I posted this two years ago. I have added new, relevant information where needed, and updated the dates and timeframes.
NVEI began (I think) as a 3-D movie company. They also dabbled in other snake-oil endeavors such as CD-based business cards. At some point, Ray got introduced to Al Blevins and Mike Sheppard, who claimed to have a remarkable broadband transmission technology. Rather than market this technology to telecom equipment manufacturers, they were introduced by Ivan Berkowitz (I think) to Ray and his little 3-D movie company in 1999. Al and Mike thought they had something big. I think that Ray and Al and Mike actually sincerely thought that they could bring the original Cu@OCx to market. You must *really* have an ego to think that three people who have no formal education in the science of DSL, no experience in marketing broadband technology and no success managing a public company could produce something much better than the best minds in the world can do. HOwever, from what I have heard, Ray's ego was up to the task. They somehow finagled Lucent into doing a test and releasing the "results". The PRs were stunning - Lucent had verified that this technology worked as advertised.
Or so we thought.
The stock price shot up, and New Visual ENtertainment was on the map. Ray was fat and happy. A mysterious device appeared at the SHM that was supposedly a "prototype", and shareholders were cautioned not to touch it. The hype was unreal.
But, physics got in the way of their plans and it turned out that Cu@OCx was a bust. It just didn't work. That didn't stop them from issuing PRs announcing "progress" and hiring of Fleishmann-Hillard, Quint and others. But in the end, Cu@OCx simply did not work, despite all the hype. The Lucent testing PRs were pulled. All evidence of the testing seemed to completely disappear, and Lucent was never spoken of by the company again. This did not stop the company from keeping up the appearance of having a "disruptive" technology, though. The public charade continued with period Persident's letters and PRs touting "progress".
But, Ray was in a predicament. He was pulling down a nice $250,000 salary plus bonuses for doing nothing, and did not want to give it up. Remember, Ray has absolutely *no* telecom or DSL experience. He had a publicly traded company that was listed as being in the telecom business. As long as he could keep investors interested and sell stock, he could keep up his salary without doing any actual work. But he needed a hook. Cu@OCx was dead, and too many people (Lucent) knew it, though it had not yet been publicly disclosed that CU@OCx was a scam.
Enter ANI.
They had a technology on the drawing boards (PowerStream) but didn't have the funds to complete it. Ray had access to money, but had no technology. It was a match made in heaven. So, Ray and ANI ink a deal. Here is where I think the dishonesty really began. I believe that Ray and Propp both knew full well that PowerStream could never be used over phone lines competitively. Look at the ANI website. The very best that PowerStream can do is 5Mbps according to their data. Yet, NVEI made claims that the PowerStream-based product could do over 100 Mbps. Furthermore, the development agreement between ANI and NVEI seemed to clearly indicate that PowerStream was a mature, working technology. Only over a year later did we find out that PowerStream was nowhere near completed at the time.
Now, think about this. First Cu@OCx was touted as being far superior to the nearest competition, and it was developed by two guys with no experience in the field. Now, Cu@OCx had been abandoned and NVEI was claiming that PowerStream-based Embarq was, once again, far superior to anything on the market, even though the ANI web site claims that PowerStream can only do 5Mbps. Bottom line is that the company publicly claimed to have developed two completely different technologies that far exceeded anything on the market. The first one was proven to be a bust, but miraculously, the "new" one was just as good. Yeah, that's likely...
But it was a telecommunications technology, complete with pedigreed industry" icons" for PR fodder and they could sure make it look like they were trying to make it work. So Ray promises to fund the completion of PowerStream and Propp in turn agrees to act like he is working on Embarq at the same time. So, Ray pays off all of ANI's debt and gives them a big hunk of cash - a total of almost $6 million. Propp and his gang busily start the job of finishing PowerStream. Meanwhile, Ray continues to lead investors down the garden path, sell wallpaper and collect his fat checks and bonused. NVEI makes public statements that an FPGA prototype will be released by the end of 2002 along with a promise of revenues. (this is important, as you will see) He brings Cooper on Board, but Cooper has integrity and sees right through the scam and departs as CEO just a few months later. Immediately following Cooper's departure as CEO, NVEI fails to deliver the FPGA prototype or any revenues as promised.
Enter Ketch. This guy has never held a job for more than a couple of years, but he has a telecom pedigree. That looks good on the "corporate bio" and investor fact sheet. Plus, Ketch gets to also pull down a fat salary plus bonuses for doing nothing. Of course, he has to have zero integrity to play along, but I know this is so, since he told me a bald-faced lie on the telephone without even flinching. So, Ketch is perfect for the figurehead who helps perpetuate the scam.
So, now you have Ray raising the bucks, and Ketch writing nice little "Dispatches from Supercomm" and "President's Letter" while Propp and his gang are busily working on PowerStream.
In the fall of 2003, PowerStream is done. A PR to that effect is released. Remember, all along, we investors were led to believe that PowerStream was done a long time before, when NVEI licensed it from ANI. Obviously, this was not so. Anyway, now ANI has their FPGA, and the "Technical Update" comes out that says Embarq is composed of 80% PowerStream. Remember that PowerStream can only do 5 Mbps, according to the ANI web site. Yet, NVEI is making outrageous claims of throughput of 20 times what PowerStream can do, and investors are gobbling it up. Once again, an FPGA prototype and revenues are promised for the end of 2003. The charade continues. Propp has no intention of actually trying to make Embarq work since he knows it won't work. But he just got his project paid for by Ray.
Of course, 2003 comes and goes without an FPGA prototype or revenues - just like the year before. NVEI does announce the release of a prototype, but it is computer based, despite two posters here saying that the company told them that the "chip was done, had 3 million gates and was the size of a fingernail". Two potential customers wer supposedly evaluating it. Needless to say, here we are five years later and those evaluating companies were never heard from.
Meanwhile, we have the film. The books only show about half a million in revenue, but some of the details of the distribution agreement are still secret and always will be, and all of the money went through TSP, which is unauditable. Sweet deal. John Howell made many statements about potential revenue in the $40 million range, only to have the company "reiterate" a $20 million target. In the end, the movie only returned a couple hundred thousand - at least above board.
So, here we are, 7 years after Cu@OCx, and Ray has taken home over $4 million over the table, and God only knows how much under the table with all of those shady share giveaway deals. Plus the many millions in the "Compensatory Elements of Stock Issuance" catagory - who know where all of that money went. $1 million raised four years ago for technology development was never spent on R&D, not a penny, but Ray and Ketch got paid anyway. Three years ago, they signed a $3.5 million death spiral financing deal, but only spent $366,000 on R&D. Meanwhile, Ketch gets a $70,000 bonus.
But now, Propp and ANI have moved on to their business after you and other shareholders funded his product. 3 years have gone by since the first promise of an FPGA prototype and revenues, and nothing has yet been delivered. Investors are getting anxious, the stock price is plummeting and Ray and Brad's gravy train is faultering. Ray needs another hook.
Enter HelloSoft. A secret deal is signed with secret phases defined and a lot of PR hullabaloo is issued. Interestingly, none of the PRs offered any details about exactly what HelloSoft was doing. Nonetheless, yet another promise (the third one) is made that an FPGA prototype will be released by year end along with revenues. Remember that this happened twice before, and no FPGA prototype was ever produced. No doubt that Ray and Brad believed that they needed to come up with something convincing. So, they announce the release of an FPGA prototype in December. However, they also tell us that we can't actually see one and that only two select customers will be given one. They announce "availability" of an unavailable product. They also produce a spiffy PDF flyer with details about their new "product". It had a professional-looking image of a chip in the corner, and a picture of an impressive circuit board with an arrow pointing to a chip, identifying it as their FPGA.
Astonishingly, we found out last month that the entire investment in the ANI PowerStream technology was written off as worthless. The PowerStream-based technology had been abandoned. Think about this. First, Cu@OCX was touted as the fastest broadband technology in thew world. Later it was found to be worthless and abandoned. Later, Embarq was touted as the fastest broadband technology in the world. We now know that it was abandoned as worthless. For a third time, they would have us believe that they have developed the fastest broadband technology in the world. People sure are gullible.
Un-freaking-believable.
I guess that they did not anticipate the tenacity of yours truly. I thought that the fancy picture of the chip, emblazoned with the EMbarq logo looked familiar, so I looked around. As an AMD investor, I had a hunch. The picture was, in fact, a stolen image from AMD and was a picture of AMD's very successful Opteron server chip. The offending picture was hastily removed from NVEI's web site shortly after I revealed their deception with my posts here.
I was also dubious about the picture of the circuit board in the flyer. I looked closely at the board, and it seemed clear to me that it had "Actiontec" engraved into the board. With the help of another skeptic, we found a photo of an *identical* board that was the guts of an Actiontec wireless DSL modem. Clearly, this company had intended to deceive us into thinking this was a picture of their own work, when in actuality, it was nothing more than a picture of the insides of a run-of-the-mill modem. Shortly after I revealed this deception here, the flyer was revamped to replace the bogus modem board with a picture of a different board.
It is abundantly clear to me that this latest promise to release an FPGA was just as bogus as the first two. This company pirated images from AMD and took pictures of modem boards and tried to pass them off as their own FPGA. The fact that these images were hastily removed from their site is proof-positive. I still have copies of the old bogus images if anyone is interested - as well as links that prove the images were bogus ripoffs.
Every assertion I have made here is dramatically supported by fact. Although I have speculated as to the motives for this bizarre littany of events, everything in this post actually happened.
Anyway, now HelloSoft is out of the picture, and the company claims to have an FPGA. They have claimed to have purchase orders, and claim that the product is once again being tested.
Which brings us to today. There are currently over half a billion shares issued, and that is following a 4:1 reverse split. Shareholders were forced to allow the number of authorized shares to increase to just under a billion. This company has raised over $70 million in the last 4 years, but in that same time period has spent almost nothing on R&D, while spending almost $5 million on salaries. Anyone wonder where the rest of the money went? I challenge *anyone* to find any semiconductor company in the history of semiconductors that has spent five times as much on executive compensation as they have on R&D. Or one that ahs three times announced the independent development of the worlds fastest technology while simultaneously abandoning the previously announced technologies as worthless. Its ludicrous.
Remember that this company is on its third disruptive technology. The first two turned out to be bogus, but they want you to trust them this time.
Each year since 2000 has brought the promise of a shipping product and revenue, and yet another year has passed with neither. The fact that anyone actually believes in this company is astonishing.
Anyway, I have written far more than I intended to. There you have it.
