"Let us revisit another misleading press release on May 17, 2000:"
By: frisky $$$
Reply To: None Sunday, 2 Jul 2000 at 8:58 PM EDT
Post # of 23399
Let us revisit another misleading press release on May 17, 2000:
Wednesday May 17, 4:03 pm Eastern Time
ZiaSun Reports Record Sales and Profits for the Three-Month Period Ending March 31, 2000 (Q1-2000)
Record sales of $14.5 million in Q1-2000 with $4.2 million in pre-tax profit and $0.20 EPS EBITDA. Q1-2000 sales increased more than 15 times over Q1-1999
SOLANA BEACH, Calif. -- May 17, 2000 -- ZiaSun Technologies, Inc. (OTC BB: ZSUN) (www.ziasun.com), a diversified Internet holding company, today reported exceptional operating results for the quarter ended March 31, 2000. The Company also announced it cleared comments with the SEC on its Form 10-SB Filing On May 12, 2000, and will now submit its application for listing on the American Stock Exchange.
ZiaSun's net sales for Q1-2000 increased more than 1536% to $14,498,361 from $885,871 in Q1-1999. First-quarter gross profit increased 1326% year-over-year to $7,023,447 with a solid 48% gross margin. Q1-2000 fiscal results were very profitable with income before taxes of $4,244,450, or $0.20 EPS EBITDA, compared to $0.01 EPS EBITDA in Q1-1999. The large increase in Q1-2000 net sales over Q1-1999 net sales was primarily due to the acquisition of OIA, which was not a subsidiary of the Company in Q1-1999.
As of March 31, 2000, the Company had $16,801,667 in cash and receivables, total current assets of $18,497,113 and $136,897,395 in total assets. The increase in current assets at March 31, 2000, over March 31, 1999, is primarily due to the increase in cash from $886,812 to $15,734,397, an increase of $14,847,585 or 1674%. ZiaSun also reported no long-term debt and $124,880,579 in total stockholders' equity at the close of Q1-2000.
...
Comment:
(1) According to the 10q statement, the weighted-average shares for basic EPS was 22,219,148 and 22,269,148 for the diluted EPS. If you divide $4,244,450 by 22,219,148, you will obtain $.19. ZSUN inflated EBITDA by a penny.
(2) Again, ZSUN did not include the contingent shares in calculating EBITDA. At the time of the press release, ZSUN knew that it was going to issue 9,820,125 shares to OIA shareholders plus $6,000,000. They did not put any portion of the contingent shares in the denominator. Again, OIA is the sole profit contributor and 85% to 90% of revenue contributor. The other shareholders get the phantom share of profit while the former OIA shareholders enjoy $6,000,000 reward. The EBITDA therefore was over-inflated further.
(3) ZSUN did not indicate that it had paid $6,000,000 to former OIA shareholders to settle 12,000,000 contingent shares. ZSUN made the public that $16,000,000 was free and clear.
(4) The increase of total assets to $136,897,395 and shareholder equity to $124,880,159 was mainly from booking the reward to former OIA shareholders of $112,000,000. Only a few shareholders enjoy the benefit. This is a badwill to other shareholders. However, the shameless management dared to brag about the significant increase of assets and shareholders' equity without telling the public that it was simple an accounting game. The gullible longs are fooled. They will carry the stigma of goodwill amortization for the next 10 years.
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