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 March 31, 2004.
( ) 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.
(F/K/A 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 March 31, 2004.
53,824,554 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (x)
1
SENTICORE, INC.
(F/K/A HOJO HOLDINGS, INC.)
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited)
Balance Sheet as of March 31, 2004 3
Statements of Operations for the three months ended 4
March 31, 2004 and 2003, and the period January 5, 1999
(date of incorporation) to March 31, 2004
Statements of Cash Flows for the three months ended 5
March 31, 2004 and 2003, and the period January 5, 1999
(date of incorporation) to March 31, 2004
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations (including Cautionary Statement)
Item 3. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Securities Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
Certifications 13
2
Item 1.
Senticore, Inc.
f/k/a Hojo Holdings, Inc.
(A Development Stage Enterprise)
BALANCE SHEET AS OF MARCH 31, 2004
(UNAUDITED)
________________________________________________________________________________
ASSETS
Current Assets:
Cash $ 25,390
Advances to affiliate 67,500
Total current assets 92,890
Investment in land 141,000
Deposit 2,000
Furniture and equipment - net 444
TOTAL $ 236,334
=============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES:
Current Liabilities:
Note payable $ 490,000
Stockholder advances 223,877
Accounts payable and accrued liabilities 68,769
Total current liabilities 782,646
STOCKHOLDERS' (DEFICIT):
Preferred stock, $.001 par value, 20,000,000 shares
authorized -
Common stock, - $.001 par value; 200,000,000 shares
authorized; 53,824,554 shares issued and outstanding 53,825
Additional paid-in capital 1,280,451
Deferred stock and interest compensation (214,822)
(Deficit) accumulated during the development stage (1,665,766)
Total stockholders' (deficit) (546,312)
TOTAL $ 236,334
=============
________________________________________________________________________________
See notes to financial statements.
3
Senticore, Inc.
f/k/a Hojo Holdings, Inc.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(UNAUDITED)
__________________________________________________________________________________________________________
For the Period
January 5, 1999
For the three For the three (date of
months ended months ended incorporation) to
March 31, 2004 March 31, 2003 March 31, 2004
REVENUE $ - $ - $ 5,275
EXPENSES:
Stock based compensation 525,215 - 948,639
Stock based interest 141,420 - 235,720
Equity in loss of LLC - - 109,000
Other selling, general and administrative
expenses 117,461 3,582 377,682
Total expenses 784,096 3,582 1,671,041
NET (LOSS) $ (784,096) $ (3,582) $ (1,665,766)
============= ============ =============
Net (Loss) Per Share-
Basic and Diluted $ (0.02) $ (0.00)
============= ============
Weighted Average Number of
Shares Outstanding - Basic and Diluted 42,183,300 14,400,000
============= ============
__________________________________________________________________________________________________________
See notes to financial statements.
5
Senticore, Inc.
f/k/a Hojo Holdings, Inc.
(A Developmental Stage Enterprise)
Statements of Cash Flows
(UNAUDITED)
___________________________________________________________________________________________________
For the Period
January 5, 1999
For the three For the three (date of
Months ended Months ended incorporation) to
March 31, 2004 March 31, 2003 March 31, 2004
Cash (used by) operating activities $ (83,229) $ (2,386) $ (265,197)
Cash (used by) investing activities- (67,500) - (72,509)
Cash flows from financing activities
Proceeds from borrowings under note payable 240,000 - 490,000
Repayments of note payable - - (250,000)
Advances from stockholder 81,119 2,386 167,232
Repayments to stockholder (145,000) - (145,000)
Proceeds from issuance of common stock - - 81,018
Other capital contributions - - 19,846
Cash provided by financing activities 176,119 - 363,096
Increase in cash 25,390 - 25,390
Cash, beginning of period - - -
Cash, end of period $ 25,390 $ - $ 25,390
============== ============ ==============
___________________________________________________________________________________________________
See notes to financial statements
6
Senticore, Inc.
f/k/a Hojo Holdings, Inc.
(A Development Stage Enterprise)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2004
________________________________________________________________________________
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Senticore, Inc. fka Hojo Holdings, Inc. (collectively "we", "us", "our"). was
incorporated under the laws of the state of Delaware on January 5, 1999. 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.
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
shareholders 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 in the accompanying 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).
Issuances and Sales of Common Shares
During the periods covered by these financial statements and subsequent thereto
we issued shares of common stock without registration under the Securities Act
of 1933. Although we believe that the issuances and sales did not involve a
public offering of its securities and that the we did comply with the "safe
harbor" exemptions from registration, we could be liable for rescission of the
sales and/or issuances if such exemptions were found not to apply and this could
have a material negative impact on our financial position and results of
operations.
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 of the
Securities and Exchange Commission (the "SEC"). Accordingly, these financial
statements do not include all of the footnotes required by generally accepted
accounting principles. In our opinion, all adjustments (consisting of normal and
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2004 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2004. The accompanying financial statements and the notes thereto
should be read in conjunction with our audited financial statements as of
December 31, 2003 and for the years ended December 31, 2003 and 2002 contained
in our Form 10-KSB.
7
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 and assets and
liabilities during the reporting period may be affected by the estimates and
assumptions we are required to make. Actual results could differ from our
estimates.
Stock-Based Compensation
We account for equity instruments issued to employees for services based on the
fair value of the equity instruments issued and account for equity instruments
issued to other than employees based on the fair value of the consideration
received or the fair value of the equity instruments, whichever is more reliably
measurable.
We account for stock based compensation in accordance with SFAS 123, "Accounting
for Stock-Based Compensation." The provisions of SFAS 123 allow companies to
either expense the estimated fair value of stock options or to continue to
follow the intrinsic value method set forth in Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) but disclose the
pro forma effects on net income (loss) had the fair value of the options been
expensed. The Company has elected to continue to apply APB 25 in accounting for
its stock option incentive plans.
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 December 31, 2002. During the year
ended December 31, 2003, and the three month period ended March 31, 2004,
certain stock options and warrants have been issued, however they are ignored in
the loss per share calculations as they are anti-dilutive. Accordingly basic and
diluted net loss per share are identical for each of the periods in the
accompanying statements of operations.
Reclassifications
Certain amounts in the March 31, 2003 financial statements have been
reclassified to conform to the presentation in the March 31, 2004 financial
statements.
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 working capital and stockholders' deficits at March 31, 2004.
In addition, we have no revenue generating operations. 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. In addition, our ability to continue as a
8
going concern must be considered in light of the problems, expenses and
complications frequently encountered by entrance into established markets and
the competitive environment in which we operate. Our plans include consummating
various acquisitions of operating companies as discussed in our audited
financial statements included in Form 10-KSB. In the interim, we plan to
continue to fund our operating expenses through the issuance of our common stock
for services and/or cash and to continue to borrow from certain shareholders or
unrelated parties. However, there is no assurance that we will be successful in
our efforts to raise capital, and/or in our efforts to complete these
transactions or to locate and merge with, acquire, or develop any other 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 B - SIGNIFICANT FIRST QUARTER EVENTS
Notes Payable
In March 2004, we borrowed $240,000 under a note payable requiring interest at
20% and payable within one year from the date of the note. The note is
collateralized by 5,000,000 shares of our common stock; 2,500,000 of which are
owned by our officers.
In addition, during the first quarter of 2004, we provided additional collateral
of 3,000,000 shares to the holder of a $250,000 note existing at December 31,
2003 (in addition to the 4,500,000 shares of collateral existing at December 31,
2003). If we fail to pay the note at maturity (May 31, 2004), the payor shall
have the right to retain a significant portion of the collateral as additional
interest. If this occurs, we will be required to record additional expense at
the date of the default based on the fair market value of our common stock at
that time.
Stock Based Officer Compensation
In 2003, we recognized $235,473 of compensation to our officers, which liability
was satisfied in 2004 through the issuance of approximately 3,837,500 shares of
our common stock. Because this compensation was paid in the form of common stock
in lieu of cash, the normal compensation for these officers was increased by a
factor of 25% prior to determining the number of shares to be issued.
In addition to the shares issued for compensation accrued at December 31, 2003,
we also issued 417,193 shares of our common stock to our officers as
consideration for their compensation for the first two months of 2004. Because
this compensation was paid in the form of common stock in lieu of cash, the
normal compensation for these officers was increased by a factor of 25% prior to
determining the number of shares to be issued. The shares were valued at
$69,232.
Other Issuances of Common Stock
On February 10, 2004, our Board of Directors approved the issuance of 1,925,000
shares of our common stock having a value of $.10 per share for various
consulting services to be provided in 2004 (however 900,000 of these shares are
being held by a third party intermediary, and we do not anticipate issuing such
shares to the consultant due to a lack of performance on their part). As a
result, we recognized $102,500 of stock based consulting expenses in the first
quarter of 2004. In addition, we may ultimately be required to record additional
stock based consulting expenses of approximately $90,000 if we are required to
release the remaining 900,000 shares to the applicable consultant.
9
In addition, on February 13, 2004, our Board agreed to issue 250,000 shares of
our common stock for investor and public relations services to be provided for a
period of one year. The shares had a value of approximately $22,250 on such
date; accordingly we recognized $3,750 of stock based consulting expenses during
the quarter ended March 31, 2004. The related deferred stock consulting charge
will be amortized to expense over the remaining term of the agreement (10
months). In addition, we recognized $10,000 of stock based consulting expense as
a result of an option granted to this person (250,000 shares at a price per
share of $.25).
In addition to the above, during the first quarter of 2004, we issued the
following shares of our common stock as consideration for certain consulting
services and recorded certain stock based compensation based on the number of
shares issued and the fair market value of our stock at the dates of the
respective agreements:
o 1,000,000 shares to a minority stockholder, whereby such stockholder
has agreed to serve as our representative to the Latin American timber
industry on a consulting basis. The shares serve as compensation for a
maximum of 500 hours of the consultant's time in 2004. Since 80% of
these hours were incurred prior to March 31, 2004, we have recognized
$80,000 of stock based consulting expenses in the first quarter of
2004, and will recognize an additional $20,000 of such expense in the
second quarter of 2004.
o 755,000 shares to attorneys and consultants for certain legal and
consulting services. As a result we recognized stock based consulting
expenses of $86,275 based on the fair market value of the shares
issued during the first quarter of 2004.
o 1,600,000 shares of our common stock having a fair market value of
$.11 per share for various consulting services to be provided in 2004.
The 1,600,000 shares will result in total stock based consulting
expense of $176,000 over the terms of the agreements ( $139,333 of
which was recognized in the first quarter of 2004).
o 10,500,000 shares of our stock was issued to certain owners of Smith
Forestal; an entity we anticipate acquiring in 2004. If the
acquisition is not consummated, the shares will be returned to us.
Finally, we canceled 12,000,000 shares that were outstanding at December 31,
2003 as the consulting agreement giving rise to the issuance of shares was
terminated and canceled before services were rendered.
NOTE C - OTHER RELATED PARTY TRANSACTIONS
We periodically receive advances from various stockholders. The net balance of
these advances, which are reflected as due to stockholders in the accompanying
balance sheet, are unsecured, non-interest bearing and due on demand.
NOTE D- SUBSEQUENT EVENTS
Subsequent to March 31, 2004 we have issued 975,000 shares of our common stock
for certain consulting services.
We also issued 666,667 shares of our common stock as potential partial
consideration for a planned acquisition. The shares are being held in escrow and
will be returned to us if the acquisition is not consummated.
10
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with the
balance sheet as of March 31, 2004 and the statements of operations and cash
flows as of and for the three months ended March 31, 2004 and 2003 included with
this Form 10-QSB, as well as the audited financial statements included in our
Form 10-KSB. In addition, readers are referred to the cautionary statement on
page 11, 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).
Results of Operations
We did not generate any revenues during the three months ended March 31, 2004
and 2003, and our respective net losses for such quarters were $784,096 and
$3,582 (of which $666,635 and $0 were non-cash compensation expenses). Our stock
based expenses increased significantly because we used our common stock as a
vehicle to pay various consultants that were, and are, helping us develop our
business plan and operations. In addition, our cash based expenses have also
increased significantly as we have begun to develop infrastructure and incur
other costs (e.g. we entered a lease for our operating facility in 2003)
necessary to implement our planned principal operations.
Since our inception we have incurred $1,671,041 of expenses; $1,184,359 were
stock based.
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 March 31, 2004, we used cash of approximately $338,000
for operating and investing activities. These cash outflows have been funded
primarily by net borrowings under two notes payable and capital contributed of
approximately $100,000.
As a result of our limited operating history, and because we plan to merge with
and/or acquire various operating businesses, we have limited meaningful
historical financial data upon which to base planned operating expenses.
However, we do not have enough cash to cover our operating expenses in the next
twelve months. Accordingly, unless we are successful in consummating an
acquisition with an operating company, and/or raising additional funds through
private equity or debt placements, or public offerings of our stock, we will not
be able to meet our cash needs for the next year, and investors may lose their
entire investment.
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
11
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.
CAUTIONARY STATEMENT
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.
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 and Chief Financial Officer, of the design
and operation of our disclosure controls and procedures. Based on this
evaluation, our Chief Executive Officer and Chief Financial 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.
12
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
RECENT SALES OF UNREGISTERED SECURITIES
In January 2004 we issued 811,293 restricted shares of our common voting stock,
$.001 par value, to five persons. A total of 681,170 shares were issued to our
officers, Rohit Patel, Jygnesh Patel and Carl Gessner, and the remaining 130,123
shares were issued to employees Robert Price and Robyn Snyder. All shares were
issued in lieu of salaries and wages for the period May 1, 2003-June 30, 2003.
We relied on exemptions provided by Section 4(2) of the Securities Act of 1933,
as amended. These shares were issued based on the following facts:
(1) the issuances were isolated private transaction which did not involve a
public offering; (2) there were only five offerees, (3) the offerees agreed to
the imposition of a restrictive legend on the face of the stock certificate
representing the shares, to the effect that it will not resell the stock unless
its shares are registered or an exemption from registration is available; (4)
the offerees were sophisticated investors; (5) there were no subsequent or
contemporaneous public offerings of the stock; (6) the stock was not broken down
into smaller denominations; (7) there was no cash consideration paid.
In January 2004, we issued 10,500,000 shares of restricted common stock as
follows:
5,250,000 restricted shares of common stock to William Richard Smith as part of
the compensation for the acquisition of Smith-Forestal;
5,250,000 restricted shares of common stock to Romilys Acevedo as part of the
compensation for the acquisition of Smith-Forestal.
In February 2004, we issued 1,000,000 shares of restricted common stock as
follows:
1,000,000 restricted shares of common stock to Louis Sitaras as collateral for a
loan to the company;
In March 2004, we issued 2,750,000 shares of common stock as follows:
250,000 restricted shares of common stock to Worldwide Financial Marketing Inc.,
a Florida Corporation, for Marketing Services and Customer Relations Services;
2,500,000 restricted shares of common stock to Harendra Patel as collateral on a
loan to Senticore, Inc.;
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
31.1 Certification Pursuant to Section 302
31.2 Certification Pursuant to Section 302
32.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act 2002
32.2 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act 2002
(b) Reports on Form 8-K.
Form 8-K filed on February 25, 2004 reporting on Item 5.
Form 8-K filed on March 10, 2004 reporting on Item 4.
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/ Jay Patel CEO & COO May 27, 2004
/s/ Carl Gessner President, Treasurer, Secretary, May 27, 2004
Director, CFO
