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Microcap & Penny Stocks : FRANKLIN TELECOM (FTEL) -- Ignore unavailable to you. Want to Upgrade?

To: William Harvey who wrote (27205)	2/5/1998 7:06:00 PM
From: Martin P. Smith	Respond to of 41046

WH, the warrants are the right to buy FTEL shares (directly from Franklin) at $1.25. You are correct on the 30% over $4.00 however. Martin Smith

To: William Harvey who wrote (27205)	2/5/1998 7:08:00 PM
From: Darrel Orpen	Respond to of 41046

Evening William, I'm going into my memory here (patience please!) and, obviously being open to correction, understand the warrant holder having the right to exchange the warrant plus $1.25 and receive one share of FTEL. These shares are not marketable til after the S1 so conversion would occur only after this date (and suggestion has been made MHMY wouldn't convert under $5.00 and they reneged but were honourable enough to wait til after the 30 monitoring period for having the price above $5 for Nasdaq registration). MHMY would have given 600,000 warrants to FTEL plus $1.25 per warrant and received 600,000 free-trading FTEL common shares. This results in FTEL receiving $750,000 (600,000 X $1.25). MHMY then takes these shares to the market and sells them for the best price they can get. FTEL only gets what MHMY paid them to exercise the warrants (plus the 30% of the value exercised above $4.00 or something to that effect). The larger profits go to MHMY since they exposed themselves to the risk in financing FTEL at such an early stage of development. If all the warrants from these private placements of a few years ago are exercised, it should bring close to $3 million into FTEL's treasury. I'm not familiar with the rights attached to the private placements done last fall. I also agree completely with Doug Hurd's perception that there was a couple million dollars worth of positioning on the buy side today and these are likely friendly, longer-term holders. Any ideas when the other warrant holders will want to take profits? It appears there's plenty to support FTEL in this price range. Darrel Orpen