Annual report pursuant to Section 13 and 15(d)

Fixed Assets

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Fixed Assets
12 Months Ended
Aug. 31, 2019
Fixed Assets  
Note 5: Fixed Assets

Fixed assets consisted of the following at August 31, 2019 and 2018:

 

 

August 31,

2019

 

August 31,

2018

 

Equipment

 

$

372,000

 

$

228,000

 

Furniture & fixtures

 

412,000

 

329,000

 

Software

 

3,737,000

 

2,797,000

 

Leasehold improvements

 

41,000

 

41,000

 

4,562,000

 

3,395,000

 

Accumulated depreciation & amortization

 

(1,202,000

)

 

(363,000

)

Fixed assets, net

 

$

3,360,000

 

$

3,032,000

 

Depreciation and amortization expense for the years ended August 31, 2019 and 2018, was $839,000 and $274,000, respectively.

 

Software consists primarily of customized software purchased from third party providers and which is incorporated into the Company’s HRIS platform and related mobile application. 

 

Information related to capitalized software costs is as follows:

 

 

August 31,

2019

 

August 31,

2018

 

Software costs capitalized

 

$

3,737,000

 

$

2,797,000

 

Software costs amortized

 

(904,000

)

 

(190,000

)

Software costs, Net

 

$

2,833,000

 

$

2,607,000

 

The Company has evaluated certain development costs of its software solution in accordance with ASC Topic 350-40, Internal Use Software, which outlines the stages of computer software development and specifies when capitalization of costs is required. Projects that are determined to be in the development stage are capitalized and amortized over their useful lives of five years. Projects that are determined to be within the preliminary stage are expensed as incurred. For the years ended August 31, 2019 and 2018 no internally developed software was capitalized. A substantial portion of the capitalized software is attributable to a third party with whom the Company is in litigation. The Company evaluated the asset value as of August 31, 2019 and determined that no asset impairment is required for this customized third party software.

 

Amortization expense included in the depreciation and amortization expense disclosed above for the years ended August 31, 2019 and 2018, was $714,000 and $190,000, respectively. The weighted average remaining life of amortizable software assets was 3.56 years as August 31, 2019. Amortization expense for capitalized software is expected to approximate the following for each of the next five fiscal years and thereafter:

 

 

Amount

 

2020

 

814,000

 

2021

 

814,000

 

2022

 

744,000

 

2023

 

458,000

 

2024

 

3,000