"In summary, ZSUN has no growing prospect. OIA's profitability is declining. The game is over. ZSUN is worth not more than $.24."
By: frisky $$$
Reply To: None Sunday, 20 Aug 2000 at 1:22 PM EDT
Post # of 25295
ZSUN lost $1,557,478 in the second quarter of 2,000. However, the shameless management covered the loss with the unrealized gain of $3,800,000 from the 1.9 million illiquid restricted-shares of AFSI. The loss was primary from the badwill amortization of $2.8 million. The badwill was from paying 9,820,152 shares and $6,000,000 to Scott Elder, Ross Jardine, David McCoy and Scott Harris on May 15, 2000.
In its press release on August 11, ZSUN did not say how much it lost in the second quarter. Instead, iZSUN bragged a record six-month of EBITDA of $.39 per share. To get this $.39, ZSUN added back badwill amortization and depreciation of $3,000,718, income tax of $3,150,451 for the numerator. ZSUN just assigned 50% weight for the newly issued 9,820,152 reward-shares to get a smaller denominator. The result was that it could inflate the EPS. The suckers would never understand anyway.
If you deduct the second quarter figures from the six month figures, you will have the first and the second quarter income statements. If you compare these two income statements, you will discover that ZSUN's businesses are deteriorating. Since ZSUN has moved the net loss of Moment Internet into discontinued operations, all the other figures in the income statement were from OIA and Momentum Asia.
You will discover that the sales of these two units (85% to 90% from OIA) increased from $14,115,191 to $15,063,161. However, the cost of goods sold increased from $7,463,914 to $10,602,377. This caused the gross profit decreased from $6,651,277 to $4,460,754. This means that OIA has to spend huge amount of money to attract the naive investors now. OIA's growth is finished.
The depreciation and amortization expense increased from $88,360 to $2,912,358. This was mainly from the badwill amortization described in the first paragraph. Generally and administrative expenses decreased from $2,227,254 to $1,371,368. I believe that this was mainly from saving the expenses of unprofitable Momentum Internet Unit. The unrealized gain on marketable securities increased from$45,480 to $3,282,859. This was mainly from recognizing paper gain of AFSI of $3,800,000. As I mentioned in some of my previous posts, ZSUN violated generally accepted accounting principles. According to FASB statement 115, ZSUN cannot add the paper gain of AFSI in its income statement. Shares of AFSI are not trading securities (short-term investment) but are available for sale securities (long-term investment). Especially, those shares are restricted and illiquid. If ZSUN had followed FASB 115, the paper gain could only be included in the total amount of shareholders' equity.
In summary, ZSUN has no growing prospect. OIA's profitability is declining. The game is over. ZSUN is worth not more than $.24. |
