If I'm reading the agreement correctly, rates are at 1.*% of net consumer sales and 7.2% of net commercial sales -- with "net sales" defined as "an amountequal to gross sales of Licensed Products (less returns & allowances attributable to sales."

So, it's not net income as reported in earnings releases (after all costs, depreciation are stripped out). But "net sales" as defined above.

Sierra reported gross margins (profit before depreciation and other write-offs) of 47.9 million for 3Q 2012.

Not enough information to get a good feel for what they're paying us. However, even going with earnings numbers of approx. 12 million for the past two quarters, and using only the consumer percentage rate, the royalties appear to be in the hundreds of thousands of dollars per year.

And did I read the agreeement correctly that they are also paying us for past royalties going back some six years? (section 4.2, page 5 of the agreement)

jmo