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: aleta who wrote (17884)	1/8/1999 10:51:00 AM
From: Jon Tara	Respond to of 18444

ISSUANCE OF THE INVESTOR PREFERRED In May 1998, the Board of Directors considered and in August 1998, the Board of Directors accepted a proposal from Netvest and certain other parties, including Netvest participants and affiliates, to acquire up to 100,000 shares of a newly authorized class of convertible preferred shares ("Investor Preferred") at a per share price of $50.00 per share. In December 1998, certain related parties agreed to convert $5,000,000 payable to them into the 100,000 shares of Investor Preferred. If Proposal II is approved at the Meeting, the holders, at their option, will be entitled to convert the Investor Preferred on the basis of one hundred shares of restricted Common Stock for each share of Investor Preferred. Thus, if fully converted, the holders would be entitled to an aggregate of 10 million shares of Common Stock, on a fully diluted basis. The Investor Preferred was offered on these terms because there was no assurance that there would be sufficient authorized shares of the Company's Common Stock to allow for conversion to shares of restricted Common Stock, and no assurance of conversion or registration could be provided. Since the number of shares into which the Investor Preferred is convertible exceeds 20% of the outstanding Common Stock, under the new NASDAQ Rules as described below (see "NASDAQ Matters"), stockholder approval is required for the issuance of the Common Stock upon conversion of the Investor Preferred Stock. Until Proposal I is approved, resulting in an increase in the number of authorized shares of the Common Stock to 100 million shares, the conversion of the Investor Preferred is limited. The other terms and relative rights of the Investor Preferred are described below (see "Description of Capital Stock of the Company"). If the Investor Preferred is converted into Common Stock, the shares of Common Stock will be issued as restricted shares but the holders will be entitled to pendent registration rights in registration statements filed by the Company, including a registration statement filed in connection with any consolidation, merger or other combination of the Company and Zulu-tek. --------------- Note that this investment, combined with other Netvest holdings, appears to make Netvest/Hayton majority shareholder in the new company. Surprise, surprise.

To: aleta who wrote (17884)	1/8/1999 11:11:00 AM
From: Jon Tara	Respond to of 18444

What is this? ------------- (1) In December, 1998, Zulu-tek issued an additional 1 million shares of Zulu-tek Common Stock in connection with the December Investment; the proceeds from the December Investment were contributed by Zulu-tek to the Company in exchange for 1 million shares of Company Common Stock.

To: aleta who wrote (17884)	1/8/1999 11:24:00 AM
From: Jon Tara	Read Replies (1) \| Respond to of 18444

Investor preferred bought at 50+% discount! -------- Investor Preferred. On August 18, 1998, the Board of Directors authorized the issuance and placement of up to 100,000 shares of Investor Preferred with a stated value of $50 per share and a par value of $.001 per share, all of which were issued in connection with the capitalization of $5,000,000 of notes payable. -------- The Investor Preferred will be immediately convertible into Common Stock upon the request of the stockholder on the basis of one (1) share of Investor Preferred for one hundred (100) shares of Common Stock. ----------- Letsee, 100,000 shares x 100 = 10,000,000 shares of common stock. 10,000,000/$5,000,000 = 0.50/share. That's what Netvest/Haton thinks the stock is worth. Pretty good deal, with the stock trading at $1.00-$1.50/share! Shareholders are being asked to approve, in retrospect, the sale of stock to Netvest/Hayton which (a) gives them a controlling interest and (b) sold them stock at less than half price. Here's another goodie from the filing, which acknowledges the discount: -------- Investor Preferred In December, 1998, 100,000 shares of Investor Preferred were issued for $5,000,000 consideration for forgiveness of advances made to the Company and amounts payable by the Company. The preferred is convertible into 10,000,000 shares of common stock. The market price of the common stock was $1.00 at the time of issuance resulting in a favorable conversion factor of $5,000,000. -------- I guess "favorable conversion factor" is just another, more-palatable way of saying "half price".

To: aleta who wrote (17884)	1/8/1999 11:43:00 AM
From: Jon Tara	Read Replies (1) \| Respond to of 18444

LEGAL PROCEEDINGS Currently, Zulu-tek is subject to a number of proceedings that arose principally on account of obligations existing on the December 31, 1997, the date of the acquisition of Zulu Media including proceedings with respect to amounts claimed to be due under agreements entered into prior to Zulu-tek's acquisition of Zulu Media. Resolution of the claims and payment of the settlements or judgments from the claims, have, in certain cases, been delayed because of the lack of funding and revenues from on-going operations. As of the date hereof, there are outstanding judgments (exclusive of settlements or agreed payment arrangements of approximately $800,000) aggregating approximately $75,000 in matters based on actions and claims for arbitration from vendors and creditors involving non-material amounts. In certain of the actions, the Company and officers and directors of the Company or Zulu-tek and certain individuals have been named as defendants; claims involving matters existing at December 31, 1997, are discussed in this section even if the Company has been named. The following matters which are pending and have not been settled or otherwise resolved, individually involve liabilities or claims for more than $100,000 against Zulu-tek, Zulu Media or echoMedia. Geosystems Global Corporation v. Enhanced Services Company, Inc., Zulu Media (formerly SIM), et al.; Los Angeles Superior Court Case No. BC 201898. This action, arising out of an advertising sales representative agreement alleged entered into as of June 1997 by SIM and Geosystems Global Corporation ("Geosystems") was filed on December 7, 1998 for breach of contract and common counts against the Company and Zulu Media. Geosystems is seeking damages of approximately $400,000, a temporary protective order and an attachment. Lycos, Inc. v. Softbank Interactive Marketing, Inc., Suffolk (Massachusetts) Superior Court Case No. 98-00704. Lycos filed an action on _____________, against SIM, a/k/a Zulu Media for contractual amounts due to Lycos for periods prior to December 1997. Lycos obtained an Agreement for Judgement in the amount of $553,856.41 and then obtained a sister-state judgment in the Los Angeles County Superior Court in the amount of $556,430.52 (Case No. BS 052102). Softbank Holdings, Inc. v. Mediabank, Inc., and Zulu-Tek Media, Inc., Los Angeles County Superior Court Case No. BC197397. Softbank Holdings, Inc. ("Softbank") filed an action in September 1998 against Mediabank, Inc. and Zulu-Tek Media, Inc. for breach of an indemnification agreement, and breach of an assumption and guarantee agreement regarding the bonus, severance and other payments paid by Softbank to a former SIM officer and allegedly owed to Softbank under the indemnification arrangement. Softbank seeks damages in the amount of $436,198.90, with interest, costs and attorneys' fees. The parties are engaged in settlement negotiations regarding the action. Batkin, et al., v. Softbank Holdings, Inc., et al. Supreme Court of the State of New York, County of New York, Index No. 601908/98. This action has been filed by Andrew Batkin, Lawrence Howorth and Theodore West, former employees of SIM and has been filed as a derivative and direct action on behalf of Zulu Media (formerly SIM) as well as the individual plaintiffs. The action seeks damages from Softbank in an amount of $200 million for Softbank's alleged breach of its obligations to the individuals and to SIM for its alleged failure to fully fund and support SIM. Softbank acquired its interest in SIM from the individual plaintiffs and entities which they controlled in 1996 and the action relates to that period. Softbank has undertaken the defense of this action and the action is disclosed herein because of the derivative nature of the action which results in Zulu Media being named as a nominal defendant and plaintiff. Softbank has _________.