Software Development Costs (Notes)

12 Months Ended

Dec. 31, 2016

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

SOFTWARE DEVELOPMENT COSTS

Software development costs consists of the following:



	December 31, 2016			December 31, 2015
Software development costs	$	1,492,665		$	1,021,446
Less accumulated depreciation and amortization	(388,706		)	(207,514		)
Software development costs, net	$	1,103,959		$	813,932

The Company determined that on April 15, 2013, its project to create IZEAx became technologically feasible and the development phase began. Throughout 2013 and the first quarter of 2014, the Company developed its new web-based advertising exchange platform, IZEAx. On March 17, 2014, the Company launched a public beta of IZEA.com powered by IZEAx. This platform is being utilized both internally and externally to facilitate native advertising campaigns on a greater scale. The Company continues to add new features and additional functionality to this platform each year. These new features will enable IZEAx to facilitate the contracting, workflow and delivery of direct content as well as provide for invoicing, collaborating and direct payments for the Company's SaaS customers. In accordance with ASC 350-40, Internal Use Software and ASC 985-730, Computer Software Research and Development, research phase costs should be expensed as incurred and development phase costs including direct materials and services, payroll and benefits and interest costs may be capitalized. As a result, the Company has capitalized $1,492,665 in direct materials, consulting, payroll and benefit costs to software development costs in the consolidated balance sheet as of December 31, 2016. The Company estimated the useful life of its developed software to be 5 years, consistent with the amount of time its legacy platforms were in-service.

Amortization expense on software development costs recorded in general and administrative expense in the accompanying consolidated statements of operations was $181,192 and $122,183 for the twelve months ended December 31, 2016 and 2015, respectively.

As of December 31, 2016, future estimated amortization expense related to software development costs over the next five years is set forth in the following schedule:



Year ending December 31:	Software Amortization Expense
2017	$	298,533
2018	298,533
2019	213,201
2020	176,351
2021	117,341
	$	1,103,959

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

+ References + Details