Software Development Costs (Notes)

6 Months Ended

Jun. 30, 2018

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

SOFTWARE DEVELOPMENT COSTS

Software development costs consists of the following:



	June 30, 2018			December 31, 2017
Software development costs	$	1,819,005		$	1,561,351
Less accumulated depreciation and amortization	(740,668		)	(593,424		)
Software development costs, net	$	1,078,337		$	967,927

The Company developed its web-based advertising and content exchange platform, IZEAx, to enable native advertising campaigns on a greater scale. The Company continues to add new features and additional functionality to 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 self-service customers. Research and planning phase costs are expensed as incurred. Costs incurred in the application and infrastructure development stage, including significant enhancements and upgrades, are capitalized. These costs include personnel and related employee benefits expenses for employees or consultants who are directly associated with and who devote time to software projects, and external direct costs of materials obtained in developing the software. We incurred and capitalized software development costs of $257,654 and $85,460 during the six months ended June 30, 2018 and 2017, respectively. As a result, the Company has capitalized a total of $1,819,005 in direct materials, consulting, payroll and benefit costs to its internal use software development costs in the consolidated balance sheet as of June 30, 2018. The Company amortizes its software development costs, upon initial release of the software or additional features, on a straight-line basis over the estimated the useful life of five years, which is consistent with the amount of time its legacy platforms were in service.

Amortization expense on software development costs that is presented separately from cost of services and recorded in depreciation and amortization expense in the accompanying consolidated statements of operations was $147,244 and $107,624 for the six months ended June 30, 2018 and 2017, respectively. Amortization expense on software development costs that is presented separately from cost of services and recorded in depreciation and amortization expense in the accompanying consolidated statements of operations was $73,622 and $53,812 for the three months ended June 30, 2018 and 2017, respectively.

As of June 30, 2018, 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
2018 (six months remaining)	$	147,243
2019	278,469
2020	245,142
2021	203,747
2022	134,421
Thereafter	69,315
	$	1,078,337