American Green Inc (ERBB)

[neilbolton]

Stingray

Sorry Neil, but you are incorrect! Please read the agreement ,you will find MMXT gets 40% of the licencing revenue while Sunncomm gets 60%.

Actually Stingray, you are incorrect. That is not the agreement. What you posted is from the SEC quarterly and annual filing, which, IMO is a misstatement of the agreement.

This is the actual agreement and this is what is said....

SunnComm hereby grants to Licensee an exclusive, non-transferable right and license throughout the Territory to distribute, market, advertise and sublicense the SunnComm Products throughout the Territory during the Term. Licensee is further granted an assignment of all revenues derived from the following:

a. that certain Copy Protection Agreement dated May 30, 2003, by and between SunnComm, as Licensor, and BMG Music, as Licensee, and

b. that certain Technology License Agreement dated December 2, 2003, by and between SunnComm, as licensor and Sonopress, L.L.C., as Licensee,
and

c. that certain Software Licensing Agreement dated January 12, 2004, by and between SunnComm, as Licensor and Immediatek, Inc. as Licensee.

Further on it states....

6. ROYALTY. Licensee shall pay a royalty to SunnComm equal to sixty percent (60%) of any and all gross licensing revenue earned by Licensee with respect to the SunnComm Products until Licensee exceeds Three Million Six Hundred Thousand Dollars ($3,600,000) in annual gross licensing revenue.

http://www.sec.gov/Archives/edgar/data/1057024/000119983504000070/marketing_agreement.txt

The above two sections are clearly stating that MediaMax receives ALL licensing revenue and must then pays a royalty equal to 60% of that amount. MediaMax Tech receives the Licensing Revenue and then they pay a Royalty. They are two separate items. That cannot happen off the books, otherwise how could the accounts be audited properly. Such transactions must be transparent.

Furthermore, my calculation of 2.5 cents per CD was not based on my interpretation of the revenue distribution, but on your interpretation, that MediaMax Tech's revenue represented only 40% of the total licensing revenue. If it were based on my take, then the combined take would only be 1 cent per CD.

This is what I wrote:

If we are to accept that MediaMax Tech reports just 40% of revenue (which I find difficult to accept based on what was told to our club on two occasions), then $99.4K for 10M CDs is 1 cent per CD to MediaMax Tech, and only 2.5 cents gross (SunnComm and MediaMax Tech together). 2.5 cents is a long way from the minimum of 4 cents we are told we are getting.

With respect to your later comment to Fly:

I do not think the 10 mil, figure can be used as the revenue producing basis until we know how many promos how many 2 disc , dual disk etc.It would not suprise me if the actual REVENUE producing CDs manufactured were in the 7 to 8 miilion range!

You will find that according to SunnComm's own PRs, all 10 million this year (and 20 million to date) are revenue producing.

This is from their own PR:

Customer support issues related to the release of nearly 20 million CDs containing MediaMax are occurring at a rate of less than two-tenths of one percent (.002).

skipped a bit

Both SunnComm and MediaMax Technology earn license fees every time MediaMax is pressed onto a CD.

http://uk.biz.yahoo.com/050728/290/fodvf.html

That is pretty clear. All 10 million earn license fees and the calculation shows that the average take (assuming MMXT reports just 40%) is just 2.5 cents.