news
FRANKLIN TELECOMMUNICATIONS CORP amends common stock. 3.1 mil shares.
IFN Smart Edgar News - November 07, 1997 15:46
%COM %regstmnt %ipo FTEL V%IFN P%SMRT
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Excerpted from S-1/A filed on 11/07 by FRANKLIN TELECOMMUNICATIONS CORP:
FRANKLIN TELECOMMUNICATIONS CORP amends common stock offering. 3.1 mil shares.
PROSPECTUS
3,103,750 SHARES
FRANKLIN TELECOMMUNICATIONS CORP.
COMMON STOCK
All of the 3,103,750 shares of Common Stock offered hereby, including
2,055,000 shares issuable upon exercise of warrants held by certain investors
(the "Warrants"), are being sold by the Selling Shareholders. The Company will
not receive any of the proceeds from the sale of shares by the Selling
Shareholders; however, it may receive proceeds from the exercise of warrants
held by the Selling Shareholders, and an additional amount equal to 30% of the
net proceeds received by the Selling Shareholders from the sale of the shares,
to the extent such net proceeds exceed $4.00 per share. See "Selling
Shareholders" and "Plan of Distribution." The Company's Common Stock is traded
on the OTC Bulletin Board under the symbol FTEL. The closing price of the
Company's Common Stock on November 5, 1997 was $5.81 per share.
The Company designs, manufactures and markets high speed communications
products and subsystems. The products are marketed through Original Equipment
Manufacturers ("OEMs") and distributors, as well as directly to end users. In
addition, through its majority-owned subsidiary, FNet, the Company is a
provider of Internet access and services to businesses and individuals.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND LIMITED
LIQUIDITY. SEE "RISK FACTORS" ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
(End of Item Excerpt)
THE COMPANY
Franklin Telecommunications Corp. (the "Company") designs, manufactures and
markets high speed communications products and subsystems. The products are
marketed through Original Equipment Manufacturers ("OEMs") and distributors, as
well as directly to end users. In addition, through its majority-owned
subsidiary, FNet Corp. ("FNet"), the Company is a provider of Internet access
and services to businesses and individuals. The Company is a California
corporation formed in 1981. Its address is 733 Lakefield Road, Westlake
Village, California 91361 and its telephone number is (805) 373-8688.
THE OFFERING
TABLE
C S
By Selling Shareholders............ 3,103,750 shares of the Company's Common
Stock, including 2,055,000 shares issuable
upon the exercise of warrants held by
certain investors (the "Warrants"),
611,750 shares previously issued upon the
exercise of warrants and stock options,
and 437,000 shares issued in connection
with certain acquisitions made by the
Company. The Company will not receive any
proceeds from the sale of these shares.
However, if the Selling Shareholders who
hold Warrants determine to exercise their
Warrants in order to sell shares
hereunder, the Company will receive the
net proceeds of the exercise of the
Warrants. If all of the Warrants were
exercised, the Company would receive
proceeds of $2,628,750, plus an additional
amount equal to 30% of the net proceeds of
the sale of the shares issued upon
exercise of the Warrants, to the extent
such net proceeds exceed $4.00 per share.
Common Stock Currently Outstanding. 16,082,686 shares, including the 2,055,000
shares issuable upon exercise of the
Warrants.
Risk Factors....................... The securities involve a high degree of
risk and limited liquidity. See "Risk
Factors."
TABLE
(End of Item Excerpt)
USE OF PROCEEDS
The Company will not receive the proceeds of sales of shares by the Selling
Shareholders. However, if the Selling Shareholders who hold Warrants determine
to exercise their Warrants in order to sell shares hereunder, the Company will
receive the proceeds of the exercise of the Warrants. If all of the Warrants
were exercised, the Company would receive net proceeds of a minimum of
$2,628,750, plus an additional amount equal to 30% of the net proceeds of the
sale of the shares issued upon exercise of the Warrants, to the extent such
proceeds exceed $4.00 per share. See "The Warrants." The Company plans to use
any such net proceeds for expanded advertising and marketing, payment of trade
accounts payable, and as working capital. The amounts actually expended for
each such use, if any, are at the discretion of the Company and may vary
significantly depending upon a number of factors, including the amount of such
proceeds, future revenue growth and the amount of cash generated by the
Company's operations. To the extent such proceeds are not utilized
immediately, they will be invested in United States government or governmental
agency securities or short-term insured certificates of deposit.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(End of Item Excerpt)
RESULTS OF OPERATIONS
Fiscal Year Ended June 30, 1997 Compared To Fiscal Year Ended June 30, 1996
Net Sales. Net sales increased by $1,305,000, or 303%, from $430,000 in the
year ended June 30, 1996 to $1,735,000 in the year ended June 30, 1997. The
overall increase is due to resurgence in demand for wide area network
products, initial demand for newly introduced hardware products, and
introduction of Internet services. Seven customers constituted 60% of total
sales for the year ended June 30, 1997. The increase in sales of wide area
network products related to shipments of the ACP 186, an existing
communication board used by a significant customer that significantly expanded
its operations during the period. Sales of the ACP 186 for the year ended June
30, 1997 were $436,000. The revenue mix for the year ended June 30, 1997
consisted of 68% wide area network products, including repair services, 9%
newly introduced D-Mark hardware products, and 23% Internet services.
Gross Profit (Loss). Gross profit increased as a percentage of net sales to
43% for the year ended June 30, 1997, from a gross loss of 37% of net sales
for the corresponding period of 1996. The gross profit percentage increase can
be attributed to increased sales of higher margin products and a spreading of
fixed manufacturing overhead costs over a larger sales base.
Operating Expenses. Operating expenses increased by $2,183,000, or 163%,
from $1,337,000 in the year ended June 30, 1996 to $3,520,000 in the year
ended June 30, 1997. Approximately 70% of the increase is attributable to a
one-time write-off of goodwill. The balance is attributable to increased
product development costs for the recently introduced hardware products, costs
in developing the Internet services infrastructure, increased sales and
marketing efforts, and costs in enhancing the general and administrative
infrastructure to support higher sales volumes.
(End of Item Excerpt)
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1997 by each director
and executive officer of the Company, each person known to the Company to be
the beneficial owner of more than 5% of the outstanding Common Stock, and all
directors and executive officers of the Company as a group. Except as
otherwise indicated below, each person has sole voting and investment power
with respect to the shares owned, subject to applicable community property
laws.
SHARES BENEFICIALLY OWNED
(INCLUDES EXERCISABLE OPTIONS)
NAME AND ADDRESS NUMBER PERCENT
Frank W. Peters .................... 5,147,719(1) 39%
733 Lakefield Road
Westlake Village, CA 91361
Peter S. Buswell ................... 105,000 1%
733 Lakefield Road
Westlake Village, CA 91361
Robert S. Harp ..................... -0- -0-
733 Lakefield Road
Westlake Village, CA 91361
Thomas Russell...................... 150,000 1%
733 Lakefield Road
Westlake Village, CA 91361
Sparrow Marcioni ................... 600,000 5%
733 Lakefield Road
Westlake Village, CA 91361
All directors and executive officers
of the Company as a group (5
persons)........................... 6,002,719 45%
(End of item excerpt.)
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1997 by each Selling
Shareholder, the number of shares to be sold by each, and the percentage
ownership of each Selling Shareholder after the sale of the Shares included in
this Registration Statement (including exercise of all warrants underlying
shares included in this table).
SHARES
BENEFICIALLY
OWNED AFTER
SHARES BENEFICIALLY OWNED SHARES OFFERING
---------------------------- TO BE ---------------
NAME NUMBER PERCENT SOLD NUMBER PERCENT
M. H. Meyerson & Co., 595,000 3.9% 595,000 -0- -0-
Inc......................
Wilson Davis.............. 30,000 0.2% 30,000 -0- -0-
Sam Wilson................ 50,000 0.3% 50,000 -0- -0-
Paul Davis................ 60,000 0.4% 50,000 10,000 .1%
Lyle Davis................ 120,000 0.8% 60,000 60,000 .4%
Byron Barkley............. 40,000 0.3% 40,000 -0- -0-
Bollard Investment Co..... 80,000 0.5% 40,000 40,000 .3%
Bruce Whaley.............. 40,000 0.4% 40,000 -0- -0-
E. Bryan Bagley........... 40,000 0.3% 40,000 -0- -0-
Joe Fisher................ 132,000 0.9% 110,000 22,000 .1%
Gary Nelson............... 128,000 0.8% 64,000 64,000 .4%
Gary Nelson
Transcorp C/F............. 11,000 0.1% 11,000 -0- -0-
Raleigh Baughman.......... 87,300 .6% 50,000 37,300 .2%
Blair Holder.............. 135,000 .9% 50,000 85,000 .6%
Vince Clements............ 100,000 .6% 50,000 50,000 .3%
Terry Widner.............. 135,175 .9% 50,000 85,175 .6%
Mike Peters............... 498,568 3.3% 190,000 308,568 2.0%
Delaware Charter Guaranty
& Trust Co., FBO
Ronald Heller............ 303,000 2.0% 303,000 -0- -0-
Delaware Charter Guaranty
& Trust Co., FBO
David Nagelberg.......... 303,000 2.0% 303,000 -0- -0-
Martin & Co............... 146,000 1.0% 146,000 -0- -0-
Michael and Linda 28,000 0.2% 28,000 -0- -0-
Silvestri................
Jeffrey Barber............ 14,000 0.1% 14,000 -0- -0-
Joel Marcus............... 12,000 0.1% 12,000 -0- -0-
Rocco Vezza............... 12,000 0.1% 12,000 -0- -0-
Joanne Gioia.............. 12,000 0.1% 12,000 -0- -0-
Joseph Schmidt............ 10,000 0.1% 10,000 -0- -0-
Eileen Rouse.............. 60,000 0.4% 10,000 50,000 .3%
Kevin Charos.............. 10,000 0.1% 10,000 -0- -0-
Marcia Joedicker.......... 20,000 0.1% 20,000 -0- -0-
Frederick I. Camerer...... 161,647 1.1% 17,500 144,147 .9%
Paul Sper................. 60,000 0.4% 60,000 -0- -0-
Sparrow Marcioni.......... 600,000 4.0% 300,000 300,000 2.0%
Mark Milhollan............ 12,000 0.1% 12,000 -0- -0-
Neil Wyenn................ 25,000 0.2% 25,000 -0- -0-
(End of item excerpt.)
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