By: frisky $$$
Reply To: 25175 by STOCKVALUE $ Friday, 18 Aug 2000 at 12:09 AM EDT
Post # of 25202
ZSUN IS A GARBAGE STOCK WITH NO FUNDAMENTALS. Like it or not, it is heading toward $.24 per share.
1. ZSUN changed its name from a bankrupt beverage refilling company, Bestway USA in September 1998. ZSUN then reversely merged with a money-losing printing and Tele-marketing company, New Age Publication in Philippines in October 1998. ZSUN then acquired a shell corp., Momentum Internet from Anthony Tobin. Since Momentum Internet has continuously lost its shirts, the management decided to kick Anthony Tobin out of ZSUN in July 2000.
2. A good company would never conduct business with a counsel who was found guilty in a pump and dump scheme.
3. A good company would never hire an auditor who has been constantly reprimanded and charged by SEC.
4. A good company would not constantly change the EPS figures. ZSUN enticed the suckers to buy its stock in April 1999 by telling the public that it earned $.11 a share with the revenues of $2,289,158 in 1998. ZSUN quietly revised its earnings to $.04 and revenues to$760,529 in April and May 2000. Surprisingly, Jones & Jensen issued unqualified opinion for all different versions of financial statements. Worse, ZSUN actually had an operating loss in 1998 but covered the loss with the realized and unrealized gain on marketable securities. Those securities are from exchanging its own shares with the related parties such as DDD, LCAI and TMOT. Cooking the earnings figures is a serious crime. The suckers who bought ZSUN shares between February 1999 and May 2000 should consider file a class action lawsuit against the company.
5. A good company would never use the paid touts to promote its stock. Worse, the amount of compensations were never disclosed. They clearly violated Securities Act of 1933 and 1934. The suckers would buy the stocks based on the false and misleading information from the paid promoters should consider file a class action lawsuit against those unscrupulous promoters.
6 At time of the formation, ZSUN exchanged its own shares with related parties: TMOT, DDD and LCAI. If the shares were not restricted, ZSUN classified them as marketable securities. If they were restricted, ZSUN classified them as common stock held to maturity. If ZSUN had sold their own shares, ZSUN could only have classified the excess of par as additional paid-in capital. In other words, ZSUN shifted the capital raising activities into investing activities. The cost of owning TMOT, DDD, LCAI was negligible. Therefore, ZSUN could generate a huge amount of realized and unrealized gain on marketable securities in 1998 and 1999. Although this may not be illegal but it is very unethical.
7. ZSUN acquired a paper company,Asia4sale.com Ltd., from Brian Hodgson. ZSUN then sold 70% of ownership in Asia4sale.com Ltd. to a group of Taiwanese suckers for $5,000,000. Asia4sale.com Ltd. virtually has no assets but some cheap computer equipment. Asia4sale.com Ltd. then reversely merged with Asia4sale.com Inc. ZSUN received 2.7 million garbage shares from AFSI. The Taiwanese suckers received 6.3 million garbage shares. God knows who kept the last one million shares of AFSI. ZSUN later paid 800,000 shares of AFSI to its shareholders. Therefore, it could adopt the cost method instead of equity method of accounting. The loss of AFSI was out of the picture. ZSUN then used the artificially high market price to value their investment in AFSI and created unrealized gain on marketable securities. AFSI had a sale of $70,024 and a loss of $5,006,986 in 1999, a sale of $60,446 and a loss of $138,702 for the first quarter of 2000, a sale of $49,432 and a loss of $204,232 . However, it had a ludicrous market cap of $110 million. Because AFSI had no cash, it issued 800,000 additional shares to unknown investors at a wholesale price of $2.50 per share. The suckers then paid $8 to $11 at retail price in the open market. AFSI is extremely thinly traded. The market value is nothing but a joke.
8. ZSUN knew that it could not show too much profit from selling DDD, LCAI and TMOT. On March 31, 1999, it acquired Online Investors Advantage, a day trading seminar firm from Scott Elder, Ross Jardine et al. ZSUN paid them $400,000 cash, 1,000,000 free shares, 5,000,000 escrow shares plus two shares for every dollar of EBITDA from OIA. According to 10sb version 7 issued on May 11, 2000, ZSUN paid them additional $6,000,000 and 9,820,152 shares. In summary, Scott Elder et al received $6,400,000 and 10,820,152 ZSUN shares for the whole deal. At the time of acquisition, OIA had net assets of $ 148,543. They have taken back more than the net profits they contributed to ZSUN in 1999. ZSUN booked the excessive payment as good (garbage)-will and additional paid-in capital to dress-up its balance sheet. Too bad, the suckers could not understand. Moreover, ZSUN paid 150,000 shares to Global Direct Marketing in December 1998 as a compensation for finding OIA.
9. ZSUN issued multiple press releases about their record earnings of every quarter in 1999 as well as the first quarter of 2000. According to 10sb version 7, ZSUN reported net income of $5.9 million in 1999 and diluted EPS of $.23. The denominator in EPS calculation did not include the additional 9 million shares issued to Scott Elder et al in May 2000. It only used 25,796,000 shares. The actual outstanding shares are more than 32 million shares now. The net income of 1999 was mainly from the short-term capital gain of selling Asia4sale of $5 million, OIA's operating income of $6 million, realized gain on marketable securities of $470,185, unrealized gain on marketable securities of $111,749. ZSUN has never disclosed the loss from Internet businesses in its press releases. The suckers can never understand.
10. ZSUN kept portraying itself as a profitable Internet holding company. However, 85% to 90% of its revenues and 100% of earnings are from high-priced day trading seminar subsidiary, OIA. All the Internet subsidiaries are losing money. ZSUN made money from OIA day trading seminars and selling and holding of TMOT, DDD, LCAI, HRCT, XNET class of yo-yo stocks.
11. In 1999 ZSUN invested a basket of listed stocks by using the profits from selling TMOT, DDD, LCAI. 1999 was a very good year but ZSUN's performance was very miserable. If ZSUN had invested in a money market mutual fund, if would have doubled its return. If the teachers are so lousy, how much can a student learn from them? Besides, the day trading seminar will cost one at least $2,995 a piece.
12. ZSUN newly acquired subsidiaries, Asia Prepress and Asia Internet Services, add no value to ZSUN but cost ZSUN $300,000, 250,000 shares, $159,229 debt. Because they are also located in Subic Bay and Clark, Philippines, the same location that Momentum Asia situated. It appears that these two companies are nothing but clones of on Momentum Asia.
12. OIA did not grow anymore. The second quarter revenues increased from the first quarter of $14,498,361 to the second quarter of $15,063,121 or 4%, but the cost of goods sold increased from $7,474,414 to $10,602,377 or 35%. It appears that OIA must try much harder now to recruit the new suckers.
13. ZSUN incurred a loss of $.04 per share in the second quarter of 2000, but it covered the loss with the unrealized gain of $3,800,000 from the illiquid stock of AFSI. The shares of AFSI are restricted. It is not a short-term investment but a long-term investment or available for sale securities. Any unrealized gain or loss on the available for sale securities should be adjusted in the total shareholders equity according to FASB statement 115. ZSUN has clearly violated the generally accepted accounting principles, because the gain cannot be reported as income item.
IMHO, ZSUN had no future. It will be just another dying WADE.
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