As filed with the Securities and Exchange Commission on May 31 , 2001
Registration No. 333-55534
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
__________
SYNDICATIONNET.COM, INC.
(Name of small business issuer in its charter)
__________
Delaware 57-2218873 8742
(State or other jurisdiction (I.R.S. Employer (Industrial Classification
of incorporation or Identification Number) Code Number)
organization)
__________
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
__________
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. [_]
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 securityholders 561,500 $.0001(1) $56.15 $1.00
Total 561,500 $.0001 $56.15 $1.00
_______________
(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.
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 selling securityholders
This prospectus relates to the offer and sale of 561,500 shares of common
stock of SyndicationNet.com, Inc., a Delaware company, ("SyndicationNet"), par
value $.0001 per share, by 35 of its securityholders.
There is no public market for SyndicationNet's common stock and a public
market may not develop. If a public market is developed, it may not be
sustained.
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.
- ------------------------------------------------------------------------------------------------------------
Underwriting Discounts Proceeds to Syndication Net
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.
Prospectus dated May __ , 2001
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.............................................................................................
1. SyndicationNet is currently operating at a loss..........................................
2. 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...................................................................
3. 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.............................................................................
4. 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.............................................................................
5. SyndicationNet may issue additional shares of its common stock which would reduce
investors percent of ownership and may dilute SyndicationNet's share value...............
6. The possibility of SyndicationNet issuing preferred stock with preferences may
depress market price of the common stock.................................................
7. The possibility of issuing preferred stock for anti-takeover effect could prevent
takeovers favored by shareholders........................................................
8. Shares of SyndicationNet's total outstanding shares that are restricted from immediate
resale but may be sold into the market in the future could cause the market price of
SyndicationNet's common stock to drop significantly, even if its business is
doing well...............................................................................
9. Management and affiliates own enough shares to control shareholder vote..................
10. Since SyndicationNet has not paid any dividends on its common stock and does not intend
do so in the foreseeable future, a purchaser in this offering will only realize an
economic gain on his or her investment from an appreciation, if any, in the market
price of SyndicationNet's common stock...................................................
11. Officers and directors have limited liability and have indemnity rights..................
12. Selling securityholders may sell securities at any price or time.........................
13. Penny stock regulation may impair shareholders= ability to sell SyndicationNet's
stock....................................................................................
14. SyndicationNet does not have funds currently available for acquisitions..................
15. Limited operating history on which to make an investment decision........................
16. Limited time available for management team to devote affairs of SyndicationNet...........
17. Limited experience which may diminish appeal to potential affiliated companies...........
18. SyndicationNet's acquisition strategy may involve speculative investments................
19. SyndicationNet does not have employment agreements with any of its officers or
employees and if SyndicationNet is unable to retain its management team SyndicationNet's
business operations and its growth objectives may be adversely affected..................
20. Dependence on the valuations of Internet-related companies...............................
21. Because many of SyndicationNet's competitors are larger and have greater financial
and other resources than SyndicationNet, SyndicationNet may not be able to successfully
compete with them........................................................................
22. Compliance with the Investment Company Act...............................................
23. Government regulations and legal uncertainties...........................................
24. The availability of lumber...............................................................
25. Cycles affecting prices..................................................................
26. Dependence on one customer...............................................................
Disclosure Regarding Forward Looking Statements..........................................................
4
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...................................................
Plan of Distribution........................................................
Legal Matters...............................................................
Experts.....................................................................
Additional Information......................................................
Index to Financial Statements............................................... F-1
___________________
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 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 is a holding company formed to acquire controlling interests
in or to participate in the creation of development stage Internet business to
business ("B2B") or e-commerce businesses. SyndicationNet intends to provide
financial, management and technical support to these businesses.
SyndicationNet's strategy is to integrate affiliated businesses into a network
and to actively develop the business strategies, operations and management teams
of the affiliated entities. SyndicationNet has acquired as a wholly-owned
subsidiary, Kemper Pressure Treated Forest Products, Inc., a business engaged in
the retail brokerage of treated lumber such as utility poles, bridge pilings,
and guardrail posts. Kemper is also developing computer software applications
to manage on-line bidding for the treatment, sale and shipment of processed
wood.
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. If at some future time
SyndicationNet becomes qualified, it will apply for qualification of its
securities 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. The financial information below is summary only. The financial
information should be read in conjunction with the more detailed financial
statements and the financial notes appearing elsewhere in this prospectus from
HJ & Associates LLC for the three month period ended March 31, 2001 and for the
fiscal years ended December 31, 1999 and 2000.
Year Ended Year Ended
Three Months Ended December 31, December 31,
March 31, 2001 1999 2000
------------------ ----------- -----------
Income Statement Items:
- -----------------------
Sales $2,268,996 $5,597,676 $7,315,093
Cost of sales 2,254,798 $5,526,429 7,267,571
Gross margin 14,198 71,147 47,522
Operating Loss (51,346) (186,318) (523,722)
Balance Sheet Items
- -------------------
Total current assets $ 994,379 493,420 571,761
Total assets 995,971 496,150 573,581
6
Current liabilities 1,389,508 962,524 998,257
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.
General Risk Factors
SyndicationNet is currently operating at a loss.
SyndicationNet currently operates at a loss and its future operations may
not be profitable. SyndicationNet's 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;
have the funds to provide seed capital and mezzanine financing to e-
commerce and Internet-related companies;
be able to 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.
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 business plan is to integrate affiliated companies
into a network and to actively develop the business strategies, operations and
management teams of the affiliated entities. SyndicationNet has acquired Kemper
as a wholly-owned subsidiary but it will need to raise funds or issue its
securities in order to acquired additional companies.
SyndicationNet will 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 need additional funds to develop its operations.
SyndicationNet may seek additional capital through
an offering of its equity securities,
an offering of debt securities, or
by obtaining financing through a bank or other entity.
SyndicationNet has not established a limit as to the amount of debt it may incur
and it has not adopted a ratio of its equity to a debt allowance. If
SyndicationNet needs to obtain additional financing,, the financing may not be
available from any source, or may not be available on terms acceptable to
SyndicationNet. Any future offering of securities may not be successful.
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
SyndicationNet common stock.
7
Without any shareholder vote or action, SyndicationNet may designate and
issue additional shares of its preferred stock. The terms of any preferred stock
may include priority claims to assets and dividends and special voting rights
which could adversely affect the rights of holders of the common stock. The
designation and issuance of preferred stock favorable to current management or
shareholders could make any possible takeover of SyndicationNet or the removal
of its management more difficult. It could defeat hostile bids for control of
SyndicationNet which bids might have provided shareholders with premiums for
their shares.
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.
Dependence on the valuations of Internet-related companies.
SyndicationNet's success is dependent on the development of the Internet
and electronic commerce market. 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. If SyndicationNet cannot riase capital or take its acquired companies
public, these acquisitions may not increase in value.
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 stage 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. There may be factors outside
SyndicationNet's control which could affect the success of the acquired
companies. SyndicationNet intends to seek out companies in the early stages of
development with limited operating history, little revenue and possible losses.
If SyndicationNet becomes affiliated with such entities and they do not succeed,
the value of SyndicationNet's assets, its results of operations, and the price
of SyndicationNet's common stock could decline.
There is no current trading market for SyndicationNet's securities. Without a
trading market, purchasers of the 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. If a trading market does develop, it may not be sustained for
any signficicant time. SyndicationNet intends to apply for admission to
quotation of its securities on the OTC Bulletin Board. If in the future
SyndicationNet meets the qualifications for admission to quotation on the Nasdaq
SmallCap Market, it may apply for admission. If for any reason SyndicationNet's
common stock is not listed on the OTC Bulletin Board or a public trading market
does not develop, purchasers of the shares may have difficulty selling their
common stock.
8
Potential market makers may significantly influence price of securities.
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. 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 common stock which could dilute
its current shareholder's share value.
If additional funds are raised through the issuance of common stock, there
may be a significant dilution in the value of SyndicationNet's outstanding
common stock. SyndicationNet's Certificate of Incorporation authorizes the
issuance of 100,000,000 shares of common stock. The issuance of all or part of
SyndicationNet's remaining authorized common stock may result in substantial
dilution in the percentage of the common stock held by SyndicationNet's then
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. The issuance of common stock might
also have an adverse effect on any trading market should a trading market
develop.
There are 10,220,250 shares of SyndicationNet's total outstanding shares that
are restricted from immediate resale but may be sold into the market in the near
future. This could cause the market price of the common stock to drop
significantly, even if the business is doing well.
There are 10,781,750 shares of common stock currently outstanding which
includes the 561,500 shares registered in this registration statement, which
shares may be resold in the public market immediately when this registration
statement is effective. The remaining shares will become available for resale
after a one-year holding period from the date of issuance pursuant to Rule 144
of the General Rules and Regulations of the Securities and Exchange Commission .
An increase in the number of shares of SyndicationNet available for public
sale without any increase to its capitalization could decrease the market price
of its 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 trading volume limitations of Rule 144 including the shares held
by affiliates being registered in this registration statement. See "Plan of
Distribution-Sales by Affiliates".
The possibility of SyndicationNet issuing preferred stock with preferences may
depress the market price of the common stock even without issuance of the
preferred stock.
The authority of the board of directors to designate preferences and issue
preferred 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.
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 at any
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.
Since SyndicationNet has not paid any dividends on its common stock and does not
intend do so in the near future. A purchaser of its securities will only
realize an economic gain on his or her investment from appreciation, if any, in
the market price of SyndicationNet's common stock.
9
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 does not expect to in the future. SyndicationNet anticipates
that its cash resources and earnings, if any, will be retained for the operation
and expansion of its business.
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 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.
These additional requirements may restrict the ability of broker-dealers to sell
a penny stock. See "Description of Securities-Penny Stock Regulation".
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 the vote on
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.
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 or
liabilities which arise from any transaction in that person's managerial
capacity unless that person:
violated 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 of its officers and directors against any losses or liabilities
incurred as a result of the operation of SyndicationNet's business or conduct
its affairs, provided that they acted in good faith and in the best interests of
SyndicationNet and that their conduct did not constitute gross negligence,
misconduct or breach of fiduciary obligations.
SyndicationNet does not have employment agreements with any of its officers or
employees and if SyndicationNet is unable to retain its management team
SyndicationNet's business operations and its growth objectives may be adversely
affected.
SyndicationNet's success in achieving its growth objectives is dependant to
a substantial extent upon the continuing efforts and abilities of its 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 may not
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.
Because many of SyndicationNet's competitors are larger and have greater
financial and other resources than SyndicationNet, it may not be able to
successfully compete with them.
SyndicationNet is significantly smaller than many competitors in the
market. The financial strength of these competitors could prevent
SyndicationNet from acquiring development stage companies or prevent development
companies from using SyndicationNet's consulting, management skills and
networking services.
10
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.
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.
Existing laws and regulations which are not currently applicable to
SyndicationNet may be interpreted more broadly in the future so as to apply to
SyndicationNet's existing activities and new laws and regulations may 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. The supply of trees of acceptable size for the production of utility
poles has decreased in recent years in relation to the demand and prices have
increased. The supply of timber is significantly affected by its availability
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 may not be able to
obtain 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.
11
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 these assumptions and expectations may not be correct and
SyndicationNet may not take any action that it may presently be planning.
SyndicationNet has disclosed some important factors that could cause its actual
results to 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 holding company
formed to acquire controlling interests in or to participate in the creation of,
and to provide financial, management and technical support to, development stage
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 investors that start-up companies often need to
fulfill their business objectives.
12
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. SyndicationNet intends to actively explore
synergistic opportunities such as cross marketing efforts within the network of
companies it will consult with or acquire.
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.
13
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.
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.
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 services.
SyndicationNet may not be able to compete effectively against such competitors
in the future.
Employees
As of May 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
14
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.
Transfer Agent
SyndicationNet's uses an internal transfer agent, Karen Lee.
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 its related notes.
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, these expectations and assumptions may not
prove to be correct.
General
SyndicationNet.com, Inc., a Delaware corporation (the "Company"), is a
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.
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.
Year Ended December 31, 2000 compared to December 31, 1999 for SyndicationNet
together with its wholly owned subsidiary, Kemper Pressure Treated Forest
Products, Inc.
For the year ended December 31, 2000, the Company's revenues increased by
30.7% to $7,315,093 from $5,597,576 for the year ended December 31, 1999. The
increase is primarily attributed to the growth of the Company's 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 ended December
31, 2000 increased 122% to $570,334 up from $256,555 for the period ending
December 31, 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
audits, legal fees, and project consulting fees attributed to the merger process
and public offering efforts have been extensive, but are expected to decrease
over the next 12 months.
16
Cost of sales were $7,267,571 for the year ended December 31, 2000,
compared to $5,526,429 for the year ended December 31, 1999. This increase in
cost of sales was primarily attributable to an increase in the Company's
revenue.
The net losses for the year ended December 31, 2000 were $(485,439)
compared to net losses of $(212,220) for the year ended December 31, 1999. The
primary reasons for the increase in the current period loss were the costs
attributed to the merger and registration process.
Total current assets increased to $571,761 at December 31, 2000 from
$496,150 at December 31, 1999, due primarily to the increase of the Company's
accounts receivable. Total current liabilities increased to $998,257 at December
31, 2000 from $962,524 at December 31, 1999.
Period Ended March 31, 2001 compared to March 31, 2000 for SyndicationNet
together with its wholly owned subsidiary, Kemper Pressure Treated Forest
Products, Inc.
For the period ended March 31, 2001, the Company's revenues increased to
$2,268,996 from $1,638,495 for the period ended March 31, 2000. The increase is
primarily attributed to the growth of the Company's wholly owned subsidiary,
Kemper Pressure Treated Forest Products, Inc. and from consulting revenues
generated from the Company.
Cost of sales were $2,254,798 for the period ended March 31, 2001, compared
to $1,627,128 for the period ended March 31, 2000. This increase in cost of
sales was primarily attributable to an increase in the Company's revenue.
The net profit for the period ended March 31, 2001 was $31,139 compared to
net losses of $(65,533) for the period ended March 31, 2000.
Total current assets increased to $994,379 at March 31, 2001 from $676,393
at March 31, 2000, due primarily to the increase of the Company's accounts
receivable. Total current liabilities increased from $1,078,360 at March 31,
2000 to $1,389,508 at March 31, 2001.
The Company has not paid dividends on its common stock, and intends to
reinvest its earnings to support its working capital and expansion requirements.
The Company intends to continue to utilize its earnings in the development and
expansion of the business and does not expect to pay cash dividends in the
foreseeable future. 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.
(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 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
17
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.
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.
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
18
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
Directors receive an annual issuance of 10,000 shares of SyndicationNet's
common stock for serving as directors of SyndicationNet and are repaid for their
expenses incurred for serving as directors.
Executive Compensation
Neither the officers nor directors of SyndicationNet have received any cash
compensation or cash bonus for services rendered during 1999.
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
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.
19
Management has received a request from an individual who owns shares of
common stock in a company claiming that he is entitled to have such shares
converted into shares of common stock of SyndicationNet. Management believes
that the claim is without merit and, if pursued, will contest it vigorously.
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.
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 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 (*)
20
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
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 May 1, 2001.
SELLING SECURITYHOLDERS
SyndicationNet is registering for offer and sale by the holders thereof
561,500 shares of common stock held by 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's securities may not be accepted for
quotation on the OTC Bulletin Board.
21
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 ownership of the Securities of
SyndicationNet held by each person who is a selling securityholder.
Number of Number of Percent of Stock Owned (1) (2)
Shares Shares Prior to After
Name and Address Owned Offered Herein Offering Offering
- ---------------------------------------------------------------------------------------------------
Frank Caravello 10,000 10,000 (*) (*)
13357 S.W. 42/nd/ Street
Davie, Florida 33330
Barry Cardott 8,000 8,000 (*) (*)
1821 S.W. 11/th/ 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 23/rd/ Street
Ft Lauderdale, Florida 33316
Kim Dickinson 10,000 10,000 (*) (*)
5641 Vayln Rd.
Baltimore, Maryland 21228
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 2/nd/ Terrace
Boca Raton, Florida 33432
Steve Framer 1,000 1,000 (*) (*)
1400 SW 72/nd/ Avenue
Plantation, Florida 33316
Joanne Framer 750 750 (*) (*)
1400 SW 72/nd/ Avenue
Plantation, Florida 33316
Robert L. Green, Jr. 200,000 200,000 1.8% (*)
3115 Foxhall Road N.W.
22
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. 131/st/ Street
North Miami, Florida 33161
Crieg D. Mahlberg 15,000 15,000 (*) (*)
428 140/th/ Avenue N.E.
Hamlake, Minnesota 55304
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. 93/rd/ 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
23
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
Cynthia White (3) 30,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Helly White 1,000 1,000 (*) (*)
9300 SW 60/th/ Avenue
Miami, Florida 33156
* Represents less than 1% of SyndicationNet's outstanding shares of common stock
(1) The figure is based upon 10,781,750 shares of common stock outstanding as of
the date of this prospectus.
(2) The 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 those sales.
SyndicationNet is bearing all expenses in connection with the registration of
the selling security holder's shares offered by this prospectus.
24
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 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
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.coms common stock.
In 1999 SyndicationNet borrowed an aggregate of $105,000 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 his 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.
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 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.
25
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.
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 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.
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
27
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.
Some 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.
SyndicationNet has received a letter from an attorney whose client claims
that he has rights to shares of common stock of SyndicationNet by virtue of his
ownership of shares in certain companies that he believes entitles him to stock
conversion rights with Kemper. Management of SyndicationNet has responded to
the letter and believes the claim to be without merit.
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 the common stock should not rely on Cassidy &
Associates with respect to any other matters. James M. Cassidy, a 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 2000 included in this prospectus have been so included in reliance on the
report of HJ & Associates LLC, independent accountants, given on the authority
of HJ & Associates LLC 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. 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. All 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 unaudited financial statement for the period ended March 31, 2001 and
the audited financial statements for the periods ended December 31, 1999 and
2000 are included herein.
28
SYNDICATIONNET.COM, INC.
561,500 shares of common stock to be sold by selling securityholders
----------------
PROSPECTUS
----------------
May ______, 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.
29
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
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
Syndication Net.com, Inc. and Subsidiary
(Formerly Life2K.com, Inc.)
Falls Church, Virginia
We have audited the accompanying consolidated balance sheet of Syndication
Net.com, Inc. and Subsidiary (formerly Life2K.com, Inc.) at December 31, 2000
and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 2000 and 1999. 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
Syndication Net.com, Inc. and Subsidiary (formerly Life2K.com, Inc.) as of
December 31, 2000 and the consolidated results of their operations and their
cash flows for the years ended December 31, 2000 and 1999 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 7 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 7. 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
March 27, 2001
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Consolidated Balance Sheet
ASSETS
------
December 31,
2000
------------
CURRENT ASSETS
Cash $ 45
Accounts receivable (Note 1) 571,716
-----------
Total Current Assets 571,761
-----------
PROPERTY AND EQUIPMENT - NET (Note 2) 1,820
-----------
TOTAL ASSETS $ 573,581
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 870,644
Accrued expenses (Note 3) 22,613
Notes payable - related party (Note 6) 105,000
-----------
Total Current Liabilities 998,257
-----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, no shares issued and outstanding -
Common stock: 100,000,000 shares authorized of $0.0001
par value, 10,781,750 shares issued and outstanding 1,078
Additional paid-in capital 791,749
Accumulated deficit (1,217,503)
-----------
Total Stockholders' Equity (Deficit) (424,676)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 573,581
===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Consolidated Statements of Operations
For the Years Ended
December 31,
------------------------
2000 1999
---------- ----------
SALES $7,315,093 $5,597,576
COST OF GOODS SOLD 7,267,571 5,526,429
---------- ----------
GROSS MARGIN 47,522 71,147
---------- ----------
OPERATING EXPENSES
Depreciation 910 910
General and administrative 570,334 256,555
---------- ----------
Total Operating Expenses 571,244 257,465
---------- ----------
OPERATING LOSS (523,722) (186,318)
---------- ----------
OTHER INCOME (EXPENSES)
Other income 51,300 -
Interest expense (13,017) (26,179)
Interest income - 277
---------- ----------
Total Other Income (Expenses) 38,283 (25,902)
---------- ----------
NET LOSS $ (485,439) $ (212,220)
========== ==========
BASIC LOSS PER SHARE $ (0.05) $ (0.02)
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
5
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Preferred Stock Common Stock Paid-In Accumulated
----------------- ------------------
Shares Amount Shares Amount Capital Deficit
-------- ------- ---------- ------ ----------- ------------
Balance, December 31, 1998 - $ - 9,813,916 $ 981 $192,209 $ (519,844)
Recapitalization 60,000 6 189,312 19 (25) -
Common stock issued for cash at
$1.65 per share - - 7,572 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 10,010,800 1,001 264,683 (732,064)
Conversion of preferred shares
to common stock (60,000) (6) 36,000 4 2 -
Common stock issued for cash at
prices ranging from $0.83 to $2.50
per share - - 193,500 19 227,482 -
Common stock issued for cash and
services at $1.67 per share - - 50,400 5 83,995 -
Common stock issued for services
at $1.67 per share - - 78,000 8 129,992 -
Common stock issued for conversion
of debt at $1.64 per share - - 19,050 2 31,248 -
Recapitalization - - 250,000 25 (25) -
Common stock issued for cash at
$0.047 per share - - 94,000 9 4,377 -
Common stock issued for services
at $1.00 per share - - 50,000 5 49,995 -
Net loss for the year ended
December 31, 2000 - - - - - (485,439)
------- ------ ---------- ------ -------- -----------
Balance, December 31, 2000 - $ - 10,781,750 $1,078 $791,749 $(1,217,503)
======= ====== ========== ====== ======== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
6
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended
December 31,
----------------------
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(485,439) $(212,220)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 910 910
Common stock issued for services 249,000 -
Changes in operating assets and liabilities:
(Increase) in accounts receivable (83,876) (50,633)
Increase in accounts payable 85,255 17,786
Increase in accrued expenses 6,728 22,135
--------- ---------
Net Cash Used in Operating Activities (227,422) (209,522)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES - -
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related party - 155,000
Payments on notes payable - related party (25,000) -
Proceeds from issuance of common stock 246,887 12,500
Proceeds from additional capital contribution - 60,000
--------- ---------
Net Cash Provided by Financing Activities 221,887 215,000
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,535) 5,478
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,580 102
--------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 45 $ 5,580
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ - $ -
Interest $ 12,539 $ 4,044
Non-Cash Financing Activities
Stock issued for services $ 249,000 $ -
Stock issued for outstanding debt $ 31,250 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
7
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of Syndication
Net.com, Inc. (formerly Life2K.com, Inc.) (Syndication) and its wholly-
owned subsidiary, Kemper Pressure Treated Forest Products, Inc. (Kemper).
Collectively, they are referred to herein as the "Company". Syndication
was incorporated under the name of Generation Acquisition Corporation
(Generation) on March 25, 1999 under the laws of the State of Delaware to
engage in any lawful act or activity. Effective August 16, 1999,
Life2K.com, Inc. (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. Effective October 13, 2000, pursuant to an
Agreement and Plan of Organization between Generation Acquisition
Corporation and Life2K, Generation Acquisition Corporation issued
10,387,750 shares of its outstanding common stock for 100% of the
outstanding shares of Life2K. As part of the transaction, Life2K was
merged with and into Generation Acquisition Corporation, Life2K was
dissolved and Generation Acquisition Corporation changed its name to
Syndication Net.com, Inc.
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.
At the time of the acquisition of Life2K, Syndication was essentially
inactive, with no operations and minimal assets. Additionally, the
exchange of Syndication's common stock for the common stock of Life2K
resulted in the former stockholders of Life2K obtaining control of
Syndication. Accordingly, Life2K became the continuing entity for
accounting purposes, and the transaction was accounted for as a
recapitalization of Life2K with no adjustment to the basis of Life2K's
assets acquired or liabilities assumed. For legal purposes, Syndication
was the surviving entity.
8
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
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 consist entirely of an amount due from one
customer. As management of the Company believes the amount to be fully
collectible, no allowance for doubtful accounts has been recorded at
December 31, 2000.
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 Years Ended
December 31,
----------------------------
2000 1999
----------- ----------
Loss (numerator) $ (485,439) $ (212,220)
Shares (denominator) 10,396,192 9,886,570
Per share amount (0.05) $ (0.02)
f. Change in Accounting Principle
The Company has adopted the provisions of FASB Statement No. 138
"Accounting for Certain Derivative Instruments and Hedging Activities,
(an amendment of FASB Statement No. 133.)" Because the Company had
adopted the provisions of FASB Statement No. 133, prior to June 15,
2000, this statement is effective for all fiscal quarters beginning
after June 15, 2000. The adoption of this principle had no material
effect on the Company's consolidated financial statements.
9
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Change in Accounting Principle (Continued)
The Company has adopted the provisions of FASB Statement No. 140
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (a replacement of FASB Statement No.
125.)" This statement provides accounting and reporting standard for
transfers and servicing of financial assets and extinguishments of
liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. Under that
approach, the transfer of financial assets, the Company recognized the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. This
statement provides consistent standards for distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. This statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after March
31, 2001. This statement is effective for recognition and
reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of this principle had no material effect
on the Company's consolidated financial statements.
The Company has adopted the provisions of FIN 44 "Accounting for Certain
Transactions Involving Stock Compensation (an interpretation of APB
Opinion No. 25.)". This interpretation is effective July 1, 2000. FIN 44
clarifies the application of Opinion No. 25 for only certain issues. It
does not address any issues related to the application of the fair value
method in Statement No. 123. Among other issues, FIN 44 clarifies the
definition of employee for purposes of applying Opinion 25, the criteria
for determining whether a plan qualifies as a noncompensatory plan, the
accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and accounting for an exchange of
stock compensation awards in a business combination. The adoption of
this principle had no material effect on the Company's consolidated
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.
10
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Provision for Taxes
At December 31, 2000, the Company had net operating loss carryforwards of
approximately $1,217,000 that may be offset against future taxable income
through 2020. No tax benefit has been reported in the consolidated
financial statements because the potential tax benefits of the net
operating loss carryforwards are offset by a valuation allowance of the
same amount.
The income tax benefit differs from the amount computed at federal
statutory rates of approximately 38% as follows:
For the Years Ended
December 31,
-------------------------
2000 1999
--------- ---------
Income tax benefit at statutory rate $ 184,460 $ 80,644
Change in valuation allowance (184,460) (80,644)
--------- ---------
$ - $ -
========= =========
Deferred tax assets (liabilities) are comprised of the following:
For the Years Ended
December 31,
-------------------------
2000 1999
--------- ---------
Income tax benefit at statutory rate $ 462,460 $ 278,000
Change in valuation allowance (462,460) (278,000)
--------- ---------
$ - $ -
========= =========
Due to the change in ownership provisions of the Tax Reform Act of 1986,
net operating loss carryforwards for Federal income tax reporting
purposes are subject to annual limitations. Should a change in ownership
occur, net operating loss carryforwards may be limited as to use in
future years.
i. Principles of Consolidation
The consolidated financial statements include those of Syndication and
its wholly-owned subsidiary, Kemper.
All material intercompany accounts and transactions have been eliminated.
11
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
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 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, 2000:
Office equipment $ 4,550
Accumulated depreciation (2,730)
-------
Net property and equipment $ 1,820
=======
12
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 2 - PROPERTY AND EQUIPMENT (Continued)
Depreciation expense for the years ended December 31, 2000 and 1999 was
$910 and $910, respectively.
NOTE 3 - ACCRUED EXPENSES
At December 31, 2000, accrued expenses consist of $22,613 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.
On April 7, 1999, the Company ratified its corporate service consulting
agreement with Source Management Services, Inc. (Source), a related
company owned by a significant shareholder. Source is to oversee the
general activities of the Company on a day-to-day basis, develop and
execute a business plan, and assist in other ongoing administrative
issues. For the year ended December 31, 2000, the Company agreed to pay
Source the greater of $150 per hour or $17,500 per month. The Company
has also agreed to award Source a bonus of 5% of the outstanding shares
of stock when the Company's securities are traded on any United States
stock exchange.
On September 19, 2000, the Company entered into a Services and Consulting
Agreement with Tri-State Metro Territories, Inc. (Tri-State), a business
that sells franchised hair coloring salon units under the copyright 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. The Company
received a total of $51,300 during 2000 as a result of the consulting
agreement with Tri-State. The agreement is for a term of twenty years
with up to four, five-year extensions. The Company is currently in
negotiations with a number of companies that are interested in entering
into similar consulting agreements.
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.
On January 1, 2000, the remaining 60,000 Series A preferred shares were
converted into common shares, thus, at December 31, 2000, no preferred
shares were outstanding.
13
SYNDICATION NET.COM, INC. AND SUBSIDIARY
(Formerly Life2K.com, Inc.)
Notes to the Consolidated Financial Statements
December 31, 2000 and 1999
NOTE 6 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following at December
31, 2000:
Note payable to a related party, due on demand, plus interest
at 12% per annum, unsecured. $ 105,000
Less: Current Portion (105,000)
----------
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
------------ ---------
2001 $ 105,000
2002 -
2003 -
2004 -
2005 and thereafter -
---------
Total $ 105,000
=========
NOTE 7 - 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 $1,217,503 at December 31, 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.
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 the Company 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.
14
SYNDICATION NET.COM, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001 and December 31, 2000
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
------
March 31, December 31,
2001 2000
---------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 25,277 $ 45
Accounts receivable (Note 1) 969,102 571,716
----------- -----------
Total Current Assets 994,379 571,761
----------- -----------
PROPERTY AND EQUIPMENT - NET (Note 2) 1,592 1,820
----------- -----------
TOTAL ASSETS $ 995,971 $ $573,581
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 1,258,895 $ 870,644
Notes payable - related party (Note 6) 105,000 105,000
Accrued expenses (Note 3) 25,613 22,613
----------- -----------
Total Current Liabilities 1,389,508 998,257
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, no shares issued or outstanding - -
Common stock: 100,000,000 shares authorized of
$0.0001 par value, 10,781,750 shares issued and
outstanding 1,078 1,078
Additional paid-in capital 791,749 791,749
Accumulated deficit (1,186,364) $(1,217,503)
----------- -----------
Total Stockholders' Equity (Deficit) (393,537) (424,676)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 995,971 $ 573,581
=========== ===========
2
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
------------------------------
2001 2000
--------- ----------
NET SALES $2,268,996 $1,638,495
COST OF SALES 2,254,798 1,627,128
---------- ----------
GROSS MARGIN 14,198 11,367
---------- ----------
OPERATING EXPENSES
Depreciation 228 228
General and administrative 65,316 74,472
---------- ----------
Total Operating Expenses 65,544 74,700
---------- ----------
INCOME (LOSS) FROM OPERATIONS (51,346) (63,333)
---------- ----------
OTHER INCOME (EXPENSE)
Other income 85,485 -
Interest expense (3,000) (2,200)
---------- ----------
Total Other Income (Expense)
82,485 (2,200)
---------- ----------
NET INCOME (LOSS) $ 31,139 $ (65,533)
========== ==========
BASIC INCOME (LOSS) PER SHARE $ 0.00 $ (0.01)
========== ==========
The accompanying notes are an integral part of these consoilidated financial
statements.
3
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Preferred Stock Common Stock Additional
----------------- ------------------ Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit
-------- ------- ---------- ------ ----------- ------------
Balance, December 31, 1998 - $ - 9,813,916 $ 981 $192,209 $ (519,844)
Recapitalization 60,000 6 189,312 19 (25) -
Common stock issued for cash at
$1.65 per share - - 7,572 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 10,010,800 1,001 264,683 (732,064)
Conversion of preferred shares
to common stock (60,000) (6) 36,000 4 2 -
Common stock issued for cash at
prices ranging from $0.83 to $2.50
per share - - 193,500 19 227,482 -
Common stock issued for cash and
services at $1.67 per share - - 50,400 5 83,995 -
Common stock issued for services
at $1.67 per share - - 78,000 8 129,992 -
Common stock issued for conversion
of debt at $1.64 per share - - 19,050 2 31,248 -
Recapitalization - - 250,000 25 (25) -
Common stock issued for cash at
$0.047 per share - - 94,000 9 4,377 -
Common stock issued for services
at $1.00 per share - - 50,000 5 49,995 -
Net loss for the year ended
December 31, 2000 - - - - - (485,439)
------- ------ ---------- ------ -------- -----------
Balance, December 31, 2000 - - 10,781,750 1,078 791,749 (1,217,503)
Net income for the three months ended
March 31, 2001 (unaudited) - - - - - 31,139
------- ------ ---------- ------ -------- -----------
Balance, March 31, 2001 (unaudited) - $ - 10,781,750 $1,078 $791,749 $(1,186,364)
======= ====== ========== ====== ======== ===========
The accompanying notes are an integral part of these consolidated financial
statements
4
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
--------------------------
2001 2000
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 31,139 $ (65,533)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation 228 228
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (397,386) (165,779)
Increase (decrease) in accrued expenses 3,000 (2,885)
Increase (decrease) in accounts payable 388,251 111,612
--------- ---------
Net Cash Provided (Used) by Operating Activities 25,232 (122,357)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES - -
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable - related party - (25,000)
Proceeds from issuance of common stock - 160,001
--------- ---------
Net Cash Provided by Financing Activities - 135,001
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 25,232 12,644
CASH AT BEGINNING OF PERIOD 45 5,580
--------- ---------
CASH AT END OF PERIOD $ 25,277 $ 18,224
========= =========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid For:
Interest $ - $ -
Income taxes $ - $ -
5
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2001 and December 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of
Syndication Net.com, Inc. (formerly Life2K.com, Inc.) (Syndication)
and its wholly-owned subsidiary, Kemper Pressure Treated Forest
Products, Inc. (Kemper). Collectively, they are referred to herein as
the "Company". Syndication was incorporated under the name of
Generation Acquisition Corporation (Generation) on March 25, 1999
under the laws of the State of Delaware to engage in any lawful act or
activity. Effective August 16, 1999, Life2K.com, Inc. (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. Effective October 13, 2000, pursuant to an Agreement and Plan
of Organization between Generation Acquisition Corporation and Life2K,
Generation Acquisition Corporation issued 10,387,750 shares of its
outstanding common stock for 100% of the outstanding shares of Life2K.
As part of the transaction, Life2K was merged with and into Generation
Acquisition Corporation, Life2K was dissolved and Generation
Acquisition Corporation changed its name to Syndication Net.com, Inc.
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.
At the time of the acquisition of Life2K, Syndication was essentially
inactive, with no operations and minimal assets. Additionally, the
exchange of Syndication=s common stock for the common stock of Life2K
resulted in the former stockholders of Life2K obtaining control of
Syndication. Accordingly, Life2K became the continuing entity for
accounting purposes, and the transaction was accounted for as a
recapitalization of Life2K with no adjustment to the basis of Life2K=s
assets acquired or liabilities assumed. For legal purposes,
Syndication was the surviving entity.
6
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial statements
March 31, 2001 and December 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
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 consist entirely of an amount due from one
customer. As management of the Company believes the amount to be fully
collectible, no allowance for doubtful accounts has been recorded at
March 31, 2001 and December 31, 2000.
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
Three Months Ended
March 31,
------------------------
2001 2000
----------- ---------
(Unaudited) (Unaudited)
Income (loss) (numerator) $ 31,139 $ (65,533)
Weighted average shares
outstanding (denominator) 10,781,750 10,179,420
----------- -----------
Basic income (loss) per share $ 0.00 $ (0.01)
=========== ===========
f. Change in Accounting Principle
The Company has adopted the provisions of FASB Statement No. 138
"Accounting for Certain Derivative Instruments and Hedging Activities,
(an amendment of FASB Statement No. 133.)" Because the Company had
adopted the provisions of FASB Statement No. 133, prior to June 15,
2000, this statement is effective for all fiscal quarters beginning
after June 15, 2000. The adoption of this principle had no material
effect on the Company's consolidated financial statements.
7
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial statements
March 31, 2001 and December 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Change in Accounting Principle (Continued)
The Company has adopted the provisions of FASB Statement No. 140
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (a replacement of FASB Statement No.
125.)" This statement provides accounting and reporting standard for
transfers and servicing of financial assets and extinguishments of
liabilities. Those standards are based on consistent application of a
financial-components approach that focuses on control. Under that
approach, the transfer of financial assets, the Company recognized the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. This
statement provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured
borrowings. This statement is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after
March 31, 2001. This statement is effective for recognition and
reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending
after December 15, 2000. The adoption of this principle had no
material effect on the Company's consolidated financial statements.
The Company has adopted the provisions of FIN 44 AAccounting for
Certain Transactions Involving Stock Compensation (an interpretation
of APB Opinion No. 25.)@. This interpretation is effective July 1,
2000. FIN 44 clarifies the application of Opinion No. 25 for only
certain issues. It does not address any issues related to the
application of the fair value method in Statement No. 123. Among other
issues, FIN 44 clarifies the definition of employee for purposes of
applying Opinion 25, the criteria for determining whether a plan
qualifies as a noncompensatory plan, the accounting consequence of
various modifications to the terms of a previously fixed stock option
or award, and accounting for an exchange of stock compensation awards
in a business combination. The adoption of this principle had no
material effect on the Company=s consolidated 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.
8
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2001 and December 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Provision for Taxes
At December 31, 2000, the Company had net operating loss carryforwards
of approximately $1,217,000 that may be offset against future taxable
income through 2020. No tax benefit has been reported in the
consolidated financial statements because the potential tax benefits
of the net operating loss carryforwards are offset by a valuation
allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Should a change
in ownership occur, net operating loss carryforwards may be limited as
to use in future years.
i. Principles of Consolidation
The consolidated financial statements include those of Syndication 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.
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.
9
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2001 and December 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
m. Concentrations of Risk
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.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31, December 31,
2001 2000
----------- -----------
(Unaudited)
Office equipment $ 4,550 $ 4,550
Accumulated depreciation (2,958) (2,730)
------- -------
Net property and equipment $ 1,592 $ 1,820
======= =======
Depreciation expense for the three months ended March 31, 2001 and
2000 was $228 and $228, respectively.
10
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2001 and December 31, 2000
NOTE 3 - ACCRUED EXPENSES
At March 31, 2001 and December 31, 2000, accrued expenses consist of
$25,613 and $22,613, respectively, 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.
On April 7, 1999, the Company ratified its corporate service
consulting agreement with Source Management Services, Inc. (Source), a
related company owned by a significant shareholder. Source is to
oversee the general activities of the Company on a day-to-day basis,
develop and execute a business plan, and assist in other ongoing
administrative issues. For the year ended December 31, 2000, the
Company agreed to pay Source the greater of $150 per hour or $17,500
per month. The Company has also agreed to award Source a bonus of 5%
of the outstanding shares of stock when the Company=s securities are
traded on any United States stock exchange.
On September 19, 2000, the Company entered into a Services and
Consulting Agreement with Tri-State Metro Territories, Inc. (Tri-
State), a business that sells franchised hair coloring salon units
under the copyright name of Ahaircolorxpress.@ The Company was
retained as Tri-State=s consultant to assist in the development of
management, sales and marketing of Ahaircolorxpress@ franchised hair
coloring salon units. The Company received a total of $51,300 during
2000 as a result of the consulting agreement with Tri-State. The
Company received an additional $85,485 during the three months ended
March 31, 2001 under the consulting agreement. The agreement is for a
term of twenty years with up to four, five-year extensions. The
Company is currently in negotiations with a number of companies that
are interested in entering into similar consulting agreements.
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.
On January 1, 2000, the remaining 60,000 Series A preferred shares
were converted into common shares, thus, at December 31, 2000, no
preferred shares were outstanding.
11
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2001 and December 31, 2000
NOTE 6 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following:
March 31, December 31,
2001 2000
------------- -----------
(Unaudited)
Note payable to a related party, due on demand,
plus interest at 12% per annum, unsecured. $ 105,000 $ 105,000
Less: Current Portion (105,000) (105,000)
--------- -----------
Long-Term Notes Payable to Related Parties $ - $ -
========= ===========
NOTE 7 - 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 $1,217,503 at December 31, 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.
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 the Company 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.
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 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 the 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 the listed expenses are estimates,
other than the filing fees payable to the Securities and Exchange Commission.
Filing Fee--Securities and Exchange Commission............... $ 1
Fees and Expenses of Accountants and legal counsel........... $ 115,000
Blue Sky Fees and Expenses................................... $ 2,000
Printing and Engraving Expenses.............................. $ 5,000
Miscellaneous Expenses....................................... $ 1,000
---------
Total........................................................ $ 123,001
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 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
30
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 shares of its
common stock to two individuals for services rendered in founding the Company.
The Company believes that these issuances were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933, as amended, as transactions by an
issuer not involving any public offering.
In August 1999, the Company issued 3,750 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 this issuance was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, as a transaction by an issuer not involving any public offering.
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 this issuance was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
as a transaction by an issuer not involving any public offering.
On March 25, 1999, the Company issued 5,000,000 (pre-merger) 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 this issuance was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
as a transaction by an issuer not involving any public offering.
In October 1999, the Company issued 7,500 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 these
issuances were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as transactions by an issuer not involving
any public offering.
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) 6,000 shares of its common stock to one entity upon the exercise of an
option agreement to purchase 10,000 shares of the Company's common stock
exercisable at $1.00; and (iii) issued 36,000 shares of its common stock upon
the conversion of 60,000 (pre-merger) shares of the Company's preferred stock
issued to a consultant to the Company in 1995. The Company believes that these
issuances were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as transactions by an issuer not involving
any public offering.
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 these issuances were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
as transactions by an issuer not involving any public offering.
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 this issuance was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended, as a
transaction by an issuer not involving any public offering.
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 this issuance was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer
not involving any public offering.
31
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 believes that
this issuance was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not involving
any public offering.
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 this issuance was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended,
as a transaction by an issuer not involving any public offering.
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 this issuance was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an
issuer not involving any public offering.
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, filed with the
Commission as Exhibit 4.3 in a registration statement on Form SB2 filed
on February 13, 2001
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;
32
(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 the information in the registration statement.
(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 in that prospectus,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
33
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 May 22, 2001.
SyndicationNet.com, Inc.
By: /s/ Vance Hartke
Vance Hartke, President and Director
By: /s/ Cynthia White
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
----------------------
Mark Griffith Treasurer, Secretary and Director May 22, 2001
/s/ Mark Solomon
----------------------
Mark Solomon Director May 22, 2001
/s/ Wayne Hartke
----------------------
Wayne Hartke Director May 22,2001
/s/ Howard B. Siegel
----------------------
Howard B. Siegel Director May 22, 2001
34