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

To: Terry T. who wrote (11463)	7/27/1998 7:19:00 PM
From: Terry T.	Read Replies (1) \| Respond to of 18444

Aleta, and the gang: Perhaps P.H.'s comments during his interview were misunderstood, and there has been a tempest in a teapot over nothing? My longstanding pitch (see immediately preceding memo) is that ASSETS and FUTURE POTENTIAL have to be separately valued for ESVS and ZULU, and the ratios for stock adjusted based on the results of this valuation. If P.H. indicated a business assets valuation technique is to be used, based on value at date of merger/combination announcement, then I agree 100%. Under a business assets valuation, I don't believe you can use stock prices to compare assets valuations. Stock pricing is arbitrary. Particularly so here, where ESVS has the liquidity and marketability of a NASDQ-listed company stock and ZULU has far less liquidity and marketability as a penny stock. To be more extreme, you can't compare depressed stock value of a privately held company, rich in assets, but no stock market to speak of, with the stock value of a shell company which just happens to be NASDQ-listed. That valuation would also be subject to extreme abuse, since the shell company (and listed stock) can easily be manipulated upwards - particularly when it has little or no float and insiders control 85% plus of the stock outstanding. Business assets can be valued in many different ways, including (i) stated book value, which would be negligible and meaningless in this case, (ii) fair market value of physical assets, which would be meaningless when value is in goodwill, intangibles,etc., (iii) revenue streams, etc. As I noted in preceding post, a revenue stream valuation approach would give ZULU a huge advantage over ESVS, irrespective of whether you base value on 1x or 2x or some other multiple of revenue stream.