Penny Stock Columns on the OTCBB

Can USVO Watermark its Success?

04-15-2008

by Priya Nigam

As the popularity of the Internet has grown, so have the problem of piracy and the activity of hijackers. According to Motion Picture Association of America (MPAA), film theft costs distributors, retailers and others $18 billion a year. MultiMedia Intelligence said in a report in January that applications that leverage content identification technologies, such as digital watermarking and fingerprinting, are growing rapidly and could surpass $500 million worldwide by 2012. Key applications include Internet and broadcast content monitoring, metadata association, copyright control, content protection and forensics, and interactive advertising.

USA Video Interactive Corp (USVO: OTCBB) designs and markets technology for the delivery of digital media. It has three main digital watermarking products, namely MediaEscort(TM), MediaSentinel(TM) and SmartMark(TM), that help producers and distributors to invisibly protect their content. The company's technology is compatible with various formats, methods and channels of digital media distribution.

USVO has inked an agreement with PIO (People of Indian Origin) TV Pvt. Ltd., which is based in India, to test the MediaSentinel digital watermarking platform. Following the success of this testing phase, PIO TV has committed to deploy the technology for watermarking and protecting its online content.

USVO has recently sold its copy protection software, MediaEscort(TM), to Twentieth Century Fox Home Entertainment, a subsidiary of Twentieth Century Fox Film Corporation, News Corp. MediaEscort automatically embeds SmartMarks, imperceptible forensic information in every frame of video content, during Internet delivery for protection against piracy. MediaEscort would help Fox protect its filmed entertainment content that is sent via the Internet to its various trade business partners prior to DVD availability.

USVO's CEO Edwin Molina said, "MediaEscort is a breakthrough for USVO product development that meets a growing demand for anti-piracy products for online media. We feel this is the beginning of a new era in content protection for intellectual property rights holders."

The company did not generate any revenues in the year ended December 31, 2007. Net loss widened to about $1.78 million, from $1.25 million in fiscal 2006. For the fourth quarter, USVO reported a net loss of $566,000, as compared to a net loss of $593,000 in the prior quarter. The company expects to need $1.25-$1.75 million in financing in fiscal 2008 and $2-$3 million in fiscal 2009.

USVO addresses a huge market potential. However, it is likely to continue to incur losses for some time to come. Shares of the company have declined by 40% from their 52-week high and are trading close to their 52-week lows.

The writer does not own shares in the above stocks.

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