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February 13, 1997updated 05 Sep 2016 1:03pm

VIRTUALITY WAKES UP TO THE REAL WORLD OF ADMINISTRATION

By CBR Staff Writer

Pending clarification of its financial position is one of those phrases attached to share suspension announcements that mean that the only choice is between the administrator and the grim receiver. So it has proved at Virtuality Group Plc, the Leicester, UK virtual reality games equipment pioneer, which on Tuesday called in administrators David Duggins, Murdoch McKillop and John Talbot, all partners at Arthur Andersen & Co. A sympathetic Duggins commented that There is little doubt that Virtuality has world-beating technology; it was the first to bring virtual reality to market. Now it is leading the commercial development of virtual reality technology for the consumer market. However, the costs of having developed that technology combined with a significant downturn in its old entertainment machinery business has drained the company of cash. Virtuality is still counting on its virtual reality headsets, and, underlining how much the whole affair has been a race against time as the cash slipped away, it has just signed a $15m US contract with Phillips Electronics NV, which follows up its headset licensing agreement with Takara Co in Japan, and the European rights to the technology are in discussion. The headsets, which are compatible with personal computers and leading games consoles, have a potentially enormous market thus generating substantial royalty streams in the future, says Duggins, who is sanguine that the company can regain its equipoise under temporary protection from creditors. We intend to work with the company through this difficult period to restructure and focus on the core headset business. It will also be very important for us to keep the core team in place so that the business retains its industry-leading position and excellent future opportunities, he said. In practice, administration means they hope to find a buyer for Virtuality. The liabilities are thought to total about 7m pounds, but the company has no debt – those banks that are so splendidly supportive of small businesses found that the risks were too rich for their dry taste. The shares were floated at 170 pence in 1993, and soared to 361p soon after that, but it has since been downhill all the way and they were suspended at 68.5 pence. It would be nice to think that the company could come back from suspension with a substantial cash injection for equity, and that the shares, somewhat diluted, could resume trading, but such things seldom happen in the harsh real world.

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