I would like to take a moment of your time to tell you about several of the exciting advances here at Rim Semiconductor Company. We realize that there are a number of important developments happening at the same time, and that investors want to stay on top of all of them. Last week we had scores of calls and emails from existing and new investors asking for more information, and we of course are glad to answer all of the inquiries that we can.
This interest is not just coming from our existing investor base. Historically, our investors have been individuals and family trust funds. But last week we saw institutional investors buying our stock for the very first time. I believe that the arrival of institutional investors to our growing ranks of shareholders is a good sign.
Not only are our investors excited, but our board of directors is, too. Last week one of our directors, Thomas J. Cooper, bought an additional 100,000 shares in the open market with his own personal cash. You will see that we disclosed this on Form 4 on the SEC website, along with updated ownership tables for all directors and officers.
Conversions are Complete. Last year we placed $3.5 million worth of convertible debentures with 26 institutional and individual investors. One feature of these debentures is that the debt-holders have a right at any time to convert their notes into Rim Semi's registered common stock at a discount to the market price. I told you in my last President’s Letter on February 1st that over 85% of the possible conversions had been completed. As of last week, they are all substantially complete.
Why Embarq™ Delivers VoIP. Next, I want to talk about what will really drive value in your investment, and that is the development and marketing of the Embarq™ family of transport processors. We have told you recently about two important uses for the transport processor that we really had not talked about much before. The first is enabling voice over internet protocol (VoIP) and the second is security.
The reason that we have added voice features to the E30 in Release 1.4 is that carriers worldwide want their new broadband DSL systems to offer not just data, but also voice. And they will want video in the near future, too. They refer to this combination of services as their “Triple Play”, and it is essential for their survival against the cable competitors. You can read more about this on our website here.
Today, carriers deliver both voice and high-speed internet access over a single copper pair using an older service called ADSL. But ADSL is not capable of carrying the new video services, and thus the rapid adoption of the next generation of DSL called VDSL2. But VDSL2 chips do not integrate voice processing in their chips – so what’s the carrier to do?
The Embarq™ E30 is the only transport processor operating at VDSL2-like speeds that integrates voice processing. In doing this, it establishes a superior competitive position and adds premium value to our already excellent value proposition. As we will show in future releases of marketing materials, this dual-function processor vastly reduces carriers’ cost to deploy voice, video and data services.
Trademark Infringement. Turning to another matter, many of you were as surprised as we were to learn in January that Sprint Corporation is renaming their business that serves DSL lines to consumers and small businesses, “Embarq”. Last week they offered cash to us to release our trademark to them. We have not accepted this offer. I will keep you apprised of this matter as important developments occur.
Why Embarq™ Delivers Secure Communication. Last week we sent a representative of Rim Semi to the RSA Conference (view conference agenda) in San Jose. We are actively exploring how our unique data encoding contributes to secure wireline communications. Worldwide, there is hardly a more pertinent topic, and we believe that we can contribute an important piece of technology.
This conference is not our first effort. In November 2005 we had our first dialog with the US federal government about how our technology can be used on military bases, and other government facilities to improve security. In December we submitted an extensive package of materials to the General Services Administration (GSA) in response to their request. In January we had follow-up meetings. Our goal is to be awarded a GSA procurement contract so that we can sell our products to the federal government. We will keep you informed as we hit future key milestones in this effort.
In closing, I want to share with you my excitement about the development of Rim Semiconductor Company. We are receiving intense interest from potential customers, investors, and potential technology partners. We have added more engineers and marketing resources, and we are focused on the successful delivery of Release 1.4.
The possibility for rapid acceptance of our technology continues to gain momentum - based on our new added features and on recent market enthusiasm. And we believe that your opportunities as investor are as big as the worldwide telecommunications and security industries.
Sincerely,
Brad Ketch President and CEO Rim Semiconductor Company
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This letter contains forward-looking statements that involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry, and that reflect our beliefs and assumptions based upon information available to us at the date of this letter. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and uncertainties discussed under the heading "RISK FACTORS" in Item 1 of our Annual Report on Form 10-KSB for the fiscal year ended October 31, 2005, and in our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason.
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