SCHEDULE 14C
(RULE 14C-101)
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
|X| Preliminary Information Statement
|_| Definitive Information Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
Syndication Net.com, Inc.
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the Appropriate Box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which the transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials
|_| check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
SYNDICATION NET.COM, INC.
1250 24th Street, NW, Suite 300
Washington, D.C. 20037
INFORMATION STATEMENT
PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY.
Washington, D.C.
*, 2006
This information statement has been mailed on or about *, 2006 to
the stockholders of record on *, 2006 (the "Record Date") of Syndication
Net.com, Inc., a Delaware corporation (the "Company") in connection with certain
actions to be taken by the written consent by the majority stockholders of the
Company, dated as of January 7, 2006. The actions to be taken pursuant to the
written consent shall be taken on or about *, 2006, 20 days after the mailing of
this information statement.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED HEREIN.
By Order of the Board of Directors,
/s/ Brian Sorrentino
----------------------------------------
Chief Executive Officer and Director
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NOTICE OF ACTION TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF MAJORITY
STOCKHOLDERS IN LIEU OF A SPECIAL MEETING OF THE STOCKHOLDERS, DATED JANUARY 7,
2006
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the following action will be taken pursuant to
a written consent of a majority of stockholders dated January 7, 2006, in lieu
of a special meeting of the stockholders. Such action will be taken on or about
*, 2006:
1. To Amend the Company's Certificate of Incorporation to change the name of the
Company to Syndication, Inc.
2. To Amend the Company's Certificate of Incorporation to increase the number of
authorized shares of common stock, par value $.0001 per share (the "Common
Stock"), of the Company from 100,000,000 shares to 3,000,000,000 shares.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the Record Date, the Company's authorized capitalization consisted
of 100,000,000 shares of Common Stock, of which * shares were issued and
outstanding as of the Record Date. Holders of Common Stock of the Company have
no preemptive rights to acquire or subscribe to any of the additional shares of
Common Stock. As of the Record Date, the Company also had 20,000,000 shares of
Preferred Stock authorized, par value $.0001 per share, of which no shares were
issued and outstanding.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to the stockholders. However, as a result of the voting rights of the
Common stockholders who hold at least a majority of the voting rights of all
outstanding shares of capital stock as of *, 2006, will have voted in favor of
the foregoing proposals by resolution dated January 7, 2006; and having
sufficient voting power to approve such proposals through their ownership of
capital stock, no other stockholder consents will be solicited in connection
with this Information Statement. Brian Sorrentino holds 17,056,262 shares of
common stock, Howard B. Siegel holds 3,025,000 shares of common stock, Mark
Solomon holds 11,098,300 shares of common stock, Seth Farbman holds 4,855,000
shares of common stock, Shai Stern holds 40,000 shares of common stock, and The
Hill Family Irrevocable Trust holds 14,321,194 shares of common stock. Combined,
they hold 50,395,756 votes out of a total of 95,221,074 possible votes on each
matter submitted to the stockholders. All of the aforementioned shareholders
will have voted in favor of the foregoing proposals by resolution dated January
7, 2006.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the proposal will not be adopted until a date at least 20 days after
the date on which this Information Statement has been mailed to the
stockholders. The Company anticipates that the actions contemplated herein will
be effected on or about the close of business on *, 2006.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
This Information Statement will serve as written notice to stockholders
pursuant to Section 242 of the General Corporation Law of the State of Delaware.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables sets forth, as of January 27, 2006, the number of and
percent of the Company's common stock beneficially owned by
o all directors and nominees, naming them,
o our executive officers,
o our directors and executive officers as a group, without naming
them, and
o persons or groups known by us to own beneficially 5% or more of our
common stock:
The Company believes that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially
owned by them.
A person is deemed to be the beneficial owner of securities that can be
acquired by him within 60 days from January 27, 2006 upon the exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants or convertible
securities that are held by him, but not those held by any other person, and
which are exercisable within 60 days of January 27, 2006 have been exercised and
converted.
Common Stock Percentage of
Name of Beneficial Owner Title Beneficially Owned (1) Common Stock (1)
- ---------------------------------------------------------------------------------------------------------------
Mrutyunjaya S. Chittavajhula. CFO 3,000,000 3.15%
1250 24th Street, NW
Suite 300
Washington, D.C. 20037
Mark Solomon President and Director 11,098,300 11.66%
901 South Federal Highway
Fort Lauderdale, Florida
22216
Howard B. Siegel Director 3,025,000 3.18%
15902 South Barker Landing
Houston, Texas 77079
Brian Sorrentino CEO and Director 17,056,262 17.91%
PO Box 484
Damascus, MD 20872
Dale Hill 14,321,194 15.04%
5056 West Grove Drive
Dallas, Texas 75248
All Directors and Executive
Officers as a Group (4) 34,179,562 50.94%
- ---------------------------------------------------------------------------------------------------------------
* Less than 1%.
(1) Applicable percentage ownership is based on 95,221,074 shares of common
stock outstanding as of January 26, 2006, together with securities exercisable
or convertible into shares of common stock within 60 days of January 26, 2006
for each stockholder. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock that are
currently exercisable or exercisable within 60 days of January 26, 2006 are
deemed to be beneficially owned by the person holding such securities for the
purpose of computing the percentage of ownership of such person, but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person.
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AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
On January 7, 2006, the majority stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to change the name of
the Company from Syndication Net.com, Inc. to Syndication, Inc. The Board of
Directors believes that the name change would be in the best interests of the
Company because the new name better reflects the long-term growth strategy of
the Company. The name change will become effective when the Certificate of
Amendment to the Certificate of Incorporation is filed with the Secretary of
State of the State of Delaware. The Company intends to file the Certificate of
Amendment to the Certificate of Incorporation on or about *, 2006, 20 days after
the mailing of this information statement.
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AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
On January 7, 2006, the majority stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock from 100,000,000 to 3,000,000,000. The
Company currently has authorized Common Stock of 100,000,000 shares and
approximately 95,221,074 shares of Common Stock are outstanding as of January
26, 2006. The Board believes that the increase in authorized common shares would
provide the Company greater flexibility with respect to the Company's capital
structure for such purposes as additional equity financing, and stock based
acquisitions.
INCREASE IN AUTHORIZED COMMON STOCK
The terms of the additional shares of Common Stock will be identical to
those of the currently outstanding shares of Common Stock. However, because
holders of Common Stock have no preemptive rights to purchase or subscribe for
any unissued stock of the Company, the issuance of additional shares of Common
Stock will reduce the current stockholders' percentage ownership interest in the
total outstanding shares of Common Stock. This amendment and the creation of
additional shares of authorized common stock will not alter the current number
of issued shares. The relative rights and limitations of the shares of Common
Stock will remain unchanged under this amendment.
As of the Record Date, a total of * shares of the Company's currently
authorized 100,000,000 shares of Common Stock are issued and outstanding. The
increase in the number of authorized but unissued shares of Common Stock would
enable the Company, without further stockholder approval, to issue shares from
time to time as may be required for proper business purposes, such as raising
additional capital for ongoing operations, business and asset acquisitions,
stock splits and dividends, present and future employee benefit programs and
other corporate purposes.
The proposed increase in the authorized number of shares of Common Stock
could have a number of effects on the Company's stockholders depending upon the
exact nature and circumstances of any actual issuances of authorized but
unissued shares. The increase could have an anti-takeover effect, in that
additional shares could be issued (within the limits imposed by applicable law)
in one or more transactions that could make a change in control or takeover of
the Company more difficult. For example, additional shares could be issued by
the Company so as to dilute the stock ownership or voting rights of persons
seeking to obtain control of the Company, even if the persons seeking to obtain
control of the Company offer an above-market premium that is favored by a
majority of the independent shareholders. Similarly, the issuance of additional
shares to certain persons allied with the Company's management could have the
effect of making it more difficult to remove the Company's current management by
diluting the stock ownership or voting rights of persons seeking to cause such
removal. The Company does not have any other provisions in its certificate or
incorporation, by-laws, employment agreements, credit agreements or any other
documents that have material anti-takeover consequences. Additionally, the
Company has no plans or proposals to adopt other provisions or enter into other
arrangements, except as disclosed below, that may have material anti-takeover
consequences. The Board of Directors is not aware of any attempt, or
contemplated attempt, to acquire control of the Company, and this proposal is
not being presented with the intent that it be utilized as a type of
anti-takeover device.
Except for the following, there are currently no plans, arrangements,
commitments or understandings for the issuance of the additional shares of
Common Stock which are proposed to be authorized:
SECURED CONVERTIBLE DEBENTURES
To obtain funding for its ongoing operations, the Company entered into a
Securities Purchase Agreement with Cornell Capital Partners, LP (the "Investor")
on December 30, 2005 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.
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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 January 26, 2006, 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 $.0105 and, therefore, the conversion
price for the Debentures notes was $.0089. Based on this conversion price, the
Debentures in the amount of $1,150,000, excluding interest, were convertible
into 129,213,483 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.
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.
The following are the risks associated with entering into the Securities
Purchase Agreement:
There are a large number of shares underlying our convertible debentures and
warrants that may be available for future sale and the sale of these shares may
depress the market price of our common stock.
As of January 26, 2006, we had 95,221,074 shares of common stock issued
and outstanding, convertible debentures outstanding that may be converted into
an estimated 33,707,865 shares of common stock, an obligation to issue
convertible debentures that may be converted into an estimated 95,505,618 shares
of common stock, and outstanding warrants to purchase 120,000,000 shares of
common stock. In addition, the number of shares of common stock issuable upon
conversion of the outstanding convertible debentures may increase if the market
price of our stock declines. All of the shares, including all of the shares
issuable upon conversion of the notes and upon exercise of our warrants, may be
sold without restriction. The sale of these shares may adversely affect the
market price of our common stock.
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The continuously adjustable conversion price feature of our secured convertible
debentures could require us to issue a substantially greater number of shares,
which will cause dilution to our existing stockholders.
Our obligation to issue shares upon conversion of our secured convertible
notes is essentially limitless. The following is an example of the amount of
shares of our common stock that are issuable, upon conversion of our secured
convertible debentures (excluding accrued interest), based on market prices 25%,
50% and 75% below the market price, as of January 26, 2006 of $0.012.
% Below Market Price Per Share Discount of 15% Number of Shares Issuable
-------------- --------------- --------------- -------------------------
25% $.009 $.0077 150,326,797
50% $.006 $.0051 225,490,196
75% $.003 $.0026 450,980,392
As illustrated, the number of shares of common stock issuable upon
conversion of our secured convertible notes will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.
The continuously adjustable conversion price feature of our $1,150,000 principal
convertible debenture may encourage investors to make short sales in our common
stock, which could have a depressive effect on the price of our common stock.
The convertible debenture is convertible into shares of our common stock
at a 15% discount to the trading price of the common stock prior to the
conversion. The significant downward pressure on the price of the common stock
as the selling stockholder converts and sells material amounts of common stock
could encourage short sales by investors. This could place further downward
pressure on the price of the common stock. The selling stockholder could sell
common stock into the market in anticipation of covering the short sale by
converting their securities, which could cause the further downward pressure on
the stock price. In addition, not only the sale of shares issued upon conversion
or exercise of notes, warrants and options, but also the mere perception that
these sales could occur, may adversely affect the market price of the common
stock.
The issuance of shares upon conversion of the convertible debentures and
exercise of outstanding warrants may cause immediate and substantial dilution to
our existing stockholders.
The issuance of shares upon conversion of the convertible debentures and
exercise of warrants may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion. Although the selling stockholders
may not convert their convertible debentures and/or exercise their warrants if
such conversion or exercise would cause them to own more than 4.99% of our
outstanding common stock, this restriction does not prevent the selling
stockholders from converting and/or exercising some of their holdings and then
converting the rest of their holdings. In this way, the selling stockholders
could sell more than this limit while never holding more than this limit. There
is no upper limit on the number of shares that may be issued which will have the
effect of further diluting the proportionate equity interest and voting power of
holders of our common stock, including investors in this offering.
In the event that our stock price declines, the shares of common stock allocated
for conversion of the convertible debentures and registered pursuant to this
prospectus may not be adequate and we may be required to file a subsequent
registration statement covering additional shares. if the shares we have
allocated and are registering herewith are not adequate and we are required to
file an additional registration statement, we may incur substantial costs in
connection therewith.
Based on the current conversion price of our convertible debentures, we
have made a good faith estimate as to the amount of shares of common stock that
we are required to register and allocate for conversion of the convertible
debentures. Accordingly, we will allocate and register 249,213,483 shares to
cover the conversion of the convertible debentures and stock purchase warrants.
In the event that our conversion or exercise price decreases, the shares of
common stock we have allocated for conversion of the convertible debentures and
are registering hereunder may not be adequate. If the shares we have allocated
to the registration statement are not adequate and we are required to file an
additional registration statement, we may incur substantial costs in connection
with the preparation and filing of such registration statement.
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If we are required for any reason to repay our outstanding convertible
debentures, we would be required to deplete our working capital, if available,
or raise additional funds. Our failure to repay the convertible debentures, if
required, could result in legal action against us, which could require the sale
of substantial assets.
On December 30, 2005, we entered into a financing arrangement involving
the sale of a $1,150,000 principal amount of convertible debenture and stock
purchase warrant to buy 120,000,000 shares of our common stock. The convertible
debenture is due and payable, with 12% interest, three years from the date of
issuance, unless sooner converted into shares of our common stock. In addition,
any event of default such as our failure to repay the principal or interest when
due, our failure to issue shares of common stock upon conversion by the holder,
our failure to timely file a registration statement or have such registration
statement declared effective, breach of any covenant, representation or warranty
in the Securities Purchase Agreement or related convertible note, the assignment
or appointment of a receiver to control a substantial part of our property or
business or the commencement of a bankruptcy, insolvency, reorganization or
liquidation proceeding against us could require the early repayment of the
convertible debentures. We anticipate that the full amount of the convertible
debentures will be converted into shares of our common stock, in accordance with
the terms of the convertible debentures. If we are required to repay the
convertible debentures, we would be required to use our limited working capital
and raise additional funds. If we were unable to repay the notes when required,
the note holders could commence legal action against us and foreclose on all of
our assets to recover the amounts due. Any such action would require us to
curtail or cease operations.
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ADDITIONAL INFORMATION
The Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 2004 is being delivered to you with this Information Statement. We
will furnish any exhibit to our Annual Report on Form 10-KSB free of charge to
any shareholder upon written request to Brian Sorrentino, Chief Executive
Officer, Syndication Net.com, Inc., 1250 24th Street, NW, Suite 300, Washington,
D.C.20037. The Annual Report is incorporated in this Information Statement. You
are encouraged to review the Annual Report together with subsequent information
filed by the Company with the SEC and other publicly available information.
By Order of the Board of Directors,
/s/ Brian Sorrentino
------------------------------------
Brian Sorrentino
Chief Executive Officer and Director
Washington, D.C.
*, 2006
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EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SYNDICATION NET.COM, INC.
The undersigned, being the Chief Executive Officer of SYNDICATION NET.COM
, INC., a corporation existing under the laws of the State of Delaware, do
hereby certify under the seal of the said corporation as follows:
1. The Certificate of Incorporation of the Corporation is hereby amended
by replacing Article One in its entirety, with the following:
"The name of the Corporation is Syndication, Inc."
2. The Certificate of Incorporation of the Corporation is hereby amended
by replacing the first paragraph of Article Four in its entirety, with the
following:
"The total number of shares of stock which the Corporation shall
have the authority to issue is 3,020,000,000 shares, consisting of
3,000,000,000 shares of Common Stock having a par value of $.0001
per share and 20,000,000 shares of Preferred Stock having a par
value of $.0001 per share."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted by the unanimous written consent of the Corporation's Board of
Directors and a majority of the Corporation's stockholders in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment of the Corporation's
Certificate of Incorporation to be signed by Brian Sorrentino, its Chief
Executive Officer, this __th day of _______________________, 2006.
SYNDICATION NET.COM, INC.
By:
------------------------------------
Brian Sorrentino, Chief Executive
Officer
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