Sequiam Biometrics (fka SQUM)

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Sequiam files for Chapter 11

http://hsdailywire.com/single.php?id=5818

Published 25 March 2008

Orlando biometrics company claims its lead investor reneged on as much as $3 million of the firm's $11 million loan commitment; late last week this investor announced plans to become the lead financier for Sequiam's rival

You win some, you lose some. Five years and more than $30 million after its inception, electronics maker Sequiam Corp. has declared bankruptcy and is mobilizing to fend off an attempted takeover, a lawyer for the company said yesterday. The Orlando-based maker of biometric fingerprint identification devices cited accumulated losses of more than $30.5 million, existing debt of more than $10.5 million, and assets of $2.57 million, in its filing for Chapter 11 reorganization last week. The Orlando Sentinnel Richard Burnett writes that Sequiam blamed its ills largely on its lead financier -- New York-based Biometric Investors LLC -- which Sequiam accused of defaulting on promised financing. Overall, the New York firm has reneged on as much as $3 million of the firm's $11 million loan commitment, said Scott Shuker, an Orlando lawyer for the local company. "We had started negotiations with them toward what we thought would be a resolution," he said. "Instead, the next thing we received from them was a proposal that would essentially sell Sequiam's assets to our competitor, which we consider unacceptable." Sequiam expects to file suit against its lender within a week, according to Shuker. In its bankruptcy filing, Sequiam said Biometric Investors "has engaged in a series of tortious acts designed to transfer Sequiam's assets to its competitor."

Late last week Biometric Investors announced plans to become the lead financier for Sequiam's rival -- a New York company called bioMETRX Inc. The move would involve the takeover of Sequiam, according to Biometric Investors, which cited its $8.5 million secured investment in Sequiam's assets.

"We believe that these assets combined with the resources of bioMETRX will have significant contributing value," said Robert Hoyt, managing partner of Crestview Capital, majority owner of Biometric Investors, in a statement. "Crestview has agreed to take the lead in bioMETRX's next round of funding between $11 million and $15 million."

Both bioMETRX and Sequiam claim to be on the verge of major sales breakthroughs in the sale of biometric products for consumer products such as residential security and computer electronics. Despite deals with some big-name companies in recent years (Black & Decker and Fujitsu, among others), Sequiam recorded sales of only $3 million in 2007, company officials said. Its key products are fingerprint ID security-access devices for door locks, personal computers, Web applications and other electronics. "Like a lot of technology-intensive companies, Sequiam has incurred some big startup costs," Shuker acknowledged. "But it was really only toward the middle of 2007 that their products became widely available. We believe we have cleared that hurdle now and are ready to go into the next phase." The company projects sales of $6.5 million in 2008 and $30 million in 2009, according to Shuker.

Its rival bioMETRX Inc. argued, however, that Sequiam has burned through too much money without producing enough results. "The reality is Biometrics Investors has loaned Sequiam all that money, but Sequiam has no real means to pay them back," said Lorraine Yarde, chief operating officer of bioMETRX, which is based in Long Island, New York. "We have worked with all of them to find a way to amicably solve this problem. We do see the benefit of consolidating with Sequiam's people and that's why we've established a relationship with Biometrics and Crestview."