Why was this 10-K/A amendment filed?

The company filed Amendment No. 2 to revise its Item 9A controls and procedures disclosure and to restate the auditor's report and financial statements. The restatement moves a $808,333 license impairment from other expenses into operating expenses and reverses the elimination of ZZP's historical deficit. The net loss stays the same at $1,397,739.

Does the company have any revenue or operations that generate income?

No. The company reported no revenue for the eleven months ended April 30, 2010. Its only prior revenue was $5,374 from online advertising in fiscal 2009. It is development-stage, has no employees beyond its officers and directors, and its business plan depends on the ZenZuu social network's future success.

What are the main risks to an investor?

The company has only $244 in cash and a stockholders' deficit of about $1.2 million, and its auditor has raised going-concern doubt. It must raise substantial additional funds to pay the remaining $550,000 license obligation, which will likely dilute shareholders through convertible debt or discounted stock sales. Management states that investors could lose their entire investment if the company cannot raise capital.

How does the ZenZuu reverse merger affect the company's ownership?

Under the February 10, 2010 share exchange, former ZenZuu USA shareholders received 25,000,000 shares and obtained about 66.8% of the voting power, which constituted a change of control. Tu Vu, who holds an interest in ZenZuu, beneficially owns a large share of the company, and ZenZuu may gain the right to nominate a board majority upon conversion of the notes, giving insiders significant influence.

Are the company's internal controls reliable?

No. Management concluded that both disclosure controls and internal control over financial reporting were not effective as of April 30, 2010. The identified material weaknesses include the lack of a functioning audit committee, the lack of a majority of outside directors, inadequate segregation of duties, and ineffective controls over period-end financial reporting. Management said the first two weaknesses could lead to material misstatements in future periods.

MDTK/BRRND 10-K Filed Aug 1, 2011

01—Abstract

Summary

Summary of the 10-K/A filed August 1, 2011. Cited figures are marked; the original filing is the authoritative source.

Techs Loanstar, Inc. (BRRN/TCLN) filed this amended annual report (Amendment No. 2 to the Form 10-K/A for the fiscal year ended April 30, 2010) to revise Item 9A controls disclosures and restate the audit report and financial statements.

The company is a development-stage entity that completed a reverse merger on February 10, 2010 with ZenZuu USA, Inc., acquiring an exclusive U.S. license to ZenZuu's online social network and revenue-sharing advertising model. The restatement reclassifies a $808,333^a license impairment into operating expenses (increasing the loss from operations to $1,162,854 from $354,521) and reverses the elimination of ZZP's historical deficit, but leaves the net loss unchanged at $1,397,739 ($0.05 per share). Investors should note that the filing reports only $244 in cash, $1.2 million in total liabilities, a stockholders' deficit of about $1.2 million, no revenue for the period, and a going-concern warning from the auditor.

Management concluded that disclosure controls and internal control over financial reporting were not effective, citing material weaknesses including the absence of a functioning audit committee, inadequate segregation of duties, and ineffective period-end reporting controls. The company has no employees beyond its officers and directors, and it says it will need to raise substantial additional capital, likely through dilutive convertible debt or discounted equity, to pay the remaining $550,000^b license obligation and fund its plan.

Management states that without new financing the company may have to cease operations, in which case investors could lose their entire investment. The filing also discloses a large dilution overhang from $150,000^c of convertible notes that convert at steep discounts, and a stock dividend of two shares for each share held in July 2010, which expanded shares outstanding to roughly 139.9 million.

02—Key points

Key Highlights

Net loss of $1,397,739 for the eleven months ended April 30, 2010, with a license impairment of $808,333 now classified within operating expenses following the restatement.
Restatement reclassifies the license impairment into operating expenses, raising the loss from operations to $1,162,854 from $354,521, while the net loss is unchanged.
Balance sheet is extremely weak: total assets of $244 against total liabilities of $1,204,257, producing a stockholders' deficit of about $1.2 million.
Auditor expresses substantial doubt about the company's ability to continue as a going concern, and management says it may have to cease operations without new capital.
Management concluded internal controls were not effective, citing material weaknesses including no functioning audit committee, weak segregation of duties, and ineffective period-end reporting.
Remaining $550,000 license payment to ZenZuu, Inc. is owed, and the company's business depends almost entirely on the success of ZenZuu's unproven social network.
Significant dilution risk from convertible notes converting at up to 45% discounts, and a July 2010 two-for-one stock dividend that expanded shares outstanding to roughly 139.9 million.

03—Questions

Frequently Asked Questions

Why was this 10-K/A amendment filed?
The company filed Amendment No. 2 to revise its Item 9A controls and procedures disclosure and to restate the auditor's report and financial statements. The restatement moves a $808,333 license impairment from other expenses into operating expenses and reverses the elimination of ZZP's historical deficit. The net loss stays the same at $1,397,739.
Does the company have any revenue or operations that generate income?
No. The company reported no revenue for the eleven months ended April 30, 2010. Its only prior revenue was $5,374 from online advertising in fiscal 2009. It is development-stage, has no employees beyond its officers and directors, and its business plan depends on the ZenZuu social network's future success.
What are the main risks to an investor?
The company has only $244 in cash and a stockholders' deficit of about $1.2 million, and its auditor has raised going-concern doubt. It must raise substantial additional funds to pay the remaining $550,000 license obligation, which will likely dilute shareholders through convertible debt or discounted stock sales. Management states that investors could lose their entire investment if the company cannot raise capital.
How does the ZenZuu reverse merger affect the company's ownership?
Under the February 10, 2010 share exchange, former ZenZuu USA shareholders received 25,000,000 shares and obtained about 66.8% of the voting power, which constituted a change of control. Tu Vu, who holds an interest in ZenZuu, beneficially owns a large share of the company, and ZenZuu may gain the right to nominate a board majority upon conversion of the notes, giving insiders significant influence.
Are the company's internal controls reliable?
No. Management concluded that both disclosure controls and internal control over financial reporting were not effective as of April 30, 2010. The identified material weaknesses include the lack of a functioning audit committee, the lack of a majority of outside directors, inadequate segregation of duties, and ineffective controls over period-end financial reporting. Management said the first two weaknesses could lead to material misstatements in future periods.

04—Continue

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