David Israel Rosen, a minority shareholder in

Eshed Robotec

(Nasdaq:ROBO), has placed a request on the company management's desk demanding to implement a reorganization plan of his making, TheMarker.com learned today.

Rosen, who owns a 5.5% stake, claims the management did not give his proposal the proper consideration. He therefore summoned an unofficial meeting at which he will demand that Eshed's management be replaced and that his recovery plan will be put into effect.

Will Rosen bid to buy?

Rosen confirmed the information and told TheMarker.com of the management's failure to lead the company to reasonable profitability in the last few years.

The company's return has also been insignificant.

"Eshed's management proved that what it is best at is sapping the company dry, yet it is unable to cut costs in the right places. The entire technology sector is suffering hard times, but Eshed is the only one not tightening its belt.

"I tried for a whole year to become a member of the company's board of directors, mainly because of my ideas on how to create value for the company. But I was rejected by the board members, who happen to be the company's founders. I intend to stop acting as an advisor for the company, and to work towards implementing the plan I have suggested, which I believe will influence the company's value substantially within 90 days," he said.

Rosen also raised several claims against the cancellation of the option allocation to workers at Eshed, which the company had announced at the end of the year 2000.

"The officers can take care of themselves. Why don't they take care of the workers? They are simply afraid of being diluted," he said.

Rosen also pointed out that he has the financial ability to bid for Eshed stock, which he may do in case his current efforts end unsuccessfully. During 2000 Rosen has acquired 120,000 Eshed shares at $10 a share. Eshed stock is now selling for $2.1.

A 65% leap in two weeks

Eshed Robotec saw its shares leap 65% within the last two weeks, lifting its market cap to $23 million. The company was restructured in March 2000 into three divisions, one specializing in educational software; YET, a developer and manufacturer of state-of-the-art motion control AC motor drivers and robot controllers; and a hi-tech ventures and investments department.

From what TheMarker.com has learned, Rosen proposes that the educational software division be sold or merged with a similar company in the same field, which has suffered a profitability crisis in the last two years.

Eshed's two flagship companies are YET, which back in 2000 was considering issuing on the Tokyo Stock Exchange Market, and Memcall, a developer of advanced computer network search and retrieval technology. Eshed was also a holder in the Internet startup SwapStation, which was closed sometime last year.

Eshed is controlled by its founders, chairman, CEO, and Managing Director Rafael Aravot, and Ahinoam Kra-Oz, its Joint Managing Director of Marketing, as well as by Haim Schleifer, joint managing director of R&D and the pedagogical department director, and Menachem Zenziper, the vice managing director of finances.

The founders own 44% of the company's stock. Eshed ended year 2000 with NIS 15.7 million in revenues and with a tiny net profit of NIS 82,000, as opposed to NIS 1.7 million in 1999 and 587,000 in 1998.

Rafael Aravot's response to this news was diplomatic but firm. "David Israel Rosen came to us with a number of proposals over the last six months. Some were good, others were not. We have established a relationship with him as our advisor in order to promote our interests in the Japanese market, funding rounds by group members included.

"So far his proposals have not proved to be great successes. Lately he approached us with a request to end his ties with us, and we agreed. As far as reorganizing the company is concerned, well the whole world knows what that entails. The question is what true value, or content, is there in such a step. However, Eshed has become a participant in a number of new ventures and enterprises recently, which could yield great results for the company in the future, in spite of the risk involved," Aravot said.