By JASON BOOTH
Helisys Inc., once considered one of L.A.’s most promising high-tech firms, is in the midst of a financial meltdown.
Beset by severe net losses and with its share price in the gutter, the company announced April 1 that it was laying off nearly a quarter of its workforce, from 63 workers to 48, in an effort to cut costs.
To make matter worse, the Torrance-based firm’s stock was delisted from the Nasdaq National Market on March 31 after Helisys repeatedly failed to file its 10K report with the Securities and Exchange Commission in a timely fashion. The shares will now be traded on the OTC Bulletin Board.
The company said its deepening financial difficulties caused the delays.
“We have been hit by the Asian flu, especially in Japan,” said founder and Chairman Michael Feygin. “We used to do almost $1 million in sales each quarter in Japan. Now it’s about one quarter that level.”
It’s a tough pill to swallow for a company that in 1996 was ranked as the fourth fastest-growing high-tech firm in the city by the Economic Development Corp. of L.A. County, with revenues surging more than 7,000 percent between 1991 and 1995.
Until recently, overseas sales accounted for as much as 70 percent of Helisys’ business. U.S. sales, meanwhile, are showing only moderate growth.
Helisys builds machines that allow designers to translate computer-generated images into three-dimensional models. The devices work by breaking down computer-generated images into thousands of two-dimensional cross-sections. Those cross-sections are then cut from special adhesive paper, which are then stuck together to create three-dimensional models.
Manufacturers like Boeing Co. and General Motors Corp. have used the technology to design and create models of engine parts. Architect Frank Gehry used a Helisys machine to create models of the Guggenheim Museum of Modern Art in Bilbao, Spain.
The company’s financial troubles began shortly after it went public in March 1996. It has seen eight consecutive quarterly net losses and in response has cut its workforce from over 100 to about 50.
In the second quarter ended Jan. 30, the company reported a net loss of $900,000, compared with a net loss of $700,000 for the like period a year ago. Revenues were $2 million vs. $3.8 million.
For 1997, Helisys lost $3 million, compared with a loss of $900,000 a year earlier. Revenues were $14 million vs. $12.3 million.
As a result, the firm’s share price has fallen from a above the $7 level in mid 1996 to around 50 cents last week.
Feygin declined to predict if and when the company might return to profitability. “Right now we are in an uncertain situation. It is quite hard to make projections,” he said.
Since being booted off Nasdaq, Helisys will find it harder to raise capital needed to revitalize its operations. In the near term, Feygin said he is depending on collecting accounts receivable and on new sales.
Feygin added that he plans to focus on the research-and-development core of the business, while outsourcing most everything else including marketing, distribution, bookkeeping and the manufacturing of the modeling machines themselves.