SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: June 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 June 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 31 pages, the Exhibit Index is located at page 27.
<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 June 30, 2000, and the results of its operations and changes in
its financial position from inception through June 30, 2000, have been made. The
results of operations for such interim period is not necessarily indicative of
the results to be expected for the entire year.
ZIASUN TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
June 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
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
2000 1999
------------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,312,769 $ 11,652,505
Trade receivables, net 1,423,160 1,145,960
Interest receivable 16,750 8,333
Inventory 16,923 18,239
Marketable securities 836,157 540,234
Prepaid expenses 535,206 131,772
------------------- -----------------
Total Current Assets 12,140,965 13,497,043
------------------- -----------------
EQUIPMENT
Printing equipment 293,193 289,443
Machinery and equipment 711,553 393,091
Office equipment 299,025 153,734
Vehicles 65,773 17,163
Leasehold improvements 261,830 138,841
Less: accumulated depreciation (587,367) (197,053)
------------------- -----------------
Total Equipment 1,044,007 795,219
------------------- -----------------
OTHER ASSETS
Marketable securities 3,966,413 -
Equity investment 729,517 254,195
Goodwill - net 115,405,314 4,667,623
Receivables - related parties 879,447 88,679
Other assets 260,735 664,088
------------------- -----------------
Total Other Assets 121,241,426 5,674,585
------------------- -----------------
TOTAL ASSETS $ 134,426,398 $ 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)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
2000 1999
------------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,595,542 $ 1,382,757
Related party payable 300,000 690,000
Taxes payable 3,030,733 2,083,763
Deferred income 20,300 74,100
Line of credit 158,988 -
------------------- -----------------
Total Current Liabilities 5,105,563 4,230,620
------------------- -----------------
Total Liabilities 5,105,563 4,230,620
------------------- -----------------
MINORITY INTEREST 1,195,414 -
------------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of $0.001
par value, 32,433,670 and 22,205,018 shares issued
and outstanding, respectively 32,434 22,205
Additional paid-in capital 120,620,090 12,504,547
Treasury stock, 63,200 shares (34,030) (34,030)
Other comprehensive income 57,702 54,230
Deferred compensation (20,000) (30,000)
Stock subscription receivable (25,000) -
Retained earnings 7,494,225 3,219,275
------------------ -----------------
Total Stockholders' Equity 128,125,421 15,736,227
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 134,426,398 $ 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 Six Months Ended For the Three Months Ended
June 30, June 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES, NET $29,178,322 $ 8,916,206 $15,063,131 $ 8,570,320
COST OF GOODS SOLD 18,066,291 5,739,953 10,602,377 5,382,530
------------ ------------ ------------ ------------
Gross Margin 11,112,031 3,176,253 4,460,754 3,187,790
------------ ------------ ------------ ------------
OPERATING EXPENSES
Depreciation and amortization expense 3,000,718 99,599 2,912,358 49,800
Bad debt expense 30,000 - 22,790 -
Consulting fees - related party - 111,640 - 81,640
General and administrative 3,598,622 1,474,927 1,371,368 1,423,197
------------ ------------ ------------ ------------
Total Operating Expenses 6,629,340 1,686,166 4,306,516 1,554,637
------------ ------------ ------------ ------------
Gain (Loss) from Operations 4,482,691 1,490,087 154,238 1,633,153
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Gain (loss) on equity investment (24,678) (1,760) (12,339) -
Unrealized gain on marketable securities 3,328,339 - 3,282,859 -
Realized gain on marketable securities - 399,843 - 427,726
Rental income - 71,421 - 10,521
Interest and dividend income 170,705 28,996 76,316 26,793
------------ ------------ ------------ ------------
Total Other Income (Expense) 3,474,366 498,500 3,346,836 465,040
------------ ------------ ------------ ------------
MINORITY INTEREST - - - -
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 7,957,057 1,988,587 3,501,074 2,098,193
INCOME TAXES 3,150,451 896,024 938,399 895,150
------------ ------------ ------------ ------------
INCOME BEFORE DISCONTINUED 4,806,606 1,092,563 2,562,675 1,203,043
OPERATIONS ------------ ------------ ------------ ------------
DISCONTINUED OPERATIONS (531,656) (43,936) (320,123) (63,680)
NET INCOME 4,274,950 1,048,627 2,242,522 1,139,363
------------ ------------ ------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment 3,472 3,768 2,426 3,768
------------ ------------ ------------ ------------
NET COMPREHENSIVE INCOME $ 4,278,422 $ 1,052,395 $ 2,244,978 $ 1,143,131
============ ============ ============ ============
</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 Six Months Ended For the Three Months Ended
June 30, June 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 27,268,927 21,565,417 32,308,670 22,200,833
============ ============ ============ ============
Continuing $ 0.18 $ 0.05 $ 0.08 $ 0.05
Discontinued (0.02) (0.00) (0.01) (0.00)
------------ ------------ ------------ ------------
BASIC INCOME PER SHARE $ 0.16 $ 0.05 $ 0.07 $ 0.05
============ ============ ============ ============
FULLY DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 27,318,927 25,488,334 32,358,670 26,227,250
============ ============ ============ ============
Continuing $ 0.18 $ 0.04 $ 0.08 $ 0.04
Discontinued (0.02) (0.00) (0.01) (0.00)
------------ ------------ ------------ ------------
FULLY DILUTED INCOME PER SHARE $ 0.16 $ 0.04 $ 0.07 $ 0.04
============ ============ ============ ============
</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
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 - - - - 3,472 - - - 3,472
Net income for the
six months ended
June 30, 2000 - - - - - - - 4,274,950 4,274,950
---------- -------- ----------- --------- ---------- --------- ------------ ---------- ---------
Balance,
June 30, 2000 32,433,670 $32,434 $120,620,090 $(34,030) $ 57,702 $(20,000) $ (25,000) $7,494,225 $128,125,421
========== ======== =========== ========= =========== ========= ============ =========== ===========
</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 Six Months Ended
June 30,
---------------------------
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 4,274,950 $ 1,048,627
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 3,218,674 317,481
Bad debt expense 37,790 100,000
Loss on equity investment 24,678 1,760
Unrealized gain on marketable securities (3,328,339) -
Currency translation adjustment 3,472 3,768
Common stock issued for services 300,000 -
Minority interest 9,991 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (323,407) 447,264
(Increase) decrease in inventory 1,316 27,104
(Increase) decrease in prepaids (403,434) (322,800)
Purchase of marketable securities (933,997) -
(Increase) decrease other assets 403,353 236,123
Increase (decrease) in accounts payable and
accrued expenses 212,785 77,025
Increase (decrease) in taxes payable 946,970 1,227,965
Increase (decrease) in deferred income (53,800) 56,710
(Increase) decrease in receivable - related party receivable (790,768) 734,265
------------ ------------
Net Cash Provided by (Used In) Operating Activities 3,600,234 3,955,292
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equity investment (500,000) -
Purchases of property and equipment (369,893) (360,197)
Purchase of consolidated subsidiaries (5,554,065) -
------------ ------------
Net Cash (Used in) Investing Activities (6,423,958) (360,197)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Line of credit 158,988 -
Sale of the Company's common stock by a subsidiary - 443,398
Proceeds from borrowings - related parties 6,000,000 690,000
Cash acquired in purchase of subsidiaries - 211,757
Proceeds from exercise of stock options 25,000 25,000
Repayment to related party (5,700,000) -
------------ ------------
Net Cash Provided by Financing Activities 483,988 1,370,155
------------ ------------
NET INCREASE (DECREASE) IN CASH (2,339,736) 4,965,250
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,652,505 517,781
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,312,769 $ 5,483,031
============ ============
</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 Six Months Ended
June 30,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest $ - $ -
Income taxes $ - $ -
Schedule of Non-Cash Financing Activities:
Purchase of subsidiaries for common stock $107,085,772 $ 3,125,000
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
June 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 June 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 June 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 1,2 000; 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, 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
June 30, 2000 and December 31, 1999
NOTE 2 - MATERIAL EVENTS (Continued)
Sale of Momentum Internet, Inc. to Vulcan Consultants Limited
-------------------------------------------------------------
Momentum Internet, Inc., ("MII"), is a wholly-owned subsidiary of
ZiaSun, which was acquired on October 5, 1999, from Vulcan Consultants
Limited ("Vulcan"), in a stock-for-stock exchange.
Vulcan has contacted the Company and expressed an interest in
acquiring all of the stock of MII from the Company whereby Vulcan
would own MII, including all of its subsidiaries, websites, business
interests, contracts and liabilities associated with MII.
The board of directors of the Company has determined that MII has not
met the expectations of the Company with regard to its growth and
generation of revenues and has determined that it is in the best
interest of the Company and its shareholders to sell MII back to
Vulcan.
Whereas, the Company has 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 $200,00 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.
-----------------------------------------
Seminar Market Group, Inc., a Utah Corporation ("SMG") is a marketing
group 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 wherein
SMG will become a wholly- owned subsidiary of the Company.
The shareholders of SMG have indicated that they are amiable to an
acquisition of SMG in exchange for 770,000 restricted shares of the
common stock, $0.001 par value per share of the Company, provided that
said shares be subject to piggy back registration rights.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
June 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 $400,000 cash. This acquisition was
accounted for as a purchase. The acquisition of OIA continues to make a
substantial, positive contribution to the financial condition of the Company.
The balance of current assets at June 30, 2000 was $12,140,965 compared to a
balance of $13,497,043 at December 31,1999. The balances of current liabilities
were $5,105,563 and $4,230,620 for the same periods respectively. The resulting
current ratio at June 30, 2000 is 2.4:1. The current ratio at December 31, 1999
was 3.2:1.
The decrease of current assets at June 30, 2000 over December 31, 1999 is
due primarily to the decrease of cash from $11,652,505 to $9,312,769 a decrease
of $2,339,736 or 20%. This decrease is due primarily to $5,700,000 of cash paid
in the purchase of OIA offset by cash flow generated from the operations of OIA.
(See further discussion of income below.) The decrease in current assets at June
30, 2000 was also offset by an increase in marketable securities from $540,234
at December 31, 1999 to $836,157 at June 30, 2000, an increase of $295,923, or
55%. The Company invested a portion of its cash in liquid equity investments.
Additionally, prepaid expenses increased from $131,772 to $535,206, an increase
of $403,434, or 306%. The increase in prepaid expenses is primarily due to
seminar related expenses of OIA. The balance of accounts receivable at June 30,
2000 was $1,423,160. The balance 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 balances has been collected
subsequent to June 30, 2000.
The balance of current liabilities at June 30, 2000 is $5,105,563 and at
December 31, 1999 is $4,230,620. The increase of $874,943 or 21%, is due
primarily to an increase in income taxes payable. During the three months ended
June 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 and will be
amortized over 10 years.
Current liabilities increased for the accrual of income taxes payable
from $2,083,763 at December 31, 1999 to $3,030,733 at June 30, 2000, an increase
of $946,970 or 45%, relating to the increased U.S. earnings of OIA. Momentum
Internet is a British Virgin Islands company, Momentum Asia is a Philippine
company. These companies are subject to income taxation of the respective
countries of their registration. OIA is a Utah corporation, and therefore
subject to United States income tax. Accounts payable increased $212,785, or
15%, from $1,382,757 at December 31, 1999 to $1,595,542 at June 30, 2000. The
increase is primarily due to OIA, which had a balance of accounts payable of
$1,298,658 at June 30, 2000.
Other assets increased $115,566,841, or 2,037% from $5,674,585 at December
31, 1999 to $121,241,426 at June 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
$500,000, which was invested in the MKZ partnership.
13
<PAGE>
At June 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.
Results of Operations
---------------------
For the six months ended June 30, 2000 and June 30, 1999
--------------------------------------------------------
The Company's operations for the six months ended June 30, 1999 include
Momentum Asia and OIA. The June 30, 2000 operations include Momentum Asia, Asia
Prepress and OIA. The Company acquired OIA on March 31, 1999. This acquisition
has had considerable impact on the operating income of the Company since that
date.
Sales for the six months ended June 30, 2000 were $29,178,322 compared to
$8,916,206 for the same period in 1999, resulting in an increase of $20,262,116,
or 227%. Cost of goods sold for the six months ended June 30, 2000 was
$18,066,291, or 62% of sales, compared to $5,739,953, or 64% of sales, for 1999.
Gross profit was $11,112,031, or 38% of sales and $3,176,253, or 36% of sales
for the same periods respectively.
Operating expenses include primarily depreciation and amortization expense
and general and administrative expenses. Depreciation and amortization expense
for the six months ended June 30, 2000 includes depreciation of $118,383 and
amortization of goodwill of $2,882,335. 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 $3,598,622 or 12% of sales, for the six months ended June 30, 2000
and $1,474,927 or 17% of sales for the same period in 1999, resulting in an
increase of $1,407,408 or 95%. 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 $498,500 in 1999 to $3,474,366 in 2000, an
increase of $2,975,866 or 597%. 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 June 30, 2000 and June 30, 1999
----------------------------------------------------------
The Company's operations for the three months ended June 30, 1999 include
Momentum Asia and OIA. The June 30, 2000 operations include Momentum Asia, Asia
Prepress and OIA.
Sales for the three months ended June 30, 2000 were $15,063,131 compared to
$8,570,320 for the same period in 1999, resulting in an increase of $6,492,811,
or 76%. Cost of goods sold for the three months ended June 30, 2000 was
$10,602,377, or 70% of sales, compared to $5,382,530, or 63% of sales, for 1999.
Gross profit was $4,460,754, or 24% of sales and $3,187,790, or 37% of sales for
the same periods respectively.
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Operating expenses include primarily depreciation and amortization expense
and general and administrative expenses. Depreciation and amortization expense
for the three months ended June 30, 2000 includes depreciation of $61,494 and
amortization of goodwill of $2,743,232. General and administrative expenses were
$1,371,368 or 9% of sales, for the three months ended June 30, 2000 and
$1,423,197 or 17% of sales for the same period in 1999.
Other income increased from $465,040 in 1999 to $3,346,836 in 2000, an
increase of $2,881,796 or 620%. 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, less unrealized losses on the balance of its
marketable securities of $517,141.
CAUTIONARY FORWARD - LOOKING STATEMENT
--------------------------------------
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, and in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive officer which
are not historical or current facts are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made. The following important factors, among others, in some cases
have affected and in the future could affect the Company's actual results and
could cause the Company's actual financial performance to differ materially from
that expressed in any forward-looking statement: (i) the extremely competitive
conditions that currently exist in the three dimensional software development
marketplace are expected to continue, placing further pressure on pricing which
could adversely impact sales and erode profit margins; (ii) many of the
Company's major competitors in its channels of distribution have significantly
greater financial resources than the Company; and (iii) the inability to carry
out marketing and sales plans would have a materially adverse impact on the
Company's projections. The foregoing list should not be construed as exhaustive
and the Company disclaims any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
YEAR 2000 INFORMATION
---------------------
IMPACT OF YEAR 2000. During 1999 the Company completed its remediation and
testing of its platform systems, management support, systems, and our internal
information technology and non-information technology systems. Because of those
planning and implementation efforts, the Company experienced no disruptions in
its information technology and non-information technology systems and those
systems have successfully responded to the Year 2000 date change. The Company
did not incur any significant expenses during 1999 in conjunction with
remediating its systems. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its products, internal systems, or
the products and services of third parties. The Company will continue to monitor
our mission critical computer applications and those of its suppliers and
vendors throughout the year 2000 to ensure any latent Year 2000 matters arising
are addressed promptly.
RISK FACTORS
------------
RISK OF PENNY STOCK. The Company's common stock may, at some future time,
be deemed to be "penny stock" as that term is defined in Rule 3a51-1 of the
Exchange Act of 1934. Penny stocks are stocks (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national exchange;
(iii) whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ-listed stocks must still meet requirement (i) above); or (iv) of an
issuer with net tangible assets less than US$2,000,000 (if the issuer has been
in continuous operation for at least three years) or US$5,000,000 (if in
continuous operation for less than three years), or with average annual revenues
of less than US$6,000,000 for the last three years.
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A principal exclusion from the definition of a penny stock is an equity
security that has a price of five dollars ($5.00) of more, excluding any broker
or dealer commissions, markups or markdowns. As of the date of this Registration
Statement the Company's common stock has a price in excess of $5.00 and would
not be deemed a penny stock.
If the Company's Common Stock were deemed a penny stock, section 15(g) and
Rule 3a51-1 of the Exchange Act of 1934 would require broker-dealers dealing in
the Company's Common Stock to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny
stock for the investor's account. Potential investors in the Company's common
stock are urged to obtain and read such disclosure carefully before purchasing
any shares that are deemed to be "penny stock."
Moreover, Rule 15g-9 of the Exchange Act of 1934 Commission requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Company's common stock to resell their shares to third parties or to
otherwise dispose of them.
COMPETITION. There are numerous corporations, firms and individuals which
are engaged in the type of business activities in which the Company is presently
engaged. Many of those entities are more experienced and possess substantially
greater financial, technical and personnel resources than the Company or its
subsidiaries. Many of the Company's competitors have longer operating histories
and significantly greater financial, technical, marketing and other resources
than the Company. In addition, many of the Company's competitors offer a wider
range of services and financial products than the Company, and thus may be able
to respond more quickly to new or changing opportunities, technologies and
customer requirements. Many of the Company's competitors also have greater name
recognition and larger customer bases that could be leveraged, thereby gaining
market share from the Company. Such competitors may conduct more extensive
promotional activities and offer better terms and lower prices to customers than
the Company can. Moreover, certain competitors have established cooperative
relationships among themselves or with third parties to enhance their services
and products. Accordingly, it is possible that new competitors or alliances
among existing competitors may significantly reduce the Company's market share.
General financial success within the securities industry over the past several
years has strengthened existing competitors. The Company believes that such
success will continue to attract new competitors to the industry, such as banks,
software development companies, insurance companies, providers of online
financial and information services and others, as such companies expand their
product lines. The current trend toward consolidation in the commercial banking
industry could further increase competition in all aspects of our business.
While the Company cannot predict the type and extent of competitive services
that commercial banks and other financial institutions ultimately may offer, or
whether legislative barriers will be modified, the Company may be adversely
affected by such competition or legislation. To the extent the Company's
competitors are able to attract and retain customers based on the convenience of
one-stop shopping, the Company's business or ability to grow could be adversely
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affected. In many instances, the Company is competing with such organizations
for the same customers. In addition, competition among financial services firms
exists for experienced technical and other personnel. There can be no assurance
that the Company will be able to compete effectively with current or future
competitors or that such competition will not have a material adverse effect on
the Company's business, financial condition and operating results. While the
Company hopes to be competitive with other similar companies, there can be no
assurance that such will be the case.
VOLATILE MARKET FOR COMMON STOCK. The Company's common stock is quoted on
the OTC Bulletin Board of the National Association of Securities Dealers, Inc.
(the "NASD") under the symbol "ZSUN." The market price of the Company's Common
Stock has been and is likely to continue to be highly volatile and subject to
wide fluctuations due to various factors, many of which may be beyond the
Company's control, including: quarterly variations in operating results;
announcements of technological innovations or new software, services or products
by the Company or its competitors; and changes in financial estimates and
recommendations by securities analysts. In addition, there have been large price
and volume fluctuations in the stock market which have affected the market
prices of securities of many technology and services companies, often unrelated
to the operating performance of such companies. These broad market fluctuations,
as well as general economic and political conditions, may adversely affect the
market price of the Company's common stock. In the past, volatility in the
market price of a company's securities has often led to securities class action
litigation. Such litigation could result in substantial costs and aversion of
the Company's attention and resources, which could have a material adverse
effect on the Company's business, financial condition and operating results.
DEPENDENCE ON KEY EMPLOYEES. Historically, the Company and its subsidiaries
have been heavily dependent on the ability of Allen D. Hardman, D. Scott Elder,
Ross W. Jardine, Anthony Tobin 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 a significant adverse effect on
the operations and prospects of the Company. There can be no assurance that it
will be able to employ qualified persons on acceptable terms to replace officers
that become unavailable.
DISCRETIONARY USE OF PROCEEDS. Because of management's broad discretion
with respect to the acquisition of assets, property or business, the Company may
be deemed to be a growth oriented company. Although management intends to apply
substantially all of the proceeds that it may receive through the issuance of
stock or debt to suitable acquisitions. such proceeds will not otherwise be
designated for any more specific purpose. The Company can provide no assurance
that any allocation of such proceeds will allow it to achieve its business
objectives.
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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RISKS ASSOCIATED WITH ACQUISITIONS, STRATEGIC RELATIONSHIPS. The Company
may acquire other companies or technologies in the future, and the Company
regularly evaluates such opportunities. Acquisitions entail numerous risks,
including: difficulties in the assimilation of acquired operations and products;
diversion of management's attention from other business concerns; amortization
of acquired intangible assets; and potential loss of key employees of acquired
companies. The Company has limited experience in assimilating acquired
organizations into our operations. No assurance can be given as to the Company's
ability to integrate successfully any operations, personnel, services or
products that might be acquired in the future. Failure to successfully
assimilate acquired organizations could have a material adverse effect on the
Company's business, financial condition and operating results. The Company has
established a number of strategic relationships with online and Internet service
providers and software and information service providers. There can be no
assurance that any such relationships will be maintained, or that if they are
maintained, they will be successful or profitable. Additionally, the Company may
not develop any new such relationships in the future. Due to the foregoing
factors, quarterly revenues and operating results are difficult to forecast. The
Company believes that period-to-period comparisons of the Company's operating
results will not necessarily be meaningful and you should not rely on them as
any indication of future performance. The Company's future quarterly operating
results may not consistently meet the expectations of securities analysts or
investors, which in turn may have an adverse effect on the market price of the
Company's Common Stock. Additionally, to the extent that the Company may acquire
a business in a highly risky industry, the Company will become subject to those
risks. Similarly, if the Company acquires a financially unstable business or a
business that is in the early stages of development, the Company will become
subject to the numerous risks to which such businesses are subject. Although
management intends to consider the risks inherent in any industry and business
in which it may become involved, there can be no assurance that it will
correctly assess such risks.
UNCERTAIN STRUCTURE OF FUTURE ACQUISITIONS. Management has had no
preliminary contact or discussions regarding, and there are no current plans,
proposals or arrangements to acquire any other specific assets, property or
business. Accordingly, it is unclear whether such any such acquisition would
take the form of an exchange of capital stock, a merger or an asset acquisition.
CONFLICTS OF INTEREST; RELATED PARTY TRANSACTIONS. Although the Company has
not identified any new potential acquisition targets and management does not
believe there is any "present potential" for such transactions, the possibility
exists that the Company may acquire or merge with a business or company in which
the Company's executive officers, directors, beneficial owners or their
affiliates may have an ownership interest. Although there is no formal bylaw,
stockholder resolution or agreement authorizing any such transaction, corporate
policy does not forbid it and such a transaction may occur if management deems
it to be in the best interests of the Company and its stockholders, after
consideration of the above referenced factors. A transaction of this nature
would present a conflict of interest to those parties with a managerial position
and/or an ownership interest in both the Company and the acquired entity, and
may compromise management's fiduciary duties to the Company's stockholders. An
independent appraisal of the acquired company may or may not be obtained in the
event a related party transaction is contemplated. Furthermore, because
management and/or beneficial owners of the Company's common stock may be
eligible for finder's fees or other compensation related to potential
acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. It is the Company's
intention that all future transactions be entered into on such terms as if
negotiated at arms length, unless the Company is able to received more favorable
terms from a related party.
RISKS ASSOCIATED WITH SYSTEMS FAILURES. Many of the services and products
offered by the Company and its subsidiaries are through and over Internet,
online service providers and touch-tone telephone. Thus, the Company depends
heavily on the integrity of the electronic systems supporting this activity,
including the Company's internal software programs and computer systems. The
Company's systems or any other systems of third parties whom the we utilize
could slow down significantly or fail for a variety of reasons including:
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undetected errors in the Company's internal software programs or computer
systems; the Company's inability to effectively resolve any errors in the
Company's internal software programs or computer systems once they are detected;
or heavy stress placed on the Company's system during certain peak hours of
usage of either the Company's own or its third party provider systems. If the
Company's systems or any other systems which the Company relies on slow down
significantly or fail even for a short time, the Company's customers would
suffer delays and dissatisfaction. The Company could experience future system
failures and degradations. The Company could experience a number of adverse
consequences as a result of these systems failures including the loss of
existing customers and the inability to attract or retain new customers. There
can be no assurance that the Company 's network structure or those of third
party service providers will operate appropriately in any of the following
events: subsystem, component or software failure; a power or telecommunications
failure; human error; an earthquake, fire or other natural disaster; or an act
of God or war. There can be no assurance that in any such event, we will be able
to prevent an extended systems failure. Any such systems failure that interrupts
the Company's operations could have a material adverse effect on the Company's
business, financial condition and operating results.
RISKS ASSOCIATED WITH ENCRYPTION TECHNOLOGY. A significant barrier to
online commerce is the secure transmission of confidential information over
public networks. The Company rely on encryption and authentication technology to
provide secure transmission of confidential information. There can be no
assurance that advances in computer and cryptography capabilities or other
developments will not result in a compromise of the encryption and
authentication technology we use to protect customer transaction data. If any
such compromise of the Company 's security were to occur, it could have a
material adverse effect on the Company's business, financial condition and
operating results.
RISKS ASSOCIATED WITH SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING
RESULTS. The Company expects to experience large fluctuations in future
quarterly operating results that may be caused by many factors, including the
following: the timing of introductions or enhancements to online investing
services and other products by the Company or its competitors; market acceptance
of online investing services and products; the pace of development of the market
for online commerce; changes in trading volume in securities markets; trends in
securities markets; domestic and international regulation of the brokerage
industry; changes in pricing policies by the Company or its competitors; changes
in strategy; the success of or costs associated with acquisitions, joint
ventures or other strategic relationships; changes in key personnel; seasonal
trends; the extent of international expansion; the mix of international and
domestic revenues; changes in the level of operating expenses to support
projected growth; and general economic conditions. The Company have also
experienced fluctuations in the average number of customer transactions per day.
Thus, the rate of growth in customer transactions at any given time is not
necessarily indicative of future transaction activity.
RISKS ASSOCIATED WITH MANAGEMENT OF A CHANGING BUSINESS. The company has
grown rapidly and the Company's business and operations have changed
substantially since the Company began offering online investing services and
products, and the Company expects this trend to continue. Such rapid change and
expansion places significant demands on the Company's administrative,
operational, financial and other resources. The Company expects operating
expenses and staffing levels to increase substantially in the future. In
particular, the Company intends to hire a significant number of additional
skilled personnel, including persons with experience in both the computer and
brokerage industries. Competition for such personnel is intense, and there can
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be no assurance that the Company will be able to find or keep additional
suitable senior managers or technical persons in the future. the Company also
expects to expend resources for future expansion of the Company's accounting and
internal information management systems and for a number of other new systems
and procedures. In addition, the Company expects that future expansion will
continue to challenge the Company's ability to successfully hire and retain
associates. If the Company's revenues do not keep up with operating expenses,
the Company's information management systems do not expand to meet increasing
demands, the Company fails to attract, assimilate and retain qualified
personnel, or the Company fails to manage the Company's expansion effectively,
there would be a material adverse effect on the Company's business, financial
condition and operating results. The rapid growth in the use of the Company's
services may strained the Company's ability to adequately expand
technologically. As the Company acquires new equipment and applications quickly,
the Company has less time and ability to test and validate hardware and
software, which could lead to performance problems. The Company also relies on a
number of third parties to process the Company's transactions, including online
and Internet service providers, back office processing organizations, service
providers and market-makers, all of which will need to expand the scope of the
operations they perform for us. Any backlog caused by a third party's inability
to expand sufficiently to meet the Company needs could have a material adverse
effect on our business, financial condition and operating results. As trading
volume increases, the Company may have difficulty hiring and training qualified
personnel at the necessary pace, and the shortage of licensed personnel could
cause a backlog in the processing of orders that need review, which could lead
to not only unsatisfied customers, but also to liability for orders that were
not executed on a timely basis.
RISKS ASSOCIATED WITH EARLY STAGE OF MARKET DEVELOPMENT; DEPENDENCE ON
ONLINE COMMERCE AND THE INTERNET. The market for online investing services,
particularly over the Internet, is at an early stage of development and is
rapidly evolving. Consequently, demand and market acceptance for recently
introduced services and products are subject to a high level of uncertainty. For
the Company, this uncertainty is compounded by the risks that consumers will not
adopt online commerce and that commerce on the Internet will not adequately
develop or flourish to permit the Company to succeed. Sales of many of the
Company's services and products will depend on consumers adopting the Internet
as a method of doing business. This may not occur because of inadequate
development of the necessary infrastructure, such as a reliable network
infrastructure, or complementary services and products such as high-speed modems
and communication lines. The Internet has grown and is expected to grow both in
number of users and amount of traffic. There can be no assurance that the
Internet infrastructure will continue to be able to support the demands placed
on it by this continued growth. In addition, the Internet could lose its
viability due to slow development or adoption of standards and protocols to
handle increased Internet activity, or due to increased governmental regulation.
Moreover, critical issues including security, reliability, cost, ease of use,
accessibility and quality of service remain unresolved and may negatively affect
the growth of Internet use or commerce on the Internet. Because use of the
Internet for commerce is new and evolving, there can be no assurance that the
Internet will prove to be a viable commercial marketplace. If these critical
issues are not resolved, if the necessary infrastructure is not developed, or if
the Internet does not become a viable commercial marketplace, the Company
business, financial condition and operating results will be materially adversely
affected. Adoption of online commerce by individuals that have relied upon
traditional means of commerce in the past will require such individuals to
accept new and very different methods of conducting business. Moreover, the
Company 's online trading and investing services over the Internet involve a new
approach to investing research and trading which will require intensive
marketing and sales efforts to educate prospective customers regarding the
Internet's uses and benefits. For example, consumers who trade with more
traditional brokerage firms, or even discount brokers, may be reluctant or slow
to change to obtaining brokerage services over the Internet .Also, concerns
about security and privacy on the Internet may hinder the growth of online
investing research and trading, which could have a material adverse effect on
the Company 's business, financial condition and operating results.
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RISKS ASSOCIATED WITH THE SECURITIES INDUSTRY; CONCENTRATION OF SERVICES.
Most of the Company's revenue in the past have been from the Company's online
investor services and products, and the Company expects this business to
continue to account for most of the Company's revenue in the foreseeable future.
The Company, like other companies in the Internet securities industry, are
directly affected by economic and political conditions, broad trends in business
and finance and changes in volume and price levels of securities and futures
transactions. In recent months, the U.S. securities markets have fluctuated
considerably and a downturn in these markets could effect customers interest in
our products and services and adversely affect the Company's operating results.
In October 1987 and October 1989, the stock market suffered major declines, as a
result of which many company's and firms suffered financial losses, and the
level of individual investor trading activity decreased after these events.
Reduced trading volume and prices have historically resulted in reduced revenues
to company's such as the Company's. When trading volume is low and investor and
customer interest or use of the Company's products and services diminishes, the
Company's operating results may be adversely affected because the Company's
overhead remains relatively fixed. Severe market fluctuations in the future
could have a material adverse effect on the Company's business, financial
condition and operating results. Some of the Company's competitors with more
diverse product and service offerings might withstand such a downturn in the
securities industry better than the Company would.
RISKS ASSOCIATED WITH DELAYS IN INTRODUCTION OF NEW SERVICES AND PRODUCTS.
The Company's future success depends in part on the Company's ability to develop
and enhance the Company's services and products. There are significant technical
risks in the development of new services and products or enhanced versions of
existing services and products. There can be no assurance that the Company will
be successful in achieving any of the following: effectively using new
technologies; adapting the Company's services and products to emerging industry
standards; developing, introducing and marketing service and product
enhancements; or developing, introducing and marketing new services and
products. The Company may also experience difficulties that could delay or
prevent the development, introduction or marketing of these services and
products. Additionally, these new services and products may not adequately meet
the requirements of the marketplace or achieve market acceptance. If the Company
is unable to develop and introduce enhanced or new services and products quickly
enough to respond to market or customer requirements, or if they do not achieve
market acceptance, the Company's business, financial condition and operating
results will be materially adversely affected.
RISKS ASSOCIATED WITH DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS. Neither
the Company or any of its subsidiaries presently holds any patents, copyrights
or trademarks for their products or services offered or the names under which
they operate. However, the Company and its subsidiaries are currently in the
process of seeking copyright and trademark protection of its trade names and
website addresses. The Company's success and ability to compete are dependent to
a degree of the Company's and its subsidiary's name and product recognition.
Accordingly, the Company will primarily rely on copyright, trade secret and
trademark law to protect our product, services and brand names offer or under
which the Company and its subsidiaries conduct their business. Effective
trademark protection may not be available for the Company's trademarks. There
can be no assurance that the Company will be able to secure significant
protection for the Company's trademarks. The Company's competitors or others may
adopt product or service names similar to the Company's, thereby impeding the
Company's ability to build brand identity and possibly leading to customer
confusion. The Company's inability to adequately protect our product, brand,
trade names and trademarks would have a material adverse effect on the Company's
business, financial condition and operating results. Despite any precautions the
Company takes, a third party may be able to copy or otherwise obtain and use the
Company's software or other proprietary information without authorization or to
develop similar software independently. Policing unauthorized use of the
Company's technology is made especially difficult by the global nature of the
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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, could result insubstantial costs
and diversions of resources, either of which could have a material adverse
effect on the Company's business, financial condition and operating results.
RISKS ASSOCIATED WITH INFRINGEMENT. The Company may in the future receive
notices of claims of infringement of other parties' proprietary rights. There
can be no assurance that claims for infringement or invalidity (or any
indemnification claims based on such claims) will not be asserted or prosecuted
against the Company. Any such claims, with or without merit, could be time
consuming and costly to defend or litigate, divert the Company's attention and
resources or require the Company to enter into royalty or licensing agreements.
There can be no assurance that such licenses would be available on reasonable
terms, if at all, and the assertion or prosecution of any such claims could have
a material adverse effect on the Company's business, financial condition and
operating results.
RISKS ASSOCIATED WITH ENTERING NEW MARKETS. One element of our strategy is
to leverage the Company's brand names and services that the Company and its
subsidiaries provide. No assurance can be given that the Company will be able to
successfully adapt the Company's products and services for use in other markets.
Even if the Company does adapt the Company's to other markets, no assurance can
be given that the Company will be able to compete successfully in any such new
markets. There can be no assurance that the Company's marketing efforts or the
Company's pursuit of any new opportunities will be successful. If the Company's
efforts are not successful, the Company could realize less than expected
earnings, which in turn could result in a decrease in the market value of the
Company's Common Stock. Furthermore, such efforts may divert management
attention or inefficiently utilize the Company's resources.
RISKS ASSOCIATED WITH INTERNATIONAL STRATEGY. One component of the
Company's strategy is a planned increase in efforts to attract additional
international customers and to expand the Company's Online Investors seminars,
services and products into international markets. To date, the Company has
limited experience in providing investment services internationally. There can
be no assurance that the Company's and the Company's subsidiaries will be able
to market the Company's branded services and products successfully in
international markets. In addition, there are certain risks inherent in doing
business in international markets, such as: unexpected changes in regulatory
requirements, tariffs and other trade barriers; difficulties in staffing and
managing foreign operations; political instability; fluctuations in currency
exchange rates; reduced protection for intellectual property rights in some
countries; seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world; and potentially adverse tax
consequences. Any of the foregoing could adversely impact the success of the
Company's international operations. Under these agreements, the Company relies
upon third parties for a variety of business and regulatory compliance matters.
The Company has limited control over the management and direction of these third
parties. The Company runs the risk that their action or inaction could harm the
Company's operations and/or the goodwill associated with the Company's brand
names. As a result, the risk to our operations and goodwill is higher. There can
be no assurance that one or more of the factors described above will not have a
material adverse effect on the Company's future international operations, if
any, and, consequently, on our business, financial condition and operating
results.
22
<PAGE>
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.
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. The matter is pending at present
time.
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.
23
<PAGE>
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 is pending at present time.
With the exception of the legal proceedings set forth above, the Company is
not a party to any pending legal proceeding. No federal, state or local
governmental agency is presently contemplating any proceeding against the
Company. No director, executive officer or affiliate of the Company or owner of
record or beneficially of more than five percent of the Company's common stock
is a party adverse to the Company or has a material interest adverse to the
Company in any proceeding.
Item 2. Changes in Securities.
Not required.
Item 3. Defaults Upon Senior Securities.
Not required.
Item 4. Submission of Matters to a Vote of Security Holders.
Not required
Item 5. Other Information.
AMENDMENT TO ACQUISITION AGREEMENT. On May 31, 2000, the Company entered
into an Amendment to Agreement with D. Scott Elder, Ross W. Jardine, David McCoy
and Scott Harris, the prior principal shareholders (the "OIA Shareholders") of
Online Investors Advantage, Inc., a wholly owned subsidiary of the Company.
Pursuant to the terms of the Agreement, the Company and the OIA Shareholders
agreed to amend paragraph 1.5 of the Acquisition Agreement which provided for
the calculation of the Actual OIA Earnings. Following the end of the earnings
period as provided in the Acquisition Agreement, OIA's audited EBITDA earnings
for the period from April 1, 1999 through March 31, 2000 was $10,910,076.
Accordingly, pursuant to the terms of the Acquisition Agreement, ZiaSun would
owe 21,820,152 (post-split adjusted) shares of its common stock at March 31,
2000 to the Shareholders. The value of these shares at March 31 was $248,204,230
which would have been added to the goodwill on the Company's balance sheet. At
the request of the OIA Shareholders and their joint recognition that it would
clearly not be in the best interests of the Company to have such a large
goodwill burden going forward, the OIA Shareholders proposed to exchange
12,000,000 of the (post-split adjusted) shares they were to receive pursuant to
the terms of the Acquisition Agreement, for $6,000,000 in cash.
Pursuant to the Amendment to Agreement the OIA Shareholders would receive
$6,000,000 in cash and 9,820,152 (post-split adjusted) shares of ZiaSun's common
stock rather than 21,820,152 (post-split adjusted) shares of ZiaSun's common
stock. The proposal was reviewed and accepted by ZiaSun on May 9, 2000, and
4,820,152 restricted shares were issued to the OIA Shareholders representing the
balance of the additional shares due the OIA Shareholders along with the
5,000,000 shares which had been held in escrow pursuant to the terms of the
acquisition agreement. A copy of the Amendment to Agreement between the Company
and the OIA Shareholders is attached hereto and incorporated herein by
reference. See Item 13 Exhibits.
24
<PAGE>
RECENT SALE OF SECURITIES.
-------------------------
(a) Issuance of Shares Pursuant to Amendment to Acquisition Agreement. On
June 6, 2000, pursuant to the terms of the Amendment to the Acquisition
Agreement between the Company and OIA Shareholders, set forth above, the Company
issued 4,820,152 restricted shares of its Common Stock to the OIA Shareholders.
(b) Issuance of Shares upon Acquisition of Asia Prepress Technologies. On
June 26, 2000, in conjunction with the closing of the acquisition of Asia
Prepress Technologies, Inc., the Company issued 100,000 restricted shares of its
Common stock to the shareholders of Asia Prepress, 1,000 shares and 99,000
shares, to Calvin A. Cox and Patrick R. Cox, respectively.
(c) Issuance of Shares upon Acquisition of Asia Internet Services. On June
26, 2000, in conjunction with the closing of the acquisition of Asia Internet
Services.com, Inc., the Company issued 150,000 restricted shares of its Common
stock to the sole shareholder of Asia Internet, Patrick R. Cox.
(d) Exercise of Stock Option by Allen D. Hardman. On July 3, 2000,
subsequent to the period covered by this report, Allen D. Hardman, the
President, CEO and a Director or the Company exercised a stock option to
purchase 25,000 restricted shares of Common Stock at a price of $2.00 per share
for total cash consideration received by the Company of $50,000.
(e) Authorization to issue Finder's Shares to Credico Inc. and Hans von
Meiss. On August 2, 2000, subsequent to the period covered by this report, at a
Special Meeting of the Board of Directors, the board ratified and approved the
issuance of a total 100,000 shares of common stock to Credico Inc., and Hans von
Meiss, for their efforts and services in locating, negotiating and assisting in
the consummation of agreement between the Company and the McKenna Group. The
board authorized the issuance of 50,000 restricted shares to Credico, Inc., a
Nevada corporation, owned and controlled by Bryant D. Cragun, a member of the
advisory board of the Company, and 50,000 restricted shares to Hans Von Meiss, a
director of the Company.
SUBSEQUENT EVENTS
-----------------
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 of the venture fund. The McKenna Group would
provide the management, consulting and analysis services on behalf of the
Venture Fund. A copy of the Venture Fund Agreement dated July 3, 2000 is
attached hereto and incorporated herein by this reference. See Item 13 Exhibits.
RESIGNATION OF DENNIS MCGRORY. On July 12, 2000, Dennis McGrory resigned as
the Corporate Secretary of the Company. The Company is presently seeking a
replacement for Mr. McGrory.
25
<PAGE>
AMENDMENT TO ALLEN D. HARDMAN EMPLOYMENT AGREEMENT. On August 2, 2000,
subsequent to the period covered by this report, 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. A copy of the Amended and Restated Employment Agreement and Stock
Option of Allen D. Hardman dated August 2, 2000, is attached hereto and
incorporated herein by this reference. See Item 13 Exhibits.
APPROVAL OF SALE OF MOMENTUM INTERNET TO VULCAN CONSULTANTS. On August 2,
2000, subsequent to the period covered by this report, at a Special Meeting of
the Board of Directors, 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.
While the definitive agreement has not been reached between the Company and
Vulcan Consultants, it is anticipated that the Company and Vulcan will enter
into an agreement whereby Vulcan will acquire 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. 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 due and payable
on closing and the balance of $300,000 due and payable on or before September
30, 2000. The Company anticipates that the closing will occur on or before
August 31, 2000.
26
<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).
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).
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).
27
<PAGE>
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).
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).
28
<PAGE>
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(+) Lease Agreement between EsNET Properties L.C. and Online Investors
Advantage, Inc., dated May 25, 1999. (Incorporated by reference from
the Registrant's Registration Statement on Form 10-SB filed 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).
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).
29
<PAGE>
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;
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.
30
<PAGE>
10.48(++) Venture Fund Agreement between the Company and The McKenna Group dated
July 3, 2000.
10.49(++) Amended and Restated Employment Agreement and Stock Option of Allen D.
Hardman dated August 2, 2000.
27.(++) Financial Data Schedule (submitted electronically for SEC information
only).
(+) Previously filed.
(++) Filed herewith.
(b) Reports on Form 8-K.
The Company filed a Form 8-K on June 7, 2000 and July 12, 2000. There were
no other reports on Form 8-K filed during the period covered by this report.
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: August 14, 2000 /S/ Allen D. Hardman
-----------------------------
By: Allen D. Hardman
Its: President & CEO
31
