17115 KENTON DRIVE, SUITE 202A
CORNELIUS, NORTH CAROLINA 28031
PHONE: (704) 584-0268
FAX: (704) 895-1528
bmpesquire@aol.com
May 28, 2008
Delivered by electronic submission via EDGAR, and US Mail
United States Securities and Exchange Commission
Division of Corporate Finance, Mail Stop 4561
450 Fifth Street, NW
Washington, DC 20549
Attn: Ms. Jennifer Monick, Staff Accountant
Re: Syndication, Inc.
Amendment No. 1 to Form 10-KSB for Fiscal Year Ended
December 31, 2006
Filed April 24, 2007
File No. 000-29701
Dear Ms. Monick:
I am securities counsel for Syndication, Inc. (the “Company”). Please find below the Company’s responses to the Staff’s comment letter dated March 24, 2008. The numbering of the responses corresponds to the numbering of the Staff’s comments.
Form 10-KSB for the year ended December 31, 2006
Financial Statements
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
o. Debt Discount Costs, page F-17
Jennifer Monick
March 6, 2008
Page 2
| Comment 1. | We note your response to our prior comment one. Your response did not address our comment; thus, the comment will be reissued. It appears that your debt discount was equal to the debentures’ face value at issuance, or $1,150,000. It does not appear that your effective interest rate method calculation takes into account the debt discount of $1,150,000. Please revise your effective interest rate method calculation to incorporate the debt discount of $1,150,000, or advise. With your response, please provide us with a SAB 99 analysis. |
Response 1. | We have taken into account your comment and have determined to restate our financial statements for the period in question, as well as the three quarterly periods following. We have timely filed a Form 8-K on May 27, 2008 indicating our intention to file an amended Form 10-KSB for fiscal 2006, and amended Forms 10-QSB for fiscal quarters ended March 31, 2007; June 30, 2007; and September 30, 2007. We intend to file these amended Forms with accompanying restated financial statements within 60 days. |
If you have further questions or comments, please feel free to contact us. We are happy to cooperate with you in any way we can.
Very truly yours,
/s/ Bruce Pritchett
Bruce M. Pritchett
Counsel for Syndication, Inc.
BMP
cc: Syndication, Inc.
Jennifer Monick
March 6, 2008
Page 3
SYNDICATION, INC.
Exhibit A
To SEC Response Letter of March 6, 2008
Explanation as to how the Company did in fact take into account the information referenced:
The Company has considered the actual debt amount of $1,150,000 in calculating the effective interest rate. The Company made the calculation in 3 separate installments since we received the amounts in 3 different installments. (Please refer to the worksheet provided in Exhibit A to our previous response letter, dated January 15, 2008.)
For example, the 1st installment of $300,000: We actually received $240,000, after whatever charges/discounts etc. That carries an interest rate of 12% per annum. That means, we pay interest on $300,000 x 12% = $36,000. But we actually received only $240,000. That means, we are paying interest of $36,000 on actual funds available of $240,000, which comes to the effective rate of interest of 36000/240000 x 100 = 15%.
In this rate (calculated above), the amount of $36,000 annual interest is based on the total debt we owe them (we owe them $300,000, not only the $240,000 actually received). Thus the effective rate of interest HAS taken into account the total debt amount we owe.
The calculations for the 2nd & 3rd installments also go along these same lines.
Effective Interest Rate Method: | ||||||
Note 1 of $300,000 | ||||||
| Debt Face Value | 300,000.00 | |||||
| Stated rate of interest | 12.00% | |||||
| Hence, the annual interest on face value | 36,000.00 | |||||
| Actual amount of funds made available after expenses | 240,000.00 | |||||
| Effective rate of interest | 15.00% | |||||
| Maturity value of the debt | 300,000.00 | |||||
| Present value of $300,000, due In 3 years at 12%, interest payable quarterly | ||||||
| (Table 6-2) | 0.65752 | =300,000 * 0.65752 | ||||
| 197,256.00 | ||||||
| Present value of $9000 interest payable quarterly for 3 years | ||||||
| at 12% pa (table 6-4) | ||||||
| 2.28323 | 82,196.28 | 279,452.28 | ||||
Jennifer Monick
March 6, 2008
Page 4
Note 2 of $700,000 | ||||||
| Debt Face Value | 700,000.00 | |||||
| Stated rate of interest | 12.00% | |||||
| Hence, the annual interest on face value | 84,000.00 | |||||
| Number of years | 3.00 | |||||
| Actual amount of funds made available after expenses | 590,871.68 | |||||
| Effective rate of interest | 14.22% | |||||
| Effective rate of interest | Nearest | 168,038.00 | 15.00% | |||
| 2,181.71 | ||||||
| 160,000.00 | ||||||
| 5,965.49 | ||||||
| 254,686.48 | ||||||
| - | ||||||
| 590,871.68 | ||||||
| Maturity value of the debt | 700,000.00 | |||||
| Present value of $700,000, due In 3 years at 12%, interest payable quarterly | ||||||
| (Table 6-2) | 0.65752 | =700,000 * 0.65752 | ||||
| 460,264.00 | ||||||
| Present value of $21,000 interest payable quarterly for 3 years | ||||||
| at 12% pa (table 6-4) | ||||||
| 2.28323 | 191,791.32 | 652,055.32 | ||||
Jennifer Monick
March 6, 2008
Page 5
Note 3 of $150,000 | ||||||
| Debt Face Value | 150,000.00 | |||||
| Stated rate of interest | 12.00% | |||||
| Hence, the annual interest on face value | 18,000.00 | |||||
| Number of years | 3.00 | |||||
| Actual amount of funds made available after expenses | 120,000.00 | |||||
| Effective rate of interest | 15.00% | |||||
| Maturity value of the debt | 150,000.00 | |||||
| Present value of $150,000, due In 3 years at 12%, interest payable quarterly | ||||||
| (Table 6-2) | 0.65752 | =150,000 * 0.65752 | ||||
| 98,628.00 | ||||||
| Present value of $18,000 annual interest payable quarterly for 3 years | ||||||
| at 12% pa (table 6-4) | ||||||
| 2.28323 | 41,098.14 | |||||
| Combined present value - carrying value of the Debt | 139,726.14 | |||||
Jennifer Monick
March 6, 2008
Page 6
SYNDICATION, INC.
Exhibit B
To SEC Response Letter of March 6, 2008
I, Brian Sorrentino, hereby acknowledge the following:
| (1) | that the Company is responsible for the adequacy and accuracy of the disclosures in the filings: |
| (2) | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and |
| (3) | the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under federal securities laws of the United States. |
By: /s/ Brian Sorrentino
Brian Sorrentino, Chief Executive Officer