R-Pac operates with a license agreement. IMO this gives R-Pac the right to solicit and book orders and said revenues and pay KMAG a royalty.
There would be no need to have a license agreement if R-Pac was simply manufacturing orders received from KMAG would they? That would simply make them a sub-contractor.
The question becomes is what do the revenues on KMAG financials represent? Is it revenue booked by R-Pac? Can anyone say for sure?
Could this be one of the points of interest in the SEC investigation? If yes do longs really want to see audited financials?