"ZSUN has significantly overstated its earnings on the second quarter."
By: frisky $$$
Reply To: 25144 by Zsunshine $$$ Thursday, 17 Aug 2000 at 11:55 AM EDT
Post # of 25156
IMO, ZSUN has significantly overstated its earnings on the second quarter. I call this as cooking the book at its own best. ZSUN announced to the public that its EBITDA EPS was $.39. This is a good PR figure becaue the imbeciles have no idea what EBITDA meant. It then said it earned $.07 EPS on a diluted basis in form 10. If you carefully scrutinize the figure, you will discover that ZSUN actually has a lost per share of -$.045.
The trick is to record unrealized gain marketable securities of $3,328,339. Most of the unrealized gain was from 1.9 million shares of AFSI. Of course, ZSUN has no guts to record at the tightly controlled market value of $10.43. It valued AFSI at the wholesale price of $2.00 per share.
If you read the balance sheet carefully, you would find marketable securities of $3,966,413 in the other assets section. This represents the valuation of AFSI. If you read the Footnote 2 carefully, you will find that ZSUN said it had an unrealized gain of $3,800,000. You can easily figure out that ZSUN has unrealized loss in DDD, LCAI and the listed stock portfolio of $471,661. AFSI is a good hiding place for all those losses even its market value is meaningless.
ZSUN has violated the generally accepted accounting principles. The restricted shares of AFSI are not marketable. ZSUN cannot classify the paper gain on AFSI as an income item in the income statement. According to FASB statement, ZSUN should classify AFSI as available for sale securities (long-term investment). Any paper gain on the long-term investment should simply be included in the total shareholders' equity. If you remove Remove the paper gain of $3,800,000 from AFSI, you will find that ZSUN has inflated its earnings by 11.5 cents ($3,800.000/32,358,670).
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