Nothing wrong with that. I worked for the company that invented those portable basketball units, the ones with the plastic bases. The moulds for those cost over $250,000 and that was back in '93. The moulds for the sponges will be smaller, but they will need more of them. And if one gets broken, SPNG has to pay for the replacement mould, not the company doing the moulding. Also, there are up front licensing fees. Viacom isn't going to just say, Give us X% of each sale. They are going to want a big chunk up front just to sign the contract. When that basketball equipment company I worked for back in the early '90s tried for the NBA endorsement, the NBA wanted $500,000 up front, plus 10% of sales (sales, not profits). All that gets added to the cost of goods sold and raises the percentage at first, but that percentage drops as sales continue to add up.
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