Faced with dwindling cash reserves and a time lag on collecting software licensing revenues, video compression company On2 Technologies
has taken in a $600,000 financing round and moved its operations out of the city as part of a restructuring.
In addition, Doug McIntyre, the chief executive of the software company, Strauss Zelnick, the chairman of the board, and Chief Financial Officer Mark Meagher said they would forego salaries between August 15, 2002 and the end of the year.
The funding, restructuring and salary decisions are expected to help On2 substantially improve its financial situation after it recently announced it didn’t have enough cash to last it through the year. Compounding the problem, the company said, is a difficult economic environment for raising capital. The company said the salaries are not being deferred and will not be accrued.
As of the end of June, On2 listed just under $321,00 in cash. Its loss for the second quarter was about $1.8 million on sales of about $513,678.
The company said the new funding, in excess of $600,000, has been committed by existing shareholders and members of the its board. The deal, expected to close within a week, includes a four-year convertible note with interest paid in kind. On2 said it believes the funding would be enough to cover its costs while it starts to collect on receivables and software revenues for sales that closed in the third calendar quarter this year.
Some of its customers and alliances include Apple Computer
, and SeaChange
, a digital video software company. America Online
recently announced that its Nullsoft multimedia player, Winamp3, now supports On2’s VP3.2 codec directly in the NSV (NullSoft Video) format.
In other moves, On2 has decided to leave the city and relocate most of its facilities and operations upstate to its Albany Technical Center in order to slash costs and avoid layoffs in its engineering ranks. The decision will result in a restructuring charge in the third quarter.
Separately, On2 announced that Elumens Corporation, which makes software for the playback of high-resolution movies, had renewed re-upped for another year with the company’s software.