Thomas, this is from Zitel's Feb 96 - 10Q
On November 17, 1995, the Company finalized an agreement to acquire 37.5% of
MatriDigm Corporation, a privately held company. The investment, which consisted
of preferred stock, totaled $3,350,000. Under the agreement, the Company
obtained an exclusive license from MatriDigm to incorporate its technology in
the development of new products. The Company does not expect development of any
new products that incorporate the technology in the current fiscal year.
There hasn't been much discussion about this ... what struck me most was that Matridigm issued preferred shares to Zitel for about $3.35 million in cash ... I'm not so sure about how private companies work, but it seems to me that being preferred shares, this 37.5% (now 33%) is meaningless because as Matridigm's equity position grows, preferred shares being debt instruments generally, just retain their original value ... for this reason, it is quite possible that Zitel at some point will see its equity stake in Matridim diminish to 5-10% ...
The next thing is the 'exclusive license' arrangement which is more like a technology benefit to Zitel rather than a clear cut financial bonanza, as have been inferred from most of the articles/postings about the Zitel/Matridigm relationsip ... being 'exclusive' how will the other equity holders fit in like BRC holdings ...
Suppose the Nevada test is a hit and a multi-million dollar contract was signed, the question is: DOES ZITEL benefit proportionally given its stake or the loot is really only Matridigm's to keep ... This is obviously very important because the basic premise of all this Zitel hype is their big equity position in Matridigm, when in fact, it's possible that Zitel has to do its own development & marketing using Matridigm's technology ...
The plot just keeps getting thicker and thicker ... |
