Worldgate Communications, Inc., the company behind the Ojo videophone has filed a Form 8-K announcing that it has shut down its operations as of January 30, 2008.

The Company is currently in a dispute with its largest customer over the payment of significant monies which the Company believes are owed to it. The customer’s refusal to pay such monies has contributed to a shortfall in the operating cash available to the Company to continue operations. Accordingly, on January 30, 2008, the Company shut down its operations as a first step to winding down its business, which will occur if the Company is not able to secure payment of the monies believed to be owed and/or new financing. The Company continues to explore potential financing opportunities and is also pursuing legal recourse against the customer. The Company would intend to resume operations if it can obtain financing or payment of the monies believed to be owed in a timely manner. Without such financing or the payment of monies believed to be owed, however, the Company will continue its plan to wind down the business.

This leaves customers who bought the videophones out in the cold because the Ojo depends on a service provided by the company to route the video calls between Ojo phones. The company had depended upon the monthly subscription model where customers would pay around $15 per month for the videophone network routing service.

Recently, the company had attempted to expand into the Video Relay Service or VRS market in partnership with Snap!VRS. Under the partnership, it is reported that Snap!VRS bought 3000 Ojo videophones to send to deaf and hard of hearing users to communicate with regular telephone users via ASL interpreters.

Snap!VRS CEO Richard Schatzberg sent out a notice claiming that they are the company in question that WorldGate blames for the lack of payment which led to the shutdown.

In his response, Schatzberg says, “While WorldGate would like to direct the blame for its present financial troubles on us, the blame does not reside with Snap!VRS and it is misleading for WorldGate to suggest so. In actuality, we are current on all payments and do not owe WorldGate any money.”

WorldGate was founded in 1995 by current CEO Hal Krisbergh. The company has never turned a profit and reported a loss of $2.7 million for the quarter ending Sept. 30, 2007.

The DeafDC Blog has reactions on the Snap!VRS and Ojo Troubles.

This entry was posted on Monday, February 11th, 2008 at 3:59 am and is filed under In the News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.