Overachievement (Plus) is a company for which the revenues are assumed to be 140% of the royalty issuerís Projected Revenues in the first 3 year Selected Adjustment Period (SAP). Therefore, beginning in the 4th year the royalty rate, which had originally been agreed to be 5% will be reduced to 75% of 5% or 3.75% with a comparable reduction in the subsequent years when a royalty rate change has been agreed..
Underachievement (Minus) is a company which was only able to generate revenues of 75% of those projected by the royalty issuing company in the SAP for the first 3 years. Therefore, the royalty rate will remain as originally agreed. The difference in the cumulative amount of royalties paid by the royalty issuer to the royalty owner in the SAP will be settled by the parties, either by the required issuance of a 5 year, 10% interest "Make-Up" note, with interest paid quarterly, or as they otherwise agree. Due to the range of variables and associated complexities no calculation of the Make-Up note will be reflected in this calculator.
Accurate (Projected) is a company accurately predicting their revenues between 75% and 140% of the projected level in the first 3 years and all subsequent SAPs and therefore the royalty rate will remain as originally agreed.
Example is a combining of the Plus of 140% and Minus of 75% of Projected revenues for a SAP of 3 years beginning in year 1. REX Scaled Royalties reflects the data entered by the users of the website calculator.
Example is a combining of the Plus and Minus companies each having current revenues of $20.0 million and seeking to sell a 20 year royalty for $10.0 million. The terms of the royalty agreement offered are a royalty which declines from 5% to 2%, while the Compound Annual Growth Rate (CAGR) of revenues declines as the company matures and achieves increasingly higher revenues. The Plus level for a royalty rate reduction is a 140% improvement in the Projected revenues in the 3 year SAP starting in the first year. The Minus level in the same SAP is revenues of 75& of those Projected resulting in an agreed Make Up obligation or arrangement as negotiated at the time of the transaction.
As users, once registered, can easily enter data reflecting their own situation no other Samples are being created. If there are any problems please let me know and I will try to assist. The Scaled Royalty Investment Return Calculator will calculate the effect of the range of user entered variables as relating to: the Projected Revenues, the Selected Adjustment Period (SAP), the percentage of the Projected Revenues which are to be calculated as Plus or Minus, the Amount to be received for the sale of the royalty, the investorís target IRR, the percentage decline in the agreed royalty rate if in a SAP the revenues reach or exceed the defined Plus level and in the case of revenues being at or below the agreed Minus level the amount of difference in received versus anticipated cumulative royalties for the SAP will be shown.The Analytics and Chart pages will reflect the impact of the entered User Data.