01—Abstract
Summary
Summary of the 10-K filed August 13, 2010. Cited figures are marked; the original filing is the authoritative source.
Byrn, Inc. (BRRN) is not the company named in this filing.
The document is the fiscal year ended April 30, 2010 10-K of Techs Loanstar, Inc. (OTC BB: TCLN), a development-stage shell that completed a reverse merger with ZenZuu USA, Inc. on February 10, 2010. ZenZuu holds an exclusive U.S. license to an online social network and advertising revenue-share model, with the ZenZuu social network itself having stalled in early 2009. The company reported no revenue for FY2010, an operating expense base of $354,521,a and a net loss of $1,397,739, which includes an $808,333 impairment of the license and a $75,000 forfeited deposit.
Cash was $244b against total liabilities of $1,204,257, producing a stockholders' deficit of $1,204,013. The auditor expressed substantial doubt about the company's ability to continue as a going concern, and management states that it would have to cease operations without new financing. The investment case is very weak.
Management's own filing says the company's operations are not sustainable without new capital, and it estimates needing roughly $348,000c over the next twelve months. Dilution is a central concern: $150,000 of convertible notes convert at up to a 45% discount, and a 2-for-1 stock dividend was paid in July 2010, expanding shares outstanding to about 140 million. Control is concentrated, with insider Tu Vu and related trusts controlling a large block and the license agreement allowing ZZI to nominate a board majority.
The internal control assessment identified material weaknesses, including no functioning audit committee and no outside directors. The filing also shows several governance and disclosure issues. The auditor changed twice in one year (Moore & Associates, then Seale and Beers, then R.R.
Hawkins), and the stated ticker and filing details do not match the requested company name. Investors should verify the registrant's identity against EDGAR before relying on any figures.
02—Key points
Key Highlights
- Identity mismatch: the filing is for Techs Loanstar, Inc. (ticker TCLN), not Byrn, Inc. (BRRN), so the requested company should be verified before use
- Net loss of $1,397,739 for FY ended April 30, 2010, driven largely by an $808,333 license impairment and a $75,000 deposit forfeiture; no revenue was generated in the year
- Cash of $244 versus total liabilities of $1,204,257 leaves a stockholders' deficit of $1,204,013, and the auditor raised substantial doubt about going concern
- Core asset is an exclusive U.S. license to ZenZuu's social network and revenue-share model, acquired for $1,000,000 with $550,000 still owed; the business was suspended in early 2009 and management plans to restart marketing with no assurance of success
- Heavy dilution risk: $150,000 of convertible notes convert at up to a 45% discount, and a 2-for-1 stock dividend in July 2010 increased shares outstanding to roughly 140 million
- Concentrated control: insider Tu Vu and affiliated trusts hold a large voting block, and the ZZI license grants ZZI the right to nominate a board majority upon note conversion
- Material weaknesses in internal controls, including no functioning audit committee, no outside directors, and inadequate segregation of duties; the auditor also changed twice within about a year
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed August 13, 2010Financial Statements
| Revenue | $0 |
| Operating Expenses | $4K |
| Operating Income | -$4K |
| Interest Expense | $0 |
| Net Income | -$4K |
| EPS (Basic) | $-0.01 |
05—Questions
Frequently Asked Questions
Is this filing for Byrn, Inc. (BRRN)?
No. The filing provided is the annual report of Techs Loanstar, Inc. (OTC BB ticker TCLN), which completed a share exchange with ZenZuu USA, Inc. in February 2010. The name and ticker in the request do not match the document, so the correct filing should be confirmed on EDGAR.
Does the company have any revenue or a viable business today?
No meaningful revenue. The company reported zero revenue for fiscal 2010 and only $5,374 of online advertising revenue in fiscal 2009 since inception. Operations were suspended in early 2009, and management says it will not have significant operations until the license is commercialized, which requires additional financing.
How much cash does the company need, and what happens if it cannot raise funds?
Management estimates about $300,000 is needed over the next twelve months to continue operations, plus $48,000 to maintain SEC reporting status, excluding $20,000 per month in officer compensation. Cash on hand was $244. If financing is not obtained, management says it would have to cease operations, and investors would lose their entire investment.
How much dilution might shareholders face?
Substantial. Convertible notes are convertible at a discount of up to 45% to market price, and additional shares may be issued to settle other obligations. The company also paid a 2-for-1 stock dividend in July 2010 and increased authorized shares from 300 million to 900 million, which raises the potential for further dilution.
Who controls the company and what risks does that pose?
Insider Tu Vu and related trusts beneficially hold a large block of shares (about 28.7% per the filing), and Tu Vu has an interest in ZenZuu USA. The license agreement gives ZenZuu, Inc. the right to nominate a majority of the board upon conversion or redemption of the notes. Investors may have limited influence over governance and strategic decisions.
06—Continue