SATURDAY AFTERNOON OFF TOPIC STORY: Burt, it literally almost pains me to mention the name. Every time I hear it or even mention it, I cringe--LOL!
The stock was called Zulu-tek (ZULU). It began in the spring or early summer of '97 when an OTC shell was bought out, Star Medical. The name was changed to Netmaster and, after a reverse split, began trading as a supposed holding company, on the OTC, as NETZ.
It's first big act was to acquire a Newport, Rhode Island company called echoMEDIA, which invented technology called Sesame-Ad, supposedly able to deliver television-quality advertising to the Internet. The technology premiered at the New York City Yacht Club and got a write-up from Courtney Pultizer.
Seems pretty good so far, doesn't it? Well, that's when I personally got hooked in, replete with visions of the Budweiser frogs and lizards showing up on our computers--LOL! My first purchase was at 17 cents.
Anyway, in early December the company changed its name to ZULU and on the last day of December it buys Softbank Marketing Internation (SMI) from Softbank Holding Company. Through most of '96 and '97 SMI was market leader over Doubleclick. Now it sounds even better, doesn't it? Well, I bought more.
Now, remember, during this period I'm a relatively new investor. I don't even know anything about shorting and "pump and dump" completely unfamiliar to me. But I came in lucky. My first investment was direct through a broker, LightPath Technologies (LPTHA). There, I tripled my money and with the profits set up my online trading account. Me? Hey, I'm now on my way to getting rich.
So I buy into an oil exploration company, TRGC, that three weeks after I bought goes belly up, because the CEO fled to Columbia, stashing the company's money in a Cayman Islands account where he owned a hotel. Trading is halted and bankruptcy declared. So now I'm four grand in the hole!
So you can just imagine me wanting to get my money back via NETZ-ZULU, online television advertising. Hey, this can't lose! And, remember, to me, OTC is merely another trading exchange. I know Nasdaq is better, but still there's the minor leagues and the major leagues. I buy tickets to minor league games; do you? So it goes.
So then what happens? Bergin Brunswick and Cardinal Health are about to merge. It looks good. If I can play the merger right, I can get my four grand back, plus some. So I withdraw all my Zulu, my remaining Lightpath and kick in some addition funds and try for the merger. It looked great. It's Friday at the close and I'm up about 20 percent and the Monday announcement from the FTC on approving the merger is well anticipated. I wake up Monday morning only to find a 8 p.m. news release from Dow Jones saying the FTC disapproved the merger. Everyone hits the sell buttong, including me. Well, as it goes, I sold at a loss.
Meanwhile, simultaneously, Zulu is popping. Having gone from a low of 15 cents to a high of around $1.50. Man, what a bummer. I'm missing the boat. So I buy back in as it's now coming downward, getting in at 7/8 and a couple of other positions around between 1 1/8 and 1 1/4. I'm a happy camper.
So now I'm firmly back in Zulu which is gonna introduce to the world quality television advertising on the Internet. You bet! I'm gonna get my four grand back from that bad oil well investment! Zulu, especially now with SMI, is real hot!
Nope!
No sooner did I get my Zulu comfort level back, and wham! Wired Magazine, which previously reported very favorably--in definite in pie in the sky fashion--about the Zulu-SMI deal, suddenly whacks the crap out of the stock and the deal, attacking the princples behind Zulu in the process.
Meanwhile, the inventor of echoMEDIA's Sesame-Ad just had a baby. I email him congratulating him, but also asking in the process: Hey, what's going on with Zulu? I get assurances that it's a misunderstanding, that all will pass and that if Zulu investors hang on they'll be "richly rewarded."
So the Zulu spin is that the SMI staff which got fired after the acquisition were disgruntled and that's what all of this was about, seemed reasonable. I fell for it hook, line and sinker. So I held firm, still advocating on behalf of the company, on behalf of my investment, hoping for the best.
During this time, of course, the message boards are all lit up, and, sure enough, there I am front and center writing my little heart out, completely affixed, mesmerized, if you will, in the belief that humans are good, not bad; and so Zulu. That there has to be an explanation for everything and that everything bad must be proven beyond a reasonable doubt, etc. And it was here, in this area, where Jon Tara and I locked horns.
So what happens? Well, things begin to look better, deals are made, executives are brought on board from places like Disney, Pixar, Barnes and Noble, DEC, etc. But things never really are better. These execs simply got lured by big stock options. There was never any substance because ZULU, it ultimately turned out, was only using echoMEDIA and SMI in name only, for PR. The employees of these entities all got fired.
So what's happening with the share price? It languishes in the 50-75 trading range and any bit of good news always seemed to get counteracted with bad news. Finally, I got so frustrated by the bad news, I posted a some blisterting criticisms against the company. This prompted not only Zulu's investor relations representive to contact me, but also the main propogator behind Zulu, Pat Hayton.
Hayton, who supposedly had a house in Newport, calls me up and says he's on his way to Newport but could meet me in Boston if I wanted to talk about the company. Well, of course I did! I wanted to know as much as I could and I desperately wanted to be able to report back to the respective posting threads some good news.
No doubt about it. Hayton was shrewd. He knew I was a strong advocate, and a good writer and could carry some influence. In effect, I got duped. At the time, the big issue was when was ZULU going to release its report to the SEC. So during that first meeting he hands me a press release showing the audit had been done and the report was in the mill. Indeed, on the basis of this meeting and the audit finally being completed, my confidence in the company was restored.
Now also happening is a supposed merger with a Nasdaq-listed stock, Enhanced Services Corporation (ESVS), which had two subsidiaries, Laptop Solutions which customized and repaired laptop computers; and NB Digital, a DVD/CD-Rom type business. So it all looks good.
But, no, the bad news keeps coming. The big-name executives begin coming and going in revolving door-like fashion. They get lured on board, discover what they got themselves into, and then eventually resign, only to be replaced by another big name.
So you can just imagine the battles on the threads, Jon Tara on one side supported by a cadre of bashers (the absolute worst kind of bashers--Hayton had loads of enemies); and me on the other side, supported by the loyalists who believed the time was right, the technology was right and with all the big names directing the show, why couldn't it work?
So fate takes a turn. I'm heading from Boston to New York and I put out a call to interested Zulu investors to meet at a pub. About 10 of us show up. And just before the event I'm contacted by Hayton who says he'd like to show up and meet everyone. He does. We have a great gathering. He answers questions and does a very good job helping to restore our sense of confidence in the company. Meanwhile, we're all having lotsa, lotsa fun. It really was a great gathering!
So what was so fateful about that wonderful evening? Well, it wasn't that the head of Zulu graced us with his presence. No. Something much more powerful than that. It was there, in that Greenwich Village bar, that I met the woman I love and the woman with whom I now live with in New York City.
So, to end this, the fate of ZULU became similar to the fate of that terrible Alaskan Airlines tragedy. Essentially, ZULU was flying with no wings. There was no good reason for the plane to be in the air. Under the pretext of the ESVS merger, there was a reverse split. Staring that share price once again, post-reverse split, heading under a dollar again, I finally gave up and sold at the dollar mark.
End result? I lost eight grand. But the hand of karma and the wheel of time was kind to me not so much with the money end of things, but because from this investment, I found love. She lost 30 grand in the investment. But when we together add it all up, none of that money can compre with the love share.
Meanwhile, Zulu is still on the OTC trading about about a nickel and it's very hard to even find a share price listing for ESVS. They never merged. From an investment point of view, it became a tragedy for many.
So now you know what Jon Tara is writing about. And I thank him for what I learned from my many, many exchanges with him: Stay away from OTC stocks. I've done so and have profited very nicely by playing IPOs, Quiet Periods stocks and staking out a few long positions on solid Nasdaq prospects. Today, I'm fully recovered and doing nicely.
Oh yeah, that oil well? Interestingly, a shareholders committee prevailed, got the company out of bankruptcy, it's completely reorganized, just this past week submitted its first audited report and will soon be off the pink sheets and trading as an OTC:BB stock under the name of Trinity Energy Resources, Inc. It's trading symbol will soon change from TRGC to TERI. I'm still holding 2900 shares and some day soon hope to get my money back.
All right, folks, back to the Saturday afternoon games! |
