Irvine Sensors Looks to Fund ‘Super Router’
By ANDREW SIMONS
Irvine Sensors Inc.’s story is one of big ideas the company is yet to realize.
Last year, the Costa Mesa-based developer of chips and other electronics saw the bankruptcy of its once-promising Silicon Film Technologies subsidiary, which offered a canister that turned film cameras into digital ones.
The company’s core offering,stacked chips that pack a lot of punch in tight spaces,also looks good on paper. The company counts government, aerospace and some wireless customers, but only $10.7 million in sales last year.
In fact, Irvine Sensors’ $5.6 million market value as of last week stands at just about half its 2001 sales, which fell by about 1% from the year before. A reverse-stock split last fall didn’t help sway souring investor sentiment.
Now Irvine Sensors has another big idea,what it calls a “super router.” The router, a computer networking device, boosts Internet speeds by cryogenically freezing the electronic switches inside the router’s circuitry. The idea is that the colder electronic signals get, the faster they go.
“This is perhaps one of the most interesting things in the company and one with the most stunning implications on the Internet,” said John Stuart, Irvine Sensors’ financial chief.
And it’s not just faster data, Stuart said. The router has the potential to combat terrorism on the Internet by enabling the immediate tracking of e-mail transmissions to a single computer, he said. That trick could be used in cases such as that of kidnapped Wall Street Journal reporter Daniel Pearl, Stuart said.
But Irvine Sensors faces significant hurdles with its super router.
The most pressing is funding. Officials at Irvine Sensors say they are looking for investors to shoulder some of the router’s development costs. The company already raised $1.6 million for the router’s development last June from Zimmer Lucas Partners LLC and Vertical Ventures LLC, both of New York.
But more money is far from certain. Last year, the company had a signed letter-of-intent with investors for more money, but following Sept. 11, those investors pulled out.
In a letter to shareholders, Robert Richards, Irvine Sensors chief executive, said he was confident that the technology eventually would get the necessary financing.
“The extensive due diligence performed on the router concept has reinforced our belief in its eventual success,” Richards wrote.
The company also is looking to the government for funds.
Irvine Sensors can’t turn to Wall Street. Despite a 25-for-1 reverse stock split on Sept. 26 designed to keep the company’s shares listed on Nasdaq, Irvine Sensors stock has floundered. It fell another 60% since the split to close at 1.13 at last check
“About the time the split came to fruition, it was overtaken by the shift in events,” Stuart said, referring to the Sept. 11 attacks.
The company has had other problems. Last year, Irvine Sensors suffered an embarrassment with the failure of its Silicon Film unit. The unit’s technology sparked investor interest, but Irvine Sensors couldn’t get it up to volume production.
The company continually failed to meet deadlines to have the product ready, according to one investment banker familiar with the company.
“Finally, credibility evaporated, along with Irvine Sensor’s ability to continue funding the burn,” he said.
Irvine Sensors’ Stuart said that while the Silicon Film product was “elegant,” its window of opportunity eventually closed.
“It took a lot of engineering grunt work to make it happen,” Stuart said. “It was going to take another serious investment, but nobody wanted to pony up.”
The company’s super router has a decent chance, Stuart said, with the economy showing signs of a rebound and the government looking to invest in new security measures.
The investors who pulled out of the project after Sept. 11 are looking at it anew, according to Stuart.
“This whole thing has taken on a new flavor,” he said. “Interest in the product has not evaporated.”
