As filed with the Securities and Exchange Commission on February , 2001
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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SYNDICATIONNET.COM, INC.
(Name of small business issuer in its charter)
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Delaware 57-2218873 8742
(State or other jurisdiction (I.R.S. Employer (Primary Standard
of incorporation Identification Number) Industrial Classification
or organization) Code Number)
---------------
SyndicationNet.com, Inc.
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
703/ 748-3480
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices and principal place of business)
Vance Hartke, President
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
703/ 748-3480
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Cassidy & Associates
1504 R Street N.W.
Washington, D.C. 20009
202/387-5400
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Approximate Date of Commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
1
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Share Offering Price Fee(2)
- --------------------------- ----------- ------------- --------------- ------
Common stock held by
selling security
holders 561,500 $.0001(1) $56.15 $1.00
Total 561,500 $.0001 $56.15 $1.00
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(1) There is no current market for the securities and the price at which the
shares held by the selling securityholders will be sold is unknown. The
book value of the registrant is a negative number and, as such, pursuant to
Rule 457(f)(2) the registration fee is based upon the par value, $.0001 per
share, of the registrant's common stock.
(2) Paid by electronic transfer.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
2
PROSPECTUS Subject to Completion, Dated , 2001
The information contained in this prospectus is subject to completion or
amendment. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of that state.
SYNDICATIONNET.COM, INC.
561,500 shares of common stock to be sold by certain selling securityholders
This prospectus relates to the offer and sale of 561,500 shares of
SyndicationNet.com, Inc.'s ("SyndicationNet") common stock, par value $.0001 per
share, by certain selling securityholders.
There has been no market for SyndicationNet's common stock and a public
market may not develop, or, if any market does develop, it may not be sustained.
The shares will become tradeable on the effective date of this prospectus.
The selling securityholders will receive the proceeds from the sale of their
shares and SyndicationNet will not receive any of the proceeds from such sales.
The selling securityholders directly or through agents, dealers or
representatives to be designated from time to time, may sell their shares on
terms to be determined at the time of sale. See "Plan of Distribution." The
selling securityholders reserve the sole right to accept or reject, in whole or
in part, any proposed purchase of the shares being offered for sale.
These securities involve a high degree of risk. See "Risk Factors" contained in
this prospectus beginning on page 7.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
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Underwriting Discounts Proceeds to Company
Price to Public(1) and Commissions(2) or Other Persons
- --------------------------------------------------------------------------------
Per Share Unknown $ 0 (3)
- --------------------------------------------------------------------------------
Total Unknown $ 0 (3)
- --------------------------------------------------------------------------------
(1) All the shares are being sold by the selling securityholders in separate
transactions at prices to be negotiated at that time.
(2) The shares are being sold by the selling securityholders and SyndicationNet
has no agreements or understandings with any broker or dealer for the sales of
the shares. A selling securityholder may determine to use a broker-dealer in the
sale of its securities and the commission paid to that broker-dealer, if any,
will be determined at that time. Prior to the involvement of any broker-dealer,
that broker-dealer must seek and obtain clearance of the compensation
arrangements from the National Association of Securities Dealers, Inc. In that
event, SyndicationNet will file a post-effective amendment identifying the
broker-dealer(s).
(3) SyndicationNet will not receive any proceeds from the sale of the shares.
One or more broker-dealers may be the principal market makers for the
shares being offered. Under these circumstances, the market bid and asked prices
for the securities may be significantly influenced by decisions of the market
makers to buy or sell the securities for their own account. The market making
activities of any market makers, if commenced, may subsequently be discontinued.
Prospectus dated February __, 2001
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No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations may not
be relied on as having been authorized by SyndicationNet. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create an implication that there has been no change in the affairs of
SyndicationNet since the date of this prospectus. This prospectus does not
constitute an offer to sell, or solicitation of any offer to buy, by any person
in any jurisdiction in which it is unlawful for any such person to make such an
offer or solicitation. Neither the delivery of this prospectus nor any offer,
solicitation or sale made hereunder, shall under any circumstances create any
implication that the information herein is correct as of any time subsequent to
the date of the prospectus.
TABLE OF CONTENTS
Page
----
Prospectus Summary......................................................... 1
Risk Factors...............................................................
-SyndicationNet is currently operating at a loss..........................
-SyndicationNet may need to raise additional funds in the future for
its operations and if it is unable to raise additional financing,
SyndicationNet may not be able to support its operations. .............
-SyndicationNet may obtain additional capital primarily through the
issuance of preferred stock which may have an adverse effect on the
rights of holders of its common stock .................................
-There is no current trading market for SyndicationNet's securities
and, if a trading market does not develop, purchasers of its
securities may have difficulty selling their shares ...................
-SyndicationNet may issue additional shares of its common stock which
would reduce investors percent of ownership and may dilute
SyndicationNet's share value............................................
-The possibility of SyndicationNet issuing preferred stock with
certain preferences may depress market price of the common stock........
-The possibility of issuing preferred stock for anti-takeover effect
could prevent takeovers favored by shareholders.........................
-Additional shares entering market pursuant to Rule 144 without
additional capital contribution.........................................
-Management and affiliates own enough shares to control shareholder vote..
-SyndicationNet has never paid dividends..................................
-Officers and directors have limited liability and have indemnity rights .
-Selling securityholders may sell securities at any price or time ........
-Penny stock regulation may impair shareholders' ability to sell
SyndicationNet's stock .................................................
-SyndicationNet does not have funds currently available for acquisitions..
-Limited operating history on which to make an investment decision........
-Limited time available for management team to devote affairs of
SyndicationNet..........................................................
-Limited experience which may diminish appeal to potential affiliated
companies...............................................................
-SyndicationNet's acquisition strategy may involve speculative
investments.............................................................
-Dependence on key personnel..............................................
-Dependence on the valuations of Internet-related companies...............
-Competition .............................................................
-Compliance with the Investment Company Act...............................
-Government regulations and legal uncertainties ..........................
-The availability of lumber...............................................
-Cycles affecting prices..................................................
-Dependence on one customer...............................................
Disclosure Regarding Forward Looking Statements............................
Business...................................................................
Use of Proceeds............................................................
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................
Management.................................................................
Security Ownership Of Certain Beneficial Owners and Management.............
Selling Securityholders....................................................
Certain Relationships and Related Transactions.............................
Description of Securities..................................................
4
Plan of Distribution.......................................................
Legal Matters..............................................................
Experts....................................................................
Additional Information.....................................................
Index to Financial Statements.............................................. F-1
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Dealer Prospectus Delivery Obligation
Until _______, 2001, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
5
PROSPECTUS SUMMARY
The following is a summary of certain information found elsewhere in this
prospectus. Reference is made to, and this summary is qualified by, the more
detailed information set forth in this prospectus, which should be read in its
entirety.
Risk Factors
There are substantial risk factors involved in investment in
SyndicationNet. An investment in SyndicationNet is speculative and investors may
not receive any return from their investment. See "Risk Factors".
SyndicationNet
SyndicationNet.com, Inc., a Delaware corporation, is a start-up holding
company which was formed to acquire controlling interests in or to participate
in the creation of, and to provide financial, management and technical support
to, development stage Internet business to business ("B2B") or e-commerce
businesses. SyndicationNet's strategy is to integrate affiliated companies into
a network and to actively develop the business strategies, operations and
management teams of the affiliated entities.
Selling Securityholders
This prospectus relates to the registration for sale of the securities held
by thirty-five securityholders of SyndicationNet. These securityholders will be
able to sell their shares on terms to be determined at the time of sale,
directly or through agents, dealers or representatives to be designated from
time to time. SyndicationNet will not receive any proceeds from the sale of the
securities by the selling securityholders.
Trading Market
There is currently no trading market for the securities of SyndicationNet.
SyndicationNet intends to apply initially for its securities to be traded in the
over-the-counter market on the OTC Bulletin Board or, if and when qualified, on
the Nasdaq SmallCap Market. SyndicationNet may not now or ever qualify for
listing of its securities on the OTC Bulletin Board and may not now or at any
time in the future qualify for quotation on the Nasdaq SmallCap Market.
Selected Financial Data
The following table sets forth the selected consolidated financial data for
SyndicationNet for the period indicated below. The financial information set
forth below is derived from, and should be read in conjunction with, the more
detailed financial statements (including the notes thereto) appearing elsewhere
in this prospectus.
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Year Ended Year Ended 9 Months
December 31, December 31 Ended September 30,
1998 1999 2000
--------------------------------------------------
Income Statement Items: (Unaudited)
- -----------------------
Sales $4,494,708 $5,597,676 $5,484,273
Cost of sales 4,403,509 5,526,429 5,448,258
Gross margin 91,199 71,147 36,015
Operating Loss (83,902) (186,318) (320,714)
Balance Sheet Items
- -------------------
Total current assets 493,420 583,691
Total assets 496,150 585,738
Current liabilities 962,524 936,899
The selected financial data above is a summary only and has been derived
from and is qualified in its entirety by reference to SyndicationNet's financial
statements and the report related thereto from HJ & Associates LLC for the year
ended December 31, 1998 and 1999 and the unaudited nine months ending September
30, 2000.
RISK FACTORS
The securities offered hereby are speculative in nature and involve a high
degree of risk and should be purchased only by persons who can afford to lose
their entire investment. Therefore, each prospective investor should, prior to
purchase, consider very carefully the following risk factors, as well as all of
the other information set forth elsewhere in this prospectus and the information
contained in the financial statements, including all notes thereto.
Special note regarding forward-looking statements
This prospectus may contain certain forward-looking statements and
information relating to SyndicationNet that are based on its beliefs and its
principals as well as assumptions made by and information currently available to
them. These statements include, among other things, the discussions of its
business strategy and expectations concerning its market position, future
operations, expansion opportunities, and profitability. When used in these
documents, the words "anticipate," "feel," "believe," "estimate," "expect,"
"plan," and "intend" and similar expressions, as they relate to SyndicationNet
or its principals, are intended to identify forward-looking statements. Such
statements reflect the current view of respecting future events and are subject
to certain risks, uncertainties, and assumptions, including the meaningful and
important risks and uncertainties noted, particularly those related to its
operations, results of operations, and growth strategy, liquidity, competitive
factors and pricing pressures, changes in legal and regulatory requirements,
general economic conditions, and other factors described in this prospectus.
General Risk Factors
SyndicationNet is currently operating at a loss
SyndicationNet currently operates at a loss. Syndication's operations are
subject to the risks and competition inherent in the establishment of a new
business enterprise. There can be no assurance that future operations will be
profitable. Revenues and profits, if any, will depend upon various factors,
including whether SyndicationNet will be able to effectively evaluate the
overall quality and industry expertise of potential acquisition candidates,
whether it will have the funds to provide seed capital and mezzanine financing
to e-commerce and Internet-related companies and whether it can develop and
implement business models that capitalize on the Internet's ability to provide
solutions to traditional companies. SyndicationNet may not achieve its business
objectives and the failure to achieve such goals would have an adverse impact on
it.
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SyndicationNet may need to raise additional funds in the future for its
operations and if it is unable to raise additional financing, SyndicationNet may
not be able to support its operations.
SyndicationNet is operating at a loss and may need additional funds to
support its operations. SyndicationNet may seek additional capital through an
offering of its equity securities, an offering of debt securities or obtaining
financing through a bank or other entity. SyndicationNet has not established a
limit as to the amount of debt it may incur nor has it adopted a ratio of its
equity to a debt allowance. If SyndicationNet needs to obtain additional
financing, financing may not be available from any source, or not available on
terms acceptable to SyndicationNet, and any future offering of securities may
not be successful. If additional funds are raised through the issuance of equity
securities, there may be a significant dilution in the value of SyndicationNet's
outstanding common stock. SyndicationNet could suffer adverse consequences if it
is unable to obtain additional capital when needed.
SyndicationNet may obtain additional capital primarily through the issuance of
preferred stock which may have an adverse effect on the rights of holders of its
common stock .
SyndicationNet may, without further action or vote by its shareholders,
designate and issue additional shares of SyndicationNet preferred stock. The
terms of any series of preferred stock, which may include priority claims to
assets and dividends and special voting rights, could adversely affect the
rights of holders of the common stock and thereby reduce the value of the common
stock. The designation and issuance of preferred stock favorable to current
management or shareholders could make the possible takeover of SyndicationNet or
the removal of its management more difficult and defeat hostile bids for control
of SyndicationNet which bids might have provided shareholders with premiums for
their shares.
There is no current trading market for SyndicationNet's securities and, if a
trading market does not develop, purchasers of its securities may have
difficulty selling their shares.
There is currently no established public trading market for
SyndicationNet's securities. A trading market in SyndicationNet's securities may
never develop or, if developed, it may not be able to be sustained.
SyndicationNet intends to apply for admission to quotation of its securities on
the OTC Bulletin Board and, if and when qualified, it intends to apply for
admission to quotation on the Nasdaq SmallCap Market. If for any reason
SyndicationNet's common stock is not listed on the OTC Bulletin Board or a
public trading market does not otherwise develop, purchasers of the shares may
have difficulty selling their common stock should they desire to do so. Various
factors, such as SyndicationNet's operating results, changes in laws, rules or
regulations, general market fluctuations, changes in financial estimates by
securities analysts and other factors may have a significant impact on the
market price of SyndicationNet's securities.
SyndicationNet may issue additional shares of its common stock which would
reduce investors percent of ownership and may dilute SyndicationNet's share
value.
SyndicationNet's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of common stock. The future issuance of all or part of
SyndicationNet's remaining authorized common stock may result in substantial
dilution in the percentage of its common stock held by SyndicationNet's then
existing shareholders. The issuance of common stock for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by SyndicationNet's investors, and might have an
adverse effect on any trading market for its common stock should a trading
market develop for SyndicationNet's securities.
The possibility of SyndicationNet issuing preferred stock with certain
preferences may depress market price of the common stock
SyndicationNet's Certificate of Incorporation authorizes 20,000,000 shares
of non-designated preferred stock which it may issue from time to time by action
of the board of directors. However, the board of directors may designate voting
and other preferences without shareholder consent which designations may give
the holders of
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the preferred stock voting control and other preferred rights such as to
liquidation and dividends. The authority of the board of directors to issue
stock without shareholder consent may have a depressive effect on the market
price of SyndicationNet's common stock even prior to any designation or issuance
of the preferred stock.
The possibility of issuing preferred stock for anti-takeover effect could
prevent takeovers favored by shareholders
The board of directors has the authority, without further approval of
SyndicationNet's stockholders, to issue preferred stock, having the rights,
preferences and privileges as the board of directors may determine. Preventing a
change in control of the company could have the effect of preventing
shareholders from receiving a premium price for their shares or may prevent a
takeover which some of the shareholders favor because they might perceive it
would result in better management of the company.
Additional shares entering market pursuant to Rule 144 without additional
capital contribution
An increase in the number of shares of SyndicationNet available for public
sale without any increase to SyndicationNet's capitalization could decrease the
market price of its shares. After a one-year holding period restricted shares of
SyndicationNet will become eligible for trading pursuant to Rule 144 of the
General Rules and Regulations of the Securities and Exchange Commission without
any additional payment to the company or any increase to SyndicationNet's
capitalization.
Of the 10,781,750 shares of common stock currently outstanding, 561,500
shares are registered in the registration statement of which this prospectus is
a part. Affiliates of SyndicationNet will be subject to the limitations of Rule
144, including its volume limitations in the sale of their shares. An aggregate
of 8,655,290 of the outstanding shares of SyndicationNet are held by officers,
directors, affiliates and entities controlled by them and are subject to the
limitations of Rule 144 including the shares held by affiliates which are
registered in this registration statement of which this prospectus is a part.
See "Plan of Distribution-Sales by Affiliates".
Management and affiliates own enough shares to control shareholder vote
SyndicationNet's executive officers, directors, affiliates and entities
controlled by them own approximately 80.2% of the outstanding common stock. As a
result, these executive officers and directors will control matters that require
stockholder approval such as election of directors, approval of a corporate
merger, increasing or decreasing the number of authorized shares, adopting
corporate benefit plans, effecting a stock split, amending SyndicationNet's
Certificate of Incorporation or other material corporate actions.
SyndicationNet has never paid dividends
Investors can not expect to receive a return on their stock investment in
the form of a dividend. SyndicationNet has never paid cash dividends on its
common stock and no cash dividends are expected to be paid on the common stock
in the foreseeable future. SyndicationNet anticipates that for the foreseeable
future all of its cash resources and earnings, if any, will be retained for the
operation and expansion of its business.
Officers and directors have limited liability and have indemnity rights
The Certificate of Incorporation and By-Laws of SyndicationNet provide that
SyndicationNet indemnify its officers and directors against losses sustained or
liabilities incurred which arise from any transaction in that officer's or
director's respective managerial capacity unless that officer or director
violates a duty of loyalty, did not act in good faith, engaged in intentional
misconduct or knowingly violated the law, approved an improper dividend, or
derived an improper benefit from the transaction. SyndicationNet's Certificate
of Incorporation and By-Laws also provide for the indemnification by it of its
officers and directors against any losses or liabilities incurred as a result of
the manner in which the officers and directors operate SyndicationNet's business
or conduct its internal affairs, provided that in connection with these
activities they act in good faith and in a manner which
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they reasonably believe to be in, or not opposed to, the best interests of
SyndicationNet and their conduct does not constitute gross negligence,
misconduct or breach of fiduciary obligations.
Selling securityholders may sell securities at any price or time
After effectiveness of this registration statement, the non-affiliated
selling securityholders may offer and sell their shares at a price and time
determined by them without being subject to Rule 144. The timing of sales and
the price at which the shares are sold by the selling securityholders could have
an adverse effect upon the public market for the common stock, should one
develop. See "Plan of Distribution-Sales by Selling Securityholders".
Penny stock regulation may impair shareholders' ability to sell SyndicationNet's
stock
If trading in SyndicationNet's stock begins, its common stock may be deemed
a penny stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share other than securities registered on certain national
securities exchanges. Penny stocks are subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell the
securities to persons other than established customers and accredited investors
and these additional requirements may restrict the ability of broker-dealers to
sell a penny stock. See "Description of Securities-Penny Stock Regulation".
SyndicationNet does not have funds currently available for acquisitions
SyndicationNet does not currently have funds reserved or available for the
acquisition of interests in or for the creation of Internet or e-commerce
businesses. SyndicationNet's strategy is to integrate affiliated companies into
a network and to actively develop the business strategies, operations and
management teams of the affiliated entities. SyndicationNet will need to raise
funds in order to commence its business plan.
Limited operating history on which to make an investment decision
SyndicationNet has a limited operating history upon which an investor may
evaluate making an investment in SyndicationNet. Accordingly, in reviewing the
actual operating results of SyndicationNet, an investor will only be able to
examine the operating results of SyndicationNet's wholly-owned subsidiary in
making an investment decision. While SyndicationNet intends to acquire Internet
related businesses in exchange for cash or the issuance of securities, no
acquisitions have been consummated and no future acquisitions may be
consummated.
Limited time available for management team to devote affairs of SyndicationNet
SyndicationNet intends that its management team will identify companies
that are positioned to succeed and to assist those companies with financial,
managerial and technical support. SyndicationNet's management team consists of
individuals who are concurrently involved in other activities and careers and
will be spending only a limited amount of time on the affairs of SyndicationNet.
Limited experience which may diminish appeal to potential affiliated companies
SyndicationNet has no experience in assisting development stages Internet
or e-commerce businesses nor in establishing a network of affiliated network B2B
companies. This lack of experience may diminish the appeal of the services
offered by SyndicationNet to potential development stage companies.
SyndicationNet's acquisition strategy may involve speculative investments
SyndicationNet's success depends on its ability to develop or select
companies that will be ultimately successful. If SyndicationNet consummates an
acquisition of an Internet related company, economic, governmental, and internal
factors outside SyndicationNet's control may affect the results of operations of
such acquired company. SyndicationNet intends to seek out companies in the early
stages of their development with limited operating history, little revenue and
possible losses. If SyndicationNet becomes affiliated with such entities and
they do not succeed,
10
the value of SyndicationNet's assets, its results of operations and the price of
SyndicationNet's common stock could decline.
Dependence on key personnel
SyndicationNet's success in achieving its growth objectives is dependant to
a substantial extent upon the continuing efforts and abilities of certain key
management personnel, including the efforts of retired United States Senator
Vance Hartke, SyndicationNet's President, as well as other executive officers
and management. SyndicationNet does not have employment agreements with any of
its executive officers. The loss of the services of any of the executive
officers may have a material adverse effect on SyndicationNet's business,
financial condition, results of operations and liquidity. SyndicationNet can
give no assurance that it will be able to maintain and achieve its growth
objectives should SyndicationNet lose any or all of these individuals' services.
SyndicationNet does not maintain key-man life insurance for any of its officers.
Dependence on the valuations of Internet-related companies
SyndicationNet's strategy will involve consulting with start-up companies
and assisting them in their business development thereby creating value for
SyndicationNet's shareholders. SyndicationNet may also take advantage of various
potential business acquisition opportunities through the issuance of
SyndicationNet's securities. The development of the Internet and electronic
commerce market is in its early stages. If widespread commercial use of the
Internet does not continue to develop, the Internet companies that
SyndicationNet will seek to acquire may not succeed. SyndicationNet's success is
further dependent on the acceptance by the public and private capital markets of
Internet-related companies. If the capital markets for Internet-related
companies or the initial public offerings of those companies weakens for an
extended period of time, SyndicationNet may not be able to raise capital or take
its acquired companies public as a means of creating shareholder value.
Competition
The market to acquire interests in development stage Internet companies is
highly competitive. Many of SyndicationNet's competitors may have more
experience identifying and acquiring equity interests in Internet companies and
have greater financial, research and management resources than SyndicationNet.
In addition, SyndicationNet may encounter substantial competition from new
market entrants. Some of SyndicationNet's current and future competitors may be
significantly larger and have greater name recognition than SyndicationNet. Many
investment-oriented entities have significant financial resources which may be
more attractive to entrepreneurs of development stage companies than obtaining
SyndicationNet's consulting, management skills and networking services. There
can be no assurance that SyndicationNet will be able to compete effectively
against such competitors in the future.
Compliance with the Investment Company Act
SyndicationNet's ownership interest in companies that it seeks to consult
with and/or acquire could result in SyndicationNet being classified as an
investment company under the Investment Company Act of 1940. If SyndicationNet
is required to register as an investment company, then it will incur substantial
additional expenses as the result of the Investment Company Act of 1940's record
keeping, reporting, voting, proxy disclosure and other legal requirements.
SyndicationNet has obtained no formal determination from the Securities and
Exchange Commission as to its status under the Investment Company Act of 1940.
Any violation of such Act could subject SyndicationNet to material adverse
consequences. In the event SyndicationNet engages in business combinations which
result in it holding passive investment interests in a number of entities,
SyndicationNet could be subject to regulation under the Investment Company Act
of 1940. Passive investment interests, as used in the Investment Company Act,
essentially means investments held by entities which do not provide management
or consulting services or are not involved in the businesses whose securities
are held. In such event, SyndicationNet would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. Restrictions on transactions between an investment company and
its affiliates under the Investment Company Act of 1940 would make it difficult,
if not impossible, for SyndicationNet to implement its business strategy of
actively managing, operating and promoting collaboration among SyndicationNet's
to be acquired network of affiliated entities.
11
Government regulations and legal uncertainties
Currently, there are few laws or regulations directed specifically at
electronic commerce. However, because of the Internet's popularity and
increasing use, new laws and regulations may be adopted. New laws and
regulations may cover issues such as the collection and use of data from Web
site visitors and related privacy issues, pricing, content, copyrights,
distribution and quality of goods and services. The enactment of any additional
laws or regulations may impede the growth of the Internet and place additional
financial burdens on SyndicationNet's business and the businesses of the
companies that may be acquired in the future. Laws and regulations directly
applicable to Internet businesses and electronic communication are becoming more
prevalent. For example, the United States Congress enacted laws regarding online
copyright infringement and the protection of information collected online from
children. Although these laws may not have a direct adverse effect on
SyndicationNet's business, they add to the legal and regulatory burden faced by
Internet companies.
There can be no assurance that existing laws and regulations which are not
currently applicable to SyndicationNet will not be interpreted more broadly in
the future so as to apply to SyndicationNet's existing activities or that new
laws and regulations will not be enacted with respect to SyndicationNet's
activities, either of which could have a material adverse effect on
SyndicationNet's business, financial condition, results of operations and
liquidity.
Special Risk Factors Involving Subsidiary
The availability of lumber
The availability and costs of obtaining softwood and hardwood lumber are
critical elements for the SyndicationNet's subsidiary, Kemper, to continue to
operate its business operations. The supply of trees of acceptable size for the
production of utility poles and has decreased in recent years in relation to the
demand, and accordingly, prices have increased. Moreover, the supply of timber,
and therefore lumber, is significantly affected by the availability of timber
from public lands, particularly in the Pacific Northwest. In response to
environmental concerns, the United States government has, over recent years,
reduced the amount of timber offered for sale. SyndicationNet can give no
assurance that it will be able to source wood raw materials at economic prices
in the future.
Cycles affecting prices
The demand for, and prices of, timber and manufactured wood products,
including lumber, are affected primarily by the cyclical supply and demand
factors of the forest products industry. The factors that may affect the price
of timber that are outside the control of Kemper include general economic
conditions, interest rates, residential construction activities and the weather
conditions for harvesting timber.
Dependence on one customer
Kemper currently has one major customer which accounts for 100% of its
revenues. Although Kemper is continually negotiating contracts with potential
customers, a loss of its only customer would greatly affect the operating
results of Kemper and of SyndicationNet.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. For example, statements included in this prospectus
regarding SyndicationNet's financial position, business strategy and other plans
and objectives for future operations, and assumptions and predictions about
future demand for SyndicationNet's services, products, marketing and pricing
factors are all forward-looking statements. When SyndicationNet uses words like
"intend," "anticipate," "believe," "estimate," "plan" or "expect,"
SyndicationNet is making forward-looking statements. SyndicationNet believes
that the assumptions and expectations reflected in such forward-looking
statements are reasonable, based on information available to it on the date of
this prospectus, but SyndicationNet cannot give any assurances that these
assumptions and expectations will prove to have been correct or that
SyndicationNet will take any action that it may presently be planning.
SyndicationNet has disclosed certain important factors that could cause its
actual results to
12
differ materially from its current expectations under "Risk Factors" and
elsewhere in this prospectus. SyndicationNet is not undertaking to publicly
update or revise any forward-looking statement if it obtains new information or
upon the occurrence of future events or otherwise.
SYNDICATIONNET.COM, INC.
Business
SyndicationNet.com, Inc., a Delaware corporation, is a start-up holding
company which was formed to acquire controlling interests in or to participate
in the creation of, and to provide financial, management and technical support
to, development stage Internet business to business ("B2B"), e-commerce
businesses and/or traditional brick and mortar businesses. SyndicationNet's
strategy is to integrate affiliated companies into a network and to actively
develop the business strategies, operations and management teams of the
affiliated entities.
SyndicationNet currently has one wholly-owned subsidiary, Kemper Pressure
Treated Forest Products, Inc. Kemper is engaged in the retail brokerage business
of preservative treated lumber such as utility poles, bridge pilings, timber and
guardrail posts. Kemper is also developing computer software applications that
will enable Kemper to manage on-line bidding for the treatment, sale and
shipment of processed wood.
SyndicationNet was originally incorporated in Delaware on March 24, 1999
under the name Algonquin Acquisition Corporation. In August 1999, Algonquin
changed its name to Life2K.com, Inc. On August 16, 1999, Life2K.com, Inc.
acquired all the outstanding shares of Kemper Pressure Treated Forest Products,
Inc., an operating Mississippi company. On October 13, 2000 Life2K.com, Inc. was
acquired by Generation Acquisition Corporation, a public reporting company, as a
wholly-owned subsidiary. Subsequently, Life2K.com, Inc. was merged with and into
Generation Acquisition Corporation which simultaneously changed its name to
SyndicationNet.com, Inc.
SyndicationNet is headquartered at the Hartke Building, 7637 Leesburg Pike,
Falls Church, Virginia 22043.
The Market
SyndicationNet believes that the Internet's substantial growth has created
a market opportunity to facilitate the activities of electronic commerce. As
Internet-based network reliability, speed and security continue to improve, and
as more businesses are connected to and familiar with the Internet, traditional
"brick and mortar" businesses are beginning to use the Internet to conduct
e-commerce and to create new revenue opportunities by enhancing their
interactions with new and existing customers. Businesses are also using the
Internet to increase efficiency in their operations through improved
communications, both internally and with suppliers and other business partners.
SyndicationNet's management team believes that it can offer development stage
Internet companies strategic guidance regarding business model development,
market positioning, management selection, day-to-day operational support and the
introduction to strategic investors that start-up companies often need to
fulfill their business objectives.
Marketing
SyndicationNet, primarily through the marketing efforts of its executive
officers, directors and consultants, intends to locate B2B Internet-related
companies and/or traditional brick and mortar businesses for which
SyndicationNet will act as a general corporate consultant and intends to locate
development stage companies as acquisition candidates. SyndicationNet's
management team, led by retired United States Senator Vance Hartke, hopes to
take advantage of the resources of its directors, specifically in the areas of
accounting, e-commerce, finance and politics, to enable SyndicationNet to
consult with, acquire and integrate B2B e-commerce companies and/or traditional
brick and mortar businesses and to leverage SyndicationNet's collective
management resources and experiences. SyndicationNet intends to actively explore
synergistic opportunities such as cross marketing efforts within the network of
companies it will consult with or acquire.
13
Strategy and Objectives
SyndicationNet believes that it can add value to development stage B2B
e-commerce Internet-related companies and/or traditional brick and mortar
businesses by providing seed-capital and SyndicationNet may take advantage of
various potential business acquisition opportunities through the issuance of
SyndicationNet's securities. SyndicationNet believes it can further assist them
in the following areas:
- to develop and implement business models that capitalize on the
Internet's ability to provide solutions to traditional companies;
- to build a corporate infrastructure including a management team, a
qualified sales and marketing department, information technology, finance
and business development;
- to assist them in their ability to manage rapid growth and flexibility to
adopt to the changing Internet marketplace and technology;
- to assist them in evaluating, structuring and negotiating joint ventures,
strategic alliances, joint marketing agreements and other corporate
transactions; and
-to advise them in matters related to corporate finance, financial
reporting and accounting operations.
SyndicationNet believes that its management team is qualified to identify
companies that are positioned to succeed. In evaluating whether to act as a
consultant with a particular company or, perhaps, acquire an interest in an
existing company, SyndicationNet intends to apply an analysis which includes,
but is not limited to, the following factors:
1. Industry evaluation to determine inefficiencies that may be
alleviated through Internet or e-commerce use and will evaluate the profit
potential, the size of the market opportunity and the competition that
exists for that particular industry.
2. Target company evaluation to determine if the target company has
the products, services and skills to become successful in its industry.
3. Overall quality and industry expertise evaluation of a potential
acquisition candidate in deciding whether to acquire a target company. If
the target company's management skills are lacking, a determination will be
made as to whether a restructuring of its corporate infrastructure is
feasible and, if done so, whether it would be successful.
4. Evaluation of SyndicationNet's equity position in a target company
and extent that SyndicationNet will be able to exert influence over the
direction and operations of the development stage company.
5. As a condition to any acquisition, SyndicationNet intends to
require representation on the company's board of directors to ensure its
ability to provide active guidance to the acquired company. SyndicationNet
intends to structure its acquisitions to permit the acquired company's
management and key personnel to retain an equity stake in the company.
SyndicationNet believes that it has the ability to complete acquisitions
and investments quickly and efficiently. SyndicationNet intends that after
acquiring an interest in a development company, it will participate in follow-on
financing if needed.
Competition
The market to acquire interests in development stage Internet companies is
highly competitive. Many of SyndicationNet's competitors may have more
experience identifying and acquiring equity interests in Internet companies and
have greater financial, research and management resources than SyndicationNet.
In addition, SyndicationNet may encounter substantial competition from new
market entrants. Some of SyndicationNet's current and future competitors may be
significantly larger and have greater name recognition than SyndicationNet. Many
investment oriented entities have significant financial resources which may be
more attractive to entrepreneurs of development stage companies than obtaining
the SyndicationNet's consulting, management skills and networking
14
services. There can be no assurance that SyndicationNet will be able to compete
effectively against such competitors in the future.
Customers
On September 19, 2000, SyndicationNet entered into a Services and
Consulting Agreement with Tri-State Metro Territories, Inc, a Delaware
corporation ("Tri-State") in the business of selling franchised hair coloring
salon units. SyndicationNet was retained as Tri-State's consultant to assist in
the management, development, sales, and marketing of "haircolorxpress", its
franchised hair coloring salon units, in the District of Columbia, Virginia,
Maryland and Delaware. SyndicationNet will be compensated from Tri-State at an
hourly rate of $150 to $250. SyndicationNet received an initial retainer of
$50,000 to be applied toward its hourly fees. The agreement is for a term of
twenty years with up to four 5-year extensions.
Kemper Pressure Treated Forest Products, Inc.
SyndicationNet's wholly owned subsidiary, Kemper Pressure Treated Forest
Products, Inc. ("Kemper") was incorporated on December 28, 1987 under the state
laws of Mississippi. Kemper was organized to procure, buy, sell and harvest
products for treating poles, conventional lumber and wood products, as well as
preserve and treat wood and forest products for sale in wholesale and retail
markets. On October 9, 1997, Kemper entered into an asset purchase agreement and
lease assignment with Electric Mills Wood Preserving, Inc., a Mississippi
company, under which it sold all of its assets and reassigned its lease related
to its manufacturing enterprise. Currently Kemper acts as a retail broker of
treated timber, having eliminated virtually all of its manufacturing capacities.
Kemper markets, distributes and arranges transportation for its treated
pine and hardwood lumber products which are used for utility poles, transmission
poles, pilings, bridge timbers, mining ties and guardrail posts. Kemper, in
working with the utility industry, procures two classifications of lumber poles:
(i) distribution poles which are typically used for electricity, cable,
telephone and other wires and (ii) transmission poles capable of carrying high
voltage electricity.
Kemper currently engages the services of a third party supplier, Electric
Mills Wood Preserving, Mississippi, which provides 100% of Kemper's wood
treating and procurement services on a purchase order basis. Management believes
that, if needed, other suppliers could provide these services on comparable
terms. A change in suppliers could, however, cause a delay in manufacturing and
a possible loss of sales, which would adversely affect Kemper's results of
operations.
Kemper currently has one customer, Shelby County Forest Products, Inc.,
Tacoma, Washington, which accounts for 100% of Kemper's revenues. Although
Kemper's management team is continually negotiating contracts with potential
customers, a loss of its current customer could have a material adverse affect
on Kemper's results of operations.
Employees
As of February 1, 2001 SyndicationNet had three full time employees and one
consultant. SyndicationNet's success depends to a large extent upon the
continued services of SyndicationNet's key managerial and technical employees.
The loss of such personnel could have a material adverse effect on
SyndicationNet's business and its results of operations. See "Risk Factors".
Physical Facilities and Offices
SyndicationNet is headquartered in the Hartke Building located at 7637
Leesburg Pike, Falls Church, Virginia 22043. Retired United States Senator Vance
Hartke, the president of SyndicationNet and the owner of the Hartke Building,
has granted SyndicationNet use of office space in the Hartke Building on a
rent-free basis. SyndicationNet projects that such office space should be
sufficient for its anticipated needs for the foreseeable future.
SyndicationNet's telephone number is 703/748-3480 and its fax number is
703/790-5435.
15
Transfer Agent
SyndicationNet's transfer agent is StockTrans, 44 West Lancaster Avenue,
Ardmore, Pennsylvania 19003.
USE OF PROCEEDS
The shares of common stock covered by this prospectus are to be sold by
SyndicationNet's shareholders and SyndicationNet will not receive any proceeds
from such sales.
DIVIDEND POLICY
SyndicationNet has not paid any cash dividends on its common stock since
inception and SyndicationNet does not anticipate paying any cash dividends on
its common stock in the foreseeable future. SyndicationNet intends to retain
future earnings, if any, to finance the expansion and development of its
business. SyndicationNet's board of directors will determine, in its sole
discretion, whether to declare any dividends on SyndicationNet's common stock in
the future, based on its earnings, capital requirements, financial position,
general economic conditions, and other relevant factors then existing.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of
SyndicationNet's financial condition and plan of operation and should be read in
conjunction with SyndicationNet's financial statements and the notes thereto.
The matters discussed in this section that are not historical or current facts
deal with potential future circumstances and developments. Such forward-looking
statements include, but are not limited to, the development plans for the growth
of SyndicationNet, trends in the results of SyndicationNet's development,
anticipated development plans, operating expenses and SyndicationNet's
anticipated capital requirements and capital resources. SyndicationNet's actual
results could differ materially from the results discussed in the
forward-looking statements.
Although SyndicationNet believes that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to be correct.
General
SyndicationNet.com, Inc., a Delaware corporation (the "Company"), is a
start-up holding company which was 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. SyndicationNet's strategy is
to integrate affiliated companies into a network and to actively develop the
business strategies, operations and management teams of the affiliated entities.
SyndicationNet currently has one wholly owned subsidiary, Kemper Pressure
Treated Forest Products, Inc. Kemper is engaged in the retail brokerage business
of preservative treated lumber such as utility poles, bridge pilings, timber and
guardrail posts. Kemper is also developing computer software applications that
will enable Kemper to manage on-line bidding for the treatment, sale and
shipment of processed wood.
SyndicationNet was originally incorporated in Delaware on March 24, 2000
under the name Algonquin Acquisition Corporation. In August 1999, Algonquin
changed its name to Life2K.com, Inc. On August 16, 1999, Life2K.com, Inc.
acquired all the outstanding shares of Kemper Pressure Treated Forest Products,
Inc., an operating Mississippi company. On October 13, 2000, Life2K.com, Inc.
was acquired by Generation Acquisition Corporation, a public reporting company,
as a wholly owned subsidiary. Subsequently, Life2K.com, Inc. was merged with and
into Generation Acquisition Corporation, which simultaneously changed its name
to SyndicationNet.com, Inc.
16
Plan of Operation
(i) The Company believes that it currently has enough cash on hand to
enable it to operate for the next twelve months. The Company's revenues and
profits, if any, will depend upon various factors, including whether the Company
will be able to effectively evaluate the overall quality and industry expertise
of potential acquisition candidates, whether the Company will have the funds to
provide seed capital and mezzanine financing to e-commerce and Internet-related
companies and whether the Company can develop and implement business models that
capitalize on the Internet's ability to provide solutions to traditional
companies. The Company may be materially adversely affected if it is unable to
secure sufficient funds to finance its proposed acquisitions and operating
costs.
The Company, primarily through the marketing efforts of its executive
officers, directors and consultants, intends to locate B2B Internet-related
companies and/or traditional brick and mortar businesses for which the Company
will act as a general corporate consultant and intends to locate development
stage companies as acquisition candidates. Over the next twelve months, the
Company's management team, led by retired United States Senator Vance Hartke,
hopes to take advantage of the resources of its directors, specifically in the
areas of accounting, e- commerce, finance and politics, to enable the Company to
consult with, acquire and integrate B2B e-commerce companies and/or traditional
brick and mortar businesses and to leverage the Company's collective management
resources and experiences. The Company intends to actively explore synergistic
opportunities such as cross marketing efforts within the network of companies it
will consult with or acquire.
The Company intends for its 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 the Company intends to increase
revenue and gross profit margin by focusing and expanding its consulting
services. It is management's belief that potential acquisition targets can be
better identified and assessed for risk if the Company becomes involved with
various companies on a consulting capacity. The Company's strategy is to
integrate affiliated companies into a network and to actively develop the
business strategies, operations and management teams of the affiliated entities.
On September 19, 2000, the Company entered into a Services and Consulting
Agreement with Tri-State Metro Territories, Inc, a Delaware corporation
("Tri-State") in the business of selling franchised hair coloring salon units
under the copy right name of "haircolorxpress". The Company was retained as
Tri-State's consultant to assist in the development of management, sales, and
marketing of "haircolorxpress", franchised hair coloring salon units in the
District of Columbia, Virginia, Maryland and Delaware. The Company will be
compensated from Tri-State at an hourly rate of $150 to $250. On November 29,
2000, the Company received an initial retainer of $50,000 to be applied toward
its hourly fees. Initially the agreement is for a term of twenty years with up
to four 5-year extensions. The Company hopes that it will enter into several
agreements over the next 12 months that will increase consulting fees as well as
open dialog for acquisition considerations.
Nine Months Ended September 30th 2000 compared to September 30th 1999 for the
- -----------------------------------------------------------------------------
Company together with its wholly owned subsidiary, Kemper Pressure Treated
- --------------------------------------------------------------------------
Forest Products, Inc.
- ---------------------
In the third quarter ended September 30th of 2000 the Company's revenues
increased by 24% to $5,484,273 up from $4,427,780 for the same nine-month period
ended 1999. The increase is primarily attributed to the growth of the Company's
only wholly owned subsidiary, Kemper Pressure Treated Forest Products, Inc. It
is the position of management that the client base of the subsidiary should
expand over the next year and the trend should continue. The general operation
and management expenses for the period have increased 100% to $320,714 up from
$160,322 for the same nine month period ended in the fiscal year 1999. It is
management's belief that the increase is primarily attributed to the one time
expenses related to the Company's recent merger, filing of its registration
statement and public offering efforts. The cost of combining with a reporting
company, audits, legal fees, and project consulting fees attributed to the
merger process and public offering efforts have been extensive, but are expected
to wind down over the next 12 months. The Company reduced its debt by retiring
$50,000.00 of notes and associated interest. The net effect is a 34% reduction
of debt from $160,021 at the nine month period ended September, 1999, down to
$105,000 for the same nine-month period ended 2000. Additional paid in capital
increased $458,157 since September 30th 1999. The net effect has produced a gain
of 24% in stockholders equity by reducing the deficit in stockholders equity
from $(437,107) at September 30th 1999, down to $(351,161) for the same nine
months from September 30th 2000. It is the belief of management that as the
Company moves toward an active trading status the ability to raise capital by
stock issuance to effect its business plan is enhanced.
17
(ii) The Company does not expect to purchase or sell any manufacturing
facilities or significant equipment over the next twelve months.
(iii) The Company does not foresee any significant changes in the number of
its employees over the next twelve months.
MANAGEMENT
The following table sets forth certain information regarding the members of
SyndicationNet's board of directors and its executive officers:
Name Age Position
Vance Hartke 81 President and Director
Mark Griffith 41 Treasurer, Secretary and Director
Cynthia White 32 Chief Financial Officer
Mark Solomon 45 Director
Wayne Hartke 52 Director
Howard B. Siegel 57 Director
SyndicationNet's directors have been elected to serve until the next annual
meeting of the stockholders of SyndicationNet and until their respective
successors have been elected and qualified or until death, resignation, removal
or disqualification. SyndicationNet's Certificate of Incorporation provides that
the number of directors to serve on the Board of Directors may be established,
from time to time, by action of the Board of Directors. Vacancies in the
existing Board are filled by a majority vote of the remaining directors on the
Board. SyndicationNet's executive officers are appointed by and serve at the
discretion of the Board. Directors receive an annual issuance of 10,000 shares
of SyndicationNet's common stock for serving as directors of SyndicationNet and
are repaid for expenses incurred in performing their obligations thereof.
Senator Vance Hartke, Esq. (retired) serves as the President and a director
of SyndicationNet. Retired Senator Hartke received his Juris Doctor in 1948 from
Indiana University Law School. From 1956 to 1958, Senator Hartke served as the
Mayor of the City of Evansville, Indiana. From 1958 to 1976, Vance Hartke served
as the United States Senator from Indiana for three terms. Senator Hartke was a
member of the United States Senate Finance Committee with jurisdiction over
taxes, debt control, international trade, social security, welfare, health and
energy, and a member of the United States Senate Commerce Committee with
jurisdiction over trade and tourism, business, communication and consumer
affairs.
Former Senator Vance Hartke is a practicing attorney who currently heads
"The Hartke Group", a full service family-owned advisory/consulting firm. Over a
period of 30 years, Mr. Hartke has been involved with the United Nation, the
World Health Organization, the Food and Agricultural Organization, the United
Nations Development Program, the World Bank, U.S. Aide, the Overseas Private
Investment Corporation, the Export- Import Bank, the Inter American Development
Bank and various agencies of the United States Administration, the United States
Senate and the United States House of Representatives.
Senator Hartke is the co-founder of the American Trial Lawyers Association
and the founder of the International Executive Service Corps. Senator Hartke
currently serves as a director of Neptune Pharmaceuticals USA, Inc., a privately
held company that imports and exports pharmaceutical products, and also serves
as a director of Wood Holdings, Inc. and Wood Sales, Inc., privately held
companies in the wood preservative industry.
18
Mark Solomon, Esq. serves as Chairman of the Board of Directors of
SyndicationNet. Mr. Solomon received a Bachelor of Science Degree from Nova
University in 1976 and received his Juris Doctor from Nova University Law School
in 1979. Mr. Solomon is a practicing attorney specializing in criminal law.
Cynthia White serves as the Chief Financial Officer of SyndicationNet.
Since October, 1991, Ms. White has owned The Accelerated Group, Inc., an
accounting firm which specializes in corporate and individual taxes, audits,
financial reporting and business consultation. From 1992 to 1993, Ms. White also
served as the Comptroller for Optoelectronics, Inc. and prior to that she served
as an accountant for Florida Business Services, Inc. and the accounting firm of
James and Surman, CPA. In 1992, Ms. White received her B.A. from Florida
Atlantic University with a major in accounting. Ms. White also serves as the
treasurer for the Boca Raton Society for the Disabled, Inc.
Mark Griffith serves as the Treasurer, Secretary and a director of
SyndicationNet. Mr. Griffith received his Bachelor of Arts degree in History and
in Education from Salisbury State University in 1984. From December 2000 to the
present, Mr. Griffith has served as the senior compliance examiner for Sterling
Financial Investment Group, Florida. From September 2000 to December 2000, Mr.
Griffith worked as a registered securities principal with National Securities,
Inc., a Florida based securities firm. From 1997 to September, 2000, Mr.
Griffith served as the Chief Compliance Officer for the Agean Group, a Florida
based securities firm. Prior to 1997, Mr. Griffith worked as a stockbroker for
J.W. Grant and Associates.
Wayne Hartke, Esq. serves as a director of SyndicationNet. Mr. Hartke
received his Bachelor of Arts degree from the University of Pennsylvania in 1970
and received his Juris Doctor in 1973 from the California Western School of Law.
Mr. Hartke, since 1978, has been a partner in the law firm of Hartke & Hartke
and is currently admitted to the bars of the District of Columbia, Virginia and
California. Mr. Hartke served as corporate counsel to Norris Satellite
Communications, Inc. where he participated in negotiations with Sprint, Orbital
Sciences Corporation, Harris Corporation and Echostar regarding satellite launch
contracts. Mr. Hartke also has experience in Federal Communications Commission
license applications, the development and sale of coal properties, international
crude oil purchases and the acquisition and marketing of Internet domain names.
Mr. Hartke currently serves as a director of Tong-1 Pharmaceuticals, Inc.,
a privately held retail chain of drug stores operating in China. Mr. Hartke also
serves as a director of Wood Holdings, Inc. and Wood Sales, Inc., privately held
companies in the wood preservative industry. Mr. Wayne Hartke is the son of
Senator Vance Hartke, the President and a director of SyndicationNet.
Howard S. Siegel serves as a director of SyndicationNet. Mr. Siegel
received his Juris Doctor in 1969 from St. Mary's University Law School. Since
1969, Mr. Siegel has been a practicing attorney. For the past five years, Mr.
Siegel has worked with the law office of Yuen & Associates, located in Houston,
Texas. Prior to working for Yuen & Associates, Mr. Siegel was employed with the
Internal Revenue Service, Tenneco, Inc., Superior Oil Company and Braswell &
Paterson. Mr. Siegel serves as a director of Golden Triangle Industries, Inc.
(GTII), a public company traded on the Nasdaq exchange, and serves as a director
for Signature Motor Cars, Inc, a privately-held company.
Director Compensation
SyndicationNet grants each member of its Board of Directors 10,000 shares
of SyndicationNet's common stock annually.
Executive Compensation
Neither the officers nor directors of SyndicationNet have received any cash
compensation or cash bonus for services rendered during 1999.
19
Employment Agreements
SyndicationNet has not entered into employment agreements with any of its
officers or employees. All key employees serve in their positions until further
action of the President of SyndicationNet or its Board of Directors.
Consulting Agreement
On April 7, 1999, SyndicationNet ratified a corporate services consulting
agreement that Kemper had with Source Management Services, Inc. Brian
Sorrentino, a significant shareholder of SyndicationNet, is the president and
sole director and shareholder of Source Management. Source Management is to
oversee the general activities of SyndicationNet on a day to day basis, develop
and execute SyndicationNet's business plan, assist in the preparation of audits,
registration statements and the listing of SyndicationNet's securities on the
OTC Bulletin Board. For the fiscal year 2000, SyndicationNet has agreed to
compensate Source Management the greater of $150 per hour or $17,500 per month.
If and when SyndicationNet's securities are traded on any United States
securities market, Source Management will receive 5% of the then outstanding
shares of SyndicationNet's common stock.
Family Relationships
Wayne Hartke, a member of SyndicationNet's Board of Directors, is the son
of Vance Hartke. There are no other family relationships among SyndicationNet's
directors, executive officers or other persons nominated or chosen to become
officers or executive officers.
Legal Proceedings
SyndicationNet is not a party to any litigation and management has no
knowledge of any threatened or pending litigation against it.
Indemnification of Officers, Directors, Employees and Agents
SyndicationNet's Certificate of Incorporation and By-Laws provide that
SyndicationNet shall, to the fullest extent permitted by applicable law, as
amended from time to time, indemnify its directors, as well as any of
SyndicationNet's officers or employees to whom SyndicationNet has agreed to
grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers provided that this provision shall not eliminate or limit the
liability of a director
-for breach of the director's duty of loyalty to the corporation or its
stockholders;
-for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
-under Section 174 (relating to the liability for unauthorized acquisitions
or redemptions of, or dividends on, capital stock) of the Delaware General
Corporation Law; or
-for any transaction from which the director derived an improper personal
benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by laws, any agreement, vote of shareholder or otherwise.
The effect of the foregoing is to require SyndicationNet to indemnify its
officers and directors for any claim arising against such person in their
official capacities if such person acted in good faith and in a manner that he
reasonably believed to be in or not opposed to SyndicationNet's best interests,
and, with respect to any criminal actions or proceedings, had no reasonable
cause to believe his conduct was unlawful.
20
SyndicationNet has adopted a charter provision that requires it to
indemnify all of the present and former directors, officers, agents and
employees of SyndicationNet to the fullest extent permitted by Delaware law. In
connection with SyndicationNet's indemnification obligations to such persons,
SyndicationNet may make advances to cover a person's expenses provided that
SyndicationNet receives an undertaking from such person to repay the advances
unless the person is ultimately determined to be entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to SyndicationNet's directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, SyndicationNet has
been advised that in the opinion of the Securities and Exchange Commission
indemnification for such liabilities is against public policy as expressed in
the Securities Act and is therefore unenforceable.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date of this
prospectus regarding the beneficial ownership of SyndicationNet's common stock
by each of its executive officers and directors, individually and as a group and
by each person who beneficially owns in excess of five percent of the common
stock after giving effect to the exercise of warrants or options held by the
named securityholder.
Number of
Shares Percent of Class
------ ----------------
Vance Hartke 20,000 (*)
President and director
7637 Leesburg Pike
Falls Church, Virginia 22043
Mark Griffith 20,000 (*)
Secretary, Treasurer and director
465 N.E. 3rd Street
Boca Raton, Florida 33432
Cynthia White 30,000 (*)
Chief Financial Officer
7637 Leesburg Pike
Falls Church, Virginia 22043
Mark Solomon 104,000 (*)
Director
901 South Federal Highway
Fort Lauderdale, Florida 22216
Wayne Hartke 20,000 (*)
Director
7637 Leesburg Pike
Falls Church, Virginia 22043
Howard B. Siegel 20,000 (*)
Director
15902 South Barker Landing
Houston, Texas 77079
Dale Hill 4,708,366 43.6%
5056 Westgrove Drive
Dallas, Texas 75248
21
Brian Sorrentino 3,732,924 34.6%
Consultant
PO Box 484
Damascus, MD 20872
All Officers and Directors 214,000 1.98%
as a group (6 persons)
- --------------------
* Represent less than 1% of the outstanding shares of SyndicationNet
(1) Based upon 10,781,750 shares of SyndicationNet's common stock issued and
outstanding as of February 1, 2001.
SELLING SECURITYHOLDERS
SyndicationNet is registering for offer and sale by the holders thereof
561,500 shares of common stock held by certain securityholders. The selling
securityholders may offer their shares for sale on a continuous basis pursuant
to Rule 415 under the 1933 Act. See "Risk Factors"
SyndicationNet intends to apply to have its common stock quoted on the OTC
Bulletin Board; however SyndicationNet can give no assurance that its securities
will be accepted for quotation thereon.
All of the selling securityholders' shares registered hereby will become
tradeable on the effective date of the registration statement of which this
prospectus is a part.
The following table sets forth certain ownership of the Securities of
SyndicationNet held by each person who is a selling securityholder.
Percent of Stock Owned(1)(2)
Number of Number of ----------------------------
Shares Shares Prior to After
Name and Address Owned Offered Herein Offering Offering
- -------------------------------------------------------------------------------------------------------
Frank Caravello 10,000 10,000 (*) (*)
13357 S.W. 42nd Street
Davie, Florida 33330
Barry Cardott 8,000 8,000 (*) (*)
1821 S.W. 11th Street
Ft. Lauderdale, Florida 33312
Commercial Roofing 30,000 30,000 (*) (*)
Analyst Profit Sharing Plan
3 Chapel Hill Road
Oakland, New Jersey 07436
Lisa Currier 1,000 1,000 (*) (*)
725 SE 23rd Street
Ft Lauderdale, Florida 33316
Kim Dickinson 10,000 10,000 (*) (*)
5641 Vayln Rd.
Baltimore, Maryland 21228
22
Allen Martin Dubow 10,000 10,000 (*) (*)
100 Main Street
White Plains, New York 10601
Allen and Marjorie Dubow 25,000 25,000 (*) (*)
100 Main Street
White Plains, New York 10601
Dr. Ratti Kenta Duta 38,000 10,000 (*) (*)
304 West Michigan
Urbana, Illinois 61801
Alex Fenik 1,000 1,000 (*) (*)
1070 NE 2nd Terrace
Boca Raton, Florida 33432
Steve Framer 1,000 1,000 (*) (*)
1400 SW 72nd Avenue
Plantation, Florida 33316
Joanne Framer 750 750 (*) (*)
1400 SW 72nd Avenue
Plantation, Florida 33316
Robert L. Green, Jr. 200,000 200,000 1.8% (*)
3115 Foxhall Road N.W.
Washington, D.C. 20016
Mark Griffith(3) 20,000 5,000 (*) (*)
465 N.E. 3rd Street
Boca Raton, Florida 33432
Vance Hartke (3) 20,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Wayne Hartke(3) 20,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Janet L. Hender 1,250 1,250 (*) (*)
1618 Willow Run
Brookshire, Texas 77423
HTRG Consulting, LLC(4) 150,000 100,000 1.39% (*)
1712 Featherwood Street
Silver Spring, Maryland 20904
Robert Lancy 10,000 10,000 (*) (*)
1570 N.E. 131st Street
North Miami, Florida 33161
Crieg D. Mahlberg 15,000 15,000 (*) (*)
428 140th Avenue N.E.
Hamlake, Minnesota 55304
23
Robert Marks 750 750 (*) (*)
12883 Peters Rd
Hemstead, Texas 77445
Paul and Linda Merson 12,500 12,500 (*) (*)
4431 E. Country Club Circle
Plantation, Florida 33161
Howard Siegel (3) 20,000 5,000 (*) (*)
15902 South Barker Landing
Houston, Texas 77079
Donald Sinclair 1,000 1,000 (*) (*)
2180 N.W. 93rd Avenue
Pembroke Pines, Florida 33024
Donald L. Siebenmorgen 500 500 (*) (*)
7623 Breas Glen
Houston, Texas 77071
Mark Solomon (3) 104,000 30,000 (*) (*)
901 S. Federal Highway
Fort. Lauderdale, Florida 33316
Brian Sorrentino (5) 3,732,924 40,000 34.6% 34.2%
PO Box 484
Damascus, Maryland 20872
Steven J. Sprechman 1,000 1,000 (*) (*)
18305 Biscayne Blvd. #213
Miami, Florida 333160
Susan Stickley 1,250 1,250 (*) (*)
823 Montery Street
Coral Gables, Florida 33134
Jennifer Thompson 500 500 (*) (*)
2910 Washington St
Coconut Grove, Florida 33133
David Tiralla 2,500 2,500 (*) (*)
1410 Armacost Rd.
Pankton, Maryland 21120
Catherin Anne Tiralla 2,500 2,500 (*) (*)
1410 Armacost Rd.
Pankton, Maryland 21120
Frank Vopitta 5,000 5,000 (*) (*)
18691 Middletown Rd
Parkton, Maryland 21120
Gregory Volpitta 5,000 5,000 (*) (*)
1220 Monkton Rd.
Monkton, Maryland 21111
24
Cynthia White (3) 30,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Helly White 1,000 1,000 (*) (*)
9300 SW 60th Avenue
Miami, Florida 33156
- ---------------------
* Represents less than 1% of SyndicationNet's outstanding shares of common stock
(1) Such figure is based upon 10,781,750 shares of common stock outstanding as
of the date of this prospectus.
(2) Such figure assumes the sale of all of the shares offered by the selling
securityholders.
(3) The named selling securityholder is an officer and/or director of
SyndicationNet.
(4) The named shareholder entered into a consulting agreement with
SyndicationNet to provide web design, internet and research services.
(5) The named shareholder is a consultant to SyndicationNet and is an owner
of more than 10% of SyndicationNet's shares of common stock outstanding.
In the event a selling securityholder receives payment from sales of their
shares, SyndicationNet will not receive any of the proceeds from such sales.
SyndicationNet is bearing all expenses in connection with the registration of
the selling security holder's shares offered by this prospectus.
The shares owned by the selling securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities and
Exchange Commission which Rules pertain to delayed and continuous offerings and
sales of securities. In regard to the selling securityholder's shares offered
under Rule 415, SyndicationNet has made certain undertakings in Part II of the
registration statement of which this prospectus is a part pursuant to which, in
general, SyndicationNet has committed to keep this prospectus current during any
period in which offers or sales are made pursuant to Rule 415.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 7, 1999, SyndicationNet.com ratified a corporate service
consulting agreement that Kemper had with Source Management Services, Inc.
Source Management is to oversee the general activities of Kemper on a day to day
basis, develop and execute Kemper's business plan, assist in the preparation of
audits, registration statements and the listing of SyndicationNet.com securities
on the OTC Bulletin Board. For the fiscal year 2000, SyndicationNet.com has
agreed to compensate Source Management the greater of $150 per hour or $17,500
per month. If and when SyndicationNet.com's securities are traded on any United
States stock exchange, Source Management will receive 5% of the outstanding
shares of SyndicationNet.com's common stock.
On March 3, 1999, SyndicationNet borrowed $100,000 from Brian Sorrentino, a
greater than 5% shareholder of SyndicationNet's common stock and the principal
of Source Management Services. SyndicationNet executed a promissory note for the
loan amount at an interest rate of 12% per annum. The loan, due March 3, 2000,
has not been paid as of the date of this filing.
In September 1999, SyndicationNet borrowed $25,000 from Dr. Rati Kenta
Dutta, a selling securityholder. Dr. Dutta agreed to cancel such loan together
with any accrued interest in exchange for an aggregate of 38,000 shares of
SyndicationNet's common stock which shares were issued to Dr. Dutta in August
2000.
25
DESCRIPTION OF SECURITIES
Common Stock
SyndicationNet is authorized to issue 100,000,000 shares of common stock,
$.0001 par value per share, of which 10,781,750 shares were outstanding as of
the date of this report.
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the board
of directors in its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of SyndicationNet, the holders
of common stock are entitled to share pro rata all assets remaining after
payment in full of all liabilities.
Holders of common stock have no preemptive rights to purchase
SyndicationNet's common stock. There are no conversion or redemption rights or
sinking fund provisions with respect to the common stock.
Preferred Stock
SyndicationNet is authorized to issue 20,000,000 shares of preferred stock,
$.0001 par value per share. As of the date of this prospectus, there were no
shares of preferred stock outstanding. The board of directors is authorized to
provide for the issuance of shares of preferred stock in series and, by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof
without any further vote or action by the shareholders. Any shares of preferred
stock so issued would have priority over the common stock with respect to
dividend or liquidation rights. Any future issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of
SyndicationNet without further action by the shareholders and may adversely
affect the voting and other rights of the holders of common stock. At present,
SyndicationNet has no plans to issue any preferred stock nor adopt any series,
preferences or other classification of preferred stock.
Additional Information Describing Securities
Reference is made to applicable statutes of the state of Delaware for a
description concerning statutory rights and liabilities of shareholders.
Trading of Shares
There are no outstanding options, options to purchase, or securities
convertible into shares of SyndicationNet's common stock other than the
securities described herein. SyndicationNet has not agreed with any
shareholders, to register their shares for sale, other than for this
registration. SyndicationNet does not have any other public offerings in process
or proposed.
Admission to Quotation on Nasdaq SmallCap Market or OTC Bulletin Board
If SyndicationNet meets the qualifications, it intends to apply for
quotation of its securities on the OTC Bulletin Board or the Nasdaq SmallCap
Market. If SyndicationNet's securities are not quoted on the OTC Bulletin Board,
a securityholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, SyndicationNet's securities. The OTC
Bulletin Board differs from national and regional stock exchanges in that it (1)
is not situated in a single location but operates through communication of bids,
offers and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. To qualify for quotation on the OTC Bulletin Board,
an equity security must have one registered broker-dealer, known as the market
maker, willing to list bid or sale quotations and to sponsor the company
listing. If it meets the qualifications for trading securities on the OTC
Bulletin Board SyndicationNet's securities will trade on the OTC Bulletin Board
until a future time, if at all, that SyndicationNet applies and qualifies for
admission to quotation on the Nasdaq SmallCap Market. SyndicationNet may not now
and it may never qualify for quotation on the OTC Bulletin Board or accepted for
listing of its securities on the Nasdaq SmallCap Market.
26
To qualify for admission to quotation on the Nasdaq SmallCap Market, an
equity security must, in relevant summary,
(1) be registered under the Exchange Act;
(2) have at least three registered and active market makers, one of
which may be a market maker entering a stabilizing bid;
(3) for initial inclusion, be issued by a company with $4,000,000 in
net tangible assets, or $50,000,0000 in market capitalization, or $750,000
in net income in two of the last three years (if operating history is less
than one year then market capitalization must be at least $50,000,000);
(4) have at a public float of at least 1,000,000 shares with a value
of at least $5,000,000;
(5) have a minimum bid price of $4.00 per share; and
(6) have at least 300 beneficial shareholders.
Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or listed on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities are provided
by the exchange or system. The penny stock rules impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Because of these penny stock rules, broker-dealers may be restricted in their
ability to sell SyndicationNet's common stock. The foregoing required penny
stock restrictions will not apply to SyndicationNet's common stock if such stock
reaches and maintains a market price of $5.00 or greater.
Reports to Shareholders
SyndicationNet will furnish to holders of its common stock annual reports
containing audited financial statements examined and reported upon, and with an
opinion expressed by, an independent certified public accountant. SyndicationNet
may issue other unaudited interim reports to its shareholders as it deems
appropriate.
PLAN OF DISTRIBUTION
Sales by Selling Securityholders
After effectiveness of this prospectus, the non-affiliated selling
securityholders may offer and sell their shares at a price and time determined
by them without regard to Rule 144. Of the 561,500 shares of common stock
registered in this prospectus, 95,000 shares of common stock are held by
officers, directors or affiliates of SyndicationNet.
Section 4(3) of the Securities Act provides an exemption from the
registration provisions of the Securities Act for transactions by a dealer for
transactions occurring within 40 days of the effective date of a registration
statement for the securities or prior to the expiration of 40 days after the
first date upon which the security was offered to the public.
27
Sales by Affiliates
Sales of the securities by affiliates of SyndicationNet are subject to the
volume limitations imposed by Rule 144 even after registration of such
securities. An affiliate who holds unrestricted securities may sell, within any
three month period, a number of the shares of SyndicationNet that does not
exceed the greater of one percent of the then outstanding shares of the class of
securities being sold or, if SyndicationNet's securities are trading on the
Nasdaq Stock Market or an exchange at some time in the future, the average
weekly trading volume during the four calendar weeks prior to such sale.
Resales of the Securities under State Securities Laws
The National Securities Market Improvement Act of 1996 ("NSMIA") limits the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the
securities in the secondary market will be made pursuant to Section 4(1) of the
Securities Act (sales other than by an issuer, underwriter or broker). It is
anticipated that following the effective date the selling securityholders'
securities will be eligible for resale in the secondary market in each state.
If SyndicationNet meets the requirements of the OTC Bulletin Board it will
apply for listing thereon. When and if it should qualify, if ever, it intends to
apply for quotation of its securities on the Nasdaq SmallCap Market.
SyndicationNet may not qualify for listing of its securities on the OTC Bulletin
Board or may never satisfy the qualifications to be quoted on the Nasdaq
SmallCap Market. If it should be accepted for listing thereon, then the
underwriters may engage in passive market making transactions in
SyndicationNet's common stock in accordance with Rule 103 of Regulation M.
Following the completion of this offering, one or more broker-dealers may
act as the principal market makers for the securities offered hereby. A
broker-dealer acting as a market maker for a particular security will purchase
and sell such securities for its own account, will maintain an inventory of such
securities and may actively assist in the sale of these securities by producing
research reports, recommending the security to its clients or otherwise. Under
these circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. The market making activities of any market
maker, if commenced, may subsequently be discontinued.
By Rule 101 of Regulation M, participants in a distribution, including
underwriters acting as market makers, are prohibited from bidding for,
purchasing, or inducing the purchase of the distributed security during an
applicable restricted period. Rule 103 provides an exemption to such restriction
and certain distribution participants, including market makers, may engage in
passive market making transactions provided the conditions of Rule 103 are met.
Certain of these conditions include, among other conditions including price and
volume limitations, that market maker must be acting in its capacity as a market
maker and the security is one quoted on Nasdaq.
LEGAL MATTERS
Legal Proceedings
SyndicationNet is not a party to any litigation and management has no
knowledge of any threatened or pending litigation against it.
Legal Opinion
Cassidy & Associates, Washington, D.C., has given its opinion as
attorneys-at-law that the shares of common stock offered by the selling
securityholders will be fully paid, validly issued and non-assessable. Cassidy &
Associates has passed on the validity of the common stock offered by the selling
securityholders but purchasers of such common stock should not rely on Cassidy &
Associates with respect to any other matters. James M. Cassidy, a
28
principal of Cassidy & Associates, is the beneficial shareholder of 250,000
shares of the common stock of SyndicationNet.
EXPERTS
The audited financial statements for the periods ended December 31, 1999
and 1998 included in this prospectus have been so included in reliance on the
report of HJ & Associates LLC, independent accountants, given on the authority
of such firm as experts in auditing and accounting.
AVAILABLE INFORMATION
SyndicationNet is subject to the informational reporting requirements of
the Securities Exchange Act of 1934 and intends to file reports and other
information with the Commission. Reports, proxy statements and other information
filed by SyndicationNet, including its registration statement, can be inspected
and copied on the Commission's home page on the World Wide Web at
http://www.sec.gov or at the public reference facilities of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
following Regional Offices: 7 World Trade Center, Suite 1300, New York, N.Y.
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies can be obtained from the Commission by mail at
prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
SyndicationNet will provide without charge to each person who receives a
copy of the prospectus which is part of this registration statement, upon
written or oral request, a copy of any of the information incorporated herein by
reference, not including exhibits. Such requests should be made in writing to
Vance Hartke, President, The Hartke Building, 7637 Leesburg Pike, Falls Church,
Virginia 22043 or by telephone at 703/748-3480.
INDEX TO FINANCIAL STATEMENTS
The audited financial statements for the periods ended December 31, 1999
and 1998 are included herein.
29
SYNDICATIONNET.COM, INC.
561,500 shares of common stock to be sold by certain selling securityholders
----------------
PROSPECTUS
----------------
, 2001
SyndicationNet has not authorized any dealer, salesperson or other person
to provide any information or make any representations other than the
information or representations contained in this prospectus. Purchasers of the
securities offered hereby should not rely on any additional information or
representations if made.
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy any securities:
. except the common stock offered by this prospectus;
. in any jurisdiction in which the offer or solicitation is not
authorized;
. in any jurisdiction where the dealer or other salesperson is not
qualified to make the offer or solicitation;
. to any person to whom it is unlawful to make the offer or
solicitation; or
. to any person who is not a United States resident or who is outside
the jurisdiction of the United States.
The delivery of this prospectus or any accompanying sale does not imply
that:
. there have been no changes in SyndicationNet's affairs after the date
of this prospectus; or
. the information contained in this prospectus is correct after the date
of this prospectus.
30
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
C O N T E N T S
Independent Auditors' Report.................................................. 3
Consolidated Balance Sheet.................................................... 4
Consolidated Statements of Operations......................................... 5
Consolidated Statements of Stockholders' Equity (Deficit)..................... 6
Consolidated Statements of Cash Flows......................................... 7
Notes to the Consolidated Financial Statements................................ 8
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Life2K.com, Inc. and Subsidiary
(Formerly Algonquin Acquisition Corporation)
Boca Raton, Florida
We have audited the accompanying consolidated balance sheet of Life2K.com, Inc.
and Subsidiary (formerly Algonquin Acquisition Corporation) at December 31, 1999
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 1999 and 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Life2K.com, Inc. and Subsidiary (formerly Algonquin Acquisition Corporation) as
of December 31, 1999 and the consolidated results of their operations and their
cash flows for the years ended December 31, 1999 and 1998 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 8 to the
consolidated financial statements, the Company has incurred significant losses
which have resulted in an accumulated deficit and a deficit in stockholders'
equity, raising substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 8. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
April 17, 2000
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Consolidated Balance Sheet
ASSETS
------
December 31,
1999
-----------------
CURRENT ASSETS
Cash $ 5,580
Accounts receivable (Note 1) 487,840
-----------------
Total Current Assets 493,420
-----------------
PROPERTY AND EQUIPMENT - NET (Note 2) 2,730
-----------------
TOTAL ASSETS $ 496,150
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 785,389
Accrued expenses (Note 3) 22,135
Notes payable - related party (Note 7) 155,000
-----------------
Total Current Liabilities 962,524
-----------------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, 60,000 shares issued and outstanding 6
Common stock: 100,000,000 shares authorized of $0.0001
par value, 16,525,000 shares issued and outstanding 1,652
Additional paid-in capital 264,032
Deficit accumulated during the development stage (732,064)
-----------------
Total Stockholders' Equity (Deficit) (466,374)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 496,150
=================
The accompanying notes are an integral part of these consolidated
financial statements.
4
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Consolidated Statements of Operations
For the Years Ended
December 31,
--------------------------------------
1999 1998
------------------ -----------------
SALES $ 5,597,576 $ 4,494,708
COST OF GOODS SOLD 5,526,429 4,403,509
------------------ -----------------
GROSS MARGIN 71,147 91,199
------------------ -----------------
OPERATING EXPENSES
Depreciation 910 910
General and administrative 256,555 174,191
------------------ -----------------
Total Operating Expenses 257,465 175,101
------------------ -----------------
OPERATING LOSS (186,318) (83,902)
------------------ -----------------
OTHER INCOME (EXPENSES)
Interest expense (26,179) (1)
Interest income 277 6
Loss on disposal of assets - (1,393)
------------------ -----------------
Total Other Income (Expenses) (25,902) (1,388)
------------------ -----------------
NET LOSS BEFORE INCOME TAXES (212,220) (85,290)
INCOME TAXES (Note 1) - -
------------------ -----------------
NET LOSS BEFORE EXTRAORDINARY ITEM (212,220) (85,290)
EXTRAORDINARY ITEM (Note 9) - 332,782
------------------ -----------------
NET INCOME (LOSS) $ (212,220) $ 247,492
================== =================
BASIC INCOME (LOSS) PER SHARE OF COMMON
STOCK (Note 1)
Loss from continuing operations $ (0.01) $ (0.01)
Income from extraordinary items - 0.02
------------------ -----------------
BASIC INCOME (LOSS) PER SHARE $ (0.01) $ 0.02
================== =================
The accompanying notes are an integral part of these consolidated
financial statements.
5
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Consolidated Statements of Stockholders' Equity (Deficit)
Preferred Stock Common Stock Additional
----------------------------- --------------------------- Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit
------------- ------------- ------------- ------------ ------------- -------------
Balance, December 31, 1997 - $ - 16,200,000 $ 1,620 $ 180,880 $ (767,336)
Capital contributions, 1998 - - - - 10,690 -
Net income for the year ended
December 31, 1998 - - - - - 247,492
------------- ------------- ------------- ------------ ------------- -------------
Balance, December 31, 1998 - - 16,200,000 1,620 191,570 (519,844)
Recapitalization 60,000 6 312,500 31 (37) -
Common stock issued for cash at
$1.00 per share - - 12,500 1 12,499 -
Capital contributions, 1999 - - - - 60,000 -
Net loss for the year ended
December 31, 1999 - - - - - (212,220)
------------- ------------- ------------- ------------ ------------- -------------
Balance, December 31, 1999 60,000 $ 6 16,525,000 $ 1,652 $ 264,032 $ (732,064)
============= ============= ============= ============ ============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
6
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Consolidated Statements of Cash Flows
For the Years Ended
December 31,
-------------------------------------
1999 1998
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (212,220) $ 247,492
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 910 910
Loss on disposal of fixed assets - 1,393
Gain on settlement of debt - (332,783)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (50,633) 16
Decrease in prepaids and other current assets - 32,747
Increase in accounts payable 17,786 25,173
Increase in accrued expenses 22,135 -
------------------ -----------------
Net Cash Used in Operating Activities (209,522) (25,052)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Disposal of fixed assets - 2,639
------------------ -----------------
Net Cash Used in Investing Activities - 2,639
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related party 155,000 -
Proceeds from issuance of common stock 12,500 -
Proceeds from additional capital contribution 60,000 6,140
------------------ -----------------
Net Cash Provided by Financing Activities 215,000 6,140
------------------ -----------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,478 (16,273)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 102 16,375
------------------ -----------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,580 $ 102
================== =================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ - $ -
Interest $ 4,044 $ -
Non-Cash Financing Activities
Stock issued for services $ 60,000 $ -
Equipment contributed by shareholder $ - $ 4,550
The accompanying notes are an integral part of these consolidated
financial statements.
7
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of
Life2K.com, Inc. (Life2K) and its wholly-owned subsidiary, Kemper
Pressure Treated Forest Products, Inc. (Kemper). Collectively,
they are referred to herein as the "Company". Life2K was
incorporated under the name of Algonquin Acquisition Corporation
on March 22, 1999 under the laws of the State of Delaware to
engage in any lawful act or activity. Effective August 16, 1999,
Life2K issued 16,200,000 shares of its common stock and 60,000
shares of its preferred stock in exchange for the issued and
outstanding stock of Kemper.
Kemper was incorporated on December 28, 1987 under the state laws
of Mississippi. Kemper was organized to procure, buy, sell and
harvest forest products for treating poles, conventional lumber
and wood products, as well as preserve and treat wood and forest
products for sale in wholesale and retail markets.
On October 9, 1997, Kemper entered into an asset purchase
agreement and lease assignment under which it conditionally sold
all of its assets as well as reassigned its lease related to its
manufacturing enterprise. From that time, Kemper has acted as a
retail broker, having eliminated virtually all of its
manufacturing capacity.
At the time of the acquisition of Kemper, Life2K was essentially
inactive, with no operations and minimal assets. Additionally, the
exchange of Life2K's common stock for the common stock of Kemper
resulted in the former stockholders of Kemper obtaining control of
Life2K. Accordingly, Kemper became the continuing entity for
accounting purposes, and the transaction was accounted for as a
recapitalization of Kemper with no adjustment to the basis of
Kemper's assets acquired or liabilities assumed. For legal
purposes, Life2K was the surviving entity.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year
end.
c. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
d. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $-0- at December 31, 1999.
8
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
e. Basic Income (Loss) Per Share
The computations of basic loss per share of common stock are based
on the weighted average number of common shares outstanding during
the period of the consolidated financial statements as follows:
For the Years Ended
December 31,
--------------------------------------
1999 1998
------------------ -----------------
Basic loss per share from continuing operations:
Loss (numerator) $ (212,220) $ (85,290)
Shares (denominator) 16,320,411 16,200,000
Per share amount $ (0.01) $ (0.01)
Basic income per share from extraordinary item:
Income (numerator) $ - $ 332,782
Shares (denominator) 16,320,411 16,200,000
Per share amount $ - $ 0.02
Basic income (loss) per share:
Income (loss) (numerator) $ (212,220) $ 247,492
Shares (denominator) 16,320,411 16,200,000
Per share amount $ (0.01) $ 0.02
Common stock equivalents, consisting of warrants and options, have
not been included in the calculation for the year ended December
31, 1999 as their effect is antidilutive.
There were no common stock equivalents outstanding for the year
ended December 31, 1998. Accordingly, only the basic income (loss)
per share has been calculated for 1998.
9
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Change in Accounting Principle
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than was previously used in accordance with APB Opinion
No. 15 "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic
earnings per share includes no dilution and is computed by
dividing income (loss) available to common shareholders by the
weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution
of securities that could share in the earnings of an entity,
similar to fully diluted earnings per share. SFAS No. 129
establishes standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15,
1997. The adoption of these two standards did not have a material
impact on the Company's consolidated financial statements.
The Financial Accounting Standards Board has also issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting or Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance. The adoption of these statements did not
have a material impact on the Company's financial statements.
10
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In February 1998, the Financial Accounting Standards Board
("FASB") has issued Statement of Financial Accounting Standard
("SFAS") No. 132. "Employers' Disclosures about Pensions and other
Postretirement Benefits" which standardizes the disclosure
requirements for pensions and other Postretirement benefits and
requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate
financial analysis. SFAS No. 132 is effective for years beginning
after December 15, 1997 and requires comparative information for
earlier years to be restated, unless such information is not
readily available. The adoption of this statement had no material
impact on the Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The adoption of this statement had no material
impact on the Company's financial statements.
g. Property and Equipment
Property and equipment is recorded at cost. Major additions and
improvements are capitalized. The cost and related accumulated
depreciation of equipment retired or sold are removed form the
accounts and any differences between the undepreciated amount and
the proceeds from the sale are recorded as gain or loss on sale of
equipment. Depreciation is computed using the straight-line method
over a period of five years.
h. Provision for Taxes
At December 31, 1999, the Company had net operating loss
carryforwards of approximately $720,000 that may be offset against
future taxable income through 2019. No tax benefit has been
reported in the consolidated financial statements because the
Company believes there is a 50% or greater chance the net
operating loss carryforwards will not be used. Accordingly, the
potential tax benefits of the net operating loss carryforwards are
offset by a valuation allowance of the same amount.
i. Principles of Consolidation
The consolidated financial statements include those of Life2K and
its wholly-owned subsidiary, Kemper.
All material intercompany accounts and transactions have been
eliminated.
11
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
j. 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 date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
k. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
l. Revenue Recognition Policy
Revenue is recognized upon shipment of goods to the customer.
m. Concentrations of Risk
Concentration of Cash in Excess of Federally Insured Limits
-----------------------------------------------------------
The Company maintains its cash in bank deposit accounts at high
credit quality financial institutions. The balances, at times, may
exceed federally insured limits.
Concentration in the Volume of Business Transacted with a
---------------------------------------------------------
Particular Supplier
-------------------
The Company currently engages the services of only one supplier,
which provides 100% of its wood treating and procurement services.
Although there are a limited number of manufacturers which provide
wood treating and procurement services, management believes that
other suppliers could provide these services on comparable terms.
A change in suppliers, however, could cause a delay in
manufacturing and a possible loss of sales, which would affect
operating results adversely.
Concentration in the Volume of Business Transacted with a
---------------------------------------------------------
Particular Customer
-------------------
The Company currently has one major customer which accounts for
100% of its revenues. Although the Company is continually
negotiating contracts with potential customers, a loss of this
customer could greatly affect the operating results of the
Company.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31,
1999:
Office equipment $ 4,550
Accumulated depreciation (1,820)
-----------------
Net property and equipment $ 2,730
=================
12
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 2 - PROPERTY AND EQUIPMENT (Continued)
Depreciation expense for the years ended December 31, 1999 and
1998 was $910 and $910, respectively.
NOTE 3 - ACCRUED EXPENSES
At December 31, 1999, accrued expenses consist of $22,135 of
interest payable associated with the related party - notes payable
(Note 6).
NOTE 4 - COMMITMENTS AND CONTINGENCIES
On May 18, 1999, the Company entered into an agreement to acquire
a reporting United States corporation with audited financial
statements showing no material assets or liabilities. The Company
agreed to pay $100,000 for its services in regard to the
transaction. Payment of this amount is to be made as follows:
$10,000 on execution of the agreement, $30,000 on delivery of
offering materials under rules 504 and/or 506, $35,000 on the
business combination and $25,000 on the filing of a Form 8-K with
the Securities and Exchange Commission. If the Company does not
elect to make any offerings under rules 504 or 506, then the
payment due on the business combination will be $60,000.
NOTE 5 - PREFERRED STOCK
The shareholders of the Company have authorized 20,000,000 shares
of preferred stock with a par value of $0.0001. The terms of the
preferred stock are to be determined when issued by the board of
directors of the Company.
Series A
--------
At December 31, 1999, there are 60,000 shares of Series A
preferred stock issued and outstanding. Each share of the
preferred stock is non-voting and convertible on a one-for- one
basis into shares of the Company's voting common stock. These
shares may be converted at any time at the will of the holder and
do not include any entitlement to dividends.
NOTE 6 - STOCK TRANSACTIONS
On October 1, 1999, the Company issued 12,500 shares of its common
stock for $12,500 cash consideration.
13
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 7 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following at
December 31, 1999:
Note payable to a director, due on demand, plus interest
at 12% per annum, unsecured. $ 105,000
Note payable to a director, due on December 23, 1999, with
interest in a flat sum amount of $6,250, unsecured. Both
principal and interest were subsequently paid in full on
February 15, 2000. 25,000
Note payable to a director, due on January 7, 2000, with
interest in a flat sum amount of $6,250, unsecured. Note is
in default. 25,000
-----------------
Total notes payable to related parties 155,000
Less: Current Portion (155,000)
-----------------
Long-Term Notes Payable to Related Parties $ -
=================
The aggregate principal maturities of notes payable to related
parties are as follows:
Year Ended
December 31, Amount
----------------- -----------------
2000 $ 155,000
2001 -
2002 -
2003 -
2004 and thereafter -
-----------------
Total $ 155,000
=================
NOTE 8 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company has historically incurred significant losses which have
resulted in an accumulated deficit of $719,564 at December 31,
1999 which raises substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might
result from the outcome of this uncertainty.
14
LIFE2K.COM, INC. AND SUBSIDIARY
(Formerly Algonquin Acquisition Corporation)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 8 - GOING CONCERN (Continued)
It is management's intent to acquire Internet and E-commerce
companies as well as develop a software for online bidding
services. Management believes this bidding service process will
allow Kemper to bid and package contracts online for the
treatment, sale and shipment of processed wood. In addition,
management believes that being a publicly traded company will
enhance their negotiating leverage as well as provide a source of
additional funding if needed.
NOTE 9 - EXTRAORDINARY ITEMS
Extraordinary items for the year ended December 31, 1999 and 1998
totaling $-0- and $332,782, respectively, relate to forgiveness of
debt in the settlement of various accounts payable.
15
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Consolidated Balance Sheets
ASSETS
September 30, December 31,
2000 1999
------------------ ------------------
(Unaudited)
CURRENT ASSETS
Cash $ 32,770 $ 5,580
Accounts receivable (Note 1) 550,921 487,840
------------------ ------------------
Total Current Assets 583,691 493,420
------------------ ------------------
PROPERTY AND EQUIPMENT - NET (Note 2) 2,047 2,730
------------------ ------------------
TOTAL ASSETS $ 585,738 $ 496,150
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 812,440 $ 785,389
Notes payable - related party (Note 7) 105,000 155,000
Accrued expenses (Note 3) 19,459 22,135
------------------ ------------------
Total Current Liabilities 936,899 962,524
------------------ ------------------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, zero and 60,000 shares issued
and outstanding, respectively - 6
Common stock: 100,000,000 shares authorized of
$0.0001 par value, 17,153,250 and 16,525,000 shares
issued and outstanding, respectively 1,715 1,652
Additional paid-in capital 709,726 264,032
Accumulated deficit (1,062,602) (732,064)
------------------ ------------------
Total Stockholders' Equity (Deficit) (351,161) (466,374)
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 585,738 $ 496,150
================== ==================
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------------- --------------- --------------- ----------------
NET SALES $ 2,103,735 $ 1,092,239 $ 5,484,273 $ 4,427,780
COST OF SALES 2,090,338 1,074,280 5,448,258 4,367,694
---------------- --------------- --------------- ----------------
GROSS MARGIN 13,397 17,959 36,015 60,086
---------------- --------------- --------------- ----------------
OPERATING EXPENSES
Depreciation 228 228 683 683
General and administrative 83,898 102,750 356,046 219,725
---------------- --------------- --------------- ----------------
Total Operating Expenses 84,126 102,978 356,729 220,408
---------------- --------------- --------------- ----------------
LOSS FROM OPERATIONS (70,729) (85,019) (320,714) (160,322)
---------------- --------------- --------------- ----------------
OTHER INCOME (EXPENSE)
Interest expense (3,153) (6,125) (9,824) (10,125)
---------------- --------------- --------------- ----------------
Total Other Income (Expense) (3,153) (6,125) (9,824) (10,125)
---------------- --------------- --------------- ----------------
NET LOSS BEFORE INCOME TAXES (73,882) (91,144) (330,538) (170,447)
---------------- --------------- --------------- ----------------
INCOME TAXES (Note 1) - - - -
---------------- --------------- --------------- ----------------
NET (LOSS) $ (73,882) $ (91,144) $ (330,538) $ (170,447)
================ =============== =============== ================
BASIC (LOSS) PER SHARE (Note 1) $ (0.00) $ (0.01) $ (0.02) $ (0.01)
================ =============== =============== ================
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
Preferred Stock Common Stock Additional
----------------------------- --------------------------- Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit
------------- ------------- ------------- ------------ ------------- -------------
Balance, December 31, 1998 - $ - 16,200,000 $ 1,620 $ 191,570 $ (519,844)
Recapitalization 60,000 6 312,500 31 (37) -
Common stock issued for cash at
$1.00 per share - - 12,500 1 12,499 -
Capital contributions, 1999 - - - - 60,000 -
Net loss for the year ended
December 31, 1999 - - - - - (212,220)
------------- ------------- ------------- ------------ ------------- -------------
Balance, December 31, 1999 60,000 6 16,525,000 1,652 264,032 (732,064)
Conversion of preferred shares to
common shares (unaudited) (60,000) (6) 60,000 6 - -
Common stock issued for cash at
approximately $0.76 per share
(unaudited) - - 332,500 34 252,467 -
Common stock issued for cash and
services at $0.50 per share
(unaudited) - - 84,000 8 41,992 -
Common stock issued for services
of $1.00 per share (unaudited) - - 120,000 12 119,988 -
Common stock issued for conversion
of debt at $0.98 per share (unaudited) - - 31,750 3 31,247 -
Net loss for the nine months ended
September 30, 2000 (unaudited) - - - - - (330,538)
------------- ------------- ------------- ------------ ------------- -------------
Balance, September 30, 2000
(unaudited) - $ - 17,153,250 $ 1,715 $ 709,726 $ (1,062,602)
============= ============= ============= ============ ============= =============
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------------- --------------- --------------- ----------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (73,882) $ (91,144) $ (330,538) $ (170,447)
Adjustments to reconcile net loss
to net cash (used by) operating
activities:
Depreciation 228 228 683 683
Stock issued for services and
interest - 60,000 147,000 60,000
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable 47,907 293,073 (63,081) 81,364
Increase (decrease) in accrued
expenses 3,153 6,125 3,574 10,125
Increase (decrease) in accounts
payable (6,457) (282,511) 27,051 (84,785)
---------------- --------------- --------------- ----------------
Net Cash (Used) by Operating
Activities (29,051) (14,229) (215,311) (103,060)
---------------- --------------- --------------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES - - - -
---------------- --------------- --------------- ----------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of stock 52,500 - 267,501 -
Proceeds from notes payable - 50,000 - 150,000
Payment on notes payable - - (25,000) -
---------------- --------------- --------------- ----------------
Net Cash Provided by Financing
Activities 52,500 50,000 242,501 150,000
---------------- --------------- --------------- ----------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 23,449 35,771 27,190 46,940
CASH AT BEGINNING OF PERIOD 9,321 11,271 5,580 102
---------------- --------------- --------------- ----------------
CASH AT END OF PERIOD $ 32,770 $ 47,042 $ 32,770 $ 47,042
================ =============== =============== ================
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------------- --------------- --------------- ----------------
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid for:
Interest $ - $ - $ 6,250 $ -
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common and preferred stock issued
for services $ - $ 60,000 $ 147,000 $ 60,000
Common stock issued for debt
conversion $ - $ - $ 31,250 $ -
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of
Syndicationnet.com, Inc. (formerly Life2k.com, Inc.) and its
wholly-owned subsidiary, Kemper Pressure Treated Forest Products,
Inc. (Kemper). Collectively, they are referred to herein as the
"Company". Life2K was incorporated under the name of Algonquin
Acquisition Corporation on March 22, 1999 under the laws of the
State of Delaware to engage in any lawful act or activity.
Effective August 16, 1999, Life2K issued 16,200,000 shares of its
common stock and 60,000 shares of its preferred stock in exchange
for the issued and outstanding stock of Kemper. Pursuant to a
merger agreement subsequent to September 30, 2000, the Company's
name was changed to SyndicationNet.Com, Inc. (see Note 9).
Kemper was incorporated on December 28, 1987 under the state laws
of Mississippi. Kemper was organized to procure, buy, sell and
harvest forest products for treating poles, conventional lumber
and wood products, as well as preserve and treat wood and forest
products for sale in wholesale and retail markets.
On October 9, 1997, Kemper entered into an asset purchase
agreement and lease assignment under which it conditionally sold
all of its assets as well as reassigned its lease related to its
manufacturing enterprise. From that time, Kemper has acted as a
retail broker, having eliminated virtually all of its
manufacturing capacity.
At the time of the acquisition of Kemper, Life2K was essentially
inactive, with no operations and minimal assets. Additionally, the
exchange of Life2K's common stock for the common stock of Kemper
resulted in the former stockholders of Kemper obtaining control of
Life2K. Accordingly, Kemper became the continuing entity for
accounting purposes, and the transaction was accounted for as a
recapitalization of Kemper with no adjustment to the basis of
Kemper's assets acquired or liabilities assumed. For legal
purposes, Life2K was the surviving entity.
b. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year end.
c. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
d. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $-0- and $-0- at September 30, 2000 and December
31,1999, respectively.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
e. Basic Loss Per Share
The computations of basic loss per share of common stock are based
on the weighted average number of common shares outstanding during
the period of the consolidated financial statements as follows:
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
Income (loss) (numerator) $ (73,882) $ (91,144) $ (330,538) $ (170,447)
Weighted average shares
outstanding (denominator) 16,990,815 16,525,000 16,990,815 16,525,000
--------------- --------------- --------------- ---------------
Basic loss per share $ (0.00) $ (0.01) $ (0.02) $ (0.01)
=============== =============== =============== ===============
Common stock equivalents, consisting of warrants and options, have
not been included in the calculations as their effect is
antidilutive.
f. Change in Accounting Principle
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than was previously used in accordance with APB Opinion
No. 15 "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic
earnings per share includes no dilution and is computed by
dividing income (loss) available to common shareholders by the
weighted average number of common shares outstanding for the
period. Diluted earnings of an entity, similar to fully diluted
earnings per share. SFAS No. 129 established standards for
disclosing information about an entity's capital structure. SFAS
No. 128 and SFAS No. 129 are effective for financial statements
issued for periods ending after December 15, 1997. The adoption of
these two standards did not have a material impact on the
Company's consolidated financial statements.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Change in Accounting Principle (Continued)
The Financial Accounting Standards Board has also issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting or Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance. The adoption of these statements did not
have a material impact on the Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for he3dge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The adoption of this statement had no material
impact on the Company's financial statements.
g. Property and Equipment
Property and equipment is recorded at cost. Major additions and
improvements are capitalized. The cost and related accumulated
depreciation of equipment retired or sold are removed from the
accounts and any differences between the undepreciated amount and
the proceeds from the sale are recorded as gain or loss on sale of
equipment. Depreciation is computed using the straight-line method
over a period of five years.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Provision for Taxes
The income tax benefit differs from the amount computed at federal
statutory rates as follows:
For the Nine Months Ended
September 30,
--------------------------------------
2000 1999
------------------ ------------------
Income tax benefit at statutory rate $ 112,000 $ 58,000
Change in valuation allowance (112,000) (58,000)
------------------ ------------------
$ - $ -
================== ==================
Deferred tax assets (liabilities) at September 30, 2000 are
comprised of the following:
Net operating loss carryforward $ 1,060,000
Depreciation -
------------------
Valuation allowance (1,060,000)
------------------
$ -
==================
At September 30, 2000, the Company has a net operating loss
carryforward available to offset future taxable income of
approximately $1,060,000, which will expire in 2020. If
substantial changes in the Company's ownership should occur, there
would also be an annual limitation of the amount of NOL
carryforwards which could be utilized. No tax benefit had been
reported in the financial statements, because the Company believes
there is a 50% or greater chance the carryforwards will expire
unused. The tax benefits of the loss carryforwards are offset by a
valuation allowance of the same amount.
i. Principles of Consolidation
The consolidated financial statements include those of
Syndicationnet.com, Inc. (formerly Life2k.com, Inc.) and its
wholly-owned subsidiary, Kemper.
Any material intercompany accounts and transactions have been
eliminated.
j. 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 date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
k. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
l. Revenue Recognition Policy
Revenue is recognized upon shipment of goods to the customer.
m. Concentrations of Risk
Concentration of Cash in Excess of Federally Insured Limits
-----------------------------------------------------------
The Company maintains its cash in bank deposit accounts at high
credit quality financial institutions. The balances, at times, may
exceed federally insured limits.
Concentration in the Volume of Business Transacted with a
---------------------------------------------------------
Particular Supplier
-------------------
The Company currently engages the services of only one supplier,
which provides 100% of its wood treating and procurement services.
Although there are a limited number of manufacturers which provide
wood treating and procurement services, management believes that
other suppliers could provide these services on comparable terms.
A change in suppliers, however, could cause a delay in
manufacturing and a possible loss of sales, which would affect
operating results adversely.
Concentration in the Volume of Business Transacted with a
---------------------------------------------------------
Particular Customer
-------------------
The Company currently has one major customer which accounts for
100% of its revenues. Although the Company is continually
negotiating contracts with potential customers, a loss of this
customer could greatly affect the operating results of the
Company.
n. Unaudited Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
include all of the adjustments which, in the opinion of
management, are necessary for a fair presentation. Such
adjustments are of a normal recurring nature.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
September 30, December 31,
2000 1999
------------------ ------------------
(Unaudited)
Office equipment $ 4,550 $ 4,550
Accumulated depreciation (2,503) (1,820)
------------------ ------------------
Net property and equipment $ 2,047 $ 2,730
================== ==================
Depreciation expense for the nine months ended September 30, 2000
and the year ended December 31, 1999 was $683 and $910,
respectively.
NOTE 3 - ACCRUED EXPENSES
At September 30, 2000 and December 31, 1999, accrued expenses
consist of $19,459 and $22,135, respectively, of interest payable
associated with the related party - notes payable (Note 7).
NOTE 4 - COMMITMENTS AND CONTINGENCIES
On May 18, 1999, the Company entered into an agreement to acquire
a reporting United States corporation with audited financial
statements showing no material assets or liabilities. The Company
agreed to pay $100,000 for its services in regard to the
transaction. Payment of this amount is to be made as follows:
$10,000 on execution of the agreement, $30,000 on delivery of
offering materials under rules 504 and/or 506, $35,000 on the
business combination and $25,000 on the filing of a Form 8-K with
the Securities and Exchange Commission. If the Company does not
elect to make any offering under rules 504 or 506, then the
payment due on the business combination will be $60,000. Through
September 30, 2000, the Company had paid $50,000 in connection
with the agreement.
NOTE 5 - PREFERRED STOCK
The shareholders of the Company have authorized 20,000,000 shares
of preferred stock with a par value of $0.0001. The terms of the
preferred stock are to be determined when issued by the board of
directors of the Company.
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 5 - PREFERRED STOCK
Series A
--------
At September 30, 2000 and December 31, 1999, there were zero and
60,000 shares of Series A preferred stock issued and outstanding,
respectively. On January 1, 2000, the 60,000 Series A preferred
shares were converted into the shares of the Company's voting
common stock.
NOTE 6 - STOCK TRANSACTIONS
On October 1, 1999, the Company issued 12,500 shares of its common
stock for $12,500 cash consideration.
On January 1, 2000, the Company converted 60,000 shares of Series
A preferred stock into voting common stock on a one-for-one basis.
On March 21, 2000, the Company issued 84,000 shares of its common
stock at $0.50 per share for $15,000 cash consideration and
services valued at $27,000.
Through March 4, 2000, the Company issued 120,000 shares of its
common stock at $1.00 per share for services valued at $120,000.
On June 7, 2000, the Company issued 31,750 shares of its common
stock for the conversion of $31,250 of debt.
From January 1, 2000, through September 30, 2000, the Company
issued 332,500 shares of common stock at an average price of $0.76
per share for $252,501 cash consideration.
NOTE 7 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following:
September 30, December 31,
2000 1999
------------------ ------------------
(Unaudited)
Note payable to a shareholder, due on demand,
plus interest at 12% per annum, unsecured. $ 105,000 $ 105,000
Note payable to a shareholder, due on
December 23, 1999, with interest in a flat
sum amount of $6,250, unsecured. - 25,000
Note payable to a shareholder, due on January 7,
2000, with interest in a flat sum amount of
$6,250, unsecured. - 25,000
------------------ ------------------
Total notes payable to related parties 105,000 155,000
Less: Current Portion (105,000) (155,000)
------------------ ------------------
Long-Term Notes Payable to Related Parties $ - $ -
================== ==================
SYNDICATIONNET.COM, INC.
(Formerly Life2k.com, Inc.)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 8 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company has historically incurred significant losses which have
resulted in an accumulated deficit of $1,062,602 at September 30,
2000 which raises substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might
result from the outcome of this uncertainty.
NOTE 9 - SUBSEQUENT EVENT
On October 13, 2000, the Company entered into an Agreement and
Plan of Merger, whereby Life2k.com, Inc. was acquired by
Generation Acquisition Corporation, a public reporting company, as
a wholly-owned subsidiary. Subsequently, Life2k.com, Inc. was
merged with and into Generation Acquisition Corporation which
simultaneously changed its name to Syndicationnet.com, Inc.
SYNDICATIONNET.COM, INC.
CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
September 30, 2000
C O N T E N T S
Consolidated Proforma Balance Sheet........................................... 3
Consolidated Proforma Statement of Operations................................. 5
Statement of Assumptions and Disclosures...................................... 6
SYNDICATIONNET.COM, INC.
Consolidated Proforma Balance Sheet
September 30, 2000
(Unaudited)
ASSETS
------
Proforma
Generation Adjustments
Syndicationnet Acquisition Increase Proforma
.com, Inc. Corporation (Decrease) Consolidated
---------------- --------------- --------------- ----------------
CURRENT ASSETS
Cash and cash equivalents $ 32,770 $ 500 $ - $ 33,270
Accounts receivable 550,921 - - 550,921
---------------- --------------- --------------- ----------------
Total Current Assets 583,691 500 - 584,191
---------------- --------------- --------------- ----------------
FIXED ASSETS
Office equipment 4,550 - - 4,550
Accumulated depreciation (2,503) - - (2,503)
---------------- --------------- --------------- ----------------
Total Fixed Assets 2,047 - - 2,047
---------------- --------------- --------------- ----------------
TOTAL ASSETS $ 585,738 $ 500 $ - $ 586,238
================ =============== =============== ================
See Summary of Assumptions and Disclosures.
3
SYNDICATIONNET.COM, INC.
Consolidated Proforma Balance Sheet (Continued)
September 30, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Proforma
Generation Adjustments
Syndicationnet Acquisition Increase Proforma
.com, Inc. Corporation (Decrease) Consolidated
---------------- --------------- --------------- ----------------
CURRENT LIABILITIES
Accounts payable $ 812,440 $ - $ - $ 812,440
Accrued expenses 19,459 - - 19,459
Notes payable - related party 105,000 - - 105,000
---------------- --------------- --------------- ----------------
Total Current Liabilities 936,899 - - 936,899
---------------- --------------- --------------- ----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000
shares authorized of $0.0001
par value, zero shares issued
and outstanding - - - -
Common stock: 120,000,000
shares authorized of $0.0001
par value, 10,656,750 shares
issued and outstanding 1,715 500 (1,149) 1,066
Additional paid-in capital 709,726 535 614 710,875
Accumulated deficit (1,062,602) (535) 535 (1,062,602)
---------------- --------------- --------------- ----------------
Total Stockholders' Equity
(Deficit) (351,161) 500 - (350,661)
---------------- --------------- --------------- ----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $ 585,738 $ 500 $ - $ 586,238
================ =============== =============== ================
See Summary of Assumptions and Disclosures.
4
SYNDICATIONNET.COM, INC.
Consolidated Proforma Statement of Operations
For the Nine Months Ended September 30, 2000
(Unaudited)
Proforma
Generation Adjustments
Syndicationnet Acquisition Increase Proforma
.com, Inc. Corporation (Decrease) Consolidated
---------------- --------------- --------------- ----------------
NET SALES $ 5,484,273 $ - $ - $ 5,484,273
COST OF SALES 5,448,258 - - 5,448,258
---------------- --------------- --------------- ----------------
GROSS MARGIN 36,015 - - 36,015
---------------- --------------- --------------- ----------------
OPERATING EXPENSES
Depreciation 683 - - 683
General and administrative 356,046 - - 356,046
---------------- --------------- --------------- ----------------
Total Operating Expenses 356,729 - - 356,729
---------------- --------------- --------------- ----------------
LOSS FROM OPERATIONS (320,714) - - (320,714)
---------------- --------------- --------------- ----------------
OTHER INCOME (EXPENSE)
Interest expense (9,824) - - (9,824)
---------------- --------------- --------------- ----------------
Total Other Income (Expense) (9,824) - - (9,824)
---------------- --------------- --------------- ----------------
NET LOSS $ (330,538) $ - $ - $ (330,538)
================ =============== =============== ================
See Summary of Assumptions and Disclosures.
5
SYNDICATIONNET.COM, INC.
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Organization
The accompanying proforma financial statements are prepared to
present the acquisition of Syndicationnet.com, Inc. (formerly
Life2K.com, Inc.) by Generation Acquisition Corporation to aid the
user in understanding the acquisition. The proforma balance sheet
is presented as though the acquisition took place on September 30,
2000 and the statement of operations as though the acquisition
took place January 1, 2000.
The financial statements presented are those of
Syndicationnet.com, Inc. (formerly Life2k.com, Inc.) and its
wholly-owned subsidiary, Kemper Pressure Treated Forest Products,
Inc. (Kemper). Collectively, they are referred to herein as the
"Company". Life2K was incorporated under the name of Algonquin
Acquisition Corporation on March 22, 1999 under the laws of the
State of Delaware to engage in any lawful act or activity.
Effective August 16, 1999, Life2K issued 16,200,000 shares of its
common stock and 60,000 shares of its preferred stock in exchange
for the issued and outstanding stock of Kemper.
Kemper was incorporated on December 28, 1987 under the state laws
of Mississippi. Kemper was organized to procure, buy, sell and
harvest forest products for treating poles, conventional lumber
and wood products, a well as preserve and treat wood and forest
products for sale in wholesale and retail markets.
On October 9, 1997, Kemper entered into an asset purchase
agreement and lease assignment under which it conditionally sold
all of its assets as well as reassigned its lease related to its
manufacturing enterprise. From that time, Kemper has acted as a
retail broker, having eliminated virtually all of its
manufacturing capacity.
At the time of the acquisition of Kemper, Life2K was essentially
inactive, with no operations and minimal assets. Additionally, the
exchange of Life2K's common stock for the common stock of Kemper
resulted in the former stockholders of Kemper obtaining control of
Life2K. Accordingly, Kemper became the continuing entity for
accounting purposes, and the transaction was accounted for as a
recapitalization of Kemper with no adjustment to the basis of
Kemper's assets acquired or liabilities assumed. For legal
purposes, Life2K was the surviving entity.
Generation Acquisition Corporation was incorporated in Delaware on
March 24, 1999 to serve as a vehicle to effect a merger, exchange
of capital stock, asset acquisition or other business combination
with a domestic or foreign private business. At September 30,
2000, the Company had not yet commenced any formal business
operations, and in accordance with SFAS #7, was considered a
development stage company.
6
SYNDICATIONNET.COM, INC.
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
b. Proforma Adjustments
The proforma financial statements have been prepared as though the
acquisition of Syndicationnet.com, Inc. (formerly Life2K.com,
Inc.) by Generation Acquisition Corporation occurred on January 1,
2000.
1) Additional paid-in capital $ 614
Common stock (1,149)
Accumulated deficit 535
------------------
$ -
==================
To record the acquisition of Syndicationnet.com, Inc. (formerly
Life2K.com, Inc.) through the issuance of 10,406,750 shares of
common stock. In addition, to record the cancellation of 4,750,000
shares of Generation Acquisition Corporation that were previously
outstanding.
7
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------
To the Board of Directors
SyndicationNet.com, Inc.
(Formerly Life2k.com, Inc.)
Falls Church, VA
We have reviewed the accompanying consolidated balance sheet of
SyndicationNet.com, Inc. (formerly Life2k.com, Inc.) as of September 30, 2000
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the three months and nine months ended September
30, 2000. These consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data, and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, which will be performed for the full
year with the objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of
SyndicationNet.com, Inc. (formerly Life2k.com, Inc.) as of December 31, 1999,
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the year then ended (not presented herein) and in
our report dated April 17, 2000, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed balance sheet as of December 31, 1999 is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 8 to the
consolidated financial statements, the Company has incurred significant losses
which have resulted in an accumulated deficit and a deficit in stockholders'
equity, raising substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 8. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
February 6, 2001
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Company is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. The Company's Certificate of
Incorporation and by-laws provide for indemnification of its directors and
officers to the fullest extent permitted by the General Corporation Law of the
State of Delaware.
The General Corporation Law of the State of Delaware provides that a
Certificate of Incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director
(1) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(3) under Section 174 (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock) of the
General Corporation Law of the State of Delaware, or
(4) for any transaction from which the director derived an improper
personal benefit.
SyndicationNet's Certificate of Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or control persons
pursuant to the foregoing provisions, it is the opinion of the Securities and
Exchange Commission that such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth SyndicationNet's expenses in connection with
this registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee--Securities and Exchange Commission.................. $ 1.00
Fees and Expenses of Accountants and legal counsel.............. $
Blue Sky Fees and Expenses...................................... $
Printing and Engraving Expenses................................. $
Miscellaneous Expenses.......................................... $
-------
Total........................................................... $
Item 26. Recent Sales of Unregistered Securities
Within the past three years, the Company has issued the following shares of
its common stock, par value $.0001 (the "Shares"), for cash or services rendered
to the Company and has granted the following warrants to purchase its common
stock, absent registration under the Securities Act of 1933, as amended (the
"Securities
31
Act") pursuant to the exemption provided in Section 4(2) of the Securities Act
for transactions by an issuer not involving a public offering except shares of
common stock issued by Generation Acquisition Corporation prior to the stock
exchange transaction and name change, which shares were issued in reliance on
Rule 506 of the Securities Act. The following information is provided as
calculated on a post-merger basis.
Some of the holders of the shares issued below may have subsequently
transferred or disposed of their shares and the list does not purport to be a
current listing of SyndicationNet's shareholders.
In October 1995, the Company issued an aggregate of 9,780,000 (post merger)
shares of its common stock to two individuals for services rendered in founding
the Company. The Company believes that such issuances were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
In August 1999, the Company issued 6,250 shares of its common stock to one
individual as payment for accrued interest as part of a loan agreement in which
the Company borrowed $25,000. The Company believes that such issuance was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
In September 1999, the Company issued 6,250 shares of its common stock to
one individual for accrued interest as part of a loan agreement in which the
Company borrowed $25,000. The Company believes that such issuance was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
On March 25, 1999, the Company issued 5,000,000 shares of its common stock
to TPG Capital Corporation at par of which 4,750,000 shares were later redeemed
at par. The Company believes that such issuances were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended.
In October 1999, the Company issued 12,500 shares of its common stock
(pre-merger) to one individual at a purchase price of $1.00 per share. The
Company also issued an aggregate of 50,000 shares of its common stock to five of
its directors as compensation for their services. The Company believes that such
issuances were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
In January 2000, the Company issued (i) 20,000 shares of its common stock
to Cynthia White as compensation for accounting services rendered to the
Company; (ii) 10,000 shares of its common stock to one entity upon the exercise
of a certain option agreement to purchase 10,000 shares of the Company's common
stock exercisable at $1.00; and (iii) issued 60,000 (pre-merger) shares of its
common stock (post-split) upon the conversion of 60,000 shares of the Company's
preferred stock issued to a consultant to the Company in 1995. The Company
believes that such issuances were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
In March 2000, the Company issued 100,000 shares of its common stock to
HTRG Consulting LLC as compensation for web hosting, web design and research
services rendered to the Company. On March 21, 2000, the Company issued 84,000
shares of its common stock to Mark Solomon, a director of the Company, for a
purchase price of $42,000. The Company believes that such issuances were exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended.
From February through August 2000, the Company issued an aggregate of
322,500 shares of its common stock to ten individuals for an aggregate purchase
price of $227,500. The Company believes that such issuances were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.
On June 7, 2000, the Company issued 31,750 shares of its common stock to
one individual in exchange for the cancellation of a $25,000 loan. The Company
believes that such issuance was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
On October 16, 2000, the Company issued an aggregate of 60,000 shares of
its common stock to five of its directors and its chief financial officer as
compensation for services rendered to the Company. The Company
32
believes that such issuances were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended.
In November 2000, the Company issued 50,000 shares of its common stock to
HTRG Consulting LLC as compensation for web hosting, web design and research
services rendered to the Company. The Company believes that such issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933,
as amended.
In November and December 2000, the Company issued 34,000 shares of its
common stock to 15 individual investors for an aggregate purchase price of
$4,386. The Company believes that such issuances were exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended.
Item 27. Exhibits and Financial Statement Schedules
(a) Exhibits
3.1* Certificate of Incorporation, filed with the registration statement of
Generation Acquisition Corporation on Form 10-SB (file No. 000-29701 filed
with the Commission and incorporated herein by reference
3.2* By-Laws of the Company, filed with the registration statement of
Generation Acquisition Corporation on Form 10-SB (file No. 000-29701)
filed with the Commission and incorporated herein by reference
4.1* Agreement and Plan of Reorganization among Generation Acquisition
Corporation, Life2K, Inc., and the shareholders of Life2K, Inc. filed on
Form 8-K with the Commission on November 6, 2000 and incorporated herein
by reference
4.2* Agreement and Plan of Merger between Generation Acquisition Corporation
and Life2K Acquisition Corporation filed on Form 8-K with the Commission
on November 6, 2000 and incorporated herein by reference
4.3 Consulting agreement between SyndicationNet.com, Inc. and Tri-State Metro
Territories, Inc. dated September 19, 2000
5.1** Opinion of Cassidy & Associates
23.1 Consent of Accountants
23.2 Consent of Cassidy & Associates (included in Exhibit 5.1)
- --------
* Previously filed
** To be filed
(b) Financial Statement Schedules
None
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(3) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
33
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that for the purpose
of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
SyndicationNet.com, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the undersigned in
Falls Church, Virginia, on February 13, 2001.
SyndicationNet.com, Inc.
By: /s/ Vance Hartke, President and Director
By: /s/ Cynthia White, Chief Financial
Officer and Principal Accounting
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Mark Griffith Treasurer, Secretary and Director February 13, 2001
/s/ Mark Solomon Director February 13, 2001
/s/ Wayne Hartke Director February 13, 2001
/s/ Howard B. Siegel Director February 13, 2001
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