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SyCoNet releases SEC filing - seperates into two companies

posted on 2001-05-08 00:53 EDT
Once one of the largest distributors of Anime in North America SyCoNet is now a "shell" corporation, but retail subsidiary lives on.

A Brief History of SyCoNet

Originally a comic book distribution company, SyCoNet grew into the anime distribution industry when fans of comics began asking for anime videos. Sy Picon himself invested over a thousand hours watching anime to ensure fans could order quality anime from Anime Depot, the online anime store run by SyCoNet.

One of SyCoNet's most ambitious projects was the plan to create an anime music division titled "Otaku Music USA". Unfortunately, nothing ever came of this attempt to bring thousands of Japanese pop and anime CDs to America.

A heart attack at Anime Expo 2000 might have been the first sign of doom for the company. Sy, considered by some to be the driving force behind SyCoNet, had severe heart problems during Anime Expo 2000 and resigned immediately because of health complications. This unexpected and unfortunate occurrence caught many in the industry off-guard, and drastically affected the outlook of SyCoNet and Anime Depot.

At that time, William Spears was appointed CEO of the company, but lagging sales and the sudden change of power dealt a cruel hand to SyCoNet. Sales plummeted rapidly after Anime Expo, crippling the company's cash flow and eventually exhausting all of its funds. Mr. Spears himself had not received any form of remuneration for many months.

Bankruptcy?

According to SyCoNet.Com, Inc.'s recent Sec filing which has just been made public, SyCoNet.com no longer exists as anything more than a Shell Corporation. After several periods of sustained financial loss, SyCoNet has suspended all operations, dismissed its employees and ceased to exist as an Anime distributor.

On paper, SyCoNet is currently looking to “acquire” or “merge” with an existing company that desires to establish a public trading market for its shares. What this really means is that SyCoNet is looking to sell its legal assets to another company. SyCoNet's legal assets include its status as a publicly-traded company, the filing refers to this as the company's most valuable asset, and their retained deficit which amounts to US$7,025,461.

According to the filing “There are numerous reasons why an existing privately-held company would seek to become a public company through a merger or acquisition rather than doing its own public offering. Such reasons include avoiding the time delays involved in a public offering, retaining a larger share of voting control of the publicly-held company, reducing the cost factors incurred in becoming a public company and avoiding any dilution requirements set forth under various states' blue sky laws."

The retained deficit is a valuable asset because any company that “merges” with or is “acquired” by SyCoNet would inherit the retained deficit and not have to pay taxes on any profit it earns up to that amount, subject to certain limitations.

SyCoNet's 31,168,848 outstanding shares of common stock, which have traded for as much as $2.91 is now worth $.0001 (one hundredth of a cent) and typically trades for $.01 (one cent).

SyCoNet's entire Anime inventory has been transferred to CEO, William Spears, in lieu of “any and all claims he may have against us [SyCoNet], including, but not limited to, back salary.” Furthermore the filing states that SyCoNet is not limiting their search for a company to “acquire” or “merge” with to any specific industry or geographic area. In short, unless some very odd twist of fate brings this company back, the Anime distributor known as SyCoNet is no longer and never again will be a part of the North American Anime industry.

The SEC filing makes no reference to Anime Depot, SyCoNet's online Anime store. The Anime Depot website remains online and would appear to be in operation.

View the SEC filing online here.

...Not the End?

So, is this the end for Anime Depot? Perhaps not.. As stated in the SEC Filing, in exchange for back-salary, Mr. Spears received the entire Anime inventory of SyCoNet, while public investors received the remaining portions of the company.

AnimeDepot.com will continue on under the guidance of CEO William Spears. Due to financial pressures as reported in the SEC Filing, Anime Depot ceased shipment of orders 3-4 weeks ago. When Anime News Network contacted Mr. Spears, he said that Anime Depot has been contacting clients with outstanding orders to confirm whether or not the orders should still be sent. He also said that Anime Depot will continue to operate, separate of SyCoNet. Mr. Spears also told Anime News Network, "We are very excited. There is still a niche to be filled in the anime industry, and we are very confident that we can fill that niche."

Anyone who has questions concerning old, uncompleted transactions with Anime Depot should call (703)281-9607 or visit the Anime Depot website.

Editor's Note: We have made our best attempt to reliably and properly interpret the SEC filing, however we make no guarantees as to the absolute correctness of our interpretation. Please be aware of this if you chose to relay or act upon this information.


Other links of interest:
Anime News Network Interviews SyCoNet.
Anime News Network - SyCoNet.com Announces the Resignation of co-CEO.
Quiken.com Stock Quotes with links to recent SyCoNet news.
Yahoo.com Stock Chart for past 6 months.

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