Rim Semiconductor Company (fka RSMI)

[deeba]

New Presidents Letter is out !!!!!!


deeba

http://www.newvisual.com/letters/pres_letter_4_2_03.cfm


Wednesday, April 2, 2003

President's Letter

To the shareholders of New Visual Corporation:

I would like to report to you on several new developments at New Visual covering our technology, the film, and general business. Though it has only been thirty days since my last communication to you, I am excited to show you how New Visual continues to make progress toward being a technically and financially strong investment for you.

Status of Embarq:
We continue to believe the copper opportunity is just unprecedented in terms of applications, service, equipment and chip revenue. With our chip, a 500-meter binder of 50 pairs could carry 5 Gbps total capacity symmetrically and reliably, opening up the bottleneck, and paving the way for the all-fiber network. The bandwidth in a billion copper pairs can, and will, overwhelm the existing interoffice capabilities, creating new opportunities for new service and equipment revenue. Customers already know how to use and are acclimated to Ethernet 100BaseT speeds in their offices, and thus an enormous market already exists for an Embarq connection.

Verizon, one of the US's largest telephone companies, is ready to take their foot off the brake with regards to DSL deployment. "At Verizon we firmly believe there will be a next phase of industry growth founded on high-speed, always-on networks that enable a whole new generation of products for the home and small business," said Lawrence T. Babbio, Verizon vice chairman. The companies that will benefit initially will be Verizon's existing suppliers, which are also New Visual's target customers. This increased capital expenditure for access wireline equipment will ultimately make our customers hungrier for what we have got.

In a bigger picture, from meetings that I have had recently, I think that telecommunications spending in our segment is getting ready to turn the corner. Last week, market researcher Electronic Trend Publications released new market forecasts for communications integrated circuits. According to their forecasts we're looking at a worldwide compounded annual growth rate for communications IC spending in excess of 20% starting now. It is exciting to me that this return to hyper growth bodes well for our entry into the marketplace. It is always easier to elbow a seat at the table when a market is expanding.

A result of this large and soon-to-be-growing marketplace is competition. Some of you have noted that our competitors have announced new products. We remain convinced that we are still able to deliver faster speeds over the longest distances, and thus stand alone.

As I reported last month, we are pleased with the progress of Embarq, and continue to receive positive interest from our target customers. Outside of this engineering work, we are laying plans for the creation of the ASIC form of the technology. Tom Cooper, a member of our Board of Directors and former Virata executive, was in Asia recently, and met with software and hardware development teams who could potentially develop our technology further. Another example of the type of background work that we are doing is that New Visual is represented at this week's Fast Net Futures conference in San Jose, CA (www.pulver.com/fastnet). These and other activities help ensure that Embarq will be a strong product when it is released.

Status of "Step Into Liquid":
As I recently reported to you, we have received multiple offers for a variety of types of distribution for "Step Into Liquid". Some of you have expressed frustration in the amount of time it has taken to sell the film. I would like for you to understand more fully the strategy that our agents are pursuing, and what our next steps are going to be.

Some of the world's largest distributors have made offers for theatrical release in the US, and also for foreign and ancillary market sales, such as home VHS/DVD, cable, and television. Because a successful theatrical release helps to enrich the films success in ancillary markets, we are now intently focused on engaging a theatrical release partner or distributor. Though we are beginning to receive reasonable theatrical offers, we know that other large studios have not made their initial bid yet, and we are optimistic for better terms. Our agents think that a series of promotional events that demonstrate the film's popularity will raise the value of the film. To date these items have included:

a thirty minute special on Planet X TV carried regionally by Fox, UPN, and Cox,
our licensing agreement with Microsoft,
special screenings that have produced extremely favorable reviews, and
participation in select film festivals.
As previously announced, we are extremely proud to be participating in The TriBeca Film Festival. In fact, this event is being billed as our "world premiere"! Founded by Robert DeNiro and Jane Rosenthal, TriBeca is one the world's premier film festivals in only its second year. For the first time, we will be competing in the Documentary Feature category. Though we will continue marketing the film in the interim between now and the Festival, we view the films acceptance into the festival as a key endorsement of its quality and value.

Even as we fight for the best terms in selling the film, we recognize the importance of releasing "Step Into Liquid" into the North American summer market window. I would like to assure you, that we have every expectation of making "Step Into Liquid' a successful summer 2003 release event!

General Business:
We recently filed our quarterly report, which covered the period of November 1, 2002 through January 31, 2003. In addition to the analysis that I wrote in the body of the report, I would like to make some further comments.

Our expenditures for research and development are found in two places on our financial statements. When we pay our development partner, Adaptive Networks, for their work on Embarq, we are technically paying down a debt we have to them. That debt appears on our Balance Sheet as a "License and Development fees payable." On October 31, 2002, our "License and Development fees payable" was $734,000. On January 1, 2003 it was $543,000, for a reduction of $191,000.

We also reported research and development expenses of $40,000 on our Statement of Operations. This, plus the payments to Adaptive, equals $231,000, which is an accurate picture of the amount of investment in the product that we made in the quarter.

It is important to note, that simply being a public company has become more expensive in the last several years. I expect to spend between $250,000 to $ 300,000 per quarter this fiscal year to comply with all of the provisions of federal securities law.

When I decide how to spend money, I first have to pay these and other fixed costs like rent utilities and insurance. I have other payables that have fixed dates and amounts that I must pay. After these non-negotiables are done, I invest in Embarq. And I want to underline something that I have said repeatedly: we will need to invest much more in Embarq than we are currently investing. And to do that, we will need to raise a significant amount of additional capital.

To raise that large capital, we have developed some new initiatives. One is a debt deal that we have disclosed to you before. Though we have agreed to terms and the board has approved such a transaction, the deal has not yet closed and we have yet to receive those funds. We are also actively developing other initiatives to meet our requirements for capital, while we continue to fund operations through a variety of finance instruments at our disposal as a public entity, and/or the funds from "Step Into Liquid."

Conclusion:
During the last twelve months, New Visual has quietly been becoming a financially stronger company. We have become financially disciplined and have strengthened our balance sheet with the help of our Board of Directors and staff.

Look for more of the same positive, exciting initiatives in the future. I will continue to build our financial strength - which we will need - as we introduce the world to Embarq.


Sincerely,

/s/Brad Ketch
Brad Ketch
President and Chief Executive Officer