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. The Company is actively marketing the new periscopes internationally and completed its first international shipment utilizing this technology in 2014. The company is bidding this technology with foreign customers in anticipation of additional orders. The Company estimates the commercial life of the patent at 7 years. As of March 29, 2015, the balance of the patent license is $135.4 thousand net of accumulated amortization. The royalty expenses for the associated patent license are amortized on a straight line basis. The amortized royalty expense for the three and six months ending March 29, 2015 and March 30, 2014 was $7.5 thousand and $15 thousand, respectively.