Compared to equivalent packaging, REELEX is the cheapest cost per package even with usage fees. Because the REELEX coil does not require an inner support structure, the package is greatly simplified compared to a spool or reel-in-a-box. As a result, REELEX packaging costs is approximately 50% less than equivalent spool packaging, even including the usage fee.
For customers with three or more REELEX machines, most license agreements had terms that linked usage fees to a percentage of net sales dollars of product sold in REELEX. In discussions with customers, we found a variety of issues with reporting, determining accurate sales numbers, and complaints regarding the impact of raw material pricing and how it affects usage fees.
As a result, we are moving forward with a new fee structure based on the amount of product using REELEX, not what it is sold for.
All equipment deliveries beginning in 2022 will require the new agreement to be signed prior to delivery.
For the first year of the REELEX license, the Licensee pays a usage fee prepayment equal to the Fixed Fee per machine.
Licensees with 1-2 machines pay the Fixed Fee per machine on an annual basis, unless production is less than the quantity of packages represented by the Fixed Fee. Upon request, but only once per year, manufacturers with lower production volumes can instead request to pay based on the Variable Fee model.
Licensees with 3 or more machines produce a report each calendar quarter of packages produced. This quantity is multiplied by the Variable Usage Fee and is paid within 30 days of the end of the calendar quarter.
Unfortunately, no. The “Most Favored Licensee” clause of the agreement means that we cannot offer special or different pricing from what other licensees pay. As a result, all licensees must abide by the same terms in the new agreement.
Because over the past 40+ years there is enough variation between agreements that we must bring all licensees under the same terms. Additionally, the recent volatility in raw materials pricing means now is the ideal time to move usage fee terms to benefit all licensees. The new agreement also includes updated, modern language and additional benefits such as an indemnification clause and clarifications with regards to trademark usage.
Yes. We encourage all licensees to sign the new license agreement at their convenience. For 2022, all new REELEX equipment will require a new agreement to be signed prior to shipment.
Correct. Our engineers have been scouring suppliers and even eBay to procure the components needed to support these circuits. Unfortunately the components required are simply no longer available or becoming obsolete themselves.
We expect that our spare supplies of these components will be depleted over the next year and will begin to reach critical scarcity starting in mid-2022.
