UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest reported): December 30, 2005
SYNDICATIONNET.COM, INC.
(Exact name of registrant as specified in charter)
Delaware 000-29701 57-2218873
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1250 24th Street, NW, Suite 300, Washington, D.C. 20037
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 467-2788
Copies to:
Gregory Sichenzia, Esq.
Stephen M. Fleming, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under
an Off-Balance Sheet Arrangement of a Registrant
Item 3.02 Unregistered Sales of Equity Securities
On December 30, 2005, Syndication Net.com, Inc. (the "Company") entered
into a Termination Agreement with Cornell Capital Partners, LP (the "Investor")
pursuant to which the Standby Equity Distribution Agreement entered between the
Company and the Investor dated June 2004 was terminated. Further, on December
30, 2005, in order to obtain alternative funding for its ongoing operations, the
Company then executed a Securities Purchase Agreement (the "Agreement") for the
sale of (i) $1,150,000 in secured convertible debentures (the "Debentures") and
(ii) stock purchase warrants (the "Warrants") to buy 120,000,000 shares of our
common stock.
On December 30, 2005, the Investor purchased $300,000 in Debentures and
received Warrants to purchase 120,000,000 shares of the Company's common stock.
In addition, provided that all of the conditions in the Securities Purchase
Agreement are satisfied, the Investor is obligated to provide the Company with
an additional $700,000 within two business days of the filing of a registration
statement registering the shares of common stock issuable in connection with the
Debentures and the Warrants (the "Registration Statement") and $150,000 within
three business days of the effectiveness of the Registration Statement.
The Debentures bear interest at 12%, mature three years from the date of
issuance, and are convertible into our common stock, at the Investor's option,
at a conversion price, equal to the lower of (i) $0.0132 or (ii) 85% of the
lowest weighted average price during the 30 trading days immediately preceding
the conversion date. As of December 30, 2005, the lowest weighted average price
during the 30 trading days immediately preceding the conversion date as reported
on the Over-The-Counter Bulletin Board was $.005 and, therefore, the conversion
price for the Debentures notes was $.0042. Based on this conversion price, the
Debentures in the amount of $1,150,000, excluding interest, were convertible
into 273,809,524 shares of our common stock.
We may prepay the Debentures only in the event that the Company's closing
bid price is less than $0.0132. We are required to pay a premium of 20% at the
time of redemption. The full principal amount of the Debentures is due upon
default under the terms of Debentures. In addition, we have granted the Investor
a security interest in substantially all of our assets and intellectual property
as well as registration rights pursuant to which we are required to have the
Registration Statement filed within 30 days of the Agreement and effective
within 120 days of the Agreement.
The Warrants are exercisable until five years from the date of issuance at
the following exercise prices:
o $0.008 with respect to 36,000,000 shares of common stock;
o $0.01 with respect to 36,000,000 shares of common stock;
o $0.02 with respect to 21,000,000 shares of common stock;
o $0.05 with respect to 16,000,000 shares of common stock; and
o $0.10 with respect to 11,000,000 shares of common stock.
In addition, the exercise price of the Warrants is adjusted in the event we
issue common stock at a price below market.
The Investor has contractually agreed to restrict their ability to convert
the Debentures and exercise the Warrants and receive shares of our common stock
such that the number of shares of the Company common stock held by them and
their affiliates after such conversion or exercise does not exceed 4.99% of the
Company's then issued and outstanding shares of common stock.
The sale of the Debentures was completed on December 30, 2005 with respect
to $300,000 of the Debentures. As of the date hereof, the Company is obligated
on $300,000 in face amount of Debentures issued to the Investor. The Debentures
are a debt obligation arising other than in the ordinary course of business
which constitute a direct financial obligation of the Company. In addition, the
Company is also obligated on an additional $850,000 in face amount of Debentures
issued to the Investors pursuant to the Agreement.
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The Debentures and Warrants were offered and sold to the Investor in a
private placement transaction made in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506
promulgated thereunder. The Investor is an accredited investor as defined in
Rule 501 of Regulation D promulgated under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
Exhibit No. Description
4.1 Securities Purchase Agreement dated December 30, 2005 by and
among the Company and Cornell Capital Partners, L.P.
4.2 Form of Secured Convertible Debenture dated December 30, 2005
4.3 Form of Stock Purchase Warrant dated December 30, 2005
4.4 Investor Registration Rights Agreement dated December 30, 2005
by and among the Company and Cornell Capital Partners, L.P.
4.5 Amended and Restated Security Agreement dated December 30, 2005
by and among the Company and Cornell Capital Partners, L.P.
4.6 Escrow Agreement dated December 30, 2005 by and among the
Company and Cornell Capital Partners, L.P.
4.7 Termination Agreement dated December 30, 2005 by and among the
Company and Cornell Capital Partners, L.P.
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 hereunto duly authorized.
SYNDICATIONNET.COM, INC.
Date: January 5, 2006 /s/ Brian Sorrentino
-----------------------------
Brian Sorrentino,
Chief Executive Officer
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