Helionetics Closes Government-Suspended Xcell Unit
Helionetics Inc., the computer and military products company, has shut down an Anaheim subsidiary that was suspended from doing business with the federal government earlier this year, according to a company filing with the Securities and Exchange Commission.
Xcell Circuit Technology, the Helionetics subsidiary formerly known as Calprotech, was suspended indefinitely from doing business with the government because it had tried to sell flawed printed circuit boards to Defense Electronics Supply Center in Akron, Ohio.
Helionetics said in the SEC filing that it believed the suspension was an error, but it said its appeals to lift the suspension failed. Helionetics officials did not return calls for comment on Wednesday.
The Defense Logistics Agency, which monitors defense contracts for the government, also suspended former Calprotech President David Ross and six other former employees from doing business with the government in May.
On Monday, Ross was sentenced in federal court in Los Angeles to three years in prison for falsifying safety tests on parts installed in military equipment, including the MX missile. He was also fined $25,000, and Calprotech was fined $1 million.
Calprotech changed its name to Xcell in June, 1988, after charges surfaced about the flawed circuit boards. Helionetics acquired Xcell for an undisclosed price in June, 1989, only three months after Bernard B. Katz purchased Helionetics in bankruptcy proceedings.
According to a statement filed with the SEC, Helionetics closed down Xcell on Nov. 6 and took a charge of $803,000 related to disposing of the operation. For the third quarter ended Sept. 30, the Xcell unit reported a loss of $372,000 on revenue of $168,000, compared to a loss of $174,000 on revenue of $410,000 a year earlier.
For the quarter, Helionetics reported a net loss of $1.6 million on revenue of $2.2 million, contrasted with net income of $250,000 on revenue of $5.4 million. The company attributed the revenue decline to delays in product shipments and higher product costs due to lower volume.
Helionetics also reported a shortage of working capital because a major customer in Brazil, Marketta International Corp., has delayed a $2.7-million payment for Helionetics’ services. The company said there is no assurance it will receive the payment from Marketta.
The company also revealed in its SEC filing that at least four lawsuits seeking more than $2 million from the company have been filed against the company. They do not include a suit filed recently by a shareholder of Definicon alleging that Helionetics undervalued Definicon International Corp. when it acquired the maker of upgrade kits that convert personal computers into workstations. The suit seeks $1 million.
Helionetics said it is attempting to settle the suits but there is no assurance it will resolve them favorably.
