UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2002
COMMISSION FILE NUMBER 0-26351
-------
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
WASHINGTON 81-0440517
- ------------------------------ --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
736 Dundas Street East
Toronto, Ontario, Canada M5A 2C3
- ---------------------------------------- -------------------------
(Address of Principal Executive Offices) (Zip Code)
(416) 703-0334
-----------------------------
(Issuer's Telephone Number)
ORGANIK TECHNOLOGIES, INC.
35 Austin Lane
Alamo, California 94507
-------------------------------------------
(Former Name, Former Address and Former Fiscal Year)
Common stock, no par value, 11,229,397 issued and outstanding
as of February 28, 2002
1
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION.............................................1
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS..........................................1
----------------------------
Condensed Balance Sheets as of
January 31, 2002 and as of July 31, 2001..........................2
Condensed Statements of Operations
for the Three Months and Six Months Ended
January 31, 2002 and 2001 and from Inception
through January 31, 2002..........................................3
Condensed Statements of Stockholders' Equity
(Deficit) through January 31, 2002................................4
Condensed Statements of Cash Flows
for the Six Months Ended January 31, 2002 and 2001
and from Inception through January 31, 2002.......................6
Notes to Condensed Financial Statements...........................8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION....13
PART II - OTHER INFORMATION...............................................16
- ---------------------------
ITEM 2. CHANGES IN SECURITIES.......................................16
------------------------------
ITEM 5. OTHER INFORMATION...........................................16
--------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................16
-----------------------------------------
i
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
CONDENSED FINANCIAL STATEMENTS
January 31, 2002 and July 31, 2001
1
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Balance Sheets
ASSETS
------
January 31, July 31,
2002 2001
------------------ -----------------
CURRENT ASSETS (Unaudited)
Cash $ - $ -
------------------ -----------------
Total Current Assets - -
------------------ -----------------
TOTAL ASSETS $ - $ -
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 57,552 $ 87,583
Payable - related party (Note 4) 54,267 -
Accrued dividends payable - 60,375
------------------ -----------------
Total Current Liabilities 111,819 147,958
------------------ -----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, no par value,
10,000,000 shares authorized;
-0- and 11,500 shares issued
and outstanding at January 31,
2002 and July 31, 2001,
respectively. - 100,318
Common stock, no par value, 999,397
and 50,000,000 shares authorized;
485,897 shares issued and outstanding
at January 31, 2002 and July 31, 2001,
respectively. 17,253,647 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 (997,537) (692,651)
------------------ -----------------
Total Stockholders' Equity (Deficit) (111,819) (147,958)
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ - $ -
================== =================
The accompanying notes are an integral part of these
condensed financial statements.
2
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
From
For the For the Inception on
Three Months Ended Six Months Ended August 1,
January 31, January 31, 1996 Through
----------------------------------- --------------------------------- January 31,
2002 2001 2002 2001 2002
----------------- ---------------- ---------------- --------------- -----------------
REVENUE $ - $ - $ - $ - $ -
OPERATING EXPENSES
General and administrative 169,881 1,157 181,431 2,315 1,094,872
Legal and professional 108,236 - 140,236 - 203,345
----------------- ---------------- ---------------- --------------- -----------------
Total Operating Expenses 278,117 1,157 321,667 2,315 1,298,217
----------------- ---------------- ---------------- --------------- -----------------
OPERATING LOSS (278,117) (1,157) (321,667) (2,315) (1,298,217)
----------------- ---------------- ---------------- --------------- -----------------
LOSS BEFORE
EXTRAORDINARY ITEM (278,117) (1,157) (321,667) (2,315) (1,298,217)
EXTRAORDINARY GAIN (Note 5) - - 22,531 - 363,930
----------------- ---------------- ---------------- --------------- -----------------
NET LOSS (278,117) (1,157) (299,136) (2,315) (934,287)
PREFERRED STOCK DIVIDENDS (2,875) (2,875) (5,750) (5,750) (63,250)
----------------- ---------------- ---------------- --------------- -----------------
LOSS ATTRIBUTABLE
TO STOCKHOLDERS $ (280,992) $ (4,032) $ (304,886) $ (8,065) $ (997,537)
================= ================ ================ =============== =================
BASIC AND DILUTED LOSS
PER SHARE (Note 2)
Loss from operations $ (0.31) $ (0.00) $ (0.35) $ (0.00)
Preferred stock
dividends (0.00) (0.01) (0.01) (0.02)
----------------- ---------------- ---------------- ---------------
Loss Per Share $ (0.31) $ (0.01) $ (0.36) $ (0.02)
================= ================ ================ ===============
The accompanying notes are an integral part of these
condensed financial statements.
3
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Statements of Stockholders' Equity (Deficit)
Common Stock &
Preferred Stock Additional Paid In Capital
--------------------------------- ------------------------------- Accumulated
Shares Amount Shares Amount Deficit
---------------- --------------- --------------- -------------- ----------------
Balance, July 31, 1995 11,500 $ 100,318 259,027 $ 12,363,989 $ (11,016,660)
Exercise of class A and B
warrants, net - - 73,509 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 - - - - (5,339,770)
---------------- ---------------- ---------------- -------------- ----------------
Balance, July 31, 1996 11,500 100,318 332,536 15,904,304 (16,367,930)
Issued 100,000 shares of common
stock for acquisition of Emerald
Apparel at $8.75 per share - - 100,000 875,000 -
Cancelled 32,778 shares of
common stock with no par value - - (1,639) - -
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 11,500 100,318 430,897 16,779,304 (17,259,060)
Common stock issued for
cash at $0.03 per share - - 50,000 30,000 -
Common stock issued to shareholder
for services at $0.60 per share - - 5,000 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 $ 100,318 485,897 $16,812,304 $ (17,353,589)
---------------- --------------- --------------- -------------- ----------------
The accompanying notes are an integral part of these
condensed financial statements.
4
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Statements of Stockholders' Equity (Deficit) (Continued)
Common Stock &
Preferred Stock Additional Paid In Capital
--------------------------- ----------------------------- Accumulated
Shares Amount Shares Amount Deficit
------------ ------------- ------------- ------------- --------------
Balance, July 31, 1998 11,500 $ 100,318 485,897 $ 16,812,304 $ (17,353,589)
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 11,500 100,318 485,897 16,812,304 (17,369,719)
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 11,500 100,318 485,897 16,812,304 (17,385,849)
Series A 10% preferred stock dividend
for six months ended July 31, 2001 - - - - (11,500)
Net income for the year ended
July 31, 2001 - - - - 336,769
------------ ------------- ------------- ------------- --------------
Balance, July 31, 2001 11,500 100,318 485,897 16,812,304 (17,060,580)
Common stock issued for cash at $0.10 per share
(unaudited) 400,000 40,000
Common stock issued to Directors for services
rendered at $2.90 per share (unaudited) 50,000 145,000
Cancelled 25,000 shares of common
stock with no par value (unaudited) (25,000)
Common stock issued for services at
$2.90 per share (unaudited) 25,000 72,500
Series A 10% Preferred stock dividend for six
months ended January 31, 2002 (unaudited) (5,750)
Common stock issued for conversion of preferred
stock and accrued preferred stock dividends
at $2.90 per share (unaudited) (11,500) (100,318) 57,500 166,443
Common stock issued to Directors for
services at $2.90 per share (unaudited) 6,000 17,400
Net loss for the six months ended
January 31, 2002 (unaudited) (299,136)
------------ ------------- ------------- ------------- --------------
Balance, January 31, 2002 (unaudited) - $ - 999,397 $ 17,253,647 $ (17,365,466)
============ ============= ============= ============= ==============
The accompanying notes are an integral part of these
condensed financial statements.
5
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
From
Inception of
Development
Stage on
For the Six Months Ended August 1,
January 31, 1996 through
---------------------------------- January 31,
2002 2001 2002
--------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (299,136) $ (2,315) $ (934,287)
Adjustments to reconcile net loss to net cash
used by operating activities:
Common stock issued for acquisition - - 875,000
Common stock issued for services 234,900 - 237,900
Common stock issued for payment of accrued
stock dividends 66,125 - 66,125
Gain on extinguishments of accounts payable (22,531) - (363,930)
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable (7,500) 2,315 61,050
Increase in payable - related party 54,267 - 54,267
--------------- ---------------- ----------------
Net Cash Provided (Used) by Operating Activities 26,125 - (3,875)
--------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
--------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 40,000 - 70,000
Dividends declared (5,750) (5,750) (63,250)
Decrease in accrued dividends payable (60,375) 5,750 (2,875)
--------------- ---------------- ----------------
Net Cash Provided (Used) by Financing Activities (26,125) - 3,875
--------------- ---------------- ----------------
NET INCREASE IN CASH - - -
CASH AT BEGINNING OF PERIOD - - -
--------------- ---------------- ----------------
CASH AT END OF PERIOD $ - $ - $ -
=============== ================ ================
The accompanying notes are an integral part of these
condensed financial statements.
6
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Condensed Statements of Cash Flows (Continued)
(Unaudited)
From
Inception of
Development
Stage on
For the Six Months Ended August 1,
January 31, 1996 through
---------------------------- January 31,
2002 2001 2002
------------ ------------- -------------
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 $ 234,900 $ - $ 237,900
Stock issued for accrued dividends $ 66,125 $ - $ 66,125
The accompanying notes are an integral part of these
condensed financial statements.
7
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Notes to the Condensed Financial Statements
January 31, 2002 and July 31, 2001
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed 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 financial statements include normal recurring
adjustments and reflects all adjustments, which, in the 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 financial
statements be read in conjunction with the Company's most recent
audited financial statements and notes thereto included in its
July 31, 2001 Annual Report on Form 10-KSB. Operating results for
the six months ended January 31, 2002 are not necessarily
indicative of the results that may be expected for the year ending
July 31, 2002.
The financial statements of the Company have previously been
presented on a consolidated basis including Organik Honduras, Inc.
and O.T. Fabrics, Inc. as wholly owned subsidiaries. These
subsidiary entities have been inactive since inception of the
development stage and have been involuntarily dissolved in their
respective domiciles. Since these companies are no longer legally
in existence, they have not been included in the accompanying
financial statements. The impact of excluding these subsidiary
companies from the financial statements presented for previous
periods is not material.
8
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Notes to the Condensed Financial Statements
January 31, 2002 and 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,
-------------------------- -----------------------
2002 2001 2002 2001
------------- ----------- ---------- -----------
Basic loss per share
from operations:
Loss - numerator $ (278,117) $ (1,157) $ (299,136) $ (2,315)
Shares - denominator 903,729 485,897 851,335 485,897
------------- ----------- ---------- -----------
Per share amount $ (0.31) $ (0.00) $ (0.35) $ (0.00)
============= =========== ========== ===========
Basic loss per share
attributable to preferred
stock dividend:
Loss - numerator $ (280,992) $ (4,032) $ (304,886) $ (8,065)
Shares - denominator 903,729 485,897 851,335 485,897
------------- ----------- ---------- -----------
Per share amount $ (0.31) $ (0.01) $ (0.36) $ (0.02)
============= =========== ========== ===========
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 (-0-
and 11,500 shares issued and outstanding at January 31, 2002 and
2001, respectively) are excluded from the computation of diluted
net loss for the three and six months ended January 31, 2002 and
2001 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, 2002 and
2001.
9
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Notes to the Condensed Financial Statements
January 31, 2002 and July 31, 2001
NOTE 3 - GOING CONCERN
The Company's 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 - PAYABLE - RELATED PARTY
As discussed in Notes 5 and 6, the Company entered into a
reorganization agreement with Telemax Global Communications, Inc.
(TGC) on November 16, 2001 that was ultimately closed on February
16, 2002. Subsequent to November 16, 2001 and through January 31,
2002, TGC advanced $54,267 to the Company to pay for operating
expenses. Accordingly, this amount has been reflected as payable
to a related party in the accompanying financial statements at
January 31, 2002. In financial statements issued subsequent to the
reorganization between the Company and TGC, this related party
payable will be eliminated in consolidation.
NOTE 5 - MATERIAL EVENTS
On August 20, 2001, the Company issued 400,000 shares of the
Company's common stock for $40,000.
On October 1, 2001, the Company recorded an extraordinary gain
related to the extinguishment of accounts payable of $22,531.
As mentioned in Note 4, on November 16, 2001, the Company and TGC
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
agreed to acquire all of the issued and outstanding common stock
of TGC in exchange for 9,230,000 post split shares of common
stock. Upon the close of the transaction, which was expected to
occur by the end of January 2002, TGC would own approximately 94%
of the Company's issued and outstanding common stock. As discussed
in Note 6 the closing of this transaction occurred on February 16,
2002.
10
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Notes to the Condensed Financial Statements
January 31, 2002 and July 31, 2001
NOTE 5 - MATERIAL EVENTS (Continued)
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 and all
accrued dividends into a total of 57,500 shares of post split
shares just prior to the closing of the Telemax transaction. On
January 28, 2002, the Company issued 57,500 shares of common stock
in compliance with this agreement. At the time of conversion,
$66,125 of accrued dividends had been outstanding.
On January 2, 2002, the Company issued 50,000 post split shares of
common stock valued at $2.90 per share to Directors for services
rendered related to the Agreement.
On January 2, 2002, the Company cancelled 25,000 post split shares
of previously outstanding common stock. The shares had no par
value.
On January 2, 2002, the Company issued 25,000 post split shares of
common stock valued at $2.90 per share for services of a third
party in relation to the Agreement.
On January 28, 2002, the Company issued 6,000 post split shares of
common stock valued at $2.90 to consultants for services rendered
related to the Agreement.
NOTE 6 - SUBSEQUENT EVENTS
On February 8, 2002, the Company effected a 1-for-20 reverse stock
split of its outstanding common stock as related to the approved
Agreement. As a result of this reverse stock split, the 19,987,920
shares of the Company's common stock was reduced to approximately
999,397 shares. Pursuant to the reverse stock split, all
fractional shares were rounded up to the nearest full share such
that no existing shareholder of the Company received less than one
share of the post-split common stock. All references to common
stock in the accompanying financial statements and footnotes have
been adjusted to reflect the post split shares.
On February 16, 2002, the Company closed its share exchange
transactions in which the Company acquired all of the issued and
outstanding shares of TGC in exchange for 9,230,000 shares of the
Company's common stock (see Note 4). As a result of this exchange,
TGC is now a wholly-owned subsidiary of the Company. TGC has two
wholly-owned subsidiaries, Parsecom, Inc. and Telemax
Communications, Inc.
11
TELEMAX GLOBAL COMMUNICATIONS, INC.
(Formerly Organik Technologies, Inc.)
(A Development Stage Company)
Notes to the Condensed Financial Statements
January 31, 2002 and July 31, 2001
Also, as a result of the exchange transaction, the Company's
primary business is now that business which is carried on by TGC
which includes the issuance of prepaid phone cards in Canada as
well as providing One-Plus long distance telephone service in
Canada. In addition to these core products, TGC is also involved
in other products and services including prepaid wireless, prepaid
Internet, point of sale terminals and the deployment of a
voice-over Internet protocol platform. TGC is also involved in
developing national telecommunications systems in various foreign
countries.
In February 2002, the Company also issued 1,000,000 shares of
post-split common stock to entities and individuals who were
instrumental in structuring and completing the exchange
transaction.
As a further result of the stock exchange transaction with TGC,
the Company has changed its name from Organik Technologies, Inc.
to Telemax Global Communications, Inc.
12
ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION
Caution about forward-looking statements
This Form 10-QSB includes "forward-looking" statements about future
financial results, future business changes and other events that haven't yet
occurred. For example, statements like we "expect," we "anticipate" or we
"believe" are forward-looking statements. Investors should be aware that actual
results may differ materially from our expressed expectations because of risks
and uncertainties about the future. We do not undertake to update the
information in this Form 10-QSB if any forward-looking statement later turns out
to be inaccurate. Details about risks affecting various aspects of the Company's
business are discussed throughout this Form 10-QSB and should be considered
carefully.
Plan of Operation for the Next Twelve Months
As used in this Form 10-QSB, the term "Company" and Telemax Global
Communications, Inc. refer to the Washington corporation formerly known as
Organik Technologies, Inc. Telemax Global Communications, Inc., the Canadian
corporation ("TGC") refers to an operating company whose business was combined
with and became that of the Company's. However, this combination between the
Company and TGC occurred after the ending date for the quarter reported in this
10-QSB.
As a consequence of the Company's discontinuance of its clothing
business in 1996, the Company has carried on only minimal business operations
primarily involving the identification and evaluation of other potential lines
of business.
As a result of these efforts, on November 16, 2001, the Company and
Telemax Global Communications, Inc., a Canadian corporation ("TGC") entered into
a Plan and Agreement of Reorganization (the "Agreement"). In accordance with the
Agreement, the Company will acquire all of the issued and outstanding common
stock of TGC in exchange for 9,000,000 shares of the Company's Common Stock
(subject to certain closing adjustments). The transaction contemplated by the
Agreement is intended to be a "tax-free" exchange pursuant to the provisions of
Sections 351 and 368(c)(1)(B) of the Internal Revenue Code of 1986, as amended.
The Closing of the transaction is subject to certain covenants and
representations and various due diligence requirements. This transaction closed
on February 16, 2002 (see "Subsequent Events").
Results of operations
Since the Company discontinued its clothing business in August, 1996
through January 31, 2002, the Company has not engaged in any material business
activity and has not generated any revenues.
For the three month and six month periods ended January 31, 2002, the
Company received no revenues from operations.
For the six month period ended January 31, 2002, the Company recognized
an extraordinary gain of $22,531 due to the extinguishment of an accounts
payable to a creditor.
13
For the three months and six months ended January 31, 2002, the Company
incurred general and administrative expenses of $169,881 and $181,431,
respectively. These expenses related primarily to shares issued to officers and
directors of the Company as payment for services rendered on behalf of the
Company. Legal and professional expenses were $108,117 for the three month
period ended January 31, 2002 and $140,236 for the six month period ended
January 31, 2002. The increase in professional expenses during the latest
quarter primarily consisted of legal and accounting and other expenses relating
to the Company's exchange transaction with TGC and the reporting obligations of
the U.S. Securities and Exchange Commission ("SEC"), preparation of financial
statements and business activities related to that transaction. Total operating
expenses of $278,117 and $321,667 for the three month and six month periods,
respectively, ended January 31, 2002 compare to $1,157 and $2,315 for the
similar periods ended January 31, 2001. This substantial increase in operating
expenses relates to the costs associated with bringing the Company's SEC filings
current and expenses incurred for the TGC exchange transaction.
Due to the continued lack of operating revenues and the significant
increase in operating expenses, the Company incurred a net loss of $278,117 for
the three months and $299,136 for the six months ended January 31, 2002. The six
month net operating loss amount was offset somewhat by a $22,531 extraordinary
gain. The Company incurred net losses of $1,157 and $2,315 for the similar
periods ended January 31, 2001 during which time the Company was inactive. The
Company expects its operating expenses to exceed its revenues for the
foreseeable future.
As a result of the exchange transaction which occurred subsequent to
the quarter ended January 31, 2002, the Results of Operation refer to the
Company's minimal operations for the quarter ended January 31, 2002. As a result
of the exchange transaction, which was consummated on February 16, 2002, the
Company's business operations have changed substantially (see "Subsequent
Events" below and refer the Company's Form 8-K filed with the SEC on February
25, 2002.
Liquidity and sources of capital
Due to the Company's lack of business operations, it does not expect to
generate revenues unless and until the reorganization with TGC is consummated.
Unless and until the reorganization with TGC is completed, the Company will be
wholly dependent on outside sources of capital to fund its ongoing operations.
The Company does not have any contractual commitment, arrangement or
understanding regarding any sources of capital. Consequently the Company will
have to rely on further equity investments in the Company . There is no
assurance that sources of investment capital will be available, or if available,
on terms acceptable to the Company. Pursuant to the Agreement, any further
issuance of stock or incurring debt would be subject to approval by TGC. Due to
the lack of current revenues, the failure of the Company to secure sufficient
capital would jeopardize its ability to continue operations.
In November, 2001, the Company sold 8,000,000 (400,000 post-split)
shares of its Common Stock to TGC for $40,000. These proceeds were used by the
Company to pay legal, accounting, transfer agent, filing fees and other expenses
relating to the reorganization with TGC. During the quarter ended January 31,
2002, the Company received advances from TGC of $54,267 which represents
transactional costs of the Company paid for by TGC. Any additional costs related
to the reorganization with TGC are expected to be paid for by TGC.
14
On January 30, 2002, the Company issued 1,150,000 (57,500 post-split)
shares of its Common Stock in exchange for cancellation of the Company's 11,500
shares of issued and outstanding Preferred Stock. This cancellation also removed
an accrued dividend liability of $66,125 owed thereon.
Subsequent Events
On February 8, 2002, the Company effected a 1-for-20 reverse stock
split of its outstanding Common Stock. As a result of this reverse stock split,
the 19,987,920 shares of the Company's Common Stock was reduced to approximately
999,397 shares. Pursuant to the reverse stock split, all fractional shares were
rounded up to the nearest full share such that no existing shareholder of the
Company received less than one share of the post-split Common Stock.
On February 16, 2002, the Company closed its share exchange transaction
in which the Company acquired all of the issued and outstanding shares of TGC in
exchange for a revised amount of 9,230,000 shares of the Company's Common Stock.
As a result of this exchange, TGC is now a wholly-owned subsidiary of the
Company and the former shareholders of TGC now own approximately 86% of the
Company's Common Stock outstanding after the Closing. TGC has two wholly-owned
subsidiaries, Parsecom, Inc. and Telemax Communications, Inc. Also, as a result
of the exchange transaction, the Company's primary business is now that business
which is carried on by TGC which includes the issuance of prepaid phone cards in
Canada as well as providing One-Plus long distance telephone service in Canada.
In addition to these core products, TGC is also involved in other products and
services including prepaid wireless, prepaid Internet, point of sale ("POS")
terminals and the deployment of a voice-over Internet protocol ("VOIP")
platform. TGC is also involved in developing national telecommunication systems
in various foreign countries.
In February 2002, the Company also issued 1,000,000 shares of
post-split common stock to entities and individuals who were instrumental in
structuring and completing the exchange transaction.
As a further result of the stock exchange transaction with TGC, the
Company has changed its name from Organik Technologies, Inc. to Telemax Global
Communications, Inc. TGC has changed its name to Telemax Global Communications
(Canada), Inc.
15
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
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 1,150,000 shares of the Company's
Common Stock. As a result, all of the Series A 6% Convertible Preferred Stock
was canceled along with $66,125 of accrued but unpaid dividends. The Company's
Common Stock was issued to the seven holders of the Series A Preferred Stock in
a private transaction deemed exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933 (the "1933 Act"). The shares issued in this
transaction are deemed to be "restricted securities" pursuant to Rule 144 of the
1933 Act.
On August 20, 2001, the Company sold 8,000,000 shares of its Common
Stock for $40,000. The shares were sold to TGC and the proceeds were used by the
Company to pay for expenses and fees relating to the share exchange transaction.
The shares were issued in a private transaction deemed exempt from registration
pursuant to Section 4(2) of the 1933 Act. The shares issued in this transaction
are deemed "restricted securities" pursuant to Rule 144 of the 1933 Act.
ITEM 5. OTHER INFORMATION
On January 22, 2001, the Company mailed to all its shareholders of
record an Information Statement pursuant to Section 14(f) of the Securities
Exchange Act of 1934. This Statement related to the anticipated change in
control and change of the Company's Board of Directors as a result of the
reorganization with TGC. This Information Statement was filed with the SEC on
January 22, 2002 and contains a description of the reorganization and the
respective businesses of the Company and TGC. As indicated in the Information
Statement, upon the Closing of the reorganization with TGC, the Company's
current Board of Directors resigned and four of the six Board positions were
filled by Evan Karras, Manu Missaghie, Farshid Missaghi and Ali Vakili.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K.
(i) The Company filed a Form 8-K for November 16, 2001
reporting an Item 2 event regarding the signing of
the Plan and Agreement of Reorganization between the
Company, Telemax Global Communications (Canada), Inc.
and the shareholders of Telemax Global Communications
(Canada), Inc.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the small business issuer has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TELEMAX GLOBAL COMMUNICATIONS, INC.
Dated: March 18, 2002 /s/ Evan Karras
--------------------------
Evan Karras, President
/s/ Jim McDowell
-------------------------
Jim McDowell, Principal Financial Officer
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