The license anticipates the delivery of up to
approximately 1,900 digital titles for broadcast by Digicable over the license period against a monthly license fee to
the Company of US $0.04 cents, per Digicable subscriber, with a minimum monthly fixed floor of $ 400,000, less
applicable India withholding taxes, for a total overall minimum license fee over the 2 year window of $ 9.6 million.
Payment of Digicable’s license fees begin within 10 days after the end of the quarter in which the Company’s digital
content is delivered, such that if content is delivered on or about December 1,2016 the first payment from Digicable
would be due on or about March 10, 2017. This License Agreement is subject to Digicable providing the Company
with a satisfactory Standby Letter of Credit (“SBLC”) for $ 9.6 million as collateral for its license fee obligation. To
date, this SBLC has not been provided by Digicable and until it is the Company will not commence delivery of the
digital broadcast elements, which could postpone the delivery of the content effective date and delay the related
revenue expected to be derived from this transaction. The Company cannot recognize revenue until content delivery is
made and payment from Digicable is reasonably assured.
The Company understands that Digicable is in discussions with funding sources concerning a major capital raise in
2017 and Digicable has advised the Company that it wishes to either extend the start date of its License Agreement
with the Company or modify its terms. Management anticipates any modifications to occur by the end of 2016.
While the Company does not expect that any amendment will materially change the economic terms of the license;
however, no assurances can be given as to any economic impact or material changes until discussions with Digicable
take place and are concluded.
THIS SBLC seems to be similar to a performance bond in terms of digicable being able to provide the movies as required for the 2 years otherwise the subscriber would be on the hook! hopefully they can get the SBLC at minimum costs because normally letter of credit don't cost unlike a performance bond is a certain %.
