As filed with the SEC on November 19, 1999 SEC Registration No. 333-87111
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HOJO HOLDINGS, INC.
(Exact name of registrant as specified in charter)
Delaware 7373 11-3504866
(State or other jurisdiction) (Primary Standard Industrial (IRS Employer
Code) Identification)
21 Blackheath Road
Lido Beach, New York 11561
(516)-670-0564
(Address and telephone number of registrant's principal executive offices and
principal place of business)
Joel Arberman
444 Bedford Street, Suite 8s
Stamford, Connecticut 06901
(203) 602-9994
(Name, address, and telephone number of agent for service)
Approximate date of commencement of proposed sale
to the public: As soon as practicable after
this Registration Statement becomes
effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ x ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [__]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [--]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [__]
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CALCULATION OF REGISTRATION FEE
Title of class of Proposed maximum Amount of
Securities to be aggregate offering Registration Fee
registered price (1)
Common Stock,
Par value $0.001
per share $625,000 $173.75
- --------- -------- -------
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 (o) under the Securities
Act.
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SUBJECT TO COMPLETION, DATED October 22, 1999
Hojo Holdings, Inc.
Maximum of 12,500,000 shares of our
common stock.
The purchase price for our shares is $0.05
Total proceeds if maximum issued: $625,000
We will offer the shares ourselves and do not plan to use underwriters or pay
any commissions.
THIS IS A RISKY INVESTMENT. WE HAVE DESCRIBED THESE RISKS UNDER THE CAPTION
"RISK FACTORS" BEGINNING ON PAGE 6.
per share underwriting discounts total
and commissions to Hojo
per share $0.05 none $0.05
total maximum 625,000 none $625,000
The proceeds to be received by Hojo are amounts before deducting expenses of the
offering, estimated to be $30,000.
Neither the Securities and Exchange Commission nor any state securities
commission have approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. We may
not sell our shares until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
our shares and it is not soliciting an offer to buy our shares in any state
where the offer or sale is not permitted.
The date of this prospectus is November *___, 1999
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TABLE OF CONTENTS
SUMMARY......................................................................5
RISK FACTORS.................................................................6
USE OF PROCEEDS.............................................................11
DETERMINATION OF OFFERING PRICE.............................................12
DILUTION....................................................................13
SELLING SECURITY HOLDERS....................................................14
PLAN OF DISTRIBUTION........................................................16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........................17
LEGAL PROCEEDINGS...........................................................17
LEGAL MATTERS...............................................................17
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS................17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............19
DESCRIPTION OF SECURITIES...................................................19
SHARES ELIGIBLE FOR FUTURE SALE.............................................20
RELATED PARTY TRANSACTIONS..................................................22
BUSINESS....................................................................22
MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................30
YEAR 2000 READINESS DISCLOSURE..............................................31
FINANCIAL STATEMENTS........................................................f1
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SUMMARY
Hojo was incorporated in January 1999 and commenced operations in October
1999. We intend to become an Internet professional services firm specializing in
high-end web site development. Our principal executive offices are located 21
Blackheath Road, Lido Beach, New York 11561. Our telephone number at that
location is (516) 670-0564.
Common stock offered for sale. Up to a maximum of 12,500,000 shares
Price to the public. $0.05 per share in cash. However,
as many as 6,250,000 shares, also
valued at $0.05 per share, may be
issued for services at the fair
market value of the services
rendered.
Number of shares outstanding
before the offering. 2,500,000 shares
Number of shares to be
outstanding after the
offering. maximum of 15,000,000 shares
Terms of the offering. This is a no
minimum offering. Accordingly, as
shares are sold, we will use the
money raised for our activities. The
offering will remain open until
November 1, 2000, unless we decide
to cease selling efforts prior to
this date.
Use of proceeds. We intend to use the net proceeds of
this offering primarily for:
-> development of our web site,
-> recruiting independent
contractors,
-> sales and marketing efforts, and
-> general corporate purposes.
Plan of distribution. This is a direct
public offering, with no commitment
by anyone to purchase any shares.
Our shares will be offered and sold
by our principal executive officer.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision.
Unless we are able to sell all of the shares offered, we may not be able to
continue as a going concern.
Our independent certified public accountants have pointed out that we have
an accumulated deficit and negative working capital so our ability to continue
as a going concern is dependent upon obtaining additional financing for our
planned operations. If we do not raise additional capital then you may lose your
entire investment.
Hojo is in the development stage and has generated no revenues to date.
We were incorporated in January, 1999, and are, therefore, in our
development stage with a limited operating history. We have not generated any
revenues. We have experienced losses and an accumulated deficit of $2,764
through August 31, 1999. Hojo had only $20 in cash as of August 31, 1999. You
should consider Hojo and our prospects in light of the risks, difficulties and
uncertainties frequently encountered by companies in an early stage of
development. You should not invest in this offering unless you can afford to
lose your entire investment.
We anticipate future losses and might not become profitable.
We anticipate that we will incur losses for the foreseeable future. Our
operating expenses are expected to increase significantly in connection with our
proposed activities. We will incur expenses in developing our web site, building
a network of independent web site developers, computer programmers and sales
agents and to establish our brand name. We cannot be sure that we can achieve
sufficient revenues in relation to our anticipated expenses to become
profitable. If we do become profitable, we cannot be sure that we can maintain
or increase our profitability.
Our success depends on the services of Mrs. Arberman.
Mrs. Arberman originated the plan for Hojo, and we continue to be dependent
on her efforts to oversee the development of the web site and to secure
independent web site developers, computer programmers, sales and marketing
agents and clients. If we lose her services and can not find a suitable
replacement we may have to cease operations. We do not have insurance covering
the life of Mrs. Arberman.
Our dependence on third parties could hamper our growth prospects.
Our operating results will depend to a large extent on attracting and
retaining independent web site developers, computer programmers and sales and
marketing agents. We have very limited capabilities and experience in these
areas. In the future, we could be dependent for a substantial portion of our
sales and technical development on one or a very small number of independent
agents. In that event, the loss of one or more significant independent agents
could have a material adverse effect on our business and financial condition. To
date, we have no agreements with any web site developers, computer programmers
or sales and marketing agents.
Since this is a direct public offering and there is no underwriter, we may not
be able to sell any shares ourselves and there may be less due diligence
performed.
This offering is being conducted as a direct public offering, meaning there
is no guarantee as to how much money we will be able to raise through the sale
of our stock. No underwriter has been retained by us to sell these securities.
Our officer will be selling shares herself and has no prior experience in
selling securities. If we fail to sell all the stock we are trying to sell, our
ability to expand and complete our business plan will be materially effected,
and investors may lose all or substantially all of their investment. In
addition, one of the functions of an underwriter, along with underwriter's
counsel, is the performance of due diligence in addition to that performed by
our counsel. Without an underwriter, we do not have the benefit of an additional
due diligence review.
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USE OF PROCEEDS
Assuming we are able to sell all of the shares we are offering, we expect to
net approximately $595,000, after deducting the estimated expenses of the
offering of approximately $30,000 and assuming that none of the shares are
issued for services.
The following table explains our anticipated use of the net proceeds of this
offering, based upon various levels of sales achieved. Specifically, the first
entry is for the relatively fixed costs associated with conducting this offering
and so are not likely to change. The next entry is for our web site development,
with the remaining entries presented in their order of importance to us and our
success.
In general, the more shares we are able so sell, the more we will be able
to quickly retain sales agents, engage additional web site developers and
computer programmers and generally grow our business. The numbers above do not
include any deductions for selling commissions since we will be selling the
shares through the efforts of our officer who will not receive any commissions.
There is no minimum amount that must be sold in this offering and there is
no minimum or maximum amount that must be purchased by each investor. We may not
be able to raise the additional funds we need to operate our business. If we
receive no or nominal proceeds we will not remain as a viable going concern and
investors may lose their entire investment.
Application of 1,000,000 12,500,000
Net Proceeds shares sold shares sold
Offering Costs $ 30,000 $ 30,000
Corporate web site 10,000 20,000
Sales and marketing 10,000 60,000
Working capital 0 515,000
- -------
Total $50,000 $625,000
Our management will have broad discretion in allocating a substantial
portion of the proceeds of this offering. We will invest proceeds not
immediately required for the purposes described above principally in United
States government securities, short-term certificates of deposit, money market
funds or other short-term interest bearing investments.
In the event we receive the maximum cash proceeds and services of
$625,000, owe believe that these net proceeds, together with anticipated funds
from operations, will provide us with sufficient funds to meet our cash
requirements for at least twelve months following the date these maximum
proceeds are raised. As set forth in the above table, if we receive net proceeds
in amounts less than the maximum proceeds, this twelve-month time frame will
probably be diminished and our business plans will have to be decreased. None of
the offering proceeds we receive will be used to make loans to officers,
directors and/or affiliates.
Our president has never been paid any salary from Hojo. Although she has
not been paid, our president has agreed to continue to work for us until the
offering is closed or abandoned. Our president will be entitled to begin to
receive an annual salary of $24,000 only when we have issued $200,000 worth of
our shares. We believe that this level of funding will allow us to generate
revenues that will allow our officers' salary to be paid out of our operating
profits. Our officer understands that if these amounts of gross proceeds or net
operating profits are never generated, she has little chance of ever being paid
for her services to us.
In September, 1999, we secured a $12,500 credit line from Joel Arberman, a
close friend of our president, to pay our expenses while this offering is
completed. The agreement by which we borrowed these funds and may borrow in the
future provide that at our sole discretion, we have the right to convert the
amounts due to him into our common stock on the basis of one share of common
stock for each $0.05 of debt converted. In the alternative, we may take part of
the proceeds of the offering to pay these debts.
Our description represents our best estimate of the allocation of the net
proceeds of this offering based upon the current status of our business. We
based this estimate on assumptions, including expected size of our client base,
growth of our network of independent agents and revenues. We assumed that our
proposed services could be introduced without unanticipated delays or costs. If
any of these factors change, we may find it necessary to reallocate a portion of
the proceeds within the above-described categories or use portions of the
proceeds for other purposes. Our estimates may prove to be inaccurate or new
activities may be undertaken which will require considerable additional
expenditures or unforeseen expenses may occur.
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If our plans change or our assumptions prove to be inaccurate, we may need
to seek additional financing sooner than currently anticipated or curtail our
operations. We may need to raise additional funds in the future in order to fund
more aggressive brand promotions and more rapid expansion, to develop newer or
enhanced products or services, to fund acquisitions, to respond to competitive
pressures, or to acquire complementary businesses, technologies or services. The
proceeds of this offering may not be sufficient to fund our proposed expansion
and additional financing may not become available if needed.
DETERMINATION OF OFFERING PRICE
There is no established public market for the shares of common stock being
registered. As a result, the offering price and other terms and conditions
relative to our shares have been arbitrarily determined by us and do not
necessarily bear any relationship to assets, earnings, book value or any other
objective criteria of value. In addition, no investment banker, appraiser or
other independent, third party has been consulted concerning the offering price
for the shares or the fairness of the price used for the shares.
DILUTION
Purchasers of the shares will experience immediate and substantial dilution
in the value of their shares after purchase. The difference between the initial
public offering price per share and the net tangible book value per share of
common stock after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing total
tangible assets less total liabilities by the number of outstanding shares of
common stock.
At August 31, 1999, we had a net tangible book value of $20 or $0.00 per
share. After giving effect to the sale of the maximum of 12,500,000 shares and
the receipt of $625,000 in cash or services, less offering expenses estimated at
$30,000, our adjusted net tangible book value at August 31, 1999 would have been
$595,000 or $.04 per share. This represents an immediate increase in net
tangible book value of $.04 per common share if we are able to complete the
maximum offering to the existing shareholders. Completing the maximum offering
would result in an immediate dilution of $.01 per common share to persons
purchasing shares in this offering.
The following table explains the dilution of this offering, based upon various
levels of sales achieved:
August 31, 1,000,000 12,500,000
1999 shares sold shares sold
Public offering
price per share n/a $0.05 $0.05
Net tangible
book value
per share of
common stock
before the offering $0 n/a n/a
Pro forma
net tangible
book value per
share of common
stock after the
offering n/a $0.01 $0.04
Increase to
net tangible
book value per
share attributable
to purchase of
common stock by
new investors n/a $0.01 $0.04
Dilution to
new investor n/a $0.04 $0.01
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PLAN OF DISTRIBUTION
General
We are offering up to a maximum of 12,500,00 Shares at a price of $0.05 per
share to be sold by our executive officer and director. If we sell the shares
through our executive officer and director, no compensation will be paid with
respect to those sales. Since this offering is conducted as a direct public
offering, there is no assurance that any of the shares will be sold.
The offering will remain open until November 1, 2000, unless the maximum
proceeds are received earlier or we decide to stop selling our shares. Our
officer, existing stockholders and affiliates may purchase shares in this
offering. There is no limit to the number of shares they may purchase.
No escrow of proceeds
There will be no escrow of any of the proceeds of this offering.
Accordingly, we will have use of all funds raised as soon as we accept a
subscription and funds have cleared. These funds shall be non-refundable to
subscribers except as may be required by applicable law.
Shares issued for services
As many as 6,250,000 shares may be issued for services. Any shares that
are issued for services will be valued at $0.05 per share, which is the amount
we could have received if we sold the shares instead of issuing it for services.
We do not currently have any agreements with others to issue shares for
services. However, we do anticipate that in the future, we may issue shares for
web site development, computer programming, sales and marketing, Internet access
and other services. When we issue shares for services, the value of the services
must be a fair market value. The fair market value of the service provided will
be determined by our president and will be based upon a reasonable evaluation of
market rates and values for specific services.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our views
about future events and financial performance. Our actual results, performance
or achievements could differ materially from those expressed or implied in these
forward-looking statements for various reasons, including those in the "risk
factors" section on page *. Therefore, you should not place undue reliance upon
these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
LEGAL PROCEEDINGS
We are not a party to or aware of any threatened litigation of a material
nature.
LEGAL MATTERS
The validity of the shares offered under this prospectus is being passed upon
for us by Hoge, Evans, Holmes, Carter & Ledbetter PLLC, Dallas TX.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table and subsequent discussion contains information concerning
our directors and executive officer, who will serve in the same capacity with us
upon completion of the offering. Our executive officer was elected to her
position in 1999.
Name Age Title
Holli Arberman 25 president and director
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There are no other persons nominated or chosen to become directors or executive
officers nor do we have any employees other than above.
Holli C. Arberman. Mrs. Arberman has served as the president, secretary,
treasurer and a director of Hojo since January 1999. Since January 1999 Mrs.
Arberman also serves as the president, secretary, treasurer and a director of
three other companies which where incorporated by Joel Arberman on January 6,
1999; HB Holdings, Inc., JAHB Holdings Inc. and HBJA Holdings Inc. None of these
companies currently conduct any business and none currently intends to make any
acquisitions. In addition, since May 1999 Mrs. Arberman has served as president
of Want.md, a web site focused on offering Internet domain name registrations to
medical professionals. From October 1998 until present, she has worked as an
independent occupational therapist contractor for various contracting agencies.
From October 1997 until October 1998, Mrs. Arberman served as an occupational
therapist at United Presbyterian Residence Care Corp, a skilled nursing
facility. From September 1995 to October 1997, she earned a M.A degree in
Occupational Therapy from Touro College. Mrs. Arberman is a registered and
licensed Occupational Therapist, is NBCOT Certified and holds a license in New
York and Connecticut.
Mrs. Arberman does not have any experience in overseeing web site development;
securing web site developers, computer programmers, sales and marketing agents;
or in obtaining clients.
Our directors hold office until the next annual meeting of shareholders and
the election and qualification of their successors. Directors receive no
compensation for serving on the board of directors other than reimbursement of
reasonable expenses incurred in attending meetings. Officers are appointed by
the board of directors and serve at the discretion of the board.
Executive Compensation
The following table sets forth all compensation awarded to, earned by, or paid
for services rendered to us in all capacities during the period ended August 31,
1999, by our executive officers whose salary and bonus for the period exceeded
$100,000.
Summary Compensation Table
Long-Term Compensation Awards
Name and Principal Compensation - 1999
Position Salary ($) Bonus ($)Number of shares
---------- --------- Underlying Options (#)
Holli Arberman, president None None None
Mrs. Arberman is currently employed by Hojo Holdings, Inc. at an annual salary
of $24,000 per annum according to a two year written employment agreement signed
on August 31, 1999. Mrs. Arberman is not accruing or entitled to any
compensation and will not be paid until Hojo raises at least $200,000 from this
offering. Her employment agreement provides for reimbursement of business
related expenses, four weeks of vacation per calendar year, medical and
disability benefits, additional benefits as offered by Hojo and bonus
entitlement. Until there is an independent board member, Mrs. Arberman has
verbally agreed not to receive any benefits or bonus from Hojo. The employment
contract also contains standard non-compete, termination, confidentiality and
other clauses.
We do not presently have a stock option plan but intend to develop an
incentive-based stock option plan for our officers and directors in the future
and may reserve up to ten percent of our outstanding shares of common stock for
that purpose.
Conflict of Interest - Management's Fiduciary Duties
A conflict of interest may arise between management's personal financial
benefit and management's fiduciary duty to you. Management's interest in their
own financial benefit may at some point compromise their fiduciary duty to you.
No proceeds from this offering will be used to purchase directly or
indirectly any shares of the common stock owned by management or any present
shareholder, director or promoter. No proceeds from this offering will be loaned
to any current management or director. We also will not purchase the assets of
any company, which is beneficially owned by any of our officers, directors,
promoters or affiliates.
Our director and officer is or may become, in her individual capacity,
officer, director, controlling shareholder and/or partner of other entities
engaged in a variety of businesses. Holli Arberman is already engaged in
business activities outside of ours, and the amount of time she will devote to
our business will not be substantial. If we are successful in raising at least
$200,000 from this offering then Mrs. Arberman intends to devote approximately
40 hours per week assisting Hojo in furthering its business plan. Until we
receive those funds, she will only devote as much time as required, which we do
not expect will exceed working 20 hours per month for us.
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Mrs. Arberman is an independent occupational therapist and is also involved
in three businesses that do not have any current business operations. She does
not devote any time to those entities. There exists potential conflicts of
interest including allocation of time between Hojo and her other business
activities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of our common stock before and after giving effect to the sale of the
maximum number of shares of common stock offered. All shareholders have sole
voting and investment power over the shares beneficially owned. Included within
this table is information concerning each stockholder who owns more than 5% of
any class of our securities, including those shares subject to outstanding
options. Although our officer may purchase shares in this offering, the
following amounts assume that our officer does not purchase any additional
shares.
Joel Arberman and Holli Arberman are husband and wife. Alfred Arberman and
Rachelle Arberman are husband and wife and also parents to Joel Arberman. They
disclaim all beneficial ownership of each others common shares. Roger Mclelland
and Shanti Mclelland are brothers.
<TABLE>
<CAPTION>
Beneficial ownership shares owned Percentage of
class of common stock before offering after offering
<S> <C> <C> <C>
Holli Arberman 900,000 36.00% 6.00%
21 Blackheath Road
Lido Beach, New York 11561
Alfred Arberman 200,000 8.00 1.30
18555 NE 14th Ave
Suite 611F
North Miami Beach, Fl 33179
Rachelle Arberman 200,000 8.00 1.30
18555 NE 14th Ave
Suite 611F
North Miami Beach, Fl 33179
Anil Goel 200,000 8.00 1.30
75-114 Broadway Ave.
Toronto, Ontario M4P1V1, Canada
Brad Jones 200,000 8.00 1.30
80 Kilworth Park Drive
RR#3 Komoka, Ontario, N0L10, Canada
Roger Mclelland 150,000 6.00 1.00
P.O. Box 235
Ajax Ontario, L1S3C3 Canada
Shanti Mclelland 150,000 6.00 1.00
26 Parker Crescent
Ajax, Ontario L1S3R5 Canada
Brad Rotter 150,000 6.00 1.00
1700 Montgomery Street
Suite 250
San Francisco, California 94111
</TABLE>
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DESCRIPTION OF SECURITIES
Current capital structure
As of the date of this prospectus, we have 20,000,000 shares of common
stock, par value $0.001, authorized, with 2,500,000 shares outstanding held of
record by 50 stockholders.
Common stock
The holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50 per cent of the shares voted for the election of
directors can elect all of the directors. The holders of common stock are
entitled to receive dividends when, as and if declared by the board of directors
out of funds legally available. In the event of liquidation, dissolution or
winding up of our company, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class of stock, if
any, having preference over the common stock. When issued for the consideration
outlined in this prospectus, all of the outstanding shares of common stock will
be fully paid and non-assessable.
Preferred stock
Hojo Holdings is not presently authorized to issue shares of preferred
stock. However, our board of directors is empowered, without shareholder
approval, to issue additional series of preferred stock with any designations,
rights and preferences as they may from time to time determine. Thus, preferred
stock, if issued, could have dividend, liquidation, conversion, voting or other
rights that could adversely affect the voting power or other rights of the
common stock. Preferred stock, if issued, could be utilized, under special
circumstances, as a method of discouraging, delaying or preventing a change in
control of our company.
Options and Warrants. We do not presently have any options or warrants
authorized. However, our board of directors may later determine to authorize
options and warrants for Hojo Holdings.
Dividend Policy. To date, we have not paid any dividends. The payment of
dividends, if any, on the common stock in the future is within the sole
discretion of the board of directors and will depend upon our earnings, capital
requirements, financial condition, and other relevant factors. The board of
directors does not intend to declare any dividends on the common stock in the
foreseeable future, but instead intends to retain all earnings, if any, for use
in our business operations.
Transfer Agent and Registrar . We intend to use Florida Atlantic Stock
Transfer, Inc., Tamarac, Florida as our transfer agent for the common stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 15,000,000 shares of
common stock outstanding, if we sell all of the shares in this offering. Of
these shares, the 12,500,000 shares to be sold in this offering will be freely
tradable without restriction or further registration under the Securities Act of
1933, except that any shares purchased by our affiliates, as that term is
defined in Rule 144 under the Securities Act, may generally only be sold in
compliance with the limitations of Rule 144 described below.
The remaining 2,500,000 of common stock held by existing stockholders were
issued and sold by us in reliance on exemptions from the registration
requirements of the Securities Act. Of these shares, 1,400,000 shares will
become eligible for sale on January 6th, 2000, subject to the limitations of
either Rule 144 or Rule 701. In addition, our executive officer and director
will own 900,000 shares of the common stock, which will also become eligible for
sale on January 6th, 2000, subject to the limitations of either Rule 144 or Rule
701. We cannot predict the effect, if any, that offers or sales of these shares
would have on the market price. Nevertheless, sales of significant amounts of
restricted securities in the public markets could adversely affect the fair
market price of the shares, as well as impair our ability to raise capital
through the issuance of additional equity shares.
In general, under Rule 144, a person who has beneficially owned shares
for at least one year is entitled to sell, within any three-month period, a
number of shares that does not exceed the greater of (1) one percent of the then
outstanding shares of common stock or (2) the average weekly trading volume in
the common stock in the over-the-counter market during the four calendar weeks
preceding the date on which notice of the sale is filed, provided several
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, our affiliates must comply with the
restrictions and requirements of Rule 144, other than the one-year holding
period requirement, in order to sell shares of common stock which are not
restricted securities.
Under Rule 144(k), a person who is not an affiliate and has not been an
affiliate for at least three months prior to the sale and who has beneficially
owned shares for at least two years may resell their shares without compliance
with the foregoing requirements. In meeting the one-and two-year holding periods
described above, a holder of shares can include the holding periods of a prior
owner who was not an affiliate. The one-and two-year holding periods described
above do not begin to run until the full purchase price or other consideration
is paid by the person acquiring the shares from the issuer or an affiliate. Rule
701 provides that currently outstanding shares of common stock acquired under
our employee compensation plans, and shares of common stock acquired upon
exercise of presently outstanding options granted under these plans, may be
resold beginning 90 days after the date of this prospectus:
. by persons, other than affiliates, subject only to the manner of sale
provisions of Rule 144, and
. by affiliates under Rule 144 without compliance with its one-year minimum
holding period, subject to some limitations.
There is presently no agreement by any holder, including our "affiliates", of
"restricted" shares not to sell their shares.
Penny stock regulation
Broker- dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Commission. Penny stocks
generally are equity securities with a price of less than $5.00. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a transaction in
a penny stock, the broker-dealer make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. As our shares
immediately following this offering will likely be subject to such penny stock
rules, investors in this offering will in all likelihood find it more difficult
to sell their securities.
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DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our certificate of incorporation contains provisions permitted under the
General Corporation Law of Delaware relating to the liability of directors. The
provisions eliminate a director's liability to stockholders for monetary damages
for a breach of fiduciary duty, except in circumstances involving wrongful acts,
including the breach of a director's duty of loyalty or acts or omissions which
involve intentional misconduct or a knowing violation of law. Our certificate of
incorporation also contains provisions obligating us to indemnify our directors
and officers to the fullest extent permitted by the General Corporation Law of
Delaware. We believe that these provisions will assist us in attracting and
retaining qualified individuals to serve as directors.
Following the close of this offering, we will be subject to the State of
Delaware's business combination statute. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a business combination with
a person who is an interested stockholder for a period of three years after the
date of the transaction in which that person became an interested stockholder,
unless the business combination is approved in a prescribed manner. A business
combination includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder. An interested stockholder is a
person who, together with affiliates, owns, or, within three years prior to the
proposed business combination, did own 15% or more of our voting stock. The
statute could prohibit or delay mergers or other takeovers or change in control
attempts and accordingly, may discourage attempts to acquire us.
As permitted by Delaware law, we intend to eliminate the personal liability
of our directors for monetary damages for breach or alleged breach of their
fiduciary duties as directors, subject to exceptions. In addition, our bylaws
provide that we are required to indemnify our officers and directors, employees
and agents under circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and we would be required to
advance expenses to our officers and directors as incurred in proceedings
against them for which they may be indemnified. The bylaws provide that we,
among other things, will indemnify officers and directors, employees and agents
against liabilities that may arise by reason of their status or service as
directors, officers, or employees, other than liabilities arising from willful
misconduct, and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified. At present, we are not aware
of any pending or threatened litigation or proceeding involving a director,
officer, employee or agent of ours in which indemnification would be required or
permitted. We believe that our charter provisions and indemnification agreements
are necessary to attract and retain qualified persons as directors and officers.
We have agreed to the fullest extent permitted by applicable law, to indemnify
all our officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of Hojo, we
have been advised that in the opinion of the Securities and Exchange Commission
that the indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable.
RELATED PARTY TRANSACTIONS
On January 6, 1999, Mrs. Arberman, our president, purchased 900,000 shares for a
total consideration of $900.
Mrs. Arberman, our president, provides various equipment and a portion of her
home for office space for no consideration. The value of this equipment and
office space are considered to be insignificant.
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Joel Arberman, the husband of our president, has provided a line of credit in
the amount of $12,500 to us. Advances under the verbal agreement, interest is
accrued at a fixed rate of 6%, are unsecured, at our sole discretion can be
converted into a maximum of 265,000 common shares, at the rate of one share per
$0.05 loaned and have no specific repayment terms.
At the request of Mrs. Arberman, Joel Arberman has been involved in two
administrative roles; (i) he filed Hojo's Articles of Incorporation with the
State of Delaware and (ii) he is assisting us with our registration statement.
To date, he has not had any material role in the founding or organizing of the
business. In addition, he has not directly or indirectly received any
consideration for services or property.
All future transactions between Hojo and its officers, directors or 5%
shareholders, and their respective affiliates, will be on terms no less
favorable than could be obtained from unaffiliated third parties and will be
approved by a majority of any independent, disinterested directors.
BUSINESS
General
Hojo was incorporated in January 1999 and commenced operations in October
1999. We intend to become an Internet professional services firm specializing in
high-end web site development. We intend to obtain clients through commissioned
sales and marketing persons and to service our clients through a network of
independent web site developers and computer programmers that we intend to
build.
Our market
Web sites provide companies with a new set of tools for improving basic
business processes including communications, data transmission, marketing,
transaction processing and customer service. Web sites can present advertising
and marketing materials in new and compelling fashions, display products and
services in electronic catalogs, offer products and services for sale online,
process transactions and fulfill orders, provide customers with rapid and
accurate responses to their questions, and gather customer feedback efficiently.
Businesses are rapidly adopting the use of web sites. Companies
implementing web site solutions often must rely on fundamentally new business
approaches because these solutions utilize new technologies and allow companies
to implement a broad scope of business process improvements. Businesses seeking
to realize the benefits provided by web site solutions face a formidable series
of challenges presented by the need to link business strategy with new and
rapidly changing technologies and continuously updated content.
Before creating any web site, a company must first conduct a thorough
needs assessment to review its strategic business requirements and compare them
to the capabilities of its existing processes and systems. Next, the company
must design the solution and develop an implementation plan. The implementation,
establishment and maintenance of the solution will require significant technical
expertise in a number of areas, including, electronic commerce systems, security
and privacy technologies, application and database programming, mainframe and
legacy integration technologies and advanced user interface and multimedia
production.
Similarly, recent trends are changing the marketing communications
requirements of businesses throughout the world. Businesses must be able to
develop and execute marketing strategies rapidly, because shortening product
life cycles reduce lead times for marketing campaigns. Internet-related services
have emerged as an integral component of marketing and communications strategy.
This new media and the increasing complexity of sophisticated digital delivery,
storage and multimedia enhancement tools and technologies enable companies to
improve the effectiveness of communications, but pose additional challenges to
businesses striving to link business strategy with rapidly changing
technologies.
To perform the multitude of Internet professional services in-house, a company
would have to make substantial commitments of time, money and technical
personnel to keep current with rapidly evolving technologies, content
presentation techniques and competitors' offerings. Professionals with the
requisite strategic, technical and creative skills are often in short supply and
many organizations are reluctant to expand their internal information systems or
marketing departments for particular engagements at a time when they are
attempting to minimize fixed costs to increase returns on investment. At the
same time, external economic factors encourage organizations to focus on their
core competencies and limit workforces in the information technology management
and marketing areas.
Accordingly, many businesses have chosen to outsource a significant
portion of the design, development and maintenance of their web sites and the
development and implementation of their marketing strategies to independent
professionals. These independent professionals can leverage accumulated
strategic, technical and creative talent and track developments in a field
characterized by extremely short technology, process and content lifecycles.
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Companies seeking to establish Internet solutions may turn to their
traditional marketing or technology service providers for assistance. However,
most of these providers have neither a proven track record of successful
Internet solution deployment nor the full portfolio of strategy, technology,
marketing and creative skills required to serve client needs effectively. A
number of small Internet professional services firms have emerged to address the
significant and rapidly growing market for Internet solutions.
We believe that the rapidly increasing demand for Internet solutions has
created a significant market opportunity for our Internet professional services
firm. In the currently fragmented and rapidly changing environment, an
organization that could deliver the creative strengths of advertising and
marketing firms, the strategic skills and technical capabilities of information
technology consulting service providers, could capitalize on this opportunity to
help companies build their businesses in innovative ways.
Strategy
Our mission is to provide clients with the expertise and resources required
to help build their businesses using Internet solutions. To capitalize on the
opportunity presented by the rapid growth in demand for those services, we are
building a professional services firm with independent representatives to
develop client relationships and gain an in-depth understanding of client needs.
We believe that our operational model will enable us to scale rapidly by
leveraging external resources as our operations expand.
Services
We anticipate that we will begin to offer our services during the first
quarter of next year. We intend to offer a range of services to deliver Internet
solutions designed to help clients build their businesses. In each consulting
engagement, the client can contract for the specific services it requires,
depending on the nature of the engagement and the capabilities of the client's
organization. We intend to bill the majority of our engagements on a time and
materials basis, although we also intend deliver solutions on a fixed-price
basis. If we fail to estimate accurately the resources and time required for a
project or to complete projects within budget, we would have cost overruns and,
in some cases, penalties, which could hurt our business.
By early next year, we intend to offer the following services:
- - Strategy consulting. To conduct a thorough study of a client's strategic
market position, business requirements and existing systems and capabilities to
determine the ways in which Internet solutions can most improve their business
processes. We would deliver our recommendations, which define the strategic
basis for a specific Internet solution that takes into account the client's
budget, timeline and available resources.
- - Analysis and design. We would translate the client's strategic requirements
into a system or process design architecture, a blueprint that defines the roles
the system will perform to meet those requirements. By choosing us, our clients
would receive vendor-neutral solutions prepared by Internet-focused consultants.
We would research, test and evaluate virtually all major Internet technologies
and tools to design system and process architectures that successfully meet
client needs. Our objective is to design, build and deploy a solution that is
logically planned, scales well over time, is sufficiently secure, and is easy to
use, administer and manage.
- - Technology development and implementation. We would build a testable version
of the client's solution based on the blueprint produced in the analysis and
design phase. We would design, code, integrate and test all necessary programs
and components using a broad range of expertise, including object-based and
relational database systems; electronic commerce systems; custom ActiveX, Java
and C++ programming and host integration; implementation of third-party
applications and security technologies; and integration of hardware, software
and Internet access products. Our independent graphic designers would work to
create a compelling user interface for the solution to enable it to attract and
hold the attention of the client's target audience while conforming to the
client's brand image and marketing campaigns. We would then test the solution
created in the development phase and ready it to be deployed into a full
production system.
- - Audience development. We would work with clients to develop a strategy for
achieving its online marketing objectives by increasing web site traffic,
strengthening brand awareness and generating sales leads. We intend to provide
online media planning and purchasing services and advice regarding online public
relations.
- - Maintenance. We would provide the client with ongoing support services for its
Internet solutions, from content maintenance to site administration, for as long
as the client wishes. Our technical consultants could assist clients on a
case-by-case basis to resolve technical problems, provide assistance with the
hosting environment, and deliver support for Internet solution software.
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Web site developers and computer programmers
We have started to identify suitable consultants to work with us but at
this time we do not have any agreements with any web site developer or computer
programmer. Our president, who is spending less than 20 hours per month working
for us, will identify and try to retain initial consultants through networking
and advertisements in technology related publications to assist us in fulfilling
a variety of technical requirements by future clients.
We expect that our consultants will be paid on a time and materials basis.
Prior to bidding on client contracts, we will estimate the time and materials
required completing the project. However, in some cases, we may agree to a
negotiated fixed project. If we fail to estimate accurately the resources and
time required for a project or to complete projects within budget, we would have
cost overruns and, in some cases, penalties, which could hurt our business.
Clients
We do not currently have any clients and there are no arrangements or
understandings to gain clients. If we cannot attract a client base, we will not
be able to generate sufficient web site development revenue. Demand and market
acceptance for Internet web site development is not established. We cannot be
sure that the market will continue to emerge or become sustainable. If the
market fails to develop or develops more slowly than we expect, then our ability
to generate revenue may be materially adversely affected and we may have to
cease operations. Our success will depend in great part on our ability to
successfully implement our marketing and sales program and create sufficient
levels of demand for our services.
We intend to market our services primarily to small and medium-sized
companies, which we define as those with over 10 but less than 500 employees.
These companies have several desirable characteristics as potential clients: a
need for Internet solutions ranging from basic to complex and highly functional
web sites, reasonable budgets devoted to information technology expenditures,
and a relatively high willingness to adopt Internet-based strategies and
solutions. We tailor our professional services to meet the specific needs of
these clients.
For Internet solutions, clients would typically begin by establishing a basic
web site and then implement increasingly powerful business solutions. Our
strategy is to provide clients with services at all stages of their adoption of
Internet solutions. We will target clients whose Internet technology and
marketing communications consulting needs will result in projects that will
generate $25,000 to $250,000 in revenues. However, in the early stages of our
business, we may need to accept smaller size contracts in order to build a
portfolio of references.
Our future consulting engagements may involve projects that are critical to
the operations of our clients' businesses. If we do not perform to our clients'
expectations, we face potential liability. Any failure or inability to meet a
client's expectations in the performance of our services could injure Hojo's
business reputation or result in a claim for substantial damages. Our projects
may involve use of material that is confidential or proprietary client
information. The successful assertion of one or more large claims against us for
failing to protect confidential information or failing to complete a project
properly and on time could hurt us.
Marketing
We anticipate that we will begin to identify and market to clients during
the first quarter of next year. We intend to sell our services through
independent sales and marketing agents. Our president, who is spending less than
20 hours per month working for us, will identify and try to retain initial
marketing consultants through networking and advertisements in sales and
marketing related publications to assist us in fulfilling a variety of sales and
marketing requirements we have.
Independent agents would typically target our sales efforts at senior executives
within a buying organization. When a prospective client is interested in working
with us, we will analyze which portions of its development we can support.
Throughout this analysis, we work with the prospective client to negotiate terms
of a service agreement. Clients are expected to enter into short-term agreements
with us. Our goal through this process is to demonstrate our capability to
provide savings, and to obtain a longer-term service agreement with the client.
Our marketing efforts will be dedicated to demonstrating the benefits of
Internet solutions, and the effectiveness of our organization in providing
solutions, to key decision makers in client organizations. We believe that a
strong Hojo brand provides us with a competitive advantage over those Internet
professional services firms whose brands may not be as well known or may not
convey the same focused message of competence, security and results.
Our marketing efforts will be focused on general communications and on
obtaining referrals from our existing clients. We may participate in trade
conferences and industry forums, and advertise in business publications. We
intend to increase our advertising and marketing expenditures in an effort to
become better known in our target markets. These expenditures will cover the
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addition of sales, marketing and business development agents, increased
advertising, increased media relations, increased presence at trade conferences,
and continuing improvements to our web site.
Our marketing budget depends on a number of factors, including our results of
operations and ability to raise additional capital. In the event that we are
successful in raising additional capital or our results of operations exceed our
expectations, our marketing budget for the next 12-month period will increase
significantly.
Strategic relationships
We do not have any strategic relationships at this time. We intend to
enter into strategic relationships with a limited number of leading Internet
hardware, software and content companies. We believe that these relationships,
which will typically be non-exclusive, enable us to deliver clients more
effective solutions with greater efficiency because the strategic relationships
provide us with the opportunity to gain early access to leading-edge technology,
cooperatively market products and services with leading technology vendors,
cross-sell additional services and gain enhanced access to vendor training and
support. We also believe that these relationships are important because they
leverage the strong brand and technology positions of these market leaders.
Operations
We have very limited operations since our president spends less than 20
hours per month working for us. Our operations are in Lido Beach, New York. We
are currently borrowing all of our computer, telecommunications and Internet
equipment from our president. Our systems include one IBM compatible computer
containing web site development, marketing and accounting software.
We currently do not have any redundant systems that would handle our
system functions in the event of a system failure, nor do we have an off-site
backup of our information. In the event of a catastrophic loss at our Lido Beach
facility resulting in damage to, or destruction of, our computer,
telecommunications and Internet systems, we would have a material interruption
in our business operations.
Competition
The market for Internet professional services is relatively new, intensely
competitive, rapidly evolving and subject to rapid technological change. We
expect competition to persist, intensify and increase in the future. Some of our
larger competitors include other Internet professional service firms including;
Zefer, Usweb, Razorfish and Rare Medium. Some of these competitors offer a full
range of Internet professional services and several others have announced their
intention to do so.
There are relatively low barriers to entry into our business. For example, we
have no significant proprietary technology that would preclude or inhibit
competitors from entering the Internet professional services market. We expect
to face additional competition from new entrants into the market in the future.
Existing or future competitors could develop or offer services that provide
significant performance, price, creative or other advantages over those offered
by us.
We believe that the principal competitive factors in our market are strategic
expertise, technical knowledge and creative skills, brand recognition,
reliability of the delivered solution, client service and price. Most of our
current and potential competitors have longer operating histories, larger
installed client bases, longer relationships with clients and significantly
greater financial, technical, marketing and public relations resources than we
have and could decide at any time to increase their resource commitments to our
market. In addition, the market for Internet solutions is relatively new and
subject to continuing definition, and, as a result, the core business of many of
our competitors may better position them to compete in this market as it
matures. Competition of the type described above could materially adversely
affect our business, results of operations and financial condition.
Regulation of our business
We do not currently face direct regulation by any governmental agency, other
than laws and regulations generally applicable to businesses.
Due to the increasing popularity and use of the Internet, it is possible
that a number of laws and regulations may be adopted in the U.S. and abroad with
particular applicability to the Internet. It is possible that governments will
enact legislation that may be applicable to us in areas including content,
network security, encryption and the use of key escrow, data and privacy
protection, electronic authentication or "digital" signatures, illegal and
harmful content, access charges and retransmission activities. Moreover, the
applicability to the Internet of existing laws governing issues including
property ownership, content, taxation, defamation and personal privacy is
uncertain.
The majority of laws that currently regulate the Internet were adopted
before the widespread use and commercialization of the Internet and, as a
result, do not contemplate or address the unique issues of the Internet and
related technologies. Any export or import restrictions, new legislation or
regulation or governmental enforcement of existing regulations may limit the
growth of the Internet, increase our cost of doing business or increase our
legal exposure. Any of these factors could have a material adverse effect on our
business, financial condition and results of operations.
Violations of local laws may be alleged or charged by state or foreign
governments and we may unintentionally violate local laws and local laws may be
modified, or new laws enacted, in the future. Any of these developments could
have a material adverse effect on our business, results of operations and
financial condition.
Employees
As of the date of this prospectus, we do not have any full time employees.
From time to time, we will employ additional independent contractors to
support our development, technical, marketing, sales, support and administrative
organizations. Competition for qualified personnel in the industry in which we
compete is intense. We believe that our future success will depend in part on
our continued ability to attract, hire or acquire and retain qualified
employees.
Properties
We have our corporate headquarters in Lido Beach, New York. Substantially
all of our operating activities are conducted from 200 square feet of office
space provided by our president at no charge. We believe that additional space
will be required as our business expands and believe that we can obtain suitable
space as needed. We do not own any real estate.
Legal proceedings
We are not currently involved in any legal or regulatory proceedings or,
arbitration. However, our business involves substantial risks of liability,
including possible exposure to liability under federal, state and international
laws in connection with the gathering and use of information about our users,
infringing the proprietary rights of others and possible liability for product
defects, errors or malfunctions.
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MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Revenues
We do not generate any revenues yet. We intend to generate revenue by
offering a range of services to deliver Internet solutions designed to help
clients build their businesses. In each consulting engagement, the client can
contract for the specific services it requires, depending on the nature of the
engagement and the capabilities of the client's organization. We intend to bill
the majority of our engagements on a time and materials basis, although we also
intend to deliver solutions on a fixed-price basis.
Cost of revenues
As we grow, our operating expenses will increase in connection with building
and maintaining our network of independent web site developers and programmers,
sales and marketing agents, web site development, and general and administrative
needed to support our growth.
Web site developer and programmer expenses consist primarily of compensation
for independent consultants that provide us with technical services. We expect
to significantly increase our web site developer and programmer expenses in
absolute dollars as we secure new clients.
Sales and marketing expenses consist primarily of compensation for sales and
marketing agents, travel, public relations, sales and other promotional
materials, trade shows, advertising and other sales and marketing programs. We
expect to continue to increase our sales and marketing expenses in absolute
dollars in future periods to promote our brand, to pursue our business
development strategy and to increase the size of our sales force.
General and administrative expenses consist primarily of compensation for
personnel and fees for outside professional advisors. We expect that general and
administrative expenses will continue to increase in absolute dollars in future
periods as we continue to add staff and infrastructure to support our expected
domestic and international business growth and bear the increased expense
associated with being a public company.
We anticipate that we will incur net losses for the foreseeable future. The
extent of these losses will be contingent, in part, on the amount of net revenue
generated from clients. There can be no assurance that our operating losses will
not increase in the future or that we will ever achieve or sustain
profitability.
Limited operating history
Our limited operating history makes predicting future operating results
very difficult. We believe that you should not rely on our current operating
results to predict our future performance. You must consider our prospects in
light of the risks, expenses and difficulties encountered by companies in new
and rapidly evolving markets. We may not be successful in addressing these risks
and difficulties.
Results of operations
For the period January 5, 1999 to August 31, 1999, we did not generate any
operating revenues and incurred a cumulative net loss of $2,764. Our operating
expenses consist of organizational costs including accounting, incorporation and
state fees.
The results of operations for the period January 5, 1999 to August 31,
1999 are not necessarily indicative of the results for any future interim
period. We expect to expand our business and client base, which will require us
to increase the number of technical, sales and marketing agents and to develop
our web site and purchase equipment, which will result in increasing expenses.
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Liquidity and capital resources
Since inception, our financing has been provided to us through a credit
line of $12,500 from Joel Arberman, a close friend of our president. Advances
under the verbal agreement earn interest at a fixed rate of 6%, are unsecured,
can be converted, at our sole discretion, into one common share for each $0.05
loaned and have no specific repayment terns. As of November 18, 1999, we
borrowed $2,640 and have a remaining credit line of $12,360.
Our operating and capital requirements have exceeded our cash flow from
operations as we have been building our business. Organizational activities
during the period January 5, 1999 to August 31, 1999 created a net use of cash
of $2,764, which have been primarily funded by $284 in borrowings and $2,500 in
proceeds from the sale of stock. At August 31, 1999 we had $20 in cash.
We expect to make expenditures of at least $50,000 during the twelve
months following the closing of this offering. These expenditures will be used
to continue web site development, recruiting independent contractors, begin
sales and marketing and for general working capital.
As a result of Hojo's current financial condition, our independent
certified public accountants have pointed out that we have an accumulated
deficit and negative working capital and that our ability to continue as a going
concern is dependent upon obtaining additional capital and financing for our
planned operations. Our independent certified public accountants' report on the
financial statements includes an explanatory paragraph stating that Hojo's
existence is dependent upon its ability to obtain additional capital, among
other things, which raises substantial doubt about our ability to continue as a
going concern.
If we are successful in selling at least 1,000,000 of the shares offered, the
$50,000 of proceeds generated will be sufficient to maintain our operations for
at least 12 months after completion of the offering. If independent contractors
accept stock for their services then we might be able to reduce our cash
requirements. As many as half of the 12,500,000 shares offered may be issued for
services. If we are unable to raise these funds we will not remain as a viable
going concern and investors may lose their entire investment.
As a result of our limited operating history, we have limited meaningful
historical financial data upon which to base planned operating expenses.
Accordingly, our anticipated expense levels in the future are based in part on
our expectations as to future revenue. We expect that these expense levels will
become, to a large extent, fixed. Revenues and operating results generally will
depend on the volume of, timing of and ability to complete transactions, which
are difficult to forecast. In addition, there can be no assurance that we will
be able to accurately predict our net revenue, particularly in light of the
intense competition for Internet professional services, our limited operating
history and the uncertainty as to the broad acceptance of the web and Internet.
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
Material agreements
To date, we have not entered into any arrangements with independent
agents to provide technology development, sales or marketing.
In August 1999, we entered into a two-year employment agreement with Holli
Arberman, our president. Mrs. Arberman will be compensated at the rate of
$24,000 per year. However, no compensation shall be paid until we raise gross
investment proceeds exceeding $200,000.
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YEAR 2000 READINESS DISCLOSURE
We are not currently aware of any Year 2000 compliance problems relating
to our software or systems that would have a material adverse effect on our
business, results of operations and financial condition, without taking into
account our efforts to avoid or fix any problems. There can be no assurance that
third-party software, hardware, or services incorporated into our systems will
not need to be revised or replaced, which could be time consuming and expensive.
Our failure to fix our software or to fix or replace third-party software,
hardware or services on a timely basis could result in lost revenues, increased
operating costs and other business interruptions, any of which could have a
material adverse effect on our business, results of operations and financial
condition. Moreover, failure to adequately address Year 2000 compliance issues
in our software and systems could result in claims of mismanagement,
misrepresentation or breach of contract and related litigation, which could be
costly and time-consuming to defend. In addition, there can be no assurance that
governmental agencies, utility companies, internet access companies, third-party
service providers and others outside our control will be Year 2000 compliant.
The failure by those entities to be Year 2000 compliant could result in a
systematic failure beyond our control, including prolonged internet,
telecommunications or electrical failure. That type of failure could prevent us
from delivering our services, decrease the use of the internet or prevent users
from accessing our websites any of which would have a material adverse effect on
our business, results of operations and financial condition.
WHERE YOU CAN FIND MORE INFORMATION?
We have not been subject to the reporting requirements of the Securities
Exchange Act of 1934, prior to completion of this offering. We have filed with
the SEC a registration statement on Form SB-2 to register the offer and sale of
the shares. This prospectus is part of that registration statement, and, as
permitted by the SEC's rules, does not contain all of the information in the
registration statement. For further information with respect to us and the
shares offered under this prospectus, you may refer to the registration
statement and to the exhibits and schedules filed as a part of the registration
statement. You can review the registration statement and our exhibits and
schedules at the public reference facility maintained by the SEC at Judiciary
Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the SEC at 7 World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. The registration statement is also available
electronically on the world wide web at http://www.sec.gov.
You can also call or write us at any time with any questions you may have. We
would be pleased to speak with you about any aspect of this offering.
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FINANCIAL STATEMENTS
Hojo Holdings, Inc.
(A Development Stage Enterprise)
Financial Statements as of and for the period January 5, 1999
(date of incorporation) to August 31, 1999
and
Independent Auditors' Report
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
TABLE OF CONTENTS
Independent Auditors' Report F-2
Financial Statements as of and for the period January 5, 1999
(date of incorporation) to August 31, 1999:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Deficit F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
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[Letterhead Beard, Nertney, Kingery, Crouse & Hohl, P.A.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Hojo Holdings, Inc.:
We have audited the accompanying balance sheet of Hojo Holdings, Inc. (the
"Company"), a development stage enterprise, as of August 31, 1999, and the
related statements of operations, stockholders' deficit and cash flows for the
period January 5, 1999 (date of incorporation) to August 31,1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates
made by management, as well as the overall financial statement presentation. We
believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of August 31,
1999, and the results of its operations and its cash flows for the period
January 5, 1999 (date of incorporation) to August 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes A and B to the
financial statements, the Company is in the development stage and will require a
significant amount of capital to commence its planned principal operations and
proceed with its business plan. As of the date of these financial statements, no
significant capital has been raised, so there is no assurance that the Company
will be successful in its efforts to raise the necessary capital to commence its
planned principal operations and/or implement its business plan. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to this matter are described in Note B.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Beard, Nertney, Kingery, Crouse & Hohl, P.A.
September 9, 1999
Tampa, FL
F-2
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Hojo Holdings, Inc..
(A Development Stage Enterprise)
BALANCE SHEET AS OF AUGUST 31, 1999
ASSETS
Cash and cash equivalents $ 20
=====
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES - Line of Credit $ 284
-------
STOCKHOLDERS' DEFICIT:
Common stock-$.001 par value-20,000,000 shares
authorized; 2,500,000 shares issued and
outstanding 2,500
Deficit accumulated during the development stage (2,764)
Total stockholders' deficit (264)
TOTAL $ 20
=====
See notes to financial statements
F-3
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
for the period January 5, 1999 (date of incorporation)
to August 31, 1999
EXPENSES:
Professional fees $ 2,200
Organization costs 564
---
NET LOSS $ 2,764
= =====
NET LOSS PER SHARE:
Basic $ 0.00
====
Weighted average number of shares - basic 2,500,000
See notes to financial statements
F-4
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' DEFICIT
for the period January 5, 1999 (date of incorporation)
to August 31, 1999
Deficit
Accumulated
During the
Common Stock Development
shares Par Value Stage Total
Balances, January 5,1999
(date of incorporation) 0 $ 0 $ 0 $ 0
Issuance of common stock 2,500,000 2,500 2,500
Net loss for the
period, January 5, 1999
(date of incorporation)
to August 31, 1999 (2,764) (2,764)
--------- -------- ------------- -------
Balances, August 31,1999 2,500,000 $ 2,500 $ (2,764) $ (264)
========= ======== ============= =======
See notes to financial statements
F-5
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
for the period January 5, 1999 (date of incorporation)
to August 31, 1999
CASH USED IN OPERATING ACTIVITIES - Net loss $ (2,764)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in line of credit 284
Proceeds from the issuance of common stock 2,500
-----
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,784
-----
NET INCREASE IN CASH AND CASH EQUIVALENTS 20
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0
------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20
======
Interest paid $ 0
Taxes paid $ 0
See notes to financial statements
F-6
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Hojo Holdings, Inc. (the "Company") was incorporated under the laws of the state
of Delaware on January 5, 1999. The Company, which is considered to be in the
development stage as defined in Financial Accounting Standards Board Statement
No. 7, is a web site development firm that intends to build a network of
independent web site developers for projects it secures from clients. The
planned principal operations of the Company have not commenced, therefore
accounting policies and procedures have not yet been established.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management 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 and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE B - GOING CONCERN
The accompanying 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. The Company will require a
significant amount of capital to commence its planned principal operations and
proceed with its business plan. Accordingly, the Company's ability to continue
as a going concern is dependent upon its ability to secure an adequate amount of
capital to finance its planned principal operations and/or implement its
business plan. The Company's plans include a public offering of its common stock
(see Note F), however there is no assurance that they will be successful in
their efforts to raise capital. This factor, among others, may indicate that the
Company will be unable to continue as a going concern for a reasonable period of
time.
The 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 the Company be
unable to continue as a going concern.
F-7
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NOTE C - RELATED PARTY TRANSACTION
On August 30, 1999, the Company executed a two year employment contract with its
president, which requires annual compensation of approximately $24,000 plus
certain bonuses and fringe benefits (as defined in the agreement). The agreement
shall become effective upon the earlier of the date mutually agreed to in
writing by both parties or two weeks following the date on which the Company
receives more than $200,000 of gross investment capital.
During the period January 5, 1999 (date of incorporation) to August 31, 199, the
Company's president provided various equipment, services and a portion of her
home for office space for no consideration. The value of this equipment,
services and office space are considered to be insignificant so no expense has
been recorded.
NOTE D - LINE OF CREDIT
The Line of Credit arises from advances under a line of credit arrangement with
the Company, whereby an individual has agreed to loan the Company up to $12,500
to fund cash flow needs. Advances under the arrangement, accrue interest at a
fixed rate of 6%, are unsecured, may be converted, at our sole discretion, into
common shares at the rate of one common share for each $0.05 loaned, and have no
specified repayment terms. At August 31, 1999, the Company had borrowed $2,784
under this arrangement of which $284 remained outstanding as of such date.
NOTE E - INCOME TAXES
The Company has recognized losses for both financial and tax reporting purposes
and has a net operating loss carryforward of approximately $2,700 as of August
31, 1999. Because the Company would establish a valuation allowance for any
deferred income tax asset, no deferred taxes have been provided for in the
accompanying financial statements.
NOTE F - LOSS PER SHARE
The Company computes 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. As of August 31, 1999 there were no common equivalent shares
outstanding, as such, the diluted net loss per share calculation is the same as
the basic net loss per share.
Net loss available to common stockholders $ 2,764
=========
Denominator for basic calculation 2,500,000
Net loss per share - basic $ 0.00
=======
F-8
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NOTE G - PROPOSED COMMON STOCK OFFERING
During the third calendar quarter of 1999, the Company intends to file a
registration statement for the sale of up to 12,500,000 shares of the Company's
common stock at $0.05 per share. The existing shareholders do not intend to
offer any shares for sale. The offering is a direct public offering, no minimum
basis. As such, there will be no escrow of any of the proceeds of the offering
and the Company will have the immediate use of such funds to finance its
operations.
F-9
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* , 1999
Hojo Holdings, Inc.
12,500,000 shares of common stock
PROSPECTUS
We have not authorized any dealer, salesperson, or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made after the date of this prospectus shall create an implication that
the information contained in this prospectus or the affairs of the company have
not changed since the date of this prospectus.
Until ______________, 1999 all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
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Part II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of directors and officers.
The information required by this Item is incorporated by reference to
"indemnification" in the prospectus herein.
Item 25. Other Expenses of Issuance and Distribution.
SEC Registration Fee $173.75
Blue Sky Fees and Expenses 6,000
Legal Fees and Expenses 10,000
Printing and Engraving Expenses 2,000
Accountants' Fees and Expenses 10,000
Miscellaneous 1,826.25
Total $30,000
The expenses, except for the SEC fees, are estimated.
Item 26. Recent sales of unregistered securities.
The following sets forth information relating to all previous sales of common
stock by the Registrant which sales were not registered under the Securities Act
of 1933.
On January 6, 1999, we issued 900,000 shares of common stock to Holli Arberman,
president and CEO at a price of $0.001 per share, for aggregate consideration of
$900. This purchase and sale were exempt from registration under the Securities
Act of 1933, (the "Securities Act"), according to Section 4(2) on the basis that
the transaction did not involve a public offering.
On January 6, 1999, we sold 1,600,000 shares of common stock to 49 investors,
each of whom subscribed to purchase the shares, at a price of $0.001 per share,
for aggregate consideration of $1,600. No sales commissions were paid in
connection with the offering. These sales were exempt from registration under
the Securities Act of 1933, (the "Securities Act"), according to Section 4(2) on
the basis that the transaction did not involve a public offering.
All individuals that purchased shares of stock had the opportunity to ask
questions and receive answers from our officer and director. In addition, they
had access to review all of our corporate records and material contracts and
agreements, which were very limited since we had just incorporated Hojo.
Each of the investors were asked a series of questions to determine whether or
not they were accredited investors, as defined by Rule 215, or if they were
sophisticated investors. All persons that had sufficient knowledge and
experience from which to make an informed investment decision are listed as
being sophisticated.
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January 6, 1999
Holli Arberman sophisticated
January 6, 1999
Alfred Arberman sophisticated
Rachelle Arberman sophisticated
Anil Goel sophisticated
Brad Jones sophisticated
Roger Mclelland sophisticated
Shanti Mclelland sophisticated
Brad Rotter accredited
Robert Enslein accredited
Paul Milelli sophisticated
Tumer Bahcheli accredited
Ellis Reemer accredited
Bryan Eggers sophisticated
Steve Palmer sophisticated
Kevin Lewis accredited
Raj Vadavia sophisticated
Bob Vukovitch accredited
Jonathan Lewis sophisticated
Mark Freeman accredited
Michael Levy accredited
Glenn Bierman accredited
Bella and Mauricio Nemes sophisticated
Simon and Sarah Blechner sophisticated
Sefany Jones sophisticated
Hillary Braderman sophisticated
Larry Stessel accredited
Isabel Arberman sophisticated
Joshua and Renee Bialek sophisticated
Fred Sager accredited
Cliff Berger accredited
Morty Dugatz accredited
Kerry Kassover accredited
Ron Kassover sophisticated
George Chajes sophisticated
Harvey Jacobson accredited
Jeremy and Karen Blumenfeld sophisticated
Lisa Appel sophisticated
Lawrence Frankel sophisticated
Debbie Galla sophisticated
Bob Herbst sophisticated
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Adam Hutt sophisticated
Lisa Kahn sophisticated
Burt Miller sophisticated
Joseph Popolow accredited
David Smith sophisticated
Ilan Weinberg sophisticated
Elain Calmon sophisticated
Herbert and June Appel sophisticated
Mark Defelice sophisticated
Thomas Caton sophisticated
Item 27. Exhibits.
The exhibits marked with an "*" have already been filed. The remaining exhibits
are filed with this Registration Statement:
Number Exhibit Name
*1.1 Subscription Agreement
*3.1 Articles of Incorporation
*3.2 By-Laws
* 5.0 Opinion Regarding Legality
*10.1 Employment Agreement with Holli Arberman.
23.1 Consent of Expert
24.1 Consent of Counsel
All other Exhibits called for by Rule 601 of Regulation S-B are not applicable
to this filing. Information pertaining to our common stock is contained in our
Articles of Incorporation and By-Laws.
Item 28. Undertakings.
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement:
To include any prospectus required by section I 0(a)(3) of the Securities Act
of 1933;
Toreflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment) which, individually or in the aggregate, represent a fundamental
change in the information in the registration statement;
Toinclude any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to the information in the Registration Statement.
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(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant undertakes to file with the
Securities and Exchange Commission any supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
to that section.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to our certificate of incorporation or provisions of
Delaware law, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission the indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. If a claim for
indemnification against liabilities (other than the payment by the Registrant)
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit, or proceeding is
asserted by a director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of our
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether the indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of the issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this
registration statement to be signed on our behalf by the undersigned, in the
City of Lido Beach, State of New York, on November 19, 1999.
(Registrant) Hojo Holdings, Inc.
By (signature and title) /s/ Holli Arberman
president, treasurer, and director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
(signature) /s/ Holli Arberman
(title) president, chief executive officer,
secretary, chairman of the board
(date) November 19, 1999
(signature) /s/ Holli Arberman
(title) Chief Accounting Officer
(date) November 19, 1999
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As filed with the SEC on November *, 1999 SEC Registration No.333-87111
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
REGISTRATION STATEMENT
ON FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
Hojo Holdings, Inc.
(Consecutively numbered pages 48 through of this Registration Statement)
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INDEX TO EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
1.1 Subscription Agreement Previous Filing
3.1 Articles of Incorporation Previous Filing
3.2 Bylaws Previous Filing
5 Consent of HOGE, EVANS, This Filing
HOLMES, CARTER & LEDBETTER, Page___
PLLC
10.1 Employment Agreement Previous Filing
for Holli Arberman
23 Consent of Kingery, This Filing
Crouse & Hohl, P.A. Page
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REFERENCE 5.0
CONSENT OF HOGE, EVANS, HOLMES, CARTER & LEDBETTER, PLLC
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HOGE, EVANS, HOLMES, CARTER & LEDBETTER, PLLC
ATTORNEYS AND COUNSELORS
HAMPTON COURT
SUITE 600
4311 OAKLAWN
DALLAS, TEXAS 75219
Steven B. Holmes
Licensed In TELEPHONE (214) 765-6000
Texas and Oklahoma TELECOPIER (214) 765-6020
E-MAIL [email protected]
September 13, 1999
Board of Directors
Hojo Holdings, Inc.
21 Blackheath Road
Lido Beach, New York 11561
Re: Hojo Holdings, Inc.
Registration Statement on Form SB-2
Gentlemen:
We have been retained by Hojo Holdings, Inc. (the "Company") in connection
with the Registration Statement (the "Registration Statement") on Form SB-2, to
be filed by the Company with the Securities and Exchange Commission relating to
the offering of securities of the Company. You have requested that we render our
opinion as to whether or not the securities proposed to be issued on terms set
forth in the Registration Statement will be validly issued, fully paid, and
nonassessable.
In connection with the request, we have examined the following:
1. Articles of Incorporation of the Company;
2. Bylaws of the Company;
3. The Registration Statement; and
4. Unanimous consent resolutions of the Company's Board of Directors.
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HOGE, EVANS, HOLMES, CARTER & LEDB LEDBETTER, PLLC
Board of Directors
September 13, 1999
Page 2
We have examined such other corporate records and documents and have made
such other examinations as we have deemed relevant.
Based on the above examination, we are of the opinion that the securities of
the Company to be issued pursuant to the Registration Statement are validly
authorized and, when issued in accordance with the terms set forth in the
Registration Statement, will be validly issued, and fully paid, and
non-assessable under the corporate laws of the State of Delaware.
We consent to our name being used in the Registration Statement as having
rendered the foregoing opinion and as having represented the Company in
connection with the Registration Statement.
Sincerely,
HOGE, EVANS, HOLMES,
CARTER & LEDBETTER PLLC
Steven B. Holmes
SBH
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REFERENCE 23
CONSENT OF KINGERY, CROUSE & HOHL, P.A.
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[Letterhead of Kingery Crouse & Hohl P.A.]
November 18, 1999
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form SB-2 (No. 333-87111) of our report dated
September 9, 1999, with respect to the financial statements of Hojo Holdings,
Inc., as of and for the period January 5, 1999 (date of incorporation) to August
31, 1999, filed with the Securities and Exchange Commission.
/s/ KINGERY, CROUSE & HOHL, P.A.
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