7/22/2005Two Red Light Camera Companies in Trouble
Transol fails, and Nestor board members walk after financial problems mount.
Financial management difficulties are crippling a pair of red light camera companies -- one based in Rhode Island, another in Australia. Troubles at Providence-based Nestor Inc. became public at a Tuesday meeting of shareholders. Four board members stepped down from their positions, citing "fundamental disagreements with the chief executive officer concerning his management of the company." They had written the CEO of their intention on June 22.
Earlier this month the company had been rocked by the loss of lucrative contracts with Falls Church and Vienna, Virginia following the legislative ban on camera enforcement earlier this month. The company could little afford another blow as debt continues to mount. Between 2000 and 2004, Nestor lost $26.6 million dollars, with little hope for future growth. "We expect to incur continuing losses for the foreseeable future due to significant engineering, product delivery, marketing and general and administrative expenses, and those losses could be substantial," the company wrote in a filing with the Securities and Exchange Commission.
In April, Nestor also lost a patent infringement lawsuit it had filed against Australian camera-maker Transol. Despite the court win, Transol has gone belly-up and is currently in administration.
"The Transol Group is generating insufficient revenue to meet non-discretionary core operational costs," according to a filing with the Australian Stock Exchange. "Accordingly, the Receivers and Managers have commenced an immediate sale program in respect of the Transol Group's business assets located in Australia and North America."
Trading of Transol stock was suspended on July 13 when the price reached 5.8 Australian cents per share. Earlier this year another Australian red light camera company Poltech emerged from bankruptcy after dropping its red light camera business to become an energy company.