Replies to post #3458 on Andrea Electronics (ANDR)

[pitts77h]

FIG doesn't "own" them at all, they own a "perpetual" right to a revenue stream based on the patents.

I was speaking figuratively when I said ANDR "sold" the patents. The reality is highly technical. I suggest you read the filings. There are several, and they are very complex. You have to understand how "PIK" notes work... spoiler alert! They aren't shareholder friendly.

I can give you the Cliff Notes version, however: They are structured so that shareholders will get nothing.

Here's the original agreement with "AND34 Funding."

https://www.sec.gov/Archives/edgar/data/6494/000114544314000190/d31067.htm

On February 14, 2014, Andrea Electronics Corporation (the “Company”) entered into a Revenue Sharing and Note Purchase Agreement (the “Agreement”) with AND34 Funding LLC (acting as the “Revenue Participants,” the “Note Purchasers,” and the “Collateral Agent”. Under the Agreement, the Company has granted each Revenue Participant a perpetual predetermined share in the rights of the Company’s future revenues from all of the patents currently owned by the Company...

In addition, the Company issued $200,000 of notes to the Note Purchasers and has agreed to issue and sell to the Note Purchasers an additional $4,000,000 during the four years after the closing date (which may extend to a fifth year by mutual agreement), or such greater amount as the Note Purchasers may agree in their sole discretion. The proceeds of the Notes will be used to pay preclose expenses of the Company and the Revenue Participants and Note Purchasers and the Company’s future Patent monetization expenses. The Notes are also secured by the Patents.

Any Monetization Revenues (as defined in the Agreement) received from the Patents will first be applied 100% to the payment of accrued and unpaid interest on, and then to repay outstanding principal of, the Notes. After the Notes are paid off in full, the Monetization Revenues received from the Patents will be allocated amongst the Revenue Participants and the Company in accordance with certain predetermined percentages (based on aggregate amounts received by the Revenue Participants) ranging from 100% to the Revenue Participants (such percentage to be allocated to the Revenue Participants until they have received $3,000,000) to ultimately 20% to the Revenue Participants.

In other words, first the "Notes" (owned by FIG) get paid off IN FULL, PLUS ACCRUED INTEREST, then the "Revenue Participants" (once again, FIG) get paid off IN FULL, PLUS ACCRUED INTEREST.

Only then AFTER Fortress (and partners) are paid off in full, will a portion of the cash trickle down to the COMPANY - not the shareholders.