The Evolving Saga Of A Destitue Business

 

As INC. dropped the curtain on the fiscal adventures of Evolution Technologies Inc. ("One Step Forward, Two Steps Back," October), the 2 1/2-year-old minicomputer manufacturing company, a product of a leveraged buyout funded by employees, had undergone a dozen different financing operations but still was not on its feet. Even so, the new owners were content just to be running their own business. "We might have been equally happy with a pizza chain," reflected president Wayne Wahlenmeier, who cofounded Evolution with Tim Sullivan. Instead, INC. concluded wryly, if they didn't find more capital they could end up working for one.

Ironically, both prospects may happen. On September 10, Evolution Technologies filed for protection under Chapter II in bankruptcy proceedings in Santa Ana, Calif., where the company and its principals had recently moved, under an agreement with Applied Technology Ventures Inc. ATV specializes in picking up such destitute businesses on the cheap and reviving them. And it likes having them nearby. With standard bankruptcy filings, ATV anticipated being named a management consultant in return for certain considerations by the court -- mainly, substantial equity. For its part, ATV would provide working capital -- initially at least $200,000, according to ATV vicepresident Michael Canfield -- to keep the company afloat and its creditors satisfied.

"We see ATV as sort of a commercial MASH unit," says Canfield, who says Evolution's problems are due not only to inexperienced management, but also to the reluctance of venture capitalists to help the company when it most needed it. "They got them just enough money to hang themselves," he complains.

There is some poetic justice in the turn of events: One ATV focus happens to be in computerized restaurant systems for fast-food outlets. If all goes aecording to ATV plan, Evolution's founders may yet be dishing out pizza -- carefully dispensed by their own machines.