Greeting All!
I’ve been busy these past few days trying to make sense of this board. It appears, because it is imprudent for the company to reveal at this time, the technology, many have taken that lack of information as opportunity for gain. While they certainly have a right to free speech, misinformation, (I hope not willful) inhibits those who are less sophisticated from getting objective information.
I began going through the quarterly and annual reports from the time of the acquisition of New Wheel forward. I saw accountings documenting millions of shares paid to Mike Sheppard and Al Blevins, as compensation in the hope they had what it took to commercialize this technology. I saw other millions of shares awarded to Adaptive Network, to employees for deferred compensation and to pay down operating expense debt. While some would say it was excessive, it is a common practice in start-up companies as a way to finance product development. Yes it does lead to dilution of shareholder value. That cannot be disputed. But can someone suggest an alternative? Banks aren’t in the habit of loaning million of dollars to start-ups at 7%. On the balance sheet, this stock compensation is converted to a cash equivalent, has value, and recorded as such. Nowhere did I see large cash outlays to employees. Rightfully so, stock-based compensation is awarded to those who have laid it on the line all these years. Such is the case with Ray and Brad. To the uninitiated, or to those who just want a reason to argue, it appears cash expenditures were exorbitant. On corporate balance sheets stock distribution is recorded as cash. As far as actual dollars, it appears NVEI has used about 26 million in R&D since 1999 when New Wheel was introduced.
Contrary to what some will surely say, in this industry, this is no very much money at all.
Here is a short list of New Visual’s future competitors and what they have spent recently.
Texas Instruments 1st quarter ending 31 March 2005
Semi-conductor revenues $2,597,000
R&D- 495 million
Ikanos
R&D 100 million since 2001
Revenue 31.5 million 2004 still operating at a loss
Metalink
R&D 35.3 million past two years
Revenues 22 million
ST Micro FY 2004
Revenues 8.7 billion
R&D 1.537 billion
Conexant last 6 months
R&D 143,080,000
183,000,000 operating loss
Centillium Communication
Revenues 17,000,000 last quarter
R&D 14,000,000 in the past year
Broadcom
Revenues 550 million past quarter
R&D 138 million
7.025 million in stock based compensation.
Compared to these companies, New Visual is still just getting started. In the future, as the product line develops, these type of expenditures can be expected.
Has New Visual done everything perfectly? By no means. I’m sure foresight would have warned that the two original engineers weren’t able to perform as promised, or that the relationship with Adaptive Networks would only get us 80% there. I don’t believe there is any company that can say that.
We all would give every dollar we have to be one of the original investors in Intel as it was developing the first Pentium chip.
How would we have responded however when it took years to develop at the cost of over 5 billion dollars!!!!
While this technology may or may not have that type of reach, Mr Yarlagadda, the Chairman, President and CEO of Hellosoft, who has been involved in just about every stage of the Pentium chip development stated our technology is one of the most elegant he has ever seen. Coming from a man of his caliber that is saying mouthfuls.
Later guys, I’m going albacore fishing !
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