Software Development Costs (Notes)

12 Months Ended

Dec. 31, 2020

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

SOFTWARE DEVELOPMENT COSTS

Software development costs consists of the following:


	December 31, 2020		December 31, 2019
Software development costs	$	3,036,810	$	2,673,017
Less accumulated amortization	(1,564,126)		(1,153,037)
Software development costs, net	$	1,472,684	$	1,519,980

The Company developed its web-based influencer marketing platform, IZEAx, to enable influencer marketing and content creation campaigns on a greater scale. The Company continues to add new features and additional functionality to IZEAx and developed additional platforms in 2020, BrandGraph and Shake, to facilitate the contracting, workflow, and delivery or posting of content as well as provide for invoicing, collaborating, and direct payments for the Company’s customers and creators. The Company capitalized software development costs of $363,793 and $590,549 during the twelve months ended December 31, 2020 and 2019, respectively. As a result, the Company has capitalized a total of $3,036,810 in direct materials, consulting, payroll and benefit costs to its internal use software development costs in the consolidated balance sheet as of December 31, 2020.

The Company amortizes its software development costs, commencing upon initial release of the software or additional features, on a straight-line basis over the estimated 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 excluded from cost of revenue and recorded in depreciation and amortization expense in the accompanying consolidated statements of operations was

$411,089 and $391,075 for the twelve months ended December 31, 2020 and 2019, respectively. After the transfer of customers to the new workflow features implemented in the IZEAx 3.0 release, the Company discontinued use of previously developed technology totaling $234,047 and recorded an impairment charge of $108,099 under impairment of goodwill and intangible assets in the accompanying consolidated statements of operations during the twelve months ended December 31, 2019.

As of December 31, 2020, future estimated amortization expense related to software development costs is set forth in the following schedule:


	Software Development Amortization Expense
2021	$	455,841
2022	400,474
2023	359,685
2024	177,764
2025	78,920
Total	$	1,472,684