Helionetics Rebounding, Chief Tells Shareholders : Annual meeting: But some expressed disbelief, with two questioning expenditures by the strapped company.
Asserting that Helionetics Inc. is not bound for bankruptcy court, the company’s top executives crossed swords with a couple of angry shareholders at the high-tech company’s annual meeting Tuesday.
E. Maxwell Malone, president of the Irvine-based computer and power-products company, said that the company is no longer on the brink of financial collapse and that it is counting on revenue from a new line of graphics components for computer monitors to rescue it.
Malone said the company expects to report next week a second-quarter profit of $830,000, or 15 cents a share, compared to net income of $841,000, or 21 cents a share, a year earlier. Revenue is expected to be $2.4 million, compared to $4.5 million a year earlier.
He said the company is marketing its high-resolution display technology to large computer companies that manufacture video monitors. He added that the product could account for 50% of the company’s revenues, projected at $10.5 million to $12 million for 1991.
But some shareholders didn’t buy it. As Malone spoke, he was repeatedly interrupted by two shareholders who grilled him about Helionetics’ financial and legal troubles.
One shareholder, who did not identify himself, asked why KB Equities, a company controlled by Helionetics Chairman Bernard Katz and partner George de Bell, received a $250,000 finder’s fee on an acquisition at the same time that Helionetics reported a loss of $9.7 million for the 1990 fiscal year.
Katz angrily denied that he was overpaid for his services, adding that he and his wife have invested $1.6 million in the past several months to rescue Helionetics.
“I put hard cash into this company,” Katz said. “Without it, we would not be at this meeting.”
Another unhappy shareholder, Mary Williams, wife of Vincent Williams, a former chief executive of the company’s Definicon International subsidiary, asked why KB Equities was paid $744,669 in unspecified business expenses in addition to the finder’s fee while the company had been losing money. Kevin Quinn, corporate secretary of the firm, argued that the fees were appropriate and that some of them had been deferred from an earlier period.
Katz blamed much of the firm’s financial problems on a deal initiated by Vincent Williams to sell computer workstation parts to a Brazilian customer.
That customer, Marketta International, still owes the company $2.8 million, and Helionetics is suing to recover it. The company is also suing Francisco Fusco, owner of Marketta, and Vincent Williams in a technology-rights dispute.
“Fusco stiffed us,” Katz said. “That triggered a qualified opinion about our potential as a going concern from (company auditor) Arthur Andersen & Co. . . . Everything hit the fan in the first quarter. I believe the second quarter will show a turnaround.”
