SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 1999; 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)
(619) 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 [ ]
On September 30, 1999, there were 27,042,518 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 34 pages, the Exhibit Index is located at page 30.
<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 September 30, 1999 and the results of its operations and changes
in its financial position from inception through September 30, 1999 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 Sheet
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,127,718 $ 517,781
Accounts receivable:
Sale of Common Stock receivable - 480,000
Contract Receivable 824,398 378,000
Trade receivable 272,138 41,879
Inventory 15,678 50,000
Marketable equity securities 706,421 775,903
Prepaid expenses 788,600 7,370
----------- -----------
Total Current Assets 7,734,953 2,250,933
----------- -----------
EQUIPMENT
Printing equipment 294,576 294,576
Machinery and equipment 218,236 218,236
Office equipment 507,139 59,571
Vehicles 48,398 48,398
Leasehold improvements 92,516 92,516
Less: accumulated depreciation (354,721) (209,518)
----------- -----------
Total Equipment 806,144 503,779
----------- -----------
OTHER ASSETS
Goodwill, net 2,513,707 -
Receivables - related parties 68,932 734,265
Other assets 1,370,920 1,315,583
----------- -----------
Total Other Assets 3,953,559 2,049,848
----------- -----------
TOTAL ASSETS $12,494,656 $ 4,804,560
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,163,695 $ 600,013
Income taxes payable 762,000 -
Note payable 100,000 -
----------- -----------
Total Current Liabilities 2,025,695 600,013
----------- -----------
Total Liabilities 2,025,695 600,013
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of
$0.001 par value, 22,055,000 and 20,930,000
shares issued and outstanding, respectively 22,055 20,930
Additional paid-in capital 6,174,175 3,013,283
Other comprehensive income 38,794 38,794
Retained earnings 4,233,937 1,131,540
----------- -----------
Total Stockholders' Equity 10,468,961 4,204,547
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,494,656 $ 4,804,560
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES, NET $ 7,932,685 $ 674,125 $17,831,876 $ 1,547,701
COST OF GOODS SOLD 5,447,640 318,332 10,995,532 516,850
----------- ----------- ----------- -----------
Gross Margin 2,485,045 355,793 6,836,344 1,030,851
----------- ----------- ----------- -----------
OPERATING EXPENSES
Depreciation and amortization 111,979 41,531 280,278 72,819
Bad debt expense 25,000 18,160 125,000 18,160
General and administrative 672,438 383,893 2,239,343 892,459
Consulting fees - related party (Note 6) 48,420 - 565,783 -
----------- ----------- ----------- -----------
Total Operating Expenses 857,837 443,584 3,210,404 983,438
----------- ----------- ----------- -----------
Income from Operations 1,627,208 (87,791) 3,625,940 47,413
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Unrealized gains on marketable
securities 185,854 - 185,854 -
Realized gain on marketable securities 23,417 - 423,260 -
Rental income 6,856 17,378 78,277 17,378
Interest income 30,127 6,500 64,823 6,524
Gain (loss) on write off of assets 1,444 - 7,418 (137,260)
----------- ----------- ----------- -----------
Total Other Income (Expense) 247,698 23,878 759,632 (113,358)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES 1,874,906 (63,913) 4,385,572 (65,945)
INCOME TAXES (BENEFIT) 387,151 (474) 1,283,175 3,349
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,487,755 $ (63,439) $ 3,102,397 $ (69,294)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 22,055,000 20,930,000 24,089,583 20,930,000
=========== =========== =========== ===========
BASIC EARNINGS PER SHARE $ 0.07 $ (0.00) $ 0.13 $ (0.00)
=========== =========== =========== ===========
FULLY DILUTED WEIGHTED
AVERAGE NUMBER OF SHARES
OUTSTANDING 27,205,000 21,030,000 29,239,583 21,030,000
=========== =========== =========== ===========
FULLY DILUTED EARNINGS PER SHARE $ 0.05 $ (0.00) $ 0.11 $ (0.00)
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Other
----------------------------- Paid-In Comprehensive Retained
Shares Amount Capital Income Earnings
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 50,000 $ 1,906 $ 824,959 $ 41,761 $ (20,670)
Contribution of capital by shareholder - - 1,359,449 - -
Recapitalization of Momentum
ASIA, Inc. and Momentum
Internet, Inc. 20,880,000 19,024 828,875 - -
Currency translation adjustment - - - (2,967) -
Net income for the year ended
December 31, 1998 - - - - 1,152,210
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 20,930,000 20,930 3,013,283 38,794 1,131,540
Purchase of ASIA4Sale.com, Ltd.
(unaudited) 100,000 100 249,900 - -
Purchase of Online Investors
Advantage, Inc. (unaudited) 1,000,000 1,000 2,445,000 - -
Exercise of stock option (unaudited) 25,000 25 12,475 - -
Gain on sale of the Company's
common stock by a Subsidiary
(unaudited) - - 453,517 - -
Net income for the nine months
ended September 30, 1999
(unaudited) - - - - 3,102,397
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1999
(unaudited) 22,055,000 $ 22,055 $ 6,174,175 $ 38,794 $ 4,233,937
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
6
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,102,397 $ (69,294)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 280,278 72,819
Allowance for bad debts 125,000 18,160
Gain (loss) on write off of assets 7,418 (137,260)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (321,657) (365,454)
(Increase) decrease in inventory 34,322 (27,591)
(Increase) decrease in other assets 337,949 489,012
(Increase) decrease in receivable - related party 734,265 -
(Increase) decrease in prepaids (781,230) -
(Increase) decrease in marketable
equity securities 69,482 -
Increase (decrease) in accounts payable
and accrued expenses 563,682 446,607
Increase (decrease) in income taxes payable 762,000 -
----------- -----------
Net Cash Provided by Operating Activities 4,913,906 426,999
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiaries (415,000) -
Purchases of property and equipment (454,986) (284,573)
----------- -----------
Net Cash Used in Investing Activities (869,986) (284,573)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 100,000 -
Sale of the Company's common stock by
a subsidiary 453,517 -
Proceeds from exercise of stock options 12,500 -
----------- -----------
Net Cash Provided by Financing Activities 566,017 -
----------- -----------
NET INCREASE (DECREASE) IN CASH 4,609,937 142,426
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 517,781 22,011
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,127,718 $ 164,437
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
7
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited) (Continued)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1999 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Cash Paid For:
Interest $ - $ -
Income taxes $ 861,882 $ 1,873
Schedule of Non-Cash Financing Activities:
Purchase of subsidiaries for common stock $ 2,696,000 $ -
Contribution of capital by shareholder:
Memberships in country clubs $ - $ 142,857
Common stock - 1,033,277
Other assets - 183,315
----------- -----------
Total $ - $ 1,359,449
=========== ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
8
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The financial statements presented are those of ZiaSun Technologies, Inc.
(formerly BestWay U.S.A., Inc.) (the "Company"). The Company was
incorporated in the State of Nevada on March 19, 1996. The Company is a
holding company in the business of acquiring companies and operations with
business models developed around the Internet. The Company was considered a
development stage company as defined in SFAS No. 7 until the acquisition of
Momentum Asia, Inc. and Momentum Internet, Inc. in 1998. The Company
changed its name to "BestWay U.S.A., Inc." on April 17, 1997 and,
subsequently, changed its name to Ziasun Technologies, Inc. during 1998. On
September 10, 1998 in connection with the agreement and plan of
reorganization described below, the shareholders of the Company authorized
and the Company completed a reverse stock split of 1-for-2. On May 14,
1999, the Company's common stock was forward split on a 2 shares for 1
share basis. All references to shares of common stock have been
retroactively restated.
Momentum Internet, Inc. (MII), a wholly-owned subsidiary, was incorporated
under the laws of the British Virgin Islands on November 7, 1997. MII
controls a range of Internet products and services, including a copyrighted
international on-line stock trading web-site, a premium web-based e-mail
service, an advertising banner network, a finance web-site and an
Asia-focused search engine. MII has its main offices in Hong Kong.
Momentum Asia, Inc. (MAI), a wholly-owned subsidiary, was incorporated in
Manilla, Philippines on September 6, 1994 under the name of New Age
Publications, Inc. On June 17, 1998, the name was changed to Momentum Asia,
Inc. MAI provides a wide range of compatible graphic design, writing,
printing, database management, direct mailing and e-mail customer service
operations.
BestWay Beverages, Inc. (BBI), a wholly-owned subsidiary, was incorporated
in the State of Nevada on September 23, 1998. BBI holds the exclusive
distribution franchise rights in the U.S. and Mexico for a patented
in-store beverage center. BBI is a U.S. based corporation.
On October 5, 1998, the Company completed an agreement and plan of
reorganization whereby Ziasun issued 2,565,000 shares of its common stock
in exchange for all the outstanding common stock of MAI and MII. 2,000,000
shares were issued for MAI and 565,000 shares were issued for MII. The
reorganization was accounted for as a recapitalization of MAI and MII and,
therefore, MAI and MII are treated as the acquiring entities. Accordingly,
there was no adjustment to the carrying value of the assets or liabilities
of MAI and MII. The Company is the acquiring entity for legal purposes and
MAI and MII are the surviving entities for accounting purposes.
Swiftrade, Inc. (SI), a wholly-owned subsidiary of MII, was incorporated
under the laws of the British Virgin Islands in 1998 to operate an online
trading and financial website. It was inactive in 1998.
9
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)
On March 31, 1999, the Company entered into an Acquisition Agreement and
Plan of Reorganization under which the Company would acquire Online
Investors Advantage, Inc. (OIA), a Utah corporation. OIA is in the business
training individuals how to effectively use the financial planning and
investment tools available on the internet to manage their own investment
portfolios. The training is structured around a five-step discipline, which
includes searching for an investment, evaluating the investment and
assessing the risk, timing the purchase, establishing an exit point and
monitoring the investment. This is done through live workshops, and
video-based, self-directed home learning programs, which include the use of
OIA's proprietary website, www.investortoolbox.com. In exchange for all of
the capital stock of OIA, the Company issued 1,000,000 (post-split
adjusted) shares of restricted common stock and paid $400,000 in cash, all
of which was distributed pro-rata to the shareholders of OIA, thereby
making OIA a wholly-owned subsidiary of the Company. In addition, the
Company issued 5,000,000 (post-split adjusted) shares pro-rata to the
shareholders of OIA. Those shares are currently being held in escrow in
accordance with the terms of the acquisition agreement, in the event that
the actual earnings of OIA are less than $2,500,000, for the specified
period, then the total number of shares being held in escrow shall be
reduced on a one-share basis for each $1.00 of actual earnings of OIA less
than $2,500,000. In the event that the actual earnings of OIA is greater
than $2,500,000, the Company shall issue such additional shares on the
basis of one additional share for each $1.00 of actual earnings of OIA
greater than $2,500,000. The acquisition was completed on April 7, 1999.
The acquisition of OIA was accounted for as a purchase. The contingent
shares are not recorded as being issued in accordance with APB 16,
paragraphs 79 and 80. OIA was incorporated under the laws of the State of
Utah in 1998 to engage in the business of providing workshops to
individuals regarding marketing in the stock market.
On March 25, 1999, the Company entered into an Acquisition Agreement and
Plan of Reorganization, under which the Company would acquire
Asia4sale.com, Ltd., ("Asia4sale"). In exchange for 99 of the 100 shares of
Asia4sale, the Company issued 100,000 (post-split adjusted) shares of
restricted common stock and paid $15,000 cash to the majority holder of the
capital stock of Asia4sale, thereby virtually making Asia4sale a
wholly-owned subsidiary of the Company. In addition, the Company made an
unsecured loan of $50,000 to Asia4sale upon closing of the acquisition and
agreed to issue one(1) additional share of restricted common stock for each
two dollars ($2.00) of actual earnings of Asia4sale for the period from
April 1, 1999 through September 31, 2000. Asia4sale is in the business of
Internet related international e-commerce. In addition, the Company was
granted the option to repurchase the 50,000 shares issued in the
acquisition of Asia4sale for a period of one (1) year at a price of $3.00
per share in the event that Asia4sale fails to reach positive cash flow
from its operations by September 30, 2000. The acquisition was completed on
May 12, 1999. The acquisition of Asia4sale was accounted for as a purchase.
The contingent shares are not recorded as being issued in accordance with
APB16, paragraphs 79 and 80.
Asia4sale was incorporated on April 9, 1996, duly organized, validly
existing and in good standing under the laws of Hong Kong. Asia4sale was
organized to buy and sell merchandise over the internet, buying and selling
goods directly from manufacturers in Asia. To be competitive in the Asian
market, the Company has acquired the assets of Pacific Barter, Ltd., a
company specializing in barter in Asia.
10
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents.
c. Inventory
Inventories of raw materials are stated at the lower of cost or market. The
cost of the inventory includes the purchase price and direct costs such as
freight-in.
d. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful accounts.
The allowance was $161,320 and $36,320 at September 30, 1999 and December
31, 1998, respectively.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financials statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
f. Foreign Operations
The Company currently conducts printing, database management, customer
service and direct mailing activities in the Philippines, a country with a
developing economy. The Philippines have experienced recently, or are
experiencing currently, economic or political instability. Hyperinflation,
volatile exchange rates and rapid political and legal change, often
accompanied by military insurrection, have been common in this and certain
other emerging markets in which the Company may conduct operations. The
Company may be materially adversely affected by possible political or
economic instability in any one or more of those countries. The risks
include, but are not limited to terrorism, military repression,
expropriation, changing fiscal regimes, extreme fluctuations in currency
exchange rates, high rates of inflation and the absence of industrial and
economic infrastructure. Changes in investment policies or shifts in the
prevailing political climate in any of the countries in which the Company
conducts exploration and development activities could adversely affect the
Company's business. Operations may be affected in varying degrees by
government regulations with respect to production restrictions, price
controls, export controls, income and other taxes, expropriation of
property, maintenance of claims, environmental legislation, labor, welfare
benefit policies, land use, land claims of local residents, water use and
safety. The effect of these factors cannot be accurately predicted.
11
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful life or lease term of
the related asset. Estimated useful lives are as follows:
Printing equipment 7 years
Machinery and equipment 5 years
Office equipment 5 years
Vehicles 10 years
Leasehold improvements 5 years
h. Marketable Equity Securities
The Company has classified its marketable equity securities as "trading"
securities. Trading securities are stated at fair value. Realized and
unrealized gains and losses are included in other income.
Marketable equity securities at September 30, 1999 and December 31, 1998
were $706,421 and $775,903 respectively, and have been included in current
assets.
i. Basic Income per Share of Common Stock
The basic income per share of common stock is based on the weighted average
number of shares issued and outstanding at the date of the consolidated
financial statements. Fully diluted income per share of common stock as
disclosed in the accompanying consolidated statements of operations
includes the stock options discussed in Note 9, and the contingent shares
discussed in Note 1, as common stock equivalents.
<TABLE>
<CAPTION>
For the Three MonthsEnded For the Nine Months Ended
September 30, September 30,
------------------------------------------------------------------
1999 1998 1999 1998
--------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Basic EPS Computation
Numerator $ 1,487,755 $ (63,439) $ 3,102,397 $ (69,294)
--------------- ---------------- --------------- --------------
Denominator:
Weighted common shares
outstanding 22,055,000 20,930,000 24,089,583 20,930,000
--------------- ---------------- --------------- --------------
Basic EPS $ 0.07 $ (0.00) $ 0.13 $ (0.00)
=============== ================ =============== ==============
Diluted EPS Computation
Numerator $ 1,487,755 $ (63,439) $ 3,102,397 $ (69,294)
--------------- ---------------- --------------- --------------
Denominator:
Weighted common shares
outstanding 22,055,000 20,930,000 24,089,583 20,930,000
Employee options 100,000 100,000 100,000 100,000
Contingent purchase shares 5,050,000 - 5,050,000 -
--------------- ---------------- --------------- --------------
Total Shares 27,205,000 21,030,000 29,239,583 21,030,000
--------------- ---------------- --------------- --------------
Diluted EPS $ 0.05 $ (0.00) $ 0.11 $ (0.00)
=============== ================ =============== ==============
</TABLE>
12
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the period and exchange rate.
Non-monetary assets are translated at the historical exchange rate and all
income and expenses are translated at the exchange rates prevailing during
the period. Foreign exchange currency translation adjustments are included
in the stockholders' equity section.
k. Fair Value of Financial Instruments
As of September 30, 1999 and December 31, 1998, the fair value of cash,
accounts receivable and accounts and advances payable, including amounts
due to and from related parties, approximate carrying values because of the
short-term maturity of these instruments.
l. Advertising
Advertising costs are expensed as incurred.
m. Research and Development
The Company incurred research and development costs of approximately
$400,000 in 1998 and approximately $48,000 in 1999. These costs are
included in general and administrative expense.
n. Principles of Consolidation
The consolidated financial statements include the Company and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
o. Change in Accounting Principle
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and
losses) in a full set of general purpose financial statements. This
statement requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section
of a statement of financial position. SFAS 130 is effective for fiscal
years beginning after December 15, 1997. The Company has retroactively
applied the provisions of this new standard by showing the other
comprehensive income (loss) for all years presented.
p. Stock Options
The Company accounts for its employee stock options under the fair value
method per Statement of Financial Accounting Standards No. 123.
13
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
q. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a fair
presentation. Such adjustments are of a normal recurring nature.
NOTE 3 - OTHER ASSETS
Other assets consisted of the following at:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Deferred compensation $ 26,667 $ 40,000
Memberships in country clubs 142,857 142,857
Prepaid rental deposits 26,383 25,583
Mortgage note receivable 250,000 250,000
Common stock 925,013 857,143
------------- -------------
$1,370,920 $ 1,315,583
============= =============
</TABLE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company currently leases a large facility under a 20 year
non-cancelable operating lease in the Philippines. The Company also leases
office space in California and Hong Kong under 5-year renewable leases
which began in 1998. Rent expense for the years ended December 31, 1998 and
1997 was $189,945 and $198,788, respectively.
Future minimum lease commitments are as follows:
1999 $ 253,260
2000 176,244
2001 184,633
2002 193,457
2003 80,292
Thereafter 1,593,540
------------
Total $2,481,426
============
The Company has an employment agreement with an officer for 5 years
beginning on July 1, 1997. The minimum salary is $120,000 per year, which
is to be evaluated annually.
14
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 5 - INCOME TAXES
For the nine months ended September 30, 1999 and the year ended December
31, 1998, income taxes were as follows:
<TABLE>
<CAPTION>
For the
Nine Months For the
Ended Year Ended
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Net income earned in the U.S. -
subject to tax $ 3,682,606 $ -
Net income earned in the Philippines -
subject to tax 89,500 333,158
Net income (loss) not subject to taxation
jurisdictions (11,534) 835,710
------------- ------------
Income Before Taxes $ 3,760,572 $ 1,168,868
============= ============
Tax liability assumed $ 340,707 $ -
Income tax expense 1,283,175 16,658
Income tax paid (861,882) (16,658)
------------- -------------
Net Tax Due $ 762,000 $ -
============= =============
</TABLE>
The Company has no deferred tax liabilities or assets. The temporary
difference due to the unrealized gain on marketable securities pertains to
the British Virgin Islands where there is no income tax.
NOTE 6 - RELATED PARTY TRANSACTIONS
a. Capital Contributions
During 1998, officers of the Company contributed other assets recorded at
cost of $1,359,449 to additional paid-in capital. The other assets included
marketable equity securities, memberships in country clubs, a mortgage note
receivable and common stock held to maturity.
15
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 6 - RELATED PARTY TRANSACTIONS (Continued)
b. Receivables
The Company has a receivable from a related company in the amount of
$734,265. This receivable in non-interest bearing, due on demand and
unsecured. Subsequent to year end, the Company has been repaid $734,265 on
this receivable.
c. Officer Compensation
The Company's president is compensated for his services under a consulting
contract with a company which he controls. The contract provides for
$10,000 per month in consulting fees. Other officers of the Company were
paid a total of $475,783 in consulting fees in addition to their base
salaries for the nine months ended September 30, 1999.
NOTE 7 - ECONOMIC DEPENDENCE AND MAJOR CUSTOMERS
The Company's marketing arrangement with one customer accounted for
approximately 26% of the Company's revenue for the year ended December 31,
1998. Sales to another customer made up approximately 24% of the net sales
in 1998. No customer made up more than 10% of net sales in 1999.
NOTE 8 - YEAR 2000
Year 2000 issues may arise if computer programs have been written using two
digits (rather than four) to define the applicable year. In such case,
programs that have time- sensitive logic may recognize a date using "00" as
the year 1900 rather than the year 2000, which could result in
miscalculations or system failures.
The Company has completed its assessment of the Year 2000 issue and
believes that any costs of addressing the issue will not have a material
adverse impact on the Company's financial position. The Company believes
that its existing computer systems and software will not need to be
upgraded to mitigate the Year 2000 issues. The company has not incurred any
costs associated with its assessment of the Year 2000 problem. In the event
that Year 2000 issues impact the Company's accounting operations and other
operations aided by its computer system, the Company believes, as part of a
contingency plan, that it has adequate personnel to perform those functions
manually until such time that any Year 2000 issues are resolved.
The Company believes that third parties with whom it has material
relationships will not materially be affected by the Year 2000 issues as
those third parties are relatively small entities which do not rely heavily
on information technology ("IT") systems and non-IT systems for their
operations. However, if the Company and third parties, upon which it
relies, are unable to address any Year 2000 issues in a timely manner, it
could result in a material financial risk to the Company, including loss of
revenue and substantial unanticipated costs. Accordingly, the Company plans
to devote all resources required to resolve any significant Year 2000
issues in a timely manner.
16
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 9 - STOCK OPTIONS
On May 30, 1997, the Company gave its vice-president the option to purchase
100,000 shares of its common stock at $2.00. At the time of the granting of
the option, the stock was trading at approximately $2.40 per share.
Accordingly, a deferred asset and contributed capital of $40,000 was
recorded for the excess of the trading price over the option price. The
shares vest in 25,000 share increments for each year of service beginning
in 1999. The Company will record as expense the difference between the
option price and the value of the shares at the time they vest over the
next 4 years.
NOTE 10 - BUSINESS SEGMENTS
Effective December 31, 1998, the Company adopted SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." Prior period
amounts have been restated to conform to the requirements of this
statement. The Company conducts its operations principally in the industry
of graphic design, writing, printing, database management, direct mailing
and e-mail customer service operations through its Momentum Asia, Inc.
subsidiary. The Company conducts internet products and services through its
Asia4sale.com, Ltd. and Momentum Internet, Inc. subsidiaries. The Company
conducts its online and offline investor education services through its
Online Investors Advantage, Inc. subsidiary.
<TABLE>
<CAPTION>
For the Online
Nine Months Investors
ended Momentum Momentum Advantage, Corporate
September 30 Asia, Inc. Internet, Inc. Inc. Unallocated
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales 1999 $ 1,345,166 $ 1,930,485 $14,556,225 $ -
1998 982,768 564,933 - -
Operating income (loss)
applicable to industry
segment 1999 34,993 649,306 3,444,183 (502,542)
1998 (36,463) 197,202 - (113,326)
General corporate
expenses not allocated
to industry segments 1999 - - - 502,542
1998 - - - 113,326
Other income (expenses)
including interest and gain
on sale of securities 1999 673,430 7,865 22,814 55,523
1998 23,902 - - (137,260)
</TABLE>
17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein.
September 30, 1999 and December 31, 1998
- ----------------------------------------
Changes in Financial Condition
- ------------------------------
On March 25, 1999 the Company acquired Asia4sale by issuing restricted
common stock of the Company for virtually all of the stock of Asia4sale and
$15,000 cash. Additionally, on March 31, 1999 the Company acquired Online
Investors Advantage (OIA) for restricted common stock of the Company and
$400,000 cash. These acquisitions were accounted for as purchases. The
acquisition of OIA has made a substantial, positive contribution to the
financial condition of the Company through September 30, 1999. The balance of
current assets at September 30, 1999 was $7,734,953 compared to a balance of
$2,250,933 at December 31,1998. The balances of current liabilities are
$2,025,695 and $600,013 for the same periods respectively. The resulting current
ratio at September 30, 1999 is 3.8:1. The current ratio at December 31, 1998 was
also 3.8:1.
The increase of current assets at September 30, 1999 over December 31, 1998
is due primarily to the increase of cash from $517,781 to $5,127,718, an
increase of $4,609,937 or 890%. The increase of cash is due primarily to the
positive cash flow generated from the operations of OIA, and the cash generated
from the sale of marketable equity securities. (See further discussion of income
below.)
Current assets at September 30, 1999 also increased due to the increase of
prepaid expenses from $7,370 to $788,600, an increase of $781,230, or 10,600%.
The increase in prepaid expenses is primarily due to the cost of advertising and
marketing of educational programs and the program-related printed materials of
OIA. Additionally, accounts receivable increased $196,657 or 22%, from $899,879
at December 31, 1998, to $1,096,536 at September 30, 1999. The balance of
accounts receivable at September 30 includes a contract receivable for $600,000
from an unrelated third party. The contract receivable has been collected. The
remaining balance of approximately $500,000 consists of trade receivables
The balance of current liabilities at September 30, 1999 is $2,025,695 and
at December 31, 1998 is $600,013. The increase of $1,425,682, or 238%, is due
primarily to the income taxes payable at September 30, 1999 of $762,000.
Momentum Internet is a British Virgin Islands company, Momentum Asia is a
Philippine company and Asia4sale is a Hong Kong 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.
There were no income taxes payable at December 31, 1998. Also, accounts payable
and accrued expenses increased by $563,682 or 94%.
The balance of equipment increased from $503,779 to $806,144, an increase
of $302,365, or 60% from December 31, 1998 to September 30, 1999. The increase
is due primarily to the addition of office equipment of approximately $175,000
by OIA. Depreciation expense on all equipment for the nine-month period is
$134,645.
Other assets increased $13,778,711, or 672% from $2,049,848 at December 31,
1998 to $15,828,559 at September 30, 1999. The increase is due primarily to the
addition of $14,388,707 of goodwill, (net) resulting from the acquisitions of
OIA and Asia4sale. Goodwill is the book value given to the difference between
the purchase price and the estimated fair market value of the net assets of OIA
and Asia4sale. The increase of other assets attributable to goodwill was offset
slightly by the net decrease in a receivable from related party of $665,333
resulting from the collection of the substantial portion of the December 31,1998
balance of $734,265.
At September 30, 1999 the Company has no long-term debt, and has sufficient
cash flow from operations and the sale of marketable equity securities to meet
its current cash obligations. The Company anticipates continued positive cash
flow from existing operations during the next twelve months, and will continue
to look for possible acquisitions of companies that will contribute in a
positive way to the Company's operating strategy.
18
<PAGE>
Results of Operations
- ---------------------
For the three months ended September 30, 1999 and September 30, 1998
- --------------------------------------------------------------------
As explained previously, the Company acquired OIA on March 31, 1999. This
acquisition has had considerable impact on the operating income of the Company
since that date.
Sales for the three months ended September 30, 1999 were $7,932,685 as
compared to $674,125 for the same period in 1998, an increase of $7,258,560, or
1,077%. The sales attributable to OIA for this same period were $6,598,868. Cost
of goods sold for the Company for the three months ended September 30, 1999 was
$5,447,640, or 69% of sales, resulting in gross profit of $2,485,045, or 31% of
sales. Cost of goods sold for the same period in 1998 was $318,322, or 47% of
sales, resulting in a gross profit for that period of $355,803, or 53% of sales.
The gross profit increased $2,129,242, or 598%. The gross profit margin for OIA
is lower than that of Momentum Internet and Momentum Asia due to higher costs
associated with advertising, marketing and presenting OIA's educational
programs.
During the three months ended September 30, 1999, OIA expanded its
operations to Australia, New Zealand, and Canada. The sales attributable to
these new markets were $1,269,832.
Operating expenses include depreciation and amortization expense and
general and administrative expenses. Depreciation and amortization expense for
the three months ended September 30, 1999 includes depreciation of $55,204 and
amortization of goodwill of $369,275. The Company recorded goodwill for the
March, 1999 acquisitions of Asia4sale and OIA. For the three-months ended
September 30, 1998 the Company reported depreciation expense of $41,531 on the
equipment of Momentum Internet, Momentum Asia and the Ziasun corporate offices.
General and administrative expenses were $690,858, or 9% of sales, for the same
three-month period in 1999 and $383,893, or 57% of sales, for the same period in
1998. The increase in general and administrative expenses was $306,965, or 80%.
The increase is related to the acquisitions in 1999 of Asia4sale and OIA for the
general and administrative expenses of these subsidiaries.
Other income (expense) increased from $23,878 of other income for the three
months ended September 30, 1998 to $247,698 of other income for the same period
in 1999, an increase of $223,820, or 937%. The increase is attributable to the
realized gain from the sale of marketable securities of $23,417 and unrealized
gains on marketable securities of $185,854. There were no realized or unrealized
gains on marketable securities for the three months ended September 30, 1998.
For the nine months ended September 30, 1999 and September 30, 1998
- -------------------------------------------------------------------
Sales for the nine months ended September 30, 1999 were $17,831,876 as
compared to $1,547,701 for the nine months ended 1998, an increase of
$16,284,175, or 52%. The 1999 sales attributable to OIA were $14,586,003. Cost
of goods sold for the Company for 1999 was $10,995,532, or 62% of sales,
resulting in gross profit of $6,836,344, or 38% of sales. Cost of goods sold for
the same period in 1998 was $516,850, or 33% of sales, resulting in a gross
profit for that period of $1,030,851, or 67% of sales. The gross profit
increased $5,805,493, or 563%.
On a nine-month ended September 30, 1999 proforma basis, including the
operations of OIA from January 1 to September 30, 1999, the Company had revenues
of $22,458,103 as compared to the nine months ended September 30, 1998 actual
revenue of $1,547,701. The increase in revenues over 1998 on a proforma basis is
$20,910,402, or 1,251%. Cost of goods sold would have been $14,122,240, or 63%
of sales, resulting in gross profit of $8,335,863, or 37% of sales. The gross
profit would have increased by $1,499,519, or 22%, over actual.
19
<PAGE>
Operating expenses include depreciation and amortization expense and
general and administrative expenses. Depreciation and amortization expense for
the nine months ended September 30, 1999 includes depreciation of $134,645 and
amortization of goodwill of $145,633. The Company recorded goodwill for the
March, 1999 acquisitions of Asia4sale and OIA. For the nine months ended
September 30, 1998 the Company reported depreciation expense of $72,819 on the
equipment of Momentum Internet, Momentum Asia and the Ziasun corporate offices.
General and administrative expenses were $2,239,342, or 13% of sales, for the
same nine-month period in 1999 and $892,459, or 58% of sales, for the same
period in 1998. The increase in general and administrative expenses was
$1,346,883, or 151%, and was attributable to the general and administrative
expenses of OIA acquired in 1999. Also, included in operating expenses during
1999 were consulting fees paid to certain related parties of $565,783.
For the nine months ended September 30, 1999 other income (expense)
increased from $113,358 expense for the nine months ended September 30, 1998 to
$759,632 other income, an increase of $872,990. The other income in 1999 is
attributable primarily to the realized gain from the sale of marketable
securities of $423,260 and unrealized gains on marketable securities of
$185,854, while other expense for the same period in 1998 was attributable
primarily to the write off of certain equipment.
CAUTIONARY FORWARD -LOOKING STATEMENT
- -------------------------------------
Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, and in future filings by the
Company with the Securities and Exchange Commission, in the Company's press
releases and in oral statements made with the approval of an authorized
executive officer which are not historical or current facts are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The following
important factors, among others, in some cases have affected and in the future
could affect the Company's actual results and could cause the Company's actual
financial performance to differ materially from that expressed in any
forward-looking statement: (i) the extremely competitive conditions that
currently exist in the three dimensional software development marketplace are
expected to continue, placing further pressure on pricing which could adversely
impact sales and erode profit margins; (ii) many of the Company's major
competitors in its channels of distribution have significantly greater financial
resources than the Company; and (iii) the inability to carry out marketing and
sales plans would have a materially adverse impact on the Company's projections.
The foregoing list should not be construed as exhaustive and the Company
disclaims any obligation subsequently to revise any forward-looking statements
to reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
YEAR 2000 INFORMATION
- ---------------------
Year 2000 Issues - Uncertainty Of The Effects Of The Year 2000 On Computer
Programs And Systems. Many currently installed computer systems and software
programs were designed to use only a two digit date field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. Until the date fields are updated, the systems and
programs could fail or give erroneous results when referencing dates following
December 31, 1999. Given that the Company's products operate on certain hardware
platforms and within certain software operating systems and environments, the
Company must rely upon the efforts of the hardware and software vendors and
manufacturers to be in the vanguard with respect to operating systems and
platform issues relating to the Year 2000 compliance.
Present Year 2000 Status.
--------------------------
The Company has assessed the impact of the year 2000 issue on the Company's
products, services, platforms systmes and internal information systems in use,
and has found them to be Year 2000 compliant. The Company does not expect the
Company's financial results to be materially affected by the need to address
year 2000 issues, but if the costs associated with addressing these issues are
greater than planned, the Company's earnings and results of operations could be
affected. Due to the Company's dependence on computer technology to conduct the
Company's business, the nature and impact of year 2000 processing failures on
the Company's business, financial condition and operating results could be
material.
20
<PAGE>
However, the Company has Y2K compliance declarations from their major
service providers. The declaration for Cable & Wireless Hong Kong Telecom may be
found at http://www.cwhkt.com/ABOUT/community/2000/progress/9909.html.
The declaration for Concentric Network USA may be found at
http://www.concentric.com/2000.html. OIA, the Company's subsidiary has received
a letter from Telescan one of its material vendors indicating that Telescan has
and continues to test and complete remidiation efforts. Telescan's Y2K statement
can be found at http://www.telescan.com/Telescan_y2k.html.
Business Continuity and Contingency Planning.
-----------------------------------------------
The Company continues the process of identifying the reasonably likely year
2000 problem failures that the Company could experience with the goal of
revising, to the extent practical, the Company's existing business continuity
and contingency plans to address the internal and external issues specific to
those problems. Thus far, the Company has focused as planned on reviewing the
Company's critical business processes and although the Company conducted tests
on the various and Platform systems in use, and has found them to be Year 2000
compliant, the Company's expect to continuously review, test and revise the
Company's existing business continuity and contingency plans to ensure that all
systems are and maintain year 2000 compliant. This will include as required
repairing or obtaining replacement systems; changing suppliers; and reducing or
suspending certain non-critical aspects of our operations. The Company has
completed Y2K remediation at the corporate office for both the network server
and the 10 workstations, and the telephone system server. The cost for this
remediation was some $2,642.00. Remediation was not necessary for the Momentum
Asia and Momentum Internet operations as their computer systems were purchased
Y2K compliant. Moreover, the Company does not expect to spend any additonal
monies on Y2K remediations issues. OIA is also Y2K compliant.
Possible Consequences of Year 2000 Problems
-------------------------------------------
The Company believes that the Company has put in place the processes and
are devoting the resources necessary to achieve a level of readiness to meet the
Company's year 2000 challenges in a timely and appropriate manner. However,
there can be no assurance that the Company's internal systems or the systems of
others on which we rely will be year 2000 ready in a timely and appropriate
manner or that the Company's contingency plans or the contingency plans of
others on which the Company reles will mitigate the effects of year 2000 problem
failures. Currently, the Company believes the most reasonably likely worst case
scenario would be a sustained, concurrent failure of multiple critical systems
(internal and external) that support the Company's operations. While the Company
does not expect that scenario to occur, that scenario if it occurs could, even
despite the successful execution of the Company's business continuity and
contingency plans, result in the reduction or suspension of a material portion
of our operations and accordingly have a material adverse effect on the
Company's business and financial condition.
21
<PAGE>
RISK FACTORS
- ------------
Risks of Penny Stock.
---------------------
The Company's common stock may, at some future time, be deemed to be "penny
stock" as that term is defined in Rule 3a51-1 of the Exchange Act of 1934. Penny
stocks are stocks (i) with a price of less than five dollars per share; (ii)
that are not traded on a "recognized" national exchange; (iii) whose prices are
not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) of an issuer with net tangible assets
less than US$2,000,000 (if the issuer has been in continuous operation for at
least three years) or US$5,000,000 (if in continuous operation for less than
three years), or with average annual revenues of less than US$6,000,000 for the
last three years.
A principal exclusion from the definition of a penny stock is an equity
security that has a price of five dollars ($5.00) of more, excluding any broker
or dealer commissions, markups or markdowns. As of the date of this Registration
Statement the Company's common stock has a price in excess of $5.00 and would
not be deemed a penny stock.
If the Company's Common Stock were deemed a penny stock, section 15(g) and
Rule 3a51-1 of the Exchange Act of 1934 would require broker-dealers dealing in
the Company's Common Stock to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny
stock for the investor's account. Potential investors in the Company's common
stock are urged to obtain and read such disclosure carefully before purchasing
any shares that are deemed to be "penny stock."
Moreover, Rule 15g-9 of the Exchange Act of 1934 Commission requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Company's common stock to resell their shares to third parties or to
otherwise dispose of them.
Competition.
------------
There are numerous corporations, firms and individuals which are engaged in
the type of business activities in which the Company is presently engaged. Many
of those entities are more experienced and possess substantially greater
financial, technical and personnel resources than the Company or its
subsidiaries. Many of the Company's competitors have longer operating histories
and significantly greater financial, technical, marketing and other resources
than the Company. In addition, many of the Company's competitors offer a wider
range of services and financial products than the Company, and thus may be able
to respond more quickly to new or changing opportunities, technologies and
customer requirements. Many of the Company's competitors also have greater name
recognition and larger customer bases that could be leveraged, thereby gaining
market share from the Company. Such competitors may conduct more extensive
promotional activities and offer better terms and lower prices to customers than
the Company can. Moreover, certain competitors have established cooperative
relationships among themselves or with third parties to enhance their services
and products. Accordingly, it is possible that new competitors or alliances
among existing competitors may significantly reduce the Company's market share.
General financial success within the securities industry over the past several
years has strengthened existing competitors. The Company believes that such
22
<PAGE>
success will continue to attract new competitors to the industry, such as banks,
software development companies, insurance companies, providers of online
financial and information services and others, as such companies expand their
product lines. The current trend toward consolidation in the commercial banking
industry could further increase competition in all aspects of our business.
While the Company cannot predict the type and extent of competitive services
that commercial banks and other financial institutions ultimately may offer, or
whether legislative barriers will be modified, the Company may be adversely
affected by such competition or legislation. To the extent the Company's
competitors are able to attract and retain customers based on the convenience of
one-stop shopping, the Company's business or ability to grow could be adversely
affected. In many instances, the Company is competing with such organizations
for the same customers. In addition, competition among financial services firms
exists for experienced technical and other personnel. There can be no assurance
that the Company will be able to compete effectively with current or future
competitors or that such competition will not have a material adverse effect on
the Company's business, financial condition and operating results. While the
Company hopes to be competitive with other similar companies, there can be no
assurance that such will be the case.
Volatile Market for Common Stock.
---------------------------------
The Company's common stock is quoted on the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD") under the symbol
"ZSUN." The market price of the Company's Common Stock has been and is likely to
continue to be highly volatile and subject to wide fluctuations due to various
factors, many of which may be beyond the Company's control, including: quarterly
variations in operating results; announcements of technological innovations or
new software, services or products by the Company or its competitors; and
changes in financial estimates and recommendations by securities analysts. In
addition, there have been large price and volume fluctuations in the stock
market which have affected the market prices of securities of many technology
and services companies, often unrelated to the operating performance of such
companies. These broad market fluctuations, as well as general economic and
political conditions, may adversely affect the market price of the Company's
common stock. In the past, volatility in the market price of a company's
securities has often led to securities class action litigation. Such litigation
could result in substantial costs and aversion of the Company's attention and
resources, which could have a material adverse effect on the Company's business,
financial condition and operating results.
Dependence on Key Employees.
----------------------------
Historically, the Company and its subsidiaries have been heavily dependent
on the ability of D. Scott Elder, Ross W. Jardine, Anthony Tobin, Eric
Montandon, Allen D. Hardman, Scott Harris, David McCoy and Peter Graham Daley,
who contribute essential technical and management experience. In the event of
future growth in administration, marketing, manufacturing and customer support
functions, the Company may have to increase the depth and experience of its
management team by adding new members. The Company's success will depend to a
large degree upon the active participation of its key officers and employees.
Loss of services of any of the current officers and directors could have a
significant adverse effect on the operations and prospects of the Company. There
can be no assurance that it will be able to employ qualified persons on
acceptable terms to replace officers that become unavailable.
Discretionary Use of Proceeds.
------------------------------
Because of management's broad discretion with respect to the acquisition of
assets, property or business, the Company may be deemed to be a growth oriented
company. Although management intends to apply substantially all of the proceeds
that it may receive through the issuance of stock or debt to suitable
acquisitions. such proceeds will not otherwise be designated for any more
specific purpose. The Company can provide no assurance that any allocation of
such proceeds will allow it to achieve its business objectives.
23
<PAGE>
Unascertainable Risks Associated with Potential Future Acquired Businesses.
---------------------------------------------------------------------------
To the extent that the Company may acquire a business in a highly risky
industry, the Company will become subject to those risks. Similarly, if the
Company acquires a financially unstable business or a business that is in the
early stages of development, the Company will become subject to the numerous
risks to which such businesses are subject. Although management intends to
consider the risks inherent in any industry and business in which it may become
involved, there can be no assurance that it will correctly assess such risks.
Risks Associated with Acquisitions, Strategic Relationships.
------------------------------------------------------------
The Company may acquire other companies or technologies in the future, and
the Company regularly evaluates such opportunities. Acquisitions entail numerous
risks, including: difficulties in the assimilation of acquired operations and
products; diversion of management's attention from other business concerns;
amortization of acquired intangible assets; and potential loss of key employees
of acquired companies. The Company has limited experience in assimilating
acquired organizations into our operations. No assurance can be given as to the
Company's ability to integrate successfully any operations, personnel, services
or products that might be acquired in the future. Failure to successfully
assimilate acquired organizations could have a material adverse effect on the
Company's business, financial condition and operating results. The Company has
established a number of strategic relationships with online and Internet service
providers and software and information service providers. There can be no
assurance that any such relationships will be maintained, or that if they are
maintained, they will be successful or profitable. Additionally, the Company may
not develop any new such relationships in the future. Due to the foregoing
factors, quarterly revenues and operating results are difficult to forecast. The
Company believes that period-to-period comparisons of the Company's operating
results will not necessarily be meaningful and you should not rely on them as
any indication of future performance. The Company's future quarterly operating
results may not consistently meet the expectations of securities analysts or
investors, which in turn may have an adverse effect on the market price of the
Company's Common Stock. Additionally, to the extent that the Company may acquire
a business in a highly risky industry, the Company will become subject to those
risks. Similarly, if the Company acquires a financially unstable business or a
business that is in the early stages of development, the Company will become
subject to the numerous risks to which such businesses are subject. Although
management intends to consider the risks inherent in any industry and business
in which it may become involved, there can be no assurance that it will
correctly assess such risks.
Uncertain Structure of Future Acquisitions.
-------------------------------------------
Management has had no preliminary contact or discussions regarding, and
there are no current plans, proposals or arrangements to acquire any other
specific assets, property or business. Accordingly, it is unclear whether such
any such acquisition would take the form of an exchange of capital stock, a
merger or an asset acquisition.
Conflicts of Interest; Related Party Transactions.
--------------------------------------------------
Although the Company has not identified any new potential acquisition
targets and management does not believe there is any "present potential" for
such transactions, the possibility exists that the Company may acquire or merge
with a business or company in which the Company's executive officers, directors,
beneficial owners or their affiliates may have an ownership interest. Although
there is no formal bylaw, stockholder resolution or agreement authorizing any
such transaction, corporate policy does not forbid it and such a transaction may
occur if management deems it to be in the best interests of the Company and its
stockholders, after consideration of the above referenced factors. A transaction
of this nature would present a conflict of interest to those parties with a
managerial position and/or an ownership interest in both the Company and the
acquired entity, and may compromise management's fiduciary duties to the
Company's stockholders. An independent appraisal of the acquired company may or
may not be obtained in the event a related party transaction is contemplated.
Furthermore, because management and/or beneficial owners of the Company's common
stock may be eligible for finder's fees or other compensation related to
potential acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. It is the Company's
intention that all future transactions be entered into on such terms as if
negotiated at arms length, unless the Company is able to received more favorable
terms from a related party.
24
<PAGE>
Risks Associated with Systems Failures.
---------------------------------------
Many of the services and products offered by the Company and its
subsidiaries are through and over Internet, online service providers and
touch-tone telephone. Thus, the Company depends heavily on the integrity of the
electronic systems supporting this activity, including the Company's internal
software programs and computer systems. The Company's systems or any other
systems of third parties whom the we utilize could slow down significantly or
fail for a variety of reasons including: undetected errors in the Company 's
internal software programs or computer systems; the Company's inability to
effectively resolve any errors in the Company's internal software programs or
computer systems once they are detected; or heavy stress placed on the Company's
system during certain peak hours of usage of either the Company's own or its
third party provider systems. If the Company's systems or any other systems
which the Company relies on slow down significantly or fail even for a short
time, the Company's customers would suffer delays and dissatisfaction. The
Company could experience future system failures and degradations. The Company
could experience a number of adverse consequences as a result of these systems
failures including the loss of existing customers and the inability to attract
or retain new customers. There can be no assurance that the Company 's network
structure or those of third party service providers will operate appropriately
in any of the following events: subsystem, component or software failure; a
power or telecommunications failure; human error; an earthquake, fire or other
natural disaster; or an act of God or war. There can be no assurance that in any
such event, we will be able to prevent an extended systems failure. Any such
systems failure that interrupts the Company's operations could have a material
adverse effect on the Company's business, financial condition and operating
results.
Risks Associated with Encryption Technology.
--------------------------------------------
A significant barrier to online commerce is the secure transmission of
confidential information over public networks. The Company rely on encryption
and authentication technology to provide secure transmission of confidential
information. There can be no assurance that advances in computer and
cryptography capabilities or other developments will not result in a compromise
of the encryption and authentication technology we use to protect customer
transaction data. If any such compromise of the Company 's security were to
occur, it could have a material adverse effect on the Company's business,
financial condition and operating results.
Risks Associated with Significant Fluctuations In Quarterly Operating
Results.
---------------------------------------------------------------------------
The Company expects to experience large fluctuations in future quarterly
operating results that may be caused by many factors, including the following:
the timing of introductions or enhancements to online investing services and
other products by the Company or its competitors; market acceptance of online
investing services and products; the pace of development of the market for
online commerce; changes in trading volume in securities markets; trends in
securities markets; domestic and international regulation of the brokerage
industry; changes in pricing policies by the Company or its competitors; changes
in strategy; the success of or costs associated with acquisitions, joint
ventures or other strategic relationships; changes in key personnel; seasonal
trends; the extent of international expansion; the mix of international and
domestic revenues; changes in the level of operating expenses to support
projected growth; and general economic conditions. The Company have also
experienced fluctuations in the average number of customer transactions per day.
Thus, the rate of growth in customer transactions at any given time is not
necessarily indicative of future transaction activity.
25
<PAGE>
Risks Associated with Management of a Changing Business.
--------------------------------------------------------
The Company has grown rapidly and the Company's business and operations
have changed substantially since the Company began offering online investing
services and products, and the Company expects this trend to continue. Such
rapid change and expansion places significant demands on the Company's
administrative, operational, financial and other resources. The Company expects
operating expenses and staffing levels to increase substantially in the future.
In particular, the Company intends to hire a significant number of additional
skilled personnel, including persons with experience in both the computer and
brokerage industries. Competition for such personnel is intense, and there can
be no assurance that the Company will be able to find or keep additional
suitable senior managers or technical persons in the future. the Company also
expects to expend resources for future expansion of the Company's accounting and
internal information management systems and for a number of other new systems
and procedures. In addition, the Company expects that future expansion will
continue to challenge the Company's ability to successfully hire and retain
associates. If the Company's revenues do not keep up with operating expenses,
the Company's information management systems do not expand to meet increasing
demands, the Company fails to attract, assimilate and retain qualified
personnel, or the Company fails to manage the Company's expansion effectively,
there would be a material adverse effect on the Company's business, financial
condition and operating results. The rapid growth in the use of the Company's
services may strained the Company's ability to adequately expand
technologically. As the Company acquires new equipment and applications quickly,
the Company has less time and ability to test and validate hardware and
software, which could lead to performance problems. The Company also relies on a
number of third parties to process the Company's transactions, including online
and Internet service providers, back office processing organizations, service
providers and market-makers, all of which will need to expand the scope of the
operations they perform for us. Any backlog caused by a third party's inability
to expand sufficiently to meet the Company needs could have a material adverse
effect on our business, financial condition and operating results. As trading
volume increases, the Company may have difficulty hiring and training qualified
personnel at the necessary pace, and the shortage of licensed personnel could
cause a backlog in the processing of orders that need review, which could lead
to not only unsatisfied customers, but also to liability for orders that were
not executed on a timely basis.
Risks Associated with Early Stage of Market Development; Dependence on
Online Commerce and the Internet.
---------------------------------------------------------------------------
The market for online investing services, particularly over the Internet,
is at an early stage of development and is rapidly evolving. Consequently,
demand and market acceptance for recently introduced services and products are
subject to a high level of uncertainty. For the Company, this uncertainty is
compounded by the risks that consumers will not adopt online commerce and that
commerce on the Internet will not adequately develop or flourish to permit the
Company to succeed. Sales of many of the Company's services and products will
depend on consumers adopting the Internet as a method of doing business. This
may not occur because of inadequate development of the necessary infrastructure,
such as a reliable network infrastructure, or complementary services and
products such as high-speed modems and communication lines. The Internet has
grown and is expected to grow both in number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by this continued growth. In addition,
the Internet could lose its viability due to slow development or adoption of
standards and protocols to handle increased Internet activity, or due to
increased governmental regulation. Moreover, critical issues including security,
reliability, cost, ease of use, accessibility and quality of service remain
unresolved and may negatively affect the growth of Internet use or commerce on
the Internet. Because use of the Internet for commerce is new and evolving,
there can be no assurance that the Internet will prove to be a viable commercial
marketplace. If these critical issues are not resolved, if the necessary
infrastructure is not developed, or if the Internet does not become a viable
commercial marketplace, the Company business, financial condition and operating
results will be materially adversely affected. Adoption of online commerce by
individuals that have relied upon traditional means of commerce in the past will
require such individuals to accept new and very different methods of conducting
business. Moreover, the Company 's online trading and investing services over
the Internet involve a new approach to investing research and trading which will
26
<PAGE>
require intensive marketing and sales efforts to educate prospective customers
regarding the Internet's uses and benefits. For example, consumers who trade
with more traditional brokerage firms, or even discount brokers, may be
reluctant or slow to change to obtaining brokerage services over the Internet.
Also, concerns about security and privacy on the Internet may hinder the growth
of online investing research and trading, which could have a material adverse
effect on the Company 's business, financial condition and operating results.
Risks Associated with the Securities Industry; Concentration of Services.
-------------------------------------------------------------------------
Most of the Company's revenue in the past have been from the Company's
online investor services and products, and the Company expects this business to
continue to account for most of the Company's revenue in the foreseeable future.
The Company, like other companies in the Internet securities industry, are
directly affected by economic and political conditions, broad trends in business
and finance and changes in volume and price levels of securities and futures
transactions. In recent months, the U.S. securities markets have fluctuated
considerably and a downturn in these markets could effect customers interest in
our products and services and adversely affect the Company's operating results.
In October 1987 and October 1989, the stock market suffered major declines, as a
result of which many company's and firms suffered financial losses, and the
level of individual investor trading activity decreased after these events.
Reduced trading volume and prices have historically resulted in reduced revenues
to company's such as the Company's. When trading volume is low and investor and
customer interest or use of the Company's products and services diminishes, the
Company's operating results may be adversely affected because the Company's
overhead remains relatively fixed. Severe market fluctuations in the future
could have a material adverse effect on the Company's business, financial
condition and operating results. Some of the Company's competitors with more
diverse product and service offerings might withstand such a downturn in the
securities industry better than the Company would.
Risks Associated with Delays In Introduction of New Services and Products.
--------------------------------------------------------------------------
The Company's future success depends in part on the Company's ability to
develop and enhance the Company's services and products. There are significant
technical risks in the development of new services and products or enhanced
versions of existing services and products. There can be no assurance that the
Company will be successful in achieving any of the following: effectively using
new technologies; adapting the Company's services and products to emerging
industry standards; developing, introducing and marketing service and product
enhancements; or developing, introducing and marketing new services and
products. The Company may also experience difficulties that could delay or
prevent the development, introduction or marketing of these services and
products. Additionally, these new services and products may not adequately meet
the requirements of the marketplace or achieve market acceptance. If the Company
is unable to develop and introduce enhanced or new services and products quickly
enough to respond to market or customer requirements, or if they do not achieve
market acceptance, the Company's business, financial condition and operating
results will be materially adversely affected.
Risks Associated with Dependence on Intellectual Property Rights.
-----------------------------------------------------------------
Neither the Company or any of its subsidiaries presently holds any patents,
copyrights or trademarks for their products or services offered or the names
under which they operate. However, the Company and its subsidiaries are
currently in the process of seeking copyright and trademark protection of its
trade names and website addresses. The Company's success and ability to compete
are dependent to a degree of the Company's and its subsidiary's name and product
recognition. Accordingly, the Company will primarily rely on copyright, trade
secret and trademark law to protect our product, services and brand names offer
or under which the Company and its subsidiaries conduct their business.
Effective trademark protection may not be available for the Company's
trademarks. There can be no assurance that the Company will be able to secure
significant protection for the Company's trademarks. The Company's competitors
or others may adopt product or service names similar to the Company's, thereby
impeding the Company's ability to build brand identity and possibly leading to
customer confusion. The Company's inability to adequately protect our product,
brand, trade names and trademarks would have a material adverse effect on the
Company's business, financial condition and operating results. Despite any
precautions the Company takes, a third party may be able to copy or otherwise
obtain and use the Company's software or other proprietary information without
authorization or to develop similar software independently. Policing
unauthorized use of the Company's technology is made especially difficult by the
global nature of the Internet and difficulty in controlling the ultimate
27
<PAGE>
destination or security of software or other data transmitted on it. The laws of
other countries may afford us little or no effective protection for the
Company's intellectual property. There can be no assurance that the steps the
Company takes will prevent misappropriation of the Company's technology or that
agreements entered into for that purpose will be enforceable. In addition,
litigation may be necessary in the future to enforce the Company's intellectual
property rights; protect the Company's trade secrets; determine the validity and
scope of the proprietary rights of others; or defend against claims of
infringement or invalidity. Such litigation, whether successful or unsuccessful,
could result insubstantial costs and diversions of resources, either of which
could have a material adverse effect on the Company's business, financial
condition and operating results.
Risks Associated with Infringement.
-----------------------------------
The Company may in the future receive notices of claims of infringement of
other parties' proprietary rights. There can be no assurance that claims for
infringement or invalidity (or any indemnification claims based on such claims)
will not be asserted or prosecuted against the Company. Any such claims, with or
without merit, could be time consuming and costly to defend or litigate, divert
the Company's attention and resources or require the Company to enter into
royalty or licensing agreements. There can be no assurance that such licenses
would be available on reasonable terms, if at all, and the assertion or
prosecution of any such claims could have a material adverse effect on the
Company's business, financial condition and operating results.
Risks Associated with Entering New Markets.
-------------------------------------------
One element of our strategy is to leverage the Company's brand names and
services that the Company and its subsidiaries provide. No assurance can be
given that the Company will be able to successfully adapt the Company's products
and services for use in other markets. Even if the Company does adapt the
Company's to other markets, no assurance can be given that the Company will be
able to compete successfully in any such new markets. There can be no assurance
that the Company's marketing efforts or the Company's pursuit of any new
opportunities will be successful. If the Company's efforts are not successful,
the Company could realize less than expected earnings, which in turn could
result in a decrease in the market value of the Company's Common Stock.
Furthermore, such efforts may divert management attention or inefficiently
utilize the Company's resources.
Risks Associated with International Strategy.
---------------------------------------------
One component of the Company's strategy is a planned increase in efforts to
attract additional international customers and to expand the Company's Online
Investors seminars, services and products into international markets. To date,
the Company has limited experience in providing investment services
internationally. There can be no assurance that the Company's and the Company's
subsidiaries will be able to market the Company's branded services and products
successfully in international markets. In addition, there are certain risks
inherent in doing business in international markets, such as: unexpected changes
in regulatory requirements, tariffs and other trade barriers; difficulties in
staffing and managing foreign operations; political instability; fluctuations in
currency exchange rates; reduced protection for intellectual property rights in
some countries; seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world; and potentially adverse
tax consequences. Any of the foregoing could adversely impact the success of the
Company's international operations. Under these agreements, the Company relies
upon third parties for a variety of business and regulatory compliance matters.
The Company has limited control over the management and direction of these third
parties. The Company runs the risk that their action or inaction could harm the
Company's operations and/or the goodwill associated with the Company's brand
names. As a result, the risk to our operations and goodwill is higher. There can
be no assurance that one or more of the factors described above will not have a
material adverse effect on the Company's future international operations, if
any, and, consequently, on our business, financial condition and operating
results.
Equity Price Risk.
------------------
The Company through its subsidiary Momentum Asia holds a small portfolio of
marketable-equity traded securities that are subject to market price volatility.
Equity price fluctuations of plus or minus 15 percent would not have a material
impact on the Company. For its working capital and reserves that are required to
be segregated under Federal or other regulations, the Company invests in money
market funds, resale agreements, certificates of deposit, and commercial paper.
Money market funds do not have maturity dates and do not present a material
market risk. The other financial instruments are fixed rate investments with
short maturities and do not present a material interest rate risk.
28
<PAGE>
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
ZiaSun Technologies, Inc. v. Floyd D. Schneider, et al.
-------------------------------------------------------
The company was a party Plaintiff in the matter of ZiaSun Technologies,
Inc. v. Floyd D. Schneider, et al., United States District Court, Western
District of Washington, C99-1025. This action arises from the defendants alleged
defamatory campaign against the Company and its officers and directors, This
alleged cybersmear campaign involved the defendants postings of statements about
the Company and its offices and directors which are alleged to be false and
defamatory.. The Company alleges that the defendants were and are knowingly
posting false statements with the intent on negatively impacting the Company's
stock prices in order for defendants to benefit financially in short selling. To
protect the Company, its shareholders and its officers and directors, on June
24, 1999, the Company filed a civil action in the United States District Court
of Washington seeking damages and injunction relief, alleging among other
things, Securities Fraud through the defendants posting of false and misleading
defamatory statements, violation of the Washington Consumer Protection Act,
Intentional Interference with Business Expectancy, Violation of Federal RICO
Statute 28 USA Sec. 1962, and violation of Washington's Criminal Profiteering
Act. The matter is pending at present time.
ZiaSun Technologies, Inc. v. Financialweb.Com, Inc., et al.
-----------------------------------------------------------
The company was a party Plaintiff in the matter of ZiaSun Technologies,
Inc. v. Financialweb.Com, Inc., et al., Circuit Court of Seminole County,
Florida, 990-1136-CA-16-G. This action arises from the defendants posting of
alleged false and defamatory article about the Company on its website known as
"The Stock Detective." The defendants allegedly knowingly posted the false and
defamatory article with the intent on negatively impacting the Company's stock
prices in order for defendants to benefit financially. The Company requested
that defendant publish a retraction but defendant has refused to do so. To
protect the Company, its shareholders and its officers and directors, the
Company filed a civil action in the Circuit Court of Seminole County Florida,
seeking damages and injunction relief. The matter is pending at present time.
With the exception of the legal proceedings set forth above, the Company is
not a party to any pending legal proceeding. No federal, state or local
governmental agency is presently contemplating any proceeding against the
Company. No director, executive officer or affiliate of the Company or owner of
record or beneficially of more than five percent of the Company's common stock
is a party adverse to the Company or has a material interest adverse to the
Company in any proceeding.
Item 2. Changes in Securities.
Not required.
Item 3. Defaults Upon Senior Securities.
Not required.
Item 4. Submission of Matters to a Vote of Security Holders.
Not required
29
<PAGE>
Item 5. Other Information.
Filing of Registration Statement Pursuant to Section 12(g)
- -----------------------------------------------------------
On September 16, 1999, the Company filed a Registration Statement on Form
10-SB in order to register the Company's common stock, $0.001 par value pursuant
to Section 12(g) of the Securities Exchange Act of 1934. Pursuant to statute the
registration statement on Form 10-SB was deemed effective on November 15, 1999.
October 26, 1999, the Company received comments from the SEC requesting
clarification of certain items in the Registration Statement. The Company will
file an Amendment No. 1 to the Registration Statement in response to the SEC's
comments. The Registration Statement on Form 10-SB and Amendment No. 1 to the
Registration on Form 10-SB, as filed with the Securities and Exchange Commission
are incorporated herein by reference.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits attached or incorporated by referenced pursuant to
Item 601 of Regulation S-B.
(3) Articles of Incorporation and By-Laws.
3.1 Articles of Incorporation of the Registrant filed on
March 27, 1994, (incorporated by reference to Exhibit 3.1 of
the Registrant's Registration Statement on Form 10-SB dated
April 28, 1998; Commission File No. 0-24109).
Exhibit
Number Description
- --------------------------------------------------------------------------------
2.1 Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and Momentum Internet Incorporated dated October 5,
1998. (Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
2.2 Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and Momentum Asia, Inc. dated October 5, 1998.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
2.3 Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and Asia4sale.com, Ltd., dated March 25, 1999.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
2.4 Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and Online Investors Advantage, Inc., dated March
31, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
3.1(a) Original Articles of Incorporation. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed September
16, 1999; Commission File No. 0-27349).
3.1(b) Certificate of Amendment to Articles of Incorporation filed April 29,
1997. (Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
3.1(c) Certificate of Amendment to Articles of Incorporation filed September
10, 1998 changing the name of the Company to ZiaSun Technologies, Inc.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
30
<PAGE>
3.1(d) Certificate filed pursuant to NRS Section 78.207. (Incorporated by
reference from the Registrant's Registration Statement on Form 10-SB
filed September 16, 1999; Commission File No. 0-27349).
3.1(e) Restated Article of Incorporation filed August 16, 1999. (Incorporated
by reference from the Registrant's Registration Statement on Form
10-SB filed September 16, 1999; Commission File No. 0-27349).
3.2 Amended and Restated By-laws. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.1 License Agreement between Fountain Fresh International and Katori
Consultants, Ltd. dated April 17, 1997. (Incorporated by reference
from the Registrant's Registration Statement on Form 10-SB filed
September 16, 1999; Commission File No. 0-27349).
10.2 Assignment of License Agreement by Katori Consultants Ltd., to the
Company dated April 18, 1999. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.3 Unsecured Promissory Note for $50,000 from Asai4sale.com in favor of
the Company dated March 31, 1999. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.4 Stock Option Agreement between Brian Hodgson and the Company dated
March 25, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
10.5 Agreement between the Company and Global Direct Marketing Limited
dated February 12, 1999. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.6 Agreement between Asia4sale.com, Ltd., and Hong Kong Telecom IMS dated
March 29, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
10.7 Agreement between Momentum Internet, Inc., and Hays Business Systems
dated April 1, 1999.(Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
10.8 Loan Agreement between Momentum Asia, Inc. (formerly New Age
Publications, Inc.) and Touchstone Transport Services, Inc.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.9 Real Estate Mortgage Momentum Asia, Inc. (formerly New Age
Publications, Inc.) and Touchstone Transport Services, Inc.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.10 Subscribers Agreement between Momentum Asia, Inc., (formerly New Age
Publications, Inc.), and Torquay Associates Ltd.(Incorporated by
reference from the Registrant's Registration Statement on Form 10-SB
filed September 16, 1999; Commission File No. 0-27349).
10.11 Reuters Investor Distribution Agreement with Momentum Internet Inc.,
dated April 22, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
31
<PAGE>
10.12 Market Datafeed Service Agreement with Stock Exchange Information
Services Limited dated May 3, 1999. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed September
16, 1999; Commission File No. 0-27349).
10.13 Agreement between Momentum Internet, Inc., and Options Direct dated
May 18, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
10.14 Agreement between Asia4sale.com, Ltd., and Karrex dated June 25,
1999.(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.15 Agreement between Momentum Internet, Inc., and United Mok Ying Kie
Limited dated June 29, 1999. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.16 Reuters Service Contract with Momentum Internet Inc. (Incorporated by
reference from the Registrant's Registration Statement on Form 10-SB
filed September 16, 1999; Commission File No. 0-27349).
10.17 Online Stock Trading Agreement between Swiftrade, Inc. and WdoT.rade
Inc. dated July 1, 1999. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.18 Lease Agreement between the Company and Propco L.P. (Incorporated by
reference from the Registrant's Registration Statement on Form 10-SB
filed September 16, 1999; Commission File No. 0-27349).
10.19 Addendum to Lease between the Company and Propco L.P.(Incorporated by
reference from the Registrant's Registration Statement on Form 10-SB
filed September 16, 1999; Commission File No. 0-27349).
10.20 Tenancy Agreement between Momentum Associates Limited and Hong Kong
Finance Property Company Limited dated December 1, 1998.(Incorporated
by reference from the Registrant's Registration Statement on Form
10-SB filed September 16, 1999; Commission File No. 0-27349).
10.21 Contract of Lease between Rebecca A. Ynares and Momentum Internet
(Philippines) Inc. dated December 1998. (Incorporated by reference
from the Registrant's Registration Statement on Form 10-SB filed
September 16, 1999; Commission File No. 0-27349).
10.22 First Amendment to Contract of Lease between Rebecca A. Ynares and
Momentum Internet (Philippines) Inc. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed September
16, 1999; Commission File No. 0-27349).
10.23 Contract of Lease between Philippine International Trading Corporation
and Momentum Internet (Philippines) Inc. (Incorporated by reference
from the Registrant's Registration Statement on Form 10-SB filed
September 16, 1999; Commission File No. 0-27349).
10.24 Sublease Agreement between Philexcel Textiles Incorporated and
Momentum Asia, Inc. (formerly New Age Publications, Inc.)
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.25 Amended Sublease Agreement between Philexcel Textiles Incorporated and
Momentum Asia, Inc. (formerly New Age Publications, Inc.)
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.26 Lease Agreement between EsNET Properties L.C. and Online Investors
Advantage, Inc., dated May 25, 1999. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed September
16, 1999; Commission File No. 0-27349).
32
<PAGE>
10.27 Lease Agreement between Dc Mason Ltd., and Online Investors Advantage,
Inc., dated October 7, 1998. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.28 Lease Agreement between Gordon Jacobson and Online Investors
Advantage, Inc., dated June 22, 1999. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed September
16, 1999; Commission File No. 0-27349).
10.29 Employment Agreement and Stock Option between the Company and Allen D.
Hardman dated July 1, 1997. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
10.30 Amendment to Employment Agreement between the Company and Allen D.
Hardman. (Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.31 Non-Qualified Stock Option Agreement between the Company and Allen D.
Hardman. (Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.32 Agreement between Momentum Associates Limited and Peter Graham Daley.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.33 Agreement between Momentum Associates Limited and Anthony L. Tobin.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.34 Agreement between Momentum Internet Inc., and Crossbow Consultants
Limited.(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed September 16, 1999; Commission File No.
0-27349).
10.35 Agreement between Asia4sale.com Ltd., and Momentum Internet Inc.,
dated March 25, 1999. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
21 Subsidiaries of the Registrant. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed September 16,
1999; Commission File No. 0-27349).
24 Power of Attorney. (Incorporated by reference from the Registrant's
Registration Statement on Form 10-SB filed September 16, 1999;
Commission File No. 0-27349).
27.1 Financial Data Schedule (submitted electronically for SEC information
only).
(b) There were no other reports on Form 8-K filed during the quarter of the
period covered.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the Undersigned, thereunto duly authorized.
ZiaSun Technologies, Inc.
Dated: December 15, 1999 /S/ D. Scott Elder
-----------------------------------
By: D. Scott Elder
Its: Chief Executive Officer
Dated: December 15, 1999 /S/ Allen D. Hardman
-----------------------------------
By: Allen D. Hardman
Its: Vice President
34
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