1.	Summary of Significant Accounting Policies

Organization and Business

Founded in

1979,

Information Analysis Incorporated, which we refer to as the “Company”, “we”, or “IAI”, is in the business of modernizing client information systems, performing professional information technology (IT) services, and developing and maintaining IT systems for government and commercial organizations. IAI’s core competencies lie in legacy system (COBOL) migration and modernization, including developing user-friendly interfaces for complex legacy environments, database conversion and migration, development of electronic fillable forms (e-Forms), including smart forms, Section

508

compliant forms, and web-based and mobile device forms solutions, full life cycle Oracle development, and custom software development. The Company also engages in sales of

third

-party software for electronic forms development and management, legacy systems modernization, and robotics process automation. IAI’s ultimate customers include federal and state government agencies as well as private sector organizations throughout the United States, with a concentration in the Washington, D.C. metropolitan area.

Unaudited Interim Financial Statements

The accompanying unaudited financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form

-Q and Article

of Regulation S-

Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited financial statements include all adjustments necessary (which are of a normal and recurring nature) for the fair and

not

misleading presentation of the results of the interim periods presented. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended

December 31, 2019

included in the Annual Report on Form

-K filed by the Company with the SEC on

March 30, 2020 (

the “Annual Report”), as amended. The accompanying

December 31, 2019,

balance sheet was derived from the audited financial statements included in the Annual Report. The results of operations for any interim periods are

not

necessarily indicative of the results of operations for any other interim period or for a full fiscal year.

There have been

changes in the Company’s significant accounting policies as of

March 31, 2020,

as compared to the significant accounting policies disclosed in Note

"Summary of Significant Accounting Policies" in the Company's Annual Report on Form

-K for the fiscal year ended

December 31, 2019,

that was filed with the SEC on

March 30, 2020.

Use of Estimates and Assumptions

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain 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. Actual results can, and in many cases will, differ from those estimates.

Income Taxes

The Company has analyzed its income tax positions using the criteria required by U.S. GAAP and concluded that as of

March 31, 2020,

and

December 31, 2019,

it has

material uncertain tax positions and

interest or penalties have been accrued. Through the anticipated filing of its

2019

federal income tax return, the Company has net operating loss carryforwards of approximately

$3.5

million, of which

$0.8

million will expire, if unused, on

December 31, 2020.

Recent Accounting Pronouncements

Not

Yet Adopted

December 2019,

the Financial Accounting Standards Board issued ASU

2019

12,

“Income Taxes (Topic

740

Simplifying the Accounting for Income Taxes,”

that removes certain exceptions to the general principles in Topic

740

and simplifies the application of areas of Topic

740

by clarifying and amending existing guidance. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2020.

The adoption of ASU

2019

not

expected to have a material effect on the Company’s financial statements or cash flows.