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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):September 29, 1997 (September
30, 1997)
AMERICAN UNITED GLOBAL, INC.
DELAWARE 0-19404 95-4359228
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(State or other (Commission File No.) (IRS Employer ID No.)
jurisdiction of
incorporation)
11130 NE 33RD PLACE, SUITE 250, BELLEVUE, WASHINGTON 98004
(Address of principal executive offices)
(206) 803-5400
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Registrant's telephone number, including area code
(Former name or former address, if changed since last report)
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ITEM 5-OTHER EVENTS
DEVELOPMENTS WITH EXODUS TECHNOLOGIES, INC.
American United Global, Inc. (the "Company") is reassessing the future of its
Exodus Technologies, Inc. subsidiary in light of comments made by Microsoft
Corporation at the Microsoft Professional Developers Conference (PDC) held in
San Diego this past week. Microsoft announced at the PDC that only its own
Windows T share multi-user client/server protocol and Citrix Systems' ICA
application server software protocol will be supported in the initial releases
of Microsoft's future Windows NT 4.0 and 5.0 "Hydra" multi-user operating system
products. Alternative multi-user and application server software protocols
belonging to companies other than Microsoft and Citrix will not be presently
considered for Windows NT 4.0 and Windows NT 5.0 releases.
Exodus markets a Windows NT application server product under the tradename
NTERPRISETM which is currently sold to businesses and governmental organizations
as an add-on to the Microsoft Windows NT 3.51 operating system. Exodus markets
its product under a license from Prologue SA of France which expires in December
1997.
Based on these developments, the immediate business prospects of Exodus has been
materially and adversely effected. AUGI's management has determined to limit
Exodus' current activities toward engineering changes in its application server
product in an effort to adapt NTERPRISE for use with Windows "hydra" operating
systems without Microsoft's support. In addition, Exodus will analyze the
feasibility of providing customers with protocols or support for client
computers which are alternatives to those supported by Microsoft, such as UnixTM
workstations, X-terminals and JavaTM-enabled computers. Such engineering
efforts will initially be limited to a small core group of technical personnel
located at AUGI's Bellevue, Washington headquarters.
There can be no assurance that Exodus will be able to adapt its NTERPRISE
product for use with "Hydra" or to effectively provide protocols or support to
non-Windows solutions. If Exodus is unable to achieve positive results in the
near future, AUGI will seek other options for Exodus.
DEVELOPMENTS WITH ERD WASTE CORP.
The Company has been informed that ERD Waste Corp. (NASDAQ:ERD) is contemplating
filing for reorganization under federal bankruptcy laws. Robert M. Rubin, the
President and Chief Executive Officer of the Company is also a principal
stockholder and Chairman of the Board of ERD.
Under the terms of an agreement, dated May 30, 1996, as amended on November 8,
1996, the Company had made available to ERD a $4.4 million standby letter of
credit (the "Letter of Credit") in favor of Chase Bank, ERD's senior secured
lender. Such Letter of Credit is still in effect. Mr. Rubin guaranteed
approximately 23% of the Company's potential losses and expenses in the event
that the Letter of Credit is drawn by Chase Bank. The Company secured its
financial
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risk with a lien on certain ERD equipment. However, the Company cannot
ascertain whether its security interest will protect it from all potential
losses and expenses which could be incurred from drawings under the Letter of
Credit, given the fact that it is difficult at this time to assess the value of
the ERD collateral in which the Company has security interests. In addition, in
February 1997, the Company loaned to ERD an additional $500,000 on an unsecured
basis (the "Unsecured Loan"), which Unsecured Loan is past due. Repayment to the
Company of principal and interest under the Unsecured Loan is guaranteed in full
by Mr. Rubin.
The Company has held preliminary discussions with Chase Bank, the beneficiary of
the Letter of Credit, with respect to measures that can be taken to forestall
drawings under the Letter of Credit by Chase Bank while ERD proposes a plan of
reorganization. The Company has been advised that Chase Bank will draw on such
letter of credit if an appropriate interim arrangement cannot be achieved within
the next two weeks. There is no assurance that the Company will be successful
in such negotiations or that it will be able to enter into an agreement with
respect to potential drawings under the Letter of Credit that will be
advantageous to the Company. It may be assumed that the letter of credit will
ultimately be drawn upon.
Under the terms of its agreements with ERD, if the Letter of Credit is drawn the
Company is entitled to receive a $4.4 million long-term note of ERD convertible
into ERD common stock at $1.00 per share. Within the context of a bankruptcy
proceeding, the court has the power to nullify the Company's agreement with ERD,
in which event the Company's entire investment in ERD may be lost. The Company
may take a reserve, effective as of July 31, 1997 , to reflect potential loss
from this investment based upon its determination, following further discussions
with Chase Bank and ERD, with respect to the amount of any probable losses which
may be incurred.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
AMERICAN UNITED GLOBAL, INC.
(Registrant)
Dated: September 30, 1997 By:/S/ DAVID M. BARNES
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David M. Barnes, Vice President
and Chief Financial Officer
