As filed with the Securities and Exchange Commission on July 3, 1997
Registration Statement No. 33 - 96444 - D
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 ON
FORM S-3 TO
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
PEN INTERCONNECT, INC.
(Exact name of registrant as specified in its charter)
Utah 3357 87-0430260
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation) Classification Code Number) Identification No.)
Pen Interconnect, Inc. James S. Pendleton, Chairman
2351 South 2300 West Pen Interconnect, Inc.
Salt Lake City, Utah 84119 2351 South 2300 West
(801) 973-6090 Salt Lake City, Utah 84119
(Address, including zip code, and (801) 973-6090
telephone number, including area code, (Name, address, including zip
of registrant's principal executive offices) code, and telephone number,
including area code, of agent
for service)
Copy to:
Oscar D. Folger, Esq.
James W. Lucas, Esq.
521 Fifth Avenue
New York, New York 10175
(212) 697-6464
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. /_/
<PAGE>
SUBJECT TO COMPLETION, DATED July , 1997
Pen Interconnect, Inc.
2,950,000 Shares of Common Stock
and
500,000 Common Stock Purchase Warrants
-------------------
This Prospectus relates to the offering of an aggregate of 2,950,000
shares of the Common Stock, par value $.01 per share ("Common Stock"), of Pen
Interconnect, Inc. (the "Company") and warrants to purchase an aggregate of
500,000 shares of Common Stock (the "Warrants"). The Common Stock and Warrants
are sometimes referred to hereinafter as "Securities." The Company's Common
Stock and Warrants have been publicly traded since November 1995, when the
Company completed an underwritten initial public offering of 1,000,000 shares of
Common Stock and warrants to purchase 1,000,000 shares of Common Stock (the
"Initial Public Offering"). The underwriter of the Initial Public Offering was
Dickinson & Co. (the "Underwriter"). The Underwriter is not underwriting the
distribution of any Securities pursuant to this Prospectus, but it is a Selling
Security Holder hereunder. Only persons named herein as Selling Security Holders
may rely upon this Prospectus for resale of Securities owned by them. The
Securities included herein are being offered as follows:
- 2,350,000 shares of Common Stock are being offered by the Company which
are issuable upon exercise of: 1,150,000 warrants which were sold in
the Initial Public Offering (including 150,000 shares underlying
warrants issued pursuant to the Underwriters' over-allotment option)
and 1,200,000 warrants which have been sold by certain bridge lenders,
- 100,000 shares of Common Stock are being offered by the Underwriter or
its designees. These shares are issuable as part of certain warrants
which were issued to the Underwriter in connection with the Initial
Public Offering (the "Underwriter's Warrants").
- 100,000 warrants included in the Underwriter's Warrants are being
offered by the Underwriter or its designees.
- 100,000 shares of Common Stock are being offered by the Underwriter or
its designees. These shares are issuable upon exercise of the warrants
contained in the Underwriter's Warrants.
- 400,000 warrants are being offered by certain a Selling Security Holder
(the "Bridge Warrants").
- 400,000 shares of Common Stock issuable upon exercise of the Bridge
Warrants are being offered by the Selling Security Holder. If the
Bridge Warrants have been sold by the Selling Security Holders prior to
exercise, the shares of Common Stock issuable upon exercise of the
Bridge Warrants will be offered by the Company.
The Company will receive the exercise prices payable upon exercise of
the Warrants at $6.50 per share. The Company will not receive any proceeds from
the sale of the Warrants or Common Stock by the Selling Security Holders. The
Company has been advised by the Selling Security Holders that there are no
underwriting arrangements with respect to the sale of any Securities. The
Securities will be sold from time to time directly by the Company upon exercise
of Warrants and in other cases by the Selling Security Holders in the
over-the-counter market at then prevailing prices and in private transactions at
negotiated prices. Usual and customary brokerage fees, if any, may be paid by
the Selling Security Holders in connection with sales by the Selling Security
Holders.
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<PAGE>
The exercise price of the Warrants was determined by negotiations in connection
with the Initial Public Offering and is not necessarily indicative of the fair
value of the Warrants or the Common Stock. The Common Stock and Warrants are
quoted on the Nasdaq National Market System under the symbols "PENC" and
"PENCW," respectively. The closing sale prices of the Company's Common Stock and
Warrants onJune 27, 1997 as quoted on the Nasdaq National Market System, were $
1.656and $ 0.375, respectively.
---------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 6
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<PAGE>
THESE SECURITIES ARE SPECULATIVE AND
INVOLVE A HIGH DEGREE OF RISK AS
WELL AS IMMEDIATE AND SUBSTANTIAL
DILUTION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==============================================================================================================================
Price Underwriting Proceeds to Proceeds to
to Public Discounts and Company(2) Selling Security
Commissions (1) Holders (1)
-------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Per $ (1) $ 0
Share............................ 6.50 6.50
Per $ (1) $18,525,000
Warrant(3)...................
Total.................................
..
==============================================================================================================================
</TABLE>
(1) Not determinable at this time.
(2) Before deducting expenses of this offering payable by the Company
estimated at $75,000.
(3) Represents exercise price per share of Common Stock payable to the
Company upon exercise of Warrants. Price to Public of Securities being
sold by Selling Security Holders is not determinable at this time.
The date of this Prospectus is July , 1997
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports and other information may be inspected at the public reference
facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511; Seven World
Trade Center - 13th Floor, New York, New York 10048; and Suite 500 East, 5757
Wilshire Boulevard, Los Angeles, California 90036-3648. Copies of such material
may be obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549, at prescribed rates; and can also be accessed electronically through
the Commission's Web Site at http;//www.sec.gov.
------------------------
The Company will furnish its security holders with annual reports
containing audited financial statements at the end of each fiscal year. In
addition, the Company may, from time to time, issue unaudited interim reports
and financial statements.
THE FOLLOWING LEGEND WILL APPEAR IN RED INK ON THE FRONT PAGE OF THE PROSPECTUS
IN THE EVENT THAT THE PROSPECTUS IS CIRCULATED PRIOR TO BEING DECLARED EFFECTIVE
BY THE COMMISSION:
"The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell nor the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State."
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<PAGE>
The Company
Pen Interconnect, Inc. (the "Company") develops and produces on a
turnkey basis, interconnections solutions for original equipment manufacturers
("OEMs") in the computer, computer peripheral, and other computer related
industries, such as the telecommunications, instrumentation and testing
equipment industries. The Company's products connect electronic equipment such
as computers, to various external devices (such as video screens, printers,
external disk drives, modems, telephone jacks, peripheral interfaces and
networks) and connect devices within the equipment (such as power supplies,
computer hard drives and PC cards). The InCirT Division is engaged in the
electronic manufacturing services industry (EMSI), and provides sophisticated
ISO 9002-certified assembly and testing services for complex printed circuit
boards and subsystems. In addition, the Company's MOTO-SAT division is a
manufacturer of satellite receiving systems for recreational vehicles. The
Company was incorporated under the laws of the State of Utah on September 30,
1985. The Company maintains divisions located in Salt Lake City, Utah and
Tustin, California. The Tustin subsidiary was acquired in April 1996 for cash
and common stock from Cerplex Group, Inc. During the fiscal year ended September
30, 1996 the Company also had a division located in San Jose, California. The
San Jose division was sold by the Company in November 1996. The executive
offices of the Company are located at 2351 South 2300 West, Salt Lake City, Utah
84119. Its telephone number is 801-973-6090.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
securities offered by this Prospectus.
Factors Affecting Operating Results
The Company's operating results are affected by a wide variety of
factors, many of which are beyond the control of the Company, which could
adversely impact its net sales and profitability. The factors include the
Company's ability to design and introduce new products on a timely and
cost-effective basis, market acceptance of products of both the Company and its
customers, customer demand for the products of the Company and its customers,
the level of orders that are received and can be shipped in a quarter, customer
order patterns and seasonality, changes in product mix, product performance and
reliability, product obsolescence, the amount of any product returns, the
availability and costs of raw materials, equipment and other supplies, the
cyclical nature of both the computer industry and the markets addressed by the
Company's products, technological changes, competition and competitive pressures
on prices, and economic conditions in the markets served by the Company. The
Company believes its ability to continue to increase its manufacturing capacity
to meet customer demand and maintain satisfactory delivery schedules will be an
important competitive factor. The Company's products find application in a wide
variety of computer, computer peripheral, medical, telecommunications and
industrial control products. A slowdown in demand for products that utilize the
Company's products as a result of economic or other conditions in the markets
served by the Company or other broad-based factors could adversely affect the
Company's operating results. In addition, the Company will be adversely affected
if OEMs increase their own manufacture of interconnections or if large
manufacturers of cables, printed circuit board assemblies or connectors seek a
greater share of the molded cable assembly business.
Wide market acceptance of the Personal Computer Memory Card
International Association ("PCMCIA") standards and increasing sales of products
using the PCMCIA standards have been critical to the Company's growth prospects.
The success of the PCMCIA standards, however, cannot be accurately predicted
since such success will depend on the promotional efforts of leading computer
manufacturers and user acceptance. In addition, market acceptance of PCMCIA
standards can be expected to displace a portion of the Company's business for
traditional cabling. Further, the establishment of a significant market for
PCMCIA related products can be
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<PAGE>
expected to result in increased competition in this market. Manufacturers of
PCMCIA devices have standardized the connections between these devices and
internal computer devices and with cables leading to connections with the
external environment, such as the connection between PCMCIA modem devices and
cables to outside telephone jacks. There has been no standardization of the
connections between these cables and external devices, leading to substantial
need for customization of cabling. The Company's PCMCIA sales rely on custom
work for connections to external devices and will be significantly and adversely
affected should manufacturers succeed in standardizing these connections. As a
result, further standardization of PCMCIA devices could adversely affect the
Company's business.
Need to Establish and Expand Customer Base
Sales by the Company have historically been concentrated with several
large customers. The Company has worked to reduce its dependence on several
large customers, however sales to Xircom Inc. still accounted for approximately
16% for the year ended September 30, 1996. The loss of this major customer, or
other significant customers or a substantial reduction in a major customer's
purchases, may significantly and adversely affect the Company.
In addition to the concentration of the Company's sales among some
large customers, the Company's relationships with many of its customers,
including Xircom, are relatively new. Most of the Company's growth and new
customers have resulted from the PCMCIA cabling and contract manufacturing
market. Although the Company was one of the earliest entrants in the market for
PCMCIA compatible cable interconnections, the Company has been involved in this
new market for only about three years and cannot assess the stability of its
relationships with the new PCMCIA market customers.
The Company's sales to a particular customer also can vary
significantly depending on the life cycles of the customer's products. As a
result of the rapid pace of technological development in the computer and
computer peripheral industries, products frequently have life cycles of less
than a year. Demand for the Company's products and services can diminish
significantly as a customer's products reach the end of their useful sales lives
or become so standardized as to be appropriate for high volume, low cost
production. The Company must continue to expand its customer base in order to
consistently have customers that have products at the beginning of their life
cycles when demand for the Company's customized cable interconnection
development and production services is greatest. Therefore, the Company's future
prospects depend significantly on its ability to establish and maintain
long-term customer relationships over the sales lives of multiple products and
to add new customers in the rapidly changing market for compatible products.
Dependence on New Products and Technologies
The Company's future operating results will depend to a significant
extent on its ability to continue to develop and introduce on a timely basis new
products, which compete effectively on the basis of price and performance and
which address customer requirements. The success of new product introductions
depends on various factors, including proper new product selection, timely
completion and introduction of new product designs and the use and market
acceptance of customers' end products. The Company's inability to design,
develop and introduce competitive products on a timely basis could adversely
affect its future operating results. Some of the Company's products also require
compatibility with products manufactured by third-party vendors. There can be no
assurance the Company will be able to maintain compatibility in the event such
vendors modify their products. In addition, there can be no assurance that
products or technologies developed by others will not render the Company's
products noncompetitive or obsolete.
Technological Obsolescence
The industries that the Company serves are marked by rapid technological
change. The Company must
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<PAGE>
continuously modify its existing products and seek to develop new products in
order to remain competitive. There can be no assurance that new technological
developments will not adversely affect the Company. Specifically, technology has
been recently developed using electromagnetic transmission on infrared and UHF
frequencies that fulfill the functions of some of the Company's cable products.
Although this technology is still subject to significant obstacles, such as
maintaining the security of the transmissions and improving their capacity and
clarity, the successful development of "wireless" local data transmission could
render many of the Company's current products obsolete.
Limited Proprietary Technology
The Company does not have any patented technology. It regards aspects
of its manufacturing processes as trade secrets and seeks to protect this
know-how with secrecy agreements. There can be no assurance, however, that these
agreements will be enforceable in the event of a breach. Therefore, even if the
Company is able to develop successful new products, the Company may be limited
in its ability to prevent competitors from copying these products. In addition,
the Company has no registered trademarks, and products manufactured by the
Company typically do not refer to the Company by name or mark.
Management of Growth
The Company is currently experiencing a period of significant
expansion. The Company's ability to manage its expansion effectively will
require it to continue to enhance its operational, financial and management
systems. If the Company is unable to manage its acquisitions effectively, the
Company's results of operations could be adversely affected.
Factors Affecting Supplies
Many of the Company's suppliers are located outside the United States.
The purchase of materials from foreign suppliers may be adversely affected by
political and economic conditions abroad. Protectionist trade legislation in
either the United States or foreign countries, such as a change in the current
tariff structures or other trade policies, could adversely affect the Company's
ability to purchase materials from foreign suppliers. Also, to the extent that
such foreign transactions are denominated in currencies other than the U.S.
dollar, the Company may be exposed to exchange rate fluctuations. Although the
Company has not entered into non-U.S. dollar transactions and has not incurred
any material exchange gains or losses to date, there can be no assurance that
the Company will not enter into such transactions in the future or that
fluctuations in the currency exchange rates in the future will not have an
adverse effect on the Company's operations.
Certain key component parts used in the Company's interconnection
products are available from only one or a limited number of suppliers, and the
Company currently does not have long-term agreements with any suppliers of
components. Any reduction or interruption in supply from third-party contractors
would adversely affect the Company's results of operations unless or until
alternative sources are established. Moreover, operating results could be
adversely affected by the receipt of defective components, an increase in prices
from suppliers or the inability of the Company to obtain lower prices in
response to competitive price reductions. Finally, some of the Company's
suppliers may also enter the manufacture of custom cable interconnections, which
could adversely affect the Company's business by directly competing with the
Company and by ceasing or delaying supplies to the Company.
Competition
Many of the markets for the Company's products are highly competitive.
The Company competes directly with numerous other contract manufacturers that,
like the Company, obtain raw material from suppliers and in turn manufacture for
customers. The Company also indirectly competes with computer cabling and
connector
8
<PAGE>
manufacturers and major OEMs that produce their own cable assemblies. In all
product lines, such manufacturing and OEMs generally are substantially larger
and have greater resources than the Company. As new products become standardized
and are produced in large quantities, foreign producers in countries with lower
labor costs than the United States will be better able to compete for production
of the products since they can generally offer lower prices than the Company.
The Company also competes with other OEM companies to obtain supplies. A number
of the companies from which the Company buys material maintain proprietary
control of their newly designed products.
Impact of Price Variations of Raw Materials
Although the Company does not manufacture the cable sub components
itself, the raw materials purchased from manufacturers are a significant
component of the Company's cost of sales. The prices of such materials can vary
substantially based upon many factors including world economic and political
conditions. The Company may be able to pass on increases in material costs
resulting from increases in raw material costs to its customers. However, the
Company generally bids on projects in advance and may not be able to pass on
increased costs to the extent that raw material costs increase more than
anticipated.
Dependence on Key Personnel
The Company's success depends to a significant extent upon the
continued service of James S. Pendleton, its Chairman and Chief Executive
Officer; Wayne R. Wright, its Vice Chairman and Chief Financial Officer; Alan
Weaver its President and Chief Operations Officer and Stephen J. Fryer, its
Senior Vice President, Sales and Marketing. The Company has employment
agreements with Messrs. Pendleton and Wright which expire in January 2000, and
with Mr. Weaver which expires April 2000. The Company has obtained $1,000,000
key person life insurance on Mr. Wright and Mr. Pendleton and $500,000 on Mr.
Weaver. The Company also will continue to depend on other members of its senior
staff as well as on its ability to continue to attract, retain and motivate
additional qualified personnel. The competition for experienced personnel is
intense, and the loss of the services of one or more of the Company's key
employees could have a material adverse effect on the Company. There can be no
assurance that the Company will be successful in retaining its existing key
employees or in attracting and retaining any additional personnel it requires.
Potential Future Need for Additional Funds
Management believes that additional working capital may be required to
meet its future operating costs, for business expansion opportunities and to
adequately support its China strategic manufacturing alliance in addition to its
existing cash balances, borrowings available under the line of credit, and cash
generated from operations. However, there can be no assurance that such
additional financing, if required, would be available on favorable terms if at
all or that such additional financing, if available, would not result in
substantial dilution of the equity interests of existing stockholders.
Maintenance Criteria for Nasdaq Securities; Penny Stock Rules
Since March 13, 1996, the Common Stock and Warrants have been quoted on
the National Association of Securities Dealers Automated Quotation System
("Nasdaq") National Market System. The Common Stock and Warrants were previously
quoted on the Nasdaq Small-Cap Market. To maintain its listing on the Nasdaq
National Market System, the Company must continue to be registered under Section
12(g) of the Exchange Act and have net tangible assets of at least $1,000,000
(or more if the Company sustains operating losses), a public float of at least
200,000 shares with a market value of at least $1,000,000, at least 300
stockholders, a minimum bid price of $1.00 per share and at least two market
makers. In addition, Nasdaq has proposed increasing the requirements for
maintaining National Market System listing to net tangible assets of at least
$4,000,000, a public float of at least 750,000 shares with a market value of at
least $5,000,000 and at least 400 stockholders. As of September 30,
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1996, the Company would have complied with the new proposed requirements except
for the market value of the public shares. When the new requirements go into
effect the Company will need to comply within six months. In the event the
Company does not meet the conditions for maintaining its listing on the National
Market System, the Company believes it will qualify for listing on the Small-Cap
Market. There can be no assurance that the Company in the future will meet the
requirements for continued listing on the Nasdaq National Market System or
Nasdaq Small-Cap Market with respect to the Common Stock or Warrants. If the
Company's securities fail to maintain a Nasdaq listing, the market value of the
Common Stock and Warrants likely would decline and purchasers in this offering
likely would find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Common Stock and Warrants.
In addition, if the Company fails to maintain at least a Nasdaq
Small-Cap Market listing for its securities, and no other exclusion from the
definition of a "penny stock" under the Exchange Act is available, then any
broker engaging in a transaction in the Company's securities would be required
to provide any customer with a risk disclosure document, disclosure of market
quotations, if any, disclosure of the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
values of the Company's securities held in the customer's accounts. The bid and
offer quotation and compensation information must be provided prior to effecting
the transaction and must be contained on the customer's confirmation. If brokers
become subject to the "penny stock" rules when engaging in transactions in the
Company's securities, they would become less willing to engage in such
transactions, thereby making it more difficult for purchasers in this offering
to dispose of their shares.
Potential Reduction in Exercise Price of Warrants
The Company can reduce the exercise price of the Warrants upon notice
to the Warrant holders and may seek to promote the exercise of the Warrants by
reducing the exercise price thereof. The Company has no current plans to effect
such a reduction in the exercise price of the Warrants and holders of Warrants
should not anticipate such a reduction. In the event that the exercise price is
reduced, Warrant holders may be able to purchase Common Stock for a price less
than the then market value of the Common Stock which may result in a material
dilution to the then current holders of Common Stock.
Effect of Issuance of Preferred Stock
Certain provisions of the Company's Certificate of Incorporation allow
the Company to issue Preferred Stock with voting, liquidation and dividend
rights senior to those of the Common Stock without the approval of the Company's
stockholders. The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding stock
of the Company and result in the dilution of the value of the then current
stockholders' Common Stock. The Company has no present plans to issue shares of
Preferred Stock.
Substantial Dilution; Purchase of Common Stock at Prices Below the Offering
Price
Purchasers of Common Stock issuable upon exercise of the Warrants will
experience immediate and substantial dilution in the net tangible book value of
Common Stock purchased by them. If the Warrants were exercised as of March 31,
1997, such purchasers would experience a reduction in the net tangible book
value of the Common Stock purchased by them of $2.32 per share, or approximately
36%, from the exercise price of $6.50 per share.
State and Federal Registration Requirements for the Exercise of Warrants
Holders will have the right to exercise the Warrants only if the
underlying shares of Common Stock are then qualified or registered for sale
pursuant to an effective registration statement under the Securities Act of
1933,
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as amended (the "Securities Act") and under applicable securities laws of the
states in which they reside (if not exempt from such qualification or
registration requirements). In addition, under the securities laws of certain
states, holders of Warrants may be required to exercise such Warrants through a
registered broker-dealer. The Warrants require the Company to maintain an
effective registration statement under the Securities Act for the term of the
Warrants. Holders of Warrants residing in states where such shares are not
qualified or registered or otherwise exempt from such requirements may be denied
the right to exercise those Warrants.
Shares Eligible for Future Sale
Sales of substantial amounts of Common Stock of the Company in the
public market could adversely affect prevailing market prices. All of the
3,033,407 shares of Common Stock outstanding as of March 31, 1997 are eligible
for resale in the public market, subject to compliance with Rule 144 under the
Securities Act, or are currently registered for public sale.
Rights to Acquire Shares; Adverse Affect on Additional Funding
A total of 270,000 shares of Common Stock have been reserved for
issuance upon exercise of options granted under the Company's stock option plan,
under which options to acquire 105,000 shares at an exercise price of $6.00 per
share are currently outstanding. In addition, Warrants covering 400,000 shares
of Common Stock exercisable at a price of $6.50 per share currently are
outstanding and the Company has issued to the Underwriter of its principal
public offering or its designees warrants (the "Underwriter's Warrants") to
purchase up to 100,000 shares of Common Stock and 100,000 warrants (the
"Underlying Warrants"). The terms and conditions of the Underlying Warrants are
identical to those of the publicly traded Warrants. The Underwriter's Warrants
will be exercisable for a period of four years commencing November 18, 1996 at
an exercise price of 130% of the initial public offering price. All of the
foregoing Warrants are being registered for sale to the public by the
registration statement of which this Prospectus forms a part. During the terms
of such options and warrants, the holders thereof will have the opportunity to
profit from an increase in the market price of Common Stock with resulting
dilution in the interest of holders of Common Stock. The existence of such stock
options and warrants may adversely affect the terms on which the Company can
obtain additional financing, and the holders of such options and warrants can be
expected to exercise such options and warrants at a time when the Company, in
all likelihood, would be able to obtain additional capital by offering shares of
its Common Stock on terms more favorable to the Company than those provided by
the exercise of such options and warrants. See " Shares Eligible for Future
Sale."
Dividends Not Likely
The Company has never paid dividends on its Common Stock and does not
anticipate that it will pay dividends in the foreseeable future. Any earnings
that may be generated will be used to finance the growth of the Company's
business. In addition, the Company's revolving credit facility prohibits the
payment of cash dividends without the lender's consent.
Control by Current Directors
Upon the consummation of this offering, current directors will own
approximately 19% (prior to offering ownership was 37.4%) of the issued and
outstanding shares of Common Stock (assuming no exercise of any outstanding
options or warrants). Accordingly, the current directors will be able to
substantially influence the election of the Company's directors, to cause an
increase in the authorized capital or the dissolution, merger, or sale of the
assets of the Company and generally to control the affairs of the Company.
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Proceeds Not Allocated to Specific Uses
There can be no assurances that the Company will receive any proceeds
from the exercise of the Warrants. Not all warrants may be exercised which could
result in the proceeds to the Company resulting from this offering being
minimal. Any proceeds received from the exercise of the warrants would be added
to working capital. The Company has no definite plans for the use of any
proceeds from the exercise of the warrants nor has the Company made any specific
allocations as to the use of any such proceeds. While the Company anticipates
that a significant portion of any proceeds received will be used for current
manufacturing, administrative, marketing or research and development expenses,
the acquisition of inventory or related businesses, the repurchase of certain of
the Company's outstanding securities, or the repayment of debt, it has made no
specific allocation for these purposes and may use these funds for other general
corporate purposes. See "Use of Proceeds."
USE OF PROCEEDS
The net proceeds to the Company from the sale of 2,850,000 shares of
Common Stock upon exercise of Warrants would be approximately $18,450,000 after
taking into account estimated offering expenses of approximately $75,000. The
Company will receive no proceeds from the sale of Securities held by any Selling
Security Holders. There can be no assurance that any or all of the Warrants will
be exercised and accordingly, the Company might receive no or only minimal
proceeds from this offering. Potential proceeds from this offering may also be
reduced in the event that the Company elects to reduce the exercise price of the
Warrants. See RISK FACTORS - - Potential Reduction in Exercise Price of
Warrants.
Any proceeds received from the exercise of Warrants would be added to
working capital. The Company has no definite plans for the use of any proceeds
from the exercise of the Warrants nor has the Company made any specific
allocations as to the use of any such proceeds. The proceeds could be used for
current manufacturing, administrative, marketing or research and development
expenses, the acquisition of inventory or related businesses, the repurchase of
certain of the Company's outstanding securities, or the repayment of debt.
Future events, including changes in the economic climate and/or the Company's
planned business operations, including the success or lack thereof of the
various intended business activities, may make shifts in the allocation of funds
amongst these categories necessary or desirable. Any such shifts will be at the
discretion of the Board of Directors of the Company. In its financial planning,
the Company has not assumed the receipt of any funds from the exercise of the
Warrants. Prior to expenditure, any net proceeds will be invested in short-term
interest bearing securities or money market funds.
MATERIAL DEVELOPMENTS
No reportable material developments have occurred since the Company's
filing of its quarterly report on Form 10-QSB for the six months ended March 31,
1997.
LEGAL PROCEEDINGS
In 1996, the Company sold its San Jose Division to Touche Electronics,
Inc., ("Touche") and TMCI Electronics, Inc., ("TMCI"). On February 14, 1997,
Touche and TMCI filed a demand for arbitration for the purpose of rescinding the
Asset Purchase Agreement in Santa Clara County, California under the arbitration
provisions of the California Code of Civil Procedure Sections 1282 through 1284
as provided in the contract of
12
<PAGE>
sale. The plaintiffs are alleging that, in connection with the sale of the San
Jose Division, (the Division) (1) the Company overstated the value of the
Division's inventory, (2) the Division's vendors have refused to deal with
Touche and TMCI, and (3) the Company failed to disclose certain accounts
payable. As an alternative to rescinding the agreement the plaintiffs requested
a reduction in the purchase price in excess of $1,050,000 plus fees. The Company
is vigorously contesting those allegations in the arbitration.
On April 8. 1997, the Company filed a complaint against TMCI, Touche
and Rolando Loera in the Superior Court of the State of California, in and for
the County of Santa Clara, with respect to the defaulted Notes which were part
of the sale of the Division to Touche (the "Complaint"). In the Complaint, the
Company made claims against TMCI, Touche and the other defendants for, amoung
other things, breach of contract, fraud, conversion and claim and delivery. The
Company has also filed motions in the lawsuit for writs of attachment and
possession and has requested an order allowing the Company to attach the
equipment and other assets acquired by TMCI and Touche in the sale of the
Division. Hearings on those motions were held on May 29, 1997. The Company's
writ of attachment motion was denied. The Company now intends to pursue the
appointment of an arbitratior for purposes of resolving certain "offset" claims
of the obligees under the Notes and to enforce full payment of the Note
obligations.
PLAN OF DISTRIBUTION
Of the Securities being offered hereunder, 500,000 Warrants and 100,000
shares of Common Stock are being offered for the respective accounts of the
Selling Security Holders. In addition, the Selling Security Holders may sell
400,000 shares of Common Stock issuable upon exercise of the Bridge Warrants. In
the event that the Selling Security Holders sell the Bridge Warrants prior to
their exercise, the Company will sell the shares of Common Stock issuable upon
exercise of the Bridge Warrants. The Company will not receive any proceeds from
the sale of these Securities by the Selling Security Holders, although it will
receive the exercise prices of such Warrants when and if the Warrants are
exercised. The sale of Securities by the Selling Security Holders may be
effected from time to time in transactions in the over-the-counter market, in
negotiated transactions, through the writing or timing of options on the
Securities, or through a combination of such methods of sale, at fixed prices,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Such transactions may include
block transactions by or for the account of the Selling Security Holders. If any
Securities, or options thereon, are sold pursuant to this Prospectus at a fixed
price or at a negotiated price which is in either case other than the prevailing
market price or in a block transaction to a purchaser who resells, or if any
Selling Security Holder pays compensation to a broker-dealer that is other than
the usual and customary discounts, concessions or commissions, or if there are
any arrangements either individually or in the aggregate that would constitute a
distribution of the Securities, a post-effective amendment to the Registration
Statement of which this Prospectus is a part would need to be filed and declared
effective by the Securities and Exchange Commission before such Selling Security
Holder could make such sale, pay such compensation or make such distribution.
The Company is under no obligation to file a post-effective amendment to the
Registration Statement of which this Prospectus is a part under such
circumstances.
The Selling Security Holders may effect transactions in their
Securities by selling their Securities directly to purchasers, through
broker-dealers acting as agents for the Selling Security Holders or to
broker-dealers who may purchase the Selling Security Holders' Securities as
principals and thereafter sell such Securities from time to time in the
over-the-counter market, in negotiated transactions, or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Security Holders and/or the
purchasers for whom such broker-dealers may act as agents or to whom they may
sell as principals, or both.
The Selling Security Holders and any broker-dealers who act in
connection with the sale of the Securities hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any
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<PAGE>
commissions received by them and profit on any sale of the Securities as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act.
Common Stock issuable by the Company on exercise of the Warrants and
the warrants issued in the Company's Initial Public Offering is distributed when
and as such warrants are exercised by warrant holders. The warrants are
exercised when the warrant holder submits the exercise price of $6.50 per share
to the Company. Under the securities laws of certain states, holders of Warrants
may be required to exercise such Warrants through a registered broker-dealer. No
warrants have been exercised as of the date indicated on the cover of this
Prospectus. The Company may solicit the exercise of the warrants at any time,
and may redeem the warrants if the market price of the Company's Common Stock
rises to the necessary level. The Company may also reduce the exercise price of
the warrants in order to encourage their exercise. The Company has no present
intention to reduce such exercise prices.
The Underwriter of the Company's Initial Public Offering is not acting
as underwriter for, agent of, or in any other capacity for, the Company or the
Selling Security Holders in connection with the exercise of any warrants issued
by the Company, including the Warrants, the issuance and sale by the Company
upon exercise of any such warrants of the Common Stock and Warrants offered
hereby or the sale to the public by the Company and the Selling Security Holders
of any of the Common Stock or Warrants offered hereby. The Underwriter will not
receive any underwriting commissions or discounts or other compensation in
connection therewith, except for proceeds of the sale by it to the public of any
Common Stock or Warrants sold by it as a Selling Security Holder hereunder or
any normal brokerage fees or commissions payable in the event that warrant
holders elect to use it as a broker in connection with the sale of any
securities hereunder. See "Selling Security Holders."
14
<PAGE>
SELLING SECURITY HOLDERS
An aggregate of 500,000 Warrants and 100,000 shares of Common Stock are
being offered for sale by Selling Security Holders. The following table sets
forth certain information with respect to the Selling Security Holders. The
Company will not receive any of the proceeds from the sale of the Warrants and
shares of Common Stock, although it will receive proceeds from the exercise of
the Warrants, if exercised.
<TABLE>
<CAPTION>
Beneficial Beneficial
Ownership of Ownership of
Shares of Shares of
Common Stock Securities to be Common Stock
Selling Security Holders Prior to Sale (1) Sold After Sale
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paulette Marie Broadchandel 700,000 400,000 300,000
- -----------------------------------------------------------------------------------------------------------------------------------
Dickinson & Co. (2) 200,000 200,000 0
- ----------
</TABLE>
(1) With the exception of 100,000 shares of Common Stock to be sold by
Dickinson & Co., consists of shares of Common Stock issuable upon
exercise of the Warrants. The additional 100,000 shares of Common Stock
shown as beneficially owned by Dickinson & Co. consist of shares of
Common Stock issuable upon exercise of certain Underwriter's Warrants
granted to Dickinson & Co. as the Underwriter of the Initial Public
Offering. Assumes that the Selling Security Holders do not own any
additional shares of Common Stock or Warrants.
(2) Represents Securities issuable pursuant to Underwriter's Warrants
granted to Dickinson & Co. as the Underwriter of the Company's Initial
Public Offering. Such Securities may be issued to certain designees of
Dickinson & Co. Consists of 100,000 shares of Common Stock to be sold
directly and 100,000 shares of Common Stock issuable upon exercise of
Warrants.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock and
the Warrants offered hereby have been passed upon for the Company by Oscar D.
Folger, Esq., New York, New York.
EXPERTS
The financial statements of Pen Interconnect, Inc., as of September 30,
1996, and for each of the two years then ended, incorporated by reference from
the Company's annual report on Form 10-KSB for the fiscal year ended September
30, 1996, have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report appearing therein, and are included in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
15
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission by
the Company are incorporated herein by reference and made a part hereof. The
Commission file number for all documents which are incorporated by reference is
1-14072.
(1) Annual Report on Form 10-KSB for the fiscal year ended September
30, 1996.
(2) Quarterly Report on Form 10QSB for the three months ended
December 31, 1996.
(3) Quarterly Report on Form 10-QSB for the three months ended March
31, 1997.
(4) Form 8-K dated May 5, 1997 regarding the sale of the San Jose
Division.
(5) The Definitive Proxy Statement filed January 28, 1997.
(6) The section entitled "Description of Securities" in the Company's
registration statement on Form SB-2 (Registration No.
33-96444-D), declared effective on November 17, 1995.
In addition, all documents filed by the Company pursuant to Sections 13
(a), 13 (c), 14 and 15 (d) of the Exchange Act, prior to the termination of the
offering of the securities covered by this Prospectus or the filing of a
post-effective amendment which indicates that all securities have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated in this Prospectus and made a part hereof by reference from the
date of filing each such document. Any statement contained in an earlier
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded to
constitute a part of this Prospectus.
INDEMNIFICATION
The Certificate of Incorporation of the Company provides that all
directors, officers, employees and agents of the Company shall be entitled to be
indemnified by the Company to the fullest extent permitted by law.
The Company's Certificate of Incorporation provides that all directors,
officers, employees and agents of the Registrant shall be entitled to be
indemnified by the Company to the fullest extent permitted by law. The
Certificate of Incorporation also provides as follows:
The corporation shall, to the fullest extent permitted by the Act, as
the same may be amended and supplemented, indemnify all directors, officers,
employees, and agents of the corporation whom it shall have power to indemnify
thereunder from and against any and all of the expenses, liabilities, or other
matters referred to therein or covered thereby. Such right to indemnification or
advancement of expenses shall continue as to a person who has ceased to be a
director, officer, employee, or agent of the corporation, and shall inure to the
benefit of the heirs, executives, and administrators of such persons. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement may be entitled under any bylaw, agreement, vote of shareholders or
of disinterested directors or otherwise. The corporation shall have the right to
purchase and maintain insurance on behalf of its directors,
16
<PAGE>
officers, employees or agents to the full extent permitted by the Act, as the
same may be amended or supplemented.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
AVAILABLE INFORMATION
This Prospectus contains certain information concerning the Company and
its securities, but does not contain all the information set forth in the
Registration Statement and the Exhibits thereto filed with the Commission under
the Securities Act of 1933, as amended, to which reference is made. Any summary
from the Exhibits contained in this Prospectus is necessarily incomplete and
must not be considered as a full statement of the provisions of such
instruments.
17
<PAGE>
PEN INTERCONNECT, INC.
2,950,000 shares of Common Stock
and
500,000 Common Stock Purchase Warrants
-------------------------------
PROSPECTUS
-------------------------------
July , 1997
II-1
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee $ 6,696
Nasdaq Listing Fee 8,000
Printing and Engraving 10,000
Transfer Agent's Fee and Expenses 1,000
Legal Fees and Expenses 18,000
Blue Sky Qualification Fees and Expenses 13,000
Accountants' Fees and Expenses 12,000
Miscellaneous Expenses 6,304
-------
Total $ 75,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers
The Company has entered into agreements with each director and officer
in which the Company agrees to indemnify each director and officer to the
maximum extent permitted by law.
The Company's Certificate of Incorporation provides that all directors,
officers, employees and agents of the Registrant shall be entitled to be
indemnified by the Company to the fullest extent permitted by law. The
Certificate of Incorporation also provides as follows:
The corporation shall, to the fullest extent permitted by the Act, as
the same may be amended and supplemented, indemnify all directors, officers,
employees, and agents of the corporation whom it shall have power to indemnify
thereunder from and against any and all of the expenses, liabilities, or other
matters referred to therein or covered thereby. Such right to indemnification or
advancement of expenses shall continue as to a person who has ceased to be a
director, officer, employee, or agent of the corporation, and shall inure to the
benefit of the heirs, executives, and administrators of such persons. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement may be entitled under any bylaw, agreement, vote of shareholders or
of disinterested directors or otherwise. The corporation shall have the right to
purchase and maintain insurance on behalf of its directors, officers, employees
or agents to the full extent permitted by the Act, as the same may be amended or
supplemented.
Sections 16.10a-902 and 16.10a-903 of the Utah Revised Business
Corporation Act concerning indemnification of officers, directors, employees and
agents are set forth below.
16-10a-902 Authority to Indemnify Directors.
(1) Except as provided in Subsection (4), a corporation may indemnify
an individual made a party to a proceeding because he is or was a director,
against liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not opposed
to the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
II-2
<PAGE>
(2) A director's conduct with respect to any employee benefit plan for
a purpose he reasonably believed to be in or not opposed to the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) in connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding
he was adjudged liable on the basis that he derived an
improper personal benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
16-10a-903 Mandatory Indemnification of Directors.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any proceeding, or in the defense of any claim, issue or matter in
the proceeding, to which he was a party because he is or was a director of the
corporation, against reasonable expenses incurred by him in connection with the
proceeding or claim with respect to which he has been successful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to the court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Pursuant to the Underwriter's Warrant Agreement between the Company and
the Underwriter of the Company's Initial Public Offering, included as Exhibit 1
to this Registration Statement, the holders of the Underwriter's Warrants are
indemnified by the Company, against certain civil liabilities under the Act.
II-3
<PAGE>
Item 16. Exhibits.
Exhibit No. Description
1 Form of Underwriter's Warrant Agreement including Form of Underwriter's
Warrant*
3.1 Restated Certificate of Incorporation, as amended*
3.2 By-Laws*
4.1 Form of Warrant Agreement to be entered into between Registrant and
American Stock Transfer & Trust Company*
5.1 Opinion and Consent of Oscar D. Folger, Esq.*
23.1 Consent of Oscar D. Folger, Esq.*
23.2 Consent of Grant Thornton LLP
* Previously filed
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any fact or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in the volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the high and low and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1) (i) and (1) (ii) do not
apply if the registration statement is on Form S-3, or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein and the
II-4
<PAGE>
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That for purposes of determining any liability under the Securities
Act of 1933, each filing of Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and authorized this
registration statement to be signed on its behalf by the undersigned in Salt
Lake City, Utah as of the 1st day ofJuly, 1997.
PEN INTERCONNECT, INC.
By /s/ James S. Pendleton
James S. Pendleton,
Chairman/ Chief Executive Officer
Each person whose signature appears below hereby constitutes and
appoints James S. Pendleton as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3 and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933. Pursuant to the requirements of the Securities Act of
1933, this registration statement was signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ James S. Pendleton CEO and Chairman July 1, 1997
- ----------------------
James S. Pendleton
/s/ Wayne R. Wright Vice Chairman and CFO July 1, 1997
- --------------------- (Principal Accounting and
Wayne R. Wright Financial Officer)
/s/ C. Reed Brown Director July 1, 1997
- ----------------------
C. Reed Brown
/s/ Stephen J. Fryer Director and Senior Vice July 1, 1997
- ---------------------- President of Sales and Marketing
Stephen J. Fryer
/s/ James Harward Director July 1, 1997
- ---------------------
James Harward
II-6
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We have issued our report dated November 22, 1996 accompanying the
financial statements of Pen Interconnect, Inc. appearing in the 1996 Annual
Report on Form 10-KSB for the year ended September 30, 1996 which is
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the aforementioned
report, and to the use of our name as it appears under the caption "Experts."
\s\ Grant Thornton LLP
Salt Lake City, Utah
July 1, 1997
II-7
