UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934.
For the quarterly period ended September 30, 2003.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for the transition period from _________ to _________ .
Commission File Number: 333-87111
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
(Exact name of registrant as specified in charter)
DELAWARE 11-3504866
(State of or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
2410 Hollywood Blvd.
Hollywood, FL 33020
(Address of Principal Executive Offices)
(954) 927-0866
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES (x) NO ( )
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of September 30, 2003
13,560,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (x)
1
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
INDEX TO FORM 10-QSB
PART I. CONSOLIDATED FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited)
Balance Sheets as of September 30, 2003 and December 31, 2002 3
Statements of Operations for the three and nine months ended 4
September 30, 2003 and 2002 and the period January 5, 1999 (date
of incorporation) to September 30, 2003
Statement of Stockholders' Deficit for the nine months ended 5
September 30, 2003
Statements of Cash Flows for the three and nine months ended 6
September 30, 2003 and 2002, and the period January 5, 1999
(date of incorporation) to September 30, 2003
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (including cautionary statement) 10
Item 3. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Securities Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
Certifications 12
2
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
_________________________________________________________________________________________
ASSETS September 30,
2003 December 31,
(unaudited) 2002
CURRENT ASSETS:
Investment in LLC $ 250,000 $ -
Deposit 2,000 -
Furniture and equipment (net of accumulated
depreciation) 584 1,611
TOTAL $ 252,584 $ 1,611
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Note Payable $ 250,000 $ -
Advances from stockholders 13,389 19,846
Accrued liabilities 112,288 12,000
Total liabilities 375,677 31,846
STOCKHOLDERS' DEFICIT:
Preferred stock - $.001 par value; 10,000,000
shares authorized; zero shares issued and
outstanding - -
Common stock - $0.001 par value; 200,000,000
shares authorized; 13,560,000 shares issued
and outstanding 13,560 14,400
Additional paid-in capital 152,786 117,100
Deficit accumulated during the development stage (289,439) (161,735)
Total stockholders' deficit (123,093) (30,235)
TOTAL $ 252,584 $ 1,611
=========== ===========
_________________________________________________________________________________________
SEE NOTES TO FINANCIAL STATEMENTS.
3
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
_____________________________________________________________________________________________________________________
For the For the For the For the For the
three nine three nine Period
months months months months January 5, 1999
ended ended ended ended (date of
September September September September incorporation) to
30, 2003 30, 2003 30, 2002 30, 2002 September 30, 2003
REVENUES $ - $ - $ - $ - $ 5,275
EXPENSES:
Employee compensation 71,400 71,400 500 1,500 85,400
Stock based consulting 15,000 15,000 - - 65,000
Rent 5,875 5,875 - - 5,875
Office 1,288 1,288 - - 25,125
Other professional fees 27,717 30,614 1,050 15,800 83,617
Travel and entertainment - - - - 13,756
Unrealized loss - - - - 5,000
Interest 2,500 2,500 - - 2,500
Other 342 1,027 324 685 8,441
Total expenses 124,122 127,704 1,874 17,985 294,714
NET LOSS $ (124,122) $ (127,704) $ (1,874) $ (17,985) $ (289,439)
============ =========== =========== ========== =============
Net Loss Per Share - Basic and
Diluted $ (.00) $ (.00) $ (.00) $ (.00)
============ =========== =========== ==========
Weighted Average Number of Shares
Outstanding 13,406,700 14,065,300 14,400,000 14,400,000
============ =========== =========== ==========
_____________________________________________________________________________________________________________________
SEE NOTES TO FINANCIAL STATEMENTS.
4
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the nine months ended September 30, 2003
(Unaudited)
_____________________________________________________________________________________________________________
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage Total
Balances, December 31, 2002 14,400,000 $14,400 $117,100 $ (161,735) $ (30,235)
Common stock issued for services 300,000 300 14,700 15,000
Capital Contribution - - 19,846 - 19,846
Cancellation of shares (1,140,000) (1,140) 1,140 - -
Net Loss - - - (127,704) (127,704)
Balances, September 30, 2003 13,560,000 $13,560 $152,786 $ (289,439) $(123,093)
=========== ======== ========= ============ ==========
_____________________________________________________________________________________________________________
SEE NOTES TO FINANCIAL STATEMENTS.
5
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
____________________________________________________________________________________________________________________________
For the For the For the period
For the three nine three For the January 5, 1999
months months months nine months (date of
ended ended ended ended incorporation)
September September September September to September
30, 2003 30, 2003 30, 2002 30, 2002 30, 2003
Cash Flows From Operating Activities:
Net loss $ (124,122) $ (127,704) $ (1,874) $ (17,985) $ (289,439)
Adjustments to reconcile net loss to net
cash used by operating activities:
Stock based consulting services 15,000 15,000 - - 65,000
Depreciation 342 1,027 324 972 4,425
Non-cash compensation - - 500 1,500 14,000
Increase in deposit (2,000) (2,000) - - (2,000)
Increase in accrued liabilities 99,777 100,288 1,050 14,013 112,288
Net Cash Used by Operating Activities (11,003) (13,389) - (1,500) (95,726)
Cash flows from Investing Activities -
Purchases of furniture and equipment - - - - (5,009)
Cash Flows From Financing Activities:
Capital Contribution - 19,846 - - 19,846
Proceeds from issuance of common stock - - - - 45,268
Advances from (repayments to) affiliate -
net 11,003 (6,457) - 1,500 35,621
Cash Provided by Financing Activities 11,003 13,389 - 1,500 100,735
Net Increase (decrease) In Cash and Cash
Equivalents - - - - -
Cash and Cash Equivalents at Beginning of
Period - - - - -
Cash and Cash Equivalents at End of Period $ - $ - $ - $ - $ -
============ ============ ========== ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ - $ - $ - $ -
============ ============ ========== ============ ============
Cash paid for income taxes $ - $ - $ - $ - $ -
============ ============ ========== ============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During
the year ended December 31, 2000, common stock and additional paid-in-capital
increased by $445 and $21,787, respectively when $22,232 of affiliate advances
were converted to common stock. In addition, during the nine months ended
September 30, 2003, we issued a note payable of $250,000 as consideration for an
interest in an LLC (see Note A)
____________________________________________________________________________________________________________________________
SEE NOTES TO FINANCIAL STATEMENTS.
6
SENTICORE, INC.
(fka Hojo Holdings, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
________________________________________________________________________________
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Senticore, Inc. fka Hojo Holdings, Inc. ("Senticore") was incorporated under the
laws of the state of Delaware on January 5, 1999. The accompanying consolidated
financial statements include the accounts of Senticore and its wholly owned
subsidiary, Global Wi Fi Corp., which has effectively been dormant since its
inception in April 2003 (collectively "we", "us", "our"). We are considered to
be in the development stage as defined in Financial Accounting Standards Board
Statement No. 7, and accordingly, most of our accounting policies and procedures
have not yet been established. We initially intended to become an internet
professional services firm specializing in high-end web site development,
however for various reasons, our Board decided that it was in the best interests
of our shareholders to seek other opportunities by merging and/or acquiring
another company. Towards this goal, we entered the following transactions
subsequent to June 30, 2003:
o In July 2003, we purchased a 60% interest in Ecats Development, LLC; a
related entity by virtue of our Vice President's ownership interest.
As consideration, we issued a 6% note payable for $250,000, which note
was paid in November 2003. Because we do not control the operations of
the LLC, our investment has been accounted for using the equity method
of accounting. As of September 30, 2003, we had recognized $2,500 of
interest expense on the note, which amount is included in accrued and
other liabilities in the accompanying consolidated balance sheet.
o In October 2003, we executed a formal Letter of intent to purchase
three gas stations carrying the Phillips 66 flag in Decatur, Illinois.
We anticipate that the three properties will be acquired for a total
purchase price of $3,900,000. The transaction has not yet closed.
o On October 31, 2003, we entered into an "Agreement and Plan of Merger"
with Smith Forestal (and its stockholders), a corporation organized
and existing under the laws of Costa Rica. Pursuant to this agreement,
and subsequent to regulatory approval, each share of Forestal common
stock shall be converted into 94,623 shares of our common stock and
112.5 shares of our Class A Voting Convertible Preferred Stock. In the
aggregate, we anticipate issuing approximately 18,924,600 shares of
our common stock and 22,500 shares of our Class A Voting Convertible
Preferred Stock (which shares are convertible into our common stock at
the rate of 200 common shares to one preferred share) for all of the
shares of Forestal (all of these share amounts have been adjusted for
the stock split discussed below).
In July 2003, we entered a purchase agreement to acquire certain real property
in Canada in exchange for $50,000 and 2,000,000 shares of our preferred stock.
The agreement was subsequently canceled.
In April 2003, the holders of a majority of our issued and outstanding shares
approved the amendment to our articles of incorporation to provide for the
authorization of 10,000,000 shares of preferred stock. In addition, on November
3, 2003, our Board of Directors announced a three for one stock split of our
common stock for each share of common stock held as of November 28, 2003. The
Board also approved an increase in the total number of common shares authorized
from 20,000,000 to 200,000,000 shares. As a result of the above, all references
to the number of shares and par value in the accompanying consolidated financial
statements and notes thereto have been adjusted to reflect the stock split and
increase in number of shares authorized as though all such changes had been
completed as of January 5, 1999 (date of incorporation).
7
Basis of Presentation
Our accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the instructions to Form 10-QSB and Rule
10-1 of Regulation S-X of the Securities and Exchange Commission (the "SEC").
Accordingly, these financial statements do not include all of the footnotes
required by accounting principles generally accepted in the United States of
America. In our opinion, all adjustments (consisting of normal and recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 2003 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2003. The accompanying financial statements and the notes should be
read in conjunction with our audited financial statements as of and for the year
ended December 31, 2002 contained in our Form 10-KSB.
Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements. The reported amounts of revenues and expenses during the reporting
period may be affected by the estimates and assumptions we are required to make.
Actual results could differ from those estimates.
NOTE B - GOING CONCERN
Our financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. We have incurred net operating losses since our
inception and have a stockholders' deficit at September 30, 2003. Our ability to
continue as a going concern is ultimately contingent upon our ability to attain
profitable operations through the successful development or integration of an
operating business. Our plans include selling shares of our common stock and/or
raising other debt or equity capital, however there is no assurance that we will
be successful in our efforts to raise capital, and/or in our efforts to locate
and merge with, acquire, or develop a suitable business. These factors, among
others, indicate that we may be unable to continue as a going concern for a
reasonable period of time. Our financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should we be unable to continue as a going concern.
NOTE C - INCOME TAXES
We recognized losses for both financial and tax reporting purposes during each
of the periods in the accompanying statements of operations. Accordingly, no
provisions for income taxes and/or deferred income taxes payable have been
provided for in the accompanying financial statements.
Assuming they are not limited and/or lost as a result of "change in control"
provisions of the Internal Revenue Code, at September 30, 2003, we had net
operating loss carryforwards of approximately $95,000 for income taxes. These
carryforwards expire in various periods through September 30, 2023. The deferred
income tax asset arising from these net operating loss carryforwards is not
recorded in the accompanying balance sheet because we established a valuation
allowance to fully reserve such asset, as its realization did not meet the
required asset recognition standards established by SFAS 109.
NOTE D - RELATED PARTY TRANSACTIONS
We recognized $1,500 of non-cash employee compensation during the nine month
period ended September 30, 2002. We believe this amount represents the fair
value of services provided to us by our president during this period. Because
this compensation will not be paid, now or in the future, the amount recorded as
of September 30, 2002 was reflected as an increase in additional paid-in
capital.
8
As consideration for various consulting services incident to the merger with
Smith Forestal (see Note A), we have agreed to issue 3,600,000 shares of our
common stock and 22,500 shares of our Class A Convertible Preferred Stock (on a
split adjusted basis) to our Board Chairman.
NOTE E - LOSS PER SHARE
We compute net loss per share in accordance with SFAS No. 128 "Earnings per
Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic net loss per share is
computed by dividing the net loss available to common stockholders for the
period by the weighted average number of common shares outstanding during the
period. Diluted net loss per share is computed by dividing the net loss for the
period by the number of common and common equivalent shares outstanding during
the period. There were no common equivalent shares outstanding during the period
January 5, 1999 (date of incorporation) to September 30, 2003 accordingly basic
and diluted net loss per share are identical for each of the periods in the
accompanying statements of operations.
NOTE F - COMMITMENT
In July 2003, we entered an operating lease agreement for our administrative
facility that requires monthly payments of approximately $2,350 (including sales
tax). Rent expense under this lease during the three and nine months ended
September 30, 2003 was $5,875. We have the right to terminate this lease upon
ninety days written notice.
NOTE G - STOCK- BASED CONSULTING EXPENSE
In August 2003, we issued 300,000 shares of our common stock to a consulting
firm as consideration for investor relations and other services for a period of
six months. The value of these services, which was based on the number, and fair
value, of shares issued (share prices represent the price at which other shares
were sold at the date the services were rendered), has been reflected as stock
based consulting expenses in the accompanying September 30, 2003 consolidated
statement of operations.
________________________________________________________________________________
9
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (INCLUDING CAUTIONARY STATEMENT)
The following discussion and analysis should be read in conjunction with the
balance sheets as of December 31, 2002 and September 30, 2003 and the statements
of operations and cash flows as of and for the three and nine months ended
September 30, 2003 and 2002 included with this Form 10-QSB. In addition, readers
are referred to the cautionary statement below, which addresses forward-looking
statements.
We are considered to be in the development stage as defined in Financial
Accounting Standards Board Statement No. 7. Since our inception, we have only
generated $5,275 of revenues ($5,000 of which resulted in us receiving stock in
lieu of cash).
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by our officers or our agents contain statements which
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis and Results of Operations, and include statements
regarding the intent, belief or current expectations us, our directors or our
officers with respect to, among other things: (i) our liquidity and capital
resources; (ii) our financing opportunities and plans and (iii) our future
performance and operating results. Investors and prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. The factors that might cause such differences
include, among others, the following: (i) any material inability of us to
successfully internally develop our products; (ii) any adverse effect or
limitations caused by Governmental regulations; (iii) any adverse effect on our
positive cash flow and abilities to obtain acceptable financing in connection
with our growth plans; (iv) any increased competition in business; (v) any
inability of us to successfully conduct our business in new markets; and (vi)
other risks including those identified in our filings with the Securities and
Exchange Commission. We undertake no obligation to publicly update or revise the
forward looking statements made in this Form 10-QSB to reflect events or
circumstances after the date of this Form 10-QSB or to reflect the occurrence of
unanticipated events.
Results of Operations
We did not generate any revenues during the nine months ended September 30, 2003
and 2002, and our respective net losses for such periods were $127,704 and
$17,985.
Since our inception we have incurred approximately $294,700 expenses;
approximately $211,000 which resulted, or are expected to ultimately result, in
the outlay of cash. These expenses resulted substantially from our efforts to
establish clients and expand our business operations.
Liquidity and capital resources
Because we are a development stage enterprise, our operating and capital
requirements have exceeded our cash flow generated by operations. During the
period January 5, 1999 to September 30, 2003, we used cash of approximately
$100,700 for operating and investing activities. These cash outflows have been
funded by stockholder advances, capital contributions and proceeds received from
sales of our common stock.
As a result of our brief operating history, we have limited meaningful
historical financial data upon which to base planned operating expenses.
However, given our recent merger activity, we expect to make significant
expenditures during the next twelve months. These expenditures will be used to
pay salaries, professional fees and other expenses incident to our business. We
will need to raise additional funds through private equity or debt placements,
or public offerings of our stock. If we are unable to raise these funds we will
not be able to meet our cash needs for the next year, and investors may lose
their entire investment.
10
Our anticipated expense levels in the future are based in part on our
expectations as to future revenue. Revenues and operating results generally will
depend on the volume and timing of transactions, as well as our ability to
complete transactions. There can be no assurance that we will be able to
accurately predict our net revenue, particularly in light of our limited
operating history, and we may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall or other unanticipated changes
in our industry. Any failure by us to accurately make predictions would have a
material adverse effect on our business, results of operations and financial
condition.
Item 3. CONTROLS AND PROCEDURES
Within 90 days prior to the date of filing of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including the Chief Executive Officer (who also effectively serves as the Chief
Financial Officer), of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our Chief Executive Officer concluded that
our disclosure controls and procedures are effective for gathering, analyzing
and disclosing the information we are required to disclose in the reports we
file under the Securities Exchange Act of 1934, within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in our internal controls or in other factors that could significantly affect
internal controls subsequent to the date of this evaluation.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act 2002
(b) Reports on Form 8-K.
On November 10, 2003 we filed a Current report on Form 8-K dated
November 6, 2003 to report under Item 5 a merger agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGNATURE TITLE DATE
/s/ Carl Gessner CEO & Acting CFO December 1, 2003
11
