#*#*#*#*# INTERESTED in #ZSUN#? HERE IS the 10SB #*#*#*#*#
ragingbull.com
***Analysis of ZSUN Part II: How did ZSUN start?***
The following info are from ZSUN's 10sb. If not, I will point out the source or my opinion.
1. Jennifer McMinn started the penny stock company, Carlise Enterprise (CLEP) on March 19, 1996 with $5,000 investment and issued 50,000 shares.
2. CLEP issued 750,000 regulation D shares at 10 cents per share to offshore entities and started trading in OTCBB on April 9, 1996.
3. CLEP issued 15,000,000 regulation S shares at $.10 a share on Jan 7, 1997 and Feb. 6, 1997. CLEP entered an agreement with Katori Consultants to acquire distribution rights of Fountain Fresh International (FEI). The company agreed to pay $5 million annual payments to Kotari. The comapny changed its name to Bestway USA on April 29, 1997.
4. In July 1997, the company issued 129,994 shares through a private placement at $2.50 per share.
5. In September 98, the company authorized a reverse one for two reverse-split and changed its name to Ziasun Technologies. ZSUN's buddy New Age Publication or Momentum Asia liquidated FEI through a joint venture with Betterstuff AG. (I believe that part of shares of the joint venture is probably in Common stock held to maturity after Momentum Asia merged with ZSUN.) ZSUN was viturally broke and the remainning assets was valued at $50,000.
6. On October 5, 1998, ZSUN reversely merged with Momentum Internet and Momentum Asia. ZSUN issued 565,000 shares to Momentum Internet to swap one sole share. Zsun issued 2,000,000 shares to swap 25,000 shares of Momentum Asia. At the time of the merger, Bryan Cragun was President, Jeniffer McMinn was Sectary and CFO. Lynn Brigs and Allen Hardman was VP. ZSUN consolidated its shares to 7,900,0009. The consel who put the deal together was George G. Chachas. (Mr. Chachas was found to have particpated in the fraud of Eletro-optical Systems (EOSC). EOSC was shut down by SEC on March 13, 1998. The naive investors lost over $5 million. See SEC case 15715, April 21, 1998).
8. Momentum Internet was a shell corp in Virgin Islands. It has only one shareholder, Vulcan Consultants. Mr. Anthoy Tobin was the director. Vulcan borrowed $70,000 from Momentum Asia right before the merger and return 65,000 shares of 565,000 shares of ZSUN shaRES as repayment on December 98. (I believe that this was the upfront fee to Mr. Tobin it was disquised as a loan.)
9. Momentum Asia, formerly New Age Publications, was engaging in printing and TELEMARKETING businesses in Subic Bay, Phillippines. It was incorporated on Sept. 6, 1994. The name was changed to Momentum Asia on June 17, 1998. For whatever reasons, the company was 99.995% owned by Momentum Media of Hong Kong. New Age lost $30,266in 1995, lost $131,950 in 1996. However, it reported a profit of $141,146 in 1997. The profit included 18,297 of unrealized gain of marketable securities and $70,688 of rental income. (I believe that rental income was from subleasing office spaces to New Age's affiliates.) The company also listed membersheep fees of yacht club and golf club for $143,857. This figure is EXACT of 1/7 of a million dolloar. In the other assets section, one will find $95,028 of motorcycles held for resale, $250,000 of land held for resale. Eric Montandon was CEO at the time. Of all the three entities comibned, Momentum Asia is the only one has some meaningful assets. Therfore, for accounting purpose, Mometum Asia is a surviving entity although ZSUN is a surviving entity for legal purpose because ZSUN was in OTCBB already.
10. Mr. Tobin created a company called, Crossbow Consultants. The company desings web pages for ZSUN. Crossbow received $10,000 a month from ZSUN.
ragingbull.com
***Analysis of 10sb, Part III: Acquisitions of OIA and Asia4sale and executive compensations***
1. On March 25, 1999, ZSUN acquired Asia4sale. ZSUN issued 100,000 shares in exchange 99 of 100 share of Asia4sale from Brian Hodgson and paid hims $15,000. Asia4sale has another shareholder, Tempest Company ltd. Asia4sale had few visible assets but had a vision of E-commerce in the future. ZSUN also agreed to issue one additional share of ZSUN to Asia4sale.com for every $2.00 profit for the period of April 1, 1999 through September 31, 2000 (I know September has only 30 days, but Maybe it will have 31 days in Hongkong next year.)
2. On March 31, 1999, ZSUN acquired Online Investors Advantages by issuing 6,000,000 shares and paid $400,000. If OIA made less than $2.5 million in a year, one share will be reduced for every dollar under $2.5 million. If OIA mad more than $2.5 million in a year, one additional share will be issued. OIA used an ISP's server for its website. OIA has four shareholders: Ross Jardin, Scott Elder, David McCoy and Scott Harris. OIA 's assets are human resources. Therefore other tangible assets are minimal.
3. Executive Compensations in 1998:
Anthony Tobin: $121,800 plus $31,200 plus $2600 housing allowance plus $150 management fee plus $10,000 a month through Crossbow Consultants.
Allen Hardman: $132,000
Scott Elder $31,200 plus consulting fees of $24,127 plus $150,000 deferred compensations.
Ross Jardin: $58,520 plus $150,000 deferred compensation.
Peter Graham Daley: $24,000 plus $2,000 housing allowance and management fee of $150 per month.
4. On Feb 12, 1999, ZSUN entered an agreement with Global Direct Marketing to acquire OIA. ZSUN will pay Global with 75,000 shares on December 7, 1999.
5. Incentive Stock Options
Allan Hardman: 25,000 shares at $2.00 per share for four years beginning one year after the employment.
6. The largest shareholders (more than 5%)as of August 31, 1999.
Scott Elder 2,100,000 7.8%
Ross Jardin 2,100,000 7.8%
(ex-owners of OIA)
Momentum Media Ltd 3,499,980 12.8%
(ex-owners of Momentum Asia)
Comment: Many famous names disappeared. IMO, Scott Elder and Ross Jardin's shares are still restricted by August 31, 1999. Momentum Media (or Monetum Asia) shares will be unlocked on October 5, 1999. Anthony Tobin's shares from Momentum Internet will be unlocked on October 5, 1999 too. owever, those shares, 1,130,000 are less than 5%. Therefore, it was not listed in 10sb. Strangely, none of the original ZSUN shareholders who own 15,800,018 (split-adjusted) is holding more than 5%. Do you believe naked short sales and SSB's story now? You'd be the judge.
ragingbull.com
***Analysis of 10sb, Part IV: Touchstone Tansport***
On May 1, 1997, New Age Publications (Momentum Asia) made a loan of $250,000 secured by a real estate to Touchstone at a steal interest rate of 5% for 5 years. The mortgage was extended to 10 years on August 20, 1999. The mortgage was in Momentum Asia balance sheet as of 12/31/97. ZSUN's balance sheet as of 12/31/98. It was listed as an item in the other assets. Although ZSUN only provided one footnote for the financial statements dated June 30, 1999, it appears that the loan is still in the other assets.
I have no idea why Momentum Asia made the loan to Touchstone. 10sb did not say the reason. I am also puzzled why the loan agreement was extended.
ragingbull.com
***Analysis of 10sb, Part V: Common Stocks Held to Maturity ***
1. As I have said before, when ZSUN reversely merged with Momentum Asia and Momentum Internet on October 5, 1998, only Momentum Asia had some meaningful assets. ZSUN had an inoperative beverage unit, the management valued the company at $50,000. Momentum Internet was as just an empty shell. Anthonty Tobin was the director of Vulcan Consultants which was a paper company too.
2. If you read ZSUN's comparative cashflow statement of 1998 and 1997, you will find out the 1997 portion is EXACT the same as New Age Publication's 1997 cash flow statement in the appendix.
3. ZSUN did not provide the balance sheet as of 12/31/97. However, it did provide a balance sheet for New Age Publications as of 12/31/97. Since 1997 cash flow statement of ZSUN and New Age are the same, the balance sheet should be the same. (Note: cashflow statement is the different of two consecutive balance sheet plus the adjustment items in the income statement).
4. In New Age's 12/31/97's balance sheet. There is no common stocks held to maturity. However, in ZSUN's 12/31/98's balance sheet, a common stock held to maturity account was popped out. ZSUN did not explain what were them in its 10sb. The funny part is the sum of the membership fees and common stock held to maturity is exact one million. The membership fee is exact 1/7th of a million and common stock held to maturity is exact 6/7th of a million. The membership fees of country club was also in New Age's 12/31/97 balance sheet. It appears that someone has a million in his mind and divided the figure in the financial statements.
5. If you look at ZSUN's 1998 cash flow statement. You will find out a noncash financing activity (meaning the company DID NOT receive any cash) of $1,359,449 which ZSUN said it was contribution of capital by shareholders. In accounting, when every you have a credit entry, you must have a debit entry. So where is the other side of 1,359,449. There are only tow possible sources: Common Stock held to maturity account of $857,143 and Receivable -related parties of $743,265.
6. Do those shares worth something, only God knows? I wish ZSUN were more specific. My best bet would be some BB shares which are still in incubating stage. Because of the newly reporting requirement for BBs, they may find a rough road ahead.
7. The balance of receivable-related parties as of 6/30/99 is 0. The balance other assets on 6/30/99 is about the same as 12/31/98. However, the company did not show notes to financial statements. I have no idea what's going on.
Again, you'd be the judge.
ragingbull.com
***Analysis of 10sb Part VI: Motorcycles held for resale***
In New Age's balance sheet as of 12/31/97, one would find the account of motorcycles held for resale at $60,000. $60,000 is important because ZSUN would explain all the transactions above $60,000 as said in the 10sb.
In ZSUN's balance sheet as of 12/31/98, all the motorcycles are vanished. If you look at the income statement, you will find a line item called loss on sale of assets. I believe that the motorcycles was buried in this account. Again, ZSUN did not explain in 10sb.
ragingbull.com
***ANALYSIS OF 10SB: CONCLUDING REMARKS***
General:
1. Do your own DD? Download the whole copy of 10sb (489 pages). Read it yourself very carefully. Ask your accountant to decipher for you. It may cost you three or four houndred dollars. But it will save you a lot of money in the long run. You need to do this before you put your money to a BB stock
2. Don't listen to P&Ds. I don't want you to listen to me either. Make your own judgment.
Following are my concerns about ZSUN:
1. The reverse-merger was handled by George G. Chachas who was found to have participated in the scheme of Eltro-optical Systems(EOSC) by SEC and federal court on April 21, 1999 (SEC case No. 15715)
2. The only people who are still holding more than 5% of total ZSUN's outstanding shares are Scott Elder, Ross Jardin (former principals of OIA) whose shares will be locked through March 31, 2000, Momentum Media, the former owner of Momentum Asia, whose shares will be unlocked on October 5, 1999. Although Mr. Tobin did not own more than 5%, whose majority shares under Vulcan Consultants will be unlocked on October 5, 1999 too. I don't know how Momemtum Media and Vulcan Consults will do on their shares. They may hold they may. We will find out. However, the old Bestway USA's big shareholders probably have liquidated their shares to less than 5%. They are very chicken.
3. For every $2 of Asia4sahe's profit, ZSUN needs to issue an addition share to Asia4sale's former shareholder, Brian Hodgson until September 30, 2000. For every $1 of OIA's profit over $2.5 million, OIA's former shareholders, Scott Elder and Ross Jardin will receive a free share until March 31, 2000. This means earnings' dilution.
4. The 75,000 free shares to Global Marketing will be issued in December 1999, another earnings' dilution.
5. Nonqualified stock options of 25,000 a year for for four years at price of $2.00 per share to Allan Hardman. another earnings' dilution. Most companies offer the incentive options at the prevailing market price on the granting date. The company then will buy back their own shares shortly before or after to avoid earnings dilution.
6. Items in the other assets, membership fees of country club and common stock held to maturity are questionable.
7. Goodwill of $14 million from the acquisition of OIA is worthless. It should be written off as a one time charge. If not, the new upcoming FASB statemtent will force ZSUN to shorten the life of goodwill to be less than 20 years. Otherwise, ZSUN's earnings will be significantly impacted.
8. Because of the earthquake in Taiwan, the mysterious Taiwanese investor may decide to put his money in his own country to rebuild Taiwan. This means that the acquisition of Asia4sale may not happen in the near future.
Longs like to hear:
Of couse, and I hope, if ZSUN can sucessfully carryout its business plans for Asia4sale and OIA. All the above concerns will not be important. Longs will be very very joyful. You just need to roll your dice.
Before the above scenario will happen, ZSUN's management and big shareholders have to show the confidence on the company. They should not sell their shares. They should come out and tell the whole world that they are buying more. This is just a pure supply and demand issue in your ECO100.
Again, you'd be the judge.
PS: The Psychotic Stalker strikes again...LOL!!! |
