As filed with the SEC on March 17, 2000 SEC Registration No. 333-87111
PROSPECTUS
Hojo Holdings, Inc.
Maximum of 12,500,000 shares of our common stock.
The purchase price for our shares is $0.05
Total cash proceeds if maximum issued: $312,500
This is our initial public offering so there is no public market for our shares.
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
per share $0.05 none $0.05
total maximum $312,500 none $312,500
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 March 17, 2000
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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 began implementing phases of its
business plan in October 1999. We are 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. Our web site can be located at
http://www.hojoholdings.com.
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 forservices 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
January 25, 2001, 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 approximately
$10,000 through December 31, 1999. Hojo had only $20 in cash as of December 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.
We have limited experience in attracting and retaining third parties.
Our operating results will depend to a large extent on attracting and
retaining independent web site developers, computer programmers and sales and
marketing agents. To date, we have no agreements with any web site developers,
computer programmers or 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.
Since this is a direct public offering and there is no underwriter, we may not
be able to sell any shares ourselves.
No underwriter has been retained by us to sell these securities. 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. 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 you may lose all or substantially all of your investment.
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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 $282,500, after deducting the estimated expenses of the
offering of approximately $30,000 and assuming that half of the shares offered
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. Some of the corporate web site, sales and marketing services we require
may be paid for through the issuance of shares.
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 6,250,000
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 0 202,500
Total $ 50,000 $ 312,500
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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 cash proceeds and services of $50,000,
we 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
proceeds are raised. As set forth in the above table, if we receive net proceeds
in amounts less than $50,000, 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. In addition, none of the offering proceeds will be
used to acquire other companies or businesses.
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, the
husband 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 December 31, 1999, we had a net tangible book value of $0 or $0.00 per
share. After giving effect to the cash sale of the maximum of 6,250,000 shares
and the receipt of $312,500 in cash, less offering expenses estimated at
$30,000, our adjusted net tangible book value at December 31, 1999 would have
been approximately $275,000 or $.01 per share. This represents an immediate
increase in net tangible book value of $.01 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 $.04 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:
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December 31, 1,000,000 6,250,000
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 $0.01
Increase to
net tangible
book value per
share attributable
to purchase of
common stock by
new investors n/a $0.01 $0.01
Dilution to
new investor n/a $0.04 $0.04
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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 president 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 January 25, 2001, 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.
There is no public market for our shares but we hope to have prices for our
shares quoted on the bulletin board maintained by the National Association of
Securities Dealers after we complete our offering.
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.
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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 director 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 has also served as the president, secretary, treasurer and a director
of three other companies which where incorporated by Mr. 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 December 1999, Mrs. Arberman 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 December
31, 1999, by our executive officer whose salary and bonus for the period
exceeded $100,000.
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Summary Compensation Table
Long-Term Compensation Awards
Name and Principal Compensation - 1999
Position Salary ($) 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. Mrs. Arberman is already 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.
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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.
Beneficial ownership shares owned Percentage of shares
class of common stock before after
offering offering
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
Mr. Joel Arberman has the right to convert the money he loaned to us into a
maximum of 265,000 shares. If the loan is converted into stock, Mr. Arberman
would own 1.76% of the shares outstanding after the offering.
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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 percent 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 business, 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 business.
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.
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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 have
become eligible for sale on January 6th, 2000, subject to the limitations of
Rule 144. 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 Rule 144. 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 those 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.
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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 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 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.
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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, earn interest
at a fixed rate of 6%, are unsecured, at our sole discretion can be converted
into a maximum of 250,000 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; o he filed Hojo's articles of incorporation with the State
of Delaware and o 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.
Mr. And Mrs. Arberman have no prior experience with any registered or
unregistered blank-check offerings.
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 Although Hojo is only recently
organized and has few tangible assets, Hojo is not a "blank check" company. A
company is considered "blanke check" when it is development stage and has no
specific business plan or purpose, or has indicated that its business plan is to
engagein a merger or acquisition with an undentified company. We are 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.
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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 2000. 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.
Early this 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.
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- - 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 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.
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Clients
We do not currently have any paying 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 this year. We intend to sell our services through
independent sales and marketing agents. Our president 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. 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. Our president currently spends a minimum of
40 hours per week working for us. Our operations are in Lido Beach, New York. We
are currently borrowing all of our telecommunications and Internet equipment
from our president. Our systems include one Dell 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.
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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.
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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 have one full time employee.
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
Plan of operations
Hojo began implementing phases of its business plan in October 1999. We
began by purchasing and installing office equipment, a computer and web site
development software. We purchased the domain name www.hojoholdings.com and have
designed, developed and launched our first commercial web site.
Our web site utilizes leading-edge technology to present a variety of
information that we believe will be of interest to future customers. We provide
several categories of information, including:
o our services - information about the services we offer
o rates - a section for potential customers to obtain quotes from us
o why a website - an explanation of why we believe web sites are required
business tools
o about us - a description and background of us
o employment - an explanation of the types of independent contractors we
are seeking
o news - current information about us
o contact us - our address, phone/fax number and email address
o samples - we show a variety of web pages and web sites that we have
developed
We believe that the most important portion of our web site is the section
that displays a variety of samples that we created. The samples demonstrate a
variety of web site design and development skills that we possess and can offer
future clients. For example, our web development samples include:
o an animation introducing a new software product
o an animated splash page utilized to introduce a new web site
o a home page created utilizing the latest animation software
o a web site containing a variety of photographs
As a result of the initial samples, we have been able to identify several
individuals and entities that were interested in us to modify their web site and
in some cases to host their web sites. In return for not charging them for our
nominal services, each has agreed to serve as a reference for us, which we
believe will help us in getting paying customers.
Based upon our samples and our references, we have had several early-stage
discussions with individuals that are considering hiring us to develop their web
sites. The discussions are ongoing, have not led to any contract as of the date
of this date and we can not assure you that they will lead to any revenues.
Since early January 2000, we began to identify web site developers that
could assist us with complex web site development that may be required by future
clients. Based upon our recent conversations with qualified individuals, we are
comfortable that we can secure appropriate web site developers as needed and in
an economical manner, to satisfy a wide variety of possible requirements from
future clients. To date, we have not contracted any web site developers. We plan
to continue to identify suitable web site developers so that we have a wide
range to select from we need them.
Beginning in the second quarter of 2000, we plan to identify independent
contractors that can assist us in obtaining web site development contracts. We
believe that these individuals would be compensated on a commission basis, which
would be calculated from the total revenues we receive as a result of their
efforts.
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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.
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Our fiscal year ends December 31.
Results of operations
For the period January 5, 1999 to December 31, 1999, we did not generate
any operating revenues and incurred a cumulative net loss of approximately
$10,000. Our operating expenses consist of organizational costs including
accounting, incorporation and state fees as well as the purchase of office
supplies and communications expenses.
The results of operations for the period January 5, 1999 to December 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, the husband 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 December 31, 1999, we borrowed
approximately $10,000 and have a remaining credit line of approximately $2,500.
Our operating and capital requirements have exceeded our cash flow from
operations as we have been building our business. During the period January 5,
1999 to December 31, 1999 we used cash of approximately $12,500 for operating
and investing activities, which have been primarily funded by approximately
$10,000 in borrowings and $2,500 in proceeds from the sale of stock.
At December 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.
We have an accumulated deficit and negative working capital and
accordingly, our ability to continue as a going concern is dependent upon
obtaining additional capital and financing for our planned operations.
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.
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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
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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.
As of this date, Hojo has not experienced any year 2000 related computer
problems.
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, write or email 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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Hojo Holdings, Inc.
(A Development Stage Enterprise)
TABLE OF CONTENTS
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Independent Auditors' Report F-2
Financial Statements as of and for the period January 5, 1999
(date of incorporation) to December 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
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F-1
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INDEPENDENT AUDITORS' REPORT
To the Director of Hojo Holdings, Inc.:
We have audited the accompanying balance sheet of Hojo Holdings, Inc. (the
"Company"), a development stage enterprise, as of December 31, 1999, and the
related statements of operations, stockholders' deficit and cash flows for the
period January 5, 1999 (date of incorporation) to December 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 December 31,
1999, and the results of its operations and its cash flows for the period
January 5, 1999 (date of incorporation) to December 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 has an
accumulated deficit, anticipates incurring net losses in the foreseeable future
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, and as such 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.
Kingery Crouse & Hohl P.A.
January 24, 2000
Tampa FL
F-2
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Hojo Holdings, Inc..
(A Development Stage Enterprise)
BALANCE SHEET AS OF DECEMBER 31, 1999
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ASSETS
Cash and cash equivalents $ 20
Computer equipment (less accumulated
depreciation of $0.00) 2,197
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TOTAL $ 2,217
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES - Due to affiliate $ 10,003
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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 (10,286)
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Total stockholders' deficit (7,786)
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TOTAL $ 2,217
===============
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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 December 31, 1999
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EXPENSES:
Professional fees $ 5,848
Office 2,226
Marketing 991
Filing fees 554
Organization costs 564
Travel and entertainment 103
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NET LOSS $ 10,286
===================
NET LOSS PER SHARE:
Basic $ 0.00
===================
Weighted average number of shares - basic 2,500,000
===================
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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 December 31, 1999
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<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Common Stock Development
Shares Par Value Stage Total
------------- -------------- ------------------ -----------
<S> <C> <C> <C> <C>
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
December 31, 1999 (10,286) (10,286)
------------- -------------- ------------------ -----------
Balances, December 31, 1999 2,500,000 $ 2,500 $ (10,286) $ (7,786)
============= ============== ================== ===========
</TABLE>
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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 December 31, 1999
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CASH USED IN OPERATING ACTIVITIES - Net loss $ (10,286)
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CASH FLOWS FROM INVESTING ACTIVITIES-
Purchase of computer equipment (2,197)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to affiliate 10,003
Proceeds from the issuance of common stock 2,500
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NET CASH PROVIDED BY FINANCING ACTIVITIES 12,503
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NET INCREASE IN CASH AND CASH EQUIVALENTS 20
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20
==============
Interest paid $ 0
==============
Taxes paid $ 0
==============
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See notes to financial statements
F-6
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Hojo Holdings, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
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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.
Use of Estimates
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. The
reported amounts of revenues and expenses during the reporting period may be
affected by the estimates and assumptions management is required to make. 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 has an accumulated
deficit of approximately $7,800 through December 31, 1999, anticipates incurring
net losses for the foreseeable future and 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) and
the issuance of debt, however there is no assurance that they will be successful
in their efforts to raise capital. These factors, 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 TRANSACTIONS
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 date on which the Company receives more than
$200,000 of gross investment capital.
During the period January 5, 1999 (date of incorporation) to December 31, 1999,
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 and as such no
expense has been recorded.
At December 31, 1999, the Company has an informal line of credit with the
President's husband. Advances under this arrangement accrue interest at a fixed
rate of 6%, are unsecured and have no specified repayment terms. At the sole
discretion of the Company this debt can be converted into a maximum of 250,000
common shares at the rate of one share per $0.05 advanced at the date of
conversion. During the period ended December 31, 1999, the Company borrowed
$12,500 under this arrangement of which $10,003 remained outstanding at December
31, 1999. Interest has not been paid or accrued as of or for the period August
5, 1999 (date of incorporation) to December 31, 1999 because of its
insignificance.
NOTE D - INCOME TAXES
The Company has recognized losses for both financial and tax reporting purposes
and has a net operating loss carryforward of approximately $10,000 as of
December 31, 1999. As such, no deferred income taxes have been provided for in
the accompanying financial statements. Also, because the Company would establish
a valuation allowance for any deferred income tax asset, no deferred income tax
benefit and/or asset has been recorded in the accompanying financial statements.
NOTE E - 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
F-8
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common equivalent shares outstanding during the period. As of December 31, 1999
there were approximately 200,000 dilutive shares outstanding related to the
convertible debt discussed in NOTE C. These shares are considered antidilutive
for purposes of the earnings per share calculation and are therefore not
included in the earnings pre share calculation; accordingly diluted net loss per
share and basic net loss per share are the same.
NOTE F - COMMON STOCK OFFERING
The Company intends to file a registration statement with the SEC to sell up to
12,500,000 shares of its common stock for $0.05 per share. As many as 6,250,000
of these shares may be issued in exchange for services. The offering will be on
a best-efforts, 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.
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F-9
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March 17, 2000
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 our business have
not changed since the date of this prospectus.
Until ______________, 2000 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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