By: frisky $$$
Reply To: None Sunday, 20 Aug 2000 at 6:08 PM EDT
Post # of 25299
If you take a closer look on ZSUN's 10q statements, you will discover that ZSUN has made many transactions to benefit a small group of insiders. The result is that the gullible shareholders are suffered. Moreover, ZSUN hid the loss on its investment in marketable securities with the paper gain of AFSI.
First, in footnote 2 and statement of cash flow, ZSUN indicated that it had paid $5,700,000 to former OIA shareholders because OIA had only generated $5,700,000 net cash during the reward period. The remaining amount of $300,000 is carried as the related party payable in the book. Meaning, it will pay $300,000 to those folks in the near future.
Second, in the current liabilities section, ZSUN reported line of credit for $158,988. In the shares counts, ZSUN indicated that it issued 250,000 shares to Mr. and Mrs. Cox. This means that the acquisition of Asiaprepress and Asia Internet Services has been completed before June 30, 2000. ZSUN probably has paid Mr. and Mrs. Cox $300,000 already.
Third, the receivables from the related parties increased $800,000. ZSUN said that $300,000 was a loan to an officer and $500,000 was a loan to a brokerage house related to Swifttrade. I believe that they are probably the transactions between Momentum Internet and Momentum Asia. Since Momentum Internet was divested, the receivable popped out. I also believe that the $500,000 deposit to McKenna Group might be recorded in this account too.
Fourth, the people behind McKenna Group Entity are Bryant Cragun or Credico Co., Hans Von Meiss. ZSUN paid 100,000 shares of ZSUN to Cragun and Meiss as finders fees for finding ZSUN for McKenna-Ziasun Fund. ZSUN will contribute 100% of money to McKenna-Ziasun Fund. However, it will only receive 60% of the fund assets of first $20,000,000. If the assets are above $20,000,000, ZSUN will only receive 51% of the fund assets above $20,000,000. The McKenna Group Entity (MGE) will receive the rest. Cragun, Meiss do not have to risk a penny, but they will enjoy all the benefits. ZSUN is so generous by giving away the money to related parties. It really treats the other shareholders as suckers. ZSUN deposited $500,000 on April 25, 2000. It will deposit, or may have deposited, $3,000,000 on the date of execution of the agreement. It has scheduled to deposit $2,000,000 on September 1, 2000, $2,500,000 on November 1, 2000, $3,500,000 on January 1, 2001 and $3,500,000 on April 1, 2000. In other words, all the cash generated from OIA will disappear into McKenna-ZSUN Fund. The shareholders immediately will lose at least 40% of their earnings. They will form an LLC called McKenna Venture Accelerator (MVA). MGE will own 25% of MVA, MVA management will own 15%, the investor or McKenna-ZSUN-Fund will own 60% of MVA. The MVA management can charge up to 5% management fee. The complicate transaction makes everyone confuse. The simple conclusion: they are using the money from ZSUN shareholders for risky investments without risking their own money.
Fifth, if you read the first quarter 10q statement, you will discover that its marketable securities had a market value of $1,228,276. In the cash flow statement of the first six months, ZSUN indicated that it had purchased $933,997 of marketable securities. In the cash flow statement of the first quarter, ZSUN said that it had purchased $643,562 of marketable securities. You can figure out that ZSUN purchased additional $291,435 marketable securities. ZSUN did not sell any securities in the second quarter of 2000. However, the ending value of marketable securities decreased to $836,157. This implies that ZSUN's marketable securities have shrunk $683,554. Gee, how much can you learn from OIA, if it does not know how to handle its own money? To cover the paper loss, it reported the paper gain of AFSI of $3,800,000 to cover the loss. As I mentioned before, this is a severe violation of FASB statement 115.
Sixth, on page 15 of the 10q statement on August 17, 2000, ZSUN said that it had 1,800,000 shares of AFSI. However, all the press releases said that it had 1.9 million shares of AFSI. I wonder whether this was just a typo. If not, 100,000 shares of AFSI is unaccountable.
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