01—Abstract
Summary
Summary of the 10-Q/A filed June 20, 2011. Cited figures are marked; the original filing is the authoritative source.
Techs Loanstar, Inc. (BRRN) filed an amended 10-Q for the period ended July 31, 2010.
This filing represents a development stage company with significant going concern issues. The company had extremely limited cash ($22a) at the end of the period and generated no revenue during the quarter, reporting a net loss of $272,007.
The company's ability to continue operations is highly dependent on its ability to raise additional capital through equity or debt financing, failing which it may be forced to cease operations. Significant accounting adjustments were made in this amended filing, including the reclassification of an impairment of license charge from 'other expenses' to 'operating expenses' and adjustments related to a reverse merger with ZenZuu USA, Inc. (ZZUSA).
02—Key points
Key Highlights
- The company is a development stage entity with no revenue generated in the reported quarter and minimal revenue since inception, leading to substantial doubt about its ability to continue as a going concern.
- As of July 31, 2010, Techs Loanstar, Inc. had only $22 in cash and cash equivalents, indicating severe liquidity constraints.
- The company reported a net loss of $272,007 for the three months ended July 31, 2010, and a cumulative loss of $2,473,199 since inception.
- A significant impairment charge of $808,333 related to a license was reclassified from 'other expenses' to 'operating expenses' in the restated financial statements.
- The company completed a reverse merger with ZenZuu USA, Inc. (ZZUSA) in February 2010, resulting in ZZUSA shareholders holding a majority stake and ZZUSA being treated as the accounting acquirer.
- The company has outstanding convertible notes and warrants with complex conversion and exercise terms, subject to future events like mergers and market prices.
- Disclosure controls and procedures were deemed not effective due to material weaknesses in internal controls that had not been remediated.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-Q/AQ3 FY2010filed June 20, 2011Financial Statements
| Revenue | $0 |
| Operating Expenses | $266K |
| Operating Income | -$266K |
| Interest Expense | -$5K |
| Net Income | -$272K |
| EPS (Basic) | $-0.01 |
| Shares Outstanding (Basic) | 57.37M |
05—Questions
Frequently Asked Questions
What is the company's financial health and outlook based on this filing?
The company is in a precarious financial position. It is a development stage company with no revenue, a significant net loss, and critically low cash reserves ($22). Management explicitly states that substantial doubt exists regarding its ability to continue as a going concern and that failure to raise additional capital may force it to cease operations. Investors face a high risk of losing their entire investment.
What were the key accounting changes or restatements in this amended filing?
The primary restatements involved reclassifying an $808,333 impairment of license charge from 'other expenses' to 'operating expenses'. Additionally, there were adjustments related to the accounting treatment of the reverse merger with ZenZuu USA, Inc., reversing a previously eliminated historical loss of ZZP and adjusting the Statements of Cash Flows to reflect only the cash portion of a license payment.
What is the nature of the company's business and its progress?
Techs Loanstar, Inc. was initially organized to provide loan management software. Following a reverse merger with ZenZuu USA, Inc., the company's reporting reflects ZenZuu's historical operations. The company is developing a website and marketing campaign based on a license for an online social database and advertising revenue-share model. However, it has not yet generated significant revenue from these efforts.
What are the company's financing plans and associated risks?
The company plans to satisfy its future cash requirements through equity financing (e.g., private placements of common stock) or debt financing. These activities are expected to cause dilution to existing shareholders. The company acknowledges that additional financing may not be available on acceptable terms, or at all, and that without it, operations may cease. High-risk loans may also come with above-market interest rates.
06—Continue