NOTE 8 - FIXED ASSETS

Fixed assets are stated at cost, less accumulated depreciation and amortization, and are summarized as follows:

	December 31,		September 30,
	2014		2015
Equipment	$	1,480,000	$	1,622,000
Computer software and website development		3,470,000		5,153,000
Computer hardware		2,717,000		2,750,000
Furniture and fixtures		373,000		373,000
Automobiles		47,000		60,000
Leasehold improvements		181,000		181,000

		8,268,000		10,139,000
Accumulated depreciation and amortization		(6,748,000)		(7,204,000)

	$	1,520,000	$	2,935,000

As of December 31, 2014 and September 30, 2015, the Company had expenditures of approximately $63,000 and $1,663,000, respectively, for computer software and website development which had not been placed in service. Depreciation expense is not recorded for such assets until they are placed in service.

Assets acquired under a capital lease, net of accumulated amortization of $104,000, were $201,000 as of September 30, 2015. If the assets acquired under a capital lease transfer title at the end of the lease term or contain a bargain purchase option, the assets are amortized over their estimated useful lives; otherwise, the assets are amortized over the respective lease term. Amortization expense for assets under capital lease was $15,000 and $43,000, for the three- and nine-months ended September 30, 2014 and $15,000 and $45,000, for the three- and nine-months ended September 30, 2015, respectively.

Depreciation and amortization expense for the three- and nine-month periods ended September 30, 2014 was $279,000 and $847,000, respectively, and for the three- and nine-month periods ended September 30, 2015 was $130,000 and $456,000, respectively. This includes amortization of costs associated with computer software and website development for the three- and nine-month periods ended September 30, 2014 of $145,000 and $431,000, respectively, and for the three- and nine-month periods ended September 30, 2015 of $29,000 and $129,000, respectively.

The Company capitalizes in fixed assets the costs of software development and website development. Specifically, the assets comprise an implementation of Oracle Enterprise Resource Planning (ERP) software, enhancements to the VeriWise^TM systems, and a customer interface website (which is the primary tool used to provide data to our customers). The website employs updated web architecture and improved functionality and features, including, but not limited to, customization at the customer level, enhanced security features, custom virtual electronic geofencing of landmarks, global positioning system (GPS)-based remote mileage reporting, and richer mapping capabilities. The Company capitalized the costs incurred during the “development” and “enhancement” stages of the software and website development. Costs incurred during the “planning” and “post-implementation/operation” stages of development were expensed. The Company capitalized $88,000 and $1,601,000 for such projects for the nine-month periods ended September 30, 2014 and 2015, respectively.