IZEA Worldwide Inc

NOTE 6. SOFTWARE DEVELOPMENT COSTS

Software development costs consist of the following:

In 2022, the Company began developingtwo new web-based influencer marketing platforms, IZEA Flex and Marketplace, to replace IZEAx and Shake, respectively. IZEAx was sunset in mid-2023, and Shake was sunset in Q4 of 2022. The Company capitalized software development costs of $253,749 and $690,901 during the three and nine months ended September 30, 2024, respectively. The Company capitalized software development costs of $234,176 and $672,053 during the three and nine months ended September 30, 2023, respectively. As a result, the Company has capitalized a total of $6.1 million in direct materials, consulting, payroll, and benefit costs to its internal-use software development costs in the consolidated balance sheet as of September 30, 2024.

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 offive years, which is consistent with the amount of time its legacy platforms were in service, or its actual useful life, if shorter. The Company recorded amortization expense associated with its capitalized software development cost of $133,290 and $90,961 during the three months ended September 30, 2024 and 2023, respectively. The Company recorded amortization expense associated with its capitalized software development cost of $385,976 and $501,708 during the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, future estimated amortization expense related to software development costs is set forth in the following schedule: