SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2004
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28955
SYNDICATION NET.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-2218873
---------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
The Hartke Building
7637 Leesburg Pike
Falls Church, Virginia 22043
(Address of principal executive offices (zip code))
202/467-2788
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [x] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Issued and Outstanding at March 31, 2004
Common Stock, $0.0001 12,510,088 shares
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNDICATION NET.COM, INC.
AND SUBSIDIARY
(A Developement Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004 and December 31, 2003
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
March 31, December 31,
2004 2003
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash $ 36,744 $ 14
Notes receivable - related party 117,100 --
Interest receivable - related party 6,957 --
-------- --------
Total Current Assets 160,801 14
-------- --------
OTHER ASSETS
Investment (Note 4) 211,431 --
-------- --------
Total Other Assets 211,431 --
-------- --------
TOTAL ASSETS $372,232 $ 14
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 303,012 $ 307,008
Note payable - related party 109,000 113,100
Interest payable - related party 36,226 32,965
Note payable 145,000 30,000
Interest payable 7,768 5,295
Accrued directors fees 20,000 12,000
----------- -----------
Total Current Liabilities 621,006 500,368
----------- -----------
COMMITMENTS AND CONTINGENCIES
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, 12,510,088 and 12,075,088 shares issued and
outstanding, respectively 1,251 1,207
Additional paid-in capital 2,356,665 2,021,958
Deferred fees (249,500) (292,000)
Deficit accumulated prior to the development stage (2,231,519) (2,231,519)
Deficit accumulated during the development stage (125,671) --
----------- -----------
Total Stockholders' Equity (Deficit) (248,774) (500,354)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 372,232 $ 14
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
3
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From Inception
of the
Development
For the Three Months Ended Stage on
March 31, January 1, 2004
-------------------------- Through
2004 2003 March 31, 2004
--------- --------- ----------------
CONSULTING REVENUE $ -- $ 1,750 $ --
--------- --------- ---------
OPERATING EXPENSES
General and administrative 120,048 541,718 120,048
--------- --------- ---------
Total Operating Expenses 120,048 541,718 120,048
--------- --------- ---------
OPERATING LOSS (120,048) (539,968) (120,048)
--------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income 138 -- 138
Interest expense (5,761) (3,270) (5,761)
--------- --------- ---------
Total Other Expenses (5,623) (3,270) (5,623)
--------- --------- ---------
LOSS BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS (125,671) (543,238) (125,671)
--------- --------- ---------
Income tax expense -- -- --
--------- --------- ---------
LOSS BEFORE DISCONTINUED
OPERATIONS (125,671) (543,238) (125,671)
--------- --------- ---------
Income from discontinued operations -- 13,488 --
--------- --------- ---------
Total Income from Discontinued
Operations -- 13,488 --
--------- --------- ---------
NET LOSS $(125,671) $(529,750) $(125,671)
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
4
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Operations (Continued)
(Unaudited)
From Inception
of the
Development
For the Three Months Ended Stage on
March 31, January 1, 2004
---------------------------------- Through
2004 2003 March 31, 2004
-------------- -------------- -----------------
BASIC LOSS PER SHARE
Loss before discontinued operations $ (0.01) $ (0.05)
Income from discontinued operations 0.00 0.00
-------------- --------------
Total Loss Per Share $ (0.01) $ (0.05)
============== ==============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,192,121 10,797,757
============== ==============
The accompanying notes are an integral part of these consolidated financial
statements.
5
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Common Stock Additional
--------------------------- Paid-In Deferred Accumulated
Shares Amount Capital Fees Deficit
------------ ------------- ------------ ------------- -------------
Balance, December 31, 2002 10,795,750 $ 1,079 $ 805,748 $ -- $(1,143,099)
Common stock issued for services at $1.00 per share 50,000 5 49,995 (50,000) --
Common stock issued for services at $1.00 per share 250,000 25 249,975 -- --
Common stock issued for cash at $0.10 per share to
related parties 70,000 7 6,993 -- --
Common stock issued for debt and services at $1.00
per share to a related party 571,338 57 571,281 -- --
Common stock issued for services at $1.00 per share
to related parties 108,000 11 107,989 -- --
Common stock issued for services at $1.00 per share
to related parties 70,000 7 69,993 -- --
Common stock issued for services at $1.00 per share 410,000 41 409,959 (242,000) --
Common stock canceled for services at $1.00 per share (250,000) (25) (249,975) -- --
Net loss for the year ended December 31, 2003 -- -- -- -- (1,088,420)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2003 12,075,088 1,207 2,021,958 (292,000) (2,231,519)
Common stock issued for cash at $1.00 per share on
February 16, 2004 (unaudited) 50,000 5 49,995 -- --
Common stock issued for deferred fees $0.80 per share
on February 16, 2004 (unaudited) 30,000 3 23,997 (24,000) --
Common stock issued for assets at $0.90 per share on
February 28, 2004 (unaudited) 120,000 12 107,988 -- --
Common stock issued for assets at $0.65 per share on
March 17, 2004 (unaudited) 160,000 16 103,984 -- --
Common stock issued for assets at $0.65 per share on
March 17, 2004 (unaudited) 15,000 2 9,749 -- --
Common stock issued for assets at $0.65 per share on
March 17, 2004 (unaudited) 60,000 6 38,994 -- --
Amortization of deferred fees (unaudited) -- -- -- 66,500 --
Net loss for the three months ended March 31, 2004
(unaudited) -- -- -- -- (125,671)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2004 (unaudited) 12,510,088 $ 1,251 $ 2,356,665 $ (249,500) $(2,357,190)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
6
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From Inception
of the
Development
For the Three Months Ended Stage on
March 31, January 1, 2004
-------------------------- Through
2004 2003 March 31, 2004
------------ ------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (125,671) $ (529,750) $ (125,671)
Adjustments to reconcile net loss to net cash
provided (used) in operating activities:
Amortization of deferred fees 66,500 -- 66,500
Changes in operating assets and liabilities:
(Increase) in interest receivable - related party (137) -- (137)
(Increase) in accounts receivable -- (535,438) --
Increase (decrease) in accounts payable (3,996) 1,061,918 (3,996)
Increase in accrued expenses 2,473 3,351 2,473
Increase in accrued expenses - related party 11,261 -- 11,261
----------- ----------- -----------
Net Cash Provided (Used) in Operating
Activities (49,570) 81 (49,570)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in investments (52,500) -- (52,500)
----------- ----------- -----------
Net Cash Used in Investing Activities (52,500) -- (52,500)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash 50,000 -- 50,000
Increase in notes payable 115,000 -- 115,000
Payments on notes payable (13,600) -- (13,600)
Increase in notes payable - related party 9,500 -- 9,500
Increase in notes receivable - related party (22,100) -- (22,100)
----------- ----------- -----------
Net Cash Provided by Financing Activities 138,800 -- 138,800
----------- ----------- -----------
NET INCREASE IN CASH 36,730 81 36,730
CASH, BEGINNING OF PERIOD 14 31 14
----------- ----------- -----------
CASH, END OF PERIOD $ 36,744 $ 112 $ 36,744
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
7
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From Inception
of the
Development
For the Three Months Ended Stage on
March 31, January 1, 2004
--------------------------- Through
2004 2003 March 31, 2004
---------- ---------- -----------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ -- $ --
Interest $ -- $ --
Non-Cash Financing Activities
Common stock issued for assets $260,751 $ --
Common stock issued for deferred fees $ 24,000 $ 50,000
The accompanying notes are an integral part of these consolidated financial
statements.
8
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2004 and December 31, 2003
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated 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 or
omitted in accordance with such rules and regulations. The information
furnished in the interim consolidated 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 consolidated financial statements be read in
conjunction with the Company's most recent audited financial statements
and notes thereto included in its December 31, 2003 Annual Report on Form
10-KSB. Operating results for the three months ended March 31, 2004 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2004.
NOTE 2 - RECLASSIFICATIONS
Certain reclassifications have been made to the March 31, 2003 financial
statements to conform to the current quarter's presentation.
NOTE 3 - GOING CONCERN
The Company's consolidated financial statements are prepared using
accounting principals generally accepted in the Unites States of America
applicable to a going concern which contemplates the realization of assets
and liquidation of liabilities in the normal course of business. However,
the Company does not have cash or other material assets, nor does it have
an established source of revenues to cover its operating costs and to
allow it to continue as a going concern. The consolidated financial
statements do not reflect any adjustments that might result from the
outcome of this uncertainty. It is management's intent to seek growth by
way of a merger or acquisition. It is the belief that over the next 12
months that Company will acquire at least one or more of acquisition
candidates. The acquisition process should provide capital, revenue and
incomes as a result. There is no assurance that the Company will be
successful in its acquisition efforts or in raising the needed capital.
NOTE 4 - MATERIAL EVENTS
Stock Issuances
On February 16, 2004, the Company issued 50,000 share of common stock for
$50,000 cash. This stock issuance is part of the approved private
placement to issue up to 50,000 units. Each unit consists of one share of
common stock and three warrants to purchase three additional shares of
common stock. Each warrant has an exercise price of $0.10 per share.
On February 16, 2004, the Company issued 30,000 shares for deferred legal
fees at $0.80 per share.
9
SYNDICATION NET. COM, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2004 and December 31, 2003
NOTE 4 - MATERIAL EVENTS (Continued)
Stock Issuances (Continued)
During the quarter ended March 31, 2004, the Company issued 355,000 shares
of common stock and paid out $52,500 in exchange for 575 class "A" common
shares and 1,500 common shares in Tri-State Metro Territories, LLC, Inc.
(TSMT) and notes receivable with principal balances of $95,000 plus
accrued interest.
Notes Receivables
During the quarter ended March 31, 2004, the Company lent $22,100 to TSMT
and purchase three notes receivables from TSMT by the issuance of common
stock to three unrelated parties for notes receivables of $95,000. All
notes are unsecured and due on demand. Interest rates range from prime +
1% to 10% per annum.
Investment
During the quarter ended March 31, 2004, the Company purchased 575 Class
"A" common stock and 1,500 common shares in Tristate Metro Territories,
LLC (TSMT). The valuation of this investment was $211,431. This investment
is valued at the lower of cost or market and represents 8% of TSMT. A
major shareholder of the Company is also the managing member of TSMT.
Note payable - Related Party
During the quarter ended march 31, 2004, the Company borrowed an
additional $9,500 from a related party and repaid $13,600. The balance at
March 31, 2004 was $109,000. This note is due on demand and unsecured.
Note Payable
During the quarter ended March 31, 2004, the Company borrowed $115,000
from two individuals. The notes are due on demand and unsecured.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion is intended to provide an analysis of the Company's
financial condition and plan of operation and should be read in conjunction with
the Company's financial statements and its related notes. The matters discussed
in this section that are not historical or current facts deal with potential
future circumstances and developments. Such forward-looking statements include,
but are not limited to, the development plans for the growth of the Company,
trends in the results of the Company's development, anticipated development
plans, operating expenses and the Company's anticipated capital requirements and
capital resources. The Company's actual results could differ materially from the
results discussed in the forward-looking statements.
Although the Company believes that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, these expectations and assumptions may not
prove to be correct.
SyndicationNet.com, Inc., a Delaware corporation (the "Company"), was formed to
acquire controlling interests in or to participate in the creation of, and to
provide financial, management and technical support to, development stage
businesses. The Company's strategy is to integrate affiliated companies into a
network and to actively develop the business strategies, operations and
management teams of the affiliated entities.
It is the intent of the Company's board of directors to develop and exploit all
business opportunities to increase efficiencies between companies with which the
Company may invest in or consult. For example, if the Company is consulting with
a marketing company, the Company may utilize that marketing company to provide
services for other companies with which the Company consults with or invests.
The Company may acquire companies to be held as wholly owned subsidiaries of the
Company.
The Company currently has one wholly owned subsidiary, Kemper Pressure Treated
Forest Products, Inc. Kemper is engaged in the retail brokerage business of
preservative treated lumber such as utility poles, bridge pilings, timber and
guardrail posts. Kemper has had one customer and this is Kemper`s only source of
income.
The Company as of September 1, 2003, has decided to wind down its wood brokerage
business which management now believes provides minimal profits and which
business has been difficult to expand. The Company has changed its focus and
growth efforts towards its consulting business and/or the acquisition of an
operating development company. Currently, the Company is negotiating with
Tri-State Metro Territories, LLC, owned by a majority shareholder and consultant
to the Company, to acquire the development rights for certain territories for
which the Company would have the right to develop several franchise locations of
HCX Salons International (formerly known as Hair Color Express), a hair salon
franchise.
Letter Of Intent: Tri-State Metro Territories LLC.
On November 10, 2003, the Company entered into a Letter of Intent with Tri State
Metro- Territories, LLC (Tri-State) to acquire substantially all of the assets
of Tri-State. Brian Sorrentino, a major shareholder of the Company, is also a
10% shareholder and managing member in Tri State. Additionally, Robert Green
serves as a member of the Board of Director of Tri-State, is a 9% shareholder of
Tri-State and a less then 2% shareholder of the Company. Mr. Mark Solomon, who
serves as a member of our Board of Directors also serves as a Board Member of
Tri-State and is a less than 2% shareholder of our Company. Mr. Solomon is also
a 5% shareholder of Tri-State. Dale Hill, is a greater than 10% shareholder of
the Company and is also a less then 2% shareholder of Tri-State. Tri State is in
the business of selling franchised hair coloring salon units under the name of
"HCX the haircolorxperts". HCX, the parent franchisor, has currently sold 31
territories in 24 states representing 2,738 franchises committed to open over
the next 7 to 10 years. The assets being negotiated by us include the exclusive
rights to develop the franchise chain of "HCX Tri-State Metro Territories LLC"
in the District of Columbia and Maryland area as well as the interest in the
prototype HCX Salon located in Columbia Maryland. We believe that through the
acquisition of the development rights from Tri-State, we have an opportunity to
sell between seventy-five and one hundred HCX units over an estimated seven to
ten years. On March 18, 2004, the Company entered into privately negotiated
exchange agreements to exchange 355,000 restricted shares of its common stock
for 8% of membership interests of Tri-State. Although it is our intent to
acquire all the assets of Tri-State, the specific terms and the evaluations of
the potential transaction have not yet been finalized and the pending audited
financial statements of Tri-State are a requirement for completion of that
transaction. The transaction is also subject to customary closing conditions,
including but not limited to the receipt of all definitive documents,
valuations, consents, and approvals. There can be no assurance as to whether or
when the transaction will close.
Recent Events:
In the first quarter of 2004, the Company issued 355,000 shares and $52,500 in
exchange for 575 Class "A" common shares of Tri-State, 1,500 common shares of
Tri-State and notes receivable with principal balances of $95,000 plus accrued
interest.
In the first quarter of 2004, the Company approved the offering of up to 50,000
units which consist of one share of the Company's common stock and three
warrants to purchase shares of our common stock at $.10 per share. As of the
date of this filing, we have sold 50,000 units. On February 16, 2004, the
Company issued 30,000 shares of common stock Shares to one individual for legal
fees at $0.80 per share.
On February 16, 2004, the Company issued 30,000 shares for deferred legal fees
at $0.80 per share.
The Company has historically incurred losses which has resulted in an
accumulated deficit. Although funds generated by operations have supported
certain ongoing expenditures including legal and accounting fees, additional
capital will be needed to affect transactions such as mergers or acquisitions,
if any. Such additional capital may need to be raised through the issuance of
the Company`s debt or equity or a combination of both. Without additional
capital, the Company may not be able to continue as a going concern.
Historically, the Company has generated funds through its wood brokerage
services and from consulting fees for services as well as raising capital
through the sale of its securities in private transactions.
Over the next 12 months the Company intends to develop revenue by focusing on
its consulting services. It is management`s belief that potential acquisition
targets can be better identified and assessed for risk if the Company becomes
involved with various companies on a consulting capacity.
The Company intends for its management team to identify companies that are
positioned to succeed and to assist those companies with financial, managerial
and technical support. Over the next 12 months the Company intends to increase
revenue and gross profit margin by focusing and expanding its consulting
services.
The Company's board of directors believes that the financial evaluations of the
Company would be enhanced as a result of having diversified companies owned by
the Company. The Company anticipates that its role as a consultant to
development stage companies may provide the opportunity for the Company to
invest in such development stage companies, however, the Company`s services as a
consultant will not be conditioned on the Company being allowed to invest in a
company.
The Company will attempt to enter into consulting agreements over the next 12
months that will increase consulting fees as well as open dialog for acquisition
considerations. The Company has no current plans, proposal, arrangements or
understandings with any representatives of the owners of any business or company
regarding an acquisition or merger transaction other than as stated above in
connection with Tri-State Metro Territories LLC.
THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED MARCH 31, 2003
FOR SYNDICATIONNET, INC.
For the three months ended March 31, 2004, SyndicationNet's revenue decreased by
$1,750 dollars from $1,750 for the quarter ended March 31, 2003 to $0 for the
quarter ended March 31, 2004. The decrease is primarily attributed to the
inactivity of SyndicationNet's consulting services.
The General and Administrative Operating Expenses for the quarter ended March
31, 2004 decreased from 541,718 for the quarter ended March 31, 2003 to
$120,048. The Company's total operating expenses decreases from $539,968 at
March 31, 2003 to $120,048 for the quarter ended March 31, 2004.
The net (loss) for the quarter ended March 31, 2004 was ($125,671) compared to
net loss of $529,750 for the year quarter ended March 31, 2003.
Total current assets at March 31, 2004 were $160,801 and total assets were
$372,232. The Company's total loss per share was $(0.01).
SyndicationNet does not foresee any significant changes in the number of its
employees over the next twelve months except in the event it finalizes its
acquisition of the assets of Tri-State or completes any other acquisitions which
would require the Company to hire additional employees related to that business.
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.
The Company does not expect to purchase or sell any manufacturing facilities or
significant equipment over the next twelve months.
The Company does not foresee any significant changes in the number of its
employees over the next twelve months.
Item 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company`s President and Principal Financial Officer. Based upon that evaluation,
he concluded that the Company`s disclosure controls and procedures are effective
in gathering, analyzing and disclosing information needed to satisfy the
Company`s disclosure obligations under the Exchange Act.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company`s internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than the information stated below, SyndicationNet is not a party to any
litigation and management has no knowledge of any threatened or pending
litigation against it.
On November 26, 2001, Barry Pope ("Pope"), individually and as a shareholder of
Worldwide Forest Products, Inc. ("Worldwide") commenced an action against Brian
Sorrentino, Dale Hill, Worldwide Forest Products, Inc., Kemper Pressure Treated
Forest Products, Inc., Life2k.com, Inc., Algonquin Acquisition Corp., Generation
Acquisition Corp., SyndicationNet.com, Inc., Castle Securities Corporation and
John Does 1-5, in the Circuit Court of Madison County, Mississippi. In such
action, Pope claims that stock he owned and commissions owed to him by Worldwide
should have been converted into shares of the common stock of SyndicationNet.
Worldwide was a corporation organized under the laws of the State of Mississippi
that operated as a wood treatment company that worked exclusively with creosite,
a wood treatment chemical, for utility wood poles and products. In 1997 the
corporate charter of Worldwide expired and Worldwide no longer conducts
operations. 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. As of March
2004, we continue to pursue discovery proceedings with plaintiff's newly engaged
counsel. SyndicationNet believes that Pope's claim is without merit and
SyndicationNet has engaged counsel to vigorously defend against the action.
ITEM 2. CHANGES IN SECURITIES
We believe that each transactions listed below were exempt from the registration
requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof,
Regulation D promulgated thereunder. All recipients had adequate access, through
their relationships with us, to information about us. All of such shares bear a
restrictive legend.
On February 16, 2004, the Company issued 50,000 share of common stock for
$50,000 cash. This stock issuance is part of the approved private placement to
issue up to 50,000 units. Each unit consists of one share of common stock and
three warrants to purchase three additional shares of common stock. Each warrant
has an exercise price of $0.10 per share.
On February 16, 2004, the Company issued 30,000 shares to one individual for
deferred legal fees at $0.80 per share.
During the quarter ended March 31, 2004, the Company issued 355,000 shares of
common stock and paid out $52,500 in exchange for 575 class "A" common shares
and 1,500 common shares in Tri-State Metro Territories, LLC, Inc. and notes
receivable with principal balances of $95,000 plus accrued interest.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
31.1 Section 302 Certification
31.2 Section 302 Certification
32.1 Section 906 Certification
(b) Reports on Form 8-K
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNDICATIONNET.COM, INC.
By: /s/ Wayne Hartke
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President, (Principal Executive Officer)
Dated: May 24, 2004
By: /s/Cynthia White
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Chief Financial Officer (Principal
Accounting Officer)
Dated: May 24, 2004