Friskies new unbias accounting opinion!!
ragingbull.com
By: frisky
Reply To: None Friday, 14 Apr 2000 at 10:36 AM EDT
Post # of 19020
If you read all ZSUN?s 10sb and 10q statements, you will discover a significant number of accounting irregularities. Please be very patient to read this message.
1. INCOME STATEMENTS:
A. Sales of 1998
a. 10sb, 9/16/99: $2,289158
b. 10sb, 11/18/99: $2,289158
c. 10sb, 12/16/99: $2.289,158
d. 10sb , 4/5/00:: $760,529
B. Basic & Diluted EPS of 1998.
a. 10sb, 9/16/99: diluted EPS: Not reported. basic EPS: $.47. ZSUN violated FASB statement 128 reporting requirement. Surprising, Jones & Jensen offered an unqualified opinion.
b. 10sb, 11/18/99: diluted EPS: $.11. Revised basic EPS to $.11 because ZSUN revised the weighted average outstanding shares of common stock.
c. 10sb, 12/16/99: diluted EPS: $.11. basic EPS: $.11.
d. 10sb, 4/5/00: Revised diluted EPS to $.04. Revised basic EPS to $.05.
Why did ZSUN revise its sales of 1998 from $2,289158 to $760,259? Why did ZSUN revise its 1998 diluted EPS $.04? Why did ZSUN report three different basic EPS and two different diluted EPS? Have you ever seen this type of reporting in a NASDAQ or NYSE company? ZSUN bragged about its 1998 basic earnings achievement of $.47 early last year. This year it revised 1998 EPS all the way down to $.04 so it could brag about a greater achievement in 1999. Is this is not a lie or just a stupid error? You make your call.
B. Loss on equity investment in 1999 and 1998
10sb, 9/16/99: $0
10sb, 11/18/99: 0
10sb, 12/16/99: 0
10sb, 4/5/00: ($165,449) for 1998 and ($49,356) for 1999.
This was the investment in Bevex by New Age Publication or Momentum Asia before the reverse-merger in September 1998. Bevex, formerly Foutain Fresh Inc. or a transplant of Bestway USA, has been out of business for a long long time. ZSUN recorded the investment in Common Stock Held to Maturity originally. After three attempts to fool SEC, ZSUN reluctantly wrote off $165,449 for 1998 and $49,356 for 1999. As of 12/31/99 the balance of this investment was $254,195. ZSUN transferred the balance from Common stock Held to Maturity to Equity Investment on the balance sheet as of 12/31/1999. IMO, Bevex stock certificates are nothing but toilet paper now. The whole balance should be written off. However, the write-off will affect the EPS.
C. Realized and unrealized gain on marketable securities:
Realized gain: 1998: $535,801; 1999: $470,185
Unrealized gain: 1998: $712,438; 1999: $114,795
If one excludes both items, the diluted EPS of 1998 will reduce $.05. In other words, ZSUN had an operating Loss in 1998. The diluted EPS (net of 36% tax) of 1999 will reduce $.015.
ZSUN directly or indirectly exchanged its shares with LCAI, TMOT, DDD and some other invisible but related penny-stock companies. If ZSUN sells its own stock, ZSUN must book the proceeds as capital. If ZSUN sells the stock of its related parties, it books as a realized gain of marketable securities. If ZSUN holds those BB shares whose prices have been pumped up, ZSUN books the paper gain as unrealized gain on marketable securities. Therefore, ZSUN claims itself a profitable Internet holding company. If you check LCAI?s 10k statement, you will discover that LCAI also has a realized gain of selling ZSUN stock for $2.7 million. Realized gain means that ZSUN has sold those related parties BB shares.
D. Management fees in 1999: $45,000.
Who is charging ZSUN for $45,000?
E. Gain on sale of subsidiary: $4,778,596.
The diluted EPS (net of tax) was inflated by $.12. This is a one-time gain. It should be clearly excluded from the operating EPS.
ZSUN made a good profit from selling 70% Asia4sale.com Ltd. to foreign uniformed individual investors. The transaction was handled by Internet Venture who sold piece by piece to small investors. After a reverse-merger with Aisa4ale.com Inc, ZSUN reduced its equity in AFSI to 27%. AFSI is thinly traded for around $10 per share. ZSUN had ballooned the market value of AFSI to $900,000,000. Sadly, in 1999, AFSI only recorded a revenue of $69,000. Since over 90% of AFSI shares are restricted for one year, we do not know what will happen until 2/10/2001. On 3/27/2000, ZSUN announced a special dividend to pay 9,000,0000 shares of AFSI restricted shares to ZSUN?s shareholders. ZSUN cut the holdings of AFSI from 27% to 19%. Therefore, ZSUN does not have to apply the equity method. If ZSUN classifies AFSI as trading securities, it will have an unrealized gain or a windfall profit for diluted EPS. If ZSUN classifies AFSI as available for sale securities, ZSUN will increase the total shareholders? equity.
F. Weighted-average outstanding common shares
a. 1998
10sb, 9/16/99: basic EPS: ,426,2000 shares.
10sb, 11/18/99: basic EPS: 10,465,000 shares. diluted EPS: 10,565,000 shares.
10sb, 12/16/99: basic EPS: 17,022,767 shares. diluted EPS 17,122,767 shares.
10sb, 4/5/00: for basic EPS 17,022,767 shares. diluted EPS 17,122,167 shares.
How can ZSUN present three different figures for the same year? Does ZSUN know that three strikes you are out?
b. 1999
10sb, 9/16/99: f basic EPS: 24,457,500 shares. No diluted shares were reported. The figure is for six month weighted-average shares as of 6/30/99.
10sb, 11/18/99: basic EPS: 22,055,000 shares. diluted EPS: 27,205,000 shares. The figures are for six-month weighted average shares as of 6/30/99.
10sb, 12/16/99: basic EPS 21,957500 shares. diluted EPS: 27,107,500 shares. The figures are for six-month weighted-average shares as of 6/30/99.
10sb, 4/5/00: basic EPS: 21,769,583 shares. diluted EPS: 25,717,500. The figures are for 12-month weighted-average shares as of 12/31/99.
IMO, ZSUN had a great difficult to calculate weighted-average shares of the 5,000,000 restricted shares in escrow that they gave to former OIA shareholders in 10sb version 1, 2, 3. They kept coming with the different figures. We know that the EPS will be different if the denominator is changed. In the 10sb version 4, ZSUN counted 3,847,9717 weighted shares for rewarding former OIA shareholders (two shares for every dollar of one year profit ended 3/31/00). However, strangely, it excluded 5,000,000 escrow shares that it has accounted for in 10sb version 2 and version 3. This is truly amazing. Again, you will not see any other companies in NYSE or NASDAQ do this weird accounting.
Well, if you check 10q statements, ZSUN had different weighted-average shares too:
10q on 11/18/99: basic EPS: 25,756,250 shares. diluted EPS: 25,856,250 shares. The figures are for nine-month weighted-average shares as of 9/30/99.
10q on 12/16/99: basic EPS: 21,675,834 shares. diluted EPS: 26,750,834 shares. The figures are for nine-month weighted-average shares as of 9/30/99.
2. BALANCE SHEETS.
A. No other companies in NYSE or NASDAQ just present one year balance sheet without presenting the balance sheet of previous year for comparison. No accountants can check the accuracy of the cash flow statement without seeing the two consecutive the balance sheets. IMO, somebody can easily massage the numbers in the cash flow statement. Jones & Jensen must have assumed that all ZSUN?s investors were gullible.
B. Goodwill
a. 10sb, 9/16/99: $14,40 1,732 as of 6/30/99
b. 10sb 11/18/99:$14,767,357 as of 6/30/99
c. 10sb 12/16/99: $2,579,857 as of 6/30/99
d. 10sb 4/05/00: $4,667,623 as of 12/31/99
Come on! How much is it? ZSUN could not make its mind. ZSUN viewed the value of its share worth about $2.5 to 2.67. The former OIA shareholders got their investment back, when ZSUN paid them $400,000 at the time of the merger. The 6,000,000 shares were viewed as goodwill. ZSUN priced its stock between $2.4 to $2.67. Therefore, it booked 14,401,732. I do not know why it increased to $14,768,357 the second time. Since SEC questioned the validity of the goodwill, ZSUN wrote it down to $2,579,857. The figure is 1/6 of the original goodwill. I think that the reason is that at the time of acquiring OIA, ZSUN placed 5,000,000 out of 6,000,000 in escrow. ZSUN inflated the goodwill in the last 10sb, because it knows that all the escrow shares will be free to go. Moreover, it may have to issue more shares.
IMO, there is no goodwill. ZSUN simply overpaid OIA shareholders. The goodwill should be written off to $0. Of course, the EPS will be ugly, if it writes off the goodwill.
C. If you click the insider info in Yahoo, all the insider estimated that the fair market value for ZSUN as of 11/15/99 was $4.94 per share. Why would you pay $10 per share or even $8.00 per share at the time I released my findings?
Any person who still has some conscience would acknowledge that something is wrong. |
