Composition of certain financial statement captions | 4. Composition of certain financial statement captions (a) Accrued expenses Accrued expenses as of July 31, 2019 and January 31, 2019 are as follows: July 31, January 31, 2019 2019 Payment processing fees liability $ 2,308,694 $ 2,266,621 Commission and bonus 3,244,770 320,402 Accrued payment related to acquisition of Vital Score 350,000 350,000 Vacation 505,890 417,467 Other 1,840,663 1,743,378 Total $ 8,250,017 $ 5,097,868 (b) Property and equipment Property and equipment as of July 31, 2019 and January 31, 2019 are as follows: Useful Life July 31, January 31, (years) 2019 2019 PhreesiaPads and Arrivals Stations 3 $ 24,976,313 $ 22,746,783 Computer equipment 3 16,699,067 14,338,489 Computer software 3 2,166,014 2,166,015 Hardware development 3 1,024,357 1,024,357 Furniture and fixtures 7 678,985 646,708 Leasehold improvements 2 1,170,771 1,150,673 Total property and equipment $ 46,715,507 $ 42,073,025 Less accumulated depreciation and amortization (32,151,159 ) (27,862,007 ) Property and equipment — net $ 14,564,348 $ 14,211,018 Depreciation expense related to property and equipment amounted to $2,136,245 and $1,777,156 for the three months ended July 31, 2019 and 2018, respectively. Depreciation expense related to property and equipment amounted to $4,291,008 and $3,549,132 for the six months ended July 31, 2019 and 2018, respectively. Capital lease depreciation, included in depreciation expense, was $1,160,897 for the six months ended July 31, 2019. Assets under capital leases included in computer equipment were $11,745,433 and $10,235,489 as of July 31, 2019 and January 31, 2019. Accumulated amortization of assets under capital leases was $6,529,422 and $5,368,525 as of July 31, 2019 and January 31, 2019, respectively. (c) Capitalized internal use software For the three months ended July 31, 2019 and 2018, the Company capitalized $1,466,761 and $1,256,564, respectively, of costs related to the Phreesia Platform. For the six months ended July 31, 2019 and 2018, the Company capitalized $2,877,713 and $2,469,695 of costs related to the Phreesia Platform. During the three months ended July 31, 2019 and 2018, amortization expense of capitalized internal-use internal-use (d) Intangible assets The following presents the details of intangible assets as of July 31, 2019 and January 31, 2019. Useful Life July 31, January 31, (years) 2019 2019 Acquired technology gross carrying value 5 $ 490,000 $ 490,000 Customer relationship gross carrying value 7 980,000 980,000 Total intangible assets $ 1,470,000 $ 1,470,000 Less accumulated amortization (152,269 ) (33,269 ) Net carrying value $ 1,317,731 $ 1,436,731 The remaining useful life for acquired technology in years is 4.4 and 4.8 as of July 31, 2019 and January 31, 2019, respectively. The remaining useful life for customer relationships in years is 6.4 and 6.8 as of July 31, 2019 and January 31, 2019, respectively. Amortization expense associated with intangible assets amounted to $59,500 and $0 for the three months ended July 31, 2019 and 2018, respectively. Amortization expense associated with intangible assets amounted to $119,000 and $0 for the six months ended July 31, 2019 and 2018, respectively. The estimated amortization expense for intangible assets for the next five years and thereafter is as follows as of July 31, 2019: 2020 (Remaining six months) $ 119,000 Years ending January 31, 2021 238,000 2022 238,000 2023 238,000 2024 224,301 2025 - thereafter 260,430 Total $ 1,317,731 (e) Deferred offering costs Deferred offering costs consist primarily of accounting, legal, and other fees related to the Company’s IPO. Prior to the IPO, all deferred offering costs were capitalized in other assets on the accompanying balance sheet. Upon the closing of the IPO on July 22, 2019, $6,083,648 were recorded in stockholders’ deficit as a reduction of additional paid in capital. The Company recorded $539,560 of deferred offering costs within other assets on the accompanying balance sheet as of January 31, 2019. (f) Accounts receivable Accounts receivable as of July 31, 2019 and January 31, 2019 are as follows: July 31, January 31, 2019 2019 Billed $ 16,778,878 $ 15,990,218 Unbilled 731,603 635,924 Total accounts receivable, gross $ 17,510,481 $ 16,626,142 Less allowance for doubtful accounts (722,758 ) (517,107 ) Total accounts receivable $ 16,787,723 $ 16,109,035 |