As filed with the Securities and Exchange Commission on May 11, 2006.
An Exhibit List can be found on page II-1.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO THE
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SYNDICATION, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 8742 57-2218873
------- ---- ----------
(State of Incorporation) (Primary Standard (IRS Employer
Industrial Code No.) Identification No.)
1250 24th Street, NW
Suite 300
Washington, D.C. 20037
(202) 467-2788
(Address and telephone number of principal executive offices)
Brian Sorrentino, Chief Executive Officer
Syndication, Inc.
1250 24th Street, NW
Suite 300
Washington, D.C. 20037
(202) 467-2788
(Name, address and telephone number of agent for service)
Copies to:
Gregory Sichenzia, Esq.
Stephen M. Fleming, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Floor.
New York, New York 10018
(212) 930-9700
Fax: (212) 930-9725
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 effective 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 statement 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 Maximum Proposed Maximum Amount of
Title of each class of securities Amount to be Offering Price Per Aggregate Offering Registration
to be registered Registered (1) Security Price Fee
- ---------------------------------------------------- ----------------- -------------------- --------------------- --------------
Common stock, $0.0001 par value issuable upon
conversion of Convertible Debentures 845,588,235(2) $ 0.008(4) $ 6,764,705.88 $ 723.82
Common Stock, $0.0001 par value issuable upon
exercise of Warrants 120,000,000(3) $ 0.008(4) $ 960,000.00 $ 102.72
- ---------------------------------------------------- ----------------- -------------------- --------------------- --------------
Total 965,588,235 $ 7,724,705.88 $ 826.54
==================================================== ================= ==================== ===================== ==============
(1) Includes shares of our common stock, par value $0.0001 per share, which
may be offered pursuant to this registration statement, which shares are
issuable upon conversion of convertible debentures and the exercise of
warrants held by the selling stockholders. In addition to the shares set
forth in the table, the amount to be registered includes an indeterminate
number of shares issuable upon conversion of the convertible debentures
and exercise of the warrants, as such number may be adjusted as a result
of stock splits, stock dividends and similar transactions in accordance
with Rule 416. The number of shares of common stock registered hereunder
represents a good faith estimate by us of the number of shares of common
stock issuable upon conversion of the convertible debentures and upon
exercise of the warrants. For purposes of estimating the number of shares
of common stock to be included in this registration statement, we
calculated a good faith estimate of the number of shares of our common
stock that we believe will be issuable upon conversion of the convertible
debentures and upon exercise of the warrants to account for market
fluctuations, and antidilution and price protection adjustments,
respectively. Should the conversion ratio result in our having
insufficient shares, we will not rely upon Rule 416, but will file a new
registration statement to cover the resale of such additional shares
should that become necessary. In addition, should a decrease in the
exercise price as a result of an issuance or sale of shares below the then
current market price result in our having insufficient shares, we will not
rely upon Rule 416, but will file a new registration statement to cover
the resale of such additional shares should that become necessary.
(2) Includes shares underlying the convertible debentures.
(3) Includes shares underlying the warrants.
(4) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, using the
average of the high and low price as reported on the Over-The-Counter
Bulletin Board on May 3, 2006, which was $.008 per share.
The registrant 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 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
1
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 11, 2006
Syndication, Inc.
965,588,235 Shares of
Common Stock
This prospectus relates to the resale by the selling stockholders of up to
965,588,235 shares of our common stock, including up to 845,588,235 shares of
common stock underlying convertible debentures in the principal amount of
$1,150,000, and up to 120,000,000 shares issuable upon the exercise of common
stock purchase warrants. The $1,150,000 convertible debentures are convertible
into our common stock at the lower of $0.0132 or 85% of the lowest weighted
average price during the 30 trading days immediately preceding the conversion
date. The warrants are exercisable into shares of our common stock until five
years from the date of issuance at the following exercise prices: (i) $0.008
with respect to 36,000,000 shares of common stock; (ii) $0.01 with respect to
36,000,000 shares of common stock; (iii) $0.02 with respect to 21,000,000 shares
of common stock; (iv) $0.05 with respect to 16,000,000 shares of common stock;
and (v) $0.10 with respect to 11,000,000 shares of common stock.
Our common stock is currently traded on the Over-The-Counter Bulletin
Board under the symbol "SYDI".
We are not selling any shares of common stock in this offering and
therefore will not receive any proceeds from this offering. We will, however,
receive the exercise price of any common stock we sell to the selling
stockholders upon exercise of the warrants. We expect to use the proceeds
received from the exercise of the warrants, if any, for general working capital
purposes. All costs associated with this registration will be borne by us.
Investing in our common stock involves substantial risks.
See "Risk Factors," beginning on page 7.
Cornell Capital Partners, L.P. is an "underwriter" within the meaning of
the Securities Act of 1933 in connection with the sale of common stock
underlying the convertible debentures in the principal amount of $1,150,000.
With the exception of Cornell Capital Partners, L.P., which is an
"underwriter" within the meaning of the Securities Act of 1933, no other
underwriter or person has been engaged to facilitate the sale of shares of
common stock in this offering. None of the proceeds from the sale of stock by
the selling stockholders will be placed in escrow, trust or any similar account.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________, 2006.
The information in this Prospectus is not complete and may be changed.
This Prospectus is included in the Registration Statement that was filed by
Syndication, Inc. with the Securities and Exchange Commission. The selling
stockholders may not sell these securities until the registration statement
becomes effective. This Prospectus is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
2
TABLE OF CONTENTS
Page
----
Prospectus Summary 4
Risk Factors 7
Forward Looking Statements 13
Use of Proceeds 14
Selling Stockholders 14
Plan of Distribution 17
Market for Common Equity and Related Stockholder Matters 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations 21
Description of Business 26
Description of Property 29
Legal Proceedings 29
Management 30
Executive Compensation 31
Certain Relationships and Related Transactions 32
Security Ownership of Certain Beneficial Owners and Management 32
Description of Securities 34
Indemnification for Securities Act Liabilities 34
Legal Matters 34
Experts 34
Additional Information 35
Index to Financial Statements F-1
3
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "RISK
FACTORS" section, the financial statements and the notes to the financial
statements. As used throughout this prospectus, the terms "we," "us," and "our"
refer to Syndication, Inc.
Syndication, Inc.
We are a consulting 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. Our strategy is to integrate
affiliated companies into a network and to actively develop the business
strategies, operations and management teams of the affiliated entities.
For the year ended December 31, 2005 and 2004, we generated $66,425 and
$-0- in revenue, respectively, and a net loss of $2,334,408 and $2,274,319,
respectively. As a result of our substantial need for working capital and other
factors, our auditors in their report dated April 13, 2006, have expressed
substantial doubt about our ability to continue as going concern.
Our principal executive offices are located at 1250 24th Street, NW, Suite
300, Washington, D.C. 20037 and our phone number is (202) 467-2788. We are a
Delaware corporation.
The Offering
Common stock outstanding
before offering............. 95,221,074 shares
Common stock offered by
selling stockholders........ Up to 965,588,235 shares, including the
following:
o up to 845,588,235 shares of common
stock underlying convertible
debentures in the principal amount
of $1,150,000 (includes a good faith
estimate of the shares underlying
the secured convertible debentures
to account for market fluctuations
antidilution and price protection
adjustments, respectively), and
o up to 120,000,000 shares of common
stock issuable upon the exercise of
common stock purchase warrants
exercisable into shares of our
common stock until five years from
the date of issuance at the
following exercise prices: (i)
$0.008 with respect to 36,000,000
shares of common stock; (ii) $0.01
with respect to 36,000,000 shares of
common stock; (iii) $0.02 with
respect to 21,000,000 shares of
common stock; (iv) $0.05 with
respect to 16,000,000 shares of
common stock; and (v) $0.10 with
respect to 11,000,000 shares of
common stock.
Common stock to be
outstanding after the
offering.................... Up to 1,060,809,309 shares.
Use of proceeds............. We will not receive any proceeds from the
sale of the common stock hereunder.
However, we will receive the sale price
of any common stock we sell to the
selling stockholder upon exercise of the
warrants. We expect to use the proceeds
received from the exercise of the
warrants, if any, for general working
capital purposes.
The above information regarding common stock to be outstanding after the
offering is based on 95,221,074 shares of common stock outstanding as of
April 21, 2006 and assumes the subsequent conversion of our issued secured
convertible debentures and exercise of warrants by our selling stockholders.
4
DECEMBER 2005 SECURITIES PURCHASE AGREEMENT
On December 30, 2005, we entered into a Termination Agreement with Cornell
Capital Partners, LP (the "Investor") pursuant to which the Standby Equity
Distribution Agreement entered between us and the Investor dated June 2004 was
terminated. Further, on December 30, 2005, in order to obtain alternative
funding for our ongoing operations, we 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 our common stock. On
February 3, 2006, the Investor 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 us 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 January 27, 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 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 our 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.
5
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 our common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of our 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 on February 3, 2006 with respect to $700,000
of the Debentures. As of the date hereof, we are 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 our company. In addition, we are
also obligated on an additional $150,000 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.
On February 3, 2006, we entered into a Termination Agreement with the
Investor pursuant to which we agreed to terminate the Escrow Agreement and the
respective rights and obligations contained therein and any rights and
obligations with respect to escrow arrangements provided for in the Securities
Purchase Agreement. As a result, the Investor and we shall not have any rights
or obligations under or with respect to the Escrow Agreement or the escrow
arrangements (including fees) provided for in the Securities Purchase Agreement.
In addition, the termination of the Escrow Agreement required us to enter into
amendments to the Securities Purchase Agreement, Investor Registration Rights
Agreement, and Security Agreement, each dated as of February 3, 2006, to delete
all references to the Escrow Agreement or the escrow arrangements specified
thereunder.
6
RISK FACTORS
Any investment in our shares of common stock involves a high degree of
risk. You should carefully consider the following information about these risks,
together with the other information contained in this prospectus before you
decide to buy our common stock. Each of the following risks may materially and
adversely affect our business, results of operations and financial condition.
These risks may cause the market price of our common stock to decline, which may
cause you to lose all or a part of the money you paid to buy our common stock.
We provide the following cautionary discussion of risks, uncertainties and
possible inaccurate assumptions relevant to our business and our products. These
are factors that we think could cause our actual results to differ materially
from expected results.
Risks Related To Our Business:
We have a history of losses which may continue, requiring us to seek additional
sources of capital which may not be available, requiring us to curtail or cease
operations.
We incurred net losses of $2,334,408 for the year ended December 31, 2005
and $2,274,319 for the year ended December 31, 2004. Our monthly burn rate is
approximately $35,000 per month and, accordingly, we will need to raise
approximately $420,000 over the next 12 months in order to sustain our current
operations. We cannot assure you that we can achieve or sustain profitability on
a quarterly or annual basis in the future. If revenues grow more slowly than we
anticipate, or if operating expenses exceed our expectations or cannot be
adjusted accordingly, we will continue to incur losses. We will continue to
incur losses until we are able to market and sell our services. Our possible
success is dependent upon the successful development and marketing of our
services, as to which there is no assurance. Any future success that we might
enjoy will depend upon many factors, including factors out of our control or
which cannot be predicted at this time. These factors may include changes in or
increased levels of competition, including the entry of additional competitors
and increased success by existing competitors, changes in general economic
conditions, increases in operating costs, including costs of supplies, personnel
and equipment, reduced margins caused by competitive pressures and other
factors. These conditions may have a materially adverse effect upon us or may
force us to reduce or curtail operations. In addition, we will require
additional funds to sustain and expand our activities, particularly if a
well-financed competitor emerges. There can be no assurance that financing will
be available in amounts or on terms acceptable to us, if at all. The inability
to obtain sufficient funds from operations or external sources would require us
to curtail or cease operations. Any additional equity financing may involve
substantial dilution to our then existing shareholders.
Our Independent Auditors have expressed substantial doubt about our ability to
continue as a going concern, which may hinder our ability to obtain future
financing.
In their report dated April 13, 2006, our independent auditors stated that
our financial statements for the year ended December 31, 2005 were prepared
assuming that we would continue as a going concern. Our ability to continue as a
going concern is an issue raised as a result of cash flow constraint, an
accumulated deficit of $4,608,727 at December 31, 2005 and recurring losses from
operations. Our ability to continue as a going concern is subject to our ability
to generate a profit and/or obtain necessary funding from outside sources,
including obtaining additional funding from the sale of our securities,
increasing sales or obtaining loans and grants from various financial
institutions where possible. Our continued net losses and stockholders' deficit
increases the difficulty in meeting such goals and there can be no assurances
that such methods will prove successful.
Our Success Depends On Attracting And Retaining Highly Skilled And Qualified
Technical And Consulting Personnel.
We must hire highly skilled technical personnel as employees and as
independent contractors in order to acquire controlling interests in or to
participate in the creation of, and to provide financial, management and
technical support to, development stage business, e-commerce businesses and
traditional brick-and-mortar businesses. The competition for skilled technical
employees is intense and we may not be able to retain or recruit such personnel.
We must compete with companies that possess greater financial and other
resources than we do, and that may be more attractive potential employees and
contractors. To be competitive, we may have to increase the compensation,
bonuses, stock options and other fringe benefits offered to employees in order
to attract and retain such personnel. The costs of retaining or attracting new
personnel may have a materially adverse affect on our business and our operating
results. In addition, difficulties in hiring and retaining technical personnel
could delay the implementation of our business plan.
7
Our Success Depends In A Large Part On The Continuing Service of Key Personnel.
Changes in management could have an adverse effect on our business. We are
dependent upon the active participation of several key management personnel,
including Brian Sorrentino, our chief executive officer, and Mark Solomon, our
president. This is especially an issue for us since our staffing is small. The
failure to retain our current management or personnel could have a material and
adverse effect on our operating results and financial performance.
Because our management team devotes a limited amount of their time to our
affairs, our business may not be successful.
Our 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 our affairs. We may not be able to successfully implement our business
plan or continue our operations if our management team is unable to devote the
time required.
Our strategy may involve speculative investments which could cause us to lose
some or all of our invested funds and could cause the price of our stock to
decline.
Our success depends on our ability to develop or select companies that
will be ultimately successful. There may be factors outside our control which
could affect the success of the acquired companies. We intend to seek companies
in the early stages of development with limited operating history, little
revenue and possible losses. If we becomes affiliated with such entities and
they do not succeed, the value of our assets, results of operations and the
price of our common stock could decline.
Management and affiliates own enough shares to control shareholder vote which
could limit the rights of existing or future shareholders.
Our executive officers, directors, affiliates and entities controlled by
them own approximately 50.94% 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 our
Certificate of Incorporation or other material corporate actions.
We do not have employment agreements with any of our officers or employees and
if we are unable to retain our management team our business operations may not
be able to continue to operate.
Our success in achieving our growth objectives is dependant to a
substantial extent upon the continuing efforts and abilities of our key
management personnel, including the efforts of Brian Sorrentino, our Chief
Executive Officer, as well as other executive officers and management. We do not
have employment agreements with any of our executive officers and the loss of
their services would deprive us of their needed legal and business contacts and
experiences. We may not be able to maintain and achieve our growth objectives
should we lose any or all of these individuals' services. We do not maintain
key-man life insurance for any of our officers.
We have and intend to continue to issue shares of our common stock to our
officers, directors and consultants as compensation for services which they
perform on behalf of our company at a discount to the market price of our common
stock at the time of such issuance. This results in a large number of shares
which have been issued and the sale of these shares may depress the market price
of our common stock and will cause dilution to our existing stockholders.
We often issue, and intend to continue to issue from time to time, shares
of our common stock to our officers, directors and consultants as compensation
for services which they perform on behalf of our company at a discount to the
market price of our common stock at the time of such issuance. As of the date
hereof, we have issued Brian Sorrentino, our Chief Executive Officer and
Director, an aggregate of 17,056,262 shares of our common stock as compensation
for services performed on our behalf. In addition, we have issued Mark Solomon,
our President and Director, and Howard Siegel, our Director, an aggregate of
11,098,300 and 3,025,000 shares of our common stock, respectively, each as
compensation for services performed on our behalf. This results in a large
number of shares which have been issued to our officers, directors and
consultants at a discount to the market price of our common stock. The sale of
these shares may depress the market price of our common stock and will cause
dilution to our existing stockholders.
8
If we are required to comply with the Investment Company Act of 1940, we will
incur substantial additional expenses and if we do not comply with the
Investment Company Act of 1940, then we could be subject to liabilities.
Our ownership interest in companies that we seek to consult with and
acquire could result in our being classified as an investment company under the
Investment Company Act of 1940. If we are required to register as an investment
company, then we 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. We have obtained no formal
determination from the Securities and Exchange Commission as to our status under
the Investment Company Act of 1940. Any violation of the Investment Company Act
of 1940 could subject us to civil or criminal liabilities. In the event we
engage in business combinations which result in our holding passive investment
interests in a number of entities, we 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, we 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 us to implement our business
strategy of actively managing, operating and promoting collaboration among our
to be acquired network of affiliated entities.
Risks Relating To Our Current Financing:
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 April 21, 2006, we had 95,221,074 shares of common stock issued and
outstanding, convertible debentures outstanding that may be converted into an
estimated 169,117,647 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 debentures 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.
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
debentures 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 April 21, 2006 of $0.008.
% Below Market Price Per Share Discount of 15% Number of Shares Issuable
- -------------- --------------- --------------- -------------------------
25% $ .006 $ .0051 225,490,196
50% $ .004 $ .0034 338,235,294
75% $ .002 $ .0017 676,470,588
9
As illustrated, the number of shares of common stock issuable upon
conversion of our secured convertible debentures 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 debentures 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 debentures are 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 debentures, 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 845,588,235 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.
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 debentures and stock
purchase warrant to buy 120,000,000 shares of our common stock. The convertible
debentures are 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 debentures 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.
10
Risks Related To Our Common Stock:
If we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.
Companies trading on the OTC Bulletin Board, such as us, must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13, in order to maintain price
quotation privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements, we could be removed from the OTC Bulletin Board. As
a result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and
the ability of stockholders to sell their securities in the secondary market.
The limited market for our shares will make our price more volatile; therefore
you may have difficulty selling our common stock.
The market for our common stock is limited and we cannot assure you that a
larger market will ever be developed or maintained. Currently, our common stock
is traded on the Over-The-Counter Bulletin Board. Market fluctuations and
volatility, as well as general economic, market and political conditions, could
reduce our market price. As a result, this may make it difficult or impossible
for you to sell our common stock.
Our common stock will be subject to the "Penny Stock" rules of the SEC and the
trading market in our securities will be limited, which will make transactions
in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 3a51-1 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, Rule
15g-9 require:
o that a broker or dealer approve a person's account for transactions in
penny stocks; and
o the broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to
be purchased
In order to approve a person's account for transactions in penny stocks,
the broker or dealer must:
o obtain financial information and investment experience objectives of the
person; and
o make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the SEC relating to the penny
stock market, which, in highlight form:
o sets forth the basis on which the broker or dealer made the suitability
determination; and
o that the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
11
Generally, brokers may be less willing to execute transactions in
securities subject to the "penny stock" rules. This may make it more difficult
for investors to dispose of our common stock and cause a decline in the market
value of our stock.
Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
12
Forward-Looking Statements
Information in this prospectus contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements can be identified by the use of words such as
"believes," "estimates," "could," "possibly," "probably," "anticipates,"
"projects," "expects," "may," "will," or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy.
13
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be offered
and sold from time to time by the selling stockholders. We will not receive any
proceeds from the sale of shares of common stock in this offering. However, we
will receive the sale price of any common stock we sell to the selling
stockholder upon exercise of the warrants. We expect to use the proceeds
received from the exercise of the warrants, if any, for general working capital
purposes. However, the selling stockholders will be entitled to exercise the
warrants on a cashless basis if the shares of common stock underlying the
warrants are not then registered pursuant to an effective registration
statement. In the event that the selling stockholder exercises the warrants on a
cashless basis, then we will not receive any proceeds. In addition, we have
received gross proceeds of $1,150,000 from the sale of the convertible
debentures. The proceeds received from the sale of the convertible debentures
will be and are being used for business development purposes, working capital
needs, consulting fees, management fees, internal and external accounting fees
and repayment of debt.
SELLING STOCKHOLDERS
The following table presents information regarding the selling
stockholders. A description of each selling stockholder's relationship to our
Company and how each selling stockholder acquired the shares in this offering is
detailed in the information immediately following this table.
- ------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Total
Total Shares of Percentage Percentage
Common Stock of Common Beneficial of Common
Issuable Upon Stock, Shares of Beneficial Percentage of Ownership Stock Owned
Conversion of Assuming Common Stock Ownership Common Stock After the After
Debentures Full Included in Before the Owned Before Offering Offering
Name and/or Warrants* Conversion Prospectus Offering** Offering** (2) (2)
- ------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
Cornell Capital 289,117,647 75.22% Up to 965,588,235 (1) 4.99% -- --
Partners, L.P. 965,588,235 (1)
shares of
common stock
- ------------------- ----------------- ------------- ------------- ------------ -------------- ------------ -------------
* This column represents an estimated number based on a current conversion price
of $0.0068, divided into the principal amount.
** These columns represent the aggregate maximum number and percentage of shares
that the selling stockholder can own at one time (and therefore, offer for
resale at any one time) due to its 4.99% limitation.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rule, beneficial ownership includes any shares as
to which the selling stockholders has sole or shared voting power or investment
power and also any shares, which the selling stockholders has the right to
acquire within 60 days. The actual number of shares of common stock issuable
upon the conversion of the secured convertible debentures is subject to
adjustment depending on, among other factors, the future market price of the
common stock, and could be materially less or more than the number estimated in
the table.
(1) The actual number of shares of common stock offered in this prospectus, and
included in the registration statement of which this prospectus is a part,
includes such additional number of shares of common stock as may be issued or
issuable upon conversion of the secured convertible debentures and exercise of
the related warrants by reason of any stock split, stock dividend or similar
transaction involving the common stock, in accordance with Rule 416 under the
Securities Act of 1933, as amended. However the selling stockholders have
contractually agreed to restrict their ability to convert their secured
convertible debentures or exercise their warrants and receive shares of our
common stock such that the number of shares of common stock held by them in the
aggregate and their affiliates after such conversion or exercise does not exceed
4.99% of the then issued and outstanding shares of common stock as determined in
accordance with Section 13(d) of the Exchange Act. Accordingly, the number of
shares of common stock set forth in the table for the selling stockholders
exceeds the number of shares of common stock that the selling stockholders could
own beneficially at any given time through their ownership of the secured
convertible debentures and the warrants. In that regard, the beneficial
ownership of the common stock by the selling stockholder set forth in the table
is not determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
14
(2) Assumes that all securities registered will be sold.
The following information contains a description of the selling
stockholders. Except as set forth, none of the selling stockholders have held a
position or office, or had any other material relationship, with our company:
Cornell Capital Partners, L.P. is the holder of convertible debentures in
the principal amount of $1,150,000 and a warrant to purchase 120,000,000 shares
of common stock. Cornell Capital Partners is a private equity fund. All
investment decisions of Cornell Capital Partners are made by its general
partner, Yorkville Advisors, LLC. Mark Angelo, the managing member of Yorkville
Advisors, makes the investment decisions on behalf of Yorkville Advisors and has
voting control over the securities beneficially owned by Yorkville Advisors, LLC
and Cornell Capital Partners. Cornell Capital Partners acquired all shares being
registered in this offering in financing transactions with us.
DECEMBER 2005 SECURITIES PURCHASE AGREEMENT
On December 30, 2005, we entered into a Termination Agreement with Cornell
Capital Partners, LP (the "Investor") pursuant to which the Standby Equity
Distribution Agreement entered between us and the Investor dated June 2004 was
terminated. Further, on December 30, 2005, in order to obtain alternative
funding for our ongoing operations, we 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 our common stock. On
February 3, 2006, the Investor 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 us 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 January 27, 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 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 our 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;
15
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 our common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of our 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 on February 3, 2006 with respect to $700,000
of the Debentures. As of the date hereof, we are 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 our company. In addition, we are
also obligated on an additional $150,000 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.
On February 3, 2006, we entered into a Termination Agreement with the
Investor pursuant to which we agreed to terminate the Escrow Agreement and the
respective rights and obligations contained therein and any rights and
obligations with respect to escrow arrangements provided for in the Securities
Purchase Agreement. As a result, the Investor and we shall not have any rights
or obligations under or with respect to the Escrow Agreement or the escrow
arrangements (including fees) provided for in the Securities Purchase Agreement.
In addition, the termination of the Escrow Agreement required us to enter into
amendments to the Securities Purchase Agreement, Investor Registration Rights
Agreement, and Security Agreement, each dated as of February 3, 2006, to delete
all references to the Escrow Agreement or the escrow arrangements specified
thereunder.
Sample Conversion Calculation
The number of shares of common stock issuable upon conversion of the
Debentures is determined by dividing that portion of the principal of the
Debenture to be converted and interest, if any, by the conversion price. For
example, assuming conversion of $300,000 of debentures on January 27, 2006, and
a conversion price of $0.0089 per share, the number of shares issuable upon
conversion would be:
$300,000/$.0068 = 44,117,647 shares
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 April 21, 2006 of $0.008.
% Below Market Price Per Share Discount of 15% Number of Shares Issuable
- -------------- --------------- --------------- -------------------------
25% $ .006 $ .0051 225,490,196
50% $ .004 $ .0034 338,235,294
75% $ .002 $ .0017 676,470,588
16
PLAN OF DISTRIBUTION
The selling stockholder and any of its pledgees, donees, assignees and
other successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholder may use any one or more of
the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately-negotiated transactions;
o broker-dealers may agree with the selling stockholder to sell a specified
number of such shares at a stipulated price per share;
o through the writing of options on the shares
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholder may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholder shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholder or its pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholder and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholder cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholder. The selling
stockholder and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed to be "underwriters" as
that term is defined under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or the rules and regulations under
such acts. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
stockholder, but excluding brokerage commissions or underwriter discounts.
The selling stockholder, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into.
The selling stockholder may pledge its shares to their brokers under the
margin provisions of customer agreements. If a selling stockholder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares. The selling stockholder and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may
restrict certain activities of, and limit the timing of purchases and sales of
any of the shares by, the selling stockholder or any other such person. In the
event that the selling stockholder are deemed affiliated purchasers or
distribution participants within the meaning of Regulation M, then the selling
stockholder will not be permitted to engage in short sales of common stock.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. In regards to short sells, the selling stockholder is contractually
restricted from engaging in short sells. In addition, if a such short sale is
deemed to be a stabilizing activity, then the selling stockholder will not be
permitted to engage in a short sale of our common stock. All of these
limitations may affect the marketability of the shares.
17
We have agreed to indemnify the selling stockholder, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the selling
stockholder or their respective pledgees, donees, transferees or other
successors in interest, may be required to make in respect of such liabilities.
If the selling stockholder notifies us that it has a material arrangement
with a broker-dealer for the resale of the common stock, then we would be
required to amend the registration statement of which this prospectus is a part,
and file a prospectus supplement to describe the agreements between the selling
stockholder and the broker-dealer.
18
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is currently traded on the Over-The-Counter Bulletin
Board under the symbol "SYDI". The following table sets forth the high and low
bid prices of our common stock, as reported by the Over-The-Counter Bulletin
Board for each quarter since January 1, 2003. The quotations set forth below
reflect inter-dealer prices, without retail mark-up, markdown or commission and
may not represent actual transactions.
High Bid Price Low Bid Price
-------------- -------------
First Quarter 2003 $ 0.05 $ 0.02
Second Quarter 2003 $ 1.15 $ 0.05
Third Quarter 2003 $ 0.05 $ 0.05
Fourth Quarter 2003 $ 2.45 $ 0.05
- --------------------------------------------------------------------
First Quarter 2004 $ 0.60 $ 0.25
Second Quarter 2004 $ 1.90 $ 0.55
Third Quarter 2004 $ 0.30 $ 0.25
Fourth Quarter 2004 $ 1.50 $ 0.15
- --------------------------------------------------------------------
First Quarter 2005 $ 1.25 $ 0.22
Second Quarter 2005 $ 0.51 $ 0.07
Third Quarter 2005 $ 0.09 $ 0.02
Fourth Quarter 2005 $ 0.05 $ 0.004
- --------------------------------------------------------------------
First Quarter 2006 $ 0.017 $ 0.006
As of April 21, 2006, there were approximately 43 holders of record of
our common stock. We believe that the number of beneficial owners is
substantially greater than the number of record holders because a significant
portion of our outstanding common stock is held of record in broker "street
names" for the benefit of individual investors. The transfer agent of our common
stock is Pacific Stock Transfer, Inc., 500 E. Warm Springs Road, Suite 240, Las
Vegas, Nevada 89119.
Dividends
We have never declared or paid any cash dividends on its common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table shows information with respect to each equity
compensation plan under which the Company's common stock is authorized for
issuance as of the fiscal year ended December 31, 2005.
19
EQUITY COMPENSATION PLAN INFORMATION
Number of securities
Number of securities remaining available for
to be issued upon Weighted average future issuance under
exercise of exercise price of equity compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a)
- ------------------------------------ ------------------------ ----------------------- ---------------------------
(a) (b) (c)
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans approved -0- -0- -0-
by security holders
- ------------------------------------ ------------------------ ----------------------- ---------------------------
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans not -0- -0- -0-
approved by security holders
- ------------------------------------ ------------------------ ----------------------- ---------------------------
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Total -0- -0- -0-
20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The information in this registration statement contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. This Act provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about themselves so long
as they identify these statements as forward looking and provide meaningful
cautionary statements identifying important factors that could cause actual
results to differ from the projected results. All statements other than
statements of historical fact made in this registration statement are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction with
our financial statements, included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management.
General
We are a consulting 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. Our 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 our board of directors to develop and exploit all
business opportunities to increase efficiencies between companies with which we
may invest in or consult. In addition, we may acquire companies to be held as
wholly owned subsidiaries.
We had one wholly owned subsidiary, Kemper Pressure Treated Forest
Products, Inc. Kemper was engaged in the retail brokerage business of
preservative treated lumber such as utility poles, bridge pilings, timber and
guardrail posts. Kemper had one customer and as a result of limited revenue we
elected to wind down Kemper's operations during the fourth quarter of 2003. We
have changed our focus and growth efforts towards our consulting business and/or
the acquisition of an operating development company.
21
On September 2005, we launched HTRG & Associates LLC ("HTRG") as a wholly
owned subsidiary that will specialize in the real estate appraisal business. We
brought on Thomas Gibbs as the President of HTRG to run the daily operations of
the organization. Mr. Gibbs is also the sole owner of a consulting company named
HTRG Consulting that has done specific consulting work for the company in the
year of 1999 in efforts to develop and launch HCX The haircolorxperts. We have
not settled with Mr. Gibbs on the terms of his employment contract at this time.
Through HTRG, we intend to leverage our activities from the real estate
appraisal business into real estate development. We will establish a formal
employment contract in relation to the real estate development projects that we
choose to engage.
On November 10, 2003, we 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, director and an executive
officer of our company, is a 10% shareholder in Tri State. Mark Solomon, who
serves as a member of our Board of Directors and is a shareholder of our company
also is a member of Tri-State. Dale Hill, is a shareholder of our company and is
also a member of Tri-State. Tri State is in the business of selling franchised
hair coloring salon units under the name of "HCX the haircolorxperts. The assets
being negotiated by us include the exclusive to the interest in the prototype
HCX Salons located in Columbia Maryland and Washington, DC. On March 18, 2004,
we entered into privately negotiated exchange agreements to exchange 355,000
restricted shares of its common stock for 8% of membership interests of
Tri-State. In addition, from September 2004 through February 2005 we entered
into two purchase agreements whereby the Company purchased 3% of membership
interests of Tri-State for $115,000. 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.
Fiscal Year Ended December 31, 2005 Compared to Fiscal Year Ended December 31,
2004
For the year ended December 31, 2005, our revenue increased by $66,425 to
$66,425 for the year ended December 31, 2005 from $0 for the year ended December
31, 2004. The increase is primarily attributed to the revenue generated by HTRG
& Associates LLC the Company's new subsidiary that came on line in September
2005.
The operating expenses for the period ended December 31, 2005 decreased by
$900,866 to $978,414 for the year ended December 31, 2005 from $1,879,280 for
the year ended December 31, 2004. Our operating expenses consist primarily of
general and administrative expenses and consulting fees which increased by
$268,702 and decreased $972,133, respectively. The reason for the changes relate
to the ability of the Company to pay for services with cash instead of relying
on the issuance of shares for consulting services.
The net loss for the year ended December 31, 2005 was $2,334,408 compared
to net less of $2,274,319 for the year ended December 31, 2004. The primary
reason for the increase in the loss was due to the reasons set for above.
22
Liquidity and Capital Resources
Total current assets at December 31, 2005 were $267,984. We have
historically incurred losses. For the fiscal year ended December 31, 2005, we
had a net loss of $2,334,408.
On December 30, 2005, in order to obtain alternative funding for our
ongoing operations, we entered into a Termination Agreement with Cornell Capital
Partners, LP (the "Investor") pursuant to which the Standby Equity Distribution
Agreement entered between our company and the Investor dated June 2004 was
terminated. On December 30, 2005, Cornell Capital purchased $300,000 in
Debentures and received Warrants to purchase 120,000,000 shares of our common
stock. In addition, provided that all of the conditions in the Securities
Purchase Agreement are satisfied, Cornell Capital is obligated to provide us
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 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 Cornell Capital'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 27, 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 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 our 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 Cornell Capital 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.
23
In accordance with EITF-00-19 and SFAS 150, and because there is no
explicit limit on the number of shares that are to be delivered upon exercise of
the conversion feature, we are not able to assert that it will have sufficient
authorized and unissued shares to settle the conversion option. As a result, the
conversion feature will be accounted for as a derivative liability, with the
fair value recorded in earnings each period. On February 6, 2006 the company
issued an additional $700,000 of the $1,150,000 debenture and expects to issue
the final $150,000 of the $1,150,000 debenture on the date that the SEC approves
the pending registration of said debenture.
Our future revenues and profits, if any, will depend upon various factors,
including the following:
Whether we will be able to effectively evaluate the overall quality and
industry expertise of potential acquisition candidates; whether we will have the
funds to provide seed capital and mezzanine financing to brick-and-mortar,
e-commerce and Internet-related companies; and whether we can develop and
implement business models that will enable growth companies to develop.
We may not be able to effect any acquisitions of or investments in
development stage companies if we are unable to secure sufficient funds to
finance our proposed acquisitions costs. We expect that our current cash and
cash equivalents will allow us to continue our current operation for six months.
If we are unable to generate additional revenues or secure financings, we may be
forced to cease or curtail operations.
We intend for our 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, we intend to increase revenue
and gross profit margin by focusing and expanding its consulting services and
seeking acquisition candidates. It is management's belief that potential
acquisition targets can be better identified and assessed for risk if we first
become involved with these candidates on a consulting capacity. Our strategy is
to integrate affiliated companies into a network and to actively develop the
business strategies, operations and management teams of the affiliated entities.
We do not foresee any significant changes in the number of our employees
over the next twelve months except in the event we finalize an acquisition. We
have not paid dividends on our common stock, and intend to reinvest our earnings
to support our working capital and expansion requirements. We intend to continue
to utilize our earnings in the development and expansion of the business and do
not expect to pay cash dividends in the foreseeable future. It is the belief of
management that as we move toward an active trading status the ability to raise
capital by stock issuance to effect our business plan is enhanced.
We do not expect to sell any manufacturing facilities or significant
equipment over the next twelve months except within the demands of potential
acquisitions that we may pursue.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on us.
24
DESCRIPTION OF BUSINESS
Organizational History
We are a Delaware corporation. Kemper Pressure Treated Forest Products,
Inc. is 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 our company which was named Generation
Acquisition Corporation at such time. 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.
General
We are a consulting 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 business, e-commerce businesses and
traditional brick-and-mortar businesses. We have no restrictions or limitations
in terms of the type of industry that we intend to focus our activities on. We
do not want to limit the scope of our potential target businesses. In evaluating
whether to act as a consultant with a particular company and whether to invest
in a specific company, our board of directors intends to apply a general
analysis which would include, but not limited to, the following:
o an evaluation of industry of a target company to determine the competition
that exists in that particular industry;
o an evaluation to determine if the target company has the products,
services and skills to successfully compete in its industry;
o an evaluation of the target company's management skills; and
o an evaluation of our equity position in a target company, if any, to
review the extent, if any, that we 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, we intend to
require representation on the company's board of directors to ensure our 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 we might make an investment.
Our 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 our board of directors to develop and
exploit all business opportunities to increase efficiencies between companies
with which we may invest in or consult. For example, if we are consulting with a
marketing company, we may utilize that marketing company to provide services for
other companies with which we consult with or invest. We may acquire companies
to be held as wholly owned subsidiaries of our company.
Our board of directors believes that the financial evaluations of our
company would be enhanced as a result of having diversified companies owned by
our company. We anticipate that our role as a consultant to development stage
companies may provide the opportunity for us to invest in such development stage
companies, however, our services as a consultant will not be conditioned on us
being allowed to invest in a company.
We do not intend to identify potential acquisition, investment and
consulting activities through the use of paid advertisements, phone solicitation
or email solicitation, but intend to become aware of and identify potential
acquisition, investment and consulting activities through the business contacts
and networking of our officers and directors.
25
HTRG & Associates LLC
In September 2005, we launched HTRG & Associates LLC ("HTRG") as a wholly
owned subsidiary that will specialize in the real estate appraisal business. We
brought on Thomas Gibbs as the President of HTRG to run the daily operations of
the organization. Mr. Gibbs is also the sole owner of a consulting company named
HTRG Consulting that has done specific consulting work for the company in the
year of 1999 in efforts to develop and launch HCX The haircolorxperts. We have
not settled with Mr. Gibbs on the terms of his employment contract at this time.
Through HTRG, we intend to leverage our activities from the real estate
appraisal business into real estate development. We will establish a formal
employment contract in relation to the real estate development projects that we
choose to engage.
Letter Of Intent With Tri-State Metro Territories LLC
On November 10, 2003, we 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, director and an executive
officer of our company, is also a 10% shareholder in Tri State. Additionally,
Robert Green is a member of Tri-State and a shareholder of our company. Mark
Solomon, who serves as a member of our Board of Directors and is a shareholder
of our company also is a member of Tri-State. Dale Hill, is a shareholder of our
company and is also a member 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. The assets being negotiated by us
include the interest in the prototype HCX Salons located in Columbia Maryland
and Washington, DC. We have loaned Tri-State $178,000 in connection with
Tri-State's opening of its prototype salon in Washington, DC. On March 18, 2004,
we entered into privately negotiated exchange agreements to exchange 355,000
restricted shares of our common stock for 8% of membership interests of
Tri-State. In addition, from September 2004 through February 2005, we entered
into two purchase agreements whereby we purchased 3% of membership interests of
Tri-State for $115,000. 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.
Letter of Intent with New Age Systems, Inc.
On September 14, 2004, we entered into a letter of intent with the
shareholders of New Age Systems, Inc. ("New Age") in which we agreed to acquire
100% of New Age's outstanding securities from New Age's shareholders. The
closing of this sale was subject to the entering of a final definitive agreement
and the performance of customary due diligence. New Age is a full-service
information technology provider to government and business, providing services
and related products. New Age provides services in the following areas:
o Software Engineering,
o Records Management and Workflow,
o Network Design and Support,
o Program Management,
o Geographic/Geospatial Information System solutions, and
o Integrated Association Management Systems.
During the three months ended September 30, 2005, we discontinued
negotiations to pursue the acquisition of New Age Systems, Inc.
The Market
We believe that the effective achievement of the public status has
provided access to the capital markets and the associated investment capital
necessary to effect our declared intention to engage in the acquisition and
merger elements of our business plan. As Internet-based network reliability,
speed and security continue to improve, and as more businesses are connected to
the Internet, traditional brick-and-mortar businesses are using 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.
Our management team believes that it can offer development stage 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 by way of increased access to public equity markets.
26
Marketing
Primarily through the marketing efforts of our executive officers,
directors and consultants, we intend to locate B2B Internet-related companies
and traditional brick-and-mortar businesses for which we will act as a general
corporate consultant and we also intend to locate development stage companies as
acquisition candidates. We do not intend to concentrate our efforts on any
particular industry. Our management team hopes to take advantage of the
resources of its directors, specifically in the areas of accounting, e-commerce,
finance and politics, to enable us to consult with, acquire and integrate B2B
e-commerce companies and traditional brick-and-mortar businesses. We intend to
actively explore synergistic opportunities such as cross marketing efforts
within the network of companies we will consult with or acquire.
Strategy and Objectives - Investment and development activities
We believe that we can add value to development stage B2B e-commerce
Internet-related companies and traditional brick and mortar businesses by
providing seed-capital and we may take advantage of various potential business
acquisition opportunities through the issuance of our securities. We believe we
can further assist them in the following areas:
o to develop and implement business models that capitalize on the Internet's
ability to provide solutions to traditional companies;
o to build a corporate infrastructure including a management team, a
qualified sales and marketing department, information technology, finance
and business development;
o to assist them in their ability to manage rapid growth and flexibility to
adopt to the changing Internet marketplace and technology;
o to assist them in evaluating, structuring and negotiating joint ventures,
strategic alliances, joint marketing agreements and other corporate
transactions; and
o to advise them in matters related to corporate finance, financial
reporting and accounting operations.
We believe that our management team is qualified to identify companies
that are positioned to compete successfully in their respective industries. We
intend to structure our acquisitions to permit the acquired company's management
and key personnel to retain an equity stake in the company. We believe that we
have the ability to complete acquisitions and investments quickly and
efficiently. We intend that after acquiring an interest in a development
company, it will participate in follow-on financing if needed. We have no
proposed activities related to the offering of securities of any other company.
Management and consulting activities
In evaluating whether to act as a consultant with a particular company, we
intend to apply an analysis which includes, but is not limited to, the following
factors:
o 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;
o target company evaluation to determine if the target company has the
products, services and skills to become successful in its industry;
o 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;
o evaluation of our equity position in a target company and extent that we
will be able to exert influence over the direction and operations of the
development stage company; and
o as a condition to any acquisition or development agreement, we intend to
require representation on the company's board of directors to ensure our
ability to provide active guidance to the acquired company.
27
Competition
The market to acquire interests in development stage growth companies,
Internet or brick-and-mortar, is highly competitive. Many of our competitors may
have more experience identifying and acquiring equity interests in development
stage companies and have greater financial, research and management resources
than our company. In addition, we may encounter substantial competition from new
market entrants. Some of our current and future competitors may be significantly
larger and have greater name recognition than our company. Many investment
oriented entities have significant financial resources which may be more
attractive to entrepreneurs of development stage companies than obtaining our
consulting, management skills and networking services. We may not be able to
compete effectively against such competitors in the future.
Employees
Other than our officers, as of April 21, 2006, we had no employees other
than one consultant, Brian Sorrentino. Our success depends to a large extent
upon the continued services of our officers and directors. The loss of such
personnel could have a material adverse effect on our business and our results
of operations.
Description of Property
We are headquartered in 1250 24th Street, NW, Suite 300, Washington, D.C.
20037. We pay $300 per month to rent this office space. We project that such
office space should be sufficient for their anticipated needs for the
foreseeable future. Our telephone number is (202) 467-2788 and our fax number is
(301) 528-4238.
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. Except as
disclosed below, we are currently not aware of any such legal proceedings or
claims that we believe will have, individually or in the aggregate, a material
adverse affect on our business, financial condition or operating results.
On January 6, 2005, the Circuit Court of Madison County, Mississippi,
granted summary judgment in favor of all defendants in the action styled "Barry
Pope, Individually and as a Shareholder of Worldwide Forest Products, Inc., v
Brian Sorrentino, et.al.", including our company as a defendant. The Court also
granted a motion of certain Defendants, including our company, asking that Mr.
Pope be ordered to pay the defendants attorney fees and expenses incurred as a
result of a continuance of a trial set on September 22, 2004, with the Court
finding that the actions of Plainfiff Pope caused the continuance. This matter
was commenced on November 26, 2001, Barry Pope, individually and as a
shareholder of Worldwide Forest Products, Inc. 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.
Cassidy and Associates, PA, our former counsel, filed a statement of claim
against us with the American Arbitration Association. This arbitration was
settled in September 2004.
28
MANAGEMENT
Executive Officers and Directors
Below are the names and certain information regarding our executive
officers and directors.
Name Age Position
- -------------------------------- ------- -------------------------------------
Brian Sorrentino 48 Chief Executive Officer and Director
- -------------------------------- ------- -------------------------------------
Mrutyunjaya S. Chittavajhula 45 Chief Financial Officer
- -------------------------------- ------- -------------------------------------
Mark Solomon 47 President and Director
- -------------------------------- ------- -------------------------------------
Howard S. Siegel 59 Director
Officers are elected annually by the Board of Directors (subject to the
terms of any employment agreement), at our annual meeting, to hold such office
until an officer's successor has been duly appointed and qualified, unless an
officer sooner dies, resigns or is removed by the Board.
Background of Executive Officers and Directors
Brian Sorrentino, 48, serves as our Chief Executive Officer and as a
director. Mr. Sorrentino has worked in the securities industry since 1986 and
has been licensed series 6, 7, and 24. In 1993, he started Source Management
Services, a consulting company. Mr. Sorrentino has specialized in mergers and
acquisitions and contract negotiations with regard to those efforts. From August
2000 to March 2005, Mr. Sorrentino has served as the CEO and development agent
of Tri-State Metro Territories LLC. Tri State is in the business of selling
franchised hair coloring salon units under the name of "HCX the haircolorxperts"
which include the exclusive rights to develop the franchise chain of "HCX" in
the District of Columbia and Maryland area.
Mrutyunjaya S. Chittavajhula, 45, serves as our Chief Financial Officer.
Mr. Chittavajhula graduated Andhra University located in India with a degree in
commerce. From July 1999 through November 2002, Mr. Chittavajhula worked as an
accountant in David Pomerantz & Associates, LLC where handled all aspects of
professional accounting services. From 2002 until present, Mr. Chittavajhula has
been employed as a comptroller of Deep Sea Logistics, Inc. From April 2003 until
the present, Mr. Chittavajhula started working for James D Goldblatt CPA PC,
Maryland, as an accountant. From May 2003 to July 2004, Mr. Chittavajhula was
employed by Futrovsky & Tossman, CPAs, as an accountant.
Mark Solomon, Esq., 47, has served as Chairman of the Board of Directors
of our company 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.
Howard S. Siegel, 59, has served as a director of our company 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.
Director Compensation
Directors receive an annual issuance of 80,000 shares of our common stock
for serving as directors and are repaid for their expenses incurred for serving
as directors. On Decemeber 30, 2005, for services rendered as directors and
officers of our company, we issued 7,000,000 shares to Brian Sorrentino,
3,000,000 shares to Mrutyunjaya Chittavajhula, 10,000,000 shares to Mark Solomon
and 3,000,000 shares to Mark Solomon.
Committees of Our Board of Directors
The Board of Directors does not have a Compensation, Audit or Nominating
Committee, and the usual functions of such committees are performed by the
entire Board of Directors. The board of directors have determined that at
present we do not have an audit committee financial expert. The Board believes
that the members of the Board of Directors are collectively capable of analyzing
and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. In addition, we have been seeking and
continue to seek an appropriate individual to serve on the Board of Directors
and the Audit Committee who will meet the requirements necessary to be an
independent financial expert.
29
Code of Ethics
We have adopted a Code of Ethics and Business Conduct for Officers,
Directors and Employees that applies to all of our officers, directors and
employees.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
directors and executive officers, and persons who own more then 10% of our
common stock, file with the SEC the initial reports of ownership and reports of
changes in ownership of common stock. Based solely on our review of the copies
of such reports received by us, or written representations from certain
reporting persons that no Forms 5 were required for such persons, we believe
that there was no failure to comply with Section 16(a) filing requirements
applicable to our officers, directors and 10% stockholders.
Executive Compensation
The following table sets forth all compensation paid in respect of our
Chief Executive Officer and those individuals who received compensation in
excess of $100,000 per year for our last three completed fiscal years.
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Restricted
Principal Stock Other($)
Position(s) Year Salary($) Bonus($) Compensation Awards(#shares)
- --------------- ----- ---------- --------- ------------ ---------------
Brian Sorrentino 2005 $95,867 -- -- 20,000
2004 -- -- -- 20,000
2003 -- -- -- 91,000
We do not have any long term compensation plans or stock option plans.
Employment Agreements
We have not entered into employment agreements with any of our officers or
employees.
Family Relationships
Currently there are no family relationships among our directors, executive
officers or other persons nominated or chosen to become officers or directors.
30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1999, we borrowed an aggregate of $105,000 from Brian Sorrentino, an
executive officer, director and shareholder. We executed a promissory note for
the loan amount at an interest rate of 12% per annum. The loan, which was due
March 3, 2000, has not been paid as of the date of this filing. In the fiscal
year ended December 31, 2003, Mr. Sorrentino loaned an additional $4,100 to us.
In the fiscal year ended December 31, 2004, Mr. Sorrentino loaned an additional
$248,730 to us. As of December 31, 2004, that the aggregate amount due including
interest to Mr. Sorrentino is $401,993.
The controlling person and founder of our company was James M. Cassidy. At
the time of the exchange of stock with Life2K.com, Inc., we had 5,000,000 shares
of our 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 we agreed to pay TPG Capital Corporation an
aggregate of $100,000 for its consulting services of which $65,000 has been
paid. In 2004, as a result of a dispute regarding the services rendered by TPG
Capital Corporation, we instructed our transfer agent to cancel the 250,000
outstanding shares.
On November 10, 2003, we 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, director and an executive
officer of our company, is also a 10% shareholder in Tri State. Additionally,
Robert Green is a member of Tri-State and a shareholder of our company. Mark
Solomon, who serves as a member of our Board of Directors and is a shareholder
of our company also is a member of Tri-State. Dale Hill, is a shareholder of our
company and is also a member 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. 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 Salons located in Columbia Maryland and
Washington, DC. The Company has loaned Tri-State $178,000 in connection with
Tri-State's opening of its prototype salon in Washington, DC. On March 18, 2004,
we entered into privately negotiated exchange agreements to exchange 355,000
restricted shares of its common stock for 8% of membership interests of
Tri-State. In addition, from September 2004 through February 2005 we entered
into two purchase agreements whereby the Company purchased 3% of membership
interests of Tri-State for $115,000. 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.
As of the date hereof, we have a corporate services consulting agreement
with Source Management Services ("Source Management"). Brian Sorrentino, a
significant shareholder and an executive officer and director, is the president
and sole director and shareholder of Source Management. Pursuant to this
agreement we compensated Source Management at the rate of $150 per hour. In
addition, we issued 571,000 shares of common stock to Source Management as a
bonus.
We pay accounting fees to MS Acctek, Inc., a private accounting firm owned
by Mr. Chittavajhula, our Chief Financial Officer, We paid MS Acctek, Inc.
$25,500 for the year ended December 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 21, 2006
with respect to the beneficial ownership of the outstanding common stock by (i)
any holder of more than five (5%) percent; (ii) each of the our executive
officers and directors; and (iii) our directors and executive officers as a
group. Except as otherwise indicated, each of the stockholders listed below has
sole voting and investment power over the shares beneficially owned.
31
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 35.9%
- -------------------------------------------------------------------------------------------------------------------
* Less than 1%.
(1) Applicable percentage ownership is based on 95,221,074 shares of common
stock outstanding as of April 21, 2006, together with securities exercisable
or convertible into shares of common stock within 60 days of April 21, 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 April 21, 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.
32
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 3,000,000,000 shares of common
stock at a par value of $0.0001 per share. As of April 21, 2006, there were
95,221,074 shares of our common stock issued and outstanding
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued, outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of
stockholders. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of our common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available
funds. In the event of a liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate pro rata in all assets that
remain after payment of liabilities and after providing for each class of stock,
if any, having preference over the common stock. Our common stock has no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to the Company's common stock.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Articles of Incorporation,
as amended and restated, is to eliminate our rights and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
damages against a director or officer for breach of the fiduciary duty of care
as a director or officer (including breaches resulting from negligent or grossly
negligent behavior), except under certain situations defined by statute. We
believe that the indemnification provisions in our Articles of Incorporation, as
amended, are necessary to attract and retain qualified persons as directors and
officers.
Our By Laws also provide that the Board of Directors may also authorize
the company to indemnify our employees or agents, and to advance the reasonable
expenses of such persons, to the same extent, following the same determinations
and upon the same conditions as are required for the indemnification of and
advancement of expenses to our directors and officers. As of the date of this
Registration Statement, the Board of Directors has not extended indemnification
rights to persons other than directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
LEGAL MATTERS
The validity of the shares of common stock being offered hereby will be
passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York.
EXPERTS
Our financial statements as of December 31, 2005 and 2004 appearing in
this prospectus and registration statement have been audited by HJ & Associates,
LLC, independent certified public accountants, as set forth on their report
thereon appearing elsewhere in this prospectus, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
33
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the Securities
Act of 1933, as amended, relating to the shares of common stock being offered by
this prospectus, and reference is made to such registration statement. This
prospectus constitutes the prospectus of Syndication, Inc., filed as part of the
registration statement, and it does not contain all information in the
registration statement, as certain portions have been omitted in accordance with
the rules and regulations of the Securities and Exchange Commission.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, which requires us to file reports, proxy
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information may be inspected by public
reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at
prescribed rates. Because we file documents electronically with the SEC, you may
obtain this information by visiting the SEC's Internet website at
http://www.sec.gov.
34
SYNDICATION NET.COM, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Registered Independent Certified Public Accounting Firm F-1
Balance Sheet at December 31, 2005 and December 31, 2004 F-2
Statements of Operations for the Years ended December 31, 2005
and December 31, 2004 F-3
Statements of Stockholders' Equity (Deficit) for the Years
Ended December 31, 2005 and December 31, 2004 F-4
Statements of Cash Flows for the Years
Ended December 31, 2005 and December 31, 2004 F-5
Notes to Financial Statements F-6
35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Syndication, Inc.
(Formerly Syndication Net.com, Inc.)
(A Development Stage Company)
Washington DC
We have audited the accompanying consolidated balance sheet of Syndication, Inc.
(formerly Syndication Net.com, Inc.) (a development stage company) at December
31, 2005, and the related statements of operations, stockholders' equity
(deficit) and cash flows for the years ended December 31, 2005 and 2004 and from
inception of the development stage on January 1, 2004 through December 31, 2005.
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 of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
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 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 financial position of Syndication, Inc.
(formerly Syndication Net.com, Inc.) (a development stage company) at December
31, 2005, and the results of their operations and their cash flows for the years
ended December 31, 2005 and 2004 and from inception of the development stage on
January 1, 2004 through December 31, 2005 in conformity with United States
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 6 to the
consolidated financial statements, the Company has recorded significant losses
from operations, and has no revenues to support operational cash flows, which
together raise 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
April 13, 2006
F-2
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
------
December 31,
2005
------------
CURRENT ASSETS
Cash $ 255,684
Accounts receivable 12,300
Note receivable, Net (Note 13) --
------------
Total Current Assets 267,984
------------
OTHER ASSETS
Investment, net (Note 10) --
Debt offering costs 60,000
------------
Total Other Assets 60,000
------------
TOTAL ASSETS $ 327,984
============
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
December 31,
2005
-------------
CURRENT LIABILITIES
Accounts payable $ 103,717
Accounts payable-related party 18,419
Note payable - related party (Note 5) 368,937
Interest payable - related party (Note 5) 84,104
Note payable 301,761
Interest payable 37,043
Interest payable - convertible debenture 1,318
Derivative liability 1,668,627
-------------
Total Current Liabilities 2,583,926
-------------
LONG TERM LIABILITIES
Convertible debenture (Note 7) 168,038
Convertible debenture (net of $300,000 discount) --
-------------
Total Long Term Liabilities 168,038
-------------
Total Liabilities 2,751,964
-------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.001 par value, no shares issued and outstanding --
Common stock: 3,000,000,000 shares authorized of $0.001
par value, 95,271,074 shares issued and outstanding 9,994
Additional paid-in capital 4,406,272
Deficit accumulated prior to the development stage (2,231,519)
Deficit accumulated during the development stage (4,608,727)
-------------
Total Stockholders' Equity (Deficit) (2,423,980)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 327,984
=============
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Statements of Operations
From inception of the
For the Twelve Months Ended Development stage on
December 31, January 1, 2004
------------------------------ through
2005 2004 December 31, 2005
------------ ------------ ------------------
CONSULTING REVENUE $ 66,425 $ -- $ 66,425
------------ ------------ ------------------
OPERATING EXPENSES
Bad debt expense 80,752 278,187 358,939
General and administrative 588,795 320,093 908,888
Consulting 308,867 1,281,000 1,589,867
------------ ------------ ------------------
Total Operating Expenses 978,414 1,879,280 2,857,694
------------ ------------ ------------------
OPERATING LOSS (911,989) (1,879,280) (2,791,269)
------------ ------------ ------------------
OTHER (EXPENSES)
Loss on investment value (8,038) (276,431) (284,469)
Other income 35,932 -- 35,932
Loss on derivative liability (1,368,627) -- (1,368,627)
Interest expense (81,686) (118,608) (200,294)
------------ ------------ ------------------
Total Other (Expenses) (1,422,419) (395,039) 1,817,458
------------ ------------ ------------------
LOSS BEFORE INCOME TAXES (2,334,408) (2,274,319) (4,608,627)
------------ ------------ ------------------
INCOME TAX EXPENSE -- -- --
------------ ------------ ------------------
NET INCOME (LOSS) $ (2,334,408) $ (2,274,319) $ (4,608,727)
============ ============ ==================
BASIC LOSS PER SHARE
Total Income (Loss) Per Share $ (0.11) $ (0.17)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 21,140,178 13,391,577
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(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, 2003 12,075,088 $ 1,207 $ 2,021,959 $ (292,000) $(2,231,519)
Common stock issued for cash at $1.00
per share on February 16, 2004 50,000 5 49,995 -- --
Common stock issued for deferred fees at
$0.80 per share on February 16, 2004 30,000 3 23,997 (24,000) --
Common stock issued for assets at $0.90
per share on February 28, 2004 120,000 12 107,988 -- --
Common stock issued for assets at $0.65
per share on March 17, 2004 160,000 16 103,984 -- --
Common stock issued for assets at $0.65
per share on March 17, 2004 15,000 2 9,748 -- --
Common stock issued for assets at $0.65
per share on March 17, 2004 60,000 6 38,994 -- --
Common stock issued for deferred fees at
$0.40 per share on May 18, 2004 600,000 60 239,940 (240,000) --
Common stock issued for services at $0.35
per share on June 1, 2004 1,200,000 120 419,880 -- --
Common stock issued for additional interest
on default on note payable at $0.35 per
share on June 15, 2004 50,000 5 17,495 -- --
Beneficial conversion feature of
convertible debentures -- -- 50,000 -- --
Common stock issued for services at $0.44
per share on December 1, 2004 675,000 67 296,932 -- --
Common stock issued for deferred fees at
$0.50 per share on December 9, 2004 80,000 8 39,992 (40,000) --
Common stock issued for services at $0.55
per share on December 27, 2004 250,000 25 137,475 -- --
Amortization of deferred fees -- -- -- 406,000 --
Net loss for the year ended
December 31, 2004
-- -- -- -- (2,274,319)
----------- ----------- ----------- ----------- -----------
Balance, December 30, 2004 15,365,088 1,536 3,558,379 (190,000) (4,505,838)
Amortization of deferred fees -- -- -- 82,500 --
----------- ----------- ----------- ----------- -----------
Subtotal 15,365,088 $ 1,536 $ 3,558,379 $ (107,500) $(4,505,838)
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional
---------------------------- Paid-In Deferred Accumulated
Shares Amount Capital Fees Deficit
----------- ----------- ----------- ----------- -----------
Balance Forward 15,365,088 $ 1,536 $ 3,558,379 $ (107,500) $(4,505,838)
Common stock issued at $0.24 per
share per Irrevocable
TA instructions free trading
on June 09, 2005 41,667 4 9,995 -- --
Common stock issued at $0.17 per
share on June 20, 2005
Loan payoff - draw 1 59,788 5 9,995 -- --
Common stock issued at $0.12 per
share on June 27, 2005
Loan payoff - draw 2 85,034 8 9,992 -- --
Common stock issued at $0.05 per
share on July 05, 2005
Loan payoff - draw 3 204,082 20 9,980 -- --
Common stock issued at $0.041 per
share on Sep 19, 2005
Loan payoff - draw 4 243,902 24 9,976 -- --
Common stock issued at $0.03 per
share on Sep 26, 2005
Loan payoff - draw 5 776,398 78 24,922 -- --
Common stock issued at $0.017 per
share on Oct 03, 2005
Note Payable 1,488,095 149 24,851 -- --
Common stock issued at $0.014 per
share on Oct 10, 2005
Note Payable 2,551,020 255 24,745 -- --
Common stock issued at $0.011 per
share on Oct 24, 2005
Note Payable 2,319,109 232 24,768 -- --
Common stock issued at $0.008 per
share on Oct 31, 2005
Note Payable 3,188,776 319 24,681 -- --
Common stock issued at $0.007 per
share on Nov 07, 2005
Note Payable 3,644,315 364 24,636 -- --
Common stock issued at $0.007 per
share on Nov 07, 2005
Interest on Note Payable 3,594,872 359 24,301 -- --
Common stock issued at $0.005 per
share on Nov 14, 2005
Note Payable 4,611,837 464 24,536 -- --
Common stock issued at $0.004 per
share on Nov 17, 2005
Convertible debenture 2,439,024 244 9,756 -- --
Common stock issued at $0.005 per
share on Nov 21, 2005
Note Payable 4,813,246 481 24,519 -- --
Common stock issued at $0.007 per
share on Nov 28, 2005
Note Payable 3,644,315 364 24,636 -- --
----------- ----------- ----------- ----------- -----------
Subtotal 49,070,568 $ 4,908 $ 3,864,668 $ (107,500) $(4,505,838)
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-7
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional
---------------------------- Paid-In Deferred Accumulated
Shares Amount Capital Fees Deficit
----------- ----------- ----------- ----------- -----------
Balance Forward 49,070,568 $ 4,908 $ 3,864,668 $ (107,500) $(4,505,838)
Common stock issued at $0.004 per
share on Dec 01, 2005
Convertible debenture 1,662,500 166 6,484 -- --
Common stock issued at $0.021 per
share on Dec 09, 2005
Note Payable 1,214,772 121 24,879 -- --
Common stock issued at $0.005 per
share on Dec 12, 2005
Convertible debenture 1,106,667 111 5,201 -- --
Common stock issued at $0.015 per
share on Dec 12, 2005
Note Payable 1,759,324 176 24,824 -- --
Common stock issued at $0.013 per
share on Dec 19, 2005
Note Payable 1,962,323 196 24,804 -- --
Common stock issued at $0.011 per
share on Dec 29, 2005
To Directors for services & fee 38,500,000 3,850 431,200 -- --
Amortization of deferred fees -- -- -- 107,500 --
Related party debt settlement -- -- 24,678
Price rounding adjustments on
issuance dates above (5,080) 466 (466) -- --
Net loss for the year
December 31, 2005 -- -- -- -- (2,334,408)
----------- ----------- ----------- ----------- -----------
Balance on December 31, 2005 95,271,074 $ 9,994 $ 4,406,272 -- $(6,840,246)
=========== =========== =========== =========== ===========
Deficit accumulated prior to
development stage $(2,231,519)
Deficit accumulated during the
development stage (4,608,727)
-----------
Accumulated deficit $(6,840,246)
===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-8
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
From Inception
of the
Development
For the Twelve Months Ended Stage on
December 31, January 1, 2004
-------------------------------------- through
2005 2004 December 31, 2005
---------------- ---------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (2,334,408) $ (2,274,319) $ (4,608,727)
Adjustments to reconcile net loss to net cash
provided (used) in operating activities:
Common stock issued for services 234,982 1,182,750 1,417,732
Amortization of deferred fees -- 406,000 406,000
Bad debt expense -- 278,187 278,187
Loss on investment value -- 276,431 276,431
Gain on accounts payable write off (39,932) -- (39,932)
Unearned compensation 190,000 -- 190,000
Increase in allowance for bad debts 80,752 -- 80,752
Changes in operating assets and liabilities:
Increase in accounts receivable (12,300) -- (12,300)
Increase in interest payable - related party 43,941 7,198 51,139
Increase in interest payable - others 40,014 -- 40,014
Increase in accounts payable - related party 16,419 1,000 17,419
Increase (decrease) in accounts payable 29,193 18,516 47,709
Increase in accrued expenses -- 38,641 38,641
Increase in directors fee accrued (44,000) -- (44,000)
Increase in accrued expenses - related party -- 32,000 32,000
Increase in deferred acquisition costs 7,000 (7,000) --
Increase in debt offering costs (60,000) -- (60,000)
Increase in derivative liability 1,368,627 -- 1,368,627
---------------- ---------------- ------------------
Net Cash Used in Operating Activities (479,712) (40,596) (520,308)
---------------- ---------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in notes receivable - related (80,752) (278,187) (358,939)
Increase in investments - related -- (276,431) (276,431)
---------------- ---------------- ------------------
Net Cash Used in Investing Activities (80,752) (554,618) (635,370)
---------------- ---------------- ------------------
The accompanying notes are an integral part of these consolidated
financial statements.
F-9
SYNDICATION, INC.
(formerly SYNDICATION NET.COM, INC.)
(A Development Stage Company)
Consolidated Statements of Cash Flows - continued
From Inception
of the
Development
For the Twelve Months Ended Stage on
December 31, January 1, 2004
---------------------------------------------- through
2005 2004 December 31, 2005
-------------------- -------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash -- 50,000 50,000
Increase in notes payable -- 207,500 207,500
Proceeds from notes payable 500,000 -- 500,000
Payments on notes payable (5,000) (96,989) (101,989)
Increase in notes payable - related party 7,107 272,990 280,097
Payments on notes payable - related party -- (24,260) (24,260)
Increase in convertible debenture -- 200,000 200,000
Increase in convertible debenture - new 300,000 -- 300,000
-------------------- -------------------- --------------------
Net Cash Provided by Financing Activities 802,107 609,241 1,411,348
-------------------- -------------------- --------------------
NET INCREASE (DECREASE) IN CASH 241,643 14,027 255,670
CASH, BEGINNING OF PERIOD 14,041 14 14
-------------------- -------------------- --------------------
CASH, END OF PERIOD $ 255,684 $ 14,041 $ 255,684
==================== ==================== ====================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ -- $ -- $ --
Interest $ -- $ 11,370 $ 11,370
Non-Cash Financing Activities
Common stock issued for deferred fees $ -- $ 304,000 $ 304,000
Common stock issued for services $ 234,982 $ 1,182,750 $ 1,417,732
Common stock issued for converting N/P $ 340,001 $ -- $ 340,001
Common stock issued for convertible debenture $ 21,962 $ -- $ 21,962
Forgiveness of debt - related party $ 24,678 $ -- $ 24,678
The accompanying notes are an integral part of these consolidated
financial statements.
F-10
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Syndication, Inc.
(formerly Syndication Net.com, Inc.) (Syndication). 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. and then to Syndication, Inc.
HTRG & Associates was formed on August 27, 2005, and is a wholly
owned subsidiary of Syndication. HTRG & Associates is a real estate
appraisal, evaluation, and development company.
b. Accounting Method
The Company's 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 a related company
in the form of a note receivable. The note carries a balance of
$85,863, which includes interest receivable on the note. The balance
of the note has been fully allowed for as of December 31, 2005
F-11
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
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 financial statements as follows:
For the Years Ended
December 31,
-------------------------
2005 2004
------------ -----------
Net Loss $ (2,334,408) $(2,274,319)
------------ -----------
Total Income (Loss) Per Share $ (0.11) $ (0.17)
============ ===========
Weighted Average Number of Shares
Outstanding 21,140,178 13,391,577
============ ===========
f. Recent Accounting Pronouncements
In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an
amendment of ARB No. 43, Chapter 4. The amendments made by Statement
151 clarify that abnormal amounts of idle facility expense, freight,
handling costs, and wasted materials (spoilage) should be recognized
as current-period charges and require the allocation of fixed
production overheads to inventory based on the normal capacity of
the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005.
Earlier application is permitted for inventory costs incurred during
fiscal years beginning after November 23, 2004. The Company has
evaluated the impact of the adoption of SFAS 151, and does not
believe the impact will be significant to the Company's overall
results of operations or financial position.
In December 2004, the FASB issued SFAS No.152, "Accounting for Real
Estate Time-Sharing Transactions--an amendment of FASB Statements
No. 66 and 67" ("SFAS 152) The amendments made by Statement 152 This
Statement amends FASB Statement No. 66, Accounting for Sales of Real
Estate, to reference the financial accounting and reporting guidance
for real estate time-sharing transactions that is provided in AICPA
Statement of Position (SOP) 04-2, Accounting for Real Estate
Time-Sharing Transactions. This Statement also amends FASB Statement
No. 67, Accounting for Costs and Initial Rental Operations of Real
Estate Projects, to state that the guidance for (a) incidental
operations and (b) costs incurred to sell real estate projects does
not apply to real estate time-sharing transactions. The accounting
for those operations and costs is subject to the guidance in SOP
04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005. The Company has
evaluated the impact of the adoption of SFAS 152, and does not
believe the impact will be significant to the Company's overall
results of operations or financial position.
F-12
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Recent Accounting Pronouncements (Continued)
In December 2004, the FASB issued SFAS No.153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting
for Nonmonetary Transactions."The amendments made by Statement 153
are based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged.
Further, the amendments eliminate the narrow exception for
nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do
not have commercial substance. Previously, Opinion 29 required that
the accounting for an exchange of a productive asset for a similar
productive asset or an equivalent interest in the same or similar
productive asset should be based on the recorded amount of the asset
relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar
productive assets. The Board believes that exception required that
some nonmonetary exchanges, although commercially substantive, be
recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the Board believes this
Statement produces financial reporting that more faithfully
represents the economics of the transactions. The Statement is
effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after the date of issuance. The provisions of this
Statement shall be applied prospectively. The Company has evaluated
the impact of the adoption of SFAS 153, and does not believe the
impact will be significant to the Company's overall results of
operations or financial position.
In December 2004, the FASB issued SFAS No.123 (revised 2004),
"Share-Based Payment". Statement 123(R) will provide investors and
other users of financial statements with more complete and neutral
financial information by requiring that the compensation cost
relating to share-based payment transactions be recognized in
financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. Statement
123(R) covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based
awards, share appreciation rights, and employee share purchase
plans. Statement 123(R) replaces FASB Statement No. 123, Accounting
for Stock-Based Compensation, and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees. Statement 123, as
originally issued in 1995, established as preferable a
fair-value-based method of accounting for share-based payment
transactions with employees. However, that Statement permitted
entities the option of continuing to apply the guidance in Opinion
25, as long as the footnotes to financial statements disclosed what
net income would have been had the preferable fair-value-based
method been used. Public entities (other than those filing as small
business issuers) will be required to apply Statement 123(R) as of
the first interim or annual reporting period that begins after June
15, 2005. The Company adopted Statement 123(R) in December of 2005.
In December 2004, the Financial Accounting Standards Board issued
two FASB Staff Positions - FSP FAS 109-1, Application of FASB
Statement 109 "Accounting for Income Taxes" to the Tax Deduction on
Qualified Production Activities Provided by the American Jobs
Creation Act of 2004, and FSP FAS 109-2 Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within the
American Jobs Creation Act of 2004. Neither of these affected the
Company as it does not participate in the related activities.
F-13
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Recent Accounting Pronouncements (Continued)
In March 2005, the SEC released Staff Accounting Bulletin No. 107,
"Share-Based Payment" ("SAB 107"), which provides interpretive
guidance related to the interaction between SFAS 123(R) and certain
SEC rules and regulations. It also provides the SEC staff's views
regarding valuation of share-based payment arrangements. In April
2005, the SEC amended the compliance dates for SFAS 123(R), to allow
companies to implement the standard at the beginning of their next
fiscal year, instead of the next reporting period beginning after
June 15, 2005. Management is currently evaluating the impact SAB 107
will have on our consolidated financial statements.
In March 2005, the FASB issued FASB Interpretation No. 47,
"Accounting for Conditional Asset Retirement Obligations" ("FIN
47"). FIN 47 provides guidance relating to the identification of and
financial reporting for legal obligations to perform an asset
retirement activity. The Interpretation requires recognition of a
liability for the fair value of a conditional asset retirement
obligation when incurred if the liability's fair value can be
reasonably estimated. FIN 47 also defines when an entity would have
sufficient information to reasonably estimate the fair value of an
asset retirement obligation. The provision is effective no later
than the end of fiscal years ending after December 15, 2005. The
Company will adopt FIN 47 beginning the first quarter of fiscal year
2006 and does not believe the adoption will have a material impact
on its consolidated financial position or results of operations or
cash flows.
In May 2005, the FASB issued FASB Statement No. 154, "Accounting
Changes and Error Corrections." This new standard replaces APB
Opinion No. 20, "Accounting Changes, and FASB Statement No. 3,
Reporting Accounting Changes in Interim Financial Statements," and
represents another step in the FASB's goal to converge its standards
with those issued by the IASB. Among other changes, Statement 154
requires that a voluntary change in accounting principle be applied
retrospectively with all prior period financial statements presented
on the new accounting principle, unless it is impracticable to do
so. Statement 154 also provides that (1) a change in method of
depreciating or amortizing a long-lived non-financial asset be
accounted for as a change in estimate (prospectively) that was
effected by a change in accounting principle, and (2) correction of
errors in previously issued financial statements should be termed a
"restatement." The new standard is effective for accounting changes
and correction of errors made in fiscal years beginning after
December 15, 2005. Early adoption of this standard is permitted for
accounting changes and correction of errors made in fiscal years
beginning after June 1, 2005 . The Company has evaluated the impact
of the adoption of Statement 154 and does not believe the impact
will be significant to the Company's overall results of operations
or financial position.
In February of 2006, the FASB issued SFAS No. 155, "Accounting for
Certain Hybrid Financial Instruments", which is intended to simplify
the accounting and improve the financial reporting of certain hybrid
financial instruments (i.e., derivatives embedded in other financial
instruments). The statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities--a replacement of FASB Statement No.
125." SFAS No. 155 is effective for all financial instruments issued
or acquired after the beginning of an entity's first fiscal year
that begins after September 15, 2006.. The Company is currently
evaluating the impact SFAS No. 155 will have on its consolidated
financial statements, if any.
The implementation of the provisions of these pronouncements are not
expected to have a significant effect on the Company's financial statement
presentation.
F-14
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
g. 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. As of December 31, 2005 &
December 31, 2004, all equipment has been fully depreciated.
h. Provision for Income Taxes
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December
31, 2005 and 2004:
2005 2004
--------- ----------
Deferred tax assets
NOL Carryover $ 800,106 $ 581,990
Accrued expenses 2,772 15,665
Deferred tax liabilities: - -
Valuation allowance (802,878) (597,655)
--------- ----------
Net deferred tax asset $ - $ -
========= ==========
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate of 39% to
pretax income from continuing operations for the years ended
December 31, 2005 and 2004 due to the following:
2005 2004
------------ -----------
Book income $ (910,380) $ (886,984)
Stock for services/options expense 533,764 479,620
Bad debt 31,493 114,204
Loss on write down 32,553 107,810
Discount debentures 117,000 5,850
Other (9,653) 45
Valuation allowance 205,223 179,455
------------ -----------
$ - $ -
============ ===========
F-15
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Provision for Income Taxes (continued)
At December 31, 2005, the Company had net operating loss carry
forwards of approximately $4,608,727 that may be offset against
future taxable income from the year 2004 through 2024. No tax
benefit has been reported in the December 31, 2005 financial
statements since the potential tax benefit is offset by a valuation
allowance of the same amount.
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 the future.
i. Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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.
j. Advertising
The Company follows the policy of charging the costs of advertising
to expense as incurred. Advertising expense for the years ended
December 31, 2005 and 2004 was $545 and $2,527 respectively.
k. Revenue Recognition Policy
The operations of the Company's wholly owned subsidiary, HTRG &
Associates are still in the initial stages. Revenues are recognized
as they are earned with respect to its appraisal and real estate
evaluation services.
l. Principles of Consolidation
The consolidated financial statements contain the financial
statements for Syndication, Inc. and its wholly owned subsidiary,
HTRG & Associates, Inc. All material intercompany transactions were
eliminated upon consolidation.
m. Name Change
In the first Quarter of 2006 the Board of Directors approved and
directed the appropriate corporate offices to amend Article I of the
Certificate of Incorporation so that it is superceded and was
replaced as follows:
The Name of Corporation. The name of the Corporation is Syndication,
Inc.
n. Change of Authorized Shares
In the first Quarter of 2006 the Board of Directors approved and
directed that the appropriate corporate offices amend Article IV of
the Certificate of Incorporation so that it was superseded and was
replaced as follows: The total number of shares of stock which the
corporation shall have authority to issue is three billion twenty
million (3,020,000,000) of which three billion (3,000,000,000)
shares shall be Common Stock with a par value of $.0001 and twenty
million (20,000,000) shares shall be Preferred Stock with a par
value of $.0001. The Board of Directors is authorized, subject to
limitations prescribed by law and the provisions of this Article
Fourth, to provide by resolution or resolutions for the issuance of
the shares of Preferred Stock in one or more series, and by filing a
certificate pursuant to the applicable laws of Delaware to establish
from time to time the number of shares included in any such series,
and to fix the designation, powers, preferences and rights of the
shares of any such series and the qualifications, limitations or
restrictions thereof.
F-16
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31,
2005:
Office equipment $ 4,550
Accumulated depreciation (4,550)
-------------
Net property and equipment $ -
=============
Depreciation expense for the years ended December 31, 2005 and 2004
was $0 and $0, respectively.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
During the first three quarters of 2005, members of the board of
directors received compensation of 20,000 shares of the Company's
common stock. During the fourth quarter, board members received
23,000,000 shares of the Company's common stock for services
provided.
NOTE 4 - PREFERRED STOCK
The shareholders of the Company have authorized 20,000,000 shares of
preferred stock with a par value of $0.001. The terms of the
preferred stock are to be determined when issued by the board of
directors of the Company.
NOTE 5 - NOTES PAYABLE - RELATED PARTY
Notes payable to related parties consisted of the following at
December 31, 2005:
Note payable to a related party, due on demand,
plus interest at 10% per annum, unsecured. $ 368,937
Less: Current Portion (368,937)
------------
Long-Term Notes Payable to Related Parties $ -
============
The aggregate principal maturities of notes payable to related
parties are as follows:
Year Ended
December 31, Amount
------------ -----------------
2006 $ 368,937
2007 -
2008 -
2009 -
2010 and thereafter -
-----------------
Total $ 368,937
=================
Interest expense for the year ended December 31, 2005 and 2004 was
$43,941 and $40,163 respectively. The total interest payable on this
note is $84,104.
F-17
NOTE 6 - 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. The Company has historically incurred
significant losses which have resulted in an accumulated deficit of
$4,608,727 at December 31, 2005 which raises substantial doubt about
the Company's ability to continue as a going concern. At year end
close, the Company had cash resources of $255,684.00 and the recent
establishment of initial stage sources of revenue to cover its
operating costs and to allow it to continue as a going concern. The
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 7 - CONVERTIBLE DEBENTURE
On December 30, 2005, Syndication Net.com, Inc. (the "Company"), in
order to obtain alternative funding for its ongoing operations of
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. To that end, on December
30th 2005, 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 company issued $300,000 of the
$1,150,000 debenture.
The debentures bear interest at 12 percent, mature three years from
the date of issuance, and are convertible into the Company's common
stock, 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.
In accordance with EITF-00-19 and SFAS 150, and because there is no
explicit limit on the number of shares that are to be delivered upon
exercise of the conversion feature, the Company is not able to
assert that it will have sufficient authorized and unissued shares
to settle the conversion option. As a result, the conversion feature
will be accounted for as a derivative liability, with the fair value
recorded in earnings each period. On February 6, 2006 the company
issued an additional $700,000 of the $1,150,000 debenture and
expects to issue the final $150,000 of the $1,150,000 debenture on
the date that the SEC approves the pending registration of said
debenture.
NOTE 8 - COMMON STOCK
On February 16, 2004, the Company issued 50,000 share of common
stock for $50,000 cash. This stock issuance is part of the 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.
During the year ended December 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.
F-18
NOTE 8 - COMMON STOCK (Continued)
During the year ended December 31, 2004, the Company issued
2,235,000 shares of common stock for services valued between $0.35
and $0.55 per share.
The Company issued 960,000 shares of common stock valued between
$0.40 and $0.80 per share for deferred legal fees during 2004
On June 15, 2004, the Company issued 50,000 shares of common stock
for defaulting on a note payable at $0.35 per share.
During June 2005, the Company issued 41,667 shares of common stock
at $0.24 per share per an irrevocable agreement with its transfer
agent.
During the year ended December 31, 2005, the Company issued
41,120,417 shares of common stock for payments on notes, loans, and
accrued interest. These shares were valued between $0.004 and $0.021
per share.
The Company issued 38,500,000 shares of common stock valued at
$0.011 per share for services rendered by its board of directors.
NOTE 9 - NOTE PAYABLE
At December 31, 2005, the Company had five notes payable totaling
$301,761. These notes are unsecured and due on demand. Interest is
accrued at 10% per annum. Interest expense for the years ended
December 31, 2005 & 2004 was $81,686 and $37,907 respectively.
NOTE 10 - INVESTMENT
During the twelve months ended December 31, 2005, the Company
purchased 723 Class "A" Preferred stock in Tristate Metro
Territories, LLC (TSMT). The valuation of this investment was
$83,468. This investment is valued at the lower of cost or market
and represents approximately 3% of TSMT. A major shareholder of the
Company is also a member of TSMT. As of December 31, 2005 the
Company has been unable to establish a market value for its
investment, and thus has written its value to zero and recognized a
loss of $83,468.
F-19
NOTE 11 - NOTE RECEIVABLE - RELATED PARTY
During the year end December 31, 2005, the Company loaned $80,752 to
a related company. The note is unsecured and due on demand. The
Company now believes that recovering the amount of the note is
unlikely and has allowed for the note in full. The Company has
recognized bad debt of $80,752.
NOTE 12 - WARRANTS & OPTIONS
The following table summarizes option and warrant activity during
the years ended December 31, 2004 and 2005.
Options
and Warrants Options or Warrants
Outstanding Price Per Share
Outstanding at January 1, 2005 --
Options granted --
Warrants issued 120,000,000 $ 0.008 - 0.10
Expired -- --
Forfeited -- --
Exercised -- --
-----------
PART II Outstanding at December, 31, 2005 120,000,000
-----------------------------------------------===========
The following table summarizes information about stock options and
warrants outstanding at December 31, 2005.
Outstanding Exercisable
----------------------------------------------------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (years) Price Exercisable Price
-------------------------------------------------------------------------------
$ 0.008 36,000,000 5.00 $0.008 36,000,000 $ 0.008
0.01 36,000,000 5.00 0.01 36,000,000 0.01
0.02 21,000,000 5.00 0.02 21,000,000 0.02
0.05 16,000,000 5.00 0.05 16,000,000 0.05
0.10 11,000,000 5.00 0.10 11,000,000 0.10
- --------------------------------------------------------------------------------
$0.008-0.10 120,000,000 5.00 $0.574 120,000,000 $ 0.574
- --------------------------------------------------------------------------------
Reference is made to the Consolidated Financial Statements of the
Company, beginning with the index thereto on page F-1
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
F-20
Up to 965,588,235
Shares of
Common Stock
of
SYNDICATION, INC.
PROSPECTUS
The date of this prospectus is __________, 2006
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Our Articles of Incorporation, as amended and restated, provide to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, that our directors or officers shall not be personally liable
to us or our shareholders for damages for breach of such director's or officer's
fiduciary duty. The effect of this provision of our Articles of Incorporation,
as amended and restated, is to eliminate our rights and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
damages against a director or officer for breach of the fiduciary duty of care
as a director or officer (including breaches resulting from negligent or grossly
negligent behavior), except under certain situations defined by statute. We
believe that the indemnification provisions in our Articles of Incorporation, as
amended, are necessary to attract and retain qualified persons as directors and
officers.
Our By Laws also provide that the Board of Directors may also authorize
the company to indemnify our employees or agents, and to advance the reasonable
expenses of such persons, to the same extent, following the same determinations
and upon the same conditions as are required for the indemnification of and
advancement of expenses to our directors and officers. As of the date of this
Registration Statement, the Board of Directors has not extended indemnification
rights to persons other than directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of all estimated expenses,
all of which we will pay, in connection with the issuance and distribution of
the securities being registered:
Nature of Expense Amount
----------
SEC Registration fee $ 826.54
Accounting fees and expenses 10,000.00*
Legal fees and expenses 40,000.00*
----------
TOTAL $ 50,826.54*
==========
* Estimated
Item 26. Recent Sales of Unregistered Securities.
The following information is given with regard to unregistered securities
sold by us during the past three years, including the dates and amounts of
securities sold, the persons to whom we sold the securities, the consideration
received in connection with such sales and, if the securities were issued or
sold other than for cash, the description of the transaction and the type and
amount of consideration received.
In October 2002, we issued 2,000 shares of common stock to each of our
officers and directors for an aggregate issuance of 12,000 shares. The shares
were issued as follows: 2,000 to Vance Hartke, our former president; 2,000 to
Wayne Hartke, a former director; 2,000 to Mark Solomon as a director; 2,000 to
Howard Siegel as a director; 2,000 to Cynthia White, our former CFO. We also
issued 1,000 shares of common stock to Wayne Hartke for legal services rendered
to us at a value of $1.00 per share and 1,000 shares to Mr. Vance Hartke as
consideration for office rental fees value at $1.00 per share.
On September 4, 2003, we issued 88,000 shares to Wayne Hartke, 18,000
shares of common stock to Cynthia White, 18,000 shares of common stock to Mark
Solomon, 18,000 shares of common stock to Mark Griffith, 18,000 to Howard Siegel
and 20,000 shares of common stock to Cynthia White. Such shares were valued at
$1.00 and were issued for board services rendered to us. We issued an aggregate
of 70,000 shares of common stock for cash at $.10 per share to Mark Solomon and
Howard Segal.
II-1
During the fourth quarter of the year ended December 31, 2003, we issued
an aggregate of 1,172,338 shares of our common stock to nine individuals,
including our officers and directors, as consideration for services rendered to
us. The shares were issued as follows; 571,338 shares of our common stock was
issued to Brian Sorrentino for consulting services as part of the terms related
to the Consulting Agreement between Kemper Pressure Treated Forest Products Inc.
and Source Management Services and valued at $1.00; we issued 300,000 shares of
common stock to the Research Works, valued at $1.00, for research services
rendered to us. The services rendered by Research Works were related to an
analysis of the market prospects related to the potential development of
Tri-State Metro Territories LLC and as a prerequisite leading to the acquisition
of that company; we issued an aggregate of 130,000 shares of common stock,
valued at $1.00, to Shai Stern and Seth Farbman for legal services and EDGAR
services rendered to us; we issued 91,000 shares to Wayne Hartke, our former
Director, 20,000 shares to Cynthia White, our former CFO; 20,000 to Mark Solomon
as Director; 20,000 to Mark Griffith, or former Secretary; and 20,000 to Howard
Seigal as director.
On February 16, 2004, we issued 50,000 shares of common stock and warrants
to purchase three shares of common stock for $50,000 cash. This stock issuance
was part of a 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, we issued 30,000 shares to Seth Farbman for deferred
legal fees at $0.80 per share.
During the quarter ended March 31, 2004, we 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. The shares
were issued to Adoribel Holdings (160,000), Jack Feldman (120,000), George
Kuipers (15,000) and Dale Hill (60,000).
On May 18, 2004, we issued 600,000 shares of common stock for deferred
legal fees at $0.40 per share.
In June 2004, we issued 600,000 shares of common stock to Seth Farbman in
consideration for consulting and edgarizing services for a period of 12 months.
In June 2004, we issued 50,000 shares of common stock to Seth Farbman, a
note holder, in consideration for the extension of the due date of such note.
On June 1, 2004, we issued 1,200,000 shares of common stock for consulting
services at $0.35 per share.
On June 15, 2004, we issued 50,000 shares of common stock for defaulting
on a note payable at $0.35 per share.
To obtain funding for our ongoing operations, we entered into a Securities
Purchase Agreement with Cornell Capital Partners on June 15, 2004 for the sale
of $200,000 in convertible debentures of which $50,000 was received by us on
June 15, 2004 and $150,000 was received by us on July 9, 2004. The debentures
issued pursuant to the June 2004 Securities Purchase Agreement bear interest at
5%, mature three years from the date of issuance, and are convertible into our
common stock, at the holder's option, at the lower of the following:
o $.42; or
o eighty percent(80%) of the lowest volume weighted average price of the
common stock for the five (5) trading days immediately preceding the
conversion date.
On June 15, 2004, we entered into a Standby Equity Distribution Agreement
with one investor. Pursuant to the Standby Equity Distribution Agreement, we
may, at our discretion, periodically sell to the investor shares of common stock
for a total purchase price of up to $10,000,000. For each share of common stock
purchased under the Standby Equity Distribution Agreement, the investor will pay
98% of the lowest volume weighted average price of the common stock during the
five consecutive trading days immediately following the notice date. The
investor, Cornell Capital Partners, L.P. is a private limited partnership whose
business operations are conducted through its general partner, Yorkville
Advisors, LLC. Cornell Capital Partners, L.P. will retain 5% of each advance
under the Standby Equity Distribution Agreement. Cornell Capital Partners is
restricted from owing in excess of 9.9% of our outstanding common stock. In the
event that Cornell Capital Partners is unable to sell shares of common stock
that it acquires under the Standby Equity Distribution Agreement and its
ownership equals 9.9% of the our outstanding, then we will not be able to draw
down money under the Standby Distribution Agreement. In June 2004, as required
by the Standby Equity Distribution Agreement we issued Cornell Capital Partners,
L.P. 1,160,000 shares of common stock. In addition, we engaged Newbridge
Securities Corporation, a registered broker-dealer, to advise us in connection
with the Standby Equity Distribution Agreement. For its services, Newbridge
Securities Corporation received 40,000 shares of our common stock.
II-2
During the six months ended June 30, 2004, we 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.
During the quarter ended March 31, 2005, we borrowed $250,000 from Cornell
Capital at an interest rate of 12%. The entire amount of principle and interest
are due in full in September 2005.
During the quarter ended June 30, 2005, we borrowed an amount of $250,000
from Cornell Capital at an interest rate of 12%. The entire amount of principle
and interest are due in full in January 2006.
On December 30, 2005, in order to obtain alternative funding for our
ongoing operations, we 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. The Debentures are convertible at a
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. 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.
Directors receive an annual issuance of 80,000 shares of our common stock
for serving as directors and are repaid for their expenses incurred for serving
as directors. On Decemeber 30, 2005, for services rendered as directors and
officers of our company, we issued 7,000,000 shares to Brian Sorrentino,
3,000,000 shares to Mrutyunjaya Chittavajhula, 10,000,000 shares to Mark Solomon
and 3,000,000 shares to Mark Solomon.
Unless otherwise specified above, all of the above offerings and sales
were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended. No advertising or general solicitation was
employed in offering the securities. The offerings and sales were made to a
limited number of persons, all of whom were accredited investors, business
associates of ours or our executive officers, and transfer was restricted by us
in accordance with the requirements of the Securities Act of 1933. In addition
to representations by the above-referenced persons, we have made independent
determinations that all of the above-referenced persons were accredited or
sophisticated investors, and that they were capable of analyzing the merits and
risks of their investment, and that they understood the speculative nature of
their investment. Furthermore, all of the above-referenced persons were provided
with access to our Securities and Exchange Commission filings.
Item 27. Exhibits.
The following exhibits are included as part of this Form SB-2.
Exhibit Number Description
- ---------------- ------------------------------------------------------------------------------------------------
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 (file no. 333-55534) 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
3.4 Restated and Amended Bylaws of the Company.
4.1 Agreement and Plan of Reorganization among Generation Acquisition Corporation, Life2K, Inc.,
and the shareholders of Life2K, Inc. filed on Form 8-K (file no. 000-29701) 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 (file no. 000-29701) with the Commission on November 6, 2000 and
incorporated herein by reference.
5.1 Opinion and Consent of Sichenzia Ross Friedman Ference LLP (3).
10.1 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 (file no. 333-55534) filed on February 13, 2001 and incorporated herein by
reference.
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Exhibit Number Description
- ---------------- ------------------------------------------------------------------------------------------------
10.2 Securities Purchase Agreement, dated June 15, 2004, by and among Syndication, Inc. and
Cornell Capital Partners, L.P. (1)
10.3 Secured Convertible Debenture with Cornell Capital Partners, L.P. (1)
10.4 Investor Registration Rights Agreement, dated June 15, 2004, by and among Syndication Net.com,
Inc. and Cornell Capital Partners, L.P. in connection with the Securities Purchase Agreement.
(1)
10.5 Escrow Agreement, dated June 15, 2004, by and between Syndication Net.com, Inc. and Cornell
Capital Partners, L.P. in connection with the Securities Purchase Agreement. (1)
10.6 Security Agreement, dated June 15, 2004, entered into between Syndication Net.com, Inc. and
Cornell Capital Partners, L.P. in connection with the Securities Purchase Agreement. (1)
10.7 Standby Equity Distribution Agreement, dated June 15, 2004, between Cornell Capital Partners,
L.P. and Syndication, Inc. (1)
10.8 Registration Rights Agreement, dated June 15, 2004, by and between Syndication Net.com, Inc.
and Cornell Capital Partners, L.P. in connection with the Standby Equity Distribution
Agreement. (1)
10.9 Escrow Agreement, dated June 15, 2004, by and between Syndication Net.com, Inc. and Cornell
Capital Partners, L.P. in connection with the Standby Equity Distribution Agreement. (1)
10.10 Placement Agent Agreement, dated June 15, 2004, by and among Syndication Net.com, Inc.,
Newbridge Securities Corporation and Cornell Capital Partners, L.P. (1)
10.11 Amendment No. 1 to the Standby Equity Distribution Agreement dated August 25, 2004 by and
between Syndication, Inc. and Cornell Capital Partners, L.P. (1)
10.12 Secured Convertible Debenture with Cornell Capital Partners, L.P. dated July 9, 2004. (1)
10.13 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 (file no. 333-55534) filed on October 5, 2001 and incorporated herein by reference.
10.14 Consulting Agreement between Syndication Net.com, Inc. and HTRG Consulting, Inc. previously
filed with the Commission as an exhibit to a registration statement on Form SB2/A (file no.
333-55534) and incorporated by reference.
10.15 Asset Purchase Agreement between Kemper Pressure Treated Forest Products, Inc. and Electric
Mills Wood Preserving LLC, previously filed with the Commission as an exhibit to a
registration statement on Form SB2/A (file no. 333-55534) and incorporated by reference.
10.16 Assignment of Lease between Kemper Pressure Treated Forest Products, Inc. and Electric Mills
Wood Preserving LLC, previously filed with the Commission as an exhibit to a registration
statement on Form SB2/A (file no. 333-55534).
10.17 Securities Purchase Agreement dated December 30, 2005 by and among the Company and Cornell
Capital Partners, L.P. (2)
10.18 Form of Secured Convertible Debenture dated December 30, 2005. (2)
10.19 Form of Stock Purchase Warrant dated December 30, 2005. (2)
10.20 Investor Registration Rights Agreement dated December 30, 2005 by and among the Company and
Cornell Capital Partners, L.P. (2)
10.21 Amended and Restated Security Agreement dated December 30, 2005 by and among the Company and
Cornell Capital Partners, L.P. (2)
10.22 Escrow Agreement dated December 30, 2005 by and among the Company and Cornell Capital
Partners, L.P. (2)
10.23 Termination Agreement dated December 30, 2005 by and among the Company and Cornell Capital
Partners, L.P. (2)
10.24 Amended and Restated Securities Purchase Agreement dated as of February 3, 2006 by and among
the Company and Cornell Capital Partners, L.P. (3).
10.25 Amended and Restated Investor Registration Rights Agreement dated as of February 3, 2006 by and
among the Company and Cornell Capital Partners, L.P. (3).
10.26 Second Amended and Restated Security Agreement dated as of February 3, 2006 by and among the
Company and Cornell Capital Partners, L.P. (3).
10.27 Termination Agreement dated as of February 3, 2006 by and among the Company and Cornell Capital
Partners, L.P. (3).
10.28 Secured Convertible Debenture with Cornell Capital Partners, L.P. dated February 3, 2006 (3)
14.1 Code of Ethics and Business Conduct for Officers, Directors and Employees of the Company. (1)
23.1 Consent of HJ & Associates, LLC
23.2 Consent of Sichenzia Ross Friedman Ference LLP (incorporated in Exhibit 5.1).
(1) Filed as an exhibit to the Form SB-2 Registration Statement filed with the
Securities and Exchange Commission on July 7, 2004.
(2) Filed as an exhibit to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 5, 2006.
(3) Filed as an exhibit to the Form SB-2 Regisration Statement filed with the
Securities and Exchange Commission on February 3, 2006.
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Item 28. Undertakings.
The undersigned registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and Notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement, and
(iii) Include any additional or changed material information on the plan
of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned small business issuer under
the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned undertakes that in a primary offering of
securities of the undersigned small business issuer pursuant to this
registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
undersigned small business issuer will be a seller to the purchaser and
will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small
business issuer relating to the offering required to be filed
pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned small business issuer or used or
referred to by the undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned small
business issuer or its securities provided by or on behalf of the
undersigned small business issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities Act and will be governed by the final adjudication
of such issue.
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Each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in Washington, D.C. on May 11,
2006.
SYNDICATION, INC.
By: /s/ Brian Sorrentino
----------------------------------------
Brian Sorrentino
Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ Mrutyunjaya S. Chittavajhula
----------------------------------------
Mrutyunjaya S. Chittavajhula
Chief Financial Officer (Principal
Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Brian Sorrentino Chief Executive Officer and Director May 11, 2006
- -----------------------
Brian Sorrentino (Principal Executive Officer)
/s/ Mark Solomon President and Director May 11, 2006
- -----------------------
Mark Solomon
/s/ Howard B. Siegel Director May 11, 2006
- -----------------------
Howard B. Siegel
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