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Technology Stocks : Aware, Inc. - Hot or cold IPO?
AWRE 1.810-0.5%Feb 4 3:59 PM EST
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To: Melissa McAuliffe who wrote (4501)10/28/1998 11:52:00 AM
From: Elroy  Read Replies (2) of 9236
 
Regarding the details of the licensing arrangements between AWRE and the chip/system makers - I called AWRE a few months ago and asked IR this question. They said that the arrangements are not all the same, and they declined to give out the details. She did say it was a safe assumption that as the number of chips/units sold increases, the royalty payment would increase. However, we have no idea if royalties are $0.01 per chip or $1.00 per chip or what. Perhaps someone who is more familiar with "normal" per unit royalties might have a better idea.

Another point from the conference call - AWRE management indicated that the bulk of the "royalty revenue" in the Sep quarter was fixed upfront fees, as opposed to the per unit charges described above.

So my interpretation is that AWRE is currently receiving a fixed royalty fee from COMS, LU, Siemens and ADI (the 4 largest royalty contributors per the conference call), perhaps in order to help those companies get their xDSL products working with AWRE technology and out the door, and a smaller per unit fee as the products have yet to achieve widespread deployment. Going forward, the per unit fee is expected to grow, if xDSL products ever take off.

But the net net is that the details of the lisencing agreements are not publicly available.

Elroy
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