash equivalents, and restricted cash	$	849,519	$	484,864

Supplemental disclosure of significant non-cash transactions*:

* On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references above in this section to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

In January 2020, the Company issued 30,000 restricted ordinary shares as compensation of approximately $144,000 for a consultant’s service.

In March 2020, the Company issued two individual investors warrants with fair value of $11,580 for each to purchase 26,667 shares of the Company’s ordinary share in connection with the issuance of a $1.48 million convertible promissory note.

In April 2020, the Company issued 16,667 restricted ordinary shares and warrant to purchase 16,667 shares of the Company’s ordinary shares as compensation for a consultant’s service. The fair values of the restricted ordinary shares and warrants were approximately $42,000 and $16,000, respectively.

In September 2020, the Company issued Convertible Promissory Notes (Note) with principal amount of $1.48 million. The Note mature in 12 months from the issue date. In June 2021, the investor of the Note converted $740,000 of principal amount of the convertible note and $26,208 of the accrued interest into 298,716 ordinary shares of the Company with no par value at a conversion price of $2.565.

In January 2021, the Company issued 7,000 non-restricted shares with a fair value of $21,840 to a consultant as a compensation for his service.

In February and April 2021, the Company issued warrants to three strategy consultants to purchase a total of 1.9 million ordinary shares as compensations to their services. The aggregate fair value of the warrants was approximately $11.2 million.

In March 2021, the Company issued 200,000 non-restricted ordinary shares to certain employees with the fair value of approximately $2,792,000 as rewards for their past services.

In April 2021, the Company issued warrants to an investment relationship consultant to purchase 15,000 ordinary shares as a compensation for its service. The fair value of the warrants was approximately $66,000.

In June 2021, the Company issued 1,213,630 restricted ordinary shares for the acquisition of Taoping New Media Co., Ltd. The fair value of the restricted ordinary shares was approximately $5,436,000.

During the six months ended June 30, 2021, purchase of software and equipment in an amount of approximately $6.7 million and $11,000 was made by an increase in accounts payable and other payable, respectively, and $765,000 was made by a decrease of advances to suppliers.

In April 2021, the Company obtained right-of-use assets of approximately $1 million in exchange for lease liabilities.

The accompanying notes are an integral part of the unaudited consolidated financial statements

F-6

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS

Taoping Inc. (f/k/a China Information Technology, Inc.), together with its subsidiaries (the “Company” or “TAOP”), is a leading cloud-based ads display terminal and service provider of digital advertising distribution network and new media resource sharing platform in the Out-of-Home advertising market in China. The Company provides the integrated end-to-end digital advertising solutions enabling customers to distribute and manage ads on the ads display terminals.

On June 9, 2021, the Company consummated an acquisition of 100% of the equity interest of Taoping New Media Co., Ltd (“TNM”), a leading media operator in China’s out-of-home digital advertising industry. Mr. Jianghuai Lin, the Chairman and CEO of TAOP, who owns approximately 24.6% of total shares outstanding of the Company, owned approximately 51% of TNM. TNM focuses on digital life scenes and mainly engaged in selling out-of-home advertising time slots on its networked smart digital advertising display terminals with artificial intelligence and big data technologies. The acquisition of TNM is expected to enhance TAOP’s presence in the new media and advertising sectors.

In 2021, the Company also launched blockchain related new business in cryptocurrency mining operations and newly established subsidiaries in Hong Kong and Cayman Island to supplement its diminished Traditional Information Technology (TIT) business segment as a part of new business transformation. With multiple cloud data centers deployed outside of China mainland, currently in Hong Kong, the Company continues to improve computing power and create value for the encrypted digital currency industry.

In May 2018, we changed our corporate name from “China Information Technology Inc.” to “Taoping Inc.”, to more accurately reflect our current business operations in the new media and IoT industries. In 2021, Information Security Tech. International Co. Ltd. (“IST HK”), one of the Company’s Hong Kong subsidiaries, changed its corporate name to Taoping Group (China) Ltd. to reflect the Company’s current corporate structure to be in line with the new business strategies. As listed in the table below, these services are provided through the Company’s wholly-owned People’s Republic of China (PRC) subsidiaries, and the Company’s Variable interest entity (“VIE”) and VIE subsidiaries.

Entities	Subsidiaries/ VIE	June 30, 2021 % owned			December 31, 2020 % owned			December 31, 2019 % owned			Location
Taoping Inc.											British Virgin Islands
Taoping Holdings Limited (THL)	Subsidiary		100	%		100	%		100	%	British Virgin Islands
Taoping Group (China) Ltd. (IST HK)	Subsidiary		100	%		100	%		100	%	Hong Kong, China
Taoping Digital Assets (Asia) Limited (TDAL)	Subsidiary		100	%							Hong Kong, China
Taoping Digital Assets (Hong Kong) Limited (TDL)	Subsidiary		100	%							Hong Kong, China
Taoping Capital Limited (TCL)	Subsidiary		100	%							Hong Kong, China
Alpha Digital Group Ltd. (ADG)	Subsidiary		100	%							Cayman, Island
Information Security Tech. (China) Co., Ltd. (IST)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
TopCloud Software (China) Co., Ltd. (TopCloud)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
Information Security IoT Tech.Co., Ltd. (ISIOT)	Subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Technology Group Co., Ltd. (iASPEC)	VIE		100	%		100	%		100	%	Shenzhen, China
Biznest Internet Tech. Co., Ltd. (Biznest)	VIE subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Bocom IoT Tech. Co., Ltd. (Bocom)	VIE subsidiary		100	%		100	%		100	%	Shenzhen, China
Taoping New Media Co., Ltd. (TNM)	VIE subsidiary		100	%							Shenzhen, China
Shenzhen Taoping E-Commerce Service Co., Ltd. (SZTEC)	VIE Subsidiary		100	%							Shenzhen, China
Shenzhen Taoping Education Technology Co., Ltd. (SZTET)	VIE subsidiary		51	%							Shenzhen, China
Wuhu Taoping Education Technology Co., Ltd. (WHTET)	VIE subsidiary		51	%							Wuhu, China

F-7

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Amended and Restated MSA

iASPEC is a VIE of the Company. To comply with PRC laws and regulations that restrict foreign ownership of companies that provide public security information technology and Geographic Information Systems software operating services to certain government and other customers, the Company operates the restricted aspect of its business through iASPEC.

The Amended and Restated Management Service Agreement (“MSA”) was entered into on December 13, 2009, by and among IST, iASPEC and iASPEC’s sole shareholder, Mr. Jianghuai Lin (“Mr. Lin”), which replaced the original MSA dated July 1, 2007. Pursuant to the Amended and Restated MSA, IST will provide management and consulting services to iASPEC, under the following terms:

● iASPEC agreed that IST will be entitled to receive ninety five percent (95%) of the Net Received Profit, as defined, of iASPEC during the term of the Agreement. iASPEC is obligated to calculate and pay the Net Received Profit due to IST no later than the last day of the first month following the end of each fiscal quarter. Mr. Lin, agreed to enter into an agreement with IST to pledge all of his equity interests in iASPEC as security for his and iASPEC’s fulfillment of their respective obligations under the MSA, and to register the pledge agreement with the local AIC (Administration for Industry and Commerce). The Amended and Restated MSA was executed on December 13, 2009. Based on the advice of the Company’s PRC legal counsel, in January 2010 all the parties to the agreement decided not to enter into a pledge agreement.

● Mr. Lin confirmed his status as the sole iASPEC shareholder and his assumption of all of the obligations of the iASPEC shareholder under the agreement, including a confirmation of his continuing obligation under a written guaranty, executed by the then iASPEC shareholders.

● Based on iASPEC’s needs for its development and operation, IST has the right, from time to time, at its sole discretion, to provide iASPEC with capital support.

● IST agreed that it will not interfere with any business of iASPEC covered by iASPEC’s PRC State Secret related Computer Information System Integration Certificate, including but not limited to, seeking access to relevant documents regarding such business. However, iASPEC agreed that it will cooperate with the requests of the Company as necessary to comply with the Company’s reporting obligations to the Securities and Exchange Commission. (“SEC”).

The Amended and Restated MSA amended certain terms of the original MSA dated July 1, 2007 and has a term of 30 years unless otherwise early termination by the parties by one of the following means:

● Either iASPEC or IST may terminate the Amended and Restated MSA immediately (a) upon the material breach by a party of its obligations and the failure of such party to cure such breach within 30 working days after written notice from the non-breaching party; or (b) upon the filing of a voluntary or involuntary petition in bankruptcy by a party, or of which the party is the subject to insolvency, or the commencement of any proceedings placing the party in a receivership, or of any assignment by a party for the benefit of creditors; or

● The Amended and Restated MSA may be terminated at any time by IST upon 90 calendar days’ written notice delivered to all other parties.

F-8

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Upon any effective date of any termination of the Amended and Restated MSA: (a) IST will cease providing management services to iASPEC; (ii) IST will deliver to iASPEC all chops and seals of iASPEC; (iii) IST will deliver to iASPEC all of the financial and other books and records of iASPEC, including any and all permits, licenses, certificates and other proprietary and operational documents and instruments; (iv) the senior managers who are recommended by IST and elected as directors of iASPEC will resign from the Board of Directors of iASPEC in a lawful way; and (v) the software license that iASPEC granted to IST according to the Amended and Restated MSA will terminate unless otherwise agreed by the parties. In addition, any amounts owing from any party to any other party on the effective date of any termination under the terms of the Amended and Restated MSA will continue to be due and owing despite such termination.

The Amended and Restated MSA does not have renewal provisions. We expect that the parties to the Amended and Restated MSA will negotiate to extend the term of the agreement before its expiration.

Option Agreement

In connection with the MSA, IST also has an immediately exercisable purchase option agreement (the “Option Agreement”) with iASPEC and its shareholders. Pursuant to the Option Agreement, the iASPEC shareholder granted IST or its designee(s) an exclusive, irrevocable option to purchase, from time to time, all or a part of iASPEC’s shares or iASPEC’s assets from the iASPEC shareholder for $1,800,000 in aggregate. The option may not be exercised if the exercise would violate any applicable laws and regulations in PRC or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. The Option Agreement will terminate on the date that IST exercises its purchase option and acquires all the shares or assets of iASPEC pursuant to the terms of the Option Agreement. The Option Agreement may be rescinded by IST upon 30 days’ notice without costs to terminate. The Option Agreement does not have renewal provisions.

The substance of the Amended and Restated MSA and the Option Agreement is to:

● Allow the Company to utilize the business licenses, contacts, permits, and other resources of iASPEC in order for the Company to be able to expand its operations and business model;

● Provide the Company with effective control over all of iASPEC’s operations; and provide the shareholders of iASPEC an opportunity to monetize a portion of their investment through the $1.8 million purchase option (see Note 22 - Subsequent Events for recent development).

Going Concern and Management’s Plans

Although the COVID-19 pandemic has largely been contained in China, ripple effect of negative impact from the pandemic to the out-of-home advertising business continues in the first half of 2021. However, our revenue achieved 71.2% year-over-year increase as a result of the additions of cryptocurrency mining and the acquisition of TNM for the first half of 2021. The Company incurred a net loss of approximately $14.4 million for the six months ended June 30, 2021, which was mainly due to the provision of allowance of credit losses and the expenses of stock-based compensation, compared to a net loss of $7.9 million for the same period of 2020. The Company reported negative cash flows from operations of approximately $16.3 million for the six months ended June 30, 2021, compared to negative cash flows of $1.2 million from operations for the same period of 2020. As of June 30, 2021, the Company had a working capital deficit of approximately $2.7 million, compared to a working capital deficit of $17.4 million as of December 31, 2020. The Company had significant accumulated deficit approximately $206.3 million and $192.2 million as of June 30, 2021 and December 31, 2020, respectively.

In the first quarter of 2021, the Company completed three financing transactions issuing 3,140,740 ordinary shares in total with aggregate proceeds of $13.1 million net of issuance costs. In July 2021, the Company consummated a financing transaction comprising of 1,200,000 ordinary shares, and warrants with aggregate proceeds net of issuance cost of $4.73 million. Proceeds from all financing activities were to increase the Company’s working capital.

In June 2021, the Company completed an acquisition of 100% of equity of TNM to offer more comprehensive services off the new media sharing platform and enhance revenue generation from new media and advertising sectors. In April 2021, the Company also formed a Blockchain business segment and engages in cryptocurrency mining activities as the first initiative of this sector to supplement the diminished Traditional Information Technology (TIT) business segment as a part of new business transformation. Revenue generated from cryptocurrency mining was approximately $815,000, and the gross profit from mining business was approximately $153,000 for the six months ended June 30, 2021. In 2021, the Company will continue to expand Blockchain related business operations to improve revenue and cash flow generations. In addition, the management will also continue to execute the existing business strategies with focuses on selection of quality customers, collection of accounts receivable, maintaining proper inventory level, and managing accounts payable to enhance operating cash flows. Meanwhile, with the increasing scale of the Taoping national network, the Company expects to gradually increase its revenue stream of platform service in 2021. The Company will continue advancing business cooperation internationally. Moreover, the Company will aggressively develop domestic and international markets to develop new customers in new media business, and explore more blockchain related businesses, such as establishing overseas data centers in addition to Hong Kong and developing applications of NFT, cloud desktop and cloud rendering. With its well established “Taoping” brand, technology platform and industry reputation along with strategic expansion into the Blockchain business sector, the Company believes that it has the ability to raise needed capital to support the Company’s operations and business expansions.

If the Company’s execution of business strategies is not successful in addressing its current financial concerns, additional capital raise from issuing equity security or debt instrument or additional loan facility may occur to support required cash flows. However, the Company can make no assurances that financing will be available for the amounts we need, or on terms commercially acceptable to us, if at all. If one or all of these events do not occur or subsequent capital raise was insufficient to bridge financial and liquidity shortfall, substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.

F-9

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Principles of Consolidation

The consolidated financial statements as of June 30, 2021 and for the six-month periods ended June 30, 2021 and 2020 are unaudited. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. 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. Operating results as presented are not necessarily indicative of the results to be expected for a full year. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 20-F for the year ended December 31, 2020 filed on April 30, 2021 with the Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company, its subsidiaries, and its VIE for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reverse Stock Split: A one (1)-for-six (6) reverse stock split of the Company’s issued and outstanding ordinary shares was effective on July 30, 2020 (the “Reverse Stock Split”). Except shares authorized, all share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

(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 and other assets and other intangible assets. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates.

F-10

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c) Economic, Pandemic, Political, and Currency Exchange Risks

All the Company’s revenue-generating operations are conducted in the PRC. 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, 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.

Recently, ten Chinese regulatory authorities collectively promulgated a guidance to further control and monitor cryptocurrency related trading, exchanges, transaction, banking and financial service, initial coin offering, and other intermediary and derivatives transactions, which are considered illegal in accordance with effectuated laws and regulations and may be subject to penalty criminally. The new guidance also bars foreign cryptocurrency trading platforms and related businesses to provide services to China domestic individuals and business entities, and expands the application of laws and regulations to Chinese employees or contractors of foreign operatives that provide related services to individuals or business entities domiciled in China. The legality of cryptocurrency mining activity may be subject to challenge by Chinese authorities. The Company is in the process of reorganizing its corporate structure to relocate cryptocurrency mining activities and related subsidiaries to jurisdictions outside of China mainland to minimize the risk.

The functional currency of the Company is 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, and Restricted cash

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 cash equivalents as of June 30, 2021 or December 31, 2020.

The Company maintains its cash accounts at credit worthy financial institutions and closely monitors the movements of its cash positions. As of June 30, 2021, and December 31, 2020, approximately $0.8 million and $0.9 million of cash, respectively, was held in bank accounts in the PRC and Hong Kong.

(e) Restricted Cash

The Company also held restricted cash of $0.2 million as of December 31, 2020. The restricted fund is a time deposit served as collateral to secure a bank loan facility that matured on May 7, 2021. The Company had no restricted cash as of June 30, 2021.

(f) Accounts Receivable, Accounts Receivable – related parties, and Concentration of Risk

In January 2020, the Company adopted ASU 2016-13, Topics 326-Credit Loss, Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology, as its accounting standard for its trade accounts receivable.

The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2020. 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 has further adjusted 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 six-month ended June 30, 2021 has increased approximately $6.94 million from the year ended December 31, 2020.

F-11

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021			December 31, 2020
	(Unaudited)
Accounts Receivable	$	15,650,969		$	12,359,619
Allowance for credit losses		(12,942,975	)		(8,095,362	)
Accounts Receivable, net	$	2,707,994		$	4,264,257
Accounts Receivable - related parties	$	15,651,195		$	12,017,651
Allowance for credit losses - related parties		(15,485,183	)		(9,098,436	)
Accounts Receivable - related parties, net	$	166,012		$	2,919,215
Non-current Accounts Receivable	$	-		$	3,013,532
Non-current Allowance for credit losses		-			(1,174,302	)
Non-current Accounts Receivable, net	$	-		$	1,839,230
Non-current Accounts Receivable - related parties	$	-		$	4,172,502
Non-current Allowance for credit losses - related parties		-			(2,849,306	)
Non-current Accounts Receivable - related parties, net	$	-		$	1,323,196

F-12

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

In accordance with ASC 210-10-45, the non-current accounts receivable and non-current accounts receivable-related parties represent the amounts that the Company does not reasonably expect to be realized during the normal operating cycle of the Company. The Company uses one-year time period as the basis for the separation of current and non-current assets.

The allowance for credit losses at June 30, 2021 and December 31, 2020, totaled approximately $28.4 million and $21.2 million, respectively, representing management’s best estimate. The following table describes the movements in the allowance for credit losses during the six-month period ended June 30, 2021 and the year ended December 31, 2020:

Balance at January 1, 2020	$	7,212,644
Increase in allowance for credit losses		13,528,638
Foreign exchange difference		476,124
Balance at December 31, 2020	$	21,217,406
Addition from acquisition of TNM		309,537
Increase in allowance for credit losses		6,691,031
Decrease for balance recovered		(61,969	)
Foreign exchange difference		272,153
Balance at June 30, 2021 (Unaudited)	$	28,428,158

(g) Prepaid expenses

As of June 30, 2021, prepaid expenses included prepaid stock-based compensation of $9,189,765 and prepaid rental of $701,611. As of December 31, 2020, prepaid expenses represented prepaid stock-based compensation of $24,635.

Prepaid stock-based compensation represents stock-based payments including ordinary shares, warrants or stock options issued to consultants as compensation for their contracted services. Share-based payments are measured at the grant date, and recognized as consulting service expense using the straight-line method over the service period.

Prepaid rental was the payment made to a hash-rate platform for leasing blockchain cloud computing power which was amortized over the 12-month lease period from March 2021.

(h) 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).

F-13

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On January 1, 2020, the Company adopted ASU 2018-13,” Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The adoption of the disclosure requirements for Fair Value Accounting has no material impact on the Company’s consolidated financial statements.

(i) Property, equipment and software, net

Property, equipment and software are stated at cost less accumulated amortization and depreciation. Amortization and depreciation are provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of property, equipment and software are as follows:

Office buildings	20-50 years
Lease improvement	Shorter of lease term or assets lives
Electronics equipment, furniture and fixtures	3-5 years
Motor vehicles	5 years
Purchased software	5 years
Media display equipment	5 years
Cryptocurrency mining machine	3 years

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.

(j) 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. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

Cryptocurrencies awarded to the Company through its mining activities are included within operating activities in the consolidated statements of cash flows. 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.

(k) 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.

(l) 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 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.

(m) Convertible promissory note

The Company determines the appropriate accounting treatment of its convertible debts in accordance with the terms in relation to conversion features. After considering the impact of such features, the Company may account for such instrument as a liability in its entirety, or separate the instrument into debt and equity components following the guidance described under ASC 815 Derivatives and Hedging and ASC 470 Debt. The debt discount, if any, together with related issuance cost are subsequently amortized as interest expense over the period from the issuance date to the earliest conversion date or stated redemption date. The Company presented the issuance cost of debt in the balance sheet as a direct deduction from the related debt.

F-14

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(n) 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.

(o) 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.

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 has indicated that it 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.

F-15

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue - Software

Customers in the private sector contract the Company to design and develop software products specifically customized for their needs for a fixed price. 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 in installments based on progression of the project or 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 customized software contracts less than 12 months and recognizes the revenue at the point of delivery 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.

F-16

TAOPING INC.

NOTES TO THE UNAUDITED 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. 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.

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 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 all 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 six years starting from May 1, 2016 and three years starting from July 1, 2019, 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 $183,000 and $211,000 rental income for the periods ended June 30, 2021, and 2020, respectively.

After completion of the business acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company, and is no longer a related party. The rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021.

Annual minimum rental income to be received in the next 5 years:
2021	155,688
2022	108,982
Total	264,670

Contract balances

The Company records advances from customers when cash payments are received or due in advance of our performance. For the six months ended June 30, 2021 and 2020, the Company recognized revenue of $104,000 and $120,000, respectively, that was included in the advances from customers balance at the beginning of each reporting period.

Practical expedients and exemptions

The Company generally expenses sales commissions and other incremental costs of obtaining a contract, if any incurred, because the duration of the service contracts and the amortization periods 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 duration of one year or less.

(p) Cost of advertising and cost of cryptocurrencies

The cost of advertising 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 cryptocurrencies 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.

F-17

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(q) Segment reporting

Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Transfers and sales between reportable segments, if any, are recorded at cost.

The Company reports financial and operating information in the following three segments:

(1)	Cloud-based Technology (CBT) segment —It includes the Company’s cloud-based products, high-end data storage servers. and related services sold to private sectors including new media, healthcare, education, and residential community management, and among other industries and applications. In this segment, the Company generates revenues from the sales of hardware and software total solutions with proprietary software and content as well as from designing and developing software products specifically customized for private sector customers’ needs for a fixed price. The Company includes the revenue and cost of revenue of high-end data storage servers in the CBT segment. Advertising services is included in the CBT segment, after the Company consummated the acquisition of TNM. Advertisements are delivered to the ads display terminals and vehicular ads display terminals through the Company’s cloud-based new media sharing platform. Incorporation of advertising services complements the Company’s out-of-home advertising business strategy.
(2)	Blockchain Technology (BT) segment — The BT segment is the Company’s newly formed business sector. Cryptocurrency mining is the first initiative implemented in the BT segment.
(3)	Traditional Information Technology (TIT) segment —The TIT segment includes the Company’s project-based technology products and services sold to the public sector. The solutions the Company has sold primarily include Geographic Information Systems (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS). In this segment, the Company generates revenues from sales of hardware and system integration services. As a result of the business transformation, the TIT segment is being phased out in 2021.

(r) Reclassifications

Certain prior period amounts have been reclassified to be comparable to the current period presentation. This reclassification has no effect on previously reported net assets or net income (loss).

(s) Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 is effective for public business entities fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The guidance provides clarification of the interaction of rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company in the first quarter of 2021. The adoption did not have any significant impact on the Company’s condensed consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe that the adoption of such pronouncements will have a material impact on the consolidated financial statements.

F-18

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

3. BUSINESS ACQUISITION

On June 9, 2021, the Company and Biznest Internet Technology Co., Ltd. (“Biznest”), a subsidiary of a VIE of the Company consummated an acquisition of 100% of the equity interests of Taoping New Media Co., Ltd and its subsidiary (“TNM”). Mr. Jianghuai Lin, the Chairman and CEO of the Company, who owns approximately 24.6% of total shares outstanding of the Company, owned approximately 51% of TNM. TNM is a new media operator focusing on digital life scenes and mainly engaged in selling out-of-home advertising time slots on its networked smart digital advertising display terminals with artificial intelligence and big data technologies. Acquiring TNM and synergizing its new media network will enhance the Company’s presence in the new media and advertising sectors. After completion of the acquisition, TNM becomes a wholly owned subsidiary of Biznest.

Pursuant to the share purchase agreement, as a consideration of the purchase, the Company issued to the shareholders of TNM a total of 1,213,630 shares of its ordinary shares with no par value, equivalent to the value of approximately $5.4 million.

The following table summarizes the purchase price allocation for TNM, and the amounts of the assets acquired, and liabilities assumed which were based on their estimated fair values at the acquisition date:

Cash	$	7,644
Accounts receivable, net		1,252,601
Advances to suppliers		75,971
Other receivables and other current assets, net		2,345,332
Long-term investments		1,386,191
Property and equipment		1,550,113
Right of use assets		74,812
Accounts payable		(339,198	)
Advances from customers		(10,943	)
Accrued payroll and benefits		(32,840	)
Amount due to related parties		(619,571	)
Other payables and accrued expenses		(87,373	)
Lease liabilities		(153,938	)
Total net assets acquired		5,448,801
Bargain purchase gain		(12,345	)
Total purchase price	$	5,436,456

Due to the negative impact from COVID-19 pandemic and slowdown of the out-of-home advertising industry in China, the total consideration paid by the Company was less than the net amount of identifiable assets acquired and liabilities assumed of TNM, which resulted in a bargain purchase gain of approximately $12,000 on the acquisition date.

The Company’s consolidated statement of operations for the six months ended June 30, 2021 included revenue of $0.08 million and net loss of $1 million attributable to TNM since June 9, 2021, the acquisition date.

The following unaudited pro forma information shows the combined operations for the periods presented, as if the acquisition of TNM had occurred on January 1, 2020. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented below has been derived from the historical condensed consolidated financial statements of the Company and from the historical accounting records of TNM.

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Revenue	$	6,895,929		$	5,417,123
Net (loss)		(14,775,796	)		(8,276,745	)
Net (loss) attributable to TAOP		(14,393,682	)		(8,015,283	)
Weighted Average Number of Shares:
Basic and Diluted		11,833,830			8,289,241
(Loss) per share – Basic and Diluted		(1.25	)		(1.00	)
(Loss) per share attributable to TAOP - Basic and Diluted	$	(1.22	)	$	(0.97	)

The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the followings:

1. Transaction costs of approximately $350,000 are assumed to have occurred on January 1, 2020 and are recognized in the first half of 2020.

2. Elimination of intercompany sales and purchases, rental income and rent expense.

3. Bargain purchase gain resulted from the transaction is recognized as if it occurred on January 1, 2020.

F-19

4. VARIABLE INTEREST ENTITY

The Company is the primary beneficiary of iASPEC, pursuant to the Amended and Restated MSA. iASPEC is qualified as a variable interest entity of the Company and is subject to consolidation. Accordingly, the assets and liabilities and revenues and expenses of iASPEC have been included in the accompanying consolidated financial statements. In 2021, Taoping New Media Co., Ltd and its subsidiary, Shenzhen Taoping Education Technology Co., Ltd. and Wuhu Taoping Education Technology Co., Ltd. were newly added VIE subsidiaries or joint ventures. In the opinion of management, (i) the ownership structure of the Company, and the VIEs are in compliance with existing PRC laws and regulations; (ii) the contractual arrangements with the VIEs and its shareholder are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the Company’s business operations are in compliance with existing PRC laws and regulations in all material respects. In July 2021, PRC government agencies jointly proposed revisions to laws and regulations to strengthen approval and supervision of VIE corporate structure. Since the proposed new regulatory requirements for VIE has not yet been finalized, the Company is unable to estimate the impact to its corporate structure, business operations, and consolidated financial performance.

For the six months ended June 30, 2021 and 2020, net loss of $366,570 and $264,047 respectively, have been attributed to non- controlling interest in the consolidated statements of operations of the Company.

Government licenses, permits and certificates represent substantially all of the unrecognized revenue-producing assets held by the VIE and its subsidiaries. Recognized revenue-producing assets held by the VIEs consist of property, equipment and software.

On September 18, 2021, the Company and the Company’s wholly owned subsidiary, Information Security Technology (China) Co., Ltd. (“IST”) entered into an equity transfer agreement with Mr. Jianghuai Lin, the sole shareholder of iASPEC. Upon closing of the equity transfer, the Company’s existing variable interest entity structure will be dissolved and iASPEC will become a wholly owned indirect subsidiary of the Company (see Note 22 Subsequent Events).

The VIE’s assets and liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021			December 31, 2020
	(Unaudited)
Total current assets	$	7,841,679		$	9,261,921
Other assets, non-current		3,790,167			4,302,000
Non-current accounts receivable, net		-			2,101,276
Long-term investments		818,266			-
Property, equipment and software		6,094,121			3,713,860
Total assets		18,544,233			19,379,057
Intercompany payable to the WFOE		29,622,291			20,449,508
Total current liabilities		48,426,228			41,717,595
Lease liability		82,134			-
Total liabilities		48,508,363			41,717,595
Total equity	$	(29,964,130	)	$	(22,338,538	)

F-20

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5. LOSS PER SHARE

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur, if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, or resulted in the issuance of ordinary shares that shared in the earnings of the entity.

Components of basic and diluted earnings per share were as follows for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Numerator:
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)
Denominator:
Weighted average outstanding ordinary shares-Basic		10,761,008			7,075,611
Weighted average outstanding ordinary shares- Diluted		10,761,008			7,075,611
Loss per share attributable to the Company
Basic	$	(1.31	)	$	(1.08	)
Diluted	$	(1.31	)	$	(1.08	)

*On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

For the six-month period ended June 30, 2021 and 2020, no shares were included in the diluted earnings per shares calculation. These incremental shares were added to denominator for the period that stock options were outstanding due to the average market price of the Company’s stock in the period exceeded the exercise prices of the stock options granted to the Company’s employees and various consultants. The incremental shares were computed under the treasury stock method. There were 296,900 stock options for employees and 68,334 stock options/warrants for nonemployees outstanding that were not included in the computation of dilutive weighted- average shares outstanding for the six months ended June 30, 2020, because the effect would be anti-dilutive.

There were 313,000 stock options for employees, 57,366 options and 1 million warrants for nonemployees outstanding that were not included in the computation of dilutive weighted- average shares outstanding for the six months ended June 30, 2021, because the effect would be anti-dilutive, as well. The EPS calculation excluded the if-converted shares from the convertible promissory note or exercised shares from detachable warrant associated with the convertible promissory note for the period ended June 30, 2021, based on the Company’s stock prices, which were significantly below the stated convertible price and among other conversion prices of alternative conversions or exercise price of the warrant.

F-21

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. RELATED PARTY TRANSACTIONS

(a) Revenue – related parties

For the six months ended June 30, 2021 and 2020, approximately $0.1 million and 0.2 million, respectively, for sales of products and other revenue were from Taoping alliance companies of which Taoping New Media Co., Ltd. (“TNM”) has equity investment of over 5% ownership. After completion of the Company’s acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company and is no longer a related party.

(b) Rental income – related party

For the six months ended June 30, 2020, the Company had a rental income of $30,000 from TNM which was for the office lease between TNM and the Company, and was included as “revenue-other-related parties”. After completion of the acquisition, the rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021, the acquisition date of TNM.

(c) Accounts payable – related party

iASPEC and Bocom had a balance of $69,585 payable to TNM as of December 31, 2020 for certain consultation service. Before the acquisition of TNM, the balance was fully repaid to TNM in April 2021.

(d) Loan receivable – related party

As of December 31, 2020, the Company recorded a loan receivable of $0.5 million from TNM, which was originally for a nine-month short-term loan without interest and is expected to be fully repaid by September 2021. Before the acquisition of TNM, $0.17 million was repaid to the Company. The remaining balance of $0.33 million was eliminated for consolidation purposes as of June 30, 2021.

(e) Amount due to related parties

As of December 31, 2020, the balance of due to related party was $0.14 million, which was borrowed from TNM for working capital purpose. Before the acquisition of TNM, the balance was fully repaid to TNM. As of June 30, 2021, the balance of due to related parties were $3.38 million, which includes the borrowing from the major shareholder, Mr. Jianghuai Lin (“Mr. Lin”), of approximately $279,000 for 6-month without interest and matures on November 9, 2021, and a loan of approximately $3,098,000 (RMB20 million) from a related company 100% owned by Mr. Lin for 12-month at the interest of 5.85% per annum, which matures on May 17, 2022.

(f) Lending of inventory and fixed assets to related parties

As of June 30, 2021, the Company lends 5,160 units of media display equipment and the other fixed assets to Taoping alliance companies without charges for one year which is renewable. Taoping alliance companies would return the media display equipment after one year, or purchase at selling price if needed. The net balance of these media display equipment was approximately $1.2 million.

(g) Operating lease - related party

On April 1, 2021, the Company entered into a lease agreement with a related company 100% owned by Mr. Lin for leasing of space for cryptocurrency mining machines which is located at Dongguan City for three years from April 1, 2021 to March 30, 2024. The monthly rent was $1,438 (RMB 9,350). For the six months ended June 30, 2021, the Company’s rental expense to the related party was approximately $4,300. As of June 30, 2021, the right-of-use asset and lease liability for the related party lease was $44,831 and $44,831, respectively.

7. INVENTORIES

As of June 30, 2021 and December 31, 2020, inventories consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Raw materials	$	3,711		$	3,663
Finished goods		1,613,853			427,942
Cost of projects		12,176			34,792
Inventories, gross	$	1,629,740		$	466,397
Allowance for slow-moving or obsolete inventories		(263,146	)		(211,719	)
Inventories, net	$	1,366,594		$	254,678

For the six months ended June 30, 2021, impairments for obsolete inventories were approximately $49,000. For the first six months ended June 30, 2020, there was a reversal of impairments for obsolete inventories in the amount of approximately $15,000. Impairment charges on inventories are included with general and administrative expenses.

Included in the balance as of June 30, 2021, there was inventory of high-end storage server and computer hardware.

F-22

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. PROPERTY, EQUIPMENT AND SOFTWARE

As of June 30, 2021 and December 31, 2020, property, equipment and software consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Office buildings	$	5,206,573		$	5,140,635
Electronic equipment, furniture and fixtures		5,983,372			5,470,985
Cryptocurrency mining machine		6,506,306			-
Media display equipment		1,232,872			-
Motor vehicles		204,094			201,509
Leasehold improvement		110,919			-
Purchased software		19,098,570			17,465,168
		38,342,706			28,278,297
Less: accumulated depreciation		(19,742,876	)		(17,426,398	)
Property, equipment and software, net	$	18,599,830		$	10,851,899

Depreciation expenses for the six months ended June 30, 2021 and 2020 were approximately $2.1 million and $1.6 million, respectively.

Management regularly evaluates property, equipment and software for impairment, if an event occurs or circumstances change that would potentially indicate that the carrying amount of the property, equipment and software exceeded its fair value. Management utilizes the discounted cash flow method to estimate the fair value of the property, equipment and software.

Company’s office buildings, with net carrying value of approximately $3.0 million, are used as collateral for its short-term bank loan.

9. CRYPTOCURRENCIES

As of June 30, 2021, cryptocurrencies included Bitcoin and Ethereum the Company held which were received from mining activities. Cryptocurrencies is classified as current asset as it is expected to be realized in cash by the Company within one year. The Company subsequently sold all cryptocurrencies held as of June 30, 2021 in July 2021.

F-23

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the movements of cryptocurrencies for the six-month period ended June 30, 2021:

	Amounts
Balance at January 1, 2021		-
Receipt of cryptocurrencies from mining activities	$	814,772
Sales of cryptocurrencies		(638,183	)
Realized gain on sale of cryptocurrencies		41,345
Impairment loss on cryptocurrencies		(42,447	)
Balance at June 30, 2021	$	175,487

10. BANK LOANS

(a) Short-term bank loans      

	June 30, 2021		December 31, 2020
	(Unaudited)
Secured short-term loans (1)	$	5,949,005	$	6,210,176

(1) Detailed information of secured short-term loan balances as of June 30, 2021 and December 31, 2020 were as follows:  

	June 30, 2021		December 31, 2020
	(Unaudited)
Collateralized by office buildings of IST and guaranteed by Mr. Lin and Biznest	$	4,182,894	$	3,976,960
Guaranteed by IST and Mr. Lin and Collateralized by the real property of ISIOT and equity investment of ISTIL		1,766,111		2,019,072
Guaranteed by a $ 0.2 million restricted bank time deposit		-		214,144
Total	$	5,949,005	$	6,210,176

As of June 30, 2021, the Company had short-term bank loans of approximately $5.9 million, which mature on various dates from July 7, 2021 to April 30, 2022. The short-term bank loans can be extended for another year by the banks without additional charges to the Company upon maturity. The bank borrowings are in the form of credit facilities. Amounts available to the Company from the banks are based on the amount of collateral pledged or the amount guaranteed by the Company’s subsidiaries. These borrowings bear interest rates ranging from 4.95% to 6.22% per annum. The weighted average interest rates on short term debt were approximately 5.84% and 6.33% for the six months ended June 30, 2021 and 2020, respectively. The interest expenses were approximately $0.2 million each, for the six months ended June 30, 2021 and 2020.

F-24

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES

Pre-tax (loss) income from continuing operations for the six months ended June 30, 2021 and 2020 were taxable in the following jurisdictions:

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC	$	(8,798,878	)	$	(7,160,850	)
HK		(224,699	)		(11,910	)
BVI		(5,440,462	)		(837,790	)
Total loss before income taxes	$	(14,464,039	)	$	(8,010,550	)

United States

The Company from time to time evaluates the tax effect of GILTI, and determined that there was no impact of GILTI tax to the Company’s consolidated financial statements as of June 30, 2021.

F-25

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

BVI

Under the current laws of the BVI, dividends and capital gains arising from the Company’s investments in the BVI and ordinary income, if any, are not subject to income taxes.

Hong Kong

Under the current laws of Hong Kong, ISTIL. is subject to a profit tax rate of 16.5%.

PRC

Income tax expense (benefit) from continuing operations consists of the following:

	Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020
	(Unaudited)		(Unaudited)
Current tax expense (benefit)	$	871	$	(69,858	)
Income tax expense (benefit)	$	871	$	(69,858	)

Current income tax expense (benefit) were recorded in 2021 and 2020 and were related to differences between the book and corporate income tax returns.

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC statutory tax rate		25	%		25	%
Computed expected income tax (benefit)	$	(3,616,011	)	$	(2,002,638	)
Tax rate differential benefit from tax holiday		952,236			801,931
Permanent differences		231,390			117,180
Tax effect of deductible temporary differences not recognized		1,016,965			801,244
Non-deductible tax loss		1,416,291			212,425
Income tax expense (benefit)	$	871		$	(69,858	)

F-26

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The significant components of deferred tax assets and deferred tax liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021						December 31, 2020
	(Unaudited)
	Deferred Tax Assets			Deferred Tax Liabilities			Deferred Tax Assets			Deferred Tax Liabilities
Allowance for credit losses	$	4,698,990		$	-		$	3,640,083		$	-
Loss carry-forwards		4,271,589			-			3,714,825			-
Fixed assets		23,230			(273,000	)		80,456			(258,451	)
Inventory valuation		384,109			-			369,064			-
Accrued liabilities		14,814			-			-			-
Long-term investments		150,832			-			5,736			-
Intangible assets		-			135,918			-			134,197
Gross deferred tax assets and (liabilities)		9,543,564			(137,082	)		7,810,164			(124,254	)
Valuation allowance		(9,406,482	)		-			(7,685,910	)		-
Total deferred tax assets and (liabilities)	$	137,082		$	(137,082	)	$	124,254		$	(124,254	)

The Company has net operating loss carry forwards totaling RMB 163 million ($25.3 million) as of June 30, 2021, substantially all of which were from PRC subsidiaries and will expire on various dates through June 30, 2025. Valuation allowance for deferred tax asset was fully provided. As of June 30, 2021, the Company also has net operating loss of approximately $9.5 million from the parent, Taoping Inc., a BVI company who is treated as a US corporation for the US tax purposes.

IST is approved as being high-technology enterprises and subject to PRC enterprise income tax rate (“EIT”) at 15%. For Biznest, the income tax starts from the earning year, tax free for the first two years and 12.5% income tax rate for year 3-5.

The Company recognizes that virtually all tax positions in the PRC are not free of some degree of uncertainty due to tax law and policy changes by the State. However, the Company cannot reasonably quantify political risk factors and thus must depend on guidance issued by current State officials.

Based on all known facts, circumstances, and current tax law, the Company has recorded nil unrecognized tax benefits as June 30, 2021 and December 31, 2020, respectively. The Company believes that there are no tax positions for which it is reasonably possible, based on current Chinese tax laws and policies, that the unrecognized tax benefits will significantly increase or decrease over the next 12 months, individually or in the aggregate, and have a material effect on the Company’s results of operations, financial condition or cash flows.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Any accrued interest or penalties associated with any unrecognized tax benefits were not significant for the six months ended June 30, 2021 and 2020.

F-27

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Since the Company intends to reinvest its earnings to further expand its businesses in the PRC, the PRC subsidiaries do not intend to declare dividends to their parent companies in the foreseeable future. The Company’s foreign subsidiaries are in a cumulative deficit position. Accordingly, the Company has not recorded any deferred taxes on the cumulative amount of any undistributed deficit. It is impractical to calculate the tax effect of the deficit at this time.

12. OTHER CURRENT AND NON-CURRENT ASSETS

(a) As of June 30, 2021, and December 31, 2020, other current assets consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances to unrelated parties (i)	$	1,641,865	$	8,305
Receivable for sales of other assets (ii)		578,700		-
Advances to employees		104,799		45,396
Other current assets (iii)		303,682		119,325
Total	$	2,629,046	$	173,026

(i) The advances to unrelated parties for business development, and are non-interest bearing and due on demand.

As of June 30, 2021, the Company included in the balance of advances to unrelated parties of $1.64 million compared to advances to unrelated parties of $8,305 as of December 31, 2020.

As of June 30, 2021, the outstanding balance included the amount due from a third-party vendor, at the amount of approximately $1,472,000, whom the Company has contracted to develop the new media advertising market. According to the contract and its subsequent amendment, the vendor is responsible for performing consulting service of market research as subcontractor and facilitating the development of the new media advertising market.

Based on the amendment of the contract, the Company agrees to make advances to the vendor specifically for its market development purposes, and the total commitment of funding was RMB6 million (USD $929,532). Meanwhile, the Company agrees to pay the vendor a 12% commission fee based on the advertising revenue it has facilitated, and a 50% subcontractor fee based on the consulting services revenue, tax inclusive.

If the Company’s revenue facilitated by the vendor does not reach certain threshold during specified periods, the contract could be terminated by the Company, and all funding with applicable interest, less any commissions and subcontractor fees payable to the vendor, shall be repaid to the Company within one month after the termination of the contract. If the two parties terminate the cooperation on the condition that the vendor meet the target, all funding without interest, shall be repaid.

The first period as specified is from January 1, 2021 to December 31, 2021 with a threshold revenue of RMB 15 million (approximately USD $2,294,400). The threshold revenue is to increase by 30% in the year 2022. As of June 30, 2021, revenue facilitated by the vendor has reached RMB3,342,355 (USD $511,247). The Company will continue to monitor the revenue facilitated by the vendor and assess if an event occurs or circumstance changes that would potentially indicate that the carrying amount of the receivable was impaired.

As of June 30, 2021, the Company overfunded the vendor by $543,000 which was returned by the vendor subsequent to June 30, 2021.

As of June 30, 2021, the outstanding balance also included the deposits of RMB 1 million (approximately USD $154,000) made to a supplier for purchases which has been cancelled. The deposits will be refundable before the end of October 2021.

(ii) Receivable for sales of other assets

In November 2020, the Company sold non-cash consideration (see Note 2-o) received in prior years in exchange for advertising service to a third-party company in a price of $1,142,779 which equals to the carrying value of non-cash consideration. The company had collected $564,079 as of June 30, 2021. The remaining balance of $578,700 was fully collected subsequently in August 2021.

(iii) Other current assets

As of June 30, 2021, the outstanding balance included the security deposit of $143,541 and the VAT credit of $87,000.

(b) As of June 30, 2021 and December 31, 2020, Other assets, non-current consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Other assets, non-current	$	3,790,167	$	4,302,000

During 2019 and 2020, the Company advanced RMB 30 million (USD $4.3 million) to a vendor, whom the Company has contracted to develop a vehicular IOT smart advertising software (“Internet of Vehicle” or “IOV” software) to interconnect to the Company’s new media advertising sharing platform expanding its advertising capability to people riding in motor vehicles. According to the contract and its subsequent amendment, total commitment of the funding was RMB 30 million (USD $4.3 million). The vendor is solely responsible for hardware and software development and marketing the vehicular terminal. The Company financially supports development cost of IOV software in exchange for advertising revenue generated from the software for four years of the contract term.

Based on the amendment of the contract, if the Company’s new media advertising revenue generated from IOV software does not reach certain threshold during specified period, the contract could be terminated by the Company, and all funding with applicable interest, and less the revenue generated from the IOV software shall be repaid to the Company within half year after the termination of the contract. Once the vendor fully repays the total funding plus applicable interest, the vendor will own 100% the title of the vehicular terminal and related equipment.

The first period as specified was from October 1, 2020 to April 30, 2021 with a threshold advertising revenue from IOV software of RMB 3 million (approximately USD $462,000). The threshold revenue is to increase incrementally by 15% in every six months going forward until the contract expires four years after the commencing date of the operation. As of April 30, 2021, revenue generated from the IOV software has exceeded RMB 3.0 million (approximately USD $462,000) in the first performance evaluation period, and the management estimates that the Company will fulfil the sales target at the end of October 2021 for the second performance evaluation period. The Company will continue to monitor advertising revenue generation from the IOV software and evaluate for impairment, if an event occurs or circumstance changes that would potentially indicate that the carrying amount of the asset exceeded its fair value. The vendor will own the title of the IOV software upon its fulfillment of the contract obligations after four years.

The development of IOV software was completed by September 30, 2020. Since Company has the right to use the IOV software in the contract term, software was capitalized as “other assets, non-current, net” and started to amortize from October 1, 2020 over the four-year contract term. As of June 30, 2021 and December 31, 2020, the balance of “other assets, non-current, net” was $3,790,000 and $4,302,000, Respectively. The amortization was approximately $0.8 million for the period ended June 30, 2021.

F-28

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. OPERATING LEASES

In addition to the lease with a related party for computing server room in Dongguan City (see Note 6-g), in April 2021, the Company leased an office space, two server rooms, and a dormitory in Hong Kong for executing the Blockchain business strategy. The fixed monthly lease payment for the office space is $22,035 (HKD 170,775) all inclusive of rental, property management fee, utility, and applicable tax) with a lease term of three years ending April 18, 2024. The fixed monthly lease payment for the server rooms is $7,484 (HKD 58,000) all inclusive of rental, management fee, utility, and applicable tax) with a lease term of three years ending May 16, 2024. The fixed monthly lease payment for the dormitory is $4,381 (HKD 34,000) including rental and management fee with a lease term of two years ending April 19, 2023. All lease agreements have no variable lease payment nor option to purchase the underlying assets. There was no initial direct cost associated with the office space lease agreement. The initial direct costs associated with the lease for server rooms and dormitory are $7,484 (HKD 58,000), and $2,194 (HKD 17,000), respectively.

The Company has also leased specific and identifiable wall spaces with a certain dimension in commercial and residential building lobbies, inside elevators, elevator waiting areas, and various places to install the new media advertising display terminals without substitution for purpose of broadcasting advertisements paid by the customers to promote their businesses or special events. The lease terms with negotiated payment terms range from one year to three years, and the rental costs vary depending on the number of spots where the display terminals are installed and the duration of the leases.

The Company incurred rent expenses of approximately $73,000 whereas rent expenses for short-term lease were approximately $3,000 for the period ended June 30, 2021. As of June 30, 2021, lease liabilities also included unpaid rent for expired long-term leases of approximately $78,000.

The Company has elected to apply the short-term lease exception to all leases with a term of one year or less. The future short-term lease costs are approximately $2,800 in the year subsequent to June 30, 2021.

Weighted-average remaining lease term as of June 30, 2021, and discount rate for its operating leases are as follows:

Weighted-average remaining lease term	32.8 months
Weighted-average discount rate	6.75%

The following table outlines maturities of operating lease liabilities as of June 30, 2021:

Year ending June 30	Leases for office/ server rooms/ Dormitory			Wall Space Leases
2022	$	375,118		$	4,082
2023		363,340			-
2024		265,973			-
Total lease payments		1,004,431			4,082
Less: Imputed interest		(87,103	)		-
Present value of lease liabilities	$	917,328		$	4,082

F-29

14. LONG-TERM INVESTMENTS

As of June 30, 2021, the carrying value of the Company’s equity investments were $818,266, which consisted of the followings:

(1) Equity method investments:

As of June 30, 2021, the Company’s equity method investments had a carrying value of $489,513 which were as follows:

Investees	Abbreviation		% of Ownership			Carrying value
Qingdao Taoping IoT Co., Ltd.		QD Taoping, or QD		47	%	$	111,638
Yunnan Taoping IoT Co., Ltd.		YN Taoping, or YN		40	%		203,097
Jiangsu Taoping IoT Technology Co.,Ltd.		JS Taoping, or JS		25	%		165,855
Jiangsu Taoping New Media Co., Ltd		JS New Media, or JN		21	%		8,923
						$	489,513

The Company’s initial investments in the above equity method investments were approximately $1.89 million. The Company recognized losses from equity method investments of approximately $0.6 million and no impairment on equity method investments from the acquisition date June 9, 2021 to June 30, 2021.

(2) Equity investments without readily determinable fair value that is not accounted for under equity method accounting:

In accordance with ASC 321, the Company elected to use the measurement alternative to measure such 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.

As of June 30, 2021, the carrying value for the equity investments without readily determinable fair value was $328,753. The total initial investments to the equity investments without readily determinable fair value were approximately $710,786. No impairment was recognized for the six months ended June 30, 2021.

15. CONVERTIBLE NOTE PAYABLE

In October 2019, March 2020, and September 2020, the Company issued Convertible Promissory Notes with principal amount of $1.04 million, $1,48 million and $1.48 million, respectively (Note-1, Note-2, and Note-3, collectively “Notes”). All three Notes mature in 12 months from the issue dates of the Notes (the “Maturity Dates”), carrying an interest rate of 5% per annum and an original issue discount (OID) to cover investors’ transaction costs of the Notes. In September and October 2020, the principal balance and the accrued interest of Note-1 was fully converted to 454,097 ordinary shares of the Company with no par value at a conversion price of $2.4. In September and December 2020, the principal balance and the accrued interest of Note-2 was fully converted to 612,748 ordinary shares of the Company with no par value at a conversion price of $2.42 and 2.57, respectively. The total amount of principal and accrued interest converted of Note-1 and Note-2 was approximately $2.6 Million. As of December 31, 2020, there was no outstanding balance and unamortized debt issuance cost of Note-1 and Note-2, and the outstanding balance of Note-3 was $1,180,908 net of unamortized debt discount of $299,695.

In conjunction with issuance of the Notes, the Company also issued the holders of the Notes warrants to purchase 26,667, 53,334, and 53,334 ordinary shares of the Company, at an exercise price of $9 with a cashless-exercise option. The warrants will expire in three years from the dates of issuance, respectively.

In June 2021, the investor of Note-3 converted $740,000 of principal amount of the convertible note along with accrued interest of $26,208 into 298,716 ordinary shares of the Company with no par value at a conversion price of $2.565. As of June 30, 2021, the outstanding balance of Note-3 was $689,502 net of unamortized debt discount of $50,498 which will be amortized through September 30, 2021.

The Company recognized interest expense of approximately $209,000 for both Note-1 and Note-2 for the six months ended June 30, 2020, including interest relating to contractual interest obligation of $45,000 and amortization of debt discount of $164,000. The Company recognized interest expense of approximately $294,000 for Note-3 including interest relating to contractual interest obligation of $36,700 and amortization of debt discount of $257,000 for the six months ended June 30, 2021.

F-30

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

16. OTHER PAYABLES AND ACCRUED EXPENSES

As of June 30, 2021 and December 31, 2020, other payables and accrued expenses consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances from unrelated third parties (i)	$	274,084	$	469,418
Other taxes payable (ii)		4,111,865		4,089,013
Unrecognized tax liability (iii)		-		433,000
Accrued professional fees		184,140		404,025
Amount due to employees (iv)		134,496		65,785
Other current liabilities (v)		287,216		1,174,856
	$	4,991,801	$	6,636,097

(i)	The advances from unrelated parties are non-interest bearing and due on demand.
(ii)	The other taxes payable were the amounts due to the value added tax, business tax, city maintenance and construction tax, and individual income tax.
(iii)	The unrecognized tax liability refers to the land value added tax due to the sale of property, equipment, and land use rights in September 2015. As of June 30, 2021, the unrecognized tax liability passed the 5-year statute of limitation and recognized as other income in the consolidated statement of operations.
(iv)	The amounts due to employees were pertaining to employees’ out-of-pocket expenses for travel and meal allowance, etc.
(v)	The other current liabilities as of June 30, 2021 included the security and deposit of approximate $207,000. The decrease was for: a) approximate of $203,000 payable of prior year’s government funding has been settled during the six months ended June 30, 2021, and b) an amount of $767,500 for ordinary shares converted from the convertible debt have been issued as of June 30, 2021.

17. STATUTORY RESERVE AND DISTRIBUTION OF PROFIT

In accordance with relevant PRC regulations and the Articles of Association of our PRC subsidiaries, our PRC subsidiaries are required to allocate at least 10% of their annual after-tax profits determined in accordance with PRC statutory financial statements to a statutory general reserve fund until the amounts in said fund reaches 50% of their registered capital. As of June 30, 2021 and December 31, 2020, the balance of general reserve was $14.0 million for each of the reporting periods.

F-31

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Under the applicable PRC regulations, the Company may pay dividends only out of the accumulated profits, if any, determined in accordance with the PRC accounting standards and regulations. As the statutory reserve funds can only be used for specific purposes under the PRC laws and regulations. The general reserves are not distributable as cash dividends.

Our after-tax profits or losses with respect to the payment of dividends out of accumulated profits and the annual appropriation of after-tax profits as calculated pursuant to the PRC accounting standards and regulations do not result in significant differences as compared to after-tax earnings as presented in our consolidated financial statements. However, there are certain differences between the PRC accounting standards and regulations and the U.S. generally accepted accounting principles, arising from different treatment of items such as amortization of intangible assets and change in fair value of contingent consideration arising from business combinations.

18. EQUITY

(a) Ordinary shares

The Company is authorized to issue 100,000,000 ordinary shares.

In March 2020, the Company issued a total of 285,714 ordinary shares to certain individual investors at $2.1 per share, which generated approximately $576,000 net proceeds for the Company.

In the first half of 2020, the Company issued a total of 30,000 ordinary shares as compensation of investor relations service, fair value of which was approximately $144,000 and was amortized over the service period until July 21, 2020.

In April 2020, the Company issued 16,667 restricted shares to a consultant as its service compensation. The fair value of the restricted shares was approximately $16,185, which was amortized over the service period until April 1, 2021.

In July 2020, the Company issued 42,000 ordinary shares to a consultant as service compensation. The fair value of issued shares was approximately $101,000, which is amortized over the service period for the service period until January 20, 2021.

In July and September 2020, the Company issued an aggregate of 13,110 ordinary shares to an employee for the individual’s job performance. The fair value of issued shares was approximately $65,000.

In September 2020, the Company issued 16,220 restricted shares to a consultant as a part of finder fees for the financing services, the fair value of which was approximately $41,000.

In September, October, and December 2020, the holders of the convertible notes issued in September 2019, and March 2020 converted all principal balance of the notes and accrued interests to the Company’s ordinary shares in an aggregate of 1,066,845 ordinary shares of which 299,318 shares converted on December 30, 2020 were not issued until February 2021 (see Note 15). The total amount of principal and accrued interest converted was approximately $2.6 million, of which $1.8 million was converted into the ordinary shares as of December 31, 2020, and $0.8 million was converted into the ordinary shares in the first half of 2021.

In January 2021, the Company issued a total of 740,740 ordinary shares to certain individual investors at $2.7 per share, which generated approximately $1.99 million net proceeds for the Company.

In February 2021, the Company issued a total of 1,900,000 ordinary shares to certain individual investors at $4.08 per share, which generated approximately $7.74 million net proceeds for the Company.

In January 2021, the Company issued 7,000 ordinary shares with fair value of approximately $21,840 to a consultant as compensation for the consulting service.

In March 2021, the Company issued 200,000 ordinary shares with fair value of approximately $2,792,000 to certain employees for their job performance.

In March 2021, the Company issued 500,000 ordinary shares in the registered direct offering at the offering price of $6.70 per share resulting in approximately $3.34 million net proceeds for the Company.

In June 2021, the Company issued 1,213,630 ordinary shares with 6 months restricted period upon the closing of acquisition of Taoping New Media Co., Ltd (“TNM”), at unit price of $5.27 per share with discounts for lack of marketability as the consideration equivalent to approximately $5.4 million for acquiring 100% equity interest of TNM.

In June 2021, the holder of the convertible note issued in September 2020 converted 50% principal balance of the note and accrued interests to the Company’s ordinary shares in an aggregate of 298,716 ordinary shares (see Note 15). The total amount of principal and accrued interest converted into the ordinary shares as of June 30, 2021 was approximately $766,000.

(b) Stock-based compensation

The following table provides the details of the approximate total share-based payments expense during the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Employees and directors share-based payments	$	2,950,000	(a)(c)	$	92,000	(c)
Stock options and warrants issued for services		2,100,000	(d)		12,000	(d)
Shares issued for services		42,000	(a)		193,000	(a)
	$	5,092,000		$	297,000

F-32

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c) Stock options to employees and directors

On May 9, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, or the 2016 Plan. Pursuant to the 2016 Plan and its amendment in May 2021, the Company may offer up to five million ordinary shares as equity incentives to its directors, employees and consultants. Such number of shares is subject to adjustment in the event of certain reorganizations, mergers, business combinations, recapitalizations, stock splits, stock dividends, or other change in the corporate structure of the Company affecting the issuable shares under the 2016 Plan. The Company accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718, Compensation – Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

During the first half of 2020, the stock options issued in May 2017 to purchase an aggregate of 160,000 ordinary shares under 2016 Plan was fully vested, and $92,000 was recognized as compensation for the six months ended June 30, 2020.

On July 24, 2020, the Company granted options to employees and directors to purchase an aggregate of 333,348 ordinary shares under the 2016 Plan. The fair value of these options was approximately $0.3 million at the date of the grant, of which approximately $158,070 was recorded as compensation and included in administrative expenses in the consolidated statements of operations for the six months ended June 30, 2021.

On July 31, 2020, the stock options granted to employees and directors in 2016 and 2017 were fully exercised on a cashless method, and 72,414 ordinary shares were issued, as a result.

Stock option activity for the six months ended June 30, 2021 is summarized as follows:

				Weighted		Weighted Average Remaining
	Options			Average Exercise		Contractual Life		Aggregated Intrinsic
	Outstanding			Price		(Years)		Value
Outstanding at January 1, 2021		326,348		$	2.4		2.6	$	143,587
Exercised		-			-
Canceled		(13,333	)	$	2.4
Outstanding at June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Vested and expected to be vested as of June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Options exercisable as of June 30, 2021 (vested)(Unaudited)		156,500		$	2.4		2.1	$	384,990

F-33

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

There were no stock options granted to employees during the year ended June 30, 2021 and 2020. There was no option exercised during the six months ended June 30, 2021 and 2020.

The following table summarizes the status of options which contain vesting provisions:    

	Options			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021		326,348		$	1.01
Vested		(156,500	)	$	1.01
Canceled		(13,333	)	$	1.01
Non-vested at June 30, 2021 (Unaudited)		156,515		$	1.01

As of June 30, 2021, approximately $22,000 unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average remaining vesting period of approximately 0.04 year. The total fair value of options vested during the six months ended June 30, 2021, and 2020 was approximately $0.2 million and $0.1 million, respectively. To the extent the actual forfeiture rate is different from what the Company has anticipated, stock-based compensation related to these awards will be different from its expectations.

(d) Stock options and warrants to non-employees

Pursuant to the Company’s 2016 Equity Incentive Plan and its amendment, for the six months ended June 30, 2021 and 2020, the Company issued 1,915,000 and 16,667 warrants to consultants, respectively. The Company expensed to administrative expense approximately $2.1 million and $12,000 for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, no options or warrants were exercised.

As of June 30, 2021, the weighted average exercise price was $4.77 and the weighted average remaining life was 0.5 years. The following table outlines the options and warrants outstanding and exercisable as of June 30, 2021:

	June 30, 2021 Number of Warrants Outstanding		Exercise		Expiration
	and Exercisable		Price		Date
July 2020 stock options to consultants		57,366	$	2.64		07/09/2023
February 2021 warrants to consultant		1,000,000	$	3.5		08/21/2021
April 2021 warrants to consultants		900,000	$	6.3		04/15/2022
April 2021 warrants to consultant		15,000	$	6.3		04/15/2022
		1,972,366

F-34

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

19. CONSOLIDATED SEGMENT DATA

Selected information by segment is presented in the following tables for the six months ended June 30, 2021 and 2020

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Revenues (1)
TIT Segment	$	88,670	$	141,919
CBT Segment		5,522,135		3,595,431
BT Segment		814,772		-
	$	6,425,577	$	3,737,350

(1) Revenues by operating segments exclude intercompany transactions.

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
(Loss) income from operations
TIT Segment	$	(72,677	)	$	(122,921	)
CBT Segment		(8,792,969	)		(6,780,105	)
BT segment		(1,246,811	)		-
Corporate and others (2)		(3,809,748	)		(640,818	)
(Loss) from operations		(13,922,205	)		(7,543,844	)
CBT’s loss from equity method investments		(578,619	)		-
BT’s other income		41,345			-
Corporate other income, net		473,879			(78,945	)
Corporate interest income		2,109			3,470
Corporate interest expense		(480,548	)		(391,231	)
(Loss) before income taxes		(14,464,039	)		(8,010,550	)
Income tax benefit		(871	)		69,858
Net loss		(14,464,910	)		(7,940,692	)
Less: Loss attributable to the non-controlling interest		366,570			264,047
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)

(2) Includes non-cash compensation, professional fees and consultancy fees for the Company.

Non-cash compensation by segment for the six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Non-cash compensation:
TIT Segment	$	55,840	$	-
CBT Segment		335,040		-
BT segment		1,357,383		-
Corporate and others		3,344,699		92,308
	$	5,092,962	$	92,308

Depreciation and amortization by segment for six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Depreciation and amortization:
TIT Segment	$	16,356	$	8,380
CBT Segment		2,385,886		1,596,821
BT Segment		310,766		-
	$	2,713,008	$	1,605,201

F-35

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers:
TIT Segment	$	(61,812	)	$	30,909
CBT Segment		6,752,063			5,844,135
BT Segment		7,357			-
	$	6,697,608		$	5,875,044

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Inventory obsolescence provision:
TIT Segment	$	-	$	504
CBT Segment		48,589		(15,759	)
	$	48,589	$	(15,255	)

Total assets by segment as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021 (Unaudited)		December 31, 2020
Total assets
TIT Segment	$	307,867	$	213,329
CBT Segment *		35,011,091		30,488,753
BT Segment		8,273,018		-
Corporate and others		9,279,275		74,569
	$	52,871,251	$	30,776,651

* CBT segment included equity investments of approximately $0.8 million as of June 30, 2021.

20. COMMITMENTS AND CONTINGENCIES

The Company may from time to time be subject to legal proceedings, investigations, and claims incidental to conduct of our business. The Company is currently subject to a legal proceeding with the bankruptcy receiver (the Receiver) for Shenzhen Kejian Information Technology Co., Ltd. (Kejian). The Receiver was appointed by the bankruptcy court to liquidate Kejian that filed bankruptcy on December 6, 2016. On July 28, 2016, the Company received a payment in the amount of RMB 550,000 (approximately $89,000) from Kejian, which was considered as a preferential payment within 6 months from Kejian’s bankruptcy filing according to China bankruptcy laws and requested to return the amount to the Receiver. The Company has anticipated an unfavorable outcome from the lawsuit and accrued a contingent liability of $89,000 for the probable loss. On August 2, 2021, the Company received the initial judgment issued by Shenzhen Intermediate People’s Court, which supported the claims of the plaintiff. The Company filed an appeal within 15 days of the conclusion of the case.

Although the COVID-19 pandemic has largely been contained in China, ripple effect of negative impact from the pandemic to the out-of-home advertising business sector continues in the first half of 2021. The China government continues asserted efforts to vaccinate general population, social distancing, mandate mask wearing in the public places and public transportation, prohibit large gatherings, control travels to and from high-risk infectious areas, and track the source of infections. The COVID-19 pandemic may continue to adversely affect the Company’s business and results of operations.

In addition to various promulgations in the past few years, ten Chinese regulatory authorities recently collectively promulgated a guidance to further control and monitor cryptocurrency related trading, exchanges, transaction, banking and financial service, initial coin offering, and other intermediary and derivatives transactions, which are considered illegal in accordance with effectuated laws and regulations and may be subject to penalty criminally. The new guidance also bars foreign cryptocurrency trading platforms and related businesses to provide services to China domestic individuals and business entities, and expands the application of laws and regulations to Chinese employees or contractors of foreign operatives, that provide related services to individuals or business entities domiciled in China. Although, the legality of cryptocurrency mining activity was not specifically mentioned in the guidance, 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 legality of cryptocurrency mining activity may be subject to challenge by Chinese authorities.

21. CONCENTRATIONS

For the six months ended June 30, 2021, the revenue from cryptocurrency mining consisted 13% of the total revenues, and one customer accounted for 10% of the total revenues. For the six months ended June 30, 2020, one customer accounted for 14% of revenue. The Company’s top five customers in aggregate accounted for 44% of the Company’s revenues for each of the six months ended June 30, 2021 and 2020, including the revenue from cryptocurrency mining.

The Company’s top five receivables in aggregate accounted for 53% of total net accounts receivable as of June 30, 2021, while two customers’ balance accounted for 18% and 14%, respectively. The Company’s top five customers in aggregate accounted for 25% of total net accounts receivable as of December 31, 2020, while no single customer accounted for greater than 10% or more of accounts receivable.

For the six months ended June 30, 2021 and 2020, approximately 96% and 84%, respectively, of total purchases were from five unrelated suppliers. Two suppliers each accounted for 59% and 19%, respectively, of total purchases in the six months ended June 30, 2021, and two suppliers each accounted for 41% and 25%, respectively, of total inventory purchases in the six months ended June 30, 2020.

22. SUBSEQUENT EVENTS

On July 12, 2021, the Company and investors entered into a securities purchase agreement to sell to the Investors an aggregate of 1.2 million ordinary shares with no par value, at a purchase price of $4.15 per share in a registered direct offering. In addition, the Company will sell and issue to the Investors warrants to purchase an aggregate of 360,000 Ordinary Shares with an exercise price of $4.56 per share within 36 months following the issue date. The Warrants can only be exercised in cash. The aggregate proceeds of the financing were approximately $4.73 million net of issuance cost. The Company intends to use the net proceeds from the financing for working capital and general corporate purposes.

F-36

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On August 26, 2021, the Company, Taoping Holdings Limited, a wholly owned subsidiary of the Company and a business company incorporated under the laws of the British Virgin Islands (“Taoping Holding”), Genie Global Limited, a Hong Kong private company limited by shares (“Genie Global”) and Render Lake Tech Ltd., a wholly owned subsidiary of Genie Global and a company governed under the Canada Business Corporations Act (“Render Lake”), entered into a termination agreement to terminate a share purchase agreement dated March 29, 2021, that Genie Global agreed to sell 51% equity interest in Render Lake to Taoping Holding in exchange for 144,204 ordinary shares to be issued by the Company.

On July 28, 2021 and August 6, 2021, the Company entered into a letter of intent (the “LOI”) with the shareholders of Zhenjiang Taoping IoT Technology Limited (“Zhenjiang Taoping”) and the majority shareholder of Yunnan Taoping IoT Limited (“Yunnan Taoping”), respectively, to acquire equity interests and increase its ownership of each two companies to no less than 51%. Currently, TNM owns no shares in Zhenjiang Taoping, and owns about 40% of Yunnan Taoping. Pursuant to the LOI, the purchase price, to be determined by the parties after the completion of due diligence, will be paid in the form of ordinary shares of TAOP. The LOI will be terminated if no definitive agreements are entered into among the parties for Zhenjiang Taoping before December 31, 2021 and for Yunnan Taoping before March 31, 2022, respectively.

On August 11, 2021, the Company signed a non-binding Memorandum of Understanding (“MOU”) with Dennver Group Holdings Limited, a British Virgin Islands company, to purchase Ethereum mining machines with a total hash rate of 500 GH/s. Pursuant to the MOU, the purchase price of the Ethereum mining machines and related rights and interests, to be determined by the two parties after the completion of due diligence, will be paid in the form of a combination of cash and restricted ordinary shares of TAOP. The price per share is set at the volume weighted average closing price of TAOP ordinary shares over the 5 trading days prior to the execution of the MOU. TAOP will designate a third-party valuation firm to conduct examination and assessment of the fair market value of the Ethereum mining machines.

On August 27, 2021, the Company’s wholly-owned subsidiary Taoping Digital Assets (Asia) Limited (“TDAL”) and a Kazakhstan company Aral Petroleum Capital LLP (“APC”) have signed a memorandum of understanding (“MOU”) to establish a joint venture in Kazakhstan, of which TDAL and APC will own 51% and 49%, respectively. TDAL will control the board of directors of the joint venture. The joint venture plans to invest and build cryptocurrency mining sites with a total capacity of 100MW, the first stage construction of 30 MW is expected to complete within three to six months. TDAL will have the priority to deploy cryptocurrency mining machines owned by TDAL or its partners. The joint venture will carry out operation and maintenance of cryptocurrency mining machines in Kazakhstan. In addition, the joint venture plans to rent out excess operating capacity to third parties for additional income.

On September 18, 2021, the Company and the Company’s wholly owned subsidiary, Information Security Technology (China) Co., Ltd. (“IST”) entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Mr. Jianghuai Lin, the sole shareholder of iASPEC Technology Group Co., Ltd., a variable interest entity (“iASPEC”), pursuant to which, IST exercised the option to purchase all of the equity interests in iASPEC. As consideration for the equity interests of iASPEC, the Company agreed to issue 612,245 ordinary shares to Mr. Lin. Upon the closing of the equity transfer, the Company’s existing variable interest entity structure was dissolved and iASPEC becomes a wholly owned indirect subsidiary of the Company. The Amended and Restated Management Services Agreement, entered into by and among IST, Mr. Lin and iASPEC on December 13, 2009, was automatically terminated then. The equity transfer was closed upon the registration of equity transfer with the local authorities on September 24, 2021. The equity transfer was completed on September 24, 2021.

As a result of the VIE dissolution, on September 23, 2021, TNM disposed 100% equity interest of Shenzhen Taoping E-Commerce Service Co., Ltd. (“SZTEC”) with nil consideration. SZTEC’s shareholder deficit as of June 30, 2021 was approximately $0.12 million.

On April 15, 2021, the Company signed a Cryptocurrency mining machine purchase agreement (the “Purchase Agreement”) with Bitmain Technologies Limited. Pursuant to the Purchase Agreement, TAOP purchased 3,000 units of Antminer S19j Pro Cryptocurrency mining machines with a total order value of about $24 million (RMB 157,500,000). As of June 30, 2021, TAOP advanced payments of approximately $6.1 million to Bitmain Technologies Limited. As of the date of this report, the Company is in the process of amending the Purchase Agreement with Bitmain Technologies Limited, as a result of the Company’s changed plan of capital allocation in the blockchain business sector. According to the amendment, the Company agrees to purchase a total of 60 units of Antminers from the seller with purchase amount of approximately $0.8 million which are expected to be delivered in the fourth quarter of 2021, and the remaining of the advance payment $5.3 million would be refunded to the Company by the end of 2021.

F-37

EX-99.2

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

IN CONNECTION WITH THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021

In this report, as used herein, and unless the context suggests otherwise, the terms “TAOP,” “Company,” “we,” “us” or “ours” refer to the combined business of Taoping Inc. (F/K/A China Information Technology, Inc.), its subsidiaries and other consolidated entities. References to “dollar” and “$” are to U.S. dollars, the lawful currency of the United States, and references to “Renminbi” and “RMB” are to the legal currency of China. References to “SEC” are to the Securities and Exchange Commission.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Report on Form 6-K and with the discussion and analysis of our financial condition and results of operations contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission on April 30, 2021 (the “2020 Form 20- F”). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those identified elsewhere in this report on Form 6-K, and those listed in the 2020 Form 20-F under “Item 3. Key Information-D. Risk Factors” or in other parts of the 2020 Form 20-F.

Overview

We are a provider of blockchain technology and smart cloud services. We provide the integrated end-to-end digital advertising solutions enabling customers to distribute and manage ads on the ads display terminals. On June 9, 2021, we consummated an acquisition of 100% equity interest of Taoping New Media Co., Ltd. (“TNM”) that focuses its business in digital advertising in the Out-of-Home advertising market. By synergizing our cloud-based new media resource sharing platform and technology with TNM’s advertising customers along with digital advertising resource of the Taoping Alliance members, we will have more prominent presence in the Out-of-Home advertising market and improve our business profitability.

As a part of our strategic business transformation, in 2021 we established a blockchain technology business segment, which is dedicated to the research and application of blockchain technology and digital assets. We launched a blockchain related new business in cryptocurrency mining operations as the first initiative of this new business segment at the end of first quarter of 2021. With multiple cloud data centers deployed outside of China mainland, the Company continues to improve computing power and create value for the encrypted digital currency industry.

We were founded in 1993 and are headquartered in Shenzhen, China. Prior to 2014, we generated majority of our revenues through selling our products mostly to public service entities to help improve their operational efficiency and service quality. Our representative customers included China Ministry of Public Security, provincial bureaus of public security, fire departments, traffic bureaus, police stations, human resource departments, urban planning boards, civic administrations, land resource administrations, mapping and surveying bureaus, and the Shenzhen General Station of Exit and Entry Frontier Inspection.

Since 2014, we have diversified our customer base beyond the public sector into private sectors. Our private sector customers include, among others, advertising agencies, auto dealerships, hotels, shopping malls, educational institutes, and beauty spas. Our new corporate mission is to make publicity accessible and affordable for businesses of every size.

1

In 2014, we generated revenues from sales of products, software, and other sources including hardware maintenance services, network maintenance services, hardware system upgrade, rental income, and miscellaneous income. Starting in 2015, with the introduction of our cloud-based software as a service (SaaS) offering, also, in May 2017, we completed the business transformation and rolled out Cloud-Application-Terminal and IoT technology based digital ads distribution network and new media resource sharing platform in the Out-of-Home advertising market. From 2017, we generated most revenue from selling fully integrated Cloud-Application-Terminal and IoT technology based digital ads display terminals.

The outbreak of COVID-19 negatively impacted our business in 2020. Starting from 2021, we have experienced certain degree of business recovery as the pandemic has been largely contained by the Chinese government, as well as additional revenue generated from block chain related business and advertising revenue from the Internet of Vehicle advertising network and the acquisition of TNM. Revenue in the first half of 2021 was $6.4 million, compared to $3.7 million for the same period of 2020, an increase of $2.7 million, or 71.9%. The Company incurred a net loss of approximately $14.5 million for the six months ended June 30, 2021, primarily due to the provision of allowance for credit losses and stock-based compensation to employees and certain consultants.

Critical Accounting Policies and 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 and other assets, and other intangible assets. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ from those estimates.

Please see Note 2 to our unaudited consolidated financial statements included elsewhere in this report on Form 6-K for a summary of significant accounting policies.

Recently Adopted and Issued Accounting Pronouncements

Please see Note 2 to our unaudited consolidated financial statements included elsewhere in this report on Form 6-K for a summary of significant accounting policies.

2

Results of Operations

The following table sets forth key components of our results of operations for the first six months ended June 30, 2021 and 2020, both in dollars and as a percentage of our revenue.

	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	(Unaudited)						(Unaudited)
	Amount			% of Revenue			Amount			% of Revenue
Revenue	$	6,425,577			100.00	%	$	3,737,350			100.00	%
Costs of revenue		4,287,336			66.72	%		2,270,345			60.75	%
Gross profit		2,138,241			33.28	%		1,467,005			39.25	%
Administrative expenses		(13,606,688	)		(211.76	)%		(7,064,286	)		(189.02	)%
Research and development expenses		(2,260,274	)		(35.18	)%		(1,802,747	)		(48.24	)%
Selling expenses		(193,484	)		(3.01	)%		(143,816	)		(3.85	)%
Loss from operations		(13,922,205	)		(216.67	)%		(7,543,844	)		(201.85	)%
Subsidy income		136,393			2.12	%		223,391			5.98	%
Loss from equity method investment		(578,619	)		(9.00	%)		-			-
Other income (loss), net		378,831			5.90	%		(302,336	)		(8.09	)%
Interest expense and debt discounts, net of interest income		(478,439	)		(7.45	)%		(387,761	)		(10.38	)%
Loss before income taxes		(14,464,039	)		(225.10	)%		(8,010,550	)		(214.34	)%
Income tax (expense) benefit		(871	)		(0.01	)%		69,858			1.87	%
Net loss		(14,464,910	)		(225.11	)%		(7,940,692	)		(212.47	)%
Less: net loss attributable to non- controlling Interest		366,570			5.70	%		264,047			7.07	%
Net loss attributable to the Company	$	(14,098,340	)		(219.41	)%	$	(7,676,645	)		(205.40	)%

Revenue

Revenue was $6.4 million for the first six months of 2021, compared to $3.7 million for the same period of last year, an increase of $2.7 million, or 71.9%. The increase was primarily due to the increase of $0.7 million of the product sale of high-end data storage servers, the increase of $0.6 million of the software sales, the addition of $0.6 million of advertising revenue, and $0.8 million revenue from cryptocurrency mining, a new business the Company initiated in March 2021. The Company expects that revenue for the second half of 2021 would increase significantly as a result of the growth of cryptocurrency mining and advertising businesses.

Cost of Revenue and Gross Profit

Cost of revenue was $4.3 million for the six months ended June 30, 2021, compared to $2.3 million for the same period of 2020. As a percentage of revenue, our cost of revenue increased to 66.7% for the first six months of 2021, from 60.8% for the first six months of 2020. As a result, gross profit as a percentage of revenue was 33.3% for the first six months ended June 30, 2021 and was 39.3% for the same period of 2020. The increase in the overall gross profits was primarily contributed by the increase of software revenue. The decrease in the overall gross margin was primarily resulted from lower margin of cryptocurrency mining and advertising. The Company expects that the gross margin for the remaining of 2021 would be slightly decrease due to new business developments in cryptocurrency mining and advertising businesses.

3

Administrative, R&D and Selling expenses

Administrative expenses increased by $6.5 million, or 92.6%, to $13.6 million for the first six months of 2021, from $7.1 million for the same period of 2020. Such increase was mainly caused by an increase in share-based compensation of $3.0 million to certain employees and $2.1 million amortization of service compensation related to warrants granted to certain consultants, respectively, and an increase of $0.9 million in allowance for credit losses. As a percentage of revenue, administrative expenses increased to 212% for the first six months of 2021, from 189% for the same period of 2020. The Company expects that the administrative expenses for the remaining of 2021 would decrease as a result of the decrease of allowance for credit losses and share-based compensation to employees.

Research and development (“R&D”) expenses increased by $0.5 million, or 25.4%, to $2.3 million for the first six months of 2021, from $1.8 million for the first six months of 2020. Such increase was primarily due to the increase in payroll and benefits to R&D staff newly employed for the Blockchain Technology business segment, and the increase of depreciation expenses of purchased software. As a percentage of revenue, R&D expenses decreased to 35.2% for the first six months of 2021, from 48.2% for the same period of last year. R&D expenses for the remaining of 2021 are expected to be consistent with the first half of the year.

Selling expenses increased by approximately $50,000, or 34.5%, to $0.19 million for the first six months of 2021, from $0.14 million for the first six months of 2020. This increase was primarily due to the increased commission and payroll expenses of sales department which was in line with the increase in revenues. Selling expenses for the remaining of 2021 is expected to slightly increase in line with revenue increase.

Net loss attributable to Company

For the first six months of 2021, net loss attributable to the Company was $14.1 million, compared to a net loss attributable to the Company of $7.7 million for the same period of last year. The increase of net loss was the result of the cumulative effect of the foregoing factors, especially the increase in administrative expenses as discussed above.

Business Acquisition

On June 9, 2021, the Company, through its consolidated affiliated entity, Biznest Internet Technology Co., Ltd. (“Biznest”), consummated an acquisition of 100% of the equity interests of TNM. After completion of the acquisition, TNM becomes a wholly owned subsidiary of Biznest.

The Company’s consolidated statement of operations for the six months ended June 30, 2021 included revenue of $0.08 million and net loss of $1 million attributable to TNM since June 9, 2021, the acquisition date, to the end of June 30, 2021.

The pro forma unaudited combined revenue was approximately $6.9 million and $5.4 million for the six months ended June 30, 2021 and 2020, respectively, and the pro forma unaudited combined net loss was approximately $14.8 million and $8.2 million for the six months ended June 30, 2021 and 2020. The pro forma combined financial information is presented as if the acquisition of TNM had occurred on January 1, 2020. (Refer to Note 3 to the unaudited consolidated financial statements for more details)

Liquidity and Capital Resources

As of June 30, 2021, we had cash and cash equivalents of $0.8 million.

We evaluate the creditworthiness of all of our customers individually before accepting them, and continuously monitor the recoverability of accounts receivable individually or in aggregate through aging analysis and past credit loss history, current financial conditions of our customers, and reasonable and supportable forecasts for future economic condition taking into consideration of the COVID-19 pandemic. If there are any indicators that a customer may not make payment, the Company may consider making provision for non- collectability for that particular customer. At the same time, the Company may cease further sales or services to such customer. We have established an accounting policy to account for allowance for credit loss described in Note 2(f) to our unaudited consolidated financial statements.

4

In previous years, with respect to private-sector customers, we generally required 30% of cash down payment and provided for a payment term ranging from 30 days to 90 days for the remaining balance of the sales contract upon customer’s acceptance of goods and services delivery. For certain strategic customers, we may extend the payment term up to 120 days.

However, because of the negative impact to overall economy and businesses caused by outbreak of the COVID-19 pandemic, we were unable to collect outstanding trade accounts receivable as planned causing significant increase in allowance for credit losses. The following table describes the movement in the allowance for credit losses for the six-month period ended June 30, 2021.

Balance at December 31, 2020	$	21,217,406
Addition from business acquisition		309,537
Increase in allowance for credit losses		6,691,031
Decrease for balance recovered		(61,969	)
Foreign exchange difference		272,153
Balance at June 30, 2021 (Unaudited)	$	28,428,158

Although the COVID-19 pandemic has largely been contained in China, ripple effect of negative impact from the pandemic to the out-of-home advertising business sector continues in the first half of 2021. In the first quarter of 2021, the Company completed three financing transactions issuing 3,140,740 ordinary shares in total with aggregate proceeds of $13.1 million net of issuance costs. In July 2021, the Company consummated a financing transaction issuing 1,200,000 ordinary shares and warrants with aggregate proceeds of $4.73 million net of issuance cost. Proceeds from all financing activities were used to increase the Company’s working capital.

In the first half of 2021, the Company signed a cryptocurrency mining machine purchase agreement (the “Purchase Agreement”) with Bitmain Technologies Limited. Pursuant to the Purchase Agreement, TAOP purchased 3,000 units of Antminer S19j Pro Cryptocurrency mining machines with a total order value of about $24 million (RMB 157,500,000). As of June 30, 2021, TAOP advanced payments of approximately $6.1 million to Bitmain Technologies Limited. As of the date of this report, the Company is in the process of amending the Purchase Agreement with Bitmain Technologies Limited, as a result of the Company’s changed plan of capital allocation in the blockchain business sector. According to the amendment, the Company agrees to purchase a total of 60 units of Antminers from the seller with purchase amount of approximately $0.8 million which are expected to be delivered in the fourth quarter of 2021, and the remaining of the advance payment $5.3 million would be refunded to the Company by the end of 2021.

To support its planned expansion in Blockchain related business, in addition to Hong Kong, the Company is in the process of constructing new dada center and cryptocurrency mining sites in Kazakhstan. Capital for this construction will be funded through a joint venture to be comprised of TAOP and other strategic business partners.

With the substantially increased computing power, the Company expects its revenues and cash inflow from Blockchain related business would grow in the second half of 2021. Meanwhile, with the increasing scale of the Taoping national network, the Company expects to gradually increase its revenue stream of platform service in 2021. With its well established “Taoping” brand, technology platform and industry reputation along with strategic expansion into the Blockchain business sector, the Company believes that it has the ability to raise needed capital to support the Company’s operations and business expansions.

If the Company’s execution of business strategies is not successful in addressing its current financial concerns, the Company will raise additional capital from issuing equity security or debt instrument, or secure additional loan facility to support required cash flows.

The following table summarizes the key cash flow components from our consolidated statements of cash flows for the periods indicated.

Cash and Financial Position

As of June 30, 2021, the Company had cash and cash equivalents of $0.8 million, compared to cash and cash equivalents of $0.9 million and restricted cash of $0.2 million as of December 31, 2020. Working capital deficit was $2.7 million as of June 30, 2021, compared to working capital deficit of $17.4 million as of December 31, 2020.

	Six Months Ended June 30,2021			Six Months Ended June 30,2020
	(Unaudited)			(Unaudited)
Net cash used in operating activities	$	(16,328,103	)	$	(1,176,940	)
Net cash provided by (used in) investing activities	$	85,959		$	(106,762	)
Net cash provided by financing activities	$	15,826,661		$	252,992

5

Operating Activities

Net cash used in operating activities was approximately $16.3 million for the first six months of 2021, compared to net cash used in operating activities of approximately $1.2 million for the first six months of 2020. For the first six months of 2021, negative operating cash flow was mainly attributable to the increased net loss, increase in prepaid expenses and advances to suppliers, increase in inventories, and decrease in accounts payable and other payables.

Investing Activities

Net cash provided by investing activities was approximately $0.086 million for the first six months of 2021, and net cash used in investing activities was approximately $0.107 million for the first six months of 2020. The change was primarily due to the purchases of property and equipment, offset by the proceeds from sales of cryptocurrencies during the first six months of 2021.

Financing Activities

Net cash provided by financing activities was approximately $15.8 million for the first six months of 2021, mainly attributable to receipts of the borrowings from related party of $3.1 million, net proceeds of $13.1 million from issuance of ordinary shares, offset by $0.3 million in net repayment of short-term bank loans. Net cash provided by financing activities was approximately $0.3 million for the first six months of 2020 mainly attributable to the net proceeds of $1.3 million from issuance of convertible notes, $0.6 million from issuance of the Company’s ordinary shares, offset by $1.6 million in net repayment of short-term bank loans.

6

EX-99.3

Exhibit 99.3

TAOP Reports Financial Results for the Six Months Ended June 30, 2021

Hong Kong, October 26, 2021 - Taoping Inc. (NASDAQ: TAOP), a provider of blockchain technology and smart cloud services, today announced its unaudited financial results for the six months ended June 30, 2021.

Revenue was $6.4 million for the first six months of 2021 as compared to $3.7 million for the same period of last year, representing an increase of $2.7 million, or 71.9%. The increase was primarily due to the increase of the sale of high-end data storage servers and software, the addition of advertising revenue as a result of the acquisition of Taoping New Media Co., Ltd. (“TNM”) on June 9, 2021, and the new revenue stream from cryptocurrency mining that the Company initiated in March 2021.

Gross profit was $2.1 million for the first six months of 2021, an increase of $0.6 million, compared to $1.5 million for the first six months of 2020. Gross profit as a percentage of revenue was 33.3% for the first six months of 2021, decreased from 39.3% for the same period of last year. The increase in the overall gross profits was primarily contributed by the increase of software revenue. The decrease in the overall gross margin was primarily resulted from lower margin of cryptocurrency mining and advertising as a result of new business developments for these two newly added business operations.

Net loss attributable to the Company was $14.1 million for the first six months of 2021, compared to a net loss attributable to the Company of $7.7 million for the same period of 2020. Most of the increase in loss was attributed to the share-based compensations granted to the Company’s employees and amortization of service compensation related to warrants issued to the consultants for their services, and loss from equity method investment of TNM, a company acquired on June 9, 2021.

Excluding share-based compensation expenses and loss from equity method investment of TNM, the adjusted net loss attributable to the Company was $8.4 million for the first six months of 2021, compared to the adjusted net loss of $7.4 million for the same period of 2020.

“In 2021, we made a series of strategic decisions including the investment in digital asset business and the acquisition of Taoping New Media. The new actions led to a $2.7 million year-over-year revenue increase for the first six months of 2021. We believe the new businesses will keep ramping up in the rest of 2021,” said Mr. Jianghuai Lin, CEO and Chairman of TAOP.

Mr. Lin added, “We are glad to see the cryptocurrency mining business generating new revenue stream in the first half of 2021 and its subsequent significant growth. We have acquired additional cryptocurrency miners to boost our mining capability and expect our computing power of Ethereum to reach a total of 1000GH/s by the end of 2021, which will generate about 700 Ether per month by then. In addition to Hong Kong facility, we are in the process of constructing new data center and cryptocurrency mining sites in Kazakhstan. We believe that our devoted efforts in the cryptocurrency mining business will provide additional value to the Company’s shareholders.”

Digital Assets Business Progress and Plan

● On August 27, 2021, the Company announced that its wholly-owned subsidiary Taoping Digital Assets (Asia) Limited (“TDAL”) and a Kazakhstan company, Aral Petroleum Capital LLP (“APC”), have signed a memorandum of understanding (“MOU”) to establish a joint venture to operate a cryptocurrency mining site in Kazakhstan, of which TDAL and APC will own 51% and 49%, respectively.

● On August 11, 2021, the Company signed a non-binding Memorandum of Understanding with Dennver Group Holdings Limited, a British Virgin Islands company, to purchase Ethereum mining machines with a total hash rate of 500 GH/s. Both parties aim to reach a definitive purchase agreement in the fourth quarter of 2021.

● On July 30, 2021, the Company entered into a strategic cooperation agreement (the “Agreement”) with Shenzhen IntelStrat Technology Co., Ltd. (“IntelStrat”). Pursuant to the Agreement, TAOP and IntelStrat will seek in-depth collaboration in data service center and investments in blockchain company. It is expected that the parties will initiate the R&D cooperation on certain blockchain technology related projects by the end of 2021.

● On May 5, 2021, the Company launched “Taoping G Cloud Hong Kong Data Center” in Hong Kong. The Company would deploy a total of 1,000 general-purpose servers suitable for Ethereum and cloud desktops at the data center, with a total hash rate of 480,000 MH/s, by the end of 2021. The Company has accomplished most of its planned deployment for the data center.

● On May 3, 2021, the Company entered into a strategic cooperation agreement with Singapore-based ZNDS Global Technology PTE. LTD. (“Zionodes”), a leading computing power trading platform for a 5-year term from May 1, 2021, to April 30, 2026. Pursuant to the strategic cooperation agreement, TAOP plans to increase the supply of computing power to Zionodes in stages totaling at least $10 million. The two parties will work together to develop the GPU cloud computing market. The cooperation is expected to be formally implemented in 2022.

Digital Culture (Advertising) Business Progress

● On August 6, 2021, the Company entered into a letter of intent with the majority shareholder of Yunnan Taoping IoT Limited (“Yunnan Taoping”) to acquire additional equity interests to increase its ownership interest of Yunnan Taoping to 51% or more. Pursuant to the letter of intent, the purchase price, to be determined by the two parties after the completion of due diligence, will be paid in the form of ordinary shares of TAOP. The letter of intent will be terminated if no definitive agreements are entered into between the parties before March 31, 2022.

● On July 28, 2021, the Company entered into a letter of intent with the shareholders of Zhenjiang Taoping IoT Technology Limited (“Zhenjiang Taoping”) to acquire 51% or more of the ownership interest of Zhenjiang Taoping. Pursuant to the letter of intent, the purchase price, to be determined by the parties after the completion of due diligence, will be paid in the form of ordinary shares of TAOP. The letter of intent will be terminated if no definitive agreements are entered into among the parties before December 31, 2021.

Dissolution of VIE Structure and Change of Corporate Headquarters to Hong Kong

On September 18, 2021, the Company’s wholly owned Chinese subsidiary, Information Security Technology (China) Co., Ltd. (“IST”), exercised the option to acquire 100% equity interests in iASPEC Technology Group Co., Ltd., the then variable interest entity (“VIE”) of the Company (“iASPEC”) from iASPEC’s sole shareholder, Mr. Jianghuai Lin, the Chief Executive Officer and Chairman of the Company. The Company believes that the dissolution of VIE structure in China will improve corporate governance and transparency for TAOP shareholders. The equity transfer was completed on September 24, 2021.

In addition, the Company relocated its global corporate headquarters from Shenzhen, China to Hong Kong as part of the implementation of its global growth strategy. As a result, the executive offices of the Company are now located at Unit 3102, 31/F, Citicorp Centre, 18 Whitefield Road, Hong Kong. TAOP’s Shenzhen office will serve as TAOP’s regional headquarter in Mainland China.

Financial Results for the First Six Months of 2021

Revenue

Revenue was $6.4 million for the first six months of 2021, compared to $3.7 million for the same period of last year, an increase of $2.7 million, or 71.9%. The increase was primarily due to the increase of $0.7 million of the product sale of high-end data storage servers, the increase of $0.6 million of the software sales, the addition of $0.6 million of advertising revenue, and $0.8 million revenue from cryptocurrency mining, a new business the Company initiated in March 2021. The Company expects that revenue for the second half of 2021 would increase as a result of the growth of cryptocurrency mining and advertising businesses.

Gross Profit

Gross profit was $2.1 million for the first six months of 2021, an increase of $0.6 million, compared to $1.5 million for the first six months of 2020. Gross profit as a percentage of revenue was 33.3% for the first six months of 2021, decreased from 39.3% for the same period of last year. The increase in the overall gross profits was primarily contributed by the increase of software revenue. The decrease in the overall gross margin was primarily resulted from lower margin of cryptocurrency mining and advertising. The Company expects that the gross margin for the remaining of 2021 would decrease slightly due to new business developments in cryptocurrency mining and advertising businesses.

Administrative, R&D and Selling Expenses

Administrative expenses increased by $6.5 million, or 92.6%, to $13.6 million for the first six months of 2021, from $7.1 million for the same period of 2020. Such increase was mainly caused by an increase in share-based compensation of $3.0 million to certain employees and $2.1 million amortization of service compensation related to warrants issued to certain consultants, and an increase of $0.9 million in allowance for credit losses. As a percentage of revenue, administrative expenses increased to 212% for the first six months of 2021, from 189% for the same period of 2020. The Company expects that the administrative expenses for remaining of 2021 would decrease as a result of the decrease of allowance for credit losses and share-based compensation to employees。

Research and development (“R&D”) expenses increased by $0.5 million, or 25.4%, to $2.3 million for the first six months of 2021, from $1.8 million for the first six months of 2020. Such increase was primarily due to the increase in payroll and benefits to R&D staff newly employed for the Blockchain Technology business segment, and the increase of depreciation expenses of purchased software. As a percentage of revenue, R&D expenses decreased to 35.2% for the first six months of 2021, from 48.2% for the same period of last year. R&D expense for the remaining of 2021 is expected to be consistent with the first half of the year.

Selling expenses increased by approximately $50,000, or 34.5%, to $0.19 million for the first six months of 2021, from $0.14 million for the first six months of 2020. This increase was primarily due to the increased commission and payroll expenses of sales department which was in line with the increase in revenues. Selling expense for the remaining of 2021 is expected to slightly increase in line with revenue increase.

Net loss attributable to Company

For the first six months of 2021, net loss attributable to the Company was $14.1 million, compared to a net loss attributable to the Company of $7.7 million for the same period of last year. The increase of net loss was the result of the foregoing factors, especially the increase in administrative expenses as discussed above.

Adjusted Net loss attributable to the Company

Excluding the two major reconciliation items, which are $5.1 million share-based compensation expenses and $0.6 million loss from equity method investment of TNM, the adjusted net loss was $8.4 million for the first six months of 2021, compared to the adjusted net loss of $7.4 million for the same period of 2020.

Cash and Financial Position

As of June 30, 2021, the Company had cash and cash equivalents of $0.8 million, compared to $0.9 million of cash and cash equivalents and $0.2 million of restricted cash as of December 31, 2020. Working capital deficit was $2.7 million as of June 30, 2021, compared to working capital deficit of $17.4 million as of December 31, 2020.

Net cash used in operating activities was $16.3 million for the first six months of 2021, compared to net cash used in operating activities of $1.2 million for the first six months of 2020.

About Taoping Inc.

Taoping Inc. (TAOP) is a blockchain technology and smart cloud services provider. The Company provides cloud-based ads display terminal, digital advertising distribution network and new media resource sharing platform in the Out-of-Home advertising market in China. TAOP is also dedicated to the research and application of blockchain technology and digital assets, a new business segment the Company initiated in 2021. With multiple cloud data center deployed overseas, the Company continues to improve computing power and create value for the encrypted digital currency industry. Relying on its self-developed smart cloud platform, TAOP provides solutions and cloud services to industries such as new media and artificial intelligence. To learn more, please visit http://www.taop.com/.

Safe Harbor Statement

This press release may contain certain “forward-looking statements” relating to the business of Taoping Inc. and its subsidiaries. All statements, other than statements of historical fact included herein, are “forward-looking statements” in nature within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, often identified by the use of forward-looking terminologies such as “believes”, “expects” or similar expressions, involve known and unknown risks and uncertainties. Such forward-looking statements may relate to, among other things, statements regarding our expected growth and financial performance, our strategies to drive growth, anticipated effects of the ongoing COVID-19 pandemic, expectations regarding our businesses and anticipated progress and benefits of the Company’s digital assets and digital culture (advertising) transactions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company and its subsidiaries or persons acting on their behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

About Non-GAAP Financial Measures

To supplement the Company’s financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP to exclude share-based compensation expenses and loss from equity method investment of TNM, a company acquired on June 9, 2021. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this release, which provide more details on the non-GAAP financial measures.

Non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the historical and current financial performance of the Company’s continuing operations and prospects for the future. Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.

Reconciliation of Non-GAAP Adjusted Net (Loss) Attributable to the Company and EPS are provided in the table at the end of this press release.

For further information, please contact:

TAOPING INC.

Chang Qiu

Email: chang_qiu@taoping.cn

Or

Dragon Gate Investment Partners LLC

Tel: +1 (646)-801-2803

Email: taop@dgipl.com

TAOPING INC.

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2021 AND DECEMBER 31, 2020

	June 30, 2021			December 31, 2020
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	849,519		$	882,770
Restricted cash		-			214,144
Accounts receivable, net		2,707,994			4,264,257
Accounts receivable-related parties, net		166,012			2,919,215
Advances to suppliers		10,950,271			3,177,678
Prepaid expenses		9,891,376			24,635
Inventories, net		1,366,594			254,678
Cryptocurrencies, net		175,487			-
Loan receivable - related party		-			519,331
Other current assets		2,629,046			173,026
TOTAL CURRENT ASSETS		28,736,299			12,429,734
Non-current accounts receivable, net		-			1,839,230
Non-current accounts receivable-related parties, net		-			1,323,196
Property, plant and equipment, net		18,599,830			10,851,899
Long-term investments		818,266			30,592
Right-of-use assets		926,689			-
Other assets, non-current		3,790,167			4,302,000
TOTAL ASSETS	$	52,871,251		$	30,776,651
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans	$	5,949,005		$	6,210,176
Accounts payable		14,985,772			14,857,436
Accounts payable-related parties		-			69,585
Advances from customers		653,804			315,924
Advances from customers-related parties		100,636			161,063
Amounts due to related parties		3,380,197			137,664
Accrued payroll and benefits		222,086			231,598
Other payables and accrued expenses		4,991,801			6,636,097
Convertible note payable, net of debt discounts		689,502			1,180,908
Lease liability-current		418,546			-
TOTAL CURRENT LIABILITIES		31,391,349			29,800,451
Lease liability		580,917			-
TOTAL LIABILITIES		31,972,266			29,800,451
EQUITY
Ordinary shares, 2021 and 2020: par $0; authorized capital 100,000,000 shares; shares issued and outstanding, June 30, 2021: 13,646,360 shares; December 31, 2020: 8,486,956 shares*;		154,316,011			131,247,787
Additional paid-in capital		26,914,305			15,643,404
Statutory reserve		14,044,269			14,044,269
Accumulated deficit		(206,310,884	)		(192,212,544	)
Accumulated other comprehensive income		23,675,886			23,612,413
Total equity (deficit) of the Company		12,639,587			(7,664,671	)
Non-controlling interest		8,259,398			8,640,871
TOTAL EQUITY		20,898,985			976,200
TOTAL LIABILITIES AND EQUITY	$	52,871,251		$	30,776,651

* On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except for shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

TAOPING INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(unaudited)			(unaudited)
Revenue – Products	$	2,971,899		$	2,056,805
Revenue – Products-related parties		67,612			217,813
Revenue – Software		1,621,534			1,049,377
Revenue – Advertising		576,310			-
Revenue – Cryptocurrency mining		814,772			-
Revenue – Other		319,429			371,381
Revenue – Other-related parties		54,021			41,974
TOTAL REVENUE		6,425,577			3,737,350
Cost – Products		2,696,207			1,970,154
Cost – Software		237,986			296,190
Cost – Advertising		683,835			-
Cost – Cryptocurrency mining		661,753			-
Cost – Other		7,555			4,001
TOTAL COST		4,287,336			2,270,345
GROSS PROFIT		2,138,241			1,467,005
Administrative expenses		13,606,688			7,064,286
Research and development expenses		2,260,274			1,802,747
Selling expenses		193,484			143,816
(LOSS) FROM OPERATIONS		(13,922,205	)		(7,543,844	)
Subsidy income		136,393			223,391
(Loss) from equity method investment		(578,619	)		-
Other income (loss), net		378,831			(302,336	)
Interest expense and debt discounts, net of interest income		(478,439	)		(387,761	)
(Loss) before income taxes		(14,464,039	)		(8,010,550	)
Income tax (expense) benefit		(871	)		69,858
NET LOSS		(14,464,910	)		(7,940,692	)
Less: Net loss attributable to the non- controlling interest		366,570			264,047
NET LOSS ATTRIBUTABLE TO THE COMPANY	$	(14,098,340	)	$	(7,676,645	)
Loss per share - Basic and Diluted*
Basic	$	(1.34	)	$	(1.12	)
Diluted	$	(1.34	)	$	(1.12	)
NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY*
Basic	$	(1.31	)	$	(1.08	)
Diluted	$	(1.31	)	$	(1.08	)

* On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

TAOPING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(unaudited)			(unaudited)
OPERATING ACTIVITIES
Net loss	$	(14,464,910	)	$	(7,940,692	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses on accounts receivable and other current assets		6,697,608			5,875,044
Provision (reversal) for obsolete inventories		48,589			(15,255	)
Depreciation and amortization		2,713,008			1,605,201
(Gain) on sales of cryptocurrencies		(41,345	)		-
Impairment on cryptocurrencies		42,447			-
(Gain) on business acquisition		(12,345	)		-
Loss on equity method investment		578,620			-
Loss on disposal of equipment and inventories		44,705			50,428
Stock-based compensation for consulting services		2,142,892			204,443
Amortization of convertible note discount		257,430			163,833
Stock-based compensation to employees		2,950,070			92,308
Write-off of long aged payables		(330,991	)		-
Changes in operating assets and liabilities:
Accounts receivable		1,460,535			(1,225,284	)
Accounts receivable - related parties		744,732			803,982
Prepaid expenses		(701,611	)		-
Inventories		(1,193,956	)		27,762
Cryptocurrencies – mining		(814,772	)		-
Other non-current assets		-			342,269
Other current assets		(139,076	)		1,601,902
Advances to suppliers		(8,488,625	)		(1,685,458	)
Other payables and accrued expenses		(741,892	)		305,903
Advances from customers		322,214			(48,317	)
Advances from customers - related parties		(62,356	)		18,491
Amounts due to related parties		(140,447	)		-
Accounts payable to related party		(70,299	)		-
Accounts payable		(7,065,510	)		(1,283,642	)
Lease liability		(62,818	)		-
Income tax payable		-			(69,858	)
Net cash used in operating activities		(16,328,103	)		(1,176,940	)
INVESTING ACTIVITIES
Proceeds from sale of property and equipment		38,974			-
Purchases of property and equipment		(769,751	)		(150,470	)
Acquired cash in connection with a business acquisition		7,644			-
Proceeds from sales of cryptocurrencies		638,183			-
Repayment of loan receivable-related party		170,909			43,708
Net cash provided by (used in) investing activities		85,959			(106,762	)
FINANCING ACTIVITIES
Proceeds from short-term bank loans		4,172,283			4,029,193
Borrowings from related party		3,090,580			-
Repayment of short-term bank loans		(4,512,247	)		(5,696,201	)
Capital injected by minority shareholders in joint venture		4,047			-
Proceeds from issuance of convertible note, net of debt issuance costs		-			1,344,000
Proceeds from issuance of common stock, net of issuance cost		13,071,998			576,000
Net cash provided by financing activities		15,826,661			252,992
Effect of exchange rate changes on cash and cash equivalents		168,088			(4,092	)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(247,395	)		(1,034,802	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING		1,096,914			1,519,666
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, ENDING	$	849,519		$	484,864
Supplemental disclosure of cash flow information:
Cash paid during the year
Income taxes	$	-		$	-
Interest	$	195,469		$	346,042

	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
Reconciliation to amounts on consolidated balance sheets
Cash and cash equivalents	$	849,519	$	286,795
Restricted cash		-		198,069
Total cash, cash equivalents, and restricted cash	$	849,519	$	484,864

TAOPING INC.

Reconciliation of Non-GAAP Adjusted Net (Loss) Attributable to the Company and EPS

	Six Months Ended
	June 30,			June 30,
	2021			2020
Net (loss) attributable to the Company	$	(14,098,340	)	$	(7,676,645	)
Share-based compensation for consulting services		2,142,892			204,443
Share-based compensation to employees		2,950,070			92,308
Loss from equity method investment		578,620			-
Adjusted net (loss) attributable to the Company	$	(8,426,758	)	$	(7,379,894	)
Weighted average number of shares outstanding
Basic		10,761,008			7,075,611
Diluted		10,761,008			7,075,611
(Loss) per share
Basic	$	(1.31	)	$	(1.08	)
Diluted	$	(1.31	)	$	(1.08	)
Adjusted (loss) per share
Basic	$	(0.78	)	$	(1.04	)
Diluted	$	(0.78	)	$	(1.04	)

XML

Cover	6 Months Ended
	Jun. 30, 2021
Cover [Abstract]
Document Type	6-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	001-35722
Entity Registrant Name	TAOPING INC.
Entity Central Index Key	0001552670
Entity Address, Address Line One	Unit 3102
Entity Address, Address Line Two	31/F
Entity Address, City or Town	Citicorp Centre
Entity Address, Country	HK

XML

Consolidated Balance Sheets - USD ($)		Jun. 30, 2021	Dec. 31, 2020
CURRENT ASSETS
Cash and cash equivalents		$ 849,519	$ 882,770
Restricted cash			214,144
Accounts receivable, net		2,707,994	4,264,257
Accounts receivable-related parties, net		166,012	2,919,215
Advances to suppliers		10,950,271	3,177,678
Prepaid expenses		9,891,376	24,635
Inventories, net		1,366,594	254,678
Cryptocurrencies, net		175,487
Loan receivable - related party			519,331
Other current assets		2,629,046	173,026
TOTAL CURRENT ASSETS		28,736,299	12,429,734
Non-current accounts receivable, net			1,839,230
Non-current accounts receivable-related parties, net			1,323,196
Property, plant and equipment, net		18,599,830	10,851,899
Long-term investments		818,266	30,592
Right-of-use assets		926,689
Other assets, non-current		3,790,167	4,302,000
TOTAL ASSETS		52,871,251	30,776,651
CURRENT LIABILITIES
Short-term bank loans		5,949,005	6,210,176
Accounts payable		14,985,772	14,857,436
Accounts payable-related parties			69,585
Advances from customers		653,804	315,924
Advances from customers-related parties		100,636	161,063
Amounts due to related parties		3,380,197	137,664
Accrued payroll and benefit		222,086	231,598
Other payables and accrued expenses		4,991,801	6,636,097
Convertible note payable, net of debt discounts		689,502	1,180,908
Lease liability-current		418,546
TOTAL CURRENT LIABILITIES		31,391,349	29,800,451
Lease liability		580,917
TOTAL LIABILITIES		31,972,266	29,800,451
EQUITY
Ordinary shares, 2021 and 2020: par $0; authorized capital 100,000,000 shares; shares issued and outstanding, June 30, 2021:13,646,360 shares; December 31, 2020: 8,486,956 shares*;	[1]	154,316,011	131,247,787
Additional paid-in capital		26,914,305	15,643,404
Statutory reserve		14,044,269	14,044,269
Accumulated deficit		(206,310,884)	(192,212,544)
Accumulated other comprehensive income		23,675,886	23,612,413
Total equity (deficit) of the Company		12,639,587	(7,664,671)
Non-controlling interest		8,259,398	8,640,871
Total Equity		20,898,985	976,200
TOTAL LIABILITIES AND EQUITY		$ 52,871,251	$ 30,776,651

[1] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Ordinary shares, no par value	$ 0	$ 0
Ordinary shares, shares authorized	100,000,000	100,000,000
Ordinary shares, shares issued	13,646,360	8,486,956
Ordinary shares, shares outstanding	13,646,360	8,486,956

XML

Consolidated Statements of Operations (Unaudited) - USD ($)		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020
TOTAL REVENUE	[1]	$ 6,425,577	$ 3,737,350
TOTAL COST		4,287,336	2,270,345
GROSS PROFIT		2,138,241	1,467,005
Administrative expenses		13,606,688	7,064,286
Research and development expenses		2,260,274	1,802,747
Selling expenses		193,484	143,816
LOSS FROM OPERATIONS		(13,922,205)	(7,543,844)
Subsidy income		136,393	223,391
(Loss) from equity method investment		(578,619)
Other income (loss), net		378,831	(302,336)
Interest expense and debt discounts, net of interest income		(478,439)	(387,761)
Loss before income taxes		(14,464,039)	(8,010,550)
Income tax (expense) benefit		(871)	69,858
NET LOSS		(14,464,910)	(7,940,692)
Less: Net loss attributable to the non- controlling interest		366,570	264,047
NET LOSS ATTRIBUTABLE TO THE COMPANY		$ (14,098,340)	$ (7,676,645)
Loss per share - Basic and Diluted*
Basic	[2]	$ (1.34)	$ (1.12)
Diluted	[2]	(1.34)	(1.12)
NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY*
Basic	[2]	(1.31)	(1.08)
Diluted	[2]	$ (1.31)	$ (1.08)
Products [Member]
TOTAL REVENUE		$ 2,971,899	$ 2,056,805
TOTAL COST		2,696,207	1,970,154
Products Related Parties [Member]
TOTAL REVENUE		67,612	217,813
Software [Member]
TOTAL REVENUE		1,621,534	1,049,377
TOTAL COST		237,986	296,190
Advertising [Member]
TOTAL REVENUE		576,310
TOTAL COST		683,835
Cryptocurrency Mining [Member]
TOTAL REVENUE		814,772
TOTAL COST		661,753
Other [Member]
TOTAL REVENUE		319,429	371,381
TOTAL COST		7,555	4,001
Other Related Parties [Member]
TOTAL REVENUE		$ 54,021	$ 41,974

[1] Revenues by operating segments exclude intercompany transactions.

[2] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

XML

Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Net loss	$ (14,464,910)	$ (7,940,692)
Other comprehensive loss:
Foreign currency translation gain (loss)	44,523	(103,036)
Comprehensive loss	(14,420,387)	(8,043,728)
Comprehensive loss attributable to the non- controlling interest	385,520	251,561
Comprehensive loss attributable to the Company	$ (14,034,867)	$ (7,792,167)

XML

Consolidated Statements of Changes in Equity (Unaudited) - USD ($)		Ordinary Shares [Member]		Additional Paid-in Capital [Member]	Statutory Reserve [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2019		$ 126,257,156	[1]	$ 16,461,333	$ 14,044,269	$ (174,517,769)	$ 23,022,845	$ 9,340,551	$ 14,608,385
Balance, shares at Dec. 31, 2019	[1]	7,000,053
Stock-based payment for consulting fee		$ 186,000	[1]	16,185					202,185
Stock-based payment for consulting fee, shares	[1]	46,667
Issued common stock		$ 576,000	[1]						576,000
Issued common stock, shares	[1]	285,714
Issued convertible note beneficial conversion feature in connection with the private placement (Note 12)			[1]	165,580					165,580
Issued detachable warrant in connection with the private placement (Note 12)			[1]	11,580					11,580
Employee Stock Incentive			[1]	92,308					92,308
Net loss for the year			[1]			(7,676,645)		(264,047)	(7,940,692)
Foreign currency translation loss			[1]				(115,522)	12,486	(103,036)
Balance at Jun. 30, 2020		$ 127,019,156	[1]	16,746,986	14,044,269	(182,194,414)	22,907,323	9,088,990	7,612,310
Balance, shares at Jun. 30, 2020	[1]	7,332,434
Balance at Dec. 31, 2020		$ 131,247,787	[1]	15,643,404	14,044,269	(192,212,544)	23,612,413	8,640,871	976,200
Balance, shares at Dec. 31, 2020	[1]	8,486,956
Stock-based payment for consulting fee		$ 21,840	[1]	11,318,641					11,340,481
Stock-based payment for consulting fee, shares	[1]	7,000
Conversion of convertible notes (Note 15)		$ 1,745,930	[1]	(205,810)					1,540,120
Conversion of convertible notes (Note 15), shares	[1]	598,034
Issuance of common stock for financing (Note 18)		$ 13,071,998	[1]						13,071,998
Insurance of common stock for financing (Note 18), shares	[1]	3,140,740
Employee Stock Incentive		$ 2,792,000	[1]	158,070					2,950,070
Employee stock incentive (Note 18), shares	[1]	200,000
Net loss for the year			[1]			(14,098,340)		(366,570)	(14,464,910)
Foreign currency translation loss			[1]				63,473	(18,950)	44,523
Common stock issued for business acquisition		$ 5,436,456	[1]						5,436,456
Common stock issued for business acquisition, shares	[1]	1,213,630
Minority shareholders’ contribution			[1]					4,047	4,047
Balance at Jun. 30, 2021		$ 154,316,011	[1]	$ 26,914,305	$ 14,044,269	$ (206,310,884)	$ 23,675,886	$ 8,259,398	$ 20,898,985
Balance, shares at Jun. 30, 2021	[1]	13,646,360

[1] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
OPERATING ACTIVITIES
Net loss	$ (14,464,910)	$ (7,940,692)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses on accounts receivable and other current assets	6,697,608	5,875,044
Provision (reversal) for obsolete inventories	48,589	(15,255)
Depreciation and amortization	2,713,008	1,605,201
(Gain) on sales of cryptocurrencies	(41,345)
Impairment on cryptocurrencies	42,447
(Gain) on business acquisition	(12,345)
Loss on equity method investment	578,620
Loss on disposal of equipment and inventories	44,705	50,428
Stock-based compensation for consulting services	2,142,892	204,443
Amortization of convertible note discount	257,430	163,833
Stock-based compensation to employees	2,950,070	92,308
Write-off of long aged payables	(330,991)
Changes in operating assets and liabilities:
Accounts receivable	1,460,535	(1,225,284)
Accounts receivable - related parties	744,732	803,982
Prepaid expenses	(701,611)
Inventories	(1,193,956)	27,762
Cryptocurrencies – mining	(814,772)
Other non-current assets		342,269
Other current assets	(139,076)	1,601,902
Advances to suppliers	(8,488,625)	(1,685,458)
Other payables and accrued expenses	(741,892)	305,903
Advances from customers	322,214	(48,317)
Advances from customers - related parties	(62,356)	18,491
Amounts due to related parties	(140,447)
Accounts payable to related party	(70,299)
Accounts payable	(7,065,510)	(1,283,642)
Lease liability	(62,818)
Income tax payable		(69,858)
Net cash used in operating activities	(16,328,103)	(1,176,940)
INVESTING ACTIVITIES
Proceeds from sales of property and equipment	38,974
Purchases of property and equipment	(769,751)	(150,470)
Acquired cash in connection with a business acquisition	7,644
Proceeds from sales of cryptocurrencies	638,183
Repayment of loan receivable-related party	170,909	43,708
Net cash provided by (used in) investing activities	85,959	(106,762)
FINANCING ACTIVITIES
Proceeds from short-term bank loans	4,172,283	4,029,193
Borrowings from related party	3,090,580
Repayment of short-term bank loans	(4,512,247)	(5,696,201)
Capital injected by minority shareholders in joint venture	4,047
Proceeds from issuance of convertible note, net of debt issuance costs		1,344,000
Proceeds from issuance of common stock, net of issuance cost	13,071,998	576,000
Net cash provided by financing activities	15,826,661	252,992
Effect of exchange rate changes on cash and cash equivalents	168,088	(4,092)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(247,395)	(1,034,802)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING	1,096,914	1,519,666
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING	849,519	484,864
Supplemental disclosure of cash flow information:
Income taxes
Interest	195,469	346,042
Reconciliation to amounts on consolidated balance sheets
Cash and cash equivalents	849,519	286,795
Restricted cash		198,069
Total cash, cash equivalents, and restricted cash	$ 849,519	$ 484,864

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Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)		1 Months Ended					6 Months Ended
		Jun. 30, 2021	Apr. 30, 2021	Feb. 28, 2021	Sep. 30, 2020	Apr. 30, 2020	Jun. 30, 2021	Mar. 31, 2020
Convertible promissory note		$ 767,500					$ 767,500
Number of shares issued for services, value							11,340,481
Purchase of software and equipment	[1]						6,700,000
Increase in accounts payable and other payable	[1]						11,000
Decrease in advance to suppliers	[1]						765,000
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	[1]		$ 1,000,000
Taoping New Media Co Ltd [Member]
Number of restricted ordinary shares	[1]	1,213,630
Number of restricted ordinary shares, value	[1]	$ 5,436,000
Convertible Promissory Note [Member]
Convertible promissory note	[1]				$ 1,480,000
Consultants [Member]
Number of restricted ordinary shares	[1]					16,667
Number of restricted ordinary shares, value	[1]					$ 42,000
Fair value of warrants	[1]					$ 16,000
Warrants to purchase common stock	[1]					16,667
Fair value of warrants	[1]		$ 66,000
Consultants [Member] | Warrant [Member]
Number of shares issued for services	[1]		15,000
Two Individual Investor [Member]
Fair value of warrants	[1]							$ 11,580
Warrants to purchase common stock	[1]							26,667
Convertible promissory note	[1]							$ 1,480,000
Investor [Member] | Convertible Promissory Note [Member]
Convertible promissory note	[1]	$ 740,000					$ 740,000
Interest payable	[1]				$ 26,208
Debt conversion, converted instrument, shares issued	[1]				298,716
Debt instrument, convertible, conversion price	[1]				$ 2.565
Three Strategy Consultants [Member] | Warrant [Member]
Number of shares issued for services, value	[1]		$ 1,900,000	$ 1,900,000
Fair value of warrants	[1]		$ 11,200,000	$ 11,200,000

[1] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references above in this section to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted

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ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS

1. ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS

Taoping Inc. (f/k/a China Information Technology, Inc.), together with its subsidiaries (the “Company” or “TAOP”), is a leading cloud-based ads display terminal and service provider of digital advertising distribution network and new media resource sharing platform in the Out-of-Home advertising market in China. The Company provides the integrated end-to-end digital advertising solutions enabling customers to distribute and manage ads on the ads display terminals.

On June 9, 2021, the Company consummated an acquisition of 100% of the equity interest of Taoping New Media Co., Ltd (“TNM”), a leading media operator in China’s out-of-home digital advertising industry. Mr. Jianghuai Lin, the Chairman and CEO of TAOP, who owns approximately 24.6% of total shares outstanding of the Company, owned approximately 51% of TNM. TNM focuses on digital life scenes and mainly engaged in selling out-of-home advertising time slots on its networked smart digital advertising display terminals with artificial intelligence and big data technologies. The acquisition of TNM is expected to enhance TAOP’s presence in the new media and advertising sectors.

In 2021, the Company also launched blockchain related new business in cryptocurrency mining operations and newly established subsidiaries in Hong Kong and Cayman Island to supplement its diminished Traditional Information Technology (TIT) business segment as a part of new business transformation. With multiple cloud data centers deployed outside of China mainland, currently in Hong Kong, the Company continues to improve computing power and create value for the encrypted digital currency industry.

In May 2018, we changed our corporate name from “China Information Technology Inc.” to “Taoping Inc.”, to more accurately reflect our current business operations in the new media and IoT industries. In 2021, Information Security Tech. International Co. Ltd. (“IST HK”), one of the Company’s Hong Kong subsidiaries, changed its corporate name to Taoping Group (China) Ltd. to reflect the Company’s current corporate structure to be in line with the new business strategies. As listed in the table below, these services are provided through the Company’s wholly-owned People’s Republic of China (PRC) subsidiaries, and the Company’s Variable interest entity (“VIE”) and VIE subsidiaries.

Entities	Subsidiaries/ VIE	June 30, 2021 % owned			December 31, 2020 % owned			December 31, 2019 % owned			Location
Taoping Inc.											British Virgin Islands
Taoping Holdings Limited (THL)	Subsidiary		100	%		100	%		100	%	British Virgin Islands
Taoping Group (China) Ltd. (IST HK)	Subsidiary		100	%		100	%		100	%	Hong Kong, China
Taoping Digital Assets (Asia) Limited (TDAL)	Subsidiary		100	%							Hong Kong, China
Taoping Digital Assets (Hong Kong) Limited (TDL)	Subsidiary		100	%							Hong Kong, China
Taoping Capital Limited (TCL)	Subsidiary		100	%							Hong Kong, China
Alpha Digital Group Ltd. (ADG)	Subsidiary		100	%							Cayman, Island
Information Security Tech. (China) Co., Ltd. (IST)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
TopCloud Software (China) Co., Ltd. (TopCloud)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
Information Security IoT Tech.Co., Ltd. (ISIOT)	Subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Technology Group Co., Ltd. (iASPEC)	VIE		100	%		100	%		100	%	Shenzhen, China
Biznest Internet Tech. Co., Ltd. (Biznest)	VIE subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Bocom IoT Tech. Co., Ltd. (Bocom)	VIE subsidiary		100	%		100	%		100	%	Shenzhen, China
Taoping New Media Co., Ltd. (TNM)	VIE subsidiary		100	%							Shenzhen, China
Shenzhen Taoping E-Commerce Service Co., Ltd. (SZTEC)	VIE Subsidiary		100	%							Shenzhen, China
Shenzhen Taoping Education Technology Co., Ltd. (SZTET)	VIE subsidiary		51	%							Shenzhen, China
Wuhu Taoping Education Technology Co., Ltd. (WHTET)	VIE subsidiary		51	%							Wuhu, China

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Amended and Restated MSA

iASPEC is a VIE of the Company. To comply with PRC laws and regulations that restrict foreign ownership of companies that provide public security information technology and Geographic Information Systems software operating services to certain government and other customers, the Company operates the restricted aspect of its business through iASPEC.

The Amended and Restated Management Service Agreement (“MSA”) was entered into on December 13, 2009, by and among IST, iASPEC and iASPEC’s sole shareholder, Mr. Jianghuai Lin (“Mr. Lin”), which replaced the original MSA dated July 1, 2007. Pursuant to the Amended and Restated MSA, IST will provide management and consulting services to iASPEC, under the following terms:

● iASPEC agreed that IST will be entitled to receive ninety five percent (95%) of the Net Received Profit, as defined, of iASPEC during the term of the Agreement. iASPEC is obligated to calculate and pay the Net Received Profit due to IST no later than the last day of the first month following the end of each fiscal quarter. Mr. Lin, agreed to enter into an agreement with IST to pledge all of his equity interests in iASPEC as security for his and iASPEC’s fulfillment of their respective obligations under the MSA, and to register the pledge agreement with the local AIC (Administration for Industry and Commerce). The Amended and Restated MSA was executed on December 13, 2009. Based on the advice of the Company’s PRC legal counsel, in January 2010 all the parties to the agreement decided not to enter into a pledge agreement.

● Mr. Lin confirmed his status as the sole iASPEC shareholder and his assumption of all of the obligations of the iASPEC shareholder under the agreement, including a confirmation of his continuing obligation under a written guaranty, executed by the then iASPEC shareholders.

● Based on iASPEC’s needs for its development and operation, IST has the right, from time to time, at its sole discretion, to provide iASPEC with capital support.

● IST agreed that it will not interfere with any business of iASPEC covered by iASPEC’s PRC State Secret related Computer Information System Integration Certificate, including but not limited to, seeking access to relevant documents regarding such business. However, iASPEC agreed that it will cooperate with the requests of the Company as necessary to comply with the Company’s reporting obligations to the Securities and Exchange Commission. (“SEC”).

The Amended and Restated MSA amended certain terms of the original MSA dated July 1, 2007 and has a term of 30 years unless otherwise early termination by the parties by one of the following means:

● Either iASPEC or IST may terminate the Amended and Restated MSA immediately (a) upon the material breach by a party of its obligations and the failure of such party to cure such breach within 30 working days after written notice from the non-breaching party; or (b) upon the filing of a voluntary or involuntary petition in bankruptcy by a party, or of which the party is the subject to insolvency, or the commencement of any proceedings placing the party in a receivership, or of any assignment by a party for the benefit of creditors; or

● The Amended and Restated MSA may be terminated at any time by IST upon 90 calendar days’ written notice delivered to all other parties.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Upon any effective date of any termination of the Amended and Restated MSA: (a) IST will cease providing management services to iASPEC; (ii) IST will deliver to iASPEC all chops and seals of iASPEC; (iii) IST will deliver to iASPEC all of the financial and other books and records of iASPEC, including any and all permits, licenses, certificates and other proprietary and operational documents and instruments; (iv) the senior managers who are recommended by IST and elected as directors of iASPEC will resign from the Board of Directors of iASPEC in a lawful way; and (v) the software license that iASPEC granted to IST according to the Amended and Restated MSA will terminate unless otherwise agreed by the parties. In addition, any amounts owing from any party to any other party on the effective date of any termination under the terms of the Amended and Restated MSA will continue to be due and owing despite such termination.

The Amended and Restated MSA does not have renewal provisions. We expect that the parties to the Amended and Restated MSA will negotiate to extend the term of the agreement before its expiration.

Option Agreement

In connection with the MSA, IST also has an immediately exercisable purchase option agreement (the “Option Agreement”) with iASPEC and its shareholders. Pursuant to the Option Agreement, the iASPEC shareholder granted IST or its designee(s) an exclusive, irrevocable option to purchase, from time to time, all or a part of iASPEC’s shares or iASPEC’s assets from the iASPEC shareholder for $1,800,000 in aggregate. The option may not be exercised if the exercise would violate any applicable laws and regulations in PRC or cause any license or permit held by, and necessary for the operation of iASPEC, to be cancelled or invalidated. The Option Agreement will terminate on the date that IST exercises its purchase option and acquires all the shares or assets of iASPEC pursuant to the terms of the Option Agreement. The Option Agreement may be rescinded by IST upon 30 days’ notice without costs to terminate. The Option Agreement does not have renewal provisions.

The substance of the Amended and Restated MSA and the Option Agreement is to:

● Allow the Company to utilize the business licenses, contacts, permits, and other resources of iASPEC in order for the Company to be able to expand its operations and business model;

● Provide the Company with effective control over all of iASPEC’s operations; and provide the shareholders of iASPEC an opportunity to monetize a portion of their investment through the $1.8 million purchase option (see Note 22 - Subsequent Events for recent development).

Going Concern and Management’s Plans

Although the COVID-19 pandemic has largely been contained in China, ripple effect of negative impact from the pandemic to the out-of-home advertising business continues in the first half of 2021. However, our revenue achieved 71.2% year-over-year increase as a result of the additions of cryptocurrency mining and the acquisition of TNM for the first half of 2021. The Company incurred a net loss of approximately $14.4 million for the six months ended June 30, 2021, which was mainly due to the provision of allowance of credit losses and the expenses of stock-based compensation, compared to a net loss of $7.9 million for the same period of 2020. The Company reported negative cash flows from operations of approximately $16.3 million for the six months ended June 30, 2021, compared to negative cash flows of $1.2 million from operations for the same period of 2020. As of June 30, 2021, the Company had a working capital deficit of approximately $2.7 million, compared to a working capital deficit of $17.4 million as of December 31, 2020. The Company had significant accumulated deficit approximately $206.3 million and $192.2 million as of June 30, 2021 and December 31, 2020, respectively.

In the first quarter of 2021, the Company completed three financing transactions issuing 3,140,740 ordinary shares in total with aggregate proceeds of $13.1 million net of issuance costs. In July 2021, the Company consummated a financing transaction comprising of 1,200,000 ordinary shares, and warrants with aggregate proceeds net of issuance cost of $4.73 million. Proceeds from all financing activities were to increase the Company’s working capital.

In June 2021, the Company completed an acquisition of 100% of equity of TNM to offer more comprehensive services off the new media sharing platform and enhance revenue generation from new media and advertising sectors. In April 2021, the Company also formed a Blockchain business segment and engages in cryptocurrency mining activities as the first initiative of this sector to supplement the diminished Traditional Information Technology (TIT) business segment as a part of new business transformation. Revenue generated from cryptocurrency mining was approximately $815,000, and the gross profit from mining business was approximately $153,000 for the six months ended June 30, 2021. In 2021, the Company will continue to expand Blockchain related business operations to improve revenue and cash flow generations. In addition, the management will also continue to execute the existing business strategies with focuses on selection of quality customers, collection of accounts receivable, maintaining proper inventory level, and managing accounts payable to enhance operating cash flows. Meanwhile, with the increasing scale of the Taoping national network, the Company expects to gradually increase its revenue stream of platform service in 2021. The Company will continue advancing business cooperation internationally. Moreover, the Company will aggressively develop domestic and international markets to develop new customers in new media business, and explore more blockchain related businesses, such as establishing overseas data centers in addition to Hong Kong and developing applications of NFT, cloud desktop and cloud rendering. With its well established “Taoping” brand, technology platform and industry reputation along with strategic expansion into the Blockchain business sector, the Company believes that it has the ability to raise needed capital to support the Company’s operations and business expansions.

If the Company’s execution of business strategies is not successful in addressing its current financial concerns, additional capital raise from issuing equity security or debt instrument or additional loan facility may occur to support required cash flows. However, the Company can make no assurances that financing will be available for the amounts we need, or on terms commercially acceptable to us, if at all. If one or all of these events do not occur or subsequent capital raise was insufficient to bridge financial and liquidity shortfall, substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Principles of Consolidation

The consolidated financial statements as of June 30, 2021 and for the six-month periods ended June 30, 2021 and 2020 are unaudited. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. 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. Operating results as presented are not necessarily indicative of the results to be expected for a full year. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 20-F for the year ended December 31, 2020 filed on April 30, 2021 with the Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company, its subsidiaries, and its VIE for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reverse Stock Split: A one (1)-for-six (6) reverse stock split of the Company’s issued and outstanding ordinary shares was effective on July 30, 2020 (the “Reverse Stock Split”). Except shares authorized, all share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

(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 and other assets and other intangible assets. 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 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c) Economic, Pandemic, Political, and Currency Exchange Risks

All the Company’s revenue-generating operations are conducted in the PRC. 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, 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.

Recently, ten Chinese regulatory authorities collectively promulgated a guidance to further control and monitor cryptocurrency related trading, exchanges, transaction, banking and financial service, initial coin offering, and other intermediary and derivatives transactions, which are considered illegal in accordance with effectuated laws and regulations and may be subject to penalty criminally. The new guidance also bars foreign cryptocurrency trading platforms and related businesses to provide services to China domestic individuals and business entities, and expands the application of laws and regulations to Chinese employees or contractors of foreign operatives that provide related services to individuals or business entities domiciled in China. The legality of cryptocurrency mining activity may be subject to challenge by Chinese authorities. The Company is in the process of reorganizing its corporate structure to relocate cryptocurrency mining activities and related subsidiaries to jurisdictions outside of China mainland to minimize the risk.

The functional currency of the Company is 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, and Restricted cash

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 cash equivalents as of June 30, 2021 or December 31, 2020.

The Company maintains its cash accounts at credit worthy financial institutions and closely monitors the movements of its cash positions. As of June 30, 2021, and December 31, 2020, approximately $0.8 million and $0.9 million of cash, respectively, was held in bank accounts in the PRC and Hong Kong.

(e) Restricted Cash

The Company also held restricted cash of $0.2 million as of December 31, 2020. The restricted fund is a time deposit served as collateral to secure a bank loan facility that matured on May 7, 2021. The Company had no restricted cash as of June 30, 2021.

(f) Accounts Receivable, Accounts Receivable – related parties, and Concentration of Risk

In January 2020, the Company adopted ASU 2016-13, Topics 326-Credit Loss, Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology, as its accounting standard for its trade accounts receivable.

The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2020. 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 has further adjusted 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 six-month ended June 30, 2021 has increased approximately $6.94 million from the year ended December 31, 2020.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021			December 31, 2020
	(Unaudited)
Accounts Receivable	$	15,650,969		$	12,359,619
Allowance for credit losses		(12,942,975	)		(8,095,362	)
Accounts Receivable, net	$	2,707,994		$	4,264,257
Accounts Receivable - related parties	$	15,651,195		$	12,017,651
Allowance for credit losses - related parties		(15,485,183	)		(9,098,436	)
Accounts Receivable - related parties, net	$	166,012		$	2,919,215
Non-current Accounts Receivable	$	-		$	3,013,532
Non-current Allowance for credit losses		-			(1,174,302	)
Non-current Accounts Receivable, net	$	-		$	1,839,230
Non-current Accounts Receivable - related parties	$	-		$	4,172,502
Non-current Allowance for credit losses - related parties		-			(2,849,306	)
Non-current Accounts Receivable - related parties, net	$	-		$	1,323,196

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

In accordance with ASC 210-10-45, the non-current accounts receivable and non-current accounts receivable-related parties represent the amounts that the Company does not reasonably expect to be realized during the normal operating cycle of the Company. The Company uses one-year time period as the basis for the separation of current and non-current assets.

The allowance for credit losses at June 30, 2021 and December 31, 2020, totaled approximately $28.4 million and $21.2 million, respectively, representing management’s best estimate. The following table describes the movements in the allowance for credit losses during the six-month period ended June 30, 2021 and the year ended December 31, 2020:

Balance at January 1, 2020	$	7,212,644
Increase in allowance for credit losses		13,528,638
Foreign exchange difference		476,124
Balance at December 31, 2020	$	21,217,406
Addition from acquisition of TNM		309,537
Increase in allowance for credit losses		6,691,031
Decrease for balance recovered		(61,969	)
Foreign exchange difference		272,153
Balance at June 30, 2021 (Unaudited)	$	28,428,158

(g) Prepaid expenses

As of June 30, 2021, prepaid expenses included prepaid stock-based compensation of $9,189,765 and prepaid rental of $701,611. As of December 31, 2020, prepaid expenses represented prepaid stock-based compensation of $24,635.

Prepaid stock-based compensation represents stock-based payments including ordinary shares, warrants or stock options issued to consultants as compensation for their contracted services. Share-based payments are measured at the grant date, and recognized as consulting service expense using the straight-line method over the service period.

Prepaid rental was the payment made to a hash-rate platform for leasing blockchain cloud computing power which was amortized over the 12-month lease period from March 2021.

(h) 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 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On January 1, 2020, the Company adopted ASU 2018-13,” Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The adoption of the disclosure requirements for Fair Value Accounting has no material impact on the Company’s consolidated financial statements.

(i) Property, equipment and software, net

Property, equipment and software are stated at cost less accumulated amortization and depreciation. Amortization and depreciation are provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of property, equipment and software are as follows:

Office buildings	20-50 years
Lease improvement	Shorter of lease term or assets lives
Electronics equipment, furniture and fixtures	3-5 years
Motor vehicles	5 years
Purchased software	5 years
Media display equipment	5 years
Cryptocurrency mining machine	3 years

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.

(j) 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. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

Cryptocurrencies awarded to the Company through its mining activities are included within operating activities in the consolidated statements of cash flows. 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.

(k) 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.

(l) 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 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.

(m) Convertible promissory note

The Company determines the appropriate accounting treatment of its convertible debts in accordance with the terms in relation to conversion features. After considering the impact of such features, the Company may account for such instrument as a liability in its entirety, or separate the instrument into debt and equity components following the guidance described under ASC 815 Derivatives and Hedging and ASC 470 Debt. The debt discount, if any, together with related issuance cost are subsequently amortized as interest expense over the period from the issuance date to the earliest conversion date or stated redemption date. The Company presented the issuance cost of debt in the balance sheet as a direct deduction from the related debt.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(n) 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.

(o) 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.

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 has indicated that it 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.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue - Software

Customers in the private sector contract the Company to design and develop software products specifically customized for their needs for a fixed price. 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 in installments based on progression of the project or 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 customized software contracts less than 12 months and recognizes the revenue at the point of delivery 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 UNAUDITED 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. 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.

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 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 all 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 six years starting from May 1, 2016 and three years starting from July 1, 2019, 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 $183,000 and $211,000 rental income for the periods ended June 30, 2021, and 2020, respectively.

After completion of the business acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company, and is no longer a related party. The rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021.

Annual minimum rental income to be received in the next 5 years:
2021	155,688
2022	108,982
Total	264,670

Contract balances

The Company records advances from customers when cash payments are received or due in advance of our performance. For the six months ended June 30, 2021 and 2020, the Company recognized revenue of $104,000 and $120,000, respectively, that was included in the advances from customers balance at the beginning of each reporting period.

Practical expedients and exemptions

The Company generally expenses sales commissions and other incremental costs of obtaining a contract, if any incurred, because the duration of the service contracts and the amortization periods 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 duration of one year or less.

(p) Cost of advertising and cost of cryptocurrencies

The cost of advertising 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 cryptocurrencies 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.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(q) Segment reporting

Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Transfers and sales between reportable segments, if any, are recorded at cost.

The Company reports financial and operating information in the following three segments:

(1)	Cloud-based Technology (CBT) segment —It includes the Company’s cloud-based products, high-end data storage servers. and related services sold to private sectors including new media, healthcare, education, and residential community management, and among other industries and applications. In this segment, the Company generates revenues from the sales of hardware and software total solutions with proprietary software and content as well as from designing and developing software products specifically customized for private sector customers’ needs for a fixed price. The Company includes the revenue and cost of revenue of high-end data storage servers in the CBT segment. Advertising services is included in the CBT segment, after the Company consummated the acquisition of TNM. Advertisements are delivered to the ads display terminals and vehicular ads display terminals through the Company’s cloud-based new media sharing platform. Incorporation of advertising services complements the Company’s out-of-home advertising business strategy.
(2)	Blockchain Technology (BT) segment — The BT segment is the Company’s newly formed business sector. Cryptocurrency mining is the first initiative implemented in the BT segment.
(3)	Traditional Information Technology (TIT) segment —The TIT segment includes the Company’s project-based technology products and services sold to the public sector. The solutions the Company has sold primarily include Geographic Information Systems (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS). In this segment, the Company generates revenues from sales of hardware and system integration services. As a result of the business transformation, the TIT segment is being phased out in 2021.

(r) Reclassifications

Certain prior period amounts have been reclassified to be comparable to the current period presentation. This reclassification has no effect on previously reported net assets or net income (loss).

(s) Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 is effective for public business entities fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The guidance provides clarification of the interaction of rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company in the first quarter of 2021. The adoption did not have any significant impact on the Company’s condensed consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe that the adoption of such pronouncements will have a material impact on the consolidated financial statements.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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BUSINESS ACQUISITION

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

BUSINESS ACQUISITION

3. BUSINESS ACQUISITION

On June 9, 2021, the Company and Biznest Internet Technology Co., Ltd. (“Biznest”), a subsidiary of a VIE of the Company consummated an acquisition of 100% of the equity interests of Taoping New Media Co., Ltd and its subsidiary (“TNM”). Mr. Jianghuai Lin, the Chairman and CEO of the Company, who owns approximately 24.6% of total shares outstanding of the Company, owned approximately 51% of TNM. TNM is a new media operator focusing on digital life scenes and mainly engaged in selling out-of-home advertising time slots on its networked smart digital advertising display terminals with artificial intelligence and big data technologies. Acquiring TNM and synergizing its new media network will enhance the Company’s presence in the new media and advertising sectors. After completion of the acquisition, TNM becomes a wholly owned subsidiary of Biznest.

Pursuant to the share purchase agreement, as a consideration of the purchase, the Company issued to the shareholders of TNM a total of 1,213,630 shares of its ordinary shares with no par value, equivalent to the value of approximately $5.4 million.

The following table summarizes the purchase price allocation for TNM, and the amounts of the assets acquired, and liabilities assumed which were based on their estimated fair values at the acquisition date:

Cash	$	7,644
Accounts receivable, net		1,252,601
Advances to suppliers		75,971
Other receivables and other current assets, net		2,345,332
Long-term investments		1,386,191
Property and equipment		1,550,113
Right of use assets		74,812
Accounts payable		(339,198	)
Advances from customers		(10,943	)
Accrued payroll and benefits		(32,840	)
Amount due to related parties		(619,571	)
Other payables and accrued expenses		(87,373	)
Lease liabilities		(153,938	)
Total net assets acquired		5,448,801
Bargain purchase gain		(12,345	)
Total purchase price	$	5,436,456

Due to the negative impact from COVID-19 pandemic and slowdown of the out-of-home advertising industry in China, the total consideration paid by the Company was less than the net amount of identifiable assets acquired and liabilities assumed of TNM, which resulted in a bargain purchase gain of approximately $12,000 on the acquisition date.

The Company’s consolidated statement of operations for the six months ended June 30, 2021 included revenue of $0.08 million and net loss of $1 million attributable to TNM since June 9, 2021, the acquisition date.

The following unaudited pro forma information shows the combined operations for the periods presented, as if the acquisition of TNM had occurred on January 1, 2020. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company. The pro forma financial information presented below has been derived from the historical condensed consolidated financial statements of the Company and from the historical accounting records of TNM.

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Revenue	$	6,895,929		$	5,417,123
Net (loss)		(14,775,796	)		(8,276,745	)
Net (loss) attributable to TAOP		(14,393,682	)		(8,015,283	)
Weighted Average Number of Shares:
Basic and Diluted		11,833,830			8,289,241
(Loss) per share – Basic and Diluted		(1.25	)		(1.00	)
(Loss) per share attributable to TAOP - Basic and Diluted	$	(1.22	)	$	(0.97	)

The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the followings:

1. Transaction costs of approximately $350,000 are assumed to have occurred on January 1, 2020 and are recognized in the first half of 2020.

2. Elimination of intercompany sales and purchases, rental income and rent expense.

3. Bargain purchase gain resulted from the transaction is recognized as if it occurred on January 1, 2020.

XML

VARIABLE INTEREST ENTITY

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITY

4. VARIABLE INTEREST ENTITY

The Company is the primary beneficiary of iASPEC, pursuant to the Amended and Restated MSA. iASPEC is qualified as a variable interest entity of the Company and is subject to consolidation. Accordingly, the assets and liabilities and revenues and expenses of iASPEC have been included in the accompanying consolidated financial statements. In 2021, Taoping New Media Co., Ltd and its subsidiary, Shenzhen Taoping Education Technology Co., Ltd. and Wuhu Taoping Education Technology Co., Ltd. were newly added VIE subsidiaries or joint ventures. In the opinion of management, (i) the ownership structure of the Company, and the VIEs are in compliance with existing PRC laws and regulations; (ii) the contractual arrangements with the VIEs and its shareholder are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the Company’s business operations are in compliance with existing PRC laws and regulations in all material respects. In July 2021, PRC government agencies jointly proposed revisions to laws and regulations to strengthen approval and supervision of VIE corporate structure. Since the proposed new regulatory requirements for VIE has not yet been finalized, the Company is unable to estimate the impact to its corporate structure, business operations, and consolidated financial performance.

For the six months ended June 30, 2021 and 2020, net loss of $366,570 and $264,047 respectively, have been attributed to non- controlling interest in the consolidated statements of operations of the Company.

Government licenses, permits and certificates represent substantially all of the unrecognized revenue-producing assets held by the VIE and its subsidiaries. Recognized revenue-producing assets held by the VIEs consist of property, equipment and software.

On September 18, 2021, the Company and the Company’s wholly owned subsidiary, Information Security Technology (China) Co., Ltd. (“IST”) entered into an equity transfer agreement with Mr. Jianghuai Lin, the sole shareholder of iASPEC. Upon closing of the equity transfer, the Company’s existing variable interest entity structure will be dissolved and iASPEC will become a wholly owned indirect subsidiary of the Company (see Note 22 Subsequent Events).

The VIE’s assets and liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021			December 31, 2020
	(Unaudited)
Total current assets	$	7,841,679		$	9,261,921
Other assets, non-current		3,790,167			4,302,000
Non-current accounts receivable, net		-			2,101,276
Long-term investments		818,266			-
Property, equipment and software		6,094,121			3,713,860
Total assets		18,544,233			19,379,057
Intercompany payable to the WFOE		29,622,291			20,449,508
Total current liabilities		48,426,228			41,717,595
Lease liability		82,134			-
Total liabilities		48,508,363			41,717,595
Total equity	$	(29,964,130	)	$	(22,338,538	)

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

XML

LOSS PER SHARE

6 Months Ended

Jun. 30, 2021

Loss per share - Basic and Diluted*

LOSS PER SHARE

5. LOSS PER SHARE

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur, if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares, or resulted in the issuance of ordinary shares that shared in the earnings of the entity.

Components of basic and diluted earnings per share were as follows for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Numerator:
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)
Denominator:
Weighted average outstanding ordinary shares-Basic		10,761,008			7,075,611
Weighted average outstanding ordinary shares- Diluted		10,761,008			7,075,611
Loss per share attributable to the Company
Basic	$	(1.31	)	$	(1.08	)
Diluted	$	(1.31	)	$	(1.08	)

*On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

For the six-month period ended June 30, 2021 and 2020, no shares were included in the diluted earnings per shares calculation. These incremental shares were added to denominator for the period that stock options were outstanding due to the average market price of the Company’s stock in the period exceeded the exercise prices of the stock options granted to the Company’s employees and various consultants. The incremental shares were computed under the treasury stock method. There were 296,900 stock options for employees and 68,334 stock options/warrants for nonemployees outstanding that were not included in the computation of dilutive weighted- average shares outstanding for the six months ended June 30, 2020, because the effect would be anti-dilutive.

There were 313,000 stock options for employees, 57,366 options and 1 million warrants for nonemployees outstanding that were not included in the computation of dilutive weighted- average shares outstanding for the six months ended June 30, 2021, because the effect would be anti-dilutive, as well. The EPS calculation excluded the if-converted shares from the convertible promissory note or exercised shares from detachable warrant associated with the convertible promissory note for the period ended June 30, 2021, based on the Company’s stock prices, which were significantly below the stated convertible price and among other conversion prices of alternative conversions or exercise price of the warrant.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

XML

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

6. RELATED PARTY TRANSACTIONS

(a) Revenue – related parties

For the six months ended June 30, 2021 and 2020, approximately $0.1 million and 0.2 million, respectively, for sales of products and other revenue were from Taoping alliance companies of which Taoping New Media Co., Ltd. (“TNM”) has equity investment of over 5% ownership. After completion of the Company’s acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company and is no longer a related party.

(b) Rental income – related party

For the six months ended June 30, 2020, the Company had a rental income of $30,000 from TNM which was for the office lease between TNM and the Company, and was included as “revenue-other-related parties”. After completion of the acquisition, the rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021, the acquisition date of TNM.

(c) Accounts payable – related party

iASPEC and Bocom had a balance of $69,585 payable to TNM as of December 31, 2020 for certain consultation service. Before the acquisition of TNM, the balance was fully repaid to TNM in April 2021.

(d) Loan receivable – related party

As of December 31, 2020, the Company recorded a loan receivable of $0.5 million from TNM, which was originally for a nine-month short-term loan without interest and is expected to be fully repaid by September 2021. Before the acquisition of TNM, $0.17 million was repaid to the Company. The remaining balance of $0.33 million was eliminated for consolidation purposes as of June 30, 2021.

(e) Amount due to related parties

As of December 31, 2020, the balance of due to related party was $0.14 million, which was borrowed from TNM for working capital purpose. Before the acquisition of TNM, the balance was fully repaid to TNM. As of June 30, 2021, the balance of due to related parties were $3.38 million, which includes the borrowing from the major shareholder, Mr. Jianghuai Lin (“Mr. Lin”), of approximately $279,000 for 6-month without interest and matures on November 9, 2021, and a loan of approximately $3,098,000 (RMB20 million) from a related company 100% owned by Mr. Lin for 12-month at the interest of 5.85% per annum, which matures on May 17, 2022.

(f) Lending of inventory and fixed assets to related parties

As of June 30, 2021, the Company lends 5,160 units of media display equipment and the other fixed assets to Taoping alliance companies without charges for one year which is renewable. Taoping alliance companies would return the media display equipment after one year, or purchase at selling price if needed. The net balance of these media display equipment was approximately $1.2 million.

(g) Operating lease - related party

On April 1, 2021, the Company entered into a lease agreement with a related company 100% owned by Mr. Lin for leasing of space for cryptocurrency mining machines which is located at Dongguan City for three years from April 1, 2021 to March 30, 2024. The monthly rent was $1,438 (RMB 9,350). For the six months ended June 30, 2021, the Company’s rental expense to the related party was approximately $4,300. As of June 30, 2021, the right-of-use asset and lease liability for the related party lease was $44,831 and $44,831, respectively.

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INVENTORIES

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

INVENTORIES

7. INVENTORIES

As of June 30, 2021 and December 31, 2020, inventories consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Raw materials	$	3,711		$	3,663
Finished goods		1,613,853			427,942
Cost of projects		12,176			34,792
Inventories, gross	$	1,629,740		$	466,397
Allowance for slow-moving or obsolete inventories		(263,146	)		(211,719	)
Inventories, net	$	1,366,594		$	254,678

For the six months ended June 30, 2021, impairments for obsolete inventories were approximately $49,000. For the first six months ended June 30, 2020, there was a reversal of impairments for obsolete inventories in the amount of approximately $15,000. Impairment charges on inventories are included with general and administrative expenses.

Included in the balance as of June 30, 2021, there was inventory of high-end storage server and computer hardware.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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PROPERTY, EQUIPMENT AND SOFTWARE

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

PROPERTY, EQUIPMENT AND SOFTWARE

8. PROPERTY, EQUIPMENT AND SOFTWARE

As of June 30, 2021 and December 31, 2020, property, equipment and software consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Office buildings	$	5,206,573		$	5,140,635
Electronic equipment, furniture and fixtures		5,983,372			5,470,985
Cryptocurrency mining machine		6,506,306			-
Media display equipment		1,232,872			-
Motor vehicles		204,094			201,509
Leasehold improvement		110,919			-
Purchased software		19,098,570			17,465,168
		38,342,706			28,278,297
Less: accumulated depreciation		(19,742,876	)		(17,426,398	)
Property, equipment and software, net	$	18,599,830		$	10,851,899

Depreciation expenses for the six months ended June 30, 2021 and 2020 were approximately $2.1 million and $1.6 million, respectively.

Management regularly evaluates property, equipment and software for impairment, if an event occurs or circumstances change that would potentially indicate that the carrying amount of the property, equipment and software exceeded its fair value. Management utilizes the discounted cash flow method to estimate the fair value of the property, equipment and software.

Company’s office buildings, with net carrying value of approximately $3.0 million, are used as collateral for its short-term bank loan.

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CRYPTOCURRENCIES

6 Months Ended

Jun. 30, 2021

Investment Company [Abstract]

CRYPTOCURRENCIES

9. CRYPTOCURRENCIES

As of June 30, 2021, cryptocurrencies included Bitcoin and Ethereum the Company held which were received from mining activities. Cryptocurrencies is classified as current asset as it is expected to be realized in cash by the Company within one year. The Company subsequently sold all cryptocurrencies held as of June 30, 2021 in July 2021.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the movements of cryptocurrencies for the six-month period ended June 30, 2021:

	Amounts
Balance at January 1, 2021		-
Receipt of cryptocurrencies from mining activities	$	814,772
Sales of cryptocurrencies		(638,183	)
Realized gain on sale of cryptocurrencies		41,345
Impairment loss on cryptocurrencies		(42,447	)
Balance at June 30, 2021	$	175,487

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BANK LOANS

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

BANK LOANS

10. BANK LOANS

(a) Short-term bank loans      

	June 30, 2021		December 31, 2020
	(Unaudited)
Secured short-term loans (1)	$	5,949,005	$	6,210,176

(1) Detailed information of secured short-term loan balances as of June 30, 2021 and December 31, 2020 were as follows:  

	June 30, 2021		December 31, 2020
	(Unaudited)
Collateralized by office buildings of IST and guaranteed by Mr. Lin and Biznest	$	4,182,894	$	3,976,960
Guaranteed by IST and Mr. Lin and Collateralized by the real property of ISIOT and equity investment of ISTIL		1,766,111		2,019,072
Guaranteed by a $ 0.2 million restricted bank time deposit		-		214,144
Total	$	5,949,005	$	6,210,176

As of June 30, 2021, the Company had short-term bank loans of approximately $5.9 million, which mature on various dates from July 7, 2021 to April 30, 2022. The short-term bank loans can be extended for another year by the banks without additional charges to the Company upon maturity. The bank borrowings are in the form of credit facilities. Amounts available to the Company from the banks are based on the amount of collateral pledged or the amount guaranteed by the Company’s subsidiaries. These borrowings bear interest rates ranging from 4.95% to 6.22% per annum. The weighted average interest rates on short term debt were approximately 5.84% and 6.33% for the six months ended June 30, 2021 and 2020, respectively. The interest expenses were approximately $0.2 million each, for the six months ended June 30, 2021 and 2020.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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INCOME TAXES

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

11. INCOME TAXES

Pre-tax (loss) income from continuing operations for the six months ended June 30, 2021 and 2020 were taxable in the following jurisdictions:

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC	$	(8,798,878	)	$	(7,160,850	)
HK		(224,699	)		(11,910	)
BVI		(5,440,462	)		(837,790	)
Total loss before income taxes	$	(14,464,039	)	$	(8,010,550	)

United States

The Company from time to time evaluates the tax effect of GILTI, and determined that there was no impact of GILTI tax to the Company’s consolidated financial statements as of June 30, 2021.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

BVI

Under the current laws of the BVI, dividends and capital gains arising from the Company’s investments in the BVI and ordinary income, if any, are not subject to income taxes.

Hong Kong

Under the current laws of Hong Kong, ISTIL. is subject to a profit tax rate of 16.5%.

PRC

Income tax expense (benefit) from continuing operations consists of the following:

	Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020
	(Unaudited)		(Unaudited)
Current tax expense (benefit)	$	871	$	(69,858	)
Income tax expense (benefit)	$	871	$	(69,858	)

Current income tax expense (benefit) were recorded in 2021 and 2020 and were related to differences between the book and corporate income tax returns.

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC statutory tax rate		25	%		25	%
Computed expected income tax (benefit)	$	(3,616,011	)	$	(2,002,638	)
Tax rate differential benefit from tax holiday		952,236			801,931
Permanent differences		231,390			117,180
Tax effect of deductible temporary differences not recognized		1,016,965			801,244
Non-deductible tax loss		1,416,291			212,425
Income tax expense (benefit)	$	871		$	(69,858	)

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The significant components of deferred tax assets and deferred tax liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021						December 31, 2020
	(Unaudited)
	Deferred Tax Assets			Deferred Tax Liabilities			Deferred Tax Assets			Deferred Tax Liabilities
Allowance for credit losses	$	4,698,990		$	-		$	3,640,083		$	-
Loss carry-forwards		4,271,589			-			3,714,825			-
Fixed assets		23,230			(273,000	)		80,456			(258,451	)
Inventory valuation		384,109			-			369,064			-
Accrued liabilities		14,814			-			-			-
Long-term investments		150,832			-			5,736			-
Intangible assets		-			135,918			-			134,197
Gross deferred tax assets and (liabilities)		9,543,564			(137,082	)		7,810,164			(124,254	)
Valuation allowance		(9,406,482	)		-			(7,685,910	)		-
Total deferred tax assets and (liabilities)	$	137,082		$	(137,082	)	$	124,254		$	(124,254	)

The Company has net operating loss carry forwards totaling RMB 163 million ($25.3 million) as of June 30, 2021, substantially all of which were from PRC subsidiaries and will expire on various dates through June 30, 2025. Valuation allowance for deferred tax asset was fully provided. As of June 30, 2021, the Company also has net operating loss of approximately $9.5 million from the parent, Taoping Inc., a BVI company who is treated as a US corporation for the US tax purposes.

IST is approved as being high-technology enterprises and subject to PRC enterprise income tax rate (“EIT”) at 15%. For Biznest, the income tax starts from the earning year, tax free for the first two years and 12.5% income tax rate for year 3-5.

The Company recognizes that virtually all tax positions in the PRC are not free of some degree of uncertainty due to tax law and policy changes by the State. However, the Company cannot reasonably quantify political risk factors and thus must depend on guidance issued by current State officials.

Based on all known facts, circumstances, and current tax law, the Company has recorded nil unrecognized tax benefits as June 30, 2021 and December 31, 2020, respectively. The Company believes that there are no tax positions for which it is reasonably possible, based on current Chinese tax laws and policies, that the unrecognized tax benefits will significantly increase or decrease over the next 12 months, individually or in the aggregate, and have a material effect on the Company’s results of operations, financial condition or cash flows.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Any accrued interest or penalties associated with any unrecognized tax benefits were not significant for the six months ended June 30, 2021 and 2020.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Since the Company intends to reinvest its earnings to further expand its businesses in the PRC, the PRC subsidiaries do not intend to declare dividends to their parent companies in the foreseeable future. The Company’s foreign subsidiaries are in a cumulative deficit position. Accordingly, the Company has not recorded any deferred taxes on the cumulative amount of any undistributed deficit. It is impractical to calculate the tax effect of the deficit at this time.

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OTHER CURRENT AND NON-CURRENT ASSETS

6 Months Ended

Jun. 30, 2021

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER CURRENT AND NON-CURRENT ASSETS

12. OTHER CURRENT AND NON-CURRENT ASSETS

(a) As of June 30, 2021, and December 31, 2020, other current assets consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances to unrelated parties (i)	$	1,641,865	$	8,305
Receivable for sales of other assets (ii)		578,700		-
Advances to employees		104,799		45,396
Other current assets (iii)		303,682		119,325
Total	$	2,629,046	$	173,026

(i) The advances to unrelated parties for business development, and are non-interest bearing and due on demand.

As of June 30, 2021, the Company included in the balance of advances to unrelated parties of $1.64 million compared to advances to unrelated parties of $8,305 as of December 31, 2020.

As of June 30, 2021, the outstanding balance included the amount due from a third-party vendor, at the amount of approximately $1,472,000, whom the Company has contracted to develop the new media advertising market. According to the contract and its subsequent amendment, the vendor is responsible for performing consulting service of market research as subcontractor and facilitating the development of the new media advertising market.

Based on the amendment of the contract, the Company agrees to make advances to the vendor specifically for its market development purposes, and the total commitment of funding was RMB6 million (USD $929,532). Meanwhile, the Company agrees to pay the vendor a 12% commission fee based on the advertising revenue it has facilitated, and a 50% subcontractor fee based on the consulting services revenue, tax inclusive.

If the Company’s revenue facilitated by the vendor does not reach certain threshold during specified periods, the contract could be terminated by the Company, and all funding with applicable interest, less any commissions and subcontractor fees payable to the vendor, shall be repaid to the Company within one month after the termination of the contract. If the two parties terminate the cooperation on the condition that the vendor meet the target, all funding without interest, shall be repaid.

The first period as specified is from January 1, 2021 to December 31, 2021 with a threshold revenue of RMB 15 million (approximately USD $2,294,400). The threshold revenue is to increase by 30% in the year 2022. As of June 30, 2021, revenue facilitated by the vendor has reached RMB3,342,355 (USD $511,247). The Company will continue to monitor the revenue facilitated by the vendor and assess if an event occurs or circumstance changes that would potentially indicate that the carrying amount of the receivable was impaired.

As of June 30, 2021, the Company overfunded the vendor by $543,000 which was returned by the vendor subsequent to June 30, 2021.

As of June 30, 2021, the outstanding balance also included the deposits of RMB 1 million (approximately USD $154,000) made to a supplier for purchases which has been cancelled. The deposits will be refundable before the end of October 2021.

(ii) Receivable for sales of other assets

In November 2020, the Company sold non-cash consideration (see Note 2-o) received in prior years in exchange for advertising service to a third-party company in a price of $1,142,779 which equals to the carrying value of non-cash consideration. The company had collected $564,079 as of June 30, 2021. The remaining balance of $578,700 was fully collected subsequently in August 2021.

(iii) Other current assets

As of June 30, 2021, the outstanding balance included the security deposit of $143,541 and the VAT credit of $87,000.

(b) As of June 30, 2021 and December 31, 2020, Other assets, non-current consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Other assets, non-current	$	3,790,167	$	4,302,000

During 2019 and 2020, the Company advanced RMB 30 million (USD $4.3 million) to a vendor, whom the Company has contracted to develop a vehicular IOT smart advertising software (“Internet of Vehicle” or “IOV” software) to interconnect to the Company’s new media advertising sharing platform expanding its advertising capability to people riding in motor vehicles. According to the contract and its subsequent amendment, total commitment of the funding was RMB 30 million (USD $4.3 million). The vendor is solely responsible for hardware and software development and marketing the vehicular terminal. The Company financially supports development cost of IOV software in exchange for advertising revenue generated from the software for four years of the contract term.

Based on the amendment of the contract, if the Company’s new media advertising revenue generated from IOV software does not reach certain threshold during specified period, the contract could be terminated by the Company, and all funding with applicable interest, and less the revenue generated from the IOV software shall be repaid to the Company within half year after the termination of the contract. Once the vendor fully repays the total funding plus applicable interest, the vendor will own 100% the title of the vehicular terminal and related equipment.

The first period as specified was from October 1, 2020 to April 30, 2021 with a threshold advertising revenue from IOV software of RMB 3 million (approximately USD $462,000). The threshold revenue is to increase incrementally by 15% in every six months going forward until the contract expires four years after the commencing date of the operation. As of April 30, 2021, revenue generated from the IOV software has exceeded RMB 3.0 million (approximately USD $462,000) in the first performance evaluation period, and the management estimates that the Company will fulfil the sales target at the end of October 2021 for the second performance evaluation period. The Company will continue to monitor advertising revenue generation from the IOV software and evaluate for impairment, if an event occurs or circumstance changes that would potentially indicate that the carrying amount of the asset exceeded its fair value. The vendor will own the title of the IOV software upon its fulfillment of the contract obligations after four years.

The development of IOV software was completed by September 30, 2020. Since Company has the right to use the IOV software in the contract term, software was capitalized as “other assets, non-current, net” and started to amortize from October 1, 2020 over the four-year contract term. As of June 30, 2021 and December 31, 2020, the balance of “other assets, non-current, net” was $3,790,000 and $4,302,000, Respectively. The amortization was approximately $0.8 million for the period ended June 30, 2021.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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OPERATING LEASES

6 Months Ended

Jun. 30, 2021

Operating Leases

OPERATING LEASES

13. OPERATING LEASES

In addition to the lease with a related party for computing server room in Dongguan City (see Note 6-g), in April 2021, the Company leased an office space, two server rooms, and a dormitory in Hong Kong for executing the Blockchain business strategy. The fixed monthly lease payment for the office space is $22,035 (HKD 170,775) all inclusive of rental, property management fee, utility, and applicable tax) with a lease term of three years ending April 18, 2024. The fixed monthly lease payment for the server rooms is $7,484 (HKD 58,000) all inclusive of rental, management fee, utility, and applicable tax) with a lease term of three years ending May 16, 2024. The fixed monthly lease payment for the dormitory is $4,381 (HKD 34,000) including rental and management fee with a lease term of two years ending April 19, 2023. All lease agreements have no variable lease payment nor option to purchase the underlying assets. There was no initial direct cost associated with the office space lease agreement. The initial direct costs associated with the lease for server rooms and dormitory are $7,484 (HKD 58,000), and $2,194 (HKD 17,000), respectively.

The Company has also leased specific and identifiable wall spaces with a certain dimension in commercial and residential building lobbies, inside elevators, elevator waiting areas, and various places to install the new media advertising display terminals without substitution for purpose of broadcasting advertisements paid by the customers to promote their businesses or special events. The lease terms with negotiated payment terms range from one year to three years, and the rental costs vary depending on the number of spots where the display terminals are installed and the duration of the leases.

The Company incurred rent expenses of approximately $73,000 whereas rent expenses for short-term lease were approximately $3,000 for the period ended June 30, 2021. As of June 30, 2021, lease liabilities also included unpaid rent for expired long-term leases of approximately $78,000.

The Company has elected to apply the short-term lease exception to all leases with a term of one year or less. The future short-term lease costs are approximately $2,800 in the year subsequent to June 30, 2021.

Weighted-average remaining lease term as of June 30, 2021, and discount rate for its operating leases are as follows:

Weighted-average remaining lease term	32.8 months
Weighted-average discount rate	6.75%

The following table outlines maturities of operating lease liabilities as of June 30, 2021:

Year ending June 30	Leases for office/ server rooms/ Dormitory			Wall Space Leases
2022	$	375,118		$	4,082
2023		363,340			-
2024		265,973			-
Total lease payments		1,004,431			4,082
Less: Imputed interest		(87,103	)		-
Present value of lease liabilities	$	917,328		$	4,082

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LONG-TERM INVESTMENTS

6 Months Ended

Jun. 30, 2021

Investments, All Other Investments [Abstract]

LONG-TERM INVESTMENTS

14. LONG-TERM INVESTMENTS

As of June 30, 2021, the carrying value of the Company’s equity investments were $818,266, which consisted of the followings:

(1) Equity method investments:

As of June 30, 2021, the Company’s equity method investments had a carrying value of $489,513 which were as follows:

Investees	Abbreviation		% of Ownership			Carrying value
Qingdao Taoping IoT Co., Ltd.		QD Taoping, or QD		47	%	$	111,638
Yunnan Taoping IoT Co., Ltd.		YN Taoping, or YN		40	%		203,097
Jiangsu Taoping IoT Technology Co.,Ltd.		JS Taoping, or JS		25	%		165,855
Jiangsu Taoping New Media Co., Ltd		JS New Media, or JN		21	%		8,923
						$	489,513

The Company’s initial investments in the above equity method investments were approximately $1.89 million. The Company recognized losses from equity method investments of approximately $0.6 million and no impairment on equity method investments from the acquisition date June 9, 2021 to June 30, 2021.

(2) Equity investments without readily determinable fair value that is not accounted for under equity method accounting:

In accordance with ASC 321, the Company elected to use the measurement alternative to measure such 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.

As of June 30, 2021, the carrying value for the equity investments without readily determinable fair value was $328,753. The total initial investments to the equity investments without readily determinable fair value were approximately $710,786. No impairment was recognized for the six months ended June 30, 2021.

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CONVERTIBLE NOTE PAYABLE

6 Months Ended

Jun. 30, 2021

Convertible Note Payable

CONVERTIBLE NOTE PAYABLE

15. CONVERTIBLE NOTE PAYABLE

In October 2019, March 2020, and September 2020, the Company issued Convertible Promissory Notes with principal amount of $1.04 million, $1,48 million and $1.48 million, respectively (Note-1, Note-2, and Note-3, collectively “Notes”). All three Notes mature in 12 months from the issue dates of the Notes (the “Maturity Dates”), carrying an interest rate of 5% per annum and an original issue discount (OID) to cover investors’ transaction costs of the Notes. In September and October 2020, the principal balance and the accrued interest of Note-1 was fully converted to 454,097 ordinary shares of the Company with no par value at a conversion price of $2.4. In September and December 2020, the principal balance and the accrued interest of Note-2 was fully converted to 612,748 ordinary shares of the Company with no par value at a conversion price of $2.42 and 2.57, respectively. The total amount of principal and accrued interest converted of Note-1 and Note-2 was approximately $2.6 Million. As of December 31, 2020, there was no outstanding balance and unamortized debt issuance cost of Note-1 and Note-2, and the outstanding balance of Note-3 was $1,180,908 net of unamortized debt discount of $299,695.

In conjunction with issuance of the Notes, the Company also issued the holders of the Notes warrants to purchase 26,667, 53,334, and 53,334 ordinary shares of the Company, at an exercise price of $9 with a cashless-exercise option. The warrants will expire in three years from the dates of issuance, respectively.

In June 2021, the investor of Note-3 converted $740,000 of principal amount of the convertible note along with accrued interest of $26,208 into 298,716 ordinary shares of the Company with no par value at a conversion price of $2.565. As of June 30, 2021, the outstanding balance of Note-3 was $689,502 net of unamortized debt discount of $50,498 which will be amortized through September 30, 2021.

The Company recognized interest expense of approximately $209,000 for both Note-1 and Note-2 for the six months ended June 30, 2020, including interest relating to contractual interest obligation of $45,000 and amortization of debt discount of $164,000. The Company recognized interest expense of approximately $294,000 for Note-3 including interest relating to contractual interest obligation of $36,700 and amortization of debt discount of $257,000 for the six months ended June 30, 2021.

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OTHER PAYABLES AND ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2021

Other Liabilities Disclosure [Abstract]

OTHER PAYABLES AND ACCRUED EXPENSES

16. OTHER PAYABLES AND ACCRUED EXPENSES

As of June 30, 2021 and December 31, 2020, other payables and accrued expenses consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances from unrelated third parties (i)	$	274,084	$	469,418
Other taxes payable (ii)		4,111,865		4,089,013
Unrecognized tax liability (iii)		-		433,000
Accrued professional fees		184,140		404,025
Amount due to employees (iv)		134,496		65,785
Other current liabilities (v)		287,216		1,174,856
	$	4,991,801	$	6,636,097

(i)	The advances from unrelated parties are non-interest bearing and due on demand.
(ii)	The other taxes payable were the amounts due to the value added tax, business tax, city maintenance and construction tax, and individual income tax.
(iii)	The unrecognized tax liability refers to the land value added tax due to the sale of property, equipment, and land use rights in September 2015. As of June 30, 2021, the unrecognized tax liability passed the 5-year statute of limitation and recognized as other income in the consolidated statement of operations.
(iv)	The amounts due to employees were pertaining to employees’ out-of-pocket expenses for travel and meal allowance, etc.
(v)	The other current liabilities as of June 30, 2021 included the security and deposit of approximate $207,000. The decrease was for: a) approximate of $203,000 payable of prior year’s government funding has been settled during the six months ended June 30, 2021, and b) an amount of $767,500 for ordinary shares converted from the convertible debt have been issued as of June 30, 2021.

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STATUTORY RESERVE AND DISTRIBUTION OF PROFIT

6 Months Ended

Jun. 30, 2021

Statutory Reserve And Distribution Of Profit

STATUTORY RESERVE AND DISTRIBUTION OF PROFIT

17. STATUTORY RESERVE AND DISTRIBUTION OF PROFIT

In accordance with relevant PRC regulations and the Articles of Association of our PRC subsidiaries, our PRC subsidiaries are required to allocate at least 10% of their annual after-tax profits determined in accordance with PRC statutory financial statements to a statutory general reserve fund until the amounts in said fund reaches 50% of their registered capital. As of June 30, 2021 and December 31, 2020, the balance of general reserve was $14.0 million for each of the reporting periods.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Under the applicable PRC regulations, the Company may pay dividends only out of the accumulated profits, if any, determined in accordance with the PRC accounting standards and regulations. As the statutory reserve funds can only be used for specific purposes under the PRC laws and regulations. The general reserves are not distributable as cash dividends.

Our after-tax profits or losses with respect to the payment of dividends out of accumulated profits and the annual appropriation of after-tax profits as calculated pursuant to the PRC accounting standards and regulations do not result in significant differences as compared to after-tax earnings as presented in our consolidated financial statements. However, there are certain differences between the PRC accounting standards and regulations and the U.S. generally accepted accounting principles, arising from different treatment of items such as amortization of intangible assets and change in fair value of contingent consideration arising from business combinations.

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EQUITY

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

EQUITY

18. EQUITY

(a) Ordinary shares

The Company is authorized to issue 100,000,000 ordinary shares.

In March 2020, the Company issued a total of 285,714 ordinary shares to certain individual investors at $2.1 per share, which generated approximately $576,000 net proceeds for the Company.

In the first half of 2020, the Company issued a total of 30,000 ordinary shares as compensation of investor relations service, fair value of which was approximately $144,000 and was amortized over the service period until July 21, 2020.

In April 2020, the Company issued 16,667 restricted shares to a consultant as its service compensation. The fair value of the restricted shares was approximately $16,185, which was amortized over the service period until April 1, 2021.

In July 2020, the Company issued 42,000 ordinary shares to a consultant as service compensation. The fair value of issued shares was approximately $101,000, which is amortized over the service period for the service period until January 20, 2021.

In July and September 2020, the Company issued an aggregate of 13,110 ordinary shares to an employee for the individual’s job performance. The fair value of issued shares was approximately $65,000.

In September 2020, the Company issued 16,220 restricted shares to a consultant as a part of finder fees for the financing services, the fair value of which was approximately $41,000.

In September, October, and December 2020, the holders of the convertible notes issued in September 2019, and March 2020 converted all principal balance of the notes and accrued interests to the Company’s ordinary shares in an aggregate of 1,066,845 ordinary shares of which 299,318 shares converted on December 30, 2020 were not issued until February 2021 (see Note 15). The total amount of principal and accrued interest converted was approximately $2.6 million, of which $1.8 million was converted into the ordinary shares as of December 31, 2020, and $0.8 million was converted into the ordinary shares in the first half of 2021.

In January 2021, the Company issued a total of 740,740 ordinary shares to certain individual investors at $2.7 per share, which generated approximately $1.99 million net proceeds for the Company.

In February 2021, the Company issued a total of 1,900,000 ordinary shares to certain individual investors at $4.08 per share, which generated approximately $7.74 million net proceeds for the Company.

In January 2021, the Company issued 7,000 ordinary shares with fair value of approximately $21,840 to a consultant as compensation for the consulting service.

In March 2021, the Company issued 200,000 ordinary shares with fair value of approximately $2,792,000 to certain employees for their job performance.

In March 2021, the Company issued 500,000 ordinary shares in the registered direct offering at the offering price of $6.70 per share resulting in approximately $3.34 million net proceeds for the Company.

In June 2021, the Company issued 1,213,630 ordinary shares with 6 months restricted period upon the closing of acquisition of Taoping New Media Co., Ltd (“TNM”), at unit price of $5.27 per share with discounts for lack of marketability as the consideration equivalent to approximately $5.4 million for acquiring 100% equity interest of TNM.

In June 2021, the holder of the convertible note issued in September 2020 converted 50% principal balance of the note and accrued interests to the Company’s ordinary shares in an aggregate of 298,716 ordinary shares (see Note 15). The total amount of principal and accrued interest converted into the ordinary shares as of June 30, 2021 was approximately $766,000.

(b) Stock-based compensation

The following table provides the details of the approximate total share-based payments expense during the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Employees and directors share-based payments	$	2,950,000	(a)(c)	$	92,000	(c)
Stock options and warrants issued for services		2,100,000	(d)		12,000	(d)
Shares issued for services		42,000	(a)		193,000	(a)
	$	5,092,000		$	297,000

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c) Stock options to employees and directors

On May 9, 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan, or the 2016 Plan. Pursuant to the 2016 Plan and its amendment in May 2021, the Company may offer up to five million ordinary shares as equity incentives to its directors, employees and consultants. Such number of shares is subject to adjustment in the event of certain reorganizations, mergers, business combinations, recapitalizations, stock splits, stock dividends, or other change in the corporate structure of the Company affecting the issuable shares under the 2016 Plan. The Company accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718, Compensation – Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

During the first half of 2020, the stock options issued in May 2017 to purchase an aggregate of 160,000 ordinary shares under 2016 Plan was fully vested, and $92,000 was recognized as compensation for the six months ended June 30, 2020.

On July 24, 2020, the Company granted options to employees and directors to purchase an aggregate of 333,348 ordinary shares under the 2016 Plan. The fair value of these options was approximately $0.3 million at the date of the grant, of which approximately $158,070 was recorded as compensation and included in administrative expenses in the consolidated statements of operations for the six months ended June 30, 2021.

On July 31, 2020, the stock options granted to employees and directors in 2016 and 2017 were fully exercised on a cashless method, and 72,414 ordinary shares were issued, as a result.

Stock option activity for the six months ended June 30, 2021 is summarized as follows:

				Weighted		Weighted Average Remaining
	Options			Average Exercise		Contractual Life		Aggregated Intrinsic
	Outstanding			Price		(Years)		Value
Outstanding at January 1, 2021		326,348		$	2.4		2.6	$	143,587
Exercised		-			-
Canceled		(13,333	)	$	2.4
Outstanding at June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Vested and expected to be vested as of June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Options exercisable as of June 30, 2021 (vested)(Unaudited)		156,500		$	2.4		2.1	$	384,990

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

There were no stock options granted to employees during the year ended June 30, 2021 and 2020. There was no option exercised during the six months ended June 30, 2021 and 2020.

The following table summarizes the status of options which contain vesting provisions:    

	Options			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021		326,348		$	1.01
Vested		(156,500	)	$	1.01
Canceled		(13,333	)	$	1.01
Non-vested at June 30, 2021 (Unaudited)		156,515		$	1.01

As of June 30, 2021, approximately $22,000 unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average remaining vesting period of approximately 0.04 year. The total fair value of options vested during the six months ended June 30, 2021, and 2020 was approximately $0.2 million and $0.1 million, respectively. To the extent the actual forfeiture rate is different from what the Company has anticipated, stock-based compensation related to these awards will be different from its expectations.

(d) Stock options and warrants to non-employees

Pursuant to the Company’s 2016 Equity Incentive Plan and its amendment, for the six months ended June 30, 2021 and 2020, the Company issued 1,915,000 and 16,667 warrants to consultants, respectively. The Company expensed to administrative expense approximately $2.1 million and $12,000 for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021, no options or warrants were exercised.

As of June 30, 2021, the weighted average exercise price was $4.77 and the weighted average remaining life was 0.5 years. The following table outlines the options and warrants outstanding and exercisable as of June 30, 2021:

	June 30, 2021 Number of Warrants Outstanding		Exercise		Expiration
	and Exercisable		Price		Date
July 2020 stock options to consultants		57,366	$	2.64		07/09/2023
February 2021 warrants to consultant		1,000,000	$	3.5		08/21/2021
April 2021 warrants to consultants		900,000	$	6.3		04/15/2022
April 2021 warrants to consultant		15,000	$	6.3		04/15/2022
		1,972,366

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED SEGMENT DATA

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

CONSOLIDATED SEGMENT DATA

19. CONSOLIDATED SEGMENT DATA

Selected information by segment is presented in the following tables for the six months ended June 30, 2021 and 2020

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Revenues (1)
TIT Segment	$	88,670	$	141,919
CBT Segment		5,522,135		3,595,431
BT Segment		814,772		-
	$	6,425,577	$	3,737,350

(1) Revenues by operating segments exclude intercompany transactions.

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
(Loss) income from operations
TIT Segment	$	(72,677	)	$	(122,921	)
CBT Segment		(8,792,969	)		(6,780,105	)
BT segment		(1,246,811	)		-
Corporate and others (2)		(3,809,748	)		(640,818	)
(Loss) from operations		(13,922,205	)		(7,543,844	)
CBT’s loss from equity method investments		(578,619	)		-
BT’s other income		41,345			-
Corporate other income, net		473,879			(78,945	)
Corporate interest income		2,109			3,470
Corporate interest expense		(480,548	)		(391,231	)
(Loss) before income taxes		(14,464,039	)		(8,010,550	)
Income tax benefit		(871	)		69,858
Net loss		(14,464,910	)		(7,940,692	)
Less: Loss attributable to the non-controlling interest		366,570			264,047
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)

(2) Includes non-cash compensation, professional fees and consultancy fees for the Company.

Non-cash compensation by segment for the six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Non-cash compensation:
TIT Segment	$	55,840	$	-
CBT Segment		335,040		-
BT segment		1,357,383		-
Corporate and others		3,344,699		92,308
	$	5,092,962	$	92,308

Depreciation and amortization by segment for six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Depreciation and amortization:
TIT Segment	$	16,356	$	8,380
CBT Segment		2,385,886		1,596,821
BT Segment		310,766		-
	$	2,713,008	$	1,605,201

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers:
TIT Segment	$	(61,812	)	$	30,909
CBT Segment		6,752,063			5,844,135
BT Segment		7,357			-
	$	6,697,608		$	5,875,044

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Inventory obsolescence provision:
TIT Segment	$	-	$	504
CBT Segment		48,589		(15,759	)
	$	48,589	$	(15,255	)

Total assets by segment as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021 (Unaudited)		December 31, 2020
Total assets
TIT Segment	$	307,867	$	213,329
CBT Segment *		35,011,091		30,488,753
BT Segment		8,273,018		-
Corporate and others		9,279,275		74,569
	$	52,871,251	$	30,776,651

* CBT segment included equity investments of approximately $0.8 million as of June 30, 2021.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

20. COMMITMENTS AND CONTINGENCIES

The Company may from time to time be subject to legal proceedings, investigations, and claims incidental to conduct of our business. The Company is currently subject to a legal proceeding with the bankruptcy receiver (the Receiver) for Shenzhen Kejian Information Technology Co., Ltd. (Kejian). The Receiver was appointed by the bankruptcy court to liquidate Kejian that filed bankruptcy on December 6, 2016. On July 28, 2016, the Company received a payment in the amount of RMB 550,000 (approximately $89,000) from Kejian, which was considered as a preferential payment within 6 months from Kejian’s bankruptcy filing according to China bankruptcy laws and requested to return the amount to the Receiver. The Company has anticipated an unfavorable outcome from the lawsuit and accrued a contingent liability of $89,000 for the probable loss. On August 2, 2021, the Company received the initial judgment issued by Shenzhen Intermediate People’s Court, which supported the claims of the plaintiff. The Company filed an appeal within 15 days of the conclusion of the case.

Although the COVID-19 pandemic has largely been contained in China, ripple effect of negative impact from the pandemic to the out-of-home advertising business sector continues in the first half of 2021. The China government continues asserted efforts to vaccinate general population, social distancing, mandate mask wearing in the public places and public transportation, prohibit large gatherings, control travels to and from high-risk infectious areas, and track the source of infections. The COVID-19 pandemic may continue to adversely affect the Company’s business and results of operations.

In addition to various promulgations in the past few years, ten Chinese regulatory authorities recently collectively promulgated a guidance to further control and monitor cryptocurrency related trading, exchanges, transaction, banking and financial service, initial coin offering, and other intermediary and derivatives transactions, which are considered illegal in accordance with effectuated laws and regulations and may be subject to penalty criminally. The new guidance also bars foreign cryptocurrency trading platforms and related businesses to provide services to China domestic individuals and business entities, and expands the application of laws and regulations to Chinese employees or contractors of foreign operatives, that provide related services to individuals or business entities domiciled in China. Although, the legality of cryptocurrency mining activity was not specifically mentioned in the guidance, 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 legality of cryptocurrency mining activity may be subject to challenge by Chinese authorities.

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CONCENTRATIONS

6 Months Ended

Jun. 30, 2021

Risks and Uncertainties [Abstract]

CONCENTRATIONS

21. CONCENTRATIONS

For the six months ended June 30, 2021, the revenue from cryptocurrency mining consisted 13% of the total revenues, and one customer accounted for 10% of the total revenues. For the six months ended June 30, 2020, one customer accounted for 14% of revenue. The Company’s top five customers in aggregate accounted for 44% of the Company’s revenues for each of the six months ended June 30, 2021 and 2020, including the revenue from cryptocurrency mining.

The Company’s top five receivables in aggregate accounted for 53% of total net accounts receivable as of June 30, 2021, while two customers’ balance accounted for 18% and 14%, respectively. The Company’s top five customers in aggregate accounted for 25% of total net accounts receivable as of December 31, 2020, while no single customer accounted for greater than 10% or more of accounts receivable.

For the six months ended June 30, 2021 and 2020, approximately 96% and 84%, respectively, of total purchases were from five unrelated suppliers. Two suppliers each accounted for 59% and 19%, respectively, of total purchases in the six months ended June 30, 2021, and two suppliers each accounted for 41% and 25%, respectively, of total inventory purchases in the six months ended June 30, 2020.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

22. SUBSEQUENT EVENTS

On July 12, 2021, the Company and investors entered into a securities purchase agreement to sell to the Investors an aggregate of 1.2 million ordinary shares with no par value, at a purchase price of $4.15 per share in a registered direct offering. In addition, the Company will sell and issue to the Investors warrants to purchase an aggregate of 360,000 Ordinary Shares with an exercise price of $4.56 per share within 36 months following the issue date. The Warrants can only be exercised in cash. The aggregate proceeds of the financing were approximately $4.73 million net of issuance cost. The Company intends to use the net proceeds from the financing for working capital and general corporate purposes.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On August 26, 2021, the Company, Taoping Holdings Limited, a wholly owned subsidiary of the Company and a business company incorporated under the laws of the British Virgin Islands (“Taoping Holding”), Genie Global Limited, a Hong Kong private company limited by shares (“Genie Global”) and Render Lake Tech Ltd., a wholly owned subsidiary of Genie Global and a company governed under the Canada Business Corporations Act (“Render Lake”), entered into a termination agreement to terminate a share purchase agreement dated March 29, 2021, that Genie Global agreed to sell 51% equity interest in Render Lake to Taoping Holding in exchange for 144,204 ordinary shares to be issued by the Company.

On July 28, 2021 and August 6, 2021, the Company entered into a letter of intent (the “LOI”) with the shareholders of Zhenjiang Taoping IoT Technology Limited (“Zhenjiang Taoping”) and the majority shareholder of Yunnan Taoping IoT Limited (“Yunnan Taoping”), respectively, to acquire equity interests and increase its ownership of each two companies to no less than 51%. Currently, TNM owns no shares in Zhenjiang Taoping, and owns about 40% of Yunnan Taoping. Pursuant to the LOI, the purchase price, to be determined by the parties after the completion of due diligence, will be paid in the form of ordinary shares of TAOP. The LOI will be terminated if no definitive agreements are entered into among the parties for Zhenjiang Taoping before December 31, 2021 and for Yunnan Taoping before March 31, 2022, respectively.

On August 11, 2021, the Company signed a non-binding Memorandum of Understanding (“MOU”) with Dennver Group Holdings Limited, a British Virgin Islands company, to purchase Ethereum mining machines with a total hash rate of 500 GH/s. Pursuant to the MOU, the purchase price of the Ethereum mining machines and related rights and interests, to be determined by the two parties after the completion of due diligence, will be paid in the form of a combination of cash and restricted ordinary shares of TAOP. The price per share is set at the volume weighted average closing price of TAOP ordinary shares over the 5 trading days prior to the execution of the MOU. TAOP will designate a third-party valuation firm to conduct examination and assessment of the fair market value of the Ethereum mining machines.

On August 27, 2021, the Company’s wholly-owned subsidiary Taoping Digital Assets (Asia) Limited (“TDAL”) and a Kazakhstan company Aral Petroleum Capital LLP (“APC”) have signed a memorandum of understanding (“MOU”) to establish a joint venture in Kazakhstan, of which TDAL and APC will own 51% and 49%, respectively. TDAL will control the board of directors of the joint venture. The joint venture plans to invest and build cryptocurrency mining sites with a total capacity of 100MW, the first stage construction of 30 MW is expected to complete within three to six months. TDAL will have the priority to deploy cryptocurrency mining machines owned by TDAL or its partners. The joint venture will carry out operation and maintenance of cryptocurrency mining machines in Kazakhstan. In addition, the joint venture plans to rent out excess operating capacity to third parties for additional income.

On September 18, 2021, the Company and the Company’s wholly owned subsidiary, Information Security Technology (China) Co., Ltd. (“IST”) entered into an equity transfer agreement (the “Equity Transfer Agreement”) with Mr. Jianghuai Lin, the sole shareholder of iASPEC Technology Group Co., Ltd., a variable interest entity (“iASPEC”), pursuant to which, IST exercised the option to purchase all of the equity interests in iASPEC. As consideration for the equity interests of iASPEC, the Company agreed to issue 612,245 ordinary shares to Mr. Lin. Upon the closing of the equity transfer, the Company’s existing variable interest entity structure was dissolved and iASPEC becomes a wholly owned indirect subsidiary of the Company. The Amended and Restated Management Services Agreement, entered into by and among IST, Mr. Lin and iASPEC on December 13, 2009, was automatically terminated then. The equity transfer was closed upon the registration of equity transfer with the local authorities on September 24, 2021. The equity transfer was completed on September 24, 2021.

As a result of the VIE dissolution, on September 23, 2021, TNM disposed 100% equity interest of Shenzhen Taoping E-Commerce Service Co., Ltd. (“SZTEC”) with nil consideration. SZTEC’s shareholder deficit as of June 30, 2021 was approximately $0.12 million.

On April 15, 2021, the Company signed a Cryptocurrency mining machine purchase agreement (the “Purchase Agreement”) with Bitmain Technologies Limited. Pursuant to the Purchase Agreement, TAOP purchased 3,000 units of Antminer S19j Pro Cryptocurrency mining machines with a total order value of about $24 million (RMB 157,500,000). As of June 30, 2021, TAOP advanced payments of approximately $6.1 million to Bitmain Technologies Limited. As of the date of this report, the Company is in the process of amending the Purchase Agreement with Bitmain Technologies Limited, as a result of the Company’s changed plan of capital allocation in the blockchain business sector. According to the amendment, the Company agrees to purchase a total of 60 units of Antminers from the seller with purchase amount of approximately $0.8 million which are expected to be delivered in the fourth quarter of 2021, and the remaining of the advance payment $5.3 million would be refunded to the Company by the end of 2021.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

(a) Basis of Presentation and Principles of Consolidation

(a) Basis of Presentation and Principles of Consolidation

The consolidated financial statements as of June 30, 2021 and for the six-month periods ended June 30, 2021 and 2020 are unaudited. The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. 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. Operating results as presented are not necessarily indicative of the results to be expected for a full year. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 20-F for the year ended December 31, 2020 filed on April 30, 2021 with the Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company, its subsidiaries, and its VIE for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reverse Stock Split: A one (1)-for-six (6) reverse stock split of the Company’s issued and outstanding ordinary shares was effective on July 30, 2020 (the “Reverse Stock Split”). Except shares authorized, all share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

(b) Use of Estimates

(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 and other assets and other intangible assets. 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 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(c) Economic, Pandemic, Political, and Currency Exchange Risks

(c) Economic, Pandemic, Political, and Currency Exchange Risks

All the Company’s revenue-generating operations are conducted in the PRC. 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, 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.

Recently, ten Chinese regulatory authorities collectively promulgated a guidance to further control and monitor cryptocurrency related trading, exchanges, transaction, banking and financial service, initial coin offering, and other intermediary and derivatives transactions, which are considered illegal in accordance with effectuated laws and regulations and may be subject to penalty criminally. The new guidance also bars foreign cryptocurrency trading platforms and related businesses to provide services to China domestic individuals and business entities, and expands the application of laws and regulations to Chinese employees or contractors of foreign operatives that provide related services to individuals or business entities domiciled in China. The legality of cryptocurrency mining activity may be subject to challenge by Chinese authorities. The Company is in the process of reorganizing its corporate structure to relocate cryptocurrency mining activities and related subsidiaries to jurisdictions outside of China mainland to minimize the risk.

The functional currency of the Company is 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, and Restricted cash

(d) Cash and Cash Equivalents, and Restricted cash

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 cash equivalents as of June 30, 2021 or December 31, 2020.

The Company maintains its cash accounts at credit worthy financial institutions and closely monitors the movements of its cash positions. As of June 30, 2021, and December 31, 2020, approximately $0.8 million and $0.9 million of cash, respectively, was held in bank accounts in the PRC and Hong Kong.

(e) Restricted Cash

(e) Restricted Cash

The Company also held restricted cash of $0.2 million as of December 31, 2020. The restricted fund is a time deposit served as collateral to secure a bank loan facility that matured on May 7, 2021. The Company had no restricted cash as of June 30, 2021.

(f) Accounts Receivable, Accounts Receivable – related parties, and Concentration of Risk

(f) Accounts Receivable, Accounts Receivable – related parties, and Concentration of Risk

In January 2020, the Company adopted ASU 2016-13, Topics 326-Credit Loss, Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology, as its accounting standard for its trade accounts receivable.

The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2020. 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 has further adjusted 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 six-month ended June 30, 2021 has increased approximately $6.94 million from the year ended December 31, 2020.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021			December 31, 2020
	(Unaudited)
Accounts Receivable	$	15,650,969		$	12,359,619
Allowance for credit losses		(12,942,975	)		(8,095,362	)
Accounts Receivable, net	$	2,707,994		$	4,264,257
Accounts Receivable - related parties	$	15,651,195		$	12,017,651
Allowance for credit losses - related parties		(15,485,183	)		(9,098,436	)
Accounts Receivable - related parties, net	$	166,012		$	2,919,215
Non-current Accounts Receivable	$	-		$	3,013,532
Non-current Allowance for credit losses		-			(1,174,302	)
Non-current Accounts Receivable, net	$	-		$	1,839,230
Non-current Accounts Receivable - related parties	$	-		$	4,172,502
Non-current Allowance for credit losses - related parties		-			(2,849,306	)
Non-current Accounts Receivable - related parties, net	$	-		$	1,323,196

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

In accordance with ASC 210-10-45, the non-current accounts receivable and non-current accounts receivable-related parties represent the amounts that the Company does not reasonably expect to be realized during the normal operating cycle of the Company. The Company uses one-year time period as the basis for the separation of current and non-current assets.

The allowance for credit losses at June 30, 2021 and December 31, 2020, totaled approximately $28.4 million and $21.2 million, respectively, representing management’s best estimate. The following table describes the movements in the allowance for credit losses during the six-month period ended June 30, 2021 and the year ended December 31, 2020:

Balance at January 1, 2020	$	7,212,644
Increase in allowance for credit losses		13,528,638
Foreign exchange difference		476,124
Balance at December 31, 2020	$	21,217,406
Addition from acquisition of TNM		309,537
Increase in allowance for credit losses		6,691,031
Decrease for balance recovered		(61,969	)
Foreign exchange difference		272,153
Balance at June 30, 2021 (Unaudited)	$	28,428,158

(g) Prepaid expenses

(g) Prepaid expenses

As of June 30, 2021, prepaid expenses included prepaid stock-based compensation of $9,189,765 and prepaid rental of $701,611. As of December 31, 2020, prepaid expenses represented prepaid stock-based compensation of $24,635.

Prepaid stock-based compensation represents stock-based payments including ordinary shares, warrants or stock options issued to consultants as compensation for their contracted services. Share-based payments are measured at the grant date, and recognized as consulting service expense using the straight-line method over the service period.

Prepaid rental was the payment made to a hash-rate platform for leasing blockchain cloud computing power which was amortized over the 12-month lease period from March 2021.

(h) Fair Value Accounting

(h) 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 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On January 1, 2020, the Company adopted ASU 2018-13,” Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The adoption of the disclosure requirements for Fair Value Accounting has no material impact on the Company’s consolidated financial statements.

(i) Property, equipment and software, net

(i) Property, equipment and software, net

Property, equipment and software are stated at cost less accumulated amortization and depreciation. Amortization and depreciation are provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of property, equipment and software are as follows:

Office buildings	20-50 years
Lease improvement	Shorter of lease term or assets lives
Electronics equipment, furniture and fixtures	3-5 years
Motor vehicles	5 years
Purchased software	5 years
Media display equipment	5 years
Cryptocurrency mining machine	3 years

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.

(j) Cryptocurrencies

(j) 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. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

Cryptocurrencies awarded to the Company through its mining activities are included within operating activities in the consolidated statements of cash flows. 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.

(k) Business combination

(k) 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.

(l) Long-term investment

(l) 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 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.

(m) Convertible promissory note

(m) Convertible promissory note

The Company determines the appropriate accounting treatment of its convertible debts in accordance with the terms in relation to conversion features. After considering the impact of such features, the Company may account for such instrument as a liability in its entirety, or separate the instrument into debt and equity components following the guidance described under ASC 815 Derivatives and Hedging and ASC 470 Debt. The debt discount, if any, together with related issuance cost are subsequently amortized as interest expense over the period from the issuance date to the earliest conversion date or stated redemption date. The Company presented the issuance cost of debt in the balance sheet as a direct deduction from the related debt.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(n) Operating leases - Right-of-use assets and lease liabilities

(n) 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.

(o) Revenue Recognition

(o) 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.

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 has indicated that it 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.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Revenue - Software

Customers in the private sector contract the Company to design and develop software products specifically customized for their needs for a fixed price. 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 in installments based on progression of the project or 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 customized software contracts less than 12 months and recognizes the revenue at the point of delivery 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 UNAUDITED 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. 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.

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 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 all 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 six years starting from May 1, 2016 and three years starting from July 1, 2019, 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 $183,000 and $211,000 rental income for the periods ended June 30, 2021, and 2020, respectively.

After completion of the business acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company, and is no longer a related party. The rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021.

Annual minimum rental income to be received in the next 5 years:
2021	155,688
2022	108,982
Total	264,670

Contract balances

The Company records advances from customers when cash payments are received or due in advance of our performance. For the six months ended June 30, 2021 and 2020, the Company recognized revenue of $104,000 and $120,000, respectively, that was included in the advances from customers balance at the beginning of each reporting period.

Practical expedients and exemptions

The Company generally expenses sales commissions and other incremental costs of obtaining a contract, if any incurred, because the duration of the service contracts and the amortization periods 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 duration of one year or less.

(p) Cost of advertising and cost of cryptocurrencies

(p) Cost of advertising and cost of cryptocurrencies

The cost of advertising 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 cryptocurrencies 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.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(q) Segment reporting

(q) Segment reporting

Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. Transfers and sales between reportable segments, if any, are recorded at cost.

The Company reports financial and operating information in the following three segments:

(1)	Cloud-based Technology (CBT) segment —It includes the Company’s cloud-based products, high-end data storage servers. and related services sold to private sectors including new media, healthcare, education, and residential community management, and among other industries and applications. In this segment, the Company generates revenues from the sales of hardware and software total solutions with proprietary software and content as well as from designing and developing software products specifically customized for private sector customers’ needs for a fixed price. The Company includes the revenue and cost of revenue of high-end data storage servers in the CBT segment. Advertising services is included in the CBT segment, after the Company consummated the acquisition of TNM. Advertisements are delivered to the ads display terminals and vehicular ads display terminals through the Company’s cloud-based new media sharing platform. Incorporation of advertising services complements the Company’s out-of-home advertising business strategy.
(2)	Blockchain Technology (BT) segment — The BT segment is the Company’s newly formed business sector. Cryptocurrency mining is the first initiative implemented in the BT segment.
(3)	Traditional Information Technology (TIT) segment —The TIT segment includes the Company’s project-based technology products and services sold to the public sector. The solutions the Company has sold primarily include Geographic Information Systems (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS). In this segment, the Company generates revenues from sales of hardware and system integration services. As a result of the business transformation, the TIT segment is being phased out in 2021.

(r) Reclassifications

(r) Reclassifications

Certain prior period amounts have been reclassified to be comparable to the current period presentation. This reclassification has no effect on previously reported net assets or net income (loss).

(s) Recent Accounting Pronouncements

(s) Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 is effective for public business entities fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements. The effect will largely depend on the composition and terms of the financial instruments at the time of adoption.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. The guidance provides clarification of the interaction of rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company in the first quarter of 2021. The adoption did not have any significant impact on the Company’s condensed consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe that the adoption of such pronouncements will have a material impact on the consolidated financial statements.

TAOPING INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS (Tables)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SCHEDULE OF SUBSIDIARIES AND VARIABLE INTEREST ENTITY

Entities	Subsidiaries/ VIE	June 30, 2021 % owned			December 31, 2020 % owned			December 31, 2019 % owned			Location
Taoping Inc.											British Virgin Islands
Taoping Holdings Limited (THL)	Subsidiary		100	%		100	%		100	%	British Virgin Islands
Taoping Group (China) Ltd. (IST HK)	Subsidiary		100	%		100	%		100	%	Hong Kong, China
Taoping Digital Assets (Asia) Limited (TDAL)	Subsidiary		100	%							Hong Kong, China
Taoping Digital Assets (Hong Kong) Limited (TDL)	Subsidiary		100	%							Hong Kong, China
Taoping Capital Limited (TCL)	Subsidiary		100	%							Hong Kong, China
Alpha Digital Group Ltd. (ADG)	Subsidiary		100	%							Cayman, Island
Information Security Tech. (China) Co., Ltd. (IST)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
TopCloud Software (China) Co., Ltd. (TopCloud)	Subsidiary		100	%		100	%		100	%	Shenzhen, China
Information Security IoT Tech.Co., Ltd. (ISIOT)	Subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Technology Group Co., Ltd. (iASPEC)	VIE		100	%		100	%		100	%	Shenzhen, China
Biznest Internet Tech. Co., Ltd. (Biznest)	VIE subsidiary		100	%		100	%		100	%	Shenzhen,China
iASPEC Bocom IoT Tech. Co., Ltd. (Bocom)	VIE subsidiary		100	%		100	%		100	%	Shenzhen, China
Taoping New Media Co., Ltd. (TNM)	VIE subsidiary		100	%							Shenzhen, China
Shenzhen Taoping E-Commerce Service Co., Ltd. (SZTEC)	VIE Subsidiary		100	%							Shenzhen, China
Shenzhen Taoping Education Technology Co., Ltd. (SZTET)	VIE subsidiary		51	%							Shenzhen, China
Wuhu Taoping Education Technology Co., Ltd. (WHTET)	VIE subsidiary		51	%							Wuhu, China

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

SCHEDULE OF ACCOUNTS RECEIVABLE

Accounts receivable as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021			December 31, 2020
	(Unaudited)
Accounts Receivable	$	15,650,969		$	12,359,619
Allowance for credit losses		(12,942,975	)		(8,095,362	)
Accounts Receivable, net	$	2,707,994		$	4,264,257
Accounts Receivable - related parties	$	15,651,195		$	12,017,651
Allowance for credit losses - related parties		(15,485,183	)		(9,098,436	)
Accounts Receivable - related parties, net	$	166,012		$	2,919,215
Non-current Accounts Receivable	$	-		$	3,013,532
Non-current Allowance for credit losses		-			(1,174,302	)
Non-current Accounts Receivable, net	$	-		$	1,839,230
Non-current Accounts Receivable - related parties	$	-		$	4,172,502
Non-current Allowance for credit losses - related parties		-			(2,849,306	)
Non-current Accounts Receivable - related parties, net	$	-		$	1,323,196

SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES

Balance at January 1, 2020	$	7,212,644
Increase in allowance for credit losses		13,528,638
Foreign exchange difference		476,124
Balance at December 31, 2020	$	21,217,406
Addition from acquisition of TNM		309,537
Increase in allowance for credit losses		6,691,031
Decrease for balance recovered		(61,969	)
Foreign exchange difference		272,153
Balance at June 30, 2021 (Unaudited)	$	28,428,158

SCHEDULE OF ESTIMATED USEFUL LIVES

Office buildings	20-50 years
Lease improvement	Shorter of lease term or assets lives
Electronics equipment, furniture and fixtures	3-5 years
Motor vehicles	5 years
Purchased software	5 years
Media display equipment	5 years
Cryptocurrency mining machine	3 years

SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASES

After completion of the business acquisition on June 9, 2021, TNM became a subsidiary of the VIE of the Company, and is no longer a related party. The rental income from TNM has become an intercompany revenue and been eliminated since June 9, 2021.

Annual minimum rental income to be received in the next 5 years:
2021	155,688
2022	108,982
Total	264,670

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BUSINESS ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

SCHEDULE OF BUSINESS ACQUISITION ASSETS ACQUIRED, AND LIABILITIES ASSUMED

The following table summarizes the purchase price allocation for TNM, and the amounts of the assets acquired, and liabilities assumed which were based on their estimated fair values at the acquisition date:

Cash	$	7,644
Accounts receivable, net		1,252,601
Advances to suppliers		75,971
Other receivables and other current assets, net		2,345,332
Long-term investments		1,386,191
Property and equipment		1,550,113
Right of use assets		74,812
Accounts payable		(339,198	)
Advances from customers		(10,943	)
Accrued payroll and benefits		(32,840	)
Amount due to related parties		(619,571	)
Other payables and accrued expenses		(87,373	)
Lease liabilities		(153,938	)
Total net assets acquired		5,448,801
Bargain purchase gain		(12,345	)
Total purchase price	$	5,436,456

SCHEDULE OF BUSINESS ACQUISITION PRO-FORMA

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Revenue	$	6,895,929		$	5,417,123
Net (loss)		(14,775,796	)		(8,276,745	)
Net (loss) attributable to TAOP		(14,393,682	)		(8,015,283	)
Weighted Average Number of Shares:
Basic and Diluted		11,833,830			8,289,241
(Loss) per share – Basic and Diluted		(1.25	)		(1.00	)
(Loss) per share attributable to TAOP - Basic and Diluted	$	(1.22	)	$	(0.97	)

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VARIABLE INTEREST ENTITY (Tables)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SCHEDULE OF VARIABLE INTEREST ENTITY OF ASSETS AND LIABILITIES

The VIE’s assets and liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021			December 31, 2020
	(Unaudited)
Total current assets	$	7,841,679		$	9,261,921
Other assets, non-current		3,790,167			4,302,000
Non-current accounts receivable, net		-			2,101,276
Long-term investments		818,266			-
Property, equipment and software		6,094,121			3,713,860
Total assets		18,544,233			19,379,057
Intercompany payable to the WFOE		29,622,291			20,449,508
Total current liabilities		48,426,228			41,717,595
Lease liability		82,134			-
Total liabilities		48,508,363			41,717,595
Total equity	$	(29,964,130	)	$	(22,338,538	)

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LOSS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2021

Loss per share - Basic and Diluted*

SCHEDULE OF COMPONENTS OF BASIC AND DILUTED EARNINGS PER SHARE

Components of basic and diluted earnings per share were as follows for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Numerator:
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)
Denominator:
Weighted average outstanding ordinary shares-Basic		10,761,008			7,075,611
Weighted average outstanding ordinary shares- Diluted		10,761,008			7,075,611
Loss per share attributable to the Company
Basic	$	(1.31	)	$	(1.08	)
Diluted	$	(1.31	)	$	(1.08	)

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

SCHEDULE OF INVENTORIES

As of June 30, 2021 and December 31, 2020, inventories consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Raw materials	$	3,711		$	3,663
Finished goods		1,613,853			427,942
Cost of projects		12,176			34,792
Inventories, gross	$	1,629,740		$	466,397
Allowance for slow-moving or obsolete inventories		(263,146	)		(211,719	)
Inventories, net	$	1,366,594		$	254,678

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PROPERTY, EQUIPMENT AND SOFTWARE (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY, EQUIPMENT AND SOFTWARE

As of June 30, 2021 and December 31, 2020, property, equipment and software consist of:
	June 30, 2021			December 31, 2020
	(Unaudited)
Office buildings	$	5,206,573		$	5,140,635
Electronic equipment, furniture and fixtures		5,983,372			5,470,985
Cryptocurrency mining machine		6,506,306			-
Media display equipment		1,232,872			-
Motor vehicles		204,094			201,509
Leasehold improvement		110,919			-
Purchased software		19,098,570			17,465,168
		38,342,706			28,278,297
Less: accumulated depreciation		(19,742,876	)		(17,426,398	)
Property, equipment and software, net	$	18,599,830		$	10,851,899

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CRYPTOCURRENCIES (Tables)

6 Months Ended

Jun. 30, 2021

Investment Company [Abstract]

SCHEDULE OF MOVEMENTS OF CRYPTOCURRENCIES

The following table presents the movements of cryptocurrencies for the six-month period ended June 30, 2021:

	Amounts
Balance at January 1, 2021		-
Receipt of cryptocurrencies from mining activities	$	814,772
Sales of cryptocurrencies		(638,183	)
Realized gain on sale of cryptocurrencies		41,345
Impairment loss on cryptocurrencies		(42,447	)
Balance at June 30, 2021	$	175,487

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BANK LOANS (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

SCHEDULE OF SHORT-TERM BANK DEBT

	June 30, 2021		December 31, 2020
	(Unaudited)
Secured short-term loans (1)	$	5,949,005	$	6,210,176

SCHEDULE OF SECURED SHORT-TERM BANK DEBT

	June 30, 2021		December 31, 2020
	(Unaudited)
Collateralized by office buildings of IST and guaranteed by Mr. Lin and Biznest	$	4,182,894	$	3,976,960
Guaranteed by IST and Mr. Lin and Collateralized by the real property of ISIOT and equity investment of ISTIL		1,766,111		2,019,072
Guaranteed by a $ 0.2 million restricted bank time deposit		-		214,144
Total	$	5,949,005	$	6,210,176

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

SCHEDULE OF INCOME BEFORE INCOME TAXES

Pre-tax (loss) income from continuing operations for the six months ended June 30, 2021 and 2020 were taxable in the following jurisdictions:

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC	$	(8,798,878	)	$	(7,160,850	)
HK		(224,699	)		(11,910	)
BVI		(5,440,462	)		(837,790	)
Total loss before income taxes	$	(14,464,039	)	$	(8,010,550	)

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

Income tax expense (benefit) from continuing operations consists of the following:

	Six Months Ended		Six Months Ended
	June 30, 2021		June 30, 2020
	(Unaudited)		(Unaudited)
Current tax expense (benefit)	$	871	$	(69,858	)
Income tax expense (benefit)	$	871	$	(69,858	)

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Current income tax expense (benefit) were recorded in 2021 and 2020 and were related to differences between the book and corporate income tax returns.

	Six Months Ended			Six Months Ended
	June 30, 2021			June 30, 2020
	(Unaudited)			(Unaudited)
PRC statutory tax rate		25	%		25	%
Computed expected income tax (benefit)	$	(3,616,011	)	$	(2,002,638	)
Tax rate differential benefit from tax holiday		952,236			801,931
Permanent differences		231,390			117,180
Tax effect of deductible temporary differences not recognized		1,016,965			801,244
Non-deductible tax loss		1,416,291			212,425
Income tax expense (benefit)	$	871		$	(69,858	)

SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES

The significant components of deferred tax assets and deferred tax liabilities were as follows as of June 30, 2021 and December 31, 2020:

	June 30, 2021						December 31, 2020
	(Unaudited)
	Deferred Tax Assets			Deferred Tax Liabilities			Deferred Tax Assets			Deferred Tax Liabilities
Allowance for credit losses	$	4,698,990		$	-		$	3,640,083		$	-
Loss carry-forwards		4,271,589			-			3,714,825			-
Fixed assets		23,230			(273,000	)		80,456			(258,451	)
Inventory valuation		384,109			-			369,064			-
Accrued liabilities		14,814			-			-			-
Long-term investments		150,832			-			5,736			-
Intangible assets		-			135,918			-			134,197
Gross deferred tax assets and (liabilities)		9,543,564			(137,082	)		7,810,164			(124,254	)
Valuation allowance		(9,406,482	)		-			(7,685,910	)		-
Total deferred tax assets and (liabilities)	$	137,082		$	(137,082	)	$	124,254		$	(124,254	)

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OTHER CURRENT AND NON-CURRENT ASSETS (Tables)

6 Months Ended

Jun. 30, 2021

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

SCHEDULE OF OTHER CURRENT ASSETS

(a) As of June 30, 2021, and December 31, 2020, other current assets consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances to unrelated parties (i)	$	1,641,865	$	8,305
Receivable for sales of other assets (ii)		578,700		-
Advances to employees		104,799		45,396
Other current assets (iii)		303,682		119,325
Total	$	2,629,046	$	173,026

(i) The advances to unrelated parties for business development, and are non-interest bearing and due on demand.

As of June 30, 2021, the Company included in the balance of advances to unrelated parties of $1.64 million compared to advances to unrelated parties of $8,305 as of December 31, 2020.

As of June 30, 2021, the outstanding balance included the amount due from a third-party vendor, at the amount of approximately $1,472,000, whom the Company has contracted to develop the new media advertising market. According to the contract and its subsequent amendment, the vendor is responsible for performing consulting service of market research as subcontractor and facilitating the development of the new media advertising market.

Based on the amendment of the contract, the Company agrees to make advances to the vendor specifically for its market development purposes, and the total commitment of funding was RMB6 million (USD $929,532). Meanwhile, the Company agrees to pay the vendor a 12% commission fee based on the advertising revenue it has facilitated, and a 50% subcontractor fee based on the consulting services revenue, tax inclusive.

If the Company’s revenue facilitated by the vendor does not reach certain threshold during specified periods, the contract could be terminated by the Company, and all funding with applicable interest, less any commissions and subcontractor fees payable to the vendor, shall be repaid to the Company within one month after the termination of the contract. If the two parties terminate the cooperation on the condition that the vendor meet the target, all funding without interest, shall be repaid.

The first period as specified is from January 1, 2021 to December 31, 2021 with a threshold revenue of RMB 15 million (approximately USD $2,294,400). The threshold revenue is to increase by 30% in the year 2022. As of June 30, 2021, revenue facilitated by the vendor has reached RMB3,342,355 (USD $511,247). The Company will continue to monitor the revenue facilitated by the vendor and assess if an event occurs or circumstance changes that would potentially indicate that the carrying amount of the receivable was impaired.

As of June 30, 2021, the Company overfunded the vendor by $543,000 which was returned by the vendor subsequent to June 30, 2021.

As of June 30, 2021, the outstanding balance also included the deposits of RMB 1 million (approximately USD $154,000) made to a supplier for purchases which has been cancelled. The deposits will be refundable before the end of October 2021.

(ii) Receivable for sales of other assets

In November 2020, the Company sold non-cash consideration (see Note 2-o) received in prior years in exchange for advertising service to a third-party company in a price of $1,142,779 which equals to the carrying value of non-cash consideration. The company had collected $564,079 as of June 30, 2021. The remaining balance of $578,700 was fully collected subsequently in August 2021.

(iii) Other current assets

SCHEDULE OF OTHER ASSETS, NONCURRENT

(b) As of June 30, 2021 and December 31, 2020, Other assets, non-current consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Other assets, non-current	$	3,790,167	$	4,302,000

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OPERATING LEASES (Tables)

6 Months Ended

Jun. 30, 2021

Operating Leases

SCHEDULE OF OPERATING LEASE

Weighted-average remaining lease term as of June 30, 2021, and discount rate for its operating leases are as follows:

Weighted-average remaining lease term	32.8 months
Weighted-average discount rate	6.75%

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

The following table outlines maturities of operating lease liabilities as of June 30, 2021:

Year ending June 30	Leases for office/ server rooms/ Dormitory			Wall Space Leases
2022	$	375,118		$	4,082
2023		363,340			-
2024		265,973			-
Total lease payments		1,004,431			4,082
Less: Imputed interest		(87,103	)		-
Present value of lease liabilities	$	917,328		$	4,082

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LONG-TERM INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2021

Investments, All Other Investments [Abstract]

SCHEDULE OF EQUITY METHOD INVESTMENTS

As of June 30, 2021, the Company’s equity method investments had a carrying value of $489,513 which were as follows:

Investees	Abbreviation		% of Ownership			Carrying value
Qingdao Taoping IoT Co., Ltd.		QD Taoping, or QD		47	%	$	111,638
Yunnan Taoping IoT Co., Ltd.		YN Taoping, or YN		40	%		203,097
Jiangsu Taoping IoT Technology Co.,Ltd.		JS Taoping, or JS		25	%		165,855
Jiangsu Taoping New Media Co., Ltd		JS New Media, or JN		21	%		8,923
						$	489,513

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OTHER PAYABLES AND ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2021

Other Liabilities Disclosure [Abstract]

SCHEDULE OF OTHER PAYABLE AND ACCRUED EXPENSES

As of June 30, 2021 and December 31, 2020, other payables and accrued expenses consist of:

	June 30, 2021		December 31, 2020
	(Unaudited)
Advances from unrelated third parties (i)	$	274,084	$	469,418
Other taxes payable (ii)		4,111,865		4,089,013
Unrecognized tax liability (iii)		-		433,000
Accrued professional fees		184,140		404,025
Amount due to employees (iv)		134,496		65,785
Other current liabilities (v)		287,216		1,174,856
	$	4,991,801	$	6,636,097

(i)	The advances from unrelated parties are non-interest bearing and due on demand.
(ii)	The other taxes payable were the amounts due to the value added tax, business tax, city maintenance and construction tax, and individual income tax.
(iii)	The unrecognized tax liability refers to the land value added tax due to the sale of property, equipment, and land use rights in September 2015. As of June 30, 2021, the unrecognized tax liability passed the 5-year statute of limitation and recognized as other income in the consolidated statement of operations.
(iv)	The amounts due to employees were pertaining to employees’ out-of-pocket expenses for travel and meal allowance, etc.
(v)	The other current liabilities as of June 30, 2021 included the security and deposit of approximate $207,000. The decrease was for: a) approximate of $203,000 payable of prior year’s government funding has been settled during the six months ended June 30, 2021, and b) an amount of $767,500 for ordinary shares converted from the convertible debt have been issued as of June 30, 2021.

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

SCHEDULE OF SHARE BASED PAYMENTS EXPENSE

The following table provides the details of the approximate total share-based payments expense during the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30, 2021			Six Months Ended June 30, 2020
	(Unaudited)			(Unaudited)
Employees and directors share-based payments	$	2,950,000	(a)(c)	$	92,000	(c)
Stock options and warrants issued for services		2,100,000	(d)		12,000	(d)
Shares issued for services		42,000	(a)		193,000	(a)
	$	5,092,000		$	297,000

SUMMARY OF STOCK OPTION ACTIVITY

Stock option activity for the six months ended June 30, 2021 is summarized as follows:

				Weighted		Weighted Average Remaining
	Options			Average Exercise		Contractual Life		Aggregated Intrinsic
	Outstanding			Price		(Years)		Value
Outstanding at January 1, 2021		326,348		$	2.4		2.6	$	143,587
Exercised		-			-
Canceled		(13,333	)	$	2.4
Outstanding at June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Vested and expected to be vested as of June 30, 2021(Unaudited)		313,015		$	2.4		2.1	$	769,980
Options exercisable as of June 30, 2021 (vested)(Unaudited)		156,500		$	2.4		2.1	$	384,990

SCHEDULE OF NON-VESTED SHARE ACTIVITY

The following table summarizes the status of options which contain vesting provisions:    

	Options			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021		326,348		$	1.01
Vested		(156,500	)	$	1.01
Canceled		(13,333	)	$	1.01
Non-vested at June 30, 2021 (Unaudited)		156,515		$	1.01

SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE

	June 30, 2021 Number of Warrants Outstanding		Exercise		Expiration
	and Exercisable		Price		Date
July 2020 stock options to consultants		57,366	$	2.64		07/09/2023
February 2021 warrants to consultant		1,000,000	$	3.5		08/21/2021
April 2021 warrants to consultants		900,000	$	6.3		04/15/2022
April 2021 warrants to consultant		15,000	$	6.3		04/15/2022
		1,972,366

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CONSOLIDATED SEGMENT DATA (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

SCHEDULE OF SEGMENT REPORTING

Selected information by segment is presented in the following tables for the six months ended June 30, 2021 and 2020

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Revenues (1)
TIT Segment	$	88,670	$	141,919
CBT Segment		5,522,135		3,595,431
BT Segment		814,772		-
	$	6,425,577	$	3,737,350

(1) Revenues by operating segments exclude intercompany transactions.

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
(Loss) income from operations
TIT Segment	$	(72,677	)	$	(122,921	)
CBT Segment		(8,792,969	)		(6,780,105	)
BT segment		(1,246,811	)		-
Corporate and others (2)		(3,809,748	)		(640,818	)
(Loss) from operations		(13,922,205	)		(7,543,844	)
CBT’s loss from equity method investments		(578,619	)		-
BT’s other income		41,345			-
Corporate other income, net		473,879			(78,945	)
Corporate interest income		2,109			3,470
Corporate interest expense		(480,548	)		(391,231	)
(Loss) before income taxes		(14,464,039	)		(8,010,550	)
Income tax benefit		(871	)		69,858
Net loss		(14,464,910	)		(7,940,692	)
Less: Loss attributable to the non-controlling interest		366,570			264,047
Net loss attributable to the Company	$	(14,098,340	)	$	(7,676,645	)

(2) Includes non-cash compensation, professional fees and consultancy fees for the Company.

Non-cash compensation by segment for the six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Non-cash compensation:
TIT Segment	$	55,840	$	-
CBT Segment		335,040		-
BT segment		1,357,383		-
Corporate and others		3,344,699		92,308
	$	5,092,962	$	92,308

Depreciation and amortization by segment for six months ended June 30, 2021 and 2020 are as follows:

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Depreciation and amortization:
TIT Segment	$	16,356	$	8,380
CBT Segment		2,385,886		1,596,821
BT Segment		310,766		-
	$	2,713,008	$	1,605,201

	Six Months Ended June 30, 2021 (Unaudited)			Six Months Ended June 30, 2020 (Unaudited)
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers:
TIT Segment	$	(61,812	)	$	30,909
CBT Segment		6,752,063			5,844,135
BT Segment		7,357			-
	$	6,697,608		$	5,875,044

	Six Months Ended June 30, 2021 (Unaudited)		Six Months Ended June 30, 2020 (Unaudited)
Inventory obsolescence provision:
TIT Segment	$	-	$	504
CBT Segment		48,589		(15,759	)
	$	48,589	$	(15,255	)

Total assets by segment as of June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021 (Unaudited)		December 31, 2020
Total assets
TIT Segment	$	307,867	$	213,329
CBT Segment *		35,011,091		30,488,753
BT Segment		8,273,018		-
Corporate and others		9,279,275		74,569
	$	52,871,251	$	30,776,651

* CBT segment included equity investments of approximately $0.8 million as of June 30, 2021.

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SCHEDULE OF SUBSIDIARIES AND VARIABLE INTEREST ENTITY (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Taoping Inc. [Member]
Entities	Taoping Inc.
Location	British Virgin Islands
Taoping Holdings Limited (THL) [Member]
Entities	Taoping Holdings Limited (THL)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	British Virgin Islands
Taoping Group (China) Ltd. (IST HK) [Member]
Entities	Taoping Group (China) Ltd. (IST HK)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Hong Kong, China
Taoping Digital Assets (Asia) Limited (TDAL) [Member]
Entities	Taoping Digital Assets (Asia) Limited (TDAL)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%
Location	Hong Kong, China
Taoping Digital Assets (Hong Kong) Limited (TDL) [Member]
Entities	Taoping Digital Assets (Hong Kong) Limited (TDL)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%
Location	Hong Kong, China
Taoping Capital Limited (TCL) [Member]
Entities	Taoping Capital Limited (TCL)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%
Location	Hong Kong, China
Alpha Digital Group Ltd (ADG) [Member]
Entities	Alpha Digital Group Ltd. (ADG)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%
Location	Cayman, Island
Information Security IoT Tech.Co., Ltd. (ISIOT) [Member]
Entities	Information Security Tech. (China) Co., Ltd. (IST)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen, China
TopCloud Software (China) Co., Ltd. (TopCloud) [Member]
Entities	TopCloud Software (China) Co., Ltd. (TopCloud)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen, China
Information Security IoT Tech.Co., Ltd. (ISIOT) [Member]
Entities	Information Security IoT Tech.Co., Ltd. (ISIOT)
Subsidiaries/VIE	Subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen,China
iASPEC Technology Group Co., Ltd. (iASPEC) [Member]
Entities	iASPEC Technology Group Co., Ltd. (iASPEC)
Subsidiaries/VIE	VIE
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen, China
Biznest Internet Tech. Co., Ltd. (Biznest) [Member]
Entities	Biznest Internet Tech. Co., Ltd. (Biznest)
Subsidiaries/VIE	VIE subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen,China
iASPEC Bocom IoT Tech. Co., Ltd. (Bocom) [Member]
Entities	iASPEC Bocom IoT Tech. Co., Ltd. (Bocom)
Subsidiaries/VIE	VIE subsidiary
Percentage owned	100.00%	100.00%	100.00%
Location	Shenzhen, China
Taoping New Media Co., Ltd. (TNM) [Member]
Entities	Taoping New Media Co., Ltd. (TNM)
Subsidiaries/VIE	VIE subsidiary
Percentage owned	100.00%
Location	Shenzhen, China
Shenzhen Taoping E-Commerce Service Co., Ltd. (SZTEC) [Member]
Entities	Shenzhen Taoping E-Commerce Service Co., Ltd. (SZTEC)
Subsidiaries/VIE	VIE Subsidiary
Percentage owned	100.00%
Location	Shenzhen, China
Shenzhen Taoping Education Technology Co., Ltd. (SZTET) [Member]
Entities	Shenzhen Taoping Education Technology Co., Ltd. (SZTET)
Subsidiaries/VIE	VIE subsidiary
Percentage owned	51.00%
Location	Shenzhen, China
Wuhu Taoping Education Technology Co., Ltd. (WHTET) [Member]
Entities	Wuhu Taoping Education Technology Co., Ltd. (WHTET)
Subsidiaries/VIE	VIE subsidiary
Percentage owned	51.00%
Location	Wuhu, China

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ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS (Details Narrative) - USD ($)			1 Months Ended			3 Months Ended	6 Months Ended
	Dec. 13, 2009	Jul. 01, 2007	Jul. 31, 2021	Jun. 30, 2021	Jul. 31, 2020	Mar. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 09, 2021	Dec. 31, 2020
Product Information [Line Items]
Purchase price of assets		$ 1,800,000
Net income loss							$ 14,400,000	$ 7,900,000
Cash flow from operating activities							16,328,103	1,176,940
Working capital deficiency				$ 2,700,000			2,700,000			$ 17,400,000
Accumulated deficit				$ 206,310,884			206,310,884			$ 192,212,544
Sale of stock, shares issued			1,200,000			3,140,740
Proceeds net of issuance cost and debt discount					$ 4,730,000	$ 13,100,000
Gross Profit							2,138,241	$ 1,467,005
Cryptocurrency Minings [Member]
Product Information [Line Items]
Revenue							815,000
Gross Profit							$ 153,000
Revenue from Rights Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | Taoping New Media Co Ltd [Member]
Product Information [Line Items]
Revenue percentage							71.20%
iASPEC Technology Group Co., Ltd. [Member]
Product Information [Line Items]
Net profit received, percentage	95.00%
Mr. Jianghuai Lin [Member]
Product Information [Line Items]
Shares outstanding, percentage									24.60%
Taoping New Media Co Ltd [Member]
Product Information [Line Items]
Equity interest acquired, percentage									100.00%
Business combination step acquisition shares percentage				100.00%			100.00%
Revenue				$ 80,000.00
Taoping New Media Co Ltd [Member] | Mr. Jianghuai Lin [Member]
Product Information [Line Items]
Equity interest acquired, percentage									51.00%

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SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Accounts Receivable	$ 15,650,969	$ 12,359,619
Allowance for credit losses	(12,942,975)	(8,095,362)
Accounts Receivable, net	2,707,994	4,264,257
Accounts Receivable - related parties	15,651,195	12,017,651
Allowance for credit losses - related parties	(15,485,183)	(9,098,436)
Accounts Receivable - related parties, net	166,012	2,919,215
Non-current Accounts Receivable		3,013,532
Non-current Allowance for credit losses		(1,174,302)
Non-current Accounts Receivable, net		1,839,230
Non-current Accounts Receivable - related parties		4,172,502
Non-current Allowance for credit losses - related parties		(2,849,306)
Non-current Accounts Receivable - related parties, net		$ 1,323,196

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SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Allowance for credit losses, beginning	$ 21,217,406	$ 7,212,644
Increase in allowance for credit losses	6,940,000	13,528,638
Foreign exchange difference	272,153	476,124
Addition from acquisition of TNM	309,537
Increase in allowance for credit losses	6,691,031
Decrease for balance recovered	(61,969)
Allowance for credit losses, ending	$ 28,428,158	$ 21,217,406

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SCHEDULE OF ESTIMATED USEFUL LIVES (Details)	6 Months Ended
	Jun. 30, 2021
Office Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	20 years
Office Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	50 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	Shorter of lease term or assets lives
Electronics Equipment, Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	3 years
Electronics Equipment, Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	5 years
Motor Vehicles [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	5 years
Purchased Software [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of intangible assets	5 years
Media Display Equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	5 years
Cryptocurrency Mining Machine [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life of property, plant and equipment	3 years

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SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASES (Details)	Jun. 30, 2021 USD ($)
Accounting Policies [Abstract]
2021	$ 155,688
2022	108,982
Total	$ 264,670

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) Number	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Reverse stock split	Reverse Stock Split: A one (1)-for-six (6) reverse stock split of the Company’s issued and outstanding ordinary shares was effective on July 30, 2020 (the “Reverse Stock Split”).
Cash equivalents	$ 0		$ 0
Cash and cash equivalents	849,519		882,770
Restricted cash		$ 198,069	214,144
Increase in allowance for credit losses	6,940,000		13,528,638
Accounts Receivable, Allowance for Credit Loss	28,428,158		21,217,406	$ 7,212,644
Prepaid Expenses	$ 9,891,376		24,635
Advertising cost, percentage	100.00%
Rental income	$ 183,000	211,000
Recognized revenue	$ 104,000	$ 120,000
Number of reportable segments | Number	3
Prepaid Stock Based Compensation [Member]
Prepaid Expenses	$ 9,189,765		$ 24,635
Prepaid Rental [Member]
Prepaid Expenses	$ 701,611

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SCHEDULE OF BUSINESS ACQUISITION ASSETS ACQUIRED, AND LIABILITIES ASSUMED (Details) - Taoping New Media Co Ltd [Member]	Jun. 09, 2021 USD ($)
Business Acquisition [Line Items]
Cash	$ 7,644
Accounts receivable, net	1,252,601
Advances to suppliers	75,971
Other receivables and other current assets, net	2,345,332
Long-term investments	1,386,191
Property and equipment	1,550,113
Right of use assets	74,812
Accounts payable	(339,198)
Advances from customers	(10,943)
Accrued payroll and benefits	(32,840)
Amount due to related parties	(619,571)
Other payables and accrued expenses	(87,373)
Lease liabilities	(153,938)
Total net assets acquired	5,448,801
Bargain purchase gain	(12,345)
Total purchase price	$ 5,436,456

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SCHEDULE OF BUSINESS ACQUISITION PRO-FORMA (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Business Combination and Asset Acquisition [Abstract]
Revenue	$ 6,895,929	$ 5,417,123
Net (loss)	(14,775,796)	(8,276,745)
Net (loss) attributable to TAOP	$ (14,393,682)	$ (8,015,283)
Basic and Diluted	11,833,830	8,289,241
(Loss) per share – Basic and Diluted	$ (1.25)	$ (1.00)
(Loss) per share attributable to TAOP - Basic and Diluted	$ (1.22)	$ (0.97)

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BUSINESS ACQUISITION (Details Narrative) - USD ($)		1 Months Ended	6 Months Ended
	Jun. 09, 2021	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Jan. 02, 2020
Business Acquisition [Line Items]
Ordinary shares, no par value		$ 0	$ 0		$ 0
Net loss			$ (14,098,340)	$ (7,676,645)
Transaction cost						$ 350,000
Mr. Jianghuai Lin [Member]
Business Acquisition [Line Items]
Shares outstanding, percentage	24.60%
Taoping New Media Co Ltd [Member]
Business Acquisition [Line Items]
Equity interest acquired, percentage	100.00%
Business acquisition, shares issued	1,213,630
Ordinary shares, no par value	$ 0
Business acquisition, shares issued, value	$ 5,400,000
Bargain purchase gain	$ 12,345
Revenues		$ 80,000.00
Net loss		$ 1,000,000
Taoping New Media Co Ltd [Member] | Mr. Jianghuai Lin [Member]
Business Acquisition [Line Items]
Equity interest acquired, percentage	51.00%

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SCHEDULE OF VARIABLE INTEREST ENTITY OF ASSETS AND LIABILITIES (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Total current assets	$ 7,841,679	$ 9,261,921
Other assets, non-current	3,790,167	4,302,000
Non-current accounts receivable, net		2,101,276
Long-term investments	818,266
Property, equipment and software	6,094,121	3,713,860
Total assets	18,544,233	19,379,057
Intercompany payable to the WFOE	29,622,291	20,449,508
Total current liabilities	48,426,228	41,717,595
Lease liability	82,134
Total liabilities	48,508,363	41,717,595
Total equity	$ (29,964,130)	$ (22,338,538)

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VARIABLE INTEREST ENTITY (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Less: Net loss attributable to the non- controlling interest	$ 366,570	$ 264,047

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SCHEDULE OF COMPONENTS OF BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($)		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020
Loss per share - Basic and Diluted*
Net loss attributable to the Company		$ (14,098,340)	$ (7,676,645)
Weighted average outstanding ordinary shares-Basic		10,761,008	7,075,611
Weighted average outstanding ordinary shares- Diluted		10,761,008	7,075,611
Basic	[1]	$ (1.31)	$ (1.08)
Diluted	[1]	$ (1.31)	$ (1.08)

[1] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.

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LOSS PER SHARE (Details Narrative) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive shares	313,000	296,900
Non Employees Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive shares	57,366	68,334
Non Employees Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of anti-dilutive shares	1,000,000	68,334

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RELATED PARTY TRANSACTIONS (Details Narrative)			6 Months Ended
	Apr. 02, 2021 USD ($)	Apr. 02, 2021 CNY (¥)	Jun. 30, 2021 USD ($) Equipment	Jun. 30, 2020 USD ($)	Jun. 30, 2021 CNY (¥) Equipment	Dec. 31, 2020 USD ($)
Related Party Transaction [Line Items]
Equity investment ownership percentage			100.00%		100.00%
Rental income			$ 183,000	$ 211,000
Loan receivable from related party						$ 519,331
Due to related party			3,380,000
Fixed assets			18,599,830			10,851,899
Right-of-use asset			$ 926,689
Lease Agreement [Member]
Related Party Transaction [Line Items]
Lease description	On April 1, 2021, the Company entered into a lease agreement with a related company 100% owned by Mr. Lin for leasing of space for cryptocurrency mining machines which is located at Dongguan City for three years from April 1, 2021 to March 30, 2024.	On April 1, 2021, the Company entered into a lease agreement with a related company 100% owned by Mr. Lin for leasing of space for cryptocurrency mining machines which is located at Dongguan City for three years from April 1, 2021 to March 30, 2024.
Lease expiration date	Mar. 30, 2024	Mar. 30, 2024
Rent expenses	$ 1,438	¥ 9,350
Media Display Equipment [Member]
Related Party Transaction [Line Items]
Number of equipment lended | Equipment			5,160		5,160
Fixed assets			$ 1,200,000
Related Company Owned By Mr.Lin [Member]
Related Party Transaction [Line Items]
Due to related party			$ 3,098,000		¥ 20,000,000
Debt term			12 months
Debt maturity date			May 17, 2022
Ownership percentage			100.00%		100.00%
Debt interest rate			5.85%
Taoping New Media Co Ltd [Member]
Related Party Transaction [Line Items]
Revenues from related parties			$ 100,000	200,000
Equity investment ownership percentage			5.00%		5.00%
Rental income				$ 30,000
Accounts payable - related party						69,585
Loan receivable from related party			$ 330,000			500,000
Repaid of loan receivable-related party			170,000
Due to related party						$ 140,000
Mr.Lin [Member]
Related Party Transaction [Line Items]
Due to related party			$ 279,000
Debt term			6 months
Debt maturity date			Nov. 09, 2021
Right-of-use asset			$ 44,831
Operating lease liability			44,831
Mr.Lin [Member] | Lease Agreement [Member]
Related Party Transaction [Line Items]
Rent expenses			$ 4,300

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SCHEDULE OF INVENTORIES (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 3,711	$ 3,663
Finished goods	1,613,853	427,942
Cost of projects	12,176	34,792
Inventories, gross	1,629,740	466,397
Allowance for slow-moving or obsolete inventories	(263,146)	(211,719)
Inventories, net	$ 1,366,594	$ 254,678

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INVENTORIES (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Inventory Disclosure [Abstract]
Impairment of inventory	$ 48,589	$ (15,255)
Impairment of inventory	$ (48,589)	$ 15,255

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SCHEDULE OF PROPERTY, EQUIPMENT AND SOFTWARE (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 38,342,706	$ 28,278,297
Less: accumulated depreciation	(19,742,876)	(17,426,398)
Property, equipment and software, net	18,599,830	10,851,899
Office Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	5,206,573	5,140,635
Electronic Equipment Furniture And Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	5,983,372	5,470,985
Cryptocurrency Mining Machine [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,506,306
Media Display Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,232,872
Property, equipment and software, net	1,200,000
Motor Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	204,094	201,509
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	110,919
Purchased Software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 19,098,570	$ 17,465,168

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PROPERTY, EQUIPMENT AND SOFTWARE (Details Narrative) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Line Items]
Depreciation expenses	$ 2.1	$ 1.6
Office Building [Member]
Property, Plant and Equipment [Line Items]
Asset collateral amount	$ 3.0

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SCHEDULE OF MOVEMENTS OF CRYPTOCURRENCIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Investment Company [Abstract]
Cryptocurrencies, beginning balance
Receipt of cryptocurrencies from mining activities	814,772
Sales of cryptocurrencies	(638,183)
Realized gain on sale of cryptocurrencies	41,345
Impairment loss on cryptocurrencies	(42,447)
Cryptocurrencies, ending balance	$ 175,487

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SCHEDULE OF SHORT-TERM BANK DEBT (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Debt Disclosure [Abstract]
Secured short-term loans (1)	$ 5,949,005	$ 6,210,176

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SCHEDULE OF SECURED SHORT-TERM BANK DEBT (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Short-term Debt [Line Items]
Total short-term bank loans	$ 5,949,005	$ 6,210,176
Bank Loan 1 [Member]
Short-term Debt [Line Items]
Total short-term bank loans	4,182,894	3,976,960
Bank Loan 2 [Member]
Short-term Debt [Line Items]
Total short-term bank loans	1,766,111	2,019,072
Bank Loan Three [Member]
Short-term Debt [Line Items]
Total short-term bank loans		$ 214,144

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SCHEDULE OF SECURED SHORT-TERM BANK DEBT (Details) (Parenthetical) $ in Millions	Dec. 31, 2020 USD ($)
Bank Loan Three [Member]
Short-term Debt [Line Items]
Restricted bank time deposit	$ 0.2

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BANK LOANS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Debt Instrument [Line Items]
Short-term bank loans	$ 5,949,005		$ 6,210,176
Debt instrument maturity date description	mature on various dates from July 7, 2021 to April 30, 2022.
Weighted average interest rate, percentage	5.84%	6.33%
Interest expenses	$ 200,000	$ 200,000
Minimum [Member]
Debt Instrument [Line Items]
Borrowings, interest rate	4.95%
Maximum [Member]
Debt Instrument [Line Items]
Borrowings, interest rate	6.22%

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SCHEDULE OF INCOME BEFORE INCOME TAXES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating Loss Carryforwards [Line Items]
Total (loss) income before income taxes	$ (14,464,039)	$ (8,010,550)
PRC [Member]
Operating Loss Carryforwards [Line Items]
Total (loss) income before income taxes	(8,798,878)	(7,160,850)
HONG KONG
Operating Loss Carryforwards [Line Items]
Total (loss) income before income taxes	(224,699)	(11,910)
BVI [Member]
Operating Loss Carryforwards [Line Items]
Total (loss) income before income taxes	$ (5,440,462)	$ (837,790)

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SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Current tax expense (benefit)	$ 871	$ (69,858)
Income tax expense (benefit)	$ 871	$ (69,858)

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SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
PRC statutory tax rate	25.00%	25.00%
Computed expected income tax (benefit)	$ (3,616,011)	$ (2,002,638)
Tax rate differential benefit from tax holiday	952,236	801,931
Permanent differences	231,390	117,180
Tax effect of deductible temporary differences not recognized	1,016,965	801,244
Non-deductible tax loss	1,416,291	212,425
Income tax expense (benefit)	$ 871	$ (69,858)

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SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Deferred tax assets, Allowance for credit losses	$ 4,698,990	$ 3,640,083
Deferred tax liabilities, Allowance for credit losses
Deferred tax assets, Loss carry-forwards	4,271,589	3,714,825
Deferred tax liabilities, Loss carry-forwards
Deferred tax assets, Fixed assets	23,230	80,456
Deferred tax liabilities, Fixed assets	(273,000)	(258,451)
Deferred tax assets, Inventory valuation	384,109	369,064
Deferred tax liabilities, Inventory valuation
Deferred tax assets, Accrued liabilities	14,814
Deferred tax liabilities, Accrued liabilities
Deferred tax assets, Long-term investments	150,832	5,736
Deferred tax liabilities, Long-term investments
Deferred tax assets, Intangible assets
Deferred tax liabilities, Intangible assets	135,918	134,197
Deferred tax assets, Gross	9,543,564	7,810,164
Deferred tax liabilities, Gross (liabilities)	(137,082)	(124,254)
Deferred tax assets, Valuation allowance	(9,406,482)	(7,685,910)
Deferred tax liabilities, Valuation allowance
Total deferred tax assets	137,082	124,254
Total deferred tax (liabilities)	$ (137,082)	$ (124,254)

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INCOME TAXES (Details Narrative) ¥ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2020	Jun. 30, 2021 CNY (¥)
Operating Loss Carryforwards	$ 25,300,000			¥ 163.0
Operating Loss Carryforwards, Expiration Date	Jun. 30, 2025
Operating Income (Loss)	$ (13,922,205)	$ (7,543,844)
Corporate tax rate	25.00%	25.00%
BVI [Member]
Operating Income (Loss)	$ 9,500,000
High Technology Enterprise [Member]
Corporate tax rate	15.00%
Biznest [Member]
Corporate tax rate	12.50%
HONG KONG
Tax profits			16.50%

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SCHEDULE OF OTHER CURRENT ASSETS (Details) - USD ($)		Jun. 30, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Advances to unrelated parties	[1]	$ 1,641,865	$ 8,305
Receivable for sales of other assets	[2]	578,700
Advances to employees		104,799	45,396
Other current assets	[3]	303,682	119,325
Total		$ 2,629,046	$ 173,026

[1] The advances to unrelated parties for business development, and are non-interest bearing and due on demand.

[2] Receivable for sales of other assets

[3] Other current assets

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SCHEDULE OF OTHER ASSETS, NONCURRENT (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other assets, non-current	$ 3,790,167	$ 4,302,000

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OTHER CURRENT AND NON-CURRENT ASSETS (Details Narrative)			1 Months Ended	2 Months Ended	6 Months Ended			7 Months Ended		12 Months Ended
		Oct. 02, 2020	Nov. 30, 2020 USD ($)	Aug. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2021 CNY (¥)	Jun. 30, 2020 USD ($)	Apr. 30, 2021 USD ($)	Apr. 30, 2021 CNY (¥)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 CNY (¥)	Jun. 30, 2021 CNY (¥)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)
Advances to unrelated parties	[1]				$ 1,641,865								$ 8,305
Proceeds from Sale of Other Assets			$ 1,142,779		564,079
Security deposit					143,541
Value added tax receivables					87,000
Advances to a vendor					$ 3,380,000
Ownership percentage					100.00%							100.00%
Revenue	[2]				$ 6,425,577		$ 3,737,350
Debt instrument covenant description								The threshold revenue is to increase incrementally by 15% in every six months going forward until the contract expires four years after the commencing date of the operation.	The threshold revenue is to increase incrementally by 15% in every six months going forward until the contract expires four years after the commencing date of the operation.
[custom:ContractTerms]		4 years
Other Assets, Noncurrent					3,790,167								4,302,000
Cost, Amortization					800,000
Advertising [Member]
Revenue					576,310
UNITED STATES
Advances to a vendor													4,300,000	¥ 30,000,000	$ 4,300,000	¥ 30,000,000
Total commitment													$ 4,300,000	¥ 30,000,000	$ 4,300,000	¥ 30,000,000
UNITED STATES | Advertising [Member]
Revenue								$ 462,000	¥ 3,000,000
Increase in revenue								$ 462,000	¥ 3,000,000.0
Subsequent Event [Member]
Proceeds from Sale of Other Assets				$ 578,700
Vendor [Member]
Due from related party					1,472,000
Funding commitment					$ 929,532	¥ 6,000,000
Commission fee					12.00%							12.00%
Revenues					$ 511,247	¥ 3,342,355
Vendor [Member] | Subsequent To June Thirty Two Thousand Twenty One [Member]
Due from related party					543,000
Vendor [Member] | Subsequent Event [Member]
Revenues										$ 2,294,400	¥ 15,000,000
Supplier [Member]
Deposit Assets					$ 154,000							¥ 1,000,000

[1] The advances to unrelated parties for business development, and are non-interest bearing and due on demand.

[2] Revenues by operating segments exclude intercompany transactions.

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SCHEDULE OF OPERATING LEASE (Details)	Jun. 30, 2021
Operating Leases
Operating Lease, Weighted Average Remaining Lease Term	32 months 24 days
Operating Lease, Weighted Average Discount Rate, Percent	6.75%

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SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES (Details)	Jun. 30, 2021 USD ($)
Finite-Lived Intangible Assets [Line Items]
Present value of lease liabilities	$ 264,670
Leases Office Server Rooms Dormitory leases [Member]
Finite-Lived Intangible Assets [Line Items]
2022	375,118
2023	363,340
2024	265,973
Total lease payments	1,004,431
Less: Imputed interest	(87,103)
Present value of lease liabilities	917,328
Wall Space Leases [Member]
Finite-Lived Intangible Assets [Line Items]
2022	4,082
2023
2024
Total lease payments	4,082
Less: Imputed interest
Present value of lease liabilities	$ 4,082

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OPERATING LEASES (Details Narrative) - 6 months ended Jun. 30, 2021	USD ($)	HKD ($)
Finite-Lived Intangible Assets [Line Items]
Lease term	2 years
Variable Lease, Payment	$ 0
Short-term Lease Payments	3,000
[custom:UnpaindRentLiabilities]	8,000
Short-term Lease, Cost	$ 2,800
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Lease term	1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Lease term	3 years
Apirl 18, 2024 [Member]
Finite-Lived Intangible Assets [Line Items]
Lease term	3 years
Office Space [Member]
Finite-Lived Intangible Assets [Line Items]
Payments for Rent	$ 22,035	$ 170,775
Operating Lease, Initial Direct Cost Expense, over Term	0
Accrued Rent, Current	73,000
Server Rooms [Member]
Finite-Lived Intangible Assets [Line Items]
Payments for Rent	7,484	58,000
Operating Lease, Initial Direct Cost Expense, over Term	7,484	58,000
Dormitory Lease [Member]
Finite-Lived Intangible Assets [Line Items]
Payments for Rent	4,381	34,000
Operating Lease, Initial Direct Cost Expense, over Term	$ 2,194	$ 17,000

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SCHEDULE OF EQUITY METHOD INVESTMENTS (Details)	Jun. 30, 2021 USD ($)
Schedule of Equity Method Investments [Line Items]
Ownership percentage	100.00%
Carrying value	$ 818,266
Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Carrying value	$ 489,513
Qingdao Taoping IoT Co Ltd [Member] | Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	47.00%
Carrying value	$ 111,638
Yunnan Taoping IoT Co Ltd [Member] | Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	40.00%
Carrying value	$ 203,097
Jiangsu Taoping IoT Technology Co Ltd [Member] | Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	25.00%
Carrying value	$ 165,855
Jiangsu Taoping New Media Co Ltd [Member] | Equity Method Investments [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	21.00%
Carrying value	$ 8,923

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LONG-TERM INVESTMENTS (Details Narrative) - USD ($)		6 Months Ended
	Jun. 09, 2021	Jun. 30, 2021	Jun. 30, 2020
Impairment Effects on Earnings Per Share [Line Items]
Carrying value		$ 818,266
Equity method investments		1,890,000
Recognized loss from equity method investments		(578,619)
Equity investments without readily determinable fair value		328,753
Initial investment equity investments without readily determinable fair value		710,786
Equity Method Investments [Member]
Impairment Effects on Earnings Per Share [Line Items]
Carrying value		489,513
Recognized loss from equity method investments		600,000
Impairment	$ 0	$ 0

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CONVERTIBLE NOTE PAYABLE (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Oct. 31, 2019	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Mar. 31, 2020
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Maturity Date, Description		mature on various dates from July 7, 2021 to April 30, 2022.
Shares Issued, Price Per Share					$ 6.70
Convertible Notes Payable, Current		$ 689,502				$ 1,180,908
Interest Expense, Debt		200,000	$ 200,000
Note-2 [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible Notes Payable, Current						2,600,000
Interest Expense, Debt		209,000
Contractual Obligation		45,000
Note-1 [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible Notes Payable, Current						2,600,000
Amortization of Debt Issuance Costs and Discounts		164,000
Note-3 [Member]
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Face Amount		$ 740,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		298,716
Shares Issued, Price Per Share		$ 0
Convertible Notes Payable, Current						1,180,908
Amortization of Debt Issuance Costs and Discounts		$ 257,000
Debt Instrument, Unamortized Discount		689,502		$ 50,498		$ 299,695
Interest expenses		26,208
Debt Instrument, Convertible, Liquidation Preference, Value		2,565,000
Interest Expense, Debt		294,000
Contractual Obligation		$ 36,700
Private Placement [Member] | Convertible Promissory Note [Member]
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Face Amount	$ 1,040,000.00
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	26,667						454,097
Shares Issued, Price Per Share							$ 0
Debt Instrument, Convertible, Conversion Price							2,400,000
Private Placement [Member] | Convertible Promissory Note-2 [Member]
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Face Amount								$ 1,480,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						612,748		53,334
Shares Issued, Price Per Share						$ 0
Debt Instrument, Convertible, Conversion Price						$ 2,570,000	$ 2,420,000
Private Placement [Member] | Convertible Promissory Note-3 [Member]
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Face Amount							$ 1,480,000
Debt Instrument, Interest Rate, Stated Percentage							5.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights							53,334
Class of Warrant or Right, Exercise Price of Warrants or Rights							$ 9
Private Placement [Member] | Convertible Promissory Note-1 [Member]
Subsidiary, Sale of Stock [Line Items]
Debt Instrument, Maturity Date, Description	All three Notes mature in 12 months from the issue dates of the Notes

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SCHEDULE OF OTHER PAYABLE AND ACCRUED EXPENSES (Details) - USD ($)		Jun. 30, 2021	Dec. 31, 2020
Other Liabilities Disclosure [Abstract]
Advances from unrelated third parties (i)	[1]	$ 274,084	$ 469,418
Other taxes payable (ii)	[2]	4,111,865	4,089,013
Unrecognized tax liability (iii)	[3]		433,000
Accrued professional fees		184,140	404,025
Amount due to employees (iv)	[4]	134,496	65,785
Other current liabilities (v)	[5]	287,216	1,174,856
Other Payables and Accrued Expenses		$ 4,991,801	$ 6,636,097

[1] The advances from unrelated parties are non-interest bearing and due on demand.

[2] The other taxes payable were the amounts due to the value added tax, business tax, city maintenance and construction tax, and individual income tax.

[3] The unrecognized tax liability refers to the land value added tax due to the sale of property, equipment, and land use rights in September 2015. As of June 30, 2021, the unrecognized tax liability passed the 5-year statute of limitation and recognized as other income in the consolidated statement of operations.

[4] The amounts due to employees were pertaining to employees’ out-of-pocket expenses for travel and meal allowance, etc.

[5] The other current liabilities as of June 30, 2021 included the security and deposit of approximate $207,000. The decrease was for: a) approximate of $203,000 payable of prior year’s government funding has been settled during the six months ended June 30, 2021, and b) an amount of $767,500 for ordinary shares converted from the convertible debt have been issued as of June 30, 2021.

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SCHEDULE OF OTHER PAYABLE AND ACCRUED EXPENSES (Details) (Parenthetical)	6 Months Ended
	Jun. 30, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Security deposit	$ 143,541
Prior year government funding	203,000
Convertible debt instrument amount	767,500
Other Current Liabilities [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Security deposit	$ 207,000

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STATUTORY RESERVE AND DISTRIBUTION OF PROFIT (Details Narrative) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Statutory Reserve And Distribution Of Profit
Annual tax profits	10.00%
Statutory reserve percentage	50.00%
General reserve	$ 14.0	$ 14.0

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SCHEDULE OF SHARE BASED PAYMENTS EXPENSE (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Equity [Abstract]
Employees and directors share-based payments	$ 2,950,000	$ 92,000
Stock options and warrants issued for services	2,100,000	12,000
Shares issued for services	42,000	193,000
Total share based payments expenses	$ 5,092,000	$ 297,000

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SUMMARY OF STOCK OPTION ACTIVITY (Details)	6 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Remaining Contractual Life (Year), Options vested	14 days
Equity Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Outstanding, Balance Beginning | shares	326,348
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 2.4
Weighted Average Remaining Contractual Life (Year), Beginning	2 years 7 months 6 days
Aggregated Intrinsic Value, Outstanding Beginning | $	$ 143,587
Option Outstanding, Exercised | shares
Weighted Average Exercise Price, Exercised | $ / shares
Option Outstanding, Canceled | shares	(13,333)
Weighted Average Exercise Price, Canceled | $ / shares	$ 2.4
Option Outstanding, Balance Ending | shares	313,015
Weighted Average Exercise Price, Ending Balance | $ / shares	$ 2.4
Weighted Average Remaining Contractual Life (Year), Ending	2 years 1 month 6 days
Aggregated Intrinsic Value, Outstanding Ending | $	$ 769,980
Option Outstanding, Vested and expected to be vested | shares	313,015
Weighted Average Exercise Price, Vested and expected to be vested | $ / shares	$ 2.4
Weighted Average Remaining Contractual Life (Year), Options vested	2 years 1 month 6 days
Aggregated Intrinsic Value, Vested and expected to be vested | $	$ 769,980
Option Outstanding, Options Exercisable | shares	156,500
Weighted Average Exercise Price, Options Exercisable | $ / shares	$ 2.4
Weighted Average Remaining Contractual Life (Year), Options exercisable	2 years 1 month 6 days
Aggregated Intrinsic Value, Options exercisable | $	$ 384,990

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SCHEDULE OF NON-VESTED SHARE ACTIVITY (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Equity [Abstract]
Options Non-vested, Beginning | shares	326,348
Weighted Average Grant Date Fair Value, Non-Vested Beginning Balance | $ / shares	$ 1.01
Options Vested | shares	(156,500)
Weighted Average Grant Date Fair Value, Vested | $ / shares	$ 1.01
Options Canceled | shares	(13,333)
Weighted Average Grant Date Fair Value, Canceled | $ / shares	$ 1.01
Options Non-vested, Ending | shares	156,515
Weighted Average Grant Date Fair Value, Non-Vested Ending Balance | $ / shares	$ 1.01

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SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE (Details)	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Warrant One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants Outstanding and Exercisable	57,366
Exercise Price | $ / shares	$ 2.64
Expiration Date	Jul. 09, 2023
Warrant Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants Outstanding and Exercisable	1,000,000
Exercise Price | $ / shares	$ 3.5
Expiration Date	Aug. 21, 2021
Warrant Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants Outstanding and Exercisable	900,000
Exercise Price | $ / shares	$ 6.3
Expiration Date	Apr. 15, 2022
Warrant Four [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants Outstanding and Exercisable	15,000
Exercise Price | $ / shares	$ 6.3
Expiration Date	Apr. 15, 2022
Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Warrants Outstanding and Exercisable	1,972,366

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EQUITY (Details Narrative) - USD ($)					1 Months Ended									3 Months Ended	6 Months Ended		12 Months Ended
		Dec. 30, 2020	Jul. 31, 2020	Jul. 24, 2020	Jun. 30, 2021	Mar. 31, 2021	Feb. 28, 2021	Jan. 31, 2021	Sep. 30, 2020	Jul. 31, 2020	Apr. 30, 2020	Mar. 31, 2020	Jan. 31, 2020	Sep. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Ordinary shares, authorized					100,000,000										100,000,000		100,000,000
Number of shares issued						500,000
Shares issued price per share						$ 6.70
Proceeds from issuance of common stock															$ 13,071,998	$ 576,000
Shares issued for services, value															$ 11,340,481	202,185
Number of shares issued, value						$ 3,340,000										576,000
Equity Method Investment, Ownership Percentage					100.00%										100.00%
Share based compensation															$ 5,092,000	297,000
Unrecognized compensation expense related to non-vested share options					$ 22,000										$ 22,000
Weighted average remaining vesting period															14 days
Fair value of stock option vested															$ 200,000	100,000
General and Administrative Expense															$ 13,606,688	$ 7,064,286
Taoping New Media Co Ltd [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Shares issued price per share					$ 5.27										$ 5.27
Number of restricted shares issued					1,213,630
Consideration					$ 5,400,000
Equity Method Investment, Ownership Percentage					100.00%										100.00%
Individual Investor [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of shares issued												285,714
Shares issued price per share												$ 2.1
Proceeds from issuance of common stock												$ 576,000
Investors [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of shares issued							1,900,000	740,740								30,000
Shares issued price per share							$ 4.08	$ 2.7
Proceeds from issuance of common stock																$ 144,000
Number of shares issued, value							$ 7,740,000	$ 1,990,000
Consultant [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of restricted shares issued									16,220		16,667
Number of restricted shares issued, value									$ 41,000		$ 16,185
Shares issued for services								7,000		42,000
Shares issued for services, value								$ 21,840		$ 101,000
Employee [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Shares issued for services														13,110
Shares issued for services, value														$ 65,000
Stock option granted															0	0
Stock options exercised															0	0
Promissory Note Holder [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of shares issued		1,066,845
Debt Conversion, Converted Instrument, Shares Issued		299,318
Principal and accured interest																	$ 2,600,000
Debt conversion converted into ordinary shares															$ 800,000		$ 1,800,000
Employees [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Shares issued for services	[1]					200,000
Shares issued for services, value	[1]					$ 2,792,000
Holder [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Debt Conversion, Converted Instrument, Shares Issued					298,716
Debt Conversion, Converted Instrument, Rate					50.00%
Debt Conversion, Converted Instrument, Amount					$ 766,000
Employees and Directors [Member] | 2016 Equity Incentive Plan [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of shares issued			72,414
Stock option granted				333,348												160,000
Fair value of stock option grant date				$ 300,000
Employees and Directors [Member] | 2016 Equity Incentive Plan [Member] | Selling, General and Administrative Expenses [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Share based compensation				$ 158,070												$ 92,000
Consultants [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Number of restricted shares issued	[1]										16,667		30,000
Number of restricted shares issued, value	[1]										$ 42,000		$ 144,000
Shares issued for services	[1]							7,000
Shares issued for services, value	[1]							$ 21,840
Consultants [Member] | 2016 Equity Incentive Plan [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Stock options exercised															0
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					1,915,000										1,915,000	16,667
General and Administrative Expense															$ 2,100,000	$ 12,000
Non-employees [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price					$ 4.77										$ 4.77
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term															6 months

[1] On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except shares authorized, all references above in this section to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted

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SCHEDULE OF SEGMENT REPORTING (Details) - USD ($)		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Segment Reporting Information [Line Items]
Revenues	[1]	$ 6,425,577	$ 3,737,350
(Loss) income from operations		(13,922,205)	(7,543,844)
CBT’s loss from equity method investments		(578,619)
BT’s other income		41,345
Corporate other income, net		473,879	(78,945)
Corporate interest income		2,109	3,470
Corporate interest expense		(480,548)	(391,231)
(Loss) before income taxes		(14,464,039)	(8,010,550)
Income tax benefit		(871)	69,858
Net loss		(14,464,910)	(7,940,692)
Less: Loss attributable to the non-controlling interest		366,570	264,047
Net loss attributable to the Company		(14,098,340)	(7,676,645)
Non-cash compensation		2,950,070	92,308
Depreciation and amortization		2,713,008	1,605,201
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers		6,697,608	5,875,044
Inventory obsolescence provision		48,589	(15,255)
Total assets		52,871,251		$ 30,776,651
TIT Segment [Member]
Segment Reporting Information [Line Items]
Revenues	[1]	88,670	141,919
(Loss) income from operations		(72,677)	(122,921)
Non-cash compensation		55,840
Depreciation and amortization		16,356	8,380
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers		(61,812)	30,909
Inventory obsolescence provision			504
Total assets		307,867		213,329
CBT Segment [Member]
Segment Reporting Information [Line Items]
Revenues	[1]	5,522,135	3,595,431
(Loss) income from operations		(8,792,969)	(6,780,105)
CBT’s loss from equity method investments		800,000
Non-cash compensation		335,040
Depreciation and amortization		2,385,886	1,596,821
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers		6,752,063	5,844,135
Inventory obsolescence provision		48,589	(15,759)
Total assets	[2]	35,011,091		30,488,753
BT Segment [Member]
Segment Reporting Information [Line Items]
Revenues	[1]	814,772
(Loss) income from operations		(1,246,811)
Non-cash compensation		1,357,383
Depreciation and amortization		310,766
Provisions for allowance for credit losses on accounts receivable, other receivable and advances to suppliers		7,357
Total assets		8,273,018
Corporate and Others [Member]
Segment Reporting Information [Line Items]
(Loss) income from operations	[3]	(3,809,748)	(640,818)
Non-cash compensation		3,344,699	92,308
Total assets		9,279,275		$ 74,569
Non Cash Compensation [Member]
Segment Reporting Information [Line Items]
Non-cash compensation		$ 5,092,962	$ 92,308

[1] Revenues by operating segments exclude intercompany transactions.

[2] CBT segment included equity investments of approximately $0.8 million as of June 30, 2021.

[3] Includes non-cash compensation, professional fees and consultancy fees for the Company.

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SCHEDULE OF SEGMENT REPORTING (Details) (Parenthetical) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
(Loss) from equity method investment	$ (578,619)
CBT Segment [Member]
Segment Reporting Information [Line Items]
(Loss) from equity method investment	$ 800,000

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COMMITMENTS AND CONTINGENCIES (Details Narrative)	Jul. 28, 2016 USD ($)	Jul. 28, 2016 CNY (¥)	Jun. 30, 2021 USD ($)
Accrued contingent liability			$ 89,000
Shenzhen Kejian Information Technology Co Ltd [Member]
Preferential payment received	$ 89,000	¥ 550,000

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CONCENTRATIONS (Details Narrative)	6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	13.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	10.00%	14.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Five Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	44.00%	44.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	18.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Top Five Receivables [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	53.00%		25.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	14.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | No Single Customer [Member]
Concentration Risk [Line Items]
Concentration of risk percentage			10.00%
Purchases [Member] | Suppliers Concentration Risk [Member] | Five Unrelated Suppliers [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	96.00%	84.00%
Purchases [Member] | Suppliers Concentration Risk [Member] | One Suppliers [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	59.00%	41.00%
Purchases [Member] | Suppliers Concentration Risk [Member] | Two Suppliers [Member]
Concentration Risk [Line Items]
Concentration of risk percentage	19.00%	25.00%

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SUBSEQUENT EVENTS (Details Narrative)							1 Months Ended	3 Months Ended
	Sep. 18, 2021 shares	Aug. 26, 2021 shares	Aug. 06, 2021	Jul. 12, 2021 USD ($) $ / shares shares	Apr. 15, 2021 USD ($) shares	Apr. 15, 2021 CNY (¥) shares	Jul. 31, 2021 shares	Dec. 31, 2021 USD ($) shares	Mar. 31, 2021 shares	Sep. 23, 2021 USD ($)	Aug. 27, 2021	Jun. 30, 2021 USD ($) $ / shares	Dec. 31, 2020 USD ($) $ / shares
Subsequent Event [Line Items]
Aggregate number of ordinary shares sold							1,200,000		3,140,740
Stock par value per share | $ / shares												$ 0	$ 0
Equity investment ownership percentage												100.00%
Shareholder deficit | $												$ 12,639,587	$ (7,664,671)
Purchase Agreement [Member] | Bitmain Technologies Limited [Member] | Cryptocurrency [Member]
Subsequent Event [Line Items]
Stock issued during period, shares, purchase of assets					3,000	3,000
Stock issued during period, value, purchase of assets					$ 24,000,000	¥ 157,500,000
Advanced payment | $												$ 6,100,000
Subsequent Event [Member] | Taoping Digital Assets Asia Limited [Member]
Subsequent Event [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired											51.00%
Subsequent Event [Member] | Aral Petroleum Capital LLP [Member]
Subsequent Event [Line Items]
Business Acquisition, Percentage of Voting Interests Acquired											49.00%
Subsequent Event [Member] | Shenzhen Taoping E-Commerce Service Co Ltd [Member]
Subsequent Event [Line Items]
Equity investment ownership percentage										100.00%
Shareholder deficit | $										$ 120,000
Subsequent Event [Member] | Securities Purchase Agreement [Member]
Subsequent Event [Line Items]
Aggregate number of ordinary shares sold		144,204
Equity investment ownership percentage		51.00%
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Yunnan Taoping [Member]
Subsequent Event [Line Items]
Business Acquisition, Description of Acquired Entity			the Company entered into a letter of intent (the “LOI”) with the shareholders of Zhenjiang Taoping IoT Technology Limited (“Zhenjiang Taoping”) and the majority shareholder of Yunnan Taoping IoT Limited (“Yunnan Taoping”), respectively, to acquire equity interests and increase its ownership of each two companies to no less than 51%. Currently, TNM owns no shares in Zhenjiang Taoping, and owns about 40% of Yunnan Taoping.
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investors [Member]
Subsequent Event [Line Items]
Aggregate number of ordinary shares sold				1,200,000
Stock par value per share | $ / shares				$ 0
Purchase price | $ / shares				$ 4.15
Proceeds from financing costs | $				$ 4,730,000
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investors [Member] | Warrant [Member]
Subsequent Event [Line Items]
Warrants to purchase ordinary shares				360,000
Warrants exercise price per share | $ / shares				$ 4.56
Warrants and rights outstanding, term				36 months
Subsequent Event [Member] | Equity Transfer Agreement [Member] | Mr.Lin [Member]
Subsequent Event [Line Items]
Ordinary shares issued under business acquisition	612,245
Subsequent Event [Member] | Purchase Agreement [Member] | Bitmain Technologies Limited [Member]
Subsequent Event [Line Items]
Stock issued during period, shares, purchase of assets								60
Stock issued during period, value, purchase of assets | $								$ 800,000
Advanced payment | $								$ 5,300,000