SCIENCE/ TECHNOLOGY : Late Payments Cause Cash Flow Problem for Helionetics
Helionetics Inc., the Irvine manufacturer of computer workstation products, says it has approved a new payment schedule for a Brazilian customer that owes a company subsidiary $2.7 million.
E. Maxwell Malone, Helionetics president and chief executive, said the customer’s failure to pay the overdue loan has created a cash flow problem for Helionetics and its Definicon International subsidiary.
But Malone said the customer, Marketta International Corp., owned by Francisco Fusco in Sao Paulo, Brazil, has failed to comply with past loan schedules and that there is no assurance that the payments--now due in increments to be paid no later than Feb. 28--will be received.
“It’s agonizingly slow in getting payments,” Malone said.
Helionetics’ stock, traded on the American Stock Exchange, closed Monday at $1.25 per share, off 50 cents, or 28.6%.
In November, 1989, Marketta placed a $7.6-million order with Helionetics for equipment to convert personal computers into more powerful workstations. Malone said Marketta has made payments of $5 million, but Helionetics has refused to ship the equipment until the order is paid in full.
Malone said Monday that Marketta will make an initial payment of $350,000 by Jan. 31 and pay off the remainder a month later. He said Helionetics has arranged a $5-million line of credit that will become available upon receipt of the Marketta payment.
The delay has led to unspecified layoffs at Helionetics. In November, the company disclosed that its Xcell Circuit Technology subsidiary was closed after it was suspended from doing business with the government.
On Nov. 15, Helionetics was sued by John S. Abram, former president and chief operating officer of Definicon, who alleged that he was fired after he spoke out about financial irregularities.
Malone also confirmed that the company no longer has corporate liability insurance protecting its officers and directors. As a result, he said directors Charles Jobbins and William Duke have resigned as directors.
Malone also said Helionetics’ Delta Electronic Controls subsidiary expects to receive an additional $1 million in orders this quarter to supply power conversion systems to the Air Force for Operation Desert Storm.
The systems will be installed in commercial airliners that the U.S. Air Force is converting into flying hospitals. The power conversion systems are necessary to power the hospital equipment needed for in-flight surgery, Malone said.
Helionetics lost $961,000 on revenue of $15 million for the nine months ended Sept. 30, contrasted with net income of $6.4 million on revenue of $15.4 million for the same period a year earlier.
