Update: Jupiter Global Holdings, Inc. - What? And Give Up Show Biz!
Investigative Reports
March 13 2005
Jupiter Global Holdings, Inc. (OTCBB: JPHC) – the Company formerly known as Livestar Entertainment Group - seems to have developed a simple plan. If at first you don’t succeed, diversify. Since the beginning of 2005, Jupiter has changed its name (from Livestar), its stock symbol, and its business, or at least its business plan. But has anything actually changed?
Until recently, Jupiter had been pinning its hopes on the entertainment industry – with little evident success. The Company’s attempt to acquire a Toronto-based nightclub called “The Sequel” failed, and its subsequent efforts to develop other nightclubs and other venues have yet to yield profits. Other attempts to carve a niche in the entertainment business have yet to prove financially fruitful. Despite a series of press releases declaring its successful participation in a series of live events, as of September 30, 2004 the financial picture was bleak. The Company had no cash and, despite modest revenues, had suffered losses of almost $2 million in the first nine months of 2004. See, Update: Livestar Entertainment Group, Inc. - That's Shoe Biz.
Unable to establish a profitable place in the entertainment world, the Company decided to look elsewhere, declaring plans to expand into one of the hottest and most competitive markets around – Voice Over the Internet (VoIP) technology. VoIP enables subscribers to make telephone calls over a broadband Internet connection rather than traditional telephone lines. It was an ambitious goal since other players in the VoIP game – including Time Warner, Vonage, Nortel, Cablevision, Cox and Comcast – were far more established and infinitely better financed.
Still, in November 2004, the Company announced that it would enter the VoIP market by acquiring 50% of an entity called VOXBOX, an aspiring VoIP company that had not yet launched any services. Now Jupiter, which had been unable to compete successfully with established entertainment businesses would be competing with established telecom operators, and relying upon a startup business partner that was not yet operational.
Press releases began to flow from Jupiter once again – but while they now focused on the VoIP initiative, there was little evidence that VOXBOX would capture any meaningful portion of that market. In a February 17, 2005 press release, the Company called attention to developments in the VoIP industry – although it failed to indicate whether VOXBOX had any operations. That did not stop VOXBOX’s CEO Ray Prescott, from declaring that “we are planning for VOXBOX to become a leading provider of VoIP services to consumers and businesses.” He did not indicate how VOXBOX possibly could compete with the giants already ensconced in the field.
A day later, on February 18, 2005, Jupiter announced that it had signed a letter of intent to acquire wireless telecom assets from Global Bancorp, Inc, including wireless communication towers and back up systems that could be configured to cover a city with a population of 1.5 million. Although Jupiter claimed that the assets had a replacement cost of $3.2 million, it did not indicate their actual value, condition, age, how much they would cost, or the terms of the acquisition – other than to say that the Company would pay a combination of cash and stock. Global indicated that Jupiter and VOXBOX would be given the option to acquire additional equipment, including wireless infrastructure having a “replacement cost of up to $20 [million].” Replacement cost, however, does not necessarily represent the actual present value of the assets being acquired.
What is the nature of the relationship between Jupiter, VOXBOX and Global? The February 18th press release did not say where Global was incorporated, where it maintained its offices or whether it operated an ongoing business, but it did identify Ray Prescott as the CEO of both VOXBOX and Global – raising serious questions about the valuation of the assets and arms length nature of this transaction. Are the terms of the acquisition fair? That is difficult to determine since they were not disclosed.
Where does the transaction now stand? A February 23rd press release stated that Jupiter would complete its review of the assets “soon.” The Company has not issued any more recent comments on the transaction.
Jupiter has, however, continued to issue press releases concerning the VoIP business. On February 22nd, the Company announced that it had “entered into discussions” to offer VOXBOX services to “a specialty broadcaster of Asian content” with 250,000 subscribers. VOXBOX CEO, Ray Prescott, projected that this could mean 25,000 new subscribers for VOXBOX, with the potential for ten times that many. No terms of the agreement were disclosed and there is no indication that this potential transaction advanced past the discussion stage.
On February 23rd, the Company announced that VOXBOX services had been launched on a limited basis, in Vancouver and Victoria, British Columbia. Although the services were confined to those two areas, the Company had bigger plans. On March 2, 2005, the Company announced that it was selling dealerships, with plans “to expand to every metropolitan city in North America and become the dominant force in the VoIP communications industry.” It still had not addressed the matter of its more established competition.
Jupiter did not say how much these dealerships would cost, or when VOXBOX would become available in these myriad territories. Nor did the Company explain how it intended to compete with better financed and more advanced VoIP companies, much less become “the dominant force” in the industry. Still, on March 8th, the Company revealed that a single “telecom marketing and development firm” had agreed to buy dealerships in a minimum of ten territories, including Florida, Arizona, Nevada and Texas. The Company did not identify the buyer of those dealerships or provide any terms of the agreement. Although the Company suggested that significant income would flow from the new dealerships, it provided no details of that revenue model.
The mystery surrounding Jupiter’s business partners continued on March 9th with a press release announcing that an unidentified private investor had agreed to provide the Company with up to $1.5 million in debt or equity financing. Jupiter said that the financing, which would become available if the Company achieved certain unspecified milestones, would result in “the issuance of restricted shares” or in “debt…structured as a long-term loan with a reasonable interest rate and reasonable non-toxic convertibility rights.” Unfortunately, the key terms of the financing were not disclosed; the Company did not state how many shares it would issue in consideration for the funds, or the terms of the possible debt conversion. Jupiter said that it already had received the first $100,000 – although it did not specify whether it had issued shares for the fund, or, if so, at what price.
Has the Company begun to generate revenues from the VOXBOX services? None of the press releases address that issue and Jupiter has not yet filed any financial reports reflecting that income. Indeed, the Company’s recent filings focus instead on a completely different acquisition, and a separate line of business. On January 14, 2005, the Company filed a Form 8-K indicating that it had issued 92,307,692 common shares to the sole shareholder of a company called Promostaffing.com LLC. Jupiter said that it was attempting to acquire Promostaffing pursuant to the terms of a January 5, 2005 letter of intent, which was not attached to the Form 8-K. The Company claimed that the shares had been issued as a refundable deposit in exchange for the exclusive right to negotiate for a 60% interest in Promostaffing. The stock would be returned if the transaction was not completed.
Although Jupiter was issuing frequent press releases concerning its efforts to establish a VoIP business, it made no similar announcement concerning the proposed Promostaffing acquisition. The Company has not provided any details concerning Promostaffing’s business or its management.
On January 27th, the Company filed another Form 8-K revealing more information about the terms of the pending transaction. According to this Form 8-K, on January 25, 2005 Jupiter had entered into a definitive agreement to acquire 60% of Promostaffing for $840,000 – represented by the 92,307,692 common shares that had been transferred to Promostaffing’s owner, Cory Sklar. A closing was scheduled for February 28, 2005.
There were, however, additional conditions to the agreement. The Company agreed to provide Promostaffing with $600,000 in convertible debt financing. If Jupiter failed to deliver those funds on the agreed upon schedule, which would begin thirty days after the acquisition closed, Sklar would receive additional shares of Promostaffing, effectively diluting Jupiter’s ownership interest to 49% or less.
Although the Company and Sklar agreed, for purposes of their contract, that the value of Promostaffing was $1.4 million, no financial statements were attached to the acquisition agreement and the closing is contingent upon final valuation. So far, the Company has not provided any basis for that valuation. That may be posing a problem. February 28th came and passed without a closing. On March 4, 2005, the Company filed an amended Form 8-K stating that the closing date had been extended until April 18 because of “an unforeseen delay in completing the final valuation of Promo Staffing.”
What will become of the plan to take control of Promostaffing? Will it go the way of the Livestar name, those live events,, the abandoned acquisition of "The Sequel," and the Company's December 2004 plan to buy 51% of a Las Vegas-based shoe company? Just another uncertainty in the life of a Company that seems to thrive on vague transactions with unidentified individuals.
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AI
