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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the three month period ending: March 31, 1997
PROMAX COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
1200 - 1185 West Georgia Street, Vancouver, British Columbia, V6E 4E6 Canada
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(Address of principal executive office)
Commission file number: 0-25820
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b).
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PROMAX COMMUNICATIONS INC.
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
BALANCE SHEET
AS AT MARCH 31, 1997
1997 1996
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 267,868 305,273
Accounts receivable 134,308 3,421
----------- -----------
402,176 308,694
CAPITAL EQUIPMENT -- 527
INVESTMENTS
Mortgages and loans -- 642,778
Investment in ArgenTel 273,580 --
----------- -----------
273,580 642,778
----------- -----------
675,756 951,999
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 88,109 4,400
Due to related parties 48,938 9,806
----------- -----------
137,047 14,206
ADVANCES RECEIVED PENDING SHARE SUBSCRIPTION 348,979 --
SHAREHOLDERS' EQUITY
Share capital 510,731 842,272
Deficit (321,001) 95,521
----------- -----------
189,730 937,793
----------- -----------
675,756 951,999
=========== ===========
All dollar amounts are shown in Canadian Dollars
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PROMAX COMMUNICATIONS INC.
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THIRD QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
1997 1996
Three Nine Three Nine
Months Months Months Months
REVENUES:
Investment Income -- 32,222 -- --
Interest Income 307 307 29,741 113,751
----------- ----------- ----------- -----------
307 32,529 29,741 113,751
----------- ----------- ----------- -----------
EXPENSES:
Amortization -- -- -- --
Bank charges and interest 457 486 47 223
Consulting 64,000 64,000 -- --
Management fees 14,764 34,764 -- --
Office and rent 7,446 20,612 5 6,008
Professional fees 73,563 107,950 4,400 11,999
Travel and promotion 67,569 67,569 -- --
----------- ----------- ----------- -----------
227,799 295,381 4,452 18,230
OTHER:
Gain on foreign exchange (2,635) (2,635) -- --
----------- ----------- ----------- -----------
(2,635) (2,635) -- --
----------- ----------- ----------- -----------
INCOME (LOSS) FOR THE PERIOD (224,857) (260,217) 25,289 95,521
DEFICIT, BEGINNING OF PERIOD (96,144) (60,784) 75,009 54,874
DIVIDENDS PAID IN PERIOD -- -- -- (49,467)
----------- ----------- ----------- -----------
DEFICIT, END OF PERIOD (321,001) (321,001) 100,298 100,928
=========== =========== =========== ===========
NET EARNINGS PER CLASS "A" SHARE (0.240) (0.379) 0.022 0.083
NET EARNINGS PER COMMON SHARE (0.067) (0.084) 0.005 0.020
(CLASSES "A" AND "B" COMBINED)
WEIGHTED AVERAGE NUMBER OF CLASS "A" 935,340 686,326 1,148,111 1,148,111
SHARES OUTSTANDING
WEIGHTED AVERAGE NUMBER OF ALL 3,335,540 3,086,526 4,696,422 4,696,422
COMMON SHARES OUTSTANDING
All dollar amounts are shown in Canadian Dollars
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PROMAX COMMUNICATIONS INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE THIRD QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
1997 1996 1995
OPERATING ACTIVITIES $ $ $
Loss for the period (260,217) 95,521 74,142
Write-off of fixed assets 368 -- --
Net change in non-cash working capital items (54,651) 7,734 (2,885)
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(314,500) 103,255 71,257
INVESTING ACTIVITIES
Mortgages and loans 297,558 126,600 (316,867)
Investment in ArgenTel (273,580) -- --
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23,978 126,600 (316,867)
FINANCING ACTIVITIES
Shares redeemed for cash (659,878) 51,340 --
Shares issued for cash 328,123 -- 280,736
Advances received pending share subscription 348,979 -- --
Dividends paid -- (49,467) (38,903)
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17,223 1,873 241,833
INCREASE IN CASH DURING THE PERIOD (273,298) 231,728 (3,777)
CASH - BEGINNING OF PERIOD 541,166 73,545 38,477
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CASH - END OF PERIOD 267,868 305,273 34,700
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All dollar amounts are shown in Canadian Dollars
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PROMAX COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The consolidated balance sheet as of March 31, 1997 and 1996 and the
consolidated statements of operations and cash flows for the three months ended
March 31, 1997 and 1996 have been prepared by the Company without audit. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the financial results of the Company
have been included in the above statements and the disclosures are adequate to
make the information presented therein not misleading. All dollar amounts are
shown in Canadian dollars. As of May 12, 1997 the rate of conversion was 1.3849
Canadian dollars equaled 1 U.S. dollar.
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash equivalents:
Cash equivalents are represented by short-term investments issued by major
financial institutions having original terms to maturity of three months or
less when acquired.
(b) Financial Instruments:
Financial instruments include cash and cash equivalents, accounts receivable
and accounts payable and accrued liabilities, the estimated fair values of
which does not differ materially from their carrying value.
(c) Investments:
Investments are recorded at the lower of cost and net realizable value.
NOTE 2 - SHARE CAPITAL
During the quarter, the company completed a private placement of 2,000,000
Class "A" common shares at U.S. $.12 per share for gross proceeds of Cdn.
$328,123.
NOTE 3 - SHARE CONSOLIDATION
The Board of Directors authorized a share consolidation applicable to both
Class "A" and Class "B" common shares on a 1 for 5 basis, to reduce the
capitalization as follows:
Number
outstanding Value
----------- -----
Class "A"
Before consolidation 1,343,367 181,408
After consolidation 268,673 181,408
Private placement (2,000,000) 2,268,673 509,531
Class "B"
Before consolidation 12,001,000 1,200
After Consolidation 2,400,200 1,200
Note: Class "B" shares are convertible into Class "A" share on a 5 for 1
basis.
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NOTE 4 - SUBSEQUENT EVENTS
At March 31, 1997, the company has received Cdn. $348,979 towards a
second private placement of 1,300,000 class "A" common shares at U.S. $.50
providing gross proceeds of Cdn. $899,860.
NOTE 5- LOSS PER SHARE
Loss per Class "A" share is calculated based on the weighted average number
of shares outstanding after giving retroactive effect to the 5 for 1 stock
consolidation. Loss per share on a fully diluted basis is calculated on the
average number of shares outstanding after giving effect to the 5 for 1
stock consolidation for both the Class "A" and Class "B" shares.
NOTE 6
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 6-K and do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements additional required information
follows.
INFORMATION REQUIRED TO BE FURNISHED
CHANGE IN BUSINESS
The Company has written no new mortgages since September, 1995 and has
been gradually liquidating its portfolio. For some months Management explored
the possibility of entering a new field of business and, on January 22, 1997, an
agreement among certain current and former shareholders was concluded which
Management believes will lead to the acquisition of a paging company with
licenses to operate a digital paging system in Latin America.
CHANGES IN MANAGEMENT CONTROL
On February 5, 1997 three directors resigned and three new directors were
appointed to the vacancies. The directors who resigned are Silvana Busa, Gerrold
Jackson, and Dennis Johnston. The newly appointed directors are Mike Devji,
Ashif Motan, and Robert H. Miller. Mr. Devji was also elected President of the
Company replacing Michael Amos in that capacity. Two directors from the "old
board" remain on the "new board". They are Michael Amos and Daniel Masters. On
February 8, 1997, Mr. Amos resigned from the board of directors and Mr. Steven
Sinn was appointed to the board and also as Chairman and Chief Executive Officer
of the Company.
ACQUISITIONS OR DISPOSITIONS OF ASSETS
Mortgages have been gradually liquidated as they came due as noted
below under "Management Discussion and Analysis." At the end of the period two
mortgages remained on the books. One of these has since paid out.
During the quarter, a number of transactions occurred. These are
discussed in the Management Discussion and Analysis, which follows.
BANKRUPTCY OR RECEIVERSHIP
Not applicable.
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS
Not applicable.
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MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS
OPERATIONS
As previously disclosed, the Company has initiated a business strategy
of developing paging licenses in Latin America. As a consequence, the Company
has engaged new directors, hired management which is experienced in the paging
industry and changed its name to Promax Communications, Inc.
The Company has advanced $200,000 to ArgenTel Corp. a private Delaware
corporation which, through its wholly owned Argentinean subsidiary, Luis G.
Ledesma Communicacciones SRL, holds an Argentinean government issued national
paging license to service the national market including 10 major cities which
cover approximately 20.5 million people or 64% of the Argentine population. The
$200,000 loan is convertible, at the Company's option, into 20% of the capital
stock of ArgenTel Corp. Negotiations are underway which may lead to a greater
equity interest being acquired by the Company.
The Company has also executed a Letter of Intent to acquire two paging
licenses in Bolivia for consideration of US $ 250,000 and 350,000 Class "A"
common shares. The Population covered by these licenses is approximately 7.4
million. The Company has made a $20,000 downpayment against the purchase.
On May 8, 1997, the Company announced that it had completed the
acquisition of 78% of the equity of Auto Link Telecommunicacao S/C Ltda. ("Auto
Link"), a Brazilian company which holds permits from the Ministry of
Communications, in Brazil to operate paging services in Sao Paulo and the 32
surrounding municipalities, The geographic area covered by the permits includes
a population of approximately 19 million inhabitants. The Company intends to
seek government approval to enable it to purchase the balance of Auto Link. The
purchase price consists of $2,000,000 in cash which has already been paid, and
750,000 shares of Class "A" common shares, of which 250,000 have been issued and
the balance of 500,000 are being held in escrow pending purchase of the balance
of the company.
Auto Link has executed a Letter of Intent to acquire an operating paging
license in Amparo and Campinas on the same frequency that Auto Link is licensed
for in Sao Paulo. These markets encompass a population of 2 million inhabitants.
LIQUIDITY AND CAPITAL REQUIREMENTS
As noted above, the company presently has completed two private placements
raising approximately Cdn. $1,232,116. These funds have supported the
commitments made to date but in order for the paging system to be constructed
and to meet planned growth opportunities, management estimates that a further
U.S. $4-8 million will be required. Arrangements are underway to raise these
funds by private placement.
LEGAL PROCEEDINGS
None other than routine legal proceedings related to a mortgage
foreclosure.
CHANGES IN SECURITIES OR IN THE SECURITY FOR REGISTERED SECURITIES
None.
DEFAULTS UPON SENIOR SECURITIES
None.
MATERIAL INCREASES OR DECREASES IN THE AMOUNT OUTSTANDING OF SECURITIES OR DEBT
See NOTES 2 and 3 above.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
TRANSACTIONS WITH DIRECTORS, OFFICERS, OR PRINCIPAL SECURITY HOLDERS
Pursuant to the private placement completed in the current quarter
(Note 2) class "A" common shares were issued as follows:
NUMBER OF
DIRECTOR SHARES
- -------- ------
Minaz Devji 700,000
Ashif Motan 800,000
Robert Miller 300,000
Steven Sinn 200,000
OPTIONS OR OTHER COMPENSATION GRANTED TO DIRECTORS OR OFFICERS
The Company's officers received compensation of approximately $57,844
during the period and additional payments of approximately $31,802 which was
reimbursement for expenses incurred.
OTHER MATERIAL INFORMATION
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROMAX COMMUNICATIONS, INC.
(Registrant)
Date: May 13, 1997 BY: "Minaz Devji"
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Minaz Devji
Corporate Secretary and Director