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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Greg Hull who wrote (18173)	9/24/1998 9:41:00 PM
From: Kerry Lee	Read Replies (5) \| Respond to of 29386

<< Are the deliverables available to be delivered today, or is further development required, e.g. more software to be written? I could imagine additional documentation might be required, but how about something riskier like a new ASIC with further integration?>> My crude understanding is that "deliverables" is really future engineering time defined as "non-recurring engineering" ( NRE ). In other words, NRE = Ancor engineering staff working with Inrange's people to build in Ancor's ASIC design or something to that effect. IMHO,Ancor really has to screw up in order to not receive the $2 million royalty.I think there may also be additional royalties over and above the $2 M that Ancor can earn which might be volume dependent, but I'm not 100% sure of that. << Does this agreement get filed with the SEC? Are we sure there are no stock warrants or other opportunities for further dilution?>> My understanding is there will be an SEC filing sometime in the near future. I have no data on any warrants, therefore at this point, I would not rule it out. In the event that there are warrants attached, my guess would be that although warrants are potentially dilutive, warrants could bring in even more cash to the Company over and above the $9 million and are the lesser of 2 evils compared to convertible preferred stock since warrants usually have exact exercise prices ( as opposed to floorless Reg D convertibles ). Suggest you call Steve Snyder and ask him about SEC filing/warrants.Good luck getting thru to him on the phone..your chances of winning the Lottery are much better. When you think about this deal, Ancor achieved a number of goals, eg -entry into a new market niche in a highly profitable manner ( 50-100% margin?) -significant cash payments over the next 3 quarters to enable the company to survive thru 1999 ( Ancor's quarterly fixed expenses are $3 million ) - no Reg D or Reg S financing necessary -industry credibility and elimination of perceived risk of doing business with Ancor due to financial condition. This can only enhance Ancor's prospects in closing future OEM's. -$9 million of virtually guaranteed revenue stream to be recognized over 1-3 quarters.Just on the $7 million licensing portion, this is equivalent to closing a $14 million sale at 50% gross margin.Not too shabby.