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As filed with the Securities and Exchange Commission on May _____, 2002
Registration No. 333-55534
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 6 TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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SYNDICATIONET.COM, INC.
(Name of small business issuer in its charter)
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Delaware 57-2218873 8742
(State or other jurisdiction (I.R.S. Employer (Industrial Classification
of incorporation or Identification Number) Code Number)
organization)
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SyndicationNet.com, Inc
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
703/748-3480
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices and principal place of business)
Vance Hartke, President
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
703/748-3480
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Cassidy & Associates
1504 R Street N.W.
Washington, D.C. 20009
202/387-5400
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Approximate Date of Commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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)
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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 ______ , 2002
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. The shares are being sold
by the selling securityholders in separate transactions at $1.00 per share until
SyndicationNet is quoted, if at all, on the OTC Bulletin Board and thereafter at
prevailing market or privately negotiated prices.
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 3. 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.
Prospectus dated May ____, 2002
TABLE OF CONTENTS
Page
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Prospectus Summary 1
Risk Factors
SyndicationNet Has Incurred Significant Losses for the Year Ended December 31,
2000 Which Raises Substantial Doubts about SyndicationNet's Ability to Continue
as a Going Concern 2
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 3
SyndicationNet May Obtain Additional Capital Primarily Through the Issuance Of
Preferred Stock Which May Limit the Rights of Current Holders of
SyndicationNet Common Stock 3
SyndicationNet Has a Limited Operating History and Investors May Not Be Able To
Base an Investment Decision on SyndicationNet's Operating History 3
Because Syndications Management Team Devotes a Limited Amount of Their Time to
the Affairs of SyndicationNet, SyndicationNet's Business May Not Be
Successful 3
SyndicationNet's Strategy May Involve Speculative Investments Which Could
Cause SyndicationNet to Lose Some or All of its Invested Funds and Could Cause
The Price of SyndicationNet's Stock to Decline 3
There Is No Current Trading Market for SyndicationNet's Securities. Without a
Trading Market, Purchasers of the Securities May Have Difficulty Selling
Their Shares 4
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 4
Selling Securityholders May Sell Securities at Any Price or Time Which
Could Cause the Price of SyndicationNet's Common Stock, If Publicly
Traded, to Decline. 4
Management and Affiliates Own Enough Shares to Control Shareholder Vote
Which Could Limit the Rights of Existing or Future Shareholders. 4
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 May Not Be Able to Continue to Operate 4
If SyndicationNet Is Required to Comply with the Investment Company Act
Then SyndicationNet Will Incur Substantial Additional Expenses and If
SyndicationNet Does Not Comply with the Investment Company Act,
Then SyndicationNet Could Be Subject to Liabilities. 5
SyndicationNet May Not Be Able to Continue to Operate as a Retailer of Lumber
If it Is Unable to Obtain Lumber at Economic Prices 5
If SyndicationNet Is Unable to Receive and Fill its Orders for Lumber Products,
it May Not Be Able to Continue to Operate its Wood Brokerage Services 5
Kemper Only Has One Customer and If Kemper Loses this Customer it May
Not Be Able to Continue to Operate 5
Disclosure Regarding Forward Looking Statements 6
Business 6
Use of Proceeds 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations 13
Management 16
Security Ownership of Certain Beneficial Owners and Management 21
Selling Securityholders 23
Certain Relationships and Related Transactions 27
Description of Securities 28
Plan of Distribution 31
Legal Matters 33
Experts 33
Available Information 33
Index to Financial Statements F-1 - F-24
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Dealer Prospectus Delivery Obligation
Until _______, 2002, 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.
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.
SyndicationNet
SyndicationNet is a holding company formed to acquire controlling interests
in or to participate in the creation of development stage businesses.
SyndicationNet intends to provide financial, management and technical support to
both Internet and brick-and-mortar businesses that demonstrate growth potential.
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.
SyndicationNet is headquartered in the Hartke Building located at 7637
Leesburg Pike, Falls Church, Virginia 22043. SyndicationNet's telephone number
is 703/748-3480 and its fax number is 703/790-5435.
Selling Securityholders
This prospectus relates to the registration for sale of the securities held
by thirty-five securityholders of SyndicationNet. These shareholders are
referred to throughout this prospectus as "selling securityholders". 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. 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.
The selling securityholders will sell their shares of common stock at $1.00 per
share until SyndicationNet is quoted, if at all, on the OTC Bulletin Board and
thereafter may sell their shares of common stock at prevailing market prices or
privately negotiated prices. SyndicationNet will not receive any proceeds from
the sale of the shares.
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.
The Offering
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Number of shares of
common stock outstanding prior
to this offering 10,781,750 shares
Common stock offered by
selling securityholders 561,500 shares
Use of Proceeds SyndicationNet will not receive any proceeds from the sale
of the shares of common stock included in the registration statement of which
this prospectus is a part.
Plan of Distribution The offering of SyndicationNet shares of
common stock is being made by the shareholders who wish to sell their shares.
Sales of SyndicationNet common stock may be made by the selling
securityholders in the open market or in privately negotiated transactions
and at prices, fixed prices or negotiated prices.
-1-
Risk Factors There are substantial risk factors involved in
investing in SyndicationNet. For a discussion of certain factors you should
consider before buying shares of SyndicationNet common stock, see the section
entitled "Risk Factors".
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 financial notes appearing elsewhere in this prospectus and in the
Company's 10-KSB for the years ended December 31, 2001 and 2000 and the
Company's Form 10-QSB for the quarter ended March 31, 2002.
Year Ended Year Ended
Three Months Ended December 31, December 31,
March 31, 2002 2001 2000
Income Statement Items:
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Total Sales $2,054,178 $8,901,207 $ 7,366,393
Cost of sales 2,040,181 8,672,565 7,267,571
Gross margin 13,997 228,642 98,822
Operating Income (Loss) (8,622) 65,698 (472,422)
Balance Sheet Items
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Total current assets $ 649,627 $ 620,038 571,761
Total assets 650,310 620,948 573,581
Current liabilities 1,033,660 992,526 998,257
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
1. SyndicationNet has incurred significant losses for the year ended December
31, 2001 which raises substantial doubts about SyndicationNet's ability to
continue as a going concern.
SyndicationNet has historically incurred significant losses which have
resulted in an accumulated deficit of $1,164,405 at December 31, 2001 which
raises substantial doubt by SyndicationNet's auditors about SyndicationNet's
ability to continue as a going concern.
2. 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 will 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. If
SyndicationNet is unable to obtain additional capital when needed SyndicationNet
may not be able to support its operations, may not be able to offer its
consulting services, may not be able to make acquisitions of development
companies and may be forced to cease doing business.
3. SyndicationNet may obtain additional capital primarily through the issuance
of preferred stock which may limit the rights of current holders of
SyndicationNet common stock.
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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 limit the rights of current shareholders of SyndicationNet 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.
4. SyndicationNet has a limited operating history and investors may not be able
to base an investment decision on SyndicationNet's operating history.
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.
5. Because SyndicationNet's management team devotes a limited amount of their
time to the affairs of SyndicationNet, SyndicationNet's business may not be
successful.
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. SyndicationNet may
not be able to successfully implement its business plan or continue its
operations if its management team is unable to devote the time required.
6. SyndicationNet's strategy may involve speculative investments which could
cause SyndicationNet to lose some or all of its invested funds and could cause
the price of SyndicationNet's stock to decline.
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.
7. 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 significant
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. 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".
9. Selling securityholders may sell securities at any price or time which could
cause the price of SyndicationNet's common stock, if publicly traded, to
decline.
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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 selling
securityholders will sell their shares of common stock at $1.00 per share until
SyndicationNet is quoted, if at all, on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. The timing of sales and
the price at which the shares are sold by the selling securityholders could
cause the price of SyndicationNet's securities, if publicly traded, to decline.
10. Management and affiliates own enough shares to control shareholder vote
which could limit the rights of existing or future shareholders.
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.
11. 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 may not be able to continue to operate.
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 and the loss of their services would deprive
SyndicationNet of their needed legal and business contacts and experiences.
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.
12. If SyndicationNet is required to comply with the Investment Company Act of
1940 then SyndicationNet will incur substantial additional expenses and if
SyndicationNet does not comply with the Investment Company Act, then
SyndicationNet could be subject to liabilities.
SyndicationNet's ownership interest in companies that it seeks to consult
with and 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 the Investment Company Act of 1940 could subject SyndicationNet
to civil or criminal liabilities. 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.
SPECIAL RISK FACTORS INVOLVING SUBSIDIARY
13. SyndicationNet may not be able to continue to operate as a retailer of
lumber if it is unable to obtain lumber at economic prices to fill its lumber
order requests.
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. 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 demand for logs and wood products is primarily affected by the
level of new residential construction activity and, to a lesser extent, repair
and remodeling activity and other industrial uses. The demand for logs is also
affected by the demand for wood chips in the pulp and paper markets. These
activities are, in turn, subject to fluctuations due to, among other factors:
changes in domestic and international economic conditions; interest rates;
population growth and changing demographics; and seasonal weather cycles. If
SyndicationNet is not able to obtain raw wood materials at economic prices in
the future it may not be able to continue to fill its lumber order requests and
may not be able to continue to operate its wood brokerage services.
-4-
14. Kemper only has one customer and if Kemper loses this customer it may not be
able to continue to operate.
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 eliminate 100% of Kemper's current
revenue and, if Kemper is unable to find additional customers, Kemper may be
forced to cease doing business in the wood brokerage industry.
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 traditional
brick-and-mortar businesses. SyndicationNet has no restrictions or limitations
in terms of the type of industry that it intends to focus its activities on.
SyndicationNet does not want to limit the scope of its potential target
businesses. In evaluating whether to act as a consultant with a particular
company and whether to invest in a specific company, SyndicationNet's board of
directors intends to apply a general analysis which would include, but be not
limited to, (i) an evaluation of industry of a target company to determine the
competition that exists in that particular industry; (ii) an evaluation to
determine if the target company has the products, services and skills to
successfully compete in its industry; (iii) an evaluation of the target
company's management skills and (iv) an evaluation of SyndicationNet's equity
position in a target company, if any, to review the extent, if any, that
SyndicationNet will be able to exert influence over the direction and operations
of the development stage company. As a condition to any acquisition or
development agreement, SyndicationNet intends to require representation on the
company's board of directors to ensure its ability to provide active guidance to
the company. The board of directors has the ultimate authority for any decision
with regard to selecting which companies to consult with and in which companies
SyndicationNet might make an investment.
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. It is the intent of
SyndicationNet's board of directors to develop and exploit all business
opportunities to increase efficiencies between companies with which
SyndicationNet may invest in or consult. For example, if SyndicationNet is
consulting with a marketing company, SyndicationNet may utilize that marketing
company to provide services for other companies with which SyndicationNet
consults with or invests. SyndicationNet may acquire companies to be held as
wholly owned subsidiaries of SyndicationNet.
SyndicationNet's board of directors believes that the financial evaluations
of SyndicationNet would be enhanced as a result of having diversified companies
owned by SyndicationNet. SyndicationNet anticipates that its role as a
consultant to development stage companies may provide the opportunity for
SyndicationNet to invest in such development stage companies, however,
SyndicationNet's services as a consultant will not be conditioned on
SyndicationNet being allowed to invest in a company.
SyndicationNet intends to accomplish its consulting and investing
activities by utilizing the combined and individual experience of the following
individuals: Vance Hartke will help accomplish SyndicationNet's activities by
utilizing his experience in business law, politics, zoning, taxes, debt control,
international trade, energy, commerce, tourism, communications, and
import-export, Mark Solomon will help accomplish SyndicationNet's activities by
utilizing his experience in business law and corporate compliance, Cynthia White
will help accomplish SyndicationNet's activities by utilizing her experience in
accounting and fiscal policy, Mark Griffith will help accomplish
SyndicationNet's activities by utilizing his experience in SEC compliance, Wayne
-5-
Hartke will help accomplish SyndicationNet's activities by utilizing his
experience in business law, as corporate counsel, in Federal communication
licensing, satellite launch contract negotiations, international crude oil
purchases, development of coal properties, acquisitions and merger law and
Internet domain name procurement, and Howard Siegal will help accomplish
SyndicationNet's activities by utilizing his experience in business law, tax
law, and oil law.
SyndicationNet does not intend to identify potential acquisition,
investment and consulting activities through the use of paid advertisements,
phone solicitation or email solicitation, but intends to become aware of and
identify potential acquisition, investment and consulting activities through the
business contacts and networking of Vance Hartke, Wayne Hartke, Mark Solomon,
Brian Sorrentino, Cynthia White, Howard Siegel and Mark Griffith.
SyndicationNet has entered into a consulting agreement with Source
Management whose principal, Brian Sorrentino, is a significant shareholder of
SyndicationNet. Source Management is to oversee the general activities of
SyndicationNet and Kemper on a day to day basis, develop and execute
SyndicationNet's and Kemper's business plan, assist with general contract and
business negotiations, project management, assist in the preparation of audits
and registration statements, and to assist SyndicationNet with the listing of
its securities on the OTC Bulletin Board. In 1997, Mr. Sorentino helped guide
Kemper from a production-based wood supplier to a broker-based supplier of
finished wood products.
Although funds generated by operations and sales of equity 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
SyndicationNet's debt or equity or a combination of both. Without additional
capital, SyndicationNet may not be able to continue as a going concern.
SyndicationNet has enough cash on hand, assuming continuation of its current
operations, to operate for the next twelve months assuming it does not make any
acquisitions or investments or affect any transactions.
BUSINESS OF SYNDICATIONNET'S SUBSIDIARY, KEMPER
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.
BACKGROUND
In preparation for this offering of its securities, SyndicationNet.com, Inc.
effected two reorganizations.
Kemper Pressure Treated Forest Products, Inc. is an operating Mississippi
corporation formed in 1987. On August 16, 1999, the shareholders of Kemper
Pressure Treated Forest Products exchanged all their outstanding stock,
16,200,000 shares, on a one-for-one basis for shares of stock of Life2K.com,
Inc., a Delaware corporation which had been incorporated in Delaware on March
24, 1999 as Algonquin Acquisition Corporation and which had no operations, no
revenues and one shareholder, TPG Capital Corporation. On August 12, 1999, in
anticipation of the share exchange with Kemper Pressure Treated Forest Products,
Inc., Algonquin Acquisition Corporation changed its name to Life2K.com, Inc. As
a result of the share exchange, Kemper Pressure Treated Forest Products, Inc.
became a wholly-owned subsidiary of Life2K.com, Inc.
On October 13, 2000, the shareholders of Life2K.com, Inc. exchanged all their
outstanding stock for shares of Generation Acquisition Corporation. Generation
Acquisition Corporation, a Delaware corporation, had filed with the Securities
and Exchange Commission a registration statement on Form 10-SB, had become a
reporting company under the Securities Exchange Act of 1934, had no revenues or
operations and had one shareholder. At the time of the exchange, the officers
and directors of Life2K.com, Inc. became the officers and directors of
Generation Acquisition Corporation. Simultaneously, Life2K.com, Inc. merged with
and into Generation Acquisition Corporation and changed its name to
SyndicationNet.com, Inc.
Kemper Pressure Treated Forest Products, Inc. wanted to diversify its
operations and to become a publicly-traded company. In order to diversify its
operations, Kemper determined to use Algonquin Acquisition Corporation as a
Delaware holding company, of which Kemper would be a wholly-owned subsidiary,
and which would make acquisitions of or engage in consulting for companies in
other industries. Toward that end, Kemper combined with Algonquin, which then
changed its name to Life2K.com, Inc. Algonquin Acquisition Corporation's
purpose in combining with Kemper was to complete its initial purpose of locating
an operating business entity for the combination of that target company with
Algonquin Acquisition Corporation.
In anticipation of registering its securities for public trading,
Life2K.com, Inc. wanted to familiarize itself with the process of being a
reporting company under the Securities and Exchange Act of 1934, and to be
exposed to its financial disciplines. Toward that end, Life2K.com, Inc. combined
with Generation Acquisition Corporation, which then changed its name to
SyndicationNet.com, Inc. Generation Acquisition Corporation's purpose in
combining with Life2k.com, Inc. was to complete its initial purpose of locating
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an operating business entity for the combination of that target company with
Generation Acquisition Corporation. SyndicationNet was pleased with the initial
transaction with Algonquin, controlled by TPG Capital, and so SyndicationNet was
comfortable pursuing the additional transaction with Generation Acquisition
Corporation, also controlled by TPG Capital.
At the time of the transactions described above, the control persons of
Kemper Pressure Treated Forest Products were Dale Hill, who controlled
approximately 66% of Kemper, and Brian Sorrentino, who owned approximately 34%
of Kemper. The controlling person of Algonquin Acquisition Corporation was its
sole officer, director and beneficial shareholder, James M. Cassidy. The
controlling persons of Life2K.com, Inc. were its directors Vance Hartke, Mark
Griffith, Cynthia White, Mark Solomon,Wayne Hartke and Howard Siegel and its
controlling shareholders Dale Hill and Brian Sorrentino. The controlling person
of Generation Acquisition Corporation was its sole officer, director and
beneficial shareholder, James M. Cassidy.
The terms of the transaction between Algonquin Acquisition Corporation and
Kemper Pressure Treated Forest Products and the transaction between Generation
Acquisition Corporation and Life2K.com, Inc. were negotiated between
unaffiliated parties with the intention of making SyndicationNet.com, Inc. a
reporting company and this public offering of its securities. Both
reorganizations consisted of an exchange of stock. While there was shareholder
approval, there were no fairness opinions issued for either of the
reorganizations.
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.
MARKETING
SyndicationNet, primarily through the marketing efforts of its executive
officers, directors and consultants, intends to locate B2B Internet-related
companies and 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 does not intend to
concentrate its efforts on any particular industry. 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 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
Investment and development activities
- ----------------------------------------
SyndicationNet believes that it can add value to development stage B2B
e-commerce Internet-related companies and traditional brick and mortarbusinesses
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.
-7-
SyndicationNet believes that its management team is qualified to identify
companies that are positioned to compete successfully in their respective
industries. SyndicationNet intends to structure its acquisitions to permit the
acquired company's management and key personnel to retain an equity stake in the
company. SyndicationNet believes that it has the ability to complete
acquisitions and investments quickly and efficiently. SyndicationNet intends
that after acquiring an interest in a development company, it will participate
in follow-on financing if needed.
SyndicationNet has no proposed activities related to the offering of
securities of any other company.
Agreement with HTRG Consulting
On January 7, 2000 HTRG was retained by SyndicationNet to design, develop
and implement computer software programs to automate and improve the business
operations of SyndicationNet and Kemper. HTRG was to analyze the business
operations of SyndicationNet and prepare written recommendations and functional
design software to automate and improve those operations. HTRG's
responsibilities also included, upon approval by SyndicationNet, the actual
development, testing, implementation and maintenance of the software programs in
accordance with the prototype designs. HTRG agreed to accept 100,000 shares of
SyndicationNet's common stock as compensation for any software design and
development services. SyndicationNet has focused its software development on
accounting programs which SyndicationNet intends to use to help evaluate
prospect acquisition or merger candidates as well as to institute monitoring
programs for those companies. SyndicationNet also expects HTRG to provide
computer software programs that will provide SyndicationNet with spread sheet
analysis and pro forma evaluations on a project by project basis of potential
target client companies and computer software programs that SyndicationNet will
utilize in its wood brokerage business. To date HTRG has provided services to
SyndicationNet which include developing a computer software purchase order
program used by SyndicationNet's subsidiary, Kemper, and HTRG has provided
computer generated analytical pro forma programs for SyndicationNet.
SyndicationNet has issued an aggregate of 150,000 shares of common stock to HTRG
for their services rendered. At this time all work by HTRG is on hold until
SyndicationNet is able to obtain a trading symbol and have its common stock
quoted on the OTC Bulletin Board. HTRG anticipates that it will need
approximately six to nine months to complete the on-line bidding and auction
program for Kemper and additional web based/software related programs for
SyndicationNet.
Management and consulting activities
- ---------------------------------------
In evaluating whether to act as a consultant with a particular 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 or development agreement, SyndicationNet
intends to require representation on the company's board of directors to ensure
its ability to provide active guidance to the acquired company.
Consulting service 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 ("HCX"), its
franchised hair coloring salon units, in the District of Columbia, Virginia,
Maryland and Delaware. SyndicationNet was to be compensated from Tri-State at an
hourly rate of $150 to $250. SyndicationNet received an initial retainer of
$50,000 which was applied toward its hourly fees. The agreement which was for an
unspecified term on a month to month or project oriented basis. Syndication is
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not currently providing any consulting services to Tri-State because Tri-State
has not recently requested any additional services. SyndicationNet intends to
provide additional services to Tri-State if and when such services are
requested. Tri-State is currently operating as an independent company. The
individuals to assist Tri-State with regard to future services will depend upon
the services requested. If such services requested involve a legal nature,
Messrs. Hartke, Hartke, Siegel and Solomon would provide such services; if such
services are of an accounting nature, Ms. White would provide such services; if
the requested services are of a general corporate nature, such services may be
provided by Mr. Sorrentino or any combination of the above named individuals.
SyndicationNet's consulting services rendered to Tri-State included, but was
not limited to, assisting Tri-State to draft its Uniform Franchise Offering
Circular, Franchise state registration statements, master development
agreements, franchise territory agreements, and to assist Tri-State to
development and negotiate its franchise store locations for HCX.
SyndicationNet's officers and directors, Mark Solomon and Wayne Hartke assisted
Tri-State in the drafting of the above stated legal documents and the ancillary
legal requirements of setting up a franchise. SyndicationNet's consultant, Brian
Sorrentino, assisted Tri-State in its day-to-day development and business
planning in connection with HCX. SyndicationNet believes that its consulting
agreement with Tri-State was negotiated as an arms length transaction.
Relationship between SyndicationNet, Tri-State and HCX
- ----------------------------------------------------------------------
Mr. Sorrentino, a consultant and 10% shareholder of SyndicationNet, owns
63.5% of the outstanding shares of HCX and is a development agent and general
partner of HCX. Mark Solomon, a director of SyndicationNet, owns 8.3% of the
outstanding shares of HCX. Robert Green, a less than 5% shareholder of
SyndicationNet, owns 9% of HCX.
Mr. Green, an independent individual, was the founder and original capital
investor in Tri-State and negotiated the terms to hire SyndicationNet as a
consultant. Subsequently, Mr. Sorrentino, as an individual, was asked by
Tri-State to act as its development agent, independent of its arrangement with
SyndicationNet. Mr. Solomon, a director of SyndicationNet, later invested in
Tri-State.
With regard to the relationships between the negotiation and execution of
the consulting agreement between SyndicationNet and investments in Tri-State by
Messrs. Sorrentino, Solomon and Green, SyndicationNet believes that its
consulting agreement was negotiated at an arms length transaction. Mr. Green, an
independent individual, was the founder and original capital investor in
Tri-State and negotiated the terms to hire SyndicationNet as a consultant.
Subsequently, Mr. Sorrentino, as an individual, was asked by Tri-State to act as
its development agent, independent of its arrangement with SyndicationNet. Mr.
Solomon, a director of SyndicationNet, later invested in Tri-State.
The relationship between Tri- State and HCX is that of a franchisor /
franchisee. Tri-State has purchased from HCX contractual rights to develop
franchised hair coloring salon units in the territories of Delaware, Maryland,
Virginia and the District of Columbia.
Competition
The market to acquire interests in development stage growth companies,
Internet or brick-and-mortar, is highly competitive. Many of SyndicationNet's
competitors may have more experience identifying and acquiring equity interests
in development stage 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.
KEMPER PRESSURE TREATED FOREST PRODUCTS, INC.
-----------------------------------------------
Background
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's management team does not believe there is a need for any
government approval of its wood brokerage services.
-9-
Market
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 typically receives a monthly request from a buyer for wood products.
Kemper then contacts a supplier and requests a quote for the specified wood
products. Kemper adds a mark-up to the price quoted from the supplier, typically
a mark-up of between $0.02 to $0.065 cents per cubic foot of treated wood, and
submits the aggregate price for acceptance by the buyer. If accepted by the
buyer, Kemper will then finalize a purchase order to buy the wood products from
the supplier and an invoice reflecting the negotiated mark-up to the buyer.
Kemper's arrangement with a buyer states that the wood is FOB the treatment
plant which places the risk of loss or damage associated with shipping the wood
product on the buyer. Kemper, as a wholesale supplier of finished treated wood
products, does not wish to engage in the shipping industry which Kemper regards
as expensive and prone to uncontrolled shipping losses and breakage as a result
of loading and unloading finished products.
Strategy
Kemper believes that its prices are competitive within the industry and
Kemper's management believes that if it is able to provide consistent on time
large volume orders it will be able to convince large utility and communication
companies and municipalities to award Kemper with multi year supply contracts
which Kemper believes can be lucrative. Kemper is currently in the process of
bidding for several large multi year supply contracts. Large utility,
communication or municipalities sometimes take up to two years or longer before
deciding to whom they will award their contracts to. Kemper believes that if it
is able to gain a reputation for being able to handle large supply demands on a
consistent basis with quality wood products then its chances of winning large
contracts of this type will be enhanced.
Suppliers
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. There is no
contractual relationship between Kemper and Electric Mills Wood Preserving that
prevents Kemper from working with other suppliers. Management believes that, if
needed, other suppliers could provide similar 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.
Customers
Kemper currently has one customer, Shelby County Forest Products, Inc.
("Shelby"), Tacoma, Washington, which accounts for 100% of Kemper's revenues.
Kemper typically receives a monthly request from Shelby for wood products.
Shelby is an unrelated third party. Kemper then contacts a supplier for an
estimated cost of filling Shelby's requested purchase order. 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.
Research and Development
Kemper's primary research and development expense over the last two years
has been in the form of the aggregate issuance of 150,000 shares of
SyndicationNet's common stock valued at an arbitrary value of $1.00 per share to
HTRG to design, develop and implement, computer software programs and computer
accounting programs which SyndicationNet intends to use to help evaluate
prospect acquisition or merger candidates as well as to institute monitoring
programs for purchased companies. SyndicationNet also expects HTRG to provide
computer software programs that will provide SyndicationNet with spread sheet
analysis and pro forma evaluations on a project by project basis of potential
target client companies and computer software programs that SyndicationNet will
utilize in its wood brokerage business. At this time all work by HTRG is on hold
until SyndicationNet is successful in having its securities listed for public
trading. It is anticipated that HTRG will continue to develop, complete, launch
and maintain SyndicationNet's Internet Web at such time.
HTRG will develop for Kemper an online bidding and wood auction web-site.
The auction software that was being developed is essentially an eBay style
auction site with member registration, password protected bidding, feedback
rating systems, automatic site updating and eMail notification functions.
The computer software system will allow:
-10-
- An Internet user to request an online quote to purchase wood
poles. Quote information provided to the Internet user would include the wood
type (coastal douglas fir, western red cedar, southern yellow pine); the
specification (ANSI, AWPA, REA); the type of framing; the type of wood treatment
(Penta Full Length, Butt Treated (cedar only), untreated); and the retention
level; and
- real time information for bidders, sellers and foresters on timber bid.
- contact opportunities with new buyers, sellers and industry professionals
- Access to professional foresters and agents and the opportunity to assist
potential regional and national buyers with the logistics of bidding, buying,
and harvesting.
Employees
As of February 1, 2002 SyndicationNet and Kemper had an aggregate of three
full time employees and one consultant. SyndicationNet's success depends to a
large extent upon the continued services of SyndicationNet's and Kemper's key
managerial and technical employees. The loss of such personnel could have a
material adverse effect on SyndicationNet's business and its results of
operations. See "Risk Factors".
Physical Facilities and Offices
Both SyndicationNet and its subsidiary, Kemper, are 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 and Kemper the use
of office space in the Hartke Building on a rent-free basis. SyndicationNet and
Kemper project that such office space should be sufficient for their 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 since SyndicationNet does not anticipate paying any cash dividends
on its common stock in the foreseeable future. SyndicationNet intends to retain
future earnings, if any, to finance the expansion and development of its
business. SyndicationNet's board of directors will determine, in its sole
discretion, whether to declare any dividends on SyndicationNet's common stock in
the future, based on its earnings, capital requirements, financial position,
general economic conditions, and other relevant factors then existing.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to provide an analysis of
SyndicationNet's financial condition and plan of operation and should be read in
conjunction with SyndicationNet's financial statements and the notes thereto.
The matters discussed in this section that are not historical or current facts
deal with potential future circumstances and developments. Such forward-looking
statements include, but are not limited to, the development plans for the growth
of SyndicationNet, trends in the results of SyndicationNet's development,
anticipated development plans, operating expenses and SyndicationNet's
anticipated capital requirements and capital resources. SyndicationNet's actual
results could differ materially from the results discussed in the
forward-looking statements.
Although SyndicationNet believes that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to be correct.
General
-11-
SyndicationNet.com, Inc. 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 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 has historically incurred losses which has resulted in an
accumulated deficit of $1,164,405 as of December 31, 2001. Although funds
generated by operations and sales of equity 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
SyndicationNet's debt or equity or a combination of both. Without additional
capital, SyndicationNet may not be able to continue as a going concern.
If SyndicationNet is only able to obtain nominal funding to finance its
acquisitions and/or investments, Syndication will not be able to effectuate a
merger, acquisition or investment until SyndicationNet has sufficient funds to
do so which amount of funds needed will depend upon the type of transaction that
may or may not arise in the future.
SyndicationNet 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.
SyndicationNet's future revenues and profits, if any, will depend upon
various factors, including whether SyndicationNet will be able to effectively
evaluate the overall quality and industry expertise of potential acquisition
candidates, whether SyndicationNet will have the funds to provide seed capital
and mezzanine financing to brick-and-mortar, e-commerce and Internet-related
companies and whether SyndicationNet can develop and implement business models
that will enable growth companies to develop. SyndicationNet may not be able to
effect any acquisitions of or investments in development stage companies if it
is unable to secure sufficient funds to finance its proposed acquisitions costs.
SyndicationNet 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 SyndicationNet
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 SyndicationNet first
becomes involved with various companies on a consulting capacity.
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.
On September 19, 2000, SyndicationNet entered into a Services and
Consulting Agreement with Tri-State Metro Territories, LLC, a Delaware limited
liability corporation, ("Tri-State") in the business of selling franchised hair
coloring salon units under the copy right name of "haircolorxpress".
SyndicationNet 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. SyndicationNet was compensated from Tri-State at an hourly rate of
$150 to $250. On November 29, 2000, SyndicationNet received an initial retainer
of $50,000 which was applied toward its hourly fees in the years 2000 and 2001.
SyndicationNet is not currently providing any consulting services to Tri-State.
SyndicationNet 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. SyndicationNet 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.
SyndicationNet 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.
YEAR ENDED DECEMBER 31, 2001 COMPARED TO DECEMBER 31, 2000 FOR SYNDICATION NET
TOGETHER WITH ITS WHOLLY OWNED SUBSIDIARY, KEMPER PRESSURE TREATED FOREST
PRODUCTS, INC.
For the year ended December 31, 2001, SyndicationNet's sales increased by
20.8% to $8,901,207 from $7,366,393 for the year ended December 31, 2000. The
-12-
increase is primarily attributed to the growth of SyndicationNet's wholly owned
subsidiary, Kemper Pressure Treated Forest Products, Inc. Further explanation
of the increase in sales is the growth of the Company's consulting business.
For the year ended December 31, 200l, the Company's consulting revenue increased
by 237% to $173,060 from $51,300 for the year ending December 31, 2000. It is
the position of management that Kemper's client base and its consulting business
should expand over the next year and the trend should continue.
The General and Administrative Operating Expenses for the period ended
December 31, 2001decreased 78% to $127,034 from $570,334 for the period ending
December 31, 2000. The decrease is primarily attributed to payment in 2000 of
the one time expenses related to SyndicationNet's merger and filing of its
registration statement and public offering efforts that were not applicable in
the year ending December 31, 2001.
Cost of sales increased 19% to $8,672,565 for the year ended December 31,
2001, compared to $7,267,571 for the year ended December 31, 2000. This
increase in cost of sales was primarily attributable to increased purchases of
wood product to meet increased demand.
The net income for the year ended December 31, 2001 was $53,098 compared to
net losses of $(485,439) for the year ended December 31, 2000. The primary
reasons for the increase in the income was that there were no, or very little,
costs attributed to the merger and registration process as were present in the
year ended December 31, 2000.
Total current assets increased to $620,038 at December 31, 2001 from
$571,761 at December 31, 2000, due primarily to the increase of SyndicationNet's
accounts receivable. Total current liabilities decreased to $992,526 at December
31, 2001 from $998,257 at December 31, 2000.
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 $649,627 at March 31, 2002 from $620,038
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.
SyndicationNet does not foresee any significant changes in the number of
its employees over the next twelve months.
The Company has not paid dividends on its common stock, and intends to
reinvest any earnings to support its working capital and expansion requirements.
The Company intends to continue to utilize any earnings in the development and
expansion of its 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.
-13-
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
Wayne Hartke 52 Director
Howard B. Siegel 57 Director
The above named officers and directors also serve identical positions as
officers and directors of Kemper.
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) has served as the President and a
director of SyndicationNet and Kemper since August 1999. 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.
For at least the last five years, former Senator Vance Hartke is a
practicing attorney who currently heads "The Hartke Group", a full service
family-owned law firm located in Falls Church, Virginia. 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. has served as Chairman of the Board of Directors of
SyndicationNet and of Kemper since August 1999. 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. For at least the last five years Mr.
Solomon has been a practicing attorney for Mark Solomon, P.A., located in
Florida, specializing in criminal law.
CYNTHIA WHITE has served as the Chief Financial Officer of SyndicationNet
and of Kemper since August 1999. Since October, 1991, Ms. White has owned The
Accelerated Group, Inc., an accounting firm located in Florida 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 has served as the Treasurer, Secretary and a director of
SyndicationNet and of Kemper since August 1999. 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
-14-
as the senior compliance examiner for Sterling Financial Investment Group
located in 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. has served as a director of SyndicationNet and of Kemper
since August 1999. 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, for at least the last five
years has been a partner in the law firm of Hartke & Hartke located in Falls
Church, Virginia and is currently admitted to the bars of the District of
Columbia, Virginia and California. Mr. Hartke served as corporate counsel to
Norris Satellite Communications, Inc. where he participated in negotiations with
Sprint, Orbital Sciences Corporation, Harris Corporation and Echostar regarding
satellite launch contracts. Mr. Hartke also has experience in Federal
Communications Commission license applications, the development and sale of coal
properties, international crude oil purchases and the acquisition and marketing
of Internet domain names.
Mr. Hartke currently serves as a director of Tong-1 Pharmaceuticals, Inc.,
a privately held retail chain of drug stores operating in China. Mr. Hartke also
serves as a director of Wood Holdings, Inc. and Wood Sales, Inc., privately held
companies in the wood preservative industry. Mr. Wayne Hartke is the son of
Senator Vance Hartke, the President and a director of SyndicationNet.
HOWARD S. SIEGEL has served as a director of SyndicationNet and of Kemper
since August 1999. 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.
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, provided
that its officers and directors 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.
Subsequent to the transactions involving SyndicationNet, on June 4, 2001,
without admitting or denying any wrongdoing, James M. Cassidy, the sole director
and executive officer of TPG Capital Corporation, a corporation controlled by
Mr. Cassidy, consented to the issuance of an order by the Securities and
Exchange Commission to cease and desist from committing or causing any violation
and any future violation of Section 10(b) of the Securities Exchange Act of 1934
("1934 Act") and Rule 10b_5 thereunder and from causing any violation and future
violation of Section 13(a) of the 1934 Act and Rules 13a_13 and 12b_20
thereunder in connection with arranging reverse mergers between reporting
companies that they controlled and issuers facing possible delisting from the
NASD Over_The_Counter Bulletin Board. Specifically, the Securities and Exchange
Commission found that Mr. Cassidy and TPG Capital Corporation arranged reverse
mergers with issuers that faced possible delisting and in the course of
providing these services made false or misleading disclosures in documents filed
with the Securities and Exchange Commission. The Commission found that Mr.
Cassidy and TPG Capital Corporation filed amended registration statements for
five blank check companies that falsely stated that the companies had not
engaged in negotiations. Three of these companies also filed periodic reports
under the 1934 Act, which the Securities and Exchange Commission said wrongly
stated that they were not engaged in merger negotiations. TPG Capital
Corporation, without admitting or denying any wrongdoing, also consented to and
paid a $50,000 civil penalty. These actions did not involve or include
SyndicationNet.
Specifically, the Securities and Exchange Commission said that Mr. Cassidy
and TPG had filed amended registration statements for five reporting companies
that wrongly stated that the companies were not engaged in negotiations with
specific entities regarding a possible business combination. Three of these
companies also filed periodic reports under the 1934 Act, which the Securities
and Exchange Commission said wrongly stated that they were not engaged in merger
negotiations. TPG Capital Corporation also agreed to consent, without admitting
or denying any wrongdoing, to the payment of a civil penalty. These actions did
not involve or include SyndicationNet.
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.
-15-
SyndicationNet pays accounting fees to the Accelerated Group, Inc., a
private accounting firm owned by Cynthia White, SyndicationNet's Chief Financial
Officer. SyndicationNet believes that it has paid less than $5,000 annually for
the past three years as compensation for such accounting services.
EXECUTIVE COMPENSATION
Neither the officers nor directors of SyndicationNet have received any cash
compensation or cash bonus for services rendered during 1999 or 2000.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Restricted
Principal Stock
Position(s) Year Salary($) Bonus($) Other($) Awards(# shares)
Compensation
- ----------- ----- -------- -------- ----------- -----------
Vance Hartke 2001 0 0
2000 0 10,000 shares*
1999 0 10,000 shares*
* Such shares were issued to Mr. Hartke for his service as a director of
SyndicationNet.
SyndicationNet does not have any long term compensation plans or stock option
plans.
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.
The officers and directors of SyndicationNet intend to devote time to
matters related to SyndicationNet approximately as follows:
Vance Hartke - 5% of his time Mark Griffith - 5% of his time
Cynthia White - 5% of her time Mark Solomon - 15% of his time
Wayne Hartke - 15% of his time Howard B. Siegel - 5% of his time
CONSULTING AGREEMENT
SyndicationNet ratified a corporate services consulting agreement that
Kemper had with Source Management Services ("Source Management") 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 and Kemper on a day to day
basis, develop and execute SyndicationNet's and Kemper's business plan, assist
in the preparation of audits, registration statements and for SyndicationNet the
listing of its securities on the OTC Bulletin Board. Specifically, the agreement
includes, but is not limited to, requiring Source Management
- -to focus on the development and execution of the business plan in general which
calls for the company to align itself by pact or joint venture with larger more
established organizations in the industry in an attempt to move from a
production based supplier of wood products to a broker based supplier of
finished lumber goods,
- -to assist in the arrangement of required audits for the preparation of a
registration statement, oversee and prepare all documentation for a Rule 505
and/or a Rule 506 private placement, prepare all filings for a listing on the
OTCBB
- - to act on behalf and legally bind and contractually obligate the company to
any and all contracts, that in his sole discretion, are necessary and are
interest of the pursuit of the company's business plan.
-16-
The consulting agreement will terminate seven years from its date of
execution. Early termination of the contract requires two-thirds vote of the
outstanding shares as calculated at the time that the motion to terminate the
agreement is carried by the existing Board of Directors.
For the fiscal year 2000, SyndicationNet has agreed to compensate Source
Management the greater of $150 per hour or $17,500 per month. Mr. Sorrentino has
waived any claims for consulting fees owed to him for the first nine months of
the fiscal year ended December 31, 2001. If and when SyndicationNet's securities
are traded on any stock exchange, Source Management will receive 5% of the then
outstanding shares of SyndicationNet's common stock.
Source Management is a sole proprietorship whose sole stockholder, officer
and employee is Brian Sorrentino. In 1997, Mr. Sorentino helped guide Kemper
from a production-based wood supplier to a broker-based supplier of finished
wood products. Kemper has experienced growth on an average of 25% per year as a
result of the transition from wood production to wood brokerage. Mr. Sorrentino
believes that his business and consulting background has enabled and will enable
him to continue to service the needs of Kemper and SyndicationNet. Mr.
Sorrentino's business background and other consulting clients have included
companies that participate in the industries of wood manufacturing, chemical
manufacturing, real-estate development, franchising, dog and pet food
manufacturing, hotel and resort management, golf, the internet and rail
transportation.
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
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. Brian Sorrentino, a shareholder of the Company, was the
chairman of the board, chief financial officer and majority shareholder of
Kemper and was also the chairman of the board, chief financial officer and
beneficial majority shareholder of Worldwide Forest Products, Inc. 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 an initial 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
effected. 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.
On May 2, 2002, the Circuit Court of Madison County, Mississippi, granted
the plaintiff's counsel motion to withdraw as counsel for the plaintiff.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
-17-
SyndicationNet's Certificate of Incorporation and bylaws 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 ("DCL") 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 (*)
President and director
7637 Leesburg Pike
Falls Church, Virginia 22043
Mark Griffith 20,000 (*)
Secretary, Treasurer and
director
465 NE 3rd Street
Boca Raton, Florida 33432
Cynthia White 30,000 (*)
Chief Financial Officer
7637 Leesburg Pike
Falls Church, Virginia 22043
-18-
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 West grove 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 February 1, 2002.
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.
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 Caravel 10,000 10,000 (*) (*)
13357 J.W. 42nd Street
Davie, Florida 33330
Barry Carded 8,000 8,000 (*) (*)
1821 J.W. 11th Street
Ft. Lauderdale, Florida 33312
-19-
Commercial Roofing(3) 30,000 30,000 (*) (*)
Analyst Profit Sharing Plan
3 Chapel Hill Road
Oakland, New Jersey 07436
Lisa Carrier 1,000 1,000 (*) (*)
725 SE 23rd 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 2nd Terrace
Boca Raton, Florida 33432
Steve Framer 1,000 1,000 (*) (*)
1400 SW 72nd Avenue
Plantation, Florida 33316
Joanne Framer 750 750 (*) (*)
1400 SW 72nd Avenue
Plantation, Florida 33316
Robert L. Green, Jr. 200,000 200,000 1.8% (*)
3115 Foxhall Road N.W.
Washington, D.C. 20016
Mark Griffith(4) 20,000 5,000 (*) (*)
465 NE 3rd Street
Boca Raton, Florida 33432
Vance Hartke (4) 20,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Wayne Hartke(4) 20,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Janet L. Hender 1,250 1,250 (*) (*)
1618 Willow Run
Brookshire, Texas 77423
-20-
HTRG Consulting, LLC(5) 150,000 100,000 1.39% (*)
1712 Featherwood Street
Silver Spring, Maryland 20904
Robert Lancy 10,000 10,000 (*) (*)
1570 NE 131st Street
North Miami, Florida 33161
Crieg D. Mahlberg 15,000 15,000 (*) (*)
428 140th Avenue NE
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 (4) 20,000 5,000 (*) (*)
15902 South Barker Landing
Houston, Texas 77079
Donald Sinclair 1,000 1,000 (*) (*)
2180 N.W. 93rd Avenue
Pembroke Pines, Florida 33024
Donald L. Siebenmorgen 500 500 (*) (*)
7623 Breas Glen
Houston, Texas 77071
Mark Solomon (4) 104,000 30,000 (*) (*)
901 S. Federal Highway
Fort. Lauderdale, Florida 33316
Brian Sorrentino (6) 3,732,924 40,000 34.6% 34.2%
PO Box 484
Damascus, Maryla nd 20872
Steven J. Sprechman 1,000 1,000 (*) (*)
18305 Biscayne Blvd. #213
Miami, Florida 333160
Susan Stickley 1,250 1,250 (*) (*)
823 Montery Street
Coral Gables, Florida 33134
Jennifer Thompson 500 500 (*) (*)
2910 Washington St
Coconut Grove, Florida 33133
David Tiralla 2,500 2,500 (*) (*)
1410 Armacost Rd.
Pankton, Maryland 21120
Catherin Anne Tiralla 2,500 2,500 (*) (*)
1410 Armacost Rd.
Pankton, Maryland 21120
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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 (4) 30,000 5,000 (*) (*)
7637 Leesburg Pike
Falls Church, Virginia 22043
Helly White 1,000 1,000 (*) (*)
9300 SW 60th Avenue
Miami, Florida 33156
- -----------------
* Represents less than 1% of SyndicationNet's outstanding shares of common stock
(1) 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 principal of the named shareholder is Mr. Rainer Gerbatch.
(4) The named selling securityholder is an officer and director of
SyndicationNet.
(5) The named shareholder entered into a consulting agreement with
SyndicationNet to provide web design, internet and research services. Its
principal is Thomas Gibbs.
(6) 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 securityholder's shares offered by this prospectus.
The shares owned by the selling securityholders are being registered
pursuant to Rule 415 of the General Rules and Regulations of the Securities and
Exchange Commission which Rules pertain to delayed and continuous offerings and
sales of securities. In regard to the selling securityholder's shares offered
under Rule 415, SyndicationNet has made 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. Source Management is to oversee the
general activities of Kemper and SyndicationNet on a day to day basis, develop
and execute Kemper's and SyndicationNet's business plan, assist in the
preparation of audits, registration statements and assist SyndicationNet in the
listing of its 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 .Mr. Sorrentino has waived any claims for
consulting fees owed to him for the first nine months of the fiscal year ended
December 31, 2001. If and when SyndicationNet.com's securities are traded on any
stock exchange, Source Management will receive 5% of the outstanding shares of
SyndicationNet.com's common stock. Mr. Sorrentino, the sole officer and director
of Source Management Services and has a material interest in the transaction in
that he is compensated on a monthly basis and may, subject to the trading of
SyndicationNet's securities, receive 5% of the outstanding common shares of
SyndicationNet.
-22-
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. Ratti 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.
The control persons of Kemper Pressure Treated Forest Products, Inc. were
Dale Hill, who owned approximately 66%, and Brian Sorrentino, who owned
approximately 34%. The controlling person and founder of Algonquin Acquisition
Corporation was its beneficial shareholder, James M. Cassidy. At the time of the
exchange of stock with Kemper Pressure Treated Forest Products, Algonquin had
5,000,000 shares outstanding of which 4,750,000 shares were redeemed and
cancelled as part of the exchange. The remaining 250,000 shares were redeemed
and cancelled at the time of the transaction with Generation Acquisition.
The controlling persons of Life2K.com, Inc. were its directors Vance
Hartke, Mark Griffith, Cynthia White, Mark Solomon, Wayne Hartke and Howard
Siegel and its controlling shareholders Dale Hill and Brian Sorrentino.
The controlling person and founder of Generation Acquisition Corporation
was its beneficial shareholder, James M. Cassidy. At the time of the exchange of
stock with Life2K.com, Inc., Generation Acquisition had 5,000,000 shares of its
common stock outstanding all of which were redeemed and cancelled except 250,000
retained by TPG Capital Corporation, a corporation controlled by James Cassidy.
As part of the transactions SyndicationNet has agreed to pay TPG Capital an
aggregate of $100,000 for its consulting services of which $65,000 has been
paid.
A consultant and 10% shareholder of SyndicationNet, Brian Sorrentino, owns
63.5% of the outstanding shares of Tri-State and is a development agent and
general partner of Tri-State. Tri-State owns the development contract to sell
franchises of HCX salons in the territory of Maryland, Virginia, Washington and
Delaware. Mark Solomon, a director of SyndicationNet, owns 8.3% of the
outstanding shares of Tri-State. Robert Green, a less than 5% shareholder of
SyndicationNet, owns 9% of Tri-State. The investments were made by the above
stated individuals after September 19, 2000 which is when SyndicationNet entered
into its consulting agreement with Tri-State.
SyndicationNet pays accounting fees to the Accelerated Group, Inc., a private
accounting firm owned by Cynthia White, SyndicationNet's Chief Financial
Officer. SyndicationNet believes that it has paid less than $5,000 annually for
the past three years as compensation for such accounting services.
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. All of SyndicationNet's outstanding shares have been
held in excess of one year. Rule 144 provides, in essence, that a person holding
"restricted securities" for a period of one year may sell only an amount every
three months equal to the greater of (a) one percent of a company's issued and
outstanding shares, or (b) the average weekly volume of sales during the four
calendar weeks preceding the sale.
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. 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. 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.
No Trading Market
-23-
There is currently no established public trading market for SyndicationNet's
securities. A trading market in SyndicationNet's securities may never develop.
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.
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. The authority of the board of
directors to designate preferences and issue preferred stock without shareholder
consent may also have a depressive effect on the market price of
SyndicationNet's common stock even prior to any designation or issuance of the
preferred stock. At present, SyndicationNet has no plans to issue any preferred
stock nor adopt any series, preferences or other classification of preferred
stock.
Additional Information Describing Securities
Reference is made to applicable statutes of the state of Delaware for a
description concerning statutory rights and liabilities of shareholders.
Trading of Shares
There are no outstanding options, options to purchase, or securities
convertible into shares of SyndicationNet's common stock other than the
securities described herein. SyndicationNet has not agreed with any
shareholders, to register their shares for sale, other than for this
registration. SyndicationNet does not have any other public offerings in process
or proposed.
Admission to Quotation on Nasdaq SmallCap Market or OTC Bulletin Board
If SyndicationNet meets the qualifications, it intends to apply for
quotation of its securities on the OTC Bulletin Board or the Nasdaq SmallCap
Market. If SyndicationNet's securities are not quoted on the OTC Bulletin Board,
a securityholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, SyndicationNet's securities. The OTC
Bulletin Board differs from national and regional stock exchanges in that it (1)
is not situated in a single location but operates through communication of bids,
offers and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. To qualify for quotation on the OTC Bulletin Board,
an equity security must have one registered broker-dealer, known as the market
maker, willing to list bid or sale quotations and to sponsor the company
listing. If it meets the qualifications for trading securities on the OTC
Bulletin Board SyndicationNet's securities will trade on the OTC Bulletin Board
until a future time, if at all, that SyndicationNet applies and qualifies for
admission to quotation on the Nasdaq SmallCap Market. SyndicationNet may not now
and it may never qualify for quotation on the OTC Bulletin Board or accepted for
listing of its securities on the Nasdaq SmallCap Market.
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
-24-
(6) have at least 300 beneficial shareholders.
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, positively or negatively, 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.
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.
The common stock offered by this prospectus may be sold from time to time
directly by the selling securityholders in separate transactions at $1.00 per
share until SyndicationNet is quoted, if at all, on the OTC Bulletin Board and
thereafter may sell their shares of common stock at prevailing market prices or
privately negotiated prices. The selling securityholders may from time to time
offer those shares through underwriters, brokers, dealers, agents or other
intermediaries. The distribution of the common stock by the selling
securityholders may be effected in one or more transactions that may take place
through customary brokerage channels, in privately-negotiated sales; by a
combination of these methods; or by other means. Transactions occurring after
the stock is quoted on the OTC Bulletin Board, if at all, may be effected at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at other negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the selling
securityholders in connection with sales of the common stock.
The selling securityholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling securityholder. The
selling securityholder also may sell shares short and redeliver the shares to
close out their short positions. The selling securityholder may enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of the shares.
The selling securityholders also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold under Rule
144 rather than pursuant to this prospectus.
-25-
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 Rule103 of Regulation M.
Following the completion of this offering, one or more broker-dealers may
act as the principal market makers for the securities offered hereby. A
broker-dealer acting as a market maker for a particular security will purchase
and sell such securities for its own account, will maintain an inventory of such
securities and may actively assist in the sale of these securities by producing
research reports, recommending the security to its clients or otherwise. Under
these circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. The market making activities of any market
maker, if commenced, may subsequently be discontinued.
By Rule 101 of Regulation M, participants in a distribution, including
underwriters acting as market makers, are prohibited from bidding for,
purchasing, or inducing the purchase of the distributed security during an
applicable restricted period. Rule 103 provides an exemption to such restriction
and certain distribution participants, including market makers, may engage in
passive market making transactions provided the conditions of Rule 103 are met.
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
Cassidy & Associates, Washington, D.C., has given its opinion as
attorneys-at-law that the shares of common stock offered by the selling
securityholders are 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, 2000 and
2001 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.
-26-
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.
-27-
INDEX TO FINANCIAL STATEMENTS
The audited financial statements for the periods ended December 31, 2001 and
2000 and the unaudited financial statements for the quarter ended March 31, 2002
are included herein.
-28-
SYNDICATION NET.COM, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001
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
Falls Church, Virginia
We have audited the accompanying consolidated balance sheet of Syndication
Net.com, Inc. and Subsidiary as of December 31, 2001 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 2001 and 2000. 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 auditing standards generally accepted
in the United States of America. 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 consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated 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 as of December 31, 2001 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 6 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 6. 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 20, 2002
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Consolidated Balance Sheet
ASSETS
------
December 31,
2001
--------------
CURRENT ASSETS
Cash $ 3,516
Accounts receivable, net (Note 1) 616,522
--------------
Total Current Assets 620,038
--------------
PROPERTY AND EQUIPMENT - NET (Note 2) 910
--------------
TOTAL ASSETS $ 620,948
==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
-------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 852,326
Notes payable - related party (Note 5) 105,000
Interest payable - related party (Note 5) 35,200
--------------
Total Current Liabilities 992,526
--------------
COMMITMENTS AND CONTINGENCIES (Note 3)
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 (1,164,405)
--------------
Total Stockholders' Equity (Deficit) (371,578)
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 620,948
==============
The accompanying notes are an integral part of these consolidated financial
statements.
F4
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended
December 31,
-----------------------------------
2001 2000
--------------------- ------------
SALES
Wood treatment commissions $ 8,728,147 $ 7,315,093
Consulting 173,060 51,300
--------------------- ------------
Total Sales 8,901,207 7,366,393
--------------------- ------------
COST OF GOODS SOLD 8,672,565 7,267,571
--------------------- ------------
GROSS MARGIN 228,642 98,822
--------------------- ------------
OPERATING EXPENSES
Depreciation 910 910
Bad Debt 35,000 -
General and administrative 127,034 570,334
--------------------- ------------
Total Operating Expenses 162,944 571,244
--------------------- ------------
OPERATING INCOME (LOSS) 65,698 (472,422)
--------------------- ------------
OTHER (EXPENSES)
Interest expense (12,600) (13,017)
--------------------- ------------
Total Other (Expenses) (12,600) (13,017)
--------------------- ------------
NET INCOME (LOSS) $ 53,098 $ (485,439)
===================== ============
BASIC INCOME (LOSS) PER SHARE $ 0.01 $ (0.05)
===================== ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 10,781,750 10,369,192
===================== ============
The accompanying notes are an integral part of these consolidated financial
statements.
F5
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Preferred Stock Common Stock Paid-In Accumulated
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)
================ ============== ========== ============ ========= ============
The accompanying notes are an integral part of these consolidated financial
statements.
F6
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
statements.
For the Years Ended
December 31,
-------------------------
2001 2000
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 53,098 $(485,439)
Adjustments to reconcile net income (loss) to net cash
Provided (used) in operating activities:
Bad debt 35,000 -
Depreciation 910 910
Common stock issued for services - 249,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable (79,806) (83,876)
Increase (decrease) in accounts payable (18,331) 85,255
Increase in accrued expenses 12,600 6,728
--------------------- ----------
Net Cash Provided (Used) in Operating Activities 3,471 (227,422)
--------------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - -
--------------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable - related party - (25,000)
Proceeds from issuance of common stock - 246,887
--------------------- ----------
Net Cash Provided by Financing Activities - 221,887
--------------------- ----------
NET INCREASE (DECREASE) IN CASH 3,471 (5,535)
CASH, BEGINNING OF YEAR 45 5,580
--------------------- ----------
CASH, END OF YEAR $ 3,516 $ 45
===================== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ - $ -
Interest $ - $ 12,539
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.
F7
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2001 and 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.
F8
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2001 and 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 of an amount due from two customers. Accounts
receivable are shown net of the allowance for doubtful accounts. The allowance
was $35,000 at December 31, 2001.
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,
----------------------------------
2001 2000
-------------------- ------------
Income (Loss) (numerator) $ 53,098 $ (485,439)
Shares (denominator) 10,781,750 10,396,192
Per share amount $ 0.01 $ (0.05)
f. Long-Lived Assets
In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of, long-lived assets, including
goodwill associated with other long-lived assets, are evaluated for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.
g. Recent Accounting Pronouncements
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 standards for transfers and servicing of financial assets and
extinguishments of liabilities.
F9
SYNDICATION NET. COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2001 and 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. Recent Accounting Pronouncements (Continued)
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 had 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.
SFAS NO.'S 141 AND 142 -- In June 2001, the Financial Accounting Standards Board
(FASB) adopted Statement of Financial Accounting Standards SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 is effective as to any business combination occurring
after June 30, 2001 and certain transition provisions that affect accounting for
business combinations prior to June 30, 2001 are effective as of the date that
SFAS No. 142 is applied in its entirety, which will be January 1, 2002 for the
Company. SFAS No. 142 is effective, generally, in fiscal years beginning after
December 15, 2001, which will be the fiscal year ending April 30, 2002 for the
Company.
SFAS No. 141 provides standards for accounting for business combinations. Among
other things, it requires that only the purchase method of accounting be used
and that certain intangible assets acquired in a business combination (i.e.
those that result from contractual or other legal rights or are separable) be
recorded as an asset apart from goodwill.
F10
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. Recent Accounting Pronouncements (Continued)
The transition provisions require that an assessment be made of previous
business combinations and, if appropriate, reclassifications be made to or from
goodwill to adjust the recording of intangible assets such that the criteria for
recording intangible assets apart from goodwill is applied to the previous
business combinations.
SFAS No. 142 provides, among other things, that goodwill and intangible assets
with indeterminate lives shall not be amortized. Goodwill shall be assigned to
a reporting unit and annually assessed for impairment. Intangible assets with
determinate lives shall be amortized over their estimated useful lives, with the
useful lives reassessed continuously, and shall be assessed for impairment under
the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." Goodwill is also assessed
for impairment on an interim basis when events and circumstances warrant. Upon
adoption of SFAS No. 142, the Company will assess whether an impairment loss
should be recognized and measured by comparing the fair value of the "reporting
unit" to the carrying value, including goodwill. If the carrying value exceeds
fair value, then the Company will compare the implied fair value of the
goodwill" (as defined in SFAS No. 142) to the carrying amount of the goodwill.
If the carrying amount of the goodwill exceeds the implied fair value, then the
goodwill will be adjusted to the implied fair value.
While the Company has not completed the process of determining the effect of
these new accounting pronouncements on its consolidated financial statements,
the Company currently expects that there will be no reclassification in
connection with the transition provisions of SFAS No. 141 based on
clarifications of the transition provisions issued by the FASB in October 2001.
Accordingly, the Company expects that, after implementation of SFAS No. 142, all
intangible assets will be amortizable and the goodwill will not be amortizable.
SFAS NO. 143 -- On August 16, 2001, the FASB issued SFAS No. 143, "Accounting
for Asset Retirement Obligations," which is effective for fiscal years beginning
after June 15, 2002. It requires that obligations associated with the
retirement of a tangible long-lived asset be recorded as a liability when those
obligations are incurred, with the amount of the liability initially measured at
fair value. Upon initially recognizing a liability for an accrued retirement
obligation, an entity must capitalize the cost by recognizing an increase in the
carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement.
F11
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. Recent Accounting Pronouncements (Continued)
While the Company has not completed the process of determining the effect of
this new accounting pronouncement on its consolidated financial statements, the
Company currently expects that the effect of SFAS No. 143 on the Company's
consolidated financial statements, when it becomes effective, will not be
significant.
SFAS NO. 144 " On October 3, 2001, the Financial Accounting Standards Board
issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" which is effective for financial statements issued for fiscal years
beginning after December 15, 2001 and, generally, its provisions are to be
applied prospectively. SFAS 144 supercedes SFAS Statement No. 121 (FAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30 (APB 30), "Reporting Results of Operations Reporting the Effects
of Disposal of a Segment of a Business."
SFAS 144 develops one accounting model (based on the model in SFAS 121) for
long-lived assets that are to be disposed of by sale, as well as addresses the
principal implementation issues. SFAS 144 requires that long-lived assets that
are to be disposed of by sale be measured at the lower of book value or fair
value less cost to sell. That requirement eliminates the requirement of APB 30
that discontinued operations be measured at net realizable value or that
entities include under 'discontinued operations' in the financial statements
amounts for operating losses that have not yet occurred.
h. 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.
i. Provision for Taxes
At December 31, 2001, the Company had net operating loss carryforwards of
approximately $1,645,000 that may be offset against future taxable income
through 2021. 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.
F12
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
i. Provision for Taxes (Continued)
The income tax benefit differs from the amount computed at federal statutory
rates of approximately 38% as follows:
For the Years Ended
December 31,
--------------
2001 2000
-------------- ----------
Income tax (liability) benefit at statutory rate $ (34,337) $ 184,460
Change in valuation allowance 34,337 (184,460)
-------------- ----------
$ - $ -
============== ==========
Deferred tax assets (liabilities) are comprised of the following:
For the Years Ended
December 31,
- -----------------------------------------------------------------
2001 2000
-------------- ----------
Income tax benefit at statutory rate $ 625,100 $ 659,771
Change in valuation allowance (625,100) (659,771)
-------------- ----------
$ - $ -
============== ==========
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.
j. 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.
k. 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.
F13
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
l. Advertising
The Company follows the policy of charging the costs of advertising to expense
as incurred. Advertising expense for the years ended December 31, 2001 and 2000
was $-0- and $49, respectively.
m. Revenue Recognition Policy
The Company recognizes its wood treatment commission revenue upon shipment of
goods to the customer. At this time, there is no further obligation of the
Company to the customer. The price of the product to the customer, at the time
of shipment has been established, and collectability is reasonably assured. Also
the cost of the product to the Company is also known.
The Company entered into a consulting agreement (Note 3) with Tri-State Metro
Territories, Inc. (Tri-State). The Company is to assist in the management,
development, sales, and marketing of Tri-State's hair coloring salon units. The
Company recognized this consulting income from Tri-State on a monthly basis for
time actually spent consulting. The agreement establishes the hourly billing
rates. Collectability is reasonably assured.
n. 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 for its wood products which
accounts for 100% of its wood treatment commissions. Although the Company is
continually negotiating contracts with potential customers, a loss of this
customer could greatly affect the operating results of the Company.
The Company has one major customer for its consulting services which accounts
for approximately 80% of its consulting revenue. A loss of this customer could
affect the operating results of the Company.
F14
Property and equipment consists of the following at December 31, 2001:
OFFICE EQUIPMENT $ 4,550
Accumulated depreciation (3,640)
--------
Net property and equipment $ 910
========
Depreciation expense for the years ended December 31, 2001 and 2000 was $910 and $910, respectively.
NOTE 3 - 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. On October 13, 200 this acquisition took place
(Note 1.) The Company has paid a total of $65,000 and has accrued an additional
$35,000 for legal fees.
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,
2001, the Company agreed to pay Source a total of $84,920. 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.
On November 26, 2001, Barry Pope ("Pope"), individually and as a shareholder of
Worldwide Forest Products, Inc. ("Worldwide") commenced an action against the
Company, Brian Sorrentino, Dale Hill, Worldwide Forest Products, Inc., Kemper
Pressure Treated Forest Products, Inc., Life2k.com, Inc., Algonquin Acquisition
Corp., Generation Acquisition Corp., 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 the Company.
F15
NOTE 3 - COMMITMENTS AND CONTINGENCIES (Continued)
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
and Worldwide, David Wise. 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 the Company.
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. 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. The Company
believes that Pope's claim is without merit and the Company has engaged counsel
to vigorously defend against the action.
NOTE 4 - 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, 2001, no preferred shares
were outstanding.
NOTE 5 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following at December 31, 2001:
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 $ -
==========
F16
NOTE 5 - NOTES PAYABLE - RELATED PARTY (Continued)
The aggregate principal maturities of notes payable to related parties are
as follows:
Year Ended
December 31, Amount
- -------------------- --------------
2002 $ 105,000
2003 -
2004 -
2005 -
2006 and thereafter -
-------------
Total $ 105,000
=============
Interest expense for the year ended December 31, 2001 and 2000 was $12,600 and
$13,017, respectively.
NOTE 6 - 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 program 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.
F-17
SYNDICATION NET.COM, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002 AND DECEMBER 31, 2001
SYNDICATION 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 consolidated financial
statements.
F2
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.
F3
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Preferred Stock Common Stock Paid-In Accumulated
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.
F4
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.
F5
SYNDICATION NET.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2002 and December 31, 2001
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.
The accompanying notes are an integral part of these consolidated financial
statements.
F6
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.
SYNDICATIONNET.COM, INC.
561,500 shares of common stock to be sold by selling securityholders
----------------
PROSPECTUS
----------------
May ______, 2002
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-
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
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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 exchange transaction and name change, which shares were issued in
reliance on Rule 506 of the Securities Act.
For each issuance upon which SyndicationNet, Life2K.com, Inc. ("Life2K"),
and Kemper relied upon Section 4(2) of the Securities Act of 1933 as an
exemption from registration, there was no general solicitation for the purchase
of securities, no advertisement for the sale of securities, no commissions were
paid to an underwriter or broker-dealer, and the Company had direct contact with
the purchasers of the securities.
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 August 1999, Life 2K 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 the shares were issued
to an accredited investor. 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, Life2K 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 the shares were issued to an
accredited investor. 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, Algonquin Acquisition Corporation issued 5,000,000
(pre-merger) shares of its common stock to TPG Capital Corporation at par all of
which 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.
On March 25, 1999, Generation Acquisition Corporation 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 and cancelled. 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 August 16, 1999, Algonquin Acquisition Corporation issued 16,200,000
shares of its common stock in a one-for-one exchange for the common stock of
Kemper and changed its name to Life2K.com, Inc.
In October 1999, Life2K 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 the
shares were issued to accredited investors. 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, Life2K issued (i) 20,000 shares of 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 the shares were
issued to accredited investors. 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, SyndicationNet issued 100,000 shares of common stock to HTRG
Consulting LLC as compensation for web hosting, web design and research services
rendered to the Company. The Company believes that HTRG Consulting, LLC is a
financially sophisticated investor. On March 21, 2000, the Company issued 84,000
shares of its common stock to Mark Solomon, a director of the Company and an
accredited investor, 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.
-31-
From February through August 2000, SyndicationNet 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 the shares were issued to
accredited investors. 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, SyndicationNet issued 31,750 shares of common stock to one
individual in exchange for the cancellation of a $25,000 loan. The Company
believes that the shares were issued to an accredited investor. 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 October 13, 2000, Generation Acquisition Corporation issued 10,387,750
shares of its common stock in an exchange for shares of Life2K. Simultaneously,
Generation Acquisition Corporation changed its name to SyndicationNet.com, Inc.
Such shares were issued in reliance on Section 4(2) of the Securities Act of
1933, as amended, and Rule 506 of the Securities Act of 1933.
On October 16, 2000, SyndicationNet 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 the
shares were issued to accredited investors. 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, SyndicationNet issued 50,000 shares of common stock to HTRG
Consulting LLC as compensation for web hosting, web design and research services
rendered to the Company. The Company believes that HTRG Consulting, LLC is a
financially sophisticated investor. 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, SyndicationNet issued 34,000 shares of its
common stock to 15 individual investors for an aggregate purchase price of
$4,386. The Company believes that the shares were issued to accredited
investors. 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 Certificate of Ownership and Merger previously filed with the
Commission as an exhibit to a registration statement on Form SB2/A and
incorporated by reference
3.3 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, LLC dated September 19, 2000, filed with the Commission as
Exhibit 4.3 in a registration statement on Form SB-2 filed on February 13, 2001
and incorporated herein by reference
5.1* Opinion of Cassidy & Associates
10.1 Consulting Agreement between Kemper Pressure Treated Forest
Products Inc. and Source Management Services filed with the Commission as
Exhibit 10.1 in a registration statement on Form SB-2 filed on October 5, 2001
and incorporated herein by reference
10.2 Consulting Agreement between SyndicationNet and HTRG Consulting,
Inc. previously filed with the Commission as an exhibit to a registration
statement on Form SB2/A and incorporated by reference
-32-
23.1 Consent of Accountants
23.2 Consent of Cassidy & Associates (included in Exhibit 5.1)
- --------
* To be filed
(b) Financial Statement Schedules
None
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(2) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to 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 April 28, 2002.
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
- ---------------------- ------------------------------------ -----------
- ---------------------
Mark Griffith Treasurer, Secretary and Director
/s/ Mark Solomon
- --------------------
Mark Solomon Director April 28, 2002
/s/ Wayne Hartke
- --------------------
Wayne Hartke Director April 28, 2002
/s/ Howard B. Siegel
--------------------
Howard B. Siegel Director April 28, 2002
-34-
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS'
Board of Directors
Syndicationnet.Com, Inc.
Falls Church, VA
We hereby consent to the use in this Registration Statement of
Syndicationnet.com, Inc. on Form SB-2/A of our report dated March
20, 2002 of Syndicationnet.com, Inc. for the years ended December 31,
2001 and 2000 which are part of this Registration Statement, and to all
references to our firm included in this Registration Statement.
H J & Associates, L.L.C.
Salt Lake City, Utah
May 20, 2002
_____________________________