Replies to post #111707 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[StarterKit]

You would add it in full at the beginning, you would add the percentage license fees in each quarter as the license continues. some companies might break it down and add in so much per quarter until the license is complete, but that is only to keep shareholders from freaking out over big increases in COGS. The full fee is usually added in at the beginning in case the product flops, but also because it is a start-up cost to that product, just like the cost of the moulds for the products and the dies for the packaging.

The COGS will come down as each quarter progresses, just relax and sit back and enjoy the ride.

[spng sqretefellin]

the cost of a license is included in the cost charged to the retailer, typically a percentage, not fixed amount, ranging from 4-12%, depending on the cost and retail value. usually though, there is an upfront deposit paid that the sales % is charged against. quarterly adjustments are made to the deposit based on past sales, not anticipated. there is also a guarantee that is usually covered by the deposit paid.