11.

Contract costs

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the period of benefit of those costs to be longer than

one

year and those costs are expected to be recoverable under the term of the contract. We have identified certain sales incentive programs that meet the requirements to be capitalized, and therefore, capitalized them as contract costs in the amount of

$1.4

million at

March 31, 2018.

Capitalized contract acquisition costs are amortized into operating expense based on the transfer of goods or services to which the assets relate which typically range

–

years. For the quarter ended

March 31, 2018,

the Company capitalized

$195,408

and amortized

$220,680

of contract costs, respectively, for a net expense impact of

$25,272

to the Consolidated Statement of Operations and Comprehensive Income. There was

impairment loss recognized in relation to the costs capitalized during the

three

months ending

March 31, 2018.

The breakdown of the movement in the contract costs balance for the

three

months ending

March 31, 2018

is as follows:

	March 31, 2018

Balance, beginning of period (1)	$	1,403,608
Capitalization of costs		195,408
Amortization of costs		(220,680	)
Balance, end of period	$	1,378,336

(

)

The beginning balance consists entirely of a cumulative adjustment recorded on

January 1

2018

as a result of the modified retrospective adoption of ASU

2014

09.

See note

for additional information.

When the amortization period for costs incurred to obtain a contract with a customer is less than

one

year, we have elected to apply a practical expedient to expense the costs as incurred. These costs include our internal sales compensation program and certain partner sales incentive programs.