U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2001
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
Commission File No. 0-26351
ORGANIK TECHNOLOGIES, INC.
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(Name of Small Business Issuer in its Charter)
Washington 81-0440517
- -------------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization Identification No.)
35 Austin Lane, Alamo, California 94507
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Address of principal executive office
(925) 837-5262
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Issuer's telephone number
Check whether the issuer has (1) filed all reports required by Section 13 or
5(d) of the Exchange Act during the past 12 months, and (2) been subject to such
filing requirements for the past ninety (90) days. Yes ( ) No (X)
As of January 31, 2001, 9,717,920 shares of Common Stock were outstanding.
ORGANIK TECHNOLOGIES, INC., AND SUBSIDIARIES
1
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
INDEX
Pages
PART I: FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets (Unaudited) 4
As of January 31, 2001 and (Audited) as of July 31, 2000
Consolidated Statements of Operations (Unaudited) 5
For the six months ended January 31, 2001 and 2000 and from
Inception through January 31, 2001
Consolidated Statements of Stockholders' Equity (Deficit) 6-7
Through January 31, 2001
Consolidated Statements of Cash Flows (Unaudited) 8-9
For the six months ended January 31, 2001 and 2000
and from Inception through January 31, 2001
Notes to Consolidated Financial Statements 10-12
ITEM 2 - Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
2
ORGANIK TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2001 and July 31, 2000
3
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
------
January 31, July 31,
2001 2000
--------------- ----------------
CURRENT ASSETS (Unaudited)
Cash $ - $ -
------------ ------------
Total Current Assets - -
------------ ------------
TOTAL ASSETS $ - $ -
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 426,667 $ 424,352
Accrued dividends payable 54,625 48,875
------------ ------------
Total Current Liabilities 481,292 473,227
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, no par value,
10,000,000 shares authorized;
11,500 shares issued and outstanding 100,318 100,318
Common stock, no par value,
50,000,000 shares authorized;
9,717,920 shares issued and outstanding 16,812,304 16,812,304
Accumulated deficit prior to the
development stage (16,367,929) (16,367,929)
Accumulated deficit since the inception
of the development stage (1,025,985) (1,017,920)
------------ ------------
Total Stockholders' Equity (Deficit) (481,292) (473,227)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ - $ -
============ ============
4
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception on
For the For the August 1,
Three Months Ended Six Months Ended 1996 Through
January 31, January 31, January 31,
----------------------------------- ---------------------------------
2001 2000 2001 2000 2001
----------------- ---------------- ---------------- --------------- -----------------
REVENUE $ - $ - $ - $ - $ -
OPERATING EXPENSES
General and administrative 1,157 1,157 2,315 2,315 911,125
Legal and administrative - - - - 63,109
----------------- ---------------- ---------------- --------------- -----------------
Total Operating Expenses 1,157 1,157 2,315 2,315 974,234
----------------- ---------------- ---------------- --------------- -----------------
OPERATING LOSS (1,157) (1,157) (2,315) (2,315) (974,234)
----------------- ---------------- ---------------- --------------- -----------------
NET LOSS (1,157) (1,157) (2,315) (2,315) (974,234)
----------------- ---------------- ---------------- --------------- -----------------
PREFERRED STOCK DIVIDENDS (2,875) (2,875) (5,750) (5,750) (51,750)
----------------- ---------------- ---------------- --------------- -----------------
LOSS ATTRIBUTABLE
TO STOCKHOLDERS $ (4,032) $ (4,032) $ (8,065) $ (8,065) $ (1,025,984)
================= ================ ================ =============== =================
BASIC AND DILUTED LOSS
PER SHARE (Note 1)
Loss from operations $ (0.00) $ (0.00)
Preferred stock
dividends (0.00) (0.00)
----------------- ----------------
Loss Per Share $ (0.00) $ (0.00)
================= ================
5
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Preferred Stock Common Stock Accumulated
--------------------------------- -------------------------------
Shares Amount Shares Amount Deficit
---------------- --------------- --------------- -------------- -----------------
Balance, July 31, 1998 11,500 $ 100,318 5,180,523 $ 12,363,989 $ (11,016,660)
Exercise of class A and B
warrants, net - - 1,470,175 3,540,315 -
Series A 10% preferred stock
dividend for year ended
July 31, 1996 - - - - (11,500)
Net loss for the year ended
July 31, 1996 - - - - (5,339,769)
---------------- ---------------- ---------------- -------------- ----------------
Balance, July 31, 1996 11,500 100,318 6,650,698 15,904,304 (16,367,929)
Common stock issued for
acquisition of Emerald
Apparel at $0.4375 per
share - - 2,000,000 875,000 -
Cancelled 32,778 shares of
no par value common stock - - (32,778) - -
Series A 10% preferred stock
dividend for year ended
July 31, 1997 - - - - (11,500)
Net loss for the year ended
July 31, 1997 (879,630)
---------------- --------------- --------------- -------------- ----------------
Balance, July 31, 1997 11,500 100,318 8,617,920 16,779,304 (17,259,059)
Common stock issued for
cash at $0.03 per share - - 1,000,000 30,000 -
Common stock issued to shareholder
for services at $0.03 per share - - 100,000 3,000 -
Series A 10% preferred stock dividend
for year ended July 31, 1998 - - - - (11,500)
Net loss for the year ended
July 31, 1998 - - - - (83,029)
---------------- --------------- --------------- -------------- ----------------
Balance, July 31, 1998 11,500 $ 100,318 9,717,920 $16,812,304 $ (17,353,588)
---------------- --------------- --------------- -------------- ----------------
6
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Preferred Stock Common Stock Accumulated
--------------------------------- -------------------------------
Shares Amount Shares Amount Deficit
---------------- --------------- --------------- -------------- -----------------
Balance, July 31, 1995 11,500 $ 100,318 9,717,920 $ 16,812,304 $ (17,353,588)
Series A 10% preferred stock
dividend for year ended
July 31, 1999 - - - - (11,500)
Net loss for the year ended
July 31, 1999 - - - - (4,630)
------------ ------------- ------------- ------------- --------------
Balance, July 31, 1999 11,500 100,318 9,717,920 16,812,304 (17,369,718)
Series A 10% preferred stock
dividend for year ended
July 31, 2000 - - - - (11,500)
Net loss for the year ended
July 31, 2000 - - - - (4,630)
------------ ------------- ------------- ------------- --------------
Balance, July 31, 2000 11,500 100,318 9,717,920 16,812,304 (17,385,848)
Series A 10% preferred stock
dividend for six months ended
January 31, 2001 (unaudited) - - - - (5,750)
Net income for the six months
ended January 31, 2001 (unaudited) - - - - (2,315)
------------ ------------- ------------- ------------- --------------
Balance, January 31, 2001 (unaudited) 11,500 $ 100,318 9,717,920 $ 16,812,304 $ (17,393,913)
============ ============= ============= ============= ==============
7
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception of
Development
Stage on
August 1, 1996
For the Six Months Ended Through
January 31, January 31,
----------------------------------
2001 2000 2001
--------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (2,315) $ (2,315) $ (974,235)
Adjustments to reconcile net loss to net cash used
by operating activities:
Common stock issued for acquisition - - 875,000
Common stock issued for services - - 3,000
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable 2,315 2,315 66,235
--------------- ---------------- ----------------
Net Cash Used by Operating Activities - - (30,000)
--------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
--------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock - - 30,000
Dividends declared (5,750) (5,750) (51,750)
Increase in accrued dividends payable 5,750 5,750 51,750
--------------- ---------------- ----------------
Net Cash Provided by Financing Activities - - 30,000
--------------- ---------------- ----------------
NET INCREASE IN CASH - - -
CASH AT BEGINNING OF PERIOD - - -
--------------- ---------------- ----------------
CASH AT END OF PERIOD $ - $ - $ -
=============== ================ ================
8
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception of
Development
Stage on
August 1, 1996
For the Six Months Ended Through
January 31, January 31,
----------------------------------
2001 2000 2001
--------------- ---------------- ----------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Income taxes $ - $ - $ -
Interest $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Stock issued for acquisition $ - $ - $ 875,000
Stock issued for services $ - $ - $ 3,000
9
The accompanying notes are an integral part of these
consolidated financial statements.
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
January 31, 2001 and July 31, 2000
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted in
accordance with such rules and regulations. The information
furnished in the interim condensed consolidated financial
statements include normal recurring adjustments and reflects all
adjustments, which, in th opinion of management, are necessary for
a fair presentation of such financial statements. Although
management believes the disclosures and information presented are
adequate to make the information not misleading, it is suggested
that these interim condensed consolidated financial statements and
notes thereto included in its July 31, 2001 Annual Report on Form
10-KSB. Operating results for the three months ended January 31,
2001 are not necessarily indicative of the results that may be
expected for the year ending July 31, 2001.
NOTE 2 - BASIC AND DILUTED LOSS PER SHARE
For the For the
Three Months Ended Six Months Ended
January 31, January 31,
---------------------------------- -------------------------------
2001 2000 2001 2000
----------------- --------------- -------------- ---------------
Basic loss per share from operations:
Loss - numerator $ (1,157) $ (1,157) $ (2,315) $ (2,315)
Shares - denominator 9,717,920 9,717,920 9,717,920 9,717,920
----------------- --------------- -------------- ---------------
Per share amount $ (0.00) $ (0.00) $ (0.00) $ (0.00)
================= =============== ============== ===============
Basic loss per share attributable
to preferred stock dividend:
Loss - numerator $ (2,875) $ (2,875) $ (5,750) $ (5,750)
Shares - denominator 9,717,920 9,717,920 9,717,920 9,717,920
----------------- --------------- -------------- ---------------
Per share amount $ (0.00) $ (0.00) $ (0.00) $ (0.00)
================= =============== ============== ===============
10
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
January 31, 2001 and July 31, 2000
NOTE 2 - BASIC AND DILUTED LOSS PER SHARE (Continued)
The basic and diluted loss per share of common stock is based on
the weighted average number of shares issued and outstanding
during the period of the financial statements. Potential shares
that could be issued from the conversion of preferred stock
(11,500 shares issued and outstanding at January 31, 2001 and
2000) are excluded from the computation of diluted net loss for
the three and six months ended January 31, 2001 and 2000 because
they would have an antidilutive effect on the net loss per common
share. As a result, basic and diluted loss per share amounts are
the same for the year ended January 31, 2001 and 2000.
NOTE 3 - GOING CONCERN
The Company's consolidated financial statements have been prepared
using generally accepting accounting principles applicable to a
going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company, however, does not have sufficient cash or other current
assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to
continue as a going concern. The Company intends to develop a
telecommunications business that could generate revenues within
the next twelve months through the acquisition of an existing
company.
NOTE 4 - SUBSEQUENT EVENTS
During the fourth quarter of the year ended July 31, 2001, the
Company recognized an extraordinary gain due to the extinguishment
of accounts payable. The accounts payable, totaling $341,399, had
been outstanding since July 31, 1996. The company obtained a legal
opinion stating that the statute of limitations had expired on
these payables. As such, the creditors associated with the
accounts payable, can not assert future claims against the Company
for the debts and the amount was written off to extraordinary
gain.
On August 20, 2001, the Company issued 8,000,000 shares of the
Company's common stock for $40,000.
11
ORGANIK TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
January 31, 2001 and July 31, 2000
NOTE 4 - SUBSEQUENT EVENTS (Continued)
On October 1, 2001, the Company recorded an extraordinary gain
related to the extinguishment of accounts payable of $22,531.
On November 16, 2001, the Company and Telemax Global
Communications, Inc. (Telemax) entered into a Plan and Agreement
of Reorganization (the "Agreement"). In accordance with the
Agreement, the Company agreed to authorize a 20-for-1 reverse
stock split immediately prior to execution of the final agreement.
In the agreement, the Company will acquire all of the issued and
outstanding common stock of Telemax in exchange for 9,000,000 post
split shares of common stock. Upon the close of the transaction,
which is expected to occur by the end of January 2002, Telemax
will own approximately 95% of the Company's issued and outstanding
common stock. There is no assurance that this transaction will
close at the end of January 2002 or at any other time.
On December 4, 2001, the Company entered into agreements with all
of the individual owners of the Company's 11,500 shares of
outstanding preferred stock to convert those shares into a total
of 57,500 shares of post split shares upon execution of the
Telemax transaction.
12
ORGANIK TECHNOLOGIES, INC.
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OOPERATIONS
The information included in this discussion contains forward-looking statements
that are based on current expectations and beliefs and involve numerous risks
and uncertainties that could cause actual results to differ materially. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof.
Corporate History
Organik was incorporated on November 5, 1991 (as Big Sky Tacoma, Inc.), under
the laws of the State of Washington. The Company and its two wholly-owned
subsidiaries, Organik Honduras, Inc., and O.T. Fabrics, Inc. (collectively the
"Company"), were primarily engaged in the design, manufacture and marketing of
high-quality casual clothing made from all-natural, shrink-free, 100% cotton
knit fabric. The Company subsequently ceased its original business activity on
July 31, 1996.
The Company never recommenced operating activity, and thereafter primarily
investigated and sought new business opportunities.
Plan of Operation
The Company will continue to seek to acquire assets or shares of an operating
entity that generates revenues in exchange for the Company's securities. The
Company has no potential acquisitions in mind and has not entered into any
negotiations regarding any possible acquisitions. None of Organik's officers,
directors or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility of any
acquisition or merger between the Company and such other company as of the date
of this Form 10-QSB.
As noted by the Company's independent auditors in the Notes to the Financial
Statements dated January 31, 2001, there is a concern as to the ability of the
Company to continue to operate as a going concern since the Company has no
revenues. The Company has no full-time or part-time employees and Company's
officers and directors have agreed to allocate a portion of their time for no
compensation. Therefore, the expenses of the Company are generally confined to
annual filing fees and the associated legal and accounting fees for filing
reports under the Securities Exchange Act of 1934. The sources of funds for
these expenses continue to be non-interest bearing advances from the officers
and directors. In the event that this support is withdrawn, the ability of the
Company to continue to operate as a going concern or to implement its plans for
future acquisitions and/or mergers would be severely limited, if not impossible.
13
Results of Operations
From August 1996 through January 31, 2001, there have been no reportable
operations in that the Company has not engaged in any material business activity
and has not generated any revenues. It is not possible for the Company to
predict any financial uncertainties or the impact of inflation in that it has
not entered into any sales at this time.
An examination of the Financial Statements of the Company will disclose that
there were no expenditures for operating costs and $1,157 of administrative
costs for the six months ended January 31, 2001. The accounts payable, totaling
$426,667, had been outstanding since July 31, 1996. During the six months ended
January 31, 2001, the Company accrued dividends of $5,750 payable on the
outstanding preferred stock.
General Business Plan
The Company's plan is to seek, investigate and, if such investigation warrants,
acquire an interest in a business entity that desires to seek the perceived
advantages of a corporation which has a class of securities registered under the
Securities Exchange Act of 1934 (the "Exchange Act'). Management does not intend
to restrict the search to any specific business, industry, or geographical
location and the Company may participate in a business venture of virtually any
kind or nature. Management anticipates that it will be able to participate in
only one potential business venture because the Company has nominal assets and
limited financial resources. This lack of diversification should be considered a
substantial risk to the Company's shareholders because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Exchange Act requires that any merger or acquisition candidate comply with
certain reporting requirements, which include providing audited financial
statements to be included in the reporting filings made under the Exchange Act.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained at or within the required period of time
after closing of the proposed transaction.
The Company may enter into a business combination with a business entity that
desires to establish a public trading market for its shares. A target company
may attempt to avoid what it deems to be adverse consequences of undertaking its
own public offering by seeking a business combination with the Company. Such
consequences may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such an offering,
loss of voting control to public stockholders or the inability to obtain an
underwriter or to obtain an underwriter on satisfactory terms.
14
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest-free loans
to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a proposed
transaction.
The Company has no current plans, proposals, arrangements, or understandings
with respect to the sale or issuance of additional securities prior to the
location of and agreement with an acquisition or merger candidate.
15
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 8, 2002 ORGANIK TECHNOLOGIES, INC.
By: /s/ A.J. SALOMON
---------------------------------
A.J. SALOMON, PRESIDENT
16