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BURST.COM & MICROSOFT SIGN
FINAL PATENT LICENSE AND SETTLEMENT AGREEMENT – BURST ANNOUNCES DIVIDEND
Santa Rosa, Calif., (April 5,
2005) – Burst.com, Inc. (OTC: BRST), announced that it has executed a
final Settlement and License Agreement with Microsoft Corporation, and
today provided certain additional information to address questions
stemming from the announcement of the preliminary agreement almost 4 weeks
ago. Richard Lang, CEO, noted that the Company has received many inquiries
regarding the Company’s use of proceeds from the license agreement and
regarding the Company’s future operations. Currently, management of the
Company does have the following responses and general intentions with
respect to some of the matters raised by the requests for additional
information:
1. The $60 million patent license
provides Microsoft with the right to use Burst’s intellectual property in
its own technology and products thus giving Microsoft’s customers the
benefit of the Burst technology. Burst, however, retains the right to
enforce its patent portfolio against those using Microsoft's technology
and products who infringe by extending or going beyond those Microsoft
offerings. The patent license also does not grant Microsoft any sublicense
rights.
2. Burst plans to continue
identifying and evaluating companies who are licensing opportunities and
intends to diligently pursue those likely to yield suitable returns. Burst
does not plan to announce specific names of suspected infringing products
or companies in advance of negotiating with them or filing litigation to
enforce its patent rights. Burst does not plan to publicly release any
internal assessments of market segment size or dollar value of those
markets, although it believes that they are large enough to warrant the
aggressive pursuit of patent licensing within them. As previously
disclosed, Burst is already in the process of pursuing licensing
opportunities with potential licensees.
3. Burst does not intend to
radically change its current basic business model, which calls for the
licensing of its patents as broadly and aggressively as possible. It does
not plan to increase the number of employees significantly or to do
significant additional R&D, and will continue to rely primarily on outside
counsel to pursue licensing initiatives. The Company overhead will likely
increase somewhat, to take into account additional administrative needs,
anticipated additional legal and accounting costs and the reinstatement of
previous salary levels of its CEO and VP of operations, which were cut by
50% in 2001 in order to preserve cash, plus cost of living increases for 2
employees.
4. Court costs and attorney’s fees
in connection with the settlement of the litigation will reduce proceeds
to the Company to approximately $39 million. According to the signed
agreement, payment to Burst is to be made within 7 days.
5. Burst’s Board of Directors has
voted to distribute a cash dividend to its shareholders from the Microsoft
license fee in the amount of $.90 per share. The dividend will be payable
to all of the Company’s shareholders of record on May 6, 2005. The company
has recommended that any Burst.com Warrant or Option holders who intend to
exercise their warrants or options in order to become shareholders of
record by May 6, 2005, complete their warrant or option exercise(s) no
later than April 14, 2005, in order to allow ample time for the processing
of their exercise(s) and the issuance of their shares.
6. Payment of the dividend is
contingent upon actual receipt of funds from Microsoft, which is required
to be made within 7 days. Prior to the distribution of the dividend, the
Company will pay-off its liabilities and intends to establish a cash
reserve of approximately $4 million, so that it can effectively implement
its business objectives going forward.
7. At this time, Burst envisions
that going forward, it will focus almost exclusively on the aggressive
enforcement of its patents in the markets previously described and the
maximization of licensing revenues.
8. As Burst has noted, the company
is unable to further publicly address issues and answer questions
regarding subjects that the Company’s Board of Directors has not yet
adequately addressed or resolved, or regarding subject matter that the
company’s legal counsel has advised is either privileged in nature, or
should not be discussed for strategic or other reasons. As the Board and
management make further determinations regarding the matters discussed in
this Release and other matters involving the Company’s future operations,
the Company will make further announcements to all shareholders and will
also post those announcements on the Company’s web site.
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This
Press Release contains forward-looking statements similar to those covered
by the safe harbor provisions under the Private Securities Litigation
Reform Act of 1995. We believe that the expectations expressed herein,
regarding the new license of our technology with Microsoft, our use of the
funds from this license, our intent to further enforce our patents against
other companies and our intent to develop and sustain new operations are
based on reasonable assumptions. However, these forward-looking statements
are subject to numerous uncertainties and risks and actual results and
developments could differ materially from these expectations. Factors
which could affect our operations and prospects include the costs and
uncertainties of pursuing complicated litigation, the effect our license
with Microsoft will have on other companies utilizing our technology and
in our market and our ability to pursue new or additional operating
strategies. We are not responsible for updating any such forward-looking
statements.
About Burst
Founded in 1988,
burst.com
has pioneered the development of Faster-Than-Real-Time™ video and audio
delivery. burst.com has built an international patent
portfolio covering burst-mode video delivery, scheduling, rapid casting
and network optimization.
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