Annual report pursuant to Section 13 and 15(d)

Note 6 - Software Development Costs

Note 6 - Software Development Costs
12 Months Ended
Mar. 25, 2017
Notes to Financial Statements  
Research, Development, and Computer Software Disclosure [Text Block]
Software Development
September 3, 2015,
the Company entered into a software development agreement with a major aerospace and defense company whereby the aerospace company developed and licensed its simulation software to the Company. The simulation software (also called Open Loop Simulator or OLS technology) is currently the aerospace company’s intellectual property. The OLS technology generates threat simulations and enables various hardware to generate signals for performing threat analysis on systems under test. The Company licenses the OLS software as a bundled or integrated solution with its Advanced Signal Generator system.
The Company paid the aerospace company software development costs and fees for OLS of
million in the aggregate (this includes an amendment to the software development agreement for additional features and functionality), which was paid in monthly installments as the work was performed by the aerospace company through the
quarter of fiscal
The OLS technology is a perpetual license agreement that
be terminated by the Company at any time as long as the Company provides a notice to the aerospace company and pays for the development costs incurred through the notice termination date. The Company is also obligated to pay royalties to the aerospace company on net sales of its Advanced Signal Generator product sold with the OLS software equal to
percent of net sales price of each ASG system sold and subject to certain minimums. The Company expenses research and development costs as they are incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers.
As of
March 25, 2017,
March 26, 2016,
capitalized software costs were
respectively. The Company began amortizing the costs of capitalized software to cost of sales in fiscal
using the percentage of revenue approach. During the
quarter of fiscal
the Company revised its estimates in accounting for the amortization of the capitalized software costs due to the long procurement cycle associated with the product. The Company had previously elected to amortize the capitalized software costs on a straight-line basis over a
year period, however, the Company revised its estimates based on the percentage of revenue associated with the current period revenues. This change in estimate increased the Company’s cost of sales by
in fiscal
Amortization of capitalized software costs recorded were
during fiscal
There was
amortization recorded in fiscal
as the Company had
yet released its ASG TEmS units in fiscal