2021 BRN Discussion, page-4781

Hi Tas

In thinking about and discussing this agreement with Renesas we are quite rightly disadvantaged because we do not have the full licence agreement for sensible commercial inconfidence reasons.

So we need to acknowledge that at least we do not know the following:

1. Does the agreement restrict the IP use to one product category?
2. If it does, does this mean the IP fee charged is less than would otherwise be the case?
3. Why would Brainchip want to restrict Renesas or any other customer to one product category?

My Speculative opinion is that the answer to the above is that the IP agreement does not restrict the use of the IP to any one product line as this would be against the best interest of Brainchip as the more products Renesas puts the IP in the higher the recurring fees paid to Brainchip.

In coming to this speculative opinion I have given weight to the fact that the CEO expressed surprise at how quickly Renesas moved to sign the unconditional agreement which likely means they did not play hard ball over the terms offered by Brainchip.

If this speculative opinion on a correct then some products such as motor vehicles will require multiple Renesas chips each containing AKIDA IP generating fees whereas other Renesas products from its medical device Division for example may only require one chip per product and hence generate only one fee from each product.

As some posters have speculated this deal with Renesas has the potential to be far bigger and more lucrative than anyone has imagined but only time will tell.

We know that the CEO described the agreement as “unconditional” which certainly means it is a done deal not a trial but how far this term ‘unconditional’ can be extended is anyone’s guess.

So my bottom line is that to do other than speculate we will need insider information and I don’t think we are going to have access to that any day soon. It will be the growing income disclosed in the balance sheet that will dictate the level of success of this agreement.

If other IP agreements are announced it will be very difficult over time to know which company is the source of the income and we will have to content ourselves with never knowing exactly what is going on.

My opinion only DYOR.
FF.

AKIDA Ballista