U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-49936
St. Joseph, Inc.
(Name of small business issuer in its charter)
Colorado | | CH 47-0844532 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
| | |
4870 S. Lewis, Suite 250 Tulsa, OK | | 74105 |
(Address of principal executive offices) | | (Zip Code) |
Issuer’s telephone number: (918) 742-1888
Former name, former address and former fiscal year if changed since last report
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ý No o
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practical date:
Outstanding at September 30, 2004 |
4,731,712 |
$.001 par value common stock |
Transitional Small Business Disclosure Format (check one): Yes o No ý
ST. JOSEPH, INC.
FORM 10-QSB
TABLE OF CONTENTS
ii
ST. JOSEPH, INC.
Condensed Consolidated Balance Sheet
(Unaudited)
September 30, 2004
Assets | | | |
Current assets: | | | |
Cash | | $ | 46,874 | |
Marketable securities | | 11,412 | |
Accounts receivable | | 128,229 | |
Employee advances | | 33,723 | |
Total current assets | | 220,238 | |
| | | |
Property and equipment, net | | 30,927 | |
Deposit | | 3,870 | |
Goodwill | | 306,149 | |
| | | |
| | $ | 561,184 | |
| | | |
Liabilities and Shareholders’ Equity | | | |
| | | |
Current liabilities: | | | |
Accounts payable and accrued liabilities | | $ | 108,899 | |
Line of credit (Note 3) | | 104,769 | |
Note payable to officer (Note 2) | | 96,000 | |
Accrued interest payable (Note 2) | | 3,392 | |
Preferred dividend accrual (Note 4) | | 289 | |
Total current liabilities | | 313,349 | |
| | | |
Shareholders’ equity (Note 4): | | | |
Preferred stock; 386,208 shares issued and outstanding | | 386 | |
Common stock; 4,731,712 shares issued and outstanding | | 4,732 | |
Outstanding stock options - 2,875,000 | | 232,800 | |
Additional paid-in capital | | 646,802 | |
Retained deficit | | (638,022 | ) |
Other comprehensive income | | 1,137 | |
| | | |
Total shareholders’ equity | | 247,835 | |
| | | |
| | $ | 561,184 | |
See accompanying notes to condensed consolidated financial statements
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ST. JOSEPH, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Service revenues, net | | $ | 349,173 | | $ | — | | $ | 1,198,394 | | $ | — | |
Direct costs of services | | 264,092 | | — | | 854,059 | | — | |
Gross profit | | 85,081 | | — | | 344,335 | | — | |
| | | | | | | | | |
Selling, general and administrative | | 136,210 | | 669 | | 412,282 | | 4,510 | |
Contributed rent (Note 2) | | — | | 600 | | — | | 1,800 | |
Depreciation | | 3,762 | | 782 | | 13,965 | | 1,996 | |
Stock-based compensation (Note 4) | | — | | — | | 242,800 | | — | |
Loss from operations | | (54,891 | ) | (2,051 | ) | (324,712 | ) | (8,306 | ) |
| | | | | | | | | |
Non-operating income: | | | | | | | | | |
Interest income | | 20 | | — | | 332 | | — | |
Interest expense | | (6,329 | ) | — | | (17,710 | ) | — | |
Loss before income taxes | | (61,200 | ) | (2,051 | ) | (342,090 | ) | (8,306 | ) |
| | | | | | | | | |
Income tax provision (Note 5) | | — | | — | | — | | — | |
| | | | | | | | | |
Net loss | | (61,200 | ) | (2,051 | ) | (342,090 | ) | (8,306 | ) |
| | | | | | | | | |
Preferred stock dividend requirements | | (19,552 | ) | — | | (58,748 | ) | — | |
| | | | | | | | | |
Loss applicable to common stock | | $ | (80,752 | ) | $ | (2,051 | ) | $ | (400,838 | ) | $ | (8,306 | ) |
| | | | | | | | | |
Basic and diluted loss per common share | | $ | (0.02 | ) | $ | 0.00 | | $ | (0.09 | ) | $ | 0.00 | |
| | | | | | | | | |
Weighted average common shares outstanding | | 4,665,045 | | 2,748,920 | | 4,621,712 | | 2,748,920 | |
See accompanying notes to condensed consolidated financial statements
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ST. JOSEPH, INC.
Condensed Consolidated Statement of Changes in Shareholders’ Equity
(Unaudited)
| | | | | | | | | | | | | | | | Other | | | |
| | | | | | | | | | | | | | | | Comprehensive | | | |
| | | | | | | | | | | | | | | | Income | | | |
| | | | | | | | | | Outstanding | | Additional | | | | Unrealized | | | |
| | Preferred Stock | | Common Stock | | Stock | | Paid-in | | Retained | | Investment | | | |
| | Shares | | Par Value | | Shares | | Par Value | | Options | | Capital | | Deficit | | Gains | | Total | |
Balance, January 1, 2004 | | 386,208 | | $ | 386 | | 4,491,712 | | $ | 4,492 | | $ | — | | $ | 517,042 | | $ | (237,184 | ) | $ | — | | $ | 284,736 | |
| | | | | | | | | | | | | | | | | | | |
Sale of common stock at $.50 per share (Note 4) | | — | | — | | 240,000 | | 240 | | — | | 119,760 | | — | | — | | 120,000 | |
Granted stock options (Note 4) | | — | | — | | — | | — | | 242,800 | | — | | — | | — | | 242,800 | |
Preferred stock dividends | | — | | — | | — | | — | | — | | — | | (58,748 | ) | — | | (58,748 | ) |
Expired stock options | | — | | — | | — | | — | | (10,000 | ) | 10,000 | | — | | — | | — | |
Comprehensive income (loss): | | | | | | | | | | | | | | | | | | | |
Unrealized investment gains | | — | | — | | — | | — | | — | | — | | — | | 1,137 | | 1,137 | |
Net loss | | — | | — | | — | | — | | — | | — | | (342,090 | ) | — | | (342,090 | ) |
Comprehensive income (loss) | | — | | — | | — | | — | | — | | — | | — | | — | | (340,953 | ) |
| | | | | | | | | | | | | | | | | | | |
Balance, September 30, 2004 | | 386,208 | | $ | 386 | | 4,731,712 | | $ | 4,732 | | $ | 232,800 | | $ | 646,802 | | $ | (638,022 | ) | $ | 1,137 | | $ | 247,835 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to condensed consolidated financial statements
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ST. JOSEPH, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | |
Net cash provided by (used in) operating activities | | $ | (30,186 | ) | $ | (6,646 | ) |
| | | | | |
Cash flows from investing activities: | | | | | |
Payment to acquire subsidiary | | (80,000 | ) | — | |
Net cash used in investing activities | | (80,000 | ) | — | |
| | | | | |
Cash flows from financing activities: | | | | | |
Capital contributed by an officer | | — | | 1,000 | |
Principal payment on officer’s note payable (Note 2) | | (99,000 | ) | — | |
Payments for preferred stock dividends (Note 4) | | (58,459 | ) | — | |
Proceeds from the sale of common stock (Note 4) | | 120,000 | | — | |
Net cash provided by financing activities | | (37,459 | ) | 1,000 | |
| | | | | |
Net change in cash | | (147,645 | ) | (5,646 | ) |
| | | | | |
Cash, beginning of period | | 194,519 | | 5,726 | |
| | | | | |
Cash, end of period | | $ | 46,874 | | $ | 80 | |
| | | | | |
Supplemental disclosure of cash flow information: | | | | | |
Income taxes | | $ | — | | $ | — | |
Interest | | $ | 14,318 | | $ | — | |
See accompanying notes to condensed consolidated financial statements
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ST. JOSEPH, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The condensed financial statements presented herein have been prepared by the Company in accordance with the instructions for Form 10-QSB and the accounting policies in its Form 10-KSB for the year ended December 31, 2003 and should be read in conjunction with the notes thereto.
In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented. The results of operations presented for the nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the year.
Financial data presented herein are unaudited.
(2) Related Party Transactions
During December 2003, the Company’s President, John Simmons, advanced the Company $195,000 for working capital in exchange for a promissory note. The note carries a ten percent interest rate, payable quarterly, and matures on June 15, 2005. During the nine months ended September 30, 2004, the Company repaid $99,000 of principal and $9,750 of interest. As of September 30, 2004, the Company owed $96,000 in principal and $3,392 in accrued interest on the note.
During the three months ended September 30, 2004, the Company sold 100,000 shares of its common stock to an employee, Zachary Karo, at $.50 per share pursuant to the exemptions afforded by Section 4(2) of the Securities Act of 1933 (the “Act”), as amended. The Company received gross proceeds of $50,000.
An officer contributed office space to the Company through December 31, 2003. The office space was valued at $200 per month based on the market rate in the local area and is included in the accompanying consolidated financial statements as contributed rent with a corresponding credit to contributed capital.
(3) Line of Credit
The Company has a $150,000 line of credit of which $45,231 was unused at September 30, 2004. The interest rate on the credit line was 5.50 percent at September 30, 2004. Interest payments are due monthly.
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(4) Shareholders’ Equity
Preferred Stock
The Board of Directors is authorized to issue shares of preferred stock in series and to fix the number of shares in such series as well as the designation, relative rights, powers, preferences, restrictions, and limitations of all such series. In December 2003, the Company issued 386,208 shares of convertible preferred stock that remain outstanding at September 30, 2004. Each share of preferred stock is convertible to one share of common stock and has a yield of 6.75 percent dividend per annum, which is paid quarterly on a calendar basis for a period of 5 years. The Company paid $58,459 in preferred stock dividends during the nine months ended September 30, 2004. Dividends unpaid as of September 30, 2004 totaled $289.
Common Stock
During the nine months ended September 30, 2004, the Company sold 240,000 shares of its common stock at $.50 per share pursuant to the exemptions afforded by Section 4(2) of the Securities Act of 1933 (the “Act”), as amended, to four individuals: Donald Karo (30,000 shares), Phyllis Bell (60,000 shares), John Hershenberg (50,000 shares), and Zach Karo (100,000 shares). The Company received gross proceeds of $120,000.
Common Stock Options
The following schedule summarizes the changes in the Company’s stock options for the nine months ended September 30, 2004:
| | Options Outstanding and Exercisable | | Weighted Average | |
| | Number of | | Exercise Price | | Exercise Price | |
| | Shares | | Per Share | | Per Share | |
Balance at January 1, 2004 | | 2,300,000 | | $ | 0.10 | | $ | 0.10 | |
Options granted | | 600,000 | | $ | 0.10 | | $ | 0.10 | |
Options exercised | | — | | $ | 0.00 | | $ | 0.00 | |
Options expired | | (25,000 | ) | $ | 0.10 | | $ | 0.10 | |
| | | | | | | |
Balance at September 30, 2004 | | 2,875,000 | | $ | 0.10 | | $ | 0.10 | |
Options granted to employees
During the three months ended March 31, 2004, the Company granted options to three members of its board of Directors to purchase 300,000 shares of the Company’s common stock at an exercise price of $.10 per share. The options vested on the date of grant. The Company’s common stock had no publicly traded market value on the date of grant; however the stock did have a fair value of $.50 per share based on contemporaneous stock sales to unrelated third parties. The weighted average exercise price and weighted average fair value of these options as
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of March 31, 2004 were $.10 and $.50, respectively. Directors’ options are considered employee options and are accounted for under APB 25. Stock-based compensation totaling $120,000 has been recognized in the accompanying condensed consolidated financial statements related to these options.
During the three months ended March 31, 2004, the Company granted options to four employees to purchase 100,000 shares of the Company’s common stock at an exercise price of $.10 per share. The options vested on the date of grant. The Company’s common stock had no publicly traded market value on the date of grant; however the stock did have a fair value of $.50 per share based on contemporaneous stock sales to unrelated third parties. The weighted average exercise price and weighted average fair value of these options as of March 31, 2004 were $.10 and $.50, respectively. The employee options and are accounted for under APB 25. Stock-based compensation totaling $40,000 has been recognized in the accompanying condensed consolidated financial statements related to these options.
Pro forma information regarding net income and earnings per share is required by SFAS 123 as if the Company had accounted for its granted stock options under the fair value method of that Statement. The fair value for the options granted during the nine months ended September 30, 2004 was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Risk-free interest rate | | 3.00 | % |
Dividend yield | | 0.00 | % |
Volatility factor | | 0.00 | % |
Weighted average expected life | | 5 years | |
The Black-Scholes options valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options.
Had compensation expense been recorded based on the fair value at the grant date, and charged to expense over vesting periods, consistent with the provisions of SFAS 123, the Company’s net loss and net loss per share would have increased to the pro forma amounts indicated below:
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| | September 30, | |
| | 2004 | |
Net loss-common shareholders, as reported | | $ | (400,838 | ) |
Decrease due to: | | | |
Employee stock options | | (5,600 | ) |
Pro forma net loss | | $ | (406,438 | ) |
| | | |
As reported: | | | |
Net loss per share - basic and diluted | | $ | (0.09 | ) |
Pro Forma: | | | |
Net loss per share - basic and diluted | | $ | (0.09 | ) |
Options granted to non-employees
During the three months ended March 31, 2004, the Company granted options to eight members of its Advisory Board to purchase 200,000 shares of the Company’s common stock at an exercise price of $.10 per share. The options vested on the date of grant. The Advisory Board options are not considered employee options and are accounted for SFAS 123. Stock-based compensation totaling $82,800 has been recognized in the accompanying condensed consolidated financial statements related to these options.
(5) Income Taxes
The Company records its income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which has been fully allowed for; therefore, the net benefit and expense resulted in $-0- income taxes.
(6) Concentration of Credit Risk
The Company conducts a significant portion of its operations with one customer, MCI, Inc. During the nine months ended September 30, 2004, approximately 78 percent of the Company’s service revenues were conducted with MCI. Accordingly, any adverse financial or operating event on MCI, or the loss or reduction of the Company’s business with MCI, could have a material adverse effect on the Company.
F-8
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the financial condition and plan of operation should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this Form 10-QSB. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements.
Material Accounting Policies
The discussion and analysis of St. Joseph’s condition and result of operations are based on the condensed consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires estimates and assumptions that affect the reported amounts and disclosures.
General / Plan of Operation
At our year ended December 31, 2003, we had not generated any revenues since our inception, however, in December of 2003, we elected to pursue a new business purpose and on December 2, 2003, we entered into an Agreement of Share Exchange and Purchase and Sale with Staf*Tek Services, Inc. (“Staf*Tek”), an Oklahoma corporation. On January 2, 2004, we completed the acquisition of Staf*Tek by acquiring all of the issued and outstanding common shares of Staf*Tek. Since its inception, Staf*Tek has been a leader in the recruiting and the placement of professional technical personnel on a temporary and permanent basis in the Tulsa, Oklahoma area. Staf*Tek assists their clients with projects that require specialized expertise ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design and help desk support.
Staf*Tek is our only subsidiary by which we generate operating revenues. Staf*Tek generates revenue primarily by providing its clients with IT professionals either on a permanent or contractual basis. The Management of Staf*Tek has placed an increased emphasis on pursuing new clients as well as continuing exemplary service to existing ones. To that end, Staf*Tek has recently added two sales personnel and two advertising and marketing specialists in an effort to grow the Company’s business.
The Company plans to satisfy cash requirements over the next 12 months through the continuation and renewal of contractual agreements in the IT staffing industry. The Company also anticipates raising additional funds from the sale of its stock.
Results of Operations
As a direct result of our acquisition of Staf*Tek, there was a substantial increase our revenues and gross profit for the nine month period ended September 30, 2004 as compared to the same period ended September 30, 2003. Our wholly owned subsidiary, Staf*Tek, generated approximately $1,198,000 in net service revenues and gross profits of approximately $344,000 for the nine months ended September 30, 2004. We did not generated any revenues or profits prior to our acquisition of Staf*Tek.
2
Our loss of approximately $400,000 for the nine months ended September 30, 2004, was caused by increases in payroll, interest expense and $242,800 of stock-based compensation related to the issuance of common stock options. We issued options to three (3) members of our Board of Directors to purchase 300,000 shares of our common stock, with a recognized value of $120,000; the issuance of common stock options to eight (8) members of our Advisory Board to purchase an aggregate amount of 200,000 shares of our common stock, with a recognized value of $82,800, in addition to our issuance of common stock options to four (4) employees, to purchase 100,000 shares of our common stock carrying a recognized value of $40,000. We also incurred preferred stock dividends, which increased the loss applicable to common stockholders by almost $59,000.
We did not acquire Staf*Tek until December 2003; however, in an attempt to provide a better understanding of our operating results, we have included an analysis that compares Staf*Tek’s operating results for the nine months ended September 30, 2004 and 2003:
| | Nine Months Ended
September 30, | | | |
Account | | 2004 | | 2003 | | Variance | |
Service revenues | | $ | 1,198,394 | | $ | 936,505 | | $ | 261,889 | |
Cost of services | | (854,059 | ) | (688,484 | ) | (165,575 | ) |
Gross profit | | 344,335 | | 248,021 | | 96,314 | |
| | | | | | | |
Gross profit percentage | | 28.73 | % | 26.48 | % | 2.25 | % |
| | | | | | | |
Selling, general and administrative | | (241,829 | ) | (228,723 | ) | (13,106 | ) |
Depreciation | | (4,652 | ) | (6,245 | ) | 1,593 | |
Interest expense | | (4,568 | ) | (6,511 | ) | 1,943 | |
Interest income | | 332 | | 947 | | (615 | ) |
| | | | | | | |
Net income | | $ | 93,618 | | $ | 7,489 | | $ | 86,129 | |
Staf*Tek’s service revenues and related costs of services increased during the nine months ended September 30, 2004 as compared to the nine months ended September 30, 2003. The increase in revenues were primarily attributable to Staf*Tek’s contract with MCI, Inc. which commenced in May 2003. Thus, Staf*Tek began to realize a significant increase in profits beginning with the June 2003 operating results. Related costs of services also increased largely due to legal and accounting costs involved with “going public,” dividend payments paid to the former owners of Staf*Tek, required travel and related expenses during the transition period, system upgrades, remodeling of Staf*Tek’s corporate offices, and the additional payroll burden of four new company employees. Two of those employees have proven managerial staffing experience, one has a strong marketing background, and one has been hired as the Company’s Public Relations Liaison.
Liquidity and Financial Resources
We had a working capital deficit of $93,111 at September 30, 2004. Our working capital decreased from a working capital deficit of $66,653 at June 30, 2004, largely due to a $29,000 increase in our line of credit.
During the nine months ended September 30, 2004, we used $30,186 through our operating activities. Our investing activities consisted of an $80,000 payment to acquire our subsidiary.
3
Our financing activities resulted in a net use of cash totaling $37,459 consisting of $120,000 in proceeds from the sale of 240,000 shares of our common stock, less $58,459 paid for preferred stock dividends and $99,000 paid against the note payable to our president.
Income Taxes
We record our income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. We incurred net operating losses during the period September 30, 2004 resulting in a deferred tax asset, which has been fully allowed for; therefore, the net benefit and expense resulted in $-0- income taxes.
ITEM 3. Controls and Procedures
(a) Evaluation of Disclosure Controls & Procedures.
The Company maintains disclosure controls and procedures designed to ensure that it is able to collect the information it is required to disclose in the reports it files with the Securities and Exchange Commission (SEC), and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of the Company’s disclosure controls and procedures as of the end of the period covered by this report conducted by the Company’s management, with the participation of the Principal Executive and Principal Financial Officers, the Principal Executive and Principal Financial Officers believe that these controls and procedures are effective to ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods.
(b) Changes in Internal Control over Financial Reporting.
During the period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings
We have no pending legal proceedings.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
On September 16, 2004, the Company sold 100,000 shares of its common stock to an employee, Zachary Karo, at $.50 per share pursuant to the exemptions afforded by Section 4(2) of the Securities Act of 1933 (the “Act”), as amended. The Company received gross proceeds of $50,000.
This transaction was exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of the exemptions provided under section 4(2) was available because:
• The transfer or issuance did not involve underwriters, underwriting discounts or commissions;
4
• A restriction on transfer legend was placed on all certificates issued;
• The distributions did not involve general solicitation or advertising; and,
• The distribution was made only to insiders, accredited investors or investors who were sophisticated enough to evaluate the risks of the investment. The shareholder was given access to all information about our business and the opportunity to ask questions and receive answers about our business from our management prior to making any investment decision.
ITEM 3. Defaults Upon Senior Securities
We incurred no defaults upon senior securities during this reporting period.
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
Market Information. As of the date of this Form 10-QSB, there is no public trading market for the Company’s Common Stock. The Company has engaged a broker/dealer, Burt Martin Arnold Securities, to file with the National Association of Securities Dealers, Inc. (NASD) to have its Common Stock traded in the Pink Sheets and the OTC Bulletin Board® (OTCBB) upon satisfaction of all disclosure and regulatory requirements, which include, among other things, completion of the review process with applicable regulatory agencies and amendment of prior Securities Exchange Act of 1934 filings as necessary. The Company’s stock will not be eligible to trade until all such requirements are met, and there can be no assurance when, if ever, trading will begin, although the Company is vigorously pursuing the fulfillment of these requirements.
The Securities and Exchange Commission has adopted regulations concerning low priced securities or “penny stocks.” The regulations define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For transactions covered by these regulations, a broker-dealer intending to sell to persons other than established customers or accredited investors must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to the sale. If our common stock will constitute penny stock upon trading, these additional burdens may discourage broker-dealers from effecting transactions in our common stock and could limit our market liquidity and your ability to sell in the secondary market. In addition, it is unlikely that any bank or financial institution will accept penny stock as collateral.
In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including an affiliate, who beneficially owns “restricted securities” may not sell those securities until they have been beneficially owned for at least one year. Thereafter, the person would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
• 1% of the number of shares of common stock then outstanding (approximately 4,731,712 shares are outstanding as of September 30, 2004); or
5
• the average weekly trading volume of the common stock during the four calendar weeks preceding the filing with the SEC of a notice on the SEC’s Form 144 with respect to such sale (shares of St. Joseph are not trading as of September 30, 2004).
Sales under Rule 144 are also subject to certain other requirements regarding the manner of sale, notice and availability of current public information about St. Joseph.
Under Rule 144(k), a person who is not, and has not been at any time during the 90 days preceding a sale, an affiliate of St. Joseph and who has beneficially owned the shares proposed to be sold for at least two years (including the holding period of any prior owner except an affiliate) is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
ITEM 6. Exhibits and Reports on Form 8-K
(a) | Exhibits |
| |
3(i) | Articles of Incorporation of Pottery Connection, Inc. * |
3(ii) | Amended Articles of Incorporation (Name change to St. Joseph Energy, Inc.) * |
3(iii) | Bylaws of Pottery Connection, Inc. * |
3(iv) | Amended Articles of Incorporation (Name change to St. Joseph, Inc.) * |
4.0 | Specimen form of Registrant’s common stock * |
10.1 | Exclusive Agreement between David Johnson-St. Joseph Energy, Inc. * |
10.2 | St. Joseph Energy, Inc. User Agreement * |
31.1 | Principal Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
31.2 | Principal Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
32.1 | Principal Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
32.2 | Principal Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
(b) Reports on Form 8-K |
| |
The Company did not file any Reports on Form 8-K during this reporting period. |
* Incorporated by reference to a previously filed exhibit or report.
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SIGNATURES
In accordance with 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 hereunto duly authorized.
St. Joseph, Inc. | |
(Registrant) | |
| |
| |
/s/ John H. Simmons | |
John H. Simmons | |
President | |
| |
Date: November 22, 2004 | |
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