Larson Electronics Magnalight announced that Cyberlux Corporation, (OTC Bulletin Board: CYBLE), a company that sells LED lighting products is more than 180 days past due on $15,465.52 for Ultralife Battery Chargers (CH0004) that they purchased from Larson Electronics' Magnalight.com in October, Novermber and December of 2008 and resold to US National Guard. A previous batch checks, dated February and March and deposited in late May recently included check 4865 ($1000), 4866 ($1000) and check 1465 ($1465.52). On 6/15/2009, checks 4868 ($2000), 4869 ($2000), 4871 ($2000), 4872 ($2000) and 4873 ($2000) were also returned from the bank. Those checks were sent the Larson Electronics in January 2009 and were post dated in March and April. None of the checks had supporting funds and all were returned. Larson Electronics has filed criminal charges with the Durham District Attorney under their "worthless check program."
Jeanette Lord and Michael Porter, with Cyberlux placed orders on 10/3/2008, 10/8/2008, 11/3/008 and 12/11/2008. UPS tracking numbers associated with the shipments include:
"In short, they ordered, received and sold the product, but now they don't want to pay for it. When they were 60 days past due they issued a stack of post dated checks, to be cashed at weekly intervals," stated Rob Bresnahan, President of Larson Electronics. Then they would send emails each week asking us not to cash the checks. When the checks dated for February, March and April were finally deposited in May and June, they continue to come back NSF. Jeanette Lord at Cyberlux repeatedly indicated that replacements will be sent out, but we haven't seen them in over a month now."
In this economy, everyone has customers that are struggling to pay. These are legitimate businesses and we are able to work out a program with them and they pay. Cyberlux doesn't fall into that category. This is fraud, plain and simple. We have overhauled our credit policies as result of this, but this message is really for their potential customers. Based on their K1, I can see we are not only company looking to collect on debt. It also appears that they are involved in other litigation for fraudulent activities. So there is a pattern here. Customer's need to choose vendors of LED lighting that have longevity and can support and upgrade the products they invest in.
Mark Schmidt, CEO at Cyberlux, stated back on 1/19/09 'We do expect our cash flow to restart this week which will allow us to retire the oldest 11/19 invoice this week and the 12/01 invoice next week. The balance should be cleaned up by the first week in February, if not sooner.'
Richard Brown, who is responsible for finance and investor relations, called the following day to retract the CEO's statements and offered to pay us off in a schedule that stretched out for a year. I indicated that we were not a financing operation. Eventually, he put together a schedule that ended in May. Ultimately, Cyberlux sent us more than $15,000 of post dated NSF checks."
The Seattle Times reported that Cyberlux has the resources to chase earmarks and host fundraising dinners for Senator Elizabeth Dole and Representative David Price, but our recent attempts to get paid resulted in a Cyberlux response of, 'Please do not deposit any checks as they will be returned for insufficient funds.' The link below, however, shows the contribution commitment from Cyberlux management and board members exceeding $10,000. An October 2008 issue of the Seattle Times reported, "Cyberlux hosted separate fundraisers in the spring for Rep. David Price, D-N.C., and Sen. Elizabeth Dole, R-N.C., and even posted solicitations on its company Web site, asking people to donate $500 to the lawmakers. The events raised $10,600 for the two. (Lawyers with expertise in campaign-finance laws say it's illegal for a company to assist in raising campaign donations from the public.)"
Rob continued, "They have choosen to chase earmarks. They could have used that to pay off most of their debt to us."
Rob explained, "Sources associated with facilitating the sales of their LED light products to the military indicated that they had to come out of pocket to provide replacements to those military customers, given that the customers were underwhelmed by the product's performance for the price tag. In order to preserve their reputation with their military customers, they had to provide alternatives for free that were more in line with the customer's expectations. LED technology has come a long way in the last few years, both in price and performance. They are selling a 20 watt LED light on a tripod for more than $10,000 each. We sell the WALTP-L2X4, a 24 watt model with a heavy duty tripod for about $500. We have models with 180 watts of LEDs on a collapsible, extendable tripod with wheels for under $3000. And were not the only ones. There are plenty of companies out there with solid end product for all types of applications. LED technology is changing monthly. Companies like Cree, Edison, Seoul, etc. are the real players with real manufacturing capabilities, making real advancements in LEDs and drivers weekly. Companies like Larson Electronics Magnalight embed those new advancements into fixtures that meet the needs of industrial customers and consumers."
"Potential Cyberlux vendors and customers should be aware of how these folks operate," Rob concluded. "Mark Schmidt, Jeanette Lord and Richard Brown had a well rehearsed, polished approach to dodging our collection efforts. Initially, they did a few credit purchases with us to win confidence and then put in their purchase orders. We let our gaurd down, because we had their card on file. Once we realized there was a problem, we discovered that card was cancelled. We have since dramatically overhauled our credit policies. I see from their 2008 K1 that there is at least one other vendor suing them for collections, so Cyberlux's customers need to determine how well they will be supported long term."