Note 6 – Prepaid Royalties

Prepaid royalties represent payments made for the purchase of non-transferable, non-exclusive patent rights associated with a patent license. The patent license allows for development of current and future products in our digital line of periscopes. We are actively marketing the new periscopes internationally and completed our first international shipment utilizing this technology 2014, and are bidding this technology with foreign customers in anticipation of additional orders. We estimate the commercial life of the patent at 7 years. As of December 28, 2014, the balance of the patent license is $142.9 thousand net of accumulated amortization. The royalty expenses for the associated patent license are amortized on a straight line basis starting in fiscal year 2013. The amortized royalty expense for the three months ending December 28, 2014 and December 29, 2013 was $7.5 thousand, respectively.