Rim shot: Will shaky finances imperil 40 Mb/s DSL?
Our recent report on a new proposed alternative to DSL called IPSL drew a lot of interest this month, particularly because the technology’s inventor, Rim Semiconductor, has claimed to have achieved 40 Mb/s speeds over copper in rural telco networks.
But there’s much more to Rim than that report reveals.
Despite having raised some $90 million over the years, the publicly held startup said in regulatory filings late last month that it needs to raise more funds “immediately” and that its liquidity problems “raise substantial doubt about [its] ability to continue as a going concern.” As of three weeks ago, the company had $5,100 in cash.
The urgency expressed there is particularly striking given the long road ahead for Rim. For its technology to be widely deployed, it must be adopted by makers of access and customer premises gear alike. It’s a fundamental departure from today’s broadband networks, and efforts to create industry standards for it have barely begun.
So where did all the money go? Rim has made some acquisitions over the years, including a $228,000 purchase of VDSL chip maker 1020 Technologies in 2006, and one of Broadband Distance Systems (a subsidiary of Utek) this year. But Rim’s financial problems stem at least partly from having essentially started over last year with a new technology.
In 2002, the company entered into a license and development deal with powerline communications vendor Adaptive Networks, paying Adaptive nearly $6 million over the following five years for its contribution to the chip that would be Rim’s central product. But that work was essentially replaced last year after Rim switched to its current focus on what it calls “IP Subscriber Line,” a faster, more efficient alternative to DSL.
Last summer, after some development work that led to its current product, Rim recorded an impairment loss of more than $6.3 million for previous licenses and development work, maintaining that some of the resulting intellectual property may still be useful in the future.
With no commercially available product yet (it’s promised for later this year), one of Rim’s few sources of revenue so far, bizarrely enough, has come from show business. Among the company’s holdings is a 50% stake in a documentary feature film about surfing called “Step into Liquid” (a title that, given the company’s current liquidity problems, rings painfully ironic), which Loren King of the Boston Globe called “lively and entertaining.” Rim says it got out of the movie business at the end of last year, after netting more than $76,000 in returns from “Step into Liquid” over the last two years.
When asked about the movie deal, Rim’s CEO, Brad Ketch, who was not CEO when Rim made the deal, said, “A long time ago, the company was in other lines of business. They’ve all been discontinued for years. [There is now a] 100% focus on IPSL.”
Following my report, I received an e-mail from someone claiming to be a longtime Rim investor. He wasn’t happy. “In the ten years that I have been an investor, they have made countless promises,” he said. “Not one, not a single one, has ever been fulfilled. They have gone through at least five iterations of their supposed technology. Just when it seems they are close, they move the goal posts. [Rim] is just another penny stock scam that is in the business of creating and selling dreams.”
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February 12th, 2008 at 2:19 pm
Ed, you seem like a conscientious reporter. Thanks for covering Rim. However, do us all a favor, separate yourself from other lazy blog writers who regurgitate filings (we can read) and “sort of” cite quotations from a nameless disgruntled shareholder. Try to schedule a sit down with CEO Brad Ketch so you can ask real, tough, probing questions about Rim, or with Telcordia or Embarq or Esilicon or with one of the several phone companies testing the tech. Thanks.
February 12th, 2008 at 3:39 pm
If you should happen to interview Brad Ketch of RSMI, you might want to inquire about the cancellation
of their little certification club meeting in Milan, Italy. It was cancelled two days prior to the supposed
meeting of all interested telco parties in Europe. The reason given was that the keynote speaker found
he had a “schedule conflict”. He found that out two days before the meeting? All the supposed attendees already had the hotel reservations, plane tickets, rental cars reserved, facilities had been
supposedly arranged, language translators (?), etc. Really now, Mr. Ketch, are we to believe that???
February 13th, 2008 at 2:16 am
Ed,
I echo others in thanking you for beginning coverage of Rim Semiconductor. I’ve followed this company for many years and am a long-time shareholder. Matter of fact, because there was so much misinformation out there, 18 months ago, I started a website www.ticktockstock.com to cover company developments.
I’ve spent countless hours researching this company and could find no public mention that Rim Semi has raised “some $90 million dollars over the years.” Can you identify your source? In addition, I could not find details regarding the delayed Milan IPSL-SIG meeting.
You speak of the long road ahead and indeed it will be. But why no mention of the many milestones reached in the last few years? The technology trial agreements with Embarq Corp and a multi-billion dollar telecom equipment maker in China would be a nice start?
You wrote of the “going concern” statement recorded in the most recent 10Q. We both know that if on the day the document is signed, if Rim Semi had less than 12 months of working capital in the bank; a statement of going concern is added to the document. In the past, Rim Semi had years where the statement was included and some years where it was not necessary. Those are the ups and downs of developing companies. Before publishing your report, did you verify this is still the case?
You wrote of accumulated losses, the fact Rim Semi has no revenue to date, and the defunct motion picture arm of the company. This is all true.
My challenge is this; If Rim Semiconductor is as precariously perched as your article depicts, how could they have done the following within the last 1 ½ years:
1. Added William A. Swope – corporate VP and general manage of Intel’s Corporate Affairs Group to their BOD
2. Keith Chipperfield, former Engineering Manager of the RFID group with Intel, to lead engineering development at Rim Semiconductor
3. Signed a joint product development agreement with Embarq Corporation
4. Signed MOUs with now 5 major equipment manufacturers in Asian and Europe
5. Signed technical trial agreements with at least 5 telcos.
6. Signed eSilicon to complete the ASIC design and front funding for ASIC manufacture through TSMC, the largest chip fab house in the world.
7. Received confirmation from Telcordia’s senior scientist Kenneth Kerpez who documented multiple “breakthrough performance gains” in the technology.
8. Made primarily stock acquisitions of 1021 technologies and Broadband Distance Systems.
And finally from Ron Victor, General Manager of Hellosoft: “We are excited about what we see with this product. You might have seen that in late March my president, Krishna Yarlagadda wanted to be on record as saying, “the offset QAM algorithm inside Embarq is absolutely at the leading edge of any transport processor in the world. These elegant and accurate OQAM processes combined with a powerful data modulator and demodulator, yields performance results that are better than we have seen from any other company.” The most significant advantage of your technology is the ability to reach farther and faster on a single pair of unshielded twisted pair copper with a higher data throughput than the announced VDSL, VDSL2, ADSL, ADSL2 and ADSL2+ products from your competitors. We are excited to be a part of such a powerful processor.”
Yes, as with most new companies waiting for those initial contracts, Rim Semi will always be in need of additional working capital. But is this so different from its predecessors? Dave Mock wrote in “The Qualcomm Equation” that funds were so low while CDMA was being developed many employees worked extensive overtime with no pay. He went on to write, “By the end of September 1991, Qualcomm’s accounts were once again drained dry. At the end of September 1991, Qualcomm had only $125,000 in cash- not even enough to meet its payroll through the year… He (Irwin Jacobs) wouldn’t allow the cash crunch to impede the development process for the CDMA trial and ASICs.
This willingness to sacrifice came purely from the excitement of being part of what was to become a disruptive new technology.
Fast forward to Rim Semi - Do you really believe, the afore mentioned agreements, acquisitions and addition of esteemed industry professionals would have occurred apart from the parties involved seeing a huge upside for Rim Semiconductor?
I appreciate your response
George B. Hightower M.D.
www.ticktockstock.com
February 13th, 2008 at 12:42 pm
Your article was dead on correct. If Dr. Hightower cannot find evidence of $90 million raised and spent, he is not reading the filings. Further, not one of the items listed in Dr. Hightower’s reply is a tangible.
MOUs are just memos, members of boards of directors are paid and do not lend credence to the business. Every quote about the supposed technology came from a person who was directly or indirectly paid by RSMI and therefore not credible. The Milan meeting was cancelled as Dr. Hightower knows very well. The acquisition of Broadband Technologies is especially revealing. The acquired company was a shell established by UTEK. The only assets were $400,000 in cash and a worthless algorithm. RSMI paid 60 million shares to get their hands on the $400,000. They valued their own stock at .0067 cents to complete the transaction.
The comparison to Qualcomm is ludicrous. Qualcomm was a going concern during the development of CDMA. QCOM was a real company with a track record and legitimate sources of funding.
All RSMI has to do is prove the existence of the technology. Make the telcos available for interviews, publish test results, release a peer-reviewable white paper. They can’t and they won’t because there is no technology and there are no tests taking place. However, they will hide behind the old story: “We don’t want to release any trade secrets”.
February 13th, 2008 at 7:01 pm
I suggest to anyone who doesn’t wish to be scammed of their hard earned dollars to go goggle all the PR’s since at least the year 2000. Current management of RSMI which use to be NVEI and then NVXE when they started the first tech scam have done their best to not display past records of this criminal operation. When you STEAL shareholders money through PR’s that are fronts in order to sell shares most people would call that criminal and I certainly do also.
Once you have the PR’s together look at the time line of them. Look for results of any PR. Do you see if any of them came true? You’ll find not one PR did. In fact even the movie came out late. Over 95 million $$$ has been gone through according to the last filing. The alleged tech has been changed more times then Roger Clemens testimony about steroids. All these alleged techs have been tested over and over but only results revealed have been by paid consultants who won’t reveal the specs they were tested on.
Believing what this company says would be like putting Britney Spears in charge of a Parenting Class.
No one with common sense after all that has been lied about up to this time should not walk, but RUN as fast as they can away from these cons.
February 13th, 2008 at 7:42 pm
after all these years of nothingness, how can Hightower be so positive? anyone who has followed this pipe smokers dream knows this has been nothing more than brad and Willenbergs cash cow. Check Forbes and see what they are worth . Your capital (finances) havn’t come close to what these people have taken from the invester who was hoodwinked into thinking a product was comeing soooooon
February 13th, 2008 at 9:20 pm
While Dr. Chan can obviously read filings and post a strong opinion, he is probably a figment of some clever poster’s imagination. For him to hammer the highly-respected Dr. George Highwayman is grossly unfair. The tick-tock site is a platform for the company and is engaged solely in its defense. Nary a contrary word, much less opinion, is ever accepted. In America, it is not respected when somebody knocks down and tramples upon a helpless blind person. While every criticism and point posted by the faux Dr. Chan might be right on target, American ethics dictate that someone protests your inclusion of the harsh challenges included in his post. In America, every penny stock scam deserves to stink on its own odor. It is not proper to uncover negative items in public reports if those reports reflect adversely upon corporate management practices. Many investors have had dreams created and expanded by corporate management. It is not nice to criticize other peoples’ investments by revealing true information. Not polite. Not allow corporate men to save face. Please research more and say only nice things again. Tomorrow is Saint Valentine’s Day; where is the love!
February 14th, 2008 at 1:33 pm
This bickering can come to an immediate halt. All RSMI has to do is prove the existence of the technology. Make the President available for an in-depth interview, publish third-party, unpaid, verified test results, and release a peer-reviewable white paper.
The ball is in RSMI’s court. It is now time to put up or shut up. $90,000,000 has been spent. FPGAs have been promised since 2002, Purchase orders have been accepted and then never fulfilled, meetings have been scheduled , canceled and then never rescheduled. Investors have lost millions on paper or in fact. The time is now for RSMI to come clean and show what they have, if anything.
February 14th, 2008 at 1:55 pm
Not nice. Dr. Chan is sticking his fingers in eyes of company management. Investors are paying much money to corporate management, not to have fingers sticked into eyes. Company may have important technology, but waiting for right customer to buy. Extreme Copper Company putting in orders for eventual millions of dolars of company products. Many Oregon large telephone companies lining up to buy billion dolars of company products. Chattahooganoochie telephone company lined up, also. Why need peer-reviewable technical paper when orders already lined up? This is money-making-to-be telephone equipment inventing corporation, not Bell Labs trying to gain Nobel Prize in Physics. Company management never required to “put up or shut up,” only to create and expand dreams for investors. Please to allow penny stock scam company to stink on own odor. IPSL Meeting to be held soooooon in Milano in order to certify and ratify new world-wide standard for company technology. Xian meeting to follow to make Asian world-wide standard for company technology. Not polite to stick fingers in eyes.
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