SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2001
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 000-29701
SYNDICATIONNET.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 September 30, 2001
Common Stock, par value $0.0001 10,781,750
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNDICATION NET.COM, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
------
September 30, December 31,
2001 2000
--------------- --------------
(Unaudited)
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 16,771 $ 45
Accounts receivable. . . . . . . . . . . . . . . . . 736,985 571,716
--------------- --------------
Total Current Assets . . . . . . . . . . . . . . . 753,756 571,761
--------------- --------------
PROPERTY AND EQUIPMENT - NET . . . . . . . . . . . . . 1,136 1,820
--------------- --------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 754,892 $ 573,581
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------------
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . $ 943,685 $ 870,644
Notes payable - related party. . . . . . . . . . . . 105,000 105,000
Accrued expenses . . . . . . . . . . . . . . . . . . 31,612 22,613
--------------- --------------
Total Current Liabilities. . . . . . . . . . . . . 1,080,297 998,257
--------------- --------------
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. . . . . . . . . . . . . . . . . (1,118,232) (1,217,503)
--------------- --------------
Total Stockholders' Equity (Deficit) . . . . . . . (325,405) (424,676)
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT). . . . . . . . . . . . . . . . . $ 754,892 $ 573,581
=============== ==============
The accompanying notes are an integral part of these consolidated financial statements.
-2-
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
NET SALES $ 2,223,889 $ 2,103,735 $ 6,691,466 $ 5,484,273
COST OF SALES 2,209,530 2,090,338 6,649,238 5,448,258
------------ ------------ ------------ ------------
GROSS MARGIN 14,359 13,397 42,228 36,015
------------ ------------ ------------ ------------
OPERATING EXPENSES
Depreciation 228 228 684 683
General and administrative 29,645 83,898 102,258 356,046
------------ ------------ ------------ ------------
Total Operating
Expenses 29,873 84,126 102,942 356,729
------------ ------------ ------------ ------------
INCOME (LOSS) FROM
OPERATIONS (15,514) (70,729) (60,714) (320,714)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Other income 36,500 - 168,985 -
Interest expense (3,000) (3,153) (9,000) (9,824)
------------ ------------ ------------ ------------
Total Other Income
(Expense) 33,500 (3,153) 159,985 (9,824)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 17,986 $ (73,882) $ 99,271 $ (330,538)
============ ============ ============ ============
BASIC INCOME (LOSS)
PER SHARE $ 0.00 $ (0.00) $ 0.01 $ (0.02)
============ ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF SHARES 10,781,750 10,637,750 10,781,750 10,324,275
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated 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 nine months ended
September 30, 2001 (unaudited) . . . . - - - - - 99,271
-------- -------- ---------- ------- --------- ------------
Balance, September 30, 2001 (unaudited) - $ - 10,781,750 $ 1,078 $791,749 $(1,118,232)
======== ======== ========== ======= ========= ============
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 Nine Months Ended
September 30,
-----------------------
2001 2000
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . . $ 99,271 $(330,538)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . 684 683
Stock issued for services and interest. . . . . . . - 147,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable. . . . . (165,269) (63,081)
Increase (decrease) in accrued expenses . . . . . . 8,999 3,574
Increase (decrease) in accounts payable . . . . . . 73,041 27,051
---------- ----------
Net Cash Provided (Used) by Operating Activities. 16,726 (215,311)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES. . . . . . . . . . - -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable - related party. . . . . . . - (25,000)
Proceeds from issuance of common stock. . . . . . . . - 267,501
---------- ----------
Net Cash Provided by Financing Activities . . . . . - 242,501
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . 16,726 27,190
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . 45 5,580
---------- ----------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . $ 16,771 $ 32,770
========== ==========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid For:
Interest. . . . . . . . . . . . . . . . . . . . . . . $ - $ 6,250
Income taxes. . . . . . . . . . . . . . . . . . . . . $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common and preferred stock issued for services. . . . $ - $ 147,000
Common stock issued for debt conversion . . . . . . . $ - $ 31,250
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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, 2000 Annual Report on Form 10-KSB.
Operating results for the nine months ended September 30, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a doing 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.
ITEM 2. 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
start-up holding company which was formed to acquire controlling interests in or
to participate in the creation of, and to provide financial, management and
technical support to, development stage businesses. SyndicationNet's strategy is
to integrate affiliated companies into a network and to actively develop the
business strategies, operations and management teams of the affiliated entities.
SyndicationNet currently has one wholly owned subsidiary, Kemper Pressure
Treated Forest Products, Inc. Kemper is engaged in the retail brokerage
business of preservative treated lumber such as utility poles, bridge pilings,
timber and guardrail posts. Kemper intends to develop 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 25, 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.
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 without making any
significant investments or acquisitions. 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.
PERIOD ENDED SEPTEMBER 30, 2001 COMPARED TO SEPTEMBER 30, 2000 FOR
SYNDICATIONNET TOGETHER WITH ITS WHOLLY OWNED SUBSIDIARY, KEMPER PRESSURE
TREATED FOREST PRODUCTS, INC.
For the period ended September 30, 2001, the Company's revenues
increased to $2,223,889 from $2,103,735 for the period ended
September 30, 2000. The increase is primarily attributed to the
growth of the Company's wholly owned subsidiary, Kemper Pressure Treated
Forest Products, Inc.
Cost of sales were $2,209,530 for the period ended September 30, 2001,
compared to $2,090,338 for the period ended September 30, 2000. This
increase in cost of sales was primarily attributable to an increase in the
Company's revenue.
The net income for the period ended September 30, 2001 was $17,985
Compared to net losses of $73,882 for the period ended September 30, 2000.
Total current assets increased to $753,756 at September 30, 2001 from
$573,761 at December 31, 2000, due primarily to the increase of the
Company's accounts receivable. Total current liabilities increased from
$998,257 at December 31, 2000 to $1,080,297 at September 30, 2001.
Total Liabilities and stockholders' equity increased from $573,581
at December 31, 2000 to $754,892 at September 30, 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.
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SyndicationNet is not a party to any current litigation.
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 October 5, 2001 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
On September 21, 2001 SynidcationNet filed a Form 8K-A which contained
financial statements for its fiscal year ended December 31, 1998 and 1999
audited by the independent public accounting firm of Jones, Jensen & Company LLC
together with the unaudited financial statements and Pro Form statements for
the period ending September 30, 2000.
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/ Cynthia White
------------------------
Chief Financial Officer and
Principal Accounting Officer
Dated: November 12, 2001