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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No.  333-140236
 
ZENTRIC, INC.
(Exact name of small business issuer as specified in its charter)
 
Nevada
   
 (State or other jurisdiction of  Incorporation or organization)
 
(I.R.S. Employer Identification No.)

Unit C2, 802 Southdown Road,
Mississauga, Ontario, Canada, L5J 2Y4
 (Address of Principal Executive Offices)

(416) 245-8000
 (Issuer’s telephone number)

 (Former name, address and fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15 (d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court.  
Yes o No 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 filer.  See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
 
Large Accelerated Filer   o
Accelerated Filer   o
Non-Accelerated Filer   o Smaller Reporting Company   x
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 21, 2012:  110,775,827 shares of common stock.
 
Transitional Small Business Disclosure Format  Yes o No x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o No x
 


 
 

 
 
TABLE OF CONTENTS
 
PART I FINANCIAL INFORMATION      
         
Item 1. Financial Statements     3  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations     14  
Item 3 Quantitative and Qualitative Disclosures About Market Risk     16  
Item 4T. Control and Procedures     16  
           
PART II-- OTHER INFORMATION        
           
 Item 1
Legal Proceedings
    17  
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    17  
 Item 3.
Defaults Upon Senior Securities
    17  
 Item 4.
Submission of Matters to a Vote of Security Holders
    17  
 Item 5.
Other Information
    17  
 Item 6.
Exhibits and Reports on Form 8-K
    17  

 
2

 
 
ZENTRIC, INC.
(A Development Stage Company)
BALANCE SHEETS
(unaudited)

 
   
March 31, 2012
   
December 31, 2011
 
ASSETS
           
Current Assets
           
     Cash
 
$
1,688
   
$
1,446
 
  Total Current Assets
   
1,688
     
1,446
 
                 
     Deposit
   
88,226
     
-
 
  Total Assets
 
$
89,914
   
$
1,446
 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
Current Liabilities
               
                 
Accounts payable and accrued liabilities
 
$
54,084
   
$
47,305
 
Advances from shareholder
   
246,852
     
127,151
 
Accrued salaries
   
79,200
     
78,800
 
Note payable
   
7,018
     
7,018
 
                 
Total Liabilities
   
387,154
     
260,274
 
                 
Stockholders' Deficit
               
Common stock, $0.001 par value, 500,000,000 shares authorized; 110,775,827 and 99,575,827 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
   
110,777
     
99,577
 
Additional paid-in capital
   
1,535,845
     
1,292,919
 
Stock Payable
   
-
     
20,000
 
Deficit accumulated during the development stage
   
(1,943,862
)
   
(1,671,324)
 
                 
  Total Stockholders' Deficit
   
(297,240)
     
(258,828)
 
                 
  Total Liabilities and Stockholders' Deficit
 
$
89,914
   
$
1,446
 

The accompanying notes are an integral part to these financial statements.
 
 
3

 
 
ZENTRIC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

 
   
Three Months Ended
March 31, 2012
   
Three Months Ended
March 31, 2011
   
For The Period From July 21, 2008 (Inception) to
March 31, 2012
 
           
REVENUE
  $ -     $ -     $ -  
EXPENSES
                       
Office and General
    33,886       7,002       123,391  
Professional fees
    3,000       4,059       68,972  
Consulting and subcontracting
    226,526       10,869       1,292,891  
R&D expense
    -       -       38,758  
Compensation Expense
    -       -       9,860  
Gain/loss on stock issued
    -       -       114,943  
Bank charges
    604       27       1,709  
                         
Operating Expense
    264,016       21,957       1,650,524  
Other Expenses
                       
Interest Expense
    7,414       5,254       58,897  
Impairment on Investment
    -       -       233,333  
Foreign exchange translation
    1,108       -       1,108  
Total Other Expense
    8,522       5,254       293,338  
NET LOSS
  $ (272,538 )   $ (27,211 )   $ (1,943,862 )
LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING BASIC AND DILUTED
  $ (0.00 )   $ (0.00 )        
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC AND DILUTED
    110,775,827       60,973,219          

The accompanying notes are an integral part to these financial statements.
 
 
4

 
 
ZENTRIC, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

 
   
Three Months Ended
March 31, 2012
   
Three Months Ended
March 31, 2011
   
For The Period From July 21, 2008 (Inception) to
March 31, 2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
Net loss
  $ (272,538 )   $ (27,211 )   $ (1,943,862 )
Adjustment to reconcile net loss to net cash used in operating activities:
                       
Common stock issued for services
    25,000       -       844,365  
Options issued for services
                    11,757  
Impairment on investment
                    233,333  
Loss on conversion of debt
    -       -       114,943  
Interest payable - related party loans
    7,114       -       8,178  
Imputed interest on advance from shareholder
    2,012       1,141       26,991  
Amortization on note discount
    -       -       2,125  
Changes in operating assets and liabilities:
                       
    Prepaid Expenses
    -       100       -  
Accounts payable and accrued liabilities
    7,179       (12,263 )     153,439  
NET CASH USED IN OPERATING ACTIVITIES
    (231,233 )     (38,233 )     (548,731 )
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Cash paid for down payment of solar panels
    (88,226 )     -       (88,226 )
CASH USED FOR INVESTING ACTIVITIES
    (88,226 )     -       (88,226 )
CASH FLOWS FROM FINANCING ACTIVITIES
                       
Proceeds from issuance of common stock
    200,000       -       226,795  
Advances from related party
    119,701       35,590       281,832  
Borrwings on debt - related party
    -       -       130,018  
                         
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES
    319,701       35,590       638,645  
NET INCREASE (DECREASE) IN CASH
    242       (2,643 )     1,688  
CASH, BEGINNING OF PERIOD
    1,446       3,367       -  
CASH, END OF PERIOD
  $ 1,688     $ 724     $ 1,688  

The accompanying notes are an integral part to these financial statements.
 
 
5

 
 
ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012 (unaudited)
 
1.     ORGANIZATION AND BASIS OF PRESENTATION

Constant Environment, Inc. (the "Company"), was incorporated on July 21, 2008, under the laws of the State of Nevada as an early stage product and services company that provides microclimate systems to specialty markets, who have a need to protect and preserve rare and/or valuable items. The Company is a development stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities.

On December 16, 2009 the Board of Directors of Constant Environment, Inc. (the “Company”) filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of Nevada changing the Company’s name to Zentric, Inc

On, November 16, 2011, Zentric, Inc. established a wholly-owned subsidiary in Hong Kong, China. During the first quarter ended March 31, 2012, the company transfered $90,000 USD to its subsidiary company.  The cash transfer was used to as a down payment to purchase solar panels.

2.     GOING CONCERN
 
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.  The Company suffered a net loss from operations and has a net deficiency, which raises substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
 
The Company's ability to continue as a going concern is contingent upon its ability to complete public equity financing and generate profitable operations in the future.  Management's plan in this regard is to secure additional funds through equity financing and through loans made by the Company's stockholders.
 
3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
a)  
Basis of Presentation and Principles of Consolidation
 
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The financial statements include the accounts of the Company and its subsidiary, Zentric HK Limited, a limited liability company in Hong Kong. All significant intercompany transactions have been eliminated as part of the consolidation.  The Company’s fiscal year-end is December 31.
 
 
6

 

b)  
Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the  carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c)  
Cash and cash equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.  As at March 31, 2012 and December 31, 2011, the Company had no cash equivalents.
 
d)  
Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at December 31, 2011 and 2010, the Company had no potentially dilutive shares.

e)  
Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Foreign currency transactions from subsidiary are primarily undertaken in Hong Kong Dollar. Foreign currency transactions are translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.  As of March 31, 2012, the company recorded a loss of $1,108 due to foreign exchange translation in the income statement under other expenses.

f)  
Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
 
 
7

 

Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or  Liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
 
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

g)  
 Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
 
h)  
Recent Accounting Pronouncements

Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on January 1, 2012. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial position or results of operations.
 
 
8

 

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on January 1, 2012. We are currently evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year of adoption. The Company does not expect that the guidance effective in future periods will have a material impact on its financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operation
 
4.     STOCKHOLDERS’ EQUITY
 
Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company’s ability to pay dividends on its common stock. The Company has not declared any dividends since incorporation.
 
On July 23, 2008, we issued a total of 40,000,000 shares (adjusted retroactively for 4:1 split) worth $10,000 to Jeff Mak for services rendered as our founder with respect to the incorporation and set-up of Constant Environment. Such shares were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933. Mr. Mak is deemed our founder and promoter.
 
On August 20, 2008, we issued 2,000,000 shares (adjusted retroactively for 4:1 split) to Ka Leung Mak for business development services in China. Such shares were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933.
 
On August 25, 2008, we issued 2,000,000 shares (adjusted retroactively for 4:1 split) to Kwok Kwong Chan for services as a director/secretary. Such shares were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933.
 
On August 25, 2008, we issued 2,000,000 shares (adjusted retroactively for 4:1 split) to Domenic Macchione for sales and marketing services. Such shares were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933.
 
For the period ended December 31, 2008, we issued 2,718,000 shares (adjusted retroactively for 4:1 split) of common stock to 40 investors in a private placement.  The consideration paid for such shares was $0.01 per share, amounting in the aggregate to $6,795.
 
 
9

 
 
A 4 for 1 forward split of our common stock was deemed effective on August 5, 2009.  The Company had 12,179,500 shares outstanding prior to the split, and will have 48,878,000 shares outstanding following the split.
 
On July 27, 2009 the Company entered into a Loan Agreement with Lucilla Ho wherein she agreed to loan the Company $20,000 and she will receive 5,000 shares of the Company’s common stock. Such shares shall be restricted in accordance with Rule 144 of the Securities Act of 1933.  The shares were value at the last sell price of common stock for cash at $0.01 and treated as a discount on the note.
 
On August 7, 2009 the Company entered into a Loan Agreement with 1456146 Ontario Limited of which Fred Lai is the principal.  The 1456146 Ontario Limited agreed to loan the Company $50,000 and 1456146 Ontario Limited will receive 100,000 shares of the Company’s common stock. Such shares shall be restricted in accordance with Rule 144 of the Securities Act of 1933.  The shares were value at the last sell price of common stock for cash at $0.01 and treated as a discount on the note.
 
On August 15, 2009 the Company entered into a Loan Agreement with Ricky Wu wherein he agreed to loan the Company $20,000 and he will receive 40,000 shares of the Company's common stock. Such shares shall be restricted in accordance with Rule 144 of the Securities Act of 1933. The shares were value at the last sell price of common stock for cash at $0.01 and treated as a discount on the note.
 
On March 25, 2010 we entered into a Loan Agreement with a shareholder wherein they agreed to loan us $25,000 and received 50,000 shares of our common stock as an incentive for providing the loan.  The shares were value at the last sell price of common stock for cash at $0.01 and treated as a discount on the note.

On October 1, 2010, holders of the Company’s notes elected to convert loans into 2,365,219 shares of our common stock for $47,130 of principal and interest.  Shares were valued based on fair market value of conversion and as a result the company recorded a loss of $73,321on conversion of debt.

On October 1, 2010, the Company issued 9,200,000 shares of our common stock for $460,000 consulting services.  Shares were valued based on fair market value on the date of authorization.

On December 1, 2010, the Company’s board of directors declared to issue 230,000 shares of our common stock for $23,000 consulting services.  Shares were valued based on fair market value on the date of authorization.

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $25,000 principal and $4,749 accrued interest by issuing 1,982,258 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $41,627 based on the closing price per share, resulting in a loss of extinguishment of debt of $11,899.

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $50,000 principal and $14,903 accrued interest by issuing 4,326,876 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $90,864 based on the closing price per share, resulting in a loss of extinguishment of debt of $25,961.

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $8,000 principal and $1,402 accrued interest by issuing 626,807 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $13,163 based on the closing price per share, resulting in a loss of extinguishment of debt of $3,761.
 
 
10

 

On July 20, 2011, Zentric, Inc. (“Company”) completed its Share Exchange Agreement with Ontex Holdings Limited, a Hong Kong Company (“Ontex”), pursuant to which the Company agreed to issue to Ontex 10,000,000 shares of common stock. In exchange, Ontex will issue to the Company 2,000,000 shares of Alpha Lujo, Inc. held by Ontex. Alpha Lujo, Inc.’s common stock is publicly traded on the OTC-BB. The share exchange was valued at $140,000 as an investment by the Company.  On the same day the Company also completed the Share Exchange Agreement with Alpha Lujo, Inc. (“Alpha Lujo”), pursuant to which the Company agreed to issue to Alpha Lujo 6,666,667 shares of its common stock in exchange for 800,000 shares of common stock of Alpha Lujo.  Based on Alpha Lujo’s most recent filing of their period ended March 31, 2011, the company has a total of 200,000,000 shares authorized and 23,244,000 shares issued and outstanding.  Based on the 2,800,000 shares the Company received, that equates to 1.4% of total authorized and 12% of total outstanding.  In both instances, it is less than 20% of total equity of Alpha Lujo’s shares, therefore, does not warrant consolidation treatment of the two companies and should be accounted for as an investment and evaluated for impairment periodically.
 
The share exchange was valued at $93,333 as an investment by the Company. The share exchange does not change the control of the Company.  The total value of $233,333 as of the July 20, 2011 was value as an investment assets and evaluated for impairment as of December 31, 2011.  Based on evaluation, the company found it appropriate to impair the assets based on the following reason:
 
-  
Company had negative cash flow; and
-  
Company only assets is Cash; and
-  
Low volume in share trading for the past 12 months; and
-  
Company has no revenue stream

On July 14, 2011, the Company completed and authorized the issuance of 15,000,000 common shares for services. The total fair value of the common stock was $232,500 based on the closing price of the Company’s stock on the date of grant.

On December 20, 2011, Zentric, Inc. entered into a subscription agreement to issue 11,000,000 common shares for $220,000 cash investment into the Company. The company received $20,000 as of December, 2011 and the remaining $200,000 was collected during the quarter ended March 31, 2012.

On February 13, 2012, the Company completed and authorized the issuance of 200,000 common shares for services. The total fair value of the common stock was $25,000 based on the closing price of the Company’s stock on the date of grant.

During fiscal year 2011, the company granted to an officer/director of the company to acquire 3,000,000 common shares, 1,000,000 vested December 31, 2011 at $0.03 per share; the remaining 2,000,000 will vest on December 31 2012 and 2013 at price of $0.10, and $0.25 per share, respectively. The options have a vesting period of three years or ninety days from termination of employment. The company valuated such options using the Black-Scholes Valuation Model. The options have an expected volatility rate of 282.71% calculated using the Company stock price for a two-year period beginning December 31, 2011. A risk free interest rate of 0.19% was used to value the options. The total value of these options was $25,841, out of the total value the company expensed $9,745 and $2,012 as of December 31, 2011 and March 31, 2012, respectively.  As of March 31, 2012, the remaining $14,084 remain unvested.

Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company's ability to pay dividends on its common stock. The Company has not declared any dividends since incorporation. 
 
 
11

 

5.  
RELATED PARTY TRANSACTIONS

Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties. Related party transactions not disclosed elsewhere in these financial statements are as follows:

The Company have received cash advanced of $119,701 and $281,832 for the three months ended March 31, 2012 and from inception to March 31, 2012, respectively from directors and shareholders.

Interest has been imputed at 15% resulting in interest expense of $7,114 and $26,991 for the three months ended March 31, 2012 and from July 21, 2008 (Inception) to March 31, 2012 respectively.  
 
6.  
 NOTES PAYABLE

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $25,000 principal and $4,749 accrued interest by issuing 1,982,258 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $41,627 based on the closing price per share, resulting in a loss of extinguishment of debt of $11,899.

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $50,000 principal and $14,903 accrued interest by issuing 4,326,876 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $90,864 based on the closing price per share, resulting in a loss of extinguishment of debt of $25,961.

On May 18, 2011 the Company received Conversion Notice from note holder to settle outstanding debt of $8,000 principal and $1,402 accrued interest by issuing 626,807 shares of common stock at a price of $0.015 per share.  The total fair value of the shares was $13,163 based on the closing price per share, resulting in a loss of extinguishment of debt of $3,761.

Interest accrual for all loans outstanding as of March 31, 2012 and December 31, 2011 are $1,052 and $752 respectively.
 
7.  
CONTINGINCIES

No legal proceedings are currently pending or, to our knowledge, threatened against us that, in the opinion our management, could reasonably be expected to have a material adverse effect on our business or financial conditions or results of operations.

8.  
DEPOSIT

During the quarter ended March 31, 2012, the company paid approximately 5% in deposit for solar panels.  The total purchase price is $1,740,000, whereby, the company has to remit the remaining 95% payment prior to completion and shipment of the solar panels.  As of March 31, 2012, the company paid $88,226 and recorded as a long-term asset in the balance sheet.  The solar panels will be used toward a project to build an 800KW solar power plant in Leicester, North Carolina.
 
 
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9.  
IMPAIRMENT AVAILABLE-FOR-SALE SECURITIES

On July 20, 2011, Zentric, Inc. (“Company”) completed its Share Exchange Agreement with Ontex Holdings Limited, a Hong Kong Company (“Ontex”), pursuant to which the Company agreed to issue to Ontex 10,000,000 shares of common stock. In exchange, Ontex will issue to the Company 2,000,000 shares of Alpha Lujo, Inc. held by Ontex. Alpha Lujo, Inc.’s common stock is publicly traded on the OTC-BB. The share exchange was valued at $140,000 as an investment by the Company.  On the same day the Company also completed the Share Exchange Agreement with Alpha Lujo, Inc. (“Alpha Lujo”), pursuant to which the Company agreed to issue to Alpha Lujo 6,666,667 shares of its common stock in exchange for 800,000 shares of common stock of Alpha Lujo.  Based on Alpha Lujo’s most recent filing of their period ended March 31, 2011, the company has a total of 200,000,000 shares authorized and 23,244,000 shares issued and outstanding.  Based on the 2,800,000 shares the Company received, that equates to 1.4% of total authorized and 12% of total outstanding.  In both instances, it is less than 20% of total equity of Alpha Lujo’s shares, therefore, does not warrant consolidation treatment of the two companies and should be accounted for as an investment and evaluated for impairment periodically. The total value of $233,333 as of the July 20, 2011 was value as an investment assets and evaluated for impairment as of December 31, 2011.  Based on evaluation, the company found it appropriate to impair the assets based on the following reason:

-  
Company had negative cash flow; and
-  
Company only assets is Cash; and
-  
Low volume in share trading for the past 12 months; and
-  
Company has no revenue stream

As of December 31, 2011, due to the above factors, the company has recorded a loss on impairment of securities available-for-sale in the amount of $233,333 under other expense in the statement of operations.
 
10.  
 SUBSEQUENT EVENTS

On April 4, 2012, Zentric (HK) Limited, a wholly owned subsidiary of Zentric, Inc., has withdrawn from the EPC Agreement dated January 7, 2012 with Matinee Energy, Inc. to build a 20MWdcp solar power plant in Benson Arizona.

On April 10, 2012, Zentric, Inc. has entered into an Agreement to purchase Innovative Solar I, LLC and Innovative Solar II, LLC, each the owner/developer of separate 800KW solar power plants in Leicester, North Carolina valued at $4 million each to build.
 
 
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Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion and analysis should be read in conjunction with our Financial Statements and notes appearing elsewhere in this report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements.  Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this report. Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
Zentric, Inc. (the "Company"), was incorporated on July 21, 2008, under the laws of the State of Nevada as Constant Environment, Inc. and changed it’s name to Zentric, Inc. on December 16, 2009. The company is an advanced battery technology company based on a new and revolutionary technology that incorporates high voltages dual electrolytes to produce higher voltages and power.
 
On, November 16, 2011, Zentric, Inc. established a wholly-owned subsidiary in Hong Kong, China. Zentric, Inc. has become actively involved in solar project development through this subsidiary. On April 10, 2012, Zentric, Inc. has entered into an Agreement to purchase Innovative Solar I LLC and Innovative Solar II, LLC, each the owner/developer of separate 800KW solar power plants in Leicester, North Carolina valued at $4 million each to build.

Business Division

The business of “Constant Environment” remains as a division of Zenrtic. The division is a separate business that provides microclimate systems to specialty markets, who have a need to protect and preserve rare and/or valuable items.  

Employees

Presently our two officers are contributing their services without payment and certain consultants have accepted shares for services.
 
In the future, we plan to hire five full time employees and two part-time employees. From time to time, we may employ additional independent contractors to support our development, marketing, sales, support and administrative organization. We also intend to hire 2 sales/marketing staff, 1 administrative assistant, and 2 microclimate technicians. Competition for qualified personnel in the industry in which we compete is intense. We believe that our future success will depend in part on our continued ability to attract, hire or acquire and retain qualified employees.
 
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND MARCH 31, 2011.

The Company did not generate any revenues for the three months ended March 31, 2012 and March 31, 2011.

Professional fees include legal and accounting fees and filing fees. Professional fees for the three months ended March 31, 2012 and March 31, 2011 was $3,000 and $4,059 respectively.

Consulting and subcontracting fees for the three months ended March 31, 2012 and March 31, 2011 was $226,526 and $10,869 respectively.
 
 
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Office and general expense for the three months ended March 31, 2012 and March 31, 2011 was $33,886 and $7,002 respectively.

Interest expense for the three months ended March 31, 2012 and March 31, 2011 was $7,414 and $5,254 respectively.

Bank charges expense for the three months ended March 31, 2012 and March 31, 2011 was $604 and $27 respectively.

Net loss for the three months ended March 31, 2012 and March 31, 2011 was $272,538 and $27,211 respectively. The loss was primarily due to the consulting fees, professional fees and interest expenses.

Loss per share was $0.00 for the three months ended March 31, 2012 and March 31, 2011.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2012, we had a working capital deficiency of $385,466, which represented a working capital decrease of $126,638 as compared to the working capital deficiency position of $258,828 as of December 31, 2011. The decrease is mainly due to the increase of our accounts payable. We raised $220,000 from issuance of 11,000,000 shares of common stock during the quarter ended March 31, 2012, of which $20,000 was received on December 2011 and the remaining $200,000 was received during the quarter ended March 31, 2012.
 
Cash flows used in operating activities for the three month period ended March 31, 2012and 2011 was $231,233 and $38,233 respectively.

Cash flows used in investing activities for the three month period ended March 31, 2012and 2011 was $88,226 and $0 respectively.

Cash flows provided by financing activities for the three month period ended March 31, 2012 and 2011 was $319,701 and $35,590, respectively, which was due to loans.

GOING CONCERN

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our audited financial statements for the period ended December 31,2011, our independent registered public accountants included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
  
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our most critical accounting policies, which are those that require significant judgment, include: income taxes and revenue recognition. In-depth descriptions of these can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. There have been no material changes in our existing accounting policies from the disclosures included in our 2011 Annual Report on Form 10-K.
 
 
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OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Item 3.   Quantitative and Qualitative Disclosures about Market Risks

We conduct our business in United States dollars. Our market risk is limited to the United States domestic, economic and regulatory factors.

Item 4T. Controls and Procedures
 
Management's evaluation of disclosure controls and procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2012, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on April 17, 2012, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.

Changes in Internal Controls

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting. 
 
 
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PART II – OTHER INFORMATION
 
Item 1.   Legal Proceedings.
 
None
 
Item 2.   Changes in Securities.
 
None
 
Item 3.   Defaults Upon Senior Securities.
 
None
 
Item 4.   Mine Safety Disclsoures
 
None.
 
Item 5.   Other Information
 
None
 
Item 6.   Exhibits and Reports on Form 8-K
 
 (A)            Exhibits
 
31.1  
Certification Pursuant to 18 U.S.C Section 1350, As adopted pursuant to Section 302 of the Sabanes-Oxley Act of 2002
   
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
17

 
 
(B)  Reports on Form 8-K
 
Form 8-K Filed on November 18, 2011, reporting that Zentric (HK) Limited, a wholly owned subsidiary of Zentric, Inc. entered into a strategic partnership with Lightway Australia Pty Ltd. to form Zentric Solar, Inc. Zentric, Inc. will hold a 35% equity interest in the new partnership while Lightway Australia Pty Ltd retains a 60% equity interest with the balance of 5% owned by Commerce King Limited.
 
Form 8-K Filed on January 18, 2012 reporting that on January 9, 2012 the Board of Directors of Zentric, Inc. filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of Nevada increasing the authorized number of common shares to 500,000,000.
 
Form 8-K Filed on March 20, 2012, Zentric (HK) Limited, a wholly owned subsidiary of Zentric, Inc. entered into an EPC agreement with Matinee Energy, Inc. for construction by Zentric, Inc. of the solar power plants for 20MWdcp (U$72M) in Benson, Arizona, as part of the aggregated 120 MWdcp of plants using a part of the larger site (1200 acres).
 
Form 8-K Filed on April 4, 2012, Zentric (HK) Limited, a wholly owned subsidiary of Zentric, Inc., has withdrawn from the EPC Agreement dated January 7, 2012 with Matinee Energy, Inc. to build a 20MWdcp solar power plant in Benson Arizona.
 
Form 8-K Filed on April 10, 2012, Zentric, Inc. has entered into an Agreement to purchase Innovative Solar I LLC and Innovative Solar II, LLC, each the owner/developer of separate 800KW solar power plants in Leicester, North Carolina valued at $4 million each to build.
 
 
18

 
 
SIGNATURES
 
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 
ZENTRIC, INC.
 
 
Registrant
 
     
Date: May 21, 2012
By: /s/ Jeff Mak
 
 
Jeff Mak
 
 
Chairman, Chief Financial Officer,
Principal Accounting Officer and Director
 
 
 
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