SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14F-1
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
ORGANIK TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in its Corporate Charger
0-18935
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Commission File Number
Washington 81-0440517
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
35 Austin Lane, Alamo, California 94507
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(Address of Principal Executive Offices) (Zip Code)
(925) 837-5262
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(Issuer's Telephone Number)
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ORGANIK TECHNOLOGIES, INC.
35 Austin Lane
Alamo, CA 94507
(925) 837-5262
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INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
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GENERAL
This Information Statement is being mailed on or about January 18, 2002, to the
holders of shares of Common Stock, par value $0.001 (the "Common Stock") of
Organik Technologies, Inc., a Washington corporation ("Organik") or the
"Company"), as of January 1, 2002. You are receiving this Information Statement
in connection with the appointment of persons designated by the current Board of
Directors of the Company to fill a majority of the seats on the Company's Board
of Directors (the "Board").
On November 16, 2001, the Company entered into a Plan and Agreement of Exchange
with Telemax Global Communications, Inc., which when closed results in a
restructuring of the Company's management, Board of Directors, and ownership, a
20:1 reverse stock split and a change in name.
SUMMARY OF TERMS
Organik Technologies, Inc., (the "Company") intends to issue 9,000,000 shares of
its common stock in exchange for all of the outstanding shares of common stock
of Telemax Global Communications, Inc., ("Telemax") (the "Exchange
Transaction"). As a result of this Exchange Transaction, Telemax will become a
wholly-owned subsidiary of the Company and the shareholders of Telemax will own
approximately 91% of the Company's then outstanding common stock. See Section
"Description of Exchange Transaction". The Company also intends to elect three
new members to the Board of Directors, to amend its Articles of Incorporation to
authorize a 20:1 reverse stock split of its Common Stock and to change its name
to "Telemax Global Communications, Inc." See the Section "Amendments of Articles
of Incorporation."
The purpose of this transaction is to have the Company acquire and assume the
business of Telemax.
Although approval of the Exchange Transaction and adoption of the Amendments to
the Company's Articles of Incorporation require only Board of Directors
approval, the Company has received the approval of shareholders owning a
majority of the issued and outstanding shares. The Company's Board believes that
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these actions are in the best interests of the Company and its shareholders, and
they have unanimously approved the Exchange Transaction and Amendments to the
Company's Articles of Incorporation. This action by the Board of Directors is
sufficient to satisfy the requirements necessary to approve the Exchange
Transaction and the Amendments to the Articles of Incorporation without the
approval of any other shareholder. Therefore, you are not required to vote and
your vote is not being sought.
The Plan and Agreement of Exchange was signed by the parties on November 16,
2001. The Exchange Transaction is expected to be completed on or about January
30, 2002.
Upon completion of the Exchange Transaction, the Company's business will be the
business currently being conducted by Telemax. See the Section "Telemax."
The Company's shareholders will not receive any cash, stock or other property in
connection with, or as a result of, the Exchange Transaction except that A.J.
Salomon will receive a facilitator's fee of 250,000 restricted shares of the
Company's Common Stock upon the close of the Exchange Transaction. However, some
of the Company's controlling shareholders are also shareholders of Telemax and
therefore will receive additional benefits from the Exchange Transaction. See
"Certain Transactions" below.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY.
YOU ARE NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
General
This Information Statement is being furnished to all of the Common Stock
shareholders of Organik Technologies, Inc., a Washington corporation, in
connection with the consummation of that certain Plan and Agreement of
Reorganization dated November 16, 2001, (the "Exchange Agreement") with Telemax
Global Communications, Inc., an Ontario, Canada corporation and its principal
shareholders to issue 9,000,000 shares of the Company's common stock (the
"Common Stock") in exchange for all of the issued and outstanding shares of
Telemax's Common Stock. In conjunction with the Exchange Transaction, the
Company is adopting amendments to the Company's Articles of Incorporation (the
"Amendment") by the approval of the Board of Directors. The purpose of this
Amendment is to:
o Change the name of the company from "Organik Technologies, Inc." to
"Telemax Global Communications, Inc." ("Name Change");
o Effect a twenty-for-one (20:1) reverse stock split ("Reverse Stock
Split"); and
As part of the Exchange Agreement, the existing directors of the Company will
resign and appoint Evan Karras, Dr. Manu Missaghie, Mr. Ali Vakili, Mr. John
Smith, and Mr. Fred Missaghie to the Board of Directors. Those directors intend
to elect Evan Karras as Chief Executive Officer and President, Dr. Missaghie as
Vice President of Operations, and Jim McDowell as Vice President, Finance.
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The Company's Board of Directors approved and recommended that the Exchange
Agreement be signed, that the new Board of Directors be elected, and the
Articles of Incorporation be amended in order to effectuate the Name Change and
the Reverse Stock Split. The Exchange Transaction is expected to close on or
about January 30, 2002, and the proposed Amendments will become effective upon
the filing of the Amendment with the Secretary of State of Washington. The
Company anticipates that the filing of the Amendments will occur on or about
January 31, 2002 (the "Amendment Effective Date").
A.J. Salomon, Dr. Manu Missaghie, and Telemax Global Communications, Inc., who
beneficially own in the aggregate 8,742,046 shares of Common Stock of the
Company, representing approximately 493% of the outstanding Voting Common Stock,
were signatories to the Exchange Agreement, which contemplated the election of
three new directors and the adoption of the Amendment described in this
Information Statement. The date on which this Information Statement was first
sent to the shareholders is on or about January 18, 2002. The record date
established by the Company for purposes of determining the number of outstanding
shares of Voting Common Stock of the Company is January 1, 2002 (the "Record
Date").
The Company intends to provide prompt notice of the taking of the corporation
action contemplated herein by providing to its shareholders of record this
Information Statement, and notifying its shareholders by letter filed under a
Current Report on Form 8-K of the effective date of the Exchange Transaction,
the election of the new Directors, and the Amendment.
Purpose of this Information Statement. The Company is not requesting your vote
or proxy since the Board of Directors had the authority under Washington state
law to approve the Exchange Transaction and the Amendments to the Articles of
Incorporation. The purpose of this Information Statement is to inform the
Company's shareholders of the above actions and the effects of such actions.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 17,717,920 shares of Common Stock outstanding.
The Common Stock constitutes the sole outstanding class of voting securities of
the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of January
1, 2002, with respect to (i) each person known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock;
(ii) each director of the Company; (iii) each person intending to file a written
consent to the Exchange Transaction and the approval of the adoption of the
Amendment described herein; and (iv) all directors, executive officers and
designated shareholders of the Company as a group. This information as to
beneficial ownership was furnished to the Company by or on behalf of the persons
named. Prior to the Exchange Transaction, there are 17,717,920 shares of Common
Stock outstanding. After giving effect to the Exchange Transaction and the
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reverse stock split, there will be approximately 10,000,000, shares of Common
Stock outstanding. The information in this Information Statement and table below
does not reflect the proposed post-split issuance of 9,000,000 shares to the
shareholders of Telemax in the Exchange Transaction and 500,000 shares of Common
Stock to finders and investment consultants.
Name and Title Number of Percent
Shares of Class
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A.J. Salomon, President , CFO and Director 700,000 4.0%
John McNulty, Secretary 42,046 *
Finn E. Walstad, Director -0- *
Telemax Global Communications, Inc. 8,000,000 45.0%
Officers and Directors as a Group (3 individuals) 742,046 4.1%
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* Less than 1%.
DESCRIPTION OF EXCHANGE TRANSACTION
Exchange Securities. On November 16, 2001, a definitive Plan and Agreement of
Exchange was signed by and among the Company, Telemax and the majority
shareholders of Telemax (the "Exchange Agreement").
The Exchange Agreement provides for a tax-free exchange of stock pursuant to the
provisions of 368(a)(1)(B) of the Internal Revenue Code whereby the Company has
made an offer to the nine (9) Telemax shareholders to acquire all of the
1,000,000 shares of Telemax's Common Stock outstanding in exchange for
9,000,000 shares of the Company's Common Stock (referred to as the "Exchange
Transaction"). The exchange ratio would be approximately nine (9) shares of
the Company's Common Stock for each share of Telemax's Common Stock outstanding.
Fractional shares of one-half or more will be rounded to the next whole share
while fractional shares of less than one-half (1/2) will be rounded down.
The 9,000,000 shares of Common Stock to be issued by the Company will represent
approximately ninety-one percent (91%) of the shares of the Company's then
outstanding Common Stock, thus giving the Telemax shareholders control of the
Company.
On or about January 31, 2002, (the "Exchange Effective Date"), Telemax will
become a wholly-owned subsidiary of the Company and the name of the Company will
be changed to "Telemax Global Communications, Inc."
Upon the Exchange Effective Date, the current officers and directors of the
Company will resign and the current officers and directors of Telemax will
become the officers and directors of the Company. See the section describing
"Telemax."
Purpose of the Exchange Transaction. The primary purposes of this transaction is
to allow the Company to acquire and carry on the business of Telemax and to
allow Telemax to become a public reporting company under the Securities Exchange
Act of 1934 by becoming a wholly-owned subsidiary of the Company. It is
anticipated that becoming a publicly reporting company will further enhance
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Telemax's business visibility and ability to attract and utilize additional
sources of capital.
AMENDMENTS TO ARTICLES OF INCORPORATION
On November 6, 2001, our Board of Directors voted unanimously to authorize and
recommend that the Company effect the Name Change and the Reverse Stock Split.
The Name Change and Reverse Stock Split will become effective upon filing of the
Amendments with the Washington Secretary of State, but the Board of Directors
reserves the right not to make such filing if it deems it appropriate not to do
so.
Name Change.
Assuming the Exchange Transaction is consummated with Telemax, the Board
believes that the new name, "Telemax Global Communications, Inc.," will reflect
the Company's change in business. The Company's Board believes that the new name
will promote public recognition and more accurately reflect its new primary
business.
Reverse Stock Split.
The Board of Directors approved the Amendment by written consent effective as of
November 6, 2001. Accordingly, your consent is not required and is not being
solicited in connection with the Amendment. There are no dissenter's rights of
appraisal with respect to the Amendment. We will pay the expenses of furnishing
this Information Statement, including the cost of preparing, assembling and
mailing this Information Statement.
The Reverse Stock Split will become effective upon its filing with the
Washington Secretary of State. We anticipate filing the Amendment with the
Washington Secretary of State on or about the tenth calendar day following the
date that this Information Statement is delivered to stockholders, which date we
anticipate will be on or about January 30, 2002.
The Amendment will reduce by a factor of twenty the number of outstanding shares
of our common stock while maintaining the current numbers of authorized shares
of our common stock and preferred stock. This effectively will result in a
twenty-fold increase in our authorized capital stock. Our Board of Directors
believes that maintaining the current amount of our authorized capital stock is
in the best interests of Organik and its stockholders because it will make
available additional shares of common stock that may be used for acquisitions,
financings, employee benefit programs and other corporate purposes. The
available shares of common stock may be issued from time to time as our Board of
Directors determines, without further action of the stockholders. Although our
Board of Directors has no current plans to use such shares to entrench present
management, it may be able to use the available shares as a defensive tactic
against hostile takeover attempts. However, to our management's knowledge, no
hostile takeover attempts are currently threatened.
The Amendment will not alter the voting or other rights of the holders of
Organik's Common Stock except to the extent that the ownership rights of holders
of its common stock are diluted from time to time through the issuance of
available additional shares. Stockholders of record do not currently possess,
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nor upon the filing of the Amendment will they acquire, pre-emptive rights that
would entitle them, as a matter of right, to subscribe for the purchase of any
shares, rights, warrants or other securities or obligations convertible into, or
exchangeable for, securities of Organik.
Our common stock currently is quoted on the Pink Sheets. We believe that the
Reverse Stock Split may make our common stock more attractive to members of the
investing public who may view low-priced stocks as unattractive or who may, as a
matter of policy, be precluded from purchasing our common stock due to its low
price. However, because our future performance depends upon various business and
economic factors that cannot be predicted, there can be no assurance that the
Reverse Stock Split will enhance the marketability of our common stock.
THE COMPANY
The Company was incorporated under the laws of the State of Montana in 1986 as
Big Sky Country Apparel, Inc., and changed its name to Big Sky USA,
Incorporated, in July 1988. The Company was reincorporated under the laws of the
State of Washington in December 1991 and, in November 1993, changed its name to
Organik Technologies, Inc. Between July 1990 and June 1996, the Company
manufactured and distributed garments using Organik(TM) fabrics. The Company
developed and enhanced a family of all natural, shrink-free, 100% cotton knit
fabrics, which it sold under the name and trademark Organik(TM).
Over the years the costs of development, manufacture and distribution was
significantly greater than revenue and, in July 1996, due to severe cash flow
deficiencies, the Company ceased all operations. The Company has been dormant
for the past 5 1/2 years. Except for reviewing and analyzing potential
acquisition and/or merger candidates, the Company has conducted no business
since July 1996. In August 2001, the Company began negotiations with Telemax
regarding a potential acquisition. These negotiations led to a purchase of
8,000,000 shares of the Company's Common Stock for $40,000 by Parsecom, Inc.,
which is a subsidiary of Telemax, and to the execution of the Exchange Agreement
on November 16, 2001.
Since November 16, 2001, all of the Company's activities have been focused on
completing the audit of its financial statements and filing its delinquent Form
10-KSBs and Form 10-QSBs with the Securities and Exchange Commission ("SEC").
The Company has filed its required reports with the SEC and management believes
it is now in compliance with the SEC reporting requirements.
Until the Exchange Effective Date, the Company's principal executive offices
will be located at 35 Austin Lane, Alamo, California 94507, and its telephone
number will be (925)837-5262. After the Exchange Effective Date, the Company's
principal executive offices will be located at Telemax Global Communications,
Inc., 736 Dundas Street East, Toronto, Ontario, Canada M5A 2C3, and its
telephone number will be (416) 703-0334.
TELEMAX GLOBAL COMMUNICATIONS, INC.
Telemax Global Communications, Inc., ("Telemax") was founded in July, 2001 and
formed under the laws of Ontario, Canada. Telemax operates its business through
its two wholly-owned subsidiaries, Telemax Communications, Inc., and Parsecom,
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Inc. Telemax's core products include prepaid phone cards and One-Plus long
distance services. Telemax markets its prepaid phone cards through its national
distribution network in over 6,000 retail locations. Through its strategic
partnership with Canquest Communications (Canada), Inc., Telemax is able to
obtain its carrier rates and services "at cost".
In addition, Telemax has entered into licensing arrangements with various
underserved emerging telecommunication markets such as China, Vietnam, the
Philippines and the Republic of Sudan. In addition, Telemax has entered into an
exclusive arrangement with Canada's largest telecommunications service provider
to distribute its prepaid calling cards.
Telemax has created a strategic platform to increase its market share in both
existing core products while at the same time significantly reducing its direct
operating costs through its partnership with Canquest.
In addition to its core products, Telemax has plans to introduce additional
products and services including prepaid wireless, prepaid Internet,
point-of-sale ("POS") terminals and the deployment of a voice over Internet
protocol ("VOIP") platform.
Telemax operates from two leased premises. The prepaid phone business is located
in 6,000 sq. ft. of office space at 231 Millway Avenue, Concord, Canada. The
long distance and international communications services are located in 5,000 sq.
ft. of office space at 736 Dundas Street, East, Toronto, Canada. Telemax plans
on consolidating its operations into one location. Telemax also has plans for an
additional location in California to house its United States sales and marketing
arm.
Product Overview. Telemax currently offers two core products and is developing
several other new products and services.
1. Prepaid Phone Cards. Telemax is one of the largest prepaid
telephone card manufacturers and distributors in Canada. Since
introducing its first telephone cards in June, 1997, sales
have increased steadily. Telemax has an exclusive distribution
agreement with Bell Canada pursuant to which Telemax
distributes Bell's prepaid phone cards through its
distribution network. Telemax earns 10% of the gross sales
revenues as its distribution commission. During the year 2001,
Bell Canada's prepaid products are expected to account for
approximately $50 million of prepaid cards sold in Canada.
Telemax offers three different types of prepaid phone cards to
the Canadian and international markets including:
o Phone cards for originating calls in North America;
o Phone cards for originating calls internationally;
o Phone cards for promotional purposes.
All of these prepaid phone cards are rechargeable allowing
them to be used repeatedly.
2. One-Plus Long Distance. Telemax's other core product is its
long distance service which provides consistent and reliable
direct dial long distance service to its subscribers. Through
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the utilization of Canquest's sophisticated low-cost routing
software and the strategic service agreement between Canquest
and Telemax, Telemax is able to offer subscribers rates that
are in most cases lower than those of other providers. Telemax
has focused on marketing its One-Plus service to consumers of
ethnic original who place calls regularly to their home
country.
Internationally, Telemax has placed an international gateway
in China which is intended to establish voice and data
capacity for telecommunications in China. Telemax is also
negotiating to establish similar telecommunication services in
India and the Philippines. Telemax currently markets and
promotes its One-Plus service through a sales agent and has
increased its active subscriber base by approximately 750%
during the last six months.
In addition to the above existing core products, Telemax is
currently developing several new products and innovations as
set forth below.
3. Prepaid Internet Card. Telemax is developing a prepaid card
that enables consumers to access the Internet from any
computer. The prepaid Internet cards will be distributed
through existing wholesale distribution networks in addition
to establishing new corporate retail outlets specifically
targeted to the mobile business person and university
students.
4. Prepaid Wireless. Telemax is developing a prepaid card to
cover wireless services. The initial introduction of prepaid
wireless services will be in Canada where there is an
estimated 600,000 credit-declined customers who either desire
or are required to purchase air time on an "as needed" basis,
without committing themselves to long-term contracts. Telemax
intends to introduce a compatible system for adding air time
which will represent one of the most advanced systems for
"recharging" a person's prepaid wireless card anywhere in the
world.
5. Electronic Point-of-Sale Terminal ("POS"). Telemax is
currently developing its electronic warehousing point-of-sale
("POS") terminal which is an innovative system for delivering
a wide range of prepaid telecommunications products and
services at the retail level. Such POS machines will be
capable of simultaneously issuing prepaid long distance cards,
prepaid wireless ("cellular"), PCS services, and prepaid
paging and more. The Telemax POS machines will also
incorporate unprecedented levels of security against theft and
fraud. The Company hopes to place over 300 POS terminals
during the next 12 months in various retail locations.
6. Voice Over Internet Protocol ("VOIP"). the VOIP is comprised
of several interconnected processes that convert a voice
signal into a "stream of packets" in a single telephone line.
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VOIP allows the human voice to travel simultaneously over a
single packet network line with both fax information and modem
data. This VOIP technology is what Telemax is currently
developing for China. The company estimates that such VOIP
services could generate volume of 500,000 minutes per month.
Telemax is negotiating the acquisition of a Company which
holds licenses to route telephone traffic to the Philippines
and has established switching facilities in that country. A
fundamental objective of Telemax is to eventually install VOIP
gateway technology in various countries that have large ethnic
populations in Canada and the United States such as India,
Brazil, Hong Kong, Iran, Poland, Pakistan, and Mexico. By
introducing these VOIP gateways, Telemax anticipates reducing
its cost of long distance calls by up to 50% which would
provide significant savings to its customers while yielding a
significant profit margin to the company.
7. Expanded International Services. Complimenting its
international marketing of its VOIP services, Telemax will
also seek to acquire contracts with various companies to
provide a full range of telecommunication services and
networks. In January 2001, Telemax entered into an operating
agreement with a license holder in the Republic of Sudan. The
license granted to the license holder (a local Sudanese
company of which Telemax owns 40%) grants the exclusive right
to develop and provide international long distance origination
and termination calls, local line service, mobile
communication services and Internet services. Such license has
an initial term of two years with the possibility of
extensions thereafter. As a result of this joint venture,
Telemax is developing a plan to deploy a national wireless
network in Sudan utilizing the latest technologies available.
Such enhanced telecommunications technology is expected to
better serve the rural areas of Sudan which are not yet
serviced or are under serviced by the existing local
telecommunications providers, Sudatel and Mobitel. Telemax
hopes to develop a national telecommunications network to
originate and terminate local and international calling,
cellular and Internet services which, when established, could
attract up to 75,000 subscribers in the first year and several
times that number in subsequent years.
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COMPETITION. The markets for Telemax's products and services are highly
competitive and the Company believes that such competition will continue to
intensify. Competitive trends in the telecommunication markets are continuing
declines in average selling prices, coupled with improvements in product
features and performance. Telemax expects such trends will continue. In the
market, Telemax competes with the major telephone services providers including
AT&T, Bell Canada, and various other phone service providers. In addition,
competition comes from other smaller independent telecommunication companies,
many of which offer the same products and services as Telemax. Among these
Canadian competitors would be Goldline, PhoneTime and Millennium Global. Telemax
believes that the principal competitive factors in the telecommunications market
are brand name recognition, the cost of telephone service, convenience,
reliability, and the ability to develop and introduce new or enhanced products
and services rapidly. Telemax believes that it has established itself as a
provider of high quality, reliable prepaid telephone and long distance telephone
services and, as a result, currently competes favorably with respect to these
factors. Telemax believes it has several competitive advantages over its
competitors including:
o "One Stop Shop"
o National Presence
o Distribution Agreement with Bell Canada
o Strategic Agreement with Canquest Communications
o International Licensing Agreements
o Innovative New Products and Services
There can be no assurance, however, that Telemax will be able to compete
successfully in the future against current or future competitors or that it will
be able to adapt successfully to changes in the market for its products and
services. The Company's inability to compete successfully in any respect or to
cease developing innovative products and services would have a material adverse
effect on the Company's business.
GOVERNMENT REGULATION. Providing telephone and other telecommunication services
is subject to various levels of government regulation. The primary governmental
agency that oversees telecommunication services in Canada is the Canadian Radio,
Television and Telecommunications Commission ("CRTC") while the primary
governmental agency which regulates telecommunication services in the U.S. is
the Federal Communications Commission ("FCC"). Telemax will also be subject to
government regulation in those countries in which it has or will be establishing
its wireless networks or VOIP gateway services.
The Company believes that it is currently in full compliance with all applicable
Canadian and U.S. requirements applicable to the products and services currently
provided by the Company. In expanding its international services, Telemax
currently operates under a license granted by the Republic of Sudan. This
license allows Telemax, through its local Sudanese affiliate, to provide
international long distance, local line service, mobile communication services
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and Internet services throughout the country of Sudan through Fall, 2003, which
license may be renewed at that time. Telemax also has VOIP service agreements in
China, the Philippines and India. These agreements were entered into between
Telemax and/or its local operating affiliate, and the regulatory agencies of
such countries. Such service agreements have varying terms and are generally
renewable at the end of each term and can be terminated prior to expiration for
specified reasons. Telemax typically utilizes the services of local consultants
to each country to assist in the acquisition and negotiation of the service
agreements in each country in which Telemax wishes to operate.
Telemax believes that it is in full compliance with all applicable licenses and
agreements. However, there can be no assurance that any current or future
business or governmental contracts could be subject to review, modification or
termination, in which case, the Company's operations in such countries might
have to be curtailed or discontinued.
EMPLOYEES. Telemax currently has 90 full-time staff employees in addition to
approximately 25 contracted staff and agents.
LEGAL PROCEEDINGS. Telemax is not currently involved in any litigation which
could have a material adverse effect on its business or results of operations,
other than those legal matters arising in the normal course of business.
BUSINESS RISKS. As indicated above and elsewhere in this Information Statement,
Telemax's business and future success are subject to numerous risks,
particularly those associated with a new and developing company. These risks
would include Telemax's limited operating history, its operations in the
telecommunications service business which is subject to rapid technological
changes and intense price competition, its expansion of telecommunications
services in other countries and the possible need for future financing to
sustain and expand its business operations. Such future financing may create new
debt or cause dilution to current shareholders. Telemax is also dependent on
certain strategic agreements including its exclusive agreement with Bell Canada
and its strategic partnership with Canquest Communications as well as the
various agreements and licenses entered into with various foreign countries. The
unexpected termination or limitation on any of these existing agreements could
have a material adverse effect on the company's results of operation.
SELECTED FINANCIAL DATA. The following table of selected financial data is
derived from and should be read in conjunction with Telemax's unaudited
financial statements included elsewhere in this Information Statement. Telemax
prepared the financial statements and, while management believes that the
financial statements fairly present the Company's consolidated financial
position and results of operations, the financial statements have not been
audited or reviewed by independent public accountants. The financial statements
may not include all adjustments necessary to fully comply with generally
accepted accounting principles or that may be required as a result of an audit
or review. The selected financial data are not necessarily indicative of results
to be expected for any future period and should be read in conjunction with
"Management's Plan of Operations."
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Three Months Ended
September 30, 2001
(Unaudited)
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Telemax Consolidated Statement of Operations Data
Sales $ 3,262,538
Cost of goods sold $ 2,622,848
Gross profit (loss) $ 639,690
Other expenses $ 455,953
Net income (loss) $ 183,737
At September 30, 2001
(Unaudited)
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Telemax Consolidated Balance Sheet Data
Cash and cash equivalents $ 323,029
Working capital (deficit) $ 2,221,837
Total Assets $ 4,924,006
Notes payable, deposits, and other payables $ 2,079,913
Total stockholders' equity $ 2,844,093
MANAGEMENT'S PLAN OF OPERATIONS. Although Telemax Global Communications, Inc.,
was founded in July, 2001, its two operating subsidiaries, Telemax
Communications, Inc., and Parsecom, Inc., have been in operation since May, 1997
and May, 2001, respectively. Telemax Communications, Inc., in conjunction with
its exclusive distribution agreement with Bell Canada, has become one of the
largest prepaid calling card distributors in Canada. Parsecom, Inc., through its
strategic partnership with Canquest Communications, has become a fast growing
long distance service provider in Canada. In the near future, Telemax intends to
commence the offering of prepaid calling cards in the United States in addition
to providing telecommunications services in many other foreign countries
pursuant to licenses or agreements either existing or proposed with the
governments of such countries. During the three months between Telemax's
formation and September 30, 2001, Telemax received combined revenues of
approximately $3,262,538 and incurred combined expenses of approximately
$3,078,801. Expenses consisted primarily of costs of goods sold of $2,622,848
and other expenses including employee expenses of $455,953. Telemax anticipates
that these expenses will increase as it commences expanded distribution of its
products and services. However, Telemax cannot predict the level of such
increases at this time, since the increases will depend substantially on the
level of revenues achieved.
For the year-ended June 30, 2001, Telemax Communications, Inc., recorded sales
of $12,100,000 (Cdn) which resulted in a gross profit of $1,300,000 (Cdn) and a
loss from operations of $740,000 (Cdn). Parsecom, Inc., had net revenues of
$63,929 (Cdn) from operations and recognized a $6,640 (Cdn) net loss for the
year-ended June 30, 2001.
To date, Telemax, and its subsidiaries, have funded their operations through
bank financing and loans from affiliates.
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Telemax will be dependent on the proceeds from future outside financing (both
debt and equity) to continue to expand its operations and fully implement its
business plan, including its expansion of telecommunication services in the U.S.
and other foreign countries. If Telemax is unable to raise sufficient capital in
the future, the Company will be required to delay or forego some portion of its
business plan, which may have a material adverse effect on the Company's
anticipated results from operations and financial condition. Telemax is
currently in compliance with all debt requirements relating to its bank loans
and director loans.
Management.
Officers and Directors. As of the Closing Date, the new executive officers and
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directors of Organik will be as follows:
Name Age Position
Evan Karras 32 Chief Executive Officer, President and Director
Dr. Manu Missaghie 53 Vice President, Operations and Director
Jim McDowell 41 Vice President, Finance and Administration
Fred Missaghi 36 Vice President, Sales and Marketing and Director
John Smith 50 Vice President, Technology and Director
Ali Vakili 50 Director
Directors hold office for a term of three years with one-third of the Board
members subject to re-election at each annual meeting of the shareholders of
Organik and the election and qualification of their successors. Officers are
appointed by the Board of Directors and serve at the discretion of the Board.
The following is a brief description of the business background of the executive
officers and Directors of Telemax (who will occupy similar positions with
Organik);
Evan Karras was a founder of Telemax Communications, Inc., and Parsecom, Inc.,
and has been Chief Executive Officer and a Director of each of the companies
since their formation on March 12, 1997 and October 31, 2000, respectively. Mr.
Karras is the past President of MoviesPlus, a company he established in Poland
to provide television programming through satellite to subscribers of that
country. He also assisted in the development of a $300 million network to
provide multimedia services to subscribers in Saudi Arabia and the UAE. As an
independent consultant, Mr. Karras assisted the government of Greece in forming
a national gaming commission for the privatization and award of twelve casino
licenses. He has also been involved in the development and finance of real
estate projects, cable television stations, communications, banking, shipping,
retail, publishing, commodities trading and manufacturing. Mr. Karras holds a
Master Degree in business and finance from McMaster University.
Dr. Manu Missaghie is a co-founder of Telemax Communications, Inc., and
Parsecom, Inc., since each was formed. Dr. Missaghie has extensive experience in
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telecommunications, information technology and systems management. He has served
over twenty years in the high-tech industry designing and developing state of
the art software applications and information technology systems for companies
including Bell Northern Research, Spar Aerospace, Nokia Telecommunications and
Allied Signal Aerospace. In addition to forming Telemax Communications, Inc.,
Dr. Missaghie also formed MANCO Information Technology, Inc., which provides
management consulting services to various corporations. Dr. Missaghie was
educated at the University of Oxford and received a Ph.D. in electrical
engineering from Queens University.
Jim McDowell joined Telemax from its inception and is a chartered accountant
with over twenty-five years of accounting and corporate finance experience. His
background includes involvement in several acquisitions, mergers and joint
ventures as well as international work experience in Canada, the United States,
Germany and the United Kingdom. He was employed by Aramark during which time he
was responsible for all acquisitions outside of the United States. He also
served as Senior Vice President and Board member of Four Seasons Hotels, Ltd.
Mr. McDowell was also the CFO and CAO of Drake International where he has
completed fourteen technology acquisitions including one technology division of
Control Data.
Fred Missaghi has been Vice President of Sales and Marketing of Telemax
Communications since 1997. Mr. Missaghi consistently surpassed all sales
expectations since 1997.
John Smith became a Vice President of Telemax in 2001 and has extensive
experience in the telecommunications industry of over twenty years. Mr. Smith is
the founder of Smiston Communications, which became a leading distributor of
business telephone systems, pagers and cellular phones in Essex-Kemp County in
Chatam, Ontario. He also co-founded Smart Talk Network, which was one of the
first long distance resellers in Canada. He is currently CEO of Canquest
Communications. Mr. Smith has been instrumental in the development of carrier
resellers and new products for Telemax.
EXCHANGE TRANSACTION
EXCHANGE WITH TELEMAX GLOBAL COMMUNICATIONS, INC. The Company entered into a
Plan and Agreement of Exchange dated November 16, 2001 (the "Exchange
Agreement") pursuant to which at least ninety-five percent (95%) of the
shareholders of Telemax will exchange their shares of Telemax common stock for
9,000,000 shares of the Common Stock (the "Exchange") on or about January 30,
2002 (the "Exchange Effective Date"). Upon the Exchange Effective Date, the
shares of Telemax common stock will be exchanged for 9,000,000 shares of Organik
Common Stock and the name of the Company will be changed to "Telemax Global
Communications, Inc." Upon the Exchange Effective Date, the current officers and
directors of the Company will resign and the current officers and directors of
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Telemax will become the officers and directors of the Company. On the Exchange
Effective Date, it is expected that the Company will have no assets and minimum
liabilities.
The Company is a reporting company under the Exchange Act. Immediately prior to
the Exchange Effective Date, the Company's outstanding shares of capital stock
will consist of 885,896 shares of Common Stock. The Company is current in its
financial reporting requirements since the close of its latest fiscal year, July
31, 2001. The Company's stock transfer agent is American Stock Transfer & Trust
Co. in Brooklyn, New York.
CONDUCT OF BUSINESS AFTER EXCHANGE TRANSACTION. After the Exchange Effective
Date, both entities would continue in existence with the Company becoming the
corporate parent of Telemax and Telemax continuing its current operations as a
wholly owned subsidiary. As a result of the Exchange, the Company intends to
change its name to Telemax Global Communications, Inc., to reflect its new
business activity.
ACCOUNTING TREATMENT OF EXCHANGE TRANSACTION. For accounting purposes only,
Telemax will be deemed the "issuer" of securities in the Exchange Transaction
and, consequently, the Exchange Transaction (consisting of the exchange of stock
of the Company for all outstanding stock of Telemax) will be treated for
accounting purposes only as the issuance of shares by Telemax principally for
control of the Company. After the Exchange Transaction, the operation, assets
and liabilities of both companies would be reported on a consolidated basis for
financial statement purposes.
REPRESENTATIONS, WARRANTIES AND COVENANTS. In the Exchange Agreement, Telemax
made various representations and warranties to the Company with respect to,
among other things, its unaudited financial statements, absence of certain
liabilities, litigation, absence of material changes in business operations,
material contracts, property, leases and operating authority.
Similar warranties and representations as those given by Telemax were made by
the Company. The representations and warranties contained in the Exchange
Agreement will survive the Exchange Transaction. After the Exchange Effective
Date, if either Telemax or the Company should breach any representation or
warranty given by it, a remedy or right would arise for the other party to seek
damages or other remedies or waive the noncompliance.
In addition to the above warranties and representations, both the Company and
Telemax have undertaken certain covenants relating to their operation after the
Closing.
Securities Laws Aspects of Issuance of the Company's Common Stock. The shares of
the Company's Common Stock which will be issued to the shareholders of Telemax
in exchange for the Telemax common stock pursuant to the Exchange Transaction
were not registered under the Securities Act. It is intended that such shares
will be issued pursuant to the private placement exemption under Section 4(2)
and Regulation D of the Securities Act. In addition, it is intended that the
issuance of such shares will be exempt from the requirements of the State of
Washington since all of the Exchange Shares are being issued to Canadian
residents.
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The shares issues by the Company in the Exchange Transaction are deemed
"restricted stock" and bear a legend indicating that the resale of such shares
may be made only pursuant to registration under the Securities Act or pursuant
to an available exemption from such registration. The Company has not granted
the Telemax shareholders any registration rights regarding the Exchange Common
Stock issued to them.
CHANGE IN THE COMPANY'S BOARD OF DIRECTORS. As a result of the Exchange
Transaction, Messrs. McNulty, Walstad and Salomon will resign as the directors
of the Company and will appoint Evan Karras, Dr. Manu Missaghie Ali Vakili, Fred
Missaghie and John Smith to the Company's Board of Directors to fill those
vacancies. The Company's Bylaws provide for a staggered Board of six (6)
members. The Board consists of three classes with two directors serving in each
class. One-third of the Board is subject to election each year with members
serving a three-year term. After the Exchange Effective Date, the Company will
have five new directors and one vacancy.
One of the directors appointed to the Company's Board will be subject to
re-election at the Company's next annual shareholders' meeting.
FEDERAL INCOME TAX CONSEQUENCES. A summary of the federal income tax
consequences of the Exchange Transaction is set forth below. The following
discussion is based upon present federal tax law and does not purport to be a
complete discussion of such consequences. EACH STOCKHOLDER IS ADVISED TO CONSULT
HIS/HER OWN TAX ADVISORS FOR MORE DETAILED INFORMATION REGARDING THE EFFECTS OF
THE PROPOSED EXCHANGE TRANSACTION ON THEIR INDIVIDUAL TAX STATUS.
No application was made for an advance ruling from the Internal Revenue Service
regarding the tax consequences with respect to this Exchange Transaction;
however, it is intended that the Exchange Transaction will constitute a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the "Code"). The references to "Sections"
herein are references to Sections of the Code.
Section 368(a)(1)(B) provides that a transaction may qualify as a "B"
reorganization if it consists of the acquisition by one corporation, in exchange
solely for all or a part of its voting stock, of stock of another corporation
if, immediately after the acquisition, the acquiring corporation has control of
the acquired corporation. The term "control" is defined in Code Section 368(c).
It is intended that the Company will control Telemax for purposes of Section
368(c) immediately after the Exchange Transaction.
Section 354(a)(1) provides that no gain or loss shall be recognized if stock or
securities in a corporation which is a party to reorganization are, in pursuance
of the plan of reorganization, exchange solely for stock or securities in such
corporation or in another corporation which is a party to the reorganization.
Treas. Reg. Section 1.354-1(e) provides that, for the purposes of Section 354,
stock rights or stock warrants are not included in the term "stock or
securities."
No gain or loss will be recognized by the Company on the receipt of Telemax
stock solely in exchange for the Company's stock pursuant to the Exchange
Transaction. Sections 1001, 1002, and 1032(a). The Company's basis in the
Telemax stock will be the same as the basis of such stock in the hands of the
Telemax transferor immediately prior to the exchange.
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Our beliefs regarding the tax consequences of the Exchange Transaction are not
binding upon the Internal Revenue Service or the courts, and there can be no
assurance that the Internal Revenue Service or the courts will accept the
positions expressed above.
This summary does not purport to be complete. The state and local tax
consequences are not addressed and may vary, depending upon the state in which a
shareholder resides.
The foregoing summary is included for general information only. Accordingly,
shareholders are urged to consult their own tax advisors with respect to the
federal, state or local tax consequences of the Exchange Transaction.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company files annual, quarterly, and current reports, proxy statements, and
other information with the Securities and Exchange Commission ("SEC"). You may
read and copy any reports, statements or other information on file at the
Commission's public reference room in Washington D.C. You can request copies of
those documents, upon payment of a duplicating fee, by writing to the
Commission.
The SEC allows the Company to "incorporate by reference" the information it
files with them, which means that the Company can disclose important information
to you by referring you to those documents. The Company incorporates by
reference the document listed below, which is considered part of this
Information Statement.
(1) Current report on Form 8-K filed on November 23, 2001;
(2) Annual Report on Form 10-KSB for the year ended July 31, 2001,
filed on January 9, 2002.
The Company's Exchange Act file number is 0-18935. You may request a copy of
these filings at no cost, by writing or telephoning the Company at the following
address: Organik Technologies, Inc., 35 Austin Lane, Alamo, California 94507,
Attention: Corporate Secretary; telephone (925)837-5262.
You may review a copy of this Information Statement, including exhibits, and
other reports, statements, or other information that the Company filed with the
SEC, at the SEC's public reference room located at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, DC 20549, and at the SEC's regional offices
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material, when filed, may also be obtained from the Public Reference
Section of the SEC at 450 Fifth Street, NW, Washington, DC 20549 at prescribed
rates. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Company's filings and the
Information Statement can also be reviewed by accessing the SEC's website at
http://www.sec.gov.
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ADDITIONAL INFORMATION
Management of both the Company and Telemax and their respective officers and
directors are available to answer questions concerning the terms and conditions
of this Exchange Transaction and to obtain any additional information, to the
extent that the Company or Telemax possesses such information or can acquire it
without unreasonable effort or expense. Questions regarding this Information
Statement or written requests for additional information to verify or supplement
the information contained in this Information Statement should be directed to:
A.J. Salomon, President Evan Karras, Chief Executive Officer
Organik Technologies, Inc. Telemax Global Communications, Inc.
35 Austin Lane 736 Dundas Street East
Alamo, CA 94507 Toronto, Ontario, Canada M5A 2C3
Telephone: (925) 837-5262 Telephone: (416) 703-0334
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