From: ""Tropika International""
To: "" ""
Subject: Repositioning Of Organization Creates Clear Focus
Date sent: Sun, 01 Jul 2001 20:39:55 -0400
Placement Addresses Working Capital Requirements
TORONTO, Canada - June 27, 2001 - John Ashbee, Chairman and CEO of Tropika
International Limited, today announced the implementation of a strategic
repositioning and corporate branding program as a result of significant business
changes within its investments and subsidiaries.
Simultaneously, working capital needs are expected to be resolved with todays
announcement of a private placement resulting in the issuance of up to
10,000,000 common shares of the company at a price of $0.05 per share resulting
in up to $500,000 in cash. The company has applied to CDNX for approval of this
arms length placement and will update the market immediately following their
decision.
Mr. Ashbee stated the changes we are announcing today are a result of a full
organizational review conducted over the last 5 months. These changes, when
complete will see the organization focused on businesses in which we have strong
intellectual property, assets and where a niche opportunity exists.
The customer service area of the company, operating as APS Marketing (100%
owned) will be renamed Itecx Online Inc. and will focus on providing
infrastructure and support to all types of Internet businesses including the
Internet casino industry. This company has a new management team and
streamlined operations resulting in a 50% reduction in monthly overheads
indicates Mr. David Prue, Sr.Vice President. The services will include:
24-hour service and technical support;
Marketing strategies/fulfillment;
Search Engine Optimization;
E-mail management
Anti-fraud services
Server hosting
Database management
Payment Exchange/Settlement
Signature Credit Card, the companys anti-fraud division (100% owned) will be
renamed Itecx Integrity Solutions and is positioned squarely in the credit card
and debit card fraud prevention sector of the Internet. The initial market of
Internet casinos has already been penetrated and the service is suited to any
vendor that accepts payment on the Internet. The company is heavily focused on
the ever-increasing debit card fraud issue and utilizes its comprehensive
databases that have been accumulated over the last 3 years.
Both of the above companies will be combined into one operating unit in the
coming year. During this period the Tropika Board of Directors will continue to
actively pursue transitioning this business to a reporting issuer status in
order to create a new public entity within the Tropika group.
Online Commerce Inc, a subsidiary of Tropikas, has until today, been an
operator of Internet casinos including the flagship Fairplay Casino. Industry
factors including credit card processing costs/availability, charge back costs,
competition, regulatory concerns and banking have made the operation of Internet
Casinos less attractive as an investment focus.
Mr. Ashbee indicated, the risks associated with revenue derived from the
operation of Internet casinos are increasing greatly. Random Number Generator
discrepancies (the software determining house margins supplied by Microgaming)
and legal issues within the North American marketplace are becoming too
uncertain. The soured relationship between Online Commerce and Microgaming (also
known as XXYX of Switzerland) has deteriorated based upon unresolved payout
discrepancies. These hurdles make the decision of the Tropika Board not to
increase its investment in this subsidiary a prudent protection of shareholder
value.
To that end Mr. Ashbee is announcing that effective today, Online Commerce Inc
will cease being a casino operator. The existing casinos will be deactivated
however the company plans to recapture some of its investment by selling the
brands and utilizing the databases in the near future. The final straw came when
the companys relationship with the OPA was destroyed based upon its decision to
follow Microgamings adamant demands that no money be paid directly to the OPA.
Tropika had already made a commitment to the OPA but rescinded that on the
premise that Microgaming was in a control position and they were expected to
support the decision.
Mr. Prue indicated that we have noted Mircogamings comments with regard to
payouts and contracts but we will defer to our solicitors advise with respect to
comment.
Mr. Prue further indicates the organization will be without revenue for the
next 60 days but post transition, net income and margins will be greater, more
stable and without the risk of gaming variability. The company is in the process
of negotiating service contracts intended to replace the top line revenue in the
near term. The reduction of the total corporate expenses to $80,000 per month
has been achieved in order to make this transition.
The Customer Relationship Management (CRM) application currently named
Websandwich (100% owned) will be renamed as E-Interaction Plus. Websandwich has
been involved in ongoing discussions with various divisions of the Bell
organization but is yet to receive confirmation of when marketing budget will be
available for launch. Based upon these ongoing delays, and with the capital now
available Websandwich will undertake direct and aggressive marketing internally
targeting ISPs and professional organizations. Websandwich has a 12-month
target of 1,000 clients representing $100,000 in net monthly recurring
revenue.
The previous business model of RC Securities Limited (and renamed Itecx
Technology Limited) will be replaced with the newer business to business (B2B)
model. This new division will be named Itecx Trading Limited and will be based
upon new back end software and system configurations. This model provides
infrastructure to banks and trust company as well as smaller brokerages. While
the marketing target is the offshore world, the company will be capable of
providing gateways to any client anywhere in the world. With working capital now
available, this upgraded product is scheduled for launch in the fall of this
year.
The above changes will result in the elimination of the companys complex
offshore structure originally intended to minimize tax liability by utilizing
reciprocal Revenue Canada tax agreements. This structure, while sound in its
nature, has contributed to regulatory concerns with respect to transparency. The
elimination of this structure should address these issues as well as improve
operational efficiency and is the clearest example of the overall restructuring.
These changes will be available on the company website and the exact structural
changes will be provided to shareholders in this years annual report. according
to Mr. Prue.
The Tropika Board of Directors has indicated that it will seek shareholder
approval to change the name of the company from Tropika International Limited to
Itecx Global Solutions, as part of its clear branding strategy, at the companys
next shareholders meeting. The companys new logo and brand identify will be
unveiled in the coming weeks. The Board also wishes to re-confirm that it has no
current plans to consolidate the outstanding share in the company.
In conjunction with these changes, the companys website www.tropika.com is in
the process of being redesigned and updated and may be off line for a period of
time to remain compliant with dissemination guidelines of the Ontario Securities
Commission.