NEW YORK, july 16, 2003 (PRIMEZONE) -- As one of the few providers of video compression software, On2 Technologies Inc. (AMEX:ONT) has a very simple vision: "to have the On2 video software in as many wireless, gaming, PC, and set-top devices in the world as possible," the company's President and CEO told www.wallst.net.
McIntyre said that although the adoption of broadband technology in the United States has been slower than some countries in Asia because of the technology recession, he is "finding that there has been a big speed up in that recently," referring to the 20 percent of all homes in the United States that utilize broadband connectivity as opposed to Japan and Korea, where the adoption rate is closer to 50 percent.
The majority of the company's revenues come from licensing fees, and distribution royalties, McIntyre said. On2 has recently formed an alliance with Beijing E-World Technology Co. Ltd., a conglomeration of several Chinese consumer electronics manufacturers, he said. The agreement will distribute On2's VP6 video Codec on E-world's Enhanced Versatile Disk (EVD) technology, which E-world is poised to distribute as the industrial standard for China for the recording and playback of video, audio and data.
"On2's VP6 Codec will be the Codec of choice for the People's Republic of China," McIntyre said. The partnership could prove lucrative for On2, as the New York-based company will acquire royalty payments for each EVD unit that is sold, McIntyre said. "The real money in these deals is in the deployments, as they move out into the future," he said. "Investors should be looking at the royalties, and the fruits of the deals." Within the next two years, McIntyre said that E-World plans to sell "Tens of Millions" of their EVD technology. "That will have a potentially very profound effect on our revenue."
On2 is also exploring the use of their video compression software in wireless devices, viewing the recent widespread use of Wi-Fi technology as a boon to their business. "Connectivity of Wi-Fi, has taken the phone and other wireless devices to (speeds) that are several times what dial up is," McIntyre said. "So as those technologies proliferate, you'll see more use of video on wireless devices."
In just under a month, On2's stock has risen from under a dollar to $4.50, and is currently trading slightly under that, McIntyre said. He attributed the recent rise to the company's increased revenue, and decrease in operations spending. "It only costs us about $1.1 or $1.2 to $1.25 million to run this company down from what once was $7 million per quarter," McIntyre said. "And that gives us tremendous leverage as revenue comes in the operating profit line."
He added that the "company has really been adding to its cash position since the beginning of the year," exercising warrants from financial transactions that "go back many years," resulting in $1 million in proceeds for the company. "Our cash position, which was a few hundred thousand dollars at the end of the first quarter is now in the neighborhood of $2.5 million," McIntyre said. "It's good news for investors as I believe that number could be as high as $5 by the end of August. At mid-year, our capital position, balance sheet, and shareholder equity will all be substantially higher than we even thought it would be by the end of the year."
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About On2 Technology
On2 Technologies is a leading technology firm at the forefront of video compression. The Company revolutionized video encoding with the creation of its advanced full-motion, full-screen, video compression and streaming technology (TrueMotion(r) VP4/VP5/VP6). On2 licenses its high quality video codecs for use in set-top boxes, consumer electronics devices and wireless applications. In addition, On2 offers a suite of products and services, including high-level video encoding, customized technical support, and consulting/integration services.
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