Eco Soil Auditors Resign as Company Faces Being Delisted
The San Diego Regional Technology Alliance, a nonprofit association promoting the high-tech industry here, handed out $726,525 in state-grant funds to six firms through the California Technology Investment Program, also called CalTIP.
The state grant program awards the money to companies that are developing new technologies or products and have received, or will soon receive, federal grants for research and development of those new products.
“Our grants are aimed the commercialization of their products,” said Tyler Orion, president and CEO of the San Diego RTA. “The funds they receive from us are usually spent on marketing, business development, positioning the products and growing the companies around the science.”
This year’s winners are:
Avanir Pharmaceuticals, $150,000; Epicyte Pharmaceuticals, $150,000; Mixture Sciences, $100,000; Newport Instruments, $100,000; Q3DM, $100,000; and Vektrex Electronic Systems, $126,525.
Perhaps reflecting a trend in the national investment arena, all except for Vektrex are in the biotech industry, and one, Avanir, is actually a publicly traded company. There is no restriction on the age or size of the firm.
Orion said the RTA reviewed 40 proposals before making the latest round of grants, so the competition was fairly stiff and could be a sign of better things to come in the future.
From 1994 to 1998, 19 companies which received $4.2 million in grants in CalTIP funds went on to receive $170 million in outside private equity investment. These companies created 231 new jobs, according to the RTA.
“I think while some of those jobs might be lost today, most of the companies are still growing in spite of an economy that’s been slipping,” Orion said.
Among notable past local CalTIP winners are Ameranth Wireless, a designer of wireless handheld software, which recently received a $350,000 grant from the National Science Foundation; Digirad Inc., a biotech focused on nuclear cardiac imaging services, which recently filed for a $67 million IPO; and LightPointe Communications, a maker and designer of optical transmission equipment used by telecom carriers which has received $51 million in two rounds of private financing.
The CalTIP program isn’t necessarily a precursor of success, just one more bit of evidence that could help a firm line up additional financial investment, Orion said.
“It’s one extra piece of credibility, and that goes a long way,” he said.
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Eco Soil Systems Auditors Resign:
Eco Soil Systems Inc., a Rancho Bernardo firm that develops and sells proprietary biological and traditional chemical products to the golf and agricultural industries, said Nasdaq halted trading of its shares Sept. 5 until the company provides it with additional information.
In July, Nasdaq notified the company it was facing delisting because of failure to meet minimum financial requirements.
But that’s the least of its problems. Eco Soil filed a statement with the SEC last week saying its auditors, McGladrey & Pullen, have resigned and issued an unqualified opinion about the firm’s future as a “going concern” because of its recurring losses and limited working capital.
The auditor’s letter said the resignation was prompted by the firm’s accounting treatment on the sale of a former subsidiary last July; the inability of the company to provide a payment plan for the fees owed; and “one or more illegal acts” that “has or may have occurred.”
The company vigorously denies any illegal acts or that it misstated financial results, according to the filing.
The firm said in July it retained an investment banker to help it reorganize its core business and sell its non-core business. It was also attempting “to shore up working capital levels so that the company can execute its business plan.”
As of March 31, the latest quarterly report available, Eco Soil lost $3.3 million on $5.7 million in revenues for its first quarter compared to a net loss of $6 million on $6.9 million in sales for the like period in 2000. Shareholders equity stood at $14 million at March 31, while it had an accumulated deficit of $50.4 million.
At the time trading was halted, Eco Soil shares were 10 cents, just above its 52-week low of 8 cents and below the high of $1.56.
Entrada Restructures:
Entrada Networks, another local Nasdaq-traded firm also facing delisting, said it restructured its business into three separate subsidiaries. The three are Torrey Pines Networks, a developer of storage area network products; Sync Research, a maker of frame relay products; and Rixon Networks, a maker of adapter cards for local area network connectivity.
Last month the firm said it discontinued operations at Sync, and was concentrating on the future of the SAN transport products.
The company reported last month it had only $1.5 million in cash and was actively seeking additional financing.
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Cubic Acquires San Jose Division:
Cubic Communications, a subsidiary of Cubic Corp., said it purchased RF Power Amplifier, a division of Advanced Analog Inc., of San Jose. Advanced Analog is a subsidiary of Los Angeles-based International Rectifier.
The acquisition, for an undisclosed amount, was done for two main reasons, said Rick Lober, president of Cubic Communications.
The new division enhances Cubic’s existing product line in the area of radio frequency, or RF, power amplifiers used for both military and commercial applications. These same RF power amplifiers are used in the manufacturing process for semiconductors, specifically in several cleaning phases, Lober said.
RF Power Amplifier had sales last year between $5 million to $6 million and had about 15 employees, which will be working for the RF Systems Division of Cubic, Lober said.
Cubic Communications, which is part of Cubic Corp.’s defense segment, provides radio communications systems to global commercial and government customers. The firm also maintains a transportation systems subsidiary that designs and manufactures automatic revenue collections systems for global mass transit systems.
SVI Repays Debt:
SVI Solutions, a Carlsbad-based provider of software for the retail industry, said it signed an agreement with its largest stockholder, Softline Ltd., to repay SVI’s $11.7 million debt to Softline.
Under the terms of the agreement, SVI will pay Softline, a South African software company, a note it owns from Kielduff Investments Ltd., which has been valued at $8.8 million, and $2.9 million in convertible preferred stock in SVI.
In addition, SVI said it will issue $8.8 million in convertible preferred stock to Softline in exchange for $10.7 million in SVI common shares Softline now holds.
With the exchange, Softline will reduce its current ownership in common stock from a little more than 50 percent to about 30 percent, said SVI’s CFO Kevin O’Neill.
The newly issued convertible preferred stock has a five-year term and offers a 7 percent return, and is similar to a dividend payment.
In other news, SVI moved its headquarters to Carlsbad from San Diego last month, signing a multiyear lease for 13,000 square feet near McClellan-Palomar Airport.
“We saved money on the lease, and we’re 18 miles closer to our Irvine office,” O’Neill said.
SVI has a total of 270 employees, including 120 in Irvine, about 50 in Carlsbad, 60 in Australia, 15 in the United Kingdom, and 25 in sales and support offices across the United States.
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