Attached files
file | filename |
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EX-99.3 - EXHIBIT 99.3 - Born, Inc. | tcln8k21010ex99_3.htm |
EX-99.1 - EXHIBIT 99.1 - Born, Inc. | tcln8k21010ex99_1.htm |
EX-99.4 - EXHIBIT 99.4 - Born, Inc. | tcln8k21010ex99_4.htm |
EX-99.2 - EXHIBIT 99.2 - Born, Inc. | tcln8k21010ex99_2.htm |
EX-23.1 - EXHIBIT 23.1 - Born, Inc. | tcln8k21010ex23_1.htm |
EX-10.1 - EXHIBIT 10.1 - Born, Inc. | tcln8k21010ex10_1.htm |
EX-23.2 - EXHIBIT 23.2 - Born, Inc. | tcln8k21010ex23_2.htm |
EX-2.2 - EXHIBIT 2.2 - Born, Inc. | tcln8k21010ex2_2.htm |
EX-2.1 - EXHIBIT 2.1 - Born, Inc. | tcln8k21010ex2_1.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report Pursuant to Section 13 or
15(d) of
the Securities Act of 1934
Date of
Report (Date of earliest event reported):
February
10, 2010
TECHS LOANSTAR,
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
333-143630
|
20-4682058
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
319
Clematis Street - Ste 703
West Palm Beach, Florida
33401
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (561) 514-9042
112 North Curry Street,
Carson City, NV 89703 (Tel: 775-284-3770)
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ]
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
[ ]
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
[ ]
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
[ ]
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
FORWARD-LOOKING
STATEMENTS
This Current Report on Form 8-K
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. This Current Report includes statements regarding our
plans, goals, strategies, intent, beliefs or current expectations. These
statements are expressed in good faith and based upon a reasonable basis when
made, but there can be no assurance that these expectations will be achieved or
accomplished. These forward-looking statements can be identified by the use of
terms and phrases such as “believe,” “plan,” “intend,” “anticipate,” “target,”
“estimate,” “expect,” and the like, and/or future-tense or conditional
constructions (“will,” “may,” “could,” “should,” etc.). Items contemplating or
making assumptions about actual or potential future sales, market size,
collaborations, and trends or operating results also constitute such
forward-looking statements.
Although forward-looking statements in
this report reflect the good faith judgment of management, forward-looking
statements are inherently subject to known and unknown risks, business, economic
and other risks and uncertainties that may cause actual results to be materially
different from those discussed in these forward-looking statements. Readers are
urged not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report. We assume no obligation to update any
forward-looking statements in order to reflect any event or circumstance that
may arise after the date of this report, other than as may be required by
applicable law or regulation. Readers are urged to carefully review and consider
the various disclosures made by us in our reports filed with the Securities and
Exchange Commission (“SEC”) which attempt to advise interested parties of the
risks and factors that may affect our business, financial condition, results of
operation and cash flows. If one or more of these risks or uncertainties
materialize, or if the underlying assumptions prove incorrect, our actual
results may vary materially from those expected or
projected.
EXPLANATORY
NOTE
ZenZuu,
USA, Inc. (“ZZUSA”) was incorporated on June 5, 2009 under the laws of the state
of Nevada for the purpose of seeking a business opportunity in the online social
network industry. On June 8, ZZUSA merged (the “ZZP Merger”) with ZZPartners,
Inc. (“ZZP”), a Nevada corporation, formed in April 2008. In the ZZP
Merger, ZZP shareholders received one share of ZZUSA’s par value $0.001 common
stock for every share of ZZP. Accordingly, all of the assets and
liabilities of ZZP are now included in ZZUSA and events that occurred prior to
the ZZP Merger are referred to as activities of ZZUSA.
In the
ZZUSA June 30, 2009 audited financial statements, (included in this filing as
Exhibit 99.2) for comparative purposes ZZUSA is including a pro forma balance
sheet as of May 31, 2009. The pro forma balance sheet reflects the
balances of ZZP as of May 31, 2009 adjusted as if the ZZP Merger occurred on May
31, 2009. Accordingly, in the May 31, 2009 proforma balance sheet,
the historical deficit was reclassified to additional paid in capital. Also for
comparative purposes ZZUSA has included in the Statement of Operations the
results for the six months ending November 30, 2008 of ZZP.
1
ITEM
1.01 ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT.
The
disclosures set forth in Item 2.01 are hereby incorporated by
reference
to this Item 1.01.
ITEM
2.01 COMPLETION
OF ACQUISITION OR DISPOSITION OF ASSETS.
(A) SHARE
EXCHANGE TRANSACTION WITH ZENZUU USA, INC.
Pursuant
to an Agreement Concerning the Exchange of Securities dated February 10,
2010(the "Share Exchange Agreement"), by and between Techs Loanstar, Inc., a
Nevada corporation (the "Registrant" or the "Company") and ZenZuu USA, Inc., a
Nevada corporation ("ZZUSA"), the Company and ZZUSA entered into a share
exchange whereby all of the issued and outstanding capital stock of ZZUSA, were
exchanged for like securities of the Company, (the "Share Exchange"). On
February 17, 2010, the Company filed the Articles of Exchange with the Nevada
Secretary of State (the "Articles of Exchange," and together with the Share
Exchange Agreement, the "Plan of Exchange"). A copy of the press
release dated February 11, 2010 announcing the completion of the documents
relating to the Share Exchange is attached to this Form 8-K as Exhibit 99.1 and
incorporated herein by reference.
Immediately
prior to the Share Exchange the Company had 40,400,000 shares of common stock
outstanding. Upon closing the Company will retire 28,000,000 shares
of common stock. Immediately prior to the effective time of the Share
Exchange, ZZUSA had 46,750 shares outstanding of its common stock ("ZZUSA Common
Stock") and no shares of preferred stock. In accordance with the Plan of
Exchange, all of the shares of ZZUSA Common Stock were acquired by the Company
in exchange for 25,000,000 shares of company common stock, par value $.001 per
share ("Common Stock"). Accordingly, after giving effect to the Share Exchange,
the Registrant has approximately 37,400,000 shares of Common Stock
outstanding. As a result of the Share Exchange, the former ZZUSA
shareholders together hold approximately 66.8% of the Registrant's outstanding
voting power. Accordingly, the Share Exchange constitutes a change of
control of the Registrant.
ZZUSA
also had outstanding convertible debt securities (the “Convertible Notes”), the
outstanding principal and accrued and unpaid interest of which, as amended,
automatically convert on the six (6) month anniversary of the Merger (the
“Automatic Conversion Date”) into shares of Common Stock at a price per share
equal to 65% of the ten (10) average closing price of Common Stock immediately
preceding the Automatic Conversion Date. As a result of the Plan of Exchange,
these convertible debt securities were exchanged for like convertible securities
of the Company, whereby the outstanding principal and interest on such
securities automatically convert into shares of Common Stock at a price per
share equal to 65% of the ten (10) day average closing price of the Common Stock
immediately preceding the Automatic Conversion Date. Additionally, the
Convertible Notes are eligible for an early conversion date whereby the
principal and accrued and unpaid interest are convertible into shares of Common
Stock at a price per share equal to 55% of any consecutive five (5) day average
closing price, within the first thirty (30) calendar days that the common stock
is eligible to be traded.
2
(B) POST-EXCHANGE
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The
following table provides information, as of January 31, 2010, regarding
beneficial ownership of our common stock by: (i) each person known to us who
beneficially owns more than five percent of our common stock; (ii) each of our
directors; (iii) each of our executive officers; and (iv) all of our directors
and executive officers as a group.
The
number of shares beneficially owned is determined under rules promulgated by the
SEC, and the information is not necessarily indicative of beneficial ownership
for any other purpose. Including those shares in the tables does not, however,
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of those shares.
NAME OF BENEFICIAL OWNER
|
NUMBER
OF SHARES
BENEFICIALLY OWNED
|
PERCENT (1)
|
Henry
Fong
319
Clematis Street - Suite 703
West
Palm Beach, FL 33401
|
1,539,037
(2)
|
23.2%
|
Barry
Hollander
319
Clematis Street - Suite 703
West
Palm Beach, FL 33401
|
1,002,674
(3)
|
2.7%
|
All
Executive Officers and
Directors
as a Group (2 persons)
|
2,541,711
(2,3)
|
6.8%
|
Tu
Vu
2116
Cluster Branch Court
Longwood,
FL 32779
|
12,366,311
(4)
|
33.1%
|
Marcus
Family Trust
2116
Cluster Branch Court
Longwood,
FL 32779
|
2,005,348
|
5.4%
|
People
Benevolence Star Trust
2116
Cluster Branch Court
Longwood,
FL 32779
|
9,959,893
|
26.6%
|
(1)
|
Based
on 37,400,000 shares of common stock
outstanding.
|
(2)
|
Includes
1,539,037 shares held by Flagler Capital Partners, LLC, of which Mr. Fong
is a managing member. Mr. Fong has been the Chief Executive
Officer and a director of the Company since its
inception.
|
(3)
|
Includes
1,002,674 shares held by Venture Equity, LLC. of which Mr. Hollander is a
managing member. Mr. Hollander has been the Chief Financial
Officer of the Company since its
inception.
|
(4)
|
Includes
(a) 2,005,348 shares held by Marcus Family Trust, for which Mr. Vu is the
trustee, (b) 9,959,893 shares held by People Benevolence Star Trust, of
which Mr. Vu is the trustee, and (c) 401,070 shares Mr. Vu
owns.
|
3
(C) MANAGEMENT
In
accordance with the Share Exchange, the Registrant's Board of Directors was
reconstituted immediately following the effective time of the Share Exchange.
Prior to the Effective Date, Mr. Gary Pizzacalla was the sole member of the
Registrant's Board of Directors. Immediately following the Share Exchange, in
accordance with the Registrant's bylaws and the Chapter 78 of the Nevada Revised
Statutes, Mr. Pizzacalla appointed Henry Fong and Barry Hollander as directors
of the Company and Mr. Pizzacalla resigned his position as a director, leaving
Mr. Fong and Mr. Hollander as the sole members of the Board of Directors. Mr.
Fong and Hollander were the sole directors of ZZUSA immediately prior to the
Share Exchange. Following the appointments, the Registrant's newly-constituted
board of directors appointed new officers of the Registrant, as
follows:
Name
|
Age
|
Position
|
Henry
Fong
|
74
|
President,
Chief Executive Officer,
Secretary
and Director
|
Barry
Hollander
|
52
|
Chief
Financial Officer and Director
|
Mr. Fong
has been the Chief executive officer of ZZUSA since its inception and the Chief
executive officer of ZZPartners, Inc from its inception (April 2008) through its
merger with ZZUSA. Mr.
Fong has been the president and a director of Alumifuel Power Corporation (f/k/a
Inhibiton Therapeutics) since its inception in May
2004. Mr. Fong was the president, treasurer and a director of
Hydrogen Power, Inc. (f/k/a Equitex, Inc.) a publicly traded alternative energy
company, from its inception in 1983 to January 2007. Mr. Fong has been a
director of FastFunds Financial Corporation, a publicly traded financial
services company, since June 2004. Mr. Fong has been president and a
director of Equitex 2000, Inc. since its inception in 2001. Mr. Fong has been
President and a Director of China Nuvo Solar Energy, Inc. since March 2002.
China Nuvo Solar Energy is a publicly traded company developing alternative
energy solutions. Mr. Fong is currently the sole director, President
and chief financial officer of PB Capital International, Inc. (“PBIC”), a blank
check shell company. PBIC is seeking to merge with a target company. PBIC filed
a Form 10 registration statement which went effective in October
2009. From 1959 to 1982 Mr. Fong served in various accounting,
finance and budgeting positions with the Department of the Air Force. During the
period from 1972 to 1981 he was assigned to senior supervisory positions at the
Department of the Air Force headquarters in the Pentagon. In 1978, he was
selected to participate in the Federal Executive Development Program and in
1981, he was appointed to the Senior Executive Service. In 1970 and 1971, he
attended the Woodrow Wilson School, Princeton University and was a Princeton
Fellow in Public Affairs. Mr. Fong received the Air Force Meritorious Civilian
Service Award in 1982. Mr. Fong has passed the uniform certified
public accountant exam. In March 1994, Mr. Fong was one of twelve CEOs selected
as Silver Award winners in FINANCIAL WORLD magazine's corporate American "Dream
Team."
4
Mr.
Hollander has been the Chief financial officer of ZZUSA since its
inception. Mr. Hollander has been the Chief Financial officer of
ZZPartners, Inc from its inception (April 2008) through its merger with
ZZUSA. Mr.
Hollander is the sole Director, president and chief financial officer of Mint
Capital, Inc. (“Mint”), a blank check shell company. Mint is seeking to merge
with a target company. Mint filed a Form 10 registration statement which went
effective in January 2010. Mr. Hollander is an affiliate (greater than 10%
shareholder) of PBIC. Mr. Hollander has been the Acting Chief
Executive Officer of FastFunds Financial Corporation, a publicly traded company
since January 2007. Prior to becoming the Acting CEO of FastFunds,
Mr. Hollander had been a financial consultant to FastFunds. Mr.
Hollander has been the chief financial officer of China Nuvo Solar Energy, Inc.
a publicly traded company since May 2002. Mr. Hollander has been the
chief financial officer of VP Sports since March 1999. From 1994 to 1999, Mr.
Hollander was the chief financial officer of California Pro Sports, Inc., an
in-line skate importer, marketer and distributor. In 1999 California Pro merged
with Imaginon, Inc. Mr. Hollander has been since 1980 in various accounting,
senior management and executive positions. Mr. Hollander has a BS degree from
Fairleigh Dickinson University and passed the uniform certified public
accountant exam.
The
Company currently does not have any full-time employees other than its officers.
Currently, the Company has month-to-month arrangements with Henry Fong and Barry
Hollander for their management services, whereby it pays Mr. Fong $10,000 in
consideration of his services to the Company as President and Mr. Hollander
$10,000 a month in consideration of his services as Chief Financial
Officer.
The
Company plans on employing a Chief Technology Officer as well as computer
programmers and customer service support upon the completion of this
offering. Additionally, the Company is currently
searching for an experienced Chief Executive Officer and VP Sales with industry
experience, as well as public company experience. We have had
discussions with executive placement firm-Matchstar Venture Search
(“Matchstar”). Matchstar is experienced in executive placements in
the social networking space. In the interim, Mr. Henry Fong is
providing oversight for the corporate development, fund raising and Mr.
Hollander is providing oversight for the set-up of day-to-day operations, as
well as responsibility for preparing financial statements of the
company.
Executive
Compensation
Summary
Compensation of Executive Officers
The
following table sets forth all of the compensation awarded to, earned by or paid
to (i) each individual serving as ZZPartners’ principal executive officer during
the last completed fiscal year ending May 31, 2009; (ii) each other individual
that served as an executive officer of ZZPartners at the conclusion of the
fiscal year ended May 31, 2009 and who received in excess of $100,000 in the
form of salary and bonus during such fiscal year.
5
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Option
Awards
|
All
Other Compensation
|
Total
|
||||||
Henry
Fong
Chief
Executive Officer & President
|
2009
|
-
|
-
|
-
|
-
|
-
|
||||||
Barry
S. Hollander
Chief
Financial Officer
|
2009
|
$156,250
|
0
|
0
|
0
|
156,250
|
ZZPartners,
Inc. (the predecessor to ZenZuu USA, Inc.) had month-to-month arrangements with
Barry Hollander for his management services, whereby it pays Mr. Hollander
$12,500 monthly for his services as Chief Financial Officer as cash flow
permits. During the year ended Mr. Hollander received cash
compensation of $68,750 and the company had accrued unpaid fees of $87,500 as of
May 31, 2009. Effective with the merger with ZenZuu USA, Inc. the
Company will compensate Mr Fong and Mr. Hollander $10,000 per month as cash flow
permits.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information regarding each unexercised option and
non-vested stock award held by each of the ZenZuu named executive officers as of
May 31, 2009.
Name
|
Number
of Securities Underlying Unexercised
Options
Exercisable
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
||||
Henry
Fong
|
-
|
-
|
-
|
-
|
||||
Barry
S. Hollander
|
-
|
-
|
-
|
-
|
As of May
31, 2009, ZenZuu’s named executive officers did not hold any unexercised options
and non-vested stock awards.
Compensation
of Directors
Neither
ZenZuu nor ZZPartners paid fees to their respective directors for attendance at
meetings of the board; however, the Company may adopt a policy of making such
payments in the future. The Company will reimburse out-of-pocket
expenses incurred by directors in attending board and committee
meetings.
6
(D) DESCRIPTION
OF BUSINESS OF ZENZUU USA, INC.
Upon
completion of the Share Exchange, the Registrant ceased all operations relating
to its historical business and adopted the business plan of ZenZuu
USA,(“ZZUSA”). Set forth below in this section entitled "Description of Business
of ZenZuu USA, Inc." is a summary of ZenZuu's business plan. References to the
terms "we", "our" and "us" refers to ZZUSA.
ZZUSA was
incorporated on June 5, 2009 under the laws of the state of Nevada for the
purpose of seeking a business opportunity in the online social network industry.
On June 8, 2009 ZZUSA acquired 100 % of ZZPartners, Inc. (“ZZP”) in a share for
share exchange. Currently, we have limited operations, and do not
expect to have significant operations until we successfully commercialize the
license described below.
ZZP was
formed in April 2008 to acquire an exclusive license to use and operate in the
United States, the online social database and advertising revenue-share model
developed and maintained by ZenZuu, Inc. (“ZZI”), a Nevada
corporation. ZZPsigned a license agreement with ZenZuu, Inc. (“ZZI”),
a Nevada corporation, setting forth the terms of a 10-year exclusive license
(with successive ten-year renewal clauses) to use, in the United States,
certain intellectual
property of ZZI. ZZP began operations in June 2008 and in conjunction
with ZZI, helped build membership to over 275,000 registrations on the web site.
In early 2009 ZZP suspended operations due to the general economic climate as
well as a lack of working capital. During this period ZZP was only
able to generate nominal revenues.
ZenZuu,
Inc.
ZZI,
using Web 2.0 technology, has developed an online social network providing its
members a broad array of services, including the opportunity to create a user
profile and webpage, chat with friends, family or other persons through the
internet, upload pictures, videos or music and other tools. Web 2.0
technology aims to enhance creativity, information sharing and collaboration
among users. ZZI intends to generate revenues by selling exclusive
license rights in various jurisdictions throughout the world to use its social
network database and advertising revenue-share model in exchange for a license
fee. Additionally, ZZI will obtain a royalty from its respective
licensees for local advertising revenue received by such licensees.
ZZI’s
website, ZenZuu.com, began in February 2008 in beta version with two
members. By March 31, 2008, there were over 16,000 members and in
September 2008 there were over 180,000 members. Approximately 275,000 members
registered to join zenzuu.com. prior to the suspension of the marketing of the
website in early 2009. The growth occurred through existing members
sponsoring new members to join the network. Membership is free to all
individuals signing up on the social network of ZZI, but each new member must be
referred by an existing member. Based on its revenue-sharing model
(as discussed below), ZZI anticipates its online social network to expand. ZZI
plans on once again initiating a marketing campaign to attract new
members.
Management
believes what makes ZZI’s business plan unique is that it plans to distribute
approximately 80% of its total net worldwide advertising revenue received from
its licensees to its active independent representatives. Active
independent representatives (“Active Reps”) are ZZI members who log in to the
ZZI website at least 30 times during a calendar month. Active Reps
can earn larger shares of the amount distributed by enrolling additional members
who become Active Reps, and so on, based on new Active Reps enrolling additional
members. Potential investors are encouraged to review the website,
www.zenzuu.com, for further details and the terms and conditions of ZZI’s
membership.
7
ZZI will
be responsible for expenses related to the database servers and the
International Membership Downline, as well as building and maintaining the
platform for the advertising revenue-sharing model. ZZI will also be
responsible for continuing to run and develop the social network and downline
and all maintenance thereon. Early in 2009, ZZI suspended the marketing of its
website due to a lack of working capital as well as the general economic
climate.
Description
of Business of ZenZuu USA, Inc.
Our
Business Plan
License Agreement with
ZZI
We have
signed a license agreement with ZZI whereby we acquired, for a license fee of
$1,000,000, an exclusive 10-year license to use ZZI’s social network database
and advertising revenue-sharing model in the United States.
We paid
$450,000 of the license fee on June 27, 2008 and the remaining $550,000 is
to be paid by making monthly payments to ZZI, equal to twenty percent (20%) of
our cash balance at the end of each such month, until such time the payment
obligation is paid in full. The license agreement will further require us to pay
to ZZI a monthly royalty equal to 25% of our local advertising revenue
received during such month, net of commissions payable to our representatives
for obtaining the advertising. Under the license agreement, ZZI will
be entitled to receive any national advertising revenue obtained, but will be
obligated to pay us a 25% royalty on national advertising revenue received, net
of commissions payable on such advertising. The license agreement
will have successive 10-year renewal terms, at terms and conditions similar to
the original term. A copy of the license agreement is attached hereto
as Exhibit xx.
Pursuant
to the terms of the license agreement, prior to the conversion or redemption of
the Notes, the noteholders will be entitled name one-half of the members of our
board of directors. Upon conversion or redemption of the Notes, ZZI will be
entitled to nominate a majority of the members of our board of
directors.
Our
Business
In
addition to using ZZI’s social network database and advertising revenue-sharing
model in the Unites States, we also plan to further develop the virtual space
and keyword search capabilities of the site. We plan to capitalize on
the ZZI member base to pursue not only national advertisers but also to attract
local advertisers in every city in the United States where there is any
concentration of members. Our goal is to become the virtual Yellow Pages of
online advertisers.
Internet
advertising has grown exponentially over the last several years. In
recent years, the focus of internet usage has gone increasingly local; every day
millions of people look online for restaurants, florists, nightclubs, doctors
and house repairs (the list is endless) in their area. This has in
turn attracted the attention of local merchants throughout the United States to
use the internet to attempt to attract these people to their place of
business. According to “Executive Summary 2008 Outlook Local Online
Advertising” issued by Borrell Associates, local online ad spending will
increase to $12.6 billion up 48% from 2007 with local search advertising
expected to more than double in 2008. In 2007, it is estimated that
of the $100 billion advertisers are spending on newspaper, television, radio,
yellow pages, only about 5% is expected to be spent on local internet
advertising. Over the coming years there is an expected dramatic
shift in the percentage of dollars to be spent on local internet
advertising. Our business plan focuses on this opportunity -- the
ever growing online advertising market. Microsoft invested $240
million in Facebook for a 1.6% stake, valuing the three-year old Facebook with
about $150 million in revenue at $15 billion. A venture capital firm
that invested $12.7 million in May 2005 and now owns 11% of Facebook now holds
stock worth $1.65 billion.
8
Based on
the number of members of ZenZuu social network who reside in the United States,
we plan to attract national, as well as local, advertisers. Our
revenues will be driven by local advertisers as they pay for placing “banners,”
displays of links and key search words (together constituting “advertising
revenues”). Members are motivated to generate advertising revenues
and will be paid by a fifteen percent (15%) commission on such
revenue. Members can get local businesses to advertise within the
ZenZuu community to local members through the use of banner ads that will be
displayed 24 hours a day. Twenty-five percent (25%) of all net local
advertising revenues will be paid to ZZI pursuant to the license
agreement. A significant portion of the revenue distributed to ZZI
will in turn be distributed to its membership base, which in turn will allow
them to generate more membership and give our advertising clients more exposure,
thereby increasing our ability to obtain advertising clients.
We will
support the ZZI servers in the United States and provide downline redundancy
(backups) and development and email servers, as well as necessary
bandwidth. We will also be responsible for all expenses related to
running the business in the United States, including customer support, the use
of technical developers to co-develop our virtual local yellow page directory,
ad space and key word search and other technology development as required to run
our business. We plan on having corporate staff including marketing
professionals to work with third party advertising agencies and affiliates that
produce the advertising accounts, and we plan to have the appropriate staff of a
public company to insure all requirements (public filings, proper disclosures,
etc) are timely met.
Competition
We plan
to operate in a highly competitive and changing environment. We will compete
with other companies which offer services in the following areas:
·
|
sales
to advertisers of pay-per-click
services;
|
·
|
Sales
to advertisers for distribution through search engines, product shopping
engines, directories, websites or other
outlets;
|
·
|
provision
of local websites containing information and user feedback designed to
attract users and help consumers make better, more informed local
decisions, while providing targeted advertising inventory for
advertisers;
|
·
|
delivery
of online advertising to end users or customers of merchants;
and,
|
·
|
services
and outsourcing of technologies that allow merchants to manage their
advertising campaigns across multiple networks and track the success of
these campaigns.
|
9
We may
potentially compete with a variety of companies, including Google, Microsoft,
Yahoo! and Yellow Pages. myspace.com and facebook.com also provide
online social networks, while also generating monthly national advertising
revenues. We believe our business model differs from each of these
and other existing competitors as we are the first online social network to link
local advertising to members in the local market while also compensating our
members for participating in the revenue-generation
model. Additionally, our licensor, ZZI, intends to distribute up to
80% of its advertising revenues received to its active representatives, which
further differentiates our plan.
We expect
competition to intensify in the future because current and new competitors can
enter our market with little difficulty. The technical barriers to entering our
market are relatively low. In fact, many current Internet and media companies
presently have the technical capabilities and advertiser bases to enter the
search marketing services industry. Further, if there is consolidation among the
larger media and search engine companies with greater brand recognition, the
share of the market remaining for smaller search marketing services providers
could decrease. These factors could adversely affect our competitive position in
the search marketing services industry.
Some of
our competitors may be better positioned to succeed in this market, and may
have:
·
|
longer
operating histories;
|
·
|
more
management experience;
|
·
|
an
employee base with more extensive
experience;
|
·
|
larger
customer and user bases;
|
·
|
greater
brand recognition; and
|
·
|
significantly
greater financial, marketing and other
resources.
|
Currently,
and in the future, as the use of the Internet and other online services
increases, there are larger, more well-established and well-financed entities
that acquire companies.
Government
Regulation
Online
search, e-commerce and related businesses face uncertainty related to future
government regulation of the Internet through the application of new or existing
federal, state and international laws. Due to the rapid growth and widespread
use of the Internet, legislatures at the federal and state level have enacted
and may continue to enact various laws and regulations relating to the Internet.
Individual states may also enact consumer protection laws that are more
restrictive than the ones that already exist.
Furthermore,
the application of existing laws and regulations to Internet companies remains
somewhat unclear. For example, as a result of the actions of advertisers in our
network, we may be subject to existing laws and regulations relating to a wide
variety of issues such as consumer privacy, gambling, sweepstakes, advertising,
promotions, defamation, pricing, taxation, financial market regulation, quality
of products and services, computer trespass, spyware, adware, child protection
and intellectual property ownership and infringement. In addition, it is not
clear whether existing laws that require licenses or permits for certain of our
advertisers’ lines of business apply to us, including those related to insurance
and securities brokerage, law offices and pharmacies.
10
Many
Internet services are automated, and companies such as ours may be unknowing
conduits for illegal or prohibited materials. It is possible that
some courts may impose a strict liability standard or require such companies to
monitor their customers’ conduct. Although we do not believe we would
be responsible for such illegal conduct, it is possible that we would somehow be
held responsible for the actions of our advertisers or distribution
partners.
We may
also be subject to costs and liabilities with respect to privacy issues. Several
Internet companies have incurred penalties for failing to abide by the
representations made in their privacy policies. In addition, several states have
adopted legislation that requires businesses to implement and maintain
reasonable security procedures and practices to protect sensitive personal
information and to provide notice to consumers in the event of a security
breach. Further, it is anticipated that additional federal and state
privacy-related legislation will be enacted.
The
Federal Trade Commission (“FTC”) has recently reviewed the way in which search
engines disclose paid placements or paid inclusion practices to Internet users.
In 2002, the FTC issued guidance recommending that all search engine companies
ensure that all paid search results are clearly distinguished from non-paid
results, that the use of paid inclusion is clearly and conspicuously explained
and disclosed and that other disclosures are made to avoid misleading users
about the possible effects of paid placement or paid inclusion listings on
search results. Such disclosures, if ultimately mandated by the FTC
or voluntarily made by us, may reduce the desirability of our paid placement and
paid inclusion services. We believe that some users will conclude that paid
search results are not subject to the same relevancy requirements as non-paid
search results, and will view paid search results less favorably. If such FTC
disclosure reduces the desirability of our paid placement and paid inclusion
services, and “click-throughs” of our paid search results decrease, our business
could be adversely affected.
Properties
The
Company is currently utilizing space at no charge from a Company related to our
Chief Executive Officer and Chief Financial Officer at 319 Clematis Street,
Suite 703, West Palm Beach, FL. 33401. The Company is
currently looking for appropriate office space in the Orlando, Fl. proximity and
intends to occupy such space in February 2010.
Legal
Matters
The
Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse impact either
individually or in the aggregate on consolidated results of operations,
financial position or cash flows of the Company.
11
(E)
RELATED PARTY TRANSACTIONS
As of May
31, 2009, ZZUSA owed its chief financial officer (“CFO”) $87,500 for accrued but
unpaid management services. Through May 31, 2009 the Company was
valuing the services at $12,500 per month. Subsequent to June 1, 2009 the fee
for the services has been reduced to $10,000 per month and will be paid when
cash flow is available. In June 2009, the Company also began accruing
$10,000 a month for management services to its Chief Executive Officer
(“CEO”).
As of
November 30, 2009 a Company of which Mr. Fong is a managing partner has loaned
the Company $27,689 and Mr. Hollander has loaned the Company $3,750. The Notes
are due on demand and have a stated per annum interest rate of 8%.
(F) RISK
FACTORS
IN
GENERAL. The purchase of shares of the Registrant's common stock is very
speculative and involves a very high degree of risk. An investment in the
Registrant is suitable only for the persons who can afford the loss of their
entire investment. Accordingly, investors should carefully consider
the
following
risk factors, as well as other information set forth herein, in making an
investment decision with respect to securities of the Registrant.
Risks Related to Our
Business:
We
have a limited operating history on which to base an investment
decision.
ZZUSA is
a newly created startup company that has very limited operating
history. Subject to our payment obligations, we acquired an exclusive
U.S. license from ZZI to use its social network database and advertising
revenue-sharing model, thereby providing us with an opportunity for new business
development. As a startup company, we are subject to unforeseen
costs, expenses, problems and difficulties inherent in new business
ventures.
Our
business plan is heavily dependent upon our license from ZenZuu, Inc. and upon
ZenZuu, Inc.’s success.
We
currently have only nominal assets and have only commenced
operations. We have made a significant investment in acquiring an
exclusive license to use the online social network and revenue-sharing model of
ZZI. ZZI, was formed in April 2008, was operational through early 2009, and then
suspended its operations. Our business plan is heavily dependent upon the terms
of our license agreement with ZZI.
Our
business plan is heavily dependent upon ZZI’s success in maintaining its website
and building its membership base in accordance with its business
plan. If ZZI, once again determines to suspend or not to pro actively
market its website, it would likely prove detrimental to our
success.
12
There
will be no assurance that ZZI will be successful in reestablishing its marketing
plans.
If ZZI is
not successful in promoting and marketing its website to attract new members, it
could be detrimental to our success.
ZZI
will be able to exert significant control over our Company.
Pursuant
to the terms of the license agreement, ZZI will be entitled to nominate a
majority of our board of directors upon conversion or redemption of the Notes
issued in the Offering. It is possible that any or all of the persons
ZZI appoints to our board will have an existing relationship with ZZI or another
entity that has interests and goals that conflict with
ours. Additionally, Tu Vu, who beneficially holds a majority of the
Company’s common stock after the Share Exchange, holds an interest in
ZZI. Accordingly, ZZI and Mr. Vu will be able to exert significant
control over our Company.
Need
for additional financing.
We have
very limited funds, and such funds are not adequate to make any required license
payments and to develop our current business plan. We will be
required to raise additional funds to acquire the ZZI license and satisfy our
working capital requirements. Our ultimate success may depend on our
ability to raise additional capital. Funds may not be available from
any source, or if available, that they can be obtained on terms acceptable to
us.
No
history of success or profitability.
We have
limited current business operations and may incur significant losses and
negative operating cash flow for the foreseeable future, and we may never
achieve or maintain profitability. We may incur losses for the foreseeable
future and may never become profitable.
We
will compete with organizations of all sizes from multinational online websites
to similar sized startup companies. Developments by competitors may
render the Company’s technologies obsolete or non-competitive.
Companies
pursuing similar business plans represent substantial competition. Many of these
organizations are some of the largest companies in the world and have
substantially greater capital resources, research and development staffs and
facilities, as well as greater marketing capabilities than we
do. These organizations also compete with us to attract
qualified personnel, parties for acquisitions, joint ventures or other
collaborations. As a result, there is no assurance that our license
rights will prove viable or that we will be able to compete with these larger
organizations to produce revenues.
We
may fail to successfully bring to market revenue producing models based on our
technology, which may prevent us from achieving sales and market
share.
We expect
to derive a substantial portion of our revenues from advertising revenues from
national and local advertisers from programs that are under development and not
yet commercially available. If we fail to successfully develop these
technologies, we will likely be unable to recover the losses we may incur to
develop these technologies and may be unable to establish our sales and market
share and become profitable. Many of our proposed technologies are novel and
represent a departure from traditional online social network technologies, and
it is difficult to predict whether we will be successful in completing their
development.
13
ZZI’s
plan to create a large social network of members may not gain market acceptance,
which would prevent us from achieving sales and market share.
The
development of a successful market for national and local advertisers to place
their ads may be adversely affected by a number of factors, many of which are
beyond our control, including:
·
|
ZZI’s
failure to develop a large social online network that competes favorably
against other online social networks on the basis of quality and
performance;
|
·
|
whether
or not advertisers will accept ZZI’s social network as a suitable
advertising option; and,
|
·
|
ZZI’s
failure to develop and maintain its online social network website, as well
as its revenue sharing advertising
model.
|
If ZZI’s
online social network fails to gain market acceptance, it would be unable to
establish sales and market share and to achieve and sustain
profitability.
We
are dependent upon the quality of traffic in our network to provide value to our
advertisers and not having adequate controls could have a material adverse
effect on the value of our services to our advertisers and adversely affect our
revenues.
We plan
on utilizing certain monitoring processes with respect to the quality of the
traffic that we deliver to our advertisers. We plan on our members to have a
level of quality clicks and reduce causes of low quality clicks such as the
mechanical automation of clicking, and other types of invalid clicks, click
fraud, or click spam, the purpose of which is something other than to view the
underlying content. Additionally, we also seek to identify other indicators
which may suggest that a user may not be targeted by or desirable to our
advertisers. We may not be able to prevent a certain amount of low-quality
traffic will be delivered to our advertisers, which may be detrimental to those
relationships. If we are unable to stop or reduce low quality traffic it may
further prevent us from growing our base of advertisers and cause us to lose
existing advertisers.
If
we do not maintain and grow a critical mass of advertisers, the value of our
services could be adversely affected.
Our
success depends, in large part, on the maintenance and growth of a critical mass
of advertisers. Advertisers will generally seek the most competitive
return on investment from advertising and marketing
services. Advertisers may change providers or the volume of business
with a provider, unless the product and terms are competitive. In this
environment, we must compete to acquire and maintain our network of
advertisers.
If our
business is unable to maintain and grow our base of advertisers and does not
continue to improve over time, current and prospective advertisers may reduce or
terminate their business with us. Any decline in the number of advertisers could
adversely affect the value of our services.
14
If
we are unable to expand the number of users to our website and generate
sufficient revenues from Internet advertising, investments in this Company may
be jeopardized.
In order
to operate our website profitably, we must attract sufficient users, including
users who regularly visit our website. Advertisers reply upon various
metrics, including the number of unique visitors, the number of unique page
views, and the number of repeat visitors. These metrics help advertisers
determine whether or not to advertise on our website and the price which we will
receive from them. If we unable to attract sufficient users, we will not
generate sufficient revenues and your investment may be
jeopardized.
If
we fail to enhance our existing services and products or develop and introduce
new features in a timely manner to meet changing customer requirements, our
ability to grow our business will suffer.
Our
social network depends in part on rapidly changing technologies, which will
impact our capacity to allow multiple users. These market characteristics are
heightened by the changing nature of the Internet and the continuing trend of
companies from many industries to offer Internet-based applications and
services. The widespread adoption of new Internet, networking, streaming media,
or telecommunications technologies or other technological changes could require
us to incur substantial expenditures to modify or adapt our operating practices
or infrastructure. Our future success will depend in large part upon our ability
to:
·
|
identify
and respond to emerging technological trends in the
market;
|
·
|
develop
programming that attracts and retains large numbers of unique viewers and
visitors;
|
·
|
enhance
our products by adding innovative features that differentiate our products
and services from those of our
competitors;
|
·
|
acquire
and license leading technologies;
|
·
|
respond
effectively to new technological changes or new product and services
announcements by others and
|
·
|
hire
and retain personnel qualified to continually monitor, maintain and
improve the website
|
We will
not be competitive unless we continually introduce new services and programs or
enhancements to existing services and programs that meet evolving industry
standards and user needs.
15
Our
success in the future may depend on our ability to establish and maintain
strategic alliances, and any failure on our part to establish and maintain such
relationships would adversely affect our market penetration and revenue
growth.
We may be
required to establish strategic relationships with third parties in the online
social network industry, including marketing agreements with advertiser
aggregators. Our ability to establish strategic relationships will depend on a
number of factors, many of which are outside our control, such as the
competitive position of our technology and marketing plan relative to our
competitors. We may not be able to establish other strategic relationships in
the future.
In
addition, any strategic alliances that we establish, will subject us to a number
of risks, including risks associated with sharing proprietary information, loss
of control of operations that are material to developed business and
profit-sharing arrangements. Moreover, strategic alliances may be expensive to
implement and subject us to the risk that the third party will not perform its
obligations under the relationship, which may subject us to losses over which we
have no control or expensive termination arrangements. As a result, even if our
strategic alliances with third parties are successful, our business may be
adversely affected by a number of factors that are outside of our
control.
We
rely on third party technology, platform, carriers, server and hardware
providers, and a failure of service by these providers could adversely affect
our business and reputation.
We rely
upon third party co-location providers to host our main servers. If these
providers are unable to handle current or higher volumes of use, experience any
interruption in operations or cease operations for any reason or if we are
unable to agree on satisfactory terms for continued hosting relationships, we
would be forced to enter into a relationship with other service providers or
assume hosting responsibilities ourselves. If we are forced to switch hosting
facilities, we may not be successful in finding an alternative service provider
on acceptable terms or in hosting the computer servers ourselves. We may also be
limited in our remedies against these providers in the event of a failure of
service. In the past, we have experienced short-term outages in the service
maintained by one of our current co-location providers. We also rely on third
party providers for components of our technology platform, such as hardware and
software providers, credit card processors and domain name registrars. A failure
or limitation of service or available capacity by any of these third party
providers could adversely affect our business and reputation.
The
limited industry experience of our management team may affect our ability to
achieve our business objectives.
Our
current management team does not have significant industry experience, requiring
us to rely heavily on third party consultants with respect to industry matters,
and our ability to achieve our business objectives may be negatively
affected.
Our
management team may not be able to successfully implement our business
strategies.
If our
management team is unable to execute on its business strategies, then our
development, including the establishment of our advertising revenue sharing
program and our sales and marketing activities would be materially and adversely
affected. In addition, we may encounter difficulties in effectively managing the
budgeting, forecasting and other process control issues presented by any future
growth. We may seek to augment or replace members of our management team or we
may lose key members of our management team, and we may not be able to attract
new management talent with sufficient skill and experience.
16
We
depend on the growth of the Internet and Internet infrastructure for our future
growth and any decrease in growth or anticipated growth in Internet usage could
adversely affect our business prospects.
Our
future revenue and profits, if any, depend upon the continued widespread use of
the Internet as an effective commercial and business medium. Factors which could
reduce the widespread use of the Internet include:
·
|
possible
disruptions or other damage to the Internet or telecommunications
infrastructure;
|
·
|
failure
of networking infrastructures to alleviate potential overloading and
delayed response times;
|
·
|
a
decision by advertisers to spend more of their marketing dollars on
offline programs; and,
|
·
|
security
and privacy protection
|
In
particular, concerns over the security of transactions conducted on the Internet
and the privacy of users, including the risk of identity theft, may inhibit the
growth of Internet usage, especially online commercial transactions. In order
for the online commerce market to develop successfully, we and other market
participants must be able to transmit confidential information, including debit
and credit card information, securely over public networks. Any decrease in
anticipated Internet growth and usage could have a material adverse effect on
our business prospects.
If
we infringe the rights of third parties we could be prevented from selling
products, forced to pay damages, and defend against litigation.
If our
products, methods, processes and other technologies infringe the proprietary
rights of other parties, we could incur substantial costs and we may have
to:
·
|
obtain
licenses, which may not be available on commercially reasonable terms, if
at all;
|
·
|
redesign
our processes to avoid
infringement;
|
·
|
stop
using the subject matter claimed in the patents held by others, which
could cause us to lose the use of one or more of our product
candidates;
|
·
|
pay
damages; or
|
·
|
defend
litigation or administrative proceedings which may be costly whether we
win or lose, and which could result in a substantial diversion of our
valuable management resources.
|
Our
technological infrastructure is vulnerable to interruption and damage that may
be costly and time-consuming to resolve and may harm our business and
reputation.
Our
services may be interrupted in the future for an indeterminate length of time
and severely damage our business, financial condition and results of operations.
Our systems and operations are vulnerable to damage or interruption
from:
17
·
|
fire,
floods or other natural disasters;
|
·
|
network,
hardware or software failure;
|
·
|
power
loss;
|
·
|
telecommunications
failures;
|
·
|
terrorism,
war or sabotage;
|
·
|
computer
viruses; and
|
·
|
firewall
failures and “hackers”
|
We may
not have developed or implemented adequate protections or safeguards to overcome
any of these events. We also may not have anticipated or addressed many of the
potential events that could threaten or undermine our technology network. Any of
these occurrences could cause material interruptions or delays in our business,
result in the loss of data or render us unable to provide services to our
members and advertisers. In addition, if a person is able to circumvent our
security measures, he or she could destroy or misuse valuable personal
information about our members or disrupt our operations. We plan to deploy
firewall hardware intended to thwart hacker attacks. Although we plan on
attaining property insurance and business interruption insurance, our insurance
(if any) may not be adequate to compensate us for all losses that may
occur.
If we
fail to address these issues in a timely manner, we may lose the confidence of
our advertisers and distribution partners, our revenue may decline and our
business could suffer. In addition, as we expand our service offerings and enter
into new business areas, we may be required to significantly modify and expand
our software and technology platform. If we fail to accomplish these tasks in a
timely manner, our business and reputation will likely suffer.
If
we are unable to hire additional qualified personnel, our ability to grow our
business may be harmed.
We will
need to hire additional qualified personnel with expertise in technology and
sales and marketing. We may face significant competition for qualified
individuals, and we cannot be certain that our search for such personnel will be
successful. Attracting and retaining qualified personnel will be critical to our
success.
We
are susceptible to general economic conditions, and reduced spending in
advertising and marketing by merchants could adversely affect our revenues and
operating results.
Our
revenues and operating results may be subject to economic conditions, in
particular those conditions that impact advertising dollars spent by merchants.
If there were to be an economic condition that affected advertisers they may
immediately reduce their advertising and marketing budgets. We believe that
during periods of lower consumer activity, merchant spending on advertising and
marketing is more likely to be reduced, and more quickly, than many other types
of business expenses. These factors could cause a material adverse effect on our
operating results.
18
Risks Related to Owning our
Common Stock:
The
Market Price Of Our Common Stock May Fluctuate Significantly.
The
market price of our common shares may fluctuate significantly in response to
factors, some of which are beyond our control, such as:
·
|
the
announcement of new products or product enhancements by us or our
competitors;
|
·
|
developments
concerning intellectual property
rights;
|
·
|
quarterly
variations in our and our competitors' results of
operations;
|
·
|
changes
in earnings estimates or recommendations by securities
analysts;
|
·
|
developments
in our industry; and
|
·
|
general
market conditions and other factors, including factors unrelated to our
own operating performance.
|
Further,
the stock market in general has recently experienced extreme price and volume
fluctuations. Continued market fluctuations could result in extreme volatility
in the price of our common shares, which could cause a decline in the value of
our common shares. You should also be aware that price volatility might be worse
if the trading volume of our common shares is low.
Because
We Gained Access To The Public Markets Through The Registrant Pursuant To A
Share Exchange, We May Not Be Able To Attract The Attention Of Major Brokerage
Firms.
Additional
risks may exist since we gained access to the public markets through a share
exchange. Security analysts of major brokerage firms may not cover us since
there is no incentive to brokerage firms to recommend the purchase of our common
stock. Brokerage firms may not want to conduct any secondary offerings on our
behalf in the future.
Trading
Of Our Common Stock Is Limited.
Trading
of our common stock is conducted on the National Association of Securities
Dealers' Over-the-Counter Bulletin Board, or "OTC Bulletin Board." This may
adversely affect the liquidity of our securities, not only in terms of the
number of securities that can be bought and sold at a given price, but also
through delays in the timing of transactions and reduction in security analysts'
and the media's coverage of us. This may result in lower prices for our common
stock than might otherwise be obtained and could also result in a larger spread
between the bid and asked prices for our common stock.
Our
common stock may be subject to penny stock rules, which may make it more
difficult for our stockholders to sell their common stock.
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
certain penny stock rules adopted by the SEC. Penny stocks generally
are equity securities with a price of less than $5.00 per share. The
penny stock rules require a broker-dealer, prior to a purchase or sale of a
penny stock not otherwise exempt from the rules, to deliver to the customer a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the
transaction, and
19
monthly
account statements showing the market value of each penny stock held in the
customer’s account. In addition, the penny stock rules generally
require that prior to a transaction in a penny stock the broker-dealer make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the
transaction. These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary market for a stock that
becomes subject to the penny stock rules.
The
Company currently has outstanding convertible debt on its balance sheet and the
issuance of common stock in satisfaction of the convertible debt will cause
significant dilution to our shareholders.
We
currently have $878,000 of convertible debt on our balance sheet that have terms
that include issuing our common stock at up to a forty five percent (45%)
discount to the market price of our common stock upon its conversion. This will
cause significant dilution to our existing shareholders.
Our
shares may have limited liquidity.
A portion
of our shares of common stock will be subject to registration, and will be
closely held by certain insider investors. Consequently, the public float for
the shares may be highly limited. As a result, should stockholders wish to sell
shares into the open market they may encounter difficulty selling large blocks
of shares or obtaining a suitable price at which to sell their
shares.
An
investment in the Company may be diluted in the future as a result of the
issuance of additional securities, the exercise of options or warrants or the
conversion of convertible debt.
In order
to raise additional capital to fund its strategic plan, we expect to issue
additional shares of common stock or securities convertible, exchangeable or
exercisable into common stock from time to time, which could result in
substantial dilution to investors. If we are successful in raising capital, we
expect to issue securities convertible into common stock which would result in
substantial dilution to investors. The current condition of the credit markets
make it probable that if we are able to raise any working capital, it will be
through the issuance of convertible debt, or the sale of restricted securities
at a significant discount to the market price of our common stock. We
may not be successful in raising additional capital.
20
ITEM
3.02 UNREGISTERED
SALES OF EQUITY SECURITIES
As
disclosed in Item 2.01, in connection with the Share Exchange, the Company
issued an aggregate of 25,000,000 shares of its common stock to the former
holders of ZZUSA Common Stock. Additionally, convertible debt securities were
exchanged for like convertible securities of the Company, whereby the
outstanding principal and interest on such securities are convertible into
shares of our common stock at a price per share equal to 65% of the ten day
average closing price of the Common Stock immediately following the effective
Date.
The
Company relied on the exemption from federal registration under Section 4(2) of
the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder,
based on its belief that the issuance of such securities did not involve a
public offering, as there were fewer than 35 "non-accredited" investors, all of
whom, either alone or through a purchaser representative, had such knowledge and
experience in financial and business matters so that each was capable of
evaluating the risks of the investment.
ITEM
5.01. CHANGES
IN CONTROL OF REGISTRANT.
The
disclosures set forth in Item 2.01 are hereby incorporated by reference into
this Item 5.01.
Item
5.02 DEPARTURE
OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
Effective
as of February 10, 2010, the Company named Henry Fong its President, Secretary,
Treasurer and Director and Barry Hollander as its Chief Financial Officer and
Director. The appointment of Messrs. Fong and Hollander in these capacities was
contemporaneous with the resignation of Gary Pizzacalla as President, Chief
Executive Officer, Chief Financial Officer, Secretary and sole Director of the
Company.
The
biographies of Messrs. Fong and Hollander as set forth in Item 2.01 are hereby
incorporated by reference to this Item 5.02.
ITEM
5.06 CHANGE
IN SHELL COMPANY STATUSES
Pursuant to the Share
Exchange, effective as of February 10, 2010 the Company is no longer a shell
company. The transaction described in Item 2.01 is hereby incorporated by
reference to this Item 5.06.
ITEM
9.01 FINANCIAL
STATEMENTS AND EXHIBITS
(a) The
audited financial statements as of June 30, 2009 of ZZUSA and May 31, 2009 and
2008 of ZZPartners, Inc. (the predecessor to ZZUSA) are attached as an exhibit
hereto pursuant to Item 2.01 of Form 8-K. The unaudited financial statements for
the six months ended November 30, 2009 of ZZUSA are attached as an exhibit
hereto pursuant to Item 2.01 of Form 8-K.
(b) As a
result of its acquisition of ZZUSA described in Item 2.01, the Company is filing
the pro forma financial information required by Item 9.01 herewith.
21
(c)
Exhibits
Ex. No.
|
Description
|
|
2.1
|
Agreement
Concerning the Exchange of Securities by and among the Registrant and
ZENZUU USA, Inc. dated February 10, 2010. (Filed
herewith)
|
|
2.2
|
Articles
of Exchange relating to the share exchange by and between Techs Loanstar,
Inc. and ZENZUU USA, Inc. as filed with the Nevada Secretary of State on
February 17, 2010. (Filed
herewith)
|
|
10.1 | Website Hosting and License Agreement dated May 20, 2008 by and between ZZPartners, Inc. and ZenZuu, Inc. (Filed herewith) | |
23.1 | Consent of Independent Registered Public Accounting Firm. (Filed herewith) | |
23.2 | Consent of Independent Registered Public Accounting Firm. (Filed herewith) | |
99.1
|
Press
Release dated February 11, 2010. (Filed
herewith)
|
|
99.2
|
Audited
financial statements as of June 30, 2009 and for the one month ended June
30, 2009 for ZenZuu USA, Inc., and unaudited financial statements as of
November 30, 2009 and for the six months ended November 30, 2009 for
ZenZuu USA, Inc. (Filed
herewith)
|
|
99.3
|
Audited
financial statements as of May 31, 2009 and for the year ended May 31,
2009 for ZZPartners, Inc. (the predecessor to ZZUSA). (Filed
herewith)
|
|
99.4
|
Unaudited
condensed combined pro forma financial statements as of October 31, 2009
and for the six months ended October 31, 2009 and the year ended April 30,
2009, for Techs and ZZUSA combined. (Filed
herewith)
|
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date:
February 17,
2010
|
By:
/s/
Henry Fong
|
Henry
Fong
President
and Chief Executive Officer
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22