SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 2000; or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _________ to __________
Commission File Number: 0-27349
ZIASUN TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 84-1376402
---------------------------------- --------------------
(State or other Jurisdiction of (IRS Employer
of Incorporation or Organization) Identification No.)
462 Stevens Avenue, Suite 106, Solana Beach, California 92075
------------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
(858) 350-4060
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that a
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
As of September 30, 2000, there were 32,330,170 shares of the registrant's
Common Stock, $0.001 par value, issued and outstanding.
This Form 10-Q has 34 pages, the Exhibit Index is located at page 29.
<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, 2000, and the results of its operations and changes
in its financial position from inception through September 30, 2000, have been
made. The results of operations for such interim period are not necessarily
indicative of the results to be expected for the entire year.
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
Index to Financial Statements
-----------------------------
Page
----
Balance Sheets ............................................... 3
Statements of Operations ..................................... 5
Statements of Stockholders' Equity ........................... 7
Statements of Cash Flows ..................................... 9
Notes to the Financial Statements ............................ 11
All other schedules are not submitted because they are not applicable or
not required or because the information is included in the financial statements
or notes thereto.
2
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 6,083,279 $11,652,505
Trade receivables, net 1,476,996 1,145,960
Interest receivable 16,758 8,333
Inventory 17,167 18,239
Marketable securities 557,438 540,234
Prepaid expenses 1,276,168 131,772
------------- ------------
Total Current Assets 9,427,806 13,497,043
------------- ------------
EQUIPMENT
Printing equipment 293,193 289,443
Machinery and equipment 662,845 393,091
Office equipment 226,849 153,734
Vehicles 36,874 17,163
Leasehold improvements 221,064 138,841
Less: accumulated depreciation (505,564) (197,053)
------------- ------------
Total Equipment 935,261 795,219
------------- ------------
OTHER ASSETS
Marketable securities 3,966,413 -
Equity investments 2,861,178 254,195
Goodwill - net 113,309,943 4,667,623
Receivables - related parties 818,774 88,679
Other assets 261,103 664,088
------------- ------------
Total Other Assets 121,217,411 5,674,585
------------- ------------
TOTAL ASSETS $131,580,478 $19,966,847
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 2,089,233 $ 1,382,757
Related party payable - 690,000
Taxes payable 119,963 2,083,763
Deferred income 16,500 74,100
------------- ------------
Total Current Liabilities 2,225,696 4,230,620
------------- ------------
Total Liabilities 2,225,696 4,230,620
------------- ------------
MINORITY INTEREST - -
------------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 250,000,000 shares authorized of $0.001
par value, 33,203,670 and 22,205,018 shares issued
and 32,310,470 and 22,141,818 shares outstanding,
respectively 33,204 22,205
Additional paid-in capital 122,544,320 12,504,547
Treasury stock, 893,200 and 63,200 shares,
respectively (2,201,652) (34,030)
Other comprehensive income 58,030 54,230
Deferred compensation (20,000) (30,000)
Stock subscription receivable (25,000) -
Retained earnings 8,965,880 3,219,275
------------- ------------
Total Stockholders' Equity 129,354,782 15,736,227
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $131,580,478 $19,966,847
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
September 30, September 30,
---------------------------- -----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES, NET $ 43,105,537 $ 15,913,891 $ 13,927,215 $ 6,997,685
COST OF GOODS SOLD 26,153,428 11,442,600 8,087,137 5,702,647
------------- ------------- ------------- -------------
Gross Margin 16,952,109 4,471,291 5,840,078 1,295,038
------------- ------------- ------------- -------------
OPERATING EXPENSES
Depreciation and amortization expense 6,178,795 475,426 3,178,077 375,827
Bad debt expense 45,000 - 15,000 -
Consulting fees - related party - 70,060 - 18,420
General and administrative 4,964,180 2,125,613 1,365,558 590,686
------------- ------------- ------------- -------------
Total Operating Expenses 11,187,975 2,671,099 4,558,635 984,933
------------- ------------- ------------- -------------
Income from Operations 5,764,134 1,800,192 1,281,443 310,105
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Gain (loss) on equity investment (37,017) (31,990) (12,339) (30,230)
Unrealized gain on marketable securities 2,942,641 83,254 (385,698) 83,254
Realized gain on marketable securities - 423,260 - 23,417
Rental income - 78,277 - 6,856
Interest and dividend income 215,579 57,543 44,874 28,547
------------- ------------- ------------- -------------
Total Other Income (Expense) 3,121,203 610,344 (353,163) 111,844
------------- ------------- ------------- -------------
MINORITY INTEREST (144,000) - (144,000) -
------------- ------------- ------------- -------------
INCOME BEFORE DISCONTINUED
OPERATIONS AND INCOME TAXES 8,741,337 2,410,536 784,280 421,949
DISCONTINUED OPERATIONS (531,656) 711,154 - 755,090
GAIN ON DISCONTINUED OPERATIONS 1,311,994 - 1,311,994 -
INCOME TAXES 3,775,070 1,283,175 624,619 387,151
------------- ------------- ------------- -------------
NET INCOME 5,746,605 1,838,515 1,471,655 789,888
------------- ------------- ------------- -------------
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment 3,800 11,302 328 7,534
------------- ------------- ------------- -------------
NET COMPREHENSIVE INCOME $ 5,750,405 $ 1,849,817 $ 1,471,983 $ 797,422
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
September 30, September 30,
---------------------------- -----------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 28,720,809 21,675,834 31,624,570 22,055,000
============= ============= ============= =============
Continuing $ 0.17 $ 0.05 $ 0.01 $ 0.01
Discontinued 0.03 0.03 0.04 0.03
------------- ------------- ------------- -------------
BASIC INCOME PER SHARE $ 0.20 $ 0.08 $ 0.05 $ 0.04
============= ============= ============= =============
FULLY DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 28,770,809 26,750,834 31,674,570 27,130,000
============= ============= ============= =============
Continuing $ 0.17 $ 0.04 $ 0.01 $ 0.00
Discontinued 0.03 0.03 0.04 0.03
------------- ------------- ------------- -------------
FULLY DILUTED INCOME PER SHARE $ 0.20 $ 0.07 $ 0.05 $ 0.03
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Other
Common Stock Additional Compre- Deferred Stock
---------------- Paid-in Treasury hensive Compen- Subscription Retained
Shares Amount Capital Stock Income sation Receivable Earnings Total
---------- -------- ---------- --------- ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 20,930,000 $20,930 $8,923,394 $(70,000) $38,794 $(40,000) $ - $(2,744,964) $6,128,154
Purchase of
ASIA4Sale.com, Ltd. 100,000 100 249,900 - - - - - 250,000
Purchase of
Online Investors
Advantage, Inc. 1,150,000 1,150 2,873,850 - - - - - 2,875,000
Exercise of stock
option at $2.00
per share 25,000 25 49,975 - - - - - 50,000
Amortization of
deferred compensation - - - - - 10,000 - - 10,000
Proceeds from the
sale of the Company's
common stock by a
Subsidiary - - 407,428 35,970 - - - - 443,398
Adjustment for
forward stock split 18 - - - - - - - -
Currency translation
adjustment - - - - 15,436 - - - 15,436
Net income for
the year ended
December 31, 1999 - - - - - - - 5,964,239 5,964,239
---------- -------- ----------- --------- ---------- --------- ------------ ---------- ---------
Balance,
December 31, 1999 22,205,018 22,205 12,504,547 (34,030) 54,230 (30,000) - 3,219,275 15,736,227
---------- -------- ----------- --------- ---------- --------- ------------ ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Other
Common Stock Additional Compre- Deferred Stock
---------------- Paid-in Treasury hensive Compen- Subscription Retained
Shares Amount Capital Stock Income sation Receivable Earnings Total
---------- -------- ---------- --------- ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 22,205,018 22,205 12,504,547 (34,030) 54,230 (30,000) - 3,219,275 15,736,227
Purchase of
Online Investors
Advantage Inc. 9,820,152 9,820 105,575,952 - - - - - 105,585,772
Purchase of Asia
Internet and Asia
Prepress 250,000 250 1,499,750 - - - - - 1,500,000
Purchase of Seminar
Marketing Group
and Memory Improvement
Systems, Inc. 770,000 770 1,924,230 - - - - - 1,925,000
Sale of Momentum
Internet, Inc. - - - (1,812,500) - - - - (1,812,500)
Repurchase of
Company shares
through the market - - - (355,122) - - - - (355,122)
Common Stock issued
for services 30,000 30 299,970 - - - - - 300,000
Stock option exercised 25,000 25 49,975 - - - (25,000) - 25,000
Amortization and
deferred compensation - - - - - 10,000 - - 10,000
Common stock issued
for related party
payable 103,500 104 689,896 - - - - - 690,000
Currency translation
adjustment - - - - 3,800 - - - 3,800
Net income for the
nine months ended
September 30, 2000 - - - - - - - 5,746,605 5,746,605
---------- -------- ----------- ------------ --------- --------- ----------- ---------- ------------
Balance,
September 30, 2000 33,203,670 $ 33,204 $122,544,320 $(2,201,652) $ 58,030 $(20,000) $ (25,000) $8,965,880 $129,354,782
========== ======== ============ ============ ========= ========= =========== ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-----------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,746,605 $ 1,838,515
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 6,188,795 484,051
Bad debt expense 45,000 125,000
Loss on equity investment 37,017 31,990
Unrealized gain on marketable securities (2,854,641) (83,254)
Gain on sale of subsidiary (1,311,994) -
Realized gain on marketable securities - (423,260)
Currency translation adjustment 3,800 (11,302)
Common stock issued for services 300,000 -
Minority interest (144,000) -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 56,717 (321,657)
(Increase) decrease in inventory 1,072 34,322
(Increase) decrease in prepaids (1,144,396) (117,940)
Purchase of marketable securities (1,128,976) -
(Increase) decrease other assets 402,985 -
Increase (decrease) in accounts payable and
accrued expenses 91,758 340,995
Increase (decrease) in taxes payable (1,963,800) 749,150
Increase (decrease) in deferred income (57,600) -
(Increase) decrease in receivable - related party receivable (730,095) 734,265
------------- -------------
Net Cash Provided by (Used In) Operating Activities 3,538,247 3,380,875
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of marketable securities - 1,302,070
Purchase of marketable securities - (424,189)
Purchase of equity investment (2,500,000) -
Purchases of property and equipment (208,311) (352,791)
Purchase of consolidated subsidiaries (6,069,040) -
------------- -------------
Net Cash Provided by (Used in) Investing Activities (8,777,351) 525,090
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-----------------------------
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock $ (355,122) $ -
Sale of the Company's common stock by a subsidiary - 453,517
Proceeds from borrowings - related parties 6,000,000 -
Cash acquired in purchase of subsidiaries - 200,455
Proceeds from exercise of stock options 25,000 50,000
Repayment to related party (6,000,000) -
------------- -------------
Net Cash Provided by (Used by) Financing Activities (330,122) 703,972
------------- -------------
NET INCREASE (DECREASE) IN CASH (5,569,226) 4,609,937
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,652,505 517,781
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,083,279 $ 5,127,718
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest $ - $ -
Income taxes $ 5,738,870 $ 861,882
Schedule of Non-Cash Financing Activities:
Purchase of subsidiaries for common stock $109,010,772 $ 2,750,000
Issuance of common stock for related party payable $ 690,000 $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
(Formerly BestWay U.S.A., Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 2000 and
1999 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December
31, 1999 audited consolidated financial statements. The results
of operations for periods ended September 30, 2000 and 1999 are
not necessarily indicative of the operating results for the full
years.
NOTE 2 - MATERIAL EVENTS
On April 21, 2000, in conjunction with the appointment of Allen
D. Hardman as the President and CEO of the Corporation, Mr.
Hardman received an increase in his annual salary to $200,000.
Additionally, Mr. Hardman was granted an option to purchase an
additional 50,000 shares of common stock of the Corporation
pursuant to the terms of the corporation's 1999 Stock Option
Plan.
The exercise price shall be the closing price as of July 1, 2000,
with such grants effective July 1, 2000; said options shall vest
and be exercisable immediately and exercisable with regard to the
remaining 50% of said shares as of May 1, 2002; and said options
shall be exercisable for a period of seven (7) years from the
date of the grant (i.e. until June 30, 2007).
On July 3, 2000, pursuant the terms of the Non-Qualified Stock
Option Agreement of Allen D. Hardman, Mr. Hardman has exercised
the third years vested options to purchase 25,000 shares of
common stock at the price of two dollars ($2.00) per share.
At the special meeting of the directors, held in Salt Lake City,
Utah on April 21, 2000, the Company agreed that in the event that
the Company consummated the agreement between the Company and the
McKenna Group, that it would compensate Credico, Inc., a Nevada
corporation, owned and controlled by Bryant D. Cragun, a member
of the advisory board of ZiaSun and Hans Von Meiss, a director of
the Company, an aggregate of 100,000 shares, for their efforts
and services in locating, negotiating and assisting in the
consummation of this such agreement.
On July 3, 2000, the Company entered into a Venture Fund
Agreement with the McKenna Group and the Company issued a total
of 100,000 shares of common stock to Credico Inc., and Hans Von
Meiss, as previously agreed to.
The Company is authorized to utilize a portion of its cash
reserves, from time to time, to purchase in the open market, and
retire up to one million (1,000,000) shares of its common stock.
11
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
(Formerly BestWay U.S.A., Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 2 - MATERIAL EVENTS (Continued)
Sale of Momentum Internet, Inc. to Vulcan Consultants Limited
-------------------------------------------------------------
Momentum Internet, Inc., ("MII"), was a wholly-owned subsidiary
of ZiaSun, which was acquired on October 5, 1999, from Vulcan
Consultants Limited ("Vulcan"), in a stock-for-stock exchange.
The Company negotiated and reached an agreement with Vulcan
whereby Vulcan will acquire all of the issued and outstanding
shares of MII, consisting of one (1) ordinary share, held by the
Company, in consideration of 725,000 restricted shares of ZiaSun,
owned and held by Vulcan, conditioned upon among other things,
that concurrently with the closing of sale that (i) Anthony Tobin
execute any and all documents, agreements and resolutions which
required Mr. Tobin's signatures, (ii) that MII execute any and
all required documentation, including the Registrant Name Change
Agreement, to transfer all rights of ownership and interest in
the corporation's website "Ziasun.com" for which MII was acting
as the corporation's website master; and (iii) Swiftrade, a
subsidiary of MII, repay the $500,000 it borrowed from MAI, a
subsidiary of ZiaSun with $200,000 due and payable on closing and
the balance of $300,000 due and payable on or before September
30, 2000, with the payment of said $300,000 being secured by a
pledge of the preferred stock of West America Securities which is
owned by Swiftrade.
Acquisition of Seminar Market Group, Inc. and Memory Improvement
Systems, Inc.
-----------------------------------------------------------------
Seminar Market Group, Inc., and Memory Improvement Systems, Inc.,
Utah Corporations ("SMG") and ("MIS") are marketing groups
comprised of various marketing and promotional personnel,
consultants, and speakers who provide services to Online
Investors Advantage, Inc. ("Online"), a wholly-owned subsidiary
of the Company.
The board of directors of the Company has determined that it is
in the interest of the Company and its shareholders to acquire
SMG and MIS, wherein SMG and MIS will become wholly-owned
subsidiaries of the Company.
Accordingly, SMG and MIS were acquired in exchange for 770,000
restricted shares of the common stock of the Company valued at
$2.50 per share.
12
<PAGE>
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
(Formerly BestWay U.S.A., Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 3 - 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 related 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,
e-commerce through its Momentum Internet Inc., and Asia4sale, Ltd.
subsidiaries and online and offline investor education services
through its Online Investors Advantage, Inc. subsidiary.
Certain financial information concerning the Company's operations
in different industries is as follows:
<TABLE>
<CAPTION>
For the Online
Nine Months Investors
Ended Momentum Advantage, Asia Corporate
September 30, Asia, Inc. Inc. Prepress Unallocated Total
------------- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales 2000 $ 1,121,251 $ 41,295,207 $ 599,079 $ 140,000 $ 43,105,537
1999 1,345,166 14,568,725 - - 15,913,891
Operating income
(loss) applicable
to industry segment 2000 (165,581) 7,734,236 63,048 (1,867,569) 5,764,134
1999 34,993 2,908,893 - (1,143,694) 1,800,192
General corporate
expenses not
allocated to industry
segments 2000 - - - 1,867,569 1,867,569
1999 - - - 1,143,694 1,143,694
Other income
(expenses) including
interest and gain
on sale of securities 2000 3,117,838 197,175 186 (193,996) 3,121,203
1999 586,945 23,399 - - 610,344
Operating assets 2000 3,348,624 121,138,276 331,395 6,762,183 131,508,478
</TABLE>
The corporate unallocated column represents the costs incurred by
the parent company which are unrelated to the operations of the
subsidiaries. Such costs included administrative salaries,
professional services and gains on sales of subsidiary.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
September 30, 2000 and December 31, 1999
----------------------------------------
Changes in Financial Condition
------------------------------
On December 31, 1999 the Company sold Asia4sale to Internet Ventures, Ltd.
for $5,000,000 cash and 2,700,000 shares of Asia4Sale.com, Ltd. common stock. On
March 31, 1999 the Company also acquired Online Investors Advantage (OIA) for
restricted common stock of the Company and a $400,000 cash downpayment. This
acquisition was accounted for as a purchase. The acquisition of OIA continues to
make a substantial, positive contribution to the financial condition of the
Company. The balance of current assets at September 30, 2000 was $9,427,806
compared to a balance of $13,497,043 at December 31,1999. The balances of
current liabilities were $2,225,696 and $4,230,620 for the same periods
respectively. The resulting current ratio at September 30, 2000 is 4.4:1. The
current ratio at December 31, 1999 was 3.2:1.
The decrease of current assets at September 30, 2000 over December 31, 1999
is due primarily to the decrease of cash from $11,652,505 to $6,083,279, a
decrease of $5,569,226 or 48%. This decrease is due primarily to $6,000,000 of
additional cash due in the amended purchase of OIA offset by cash flow generated
from the operations of OIA and $2,500,000 invested in the McKenna Joint Venture.
(See further discussion of income below.) The decrease in current assets at
September 30, 2000 was also offset by an increase in prepaid expenses from
$131,772 at December 31, 1999 to $1,276,168 at September 30, 2000, an increase
of $1,144,396 or 869%. The prepaid expenses were primarily income taxes of
$1,114,711. Additionally, accounts receivable increased from $1,145,960 to
$1,476,996, an increase of $331,036 or 29%. The balance of accounts receivable
includes OIA's pre-approved seminar payments not yet charged to credit cards of
approximately $400,000 and the trade receivables of MAI. A substantial portion
of these receivables have been collected subsequent to September 30, 2000.
The balance of current liabilities at September 30, 2000 is $2,225,696 and
at December 31, 1999 is $4,230,620. The decrease of $2,004,924 or 47%, is due
primarily to a decrease in income taxes payable. During the nine months ended
September 30, 2000 the Company paid $6,000,000 which represents the amount owed
to certain shareholders of OIA, as of June 30, 2000, based on the Company's
amended purchase agreement with OIA whereby these shareholders would receive an
earn out, or increase in purchase price, based on OIA's profitability from the
period from June 30, 1999 to June 30, 2000. Additionally, these shareholder's
received 9,820,152 shares of the Company's stock pursuant to the earn out
provision. The earn out has increased the Company's goodwill by $111,585,772
which is being amortized over 10 years.
Accounts payable increased $706,476, or 51%, from $1,382,757 at December
31, 1999 to $2,089,233 at September 30, 2000. The increase is primarily due to
MKZ which had a balance of accounts payable of approximately $500,000 at
September 30, 2000.
Other assets increased $115,542,826, or 2036% from $5,674,585 at December
31, 1999 to $121,217,411 at September 30, 2000. The increase is due primarily to
the addition of $111,585,772 of goodwill, resulting from the earn out provision
of the acquisition agreement of OIA. (See explanation above.) 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 is amortized over the estimated
life of 10 years. The receivable from related party also increased for a
$300,000 loan made to an officer of a subsidiary and a $500,000 loan to a
brokerage firm related to Swiftrade. Marketable securities increased by
$3,800,000 for unrealized gains on the Asia4sale common stock. Equity
investments increased by $2,500,000, which was invested in the MKZ partnership.
At September 30, 2000 the Company has no long-term debt. The Company has
sufficient cash flow from operations 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 ways to invest its cash
flow in acquisitions of companies and other investments that will contribute in
a positive way to the Company's operating strategy.
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Results of Operations
---------------------
For the nine months ended September 30, 2000 and September 30, 1999
-------------------------------------------------------------------
The Company's operations for the nine months ended September 30, 1999
include Momentum Asia and OIA. The September 30, 2000 operations include
Momentum Asia, Asia Prepress, MKZ and OIA. The Company acquired OIA on March 31,
1999. This acquisition has had considerable impact on the results of operations
of the Company since that date.
Sales for the nine months ended September 30, 2000 were $43,105,537
compared to $15,913,891 for the same period in 1999, resulting in an increase of
$27,191,646, or 171%. Cost of goods sold for the nine months ended September 30,
2000 was $26,153,428, or 61% of sales, compared to $11,442,600, or 72% of sales,
for 1999. Gross profit was $16,952,109, or 39% of sales and $4,471,291, or 28%
of sales for the same periods respectively. The gross profit percentage
increased due to revenues from renewals of subscriptions for OIA services and
products.
Operating expenses include primarily depreciation and amortization expense
and general and administrative expenses. Depreciation and amortization expense
for the nine months ended September 30, 2000 includes depreciation of $184,856
and amortization of goodwill of $5,993,939. The Company recorded goodwill for
the October, 1998 acquisition of Momentum Asia, the March 31 1999 acquisition of
OIA and the May 2000 acquisition of Asia Prepress. General and administrative
expenses were $4,964,180 or 12% of sales, for the nine months ended September
30, 2000 and $2,125,613 or 13% of sales for the same period in 1999, resulting
in an increase of $2,838,567 or 134%. The increase is due to primarily to the
operating expenses of OIA which were not present in the first quarter 1999
numbers.
Other income increased from $610,344 in 1999 to $3,121,203 in 2000, an
increase of $2,510,859 or 411%. The increase is due primarily to the unrealized
gains of $3,800,000 the Company recognized on the 1,800,000 shares of
Asia4sale.com, Ltd. it is holding.
For the three months ended September 30, 2000 and September 30, 1999
--------------------------------------------------------------------
The Company's operations for the three months ended September 30, 1999
include Momentum Asia and OIA. The September 30, 2000 operations include
Momentum Asia, Asia Prepress and OIA.
Sales for the three months ended September 30, 2000 were $13,927,215
compared to $6,997,685 for the same period in 1999, resulting in an increase of
$6,929,530, or 99%. Cost of goods sold for the three months ended September 30,
2000 was $8,087,137, or 58% of sales, compared to $5,702,647, or 81% of sales,
for 1999. Gross profit was $5,840,078, or 42% of sales and $1,295,038, or 19% of
sales for the same periods respectively. The gross profit percentage increased
due to revenues from renewals of subscriptions for OIA's services and products.
Operating expenses include primarily depreciation and amortization expense
and general and administrative expenses. Depreciation and amortization expense
for the three months ended September 30, 2000 includes depreciation of $66,473
and amortization of goodwill of $3,111,604. General and administrative expenses
were $1,365,558 or 10% of sales, for the three months ended September 30, 2000
and $590,686 or 8% of sales for the same period in 1999.
Other income decreased from $111,844 in 1999 to $(353,163) in 2000, a
decrease of $465,007 or 416%. The decrease is due primarily to the unrealized
losses of $385,698 the Company recognized on its marketable securities.
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
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expected to continue, placing further pressure on pricing, which could impact
sales and erode profit margins; (ii) many of the Company's major competitors in
its channels of distribution have 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.
RISK FACTORS
------------
RISK OF PENNY STOCK. The Company's common stock may, at some 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) or more, excluding any broker
or dealer commissions, markups or markdowns. As of the date of this Report, the
Company's common stock has a price less than $5.00.
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. Certain of the Company's competitors have longer operating
histories and greater financial, technical, marketing and other resources than
the Company. In addition, certain 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. Certain 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 possibly 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 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
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that such 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 its
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
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 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 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 Allen D. Hardman, D. Scott Elder,
Ross W. Jardine, Calvin Cox, and Eric Montandon 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 an 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.
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.
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<PAGE>
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 somewhat limited experience in assimilating acquired
organizations into its operations. No assurance can be given as to the Company's
ability to successfully integrate any operations, personnel, services or
products that might be acquired in the future. Failure to successfully
assimilate acquired organizations could have an 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. However, 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 such new 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 is 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 after consideration of the above referenced
factors such a transaction may occur if management deems it to be in the best
interests of the Company and its stockholders. 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 receive more favorable
terms from a related party.
RISKS ASSOCIATED WITH SYSTEMS FAILURES. Many of the services and products
offered by the Company and its subsidiaries are through and over the 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 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 could suffer delays and dissatisfaction. The
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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, the Company 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 relies 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 the Company uses 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 has 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.
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. 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 in the future. In particular, the
Company intends to hire 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 could 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 strain 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 its 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 require review, which could
lead not only to unsatisfied customers.
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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 is expected to grow both in number of
users and amount of traffic. There is 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 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. I 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 may
be 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 require intensive
marketing and sales efforts to educate prospective customers regarding the
Internet's uses and benefits. Also, concerns about security and privacy on the
Internet may impact the growth of online investing research and trading, which
could have an adverse effect on the Company's business, financial condition and
operating results.
RISKS ASSOCIATED WITH INDUSTRY. CONCENTRATION OF SERVICES. Most of the
Company's revenues 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, is 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
its products and services and affect the Company's operating results. In October
1987 and October 1989, the stock market suffered major declines, as a result of
which many companies 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
companies such as the Company. 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 affected because the Company's overhead
remains relatively fixed. Severe market fluctuations in the future may have an
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 somewhat
better than the Company.
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 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 may be affected.
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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 on the Company's and its subsidiaries' name and product recognition.
Accordingly, the Company will primarily rely on copyright, trade secret and
trademark laws to protect its products, services and brand names offered, 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 potentially
impeding the Company's ability to build brand identity, and possibly leading to
customer confusion. The Company's inability to adequately protect its products,
brands, trade names and trademarks may have an 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 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, may result in additional costs
and diversion of resources, either of which could have an adverse effect on the
Company's business, financial condition and operating results.
RISKS ASSOCIATED WITH INFRINGEMENT. In the future, the Company may, receive
notices of claims of infringement on 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
an adverse effect on the Company's business, financial condition and operating
results.
RISKS ASSOCIATED WITH ENTERING NEW MARKETS. One element of its strategy is
to leverage the Company's brand names and services provided by the Company's
subsidiaries. However, no assurance can be given that the Company will be able
to successfully adapt the Subsidiaries' products and services for use in other
markets. Even if the Company does adapt the Subsidiaries' products and/or
services to other markets, no assurance can be given that the Company will be
able to compete successfully in any such new markets. Also, 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.
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RISKS ASSOCIATED WITH INTERNATIONAL STRATEGY. One component of the
Company's strategy is a 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 somewhat limited, but rapidly
increasing experience in providing investment services internationally. There
can be no assurance that the Company and/or the Company's subsidiaries will be
able to continually 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 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 its operations and goodwill is somewhat higher. There can be
no assurance that one or more of the factors described above will not have an
adverse effect on the Company's future international operations, if any, and,
consequently, on its 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.
23
<PAGE>
PART II
-------
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings.
ZIASUN TECHNOLOGIES, INC. V. FLOYD D. SCHNEIDER, ET AL. The company is 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 cyber smear
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 of 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, Western
District 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. On November 29,1999, defendant, Stephen Worthington who posts
under the name "Auric Goldfinger" filed a motion to dismiss on various grounds
including that Washington was improper venue. The Honorable Marcia Pechman
granted the Company's motion for preliminary injunction against Floyd Schneider
on January 21, 2000, restraining him from posting defamatory or untrue remarks
on the internet or elsewhere. On February 28, 2000, the Court granted the
defendant, Worthington's motion on the grounds of improper venue without ruling
on the defendant's other claims motions, and further ruled on the Court's own
initiative that venue was inappropriate for all defendants, dismissing the case.
The Company thereafter filed a motion for reconsideration of the dismissal
asking in the alternative that this case be transferred to another venue. The
Court granted The Company's motion for reconsideration on March 24, 2000,
reinstating the action and pending preliminary injunction, and subsequently, on
April 7, 2000, ordered that the entire action be transferred to the United
States District Court for the Northern District of California. The case was
physically retained in Washington for 30 days and then transferred to the United
States District Court for the Northern District of California, before the
Honorable Charles R. Breyer, on approximately May 5, 2000. The case has since
been transferred to Judge Phyllis J. Hamilton. This matter has been settled.
JOAKIMIDIS V. CRAGUN, ET AL. The company was a party cross-defendant in the
matter of George Joakimidis v. Bryant Cragun, et al., Superior Court of
California, County of San Diego, Case No. 730826. The Plaintiff alleges Unfair
Business Practices, Fraud and Breach of Contract against ZiaSun, alleging that
in October 1997 he invested in various corporations, including ZiaSun based on
representations of third parties other than ZiaSun. Plaintiff alleges that the
financial condition of these corporations were other than as represented to him,
that past officers and directors of these corporations made misrepresentations
during the course of attempting to settle their dispute, and that these
corporations breached the terms of the alleged settlement. The Plaintiff is
claiming damages of $45,000 and is also seeking punitive damages. The Company
believes that the allegations are without merit and will vigorously defend this
matter. The matter has been settled.
Settlement of Above Reference Litigation
----------------------------------------
On October 11, 2000, subsequent to the period covered by this report, the
Company entered into a Settlement Agreement in the above two matters. See
"Subsequent Events" below.
24
<PAGE>
Pending Litigation
------------------
ZIASUN TECHNOLOGIES, INC. V. FINANCIAL WEB.COM, INC., ET AL. The company
was a party Plaintiff in the matter of ZiaSun Technologies ,Inc. v. Financial
web.Com, Inc., et al., Circuit Court of Seminole County, Florida,
99-1136-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 proceeding entitled ZIASUN TECHNOLOGIES,
INC. V. FINANCIAL WEB.COM, INC., ET AL., 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.
There were no matters submitted for vote to the security holders during the
period covered by this report.
Item 5. Other Information.
Venture Fund Agreement With The McKenna Group.
---------------------------------------------
On July 3, 2000, subsequent to the period covered by this report, the
Company entered into a Venture Fund Agreement with The McKenna Group of Palo
Alto, California under which the Company and the McKenna Group through a newly
formed company would pool their resources, expertise and capital to create a
venture fund known as McKenna-ZiaSun ("MKZ") to perform and support incubation
activities of emerging technology companies. According to the terms of the
Venture Fund Agreement, ZiaSun will contribute a total of $15,000,000 over a
period of time, representing 100% of the funding for the venture fund. The
McKenna Group will provide the management, technical knowhow, consulting and
financial analysis services for the Venture Fund.
Resignation of Dennis McGrory.
-----------------------------
On July 12, 2000, Dennis McGrory resigned as the Corporate Secretary of the
Company. Mr. Allen D. Hardman was appointed as Secretary of the Corporation on
September 27, 2000.
Amendment to Allen D. Hardman Employment Agreement.
--------------------------------------------------
On August 2, 2000, the Company entered into an Amended and Restated
Employment Agreement and Stock Option with Allen D. Hardman. On April 21, 2000,
in conjunction with the appointment of Allen D. Hardman as the President and CEO
of the Company, Mr. Hardman received an increase in his annual salary to
$200,000. Additionally, Mr. Hardman was granted an option to purchase an
additional 50,000 shares of common stock of the Company pursuant to the terms of
the Company's 1999 Stock Option Plan, with the exercise price of said options
being the closing price as of the date of execution of the Amended and Restated
Employment Agreement. The option shall vest and be exercisable immediately with
regard to 50% of said option shares, and exercisable with regard to the
remaining 50% of said shares as of May 1, 2002. The options shall be exercisable
for a period of seven (7) years from the date of the grant.
25
<PAGE>
Sale of Momentum Internet, Inc. to Vulcan Consultants.
------------------------------------------------------
On August 2, 2000, the board approved the sale by the Company of all shares
of its subsidiary, Momentum Internet, Inc., to Vulcan Consultants Limited. The
Company acquired Momentum Internet on October 5, 1998, from Vulcan Consultants
Limited in a stock-for-stock exchange. The board of directors of the Company
determined that Momentum Internet has not met the expectations of the Company in
its growth and generation of revenues and has determined that it is in the best
interest of the Company and its shareholders to sell Momentum Internet back to
Vulcan whereby Vulcan would own Momentum Internet outright, including all its
subsidiaries, websites, business interest, contracts and liabilities associated
with Momentum Internet.
The closing of the sale of Momentum Internet to Vulcan occurred on
September 13, 2000, whereby Vulcan acquired all of the issued and outstanding
shares of Momentum Internet held by the Company, in consideration of 725,000
restricted shares of ZiaSun, owned and held by Vulcan, which shares have been
canceled. In addition, Swiftrade, a subsidiary of Momentum Internet will repay
the $500,000 it borrowed from Momentum Asia, Inc., a subsidiary of the Company,
with $200,000 paid on closing and the balance of $300,000 due and payable on or
before September 30, 2000.
As of September 30, 2000, and the date of this report, Swiftrade has failed
to make the payment of $300,000 and Swiftrade is now in default of the loan and
security agreement.
Amendment to By-laws of the Corporation.
----------------------------------------
On September 27, 2000, the Board of Directors of the Corporation by Written
Unanimous Consent, pursuant to Section 78.120 of the Nevada Revised Status and
Article X, Section 10.01 of the Amended and Restated By-laws of the Corporation,
amended Article IV., of the Bylaws to expand and clarify the titles and roles of
the executive officers of the Corporation. A copy of the By-laws as amended are
attached as Exhibit 3.3, hereto and incorporated herein by this referenced.
Change of the Executive Officers of the Company.
-----------------------------------------------
On September 27, 2000, in conjunction with the amendment to Article IV., of
the bylaws, as stated above, the Board of directors restructured the composition
of its executive officers and their roles, wherein the following persons were
appointed to serve until the next annual meeting of the directors or until their
successors have been duly elected and qualified:
D. Scott Elder................. Chairman of the Board
D. Scott Elder................. Chief Executive Officer
Allen D. Hardman............... President
Allen D. Hardman............... Chief Operating Officer
Ross W. Jardine................ Executive Vice President
Ross W. Jardine................ Chief Financial Officer
Allen D. Hardman .............. Secretary
RECENT SALE OF SECURITIES.
-------------------------
Seminar Marketing Group, Inc.
----------------------------
On September 29, 2000, the Company acquired all of the outstanding stock of
Seminar Marketing Group, Inc., ("SMG"), a Utah corporation. Pursuant to the
terms of the acquisition agreement, the Company, issued an aggregate of 370,000
restricted shares of Common Stock to stockholders of SMG in exchange for such
stock. The shares of Common Stock were issued and sold to the stockholders of
SMG in reliance on Section 4(2) of the Securities Act of 1933, as amended, as a
sale by the Company not involving a public offering. No underwriters were
involved with the issuance and sale of the shares of Common Stock.
The ZiaSun Shares are subject to "piggyback registration rights" under
which ZiaSun has agreed, that if ZiaSun determined to register any of its
securities, for its own account or the account of any of its shareholders, other
than a registration on S-8 relating solely to employee stock option or purchase
plans, or a registration on Form S-4 relating solely to an SEC Rule 145
transaction, ZiaSun would include in such registration the shares issued to the
SMG shareholders, subject to certain limitations as set forth in the
Registration Rights Agreement.
26
<PAGE>
SUBSEQUENT EVENTS
-----------------
Change of Independent Accountants.
---------------------------------
(a) Previous Independent Accountants
(i) On October 3, 2000, the Company dismissed HJ & Associates, LLC as
its independent public accountants.
(ii) Neither of the reports of HJ & Associates, LLC on the financial
statements for the past two years contained an adverse opinion or
disclaimer of opinion or were qualified or modified as to uncertainty,
audit scope or accounting principles.
(iii) The dismissal of HJ & Associates, LLC, was recommended and
approved by the Audit Committee of the Board of Directors of the Company.
(iv) During the past fiscal year and through September 30, 2000, there
were no disagreements with HJ on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure
which disagreements, if not resolved to the satisfaction of HJ, would have
caused HJ to make reference to the subject matter of the disagreement(s) in
their reports on the consolidated financial statements for such years.
(v) During the Company's two most recent fiscal years and through the
period from December 31, 1999 to September 30, 2000, there have been no
reportable events (as defined in Regulation S-K Item 304(a)(1)(v)).
(vi) The Company provided HJ & Associates with a copy of the
disclosure it made in response to Item 304 (a) of Regulation S-K, in its
Current Report on Form 8-K filed October 10, 2000. The Company requested HJ
& Associates, LLC, to furnish, and HJ & Associates, LLC, furnished to, the
Company a letter addressed to the Commission stating that it agreed with
the statements made by the Company.
(b) Newly Engaged Independent Accountants
(i) On October 3, 2000, the Company engaged BDO Seidman, LLP, as its
new independent accountant. Through September 30, 2000, neither the Company
nor anyone on its behalf consulted BDO Seidman, LLP regarding (i) the
application of accounting principles to any transaction, either completed
or proposed, or (ii) the type of audit opinion that might be rendered by
BDO Seidman, LLP on the Company's financial statements.
Memory Improvement Systems, Inc.
-------------------------------
On October 16, 2000, the Company acquired all of the outstanding stock of
Memory Improvement Systems, Inc., ("MIS"), a Utah corporation. Pursuant to the
terms of the acquisition agreement, the Company issued an aggregate of 400,000
restricted shares of Common Stock to stockholders of MIS in exchange for such
stock. The shares of Common Stock were issued and sold to the stockholders of
MIS in reliance on Section 4(2) of the Securities Act of 1933, as amended, as a
sale by the Company not involving a public offering. No underwriters were
involved with the issuance and sale of the shares of Common Stock.
The ZiaSun Shares are subject to "piggyback registration rights" under
which ZiaSun has agreed, that if ZiaSun determined to register any of its
securities, for its own account or the account of any of its shareholders, other
than a registration on S-8 relating solely to employee stock option or purchase
plans, or a registration on Form S-4 relating solely to an SEC Rule 145
transaction, ZiaSun would include in such registration the shares issued to the
MIS shareholders, subject to certain limitations as set forth in the
Registration Rights Agreement.
27
<PAGE>
Settlement of Pending Litigation.
--------------------------------
On October 11, 2000, subsequent to the period covered by this report, the
Company entered into a Settlement Agreement in the above two matters under which
the defendants agreed to refrain from publishing to any third party, directly,
indirectly, or through any third party intermediary, any statement, opinion or
other communication about, the Company, and others, including any person
defendants know or reasonably should know is an employee, agent, attorney,
accountant, heir, successor, assign, or representative of the Company. The
defendants also agreed to cease all postings on any Internet bulletin boards
related to any of the companies or individuals protected under the settlement
agreement. The defendants also agreed to waive any First Amendment protection to
make such statements, to the extent the First Amendment protects them, and to
submit to jurisdiction of both the Federal and state courts to enforce the
restraint provisions including by injunctive relief. To accommodate the
settlement, the Company and other plaintiffs similarly agreed not to post such
statements about the defendants, although the plaintiffs had not engaged in such
conduct and none of the defendants had accused them of doing so. Under the
settlement agreement, both cases will be dismissed as to the settling defendants
and all parties will bear their own attorneys' fees and expenses.
28
<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.
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 on September 16, 1999;
Commission File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
2.5(+) Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and the shareholders of Seminar Market Group,
Inc. (Incorporated by reference from the Registrant's Current
Report on Form 8-K filed on October 3, 2000).
2.6(+) Acquisition Agreement and Plan of Reorganization between ZiaSun
Technologies, Inc. and the shareholders of Memory Improvement
Systems, Inc., dated September 26, 2000. (Incorporated by
reference from the Registrant's Current Report on Form 8-K filed
on October 18, 2000).
3.1(a)(+) Original Articles of Incorporation (Incorporated by reference
from the Registrant's Registration Statement on Form 10-SB filed
on September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999; Commission File No.
000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
3.2(+) Amended and Restated By-laws. (Incorporated by reference from the
Registrant's Registration Statement on Form 10-SB filed on
September 16, 1999; Commission File No. 000-27349).
29
<PAGE>
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 on September 16, 1999; Commission File No.
000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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
on September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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
on September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
30
<PAGE>
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 on
September 16, 1999; Commission File No. 000-27349).
10.16(+) Reuters Service Contract with Momentum Internet Inc.
(Incorporated by reference from the Registrant's Registration
Statement on Form 10-SB filed on September 16, 1999; Commission
File No. 000-27349).
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
on September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999; Commission File No.
000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission File No.
000-27349).
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 on September 16, 1999; Commission File No.
000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on September 16, 1999; Commission
File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
10.26(+) LeaseAgreement 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
on September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999; Commission File No.
000-27349).
31
<PAGE>
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
on September 16, 1999; Commission File No. 000-27349).
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
on September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
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 on September 16, 1999;
Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
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 on
September 16, 1999; Commission File No. 000-27349).
10.36(+) ZiaSun Technologies, Inc. - 1999 Stock Option Plan, as amended.
(Incorporated by reference from the Registrant's Registration
Statement on Form S-8 filed on June 14, 2000; Commission File No.
333-37754).
10.37(+) Consulting Agreement dated January 1, 2000, between the Company
and Netgenesis Strategic Internet Marketing, Ltd. (Incorporated
by reference from the Registrant's Annual Report on Form 10-KSB,
as amended, filed on May 12, 2000).
10.38(+) Client Service Agreement dated January 14, 2000, between the
Company and Continental Capital & Equity Corporation.
(Incorporated by reference from the Registrant's Annual Report on
Form 10-KSB, as amended, filed on May 12, 2000).
10.39(+) Common Stock Purchase Warrant issued to Continental Capital &
Equity Corporation. (Incorporated by reference from the
Registrant's Annual Report on Form 10-KSB, as amended, filed on
May 12, 2000).
10.40(+) Registration Rights Agreement between the Company and Continental
Capital & Equity Corporation. (Incorporated by reference from the
Registrant's Annual Report on Form 10-KSB, as amended, filed on
May 12, 2000).
10.41(+) Consulting Agreement dated January 1, 2000, between the Company
and Credico Inc. (Incorporated by reference from the Registrant's
Quarterly Report on Form 10-QSB, filed on May 22, 2000).
32
<PAGE>
10.42(+) Business Agreement dated April 20, 2000, between the Company and
The McKenna Group. (Incorporated by reference from the
Registrant's Quarterly Report on Form 10-QSB, filed on May 22,
2000).
10.43(+) Sale and Purchase Agreement dated March 13, 2000, between the
Company and Paradym Enterprises Limited. (Incorporated by
reference from the Registrant's Quarterly Report on Form 10-QSB,
filed on May 22, 2000).
10.44(+) Shareholders' Agreement between Momentum Internet, Inc., Bensley
Ltd., and Paradym Enterprises Limited dated March 13, 2000.
(Incorporated by reference from the Registrant's Quarterly Report
on Form 10-QSB, filed on May 22, 2000).
10.45(+) Merger Agreement and Plan of Reorganization dated May 22, 2000,
between the Company and Asia Prepress Technology, Inc.
(Incorporated by reference from the Registrant's Current Report
on Form 8-K filed on June 8, 2000).
10.46(+) Merger Agreement and Plan of Reorganization dated May 22, 2000,
between the Company and Asia Internet Services.com, Inc.
(Incorporated by reference from the Registrant's Current Report
on Form 8-K filed on June 8, 2000).
10.47(+) Amendment to Agreement between the Company and the OIA
Shareholders dated May 31, 2000. (Incorporated by reference from
the Registrant's Quarterly Report on Form 10-Q filed on August
17, 2000).
10.48(+) Venture Fund Agreement between the Company and The McKenna Group
dated July 3, 2000. (Incorporated by reference from the
Registrant's Quarterly Report on Form 10-Q filed on August 17,
2000).
10.49(+) Amended and Restated Employment Agreement and Stock Option of
Allen D. Hardman dated August 2, 2000. (Incorporated by reference
from the Registrant's Quarterly Report on Form 10-Q filed on
August 17, 2000).
99.1(+) Press Release regarding settlement of certain litigation.
(Incorporated by reference from the Registrant's Current Report
on Form 8-K filed on October 27, 2000).
27.(+) Financial Data Schedule (submitted electronically for SEC
information only).
(+) Previously filed.
(++) Filed herewith.
(b) Reports on Form 8-K.
On July 21, 2000, the Company filed a Form 8-K with regard to the
Acquisition of Asia Prepress Technologies, Inc., a Maryland corporation.
On September 14, 2000, the Company filed a Form 8-K with regard to the sale
by the Company of its subsidiary, Momentum Internet, Inc.
There were no other reports on Form 8-K filed during the period covered by
this report.
33
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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: November 20, 2000 /S/ Allen D. Hardman
------------------------------
By: Allen D. Hardman
Its: President & COO
34
