----------
339,668
Shares
FASTCOMM COMMUNICATIONS CORPORATION
Common Stock
----------
This Prospectus relates to the offer and sale of up to 339,668 shares of
Common Stock, par value $.01 per share, of FastComm Communications Corporation.
All of the Common Stock offered hereby may be sold from time to time by and for
the accounts of the selling stockholders named in this Prospectus (the "Selling
Stockholders"). See "Selling Stockholders." The methods of sale of the Common
Stock offered hereby are described under the heading "Plan of Distribution." The
Company will receive none of the proceeds from such sales. The Selling
Stockholders will pay all expenses in connection with this offering.
The Selling Stockholders and any broker-dealers that participate in the
distribution of the Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"), and any commission or profit on the resale of shares received by
such broker-dealers may be deemed to be underwriting commissions and discounts
under the 1933 Act. Upon the Company's being notified by a Selling Stockholder
that any material arrangement has been entered into with a broker or dealer for
the sale of shares through a secondary distribution, or a purchase by a broker
or dealer, a supplemental Prospectus will be filed, if required, disclosing
among other things the names of such broker-dealers, the number of shares
involved, the price at which such shares are being sold and the commissions paid
or the discounts or concessions allowed to such broker-dealers.
The Common Stock of the Company is listed on the NASDAQ-NMS System (Symbol:
FSCX). The Securities offered hereby involve a high degree of RISK. See
"CERTAIN RISK FACTORS" at page 3 of this Prospectus.
----------
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.
----------
================================================================================
Underwriting Prodeeds
Estimated Discount to Selling
Price to Public and Commission Security Holders
- --------------------------------------------------------------------------------
Per Share $12.00 $0.0 $12.00
- --------------------------------------------------------------------------------
Total $----- $0.0 $4,076,016
- --------------------------------------------------------------------------------
The date of this Prospectus is August 15, 1996
1
<PAGE>
No person has been authorized to give any information or to make any
representation other than those contained in, or incorporated by reference into,
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or any Selling
Stockholders. This Prospectus does not constitute an offer to sell or
solicitation of an offer to buy, nor shall there be any sale of these securities
by anyone, in any state in which such offer, solicitation, or sale would be
unlawful prior to the registration or qualification under the securities laws of
any state, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the information herein or the affairs of the Company since the date
hereof.
A registration statement on Form S-3 in respect of the Common Stock offered
by this Prospectus (the "Registration Statement") has been filed with the
Securities and Exchange Commission (the "Commission"), Washington, D.C. 20549,
under the 1933 Act. This Prospectus does not contain all of the information
contained in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission. Accordingly,
additional information concerning the Company and such securities can be found
in the Registration Statement, including various exhibits thereto, which may be
inspected at the Public Reference Section of the Commission.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Commission. Reports, proxy and
information statements, and other information filed by the Company with the
Commission can be inspected and copied, at prescribed rates, during normal
business hours at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; New York Regional Office, 75 Park Place, 14th Floor, New
York, New York 10007. Copies of such materials can also be obtained from the
Public Reference Section of the Commission, at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into this Prospectus:
(1) Form 10-K for the fiscal year ended April 30, 1996, filed with the
Commission pursuant to Section 13(a) of the 1934 Act;
(2) Form 10-K/A for the fiscal year ended April 30, 1996, filed with the
Commission pursuant to Section 13(a) of the 1934 Act;
(3) Form 10-K for the fiscal year ended April 30, 1995, filed with the
Commission pursuant to Section 13(a) of the 1934 Act;
(4) Form 10-K/A for the fiscal year ended April 30, 1995, filed with the
Commission pursuant to Section 13(a) of the 1934 Act;
(5) Form 10-Q for the fiscal quarters ended August 5, 1995, November 4,
1995 and February 3, 1996 filed pursuant to Section 13(a) of the 1934 Act since
the end of the fiscal year covered by the Annual Report referred to above;
(6) Form 10-Q/A1 for the quarter ended February 3, 1996, filed with the
Commission pursuant to Section 13(a) of the 1934 Act; and
(7) The description of the Company's Common Stock registered under the 1934
Act contained in the Company's Form 8-A filed with the Commission on September
8, 1988, including any amendments or reports filed for the purpose of updating
such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering, shall be deemed to be incorporated by reference
into this Prospectus. Any statement contained herein or in a 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 or is 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.
2
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the foregoing
documents incorporated herein by reference (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporated). Requests should be directed to FastComm Communications
Corporation, 45472 Holiday Drive, Sterling, Virginia 20166 (703) 318-7750,
Attention: Investor Relations.
CERTAIN RISK FACTORS
The securities offered hereby involve a high degree of risk. Each
prospective investor should carefully consider the following risk factors
inherent in, and affecting the business of, the Company before making an
investment decision.
1. Recent History of Losses. The Company incurred net losses of $1,999,000,
$4,084,000, and $631,000 for the years ended April 30, 1994, 1995 and 1996.
There can be no assurance that the Company will generate sufficient revenues to
meet expenses or to operate profitably in the future.
2. Competition. The Company competes with other companies involved in the
networking industry and the distribution of data communications equipment. These
competitors include computer manufacturers, software vendors, telephone
companies and distribution companies. This market is highly competitive, and
some companies with which the Company competes are substantially larger and have
significantly greater resources than the Company. There can be no assurance that
the Company will be able to continue to compete successfully in the future.
3. Fourth Quarter Adjustments. During the fourth quarter ended April 30,
1995, the Company increased its allowance for doubtful accounts by $200,000
($0.02 per share) to take account of products returned and credited to customers
in the fourth quarter as well as to provide for future sales returns and
allowances. The Company also increased its reserve for inventory obsolescence in
the fourth quarter by $295,000 ($0.04 per share) primarily to take account of
certain slow moving data compression and analog modem inventory.
During the fourth quarter ended April 30, 1994, the Company reversed a sale
in the amount of $580,000 which was originally recorded in the third quarter
ended February 5, 1994. The reversal of the sale was made after certain
technical difficulties arose in the fourth quarter regarding the project for
which the Company's precede was intended. These matters were not identified by
management at the time of sale. The effect on third quarter and fiscal 1994
operating results of the reversal of the sale was to increase net loss by
approximately $296,000, and to increase the per share net loss by ($0.04) per
share.
Also during the fiscal 1994 fourth quarter, the Company increased its
allowance for doubtful accounts to take account of products returned and
credited to customers in the fourth quarter as well as to provide for potential
future returns and allowances. The increase in the allowance includes $220,000
which management now believed was attributable to matters which existed at the
end of third quarter. The effect on third quarter and fiscal 1994 and operating
results of increasing the allowance for doubtful accounts by $220,000 was to
increase the net loss by $220,000 and to increase the net loss per share by
($0.03).
4. Restatement of Fiscal 1993 Financial Statements. The Company restated
its 1993 financial statements to reflect corrections to the accounts payable,
cost of goods sold and additional paid-in capital accounts, in connection with
the re-audit of the 1993 financial statements by the Company's accountants BDO
Seidman.
With respect to the 1993 financial statements, the restatement reduced the
pre-tax income and the net income by $90,000 ($0.01 per share). The restatement
had no effect on total stockholders' equity as originally reported.
5. Pending SEC Investigation. The United States Securities and Exchange
Commission ("SEC") is currently conducting a confidential inquiry pursuant to a
formal order directing a private investigation. This inquiry, which commenced in
September, 1994 is confidential and should not be construed as an indication by
the SEC or the staff thay any violations of law have occurred relating to
certain prior public disclosures and periodic reports of the Company. The
Company is cooperating fully with the SEC staff. No assurance can be given
concerning the outcome of this investigation or that the inquiry will be
resolved in the near future.
6. Weaknesses in Internal Accounting Controls. In 1993 the Registrant was
informed by its then independent public accounting firm, Deloitte & Touche LLP,
of certain weaknesses in its internal accounting controls, including interim
financial accounting valuation accounts, inventory accounting and account
receivable aging. Subsequently the Company has taken numerous steps, including
(i) the hiring of a Chief Financial Officer, controller, and accounting staff
(ii) establishing weekly internal reports to provide improved information to
management; (iii) enhanced order processing procedures whereby all purchase
orders are subject to two levels of review and (iv) updating of procedures and
development of automated reports to analyze and update accounting estimates to
respond to these weaknesses.
7. Fluctuations in Quarterly Operating Results. The Company has
historically experienced substantial quarterly fluctuation in its operating
results. Due to changes to software and the relatively high revenues per units
sold, production or shipping delays or customer order rescheduling can
significantly affect quarterly revenues and profitability. The Company has
experienced and may again experience quarters during which a substantial portion
of the Company's net sales are realized near the end of the quarter.
Accordingly, delays in shipments near the end of a quarter can cause quarterly
net sales to fall significantly sort of anticipated levels. Since most of the
Company's expenses are fixed in the short term, such shortfalls in net sales
could have a material adverse effect on the Company's business and results of
operations. The Company's operating results may also vary from quarter to
quarter based upon numerous factors including the timing of new product
introductions, product mix, levels of sales, proportions of domestic and
international sales activities of competitors, acquisitions, international
events and problems in obtaining adequate materials or components on a timely
basis.
8. Shares Eligible for Future Sale. The Company has approximately 9,808,086
shares of Common Stock outstanding, of which approximately 8,668,648 shares are
freely tradeable without restriction. The Company's executive officers and
directors beneficially own 1,151,433 shares of Common Stock, excluding
approximately 195,00 shares issuable upon exercise of options.
Sales of a substantial number of shares in the public market could
adversely affect the market price of the Common Stock and the Company's ability
to raise additional capital at a price favorable to the Company.
THE COMPANY
FastComm Communications Corporation, a Virginia corporation ("FastComm" or the
"Company"), participates in the communications networking industry,which divides
logically into two major areas:
1. Backbone systems and components: consisting of large switches and
multiplexers, connected to each other by Wide Area Network (WAN)
transmission lines. Public networks put backbone components in Central
Offices. Private networks place them at headquarters, major regional
centers, and the larger branch locations.
2. Access devices: this equipment is physically smaller, typically located in
remote customer offices and attached to the backbone network through a
single or multiple telephone lines. An access device may be part of a local
area network (LAN) within a building or campus and/or facilitate connection
among and between LAN and WAN environments.
Networks may be analog, where the electrical signal varies continously like the
volume of a speaker's voice, or digital, where the signal is either on or off (1
or 0).
FastComm designs, manufactures, markets, and sells access devices that allow
computer users to connect to public and private networks based on analog and
digital transmission. Its products include a range of devices aimed at the fast
packet services as well as digital leased-lines,switched 56 networks and ID
route networks (including the Internet). The Company's access devices allow many
types of terminal equipment and computers to access these services.
The Company's current business is primarily based on access devices for
frame relay services. Other access products offered include models designed for
cell relay or ATM services (a LAN bridge), analog phone lines (modems), and
leased or switched digital data services (CSU/DSUs for DDS). FastComm also
offers a family of moderate to very high speed data compressors to enhance
access to digital services.
The Company manufactures the bulk of its products at its headquarters location
in Sterling, Virginia. But it also resells products manufactured by others under
its label.
The Company does not make backbone network components or systems, but is focused
on the much simpler access devices. The market potential (in units) is greater
for access products because there are so many small offices and businesses that
are increasingly able to justify a digital connection.
PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares by the Selling Stockholders.
3
<PAGE>
SELLING STOCKHOLDERS
Certain of the shares offered hereby were issued to certain individuals in
connection with a private placement of the Company's stock in December 1994
including Mr. Dennis, the Company's co-founder. The remainder of the shares
offered hereby were issued in connection with acquisitions in 1992 and 1994.
SHARES ISSUED
The following table and text shows as to each Selling Stockholder, any
material relationship with the Company or its affiliates within the past three
years; the number of shares of the outstanding Common Stock of the Company owned
as of July 15, 1996; the number of such shares which may be sold for the account
of the Selling Stockholder; and the number of such shares that will be owned by
the Selling Stockholder assuming the sale of all shares offered hereby. Except
as noted below, no Selling Stockholder beneficially owned as of April 30, 1996,
or will own as of the completion of this offering (unless additional shares are
purchased by a Selling Stockholder), one percent or more of the outstanding
Common Stock of the Company.
Number of
Number of Shares Shares Which Shares Owned
Selling Shareholder Owned Before Sale May Be Sold After Sale
- ------------------- ----------------- ----------- ----------
Danny G. Snow 91,250 60,000 31,250
Beacon North 10,000 10,000 -0-
Lawrence Dezenzo 16,000 10,000 6,000
Watch Hill Research 18,417 18,417 -0-
Estate of Robert N. Dennis 346,441 200,000 146,441
David Minker 54,000 27,750 26,250
William Flanagan 217,421 3,922 213,499
Warren Belkin 4,579 4,579 -0-
Jerry Zeisler 5,000 5,000 -0-
William Flanagan is Vice President Marketing-Technology of the Company. Mr.
Flanagan owns 2.22 percent of the outstanding shares of the Company at July 15,
1996, and will own 2.2 percent (2.2%) of the outstanding shares after completion
of the offering. Robert N. Dennis former President and Chairman of the Company
died on May 28, 1995. The Estate of Robert N. Dennis own 4.26% of the
outstanding shares of the Company at July 15, 1996, and will own 2.2 percent
(2.2%) of the outstanding shares after completion of the offering.
4
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby may be sold by the Selling Stockholders. Such
sales may be made on one or more exchanges or in the over-the-counter market, or
otherwise at prices and at terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The shares may be sold
by one or more of the following methods, without limitation: (a) a block trade
in which the broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (d) an exchange distribution in accordance with the rules of such
exchange; and (e) face-to-face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by the
Selling Stockholders may arrange for other brokers or dealers to participate.
Brokers or dealers may receive commissions or discounts from Selling
Stockholders in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the 1933 Act, in connection with such
sales. In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this Prospectus.
Upon the Company's being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the sale
of shares through a secondary distribution, or a purchase by a broker or dealer,
a supplemental Prospectus will be filed, if required, pursuant to Rule 424(b)
under the 1933 Act, disclosing (a) the names of such broker-dealers, (b) the
number of shares involved, (c) the price at which such shares are being sold,
(d) the commissions paid or the discounts or concessions allowed to such
broker-dealers, (e) where applicable, that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference
in this Prospectus, as supplemented, and (f) other facts material to the
transaction.
Each Selling Stockholder has agreed with the Company that, among other
things, for so long as the Registration Statement remains in effect, such
Selling Stockholder (1) will deliver a copy of this Prospectus, as amended or
supplemented, to any broker-dealer or other intermediary and any person or
entity purchasing any of such Selling Stockholder's shares hereunder, (2) will
give the Company certain specified notices with respect to any purchases or
sales by such Selling Stockholder of any Common Stock of the Company and (3)
will not engage in any stabilization activity in connection with the Company's
securities. In addition, each Selling Stockholder will pay such Selling
Stockholder's proportionate share of all expenses in connection with this
offering.
EXPERTS
The financial statements and supplemental schedules of the Company and its
consolidated subsidiaries as of April 30, 1996 and for the three years then
ended have been audited by BDO Seidman, Independent Auditors, whose report is
incorporated herein by reference from the Company's Annual Report on Form 10-K.
These financial statements and supplemental schedules are incorporated herein by
reference in reliance upon the reports of such independent certified public
accountants given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby is being passed
upon by Amon & Sabatini, New York, New York, counsel to the Company.
5
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in the
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus
does not constitute an offer to sell, or a solicitation of any offer to buy, any
securities offered hereby anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer, or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that the information herein contained is correct as of any time subsequent to
the date of this Prospectus.
------------
TABLE OF CONTENTS
Page
----
Prospectus Summary ........................................................ 1
Available Information ..................................................... 2
Document Incorporated by Reference ........................................ 2
Certain Risk Factors ...................................................... 3
The Company ............................................................... 3
Proceeds .................................................................. 4
Selling Stockholders ...................................................... 4
Shares Issued ............................................................. 4
Plan of Distribution ...................................................... 5
Legal Matters ............................................................. 5
Experts ................................................................... 5
================================================================================
================================================================================
339,668 Shares
FastComm Communications
Corporation
Common Stock
------------
PROSPECTUS
------------
August 15, 1996
================================================================================
