FORM 8-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported) November 22, 2002
USA VIDEO INTERACTIVE CORP.
(Exact name of registrant as specified in its chapter)
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0-29651 06-15763-91
WYOMING
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
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06355
70 ESSEX STREET, MYSTIC, CONNECTICUT
(Address of principal executive offices) (Zip Code)
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(800) 625-2200
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
On November 22nd, 2002, the Registrant issued a Corporate Update to its
shareholders advising of the impact of the current economy on the Registrant's
business and the current status of the Registrant's business
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 News Release dated November 22, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
USA VIDEO INTERACTIVE CORP.
Date : November 22, 2002 By : /s/ Anton J. Drescher
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ANTON J. DRESCHER,
CORPORATE SECRETARY
USA Video Interactive - Corporate Update
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NOVEMBER 22, 2002 - MYSTIC, CONNECTICUT - USA Video Interactive (OTCBB: USVO;
TSX: US; BSE/Frankfurt: USF; http://www.usvo.com)
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It has been a difficult two-plus years for USA Video Interactive (USVO) and for
the entire economy, as everyone knows all too well. The internet-related and
high-tech sectors have been particularly hard hit, with smaller companies -
those listed on the Over The Counter Bulletin Board (OTCBB), like USVO -
declining in value by more than 95% in 2000 and 2001. Business conditions in
2002 certainly have provided no relief. What began as a rout of OTCBB stocks in
2000 has spread to the Nasdaq and NYSE and every other stock exchange in the
world, affecting virtually every listed company and costing American investors
more than $8.4 trillion (USA Today - October 8, 2002). It is an understatement
to say that these past few years have been a daunting challenge for companies
and shareholders alike.
As all our shareholders know, USVO has not been immune to these conditions. We
have made many changes in order to stay in business until the economy begins
improving, and we will describe some of these below. But first, we sometimes
are asked about what happened to many of the agreements we announced in the late
1990s and over the past couple of years. Every one of these was entered into in
good faith by all parties involved, typically after long negotiations and due
diligence. But the economic pressures on the other parties to those agreements
and our company have been relentless. Many of the smaller (and some of the
larger) companies with whom we had agreements are now out of business or close
to it. Most of the surviving companies with whom we had agreements suffered
greatly during the past two years and have changed their business focus, putting
off plans and postponing spending, trying hard to weather the economic downturn.
Orders in the pipeline fizzled and promised benefits of alliances did not
materialize-not because of some failing of any of the parties, but because
economic conditions had changed so dramatically and everyone was being affected.
Paid advertising via the Internet, the target market that should have
voraciously consumed StreamHQ's capabilities, encountered a significant
downturn. Additionally, we found ourselves competing for the diminishing
remnants of that market against industry giants who could easily underprice us
or give their services away for free.
Our first StreamHQ services, Zmail and mediaClix , presented an innovative (and
widely demanded) marketing approach with the emphasis on results, not volume,
targeting an opt-in consumer base with a creative call-to-action rather than
bombarding the user with lifeless emails in the hope of a getting a less-than-1%
click-through rate. The initial response to our services was positive; one of
our clients had a nearly 40% view rate and realized a tenfold return on
investment. We had numerous enquiries and leads which led to completion of
contracts, a build up of orders and work in progress, which in turn created much
optimism within the Company, but the economy kept spiraling downward and more
and more of these orders were deferred. We began reducing staff and cutting
costs so we would be ready to ramp up once things improved globally. Earlier
this year, we asked officers and employees to defer some or all of their pay if
they could, with the promise that they would be paid as soon as some pending
contracts were finalized. In an unprecedented show of support, many of them did
and we were able to spread out dwindling cash reserves. We can't express enough
how much their sacrifice and their continued amazing talent have meant during
these difficult times.
Unfortunately, the anticipated contracts did not finalize and most of the
remaining employees had to be furloughed, again with the promise that paying
them their back wages was the Company's highest priority. Four employees met
with the Connecticut Department of Labor to protect their rights to back pay.
The case is pending in New London, Connecticut courts. In the meantime, formal
arrangements have been made with these four employees and other employees who
are owed back wages, and we are confident that the issue is close to being
resolved. In any event, it was and is most regrettable and we apologize to our
shareholders and employees for allowing it to occur.
Throughout the past couple of years amidst all these problems, we maintained our
pioneering video-on-demand patent and earlier this year, retained in-house
counsel to represent it aggressively. We focused remaining staff on licensing
the VOD patent and other intellectual properties such as our patent-pending
video digital fingerprinting and motion wavelet compression technologies. We
have received solicited and unsolicited expressions of interest in these
technologies, including proposals to purchase certain intellectual property
outright. However, in the interest of our shareholders, we must achieve the
right balance between timeliness of execution and proper value recognition; we
are not willing to sell out the Company's valuable long-term intellectual
property rights for a small fraction of their potential worth. A measure of
patience has been necessary so far, and will continue to be necessary as we
aggressively pursue licensing proposals and negotiations with strategically
selected target companies.
As we approach the end of a difficult year during which we experienced much
disappointment and an understandable loss of shareholder confidence, the Company
has refocused its energy on obtaining revenues through the sale and/or licensing
of its intellectual properties. At the same time, we are ready to re-launch
various StreamHQ initiatives, plus others that were in development, as soon as
the market recovers. We are confident that the economy will recover, and this
is confidence that seems widely shared among most business observers; it's just
that nobody seems to know exactly when that will occur.
In closing, we realize that shareholders have taken the brunt of the economic
downturn and many have incurred significant losses across their entire
portfolios, making losses associated with USVO all the more painful. As
principals in this Company, we know this first hand. But we are committed to
continuing in operation at the current reduced levels so that we can increase
shareholder value through licensing fees for our patent and other technologies,
and by leveraging StreamHQ to produce a revenue stream as the economy recovers.
We appreciate the confidence and patience that many have shown throughout this
time, and we certainly understand the frustration that all of us have shared.
We believe our current course and focus will lay the cornerstone for the
Company's future. As always, our commitment to our shareholders is to build
lasting value in the Company.
On behalf of the
Board of Directors
"EDWIN MOLINA"
Edwin Molina,
President
ABOUT USA VIDEO INTERACTIVE
USVO is a developer and supplier of Internet media delivery services, systems,
and innovative end-to-end solutions. The Company developed its StreamHQ
architecture to provide a wide range of business customers with value-added
media delivery services. USVO holds the pioneering patent for store-and-forward
video, filed in 1990 and issued by the United States Patent and Trademark Office
on July 14, 1992; it has been cited by at least 145 other patents. USVO holds
similar patents in Germany, Canada, England, France, Spain, and Italy. For more
information, visit www.usvo.com.
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USA VIDEO INTERACTIVE Corporate Headquarters Office: 70 Essex Street, Mystic,
CT 06355 (860) 572-1560; Canada Office: 507 - 837 West Hastings Street,
Vancouver, BC V6C 3N6. Trading symbol on the OTCBB: USVO; Trading symbol on
the TSX Venture Exchange US; Trading symbol on the Berlin and Frankfurt Stock
Exchanges: USF. CUSIP 902924208. The TSX Venture Exchange (TSX) has not
reviewed and does not accept responsibility for the adequacy or accuracy of this
release. For more information contact Edwin Molina (860) 572-1560;
info@usvo.com
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The press release may contain forward-looking statements. Actual results may
differ materially from those projected in any forward-looking statements.
Investors are cautioned that such forward-looking statements involve risk and
uncertainties, which may cause actual results to differ from those described.