Several companies are showing interest in buying the business activity of delisted
, formerly (Nasdaq:MKID), which is in receivership.
The interest in the company is described in the report written by Attorney Dan Friedman, the company's temporary receiver, appointd by the court.
Friedman's report also reveals that MKID's financial obligations amount to NIS 6.8 million, of which NIS 2.5 million is owed to suppliers, NIS 2 million to United Mizrahi Bank, and NIS 1.8 million to employees.
Multimedia KID develops and markets computer-based learning systems meant to provide a complete educational environment. The company was founded in 1996 by Pessie Goldberg. Over time investors jumped in, including David Rubner, former chairman of
(Nasdaq:ECIL), Murray Haberfeld, and David Bodner. But Multimedia KID sank into financial difficulties. On December 21, 2000, the Israeli courts appointed a temporary receiver.
The report says that according to Rubner, the investors provided the company with about $8 million. The court appointee writes that this fact requires extensive investigation.
Friedman also reports that in the initial inquiry conducted jointly by court receiver and CPA Eli Shefler, it appeared that it would not have made financial sense to keep the company as a going concern, but that the company does has economic merit and that sale of the its business activity could yield a decent return.
The receiver says that several businesses have been sniffing at the company's activity. The receiver assesses that in order to maintain the company's intrinsic value while its activity is frozen, a further NIS 95,000 would be needed. Rubner had agreed to provide the fund.
The chain of events
Friedman's report goes over the chain of activities that were performed by investors and that directly concern the company and its assets. It reports that Rubner, Bodner, and Haberfeld intended to take the company public on Nasdaq through a reverse merger with a listed Nasdaq shell. It said that the first two attempts failed and that only on the third try, a reverse merger took place with defunct yet still traded United States-based Jenkon International.
Furthermore, the report said that Multimedia KID signed a deal with underwriter AIF, made out of various investors including Old Oak Fund and Troutman Wasserman, to issue securities convertible to 5 million Jenkon shares, as payment for the initial contact with Jenkon, and added $10 million for good measure.
Multimedia KID and Jenkon International signed the reverse merger contract on December 1999. Multimedia KID owners received 840,000 shares of Jenkon as well as 2.5 million preferred stock that could be converted to 25 million shares under certain conditions, which actually took place.
The receiver claims that after the merger, Jenkon issued $4.5 million in debentures convertible at one dollar a share. At this stage it is yet unknown who was the investor.
The report further claims that at that stage Jenkon stock, which henceforth changed its name to Multimedia KID, was trading at a market cap of $270 million. Jenkon stock started to sink after a story in
about dubious dealings taking place in Israeli technology firms in which Rubner, Bodner, and Haberfeld were involved. The piece named the Jenkon deal. MKID finally stopped trading on December 21, 2000, the day the company went under court receivership.