UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: December 31, 2003
Commission file number: 033-25900
CENUCO, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2228820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6421 CONGRESS AVENUE, SUITE 201
BOCA RATON, FLORIDA 33432
(Address of principal executive offices)
(Zip code)
(561) 994-4446
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:
On February 10, 2004, the issuer had outstanding 10,146,605 shares of common
stock, $.001 par value per share.
CENUCO, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTERLY PERIOD ENDED DECEMBER 31, 2003
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets
As of December 31, 2003 (Unaudited) and June 30, 2003...........3-4
Consolidated Statements of Operations (Unaudited)
For the Three and Six Months Ended December 31, 2003 and 2002.....5
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended December 31, 2003 and 2002.............6-7
Condensed Notes to Consolidated Financial Statements............8-12
Item 2 - Management's Discussion and Analysis and Results of Operations.13-22
Item 3 - Control and Procedures............................................22
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.................................................23
Item 2 - Changes in Securities and Use of Proceeds.........................23
Item 4 - Submission of Matters to a Vote of Security Holders...............23
Item 5 - Other Information.................................................23
Item 6 - Exhibits and Reports on Form 8-K..................................24
SIGNATURES....................................................................24
-2-
CENUCO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, June 30,
2003 2003
------------ -----------
(Unaudited)
CURRENT ASSETS:
Cash and Cash Equivalents .................................... $ 103,847 $ 295,088
Short-term Investment ........................................ 709,905 701,614
Tuition Receivable - current (Net of Allowance for
Doubtful Accounts of $88,222 and $108,000, respectively) . 710,327 870,261
Accounts Receivable (Net of Allowance for Doubtful
Accounts of $4,027 and $9,027, respectively) ............. 20,384 19,262
Inventories .................................................. 23,185 32,814
Deferred Recruiting Fees ..................................... 30,947 45,852
Other Current Assets ......................................... 33,862 28,122
----------- -----------
Total Current Assets ..................................... 1,632,457 1,993,013
----------- -----------
PROPERTY AND EQUIPMENT:
Computer Equipment and Software .............................. 197,569 170,225
Furniture, Fixtures and Office Equipment ..................... 50,699 50,699
Leasehold Improvements ....................................... 3,051 3,051
----------- -----------
251,319 223,975
Less: Accumulated Depreciation ............................... (121,778) (98,646)
----------- -----------
Total Property and Equipment ............................. 129,541 125,329
----------- -----------
OTHER ASSETS:
Tuition Receivable - non-current (Net of Allowance for
Doubtful Accounts of $351,196 and $346,000, respectively) 503,643 542,310
Deferred Recruiting Fees ..................................... 39,387 36,121
Security Deposits ............................................ 8,642 8,642
----------- -----------
Total Other Assets ....................................... 551,672 587,073
----------- -----------
Total Assets ............................................. $ 2,313,670 $ 2,705,415
=========== ===========
See accompanying notes to consolidated financial statements
-3-
CENUCO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31, June 30,
2003 2003
------------ -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts Payable ............................................. $ 28,556 $ 21,762
Unearned Revenues ............................................ 1,086,718 984,396
Accrued Recruiting Fees ...................................... 7,494 20,544
Other Accrued Expenses ....................................... 33,366 90,695
----------- -----------
Total Current Liabilities ................................ 1,156,134 1,117,397
----------- -----------
NON-CURRENT LIABILITIES:
Unearned Revenues ............................................ 1,362,078 1,528,502
Accrued Recruiting Fees ...................................... 8,240 16,184
----------- -----------
Total Non-Current Liabilities ............................ 1,370,318 1,544,686
----------- -----------
Total Liabilities ........................................ 2,526,452 2,662,083
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock ($.001 Par Value; 1,000,000 Shares Authorized)
No Shares Issued and Outstanding) ........................ - -
Common Stock ($.001 Par Value; 25,000,000 Shares Authorized;
9,369,141 and 8,981,061 Shares Issued and Outstanding at
December 31, 2003 and June 30, 2003, respectively) ....... 9,369 8,981
Common Stock Issuable (777,464 shares) ....................... 777 -
Additional Paid-in Capital ................................... 2,829,423 1,671,827
Accumulated Deficit .......................................... (2,253,926) (1,611,476)
Deferred Compensation ........................................ (798,425) (26,000)
----------- -----------
Total Stockholders' Equity (Deficit) ..................... (212,782) 43,332
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) ..... $ 2,313,670 $ 2,705,415
=========== ===========
See accompanying notes to consolidated financial statements
-4-
CENUCO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NET REVENUES:
Tuition and Tuition-related ................ $ 244,705 $ 371,553 $ 459,004 $ 652,172
Wireless Products and Services ............. 36,930 109,361 89,717 285,268
----------- ----------- ----------- -----------
NET REVENUES ................................... 281,635 480,914 548,721 937,440
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of Equipment Sales .................... 5,290 49,006 14,373 147,016
Instructional and Educational Support ...... 18,103 32,806 26,670 52,874
Research and Development ................... 2,930 1,639 20,571 23,607
Selling and Promotion ...................... 62,814 102,299 98,142 216,765
General and Administrative ................. 599,107 633,431 1,040,260 1,107,243
----------- ----------- ----------- -----------
Total Operating Expenses ............... 688,244 819,181 1,200,016 1,547,505
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS ........................... (406,609) (338,267) (651,295) (610,065)
OTHER INCOME:
Interest Income ............................ 5,063 4,703 8,845 13,417
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES ....................... (401,546) (333,564) (642,450) (596,648)
INCOME TAX BENEFIT (EXPENSE):
Deferred Income Tax ........................ - 82,460 - 198,724
----------- ----------- ----------- -----------
Total Income Tax Benefit (Expense) ..... - 82,460 - 198,724
----------- ----------- ----------- -----------
NET LOSS ....................................... $ (401,546) $ (251,104) $ (642,450) $ (397,924)
=========== =========== =========== ===========
Net Loss Per Common Share - Basic .......... $ (0.04) $ (0.03) $ (0.07) $ (0.05)
=========== =========== =========== ===========
Weighted Common Shares Outstanding - Basic . 9,224,487 8,705,656 9,104,605 8,703,562
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements
-5-
CENUCO, INC. AND SUBSIDIAIRES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
December 31,
-------------------------------
2003 2002
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .......................................... $ (642,450) $ (397,924)
Adjustments to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Depreciation ............................... 23,132 17,985
Stock-Based Compensation ................... 277,336 18,474
Deferred Income Taxes ...................... - (198,724)
Provision for Doubtful Accounts ............ (19,548) 127,123
(Increase) Decrease in:
Tuition Receivable ....................... 179,271 280,621
Accounts Receivable ...................... 3,878 (24,917)
Inventories .............................. 9,629 50,458
Deferred Recruiting Fees ................. 14,905 1,371
Other Current Assets ..................... (5,740) (6,892)
Other Assets:
Tuition Receivable - Non-current ......... 33,878 (275,029)
Deferred Recruiting Fees - Non-current ... (3,266) (249)
Increase (Decrease) in:
Accounts Payable ........................ 6,794 7,369
Unearned Revenues ....................... 102,322 118,625
Accrued Recruiting Fees ................. (13,050) (27,952)
Other Accrued Expenses .................. (48,329) 738
Other Liabilities:
Unearned Revenues - Non-current ......... (166,424) 50,631
Accrued Recruiting Fees - Non-current ... (7,944) (4,097)
----------- -----------
Net Cash Flows Used in Operating Activities ........... (255,606) (262,389)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in Short-term Investment ................. (8,291) -
Acquisition of Property and Equipment ............. (27,344) (37,817)
----------- -----------
Net Cash Flows Used in Investing Activities ........... (35,635) (37,817)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Common Stock ................ 100,000 -
----------- -----------
Net Decrease in Cash and Cash Equivalents ............. (191,241) (300,206)
Cash and Cash Equivalents - Beginning of Year ......... 295,088 1,529,851
----------- -----------
Cash and Cash Equivalents - End of Period ............. $ 103,847 $ 1,229,645
=========== ===========
See accompanying notes to consolidated financial statements
-6-
CENUCO, INC. AND SUBSIDIAIRES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
For the Six Months Ended
December 31,
-------------------------------
2003 2002
----------- -----------
(Unaudited) (Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ........................................... $ - $ -
=========== ===========
Income Taxes ....................................... $ - $ -
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for debt ...................... $ 9,000 $ -
=========== ===========
Common stock issued for future services .......... $ 1,195,585 $ -
=========== ===========
See accompanying notes to consolidated financial statements
-7-
CENUCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Currently, Cenuco, Inc., (a Delaware corporation) and Subsidiaries (the
"Company") is engaged in two different business segments:
The Company has established a technology subsidiary called Cenuco, Inc., a
Florida corporation ("Cenuco"). Cenuco is a wholly-owned subsidiary that
develops wireless e-learning platform and technologies in the academic, consumer
and corporate marketplaces. We are also engaged in the development and sale of
wireless solutions and web services, which include the development of
business-to-business and business-to-consumer wireless applications, and state
of the art web technology and design services, though our subsidiary.
Additionally, through our subsidiary Barrington University, we are engaged in
the online distance learning industry with a focus on the international,
mid-career adult and corporate training markets. Our management has been engaged
in this business since 1993, through various predecessor entities (the
"Predecessors"). We own and operate an online distance learning university and
nutrition academy that offers licensed certificate and degree programs in a
variety of concentrations to students in over 80 countries worldwide. We are
licensed by the State Education Departments of the States of Alabama and
Florida, respectively. In addition to online training, we develop wireless
applications for schools and enterprise companies.
Our executive office is located at 6421 Congress Ave, Suite 201, Boca Raton,
Florida 33487 and we have an administrative office at 801 Executive Park Drive,
Mobile, Alabama 36606.
Our reportable segments are strategic business units that offer different
products, which complement each other. They are managed separately based on the
fundamental differences in their operations.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. The consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements for the year ended June 30, 2003 and notes
thereto contained in the Company's report on Form 10-KSB as filed with the SEC.
The results of operations for the six months ended December 31, 2003 are not
necessarily indicative of the results for the full fiscal year ending June 30,
2004.
Certain reclassifications have been made to the prior period's consolidated
statements of operations to conform to the current period's presentation.
-8-
CENUCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
Inventories, consisting of security cameras and equipment, are stated at the
lower of cost or market utilizing the first-in, first-out method.
REVENUE RECOGNITION
In connection with the development and sale of wireless solutions and web
services, which include the development of business-to-business and
business-to-consumer wireless applications, and state of the art web technology
and design services, the Company recognizes revenue as services are performed or
products are delivered. The Company has executed a distribution agreement
whereby the distributor may purchase wireless product on consignment. Any sales
made to the distributor under this agreement will be recorded as a deferred
revenue liability until such time as the distributor has sold the product at
which time the Company will recognize the related revenues.
The Company recognizes tuition and registration revenues from its online
distance learning segment based on the number of courses actually completed in
each student's course of study. For example, if a student completes three out of
his nine required courses, the Company will recognize 33% of the tuition
regardless of the amount of time that the student has taken to fulfill these
requirements.
Tuition refunds are based on the date that the student cancels and the policy is
as follows: If the student withdraws within 5 calendar days after midnight of
the day the student signs the Enrollment Agreement (Full Refund Period) the
student will receive a full refund with no further obligation. If the student
cancels after the Full Refund Period but before the school receives the first
completed lesson, the student will be charged a registration fee of $150 and the
student will receive a full refund less the registration fee charge. If the
student cancels after the school receives the first completed lesson, the
student's tuition obligation will be their registration fee plus a portion of
the remaining tuition as defined below.
PERCENTAGE OF COURSE COMPLETED AMOUNT OF TUITION OBLIGATED
------------------------------ ---------------------------
10% of less 10% of tuition
Between 11% - 25% 25% of tuition
Between 26% - 50% 50% of tuition
Over 50% Obligated for full tuition.
When a student withdraws, the Company writes off the remaining tuition
receivable balance against the remaining unearned revenue balance and records a
net increase or decrease to net revenues.
-9-
CENUCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
STOCK OPTIONS
The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company adopted the disclosure provisions of SFAS No.
123, "Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to non-employees for goods or services in accordance with the
fair value method of SFAS 123.
EARNINGS (LOSS) PER COMMON SHARE
Basic net earnings (loss) per share equals net earnings (loss) divided by the
weighted average shares outstanding during the year. The computation of diluted
net earnings per share does not include dilutive common stock equivalents in the
weighted average shares outstanding as they would be antidilutive. The
reconciliation between the computations is as follows:
Net Loss Basic Shares Basic EPS
----------- ------------ ---------
Six months ended December 31, 2003 .... $ (642,450) 9,104,605 $ (.07)
Six months ended December 31, 2002 .... $ (397,924) 8,703,562 $ (.05)
Three months ended December 31, 2003 .. $ (401,546) 9,224,487 $ (.04)
Three months ended December 31, 2002 .. $ (251,104) 8,705,656 $ (.03)
The exercise prices of all options granted by the Company equal the market price
at the dates of grant. No compensation expense has been recognized. Had
compensation cost for the stock option plan been determined based on the fair
value of the options at the grant dates consistent with the method of SFAS 123,
"Accounting for Stock Based Compensation", the Company's net loss and loss per
share would have been changed to the pro forma amounts indicated below for the
six months ended December 31, 2003 and 2002:
For the six months ended
December 31,
-----------------------------
2003 2002
----------- -----------
Net loss:
As reported .......... $ (642,450) $ (397,924)
Pro forma ............ (708,609) (397,924)
Basic loss per share:
As reported .......... (.07) (.05)
Pro forma ............ (.08) (.05)
The above pro forma disclosures may not be representative of the effects on
reported net earnings for future years as options vest over several years and
the Company may continue to grant options to employees.
-10-
CENUCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 - STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK
On December 10, 2003, the Board of Directors approved an increase in the
authorized common shares to 25,000,000.
On December 10, 2003, the Company issued 260,000 shares of common stock to
officers of the Company and to independent directors for services rendered. Such
shares were valued at their market value on the date of issuance at $.71 per
share. The Company recorded compensation of $184,600 related to these services.
On December 10, 2003, in connection with consulting agreements, the Company was
to issue 777,464 restricted shares of common stock for services rendered and to
be rendered in the future. As of December 31, 2003, these shares had not been
issued and are included in common stock issuable on the consolidated balance
sheet. The Company valued these shares at their market value on the date of
issuance of $.71 per share. In connection with these shares, the Company
recorded compensation of $39,980 and deferred compensation of $512,019, which
will be amortized over the service period.
On December 31, 2003, in connection with a private placement, the Company sold
one unit for $100,000 comprised of 100,000 shares of common stock and warrants
entitling the holder to purchase up to 100,000 shares of the Company's common
stock, at an exercise price of $1.00. The warrants expire on December 31, 2008.
COMMON STOCK WARRANTS
On December 10, 2003, the Company entered into a thirteen month agreement with
two consultants beginning on December 18, 2003. The consultants received an
aggregate of 850,000 warrants to purchase shares of the Company's common stock
at an exercise price of $1.00 per share. The fair value of this warrant grant
was estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions dividend yield of -0- percent;
expected volatility of 64 percent; risk-free interest rate of 4.50 percent and
an expected holding periods of 5.00 years. In connection with these warrants,
the Company recorded compensation expense of $11,456 for the six months ended
December 31, 2003 and deferred compensation of $286,406, which will be amortized
over the service period. The warrants expire on December 18, 2008.
-11-
CENUCO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 - SEGMENT INFORMATION
For the three and six months ended December 31, 2003 and 2002, the Company
operated in two reportable business segments - (1) the online distance learning
industry and (2) the development and sales of wireless solutions and web
services. The online distant learning segment provides internet education to
student internationally. The latter segment includes development of business-to-
business and business-to-consumer wireless applications, and state of the art
web technology and design services. The Company's reportable segments are
strategic business units that offer different products, which compliment each
other. They are managed separately based on the fundamental differences in their
operations. Information with respect to these reportable business segments for
the three and six months ended December 31, 2003 and 2002 is as follows:
For the Three Months Ended For the Six Months Ended
December 31, December 31,
2003 2002 2003 2002
--------- --------- ----------- -----------
Net Sales:
Online distance learning ... $ 244,705 $ 371,553 $ 459,004 $ 652,172
Wireless solutions ......... 36,930 109,361 89,717 285,268
--------- --------- ----------- -----------
Total Net Sales ......... 281,635 480,914 548,721 937,440
--------- --------- ----------- -----------
Costs and Operating Expenses:
Online distance learning ... 260,739 410,010 440,620 735,348
Wireless solutions ......... 427,505 409,171 759,396 812,157
--------- --------- ----------- -----------
Total Costs and Operating
Expenses .............. 688,244 819,181 1,200,016 1,547,505
--------- --------- ----------- -----------
Interest Income:
Online distance learning ... - 2,222 90 8,990
Wireless solutions ......... 5,063 2,481 8,755 4,427
--------- --------- ----------- -----------
Total Interest Income ... 5,063 4,703 8,845 13,417
--------- --------- ----------- -----------
Net Income (Loss):
Online distance learning ... (16,034) (126,327) 18,474 (48,014)
Wireless solutions ......... (385,512) (124,777) (660,924) (349,910)
--------- --------- ----------- -----------
Total Net Loss: ......... $(401,546) $(251,104) $ (642,450) $ (397,924)
========= ========= =========== ===========
Total Assets:
Online distance learning ................................ $ 1,341,966 $ 2,951,278
Wireless solutions ...................................... 971,704 1,225,021
----------- -----------
$ 2,313,670 $ 4,176,299
=========== ===========
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
GENERAL
The following analysis of the results of operations and financial
condition of the Company should be read in conjunction with the consolidated
financial statements for the year ended June 30, 2003 and notes thereto
contained in the Report on Form 10-KSB of Cenuco, Inc. as filed with the SEC.
These financial statements reflect the consolidated operations of Cenuco, Inc.
for the six months ended December 31, 2003 and 2002, respectively.
This report on Form 10-QSB contains forward-looking statements. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. The reader is cautioned that
all forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward-looking statements. We do not
have a policy of updating forward-looking statements and thus it should not be
assumed that silence over time means that actual events are bearing out as we
estimated in such forward-looking statements.
Reflecting the changing focus of our business, we plan to accelerate
the development of our suite of fully integrative wireless solutions for the
Security, Real Estate and Insurance markets. We have focused on our development
of wireless applications, while maintaining our market presence in the
distance-learning sector. We have continued to try and expand our online
distance- learning programs and have been restructuring and improving our
efforts to obtain our goals through increased mentoring programs to facilitate
the completion of course work, increased marketing efforts and improvement in
our on-line learning technologies. Additionally, we are seeking opportunities to
expands our programs in Asia and South America. We have hired additional sales
people for our online distance learning segment.
Our wireless segment has produced viable solutions for the real estate
and security markets. In addition, we launched our retail line of wireless video
monitoring solutions, MommyTrack(TM). For the six months December 31, 2003,
revenue from our MommyTrack product amounted to approximately $7,300.
Through Barrington University, our subsidiary, we are engaged in the
online distance learning business with a focus on the international,
second-career adult and corporate training markets. We currently operate our
main school, Barrington University, from Mobile, Alabama, where the State of
Alabama Department of Education, Code of Alabama, Title 16-46-1 through 10,
licenses the school. We offer degrees and training programs to students in over
90 countries and in multiple languages. The programs are "virtual" in their
delivery format and can be completed from a laptop, home computer or through a
wireless device.
In addition to degree completion programs, we are focusing on training
corporate personnel, continuing education (CE) courses and wireless technology
for education, which we believe is a major growth area.
-13-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
We are currently developing affordable wireless platforms to provide
companies with quality training services for their employees. Our staff works
directly with Human Resource departments to ensure the training is scalable and
applicable to their employees' needs. Our technology provides seamless
information to all employees, regardless if they are in the home, office or out
in the field.
We have released other wireless application products that are currently
being used in the Security, Real Estate and insurance industries. The software
applications are compatible with most existing wireless devices. We expect to
release several academic and training solutions in fiscal 2004.
We have received full approval for Sallie Mae funding for our students
that qualify for Sallie Mae loans. Sallie Mae has been providing funds for
educational loans. Sallie Mae currently owns or manages student loans for more
than seven million borrowers and is the nation's leading provider of educational
loans.
We operate in two reportable business segments - (1) the development
and sales of wireless solutions and web services, and (2) the online distance
learning industry. The first segment includes development of
business-to-business and business-to-consumer wireless applications, and state
of the art web technology and design services. Our reportable segments are
strategic business units that offer different products. They are managed
separately based on the fundamental differences in their operations and are
discussed separately below.
SEASONALITY IN RESULTS OF OPERATIONS
We experience seasonality in our results of operations from our online
distance-learning segment primarily as a result of changes in the level of
student enrollments and course completion. While we enroll students throughout
the year, December and January average enrollments and course completion and
related revenues generally are lower than other quarters due to seasonal breaks
in December and January. Accordingly, costs and expenses historically increase
as a percentage of tuition and other net revenues as a result of certain fixed
costs not significantly affected by the seasonal second quarter declines in net
revenues.
We experience a seasonal increase in new enrollments in August of each
year when most other colleges and universities begin their fall semesters. As a
result, instructional costs and services and selling and promotional expenses
historically increase as a percentage of tuition and other net revenues in the
fourth quarter due to increased costs in preparation for the August peak
enrollments.
-14-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
CONSOLIDATED RESULTS
The following discussion relates to our consolidated results of
operations. Further discussion and analysis of operating results follows and is
discussed by segment.
Revenues
For the six months ended December 31, 2003, we had a 41% decrease in
earned revenues to $548,721 from $937,440 for the six months ended December 31,
2002.
Cost of Equipment Sales
For the six months ended December 31, 2003 and 2002, we incurred cost
of sales related to the sale of equipment of $14,373 and $147,016, respectively.
Instruction and Educational Support
Instruction and educational support expenses related to our online
distant-learning segment. For the six months ended December 31, 2003,
instructional and educational support expenses decreased by 50% to $26,670 or
4.9% of net revenues as compared to $52,874 or 5.6% of net revenues for the six
months ended December 31, 2002.
Selling and Promotion
Selling and promotion expense consists primarily of recruiting fees,
advertising, trade show expense, and travel. For the six months ended December
31, 2003, selling and promotion expenses decreased by 54.7% to $98,142 or 17.9%
of net revenues as compared to $216,765 or 23.1% of net revenues for the six
months ended December 31, 2002.
General and Administrative Expenses
General and administrative expenses, which includes salaries,
professional fees, rent, travel and entertainment, insurance, bad debt, and
other expenses, were $1,040,260 for the six months ended December 31, 2003 as
compared to $1,107,243 for the six months ended December 31, 2002. This amounted
to 190.0% of net revenues for the six months ended December 31, 2003 as compared
to 118.1% for the six months ended December 31, 2002.
Interest Income
Interest income was $8,845 for the six months ended December 31, 2003
as compared to $13,417 for the six months ended December 31, 2002, a decrease of
$4,572.
-15-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (Continued)
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
Income Taxes
Deferred tax assets and liabilities are provided for significant income
and expense items recognized in different years for tax and financial reporting
purposes. As of December31, 2002, we did not record a valuation allowance on the
deferred tax assets because the Company's ability to realize these benefits was
"more likely than not". The deferred tax asset was reported in the accompanying
balance sheet at December 31, 2002. As of December 31, 2003, the net deferred
taxes have been fully offset by a valuation allowance since the Company cannot
currently conclude that it is more likely than not that the benefits will be
realized. The net operating loss carryforward for income tax purposes of
approximately $1,400,000 expires beginning in 2017. Internal Revenue Code
Section 382 places a limitation on the amount of taxable income that can be
offset by carryforwards after a change in control (generally greater than a 50%
change in ownership).
ONLINE DISTANCE LEARNING SEGMENT
REVENUES
For the six months ended December 31, 2003, we had a 29.6% decrease in
earned revenues to $459,004 from $652,172 for the six months ended December 31,
2002. The decrease in revenues is due primarily to a decrease in the number of
students that have completed courses in our programs at a slower rate than
expected. Unearned revenue represents the portion of tuition revenue invoiced
but not earned and is reflected as a liability in the accompanying consolidated
balance sheets. Since we will recognize tuition and registration revenue based
on the number of courses actually completed in each student's course of study,
student course completion efforts, if successful, are extremely beneficial to
operating results. The general slowdown in course completion by our students had
an adverse effect on our revenues. We are making efforts to mentor our students
and are encouraging them to complete their respective coursework. These efforts
include telephone calls, emails, letters, and the offering of incentives to
students. We have recently increased our marketing efforts and we have seen an
increase in student enrollment in the quarter ended December 31, 2003 and expect
student enrollment to continue increase in the third quarter of fiscal 2004.
Tuition refunds are based on the date that the student cancels and the
policy is as follows: If the student withdraws within 5 calendar days after
midnight of the day the student signs the Enrollment Agreement (Full Refund
Period) the student will receive a full refund with no further obligation. If
the student cancels after the Full Refund Period but before the school receives
the first completed lesson, the student will be charged a registration fee of
$150 and the student will receive a full refund less the registration fee
charge. If the student cancels after the school receives the first completed
lesson, the student's tuition obligation will be their registration fee plus a
portion of the remaining tuition as defined below.
PERCENTAGE OF COURSE COMPLETED AMOUNT OF TUITION OBLIGATED
------------------------------ ---------------------------
10% of less 10% of tuition
Between 11% - 25% 25% of tuition
Between 26% - 50% 50% of tuition
Over 50% Obligated for full tuition.
-16-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (Continued)
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
When a student withdraws, we write off the remaining tuition receivable
balance against the remaining unearned revenue balance and recorded a net
increase or decrease to net revenues. The effect on net revenues was
approximately a decrease of approximately $2,000 for the six months ended
December 31, 2003.
EXPENSES
Instruction and Educational Support
Instruction and educational support expenses consist primarily of
student supplies such as textbooks as well as course development fees, credit
card fees, computer related expenses, and printing fees. For the six months
ended December 31, 2003, instructional and educational support expenses
decreased by 50% to $26,670 or 5.8% of net tuition and tuition-related revenues
as compared to $52,874 or 8.1% of net tuition and tuition-related revenues for
the six months ended December 31, 2002. The decrease in instructional and
educational support expenses and the related percentages was mainly attributable
to the fact that we have enrolled fewer students in the current period and we
are able to purchase text books from a new supplier at reduced prices.
Accordingly, student supply expense was $4,391 or 1.0% of net tuition and
tuition-related revenues for the six months ended December 31, 2003 as compared
to $12,745 or 2.0% of revenue for the six months ended December 31, 2002.
Printing and reproduction costs decreased to $9,703 for the six months ended
December 31, 2003 as compared to $15,631 for the six months ended December 31,
2002. Computer and internet expenses increased to $7,211 for the six months
ended December 31, 2003 as compared to $3,420 for the three months ended
September 30, 2002. Additionally, we didn't incurred costs associated with
course development for the six months ended December 31, 2003 as compared to
$8,292 for the six months ended December 31, 2002.
Selling and Promotion
Selling and promotion expense consists primarily of recruiting fees,
advertising and travel. For the six months ended December 31, 2003, selling and
promotion expenses decreased by 55% to $41,385 or 9.0% of net tuition and
tuition-related revenues as compared to $91,776 or 14% of similar net revenues
for the six months ended December 31, 2002. The decrease in selling and
promotion expenses is attributable to the shift in our selling and promotion
efforts to our wireless solutions segment. We have refocused our efforts on our
distant learning segment and plan to increase our advertising and marketing
efforts. For the six months ended December 31. 2003, advertising expense
amounted to $20,052 as compared to $64,429 for the six months ended December 31,
2002. Additionally, our recruiting fees decreased to $18,323 for six months
ended December 31, 2003 from $19,557 for the six months ended December 31, 2002.
The decrease is attributable to our decreased use of recruiters to obtain
students and a general slow-down in new students. Additionally, during the six
months ended December 31, 2003, we reversed accrued recruiting fees due to the
withdrawal of students that attributed to the recording of recruiting fee
income. We are currently running advertisements in various national publications
and newspapers in order to attract more students. We expect our advertising
budget to increase through the end of fiscal 2004.
-17-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
ONLINE DISTANCE LEARNING SEGMENT (CONTINUED)
General and Administrative Expenses
General and administrative expenses, which includes salaries,
professional fees, rent, travel and entertainment, insurance, bad debt, and
other expenses, were $372,565 for the six months ended December 31, 2003 as
compared to $590,698 for the six months ended December 31, 2002. This amounted
to 81.2% of net tuition and tuition-related revenues for the six months ended
December 31, 2003 as compared to 90.6% for the six months ended December 31,
2002. The change was directly attributable to increased non-cash compensation
expense from the issuance of common stock and grants of stock options and
warrants for services offset by decreases in operating expenses and was
primarily due to the following factors:
The cost of professional fees decreased to $33,071 for the six months
ended December 31, 2003 as compared to $57,385 for the six months ended December
31, 2002. During the six months ended December 31, 2002, we incurred additional
costs associated with the filing of a registration statement with the Securities
and Exchange Commission and incurred legal expenses in connection with the
dismissal of a lawsuit. For the six months ended December 31, 2003, salaries
were $141,782 as compared to salaries of $145,527 for the six months ended
December 31, 2002. Additionally, we experienced a decrease in postage and
delivery and telephone expenses due to a decrease in student activity. We
incurred bad debt expense of $(14,548) for the six months ended December 31,
2003 as compared to $253,524 for the six months ended December 31, 2002 For the
six months ended December 31, 2003, we reduced our allowance for doubtful
account due to the withdrawal of inactive students. For the six moths ended
December 31, 2003, we recorded non-cash compensation of $78,087 from the
issuance of common stock and granted of stock option and warrants for services.
Interest Income
Interest income was $90 for the six months ended December 31, 2003 as
compared to $8,990 for the six months ended December 31, 2002, a decrease of
$8,900 due to the fact that cash was transferred to our wireless segment. We
currently invest our excess cash balances in primarily two interest-bearing
accounts with two financial institutions.
-18-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
WIRELESS AND WEB SOLUTIONS SEGMENT
For the six months ended December 31, 2003 and 2002, we had net
revenues from our wireless and web solutions segment of $89,717 and $285,268,
respectively, which consisted of the following:
Equipment and Software Sales ........... $ 18,367 $157,194
Wireless Solutions and Web Services .... 71,350 105,334
Other .................................. - 22,740
-------- --------
$ 89,717 $285,268
======== ========
For the six months ended December 31, 2002, equipment sales included
revenues from the sale of telephone equipment or approximately $78,000 that we
no longer sell in the current period. Additionally, in the six months ended
December 31, 2002, we had non-recurring revenues from certain web related
development service amounting to approximately $30,000.
For the six months ended December 31, 2003 and 2002, we incurred cost
of sales related to the sale of equipment of $14,373 and $147,106, respectively.
For the six months ended December 31, 2003 and 2002, we incurred
research and development expenses from the development of our new products of
$20,571 and $23,607, respectively.
For the six months ended December 31, 2003, selling and promotion
expenses amounted to $56,757, which included $29,965 in commission expense,
$11,122 in advertising expense, printing and reproduction expense of $3,848, and
travel expenses of $11,873. For the six months ended December 31, 2002, selling
and promotion expenses amounted to $124,989, which included $5,119 in commission
expense, $17,865 in advertising expense, $58,534 of trade show expense, printing
and reproduction expense of $14,635, travel expenses of $19,836, licensing fees
of $20,418 and other expenses.
For the six months ended December 31, 2003, we incurred $667,695 of
general and administrative expenses, which included salaries expense of
$235,681, consulting expense of $119,217, rent expense of $22,188, professional
fees of $23,914 and other expenses. Additionally, for the six moths ended
December 31, 2003, we recorded non-cash compensation of $138,450 from the
issuance of common stock and grants of stock options and warrants for services.
For the six months ended December 31, 2002, we incurred $516,545 of general and
administrative expenses, which included salaries of $289,284, consulting expense
of $36,000, computer and internet related expenses of $14,929, rent expense of
$15,031, licensing fees of $31,577 and other expenses. The increase in
consulting fees for the six months ended December 31, 2003 as compared to the
six months ended December 31, 2002 was attributable to an increase in fees paid
for public relations services related to our MommyTrack product. The increase in
rent expense for the six months ended December 31, 2003 as compared to the six
months ended December 31, 2002 was attributable the increase in rent allocated
to our wireless segment related to an increase in office space used by this
segment.
-19-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
(Continued)
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2002
WIRELESS AND WEB SOLUTIONS SEGMENT (CONTINUED)
For the six months ended December 31, 2003 and 2002, interest income
was $8,755 and $4,427, respectively. We currently invest our excess cash
balances in primarily two interest-bearing accounts with two financial
institutions.
OVERALL CONSOLIDATED RESULTS
Net income (loss)
As a result of the foregoing factors, we recognized a net loss of
$(642,450) or $(.07) per share on a consolidated basis for the six months ended
December 31, 2003 as compared to net loss of $(397,924) or $(.05) per share for
the six months ended December 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2003, we had $813,752 in cash and equivalents and a
short-term investment on hand to meet our obligations. In connection with a
private placement, we sold one unit for $100,000 comprised of 100,000 shares of
common stock and warrants entitling the holder to purchase up to 100,000 shares
of the Company's common stock, at an exercise price of $1.00. We plan on raising
additional funds to expand our operations or to pursue acquisition opportunities
or other expansion opportunities
During the six months ended December 31, 2003, we invested substantial
time and resources developing and evaluating products and opportunities for our
wireless solutions segment. We will continue to develop new wireless solutions
for both of our segments and may consider acquisitions, business combinations,
or start up proposals, which could be advantageous to our product lines or
business plans, although the Company expects to be profitable in the future
there can be no assurance.
Net cash used in operations was $255,606 for the six months ended
December 31, 2003 as compared to net cash used in operations of $262,389 for the
six months ended December 31, 2002. We feel that with expected positive cash
flow, our current cash balance is sufficient to sustain our operations over the
ensuing 12-month period, including the expected growth during this period.
Net cash used in investing activities for the six months ended December
31, 2003 was $35,635 as compared to $37,817 for six months ended December 31,
2002 and primarily related to the acquisition of property and equipment of
$27,344 and $37,817 for the six months ended December 31, 2003 and 2002,
respectively.
We currently have no material commitments for capital expenditures. Our
future growth is dependent on our ability to raise capital for expansion, and to
seek additional revenue sources. If we decide to pursue any acquisition
opportunities or other expansion opportunities, we may need to raise additional
capital, although there can be no assurance such capital- raising activities
would be successful.
-20-
CRITICAL ACCOUNTING POLICIES
A summary of significant accounting policies is included in Note 1 to
the audited financial statements included in Quarterly Report on Form 10-QSB for
the year ended June 30, 2003. We believe that the application of these policies
on a consistent basis enables us to provide useful and reliable financial
information about our operating results and financial condition.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
We account for stock options issued to employees in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. As such,
compensation cost is measured on the date of grant as the excess of the current
market price of the underlying stock over the exercise price. Such compensation
amounts, if any, are amortized over the respective vesting periods of the option
grant. We adopted the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" and SFAS 148, "Accounting for Stock-Based Compensation
-Transition and Disclosure", which permits entities to provide pro forma net
income (loss) and pro forma earnings (loss) per share disclosures for employee
stock option grants as if the fair-valued based method defined in SFAS No. 123
had been applied. We account for stock options and stock issued to non-employees
for goods or services in accordance with the fair value method of SFAS 123.
We recognize tuition and registration revenue based on the number of
courses actually completed in each student's course of study. For example, if a
student completes three out of his nine required courses, the Company will
recognize 33% of the tuition regardless of the amount of time that the student
has taken to fulfill these requirements. Tuition refunds are based on the date
that the student cancels and the policy is as follows: If the student withdraws
within 5 calendar days after midnight of the day the student signs the
Enrollment Agreement (Full Refund Period) the student will receive a full refund
with no further obligation. If the student cancels after the Full Refund Period
but before the school receives the first completed lesson, the student will be
charged a registration fee of $150 and the student will receive a full refund
less the registration fee charge. If the student cancels after the school
receives the first completed lesson, the student's tuition obligation will be
their registration fee plus a portion of the remaining tuition as defined below.
PERCENTAGE OF COURSE COMPLETED AMOUNT OF TUITION OBLIGATED
------------------------------ ---------------------------
10% of less 10% of tuition
Between 11% - 25% 25% of tuition
Between 26% - 50% 50% of tuition
Over 50% Obligated for full tuition.
When a student withdraws, we write off the remaining tuition receivable
balance against the remaining unearned revenue balance and recorded a net
increase or decrease to net revenues. The effect on net revenues was
approximately a decrease of approximately $2,000 for the three months ended
September 30, 2003.
In connection with the development and sale of wireless solutions and
web services, which include the development of business-to-business and
business-to-consumer wireless applications, and state of the art web technology
and design services, the Company recognizes revenue as services are performed or
on a pro rata basis over the contract term.
-21-
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued several
new accounting pronouncements:
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires that if an entity
has a controlling financial interest in a variable interest entity, the assets,
liabilities and results of activities of the variable interest entity should be
included in the consolidated financial statements of the entity. FIN 46 requires
that its provisions are effective immediately for all arrangements entered into
after January 31, 2003. The Company does not have any variable interest entities
created after January 31, 2003. For those arrangements entered into prior to
January 31, 2003, the FIN 46 provisions are required to be adopted at the
beginning of the first interim or annual period beginning after June 15, 2003.
The Company has not identified any variable interest entities to date.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective for the first interim
period beginning after June 15, 2003, with certain exceptions. The adoption of
SFAS No. 150 did not have a significant impact on our consolidated financial
position or results of operations.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an
evaluation, under the supervision and with the participation of the Chief
Executive Officer and Principal Accounting Officer, of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the Chief
Executive Officer and Principal Accounting Officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
Changes in Internal Controls
There have been no significant changes (including corrective actions
with regard to significant deficiencies or material weaknesses) in our internal
controls or in other factors that could significantly affect these controls
subsequent to the Evaluation Date set forth above.
-22-
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the company faces litigation in the ordinary course
of business. Currently we are not involved with any litigation which will have a
material adverse effect on our financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
COMMON STOCK
On December 10, 2003, the Board of Directors approved an increase in
the authorized common shares to 25,000,000.
On December 10, 2003, we issued 260,000 shares of common stock to
officers of the Company and to independent directors for services rendered. Such
shares were valued at their market value on the date of issuance at $.71 per
share.
On December 10, 2003, in connection with consulting agreements
effective December 18, 2003, we were to issue 777,464 restricted shares of
common stock for services rendered and to be rendered in the future. As of
December 31, 2003, these shares had not been issued and are included in common
stock issuable on the consolidated balance sheet.
On December 31, 2003, in connection with a private placement, we sold
one unit for $100,000 comprised of 100,000 shares of common stock and warrants
entitling the holder to purchase up to 100,000 shares of the Company's common
stock, at an exercise price of $1.00. The warrants expire on December 31, 2008.
COMMON STOCK WARRANTS
On December 10, 2003, we entered into a thirteen month agreement with
two consultants effective December 18, 2003. The consultants received an
aggregate of 850,000 warrants to purchase shares of the Company's common stock
at an exercise price of $1.00 per share. The warrants expire on December 18,
2008.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
-23-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.4 Form of subscription agreement used in private placement
31.1 Certification of Chief Executive Officer in accordance with 18
U.S.C. Section 1350, as adopted by Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer in accordance
with 18 U.S.C. Section 1350, as adopted by Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer in accordance with 18
U.S.C. Section 1350, as adopted by Section 906 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Financial Officer in accordance
with 18 U.S.C. Section 1350, as adopted by Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports On Form 8-K
On December 19, 2003, we filed an 8-K reporting a change in our
certifying accountants
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, duly authorized.
CENUCO, INC. AND SUBSIDIARIES
Dated: February 13, 2004 By: /s/ Steven Bettinger
--------------------
Steven Bettinger, President and
Chief Executive Officer
Dated: February 13, 2004 By: /s/ Robert Bettinger
--------------------
Robert Bettinger, Chairman of the
Board, Treasurer, Principal
Financial and Accounting Officer
-24-