Rim Semiconductor Company (fka RSMI)

[spokeshave]

Thoughts on the SHM notes...

OK. I am going to take a departure from my usual "bashing" and comment on what I believe to be some very positive developments. I'll take a few selected passages from the text of the notes and provide my comments:

 
 o    Pay off Short-Term Debt 
         o    Interest Expense down 72% 
 o    Slash Spending 
         o    Down 42% from last year 
         o    Executive pay reduced 40% 
              o   June 2002           $102,000 per month 
              o   September 2003        61,581 per month 
              o   Temporary reductions: 
                  o   Brad Ketch              20% 
                  o   Rich Wilson             50% 
                  o   Ray Willenberg, Jr.,    30% 
 o    Focus on the technology 
 

This is definitely an improvement. The financial picture is much better now, and although I would liked to have seen a greater salary reduction, it is a very important gesture. It is also evidence that the company is becoming more in tune with shareholder sentiments. After all, they work for us. I think it is clear that it is a reduction not a deferral. Well done.

We require $10 million over the next 12 to 14 months in order
to accomplish our vision for this company. The film is a hit,
and it is contributing cash, and it may make us all the money that we need.

I think this is still optimistic, but at least they have acknowledged the financial commitment necessary. I doubt the film can get them all they need, but it will definitely help. An FPGA would also help with potential lenders. More on that...

As a final note, this year will likely hold for us more
opportunities for a merger or an acquisition. I had an overture
from an equipment manufacturing company just this week, though
I don't think that it would be in our best interest. I have a
short list in mind of companies that we would propose
acquiring. If any deals come together that will add value to
your stock, we will pursue them vigorously, though we do not
have any such deal to report to you now.

I am not all that optimistic about M&A activity, but who knows. I do like the openness and honesty. I also like the increased awareness of shareholder satisfaction.

I am going to go ahead and cut to the chase here and illustrate that on a worldwide basis, we estimate Step into Liquid to gross nearly $40 million over the next 12-18 months. And, given the terms of the deal with our distributor, that should translate to approximately $7 million in revenue to New Visual.

So, on a gross receipts of $40 million, NVEI gets $7 million. That is at least as good as I expected - maybe a little bit better. I think that I originally guessed that theaters would get 50%, and NVEI (with Top Secret) would split the remainder with Artisan. That would leave 12.5% for NVEI. So, based on my guess, NVEI and Top Secret would split $10 million. NVEI then would get the first $2.25 million, then half of the remaining $7.75 million for a total of $6.125 million. So, the actual deal is a bit better than my model. That is great.

want to let you know today that we are at the point in the design where it is "frozen" to new contributions, which means that we have entered the period where we are simply doing the tedious work to convert the design to the next step, the FPGA.

I think I saw someone say this was already known. If so, I missed it, and it is important. It means that the "tedious work" need only be done once. This also tends to dismiss the rumors that the FPGA was complete and waiting on an Adaptive shelf for the bills to be paid. Clearly, "the next step" implies something that is not yet done.

 
 THE ROAD MAP 
 - ------------ 
 o   Assuming that funding is in place... 
             Step                             Status 
 Complete the Intellectual Property            [X] 
 Prototype semiconductor 
 o   Step One - computer                       [X] 
 o   Step Two - FPGA                          2H03 
 Evaluation of the FPGA from wireline 
 carriers and  platform providers             1H04 
 Volume production                            1H04 
 Revenues from production chips               1H04 
  
 

This is one of the most important things that came from the notes IMO. This is the first time that Brad has actually committed to a schedule. Thanks, Brad. It is certainly an optimistic one, but it is realistic if everything works perfectly.

I would like to see the slides that compare Embarq to other products - particularly the Infineon product. Does anyone know if the slides will be posted?

Nothing really new in the discussion of the ASIC fab process except to confirm what I had already suspected - and speculated here. I figured all along that they would use a Taiwanese foundry - packaging too. The only really interesting open question is who will do the design work... That still remains to be seen.

Well, that's about it. I got more than I expected, but somewhat less than I hoped from this. I hoped (though never believed) that they would be sandbagging, and would produce a working FPGA and a check with many zeroes. Well, one can dream. I did get most of what I have been asking for:

1) A reduction in salaries (got it)
2) An idea of the movie cut (got an idea, but more details would have been nice)
3) Status of funding (didn't really get that)
4) Status of the tech (got that - sort of)
5) A realistic plan forward (got that)

So. We are once again facing the closing months of the year eargerly anticipating the release of an FPGA prototype.

This is no place to be if you got a case of the nerves....