Replies to post #11 on Avistar Communications Corp (AVSR)

[The Claw]

On September 22, 2011, we entered into a License and OEM Agreement (the “Citrix Agreement”) with Citrix Systems, Inc.
(“Citrix”). Under the agreement, we are required to create customized versions of Avistar’s voice and video software products that Citrix will
have the rights to commercialize as bundled with Citrix’s products. Citrix will also have the right to receive support and maintenance services
from Avistar in connection with such products. The initial term of the agreement commences on September 22, 2011 and ends four years after
Citrix’s commercial release of a Citrix product that includes the Avistar product or technology, and Citrix has the right to renew the agreement
for an additional four year term. Citrix has agreed to pay us a $7.7 million initial license fee for the technology deliverables and $1.0 million
per year for maintenance and support fees for the initial term of the Citrix Agreement. As of March 31, 2012, a total of $6.0 million in license,
service and maintenance fee was billed and collected from Citrix for project phases that have been delivered to and accepted by Citrix since the
inception of the Citrix Agreement. In the event that Citrix renews the Citrix Agreement for a second four year term, it will pay a $2.0 million
renewal fee for the license, and $1.25 million per year for maintenance and support fees. Under the initial term of the Citrix Agreement, we are
required to deliver the technology deliverables associated with our products to Citrix in successive phases. The initial license fee and the first
year maintenance and support fee totaling $8.7 million is payable in various installments subject to Citrix’s acceptance of the technology
deliverables and refund provisions at each phase, whereby all or part of the previously paid license fee is refundable following a final rejection
of the deliverable by Citrix and/or termination of the agreement depending on the project phase. We have determined the value of maintenance
based on VSOE of fair value and allocated the residual portion of the initial $8.7 million to the development and customization of the
technology deliverables. The amount of the residual portion that is fixed and determinable is recognizable under the percentage of completion
method, in accordance with the “Input Method.” For the three months ended March 31, 2012, we recognized approximately $594,000 in
product revenue and $907,000 in service revenue. As of March 31, 2012, a total of approximately $4.5 million in license, service and
maintenance fee billed and collected from Citrix, of which $3.8 million is subject to refund provisions, was recorded as deferred revenue and
customer deposits in the accompanying condensed consolidated balance sheet.
Based on the proceeds we received from issuance of the Note, the results of our ongoing