I'll try to summarize the details from the 8K that was re-posted on the AOL board this morning.
The first statement of work is for answering machines.
Seimens gave Fonix 5,000,000 DM (the current exchange rate is approximately 1.8 DM to 1 US dollar) as follows:
2.4 million is a non-refundable royalty pre-payment.
.6 million for warrants to purchase Fonix RESTRICTED stock at exercise prices between $10 and $30 per share between now and the next 22 months (200,000 @ $10 (12/31/98), 200,000 @ $15 (3/31/99), 200,000 @ $20 (6/30/99), 200,000 @ $25 (9/30/99), 200,000 @ $30 (12/31/99))
2.0 million DM to acquire share of fonix's restricted common stock at any time prior to 3/13/98 at Seimens' election. If they don't take the stock, the 2.0 million DM will be an advance payment of royalties. The stock price will be the closing price on the day preceding the election to take the stock.
Seimens agrees to pay an annual royalty calculated from the net selling price of integrated circuits received by Seimens. Seimens' exclusive rights expire after 10 years. 3 years after the IC is developed, Seimens must pay an annual minimum royalty fee (not disclosed) to preserve its exclusive license.
Here are my comments:
This is for answering machines. Fonix predicts that there will be more of these agreements in the coming weeks and months. This is for answering machines. I suspect the next ones will be for phones and Window's CE type devices.
If (when?) Seimens does take an equity position, they will be motivated to "pull" fonix into a leadership position.
Although the upfront money isn't enough to cover all Fonix's expenses this year, I believe it's a great start for a year where we might see some actual earnings per share. However, the BIG money will come in 1999 when Seimens is selling these answering machines and Fonix gets a percent of the action. This is highlighted in the warrents noted above. The first 200,000 is for all of 1998, but the next 800,000 are all in 1999! Is this all smoke and mirrors? Maybe. Maybe not.
I'll finish with this thought. Fonix said they would do it and they did it.
Marc |
