Adult Entertainment Capital Bails Out of Adult Biz

Rhett Pardon
TUSTIN, Calif. — Fleeing investors caused Adult Entertainment Capital’s board to abandon the adult business and go back to selling portable propane grills, snowboards and comic magazines.

Spokeswoman Sherry Ziegelmeyer told XBIZ that two large hedge funds recently bailed out and that six board members on Friday voted to change the public company’s name back to Zealous Trading Group, which will now only own the Freedom Grill, Haynes Bros. Snowboards and Boom-Studios comic book brands.

“You say ‘adult entertainment’ to investors and they usually freak out,” Ziegelmeyer said. “The existing investors were not happy that so much emphasis was placed on adult investments."

As a result, Tustin, Calif.-based Adult Entertainment Capital will no longer be working with the adult entertainment industry.

“The company will now do a 180 and produce family-friendly entertainment,” Ziegelmeyer said.

Shares of Stilletto magazine will revert back to its owner, Gary Gottlieb, and Rock Candy Entertainment will later change hands to adult distributor Brookland Bros., she said.

Rock Candy provides streaming tube and cam sites, SexMonsterCams and MonsterTubers, which offers free and paid video streaming sites such as Monster Milk Juggs, Muff On Muff, Let's Make Fucky and I’d Fuck That.

Stiletto magazine is distributed free at entertainment venues, adult and mainstream retailers, lifestyle events and newsracks in California and Nevada. The circulation is reported at 60,000.

The company also cancelled a deal with ComedyNet, which reaches 19 million homes through cable operators, as well as broadband portals that include Sling Media, Hulu and ActiveVideo. Through an affiliation with QuickPlay, ComedyNet is available via subscription on AT&T, Verizon and Sprint cellphones. ComedyNet's uncut and uncensored events are carried by Events on Demand.

Adult Entertainment Capital launched in September as “the first publicly traded and licensed investment capital option for the adult industry,” as described by CEO Milton “Todd” Ault III.

At the time Ault said the company would acquire and invest in adult businesses, similar to a private equity firm or holding company, without requiring its adult partners to disclose their financial reports.

Ault started his financial career with investment firm Dean Witter Reynolds before moving to Prudential Securities. From 1998 to 2005, he worked with Strome Susskind, a $1.2 billion hedge fund. In 2007, Ault founded Zealous Holdings Inc.

Now the company will go back to the Zealous brand.

Ault, who will retain the position of CEO of Zealous Trading Group, said that slow economic times also had a lot to do with the switched course.

"While adult has great benefits, the abrupt change in the market has made it clear that a bold move in that direction is too far ahead of its time," he said in a statement. "The majority of our investors want us to take control of the situation and do what we do best. There has been a lot of support from within the company to make this change."

In the months ahead, the over-the-counter company plans on changing its stock symbol to reflect the decision, Ault said.