SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28955
SYNDICATION NET.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-2218873
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
(Address of principal executive offices (zip code))
703/748-3480
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the last 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date.
Class Outstanding at March 31, 2002
Common Stock, $0.0001 10,781,750
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNDICATION NET.COM, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002 and December 31, 2001
SYNCIATION NET.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
March 31, December 31,
2002 2001
(Unaudited)
CURRENT ASSETS
Cash $ 70 $ 3,516
Accounts receivable, net 649,557 616,522
---------- ---------
Total Current Assets 649,627 620,038
---------- ---------
PROPERTY AND EQUIPMENT - NET 683 910
---------- ---------
TOTAL ASSETS $ 650,310 $ 620,948
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 890,310 $ 852,326
Notes payable-related party 105,000 105,000
Interest payable-related party 38,350 35,200
----------- ---------
Total Current Liabilities 1,033,660 992,526
----------- ---------
COMMITMENTS AND CONTINGENCIES
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 (1,176,177) (1,164,405)
----------- -----------
Total Stockholders'
Equity (Deficit) (383,350) (371,578)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $ 650,310 $ 620,948
============ ============
The accompanying notes are an integral part of these
consolidatd financial statements.
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
--------------------------
2002 2001
----------- -----------
SALES
Wood treatment commissions $ 2,053,678 $ 2,268,996
Consulting 500 85,485
---------- -----------
Total Sales 2,054,178 2,354,481
---------- -----------
COST OF GOODS SOLD 2,040,181 2,254,798
---------- -----------
GROSS MARGIN 13,997 99,683
---------- -----------
OPERATING EXPENSES
Depreciation 228 228
General and administrative 22,391 65,316
--------- ----------
Total Operating Expenses 22,619 65,544
---------- ----------
OPERATING INCOME (LOSS) (8,622) 34,139
---------- ---------
OTHER (EXPENSES)
Interest expense (3,150) (3,000)
---------- ----------
Total Other (Expenses) (3,150) (3,000)
---------- ----------
NET INCOME (LOSS) BEFORE
INCOME TAXES (11,772) 31,139
---------- ----------
INCOME TAX EXPENSE - -
NET INCOME (LOSS) $ (11,772) $ 31,139
========== ==========
BASIC INCOME (LOSS) PER SHARE $ (0.00) $ 0.00
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 10,781,750 10,781,750
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
SYNDICATION NOT.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Addi-
tional Accumu-
Preferred Stock Common Stock Paid-In lated
Shares Amount Shares Amount Capital Deficit
------ ------ ------ ------ ------- -------
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 year ended
December 31, 2001 - - - - - 53,098
------- ----- ---------- ----- ------- ----------
Balance, December 31, 2001 - - 10,781,750 1,078 791,749 (1,164,405)
Net loss for the three months
ended March 31, 2002
(unaudited) - - - - - (11,772)
------- ------ --------- ------ ------- ----------
Balance, March 31, 2002
(unaudited) - $ - 10,781,750 $1,078 $791,749 $(1,176,177)
======= ====== ========== ====== ======== ============
The accompanying notes are an integral part of these consolidated
financial statements.
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (11,772) $ 31,139
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities:
Depreciation 228 228
Changes in operating assets and liabilities:
(Increase) in accounts receivable (33,036) (397,386)
Increase in accounts payable 37,984 388,251
Increase in accrued expenses 3,150 3,000
------------ -----------
Net Cash Provided (Used) by
Operating Activities (3,446) 25,232
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES - -
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES - -
----------- -----------
NET INCREASE (DECREASE) IN CASH (3,446) 25,232
CASH, BEGINNING OF YEAR 3,516 45
----------- -----------
CASH, END OF YEAR $ 70 $ 25,277
=========== ===========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid For:
Interest $ - $ -
Income taxes $ - $ -
Non-Cash Financing Activities
Stock issued for services $ - $ -
Stock issued for outstanding debt $ - $ -
The accompanying notes are an integral part of these
consolidated financial statements.
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2002 and December 31, 2002
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
a. Organization
The accompanying unaudited condensed financial statements
have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in
accordance with such rules and regulations. The information
furnished in the interim condensed financial statements include
normal recurring adjustments and reflects all adjustments, which,
in the opinion of management, are necessary for a fair
presentation of such financial statements. Although management
believes the disclosures and information presented are adequate
to make the information not misleading, it is suggested that these
interim condensed financial statements be read in conjunction with
the Company=s most recent audited financial statements and
notes thereto included in its December 31, 2001 Annual Report on
Form 10-KSB. Operating results for the three months ended
March 31, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002.
NOTE 2 -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 $1,164,405 at December 31, 2001 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of the
Company's financial condition and plan of operation and should be read in
conjunction with the Company'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 the Company, trends in the results
of the Company's development, anticipated development plans, operating
expenses and the Company's anticipated capital requirements and capital
resources. The Company's actual results could differ materially from
the results discussed in the forward-looking statements.
Although the Company 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.
SyndicationNet.com, Inc., a Delaware corporation (the "Company"), is a
start-up holding company which was formed to acquire controlling
interests in or to participate in the creation of, and to provide
financial, management and technical support to, development stage
businesses. 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.
It is the intent of the Company's board of directors to develop and
exploit all business opportunities to increase efficiencies between
companies with which the Company may invest in or consult. For example,
if the Company is consulting with a marketing company, the Company may
utilize that marketing company to provide services for other companies
with which The Company consults with or invests. The Company may
acquire companies to be held as wholly owned subsidiaries of the
Company.
The Company 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 intends to develop
computer software applications that will enable Kemper to manage on-line
bidding for the treatment, sale and shipment of processed wood. Kemper
has one customer and the income from this customer is expected to
continue.
The Company has historically incurred losses which has resulted in an
accumulated deficit of $(1,176,177) as of March 31, 2002. Although
funds generated by operations have supported certain ongoing
expenditures including legal and accounting fees, additional capital
will be needed to affect transactions such as mergers or acquisitions,
if any. Such additional capital may need to be raised through the
issuance of the Company's debt or equity or a combination of both.
Without additional capital, the Company may not be able to continue
as a going concern.
The Company has incurred significant losses in the past because of
significant costs related to the decision to pursue public ownership status.
In that effort, in the year 2000, the Company reorganized itself, completed
two mergers, paid for the cost of the public company purchase and the
legal and auditing fee's related to that project. Without such expenses,
the Company believes that its losses would be significantly less.
The Company has generated funds through its wood brokerage services
and from consulting fees for services as well as raising capital through
the sale of its securities in private transactions. Over the next 12
months the Company intends to develop revenue by focusing on 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 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.
The Company's board of directors believes that the financial evaluations
of the Company would be enhanced as a result of having diversified
companies owned by the Company. The Company anticipates that its role
as a consultant to development stage companies may provide the
opportunity for the Company to invest in such development stage
companies, however, the Company's services as a consultant will not be
conditioned on the Company being allowed to invest in a company.
The Company will attempt to enter into consulting agreements over the
next 12 months that will increase consulting fees as well as open dialog
for acquisition considerations. The Company has no current plans, proposal,
arrangements or understandings with any representatives of the owners of
any business or company regarding an acquisition or merger transaction.
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.
PERIOD ENDED MARCH 31, 2002 COMPARED TO MARCH 31,
2001 FOR SYNDICATIONNET TOGETHER WITH ITS WHOLLY
OWNED SUBSIDIARY, KEMPER PRESSURE TREATED FOREST
PRODUCTS, INC.
The Company's total sales decreased to $2,054,178 for the period ended
March 31, 2002, compared to $2,354,481 for the period ended March 31,
2001.
Cost of sales were $2,040,181 for the period ended March 31, 2002,
compared to $2,254,798 for the period ended March 31, 2001.
The net loss for the period ended March 31, 2002, was $(11,772)
compared to net income of $31,139 for the period ended March 31, 2001.
Total current assets increased to $650,310 at March 31, 2002 from
$620,948 at March 31, 2001 due primarily to the increase of the
Company's accounts receivable.
Total current liabilities increased to $1,033,660 at March 31, 2002 from
$992,526 at March 31, 2001.
Total liabilities and stockholders' deficit increased to $(650,310) at
March 31, 2002 from $(620,948) 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.
The Company does not expect to purchase or sell any manufacturing
facilities or significant equipment over the next twelve months.
The Company does not foresee any significant changes in the number of
its employees over the next twelve months.
PART 2 - OTHER INFORMATION ITEM
ITEM 1. LEGAL PROCEEDINGS
Other than the information stated below, SyndicationNet is not a party to
any litigation and management has no knowledge of any threatened or
pending litigation against it.
On November 26, 2001, Barry Pope ("Pope"), individually and as a
shareholder of Worldwide Forest Products, Inc. ("Worldwide")
commenced an action against Brian Sorrentino, Dale Hill, Worldwide
Forest Products, Inc., Kemper Pressure Treated Forest Products, Inc.,
Life2k.com, Inc., Algonquin Acquisition Corp., Generation Acquisition
Corp., SyndicationNet.com, Inc., Castle Securities Corporation and John
Does 1-5, in the Circuit Court of Madison County, Mississippi. In such
action, Pope claims that stock he owned and commissions owed to him
by Worldwide should have been converted into shares of the common
stock of SyndicationNet.
Worldwide was a corporation organized under the laws of the State of
Mississippi that operated as a wood treatment company that worked
exclusively with creosite, a wood treatment chemical, for utility wood
poles and products. In 1997 the corporate charter of Worldwide expired
and Worldwide no longer conducts operations. In 1996, Pope entered
into a consent order settlement with Worldwide arising from claims
brought by Pope against the former President of Worldwide, David Wise,
and Worldwide. Pursuant to such settlement, on November 8, 1996, Pope
received 30,000 shares of Worldwide common stock and received
warrants, exercisable at $1.00 per share, to purchase 200,000 shares of
Worldwide common stock.
Worldwide never completed a public offering and, as such, Pope alleges
losses equal to the value of his Worldwide shares had Worldwide
completed a public offering, had such shares traded at a minimum of $5.00
per share and had Pope been able to sell his securities equal to or in excess
of $5.00. Pope further alleges that certain defendants guaranteed the
obligations of Worldwide in the amount of $2,060,000 and alleges that all
shareholders of Worldwide were provided an opportunity by Worldwide
to convert shares of Worldwide common stock into shares of common
stock of Syndication.
Finally, Pope alleges that Brian Sorrentino orally guaranteed payment to
Pope in the amount of $200,000 representing commissions to be paid to
Pope if and when Pope provided a $2,000,000 loan for Worldwide, which loan
was never received. Pope is seeking compensatory and punitive damages in
an amount to be determined at trial, plus an award of reasonable costs,
attorneys' fees and expenses, pre-judgement and post-judgement interest,
and any other relief to which Pope may be entitled. SyndicationNet believes
that Pope's claim is without merit and SyndicationNet has engaged counsel
to vigorously defend against the action.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Subsequent Events.
On February 15, 2002, the Company filed an amended registration
statement on Form SB-2/A with the Securities and Exchange Commission
to register 561,500 shares of its common stock held by thirty-five of its
securityholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(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
- - -------- * Previously filed
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNDICATIONNET.COM, INC.
By: /s/ Vance Hartke
President
Dated: 5/14/02
By: /s/ Cynthia White
Chief Financial Officer and
Principal Accounting Officer
Dated: 5/14/02