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for as a single unit of accounting, the Company assesses whether its involvement constitutes a performance obligation or a right to participate. Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.
Deferred Revenue
Amounts received prior to satisfying the above revenue
recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized during the year ending December 31, 2010 are classified as long-term deferred revenue. As of December 31, 2009, the Company has short-term deferred revenue of US$476,500 (2008: US$1,198,992) related to its collaborations.
Summary
The Company has three customers in the pesticides and insecticides segment in 2009 that represents 96% of total revenue (2008: one customer represents 82%).
(h) Equity Based Compensation
Subsequent to January 1, 2006 stock based compensation cost is measured at the grant date based on the value of the award and is recognized as expense on a straight-line basis over the vesting period. Compensation expense is recognized only for those shares expected to vest, with forfeitures based upon future expectations.
(i) Research and Technical Development
Research and technical development costs are expensed as incurred. Research and technical development costs for the years ended December 31, 2009 amount to US$4,393,367 (2008: US$5,253,061) after charging US$1,680,082 (2008: US$2,780,224) to cost of sales.
(j) Reclassification
Certain reclassifications have been made in the 2008 consolidated statement of operations to conform to the classifications used in 2009 in that US$677,723 has been reclassified
from Business and development to Research and technical development.
(k) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB Accounting Standards Codification (ASC) 740, Income Taxes on January 1, 2009. As required by the uncertain tax position guidance of ASC 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relative tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in
the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied the uncertain tax position guidance of ASC 740 to all tax positions for which the statute of limitations remained open. As of January 1, 2009 and December 31, 2009, the Company did not recognize any liability for unrecognized tax benefits.
The Company recognizes both accrued interest and penalties related to unrecognized benefits in income tax expense. The Company has not recorded any interest and penalties on any unrecognized tax benefits since its inception.
(l) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on management's best knowledge of current events and actions the Company
may undertake in the future, actual results ultimately may
