Did IA Global (now: Asura Development Group) actually pay over one million dollars to Terrie Lloyd? Or to Erik Gain and Peter Wilson at GaijinPot?

The answer is no, isn’t it? These men never saw any buy-out or “alliance” money like that.

I have been studying the IA Global 10-K filings. As I mentioned yesterday, IA Global is a company that is still in business. Its stock went from the high teens in U.S. dollars during late 2007, to 25 cents a share nowadays.

I have previously linked to some of the contracts between IA Global and Terrie Lloyd’s Linc Media. Also, to those of IA Global and GPlus. These are all online, for their first few pages. You have to join a service to get the full contract. I don’t feel it’s worth the price ($199), but if you are a regular journalist reading me, it might be.

I have previously written that the buyout of IA Global’s 25% stake in the Gaijin Pot owner, GPlus Media, was for $75,000. I wondered whether GPlus had ever seen the $1,280,000 as cash for the stock portion of that transaction. Looking at the 10K’s for both 2009 and 2010, I’d have to say the answer was no. This was entirely a book transaction, where privately-held stock that was said to be worth 3,000,000 shares of a publicly traded company were exchanged. (By the way, if you do not know, “10K” is generally referred to as a company’s annual report; but it is a specific filing required by the American Securities and Exchange Commission for companies whose stock trades publicly. Sorry to be slinging the lingo.)

What is tricky about the IA Global dealings with both Terrie Lloyd, and Erik Gain and Peter Wilson, is that there are related and subsequent side contracts, and amendments, that change what looks like a vanilla deal.

As you know, I am someone who wants all the deals on one paper. It may not be one page, but the idea is: the deal is the deal. Any modification is to that deal, and shows.

I realize that this is not how everybody plays it in the contemporary business world. But then again, I think this is why the contemporary business world has the problems that it does.

Terrie Lloyd’s transaction is particularly disconcerting, because it was unwound shortly after the deal was done. This apparently was not breach, but rather, a clause in the original deal that it could be undone based on business conditions.

Here is the screenshot of the IA Global 10K, from July 14, 2010:

As IA Global tells the investing community last summer:

On March 12, 2008, the Company and LINC Media terminated the definitive agreements due to the U.S. market conditions. LINC Media retains the $110,000 paid to date, less $10,000 deducted for legal fees. There are no additional fees or cash payments or stock issuances required by the Company or LINC Media. The $110,000 paid to date has been written off as of December 31, 2007 and is accounted for as a loss from disposal of a discontinued operation.

Read more at: this site.

In the 2009 10K report, the $110,000 figure is mentioned, without connecting it to the LINC Media deal.

The evidence suggests that there was a similar arrangement with GPlus, which was unwound in March 2009.

So what look to be big losses for IA Global, may in fact have been transactions based on a lot of puffery on both sides. Isn’t this so typical with internet-based businesses? Companies that allegedly were worth seven figures, really had trouble being priced in the six figures. If that.

When you think this through, why is that?

Part of it is the desire of people to believe that this relatively new internet technology is also something that creates vast prosperity. What it does, in fact, is create and destroy. What we see is that it makes sharing information, text or visual data, much more economical. What it also does is create a lot of avenues to move this data around. It creates a sea of useless data, too. It opens up avenues to exploit other people’s information; and also manipulate their expectations and play on their gullibility.

What the analog world of “transmitting data by paper” did was block out all the nonsense that has begun to flow through the internet. If the communication didn’t have a legitimate purpose, the person doing any kind of sending out to the community was spending a lot of money for nothing. So with news or advertising, your product had to be solid. If someone didn’t want it, or wasn’t going to read it, you were just wasting your money and time.

Digital media creates a vast effluent. It doesn’t cost big money, and the value attached to it is whatever you can convince someone it’s worth as its own digital product.

So the web businesses that make it–and here, I’m talking about pure web business, not “clicks and bricks”–are those that you can persuade other people are valuable.

Sure, an internet-based business can be authentic. But it’s easier to put in an element of a con in it as well. Remember, “con” comes from the phrase “confidence artist”. The confidence artist is a cheater who is looking to gain someone’s confidence in order to cheat them.

Within the Japan-side expat community, the conning is over several levels. It’s intertwined. You hear that an online site is read by everybody, so you, yourself, visit it. If 10 or 20 people leave some comments or give it some sign of life, this enhances your belief that the site really is credible. It needs some credibility—otherwise you just laugh or groan, and go on to the next thing.

I think what we’re winding up (I use ‘we’ as a now-stateside expat), is about a 10-year stint, where a handful of people in Tokyo and a few other locations in Japan have been able to convince people that their businesses were really much, much more than they actually were.

They really didn’t have anything. It was the image that they had something.

I don’t mean to insinuate that the big names of the Tokyo internet business community were pure con artists. Sure, I think some are. And I think they con each other. (For example, saying that a business sold for $22 million to a guy who knows that he couldn’t get his sold for a million-two without it being hoisted back to him four months later.) What I am saying is that element of deception seems to be more important than the actual work of business itself. GPlus is a legitimate business–it’s doing something. I am sure that Terrie Lloyd’s activities do something. It’s not “give us money, and we do nothing.” It’s that what they make themselves out to be is more than what they really are.

And because it’s a select group doing it for each other, I think just makes it all worse.

Next, we are going to focus again on Ascendant Business Solutions, which I had blogged about last year. Something happened with them last month, which is worth a look.

[Update: IA Global recently changed its name to Asura Development Group. The SEC requires, though, that all the old information about IA Global be connected to the new name, which is why the links should still work.]

[Update 1/5/14: As an aside to my post from three years ago, it looks like Terrie Lloyd is being accused by Mark & Mary Devlin of not paying according to the terms of their sale of Metropolis, K.K., to Lloyd in 2007. There are a number of twists to the story, but the gist is that the Devlins turned over a cash positive business to Lloyd on an unsecured, installment sale (that is, on credit without collateral.) They say Lloyd still owes, and that assets have been encumbered and shifted overseas, to get out of paying. The unfortunate part of their claim is that the website entries where they put their side of the story out throughout 2013 tended to disappear, only to reappear some time later. Since only one side is talking, it’s hard to know what the bottom line is. But in the context of deals being done in the Japan-side expat community using fluff for payment, it fits the pattern.]

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14 comments

  1. Terrie Lloyd · June 6, 2011

    Rather than speculate, why don’t you just ask? The deal with IA Global happened 3 years ago and they were unable to complete the transaction due to issues on their side related to the Lehman Shock (by NDA I can’t say what). The asset they were purchasing was a multi-million dollar business still owned by us today. The termination was amicable but we have had nothing to do with IA Global ever since. Nothing strange in this. Just bad luck for IA Global that the Lehman Shock hit them the way it did.

    Regards,

    TL

    • hoofin · June 6, 2011

      Hello Terrie, thanks for your response.

      According to the IA Global 10(k), they unwound the transaction on March 12, 2008. The bankruptcy of Lehman Brothers was September 15, 2008. So several months later, although the economy had entered recession in America by that time.

      The stock of IA Global did begin any serious descent until June of that year (June 2008). This means they quit the deal before things got really bad for them.

      http://finance.yahoo.com/echarts?s=IAGIE.OB+Interactive#chart3:symbol=iagie.ob;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

      I am certain that the outsourcing business does have a value and a viable business model. I just don’t think I can agree to the valuations that have been placed on certain Japan-side outsourcing companies. I think they are valued at multiples much lower than what you place on them.

      Do you still feel that Wall Street Associates was valued at $22 million cash-equivalent last year? I am finding it hard to believe that EN Japan would have paid that amount. You suggested this in September of last year; but by December, you seemed convinced that a company would pay 5 years’ worth of profit for an outfit that was smaller than their own operation . . .

  2. Bruce Spencer · June 9, 2011

    Hoofin, what’s your point?

    I realize you will probably delete this, but I wanted to send you my opinion just in case, in the hope that it might help influence the direction you take for future postings. These topics you’re covering of late tend to be overly critical towards gaijin entrepreneurs and so-called “internet business’s” in Japan.

    Details regarding these details are, for the most part, publicly available in 10-Q, 8-K and other filings. Or, as Terrie Lloyd points out, you can just ask. You mention that IA Global’s shareprice fell to what you refer to as “pocket change”. Well, I think it it safe to say that the same happened to a lot of companies, good or bad, including Lehman Brothers, and even CitiGroup (without the help of the U.S. govt) and, of course, countless other companies in your previous home country, Japan. Perhaps that had something to do with the effects of the world’s worse post-war financial crisis on record?

    Wrt these supposed over-valuations for Wall Street, LINC Media and others, I think it is safe to assume that the purchasers are doing the necessary due diligence to justify the offers, and this would especially be the case for publicly traded companies. Or are you able to see things that professional third party valuators are not? If that is the case, you should be back in Japan, working for Goldman, not posing as the armchair economist -undercover nvestigator publishing rants on your own blog board. T Lloyd, Wall Street, G Plus, Ascendant, these are the bad guys? As far as I can tell, there are no boogeyman conspiracies going on here, just hard working foreigners trying their best to build up successful businesses in Japan. Some make it, the majority don’t. Personally, I have a tremendous amount of respect for any gaijin entrepreneur able to make it in Japan, which is arguably one of the most difficult markets to penetrate for outsiders.

    Sorry to end on a negative note but, again, what’s your point?

    MIJ

    • hoofin · June 9, 2011

      Bruce, I really appreciate your comment. Of course I am going to post it—you say a couple of interesting things.

      To answer you in general: from time to time, I like to talk about organizations or phenomena that aren’t exactly what they seem. I am not a journalist; just an internet commentator. Unlike some who make a blog dedicated to challenging what appears on one other blog (see Debito.org versus Tepido.org), I usually discuss a topic in depth over several days. Then, I go on to something else. Some projects, like Temple Japan’s accounting, go on longer, since I clearly have an interest as a Pennsylvania resident.

      Bruce, I think you have the recent Financial Crisis entirely wrong. The Financial Crisis was caused by overleverage and, then, panic. The overleverage and panic were not the results of the Financial Crisis. In fact—since you brought it up—it’s one of the reasons why IA Global caught my eye while web surfing.

      As it stood on September 30, 2007 (IA Global balance sheet), the non-current portion of IA Global consisted of equity in other, non-traded corporations. This was one year before the Lehman Bankruptcy, and so what history inevitably showed with this company, is that its overleveraging got it into a bind well before the headlines that made the news in late 2008. It had to unwind its balance sheet piece by piece, and apparently this began with deals like the one for 25% of G-Plus Media and the LINC Media outsourcing sale.

      You bring up “due diligence”, but I have to wonder if you are offering that as a bit of a red herring. The lesson of the early 2000’s is that contemporary due diligence is something less than what maybe should be. Due diligence was simply someone else saying “this is worth that”, with no further questioning about why “that” was worth “that”. (Going straight to the source of “that” to ask the question is not the answer. Ideally, you want something independent to measure it to.)

      IA Global unraveled (deleveraged) in fits and jerks, until its present state in 2011. Your post had me surfing some more, and I learned that IA Global actually sought to litigate about this very unraveling with a Yahoo chatboard poster. This was picked up by a civil rights law firm, and you can see one of the filings here: Citizen dot org website.

      What makes IA Global interesting to the people who follow the Japan-side expat community is that its investments touched on practically every piece of online media–as well as gap insurance call centering and communication bandwidth brokering—focusing on foreigners coming to and working in Japan. Yet there’s never really been any Japan-side coverage of this company in the traditional media. You have to go online and find the bits and pieces.

      Bruce, at the end you set up a bit of a straw man. I do not see the gaijin entrepreneurs as “bad guys”. What I try to do is analyze for what really is, versus what certain people would rather have thought. I don’t see this as conspiracy. It’s simply taking a set of facts and drawing a conclusion. That the conclusion is not the same as what internet businessmen would want is not something that I can really fix.

      IA Global had a stake in very many of the businesses that sell to foreigners to Japan over the net. IA Global began to unravel sometime before the Financial Crisis. As it unraveled, it had to unwind deals that were either struck at the wrong price, or that caused enough doubt that liability-side partners were not comfortable about the asset-side prices. IA Global got defensive about the shorts who were following it. In the end, the company is not worth anything like it used to be.

      This is actually a very typical pattern in the business world, so why would it be an issue if someone talked about it in the context of the internet business scene of the foreigner community in Japan?

  3. Pingback: People involved with IA Global over the last five years don’t want any digging. | Hoofin to You!
  4. Pingback: Terrie Lloyd as internet target | Hoofin to You!
  5. Pingback: IA Global update: A telling May 2012 8-K filing | Hoofin to You!
  6. sigmafinancialenglish · June 11, 2012

    Very much enjoying the content of this blog with no affiliation whatsoever to either side!

    The only thing I would comment on is how a beach house in NZ is related to the other content which seems to be mostly about start up buying and selling and foreign entrepreneurs.

    • hoofin · June 11, 2012

      Oh, that’s easy—it’s just part of the story last year. Around the time of the original blogging, someone sent to me a piece that appeared in a New Zealand newspaper about how Terrie Lloyd was selling his second home in an exclusive neighborhood on the northern shores of New Zealand. (North is south for us northern hemisphere types.) According to the article, the sale was to raise cash for potential investments that the 3/11 disaster had opened up. Another reason was that (supposedly) Japanese creditors wouldn’t lend to a 30-year resident because of his being a foreigner. At the time, I wondered why the property just simply couldn’t be used to support a mortgage for the needed capital.

      So it looks like the property was either sold to an investor, or is just being rented out. Word is that, if sold, it may have gone for $600,000 or $800,000 Kiwi less than the asking price?

      • sigmafinancialenglish · June 13, 2012

        Thanks a lot for your detailed reply. You certainly have a great talent for writing.

        I will continue to read with inteest. Your comment makes me think without a doubt there is huge speculative property bubble ready to implode in NZ (Aus too ?)

        I also wonder who would want to rent such a place. Anyway great comments again.

        Thanks and regards,

  7. Pingback: More controversy surrounding Japan Partership KK, Metropolis and Terrie Lloyd. | Hoofin
  8. Pingback: According to the Devlins, onetime Tokyo publishers, they were robbed of Metropolis. But they can’t get recourse. | Hoofin
  9. hoofin · June 27, 2014

    Reblogged this on Hoofin and commented:

    Several years back, I followed an expat company doing business around Tokyo called “IA Global”. IA Global had, at one point or another, invested or “allied” with the various online media outfits serving the expat community. At some point, I concluded it was all leverage, and, sure enough, IA Global imploded. It changed its name to “Asura Development”. In recent weeks, Asura has been attracting a lot of attention. My sense is because the stock just went to (near) zero: http://finance.yahoo.com/echarts?s=IAGI+Interactive#symbol=IAGI;range=3m

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