E-MAIL to J.Crane - REPLY at bottom.
A filing of MyStarU.com, Inc., Schedule 14C of September 30, 2009 listed the following subsidiaries, and the percentages owned -
MyStarU Ltd 100.00%
3G Dynasty Inc. 100.00%
Subaye.com, Inc. 69.03%
Subaye IIP Limited 69.03%
Guangzhou Panyu Metals & Materials Limited 100.00%
Guangzhou Subaye Computer Tech Limited 69.03%
Media Group International Limited 69.03%
There are 4 entities at 69.03%. With the recent full "acquisition" of Subaye.com, Inc., does that leave 3 entities still to be acquired, or were any of them included in said deal?
If none were included, then perhaps you can guide, either by reply, or in a not too distant PR, as to what plans the company has for their acquisition.
I have read a line attributed to you, "There are no significant acquisitions on the horizon either". I think the general stateside shareholder consensus, was that the 31% acquisition of Subaye.com, Inc., would have been a rather benign event, instead it turned out to be an over 100% dilution. Obviously, what you may consider to be of no significance in China, is a major matter stateside.
I am concerned, as I am sure are many other shareholders, that further devastating dilution will occur, since Guangzhou Subaye only owns fifty percent (50%) of Aixi Software! Any comment?
I will now excerpt from 2 paragraphs, concerning 2 of the Company's service providers, CN and SSTH -
"The Company has an ongoing agreement with China Netcom ("CN"). CN is an internet and webhosting provider in the PRC and manages the internet connection and webhosting of the Company's www.subaye.com website. CN is compensated such that CN receives forty percent (40%) of the Company's gross membership fees.
The Company does not believe it has the ability to replace CN with another comparable internet and webhosting provider."
"The Company has an ongoing agreement with SSTH Limited ("SSTH"). SSTH is a merchant service provider. SSTH is compensated such that SSTH receives ten percent (10%) of the Company's gross membership fees. The Company does not believe it has the ability to replace SSTH with another comparable internet and webhosting provider."
Observation - seems like the last line of SSTH was simply copied fron the previous paragraph, re CN.
Question - while these agreements are mentioned on page F7, the SSTH agreement is not mentioned under Vendor Commitments, on page F48 - was that an oversight?
Question - are these the best terms that the Company can get in the whole of China? It seems a bit lopsided, that for the vast revenue stream expected by the Company, it can only be achieved in conjunction with those 2 service providers! Has this Delaware registered company ever attempted to obtain bids from any US service providers?
So overall, does this mean that fifty percent (50%) of the membership fees are going to service providers, and will you at least be footnoting this on the Income statement? (I am aware on the netting under EITF 99-19, but I am sure you will agree, more information leads to greater transparency.)
There is another paragraph, on page F6, which reads -
CONTROL BY PRINCIPAL STOCKHOLDERS
MyStarU.com, Inc., a Delaware corporation owns beneficially and in the aggregate, the majority of the voting power of the outstanding shares of the common stock of the company. Accordingly, MyStarU.com, Inc., its directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including increasing the authorized capital stock of the Company and the dissolution, merger or sale of the Company's assets or business.
Does that still hold true, when one considers -
Let us look at some simple mathematics. Consider an Income amount of $4,350,000.00 - under pre acquisition, this would have been split 69:31 with Subaye Inc getting
69% = $3,000,000.00 assigned to 3,000,000 shares for an EPS of $1.00
31% = $1,350,000.00 to Subaye.com, Inc.
Under the new math, said $4,350,000 now has to be shared by 3,000,000 + 3,408,852 shares = 6,408,852.00 i.e., $0.68 EPS
So the old Subaye Inc 3,000,000 gets x $0.68 = $2,040,000.00
While the Subaye.com Inc group gets 3,408,852 x $0.68 = $2,310,000.00
I have rounded, and omitted the 200,000 "warrant exchange".
This reminds me of a line from the famous poem The Rainbow, written in 1802 by William Woodsworth "The Child is father of the Man".
Also attributed to you - "Both the 3D mall and Dayoucun advertising are going to be very expensive but we (including me) all believe in the roi each of those investments will produce. Dayoucun is going to be national here in china and could very well produce significant revenues in the six months ending in May".
I am going to assume, that DaYouCun is being produced by 3G Dynasty, Inc., in conjunction with other business partners, and would therefore like to know, what are the relative costs and working interest percentages involved here.
I noted a mention of presenting in 6 US cities the week after thanksgiving - would San Francisco be one of them, and if so, could I get an invite.
REPLY
If you would like to talk then please always feel free to call.
I will say that all 3 subsidiaries of Subaye.com, Inc were acquired in
connection with the acquisition of Subaye.com.
Jim
