StockDetective Rebuttal, found on Raging Bull...
First off, all stocks highlighted by FinancialWeb.com (FWEB) - whether they say good things or bad about the company - are paid for! ZiaSun approached FWEB a while back to try and get featured in one of their articles and found out that all articles listed there had to be paid for. Thus, they themselves are doing the exact same thing that they are critizing ZiaSun for doing - paid advertisement.
With that said, let's focus on their article. I list below quotes from the article that state what I believe to be the seven key factors that they used as the basis of their argument and my response to each:
1) "We got a little nervous right off the bat when it turned out the company's "world headquarters" shared a phone number with a Vancouver, B.C.-based stock promoter, Veritas Group. Several people at Veritas, which is handling the company's investor relations, were unable to answer some pretty basic questions about the company's stock structure or its business plan."
Answer: This is the Legal Counsel's address, as is always the case. The CEO, Mr. Tobin, is based out of their Hong Kong office. A simple call to the IR team would have answered this question for them.
2) "For a rundown on the status of the closely-held shares - are they restricted, under what terms, etc. - we were referred to ZiaSun CEO Tony Tobin, who lives in Hong Kong. Tobin did not respond to our questions, either through Veritas or a direct email. So much for informing investors."
Answer: The IR team was unsure of the exact restrictions.
3) "Thinking that maybe ZiaSun is handling some of AOL's customer service offsite in the Philippines? Guess again. AOL established its own customer service program in the same facility ZiaSun uses, but there is no customer service-based business relationship between the two companies, according to Jason Birmingham, one of ZiaSun's account reps at Veritas."
Answer: This was not even close to being misleading. The press release made very clear that they were just comparing their operations to that of AOL as a proof of concept.
4) "In the meantime, ZiaSun has released financial information on two of its recently acquired subsidiaries - Momentum Asia and Momentum Internet. But the information is incomplete and unaudited, so it is of little value to investors trying to get a handle on ZiaSun's true financial condition."
Answer: This is not true. As they go on to state later in the article, the companies earnings have indeed been audited. Within the matter of a couple of paragraphs the author completely contradicts herself by stating that the earnings have indeed been audited.
5) "An even more recent announcement holds few clues. An April 19 press release heralds earnings of $0.11 per share (earnings of $1.15 million on revenues of $3.53 million) through the end of 1998, and a 2-for-1 stock split. But that's it. The auditor isn't named, there are no actual financial statements or anything else to give investors a sense that the figures are grounded in reality."
Answer: The auditing firm is Jones, Jensen and Co. (NASDAQ listed - JJ&Co's books are done by PriceWaterhouseCoopersLybrand). If they would have simply called the IR team they could have found this out.
6) "Veritas receives $5,000 and 5,000 shares of stock each month for its services. IBC was paid 50,000 free-trading ZiaSun shares. And then there's all of the coverage ZiaSun's gotten on Stockhouse's Inner Circle site, apparently a branch of Veritas - but you'd never know that without a lot of digging and a little luck (the obscure disclaimer link doesn't always work)."
Answer: This is typical behavior for an OTC-BB stock tying to get the attention of potential investors and get their name out to the public. There is nothing unusual or fishy about this. In fact, it is this very business that FinancialWeb takes part in.
7) "Swiftrade operates through Amber Securities, which along with its sister company, Amber Capital Assets Ltd. in Hong Kong, has raised the ire of several investors."
Amber Securities is not a part of ZSUN and is only used to place trades for Swifttrade. Any problems that Amber Securities may have do not reflect in any way on the legitimacy of ZSUN as a business nor on their business practices.
It is very clear to me that the author did absolutely no research into this company before writing this article. A simple call to the IR team would have answere almost all of their issues.
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