SOURCE: Burst.com, Inc.

April 05, 2005 07:00 ET

Burst.com & Microsoft Sign Final Patent License and Settlement Agreement -- Burst Announces Dividend

SANTA ROSA, CA -- (MARKET WIRE) -- 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.

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 (www.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.

Contact Information

  • For Further Information Contact:
    Richard Lang
    707-541-3870