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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 29, 2000
0-21864
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(Commission File Number)
TELEGEN CORPORATION
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(Exact name of registrant as specified in its charter)
CALIFORNIA 84-067214
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1840 GATEWAY DRIVE, SUITE 200,
SAN MATEO, CALIFORNIA 94404
(Address of principal executive offices)
(650) 261-9400
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(Registrant's telephone number, including area code)
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Item 3. Bankruptcy or Receivership
On October 28, 1998, Registrant commenced a reorganization case ("Chapter 11
Case") under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Northern District of California, San Francisco Division
("Bankruptcy Court"), designated as IN RE TELEGEN CORPORATION, case number
98-34876-DM-11. During the period of its reorganization, the Registrant's board
of directors and officers continued to manage its affairs, subject to the
requirements that the Registrant file certain reports and seek Bankruptcy Court
approval for certain actions, primarily any actions outside the ordinary course
of business.
On April 24, 2000, the Company filed a plan of reorganization. On May 26, 2000,
the Bankruptcy Court approved a Plan of Reorganization (As Amended) and a Second
Amended Disclosure Statement for Plan of Reorganization of Telegen Corporation
("Disclosure Statement") to be used in soliciting creditor and shareholder votes
on Telegen's Plan of Reorganization. The Bankruptcy Court also set June 23, 2000
at 5 PM Pacific Time as the deadline for voting on the Plan. On June 13, 2000,
the Bankruptcy Court entered its order approving the Disclosure Statement for
use in soliciting creditor and shareholder votes on the Plan. The Plan was
confirmed by the Bankruptcy Court by order entered on June 29, 2000
("Confirmation Order") with an Effective Date of June 30, 2000.
SUMMARY OF THE PLAN OF REORGANIZATION
Following is a summary of the Plan similar to that contained in the Disclosure
Statement approved by the Bankruptcy Court:
As described in the BUSINESS INFORMATION section of the Disclosure Statement,
prior to confirmation of its Plan, the Registrant completed two private
placements of its post-reorganization common stock ("New Common Stock") with
various investors, raising a total of $11,000,000. The Registrant had also begun
one of three additional planned offerings, and had been informed that
subscriptions for an additional $7,000,000 have been received. Proceeds from the
first offering totaling $7,000,000 were made available to the Registrant when
the Plan was confirmed. The balance of the funds are currently in escrow and
will be available upon fulfillment of other conditions of the Offerings,
primarily the effectiveness of a registration statement to be filed with the
SEC. The funds raised in these private placements will be used primarily to
complete development and set up of prototype production for the Registrant's
HGED flat panel display products.
In addition, another company, eTraxx Corporation ("eTraxx"), subsequently known
as Telisar Corporation, became a subsidiary of the Registrant on October 19,
2000 as a result of a stock-for-stock exchange which was accomplished as part of
the Plan. A total of 5,575,000 shares of the Registrant's common stock was
issued to eTraxx shareholders in exchange for 63.6% or 16,725,000 of the
outstanding shares of eTraxx. Another portion of the proceeds of the private
placements and a separate placement by eTraxx will be used to complete
development of eTraxx's products.
Upon confirmation of the Plan, all issued and outstanding shares of common stock
of the Registrant were exchanged for New Common Stock on a sixteen to one basis.
This is commonly referred to as a sixteen-to-one reverse split.
Upon confirmation of the Plan, all holders of allowed claims in the Chapter
11 Case were entitled to receive cash in full payment of their allowed
claims. In the alternative, the Registrant proposed to issue shares of New
Common Stock on account of most claims and interests under the Plan. Holders
of Allowed Claims in certain categories had the option to receive New Common
Stock in lieu of cash at $1.75 per share, and holders of equity security
interests in the Registrant were only entitled to New Common Stock at a rate
of sixteen shares of common stock outstanding on the Effective Date for each
share of New Common Stock. From 1996 until July 14, 2000, the Company's
common stock had been publicly traded under the trading symbol TLGN. After
July 14, 2000, the Company's stock has been publicly traded under the trading
symbol TEGN. Pursuant to Section 1145 of the Bankruptcy Code, shares issued
under the Plan to nonaffiliate holders of claims and interests became
tradable in the public market without restriction.
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In summary, the Plan divided claims and interests into the following classes and
treats them as shown below:
<TABLE>
<CAPTION>
CLASS DESCRIPTION TREATMENT
SECURED CLAIMS
<S> <C> <C>
A-1 EDD tax lien against Telegen Full Cash payment
A-2 RR. Donnelley - judgment lien Full Cash payment
A-3 EDD tax lien against TDL Full Cash payment
A-4 IRS tax lien against TCC Full Cash payment
A-5 IRS tax lien against TDL Full Cash payment
A-6 Hamilton Hallmark - judgment lien Full Cash payment
A-7 McDonald, Maddox and McKinley Previously paid
B Priority employee claims Full Cash payment
or New Common Stock
C Nonpriority unsecured claims Full Cash payment
or New Common Stock
EQUITY SECURITY INTERESTS
D-1 Existing common stock 1:16 reverse split
D-2 Existing preferred stock and dividends thereon Conversion to New Common
Stock
D-3 Subordinated Notes Rescission - Return of New
Common Stock
D-4 Rights, options, and warrants No Distribution
D-5 Naugler warrant in Telegen Display Laboratories, Inc. Cash payment of $100,000
</TABLE>
The Bankruptcy Code requires two other categories of claims to receive specific
treatment, and they may not be "classified" under a Plan. Unless individual
holders chose otherwise (a) administrative claims (primarily claims arising
during the Chapter 11 Case) must be paid in full in cash on the Effective Date
of the Plan and (b) unsecured priority tax claims must be paid in full within
six years following the date of assessment of the tax. The Plan provided for
both these categories to be paid in cash on the Effective Date and provided that
holders of administrative claims may exchange such claims for New Common Stock
at $1.40 per share.
CASH PAYMENTS UNDER THE PLAN
As of the date of this Form 8-K, the Registrant has paid $1,190,117 in cash to
holders of allowed claims pursuant to Article 5.13 of the Plan and has reserved
$254,827 for cash payments to holders of disputed claims. Pursuant to Article
5.20 of the Plan, the Registrant has also paid $163,000 in cash to SynerCom,
Inc. ("SynerCom"), in a settlement rescinding the sale of substantially all of
the assets of Telegen Communications Corporation to SynerCom in April 1998.
As of the date of this Form 8-K, the Registrant has paid $246,160 in cash to
holders of allowed administrative claims under the Plan and has reserved $54,181
for future cash payments to holders of allowed administrative claims.
OUTSTANDING SECURITIES AND NEW COMMON STOCK ISSUED UNDER THE PLAN
On the Effective Date, the Registrant had 15,779,804 shares of common stock
issued and outstanding. Pursuant to the terms of the Plan, on the Effective Date
all issued and outstanding shares of common stock of the Company were exchanged
for New Common Stock on a sixteen to one basis. After this exchange, the
Registrant had 986,238 shares of New Common Stock issued and outstanding.
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As of the date of this Form 8-K, the Registrant has issued a total of 1,280,177
shares of New Common Stock to holders of allowed creditor and administrative
claims under the Plan, has reserved a total of 1,108,321 shares of New Common
Stock for future issuance to holders of allowed creditor and administrative
claims and has reserved a total of 495,555 shares of New Common Stock for future
issuance to holders of dispute claims.
As of the date of this Form 8-K, the Registrant has issued 138,950 shares of New
Common Stock to holders of allowed claims pursuant to Article 5.3 of the Plan in
payment of claims totaling $243,163 and has reserved 496,726 shares of New
Common Stock for future issuance to holders of allowed claims totaling $869,271.
The Registrant has also reserved 495,555 shares of New Common Stock for payment
of dispute claims totaling $860,221.
As of the date of this Form 8-K, the Registrant has issued 1,141,227 shares of
New Common Stock to holders of allowed administrative claims under the Plan
totaling $1,507,318 and has reserved 611,595 shares of New Common Stock for
future issuance in payment of allowed Administrative Claims.
Pursuant to Article 5.2 under the Plan, on the Effective Date, June 30, 2000,
the Registrant closed an offering of 4,000,000 shares of New Common Stock for
gross proceeds of $7,000,000. In connection with this offering and an earlier
placement of $500,000 in debt instruments completed in December 1999, the
Registrant issued to the Pacific West Securities, Inc., and WMS Financial
Planners, Inc., 128,751 shares of New Common Stock.
Pursuant to Article 5.4 under the Plan, on the Effective Date, June 30, 2000,
each sixteen shares of common stock issued and outstanding as of that date were
deemed exchanged for one share of New Common Stock. As of the Effective Date,
there were 15,963,349 shares of the Registrant's common stock issued and
outstanding which were exchanged for 997,709 shares of New Common Stock.
Pursuant to Article 5.5 under the Plan, on October 19, 2000, the Registrant
completed the acquisition of eTraxx Corporation and issued 5,575,000 shares of
New Common Stock in exchange for 16,725,000 share of eTraxx common stock,
representing 63.6% of the outstanding shares of eTraxx.
ASSETS AND LIABILITIES AS OF CONFIRMATION
The following tables were included in the Disclosure Statement and furnished to
the Bankruptcy Court. The following table shows the assets of the Registrant
after giving effect to confirmation of the Plan and the consummation of the
transactions authorized thereby:
<TABLE>
<CAPTION>
UPON
ASSETS CONFIRMATION
<S> <C> <C>
Cash 19,200,000 (1)
Furniture and Equipment 400,000 (2)
Stock in Subsidiaries 37,700,000 (3)
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Total Assets 57,100,000
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</TABLE>
The following table shows the liabilities of the Registrant as of the date of
the Confirmation Order prior to making the distributions to creditors and equity
security holders authorized by the Plan and which are described under "Cash
Payments Under the Plan" and "Outstanding Securities and New Common Stock Issued
Under the Plan" above.
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1 Assumes $11,000,000 in prior Offerings and $10,000,000 current Offering
fully subscribed, but no future offerings subscribed, and Selling Agents
take the full Cash commissions (in lieu of New Common Stock) of $1,800,000
for which they would be eligible.
2 Combined value proposed by Registrant's auditors for property of the
Debtor, Telegen Communications Corporation and Telegen Display
Laboratories, Inc., assuming consolidation under the Plan.
3 Represents 61.9% interest in eTraxx Corporation.
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<TABLE>
<CAPTION>
LIABILITIES AND EQUITY
<S> <C>
Liabilities
Secured Claims (4) 410,000
Administrative Claims 2,000,000
Priority Employee Claims 51,300
Priority Tax Claims 30,000
Unsecured Claims 3,300,000
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Total Liabilities 5,791,300
Equity 51,308,700
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Total Liabilities and Equity 57,100,000
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</TABLE>
A copy of the Plan of Reorganization (As Amended) is filed as Exhibit 99.1
hereto and incorporated herein by this reference; and a copy of the Confirmation
Order is filed as Exhibit 99.2 hereto and incorporated herein by this reference.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
Pursuant to the Plan, the Company filed Amended and Restated Articles of
Incorporation, upon which the "Effective Date" occurred under the Plan. A copy
of the Amended Articles is filed as Exhibit 3.6 hereto and incorporated herein
by this reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
3.6 Amended and Restated Articles of Incorporation
99.1 Plan of Reorganization (As Amended)
99.2 Order Confirming Debtor's Plan of Reorganization and
Fixing Postconfirmation Deadlines
</TABLE>
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4 Without consideration of collateral values under Section 506.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELEGEN CORPORATION
Dated: December 19, 2000 By: /s/ JESSICA L. STEVENS
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Jessica L. Stevens
Chief Executive Officer
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