Wespercorp Loss Reported; Debt Extension Sought
Wespercorp said Thursday that it suffered a net loss of $1.73 million for its fiscal year ended June 30 and indicated that it may not be able to continue as a viable concern unless it can win an extension of its bank debt.
For the prior fiscal year, the Santa Ana-based maker of computer peripherals reported a net loss of $2.9 million.
Sales for the year totaled $14.3 million compared to sales of $20.1 million for the prior fiscal year, the company said.
Resolution of $4.8 million in claims on a Federal Aviation Administration contract and negotiations with its bank to modify certain terms of its loan agreement caused the delay in reporting year-end results, Wespercorp said.
Citing these problems, the company’s auditor, Touche Ross & Co., declined to express an opinion on Wespercorp’s year-end financial statements.
The loss for the year included a $1.5-million reserve for contract costs on the contract with the FAA for a component of a new flight data system. The company’s reserve now totals $2.5 million, President and Chief Executive George Dashiell said. The additional reserve is needed because of “technical uncertainties and possible program delays” with the FAA contract, he added.
Separately, Wespercorp also reported a net loss of $95,000 for its fiscal first quarter ended Sept. 30, compared to a net loss of $157,000 for the same period a year earlier.
Sales for the period totaled $2.5 million compared to sales of $3.9 million for the prior year, a decline the company attributed to sluggish demand for its computer peripherals, the adverse effect of a patent-infringement suit the company settled and a decrease in revenue as the company moves to complete its contract with the FAA.
Wespercorp also said it reached agreement with Union Bank to modify its loan agreements and thus avoid certain technical defaults on its existing $4.5-million loan. The company is still negotiating with the bank for an extension of the Jan. 31 maturity date. Wespercorp said it is “optimistic” that it will be able to negotiate new terms on the loan, although it said it has “no other foreseeable source for repayment” of the debt.
Under terms of its current agreement, Union will continue to make available an additional $800,000 in short-term financing, Wespercorp said, that should be sufficient to meet its needs until FAA payments are resumed. Payments on the $29-million contract were halted until certain claims by the company and modifications requested by the FAA were resolved. Tentative resolution of those claims came earlier this month, Wespercorp said.
The company declined to forecast results for the current quarter or beyond, but Dashiell said that if it is successful in extending the maturity of its bank loan and its claims with the FAA win final approval, it will have sufficient cash to complete the contract.
In trading Thursday on the American Stock Exchange, Wespercorp closed at 87.5 cents, up 6.25 cents for the day.
