Struggling Mystic firm running out of options
USA Video says it doubts it will be able to continue to function as a 'going concern'
By Robert A. Hamilton - More Articles
Published on 4/3/2001
Mystic — USA Video Interactive saw its expenses almost triple, to $5.3 million, far outpacing its increase in revenues and leading to a net loss of $4.7 million for the year, according to the annual report it filed with the U.S. Securities and Exchange Commission.
The company said in the annual report that it is going to need as much as $3.5 million in financing by mid-year to keep its operations going, and its auditors stated there are “substantial doubts about the company's ability to continue as a going concern.”
USA Video Executive Vice President Anthony J. Castagno said the financial results reflect the company investing in the sales and marketing infrastructure it will need to begin generating revenues, as well as development expenses related to a product it expects to roll out later this year.
He said the company last month raised $1.35 million in a private placement of its stock, mostly to insiders, including himself, company president Edwin Molina, and Chief Financial Officer Anton J. Drescher.
The offering consisted of restricted stock, which cannot be traded for one year after the purchase price, and warrants to purchase additional shares.
Company remains confident
“We're willing to tie our money up for a year because we're confident in the direction the company is going,” Castagno said.
But raising the rest of the $3.5 million the company needs to keep going its likely to be tough given the level to which the company's stock has fallen. USA Video shares closed Monday at 61 cents, down almost 83 percent from its 52-week high of $3.56, but still ahead of its low of 38 cents a share reached last December.
Castagno said he was not sure how the company might raise the rest of the money.
“It could be another private placement — we're looking at all the options,” Castagno said. Beyond this year, the company expects it would have to raise $5 million to $6 million to maintain its operations through 2002.
The company announced Monday that it has hired Jeffrey S. Bartlett as Vice President of Sales to spearhead the upcoming launch of StreamHQ. Bartlett has more than 15 years experience in high-tech sales.
He also noted that the company is not alone in its economic troubles – the technology heavy Nasdaq exchange closed Monday at 1,782.97, its lowest point since November 1998.
According to the company's annual report, the company had expenses of $5.3 million last year, up from $1.6 million a year earlier and $615,817 in 1998.
Castagno said many of the expenses were related to the hardware and software purchases necessary for the development of the company's StreamHQ, a system of internet video and audio services that will include everything from content production to transaction processing off a website.
It first reported revenues in 1999, of $20,500, and though some company executives initially had expected revenues to jump to as much as $25 million last year, instead they totaled just $653,592, have of that through engineering services provided to other companies, instead of product sales. |
