February 28, 2002 5:45 PM PST

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Moxi Digital may be on its way to becoming a large company--just not the way the backers originally intended.

According to a source close to the company, employees have been asked to resubmit their resumes, possibly indicating that management is looking to fit people into new roles in a merged company.

Moxi Digital, which recently unveiled its first products for the digital home entertainment market, was founded two years ago by Steve Perlman, the co-founder of WebTV. It intends to license a software platform and reference designs for set-top boxes that can access and store digital media such as movies and music.

The company has been through some management changes in the past few weeks, and a recent published report raised questions about its financial condition.

Last week, founder Perlman stepped down as president and chief executive to focus on projects at digital media production company Rearden Steel Studios. Perlman will remain vice chairman.

The role of chairman is vacant and new Moxi Digital Chief Executive Rita Brogley said the board is considering several candidates, although as a private company it is not required to fill the position.

The composition of Moxi Digital's board of directors also has shifted since it debuted the software platform in early January at the Consumer Electronics Show. Of the original five members, two have recently left and one of those seats was filled by a Moxi Digital employee. As a result, Moxi Digital employees, including Perlman, occupy three of the four board seats that are filled.

Moxi spokeswoman Gina Aumiller would not comment on why Cooley Godward partner Gary Moore and Cisco Vice President Paul Bosco are no longer voting board members or when they left the board. However, Aumiller wrote in an e-mail that Moore will continue in his role as secretary of the board, attending all upcoming meetings, and Cisco will continue to send a representative to board meetings as an observer.

Moore confirmed that he is no longer on the board, but declined to comment further. Bosco did not return calls for comment.

Toby Farrand, Moxi vice president of engineering, joins Perlman, Brogley and Kevin Fong, a managing partner at venture capital firm Mayfield, on the board.

Mayfield and Cisco Systems are among the first group of investors in Moxi Digital. The other companies to invest in Moxi included America Online, EchoStar Communications, Vulcan Ventures, The Barksdale Group, The Washington Post Company and Macromedia Ventures.

BusinessWeek reported recently that Moxi Digital has burned through much of the $67 million that the company, formerly known as Rearden Steel Technologies, raised in its first round of investments and that it was now searching for more funding.

Brogley would not comment on funding specifics, but did note that the company is always looking for additional money and is not ruling out partnerships. While it has not closed its second funding round, Brogley said cash concerns would not force the company to consider an acquisition.

"We've lowered our (cash) burn rate by closely watching our expenses," Brogley said. "We aren't growing as quickly as we may have originally anticipated, but there's not a lot of fat here."

 

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