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TELYNX INC files Form PRES14A, Preliminary Proxy
Statement
SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TELYNX, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated
and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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PROXY STATEMENT AND
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2001
To the Stockholders: NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders of Telynx, Inc. (the "Company") will be held at 10:00 a.m., on Friday,
June 1, 2001 at the Embassy Suites Hotel, 6100 Gateway East, El Paso, Texas, for
the following purposes:
1. To amend the Restated Certificate of Incorporation of the Company to increase
the number of authorized shares of Class A Common Stock to 1,000,000,000 from
200,000,000.
2. To amend the Restated Certificate of Incorporation of the Company to effect a
1-for-2 reverse stock split.
3. To transact such other business as may properly come before the meeting or any
adjournment thereof.
The foregoing items of business are more fully described in the proxy statement
accompanying this notice.
Only stockholders of record at the close of business on Wednesday, May 9, 2001
are entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof. A list of stockholders entitled to vote at the Special Meeting
will be available for inspection at the Company's offices at 6006 North Mesa, Suite
600, El Paso, Texas, for at least 10 days prior to and during the meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. HOWEVER, WHETHER OR NOT YOU ARE ABLE
TO ATTEND THE SPECIAL MEETING AND TO ASSURE YOUR
REPRESENTATION AT THE MEETING, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID,
SELF-ADDRESSED ENVELOPE. ANY STOCKHOLDER ATTENDING THE
MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE HAS RETURNED
A PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING AT ANY TIME PRIOR TO OR AT THE SPECIAL MEETING.
As you may be aware, Telynx, Inc. is close to exhausting its current supply of
authorized Class A Common Stock. Because of this, the Board of Directors of the
Company (the "Board") has called for a special stockholders meeting to address this
issue as set forth in the proxy statement that accompanies this notice. The Board's
recommendation is that the number of authorized shares of Class A Common Stock
be increased to 1,000,000,000 from 200,000,000. The increase in our authorized
shares of Class A Common stock will provide the Company with flexibility in
obtaining additional funding. We are requesting that you support the Board's
recommendations and vote your proxy to increase the number of Class A Common
Stock authorized. IF WE ARE UNABLE TO RAISE ADDITIONAL FUNDING,
THE COMPANY WILL NOT BE ABLE TO CONTINUE ITS OPERATIONS.
THEREFORE, IT IS VERY IMPORTANT TO THE SURVIVAL OF THE
COMPANY THAT YOU SUPPORT THE BOARD BY SIGNING YOUR
PROXY AND RETURNING IT IN THE ENVELOPE PROVIDED. In addition,
as discussed in more detail in the proxy statement, the increased number of
authorized shares will provide the Company with greater flexibility in connection
with any possible strategic mergers or acquisitions and in recruiting and retaining
qualified personnel. Furthermore, the Board recommends that a 1-for-2 reverse
stock split be effected for shares of the Company's Class A
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Common Stock, so that the amount of shares currently held by each holder of shares
of Class A Common Stock will be reduced by one half.
The Company has an excellent opportunity to take advantage of current market
conditions in the telecommunications industry with our Telynx product line, but we
need your help to take advantage of this opportunity. Please vote in favor of the
proposed amendments to our Certificate of Incorporation.
Sincerely,
Ali Al-Dahwi
Chairman, President and CEO
El Paso, Texas
May 4, 2001
YOUR VOTE IS IMPORTANT
TO ASSURE THAT YOU ARE REPRESENTED AT THE SPECIAL
MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN
THE ACCOMPANYING PROXY IN THE
SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE PROVIDED.
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TELYNX, INC.
6006 N. MESA, SUITE 600
EL PASO, TEXAS 79912
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2001
GENERAL
This proxy statement is furnished in connection with the solicitation by and on behalf
of the Board of Directors (the "Board") of Telynx, Inc. (the "Company") of proxies
to be used at a Special Meeting of Stockholders of the Company (the "Special
Meeting") to be held on Friday, June 1, 2001, and any postponement or adjournment
thereof.
RECORD DATE AND SHARE OWNERSHIP
Only stockholders of record at the close of business on May 9, 2001 (the "Record
Date") are entitled to notice of and to vote at the Special Meeting. At the close of
business on the Record Date, the Company had outstanding 151,656,912 (TO BE
ADJUSTED AT RECORD DATE) shares of Class A Common Stock and no
shares of Class B Common Stock. The Class A Common Stockholders are entitled
to one vote per share. The Class B Common Stockholders are entitled to ten votes
per share. The Company has outstanding 500 shares of Series B Preferred Stock
("Preferred B Stock"), the holders of which are entitled to vote on all matters
submitted to the Class A Common Stock shareholders. The Preferred B Stock
stockholders are entitled to 500 votes per share of Preferred B Stock. The Company
also has outstanding 1,260 shares of Series C Preferred Stock ("Preferred C
Stock"), the holders of which are entitled to vote on all matters submitted to the
Class A Common Stock shareholders. The Preferred C Stock stockholders are
entitled to 805,929 votes per share of Preferred C Stock.
VOTING AND SOLICITATION
The affirmative vote of the holders of a majority of the aggregate voting power of
the shares of Class A Common Stock, Class B Common Stock, Preferred B Stock
and Preferred C Stock voting together as a single class, present or represented at
the meeting, is required to amend the Certificate of Incorporation as described in
Proposals 1 and 2 or to transact such other business as may properly come before
the Special Meeting, or any adjournment thereof. Abstentions with respect to any
matter are treated as shares present or represented by proxy and entitled to vote on
that matter and thus have the same effect as negative votes. Broker non-votes and
other circumstances in which proxy authority has been withheld do not constitute
abstentions.
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PROPOSAL NUMBER 1
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
At the Special Meeting, holders of record as of the close of business on the Record
Date of the outstanding voting shares of the Company will consider and vote upon
an amendment to the Certificate of Incorporation. This amendment, if adopted, will
increase the number of authorized shares of Class A Common Stock to
1,000,000,000 from 200,000,000. The full text of the proposed amendment is
attached to this proxy statement as Appendix A.
The Board of Directors has declared advisable, authorized and approved, and
recommends to the stockholders that they consider and approve the amendment to
increase the authorized shares of Class A Common Stock. The shares of Class A
Common Stock do not have pre-emptive rights. The Company currently has
outstanding, as of April 24, 2001 (TO BE ADJUSTED FOR MAY RECORD
DATE), 151,656,912 shares of Class A Common Stock and 500 shares of Series B
Preferred Stock that are convertible at any time into 250,000 shares of Class A
Common Stock. The Company also has warrants outstanding for the purchase of
2,250,000 shares of Class A Common Stock and approximately 36,200,000 shares of
Class A Common Stock from a SB-2 Registration in reserve for conversion of
convertible notes payable. When the current outstanding Class A Common Stock,
Series B Preferred Stock if converted, warrants and convertible note conversions
are combined as current outstanding obligations to issue stock, the Company has
approximately 190,400,000 shares of stock outstanding or reserved for issuance.
This does not include approximately 201,600,000 shares of Class A Common Stock
that the Company would need to reserve if certain events transpired allowing the
holders of the Series C Convertible Preferred Stock to convert their Preferred
Shares into the Class A Common Stock, nor does it cover shares reserved for stock
options that the Board anticipates will need to be issued to employees. As a result of
the foregoing, the 200,000,000 shares of Class A Common Stock currently
authorized is an insufficient number of available authorized shares for the Company
to achieve its business objectives, and, therefore, the Board of Directors
recommends the approval of the amendments proposed herein.
As we have released our new product line, Telynx Version 2.0, and continue the
building up of our pipeline of potential customers, we believe that for the short to
medium term, our potential revenues will not meet the working capital requirements
of our operations as well as meet the liability requirements incurred by the Company
over the past few years. Thus, further working capital is required which establishes
the need for further financing necessary to the success and survival of the
Company. Additionally, the Company anticipates a need for additional working
capital as the Company expands in international markets. In order to assure that the
Company has some flexibility in obtaining financing, the availability of additional
Class A Common Stock is critical.
The Company also has a need for additional funding to support sales and marketing
costs as well as continuity of research and development costs and for working
capital needs. The Company will need such additional funding for the foreseeable
future until its sales revenues are sufficient to cover these costs. If the Company is
unable to raise the additional funding, it will not be able to continue its operations.
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The Company is also concerned with being able to attract and maintain a talented
workforce in a high technology industry. A significant aspect of the compensation
paid by companies competing in "high tech" industries is stock and options. In order
to attract and maintain such a workforce, the Company needs the flexibility to issue
stock and options as compensation to its employees. This tool will not be available to
the Company without your vote in support of the Board's recommendation to
increase our number of shares authorized.
The Company is currently and intends to in the future direct market its products.
This will require additional funding. Thus far, the Company has relied on its strategic
partners to make the Company's products visible and available to the
telecommunications industry for approximately 50% of our outstanding proposals.
The Company is in the process of attempting to streamline its marketing efforts and
increase the efficiency of such efforts. In the last seven months, we have started to
build a marketing and sales team to directly market our products. The Company
intends to continue direct marketing and sales. Therefore, the Company believes that
it is time to proceed with additional direct marketing for which additional capital is
required.
The additional shares of Class A Common Stock that would be available for
issuance if the proposed amendment is approved could be issued for any proper
corporate purpose by the Board at any time without further stockholder approval,
subject to applicable law. The voting and equity ownership rights of the Company's
stockholders may be diluted by such issuances. Stockholders will not have
pre-emptive rights to subscribe for shares of Class A Common Stock, unless the
Company grants such rights at the time of issuance. Other than as described above,
the Company currently has no plans or proposals to issue any of the additional
shares of Class A Common Stock.
The Board is required to make any determination to issue shares of Class A
Common Stock based on its judgment as to the best interests of the Company.
Although the Board has no present intention of doing so, it could issue shares of
Class A Common Stock that could, depending on the circumstances, make more
difficult or discourage an attempt to obtain control of the Company by means of a
merger, tender offer, proxy contest or otherwise. When in the judgment of the
Board such use would be in the best interest of the Company, such shares could be
used to create voting or other impediments or to discourage persons seeking to gain
control of the Company. Such shares could be privately placed with purchasers
favorable to the Board in opposing such action. The issuance of new shares of Class
A Common Stock also could be used to dilute the stock ownership of a person or
entity seeking to obtain control of the Company should the Board consider the action
of such entity or person to be in the best interest of the Company. Any such
issuance could also have the effect of diluting the earnings per share, book value per
share and/or voting power of the Class A Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" APPROVAL OF THE AMENDMENT
TO INCREASE THE NUMBER OF AUTHORIZED SHARES.
ALL PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE VOTED "FOR" PROPOSAL 1 UNLESS STOCKHOLDERS
SPECIFY IN THEIR
PROXIES A CONTRARY CHOICE.
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PROPOSAL NUMBER 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO EFFECT A ONE-FOR-TWO REVERSE STOCK SPLIT
Our Board has proposed amending Article IV of our restated certificate of
incorporation to effect a 1-for-2 reverse stock split (the "Stock Split"). The proposed
amendment will reduce the number of issued and outstanding shares of . . .
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