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PROSPECTUS Filed Pursuant to Rule 424(b)(2)
File Number 333-25023
1,033,459 SHARES
TELEGEN CORPORATION
COMMON STOCK
This Prospectus may be used in connection with the offer and sale, from time
to time, of up to 134,583 shares (the "Resale Shares") of Common Stock, no par
value per share (the "Common Stock"), of Telegen Corporation, a California
corporation ("Telegen" or the "Company"), for the account of the selling
shareholders identified below (the "Selling Shareholders"), who received the
Shares issued pursuant to an exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Act"), provided by Section 4(2)
thereof, and of up to 898,876 shares of Common Stock (the "Conversion Shares")
upon the conversion of 3,500 shares of Telegen Series A Preferred Stock (the
"Preferred") for the account of Silenos, Ltd. ("Silenos"), which received the
Preferred pursuant to an exemption from the registration requirements of the
Act provided by Section 4(2) thereof. All of the Resale Shares covered hereby
are to be sold by the Selling Shareholders. The Company will not receive any
proceeds from the sale of the Shares by the Selling Shareholders or the
conversion of the Preferred by Silenos. The expenses incurred in registering
the Shares, including legal and accounting fees, will be paid by the Company.
None of the shares offered pursuant to this Prospectus have been registered
prior to the filing of the Registration Statement of which this prospectus is
a part.
The Company is listed on the Nasdaq SmallCap Market for trading of its
Common Stock under the symbol "TLGN."
The Resale Shares offered hereby may be offered and sold, from time to time,
by the Selling Shareholders in one or more transactions on the Nasdaq SmallCap
Market (or any exchange on which the Common Stock may then be listed), in the
over-the-counter market, in negotiated transactions or otherwise. Sales will
be effected at such prices and for such consideration as may be obtainable
from time to time. Commission expenses and brokerage fees, if any, will be
paid by the Selling Shareholders. See "Plan of Distribution."
----------------
SEE "RISK FACTORS" ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
----------------
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.
----------------
The date of this prospectus is May 19, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy and
information statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade Center, New York,
New York 10048, and Chicago Regional Office, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 upon payment of the prescribed fees. In addition, the Commission
maintains a Website (http:\\www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission through the Electronic Data Gathering,
Analysis, and Retrieval system.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the shares covered by this prospectus, reference is made to the
Registration Statement. Statements contained herein concerning the provisions
of any document are not necessarily complete, and each such statement is
qualified in its entirety by reference to the copy of such document filed with
the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus: (i) the Company's Form 8-K filed
with the Commission on January 15, 1997, amended on March 14, 1997; (ii) the
Company's Form 8-K filed with the Commission on January 21, 1997; (iii) the
Company's Form 8-K filed with the Commission on February 7, 1997; (iv) the
Company's Form 8-K filed with the Commission on March 25, 1997; (v) the
Company's Annual Report on Form 10-K filed with the Commission on March 31,
1997, amended on April 9, 1997 and April 30, 1997; (vii) the Company's Form 8-
K filed with the Commission on May 9, 1997; (vii) the Company's Quarterly
Report on Form 10-Q filed with the Commission on May 15, 1997; and (viii) the
Company's Report on Form 8-K filed with the Commission on May 19, 1997.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents. Any statement incorporated 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 statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests for such documents should be
submitted in writing to Investor Relations at the Company's principal
executive offices at 101 Saginaw Drive, Redwood City, CA 94063 or by telephone
at (415) 261-9400.
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THE COMPANY
Telegen Corporation ("Telegen" or the "Company") is a diversified, high
technology company with products, both developed and in development, in the
telecommunications and internet hardware, flat panel display and multimedia
markets. At present, Telegen is organized into three subsidiaries and one
division. Telegen Display Laboratories, Inc. ("TDL"), a California corporation
and a controlled second-tier subsidiary of the Company, has developed a low-
cost flat panel technology to compete with other types of flat panel displays.
Telegen Communications Corporation ("TCC"), a California corporation and a
wholly-owned subsidiary of the Company, develops, manufactures and markets
internet products and a line of intelligent telecommunications which provide
additional features to existing telephone equipment used by consumers and
small businesses. Morning Star Multimedia, Inc., a New Jersey corporation
("MSM"), a wholly-owned subsidiary of the Company, is a creator and supplier
of interactive CD-ROM and internet-based edutainment, infotainment and
entertainment programs and software. The Telegen Laboratories division is a
research organization which develops new products and technologies which are
then manufactured and marketed through one of the operating divisions or
subsidiaries. Telegen's corporate offices are located at 101 Saginaw Road,
Redwood City, CA 94063, (415) 261-9400.
SERC TRANSACTION. On October 28, 1996, the Company completed its merger with
Solar Energy Research Corp., a Colorado corporation ("SERC") and became a
public reporting company. During the course of this merger, SERC was
redomiciled to become a California corporation, Telegen changed its name to
TCC and the entity formerly known as SERC changed its name to Telegen.
Ownership in the new merged entity was 97% by former Telegen shareholders and
3% by SERC shareholders.
DESCRIPTION OF COMMON STOCK. The Company is authorized to issue 100,000,000
shares of Common Stock and, as of February 28, 1996, it had 5,021,460 shares
of Common Stock outstanding.
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders, and shareholders
have the right to then cumulate their votes in the election of directors.
Subject to preferences that may be applicable to any outstanding shares of
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the board of directors out of funds legally
available therefor. Holders of Common Stock have no preemptive rights and no
right to convert their shares of Common Stock into other securities. There are
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable. Upon
liquidation, dissolution or winding up of the Company, the assets of the
Company, after satisfaction of all liabilities and distributions to preferred
shareholders, if any, would be distributed pro rata to the holders of the
Common Stock.
SERIES A PREFERRED FINANCING. On March 4, 1997, Telegen entered into a
Subscription Agreement to sell in a private placement up to $15,000,000 in
stated value of its newly created 8% Series A Convertible Preferred Stock (the
"Preferred") which would yield the Company, after discounts and expenses, up
to $12,000,000. The financing is structured to take place in three tranches,
with the first tranche closing in two parts -- one selling $3,500,000 in
stated value of the securities, which closed on March 21, 1997, and an
additional $1,500,000 in stated value upon the effective date of the
registration statement which is required to be filed immediately upon the
first closing to register the shares of Common Stock issuable upon conversion
of the Series A Preferred. This Prospectus is a part of the registration
statement filed pursuant to such registration obligation (the Registration
Statement). Each subsequent tranche closing, if it occurs, will be for
$5,000,000 in stated value. In order for the Company to be able to request any
additional funds after the initial $5,000,000, the twenty (20) day average
daily dollar volume of the Company's stock on the NASDAQ SmallCap market must
be equal to or greater than $450,000 per day. At the closing of each tranche,
the Company will issue four-year warrants to purchase an aggregate amount of
twenty percent (20%) of the purchase price of the Preferred at a price per
share equal to the Telegen Common Stock price on the closing date for such
tranche.
The Subscription Agreement executed by and between the Company and Silenos
provides for a conversion price of the lesser of: (i) $6.9375 (the average of
the closing bid prices of the Common Stock for the five days
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immediately preceeding the closing of the first tranche (the "Fixed Conversion
Price"); and (ii) the average closing bid prices of the Common Stock for the
two trading days immediately preceeding the date of conversion (the "Current
Market Price"). The assumed $4.91 conversion price is the Current Market Price
as of the date of this Prospectus. If the Current Market Price drops below
$3.89, the Registrant may be required to amend the Registration Statement of
which this Prospectus is a part to register more Common Stock to be issued upon
conversion of the Preferred.
THE PREFERRED RANK PRIOR TO ANY OF THE COMPANY'S COMMON STOCK. The Purchaser
shall receive dividends at a rate of eight percent (8%) per annum, payable
quarterly, and may receive the dividends in the form of cash or additional
shares of Telegen common stock at the Purchaser's option. The Preferred may be
converted into Telegen Common Stock, at any time after the earlier of the
effective date of the registration statement or sixty (60) days after the
closing date of the first tranche, based on a ratio which adjusts with the then
current market price of Telegen's Common Stock, or the market price at closing,
whichever is higher. Any Preferred outstanding on December 31, 1998
automatically converts into Common Stock.
The Company granted Silenos a right of first refusal on certain future sales
of discounted equity securities and agreed not to sell any new equity series at
a discount to the then-current market price per share of the Common Stock,
other than offerings in connection with mergers, acquisitions, and certain
benefit plans, for a period of one hundred twenty (120) days from the initial
closing of the first tranche. The Company also has a call option for a period
of time beginning one hundred twenty (120) days following the first closing
date to repurchase any outstanding portion of the securities plus accrued
dividends at a price of one hundred percent (100%) of the stated value ($1,000)
plus accrued dividends, payable in cash.
MORNING STAR ACQUISITION. On December 31, 1996, Telegen completed the
acquisition (the "Acquisition") of Morning Star Multimedia, Inc., a New Jersey
corporation ("MSM"). The acquisition of MSM was accomplished pursuant to an
Agreement and Plan of Reorganization and Merger dated December 30, 1996 among
the Registrant, Morning Star Acquisition Corporation, a New Jersey corporation
and wholly-owned subsidiary of the Registrant, MSM, Daniel J. Kitchen, Kevin
Mitchell and Dennis P. Huzey (Messrs. Kitchen, Mitchell and Huzey are
hereinafter collectively referred to as the "MSM Shareholders"). Mr. Kitchen is
the brother of Jessica Stevens, President of the Registrant. The purchase price
for MSM consisted of an aggregate of 133,333 shares of the Registrant's common
stock which were issued to the MSM Shareholders. Pursuant to the Agreement,
each of the MSM Shareholders executed an Employment Agreement with the
Registrant.
The acquisition of MSM was treated as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended. The acquisition of MSM
was treated as a pooling-of-interests for financial accounting purposes. Prior
to the Acquisition, MSM utilized its assets for multimedia software
development. Following the Acquisition, the Registrant has used such assets for
the same purposes.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
shares of Common Stock offered by this Prospectus. The discussion in this
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in "Risk Factors" and "The
Company" as well as those discussed elsewhere in this Prospectus.
History of Telegen Operating Losses; Accumulated Deficit and Minimum Revenues
Telegen's operating subsidiary, Telegen Communications Corporation ("TCC"),
was incorporated in 1990 and first shipped products in 1991. Telegen has been
engaged in lengthy development of its products and has incurred significant
operating losses in every fiscal year since its inception. The cumulative net
loss for the period from inception through December 31, 1996 was $10,441,795.
In order to become profitable, Telegen must increase sales of its existing
products, sustain volume manufacturing of its products at increased levels,
develop new products for new and existing markets, and manage its operating
expenses and expand its distribution capability. There can be no assurance
that Telegen will meet and realize these objectives or ever achieve
profitability.
Telegen's Future Capital Needs
Telegen's future capital requirements will depend upon many factors,
including the extent and timing of acceptance of Telegen's products in the
market, the progress of Telegen's research and development, Telegen's
operating results and the status of competitive products. Although Telegen
believes that its existing capital resources, including expected future
scheduled funding of Series A Preferred Stock and revenues from operations,
will be adequate to meet Telegen's forecasts through 1998, such funding and
revenues are dependent upon certain events in the future. Additionally,
Telegen's actual working capital needs will depend upon numerous factors,
including the progress of Telegen's research and development activities, the
cost of increasing Telegen's sales, marketing and manufacturing activities and
the amount of revenues generated from operations. There can therefore be no
assurance that Telegen will not require additional funding, or that any
additional financing will be available to Telegen on acceptable terms, if at
all. If adequate funds are not available as required, Telegen's results of
operations will be materially adversely affected.
While Telegen believes it has arranged for the capital needed to complete
development of a finished prototype of the HGED flat panel display technology,
additional capital will be needed to establish a high volume production
capability. There can be no assurance that any additional financing will be
available to Telegen on acceptable terms, if at all. If adequate funds are not
available as required, Telegen's results of operations from the flat panel
technology will be materially adversely affected.
Telegen's Exposure to Technological and Market Change
The market for Telegen's products is characterized by rapid technological
change and evolving industry standards and is highly competitive with respect
to timely product innovation. The introduction of products embodying new
technology and the emergence of new industry standards can render existing
products obsolete and unmarketable. Telegen's success will be dependent in
part upon its ability to anticipate changes in technology and industry
standards and to successfully develop and introduce new and enhanced products
on a timely basis. If Telegen is unable to do so, Telegen's results of
operations will be materially adversely affected. For example, Telegen took a
longer period of time than expected to develop its ACS telephone peripheral
product line. Although Telegen believes such delay has not materially affected
its ability to market and sell the ACS products, there can be no assurance
that Telegen will not encounter other technical or similar difficulties that
could in the future delay the introduction of new products or product
enhancements. With regards to MSM, the multimedia industry can be a rapidly
changing and highly competitive industry relating to both the technology
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and content of the medium. MSM must stay abreast of technological changes to
ensure that its products meet the ever higher standards that the consumer has
come to expect and that will be offered by competitors' products.
Additionally, MSM's success in this field will be dependent upon its ability
to identify marketable concepts, acquire license rights and develop content in
a timely manner to capture the consumer interest. With regard to its flat
panel display technology, there are other more developed and accepted flat
panel display technologies already in commercial production which will compete
with Telegen's technology. There can be no assurance that Telegen will be
successful in the development of its flat panel technology or that Telegen
will not encounter technical or other serious difficulties in its development
or commercialization which would materially adversely affect Telegen's results
of operations.
Telegen's Dependence Upon Key Personnel
Telegen's future success will depend in significant part upon the continued
service of certain key technical and senior management personnel, and
Telegen's ability to attract, assimilate and retain highly qualified
technical, managerial and sales and marketing personnel. Competition for such
personnel is intense, and there can be no assurance that Telegen can retain
its existing key managerial, technical or sales and marketing personnel or
that it can attract, assimilate and retain such employees in the future. The
loss of key personnel or the inability to hire, assimilate or retain qualified
personnel in the future could have a material adverse effect upon Telegen's
results of operations.
Telegen has entered into agreements with each of its executive officers (as
well as all other full-time employees) that prohibit disclosure of
confidential information to anyone outside of Telegen both during and
subsequent to employment and require disclosure and assignment to Telegen of
all proprietary rights to any ideas, discoveries or inventions relating to or
resulting from the officer's work for Telegen.
Competition in the Telecommunications Market
The market for telephone peripheral equipment is highly competitive, is
dominated by successful niche marketers and Telegen expects this competition
to continually increase. There are a number of companies which develop,
manufacture and sell telecommunications devices which perform some of the same
functions as those of Telegen's products. There can be no assurance that
Telegen will be able to compete effectively against its competitors, many of
whom may have substantially greater financial resources than Telegen. Further,
some of the telephone call routing functions of Telegen's products can be
provided through reprogramming by Bell Operating Companies of their central
office equipment to allow "equal access" by customers to the long distance
carrier of their choice without "dialing around" by inserting an access code.
Since this "dial around" process is the principal function of Telegen's ACS
2000 and MLD 1000 products, if such an "equal access" feature were introduced,
demand for Telegen's present products would be seriously impaired.
TCC's Dependence on Major Customers
Telegen expects that a large proportion of its revenues from its
telecommunications products will be realized from sales to a small number of
companies, primarily the major long distance carriers, the Regional Bell
Operating Companies, as well as other nationwide distributors. The loss of one
or more of these relationships, when developed, could have a material negative
effect on Telegen's results of operations.
During 1995, three customers accounted for approximately 82% of TCC's
revenues: Bell Atlantic, Synernet and Sprint. Of these, Bell Atlantic, which
purchased TCC's Teleblocker product, made up 45% of TCC's total sales for
1995. The removal of the Teleblocker product from the market in 1996 due to
redesign, effectively eliminated sales to Bell Atlantic and significantly
affected total sales for TCC for 1996.
Competition in the Multimedia Market
The interactive multimedia market is a highly competitive field. MSM
competes against several significantly larger companies which are currently
better known and better funded than MSM, as well as many other small
companies. Some of the larger companies against which MSM competes are
Microsoft, Broderbund, Softkey,
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Sierra On-Line and Electronic Arts. MSM competes with these other companies
both for the acquisition of licenses with widespread brand awareness (content
for development) and for sales of its developed products to consumers.
Flat Panel Competition; Flat Panel Patent(s)
The market for flat panel displays is dominated by major Japanese companies
such as Sharp Electronics, Toshiba and Sony. Telegen expects this competition
to continually increase. There can be no assurance that Telegen will be able
to compete effectively against its competitors, many of whom may have
substantially greater financial resources than Telegen. Flat panel displays
manufactured utilizing AMLCD technology have been in production for almost 10
years and have proven market acceptance. New technologies, such as FED and
Color Plasma, are in development by a number of potential competitors, some of
whom have greater financial resources than Telegen. There can be no assurance
that Telegen's HGED technology can compete successfully on a cost or display
quality basis with these other technologies. Further, there can be no
assurance that Telegen's efforts to obtain patent protection for its HGED
technology will be successful or, if patent protection is obtained, that
Telegen's patent(s) will provide adequate protection.
Telegen's Dependence Upon Limited Number of Manufacturing Sources and
Component Suppliers
Telegen currently relies upon a limited number of manufacturing sources for
its telecom production capability. Although Telegen is currently seeking to
qualify alternative sources of supply, Telegen has not yet contracted for
alternative suppliers to perform such manufacturing activities. In the event
of an interruption of production or delivery of supplies, Telegen's ability to
deliver its products in a timely fashion would be compromised, which would
materially adversely affect Telegen's results of operations. Certain
components used in Telegen's telecommunications products, such as
microprocessors, are available from only a limited number of sources. Although
to date Telegen has generally been able to obtain adequate supplies of these
components, Telegen obtains these components on a purchase order basis and
does not have long-term contracts with any of these suppliers. In addition,
some suppliers require that Telegen either pre-pay the price of components
being purchased or establish an irrevocable letter of credit for the amount of
the purchase. Telegen anticipates that, as it begins manufacture of other
products, it will encounter similar limitations regarding the components for
those products. Telegen's inability in the future to obtain sufficient
limited-source components for its telecommunications and other products, or to
develop alternative sources, could result in delays in product introductions
or shipments, which could have a material adverse effect on Telegen's results
of operations.
Telegen's Need to Develop Marketing Experience
Telegen has limited marketing experience, and expanding Telegen's markets
will require significant expenses, including additions to personnel. There can
be no assurance that Telegen will have all the capital resources necessary to
expand its sales and marketing operations, or that Telegen's attempts to
expand its sales and marketing efforts will be successful.
Intellectual Property
Telegen relies on a combination of patents, trade secret and other
intellectual property law, nondisclosure agreements and other protective
measures to preserve its rights pertaining to its products. Such protection,
however, may not preclude competitors from developing products similar to
those of Telegen. In addition, the laws of certain foreign countries do not
protect Telegen's intellectual property rights to the same extent as do the
laws of the United States. There can also be no assurance that third parties
will not assert intellectual property infringement claims against Telegen. One
such matter was recently dismissed without prejudice to the Company but there
is no assurance that more claims will not be initiated from litigants with
more resources than Telegen. There is no assurance that Telegen will prevail
in such litigation seeking damages or an injunction against the sale of
Telegen's products or that Telegen will be able to obtain any necessary
licenses on reasonable terms or at all.
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Dispute Over Canceled Telegen Shares
In August 1991, Old Telegen (now TCC) issued an aggregate of 208,592 shares
of common stock to Sahara Associates, Inc. ("Sahara") in connection with a
letter of credit and related financing to be obtained by Old Telegen. A letter
of credit in the amount of $300,000 was issued in favor of Old Telegen by Bank
Sadarat but Old Telegen was unable to realize any benefit from such a letter
of credit. In September 1992, Bank Sadarat filed a complaint against Old
Telegen in the Superior Court of the State of California for the County of San
Mateo for approximately $110,000 advanced under a separate letter of credit.
In March 1993, Old Telegen canceled the 208,592 shares issued to Sahara and
filed a cross-complaint for declaratory relief against Sahara and others. In
that action, Old Telegen sought a judicial declaration that the issuance of
the aforementioned shares was void for lack of consideration, that the action
of Old Telegen in canceling such shares was valid and that the persons to whom
such shares were issued have no rights as shareholders of Old Telegen. The
case was removed to the Federal District Court for the Northern District of
California. In July 1996, Old Telegen settled Bank Sadarat's claim by paying
Bank Sadarat $100,000, which is less than the liability for the Bank Sadarat
claim that is reflected in Old Telegen's (now TCC's) Financial Statements
which are incorporated by reference herein. The dispute with Sahara regarding
the canceled shares has not yet been resolved. Although the number of shares
and percentages of the outstanding shares referred to in this Registration
Statement reflect the cancellation of shares issued to Sahara, there can be no
assurance as to the ultimate result of the litigation with Sahara.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Resale Shares
by the Selling Shareholders or the issuance of the Conversion Shares to
Silenos.
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SELLING SHAREHOLDERS
The following table sets forth as of April 11, 1997 certain information with
respect to the beneficial share ownership of the Selling Shareholders. The
following table assumes the sale of all of their Resale Shares by each selling
Shareholder. After such sale no Selling Shareholder will beneficially own one
percent (1%) or more of the Shares.
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER OF
OF SHARES OF SHARES SHARES
BENEFICIALLY OF COMMON BENEFICIALLY
OWNED PRIOR STOCK BEING OWNED AFTER
NAME OF SELLING SHAREHOLDER TO OFFERING OFFERED OFFERING
--------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Daniel J. Kitchen................... 60,000 60,000 0
Kevin Mitchell...................... 60,000 60,000 0
Dennis P. Huzey..................... 13,333 13,333 0
Fred Barton......................... 1000 1000 0
Adam Lebowitz....................... 200 200 0
Jeffrey Scheetz..................... 50 50 0
------- ------- ---
TOTAL........................... 134,583 134,583 0
</TABLE>
PLAN OF DISTRIBUTION
This Prospectus registers the estimated 898,876 shares of Conversion Stock
which will be issued upon the conversion of the Preferred held by Silenos.
Registrant hereby represents that it has furnished Silenos with written
material containing the information required by Rule 14a-3(b) under the
Securities and Exchange Act of 1934, as amended, and items 401, 402 and 403 of
Regulation S-K of the Securities Act of 1933, as amended.
This Prospectus also registers the 134,583 Resale Shares which may be sold
from time to time by the Selling Shareholders or by their pledgees, donees,
transferees or other successors in interest. Such sales may be made in any one
or more transactions on the NASDAQ SmallCap Market, or any exchange on which
the Common Stock may then be listed, in the over-the-counter market or
otherwise in negotiated transactions or a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders who
sell Resale Shares may effect such transactions by selling shares to or
through broker- dealers, and such broker-dealers may sell the Shares as agent
or may purchase such Resale Shares as principal and resell them for their own
account pursuant to this Prospectus. Such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Shareholders who sell Resale Shares and/or purchasers of the
Resale Shares, for whom they may act as agent (which compensation may be in
excess of customary commissions). In connection with such sales, the Selling
Shareholders who sell Resale Shares and any participating brokers or dealers
may be deemed to be "underwriters" as defined in the Securities Act.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered
hereby will be passed upon for the Company by Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California.
EXPERTS
The consolidated balance sheets of Telegen as of December 31, 1996 and 1995,
and the consolidated statements of operations, shareholders' equity/(deficit),
and cash flows for each of the three years in the period ended December 31,
1996, incorporated by reference from the Form 10-K for the fiscal year ended
December 31, 1996, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent certified public accountants, given on
the authority of that firm as experts in accounting and auditing.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Risk Factors............................................................... 5
Use of Proceeds............................................................ 8
Selling Shareholders....................................................... 9
Plan of Distribution....................................................... 9
Legal Matters.............................................................. 9
Experts.................................................................... 9
</TABLE>
-----------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representations must
not be relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the Shares by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making the offer or solicitation is not qualified to do so, or to any person
to whom it is unlawful to make such offer or solicitation. Under no
circumstances shall the delivery of this Prospectus or any sale made pursuant
to this Prospectus, create any implication that the information contained in
this Prospectus is correct as of any time subsequent to the date of this
Prospectus.
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1,033,459 SHARES
TELEGEN
CORPORATION
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COMMON STOCK
PROSPECTUS
May 19, 1997
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