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  • Writer's pictureQuantum Industries

BGXL01 June Statement

To all our backers patiently awaiting the BGXL01:

Firstly, I would like to thank every single person that has put down deposits on the project and helped us feel confident in its success once launched!

We face one final hurdle that I believe warrants a statement to explain the current ongoing situation in clear detail for any of you unfamiliar with international product development.

As mentioned via our social media channels we finally got to a final sample that we approved a couple of weeks ago. However, this is where a new problem emerged that has caught us majorly by surprise. We sent forward our order to our supplier, but days later we had an unexpected unit price increase of almost 90%. To anyone in manufacturing this is obviously extreme and has caused an extreme bump in our ability to produce the product, especially as we manufacture at scale. This totally caught us by surprise, is not in any way a normal way of developing items, but if we proceed immediately, this means our costs have doubled.

We have taken the past week or so to try and find a way around this problem however I would like to clarify the situation to anyone that doesn't know how Covid has affected product development, especially for international companies such as ourselves where many supply chains and materials are consolidated and exported.

• The USD in the past year has been rapidly losing value (which is the main trading currency of the World), mainly due to COVID19, as we are based in Asia and most of our regions have handled the pandemic well and recovered remarkably quickly. This has actually bolstered the domestic currencies which we need to buy many of our materials and labour in. Sadly USA and the West have had major setbacks because of their handling of covid, lockdowns, massive bailouts, furloughs and cheap loans (Quantitative Easing) have put us in a tricky spot because it has caused in particular the US Dollar to lose value massively against other currencies.

• Due to the pandemic we've also seen a massive collapse of manufacturing levels and orders, as everyone shut down in the beginning of the pandemic including material suppliers and retail. However, there has been a rapid rebound that has caused a huge glut of new orders of products. Cars, microchips, metals and other materials have become incredibly scarce, which has also driven up material prices as companies compete for the little resources that are available. We've noticed car companies cutting production lines, and massive delays in Tech and Automotive industries as notable highlights in the current drama (which is a huge reason no one can get their hands on PS5s still at present even 8 months after launch)

• To further the woes of the Global economy, many Countries continued massively importing products in shipping containers, but because Asia has been relatively Covid free, many Countries restricted imports from the West, so these imports into Asian nations have not happened. This has caused chaos for international shipping as it has meant a huge build up of containers on the West Coast USA, which has a knock on effect that the few remaining containers that are available to move cargo have seen a massive price spike at present. This scenario, combined with the Suez Canal shipping catastrophe which blocked many imports for weeks has had a chain reaction that any materials moving around regions, have had to be shipped at near double the cost at present (which has been a nightmare for us trying to ship products out to regions where we don't hold stock in of inventory). We still have the ongoing border lockdowns between Countries also to deal with, including Hong Kong, China and others. which means we also find it impossible to have sit down meetings with our factories and have been reduced to video calls and texts. The other option is a 1 month quarantine in hotels each side of the borders which is not possible.

These three issues of currency inflation, material scarcity and shipping scarcity have created a storm of unpredictable costs. We actually have remained on top of the situation on other items anticipating a 10-30% price increase on certain products we make for other companies. However we've been blindsided by this raise.

This statement is not to say we are cancelling BGXL01 or any of our future products, as of now we were lucky enough to get clear communication with our bag suppliers well in advance which enabled us to buy all our materials so our products are safe. We are currently in talks with the supplier to work directly with the factory themselves to see if we can reduce costs, and commit to launching the product even if the preorders are at a loss or break even with the higher unit price.

What this means is that we need a little more time to figure out how to get production moving at a lower quantity so that we can service the preorders and make sure backers get their products even if it puts us at a loss to do so. Although a delay is inevitable, the positive thing is that all of you that have backed the project will be getting the case now at a substantially lower price than we will be forced to launch at. Markets such as UK, EU and Asia shouldn't be too affected by the rises as their currencies have also strengthened, but the US, Japan and SEA markets in particular will see a dramatic increase in price for this case at launch so our advice is to ride this storm with us because we are determined to not let you guys down.

We aim to solve this issue in a few ways which I will explain below so you can see we have multiple options to solve this, and potentially other options we have yet to realise:

*We are negotiating lower prices on certain components such as locks and foams, trying to bring the costs down on the last quoted manufacturing cost, we will not be compromising any quality by trying to find ways to reduce costs as we cannot release an inferior product to our flagship range.

*We are negotiating a smaller MOQ for this order, and the factory seems to understand and be willing to assist us to make the product at a lower quantity, which will alleviate us of the burden of a huge amount of very expensive stock.

*If we cannot find a solution with this supplier, we are then forced to transfer the project to a new supplier that will give us a better fixed price to launch. We have this in place as an emergency option but it is an option we are exploring but if chosen will cause a longer delay so is our third option.

The good news is there is NO scenario where we do not launch this item, as it will be one of our key flagship items that we need to be a serious player in the touring case market.

It's purely a matter of patience and solving these unexpected problems. Crowdfunded and preorder programs always have risk to face delays at the best of times or even cancellation (personally I am awaiting a pair of true wireless headphones I purchased 5 years ago via indiegogo.... I wont hold my breath), especially when we have little control over the shipment of parts, rising fuel and production costs, and travel restrictions between countries.

We can guarantee that our company is liquid, as we are sustainable and not in any financial hardship at all, so your deposits are totally safe with us and purely held to drop when we manage to press this production button so there is no risk in losing your deposit. We are working overtime on this and trying to find the right way to handle the situation and also find the right launch window to ship the products, as right now it seems like the peak of this production and shipping crisis. We are still working very well on Gig Bags and other items are already developing smoothly so it is purely BGXL01 that has become the wildcard.

We know this has been excruciating, especially for people that have been waiting before Covid kicked in, but we are truly working on bringing this case to light. We have a full complete and realised prototype and tooling ready to go, it's just a matter of solving this situation in the smartest way possible.

For anyone that is concerned or wants to talk to us you can reach out to us via our social media accounts and we are watching for messages or alternatively feel free to email me directly if you need any further clarifications.

We hope to get you all an update soon, but also your case soon and get this case into production asap and truly we apologise for how this project has such an unusually painful ride.

Thank you so much for your understanding and patience as we navigate this very difficult and annoying situation.

Lee James Tsui - Director

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