UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-K
 
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM _______ TO _______
 
000-52320
(Commission File Number)

SENTISEARCH, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
20-5655648
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 

1217 South Flagler Drive, 3 rd Floor  West Palm Beach, FL 33401
(Address of principal executive offices)                          ( zip code)

Registrant's telephone number, including area code: (561) 653-3284

Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    o No    x    

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes    o   No    x

Indicate by check mark whether the 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.   x   Yes   o   No

Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       o   Yes   o   No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   o
Accelerated filer  o
Non-accelerated filer  o
Smaller reporting company  x
   
(Do not check if a smaller
 reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
 
The aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant as of the close of business on June 30, 2009 was approximately $136,983. For purposes of this calculation only, shares of Common Stock held by each officer and director as well as and by each person who, as of June 30, 2009, may be deemed to have beneficially owned more than 10% of the outstanding voting stock have been have been excluded. This determination of affiliate status is not necessarily a conclusive determination of affiliate status for any other purpose.

As of March 23, 2010 12,747,844 shares of the registrant's Common Stock, par value $.0001 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.

 

 

TABLE OF CONTENTS

     
PAGE
       
PART I
     
       
Forward-Looking Information
 
1
Item 1.
Business.
 
1
Item 1A.
Risk Factors.
 
4
Item 1B.
Unresolved Staff Comments.
 
4
Item 2.
Properties.
 
4
Item 3.
Legal Proceedings.
 
4
Item 4.
(Removed and Reserved).
 
4
       
PART II
     
       
Item 5.
Market For Registrant’s Common Equity And Related Stockholder Matters And Issuer Purchases Of Equity Securities.
 
5
Item 6.
Selected Financial Data.
 
6
Item 7.
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations.
 
6
Item 7A.
Quantitative And Qualitative Disclosures About Market Risk.
 
11
Item 8.
Financial Statements And Supplementary Data.
 
11
Item 9.
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
 
27
Item 9A(T).
Controls And Procedures.
 
27
Item 9B.
Other Information.
 
28
       
PART III
     
       
Item 10.
Directors, Executive Officers and Corporate Governance.
 
28
Item 11.
Executive Compensation.
 
30
Item 12.
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters.
 
31
       
Item 13.
Certain Relationships And Related Transactions, And Director Independence.
 
32
       
Item 14.
Principal Accounting Fees And Services.
 
34
       
PART IV
     
       
Item 15.
Exhibits, Financial Statement Schedule.
 
38
     
Signatures
 
36
     
Exhibit Index
 
39

 

 

PART I
Forward-looking Information

This Annual Report on Form 10-K (including the section regarding Management’s Discussion and Analysis and Results of Operations) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements using terminology such as “can”, “may”, “believe”, “designated to”, “intend to”, “expect”, “plan”, “anticipate”, “estimate”, “potential” or “continue”, or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. You should read statements that contain these words carefully because they:
 
 
discuss our future expectations;

 
contain projections of our future results of operations or of our financial condition; and

 
state other “forward-looking” information.

We believe it is important to communicate our expectations. However, forward-looking statements involve risks and uncertainties and our actual results and the timing of certain events could differ materially from those discussed in or implied by forward-looking statements as a result of certain factors, including those set forth under “Management’s Discussion and Analysis and Results of Operations” and elsewhere in this Annual Report on Form 10-K. All forward-looking statements included in this document are made as of the date hereof, based on information available to us as of the date thereof, and we assume no obligations to update any forward-looking statement or risk factor, unless we are required to do so by law.

ITEM 1.
BUSINESS.

General
  
SentiSearch, Inc. (“SentiSearch” or “we” or “us” or the “Company”) is a Delaware corporation that was incorporated on October 3, 2006. We were previously a wholly-owned subsidiary of Sentigen Holding Corp. (“Sentigen”) and were incorporated solely for the purposes of holding the olfaction intellectual property assets of Sentigen and its then subsidiary, Sentigen Biosciences, Inc. (“Sentigen Biosciences”). Prior to the merger between Sentigen and Invitrogen Corporation (“Invitrogen”) that was consummated on December 1, 2006, Sentigen separated its olfaction intellectual property assets from the businesses to be acquired by Invitrogen. This separation was accomplished through the contribution of Sentigen’s olfaction intellectual property assets to us on October 10, 2006 and the subsequent spin-off in which Sentigen distributed 100% of its ownership interest in us to its then stockholders on December 1, 2006. As a result of this spin-off, we became a public, stand-alone company. Our principal executive offices are located at 1217 South Flagler Drive, 3 rd   Floor, West Palm Beach, Florida 33401.

Overview

The olfaction intellectual property assets that we hold primarily consist of an exclusive worldwide license issued by The Trustees of Columbia University in the City of New York (“Columbia”), as described in more detail below under the heading “Licensed Products and Services” (the “Columbia License”), and certain patent applications titled “Nucleic Acids and Proteins of Insect or 83b odorant receptor genes and uses thereof.” The olfaction intellectual property assets are also referred to in this Form 10-K as “our olfaction intellectual property.” We are currently a development stage company and have a limited operating history. Other than with regard to the development and protection of our intellectual property, our planned principal operations have not commenced. We have not generated any revenues from operations and have no assurance of any future revenues. All losses accumulated since the commencement of our business have been considered as part of our development stage activities.

 
1

 
 
Licensed Products and Services

On April 10, 2000, Sentigen Biosciences entered into the Columbia License described below. On October 10, 2006, we entered into a contribution agreement with Sentigen pursuant to which Sentigen transferred to us all of its olfaction intellectual property, including the Columbia License. On October 17, 2006, Columbia consented to the assignment of the Columbia License from Sentigen Biosciences to us subject to certain conditions, all of which have been satisfied to the extent currently required.
 
The Columbia License provides us with worldwide rights to certain of Columbia’s patent applications and other rights in the areas of insect chemosensation and olfaction. The Columbia License gives us an exclusive license to develop, manufacture, have made, import, use, sell, distribute, rent or lease (i) any product or service the development, manufacture, use, sale, distribution, rental or lease of which is covered by a claim of a patent licensed to us under the Columbia License or (ii) any product or service that involves the know-how, confidential information and physical materials conveyed by Columbia to us relating to the patents licensed from Columbia (collectively, the “Licensed Products/Services”). In addition to certain funding requirements by Sentigen, all of which were satisfied, in consideration of the Columbia License, Columbia was issued 75,000 shares of Sentigen common stock and will receive royalties of 1% of the net sales of any Licensed Products/Services.
 
The licenses granted to us under the Columbia License expire on the later of the date of expiration of the last to expire of the licensed patents relating to any Licensed Product/Service or ten years from the first sale of any Licensed Product/Service.
 
The potential uses of the olfaction intellectual property assets derived from the Columbia License consist of three families of patent applications relating to (i) odorant receptors and their uses, (ii) cloning of vertebrate pheromone receptors and their uses and (iii) genes encoding insect odorant receptors and their uses. We believe that the applications most likely to be useful in the near future are in the area of insect control, because insects operate entirely through sense of smell and taste for feeding, mating, locating egg-laying sites and general navigation. Blocking the insect sense of smell and taste may afford a potential strategy to inhibit insect reproduction, feeding behavior, and damage to humans, animals, crops and stored products. Such a technology would not require genetic modification of the plant or insect and may rely solely on compounds that are natural, non-toxic and compatible with organic farming methods. This technology has the potential to offer a high level of specificity providing for the targeting of an individual species, reduction of environmental disruption and less chance of insect resistance.
 
In addition to the Columbia License, we have certain patent applications relating to nucleic acids and proteins of insect or 83b odorant receptor genes and their uses. These patent applications relate to the isolation of a gene that appears to be ubiquitous among insects. This gene has been identified in various species of insects, including many that have a profound effect on agricultural production and human health. The identification of this gene, and the protein that it expresses, may enable the development of high-throughput screening methods to discover compounds that attract insects to a particular site (and away from one where their presence is undesirable), or develop materials that are distasteful to the insects’ sense of “smell,” thereby making agricultural products, for example, undesirable to them.
 
During July 2007, we were issued two patents in the United States and during November 2007, we were issued a patent in Australia and during 2008, we were issued one patent in Mexico. One of the U.S. patents and the Australia and Mexico patents, were issued directly to us and the other U.S. patent was issued under the Columbia License. All of the issued patents cover nucleic acid molecules which encode insect odorant receptor proteins, including numerous variations on insect odorant receptor coding sequence. The patents cover any nucleic acid molecule as long as the protein it encodes contains a short segment of amino acids, linked together.
 
We believe that our olfaction intellectual property may be of value to commercial and non-profit partners wishing to develop novel, safer and more effective means to control pest insects through molecular manipulation of insect olfaction and taste. This effort would aim to identify receptor molecules that control key aspects of insect behavior and discovering compounds that block or activate the function of these receptors and to identify new compounds that may have use in agricultural crop protection and insect-borne disease management such as agents that completely block the insect sense of smell rendering an individual or a field invisible to insects. Other potential products include new and effective insect repellants and novel potent attractants for use in insect bait stations and traps.

 
2

 
 
We believe the applications offering the greatest potential for developing products in the intermediate term are for mosquito repellants to be sold by household product companies. Other potential markets for our olfaction intellectual property include:
 
 
food production;

 
agricultural chemical companies; and

 
pharmaceutical companies.

Our executive officer and Board of Directors are also seeking opportunities with non-profit agencies and with potential commercial partners to leverage our olfaction intellectual property for the development of control agents for biting insects, in particular, insect vectors of malaria and other diseases. If these endeavors are successful, additional capital commensurate with such an undertaking may need to be raised.
 
In particular, additional steps to commercialize the intellectual property assets may include:
 
 
obtaining research and development grants;

 
developing commercially feasible products;

 
filing and obtaining additional patents;

 
entering into licensing, marketing or joint venture agreements;

 
applying the olfaction intellectual property to a commercially viable product;

 
developing and implementing a marketing plan in conjunction with a partner or licensee;

 
controlling quality and cost in the manufacturing process in conjunction with a partner or licensee;

 
selling products on a profitable basis in conjunction with a partner or licensee; and

 
structuring an agreement that will enable us to enjoy the profits of our products.

However, there is no guarantee that commercial opportunities will arise from our efforts to develop our olfaction intellectual property. We currently do not have any research and development grant applications outstanding nor can we predict whether we will receive any research and development grants or other commercial funding in the near future. Although no commercially feasible products are imminently foreseeable, we intend to enter into discussions with third parties concerning a possible development, licensing, marketing or joint venture agreement to commercialize our olfaction intellectual property. We currently have limited financial and personnel resources, and believe that we must enter into an agreement with another party in order to commercialize our intellectual property assets.
 
Competition
 
We face competition primarily from universities, including Yale University and Vanderbilt University, who are conducting the research and have patent applications pertaining to areas relevant to olfaction technology. These competitors may have greater financial, management, technology, research and development, sale, marketing and other resources than we do.

 
3

 
 
Employees
 
We currently have one employee, in addition to our Chief Executive Officer. In the event we are able to commercialize our research and development activities, or prospects for doing so appear significant, we would expect at that time to hire additional employees. Presently, Mr. Joseph K. Pagano, our Chairman of the Board and Chief Executive Officer, devotes his time to our Company without a salary. In addition, Mr. Dean R. Gresk, one of the members of our Board of Directors, has agreed to provide non-Board related services to us for a fee of $500 per day, plus reimbursed travel expenses.  No payments were made to Mr. Gresk in 2009 for non-Board related services.
 
Government Regulation
 
In the event we are able to commercialize our research and development activities and depending on the development objectives and uses of any of our potential products, we may become subject to government regulation by certain government agencies including the Food and Drug Administration and the Environmental Protection Agency. In addition, we may become subject to various other federal, state and local regulatory and licensing requirements as the same are promulgated from time to time. We intend to monitor and comply with any requirements which may, from time to time, become applicable to us. Failure by us to comply with any applicable requirements could result in, among other things, the imposition of fines by governmental authorities or awards of damages to private litigants.

ITEM 1A.
RISK FACTORS.
 
We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act  and are not required to provide information under this item.

ITEM 1B.
UNRESOLVED STAFF COMMENTS.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item, however there are no unresolved staff comments.

ITEM 2.
DESCRIPTION OF PROPERTY.

Our principal executive office is located at 1217 South Flagler Drive, 3 rd   Floor, West Palm Beach, Florida 33401. We lease this approximately 411 square foot office space pursuant to a sublease that expires in June 2010, with an option to renew for an additional year. The lease requires us to make twelve monthly payments of approximately $1,390 through June 2010. We do not own any real property.
                 
ITEM 3.
LEGAL PROCEEDINGS.

None.

ITEM 4.
(REMOVED AND RESERVED).

 
4

 

PART II
                
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information
 
Since our spin-off from Sentigen in late 2006, our common stock has been listed for quotation on the OTC Bulletin Board under the symbol “SSRC.” The following table sets forth for the period indicated, the high and low prices for our common stock. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
 
   
Price
 
Period
 
High
   
Low
 
2009
           
First Quarter
  $ 0.13     $ 0.02  
Second Quarter
  $ 0.02     $ 0.02  
Third Quarter
  $ 0.03     $ 0.02  
Fourth Quarter
  $ 0.10     $ 0.03  
2008
               
First Quarter
  $
0.23
    $ 0.19  
Second Quarter
  $ 0.23     $ 0.18  
Third Quarter
  $ 0.18     $ 0.15  
Fourth Quarter
  $ 0.15     $ 0.13  

Holders
 
As of March 24, 2010, we had 55 stockholders of record.
 
Dividends
 
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors considers relevant.

 
5

 

Equity Compensation Plan Information
 
The following table provides certain information as of December 31, 2009 with respect to our equity based compensation plans.
  
Plan category
 
(a)
Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights
   
(b)
Weighted-
average
exercise  price 
of
outstanding
options,
warrants  and 
rights
   
(c)
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
 
Equity compensation plans approved by security holders
                 
Equity compensation plans not approved by security holders(1)
    675,000     $ 0.17        
Total
    675,000     $ 0.17        
 

 
(1)           Column (a) and (b) represent the aggregate shares issuable upon exercise of outstanding five and ten-year stock options granted from May 2007 through October 2009 to certain consultants to the Company and the three non-officer directors of the Company. These options expire at various times with the last expiring on October 20, 2019.
 
ITEM 6.
SELECTED FINANCIAL DATA.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS.

Introduction
 
We were previously a wholly-owned subsidiary of Sentigen. Sentigen and its then subsidiary, Sentigen Biosciences, previously owned all right and title to the olfaction intellectual property assets. Prior to its merger with Invitrogen, Sentigen separated its olfaction intellectual property assets from the businesses acquired by Invitrogen. This separation was accomplished through the contribution of Sentigen’s olfaction intellectual property assets to us on October 10, 2006 and the subsequent spin-off in which Sentigen distributed 100% of its ownership interest in us to its then stockholders on December 1, 2006.
 
To date, we have incurred substantial operating losses. As of December 31, 2009, we held three patents directly with another patent being issued under our Columbia License.  We also have additional pending patent applications.  We cannot provide any assurance that our additional patent applications will be successful. While we believe our technology capabilities in the olfaction area are substantial, we intend to continually review the commercial validity of our olfaction technology in order to make the appropriate decisions as to the best way to allocate our limited resources.

 
6

 
 
Critical Accounting Policies and Use of Estimates
 
The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and demanding of management’s judgment. Our critical accounting policies include:
 
Impairment of intangibles
 
Our intangible assets consist of license and patent costs of $35,922 as of December 31, 2009, as compared with $89,655 as of December 31, 2008, and are the result of the Columbia License and certain patents. The value of the license reflects the closing share price of Sentigen’s common stock on April 10, 2000 (the closing date of the Columbia License) multiplied by the 75,000 shares of Sentigen common stock issued to Columbia University less accumulated amortization. The value of the license is subject to an amortization period of 10 years. The value of the patents mainly consists of legal fees and is being amortized over the remaining term of the license. Management reviews the value of the license and patents for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable. A review for impairment was conducted by an outside firm that concluded the fair market value of the olfaction technology was between $120,000 and $190,000 as of August 2006. The license and patent are considered to be impaired when the carrying value exceeds the calculation of the undiscounted net future cash inflows or fair market value. An impairment loss of $122,996 was recognized as amortization expense in August 2006 in connection with the license. We believe no further impairment loss is necessary as of December 31, 2009.
 
Off-Balance-Sheet Arrangements
 
As of December 31, 2009, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K. 
 
Results of Operations
 
General
 
We are a development stage company as defined in Financial Accounting Standard Board (“FASB”) ASC 915, "Development Stage Entities”. Other than with regard to the development and protection of our intellectual property, our planned principal operations have not yet commenced. We intend to establish a new business. We have not generated any revenues from operations and have no assurance of any future revenues. All losses accumulated since commencement of our business have been considered as part of our development stage activities.
 
Prior to the spin-off on December 1, 2006, our business was operated within Sentigen as part of its broader corporate organization rather than as a stand-alone company. Historically, Sentigen performed certain corporate functions for us. Our historical financial statements included herein do not reflect the expense of certain corporate functions we would have needed to perform if we were not a wholly-owned subsidiary. Following the spin-off, Sentigen no longer provided assistance to us and we are responsible for the additional costs associated with being an independent public company, including costs related to corporate governance, quoted securities and investor relations issues. Therefore, you should not make any assumptions regarding our future performance based on the financial statements.
 
Our financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities. Funding for the year ended December 31, 2009 was provided by the proceeds we received from the $750,000 financing we closed on May 9, 2008, the $145,980 financing we closed on June 20, 2008 with certain of our largest stockholders, including our Chief Executive Officer and Chairman of the Board and another member of our Board of Directors, a $25,000 loan to us by our Chief Executive Officer and Chairman of the Board in September 2009, referred to as the September loan, and through the loans made to us in October 2009 by four individuals, including a rollover of the September loan with our Chief Executive Officer and Chairman of the Board,  another member of our Board of Directors and, a beneficial owner of more than 5% of our outstanding common stock, discussed in greater detail below.

 
7

 
 
On October 26, 2009, we issued to each of four individuals $50,000 subordinated convertible promissory notes, referred to as the notes (an aggregate principal amount of $200,000 of notes). The individuals included our Chief Executive Officer and Chairman of the Board, another director and one of our greater than 5% stockholders. The $50,000 principal amount of notes issued to the Chief Executive Officer and Chairman of the Board represented $25,000 of new funds received by us and a rollover of the September loan.  The notes bear interest of 4% per annum and are payable on demand. For a more detailed description of the notes, see Liquidity and Capital Resources below.
 
Our ability to obtain financing and realize revenue depends upon the status of future business prospects, as well as conditions prevailing in the capital markets. These factors, among others, raise doubt about our ability to continue as a going concern should we be unable to realize revenues from our olfaction technology or raise sufficient additional funds in the future.
 
Our Chief Executive Officer and Board of Directors are also seeking opportunities with non-profit agencies and with potential commercial partners to leverage our olfaction intellectual property for the development of control agents for biting insects, in particular, insect vectors of malaria and other diseases.
 
Product Research and Development
 
We intend to continually review the commercial validity of the olfaction technology, in order to make the appropriate decisions as to the best way to allocate our limited resources. We currently do not have any research and development grant applications outstanding nor can we predict whether we will receive any research and development funding during the next twelve (12) months. We are unable at this time to predict a level of spending, if any, for product research and development activities during the next twelve (12) months, all of which will be dependent upon the implementation of our business plan. Our Chief Executive Officer and Board of Directors have and intend to continue to seek opportunities with non-profit agencies and with potential commercial partners to leverage our olfaction intellectual property for the development of control agents for biting insects, in particular, insect vectors of malaria and other diseases.
 
Acquisition of Plant and Equipment and Other Assets
 
We do not anticipate the purchase or sale of any material property, plant or equipment during the next 12 months.
 
Operating Expenses
 
For the year ended  December 31, 2009, we had general and administrative costs of $374,344, compared to $582,372 for the year ended  December 31, 2008. The comparative decrease of $208,028 is primarily due to a decrease in professional fees of approximately $144,198, a decrease in travel expense of approximately $38,550, a decrease of approximately $20,918 in stock-based compensation expense and a decrease of approximately $4,362 in other expenses.
 
Amortization expense includes the amortization of our license and patent costs. For the years ended December 31, 2009 and 2008, amortization expense was $91,343 and $55,823, respectively.  The increase in amortization expense is primarily due to the amortization of patent costs capitalized during 2009.  For the period April 10, 2000 (Commencement of Business) to December 31, 2009, amortization expense was $517,410. The original value of the license of $440,625 reflects the closing share price of  Sentigen’s common stock on April 10, 2000. The value of the patent of $112,707 mainly consists of legal and application fees. The value of the license and patent, net of amortization as of the year ended December 31, 2009 and 2008, was $35,922 and $89,655, respectively. The remaining licensing and patent costs are being amortized on a straight line basis through April 2010.
 
Interest and financing expense in 2008 reflects the cost of our promissory notes issued on June 21, 2007, which were cancelled during the second quarter of 2008. Interest and financing expense in 2009 reflects the cost of our promissory notes we issued in  September and October 2009. For the years ended December 31, 2009 and 2008 accrued interest on our promissory notes amounted to $1,540, and $6,520, respectively.

 
8

 
 
Liquidity and Capital Resources
 
We have incurred operating losses since inception. As of December 31, 2009 we had $73,612 in cash and cash equivalents, compared to $198,187 at December 31, 2008. At December 31, 2009 we had a working capital deficiency of  $328,367 compared to working capital of $77,005 at December 31, 2008.  Net cash used in operating activities for the year ended December 31, 2009 was $286,965 mainly attributable to our net loss of $466,729, offset in part by amortization of license and patent costs of $91,343 stock based compensation expense of $7,624 and an increase in accounts payable and accrued expenses of $80,797.  Net cash used in operating activities for the year ended December 31, 2008 was $550,633 mainly attributable to our net loss of $642,303 and cash paid for security deposits of $4,170, offset in part by amortization of license and patent costs of $55,823 stock-based compensation expense of $28,542 and an increase in accounts payable and accrued expenses of $11,475.
 
During the second quarter of 2008, as previously disclosed, we closed on a financing for an aggregate amount of $950,000. On May 9, 2008, we closed on the first tranche of the financing, for an aggregate amount of $750,000, which consisted of cash in the amount of $563,986 and the conversion of $186,014 of indebtedness. Participants in the first tranche of the financing subscribed for an aggregate of 3,947,363 shares of common stock, based on the closing price of $0.19 per share of our common stock on the closing date. On June 20, 2008, we closed on the second tranche of the financing, for an aggregate amount of 200,000 of which $145,980 was subscribed for, consisting of cash in the amount of $62,240 and the conversion of $83,740 of indebtedness. Participants in the second tranche of the financing subscribed for an aggregate of 768,315 shares of common stock, based on the closing price of $0.19 per share of our common stock on the closing date. In the third quarter of 2008, two participants in the financing elected to exercise their over-allotment options, which consisted of cash in the amount of $54,020. The participants who exercised their over-allotment options subscribed for an aggregate of 337,424 shares of common stock, based on the closing price of $0.16 per share of our common stock on the closing date.  Issuance of the shares were subject to stockholder approval of the amendment to our certificate of incorporation to increase the number of shares of common stock, which was approved by the stockholders at our 2008 annual meeting on June 24, 2008.
 
Ten of our largest stockholders (each holding 50,000 or more shares of our common stock) subscribed in the May 2008 financing, of which the following are holders of 5% or more of our common stock: Joseph K. Pagano, Frederick R. Adler, Longview Partners L.P., The Joseph A. Pagano Jr. 2007 Trust and Samuel A. Rozzi, who subscribed for $122,325, $109,350, $112,125, $100,350 and $95,775, respectively. Also, Mr. Pagano serves as our Chairman of the Board and Chief Executive Officer, and Mr. Adler is a member of our Board of Directors. The general partner of Longview Partners L.P. is Susan Chapman, an adult daughter of Mr. Adler.
 
The funds raised in the financing were used for general working capital purposes, including the funding of research and development efforts and the pursuit of a joint venture or other form of collaboration with another entity or entities. Our ability to obtain financing and realize revenue depends upon the status of future business prospects, as well as conditions prevailing in the capital markets. It is possible that any such additional financing may be dilutive to current stockholders and the terms of any debt financings could contain restrictive covenants limiting our ability to do certain things, including paying dividends.
 
On June 21, 2007, we issued a demand promissory note in favor of each of Mr. Frederick R. Adler, Mr. Joseph K. Pagano, D.H. Blair Investment Banking Corp. and Mr. Samuel A. Rozzi (together, the “Lenders”), evidencing loans extended to us in the principal amount of $50,000, $50,000, $50,000 and $30,000, respectively, by the Lenders, for an aggregate amount of $180,000. The promissory notes accrued interest at Citibank N.A.’s reported prime rate plus 3%, which was due and payable at the time the principal amount of each respective promissory note becomes due. The promissory notes had a maturity date of June 22, 2009. Each Lender could demand the payment of all of the outstanding principal and interest of his or its respective promissory note at any time prior to the maturity date. At the time of the loan transaction, each of the Lenders was the beneficial owner of a significant number of shares of our common stock. In addition, Mr. Pagano is our Chief Executive Officer and the Chairman of our Board of Directors, and Mr. Adler is a member of our Board of Directors. On May 9, 2008, in connection with the first tranche of the financing discussed above, (i) $24,675 of the outstanding amount of Mr. Pagano’s promissory note was applied to the subscriptions made by Mr. Pagano and a trust for the benefit of his son; and (ii) $54,425, the entire outstanding amount of D.H. Blair Investment Banking Corp.’s promissory note, including principal and accrued interest, was applied to the subscriptions made by each of three affiliates of D.H. Blair Investment Banking Corp. On May 16, 2008, Mr. Pagano made a demand for repayment of the remaining outstanding principal and interest $29,750 of his promissory note. On June 20, 2008, in connection with the second tranche of the financing discussed above (i) $30,000 of the outstanding principal amount of Mr. Rozzi’s promissory note was applied to the subscription made by Mr. Rozzi and he received a payment for $2,961 in accrued interest on July 10, 2008 and (ii) $53,740 of the outstanding amount of principal and accrued interest of Mr. Adler’s promissory note was applied to the subscription made by Mr. Adler and he received a payment for the remaining $1,195 in accrued interest. All of the promissory notes have been cancelled and there are no amounts outstanding to date.

 
9

 
 
On September 10, 2009 we borrowed $25,000 from our Chief Executive Officer and Chairman of the Board. This loan bore interest at 6% per annum, and has been amended as described below.
 
On October 26, 2009, we issued to each of four individuals $50,000 subordinated convertible promissory notes (an aggregate principal amount of $200,000 of notes). The individuals included our Chief Executive Officer and Chairman of the Board, another director and one of our greater than 5% stockholders. The $50,000 principal amount of notes issued to the Chief Executive Officer and Chairman of the Board represent $25,000 of new funds received by us and a rollover of the September 10, 2009  loan.  The notes bear interest at 4% per annum and are payable on demand. The holders may convert the outstanding principal amount of the notes and accrued and unpaid interest thereon into shares of our common stock at any time at the conversion price in effect on the conversion date.  We may prepay the Notes on 20 days prior written notice to the holders.  We have agreed to include the shares of common stock issuable upon conversion of the Notes in any applicable registration statement filed by us with the U.S. Securities and Exchange Commission (“SEC”) covering our equity securities.
 
Our ability to obtain financing and realize revenue depends upon the status of future business prospects, as well as conditions prevailing in the capital markets. These factors, among others, raise substantial doubt about our ability to continue as a going concern should we be unable to realize revenues from our olfaction technology or raise sufficient additional funds in the future.  If we are unable to raise such funds, we may need to cease our operations.  Additionally, if we raise additional funds by issuing equity securities, our then-existing stockholders will likely experience dilution, depending upon the terms and conditions of such financing.
 
Inflation
 
Periods of high inflation could have a material adverse impact on us to the extent that increased borrowing costs for floating rate debt (if any) may not be offset by increases in cash flow. At December 31, 2009, we had $0 in floating rate debt outstanding. There was no significant impact on our operations as a result of inflation during the years ended December 31, 2009 and 2008.
 
Recently Issued Accounting Pronouncements
 
  In March 2008, the FASB issued an update to ASC 815, Derivatives and Hedging, which requires enhanced disclosures related to derivative instruments and hedging activities, including disclosures regarding how an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and the impact of derivative instruments and related hedged items on an entity’s financial position, financial performance and cash flows.  It also provided a new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock.  The amended guidance became effective on January 1, 2009.  The adoption of this guidance on January 1, 2009 did not have a material effect on our financial statements.
 
In June 2009, the FASB issued revised guidance for the accounting of transfers of financial assets (codified in December 2009 as Accounting Standards Update (“ASU”) No. 2009-16). The guidance eliminates the concept of a qualified special purpose entity) removes the scope exception for qualifying special-purpose entities when applying the accounting guidance related to the consolidation of variable interest entities; changes the requirements for derecognizing financial assets; and requires enhanced disclosure. This accounting guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The adoption of this guidance is not expected to have a material impact on our financial position or results of operations.

 
10

 
 
In June 2009, the FASB issued revised guidance for the accounting of variable interest entities (codified in December 2009 as ASU No. 2009-17), which replaces the quantitative-based risks and rewards approach with a qualitative approach that focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. The accounting guidance also requires an ongoing reassessment of whether an entity is the primary beneficiary and requires additional disclosures about an enterprise’s involvement in variable interest entities. This accounting guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The adoption of this pronouncement is not expected to have a material impact on our financial position or results of operations.
 
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
 
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.
 
  ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

SENTISEARCH, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS

 
Page No.
Report of Independent Registered Public Accounting Firm
12
   
Financial Statements:
 
   
Balance Sheets
13
   
Statements of Operations
14
   
Statements of Changes in Stockholders’ Equity (Deficiency)
15
   
Statements of Cash Flows
16
   
Notes to Financial Statements
17

 
11

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
 SentiSearch, Inc.
 West Palm Beach, Florida
 
We have audited the accompanying balance sheets of SentiSearch, Inc. (A Development Stage Company) (the “Company”) as of December 31, 2009 and 2008, and the related statements of operations, stockholders’ equity (deficiency), and cash flows for the years then ended, and the cumulative period April 10, 2000 (commencement of business) to December 31, 2009. The Company’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 SentiSearch, Inc. as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended and the cumulative period April 10, 2000 (commencement of business) to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company is in the development stage, has a working capital deficiency, stockholders’ deficit and has suffered recurring losses.  These conditions raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regards to these matters are also described in Note 2.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Raich Ende Malter & Co. LLP

Raich Ende Malter & Co. LLP

New York, New York
March 30, 2010

 
12

 

SENTISEARCH, INC.
(A Development Stage Company)
Balance Sheets

   
December 31,
   
December 31,
 
   
2009
   
2008
 
             
ASSETS
           
             
Current Assets
           
             
Cash and cash equivalents
  $ 73,612     $ 198,187  
                 
Security deposit
    4,170       4,170  
                 
Total Current Assets
    77,782       202,357  
                 
Other Assets
               
                 
License and patent costs
    553,332       515,722  
                 
Less: accumulated amortization
    (517,410 )     (426,067 )
                 
Total Other Assets
    35,922       89,655  
                 
Total Assets
  $ 113,704     $ 292,012  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
               
                 
Current Liabilities
               
                 
Accounts payable and accrued expenses
  $ 206,149     $ 125,352  
                 
Convertible notes payable – related party
    150,000       -  
                 
Convertible note payable
    50,000       -  
                 
Total Current Liabilities
    406,149       125,352  
                 
Stockholders' Equity (Deficiency)
               
Common stock — $0.0001 par value, 20,000,000 shares authorized, 12,747,644 and 12,747,644 shares issued and outstanding
    1,275       1,275  
                 
Additional paid - in capital
    1,963,415       1,955,791  
                 
Deficit accumulated during development stage
    (2,257,135 )     (1,790,406 )
                 
Total Stockholders' Equity (Deficiency)
    (292,445 )     166,660  
                 
Total Liabilities and Stockholders' Equity (Deficiency)
  $ 113,704     $ 292,012  

See notes to financial statements.

 
13

 

SENTISEARCH, INC.
(A Development Stage Company)
Statements of Operations

               
For the period
 
               
April 10, 2000
 
               
(Commencement
 
   
For the Years
   
of Business)
 
   
Ended December 31,
   
to December 31,
 
   
2009
   
2008
   
2009
 
                   
Revenues
  $ -     $ -     $ -  
                         
Direct costs
    -       -       -  
                         
Income after direct costs
    -       -       -  
                         
Operating expenses:
                       
General and administrative
    374,344       582,372       1,724,173  
Amortization of license and patent costs
    91,343       55,823       517,410  
      465,687       638,195       2,241,583  
Other (income) expense:
                       
Interest (income)
    (498 )     (2,412 )     (2,910 )
Interest and financing expense
    1,540       6,520       18,462  
      1,042       4,108       15,552  
Net loss before provision for income taxes
    (466,729 )     (642,303 )     (2,257,135 )
Income taxes
    -       -       -  
                         
Net loss
  $ (466,729 )   $ (642,303 )   $ (2,257,135 )
                         
Basic and diluted loss per share
  $ (0.04 )   $ (0.06 )        
Weighted average shares outstanding — basic and dilutive
    12,747,644       10,317,714          

See notes to financial statements.

 
14

 

SENTISEARCH, INC.
(A Development Stage Company)
Statements of Changes in Stockholders’ Equity (Deficiency)
 
   
Common   Stock
   
Subscription
   
Additional
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Receivable
   
Capital
   
Deficit
   
Total
 
Balance - April 10, 2000
(Commencement of Predecessor Business)
    -     $ -     $ -     $ -     $ -     $ -  
Net loss
    -       -       -       -       (47,763 )     (47,763 )
Balance - December 31, 2000
    -       -       -       -       (47,763 )     (47,763 )
Net loss
    -       -       -       -       (63,169 )     (63,169 )
Balance - December 31, 2001
    -       -       -       -       (110,932 )     (110,932 )
Net loss
    -       -       -       -       (65,936 )     (65,936 )
Balance - December 31, 2002
    -       -       -       -       (176,868 )     (176,868 )
Net loss
    -       -       -       -       (77,083 )     (77,083 )
Balance - December 31, 2003
    -       -       -       -       (253,951 )     (253,951 )
Net loss
    -       -       -       -       (109,169 )     (109,169 )
Balance - December 31, 2004
    -       -       -       -       (363,120 )     (363,120 )
Net loss
    -       -       -       -       (60,870 )     (60,870 )
Balance - December 31, 2005
    -       -       -       -       (423,990 )     (423,990 )
Net loss
    -       -       -       -       (320,747 )     (320,747 )
Balance - October 2, 2006
    -       -       -       -       (744,737 )     (744,737 )
Issuance of common stock - October 3, 2006
    7,694,542       769       (769 )     -       -       -  
Additional contribution of capital - October 10, 2006
                    769       249,231               250,000  
Contribution to capital of License costs and assumption of liability - October 10, 2006
    -       -       -       749,334       -       749,334  
Net loss
    -       -       -       -       (116,822 )     (116,822 )
Balance - December 31, 2006
    7,694,542       769       -       998,565       (861,559 )     137,775  
Stock-based compensation expense
                            1,490       -       1,490  
Net loss
    -       -       -       -       (286,544 )     (286,544 )
Balance - December 31, 2007
    7,694,542       769       -       1,000,055       (1,148,103 )     (147,279 )
Issuance of common stock -June 29, 2008
    5,053,102       506       -       927,194       -       927,700  
Stock-based compensation expense
                            28,542               28,542  
Net loss
    -       -       -       -       (642,303 )     (642,303 )
Balance- December 31, 2008
    12,747,644       1,275       -       1,955,791       (1,790,406 )     166,660  
Stock-based compensation expense
                            7,624               7,624  
Net loss
                                    (466,729 )     (466,729 )
Balance – December 31, 2009
    12,747,644     $ 1,275     $ -     $ 1,963,415     $ (2,257,135 )   $ (292,445 )

See notes to financial statements.

 
15

 
 
SENTISEARCH, INC.
(A Development Stage Company)
Statements of Cash Flows

               
For the period
 
               
April 10, 2000
 
               
(Commencement
 
   
For the
   
of Business)
 
   
Year ended
   
Through
 
   
December   31,
   
December   31
 
   
2009
   
2008
   
2009
 
                   
Cash flows from operating activities
                 
Net loss
  $ (466,729 )   $ (642,303 )   $ (2,257,135 )
Adjustments to reconcile net loss to net cash provided by operating activities:
                       
Stock-based compensation expense
    7,624       28,542       37,656  
Amortization
    91,343       55,823       517,410  
Changes in operating assets and liabilities
                       
Security Deposits
          (4,170 )     (4,170 )
Increase  in accounts payable and accrued expenses
    80,797       11,475       523,023  
Net cash used in operating activities
    (286,965 )     (550,633 )     (1,183,216 )
Cash flows from investing activities
                       
Investment in patents
    (37,610 )     (33,215 )     (112,707 )
Net cash used in investing activities
    (37,610 )     (33,215 )     (112,707 )
                         
Cash flows from financing activities
                       
(Repayment) proceeds of notes payable - related parties
          (25,325 )     154,675  
Proceeds of convertible notes payable
    200,000             200,000  
Proceeds from due to related party
          106,914       106,914  
Proceeds from issuance of common stock
          657,946       907,946  
Net cash provided by financing activities
    200,000       739,535       1,369,535  
                         
(Decrease)/Increase in cash and cash equivalents
    (124,575     155,687       73,612  
Cash and cash equivalents — beginning of period
    198,187       42,500        
                         
Cash and cash equivalents — end of period
  $ 73,612     $ 198,187     $ 73,612  
                         
Non-cash from financing activities:
                       
Assumption of liability by Sentigen Holding Corp.
  $     $     $ 308,709  
Stock of Sentigen Holding Corp. issued for license costs
  $     $     $ 440,625  
                         
Conversion of notes payable and accrued interest to common stock
  $     $ 162,840     $ 162,840  
Conversion of due to related party for common stock
  $     $ 106,914     $ 106,914  

See notes to financial statements.

 
16

 

Notes to Financial Statements
 
1. Organization and Nature of Operations
 
SentiSearch, Inc. (“we,” “our”, “SentiSearch,” and “the Company”) was a wholly-owned subsidiary of Sentigen Holding Corp. (“Sentigen”) until the December 1, 2006 “spin-off”, discussed below. We are a development stage company and have a limited operating history. We were incorporated in the State of Delaware on October 3, 2006 to hold the olfaction intellectual property assets of Sentigen and its subsidiaries.
 
On October 10, 2006, in connection with its merger with Invitrogen Corporation, Sentigen separated its olfaction intellectual property assets from the businesses being acquired by Invitrogen Corporation. The distribution of SentiSearch shares to the shareholders of Sentigen, commonly referred to as a “spin-off,” took place immediately prior to the consummation of the merger. In connection with the distribution, on October 10, 2006, we entered into a distribution agreement with Sentigen, pursuant to which Sentigen contributed $250,000 to our capital. Also on October 10, 2006, we entered into a contribution agreement with Sentigen, pursuant to which Sentigen transferred to us all of its olfaction intellectual property. The olfaction intellectual property assets primarily consist of an exclusive license agreement with The Trustees of Columbia University in the City of New York (“Columbia”), dated April 10, 2000 (the “Columbia License”), and certain patent applications titled “Nucleic Acids and Proteins of Insect or 83b odorant receptor genes and uses thereof.”
 
During July 2007, we were issued two patents in the United States. During November 2007, we were issued one patent in Australia and during April 2008, we were issued one patent in Mexico. Three of these patents were issued directly to us and the other patent was issued under the Columbia License. All of the issued patents cover nucleic acid molecules which encode insect odorant receptor proteins, including numerous variations on insect odorant receptor coding sequence. The patents cover any nucleic acid molecule as long as the protein it encodes contains a short segment of amino acids, linked together.
 
While we believe our technology capabilities in the olfaction area are substantial, up to this point, we have incurred substantial operating losses. There have been no revenues from operations to date. Although we have an exclusive license agreement with Columbia, only one patent has been issued under the Columbia License and we cannot provide any assurance that our additional patent applications will be successful. We intend to continually review the commercial validity of our olfaction technology in order to make the appropriate decisions as to the best way to allocate our limited resources.
 
2. Basis of Presentation
 
The financial statements for the period April 10, 2000 (Commencement of Business) to December 31, 2009 differ from the results of operations, financial condition and cash flows that would have been achieved had we been operated independently during the periods from April 10, 2000 through December 31, 2009. Our business was operated within Sentigen as part of its broader corporate organization rather than as a stand-alone company. Our historical financial statements do not reflect the expense of certain corporate functions that we would have needed to perform if we were not a wholly-owned subsidiary.
 
We are a development stage company whose planned principal operations have not yet commenced. We intend to establish a new business. We have not generated any revenues from operations and have no assurance of any future revenues. All losses accumulated since commencement of our business have been considered as part of our development stage activities.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company has had no revenue and has incurred accumulated net losses during the development stage of $2,257,135 and as of December 31, 2009, has a working capital deficiency of $328,367 and a stockholders' deficit of $292,445. The Company may need substantial amounts of additional financing to commercialize the research programs undertaken, for which financing may not be available on favorable terms, or at all. The Company’s ability to obtain financing and realize revenue depends upon the status of future business prospects, as well as conditions prevailing in the capital markets. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plan to locate opportunities with non-profit agencies and/or potential commercial partners, raise additional capital from the sale of stock and, ultimately, income from operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.

 
17

 
 
3. Summary of Significant Accounting Policies  
 
      a.             Cash and Cash Equivalents – Cash and cash equivalents include liquid investments with maturities of three months or less at the time of purchase.
 
b.             Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.  The Company maintains its cash accounts at high quality financial institutions with balances, at times, in excess of federally insured limits. As of December 31, 2009, the Company had no cash balances in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance limit. Management believes that the financial institutions that hold the Company’s deposits are financially sound and therefore pose minimal credit risk. FDIC deposit insurance is $250,000 per depositor through December 31, 2013 .

c.             License and Patent Costs – The costs of intangible assets that are purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are accounted for in accordance with accounting standards. The amortization of those intangible assets used in research and development activities is a research and development cost. However, the costs of intangibles that are purchased from others for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are research and development costs at the time the costs are incurred. We determined that the licensing costs arising from our exclusive licensing agreement with The Trustees of Columbia University have alternative future uses. These costs have been capitalized and are being amortized on a straight-line basis through April 2010 (see Note 4).
 
d.             Impairment – Intangible and long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. A review for impairment includes comparing the carrying value of an asset to an estimate of the undiscounted net future cash inflows over the life of the asset or fair market value. An asset is considered to be impaired when the carrying value exceeds the calculation of the undiscounted net future cash inflows or fair market value. An impairment loss is defined as the amount of the excess of the carrying value over the fair market value of the asset. We believe that none of our intangible and long-lived assets are impaired as of December 31, 2009 (see Note 4 and 5).

e.             Estimates – 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
   
f.             Income Taxes –  The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a "more-likely-than-not" threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. As of December 31, 2009, the Company is unaware of any uncertain tax positions.

 
18

 

g.             Loss Per Share – The accompanying financial statements include loss per share calculated as required by Accounting standards on a “pro-forma” basis as if we were a separate entity from the period April 10, 2000 (commencement of business) until October 3, 2006 (our date of incorporation). Basic loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding. Diluted loss per share include the effects of securities convertible into common stock, consisting of stock options, to the extent such conversion would be dilutive. Accounting standards prohibits adjusting the denominator of diluted earnings per share for additional potential common shares when a net loss from continuing operations is reported. The assumed exercise of common stock equivalents was not utilized for the twelve months ended December 31, 2009 since the effect would be anti-dilutive. As of December 31, 2009, 675,000 options were outstanding of which 541,667 were exercisable.

h.             Fair Value of Financial Instruments –  The Company adopted the Financial Accounting Standards Board Fair Value Measurements, as it applies to its financial statements. This standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The standard establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. The standard requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

The carrying value of current assets and liabilities approximates fair value due to the short period of time to maturity. The carrying amount of notes payable approximate their fair value, using level three inputs, as the current interest rate on such instruments approximates current market rates on similar instruments.

i.             Stock-Based Compensation – Stock-based compensation expense represents share-based payment awards based upon the grant date fair value estimated in accordance with  accounting standards. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award. Stock-based compensation expense is recognized based upon awards ultimately expected to vest, reduced for estimated forfeitures. Forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
 
The expected term of stock options represents the average period the stock options are expected to remain outstanding.  The expected stock price volatility for the Company’s stock options was determined by examining the historical volatilities for industry peers for periods that meet or exceed the expected term of the options, using an average of the historical volatilities of the Company’s industry peers as the Company did not have sufficient trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.
 
The Company accounts for its issuances of stock-based compensation to non-employees for services using the measurement date guidelines enumerated in the accounting standards. Accordingly, the value of any awards that were vested and non forfeitable at their date of issuance were measured based on the fair value of the equity instruments at the date of issuance. The non-vested portion of awards that are subject to the future performance of the counterparty are adjusted at each reporting date to their fair values based upon the then current market value of the Company’s stock and other assumptions that management believes are reasonable. The Company believes that the fair value of the stock options issued to non-employees is more reliably measurable than the fair value of the services rendered. The fair value of the stock options granted was calculated using the Black-Scholes option pricing model. 

 
19

 

j.           Recently Adopted Accounting Pronouncements
 
On January 1, 2009, we adopted Accounting Standards Codification (the “ASC” or “Codification”) 350-30, “Determination of the Useful Life of Intangible Assets”. ASC 350-30 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset in order to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The adoption did not have a significant impact on our financial statements.
 
In February 2010, the Financial Accounting Standards Board (“FASB”) issued and update to ASC 855, “Subsequent Events”. This Codification does not require significant changes regarding recognition or disclosure of subsequent events, but does require evaluation of subsequent events through the date the financial statements are issued.  The update was effective upon issuance.  The adoption did not have a significant impact on our financial statements.  Subsequent events have been evaluated through the time of the filing of our annual report on Form 10-K.
 
On April 1, 2009, we adopted ASC 825-10 and ASC 270-10, “Interim Disclosures about Fair Value of Financial Instruments”. This Codification requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. The Codification is effective for interim and annual reporting periods ending after June 15, 2009.  The adoption did not have a significant impact on our financial statements.
 
On April 1, 2009, we adopted ASC 320-10, “Recognition and Presentation of Other-Than-Temporary Impairments”. The Codification amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. The Codification does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.  This Codification is effective for interim and annual reporting periods ending after June 15, 2009. The adoption did not have a significant impact on our financial statements.
 
  On April 1, 2009, we adopted ASC 820-10, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and identifying Transactions That Are Not Orderly”.  This Codification provides additional guidance for estimating fair value when the volume and activity for the asset or liability have significantly decreased. This Codification also includes guidance on identifying circumstances that indicate a transaction that is not orderly. The Codification is effective for interim and annual reporting periods ending after June 15, 2009.  The adoption did not have a significant impact on our financial statements.
 
In June 2009, the FASB issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, which established the FASB as the source of authoritative principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”).  Rules and interpretive releases of the Securities and Exchange Commission (the “SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The adoption of this standard did not have a material impact on our financial statements.  
 
4. Exclusive License Agreement
 
On April 10, 2000, Sentigen Biosciences, Inc. (“Sentigen Biosciences”), a wholly-owned subsidiary of Sentigen, entered into the Columbia License.
 
In consideration of the Columbia License, Columbia was issued 75,000 shares of Sentigen common stock and will receive royalties of 1% of the net sales of any licensed products or services. The Columbia License had certain minimum funding requirements, all of which have been satisfied.
 
 
20

 
 
On October 10, 2006, the Company entered into a contribution agreement with Sentigen pursuant to which Sentigen transferred to us all of its olfaction intellectual property, including the Columbia License. On October 17, 2006, Columbia consented to the assignment of the Columbia License from Sentigen Biosciences to SentiSearch subject to certain conditions, all of which have already been satisfied to the extent currently required.
 
The value of the Columbia License is recorded as license costs, net of accumulated amortization on the accompanying balance sheet. The original value of the license costs reflects the closing share price of Sentigen’s common stock on April 10, 2000. The value of the license costs, net of amortization as of December 31, 2009 was $10,909.
 
Intangible and long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. A review of the Company’s olfaction technology was performed by Charter Capital Advisers, Inc. in August 2006 which concluded that the estimated range of fair value was $120,000 to $190,000. An impairment loss of $122,996 was recognized as amortization expense in August 2006 as the amount of the excess of the carrying value over the fair market value of the asset.
 
The license costs are being amortized on a straight line basis through April 2010.  Expected amortization expense for the year ending December 31, 2010 is $10,909.
 
  5. Patent Costs

During July 2007, the Company was issued two patents in the United States. During November 2007, the Company was issued a patent in Australia and during May 2008, the Company was issued a patent in Mexico. One of the U.S. patents and the Australia and Mexico patents, were issued directly to the Company and the other U.S. patent was issued under the Columbia License. All of the issued patents cover nucleic acid molecules which encode insect odorant receptor proteins, including numerous variations on insect odorant receptor coding sequence. The patents cover any nucleic acid molecule as long as the protein it encodes contains a short segment of amino acids, linked together.
 
The value of the patent costs, mainly consisting of legal and application fees in the amount of $112,707, is recorded as patent costs, net of accumulated amortization on the accompanying balance sheet. The value of the patent costs, net of amortization as of December 31, 2009 was $25,013.
 
The patent costs are being amortized on a straight line basis through April 2010, the remaining term of the license costs.  Expected amortization expense for the year ending December 31, 2010 is $25,013.
 
6. Share-Based Payments
 
On May 16, 2007, the Company granted options to purchase 50,000 shares of its common stock at an exercise price of $0.18 per share to a director.  The fair value of the underlying common stock at the date of grant was $0.18 per share.  The options vested immediately and have a five year term.  Assumptions related to the estimated fair value of these stock options on their date of grant, which the Company estimated using the Black-Scholes option pricing model, are as follows:  risk-free interest rate of approximately 5%; expected divided yield of 0%; expected option life of two and one-half years; and expected volatility of approximately 17%.  The aggregate grant date fair value of the award amounted to $1,490.
 
On March 27, 2008 and May 14, 2008, the Company granted options to purchase an aggregate of 425,000 and 100,000 shares, respectively,  of its common stock to three individuals for consulting services rendered to the Company and a director, respectively, each at an exercise price of $0.19 per share and term of ten years. The terms of the consulting arrangements are for five years. The fair value of the underlying common stock at the date of grant was $0.07 per share. The options granted on March 27, 2008, vest as follows: 158,334 immediately, 133,333 on the first anniversary and 133,333 on the second anniversary. The options granted on May 14, 2008 vested upon stockholder approval to amend the Certificate of Incorporation to increase the number of authorized shares of common stock at the annual stockholder meeting on June 24, 2008, and have a term of ten years unless cancelled earlier upon director's removal or resignation from the board. Assumptions related to the estimated fair value of these stock options on their date of grant, which the Company estimated using the Black-Scholes option pricing model, are as follows: risk-free interest rate of approximately 4%; expected dividend yield of 0%; expected option life of ten years; and expected volatility of approximately 17%. The aggregate grant date fair value of the award amounted to $36,698.
 
 
21

 
 
On October 20, 2009, the Company granted options to purchase 100,000 shares of its common stock at an exercise price of $0.05 per share to a director.  The fair value of the underlying common stock at the date of grant was $0.03 per share.  The options vested immediately and have a ten year term.  Assumptions related to the estimated fair value of these stock options on their date of grant, which the Company estimated using the Black-Scholes option pricing model, are as follows: risk-free interest rate of approximately 3%; expected divided yield of 0%; expected option life of ten years; and expected volatility of approximately 22%.  The aggregate grant date fair value of the award amounted to $634.
 
The Company recorded $7,624 and $28,542 of compensation expense for the year ended December 31, 2009 and 2008, respectively, related to these options.
 
The weighted-average grant date fair value of options granted during the year ended December 31, 2009 amounted to $0.006 per share. Total unamortized compensation expense related to unvested stock options at December 31, 2009 amounted to $1,165 and is expected to be recognized over a weighted average period of approximately three months.
 
The following table summarizes information on all common stock purchase options issued by us for the years ended December 31, 2009 and 2008:
 
   
December 31, 2009
   
December 31, 2008
 
   
Number
   
Weighted
Average
Exercise Price
   
Number
   
Weighted
Average
Exercise Price
 
                         
Outstanding, beginning of  the year
    575,000     $ 0.19       50,000     $ 0.18  
Granted
    100,000       0.05       525,000       0.19  
                                 
Outstanding, end of the year
    675,000     $ 0.17       575,000     $ 0.19  
                                 
Exercisable, end of the year
    541,667     $ 0.16       308,334     $ 0.19  

The number and weighted average exercise prices of all common stock purchase options as of December 31, 2009 are as follows:
 

Range   of     Exercise
Prices
 
Remaining   Number
Outstanding
   
Weighted   Average
Contractual   Life   (Years)
   
Weighted   Average
Exercise   Price
 
                   
$0.05 to $0.19
    675,000       8.06     $ 0.16  
 
All options were issued at an option price equal to the market price on the date of the grant in addition, none of the options currently outstanding have any intrinsic value.
 
The Company issues new shares of common stock upon exercise of stock options.
 

 
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7. Notes Payable
 
On June 21, 2007, the Company entered into demand promissory notes with four of its stockholders including its Chief Executive Officer and a member of the Board of Directors (together, the “Lenders”), providing for loans to the Company in the aggregate amount of $180,000. The promissory notes accrued interest at Citibank N.A’s reported prime rate plus 3%, which was due and payable at the time the principal amount of each respective promissory note became due. Although the promissory notes had a maturity date of June 22, 2009. Each Lender had the right to demand the payment of all of the outstanding principal and interest of his or its respective promissory note at any time prior to the maturity date. At the time of the loan transaction, each of the Lenders was a beneficial owner of 5% or more of the Company’s common stock.
 
In May and June 2008, these promissory notes were converted into subscriptions agreements in two phases. The accrued interest expense related to the promissory notes amounted to $16,921, of which $8,756 was paid in cash and $8,165 was converted into the subscriptions.
 
During October 2009, the Company issued to each of four individuals $50,000 subordinated convertible promissory notes (the “Notes”) aggregating $200,000. The individuals included the Company’s Chief Executive Officer and Chairman of the Board, another director, one of the Company’s greater than 5% stockholders and an accredited investor. The  $50,000 principal amount of Notes issued to the Chief Executive Officer and Chairman of the Board represent $25,000 of new funds received and a rollover of a $25,000 loan made by him to the Company on September 10, 2009.  The Notes bear interest of 4% per annum and are payable on demand on the earlier of (i) the date on which the Company publicly announces a joint venture or strategic relationship, the execution of a license, or similar agreement with a third-party with respect to the Company’s technology and (ii) the date on which the Company files with the SEC its annual report on Form 10-K, which includes audited financial statements for the year ended December 31, 2009, such date referred to as the target date.  The holders may convert the outstanding principal amount of the Notes and accrued and unpaid interest thereon into shares of the Company’s common stock at any time commencing on the fifth trading day immediately following the target date at the conversion price in effect on such date.  The conversion price will be the greater of (i) the average of the closing sale price of the Company’s common stock for the five trading days immediately following the target date and (ii) $0.05 per share.
 
The Company may prepay the Notes on 20 days prior written notice to the holders.  The Company has agreed to include the shares of common stock issuable upon conversion of the Notes in any applicable registration statement filed by the Company with the SEC covering its equity securities.
 
8. Stockholders’ Equity
 
Common Stock
 
During the second quarter of 2008, the Company closed on a financing in two tranches resulting in the issuance of common stock for $927,700, net of offering costs of $22,300. On May 9, 2008, the Company closed on the first tranche of the financing, for an aggregate amount of $750,000, which consisted of cash in the amount of $563,986 and the conversion of $186,014 of indebtedness. Participants in the first tranche of the financing subscribed for an aggregate of 3,947,363 shares of common stock, based on the price of $0.19 per share.  On June 20, 2008, we had an initial closing of $145,980 of the second tranche of the financing, consisting of cash in the amount of $62,240 and the conversion of $83,740 of indebtedness. Participants in the initial closing of the second tranche of the financing subscribed for an aggregate of 768,315 shares of common stock, based on the price of $0.19 per share.
 
On July 9, 2008, the Company raised $54,020 of additional funds from the unsubscribed portion of the second tranche of the financing from the investors who participated and desired to exercise their over-allotment option in the June 20, 2008 closing. The Company issued an aggregate of 337,424 shares of its common stock in connection with the over-allotment exercise, based on the price of $0.16 per share.
 
Prior to the issuance of any shares of common stock pursuant to the financing, the Company was required to receive the approval of its stockholders to amend our Certificate of Incorporation to increase the number of authorized shares of common stock to permit the financing shares to be issued (“Stockholder Approval”). The Company received Stockholder Approval at its annual meeting of stockholders on June 24, 2008.
 
 
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Participants in the financings included ten of our largest stockholders (each holding 50,000 or more shares of our common stock), including, the Company’s Chairman of the Board and Chief Executive Officer, a director, and certain holders of 5% or more of the Company’s common stock. All ten stockholders participated in the first tranche of the financing, and six stockholders (including a director) participated in the second tranche of the financing.
 
9. Income Taxes
 
SentiSearch was a member of the Sentigen consolidated group for federal income tax purposes for the period October 3, 2006 through December 1, 2006. Prior to October 3, 2006, the assets and the related business of SentiSearch were owned and operated by Sentigen. Such business was the predecessor of SentiSearch, which became a separate legal entity on October 3, 2006. As such, any deductions generated by the Company’s assets prior to October 3, 2006 were utilized by, or remain with, the consolidated group, Sentigen. The Company was allocated its share of the consolidated group’s net operating loss for the period October 3, 2006 through December 1, 2006. The table below reflects the deferred tax assets from net operating loss carryforwards “as if” the Company was a stand alone legal entity from the period April 10, 2000 through October 2, 2006.
 
 The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception.  The earliest tax year subject to examination by these taxing authorities is 2006.
 
Deferred taxes reflect the tax effects of temporary differences between the amounts of assets and liabilities for financial reporting and the amounts recognized for income tax purposes as well as the tax effects of net operating loss carryforwards. The significant components of net deferred tax assets are as follows:
 
   
December 31,
 
   
2009
   
2008
 
             
Net operating loss carryforwards
  $ 538,245     $ 374,844  
                 
Amortization
    100,850       80,608  
                 
Stock based compensation
    15,063       12,013  
                 
Less: Valuation allowance
    654,158       467,465  
                 
Net deferred tax assets
  $ -     $ -  
 
 
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The Company believes that it is more likely than not that the deferred tax assets will not be realized and have therefore provided a valuation allowance in the accompanying balance sheet equal to the entire amount of the deferred tax assets. The provision for income taxes on continuing operations differs from the amount using the statutory federal income tax rate (34%) as follows:
 
   
   
   
   
   
For the period
 
               
April
 
   
   
   
   
   
10, 2000
 
               
(Commencement
 
   
   
   
   
   
of Predecessor
 
   
For the years ended December
   
Business) to
 
   
31,
   
December 31,
 
   
2009
   
2008
   
2009
 
   
   
             
At Statutory Rates
  $ (158,688 )     $ (218,383 )     $ (767,426 )
State income taxes, net of federal benefit
    (28,004 )       (38,538 )       (135,428 )
NOL’s utilized by Sentigen
                297,895  
Increase in valuation allowance
    186,692         256,921       604,959  
                         
Provision for income taxes
  $     $     $  

At December 31, 2009, the Company has federal and state net operating loss carryforwards of approximately $1,345,615 for each tax jurisdiction, available to offset future federal and state taxable income through December 31, 2029. There are no tax-related balances due to or from any entities of which the Company was previously affiliated.
 
10. Recently Issued Accounting Pronouncements
 
In June 2009, the FASB issued an update to ASC 810, Consolidation , which modifies the existing quantitative guidance used in determining the primary beneficiary of a variable interest entity (“VIE”) by requiring entities to qualitatively assess whether an enterprise is a primary beneficiary, based on whether the entity has (i) power over the significant activities of the VIE, and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.  The adoption of this guidance on January 1, 2010 is not expected to  have a material impact  on our financial position or results of operations.
 
In June 2009, the FASB issued revised guidance for the accounting of variable interest entities (codified in December 2009 as ASU No. 2009-17), which replaces the quantitative-based risks and rewards approach with a qualitative approach that focuses on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance. The accounting guidance also requires an ongoing reassessment of whether an entity is the primary beneficiary and requires additional disclosures about an enterprise’s involvement in variable interest entities. This accounting guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The adoption of this guidance is not expected to have a material impact on our financial position or results of operations.
 
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
 
 
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11. Commitments and Contingencies
 
The Company has entered into a one-year sublease for office space in West Palm Beach, Florida.  The sublease expires in June 2010, with an option to renew for an additional year. The sublease requires monthly payments of approximately $1,390 through June 2010.
 
12. Related Party Transactions
 
On September 10, 2009, the Company entered into a loan agreement with the Chief Executive Officer in the amount of $25,000 (the “September Loan”).  The loan bore interest at 6% per annum and was settled on October 27, 2009.
 
On October 20, 2009 a newly appointed Director was granted options to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.05 per share.  The options vested immediately and have a ten year term.
 
Please refer to Notes 6 and 7 regarding additional related party transactions.
 
 
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ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.
 
  ITEM  9A(T).       CONTROLS AND PROCEDURES.

Controls and Procedures
 
As of December  31, 2009, Mr. Joseph K. Pagano, who as our Chief Executive Officer, Secretary and Treasurer is our principal executive and principal financial officer, evaluated the effectiveness of our "disclosure controls and procedures" as defined in Rules 13a-15(e) and Rule 15d-15(e)of the Securities Exchange Act of 1934 ("Disclosure Controls"). Based upon this evaluation, Mr. Pagano concluded that the Disclosure Controls were effective, as of the date of their evaluation, in reaching a reasonable level of assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that any information relating to us that is required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive/financial officer, to allow timely decisions regarding required disclosure.
 
Changes in Internal Controls Over Financial Reporting
 
During the fiscal quarter ended December 31, 2009, there were no changes in our "internal control over financial reporting" as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934 (“Internal Control”), that have materially affected or are reasonably likely to materially affect our Internal Control.
 
Management’s Annual Report on Internal Control Over Financial Reporting
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Our internal control over financial reporting includes those policies and procedures that:
 
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in   Internal Control over Financial Reporting — Guidance for Smaller Public Companies .
 

 
27

 

We are a development stage organization, with our chief executive officer having control over all of the detail accounting transactions and the day-to-day activities. Although this control rests with the chief executive officer, care was taken to select and employ key controls which are sensitive to the segregation of duties issue. Based on our assessment of those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2009.
 
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report on Form 10-K.
 
ITEM 9B.            OTHER INFORMATION.
None.

P ART III

ITEM 10.         DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officer
 
Set forth below are the names, ages and current positions of our executive officer and directors. We have one employee, in addition to Joseph K. Pagano, who presently serves as our Chief Executive Officer, Secretary and Treasurer for no compensation.
 
Name
 
Age
 
Position
Joseph K. Pagano
 
65
 
Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors
Frederick R. Adler
 
84
 
Director
Erik R. Lundh
 
40
 
Director
Dean R. Gresk
 
47
 
Director

The following information includes information each director and executive officer has given us about his age, all positions he holds, his principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he currently serves as a director or has served as a director during the past five years. In addition to the information presented below regarding each director’s specific experience, qualifications, attributes and skills that led our Board of Directors to the conclusion that he should serve as a director, we also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to the Company and our Board of Directors.
 
Joseph K. Pagano has served as our Chief Executive Officer, Secretary and Treasurer and as the Chairman of our Board since our formation in October 2006 and as the Chairman of the Board of Sentigen from 1996 until November 2006. He served as Sentigen’s Chief Executive Officer and President from 1996 through March 21, 2006. Mr. Pagano has been a private investor for more than the past five years. Mr. Pagano has been active in venture capital for over 20 years, with investments in a wide variety of industries, including information and technology, medical equipment, biotechnology, communications, retailing and outsourcing. He was a founding investor in Ribi Immunochem, one of the earliest biotechnology companies to go public and one of the first to focus on cancer vaccines. He participated in the early round financing of Amcell Cellular Communication, which was sold to Comcast. He was a founding investor of NMR of America, the first MRI center business to go public and was also a founding shareholder and director of Office Depot, the first office warehouse to go public.  Mr. Pagano’s vast experience with Sentigen and our technology, together with his extensive experience in various industries, makes him uniquely qualified to serve on our Board of Directors.
 
 
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Frederick R. Adler has been our director since our formation in October 2006 and was a director of Sentigen from May 1996 until November 2006. Mr. Adler is Managing Director of Adler & Company, a venture capital management firm he organized in 1968, and a general partner of its related investment funds. He is also a director of SIT Investments, Inc., an investment management firm located in Minneapolis, Minnesota and from 1977 to 1995 was a trustee and member of the Finance Committee of Teachers Insurance and Annuity Association. Mr. Adler is a retired partner of the law firm of Fulbright & Jaworski L.L.P. and was previously a senior partner in the firm and of counsel to the firm. From 1982 to 1996 he was a director of Life Technologies, Inc., a significant supplier in the biotechnology area, serving at various times until January 1, 1988 as either its Chairman or its Chief Executive Officer and after 1988 as Chairman of its Executive Committee. He has been a founding investor and a director of a number of technology entities including Data General Corporation, Applied Materials, Inc., Life Technologies, Inc., Biotechnology General (now Savient) and Synaptic. In 1998, Mr. Adler received an honorary doctorate from the Technion-Israel Institute of Technology in recognition of his work in the development of the Israeli high technology industry.  Mr. Adler’s extensive experience with Sentigen, our former parent company, and our technology, as well as experience in the biotechnology field, makes him uniquely qualified to serve on our Board of Directors.
 
Erik R. Lundh has been our director since May 2007. Mr. Lundh currently leads operations in the Western Unites States for J. Robert Scott, a boutique executive search firm Mr. Lundh joined in November 2009.  Mr. Lundh is also the leader of J. Robert Scott’s life sciences practice.  From 2006 to November 2009, Mr. Lundh led the biotechnology sector of Heidrick & Struggles’ global life sciences practice, and managed the firm’s San Francisco office. He joined Heidrick & Struggles in 2006 and has more than 19 years’ experience in the life sciences industry. From 2005 to 2006, Mr. Lundh served as a client partner with Korn/Ferry, an international executive search firm. From 2003 to 2004, Mr. Lundh was executive vice president of commercial operations for Sentigen Holding Corp. Earlier, Mr. Lundh worked in industry for several life sciences companies in operating roles spanning corporate strategy, business development, sales and marketing, and commercial operations.  Mr. Lundh’s extensive experience in the biotechnology field and life sciences industry makes him uniquely qualified to serve on our Board of Directors.
 
Dean R. Gresk has been our director since October 2009.  Mr. Gresk is currently a real estate broker with Aspen Signature Properties, a position he has held since March 2007.  Prior to joining Aspen Signature Properties, Mr. Gresk worked for Sentigen Holding Corp., the Company’s former holding company, as a manager reporting directly to Joseph K. Pagano, Sentigen’s Chief Executive Officer and the Company’s Chief Executive Officer.  Mr. Gresk’s management experience with Sentigen, our former parent company, and its operations, as well as his familiarity with our technology, makes him uniquely qualified to serve on our Board of Directors.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Based solely on a review of Forms 3, 4 and 5 and amendments thereto furnished to us with respect to our most recent fiscal year, we believe that all required reports by our officers, directors and 10% or greater stockholders were filed on a timely basis.
 
Code of Ethics
 
We have not yet adopted a formal code of ethics governing our executive officer and directors. We have not adopted a code of ethics because we have minimal operations. Our Board of Directors will address this issue in the future when determined to be appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.
 
 
29

 

Committees
 
We do not and, for at least the near future, will not have an audit, nominating or compensation committee because we believe that our Board of Directors is capable of performing the respective functions of the foregoing committees as a result of our size. The Board of Directors has determined that Frederick R. Adler qualifies as an “audit committee financial expert” under SEC regulations and has accounting or related financial management expertise and that Mr. Adler is an “independent” director, as defined under the standards of independence set forth in the Marketplace Rules of the NASDAQ Stock Market, although these independent director standards do not apply to us because we do not have any securities that are listed on NASDAQ.
 
We have not adopted any procedures by which our stockholders may recommend nominees to our Board of Directors.
 
ITEM 11.              EXECUTIVE COMPENSATION.

Executive Officer Compensation.
 
Mr. Pagano, our only executive officer, is not compensated for the services he provides other than with respect to reimbursement of out of pocket expenses actually incurred. In the future, if and when our operations so dictate, we may approve payment of salaries for our executive officer and directors, but currently, no such plans have been approved.    Other than our health insurance plan, in which Mr. Pagano participates, we do not have any benefits, such as life insurance or any other benefits.  We have no equity compensation plans and we have not granted any options or other stock-based awards to our executive officer.  In addition, our executive officer is not a party to any employment agreements.
 
Director Compensation.
 
The following table sets forth a summary of the compensation we paid to our directors during fiscal year 2009.
 
Name
 
Option awards (1)
   
Total
 
 
 
($)
   
($)
 
Joseph K. Pagano
           
Frederick R. Adler
           
Erik R. Lundh
           
Dean R. Gresk (2)
  $ 634     $ 634  
 

(1)          The amounts in this column represent the dollar amount recognized in accordance with FASB ASC Topic 718 for financial statement reporting purposes with respect to the 2009 fiscal year for the fair value of stock options granted in 2009. Assumptions used in the calculation of these amounts for the 2009 fiscal year are included in Note 6 to our audited financial statements for the 2009 fiscal year included elsewhere herein.

(2)           On October 20, 2009, we granted 100,000 ten-year options at $0.05 per share to Dean R. Gresk.  The options vested immediately and were granted at an exercise price greater than the closing price on the date of grant.
 
Typically, our directors are not compensated for the services they provide other than with respect to reimbursement of out of pocket expenses actually incurred. Mr. Gresk, however, in addition to serving as a director, will also provide certain non-Board related services to us for which he will be paid $500 per day, in addition to reimbursement for his travel expenses.  Mr. Gresk received no such payments in 2009.  In the future, if and when our operations so dictate, we may approve payment of retainers for our directors, but currently, no such plans have been approved. Other than the option grants to Messrs. Adler, Lundh and Gresk discussed above, there have been no equity grants to directors to date.
 
 
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ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table provides information with respect to the beneficial ownership of our common stock as of March 23, 2010 by (1) each of our stockholders who is known to us to be a beneficial owner of more than 5% of our outstanding common stock, (2) each of our current directors, (3) our executive officer, and (4) our executive officer and all of our directors as a group. Except as otherwise specified, the named beneficial owner has sole voting and investment power over the shares listed.
 
The shares “beneficially owned” by a person are determined in accordance with the definition of “beneficial ownership” set forth in the regulations of the SEC and, accordingly, shares of our common stock subject to options, warrants or other convertible securities that are exercisable or convertible within 60 days as of March 23, 2010 are deemed to be beneficially owned by the person holding such securities and to be outstanding for purposes of determining such holder's percentage ownership. The same securities may be beneficially owned by more than one person. Shares of common stock subject to options, warrants, restricted stock units, restricted stock awards or convertible securities that are not exercisable or do not vest within 60 days from March 23, 2010 are not included in the table below as shares “beneficially owned”.
 
Percentage ownership of our common stock is based on the 12,747,844 shares of common stock outstanding as of March 23, 2010.
 
Name and Address of Beneficial Owner
 
Amount and Nature of 
Beneficial Ownership
   
Percentage of
Common Stock
 
             
Joseph K. Pagano
    1,195,265 (1)     9.4 %
1217 South Flagler Drive, 3 rd Floor
West Palm Beach, Florida 33401
               
                 
Frederick R. Adler
    1,611,941 (2)     12.5 %
1520 S. Ocean Boulevard
Palm Beach, Florida 33480
               
                 
Erik R. Lundh
    55,000 (3)     *  
c/o Heidrick & Struggles
One California Street, Ste. 2400
San Francisco, CA 94111
               
                 
Samuel A. Rozzi
    1,628,777 (4)     12.8 %
c/o Corporate National Realty Inc.
135 Crossways Park Drive, Suite 104
Woodbury, New York 11797
               
                 
The Joseph A. Pagano, Jr. 2007 Trust
    1,128,157       8.8 %
1217 South Flagler Drive, 3 rd Floor
West Palm Beach, Florida 33401
               
                 
Longview Partners, L.P.
    1,260,458 (5)     9.9 %
c/o Adler & Co.
400 Madison Ave. Suite 7C
New York, NY 10017
               
                 
Susan Chapman
    1,287,525 (6)     10.1 %
c/o Adler & Co.
400 Madison Ave., Suite 7C
New York, NY 10017
               
                 
Dean R. Gresk
    100,000 (7)     *  
c/o Aspen Signature Properties
215 S. Monarch
Suite 201
Aspen, CO  81611
               
                 
Executive officer and all directors as a group (4 persons)
    2,962,206 (1)(2)     23.2 %
 
31



 
*
Represents less than 1%.

(1)
Includes 25,000 shares of Common Stock held of record by the Joseph Pagano, Jr. Trust. Mr. Pagano disclaims beneficial ownership of all shares other than those held in his name. Does not include the shares of Common Stock held of record by The Joseph A. Pagano Jr. 2007 Trust, a trust for which Mr. Pagano has no investment control, right to revoke, or voting rights.
     
(2)
Includes 100,000 shares issuable upon the exercise of stock options to purchase share of our Common Stock that are exercisable within 60 days of March 23, 2010
     
(3)
Includes 2,500 shares held of record by each of Mr. Lundh’s son and daughter. Mr. Lundh disclaims beneficial ownership of these shares. Includes 50,000 shares issuable upon the exercise of stock options to purchase shares of our Common Stock that are exercisable within 60 days of March 23, 2010.

(4)
Includes 150,000 shares held by Scarsdale Limited Partnership, of which Mr. Rozzi is general partner. Mr. Rozzi’s daughter and The Samuel A. Rozzi Grantor Retained Annuity Trust, of which Mr. Rozzi’s daughter is trustee, are the sole limited partners of Scarsdale Limited Partnership. Mr. Rozzi disclaims beneficial ownership of all shares other than those held in his name.

(5)
Susan Chapman is the general partner of Longview Partners, L.P., which is the registered holder of these shares. Mrs. Chapman is an adult daughter of Frederick R. Adler.

(6)
Includes the shares held of record by Longview Partners, L.P. (of which Mrs. Chapman is the general partner), 300 shares held in trusts for the benefit of Mrs. Chapman’s children and 26,767 shares held of record by Mrs. Chapman’s spouse.

(7)
Represents 100,000 shares issuable upon the exercise of stock options to purchase shares of our Common Stock that are exercisable within 60 days of March 23, 2010.

ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Certain Relationships and Related Transactions
 
On June 21, 2007, we issued a demand promissory note in favor of each of Mr. Frederick R. Adler, Mr. Joseph K. Pagano, D.H. Blair Investment Banking Corp. and Mr. Samuel A. Rozzi (together, the “Lenders”), evidencing loans extended to us in the principal amount of $50,000, $50,000, $50,000 and $30,000, respectively, by the Lenders, for an aggregate amount of $180,000. The promissory notes accrue interest at Citibank N.A.’s reported prime rate plus 3%, which is due and payable at the time the principal amount of each respective promissory note becomes due. The promissory notes had a maturity date of June 22, 2009, except that each Lender may demand the payment of all of the outstanding principal and interest of his or its respective promissory note at any time prior to the maturity date. At the time of the loan transaction, each of the Lenders was the beneficial owner of 5% or more of the outstanding shares of our Common Stock. In addition, Mr. Pagano is our Chief Executive Officer and the Chairman of our Board of Directors, and Mr. Adler is a member of our Board of Directors.  On May 9, 2008, in connection with the financing discussed below, (i) $24,675 of the outstanding amount of Mr. Pagano’s promissory note was applied to the subscriptions made by Mr. Pagano and a trust for the benefit of his son; and (ii) $54,425, the entire outstanding amount of D.H. Blair Investment Banking Corp.’s promissory note, including principal and accrued interest, was applied to the subscriptions made by three affiliates of D.H. Blair Investment Banking Corp. On May 16, 2008, Mr. Pagano made a demand for repayment of the remaining outstanding principal and interest of his promissory note.  On June 20, 2008, in connection with the second tranche of the financing discussed above (i) $30,000 of the outstanding principal amount of Mr. Rozzi’s promissory note was applied to the subscription made by Mr. Rozzi and he received a payment for $2,961 in accrued interest on July 10, 2008 and (ii) $53,740 of the outstanding amount of principal and accrued interest of Mr. Adler’s promissory note was applied to the subscription made by Mr. Adler and he received a payment for the remaining $1,195 in accrued interest.  All of the promissory notes have been cancelled and there are no amounts outstanding.
 
 
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As of March 10, 2008, we entered into a Revolving Credit Note with Mr. Joseph K. Pagano, our Chief Executive Officer and the Chairman of our Board of Directors, which provides for interest-free loans to the Company. Under the Revolving Credit Note, during March and April of 2008, Mr. Pagano made loans to the Company in the aggregate amount of $106,914, which were used to finance our operating activities. The Revolving Credit Note matures on March 10, 2009 and Mr. Pagano may demand the payment of all of the outstanding principal amount of all borrowings under the Revolving Credit Note at any time prior to the maturity date. Upon the occurrence of certain specified events, the entire outstanding balance of the borrowings under the Revolving Credit Note automatically becomes immediately due and payable. The total aggregate amount of $106,914 was applied to Mr. Pagano’s subscription in the Company’s financing that is discussed below. As of the date hereof, there are no borrowings outstanding under the Revolving Credit Note.
 
On May 9, 2008, we closed on a $750,000 financing, consisting of cash in the amount of $563,986 and the conversion of $186,013 of indebtedness. Participants in the financing entered into Subscription Agreements for an aggregate of 3,947,368 shares of common stock, based on the closing price of $0.19 per share of our common stock on the closing date. Issuance of the shares is subject to stockholder approval of the amendment to our Certificate of Incorporation to increase the number of shares of our authorized Common Stock, which was approved by the stockholders at our 2008 Annual Meeting which took place on June 24, 2008.
 
Ten of our largest stockholders (each holding 50,000 or more shares of our common stock) subscribed in the May 2008 financing, of which the following are holders of 5% or more of our common stock: Joseph K. Pagano, Frederick R. Adler, Longview Partners L.P., The Joseph A. Pagano Jr. 2007 Trust and Samuel A. Rozzi, who subscribed for $122,325, $109,350, $112,125, $100,350 and $95,775, respectively. Also, Mr. Pagano serves as our Chairman and Chief Executive Officer, and Mr. Adler is a member of our Board of Directors. The general partner of Longview Partners L.P. is Susan Chapman, an adult daughter of Mr. Adler.
 
Certain of the investors utilized the amounts outstanding under the June 2007 loans described above toward the payment for their subscription. All other amounts due to the Lenders may be repaid from the proceeds of the May 2008 financing to the extent that the loans are not applied our anticipated additional capital raise.
 
On June 20, 2008, we  closed on the second tranche of our  previously announced capital raising financing of up to $950,000. The second tranche was for up to $200,000 of which $145,980 was subscribed for, consisting of cash in the amount of $62,168 and the conversion of $83,740 of indebtedness. Participants in this second tranche of the financing entered into subscription agreements to purchase an aggregate of 767,936 shares of common stock, based on the closing price of $0.19 per share of the Company’s common stock on the closing date. The second tranche of financing closed on terms that are substantially similar in all material respects to the terms of the May 9, 2008 financing.
 
Six of our largest stockholders (each holding 50,000 or more shares of the Company's common stock) purchased shares in the second tranche of the financing, of which Messrs. Adler and Rozzi are holders of 5% or more of our common stock. Mr. Adler is also a director of the Company.
 
On July 9, 2008, we raised $54,020 of additional funds from the unsubscribed portion of the second tranche of the financing from two investors who participated in the June 20, 2008 closing and desired to exercise their over-allotment option.  We issued an aggregate of 337,424 shares of our common stock in connection with the over-allotment exercise, based on the closing price of $0.18 per share of our common stock on July 9, 2008 to Messrs. Rozzi and Serure.
 
 
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On October 26, 2009, we issued to each of four individuals who qualify as “accredited investors”, $50,000 principal amount of our subordinated convertible promissory notes (the “Notes”) (a total of $200,000 principal amount of Notes). The investors include our Chief Executive Officer and a member of our Board of Directors,  a beneficial owner of more than 10% of our common stock and another accredited investor. The  $50,000 principal amount of Notes issued to our Chief Executive Officer represented $25,000 of new funds received by us and a rollover of  a $25,000 loan made by him to us in  September 10, 2009.   Principal and accrued interest on the Notes are payable upon demand of the holders.  The Notes bear interest at the rate of 4% per annum.  The holders may convert the outstanding principal amount of the Notes and accrued and unpaid interest thereon into shares of our common stock at any time  at the conversion price then in effect on the conversion date.  We may prepay the Notes on 20 days prior written notice to the holders.  We have agreed to include the shares of common stock issuable upon conversion of the Notes in any applicable registration statement filed by us with the SEC covering our equity securities.
 
Review, Approval or Ratification of Transactions with Interested Persons
 
All transactions with related persons covered by Item 404(a) of Regulation S-K are reviewed by the full Board of Directors.  We do not have a written policy in respect of such review.
 
Director Independence
 
Our common stock trades on the OTCBB, which currently does not have director independence requirements. Messrs. Adler and Lundh have been deemed by our Board of Directors to be “independent” directors, as defined under the standards of independence set forth in the Marketplace Rules of the NASDAQ Stock Market, although these independent director standards do not directly apply to us because we do not have any securities that are listed on NASDAQ. As discussed above, Mr. Gresk is entitled to receive $500 per day for non-Board related services to the Company, in addition to reimbursement of his travel expenses.  Mr. Gresk may not be considered independent if he received in excess of $120,000 in a year from the Company.  For the year ended December 31, 2009, Mr. Gresk received no such payments.  In determining independence, the Board of Directors has determined, among other items, whether the directors have any relationship that would interfere with the exercise of independent judgment.  We do not expect to have an audit, nominating or compensation committee because we believe that our Board of Directors is capable of performing the respective functions of the foregoing committees as a result of our size.
                  
ITEM 14.                PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following table sets forth fees billed to us by our auditors during the fiscal years ended December 31, 2009 and 2008 for: (i) services rendered for the audit of our annual financial statements, (ii) services by our auditor that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees, (iii) services rendered in connection with tax compliance, tax advice and tax planning, and (iv) all other fees for services rendered.
 
   
December 31, 2008
   
December 31, 2009
 
(i) Audit Fees
  $ 40,000     $ 35,000  
(ii) Audit Related Fees
    -       -  
(iii) Tax Fees
    -       -  
(iv) All Other Fees
    -         -    
                 
Total Fees
  $ 40,000     $ 35,000  

Audit Fees
 
Audit fees consist of fees billed for professional services rendered for the audit of our financial statements and services that are normally provided by Raich Ende Malter & Co. LLP in connection with statutory and regulatory filings or engagements.
 
 
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Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
 
We currently do not have a designated audit committee, and accordingly, our Board of Directors’ policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. The independent auditors are required to periodically report to our Board of Directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. During 2009, all of the audit fees were pre-approved by our Board of Directors.
 
 
35

 

PART IV

ITEM 14.             EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit
 
Description
3.1
 
Certificate of Incorporation of SentiSearch, Inc.(1)
     
3.1.1
 
Certificate of Amendment to Certificate of Incorporation of SentiSearch, Inc. dated June 24, 2008, incorporated by reference to Exhibit 3.1 on SentiSearch’s Form 8-K filed on June 26, 2008.
     
3.2
 
Bylaws of SentiSearch, Inc.(1)
     
4.1
 
Specimen Common Stock Certificate of SentiSearch, Inc.(2)
     
10.1
 
Exclusive License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly known as Sentigen Corp.), and The Trustees of Columbia University in the City of New York.(1)
     
10.2
 
Consent to the Assignment to SentiSearch, Inc. of the Exclusive License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly known as Sentigen Corp.), and The Trustees of Columbia University in the City of New York: (1) Letter dated September 25, 2006 by Sentigen Biosciences, Inc. requesting consent to assignment of the Exclusive License Agreement, and (2) Letter dated October 17, 2006 by Columbia University granting consent to the assignment of the Exclusive License Agreement.(1)
     
10.3
 
Separation and Distribution Agreement, dated as of October 10, 2006, between Sentigen Holding Corp. and SentiSearch, Inc.(1)
     
10.4
 
Contribution Agreement, dated as of October 10, 2006, between Sentigen Holding Corp. and SentiSearch, Inc.(1)
     
10.5
 
Patent Assignment, dated October 10, 2006, by Sentigen Holding Corp. to SentiSearch, Inc.(1)
     
10.6
 
Form of Indemnification Agreement.(1)
     
10.7
 
Option Agreement dated May 16, 2007 by and between Erik R. Lundh and SentiSearch, Inc., incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on May 18, 2007.
     
10.8
 
Form of Demand Promissory Note, incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on June 22, 2007.
     
10.9
 
Revolving Credit Note, dated as of March 10, 2008, incorporated by reference to Exhibit 10.1 to SentiSearch’s on Form 10-Q filed for the Quarter Ending March 31, 2008.
     
10.10
 
Form of Subscription Agreement, incorporated by reference to Exhibit 10.1 to  SentiSearch’s Form 8-K filed on May 15, 2008.
     
10.11
 
Revolving Credit Note dated as of March 10, 2008, incorporated by reference to SentiSearch’s Exhibit 10.1 on Form 8-K filed on May 15, 2008.
     
10.12
 
Form of Subscription Agreement, incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on June 26, 2008.

 
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10.13
 
Sublease dated as of June 16, 2009 between SentiSearch and Muriel Siebert & Co., Inc., incorporated by reference to Exhibit 10.1, to SentiSearch’s Quarterly Report Form 10-Q for the Quarter Ended September 30, 2009.
     
10.14
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of Samuel Rozzi.*
     
10.15
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of  Frederick R. Adler.*
     
10.16
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of  Joseph K. Pagano.*
     
10.17
 
Subordinated Convertible Promissory Note made by Sentisearch in favor of  Rosalind Davidowitz.*
     
10.18
 
Stock Option Agreement between SentiSearch and Dean R. Gresk dated as of October 20, 2009.*
     
31
 
Certification of Chief Executive and Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.*
     
32
 
Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 

(1)
Incorporated by reference to SentiSearch’s Registration Statement on Form 10-SB filed with the SEC on November 15, 2006. File No. 000-52320.

(2)
Incorporated by reference to SentiSearch’s Registration Statement on Amendment No. 1 to Form 10-SB filed with the SEC on November 29, 2006. File No. 000-52320.
 
*  Filed herewith.

 
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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
SENTISEARCH, INC.
     
Date: March 31, 2010
By: 
/s/ Joseph K. Pagano
   
Joseph K. Pagano,
Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:  
 
Name
 
Title
 
Date
         
/s / Joseph K. Pagano
       
Joseph K. Pagano
  
Chief Executive Officer, Secretary and Treasurer
Chairman of the Board, Principal Executive
Officer and Principal Financial and Accounting
Officer
 
March 31, 2010
         
/s/ Frederick R. Adler
       
Frederick R. Adler
  
Director
 
March 31, 2010
         
/s/ Dean R. Gresk
       
Dean R. Gresk
  
Director
 
March 31, 2010
         
/s/ Erik R. Lundh
       
Erik R. Lundh
  
Director
 
March 31, 2010

 
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EXHIBIT INDEX

Exhibit
 
Description
3.1
 
Certificate of Incorporation of SentiSearch, Inc.(1)
     
3.1.1
 
Certificate of Amendment to Certificate of Incorporation of SentiSearch, Inc. dated June 24, 2008, incorporated by reference to Exhibit 3.1 on SentiSearch’s Form 8-K filed on June 26, 2008.
     
3.2
 
Bylaws of SentiSearch, Inc.(1)
     
4.1
 
Specimen Common Stock Certificate of SentiSearch, Inc.(2)
     
10.1
 
Exclusive License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly known as Sentigen Corp.), and The Trustees of Columbia University in the City of New York.(1)
     
10.2
 
Consent to the Assignment to SentiSearch, Inc. of the Exclusive License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly known as Sentigen Corp.), and The Trustees of Columbia University in the City of New York: (1) Letter dated September 25, 2006 by Sentigen Biosciences, Inc. requesting consent to assignment of the Exclusive License Agreement, and (2) Letter dated October 17, 2006 by Columbia University granting consent to the assignment of the Exclusive License Agreement.(1)
     
10.3
 
Separation and Distribution Agreement, dated as of October 10, 2006, between Sentigen Holding Corp. and SentiSearch, Inc.(1)
     
10.4
 
Contribution Agreement, dated as of October 10, 2006, between Sentigen Holding Corp. and SentiSearch, Inc.(1)
     
10.5
 
Patent Assignment, dated October 10, 2006, by Sentigen Holding Corp. to SentiSearch, Inc.(1)
     
10.6
 
Form of Indemnification Agreement.(1)
     
10.7
 
Option Agreement dated May 16, 2007 by and between Erik R. Lundh and SentiSearch, Inc., incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on May 18, 2007.
     
10.8
 
Form of Demand Promissory Note, incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on June 22, 2007.
     
10.9
 
Revolving Credit Note, dated as of March 10, 2008, incorporated by reference to Exhibit 10.1 to SentiSearch’s on Form 10-Q filed for the Quarter Ending March 31, 2008.
     
10.10
 
Form of Subscription Agreement, incorporated by reference to Exhibit 10.1 to  SentiSearch’s Form 8-K filed on May 15, 2008.
     
10.11
 
Revolving Credit Note dated as of March 10, 2008, incorporated by reference to SentiSearch’s Exhibit 10.1 on Form 8-K filed on May 15, 2008.
     
10.12
 
Form of Subscription Agreement, incorporated by reference to Exhibit 10.1 to SentiSearch’s Form 8-K filed on June 26, 2008.
     
10.13
 
Sublease dated as of June 16, 2009 between SentiSearch and Muriel Siebert & Co., Inc., incorporated by reference to Exhibit 10.1, to SentiSearch’s Quarterly Report Form 10-Q for the Quarter Ended September 30, 2009.
     
10.14
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of Samuel Rozzi.*

 
39

 

10.15
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of  Frederick R. Adler.*
     
10.16
 
Subordinated Convertible Promissory Note made by SentiSearch in favor of  Joseph K. Pagano.*
     
10.17
 
Subordinated Convertible Promissory Note made by Sentisearch in favor of  Rosalind Davidowitz.*
     
10.18
 
Stock Option Agreement between SentiSearch and Dean R. Gresk dated as of October 20, 2009.*
     
31
 
Certification of Chief Executive and Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.*
     
32
 
Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 

(1)
Incorporated by reference to SentiSearch’s Registration Statement on Form 10-SB filed with the SEC on November 15, 2006. File No. 000-52320.

(2)
Incorporated by reference to SentiSearch’s Registration Statement on Amendment No. 1 to Form 10-SB filed with the SEC on November 29, 2006. File No. 000-52320.

*  Filed herewith.

 
40

 
 
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