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Microcap & Penny Stocks : Zulu-tek, Inc. (ZULU) -- Ignore unavailable to you. Want to Upgrade?

To: aleta who wrote (3317)	3/10/1998 4:57:00 PM
From: Albig	Respond to of 18444

Did CBS market watch do away with there BB-QUOTES? THKS IN ADV. AL L

To: aleta who wrote (3317)	3/10/1998 5:28:00 PM
From: maurice18	Read Replies (4) \| Respond to of 18444

ESVS F/S analysis. My review of the financials, at the request of Tahoeman, shows a company that is struggling to stay afloat. According to those financials, esvs has lost about 1.6 mil from operations of laptop repair, had a one time gain of about 700 from the sale leaseback of a building they owned (very creative), did a reverse split of 1 for 5 to get the stock price up, entered into consulting agreements with Wall Street Financial and Creative Business Strategies (can someone do a check on these guys?) to raise money and value, and issued about 3 mil of preferred (convertible at esvs option but only after shareholder approval) and 220,000 of common (19%- this is because 20% and over requires accounting for the investment on the equity method which would require the recepient of these shares to record its proportionate share of esvs profits and losses). In addition there are all sorts of options given to the financial advisors that could further dilute the existing esvs shareholders as well as a preciously issued convertible preffered which would convert into another 176,000 shares (about 16%). The small accounting firm gave a "going concern" opinion which means that the financials are fairly stated but the company needs to get some financing in place to keep it a viable company. All in all - a weak picture. As esvs is in the business of fixing computers for the most part Im not sure what the synergy is here. NB Engineering apparently does some type of consulting in the digital media arena primarily in compression and DVD. It managed to lose about 860,000 on sales of 1.2 mil. The transaction with netz, created s/h equity of 4 mil (3 mil preferred and 1 mil common) which they needed one way or the other in order to get their equity up high enough to maintain their NASDAQ listing. As best as I can tell from the financials, the esvs stock went to "exchanging parties" in netz. This means that they traded some of hteir shares for some of the shares held by s/h in netz, not netz itself. Therefore, there should be no dilution to NETZ s/h based on this transaction. There is dilution to esvs s/h of 222/1125 (19%) plus whatever the preferred is convertible into which is not disclosed. I would guess that if the convertible is valued at 3 mil and the total s/h equity before counting the conver tible is 2.1, than the convertible holders would have to be crazy not to ask for at least half the company in the conversion. I'm not saying 3/5 (60%) because there is some value to the convertible holders from holding convertible vs. common such as liquidation rights and coupon (although the financials don't say what the coupon, if any, is). That's all folks. Make of it what you will.