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 Securitiesand Exchange Act of 1934.
For the quarterly period ended March 31, 2005
( ) Transition report pursuant to Section 13 or 15(d) of the ExchangeAct 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 (State of or other jurisdiction of incorporation or organization) | 11-3504866 (IRS Employer I.D. No.) |
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 May 25, 2005.
147,798,963 Common Shares
- -0- Preferred Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (x)
(F/K/A HOJO HOLDINGS, INC.)
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION | Page |
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| 3 |
| 4 |
| 5 |
| 6 |
| 8-9 |
| 10-11 |
| 12 |
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PART II. OTHER INFORMATION | |
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| 14 |
| 14 |
| 14 |
| 14 |
| 14 |
| 14 |
| 15 |
| Certifications | 16 |
f/k/a Hojo Holdings, Inc (A Development Stage Enterprise) BALANCE SHEET AS OF MARCH 31, 2005 |
| | | | |
ASSETS | | | |
| | | | |
| Current Assets: | | | |
| Cash | | $ | 855 | |
| Advances to affiliate | | | 189,000 | |
| Total current assets | | | 189,855 | |
| | | | | |
| Property, Plant and Equipment: | | | | |
| Furniture and fixtures | | | 5,789 | |
| Computer software | | | 130,000 | |
| Accumulated depreciation | | | (27,818 | ) |
| Total property, plant and equipment | | | 107,971 | |
| | | | | |
| Goddwill | | | 908,759 | |
| Other assets | | | 5,867 | |
| | | | | |
| TOTAL ASSETS | | $ | 1,212,452 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | | | | |
| | | | | |
| LIABILITIES: | | | | |
| Accounts payable and other current liabilities | | $ | 106,150 | |
| Stockholder loans payable | | | 315,058 | |
| Total current liabilities | | | 421,208 | |
| | | | | |
| LONG-TERM LIABILITIES: | | | | |
| Notes payable | | | 329,225 | |
| | | | | |
STOCKHOLDERS' (DEFICIT): Preferred stock, $.001 par value, 20,000,000 shares authorized | | | - | |
| Common stock, - $.001 par value; 200,000,000 shares authorized; 147,798,963 shares issued and outstanding | | | 147,799 | |
| Additional paid-in capital | | | 4,482,898 | |
| Deferred stock and interest compensation | | | (314,950 | ) |
| (Deficit) accumulated during the development stage | | | (3,861,128 | ) |
| Total stockholders' (deficit) | | | 454,619 | |
| | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | | $ | 1,212,452 | |
See notes to financial statements.
f/k/a Hojo Holdings, Inc. (A Development Stage Enterprise) STATEMENTS OF OPERATIONS |
| | | | | | |
| | | For the three months ended March 31, 2005 | | For the three months ended March 31, 2004 | |
| | | | | | |
| REVENUE | | | - | | | - | |
| | | | | | | | |
| EXPENSES: | | | | | | | |
| Stock based compensation | | | 273,190 | | | 525,215 | |
| Stock based interest | | | - | | | - | |
| Equity in loss of LLC | | | - | | | - | |
| Other S,G &A expenses | | | 161,951 | | | 117,461 | |
| Total expenses | | | 435,141 | | | 784,096 | |
| | | | | | | | |
| NET (LOSS) | | | (435,141 | ) | | (784,096 | ) |
| | | | | | | | |
| Net (Loss) Per Share- | | | | | | | |
| Basic and Diluted | | | ** | | | ** | |
| | | | | | | | |
Weighted Average Number of Shares Outstanding - Basic and Diluted | | | 135,474,112 | | | 42,183,300 | |
**Less than $.01
See notes to financial statements.
| |
f/k/a Hojo Holdings, Inc. | |
(A Developmental Stage Enterprise) | |
| | | | |
|
| | | | | | |
| | | For the three | | For the three | |
| | | months ended | | months ended | |
| | | March 31, 2005 | | March 31, 2004 | |
| Cash flows from operating activities: | | | | | |
| Net Loss | | | (435,141 | ) | | (784,096 | ) |
| Adjustments to reconcile net loss to net cash used in operations: | | | | | | | |
| Depreciation | | | 3,500 | | | 1,027 | |
| Stock based compensation | | | 273,190 | | | 642,410 | |
| Stock based interest | | | - | | | - | |
| Other stock based expenses | | | - | | | - | |
| Loss in equity of LLC | | | - | | | - | |
| Advances to employees | | | - | | | - | |
| Increase in deposits | | | - | | | (2,000 | ) |
| Increase (decrease) in accounts payable and accrued liabilities | | | (66,169 | ) | | 59,430 | |
| | | | | | | | |
| Net cash provided by (used in) operating activities | | $ | (224,620 | ) | $ | (83,229 | ) |
| | | | | | | | |
| Cash flows from investing activities: | | | | | | | |
| Purchases of property, plant and equipment | | | - | | | (67,500 | ) |
| Net cash (used in) investing activities | | | - | | | (67,500 | ) |
| | | | | | | | |
| Cash flows from financing activities: | | | | | | | |
| Proceeds from borrowings under note payable | | | 321,825 | | | 240,000 | |
| Repayments of note payable | | | - | | | - | |
| Advances (repayments) to affiliate | | | (107,600 | ) | | (63,881 | ) |
| Advances from stockholder | | | 11,250 | | | - | |
| Repayments to stockholder | | | - | | | - | |
| Proceeds from issuance of common stock | | | - | | | - | |
| Other capital contributions | | | - | | | - | |
| Net cash provided by (used in) financing activities | | | 225,475 | | | 176,119 | |
| | | | | | | | |
| Net increase in cash | | | 855 | | | 25,390 | |
| | | | | | | | |
| Cash, beginning of period | | | - | | | - | |
| | | | | | | | |
| Cash, end of period | | $ | 855 | | $ | 25,390 | |
See notes to financial statements
f/k/a Hojo Holdings, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
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.
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 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 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, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. The accompanying financial statements and the notes thereto should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2004 contained in our Form 10-KSB.
Management’s 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 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) through March 31, 2005 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 is identical for each of the periods in the accompanying statements of operations
Reclassifications
Certain amounts in the March 31, 2005 financial statements have been reclassified to conform to the presentation in the 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 a significant stockholders' deficit March 31, 2005. 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 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 SECOND QUARTER EVENTS
Notes Payable
In the quarter ended March 31, 2005, we borrowed $321,825 from several investors for working capital purposes. The notes bear interest between 6-18% and are due within 12 months. Two of the notes are collateralized with the Company's common stock.
Stock Based Officer Compensation
During the quarter ended March 31, 2005 we issued $273,190 in common stock for services rendered. The stock was valued at the date of issuance at prices between $.068-.12 per share. These expenses were included in the accompanying financial statements.
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. Imputed interest has been included in the financial statements herein with a charge to interest expense and a credit to equity.
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, 2005 and the statements of operations and cash flows as of and for the three months ended March 31, 2005 and 2004 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 pages 11 and 12, 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, 2005 and 2004. Our respective net losses for the quarter ended March 31, 2005 and 2004 were $435,141 and $784,096 (of which $273,190 and $525,215 were non-cash compensation expenses, respectively.) Our stock based expenses decreased significantly because we used less of 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.
Liquidity and Capital Resources
Net cash (used in) financing activities for the three months ended March 31, 2005 was$225,475 as compared with net cash provided by financing activities of $176,119 for the three months ended March 31, 2004. The increase in net cash used in financing activities is attributable to proceeds in short-term notes payable in the three months ended March 31, 2005less the effects of borrowings on notes payable and repayments of shareholder loans.
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 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.
CONTROLS AND PROCEDURES
Quarterly Evaluation of Controls
As of the end of the period covered by this quarterly report on Form 10-QSB, We evaluated the effectiveness of the design and operation of (i) our disclosure controls and procedures ("Disclosure Controls"), and (ii) our internal control over financial reporting ("Internal Controls"). This evaluation ("Evaluation") was performed by our Chief Executive and Operating Officer, Jay Patel ("CEO") and our Chief Financial Officer and President, Carl Gessner ("CFO"). In this section, we present the conclusions of our CEO and CFO based on and as of the date of the Evaluation, (i) with respect to the effectiveness of our Disclosure Controls, and (ii) with respect to any change in our Internal Controls that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our Internal Controls.
CEO and CFO Certifications
Attached to this annual report, as Exhibits 31.1 and 31.2, are certain certifications of the CEO and CFO, which are required in accordance with the Exchange Act and the Commission's rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications"). This section of the annual report contains the information concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This information should be read in conjunction with the Rule 13a-14(a)/15d-14(a) Certifications for a more complete understanding of the topic presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed with the Commission under the Exchange Act, such as this annual report, is recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms. Disclosure Controls are also designed with the objective of ensuring that material information relating to the Company is made known to the CEO and the CFO by others, particularly during the period in which the applicable report is being prepared. Internal Controls, on the other hand, are procedures which are designed with the objective of providing reasonable assurance that (i) our transactions are properly authorized, (ii) the Company's assets are safeguarded against unauthorized or improper use, and (iii) our transactions are properly recorded and reported, all to permit the preparation of complete and accurate financial statements in conformity with accounting principals generally accepted in the United States.
Limitations on the Effectiveness of Controls
Our management does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well developed and operated, can provide only reasonable, but not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances so of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision -making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of a system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Scope of the Evaluation
The CEO and CFO's evaluation of our Disclosure Controls and Internal Controls included a review of the controls' (i) objectives, (ii) design, (iii) implementation, and (iv) the effect of the controls on the information generated for use in this annual report. In the course of the Evaluation, the CEO and CFO sought to identify data errors, control problems, acts of fraud, and they sought to confirm that appropriate corrective action, including process improvements, was being undertaken. This type of evaluation is done on a quarterly basis so that the conclusions concerning the effectiveness of our controls can be reported in our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and our Internal Controls, and to make modifications if and as necessary. Our external auditors also review Internal Controls in connection with their audit and review activities. Our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including improvements and corrections) as conditions warrant.
Among other matters, we sought in our Evaluation to determine whether there were any significant deficiencies or material weaknesses in our Internal Controls, which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information, or whether we had identified any acts of fraud, whether or not material, involving management or other employees who have a significant role in our Internal Controls. This information was important for both the Evaluation, generally, and because the Rule 13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO disclose that information to our Board (audit committee), and to our independent auditors, and to report on related matters in this section of the annual report. In the professional auditing literature, "significant deficiencies" are referred to as "reportable conditions". These are control issues that could have significant adverse affect on the ability to record, process, summarize and report financial data in the financial statements. A "material weakness" is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce, to a relatively low level, the risk that misstatement cause by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employee in the normal course of performing their assigned functions. We also sought to deal with other controls matters in the Evaluation, and in each case, if a problem was identified; we considered what revisions, improvements and/or corrections to make in accordance with our ongoing procedures.
Conclusions
Based upon the Evaluation, the Company's CEO and CFO have concluded that, subject to the limitations noted above, our Disclosure Controls are effective to ensure that material information relating to the Company is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared, and that our Internal Controls are effective to provide reasonable assurance that our financial statements are fairly presented inconformity with accounting principals generally accepted in the United States. Additionally, there has been no change in our Internal Controls that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our Internal Controls.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not have any material risk with respect to changes in foreign currency exchange rates, commodities prices or interest rates. We do not believe that we have any other relevant market risk with respect to the categories intended to be discussed in this item of this report.
PART II. - OTHER INFORMATION
NONE
During the period ended March 31, 2005, we issued 10 million shares to acquire 79% of Pokerbook Gaming, Inc., a Company traded on the National Quotation Bureau's Pinksheets ("POKG").
NONE
NONE
NONE.
On January 6, 2005 we filed Form 8-K to report that we entered a Plan of Exchange between and among Jack E. Owens, a citizen and resident of Orange County ("Owens"), and Star Capital Investors("SCI"), LLC, a Florida Limited Liability Corporation controlled by Owens and us. Such form is incorporated by reference herein.
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 25, 2005 |
| Carl Gessner | President, Treasurer, Secretary, Director, CFO | May 25, 2005 |
