Edgar Filing: NEW VISUAL CORP

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NEW VISUAL CORPORATION
305 NE 102nd Avenue, Suite 105
Portland, Oregon 97220

Dear Shareholder:

I am pleased to invite you to New Visual Corporation's 2005 Annual Meeting of
Shareholders. The meeting will be held at 10:00 a.m. on Wednesday, July 27, 2005
at the Hotel Vintage Plaza, 422 SW Broadway, Portland, Oregon 97205.

At the meeting, you and the other shareholders will be asked to (1) elect
directors to the New Visual Corporation board; and (2) ratify the appointment of
Marcum & Kliegman, LLP, as our independent public accountants for the current
fiscal year. You will also have the opportunity to hear what has happened in our
business in the past year and to ask questions. You will find other detailed
information about our operations, including our audited financial statements, in
the enclosed annual report.

Your vote is very important. We encourage you to read this proxy statement and
vote your shares as soon as possible. A return envelope for your proxy card is
enclosed for convenience. You also may have the option of voting by using a
toll-free telephone number. Instructions for using this service is included on
the proxy card.

Thank you for your continued support of New Visual Corporation. We look forward
to seeing you on July 27th.

Very truly yours,

Brad Ketch
President and Chief Executive Officer

NEW VISUAL CORPORATION
305 NE 102nd Avenue, Suite 105
Portland, Oregon 97220

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 27, 2005

Notice is hereby given that New Visual Corporation will hold its 2005 Annual
Meeting of Shareholders at the Hotel Vintage Plaza, 422 SW Broadway, Portland,
Oregon 97205, on Wednesday, July 27, 2005 at 10:00 a.m.

We are holding this meeting:

o To elect four directors to serve until the 2006 Annual Meeting of
Shareholders and their successors are elected and qualified;

o To ratify the appointment of Marcum & Kliegman, LLP, as our
independent public accountants; and

o To transact any other business that properly comes before the meeting.

Your board of directors recommends that you vote in favor of each of the
proposals outlined in this proxy statement.

Your board of directors has selected June 15, 2005 as the record date for
determining shareholders entitled to vote at the meeting. A list of shareholders
on that date will be available for inspection at our corporate headquarters, 305
NE 102nd Avenue, Suite 105 Portland, Oregon 97220, for at least ten days before
the meeting. The list also will be available for inspection at the meeting.

This notice of annual meeting, proxy statement, proxy and our 2004 Annual Report
to Shareholders are being distributed on or about June 25, 2005.

By Order of the Board of Directors,

Brad Ketch
President and Chief Executive Officer

June 17, 2005

TABLE OF CONTENTS

QUESTIONS AND ANSWERS..........................................................1

ITEM 1. ELECTION OF DIRECTORS..................................................2

ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS.......................4

Committees of the Board of Directors..................................4

STOCK OWNERSHIP................................................................5

Beneficial Ownership of Certain Shareholders, Directors and
Executive Officers....................................................5

Section 16(a) Beneficial Ownership Reporting Compliance...............6

ITEM 2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS .......................6

Audit Committee Report................................................7

ADDITIONAL INFORMATION CONCERNING OUR MANAGEMENT...............................8

Executive Compensation................................................8

Employment Agreements with Executive Officers.........................9

Certain Relationships and Related Transactions.......................10

ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS....................................12

WHERE YOU CAN FIND MORE INFORMATION...........................................13

-i-

QUESTIONS AND ANSWERS

Q1: WHO IS SOLICITING MY PROXY?

A: We, the board of directors of New Visual, are sending you this proxy
statement in connection with our solicitation of proxies for use at the 2005
Annual Meeting of Shareholders (the "Annual Meeting" or the "Meeting"). Certain
directors, officers and employees of New Visual also may solicit proxies on our
behalf by mail, phone, fax or in person.

Q2: WHO IS PAYING FOR THIS SOLICITATION?

A: New Visual will pay for this solicitation of proxies. New Visual also will
reimburse banks, brokers, custodians, nominees and fiduciaries for their
reasonable charges and expenses in forwarding our proxy materials to the
beneficial owners of New Visual Common Stock.

Q3: WHAT AM I VOTING ON?

A: Two items: (1) the election of Brad Ketch, Ray Willenberg, Jr., Thomas J.
Cooper and Jack L. Peckham to our board of directors; and (2) the ratification
of Marcum & Kliegman, LLP, as our independent public accountants for the current
fiscal year.

Q4: WHO CAN VOTE?

A: Only those who owned New Visual's common stock, par value $0.001 per share
("Common Stock"), at the close of business on June 15, 2005, the record date for
the Annual Meeting, can vote. If you owned Common Stock on the record date, you
have one vote per share for each matter presented at the Annual Meeting.

Q5: HOW DO I VOTE?

A: You may vote your shares either in person or by proxy.

There are generally three ways to vote:

o by toll-free telephone at 1-800-690-6903;
o by completing, executing and returning your proxy card; and
o by written ballot at the meeting.

Please see your proxy card for the voting options available to you. If your
shares are held in a brokerage account in your broker's name (this is called
street name), you should follow the voting directions provided by your broker or
nominee. You may complete and mail a voting instruction card to your broker or
nominee or, in most cases, submit voting instructions by telephone. If you
provide specific voting instructions by mail or telephone, your shares should be
voted by your broker or nominee as you have directed.

We will pass out written ballots to anyone who holds shares in his or her own
name and who wants to vote at the Meeting. If you hold your shares in street
name, you must request a legal proxy from your broker to vote at the Meeting.

If you vote by telephone, your vote must be received by 11:59 p.m., Eastern Time
on July 26th, the day before the meeting. Your shares will be voted as you
indicate. If you return your proxy card but you do not mark your voting
preference, the individuals named as proxies will vote your shares FOR the
election of the four nominees for director named in this proxy statement and FOR
ratification of Marcum & Kliegman, LLP as our independent public accountants.

Q6: WHAT CONSTITUTES A QUORUM?

A: Voting can take place at the Annual Meeting only if shareholders owning
shares representing a majority of the total number of votes entitled to be cast
are present in person or represented by effective proxies. On the record date,
there were 111,579,643 shares of our Common Stock outstanding. Both abstentions
and broker non-votes are counted as present for purposes of establishing the
quorum necessary for the meeting to proceed. A broker non-vote results from a
situation in which a broker holding your shares in "street" or "nominee" name
indicates to us on a proxy that you have not voted and it lacks discretionary
authority to vote your shares.

Q7: WHAT VOTE OF THE SHAREHOLDERS WILL RESULT IN THE MATTERS BEING PASSED?

A: ELECTION OF DIRECTORS. Director nominees need the affirmative vote of holders
of a plurality of the shares represented in person or by proxy at the Meeting to
be elected. The four nominees receiving the greatest number of votes at the
Meeting will be deemed to have received a plurality of the voting power present.
Neither abstentions nor broker non-votes will have any effect on the election of
directors.

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS. To ratify the appointment of
Marcum & Kliegman, LLP, as our independent public accountants for the current
fiscal year, shareholders holding a majority of the shares represented in person
or by proxy at the Meeting must affirmatively vote to approve the matter.
Abstentions have the same effect as votes "against" the proposal, while broker
non-votes have no effect.

Q8: HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE MATTERS PROPOSED?

A: The board of directors of New Visual unanimously recommends that shareholders
vote FOR each of the proposals submitted at this year's Annual Meeting.

Q9: WILL THERE BE OTHER MATTERS PROPOSED AT THE ANNUAL MEETING?

A: New Visual's bylaws limit the matters presented at the Annual Meeting to
those in the notice of the meeting (or any supplement), those otherwise properly
presented by the board of directors and those presented by shareholders so long
as the shareholder complies with certain advance notice requirements. Please
refer to the section of this proxy statement captioned "Annual Meeting Advance
Notice Requirements" for a description of these requirements. We do not expect
any other matter to come before the Annual Meeting. However, if any other matter
is presented, your signed proxy gives the individuals named as proxies authority
to vote your shares in their discretion.

Q10: WHEN ARE 2006 SHAREHOLDER PROPOSALS DUE IF THEY ARE TO BE INCLUDED IN THE
COMPANY'S PROXY MATERIALS?

A: To be included in our proxy statement for the 2006 Annual Meeting of
Shareholders, a shareholder proposal must be received at New Visual's offices no
later than February 25, 2006 (unless next year's meeting date is before June 28
or after August 26, in which case a proposal must be received a reasonable time
before we begin to print and mail next year's proxy materials, and in compliance
with the advance notice requirements of our bylaws). To curtail controversy as
to the date on which the Company received a proposal, we suggest that proponents
submit their proposals by certified mail, return receipt requested.

ITEM 1.
ELECTION OF DIRECTORS

The board of directors of New Visual has currently set the number of directors
constituting the whole board at seven. At the Annual Meeting, you and the other
shareholders will elect four individuals to serve as directors until the 2006
Annual Meeting of Shareholders and their successors are elected and qualified.
All nominees are currently serving as directors of New Visual.

Directors need the affirmative vote of holders of a plurality of the shares
represented in person or by proxy at the Meeting to be elected. The four
nominees receiving the greatest number of votes at the Meeting will be deemed to
have received the votes of a plurality of the shares present. Neither
abstentions nor broker non-votes will have any effect on the election of
directors.

The persons designated as proxies will vote the enclosed proxy for the election
of all of the nominees unless you direct them to withhold your vote for any one
or more of the nominees. If any nominee becomes unable to serve as a director
before the meeting (or decides not to serve), the individuals named as proxies
may vote for a substitute or we may reduce the number of members of the board.
We recommend a vote FOR each of the nominees.

Below are the names and ages of the nominees for director, the years they became
directors, their principal occupations or employment for at least the past five
years and certain of their other directorships, if any.

BRAD KETCH, age 42, has served as a director of the Company since December 2002.
He has also served as our President and Chief Executive Officer since December
2002. In March 2002, Mr. Ketch became a consultant with us on our broadband
technology and served in that capacity until July 2002, when he became our Chief
Marketing Officer. With over 18 years experience creating shareholder value
through broadband telecommunications products and services, Mr. Ketch, from
October 2001 to March 2002, served as CEO of Kentrox LLC, a manufacturer and
marketer of data networking equipment. At Kentrox, Mr. Ketch was responsible for
a company with 260 employees and $90 million in annual revenues. From January
2001 to October 2001 Mr. Ketch implemented strategic plans for telecom service
providers and equipment manufacturers through his telecommunications consulting
company, Brad Ketch & Associates, of which he was founder and President. From
February 1999 to January 2001 he was Senior Vice President of Sales and
Marketing for HyperEdge Corporation, a company he co-founded. HyperEdge acquired
and integrated broadband access equipment manufacturers to further enable
service providers to deliver broadband access to the "Last Mile." From August
1997 through February 1999, Mr. Ketch implemented strategic business and
technical plans for competitive local exchange carrier network access and
created products targeted at the incumbent local exchange carrier market as a
consultant to various telecommunications companies as a consultant with Brad
Ketch & Associates. Prior to August 1997 he served in various capacities at
Nortel, Advanced Fibre Communications and Cincinnati Bell. Mr. Ketch has a
Bachelor of Arts degree in Economics from Wheaton College and a MBA from
Northwestern University.

RAY WILLENBERG, JR., age 52, has served as a director of the Company since
October 1996 and as Chairman of the Board of Directors since April 1997. Since
March 2002, he has served as our Executive Vice President. Mr. Willenberg served
as our President and Chief Executive Officer from April 1997 until March 2002.
Mr. Willenberg joined us as Vice President and Corporate Secretary in 1996. From
1972 to 1995, Mr. Willenberg was Chief Executive Officer of Mesa Mortgage
Company in San Diego, California.

THOMAS J. COOPER, age 55, has served as a director of the Company since March
2002. From June 1 to December 2, 2002, Mr. Cooper served as our President and
Chief Executive Officer. Mr. Cooper has been engaged in the development,
creation and management of global sales and marketing platforms for businesses
operating in the areas of high technology, real estate, office automation, and
telecommunications for the past 30 years. Mr. Cooper is currently the Senior
Vice President of Sales and Marketing of Artimi, Inc., a fabless semiconductor
firm based in Santa Clara, California serving new markets with Ultra Wideband
wireless technology and products. From 1994 to 2002, Mr. Cooper served in
various high-ranking positions at Conexant (formerly Virata), most recently as
Senior Vice President, Corporate Development (from July 1999 to February 2002),
where he was responsible for the development and implementation of long range
growth strategies, including defining global partnership initiatives,
identifying potential acquisition and joint venture candidates, and directing
strategic investment of corporate capital into select ventures in which the
company acquired minority stakes. From 1994 until 1999, Mr. Cooper served as
Virata's Senior Vice President, Worldwide Sales and Marketing, where he oversaw
all aspects of the company's product sales and marketing, corporate
marketing/communications and public relations. During his tenure, Virata grew
its revenues from $8.9 million in 1998, $9.3 million in 1999, and $21.8 million
in 2000, to over $120 million in 2001.

JACK L. PECKHAM, age 63, has served as a director of the Company since March
2005. Mr. Peckham is a founder and director of Heritage Commerce Corp in San
Jose, California and serves on its audit and compensation committees. He is
currently the Chairman and Chief Executive Officer of Broadband Graphics, a
company which owns and licenses intellectual property in the areas of video and
desktop computing. From 1985 to 1998, Mr. Peckham held various positions at
Atmel Corporation, retiring as its General Manager. Mr. Peckham received a
Master of Arts and a Bachelor of Arts in finance and marketing from Burdette
College in Boston.

ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS

The board of directors of New Visual met two times during the fiscal year ended
October 31, 2004. No director who served during the 2004 fiscal year attended
fewer than 75% of the meetings of the Board and of committees of the Board of
which he was a member. Other actions were taken by unanimous consent in lieu of
a meeting during the fiscal year ended October 31, 2004. In addition to
regularly scheduled meetings, a number of directors were involved in numerous
informal meetings with management, offering valuable advice and suggestions on a
broad range of corporate matters.

During the fiscal year ended October 31, 2004, it was our policy to pay each
outside director $2,000 for each meeting of our Board of Directors attended and
for each committee meeting attended. During the year ended October 31, 2004,
each outside director waived their board meeting and committee meeting fees
until the Company's financial condition improves. . We reimburse our directors
for reasonable expenses incurred in traveling to and from board or committee
meetings. Upon his resignation as a director of the Company in March 2004, Ivan
Berkowitz was paid $57,251, representing deferred meeting fees, expense
reimbursements and fees for service as Vice Chairman of the Board of Directors
accrued and unpaid though the date of his resignation.

In addition, we have granted stock and stock options to the directors to
compensate them for their services. Our directors are eligible to receive stock
option grants under our 2000 Omnibus Securities Plan. We did not grant options
to our directors in 2004.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board of directors operates with the assistance of the Audit Committee and
the Compensation Committee. The function of the Audit Committee is to:

o make recommendations to the full board of directors with respect to
appointment of the Company's independent public accountants; and

o meet periodically with our independent public accountants to review
the general scope of audit coverage, including consideration of our
accounting practices and procedures, our system of internal accounting
controls and financial reporting.

The Audit Committee adopted a written charter governing its actions on June 26,
2000. The Audit Committee currently consists of Bruce Brown and Jack L. Peckham.
The Company believes that Mr. Peckham meets the independence criteria set out in
Rule 4200(a)(14) of the Marketplace Rules of the National Association of
Securities Dealers and the rules of the and other requirements of the SEC. The
Audit Committee, then consisting of Ivan Berkowitz and Bruce Brown, met four
times during the fiscal year ended October 31, 2004. For a more detailed
discussion of the Audit Committee, see "Audit Committee Report."

The function of the Compensation Committee is to review and approve the
compensation arrangements for our executive officers. The Compensation Committee
currently consists of Bruce Brown and Jack L. Peckham. The Compensation
Committee, then consisting of Ivan Berkowitz and Bruce Brown, met once during
the fiscal year ended October 31, 2004.

We do not maintain a formal nominating committee.

DIRECTOR RESIGNATIONS

Mr. Ivan Berkowitz resigned from his position as a director of the Company in
March 2005. Mr. Bruce Brown has declined to stand for re-election as a director
of the Company at the Annual Meeting.

BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS, DIRECTORS
AND EXECUTIVE OFFICERS

The following table sets forth information as of June 15, 2005, concerning all
persons known by us to own beneficially more than 5% of our Common Stock and
concerning shares beneficially owned by each director and named executive
officer and by all directors and executive officers as a group. Unless expressly
indicated otherwise, each shareholder exercises sole voting and investment power
with respect to the shares beneficially owned. The address for each of our
executive officers and directors is 305 NE 102nd Avenue, Suite 105, Portland,
Oregon 97220.

In accordance with the rules of the SEC, the table gives effect to the shares of
Common Stock that could be issued upon the exercise of outstanding options and
warrants and conversion of outstanding convertible securities within 60 days of
June 15, 2005. Unless otherwise noted in the footnotes to the table and subject
to community property laws where applicable, the following individuals have sole
voting and investment control with respect to the shares beneficially owned by
them. The address of each executive officer and director is c/o New Visual
Corporation, 305 NE 102nd Avenue, Suite 105, Portland, Oregon 97220. We have
calculated the percentages of shares beneficially owned based on 111,579,643
shares of Common Stock outstanding as of June 15, 2005.

SHARES BENEFICIALLY OWNED
-------------------------------
PERSON OR GROUP Number Percent (1)
------------------------------------------- ---------------- -----------
Brad Ketch 2,373,333(2) 1.76%
Ray Willenberg, Jr. 6,903,446(3) 5.99%
Thomas J. Cooper 700,000(4) *
Bruce Brown 374,000(5) *
Jack L. Peckham 300,000 *

All executive officers and directors
as a group (5 persons) 10,650,779(6) 9.11%

* Less than 1%.

(1) Percentage of beneficial ownership as to any person as of a particular date
is calculated by dividing the number of shares beneficially owned by such person
by the sum of the number of shares outstanding as of such date and the number of
unissued shares as to which such person has the right to acquire voting and/or
investment power within 60 days.
(2) Comprised of (i) 1,373,333 shares of Common Stock and (ii) 1,000,000 shares
of Common Stock issuable upon exercise of options. Does not include 6,000,000
shares of Common Stock issuable upon exercise of options which vest upon the
Company's release of a beta version of its semiconductor technologies.
(3) Comprised of (i) 3,181,613 shares of Common Stock, (ii) options to purchase
1,000,000 shares of Common Stock, and (iii) 2,721,833 shares of Common Stock
issuable upon conversion of the convertible promissory note issued to
Mr.Willenberg in March 2005. Does not include 6,000,000 shares of Common Stock
issuable upon exercise of options which vest upon the Company's release of a
beta version of its semiconductor technologies.
(4) Comprised of (i) 200,000 shares of Common Stock and (ii) 500,000 shares of
Common Stock issuable upon exercise of options.
(5) Comprised of (i) 214,000 shares of Common Stock and (ii) 160,000 shares of
Common Stock issuable upon exercise of options.
(6) Includes (i) 2,660,000 shares of Common Stock issuable upon exercise of
options and (ii) 2,721,837 shares of Common Stock issuable upon conversion of
convertible securities.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires each
of our officers and directors and each person who owns more than 10% of a
registered class of our equity securities to file with the SEC an initial report
of ownership and subsequent reports of changes in such ownership. Such persons
are further required by SEC regulation to furnish us with copies of all Section
16(a) forms (including Forms 3, 4 and 5) that they file. Based solely on our
review of the copies of such forms received by us with respect to fiscal year
2004, or written representations from certain reporting persons, we believe all
of our directors and executive officers met all applicable filing requirements,
except as described in this paragraph.

ITEM 2.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

The board of directors has appointed Marcum & Kliegman, LLP ("Marcum") to serve
as our independent public accountants for the fiscal year ending October 31,
2005 and is soliciting your ratification of that appointment.

Marcum has served as our independent public accountants since September 2002. In
their role as independent public accountants, Marcum reports on our financial
statements. They also assist us with due diligence activities in connection with
our acquisitions and provide general accounting and tax consulting. We do not
anticipate that a representative of Marcum will be present at the Meeting.

Your ratification of the Board's selection of Marcum is not necessary because
the board of directors has responsibility for selection of our independent
public accountants. However, the board of directors and the Audit Committee will
take your vote on this proposal into consideration when selecting our
independent public accountants in the future.

Aggregate fees for professional services rendered for the Company by Marcum &
Kliegman LLP for the fiscal year ended October 31, 2004 and 2003 are set forth
below. The aggregate fees included in the Audit category are fees billed for the
fiscal years for the audit of the Company's annual financial statements and
review of financial statements and statutory and regulatory filings or
engagements. The aggregate fees included in each of the other categories are
fees billed in the fiscal years.

Fiscal Year Ended

October 31, 2004 October 31, 2003

Audit Fees $146,906 $142,000
Audit Related Fees $77,108 $10,720
Tax Fees $13,784 $15,043
All Other Fees $0 $0
--------- --------
Total $237,799 $167,763

Audit Fees were for professional services rendered for the audits of the
consolidated financial statements of the Company, quarterly review of the
financial statements included in Quarterly Reports on Form 10-QSB, consents, and
other assistance required to complete the year end audit of the consolidated
financial statements.

Audit-Related Fees were for assurance and related services reasonably related to
the performance of the audit or review of financial statements and not reported
under the caption Audit Fees.

Tax Fees were for professional services related to tax compliance, tax authority
audit support and tax planning.

There were no fees that were classified as All Other Fees for each of our last
two fiscal years.

To ratify the appointment of Marcum as our independent public accountants for
the current fiscal year, shareholders holding a majority of the shares
represented in person or by proxy at the Meeting must affirmatively vote to
approve the matter. Abstentions have the same effect as votes "against" the
proposal, while broker non-votes have no effect.

We recommend a vote FOR the ratification of Marcum as our independent public
accountants for the current fiscal year.

AUDIT COMMITTEE REPORT

The Audit Committee's responsibilities are set forth in the Audit Committee
Charter. The Audit Committee assists the full board of directors in fulfilling
its oversight responsibilities. Our management prepares financial statements and
establishes the system of internal control.

In fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements with management, including a discussion of the
acceptability as well as the appropriateness, of significant accounting
principles. The Audit Committee also reviewed with management the reasonableness
of significant estimates and judgments made in preparing the financial
statements as well as the clarity of the disclosures in the financial
statements.

The Audit Committee reviewed with our independent accountants, Marcum &
Kliegman, LLP, its judgments as to the acceptability as well as appropriateness
of the Company's application of accounting principles. Marcum has the
responsibility for expressing an opinion on the conformity of the Company's
audited financial statements with U.S. generally accepted accounting principles.
The Audit Committee also discussed with Marcum matters required to be discussed
under Statement on Auditing Standards No. 61 (Communicating with Audit
Committees).

In addition, the Audit Committee discussed with Marcum its independence from
management and the Company, the matters included in the written disclosures
required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the impact on auditor independence of
non-audit related services provided to us by Marcum during the 2004 fiscal year.
The Committee concluded that Marcum is independent from the Company and its
management.

The Audit Committee discussed with Marcum the overall scope and plans for its
audit. The Audit Committee meets with Marcum with and without management present
to discuss the results of its audits, its opinions of the Company's system of
internal controls, and the overall quality of the Company's financial reporting.

The Audit Committee held four meetings in fiscal 2004.

Ivan Berkowitz resigned from the Audit Committee in March 2005 upon his
resignation as a director of the Company.

In reliance on the reviews and discussions noted above, the Audit Committee,
then consisting of Mr. Berkowitz and Mr. Bruce Brown, recommended to the full
board of directors that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended October 31, 2004 for filing with
the SEC. The Audit Committee and the full board of directors have also
recommended the selection of Marcum & Kliegman, LLP as the Company's independent
public accountants for 2005.

June 1, 2005

THE AUDIT COMMITTEE
Bruce Brown
Jack L. Peckham

ADDITIONAL INFORMATION CONCERNING OUR MANAGEMENT

EXECUTIVE COMPENSATION

The following table sets forth all compensation for each of the last three
fiscal years awarded to, or earned by, our Chief Executive Officer and to all
other executive officers serving as such at the end of 2004 whose salary and
bonus exceeded $100,000 for the year ended October 31, 2004 or who, as of
October 31, 2004, was being paid a salary at a rate of $100,000 per year.

Summary Compensation Table

Restricted Securities
Name and Principal Other Annual Stock Underlying
Position(s) Year Salary Compensation Award(s) Options
--------------------- ---- ----------- ------------ ---------- ------------

Brad Ketch 2004 $ 204,620(2) $ -- 86,667(3)
President and 2003 225,833(4) -- -- 1,500,000
Chief Executive 2002 60,000 -- -- 455,000
Officer(and Principal
Financial Officer) (1)

Ray Willenberg, Jr. 2004 157,417(6) -- 176,667(7) --
Chairman of the Board 2003 177,694(8) -- -- --
Executive Vice President 2002 258,406(9) -- -- 350,000
and former Chief
Executive Officer(5)

C. Rich Wilson III 2004 45,215 -- 76,667 --
Former Vice 2003 156,083 -- -- --
President and 2002 166,329(11) 91,875(12) -- 600,000
Secretary (10)

Thomas J. Sweeney 2004 16,674 -- -- --
Former Chief 2003 129,848 -- -- --
Financial Officer (13) 2002 133,455(14) -- -- --

(1) Mr. Ketch was appointed Chief Executive Office on December 2, 2002.
(2) Does not include $45,380 in earned, but deferred payroll unpaid as October
31, 2004.
(3) In December 2003, Mr. Ketch received 40,000 shares of our Common Stock in
lieu of $10,000 of deferred payroll. In March 2004, Mr. Ketch received 333,333
shares of our Common Stock valued at $76,333 as a performance bonus.
(4) Does not include $43,000 in earned, but deferred payroll unpaid as October
31, 2003.
(5) Mr. Willenberg served as our President and Chief Executive Officer until
June 1, 2002, whereupon he resigned from such position and became our Executive
Vice President.
(6) Includes $12,375 in bonuses paid Mr. Willenberg per his employment
agreement. Does not include $29,958 in earned, but deferred payroll unpaid as of
October 31, 2004. The Company owed Mr. Willenberg $353,318 in unpaid commissions
as of October 31, 2004.
(7) In December 2003, Mr. Willenberg received 400,000 shares of Common Stock in
lieu of $100,000 of unpaid bonuses. In March 2004, Mr. Willenberg received
333,333 shares of our Common Stock valued at $76,333 as a performance bonus.
(8) Includes $28,106 in bonuses paid Mr. Willenberg per his employment
agreement. Does not include $24,019 in earned, but deferred payroll unpaid as of
October 31, 2003. The Company owed Mr. Willenberg $463,878 in unpaid bonuses as
of October 31, 2003. (In December 2003, Mr. Willenberg received 400,000 shares
of Common Stock in lieu of $100,000 of unpaid bonuses.)
(9) Includes $14,250 in earned, but deferred payroll unpaid as of
October 31, 2002.

(10) Mr. Wilson served as Vice President and Secretary from April 2000 until his
resignation on from all positions with the Company on December 31, 2003.
(11) Includes $29,999 in earned, but deferred payroll unpaid as of October 31,
2002.
(12) Represents the issuance to Mr. Wilson in February 2002 of 250,000 shares of
Common Stock valued at $0.37 per share.
(13) Mr. Sweeney served as Chief Financial Officer until his resignation on
December 12, 2003.
(14) Includes $13,514 in earned, but deferred payroll unpaid as of October 31,
2002.

In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted for the named executive
officers because the aggregate amount of these perquisites and other personal
benefits was less than the lesser of $50,000 or 10% of annual salary and bonuses
for the named executive officers.

OPTION GRANTS IN THE LAST FISCAL YEAR

No stock options were granted to the named executive officers during the year
ended October 31, 2004

AGGREGATE OPTIONS EXERCISED IN 2004 AND 2004 YEAR END OPTION VALUES

The named executive officers did not exercise any stock options during the year
ended October 31, 2004. The following table sets forth information as of October
31, 2004 concerning options held by the named executive officers.

Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at Fiscal Year End Options at Fiscal Year End (1)
--------------------------- ---------------------------
Shares
Acquired on
Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------ ------------ ----------- ------------- ----------- -------------

Brad Ketch -- -- 1,255,000 700,000 $ -- $ --
Ray Willenberg, Jr. -- -- 1,120,000 -- -- --
C. Rich Wilson III (2) -- -- 745,000 -- -- --

(1) Based upon the difference between the exercise price of such options and the
closing price of the Common Stock $0.10 on October 31, 2004, as reported on the
Over-The-Counter Market, no options were in-the-money.
(2) Mr. Wilson resigned from our employ on December 31, 2003.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

BRAD KETCH. On December 2, 2002, we entered into an employment agreement with
Brad Ketch pursuant to which Mr. Ketch was retained as our Chief Executive
Officer. The agreement entered into with Mr. Ketch in December 2002 replaced the
agreements previously entered into with Mr. Ketch (and discussed below) pursuant
to which he was retained in various other capacities. Mr. Ketch's current
agreement with us began on December 2, 2002 for a three-year term and provided
for Mr. Ketch to receive an initial base salary of $250,000, with an annual
bonus to be paid at the discretion of the Board of Directors in either cash or
stock. In addition, pursuant to the agreement Mr. Ketch was issued an option to
purchase 1,500,000 shares of our Common Stock at a per share exercise price of
$0.64 vesting in 12 quarterly installments of 125,000, beginning March 1, 2003.
This option was cancelled in April 2005. See "Certain Relationships and Related
Transactions - Brad Ketch".

Mr. Ketch's agreement provided that he may be terminated for "cause," as defined
in his employment agreement. If Mr. Ketch is terminated without "cause" or left
New Visual for "good reason," each as defined in the agreement, he will receive
a severance payment equal to two years of his base salary on the date of his
termination. If Mr. Ketch is terminated without cause or with good reason within
one year after a "change of control," as defined in the agreement, he will
receive a severance payment equal to two years of his base salary and an amount
equal to two times the amount of his last bonus received.

Prior to our entering into the agreement with Mr. Ketch retaining him as our
Chief Executive Officer, we entered into several agreements with him during
fiscal year 2002. In March 2002, we entered into a one-year consulting
arrangement with Mr. Ketch, in which we retained Mr. Ketch to provide consulting
and advisory services with respect to our technology for transmitting high speed
data over extended ranges of copper telephone wire. Pursuant to this consulting
agreement, we agreed to pay Mr. Ketch $15,000 per month and granted him an
option to purchase 50,000 shares of our Common Stock at an exercise price of
$1.02 per share, exercisable upon grant. This option was cancelled in April
2005. See "Certain Relationships and Related Transactions - Brad Ketch".

In July 2002, we entered into an employment agreement and a second stock option
agreement with Mr. Ketch whereby he become our Chief Marketing Officer. This
employment agreement, which was for a three year term, began on July 1, 2002,
and provided for a base salary of $15,000 per month and an annual bonus to be
paid at the discretion of the Board of directors in either cash or stock.
Pursuant to this employment agreement, we issued Mr. Ketch an option to purchase
405,000 shares of Common Stock, of which 105,000 vested on the date of grant and
the remainder vested quarterly, beginning on May 31, 2003, in equal amounts of
37,500 shares, at an exercise price of $1.09 per share. This option was
cancelled in April 2005. See "Certain Relationships and Related Transactions -
Brad Ketch".

RAY WILLENBERG, JR. On March 3, 2005, we entered into an employment agreement
with Mr. Willenberg pursuant to which he continues to serve as our Executive
Vice President for a term of three years commencing on March 23, 2005, subject
to the earlier (i) the death or Disability (as defined in the employment
agreement) of Mr. Willenberg; (ii) the termination of the agreement by either
party without cause upon written notice; or (iii) termination of the agreement
by us for Cause (as defined in the employment agreement).

Under this employment agreement, Mr. Willenberg is entitled to receive a
commission on any equity or long-term debt financing we may obtain during the
term of the agreement or the twelve month period after the termination thereof
from any source introduced to us by Mr. Willenberg or as a result of Mr.
Willenberg's personal efforts. Mr. Willenberg's commission will equal 6% of the
aggregate annual proceeds of such financings up to $2 million; 5% of the
aggregate annual proceeds of such financings in excess of $2 million and up to
$5 million; and 4% of the aggregate annual proceeds of such financings in excess
of $5 million. Mr. Willenberg is also entitled to be paid a bonus equal to the
amount, if any, paid as a bonus to our Chief Executive Officer in connection
with the successful commercialization of our technologies. Mr. Willenberg will
not be paid a fixed salary for his service under the employment agreement.

Under this employment agreement, we granted Mr. Willenberg the right of first
refusal to purchase our equity interest in Top Secret Productions, LLC in case
of a bona fide third-party offer to purchase that interest or our determination
to offer that interest for sale at a specified price.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

BRAD KETCH. During our 2002 fiscal year we entered into several agreements with
Brad Ketch, our current Chief Executive Officer. In March 2002, we entered into
a one-year consulting arrangement with Mr. Ketch, in which we retained Mr. Ketch
to provide consulting and advisory services with respect to our technology for
transmitting high speed data over extended ranges of copper telephone wire.
Pursuant to this consulting agreement, we agreed to pay Mr. Ketch $15,000 per
month and granted him an option to purchase 50,000 shares of our Common Stock at
an exercise price of $1.02 per share, exercisable upon grant. This option was
among those cancelled in April 2005, as described below.

In July 2002, we entered into an employment agreement and a second stock option
agreement with Mr. Ketch whereby he become our Chief Marketing Officer. This
employment agreement, which was for a three year term, began on July 1, 2002,
and provided for a base salary of $15,000 per month and an annual bonus to be
paid at the discretion of the Board of Directors in either cash or stock.
Pursuant to this employment agreement, we issued Mr. Ketch an option to purchase
405,000 shares of Common Stock, of which 105,000 vested on the date of grant and
the remainder vested quarterly, beginning on May 31, 2003, in equal amounts of
37,500 shares, at an exercise price of $1.09 per share. This option was among
those cancelled in April 2005, as described below.

This July 2002 employment agreement was replaced in December 2002, when we
entered into a second employment agreement and third stock option agreement with
Mr. Ketch, by which Mr. Ketch became our Chief Executive Officer. This
agreement, which is for a three year term, provides for a base salary of
$250,000 per year, an annual bonus to be paid at the discretion of the Board of
Directors in either cash or stock, and a stock option grant of 1,500,000 shares.
It will be automatically renewed for successive one-year terms unless earlier
terminated pursuant to the terms of the agreement or with 60 days' notice prior
to the end of a term. The stock options awarded to Mr. Ketch in connection with
his employment as our Chief Executive Officer, which were to vest in 12
quarterly installments of 125,000 shares beginning on March 1, 2003 and were
exercisable at $0.64 per share, were among those cancelled in April 2005, as
described below.

In April 2005, we issued to Mr. Ketch 1,000,0000 shares of Common Stock and an
option to purchase 7,000,000 shares of Common Stock at an exercise price of
$0.17 per share, which is equal to the closing price of the Common Stock on the
Over the Counter Bulletin Board on the date of grant. 1,000,000 of the shares
for which the option may be exercised vest upon our consummation of a capital
financing from which we receive gross proceeds of at least $3.5 million and
6,000,000 of the shares for which the option may be exercised vest upon our
release of a beta version of its semiconductor technologies. We consummated a
capital financing from which we received gross proceeds of $3.5 million in May
2005. In consideration of this issuance of shares and options, options issued to
Mr. Ketch in March, July and December 2002 to purchase an aggregate of 1,955,000
shares of Common Stock were cancelled.

RAY WILLENBERG, JR. In March 2005, we issued in favor of Ray Willenberg, Jr.,
our Executive Vice President, a convertible promissory note in the principal
amount of $383,910.72 (the "Convertible Promissory Note"). The Convertible
Promissory Note was issued in evidence of our obligation to Mr. Willenberg for
deferred compensation. The Convertible Promissory Note is payable in monthly
installments, on the first day of each month, beginning on April 1, 2005. Each
month, we shall pay to Mr. Willenberg an amount not less than the monthly base
salary paid to our Chief Executive Officer; provided, however, that if we
determine in our sole discretion that we have the financial resources available
therefor we shall pay Mr. Willenberg up to $20,833 per month. The Convertible
Promissory Note does not bear interest. The Convertible Promissory Note is
convertible, at the option of the holder, at any time and from time to time,
into shares of Common Stock at a conversion price per share equal to the closing
price of the Common Stock on the Over-the-Counter Bulletin Board on the date of
conversion. Mr. Willenberg is entitled to require us to use our best efforts to
include any shares of Common Stock issued upon conversion of the Convertible
Promissory Note in any registration statement covering the sale of Common Stock
that we may file, subject to certain limitations. Mr. Willenberg may, at his
discretion, consider the Convertible Promissory Note immediately due and payable
and may immediately enforce any and all of his rights under the Convertible
Promissory Note or any other rights or remedies afforded by law, upon the
occurrence of certain events specified in the Convertible Promissory Note.

On March 3, 2005, we entered into an employment agreement with Mr. Willenberg
pursuant to which he continues to serve as our Executive Vice President for a
term of three years commencing on March 23, 2005, subject to the earlier (i) the
death or Disability (as defined in the employment agreement) of Mr. Willenberg;
(ii) the termination of the agreement by either party without cause upon written
notice; or (iii) termination of the agreement by us for Cause (as defined in the
employment agreement).

In April 2005, we issued to Mr. Willenberg 1,000,0000 shares of Common Stock and
an option to purchase 7,000,000 shares of Common Stock at an exercise price of
$0.17 per share, which is equal to the closing price of the Common Stock on the
Over the Counter Bulletin Board on the date of grant. 1,000,000 of the shares
for which the option may be exercised vest upon our consummation of a capital
financing from which we receive gross proceeds of at least $3.5 million and
6,000,000 of the shares for which the option may be exercised vest upon our
release of a beta version of its semiconductor technologies. We consummated a
capital financing from which we received gross proceeds of $3.5 million in May
2005. In consideration of this issuance of shares and options, options
previously issued to Mr. Willenberg to purchase an aggregate of 370,000 shares
of Common Stock were cancelled.

ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS

SHAREHOLDER PROPOSALS. Our bylaws provide that shareholder proposals and
director nominations by shareholders may be made in compliance with certain
advance notice, informational and other applicable requirements. With respect to
shareholder proposals (concerning matters other than the nomination of
directors), the individual submitting the proposal must file a written notice
with the Secretary of New Visual at 305 NE 102nd Avenue, Suite 105, Portland,
Oregon 97220 setting forth certain information, including the following:

o a brief description of the business desired to be bought before the
meeting and the reasons for conducting that business at the meeting;

o the name and address of the proposing shareholder;

o the number of shares of Common Stock beneficially owned by the
proposing shareholder; and

o any material interest of the proposing shareholder in such business.

The notice must be delivered to the Secretary (1) at least 30, but no more than
60, days before any scheduled meeting or (2) if less than 40 days notice or
prior public disclosure of the meeting is given, by the close of business on the
10th day following the giving of notice or the date public disclosure was made,
whichever is earlier.

BOARD NOMINATIONS. A shareholder may recommend a nominee to become a director of
New Visual by giving the Secretary of New Visual (at the address set forth
above) a WRITTEN NOTICE setting forth the following information concerning each
person the shareholder proposes to nominate:

o the name, age, business address and residence of the person;

o the principal occupation or employment of the person;

o the number of shares of Common Stock beneficially owned by the person;
and

o any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors
pursuant to the rules of the SEC.

o The shareholder's notice must also contain the following information
concerning the proposing shareholder:

o the name and record address of the proposing shareholder; and

o the number of shares of Common Stock beneficially owned by the
proposing shareholder.

Such nominations must be made pursuant to the same advance notice requirements
for shareholder proposals set forth in the preceding section.

GENERALLY. Our annual meetings are held each year at a time and place designated
by our board of directors in the notice of the meeting. Copies of our bylaws are
available upon written request made to the Secretary of New Visual at the above
address. The requirements described above do not supersede the requirements or
conditions established by the SEC for shareholder proposals to be included in
our proxy materials for a meeting of shareholders. The chairman of the meeting
may refuse to bring before a meeting any business not brought in compliance with
applicable law and our bylaws.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You can read and copy any materials we file with the
SEC at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain information about the operation of the SEC's public
reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
web site that contains information we file electronically with the SEC, which
you can access over the Internet at www.sec.gov. Statements contained in this
proxy statement regarding the contents of any contract or other document are not
necessarily complete and each such statement is qualified in its entirety by
reference to such contract or other document filed as an exhibit with the SEC.

ANNUAL REPORT

Enclosed are our Annual Report on Form 10-KSB for the fiscal year ended October
31, 2004, including audited financial statements, and our Quarterly Report on
Form 10-QSB for the quarter ended April 30, 2005. Such reports do not form any
part of the material for the solicitation of proxies.

PLEASE TAKE A MOMENT NOW TO VOTE. PLEASE SIGN AND RETURN
YOUR PROXY CARD OR FOLLOW THE PROCEDURES ON THE PROXY CARD
FOR VOTING BY TELEPHONE.

THANK YOU.

NEW VISUAL CORPORATION

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
JULY 27, 2005

The undersigned hereby constitutes and appoints BRAD KETCH with full power of
substitution, attorney and proxy to represent and to vote all the shares of
common stock, par value $.001 per share, of NEW VISUAL CORPORATION (the
"Company") that the undersigned would be entitled to vote, with all powers the
undersigned would possess if personally present, at the Annual Meeting of
Stockholders of the Company, to be held on July 27, 2005, and at any adjournment
thereof, on the matters set forth on the reverse side and such other matters as
may properly come before the meeting.

1. ELECTION OF DIRECTORS. Nominees: BRAD KETCH, RAY WILLENBERG, JR., THOMAS J.
COOPER AND JACK L. PECKHAM.

(Mark only one of the following boxes.)

|_| VOTE FOR all nominees listed above, except vote withheld as to the following
nominees (if any): _________________

|_| VOTE WITHHELD from all nominees.

2. PROPOSAL TO RATIFY THE APPOINTMENT OF MARCUM & KLIEGMAN, LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER 31, 2005.

|_| FOR |_| AGAINST |_| ABSTAIN

In their discretion, upon any other business that may properly come before the
meeting or any adjournment thereof.

This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
(i) FOR the election as directors of the nominees of the Board of Directors,
(ii) FOR the ratification the appointment of Marcum & Kliegman, LLP as the
independent public accountants of the Company for the year ending October 31,
2005; and (iii) in the discretion of the Proxies named in the proxy card on any
other proposals to properly come before the Annual Meeting or any adjournment
thereof.

The undersigned acknowledges receipt of the accompanying Proxy Statement dated
June _______, 2005.

Dated: __________________, 2005

SIGNATURE OF SHAREHOLDER(S)

(When signing as attorney,
trustee, executor,
administrator, guardian,
corporate officer, etc., please
give full title. If more than
one trustee, all should sign.
Joint owners must each sign.)

Please date and sign exactly as
name appears above.

I plan |_| I do not plan |_| to
attend the Annual Meeting.