Syndication Net Com (SYCI) 10QSB 2007 Q2 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the quarterly period ended June 30, 2007

or

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

EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________ 

Commission file number 0-28955

SYNDICATION, INC.

(Exact name of registrant as specified in its charter)

Delaware	57-2218873
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1250 24th Street, NW

Suite 300

Washington, D.C. 20037

(Address of principal executive offices (zip code))

(202) 467-2788

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12-b2 of the Exchange Act).

Yes  o  No x

At August 17, 2007, there were 266,846,589 shares of common stock, $0.0001 par value per share, issued and outstanding.

Transitional Small Business Disclosure Format (Check One): Yes  o  No x

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets

ASSETS

	June 30,			December 31,
	2007			2006
	(Unaudited)
CURRENT ASSETS
Cash	$	20,062		$	205,561
Prepaid expenses		7,769			-
		-			-
Total Current Assets		27,831			205,561
Property and equipment		95,246			-
Accumulated depreciation		(3,402	)		-
		-			-
Net Property and equipment		91,844			-
Other Assets		212			-
Debt Offering Costs		165,521			165,521
Less:Accumulated Amortization Debt Offering Costs		(75,783	)		(48,197	)
Total Other Assets		89,950			117,324
TOTAL ASSETS	$	209,625		$	322,885

The accompanying notes are an integral part of these consolidated financial statements.

2

SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets (Continued)

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

	June 30,			December 31,
	2007			2006
	(Unaudited)
CURRENT LIABILITIES
Accounts payable	$	38,667		$	48,803
Accounts payable - related party		134,203			28,497
Capital lease obligation - current		14,061			-
Note payable - related party		368,937			368,937
Interest payable - related party		61,565			128,377
Note payable		138,011			138,011
Interest payable		50,457			45,985
Interest payable - convertible debenture		185,555			123,099
Obligations under capital lease- current portion
Directors fee accrued		-			48,040
Derivative Liability		4,824,839			2,614,266
Total Current Liabilities		5,816,296			3,544,015
LONG TERM LIABILITIES
Obligations under capital lease		68,629			-
Convertible Debenture		1,032,000			1,074,300
Debt discount net of amortization		(538,281	)		(746,146	)
Total Long Term Liabilities		562,348			328,154
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, no shares issued and outstanding		-			-
Common stock: 3,000,000,000 shares authorized of $0.0001
par value, 266,846,589 shares issued and
outstanding respectively		26,685			13,748
Additional paid-in capital		4,847,489			4,670,745
Stock subscriptions payable		-			2,500
Stock warrants payable		8,231			2,460
Deficit accumulated prior to the development stage		(2,231,519	)		(2,231,519	)
Deficit accumulated during the development stage		(8,819,905	)		(6,007,218	)
Total Stockholders’ Equity (Deficit)		(6,169,019	)		(3,549,284	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	209,625		$	322,885

The accompanying notes are an integral part of these consolidated financial statements.

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SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

														From inception
														of the
														Development stage on
		For the Three Months Ended						For the Six Months Ended						January 1, 2004
		June 30						June 30,						through
		2007			2006			2007			2006			June 30, 2007
OPERATING EXPENSES
Bad debt expense (recovered)		(20,000	)		6,750			(20,000	)		56,314			383,916
General and administrative		42,544			88,534			69,886			101,373			1,064,308
Consulting		72,000			22,880			144,000			68,805			1,971,267
Total Operating Expenses		94,544			118,164			193,886			226,492			3,419,491
OPERATING LOSS		(94,544	)		(118,164	)		(193,886	)		(226,492	)		(3,419,491	)
OTHER INCOME (EXPENSES)
Amortization of debt discount		(173,634	)		(145,741	)		(207,865	)		(145,741	)		(757,460	)
Amortization of debt offering costs		(13,793	)		(14,546	)		(27,586	)		(21,322	)		(97,105	)
Amortization of leased equipment		(3,402	)		-			(3,402	)		-			(3,402	)
Amortization of deferred fee		-			-			-			-			(406,000	)
Amortization of other costs		-			-			-			-			167,063
Interest income		79			711			1,001			711			5,386
Other Income (expenses)		-			33,021			(21,709	)		6,413			470,083
Gain (Loss) on investments		-			(35,101	)		-			(52,273	)		(420,210	)
Gain (Loss) on derivative liability		(2,094,332	)		(393,580	)		(2,268,206	)		(242,126	)		(3,842,528	)
Interest expense		(45,144	)		(66,036	)		(91,034	)		(82,578	)		(495,994	)
Total Other Income (Expenses)		(2,330,227	)		(621,272	)		(2,619,802	)		(536,915	)		(5,380,165	)
LOSS BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS		(2,424,771	)		(739,437	)		(2,812,687	)		(763,407	)		(8,799,656	)
INCOME TAX EXPENSE		-			-			-			-			-
LOSS FROM CONTINUING OPERATIONS		(2,424,771	)		(739,437	)		(2,812,687	)		(763,407	)		(8,799,656	)
LOSS FROM DISCONTINUED OPERATIONS		-			-			-			(15,198	)		(20,248	)
NET LOSS	$	(2,424,771	)	$	(739,437	)	$	(2,812,687	)	$	(778,605	)	$	(8,819,904	)
LOSS PER SHARE FROM CONTINUING OPERATIONS	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
LOSS FROM DISCONTINUED OPERATIONS		-			-			-			-
BASIC INCOME (LOSS) PER SHARE	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		266,846,589			99,993,946			223,753,991			99,993,946

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited) 

							From Inception
							of the
							Development
							Stage on
	For the Six Months Ended June 31,						January 1, 2004 Through
	2007			2006			June 30, 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$	(2,812,686	)	$	(778,605	)	$	(8,819,904	)
Adjustments to reconcile net loss to net cash
provided (used) in operating activities:
Common Stock issued for services		87,248			-			1,520,480
Stock warrants for services		5,771			-			8,231
Amortization of debt discount		207,865			-			611,719
Amortization of debt offering costs		13,793			21,322			61,990
Amortization of deferred fees		-			-			406,000
Amortization of leased equipment		3,402			-			3,402
Bad debt expense		-			-			403,916
Loss on investment value		-			-			420,210
Gain on A/P write off		-			-			(39,932	)
Unearned compensation		-			-			190,000
Loss (Gain) on derivative liability		2,268,206			1,092,126			3,842,528
Contributed services		-			-			69,471
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		(7,769	)		(1,400	)		(7,769	)
(Increase) decrease in accounts receivable		-			10,450			-
Decrease in accounts payable		(10,136	)		(65,467	)		(17,341	)
Increase (decrease) in accounts payable - related party		105,705			15,292			133,202
Increase (decrease) in interest payable - related party		(66,812	)		22,259			28,601
Increase (decrease) in interest payable - others		4,472			(2,291	)		56,128
Increase (decrease) in interest payable - convertible debentures		62,456			47,463			181,536
(Decrease) in directors fee accrued		(48,040	)		-			(44,000	)
Increase in debt offering costs		13,793			(105,521	)		13,793
Increase in accrued expenses		-			-			38,641
Increase in accrued expenses related party		-			-			32,000
Net Cash Used in Operating Activities		(172,732	)		255,628			(907,098	)
CASH FLOWS FROM INVESTING ACTIVITIES
Incorporation expenses		(212	)		-			(212	)
Decrease in notes receivable - related party		-			-			(403,916	)
Decrease in investments - related party		-			-			(420,210	)
Net Cash Used in Investing Activities		(212	)		-			(824,338	)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash		-			-			50,000
Proceeds from notes payable		-			-			707,500
Payments on notes payable		-			(163,750	)		(265,739	)
Proceeds from convertible debenture		-			145,741			1,184,479
Payments on convertible debentures		-			(168,038	)		(168,038	)
Proceeds from notes payable - related party		-			-			280,097
Payments on notes payable - related party		-			-			(24,260	)
Repayment of lease liability		(12,556	)		-			(12,556	)

Net Cash Provided by Financing Activities		(12,556	)		(186,047	)		1,751,483
NET INCREASE (DECREASE) IN CASH		(185,500	)		69,581			20,047
CASH, BEGINNING OF PERIOD		205,561			255,684			14
CASH, END OF PERIOD	$	20,061		$	325,265		$	20,061

The accompanying notes are an integral part of these consolidated financial statements.

5

SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

					From Inception
					of the
					Development
					Stage on
	For the Six Months Ended				January 1, 2004
	March 31,				Through
	2007		2006		June 30, 2007
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes	$	-	$	-	$	-
Interest	$	-	$	-	$	11,370
Non-Cash Financing Activities
Common stock issued for deferred fees	$	-	$	-	$	304,000
Common stock issued for converting N/P	$	-	$	-	$	340,001
Common stock issued for converting debt	$	42,300	$	-	$	139,962
Common stock issued for services	$	87,248	$	-	$	1,512,981
Forgiveness of debt - related party	$	-	$	-	$	24,678

The accompanying notes are an integral part of these consolidated financial statements.

6

SYNDICATION, INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2007 and December 31, 2006

NOTE 1 -BASIS OF FINANCIAL STATEMENT PRESENTATION

General

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been or omitted in accordance with such rules and regulations. The information furnished in the consolidated interim financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these consolidated interim financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in its December 31, 2006 Annual Report on Form 10-KSB. Operating results for the three months ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

Business and Basis of Presentation

On March 25, 1999, Syndication, Inc. (the "Company") was incorporated under the laws of the State of Delaware The Company is in the development stage, as defined by Statement of Financial Accounting Standards No. 7 ("SFAS No. 7") and its efforts have been principally devoted to acquire controlling interests in or to participate in the creation of, and to provide financial, management and technical support to, development stage business, e-commerce businesses and traditional brick-and-mortar businesses. To date, the Company has no revenues , has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. For the period from its inception as a development stage enterprise through June 30, 2007, the Company has accumulated losses of $8,816,905.

The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary , Syndicated Properties LLC,  All significant inter-company transactions and balances have been eliminated in consolidation.

Reclassification

Certain prior period amounts have been reclassified for comparative purposes.

NOTE 2 -GOING CONCERN

The Company’s consolidated financial statements are prepared using accounting principals generally accepted in the Unites States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At the 2^nd Quarter close, the Company had cash resources of $20,061.00 which the Company believes will be adequate resources to cover its operating costs and to allow it to continue as a going concern. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. It is management’s intent to seek growth by way of a merger or acquisition. It is the belief that over the next 12 months that Company will acquire at least one or more of acquisition candidates. The acquisition process should provide capital, revenue and incomes as a result. There is no assurance that the Company will be successful in its acquisition efforts or in raising the needed capital.

NOTE 3 - CONVERTIBLE DEBENTURE

On December 30 ^th 2005, Syndication, Inc. (the “Company”), in order to obtain alternative funding for its ongoing operations of the Company, entered into a Termination Agreement with Cornell Capital Partners, LP (the “Investor”) pursuant to which the Standby Equity Distribution Agreement entered between the Company and the Investor dated June 2004 was terminated. To that end, on December 30 ^th 2005, the company then executed a Securities Purchase Agreement (the “Agreement”) for the sale of (i) $1,150,000 in secured convertible debentures (the “Debentures”) and (ii) stock purchase warrants (the “Warrants”) to buy 120,000,000 shares of our common stock. In accordance with EITF-00-19 and SFAS 150, since there is no explicit limit on the number of shares that are to be delivered upon exercise of the conversion feature, the Company is not able to assert that it will have sufficient authorized and unissued shares to settle the conversion option. As a result, the conversion feature should be accounted for as a derivative liability, with the fair value recorded in earnings each period. On February 6 ^th 2006 the company issued an additional $700,000 of the $1,150,000 debenture and on June 8 ^th 2006 issued the final $150,000 of the $1,150,000 debenture. As of June 30, 2007 , the Company converted $118,000 of its debenture to equity reducing the outstanding debenture balance from $1,150,000 to $1,032,000.

7

NOTE 4 - CAPITAL LEASE OBLIGATION

Property and equipment includes the following amounts for capitalized leases at June 30, 2007:

	2007
Surgical treatment	$	95,246
Less: accumulated depreciation and amortization		(3,402	)
	$	91,844

Future minimum lease payments required under the capital leases are as follows:

2007		11,614
2008		23,228
2009		23,228
2010		23,228
2011 and after		27,099
Less: amount representing interest		(25,705	)
Less: current portion		(14,061	)
Long-term portion	$	68,629

8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

The information in this registration statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this registration statement are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations.

The following discussion and analysis should be read in conjunction with our financial statements and summary of selected financial data, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

PLAN OF OPERATION

We are a consulting company formed to acquire controlling interests in or to participate in the creation of, and to provide financial, management and technical support to, development stage businesses. Our strategy is to integrate affiliated companies into a network and to actively develop the business strategies, operations and management teams of the affiliated entities.

It is the intent of our board of directors to develop and exploit all business opportunities to increase efficiencies between companies with which we may invest in or consult. In addition, we may acquire companies to be held as wholly owned subsidiaries.

We had one wholly owned subsidiary, Kemper Pressure Treated Forest Products, Inc. Kemper was engaged in the retail brokerage business of preservative treated lumber such as utility poles, bridge pilings, timber and guardrail posts. Kemper had one customer and as a result of limited revenue we elected to wind down Kemper’s operations during the fourth quarter of 2003. We have changed our focus and growth efforts towards our consulting business and/or the acquisition of an operating development company.

HTRG Associates LLC / Name Changed; 1stQuarter 2006 to “Syndicated Properties LLC”

In September 2005, we launched HTRG Associates LLC and changed the name to Syndicated Properties LLC in the first quarter of 2006. Syndicated Properties LLC (f/k/a SP & Associates LLC) ("SP") is a wholly owned subsidiary that will specialize in the real estate appraisal business. We originally brought on Thomas Gibbs as the President of SP to run the daily operations of the organization. In the 1 ^st quarter of 2006 the company decided to discontinue its efforts in the real estate appraisal industry and focus on real estate development. As a result of the shift in business strategy the services of Mr. Gibbs were no longer essential to the operations of the company and a long term service contract was never executed. Mr. Gibbs is currently not affiliated with the company in any capacity but, the company may use his services when real estate development projects ensue.

Letter Of Intent with Tri-State Metro Territories LLC

On November 10, 2003, we entered into a Letter of Intent with Tri State Metro-Territories, LLC (Tri-State) to acquire substantially all of the assets of Tri-State. Brian Sorrentino, a greater the 10% shareholder, director and an executive officer of our company, is a 10% shareholder in Tri State. Mark Solomon, who serves as President and member of our Board of Directors and is a shareholder of our company also is a member of Tri-State. Dale Hill, is a shareholder of our company and is also a member of Tri-State. Tri State is in the business of operating hair coloring salon units under the name of "HCX the haircolorxperts. The assets being negotiated by us include the interest in the prototype HCX Salons located in Columbia Maryland and Washington, DC. On March 18, 2004, we entered into privately negotiated exchange agreements to exchange 355,000 restricted shares of its common stock for 8% of membership interests of Tri-State. In addition, from September 2004 through February 2005, we entered into two purchase agreements whereby the Company purchased 3% of membership interests of Tri-State for $115,000. During the twelve months ended December 31, 2006, the Company purchased 454 Class “A” Preferred stock in Tristate.

Although it is our intent to acquire all the assets of Tri-State, the specific terms and the evaluations of the potential transaction have not yet been finalized and the pending audited financial statements of Tri-State are a requirement for completion of that transaction. The transaction is also subject to customary closing conditions, including but not limited to the receipt of audited financial statements, all definitive documents, valuations, consents, and approvals. There can be no assurance as to whether or when the transaction will close.

9

Sy-Med Decompression Inc.

In April 2007 the company launched a wholly owned Subsidiary named “Sy-Med Decompression Inc.” Sy-Med Decompression is engaged in the business of providing a non-surgical treatment option for patients with back pain due to lumbar disc herniation, degenerative disc disease, sciatica, facet syndrome and spinal stenosis. Clinical studies have shown that spinal decompression treatments are more than 82% effective in relieving lower back pain and sciatica. The company’s business plan calls for a roll out of 10 Sy-Med Decompression Centers over the next 12 months. The roll out will include a combination of “Fee Per Click” partnership arrangements with current operating Chiropractic Centers and stand alone “doc in the box” centers that provide only decompression treatment services.

Result of Operations

The Company is in the development stage and to date has not generated revenues. The risks specifically discussed are not the only factors that could affect future performance and results. In addition to the discussion in this prospectus concerning us, our business and our operations contain forward-looking statements. Such forward-looking statements are necessarily speculative and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. We do not have a policy of updating or revising forward-looking statements and thus it should not be assumed that silence by our Management over time means that actual events or results are occurring as estimated in the forward-looking statements herein.

As a development stage company, we have yet to earn revenues from operations. We may experience fluctuations in operating results in future periods due to a variety of factors., including our ability to obtain additional financing in a timely manner and on terms favorable to us, our ability to successfully develop our business model, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure and the implementation of marketing programs, key agreements, and strategic alliances, and general economic conditions specific to our industry.

As a result of limited capital resources and no revenues from operations from its inception, the Company has relied on the issuance of equity securities to employees and non-employees in exchange for services. The Company's management enters into equity compensation agreements with non-employees if it is in the best interest of the Company under terms and conditions consistent with the requirements of Financial Accounting Standards No. 123 R, "Share-Based Compensation." In order to conserve its limited operating capital resources, the Company anticipates continuing to compensate non-employees for services during the next twelve months. This policy may have a material effect on the Company's results of operations during the next twelve months.

The operating expenses for the three months ended June 30, 2007 decreased by $22,620 to $94,544 for the three months ended June 30, 2007 from $118,164 for the three months ended June 30, 2006. Our operating expenses consist of bad debt expenses, general and administrative expenses and consulting fees. The reason for the decrease primarily relates to the decrease in administrative expenses and bad debt expense which was offset by an increase in consulting fees.

The net loss for the three months ended June 30, 2007 was $2,424,771 compared to net loss of $739,437 for the three months ended June 30, 2006. The primary reasons for the increase in net loss was due to the derivative liability expense related to the company’s Convertible Debenture.

Product Research and Development

We do not anticipate incurring any material product research and development activities during the next twelve months.

 Acquisition of Plant and Equipment and Other Assets

We do not anticipate the sale of any material property, plant or equipment during the next 12 months. We do not anticipate the acquisition of any material property, plant or equipment during the next 12 months.

Number of Employees

From our inception as a development stage enterprise through the period ended June 30, 2007, we have principally relied on the services of outside consultants and part-time employees for services. We currently have 1 full time employees and 3 part-time employees. In order for us to attract and retain quality personnel, we anticipate we will have to offer competitive salaries to future employees. We anticipate that it may become desirable to add additional full and or part time employees to discharge certain critical functions during the next 12 months. This projected increase in personnel is dependent upon our ability to generate revenues and obtain sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees. As we continue to expand, we will incur additional cost for personnel.

10

Liquidity and Capital Resources

Total current assets at June 30, 2007 were $27,831 with total current liabilities of $5,816,296, resulting in a working capital deficit of $5,788,465 at June 30, 2007. From the Company's inception as a development stage enterprise on January 1, 2004 through June 30, 2007 the Company has incurred an operating cash flow deficit of $ 907,098, invested $824,338 in the acquisition of investments, which has been principally financed through the private placement of our common stock of $ 50,000, convertible debentures of $ 1,184,479, issuance of $707,500 of notes payable.

We expect to continue to incur additional losses and negative cash flows from operating activities for the next two years.

We have historically incurred losses. From our inception as a development stage enterprise on January 1, 2004 , we have incurred losses of $8,819,904

On December 30, 2005, the Company, in order to obtain alternative funding for its ongoing operations of the Company, entered into a Termination Agreement with Cornell Capital Partners, LP (the "Investor") pursuant to which the Standby Equity Distribution Agreement entered between the Company and the Investor dated June 2004 was terminated. To that end, on December 30th 2005, the company then executed a Securities Purchase Agreement (the "Agreement") for the sale of (i) $1,150,000 in secured convertible debentures (the "Debentures") and (ii) stock purchase warrants (the "Warrants") to buy 120,000,000 shares of our common stock. On December 30, 2005, the company issued $300,000 of the $1,150,000 debenture.

The debentures bears interest at 12 percent, mature three years from the date of issuance, and are convertible into the Company's common stock, at a conversion price equal to the lower of (i) $0.0132 or (ii) 85% of the lowest weighted average price during the 30 trading days immediately preceding the conversion date.

In accordance with EITF-00-19 and SFAS 150, and because there is no explicit limit on the number of shares that are to be delivered upon exercise of the conversion feature, the Company is not able to assert that it will have sufficient authorized and unissued shares to settle the conversion option. As a result, the conversion feature will be accounted for as a derivative liability, with the fair value recorded in earnings each period. On February 6, 2006 the Company issued an additional $700,000 of the $1,150,000 debenture and on June 8, 2006 the Company issued the final $150,000 of the $1,150,000 debentures.

Our future revenues and profits, if any, will depend upon various factors, including the following:

Whether we will be able to effectively evaluate the overall quality and industry expertise of potential acquisition candidates; whether we will have the funds to provide seed capital and mezzanine financing to brick-and-mortar, e-commerce and Internet-related companies; and whether we can develop and implement business models that will enable growth companies to develop.

We may not be able to effect any acquisitions of or investments in development stage companies if we are unable to secure sufficient funds to finance our proposed acquisitions costs. We expect that our current cash and cash equivalents will allow us to continue our current operation for six months. If we are unable to generate additional revenues or secure financings, we may be forced to cease or curtail operations.

We intend for our management team to identify companies that are positioned to succeed and to assist those companies with financial, managerial and technical support. Over the next 12 months, we intend to increase revenue and gross profit margin by focusing and expanding its consulting services and seeking acquisition candidates. It is management's belief that potential acquisition targets can be better identified and assessed for risk if we first become involved with these candidates on a consulting capacity. Our strategy is to integrate affiliated companies into a network and to actively develop the business strategies, operations and management teams of the affiliated entities. 

By adjusting our operations and development to the level of capitalization, we believe we have sufficient capital resources to meet projected cash flow deficits. However, if during that period or thereafter, we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations liquidity and financial condition.

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We do not foresee any significant changes in the number of our employees over the next twelve months except in the event we finalize an acquisition. We have not paid dividends on our common stock, and intend to reinvest our earnings to support our working capital and expansion requirements. We intend to continue to utilize our earnings in the development and expansion of the business and do not expect to pay cash dividends in the foreseeable future. It is the belief of management that as we move toward an active trading status the ability to raise capital by stock issuance to effect our business plan is enhanced.

We do not expect to sell any manufacturing facilities or significant equipment over the next twelve months except within the demands of potential acquisitions that we may pursue.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on us.

Inflation

It is the opinion of the Company that inflation has not had a material effect on its operations.

ITEM 3. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure and Controls and Procedures .As of June 30, 2007, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act).. Based on that evaluation, the Company's management concluded that such disclosure controls and procedures were not effective and that it would take steps to upgrade its significant control procedures in order to better monitor and control the process of presentation of expense accruals. This we believe will stave off the potential for improper presentation of prepaid expenses and account reconciliations. Further, in order to better comply with the changes in reporting requirements mandated by rule 404 of the Sarbanes-Oxley Act of 2002, the Company will establish and implement appropriate accounting policies and procedures and then prepare an accounting policies and procedural manual. The manual will include a chart of accounts, adequate explanations of account content, month end, quarter end, and year end closing procedures, appropriate descriptions of all accounting procedures and routines and all matters that bear directly or indirectly on the functioning of the system of internal accounting control. The Company will then take steps to establish policies and procedures to regularly evaluate and report on their effectiveness as part of the Company’s corporate governance and related reporting requirements.

Changes in Internal Controls Over Financial Reporting. There was no change in the Company’s internal controls, which are included within disclosure controls and procedures, during its most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls.

PART 2 - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any material litigation and management has no knowledge of any threatened or pending litigation against it.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES:

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

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ITEM 6. EXHIBITS

31.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements 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.

SYNDICATION, INC.

By:   /s/ Brian Sorrentino

Brian Sorrentino

CEO and Principal Executive Officer

Dated: August 20, 2007

By:  /s/Mrutyunjaya S. Chittavajhula.

Mrutyunjaya S. Chittavajhula.

CFO and Principal Accounting Officer

Dated: August 20, 2007

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