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Technology Stocks : ESVS vs DCLK -- Ignore unavailable to you. Want to Upgrade?

To: Joe Copia who wrote (174)	3/1/1998 1:01:00 AM
From: slipnsip	Read Replies (3) \| Respond to of 717

OK, Matty has had his say and now here is mine.... Matty experiance is with the industry, mine is financial. Before I said I would go, I fully expected to do nothing more than a drive by only to find a P.O. Box. If they actually had an office, I thought maybe I would pick up some literature. Then comes Matty. He sends me this mail saying that he set up an appointment with Thomas Burgess which shocked the heck out of me. Ok so now we are off. I pick up Matty, we head off. It is a 2 hour drive. We have plenty of time to talk about what we expect, I had copied everyones questions and had a hard copy, as well as putting together my own wish list of questions I would like to have answered. Arrival: We roll into Newport right off the main strip of beaches and surf shops lies a circle called Washington Square. This is where EchoMedia was headquartered before it turned into Netmaster aka Zulu-tek. The 1st floor of the building was completely under construction. Locked doors, building permits, the whole 9 yards. At this point I was not feeling to good. We wonder around to the back and find an unmarked door ( which at this time Matty remembers that Thom told him to go to the back ) and head on up to the second floor. This office is certainly nothing to brag about, certainly not an office that was constructed to impress clients but adaquate non the less. We walk in and are greeted by the receptionist. Looks to be about 3-6 offices on the second floor two of which were occupied by men and machines (apparently recently hired from DEC) and Thom was in yet another. Thom came out as Matty said within a couple minutes. Young guy, mid 30's dressed in jeans and a button down. Took us back to his office and gave us 100% of his time for the next 1 hour and 45 minutes. Lets face it, he can't tell us things that are not public that would be insider information. He knew we were from SI. He is not an idiot. That being said here are my impressions. Thom is an entprenuer who has started (according to him) two other companies prior to echo media. He needed expansion capital to grow his business so he started putting out the feelers looking for cash. Along come various venture capitalists with ideas. Specifically he mentioned that there were 3 primary of which he ended going with Netmaster. He got a deal of stock (some restricted some not) and cash for his company. How much we did not specifically ask. Based on other inderect questions, it is my conclusion that it was far less than 5 million total stock and cash. I will say this, Thom seemed like about as upfront guy as you could hope for. Small business man with great ideas, proud as a peacock about his accomplishments (as well he should be). Recently he said that he had stepped down from some of his responsabilities and was focusing more on Business developement. He mentioned a title, but I don't remeber what exactly it was. He told us right upfront that he was probably not the best guy to ask about specific financial questions but would try to answer as best he could. At this time he volunteered Lawrence Howorth's name in CA. Moving on...... Echomedia apparently did about 500M revenues and was profitable at aquisition. All operations that were conducted from the RI office (as best as I can tell) have been completely shut down and moved to NY. The lower floor that was under construction (large multi faceted space) was being rebuilt to supposedly house the technical and developement crew for the entire company. Looks like could be done within a couple months. As Matty and Thom pointed out, Large 10bt hub was recently installed with at least one "pipe" (can't remember what the line is called for high speed access) was in place. Ok so Thom goes with these investors (British) who have this unfunded shell company with a BB listing. On the date of the aquisition, the Brits funded the shell, paid Thom, and gave him a roughly 10% equity share in Netmaster. Numbers like 250m to 500m were thrown out in relation to the amount funded in the shell by the Brits. Should mention as this time that there were 3 Brits only one of which Thom has to this day ever met. Asked about sales, supposedly there are about 60 sales people in NY, LA, Chicago IL, Cambridge MA, and soon Detroit MI. Thom has not even been to all of them yet. His sales force was moved to NY. As we talked about financial questions among other things, Thom completely understood that nobody believes anything until the financials are audited. He went out of his way to express his understanding of this including saying that he just got back from CA where the CFO and others are working round the clock on getting the financials in line. This is the number one priority of the company at the moment as far as I can ascertain. Apparently they were hoping to have financials available prior to double click, but the Softbank aquistion muddied everything up enough where it was just impossible. Now that Double Click went off with such Hysteria, I think that Netmaster understands their window and is working to capitalize on it. I specifically asked wether there was a big six accounting firm involved. I asked 3 times. The first time there was a pause then a yes. I asked three times because I wasn't sure of the answer. In the end I believe that if it is not a big six accounting firm ( I think there are still 6) then to the best of Thom's knowledge he believes it is. I asked about investment bankers. Was told that there was an investment banking firm involved. Wouldn't dislcose which. Asked if big wirehouse or boutique. It was my understanding that it was a New England boutique. I may have been confused though. It might have been a New England boutique that helped him with Echomedia. ( Can't remember ). That's all I got at the moment. I say AGAIN. I HAVE NOTHING CONCRETE THAT YOU DON"T HAVE. I met a small business man who is excited about his current situation. This BB shell and the Brits add cause for concern. They are from as best I can tell Venture capitalist out for a quick buck then on to the next deal. At least that is my concern. Make your own calls and good luck to all. Products such as the Auto whatever it is and Bellcore are on quasi hold. Still being worked on by people internally, but not the primary focus. Softmaster aquistion: Can say this: Complicated aquistion. This leads me to believe lots of creative financing as pertaining to stock. Was told that a model was posted on SI that was pretty darn close to reality (not sure where that post is) but if we draw upon the news releases, it was somwhere in the neighborhood of 4-8 million. Thom also eluded to the fact that this aquisition utilized a good chunk of the "20 million war aquistion war chest". Bottom line: This Thomas Burgess is a real guy. Appeared completely honest and forthright. Didn't have or (wasn't able to share) much of the exact financial information. Didn't even know where the stock was trading. We had to tell him. For a guy who has "10%" of the company he wasn't to concerned about the day to day fluctuations. Told us he had no reason to doubt the TA concerning the number of shares outstanding etc but again reffered us to the CFO. Said he would be hard extrememly hard to get a hold of this week but gave us a number anyway. Bottom line: Pleasantly suprised with the whole situation. Would have been happier seeing the 60 salespeople right there, but am sure we can get someone to venture to the NY office in the very near term. Thom is believable. No idea what the intentions are of the original investors (Brits/venture capitalists). Do they want to cash out with a 100-200% return?? Are they in this for the long hall?? No Idea, but I can only assume that they do indeed want to take advantage of the doubleclick IPO. I think this caught everyone off guard as far as how successful it was. Lets face it the Bankers blew it. If they thought it would have been up 70% first day of trading they would have priced it higher. Double Click got screwed. But who would have known?? One mans humble opinion. As I said, pros and cons. Didn't see anything on the trip that validates this as an ongoing 30 million plus company. No big office, no sales, etc. On the other hand met Thom who was as best I can tell as honest as they come who is as excited about the current situation as any of us. How much is he familiar with offshore stock scams I don't know, but he is pretty darn comfortable and excited about the companies prospects and his position. Nuff said Don't forget this is a penny stock and most are penny stocks for a reason. Do not invest anything that you are not willing to lose 100% off.