Look at their 10K. It is all about stealing money, with complete disclosure, between Vince Molinari, Lori Livingston, and Sothi, the CFo and this brother:
Real Estate Note Receivable
At December 31, 2008 the balance in the real estate note receivable account consisted of a $632,000 note receivable from an individual engaged in real estate development reduced by an impairment reserve of $631,999 (see note 17). The note resulted from deposits made by the Company on a land parcel that was to be subdivided for resale. The initial note amounted to $535,000, was collateralized by the underlying real estate and bore interest at the rate of 6% annually. During the year ended December 31, 2008, the Company advanced an additional $97,000 towards the same real estate project. At December 31, 2008, accrued interest relating to this note of $41,695 has been included in accrued interest receivable. The note receivable balance of $632,000 and related interest receivable of $41,695 has been written down to $1 pursuant to management’s evaluation of the viability of the real estate project, the uncertainties raised by a failed Company sale of certain intellectual property to a party related to the debtor (See note 15) and the cash flows expected from the underlying real estate. The Company also believes that this note cannot be sold due to the current economic conditions surrounding the real estate market.
8. Deposit on computer software and other assets
At December 31, 2008 deposits on computer software and other assets consisted of a $514,321 deposit on a contract for the development of software for the ZATS platform, a deposit of $993,754 with Transfer Online Technology Development, LLC (“TOLTD”) towards the purchase of other necessary software and intellectual property for the ZATS platform, a $75,000 deposit towards the failed acquisition of Comedy.Net and other miscellaneous deposits totalling $25,000. These amounts have been netted by an impairment reserve of $1,508,075 (see note 17) to reduce the book value of all of the above, except for deposit towards the failed acquisition of Comedy.Net and other deposits of $25,000 to zero. The $75,000 deposit towards the failed acquisition of Comedy.Net has been written off as uncollectable due to the Company’s inability to collect.
F-16
Table of Contents
Zealous, Inc. and Subsidiaries
(Formerly, Adult Entertainment Capital, Inc.)
Notes to Consolidated Financial Statements
December 31, 2008 and 2007
8. Deposit on computer software and other assets (continued)
The $514,321 deposit resulted from cash payments and stock issued to EAI, Inc. (‘EAI”) towards the development (see note 15) of the software to operate ZATS. The total cost of the contract was for $814,321. The amounts paid on this contract are not expected to be recovered. The completion of this contract was dependent upon the Company making a final payment of $300,000. The Company lacks the resources to make such payment and further believes that such platform no longer has a competitive advantage. The Company also believes that this software cannot be sold due to its uniqueness and specific use.
The $993,754 deposit with TOLTD (see note 15) represents various advances to TOLTD pursuant to an Asset Purchase Agreement dated March 3, 2008, whereby the Company agreed to purchase from TOLTD all rights, title and interest in an online/electronic trading platform, including without limitation, the source code, software, any and all intellectual property rights and title related to such trading platform, excluding any licenses for third party software necessary for the performance of the trading platform for the sum of $1,000,000 . Through December 31, 2008, the Company paid a deposit of $50,000 in cash and $943,754 in stock which includes $37,253 in accrued interest on the note pertaining to the purchase. The amounts paid on this agreement are not expected to be recovered. The transaction was rescinded due to the Company’s failure to perform in accordance with the terms of the agreement. The Company also believes that this platform cannot be sold even if recoverd due to its uniqueness and specific use.
The other deposits of $25,002 which are deemed to be recoverable consist of a deposit towards rent for our current office premises of $25,000, $1 towards the purchase of the TOLTD intellectual property and $1 towards the purchase of the ZATS platform.
9. Property and Equipment, net
As of December 31, 2008 and 2007 property and equipment consist of the following:
2008
2007
Estimated
Useful Life
Furniture and Equipment
$ 537,666 $ 511,515 3-15
Leasehold Improvements
140,374 140,374 5
Less: Accumulated Depreciation
(303,975) (201,519)
Less: Impairment Reserve
(80,286) -
$ 293,779 $ 450,370
During the twelve months ended December 31, 2008, the Company purchased assets for $26,151 and recorded an impairment of $80,286 (see note 17) against leasehold improvements relating to an office no longer occupied by the Company.
Depreciation and amortization expense recorded during the twelve months ended December 31, 2008 and 2007 amounted to $102,455 and $101,428, respectively.
F-17
Table of Contents
Zealous, Inc. and Subsidiaries
(Formerly, Adult Entertainment Capital, Inc.)
Notes to Consolidated Financial Statements
December 31, 2008 and 2007
10. Non-convertible notes payable
Non-convertible notes payable at December 31, 2008 and 2007 are comprised of the following:
2008
2007
Short-Term Borrowings:
Notes Payable - Subsidiary (1)
$ - $ 3,765,659
Notes Payable - Stockholders (2)
2,056,039 1,483,556
Notes Payable - Financial Institutions (3)
AI
