Inner Circle Special Report, November, 1998
ZiaSun Technologies Inc.(ZSUN) NASD OTC BB
Shares Out 10 million
Shares in the Float 2.5 million
Cash $2.5 million
Investor Relations:1-800-773-7317
Ziasun Technologies Inc. is an internet holding company specializing in
acquiring leading edge technology companies and specialized internet
niche service companies. What makes Ziasun unique is that it has
acquired a diversified portfolio of established companies which have
established profitable businesses with excellent growth potential.
Many internet related companies such as Netscape, Yahoo, E*Trade,
or America On Line have had extraordinary share price growth for investors
however despite the meteoric share values of internet stocks, most of
these high flyers have yet to make a profit.
Case in point, Amazon's share price is about $126 and the company's
EPS is a negative <$-1.03>. In fact, over two thirds of the internet
companies which are publicly traded have negative earnings.The
valuations of these stocks are driven by intense demand for stock
ownership due to the blue sky potential for this industry. It's amazing
to me that many of these companies which have posted losses quarter
after quarter have shown continued share price appreciation.
Ziasun on the other hand, expects to earn 11 cents per share this year
with profits of $1,114,000 and in 1999, profits of $2,928,000 with an
EPS of 29 cents.
Ziasun's strategy is to acquire undiscovered high potential companies
who found success in a competitive market. Typically, these companies
started out as small private firms who have been quietly developing
leading edge technology or specialized niche market services.
The firms considered must meet Ziasun's strict criteria before they are
acquired. These companies must be producing a consistent revenue,
exhibit high growth potential, and are highly service oriented which will
set them apart from their competitors, and have potential for a merger
or acquisition from another firm.
The Internet Industry
The internet is the fastest growing form of communication that the world
has ever seen. Forecasters estimate half the population of the U.S. will
be on line by 2001. Worldwide, usage will jump from 90 million today to
320 million by 2001. An estimated128 million people will buy goods and
services on line by 2001 which represents $400 billion in e-commerce
sales.
In the future, the internet will provide information on what is going on
in your town or neighborhood much like the city or district newspapers
do. In fact, many local news papers and community businesses are
providing information online in various communities around the world
already. These neighborhood web sites will become more prevalent as
statistics show that most people tend to spend money in the areas
where they live.
Your local shops and services will therefore be looking for cheap and
easy ways to get your attention on line. One prediction is that just over
50% of local businesses will advertise on the web in just a few years time.
ZiaSun's Acquisitions
Aside form your neighborhood merchants advertising on the web, larger
corporations will also be in a position to sell more of their goods to a
growing international audience.
This brings me to ZiaSun's first two acquisitions which are Asian internet
companies that provide a geographic niche market opportunity.
Momentum Internet Inc.(MII) offers a number of products and services which
include, online stock trading designed for European and Asian investors
who what to trade on U.S. exchanges, a premium e-mail service,
international banner advertising, a European/Asian financial website,
and a Asian search engine.
Momentum Asia Inc.(MAI) provides a wide range of compatible graphic
design, writing, printing, database management, and internet customer
service. This company is operating in the low cost incentive rich, free
port zones in the Philippines. Consequently, they can offer their services
for considerably less money than U.S. internet companies.
America On Line (AOL) established its own internet customer service
center in MAI's offices. Together these two companies developed the
infrastructure to make the two services work together. AOL is expanding
and will eventually have over 40 workers at this location thus saving AOL
U.S. $15 million per year.
MAI will provide the technical assistance, software, and staff to handle the
huge volume of traffic which AOL will generate. MAI is also negotiating with
other high traffic web site providers.
Ziasun will integrate the services of MII and MIA which will enhance
each company's ability to service its clients more fully while, at the same
time, providing each company added business potential. Momentum Asia
will provide help generate design and copy content for Momentum Internet
sites. Momentum Internet will offer its clients service packages which
Momentum Asia can provide.
Ziasun receives a substantial amount of its revenue from advertising and,
since the projected growth rates for advertising expenditures on the web is
expected to sky rocket, particularly in Europe and Asia, Ziasun is in a good
position to capitalize on this trend.
Outside of the U.S, Europe will spend the most money on internet
advertising growing from $105 million this year to a projected $2.8 billion
by 2003. Despite Asia's economic owes, ad spending is still projected to
be rather healthy at $1.25 Billion in 2003.
The Asian internet market is still in its infancy compared to the U.S. and
Canada. The fact that Momentum Asia and Momentum Internet have
established themselves as premier site and service providers will attract
new clients who are looking for an easy way to set up an Asian sales
presence.
Foreign corporations who want to expand their business in Asia will be
looking for a internet site which the local population uses and identifies
with culturally. The Foreign corporations will also be looking for all the
necessary services needed to maintain their sales and marketing ie.
e-commerce, order processing, customer service.
Acquisitions under Momentum Internet
There are five other independently operated internet companies which
Ziasun has acquired which fall under Momentum Internet's umbrella.
These companies offer services and information in niche markets which
are large enough to accommodate various competitors due to the enormous
size of the market.
Ziasun's IR department has done an interesting snapshot comparison of
these companies compared to market leaders in each category:
Market category: Ad Network
ZIASUN owned: www.mediahits.com
Mediahits is a banner network which is supported by Momentum's priority
software. This is quickly becoming a powerful marketing tool which can be
used to direct visitors to any website for sales ad brand building. Mediahits
now has 6,200 hosts and exceeds 10 million impressions per month. It is
one of the fastest growing banner networks on the World Wide Web with
impressions growing at over 25% per month.
Industry Leader: 24/7 (TFSM) currently trades at about $12 with a negative
EPS of <$-4.90>
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Market category: Finance Network
ZIASUN owned:www.mfinance.com
This is an on-line financial publication providing comprehensive data on
U.S., Asian, and European stock markets. Information on finance and
investments is also provided and is geared toward European and Asian
investors. Momentum finance is being upgraded and is rapidly becoming
a world class resource for financial and investment information. Their
revenue is derived from subscriptions and advertising. Regular
advertisers include Barclay's International Funds and the Far Eastern
Economic Review.
Industry Leader: Wall Street City which is estimated to be worth $30 million.
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Market category: Navigation Services
ZIASUN owned:www.search dragon.com
This is a search engine and business directory specifically designed for
the Asian market covering Hong Kong, Indonesia, Macau, Malaysia, the
Philippines ,Singapore,Taiwan, and Tailand. This is an ideal medium for
advertising aimed at the Asian market.
Industry Leader: Yahoo which currently trades in the $130 range with a
negative EPS of <$-.2360>. Yahoo's stock price has increased 560% in the
last 12 months.
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Market category: Web Stock Trades
ZIASUN owned:www.swiftrade.com
This is an on-line stock trading system for overseas investors who want to
access U.S. stock markets.
Industry Leader: E*Trade which recently sold about 27% of the company
to Softbank for a reported $400 million. E*Trade's share price is about $18
with an EPS of 12 cents.
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Market category: E-mail Service
ZIASUN owned:www.pinmail.com
This is a web based premium e-mail service which is ideally suited for the
frequent business traveler or users who want their e-mail in a easy to
access central location.
Industry Leader: Hotmail which was recently purchased by Microsoft for
$400 million.
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Conclusion
Market watchers are of the opinion that the Asian internet market will be
growing at a faster pace than the North American market's phenomenal
growth rate. Larger North American internet companies will be looking
at designing their portal sites for this growing Asian and European
markets.
Consequently, modifications will have to be made to their sites to adapt
to the local language and culture. Alliances with established internet
companies will allow for a smooth transition into these markets thus
allowing for language translation and cultural identification.
Yahoo has already launched 12 unique versions of their site around the
world. As more large internet companies expand into foreign markets,
the greater potential for acquisitions or lucrative partnerships such as
Momentum has made with AOL.
Ziasun is well positioned to take advantage of not only an expanding
internet market but also the potential for its subsidiaries to be acquired.
With Ziasun's positive EPS projected at 11 cents this year and 29 cents
for 1999, I would say the potential for the share price increasing
concurrently
with earnings seems logical.
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discuss interesting stocks and review their technical buy and sell indicators
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buy or sell securities. The information herein should be construed as an
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thought
to be accurate but there is no guarantee. All due diligence should be done by
the reader and their financial advisor. E.&O.E.
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