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): February 3, 2006
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, in order to obtain alternative funding for its
ongoing operations, Syndication Net.com, Inc. (the "Company") entered into a
Securities Purchase Agreement (the "Agreement") with Cornell Capital Partners,
LP (the "Investor") 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. On February 3, 2006, the
Investors purchase an additional $700,000 pursuant to the Agreement. In
addition, provided that all of the conditions in the Agreement are satisfied,
the Investor is obligated to provide the Company with an additional $150,000
within three business days of the effectiveness of the registration statement
registering the shares of common stock underlying the Debentures and the
Warrants.
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 February 7, 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 $.008 and, therefore, the conversion
price for the Debentures notes was $.0068. Based on this conversion price, the
Debentures in the amount of $1,150,000, excluding interest, were convertible
into 169,117,647 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 2 days of the second closing and effective
within 90 days of the second closing.
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 and February 3, 2006 with respect to $700,000 of
the Debentures. As of the date hereof, the Company is obligated on $1,000,000 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.
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.
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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. (1)
4.2 Form of Secured Convertible Debenture dated December 30,
2005 (1)
4.3 Form of Stock Purchase Warrant dated December 30, 2005 (1)
4.4 Investor Registration Rights Agreement dated December 30, 2005
by and among the Company and Cornell Capital Partners, L.P. (1)
4.5 Amended and Restated Security Agreement dated December 30, 2005
by and among the Company and Cornell Capital Partners, L.P. (1)
4.6 Escrow Agreement dated December 30, 2005 by and among the
Company and Cornell Capital Partners, L.P. (1)
4.7 Termination Agreement dated December 30, 2005 by and among the
Company and Cornell Capital Partners, L.P. (1)
4.8 Amended and Restated Investor Registration Rights Agreement
dated February 3, 2006 by and among the Company and Cornell
Capital Partners, L.P. (2)
4.9 Amended and Restated Securities Purchase Agreement dated
February 3, 2006 by and among the Company and Cornell Capital
Partners, L.P. (2)
4.10 Amended and Restated Security Agreement dated February 3, 2006
by and among the Company and Cornell Capital Partners, L.P. (2)
4.11 Termination Agreement dated as of February 3, 2006 by and among
the Company and Cornell Capital Partners, L.P. (2)
4.12 Secured Convertible Debenture with Cornell Capital Partners,
L.P. dated February 3, 2006 (2)
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(1) Incorporated by reference to the Form 8-K Current Report filed with the
Securities and Exchange Commission on January 5, 2006
(2) Incorporated by reference to the Form SB-2 Registration Statement filed with
the Securities and Exchange Commission on February 3, 2006
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: February 9, 2006 /s/ Brian Sorrentino
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Brian Sorrentino,
Chief Executive Officer
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