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

To: Snowman who wrote (38227)	10/2/1998 10:47:00 AM
From: VALUESPEC	Read Replies (2) \| Respond to of 41046

I just read the 10K and have some thoughts: << As of June 30, 1998, the deferred compensation of $129,000 for the CEO was converted into a promissory note. One half of the principal balance of the note is convertible into shares of the Company's Common Stock at a conversion rate of 50% of the fair market value of the Common Stock at the date of conversion.>> Can anyone explain this paragraph taken from the 10K filed September 28, 1998? It seems to me that FTEL should have just paid the $ 129,000 in deferred compensation. Why would they offer Frank Peters such ridiculous terms on an amount which they could easily have repaid? Am I missing something? * * * * * Also, in looking at the 10K: Did revenues decrease in 1998 compared to 1997? From the 10K- <<RESULTS OF OPERATIONS Fiscal Year Ended June 30, 1998 Compared To Fiscal Year Ended June 30, 1997 Net Sales. Net sales decreased by $358,000, or 21%, from $1,735,000 in the year ended June 30, 1997 to $1,377,000 in the year ended June 30, 1998. The overall decrease is due to reduced demand for wide area network products, partially offset by increased demand for newly introduced hardware products, and Internet services. Three customers constituted 49% of total sales for the year ended June 30, 1998. The revenue mix for the year ended June 30, 1998 consisted of 13% wide area network products, including repair services, 43% DVG and D-Mark hardware products, and 44% Internet services.>> * * * * * How much cash did they burn between the last quarter and this quarter ended June 30, 1998? It appears to me that on June 30, 1998, they had only $ 5.7 mil in cash, way down from the $ 7.9 mil on March 31, 1998. Its appears that they burned over $ 2 mil in one quarter ! At $ 2 mil per quarter, how long will the $ 5.7 mil last? How long will it be before FTEL, yet alone FNET, needs to have another private placement? * * * * * Regarding the May 1998 joint venture with LibertyOne. Why hasn't it commenced, yet? << In May 1998, the Company's subsidiary, FNet, entered into a joint venture agreement with LibertyOne for the operation of telephone services in New Zealand and Australia. Operations of this joint venture have not yet commenced.>> * * * * * Regarding the Bosnia joint venture. What happens when the troops go home? I thought they were serving Bosnia, not just the troops. Was anyone else under the same impression? <<In June 1998, the Company's subsidiary, FNet, entered into a joint venture agreement with Megaburst for the operation of telephone services for NATO troops within Bosnia. Operations commenced in August 1998. (See Note 1, Page 12 to the Financial Statements).>> * * * * * Link to the FTEL 10K released Sept 28, 1998 for the year ended June 30, 1998: www4.edgar-online.com * * * * * I am learning a lot by following both these small companies and the large ones like Cendant. Cendant has been a great learning experience as I now look at larger companies much like I do the smaller companies like FTEL. Most companies seem to do things which are often hard to follow or verify, are often misleading, and are generally run for the benefit of the insiders. May we all prosper at whatever we do. FTEL: $ .69 VALUESPEC