Helionetics Inc. said it expects to report a 1985 fourth quarter net loss of approximately $14 million, a downturn that the Irvine-based company attributed to write-offs from discontinued operations and a loss from operations.
At the company's request, trading in its stock was halted before the markets opened Thursday and will not resume "until further notice." In composite trading Wednesday on the American Stock Exchange, Helionetics closed at $2.125.
The designer and maker of lasers, electro-optical systems and military communications equipment also said it is in violation of its loan agreement with its secured lenders, Bank of America and Downey Savings and Loan.
Additionally, Helionetics said its wholly owned Canadian subsidiary, HLX Canada Inc., which makes steel supports for communications equipment, has "no real prospects for future orders." A write-down of Helionetics' investment in HLX may be required during the first half of this year, further affecting the company's financial status.
For the fourth quarter, Helionetics said, "substantially all" of the anticipated loss will come from discontinued operations. Those operations include Pacific Analysis Corp., an alternative energy research concern, and Intersea Research, an oil exploration service company, which together accounted for about 20% of Helionetics' 1985 revenues of $20.3 million, the company said.
For the first nine months, the company reported a net loss of $4.8 million, compared to net income of $456,200 for the same period a year earlier. The loss included $4.4 mil lion in losses from write-offs of discontinued operations. Revenue for the nine months was $15.5 million compared to $17.4 million for the same period the prior year.
Wrote Off Inventory
In addition, Helionetics said the fourth quarter losses will include write-offs from old product inventory, which "has a current market value below acquisition cost" and write-downs of the company's investment in Solar Industries Inc., a New Jersey company that filed for protection last year under Chapter 11 of the Federal Bankruptcy Code. Under the provisions of Chapter 11, a company is protected from its creditors while it tries to work out a plan to pay its bills.
The company said that principal payments to both secured lenders are up to date and it is discussing a restructuring of its debt agreement. Interest payments from October totaling $552,700 to Bank of America have not been made but interest payments to Downey Savings are being kept current by the sale of stock pledged to the company's employee stock ownership plan. Helionetics has 6.5 million common shares outstanding.
In January, Helionetics withdrew a registration statement it had filed in October to cover a proposed public offering of 400,000 shares of cumulative convertible preferred stock.
Meetings with trade creditors to discuss a moratorium on debt payments have been scheduled, the company said.