SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11616
FRANKLIN TELECOMMUNICATIONS CORP.
(Exact Name of Registrant as Specified in its Charter)
---------------
California 95-3733534
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
733 Lakefield Road, Westlake Village, California 91361
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (805) 373-8688
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
------------------- ---------------------
Common stock, American Stock Exchange
without par value
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes[ X] No [ ]
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date:
TITLE OF EACH CLASS OF COMMON STOCK OUTSTANDING AT MAY 16, 2001
----------------------------------- ---------------------------
Common Stock, no par value 42,480,796
Index
Franklin Telecommunications Corp.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 2001 (Unaudited) and June 30, 2000
Consolidated Statements of Operations (Unaudited) - Three months and
nine months ended March 31, 2001 and 2000
Consolidated Statements of Cash Flows (Unaudited) - Nine months ended
March 31, 2001 and 2000
Notes to Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Item 1. Financial Statements
FRANKLIN TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 (UNAUDITED) AND JUNE 30, 2000
MARCH 31, JUNE 30,
2001 2000
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(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents .................................................. $ 200,000 $ 1,275,000
Accounts receivable, less allowance for doubtful accounts of $69,000
(unaudited) and $50,000, respectively .................................... 78,000 136,000
Other receivables .......................................................... 48,000 8,000
Note receivable (a portion due from a related party) ....................... 60,000 64,000
Inventories (Note 2) ....................................................... 1,272,000 2,698,000
Prepaid expenses ........................................................... 98,000 80,000
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Total current assets ..................................................... 1,756,000 4,261,000
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Property and equipment
Machinery and equipment .................................................... 1,108,000 1,562,000
Furniture and fixtures ..................................................... 280,000 280,000
Computers and software ..................................................... 1,667,000 1,607,000
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3,055,000 3,449,000
Less accumulated depreciation .............................................. 1,625,000 1,291,000
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Total property and equipment ............................................. 1,430,000 2,158,000
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Other assets ................................................................. 438,000 738,000
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Total assets ............................................................. $ 3,624,000 $ 7,157,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations ............................. $ 28,000 $ 34,000
Convertible promissory note (due to a related party) (Note 4) ............ 100,000 -0-
Accounts payable ........................................................... 199,000 407,000
Accrued liabilities (Note 3) ............................................... 825,000 1,028,000
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Total current liabilities ................................................ 1,152,000 1,469,000
Long-term debt, (majority due to a related party) ............................ 762,000 762,000
Capital lease obligations, net of current portion ............................ -0- 20,000
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Total liabilities ........................................................ 1,914,000 2,251,000
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Contingencies (Note 5)
Shareholders' equity
Preferred stock, no par value 10,000,000 shares authorized,
Convertible Series C -0- (unaudited) and -0- shares issued and outstanding -0- -0-
Common stock, no par value 90,000,000 shares authorized 42,406,080
(unaudited) and 34,247,013 shares issued and outstanding ................. 35,084,000 32,270,000
Common stock committed, no par value 74,716 (unaudited) and 74,716 shares
committed but not yet issued ............................................. 82,000 82,000
Accumulated deficit ........................................................ (33,456,000) (27,446,000)
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Total shareholders' equity ............................................... 1,710,000 4,906,000
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Total liabilities and shareholders' equity ............................... $ 3,624,000 $ 7,157,000
============= =============
The accompanying notes are an integral part of these financial statements.
FRANKLIN TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2001 2000 2001 2000
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Sales
Product .................................. $ 66,000 $ 223,000 $ 379,000 $ 773,000
Telephone and Internet services .......... 126,000 535,000 725,000 1,646,000
------------- ------------- ------------- -------------
Total sales ......................... 192,000 758,000 1,104,000 2,419,000
------------- ------------- ------------- -------------
Cost of sales
Product .................................. 1,064,000 225,000 1,638,000 780,000
Telephone and Internet services .......... 230,000 1,468,000 942,000 2,774,000
------------- ------------- ------------- -------------
Total cost of sales ................. 1,294,000 1,693,000 2,580,000 3,554,000
------------- ------------- ------------- -------------
Gross profit (loss) ........................... (1,102,000) (935,000) (1,476,000) (1,135,000)
------------- ------------- ------------- -------------
Operating expenses
Research and development expenses ........ 245,000 431,000 1,132,000 1,315,000
Impairment of long-lived assets ....... 444,000 160,000 444,000 160,000
Selling, general, and administrative
Expenses .............................. 605,000 1,274,000 2,973,000 5,092,000
------------- ------------- ------------- -------------
Total operating expenses ............ 1,294,000 1,865,000 4,549,000 6,567,000
------------- ------------- ------------- -------------
Loss from operations .......................... (2,396,000) (2,800,000) (6,025,000) (7,702,000)
------------- ------------- ------------- -------------
Other income (expense)
Interest income .......................... --- 15,000 15,000 29,000
Interest expense ......................... --- (65,000) (2,000) (66,000)
Loss on disposal of property and equipment --- --- (3,000) (30,000)
Other income (expense) ................... 9,000 (17,000) (1,000) (11,000)
------------- ------------- ------------- -------------
Total other income (expense) ........ 9,000 (67,000) 9,000 (78,000)
------------- ------------- ------------- -------------
Net loss ...................................... $ (2,387,000) $ (2,867,000) $ (6,016,000) $ (7,780,000)
============= ============= ============= =============
Basic and diluted loss per common share ....... $ (.06) $ (.10) $ (.15) $ (.27)
============= ============= ============= =============
Weighted average common shares
outstanding used to compute basic
and diluted loss per common share ......... 42,456,352 30,011,592 39,411,068 28,372,479
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
FRANKLIN TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
NINE MONTHS ENDED
MARCH 31,
2001 2000
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(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ............................................................... $ (6,016,000) $ (7,780,000)
Adjustments to reconcile net loss to net cash
Used in operating activities
Depreciation and amortization .................................. 565,000 474,000
Provision for loss on obsolete inventory ....................... 1,133,000 ---
Provision for loss on doubtful accounts ........................ 38,000 ---
Stock issued for services rendered ............................. 325,000 142,000
(Gain) loss on disposal of property and equip .................. (3,000) 24,000
Loss on impairment of note receivable .......................... --- 160,000
Loss on impairment of long-lived assets ........................ 444,000 ---
Write-off of accounts receivable ............................... --- 1,529,000
(Increase) decrease in
Accounts receivable ............................................ 20,000 12,000
Other receivables .............................................. (36,000) 67,000
Inventories .................................................... 293,000 (234,000)
Prepaid expenses ............................................... (18,000) (54,000)
Increase (decrease) in
Accounts payable .................................................. (202,000) 169,000
Accrued liabilities ............................................... (103,000) (628,000)
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Net cash used in operating activities .................................. (3,560,000) (6,119,000)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment .................................... (75,000) (668,000)
Disposal of property and equipment ..................................... --- (34,000)
Other assets ........................................................... (3,000) (59,000)
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Net cash used in investing activities .................................. (78,000) (761,000)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable ................................ 100,000 2,500,000
Proceeds from exercise of stock options and
warrants ............................................................. 4,000 13,000
Proceeds from sale of common stock ..................................... 2,485,000 9,560,000
Payments on capital lease obligations .................................. (26,000) ---
Proceeds from sale of minority stock in
consolidated subsidiary .............................................. --- 53,000
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Net cash provided by financing activities .............................. 2,563,000 12,126,000
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Net increase (decrease) in cash and equivalents ........................ (1,075,000) 5,246,000
Cash and cash equivalents, beginning of the period ..................... 1,275,000 1,637,000
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Cash and cash equivalents, end of the period ........................... $ 200,000 $ 6,883,000
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
2001 2000
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(unaudited) (unaudited)
Interest paid .......................................................... $ 2,000 $ 0
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SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the nine months ended March 31, 2001, the Company issued 400,000 shares
(unaudited) of common stock for services valued at $325,000 (unaudited).
The accompanying notes are an integral part of these financial statements.
FRANKLIN TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1--GENERAL AND SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND ORGANIZATION
Franklin Telecommunications Corp. ("Franklin") and its subsidiaries
(collectively the "Company") manufacture and distribute data and telephony
communications, access and connectivity products for IP Telephony networks, T-1
and X.25 wide-area networks and provide IP Telephony and Internet services
through its majority-owned subsidiary, FNet Corp. ("FNet"). The Company's
customers are located predominantly in the United States, Canada, Australia,
South America and parts of Europe in a wide range of industries including
financial services, government, telephone services and manufacturing.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all normal, recurring adjustments considered
necessary for a fair presentation have been included. The financial statements
should be read in conjunction with the audited financial statements included in
the Company's annual report on Form 10-K for the fiscal year ended June 30,
2000. The results of operations for the nine months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 2001.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Franklin Telecommunications Corp. and its wholly-owned or majority owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount exceeds the fair value of the assets. During the nine months
ended March 31, 2000, the Company recognized $104,000 (unaudited) as an
impairment loss related to licenses which the Company is no longer using and
$340,000 (unaudited) as an impairment loss related to FNet discontinuing its
satellite telephone network in the Balkan region.
LOSS PER COMMON SHARE
The Company calculates loss per common share in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." Basic loss per share is computed by dividing the loss available to
common shareholders by the weighted-average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share, except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. The following potential
common shares have been excluded from the computation of diluted net loss per
share for all periods presented because the effect would have been
anti-dilutive:
For the Nine Months Ended
March 31,
---------------------------------
2001 2000
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(unaudited) (unaudited)
Options outstanding under the Company's stock
option plans 1,880,250 2,791,642
Options granted outside the Company's stock
option plans 1,630,000 1,194,508
Convertible notes payable 833,333 -
Warrants issued in conjunction with convertible
notes payable 1,000,000 1,000,000
Warrants issued in conjunction with various private
placements 5,800,267 2,099,267
Warrants issued as offering costs for convertible
notes payable 100,000 100,000
INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. A valuation allowance is
required when it is less likely than not that the Company will be able to
realize all or a portion of its deferred tax assets.
NOTE 2--INVENTORIES
Inventories consisted of the following:
MARCH 31, JUNE 30,
2001 2000
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(UNAUDITED)
Raw materials....... $1,190,000 $1,314,000
Work in process..... 207,000 222,000
Finished goods...... (125,000) 1,162,000
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Total.......... $ 1,272,000 $ 2,698,000
============= ==============
NOTE 3--ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
MARCH 31, JUNE 30,
2001 2000
----------- -----------
(UNAUDITED)
Salaries and related expense $ 654,000 $ 690,000
Customer deposits .......... 37,000 80,000
License payable ............ --- 100,000
Other accrued liabilities .. 134,000 158,000
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Total ............ $ 825,000 $1,028,000
=========== ===========
NOTE 4--CONVERTIBLE PROMISSORY NOTE
During the nine months ended March 31, 2001, the Company issued
convertible promissory debt of $100,000 (unaudited), payable to the Company's
Chief Executive Officer, which is convertible at the option of the holder into
the Company's common stock. Interest at 6% per annum and principal are due on
March 20, 2002. If the note holder elects to convert the debt into common stock,
the conversion price for each share will equal $0.12 per share, which is the
fair market value of the Company's common stock at the date of issuance.
NOTE 5--COMMITMENTS AND CONTINGENCIES
Service Agreement
During the nine months ended March 31, 2001, FNet entered into a
five-year service agreement with a satellite service provider to operate uplink
and downlink earth stations between the United States and the Balkan region. The
estimated fee for the project is $1,236,000 (unaudited).
Litigation
The Company is involved in certain legal proceedings and claims which
arise in the normal course of business. Management does not believe that the
outcome of these matters will have a material adverse effect on the Company's
consolidated financial position or results of operations.
NOTE 6--RECENT SALE OF EQUITY SECURITIES
During the three months ended March 31, 2001, the Company completed the
following significant common stock transactions of previously unissued common
shares: Issued 200,000 shares (unaudited) of common stock for services valued at
$100,000 (unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
Franklin Telecommunications Corp. ("Company") designs, manufactures and sells
Internet Telephony equipment, also called Voice Over Internet Protocol equipment
("VOIP") and other high speed communications products and subsystems. Our
products are marketed through Original Equipment Manufacturers ("OEMs") and
distributors, as well as directly to end users. In addition, through our
majority-owned subsidiary, FNet Corp. ("FNet"), we provide traditional switched
network and Internet Protocol telephony services, and Internet access to
businesses and individuals. The Company's customers are located throughout the
world in a wide range of industries including financial services, government,
telephone services and manufacturing.
The Company offers a suite of Internet Telephony solutions that enable business
communications over data networks. From the small office home office (SOHO) to
the branch office and headquarters operations of medium to large scale
corporations, the Company offers a cost-effective call handling solution. From
the enterprise to the carrier market, the Company offers converged network
solutions; managing the connectivity and integration of voice, data, fax and
video. Where ever possible, the Company offers a turnkey solution that can be
"owned" by its customers. When equipment sales are not in the best interest of a
particular customer's business communications solution, the Company plans to
provide that solution as a "service" that can be leased. The Company aims to be
a leading edge supplier of Internet Telephony solutions as a result of its
flexibility in providing on net and off net business communication solutions as
customer owned equipment or Franklin provided services on a global basis. The
Company's products and services enable connectivity and e-commerce.
The Company is both an equipment supplier and a service provider, offering
turn-key business communications solutions to both the carrier and enterprise
segments of the Internet Telephony market. The Company produces gateways,
gatekeepers and edge servers that provide advanced packet switching solutions
that significantly reduce the infrastructure costs associated with
communications networks. The Company's products are designed, developed and
manufactured by the Company.
In addition to manufactured solutions, the Company maintains a Network
Operations Center that provides both "on -net" and "off-net" connectivity for
the Company's equipment customers. The Network Operations Center interconnects
the Company's customers on a global basis. The Network Operations Center
includes Internet access facilities and a Class 4 circuit switch. The center
interconnects with three International Record Carriers and is capable of
completing a voice call to any phone in the world. The Company plans to offer
its equipment and services customers the opportunity to access the circuit
switched facilities and to interconnect with each other, using the Company to
enable "settlement" between the networks. This interconnection can be either
"free" through the Internet, or delivered through private leased lines.
As a result of the Company's expertise in network operations, the Company is
also able to provide additional assistance to its customers by offering design,
installation and network management services. The company believes that this
strategy of combining network operations and equipment design is a significant
product differentiation strategy, uniquely positioning the Company. Many of the
Company's customers elect to interconnect with the Network Operations center.
Much like the Internet, the Company is growing with each additional gateway
sale.
Forward-looking statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, including statements regarding
the Company's entrance into the Telephone and Internet business, newly
introduced products, development of "VOIP" service capabilities over the
Internet, net sales, gross profit, operating expenses, other income and
expenses, liquidity and cash needs and the Company's plans and strategies are
all based on current expectations, and the Company assumes no obligation to
update this information. Numerous factors could cause actual results to differ
from those described in the forward-looking statements.
As with any line of business, there can be no assurance that the DVG VOIP
products will gain widespread market acceptance or be profitable. In addition,
there can be no assurance that new hardware products and services developed by
others will not render the Company's hardware products and services
noncompetitive or obsolete.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31,
2000
NET SALES. Net sales decreased by $566,000, or 75%, from $758,000 in the
three months ended March 31, 2000 to $192,000 in the three months ended March
31, 2001. The decrease is due both to a reduction of DVG hardware systems sales
and reduced service revenue, primarily from the Balkan operation. The revenue
mix for the three months ended March 31, 2001 consisted of 66% Telephone and
Internet services revenue and 34% hardware product sales.
GROSS LOSS. Gross loss increased as a percentage of net sales to a gross
loss of 574% for the three months ended March 31, 2001, from a gross loss of
123% of net sales for the corresponding period of 2000. The gross loss
percentage increase can be primarily attributed to the $1,133,000 provision for
loss on obsolete inventory and secondarily to fixed hardware and service
overhead expenses spread over a smaller sales base.
OPERATING EXPENSES. Operating expenses decreased by $571,000, or 31%, from
$1,865,000 in the three months ended March 31, 2000 to $1,294,000 in the three
months ended March 31, 2001. The decrease was primarily attributable to a
reduced number of employees.
OTHER INCOME (EXPENSE). Interest income decreased by $15,000, or 100%, from
$15,000 in the three months ended March 31, 2000 to $-0- in the three months
ended March 31, 2001, due to reduced cash balances available to earn interest.
Interest expense decreased by $65,000, or 100%, from $65,000 in the three months
ended March 31, 2000 to $-0- in the three months ended March 31, 2001, due to
the repayment of $2,500,000 in convertible notes payable. Other components of
other income (expense) were immaterial and were due to various non operating
items.
NINE MONTHS ENDED MARCH 31, 2001 COMPARED TO NINE MONTHS ENDED MARCH 31, 2000
NET SALES. Net sales decreased by $1,315,000, or 54%, from $2,419,000 in
the nine months ended March 31, 2000 to $1,104,000 in the nine months ended
March 31, 2001. The decrease is due both to a reduction of DVG hardware systems
sales and reduced service revenue, primarily from the Balkan operation. The
revenue mix for the nine months ended March 31, 2001 consisted of 68% Telephone
and Internet services revenue and 32% hardware product sales.
GROSS LOSS. Gross loss increased as a percentage of net sales to a gross
loss of 134% for the three months ended March 31, 2001, from a gross loss of 47%
of net sales for the corresponding period of 2000. The gross loss percentage
increase can be primarily attributed to the $1,133,000 provision for loss on
obsolete inventory and secondarily to fixed hardware and service overhead
expenses spread over a smaller sales base.
OPERATING EXPENSES. Operating expenses decreased by $2,018,000, or 31%,
from $6,567,000 in the nine months ended March 31, 2000 to $4,549,000 in the
nine months ended March 31, 2001. The primary reason for the decrease was due to
a one time increase in the allowance for doubtful accounts of $1,284,000 during
the nine months ended March 31, 2000 for the receivable of a major customer and
to a reduced number of employees in the nine months ended March 31, 2001.
OTHER INCOME (EXPENSE). Interest income decreased by $14,000, or 48%, from
$29,000 in the nine months ended March 31, 2000 to $15,000 in the nine months
ended March 31, 2001, due to reduced cash balances available to earn interest.
Interest expense decreased by $64,000, or 97%, from $66,000 in the nine months
ended March 31, 2000 to $2,000 in the nine months ended March 31, 2001, due
primarily to the repayment of $2,500,000 in convertible notes payable. Other
components of other income (expense) were immaterial and were due to various non
operating items.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and net working capital totaled $200,000 and
$604,000, respectively, as of March 31, 2001. The primary source of cash has
been net proceeds generated from equity and debt financings. The Company has
relied on sales of new shares, loan proceeds and the exercise of warrants and
options to fund operations for an extended period of time. The Company received
$10,589,000 and $2,485,000 in equity financing for the year ended June 30, 2000,
and the nine months ended March 31, 2001, respectively. Its subsidiary, FNet,
raised $53,000 for the year ended June 30, 2000 and $-0- for the nine months
ended March 31, 2001. The Company and its subsidiary FNet have continued to
experience losses due to low sales results.
The Company anticipates that its primary uses of working capital in future
periods will be for product development, marketing and general working capital.
The Company believes that existing cash and cash equivalents, cash flow
from operations and cash raised through future anticipated private placements
will be sufficient to meet the Company's presently anticipated working capital
needs. The Company is currently having difficulty raising additional capital due
to the low trading price of its common shares. If the Company is unable to
obtain sufficient private placement financing, it may be unable to continue as a
going concern. There can be no assurance that such capital will be available on
acceptable terms.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FRANKLIN TELECOMMUNICATIONS CORP.
By /s/ FRANK W. PETERS
-----------------------------------
Frank W. Peters
Chief Executive Officer
Dated: May 17, 2001