Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: BlueFox who wrote (11490)	7/27/1998 10:59:00 PM
From: Terry T.	Read Replies (1) \| Respond to of 18444

Blue Fox, I am following up on what appears to be P.H.'s suggestion that assets value will play a role in eventual stock valuation and transfer. Stock value, in particular in the case of ZULU, may be no where near asset value, for any number of reasons. However, when the stock has not been supported by management, or when assets have been diverted, I suggest that (i) any use of the manipulated stock value is misguided and/or contrived and (ii) we should look at investment or asset values of the 2 companies and divide up the total stock in the surviving entity accordingly. Thus, if ZULU has $45mm asset value and ESVS has $5mm asset value, the total shares of ESVS stock outstanding should be divided 90% to ZULU and 10% to ESVS to parallel division of assets of merged entity. If 10mm shares were to be issued, ZULU would get 9mm shares and ESVS 1mm shares of the surviving entity. This would result in a 5 for 1 exchange ratio. If 20mm shares are to be issued, then ZULU shareholders should get 18mm and ESVS shareholders 2mm shares. This results in about a 2.75 exchange. If, as is the case, 2.5mm shares of ESVS are outstanding, then that represents 10% of necessary ESVS stock, and another 22.5mm shares will need to be issued to ensure that ZULU shareholders retain 90% of total value of combined entities. If 22.5mm more shares need to be issued (while existing ESVS shareholders keep their 2.5mm shares), that would result in about a 2 for 1 exchange ratio. These ratios, with the # of shares identified, are fair (assuming the values are 90-10), in my opinion.