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Factory News March 2009

TECHNOLOGY VERSUS CASH

I've written to you many times over the past two years — occasionally with unfortunate news — but I never imagined the topic I am about to cover in this newsletter. Desktop Factory, like so many other companies today is forced to reduce our spending and focus on just the most vital activities to preserve our cash. How ironic that our biggest concern is no longer product-related or technical issues, which we have faced and overcome, but financial resources.

We have adroitly survived a near catastrophic technical challenge; now we need to weather this unprecedented financial climate. To ensure you understand how we are approaching the situation here is the chronology of the past 18 months.
  • October 2007: Technology issues arise; customer beta and fundraising sidelined
  • January 2008: Assessments point to the need for a redesign of our imaging sub-system
  • All 2008: Redesign imager and re-test every aspect of printer operation and reliability
  • September 2008: Restart fund raising for long delayed $3M round
  • November 2008: Received $1M commitment from a well known venture capital firm
  • December 2008: Received matching commitment from incubator for $1M
  • February 2009: Ready for customer acceptance beta test
From a macro view we have done well with $2M raised and another $1 million needed to finalize the round. However, we had not planned for the extreme deterioration of the financial markets and need to comply with an important 'contingency' from the venture capital firm. The contingency stipulates that no monies go into the round until all monies are available, which is the crux of the problem. We still need $1M and sufficient time to find the third investor in this difficult economy.

While we continue to aggressively work this issue we have judiciously delayed the customer beta. We need to make certain we have the right resources available to meet with our investors and that we are able to fully support our customers during a rigorous beta process.

WHAT YOU SHOULD EXPECT?

We promise that complete transparency in the information we share with you will continue. We will send another newsletter update within the next few weeks regarding our status. The monies we have collected for reservation orders are held in a separate account and are not used for operating expenses. We have had a few customers with their own financial challenges request refunds which we have immediately provided.

We have a number of potential investors that we are talking with presently and hope to conclude the negotiations within the next few weeks.

WHAT CAN YOU DO?

I have mentioned our fund raising activities to you in the past, mostly in passing. If you or someone you know is in the business of investing in emerging technologies, we would encourage you to contact us. Desktop Factory has a terrific team, technology, patents, orders on file, future customers and a significant market potential that is almost entirely untapped. And, as always, we will return all emails and calls within 24 hours.

We look forward to providing you with a very positive outcome to this challenge in the very near future!


Regards,
Cathy Lewis signature
Cathy Lewis
CEO
 


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