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ZIASUN TECHNOLOGIES INC
Form: 10QSB Filing Date: 5/22/2000 Filing Index
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<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<DESCRIPTION>ZIASUN TECHNOLOGIES, INC. FORM 10-QSB
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: March 31, 2000; or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _________ to __________
Commission File Number: 0-27349
ZIASUN TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 84-1376402
---------------------------------- --------------------
(State or other Jurisdiction of (IRS Employer
of Incorporation or Organization) Identification No.)
462 Stevens Avenue, Suite 106, Solana Beach, California 92075
------------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
(858) 350-4060
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that a
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
As of March 31, 2000, there were 27,230,018 shares of the registrant's
Common Stock, $0.001 par value, issued and outstanding.
Transitional Small Business Disclosure Format. Yes [ ] No [ X ]
This Form 10-QSB has 29 pages, the Exhibit Index is located at page 25.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements included herein have been prepared by the Company,
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of March 31, 2000 and the results of its operations and changes in
its financial position from inception through March 31, 2000 have been made. The
results of operations for such interim period is not necessarily indicative of
the results to be expected for the entire year.
Index to Financial Statements
-----------------------------
Page
----
Balance Sheets........................................................... 3
Statements of Operations................................................. 5
Statements of Stockholders' Equity....................................... 6
Statements of Cash Flows................................................. 7
Notes to the Financial Statements......................................... 9
All other schedules are not submitted because they are not applicable or
not required or because the information is included in the financial statements
or notes thereto.
2
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 15,734,397 $ 11,652,505
Trade receivables, net 1,067,270 1,145,960
Interest receivable 16,458 8,333
Inventory 16,923 18,239
Marketable securities 1,228,276 540,234
Prepaid expenses 433,789 131,772
---------------- ----------------
Total Current Assets 18,497,113 13,497,043
---------------- ----------------
EQUIPMENT
Printing equipment 289,443 289,443
Machinery and equipment 435,150 393,091
Office equipment 153,734 153,734
Vehicles 17,163 17,163
Leasehold improvements 138,841 138,841
Less: accumulated depreciation (253,942) (197,053)
---------------- ----------------
Total Equipment 780,389 795,219
---------------- ----------------
OTHER ASSETS
Equity investment 241,856 254,195
Goodwill - net 116,242,750 4,667,623
Receivables - related parties 360,638 88,679
Other assets 774,649 664,088
---------------- ----------------
Total Other Assets 117,619,893 5,674,585
---------------- ----------------
TOTAL ASSETS $ 136,897,395 $ 19,966,847
================ ================
</TABLE>
3
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 2,321,505 $ 1,382,757
Related party payable 6,000,000 690,000
Taxes payable 3,632,316 2,083,763
Deferred income 62,995 74,100
---------------- ----------------
Total Current Liabilities 12,016,816 4,230,620
---------------- ----------------
Total Liabilities 12,016,816 4,230,620
---------------- ----------------
MINORITY INTEREST 800,136 -
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of $0.001
par value, 32,153,670 and 22,205,018 shares issued
and outstanding, respectively 32,154 22,205
Additional paid-in capital 118,820,370 12,504,547
Treasury stock, 63,200 shares (34,030) (34,030)
Other comprehensive income 55,276 54,230
Deferred compensation (20,000) (30,000)
Stock subscription receivable (25,000) -
Retained earnings 5,251,673 3,219,275
---------------- ----------------
Total Stockholders' Equity 124,080,443 15,736,227
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 136,897,395 $ 19,966,847
================ ================
</TABLE>
4
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
SALES, NET $ 14,498,361 $ 885,871
COST OF GOODS SOLD 7,474,414 393,423
---------------- ----------------
Gross Margin 7,023,947 492,448
---------------- ----------------
OPERATING EXPENSES
Depreciation and amortization expense 195,992 88,784
Bad debt expense 15,000 -
Consulting fees - related party - 30,000
General and administrative 2,701,487 500,490
---------------- ----------------
Total Operating Expenses 2,912,479 619,274
---------------- ----------------
Gain (Loss) from Operations 4,111,468 (126,826)
---------------- ----------------
OTHER INCOME (EXPENSE)
Loss on equity investment (12,339) (12,339)
Unrealized gain on marketable securities 45,480 (17,324)
Rental income - 60,920
Interest and dividend income 99,841 5,270
---------------- ----------------
Total Other Income (Expense) 132,982 36,527
---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES 4,244,450 (90,299)
INCOME TAXES 2,212,052 437
---------------- ----------------
NET INCOME (LOSS) 2,032,398 (90,736)
---------------- ----------------
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment 1,046 -
---------------- ----------------
NET COMPREHENSIVE INCOME $ 2,033,444 $ (90,736)
================ ================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 22,219,148 20,930,000
================ ================
BASIC INCOME PER SHARE $ 0.09 $ (0.00)
================ ================
FULLY DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 22,269,148 21,030,000
================ ================
FULLY DILUTED INCOME PER SHARE $ 0.09 $ (0.00)
================ ================
</TABLE>
5
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Other
Common Stock Additional Compre- Deferred Stock
---------------- Paid-in Treasury hensive Compen- Subscription Retained
Shares Amount Capital Stock Income sation Receivable Earnings Total
---------- -------- ---------- --------- ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 20,930,000 $20,930 $8,923,394 $(70,000) $38,794 $(40,000) $ - $(2,744,964) $6,128,154
Purchase of
ASIA4Sale.com, Ltd. 100,000 100 249,900 - - - - - 250,000
Purchase of
Online Investors
Advantage, Inc. 1,150,000 1,150 2,873,850 - - - - - 2,875,000
Exercise of stock
option at $2.00
per share 25,000 25 49,975 - - - - - 50,000
Amortization of
deferred compensation - - - - - 10,000 - - 10,000
Proceeds from the
sale of the Company's
common stock by a
Subsidiary - - 407,428 35,970 - - - - 443,398
Adjustment for
forward stock split 18 - - - - - - - -
Currency translation
adjustment - - - - 15,436 - - - 15,436
Net income for
the year ended
December 31, 1999 - - - - - - - 5,964,239 5,964,239
---------- -------- ----------- --------- ---------- --------- ------------ ---------- ---------
Balance,
December 31, 1999 22,205,018 22,205 12,504,547 (34,030) 54,230 (30,000) - 3,219,275 15,736,227
Purchase of
Online Investors
Advantage Inc. 9,820,152 9,820 105,575,952 - - - - - 105,585,772
Stock option exercised 25,000 25 49,975 - - - (25,000) - 25,000
Amortization and
deferred compensation - - - - - 10,000 - - 10,000
Common stock issued
for related party
payable 103,500 104 689,896 - - - - - 690,000
Currency translation
adjustment - - - - 1,046 - - - 1,046
Net income for the
three months ended
March 31, 2000 - - - - - - - 2,032,398 2,032,398
---------- -------- ----------- --------- ---------- --------- ------------ ---------- ---------
Balance, March
31, 2000 32,153,670 $32,154 $118,820,370 $(34,030) $ 55,276 $(20,000) $(25,000) $5,251,673 $124,080,443
========== ======== =========== ========= =========== ========= ============ =========== ===========
</TABLE>
6
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,032,398 $ (90,736)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 195,992 88,784
Bad debt expense 15,000 -
Loss on equity investment 12,339 12,339
Unrealized gain on marketable securities (45,480) 17,324
Currency translation adjustment 1,046 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 55,565 19,557
(Increase) decrease in inventory 1,316 50,000
(Increase) decrease in prepaids (302,017) 2,454
Purchase of marketable securities (642,562) -
(Increase) decrease other assets (110,561) (65,999)
Increase (decrease) in accounts payable and
accrued expenses 938,748 (90,508)
Increase (decrease) in taxes payable 1,548,553 -
Increase (decrease) in deferred income (11,105) -
(Increase) decrease in receivable - related party receivable (271,959) (68,017)
---------------- ----------------
Net Cash Provided by (Used In) Operating Activities 3,417,273 (124,802)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (42,059) (161,322)
---------------- ----------------
Net Cash Provided by Investing Activities (42,059) (161,322)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Minority interest 800,136 -
Sale of the Company's common stock by a subsidiary - 443,398
Proceeds from borrowings - related parties 5,310,000 -
Cash acquired in purchase of subsidiaries (5,428,458) 211,757
Proceeds from exercise of stock options 25,000 -
---------------- ----------------
Net Cash Provided by Financing Activities 706,678 655,155
---------------- ----------------
NET INCREASE (DECREASE) IN CASH 4,081,892 369,031
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,652,505 517,781
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,734,397 $ 886,812
================ ================
</TABLE>
7
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest $ - $ -
Income taxes $ - $ -
Schedule of Non-Cash Financing Activities:
Purchase of subsidiaries for common stock $ 105,585,772 $ 3,125,000
Issuance of common stock for related party payable $ 690,000 $ -
</TABLE>
8
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
(Formerly BestWay U.S.A., Inc.)
Notes to the Consolidated Financial Statements
March 31, 2000 and December 31, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 2000 and 1999
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December
31, 1999 audited consolidated financial statements. The results of
operations for periods ended March 31, 2000 and 1999 are not
necessarily indicative of the operating results for the full
years.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
March 31, 2000 and December 31, 1999
Changes in Financial Condition
------------------------------
On December 31, 1999 the Company sold Asia4sale to Internet Ventures, Ltd.
for $5,000,000 cash and 300,000 shares of Internet Ventures, Ltd. common stock.
On March 31, 1999 the Company also acquired Online Investors Advantage (OIA) for
restricted common stock of the Company and $400,000 cash. This acquisition was
accounted for as a purchase. The acquisition of OIA continues to make a
substantial, positive contribution to the financial condition of the Company.
The balance of current assets at March 31, 2000 was $18,497,113 compared to a
balance of $13,497,043 at December 31,1999. The balances of current liabilities
were $12,016,816 and $4,230,620 for the same periods respectively. The resulting
current ratio at March 31, 2000 is 1.5:1. The current ratio at December 31, 1999
was 3.2:1.
The increase of current assets at March 31, 2000 over December 31, 1999 is
due primarily to the increase of cash from $11,652,505 to $15,734,397 an
increase of $4,081,892, or 35%. This increase is due primarily from positive
cash flow generated from the operations of OIA. (See further discussion of
income below.)
Current assets at March 31, 2000 also increased due to an increase in
marketable securities from $540,000 at December 31, 1999 to $1,228,276 at March
31, 2000, an increase of $688,042, or 127%. The Company invested a portion of
its cash in liquid equity investments. Additionally, prepaid expenses increased
from $131,772 to $433,789, an increase of $302,017, or 229%. The increase in
prepaid expenses is primarily due to seminar related expenses of OIA. The
balance of accounts receivable at March 31, 2000 was $1,067,270. The balance
includes OIA's pre-approved seminar payments not yet charged to credit cards of
approximately $774,950 and the trade receivables of MAI. A substantial portion
of these balances has been collected subsequent to March 31, 2000.
The balance of current liabilities at March 31, 2000 is $12,016,816 and at
December 31, 1999 is $4,230,620. The increase of $7,786,196, or 184%, is due
primarily to the increase in related party payable from $690,000 at December 31,
1999 to $6,000,000 at March 31, 2000. The March 31, 2000 balance of $6,000,000
represents the amount owed to certain shareholders of OIA, as of March 31, 2000,
based on the Company's amended purchase agreement with OIA whereby these
shareholders would receive an earn out, or increase in purchase price, based on
OIA's profitability from the period from March 31, 1999 to March 31, 2000.
Additionally, these shareholder's will receive 9,820,152 shares of the Company's
stock pursuant to the earn out provision. The earn out has increased the
Company's goodwill by $111,585,772 and will be amortized over 10 years.
Current liabilities also increased for the accrual of income taxes payable
from $2,083,763 at December 31, 1999 to $3,632,316 at March 31, 2000, an
increase of $1,548,553 or 74%, relating to the increased first quarter U.S.
earnings of OIA. Momentum Internet is a British Virgin Islands company, Momentum
Asia is a Philippine company. These companies are subject to income taxation of
the respective countries of their registration. OIA is a Utah corporation, and
therefore subject to United States income tax. Accounts payable increased
$938,748, or 68%, from $1,382,757 at December 31, 1999 to $2,321,505 at March
31, 2000. The increase is primarily due to OIA, which had a balance of accounts
payable of $1,544,044 at March 31, 2000.
Other asset |
