<PAGE>
As filed with the Securities and Exchange Commission on November 4, 1997
Registration No. 333-25023
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TELEGEN CORPORATION
(PREVIOUSLY NAMED "SOLAR ENERGY RESEARCH CORP.," A COLORADO CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
CALIFORNIA 3665 84-0672714
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
101 SAGINAW DRIVE
REDWOOD CITY, CA 94063
(415) 261-9400
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
FRED KASHKOOLI
CHIEF EXECUTIVE OFFICER
101 SAGINAW DRIVE
REDWOOD CITY, CA 94063
(415) 261-9400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
WITH COPY TO:
THOMAS C. DEFILIPPS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(415) 493-9300
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following [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. [X]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================
TITLE OF SECURITIES TO AMOUNT PROPOSED PROPOSED AMOUNT OF
BE REGISTERED TO BE MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING PRICE AGGREGATE FEE
PER SHARE(1) OFFERING PRICE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,028,721 shares $2.39 $4,848,643.19 $1,469.29(2)
================================================================================================
</TABLE>
(1) THE PROPOSED MAXIMUM OFFERING PRICE PER SHARE WAS ESTIMATED PURSUANT TO RULE
457(c) ON THE BASIS OF THE AVERAGE OF THE HIGH AND LOW PRICES REPORTED ON
THE NASDAQ SMALLCAP MARKET ON NOVEMBER 3, 1997.
(2) $1,684.85 previously paid to the Commission on April 11, 1997.
------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
PROSPECTUS
2,028,721 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 1,894,138 shares of Common Stock (the
"Conversion Shares") upon the conversion of 4,000 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 NOVEMBER 4, 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 filed on Form 10-K for the fiscal year ended December
31, 1996 as filed with the Commission on March 31, 1997, amended on April 9,
1997 and April 30, 1997, (vi) 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 19, 1997, (viii) the Company's Report on Form 8-K filed with
the Commission on May 19, 1997, (ix) the Company's report on Form 8-K filed with
the Commission on July 8, 1997, (x) the Company's Proxy Statement delivered to
its Shareholders filed with the Commission on July 9, 1997, (xi) the Company's
Quarterly Report on Form 8-K as filed with the Commission on August 14, 1997,
(xiii) the Company's Report on Form 8-K filed with the Commission on August 19,
1997, and (xiv) the Company's Report on Form 8-K filed with the Commission on
October 15, 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.
-2-
<PAGE>
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.
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 number of shares being registered by the Registration Statement was
calculated based upon a conversion price of $2.11. 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 immediately preceeding the closing of the
first tranche (the "Fixed Conversion Price"); and (ii) the average closing bid
price of the Common Stock for two trading days immediately preceding the date
of conversion (the "Current Market Price"). The assumed $2.11 conversion price
is the Current Market Price as of the date prior to the Registration Statement.
If the Current Market Price drops below $2.11, the Registrant will be required
to amend this Registration Statement to register more Common Stock to be issued
on conversion of the Preferred.
-3-
<PAGE>
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.
-4-
<PAGE>
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
-5-
<PAGE>
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 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.
-6-
<PAGE>
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, 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.
-7-
<PAGE>
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.
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.
-8-
<PAGE>
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 OF SHARES NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED OF COMMON STOCK BENEFICIALLY OWNED
NAME OF SELLING SHAREHOLDER PRIOR TO OFFERING BEING OFFERED AFTER 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 1,894,138 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.
-9-
<PAGE>
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<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.
================================================================================
2,028,721 Shares
TELEGEN
CORPORATION
----------------------------------------------
COMMON STOCK
PROSPECTUS
November 4, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses, all of which will be
paid by the Registrant in connection with the sale and distribution of the
securities being registered, other than underwriting discounts and commissions,
if any. All of the amounts shown are estimates except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee $ 1,685
Legal fees and expenses 15,000
Accounting fees and expenses 5,000
Blue Sky fees and expenses (including legal fees) 2,000
Transfer agent's and registrar's fees and expenses 500
Miscellaneous expenses 815
-------
Total $25,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Article V of the Company's Amended
Articles of Incorporation and Article VI of the Company's Bylaws provide for
indemnification of its directors, officers, employees and other agents to the
maximum extent permitted by the California Corporations Code. In addition, the
Company has entered into indemnification agreements with its officers and
directors.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the California Corporation Law and Bylaws of the Company, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
NUMBER
- ------- ----------------------------------------------------------------------
<S> <C>
2.1 Plan of Acquisition+
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
27.1 Financial Data Schedule++
</TABLE>
+ Incorporated by Reference to the Registrant's 8-K as originally filed with
the Commission on January 14, 1997 and amended on March 14, 1997.
++ Incorporated by Reference to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 filed with the Commission on March 31, 1997
and amended on April 9, 1997.
II-1
<PAGE>
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:
a. To include any prospectus required by Section 10(a)(3) of
the Securities Act;
b. To reflect in the prospectus any facts 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;
and
c. 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 (a) and (b) above do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that are incorporated by reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
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 the registrant's annual report pursuant
to section 13(a) or section 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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 Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Telegen Corporation, a corporation organized and existing under the laws of the
State of California, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Redwood City, State of California, on this 4th
day of November 1997.
TELEGEN CORPORATION
By: /s/ FRED KASHKOOLI
-------------------------
Fred Kashkooli,
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of
Fred Kashkooli and Warren M. Dillard as attorney-in-fact for him or her in any
and all capacities, to sign any amendment to this Registration Statement and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorney-in-fact full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- ------------------------------------------------------------- --------------
<S> <C> <C>
/s/ FRED KASHKOOLI Chief Executive Officer (Principal November 4, 1997
- ----------------------------- Executive and Accounting Officer)
Fred Kashkooli
/s/ JESSICA L. STEVENS* Director November 4, 1997
- -----------------------------
Jessica L. Stevens
/s/ BONNIE A. CRYSTAL* Director November 4, 1997
- -----------------------------
Bonnie A. Crystal
Director
- -----------------------------
Gilbert F. Decker
/s/ JAMES R. IVERSON* Director November 4, 1997
- -----------------------------
James R. Iverson
/s/ FREDRICK T. LEZAK, JR.* Director November 4, 1997
- -----------------------------
Fredrick T. Lezak, Jr.
/s/ LARRY J. WELLS* Director November 4, 1997
- -----------------------------
Larry J. Wells
Director
- -----------------------------
Gregory Bell
* /s/ WARREN M. DILLARD Attorney-in-Fact November 4, 1997
- -----------------------------
Warren M. Dillard
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- -------- ------------------------------------------------------------------------- -------------
<C> <S> <C>
2.1 Plan of Acquisition + --
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation --
12.1 Statements re Computation of Ratios++ --
23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants --
23.2 Consent of Counsel (included in Exhibit 5.1) --
24.1 Power of Attorney (see page II-3) II-3
27.1 Financial Data Schedule++ --
</TABLE>
- -------------------
+ Incorporated by Reference to the Registrant's 8-K as originally filed with
the Commission on January 14, 1997 and amended on March 14, 1997.
++ Incorporated by Reference to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996 filed with the Commission on March 31, 1997
and amended on April 9, 1997.
<PAGE>
Exhibit 5.1
-----------
November 4, 1997
Telegen Corporation
101 Saginaw Drive
Redwood City, California 94063
RE: REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies and Gentlemen:
We have examined the Post Effective Amendment No. 1 to the Registration
Statement on Form S-3 to be filed by you with the Securities and Exchange
Commission on or about November 4, 1997 (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 2,028,721 shares of your Common Stock, no par value per share (the "Shares"),
to be sold by certain shareholders listed in the Registration Statement (the
"Selling Shareholders") or upon conversion of shares of Series A Preferred Stock
previously issued. As your counsel, we have examined the proceedings taken and
proposed to be taken in connection with the sale of the Shares by the Selling
Shareholders in the manner set forth in the Registration Statement in the
Section entitled "Plan of Distribution" and with the conversion of the Series A
Preferred.
It is our opinion that the Shares, when sold by the Selling Shareholders in
the manner referred to in the Registration Statement and upon conversion of the
Series A Preferred, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendment thereto.
Very truly yours,
Wilson Sonsini Goodrich & Rosati
Professional Corporation
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Telegen Corporation on the Form S-3 (the "Form") of our report dated March 21,
1997, on our audits of the financial statements of Telegen Corporation as of
December 31, 1996 and 1995, and for the years ended December 31 1996, 1995, and
1994, which report is included in the Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts".
COOPERS & LYBRAND, L.L.P.
Sacramento, California
April 11, 1997
