Note 5 - Capitalized Software Costs

6 Months Ended

Jul. 31, 2021

Notes to Financial Statements

Capitalized Software Costs [Text Block]

5. CAPITALIZED SOFTWARE COSTS

Capitalized software costs and accumulated amortization at July 31, 2021 and January 31, 2021 were as follows:

	July 31, 2021			January 31, 2021
	(in thousands)
Capitalized software costs:
Capitalized software development costs	$	3,711		$	3,655
Acquired software technology		9,272			6,191
		12,983			9,846
Less accumulated amortization		(2,756	)		(1,866	)
Capitalized software costs, net	$	10,227		$	7,980

The Company’s capitalized software development costs relate to translations and localizations of QAD Adaptive Applications. Acquired software technology costs relate to intellectual property purchased during the second quarter fiscal 2019, the fourth quarter of fiscal 2021 and the first quarter of fiscal 2022.

It is the Company’s policy to write off capitalized software development costs once fully amortized. Accordingly, during the first six months of fiscal 2022, approximately $0.5 million of costs and accumulated amortization were removed from the Condensed Consolidated Balance Sheet, related to capitalized software development costs which were fully amortized during the first six months of fiscal 2022.

Amortization of capitalized software costs was $0.8 million and $1.4 million for the three and six months ended July 31, 2021, respectively; compared to $0.3 million and $0.6 million for the three and six months ended July 31, 2020, respectively. Amortization of capitalized software costs is included in “Cost of subscription” and “Cost of license” in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

The following table summarizes the estimated amortization expense relating to the Company’s capitalized software costs as of July 31, 2021:

Fiscal Years	Cost of License		Cost of Subscription		Total
	(in thousands)
2022 remaining	$	588	$	914	$	1,502
2023		894		1,827		2,721
2024		450		1,827		2,277
2025		65		1,827		1,892
Thereafter		-		1,835		1,835
	$	1,997	$	8,230	$	10,227