Semiconductor firm plans Portland move
Aliza Earnshaw
Business Journal staff writer
A publicly traded California company that combines telecom-semiconductor development with movie production said this week that it plans to move its offices to Portland.
New Visual, which has six employees, plans to locate permanently in Portland during the first quarter of next year.
However, the company's presence here may not be of long duration. In its most recent quarterly report filed with the Securities and Exchange Commission, New Visual states, "We have continued losses in each of our years of operation, negative cash flow and liquidity problems. These conditions raise substantial doubt about our ability to continue as a going concern."
New Visual Corp. (OTCBB: NVEI), now based in San Diego, also announced that it has hired James Cruckshank, a local partner with finance and information-technology consulting firm Tatum Partners, as its new CFO in connection with the move.
Cruckshank was formerly CFO for Christensen Electric Inc. and Assisted Living Concepts Inc., and was corporate controller of The Schnitzer Group.
New Visual's public statements reveal a company in a state of transition.
The company, which is incorporated in Utah, has co-produced a surfing documentary, "Step Into Liquid," which opened in movie theaters this summer. However, the company also entered into a development and license agreement about 18 months ago with a Newton, Mass., company called Adaptive Networks Inc. to develop a semiconductor for the telecom market. New Visual announced the prototypes of the new product, dubbed Embarq, a year ago.
New Visual's CEO, Brad Ketch, said in an interview published on the company's web site in January that during this year, the company intended to move past the prototype stage and release "a final high-volume, low-cost product."
He added, "We believe we are one of a very few companies in what is normally a highly competitive worldwide industry that is actually rolling out a new product in 2003."
New Visual has not, so far this year, announced any customers for the new product, nor has it announced a production run.
New Visual has recorded no revenue for the past two years, and has recorded just $12,200 in total revenue since Nov. 1, 1999. Since that date, the company has recorded a total net loss of more than $36.3 million.
For the time being, New Visual is looking to future revenue from the film it co-produced. So far, no revenue from "Step Into Liquid" has appeared on New Visual's books.
The company agreed in April 2000 to invest up to $2.25 million in the film, and will receive a 50 percent share in all net profits from worldwide distribution and merchandising, after receiving return of its initial investment.
As of July 31, New Visual had funded just under $2.2 million of the film's production costs, according to the company's quarterly filing with the SEC. As of Nov. 9, the film had grossed almost $3.7 million in box office sales, according to the Internet Movie Database web site and other sources.
At the August shareholder meeting, Rich Wilson III, New Visual's vice president and secretary, said that New Visual estimated that "Step Into Liquid" should gross about $40 million over the following 12 to 18 months, which would bring about $7 million in revenue to New Visual.
During the shareholder meeting, CEO Ketch said that he realized shareholders were concerned about the bottom line, and wanted to know how soon the company would turn a profit.
"I want you to know that next year we will make money," reads the script from the meeting. Ketch added that he did not yet know how much New Visual would make, but that he would tell investors "when I have a good feel for it."
"Moving from loss to profit is a giant step forward for your investment, and I am confident that the markets will value your investment much higher because of it."
New Visual's stock currently trades on the over-the-counter bulletin board at 24 cents per share.
For the nine months ended July 31 2002, New Visual lost 19 cents per share, or nearly $7.4 million. During the first nine months of this year, the company narrowed its loss to 2 cents per share, or just under $2.3 million. New Visual's fiscal year ends Oct. 31.
New Visual has funded its operations by issuing equity and borrowing. During the first nine months of this fiscal year, $2.5 million in cash flowed into the company from its financing activities. During the same period last year, the company received nearly $4.4 million from its financing activities.
However, expenses outstrip the inflow of cash. For the first nine months of this fiscal year, New Visual has seen a decline of $194,059 in cash, and as of July 31, held $117,578 in cash. Total current assets were $188,294, of which just over $9,000 is listed as "receivable from officers."
"Management believes funds on hand and available sources of financing will enable the company to meet its liquidity needs for at least the next three months," New Vision's filing reads. "However, funding for the company's operations has become more difficult to secure and more expensive than in prior periods ... our continued existence is dependent upon our continued ability to raise funds through the issuance of our securities or borrowings."
At New Visual's annual shareholder meeting, held in Portland in August, shareholders voted to re-name the company Rim Semiconductor Co., in order "to reflect our current and future business activities and strategic direction," according to the proxy that New Visual filed with the SEC.
However, the company is still using the name New Visual on its web site and in current press releases.
© 2003 American City Business Journals Inc.
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