AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 27, 2005
REGISTRATION NO. 333-124613
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Farmstead Telephone Group Inc.
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(Exact name of registrant as specified in its charter)
Delaware 06-1205743
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
22 Prestige Park Circle
East Hartford, Connecticut 06108
(860) 610-6000
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Robert G. LaVigne
Executive Vice President, Chief Financial Officer and Secretary
Farmstead Telephone Group, Inc.
22 Prestige Park Circle
East Hartford, Connecticut 06108
(860) 610-6000
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Henry E. Knoblock, III, Esq.
Pepe & Hazard LLP
225 Franklin Street - 16th Floor
Boston, Massachusetts 02110
Telephone (617) 748-5500
Facsimile: (617) 748-5555
Approximate date of proposed commencement of sale to public: As soon as
practicable after this Registration Statement becomes effective.
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 please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
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 for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Amount of Maximum Aggregate
Title of Each Class Securities Offering Dollar Price Amount
of Securities to be Registered Price Per of Securities to Of
to be Registered in the Offering Security be Registered Fee (4)
------------------- ---------------- --------- ---------------- -------
Common Stock 325,000 $ 1.33 $ 432,250 $ 50.88
Shares (1)
Common Stock 500,000 $ 1.33 $ 665,000 $ 78.27
Shares (2)
Common Stock 650,000 $ 1.33 $ 864,500 $101.75
Shares (3)
Total Securities
to be Registered 1,475,000 $1,961,750 $230.90 (5)
Shares
These shares (being issued for resale) are issuable on conversion of
outstanding note(s) (principal and interest) at a conversion price of
$1.54. The number of shares presently issuable on conversion is
325,000.
These shares (being registered for resale) are issuable on exercise
of warrants, at $1.82 per share. The number of shares presently
issuable on exercise is 500,000.
These shares (being registered for resale) are issuable on exercise
of warrants by certain executive officers of the Company, at fair
market value as of the date the Warrant was issued to each executive
officer. The number of shares issuable on exercise within the next
twelve months is a total of 650,000 shares.
Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457 (c) of the Securities Act of 1933, as amended,
the registration fee for the shares has been calculated based upon
the average of the high and low prices, as reported by AMEX, for the
registrant's common stock as of April 28, 2005, which was $1.33 per
share.
Previously Paid
Delaying amendment under rule 473(a): 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 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 section 8(a), may determine.
The information in this prospectus is subject to completion or amendment.
The securities covered by this prospectus cannot be sold until the
registration statement filed with the Securities and Exchange Commission
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which an offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of that state.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed
withthe Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED May 27, 2005
PROSPECTUS
[LOGO] FARMSTEAD
Farmstead Telephone Group, Inc.
SHARES OF COMMON STOCK
The selling stockholders listed on page 10 of this prospectus are
offering for resale up to 1,475,000 shares of common stock beneficially
owned by them. We will not receive any of the proceeds from the sale of the
shares by the selling stockholders. We will receive proceeds from any
exercise for cash of warrants made before any sale of any of the shares of
common stock being offered under this prospectus that are underlying the
warrants.
The common stock may be offered from time to time by the selling
stockholders through ordinary brokerage transactions in the over-the-
counter markets, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices and in other ways as
described in the "Plan of Distribution".
Our common stock is listed on the American Stock Exchange (the
"AMEX")under the symbol "FTG". On April 28, 2005, the last sale price of
our common stock as reported by the AMEX was $1.33 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. FOR
MORE INFORMATION, SEE "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _______________, 2005
Table of Contents
Page
Forward-looking Statements 3
About Farmstead Telephone Group, Inc. 3
Risk Factors 4
Use of Proceeds 9
Selling Stockholders 10
Plan of Distribution 12
Legal Matters 14
Experts 14
Where You Can Find More Information 14
Incorporation of Certain Documents By Reference 15
2
FORWARD-LOOKING STATEMENTS
Certain statements in this Registration Statement or the documents
incorporated by reference in this Registration Statement constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Farmstead Telephone
Group, Inc. to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, those set forth under the caption "Risk
Factors." Forward-looking statements may be indicated by the words
"believe," "expect," "anticipate," "intend," and "plan" and similar
expressions, by context or otherwise. Readers are cautioned not to place
undue reliance on any of these forward-looking statements, which speak only
as of the date of the statement was made. Farmstead Telephone Group, Inc.
undertakes no obligation to update any forward-looking statement.
ABOUT FARMSTEAD TELEPHONE GROUP, INC.
Farmstead Telephone Group, Inc. ("Farmstead", the "Company", "we", or
"our") was incorporated in Delaware in 1986. We are principally engaged as
a provider of new and used Avaya, Inc. ("Avaya") business
telecommunications parts, complete systems, and services. From December
1998 to the program's termination in July 2004, we provided refurbished
"Classic Lucent(TM)" and "Classic Avaya(TM)" telecommunications equipment
pursuant to an "Authorized Remarketing Supplier Program" with Lucent
Technologies and Avaya. Since the termination of this program, we have
continued to supply refurbished equipment to our customers. We also offer
Avaya's full-line of new telecommunications parts and complete systems as
an Avaya-certified "Gold Dealer". Our service revenues are under the aegis
of our "2 Star" Avaya Services Agreement. Our product offerings are
primarily customer premises-based private switching systems and peripheral
products, including voice messaging products. We also provide
telecommunications equipment installation, repair and refurbishing, short-
term rental, inventory management, and related value-added services. A
portion of our revenues is also derived from the sale of Avaya maintenance
contracts. We sell our products and services to large and mid-size, multi-
location businesses, as well as to small businesses, government agencies,
and other equipment resellers.
Effective February 1, 2001, we entered into a joint venture agreement
with TriNET Business Trust ("TriNET"), forming a limited liability
corporation operating under the name of InfiNet Systems, LLC ("InfiNet").
Under the agreement, we had a 50.1% ownership interest, and TriNET had a
49.9% ownership interest. Based in East Hartford, Connecticut, InfiNet was
organized for the purpose of selling new Avaya telecommunications systems
primarily to customers within the State of Connecticut and various counties
in the State of New York. Effective January 1, 2002, we acquired TriNET's
49.9% ownership interest in InfiNet. During 2002, however, we changed our
business strategy concerning the use of InfiNet, downsizing its operating
activities by eliminating its entire workforce and fulfilling systems sales
orders directly through Farmstead, which acquired its own systems dealer
license in 2002. As a result, InfiNet has since been inactive.
Our revenue has declined significantly over the past several years.
Revenue for the years ended December 31, 2004, 2003, and 2002 was $12.34
million, $14.9 million, and $19.46 million, respectively. The decline in
revenue and profit margins has been primarily attributable to reduced
business spending by our larger customers on enterprise communications
equipment coupled with intense competition between the Company and other
telecommunications equipment dealers and aftermarket resellers. The decline
in revenue and profit margins has also been the prime contributor to our
net losses for the years ended December 31, 2004, 2003, and 2002 of
$1,424,000, $709,000, and $2,530,000, respectively. Accordingly, we tried
to reduce our losses and return to profitability through cost reductions
and by broadening our product offerings. Cost reductions alone, however,
were not enough to offset the impact of continued revenue declines.
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In the fourth quarter of 2004 we began implementing a strategic
redirection, which is principally based upon building a larger and more
highly qualified sales force, and diversifying the Company's product
offerings and targeted customers. The business strategy is to transition to
a full communications solutions provider, becoming less dependent on parts
sales, and developing more sources of recurring revenues, such as through
installation and maintenance services. We plan to expand our product
offerings beyond traditional voice communications products by offering
Internet Protocol, or IP, telephony products and unified communications
products including voice messaging, and we plan to expand our customer base
and revenues by targeting the small to medium-sized (under 200 employees)
business market ("SMB").
Since the beginning of 2005, we have been working with Avaya to
structure a "strategic alliance" that would allow us to launch a nationwide
effort to sell Avaya SMB products and services. Effective March 1, 2005 we
concluded a non-binding agreement to commence a "pilot program", obtaining
authorization to market SMB products and services nationally. The purpose
of the program is to enable Avaya, and our Company, to increase market
share of SMB products and services. Under this trial agreement, Avaya will
provide marketing leads and other marketing and technical support, and we
will provide the direct sales team to generate sales in the authorized
territory. To this end, in March 2005 we hired 23 former Avaya sales and
support professionals and launched our SMB program. The pilot program
agreement may be terminated by either party upon 30 days prior notice.
RISK FACTORS
We operate in a changing environment that involves numerous known and
unknown risks and uncertainties that could materially adversely affect our
operations. The following highlights some of the factors that have
affected, and/or in the future could affect, our operations.
OUR BUSINESS IS SUBJECT TO A NUMBER OF RISKS INCLUDING THE RISKS SET
FORTH BELOW.
Our prospects are subject to many uncertainties and risks. Management
recognizes the challenges that it faces, particularly during this period of
diminished sales levels, and has adopted a number of strategies and action
steps to deal with its current operating environment. Disclosure of our
strategies and action steps is contained in the discussions set forth in
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations", of our Annual Report on Form 10-K filed with the
SEC on April 7, 2005 and elsewhere therein. These risks and uncertainties
are also detailed from time to time in reports we file with the SEC,
including Forms 8-K, 10-Q, and 10-K, and include, among other factors, the
following principal risks:
OUR BUSINESS IS MATERIALLY IMPACTED BY CAPITAL SPENDING LEVELS FOR
TELECOMMUNICATIONS PRODUCTS AND SERVICES IN THE UNITED STATES.
As a result of the economic downturn that commenced in 2001, many
businesses have reduced or deferred capital expenditures for
telecommunications equipment. Our reported 2004 revenues were 17% lower
than 2003, and 2003 revenues were 23% lower than 2002 revenues. In
addition, this environment has resulted in increased pricing and
competitive pressures, which have contributed to our revenue erosion. If
business capital spending for telecommunications products does not improve,
or if economic conditions in the U.S. deteriorate, our revenues may
continue to decline and our operating results will be adversely affected.
We remain cautious about the telecommunications product marketplace going
forward, and cannot predict whether the level of capital spending for the
Company's products will improve in the near term. As a result, we believe
that there will be continued pressure on our ability to generate revenue in
excess of current levels.
OUR BUSINESS IS HEAVILY DEPENDENT UPON AVAYA, AS OUR PRIMARY SUPPLIER
OF EQUIPMENT FOR RESALE.
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We primarily sell Avaya telecommunications products and services
through various Dealer agreements with Avaya. The Company is dependent upon
the quality and price-competitiveness of current Avaya products as well as
Avaya's continued development of new products in order to compete. The
Company's current sales levels for new parts and systems would be adversely
impacted should market demand for these Avaya products significantly
decline. Should Avaya's operations deteriorate to the point that it either
cannot continue to introduce technologically new products or effectively
compete with other equipment manufacturers, our long-term business strategy
to continue as an Avaya dealer would be adversely affected.
Our new parts and systems sales levels would also be adversely
impacted if the Avaya dealer agreements were terminated, or if Avaya
eliminated its "Business Partner" programs. It is Avaya's current intent to
generate a larger percentage of its revenues from its dealer base, of which
we are one. Effective July 30, 2004, Avaya terminated the ARS aftermarket
program, and by September 30, 2004 we were no longer authorized to sell
refurbished product under the "Classic Avaya" label. We believe,
however,that the termination of this program did not have a material
adverse impact on our sales of refurbished equipment, primarily because we
have continued to sell refurbished equipment under our "Farmstead-
Certified" label, and because Avaya continues to offer installation and
maintenance of its refurbished equipment with or without their "Classic
Avaya" label.
Since the beginning of 2005, we have been working with Avaya to
structure a "strategic alliance" that would allow us to launch a nationwide
effort to sell Avaya SMB products and services. Effective March 1, 2005 we
concluded a non-binding agreement to commence a "pilot program", obtaining
authorization to market SMB products and services nationally. The purpose
of the program is to enable Avaya, and our Company, to increase market
share of SMB products and services. Under this trial agreement, Avaya will
provide marketing leads and other marketing and technical support, and we
will provide the direct sales team to generate sales in the authorized
territory. To this end, in March 2005 we hired 23 former Avaya sales and
support professionals and launched our SMB program. The pilot program
agreement may be terminated by either party upon 30 days prior notice.
OUR GROSS PROFIT MARGINS VARY FROM PERIOD TO PERIOD.
Our gross profit margins are dependent upon a variety of factors
including (1) product mix - gross margins can vary significantly among
parts sales, system sales and our various service offerings. The parts
business, for example, involves hundreds of parts that generate
significantly varying gross profit margins depending upon their
availability, competition, and demand conditions in the marketplace;
(2)customer mix - we sell parts to both end-users and to other equipment
resellers. Our larger "Enterprise" companies often receive significant
purchase discounts from Avaya, which could lower our gross margins as we
compete against Avaya directly for this business; (3) the level and amount
of vendor discounts and purchase rebates available to us from Avaya and its
master distributors; (4) excess capacity - as sales volume falls, overhead
costs become a higher percentage of sales dollars; (5) competitive
pressures - as a result of the slowdown in capital equipment spending in
our industry, and the several hundred Avaya dealers nationwide , we have
been faced with increased price competition; and (6) obsolescence charges.
The combined effect of all of these factors will result in varying gross
profit margins from period to period.
OUR GROSS PROFIT MARGINS AND OPERATING EXPENSES COULD BE ADVERSELY
AFFECTED BY A REDUCTION IN PURCHASE DISCOUNT AND OTHER REBATE OR
INCENTIVE PROGRAMS CURRENTLY OFFERED BY AVAYA.
As an Avaya Dealer, we receive substantial rebates and other cash
incentives from Avaya, based upon volume levels of certain product
purchases, which are material to our operating results and which help
reduce product purchase costs, market development and marketing expenses.
These incentive programs are subject to change by Avaya, and no assurances
can be given that they would not be altered so as to adversely impact our
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profit margins or operating expenses.
WE MAY NOT HAVE ADEQUATE CASH OR CREDIT LINES TO FINANCE THE COMPANY'S
WORKING CAPITAL REQUIREMENTS OR GROWTH PLANS.
Our operating losses over the past three years have significantly
reduced the amount of credit available to us from outside lenders, and
increased the cost of borrowed funds. We are currently dependent upon cash
generated from operations, and borrowings under a revolving credit
facility, to satisfy our working capital requirements. Our revolving credit
borrowings are based upon the generation of eligible accounts receivable.
As our revenues have declined, so too have our receivables and borrowing
availability. A material adverse change in our business going forward could
prompt our lender to terminate our credit facility. In addition, continued
losses could consume our current cash reserves, and negatively affect our
ability to obtain replacement financing until we could demonstrate improved
operating results or a return to profitability. No assurances can be given
that we will have sufficient cash resources to finance future growth, and
it may become necessary to raise additional funds through public or private
debt or equity financings, which may also not be available to us until
operating performance improves, and which may dilute stockholder ownership
in us. If, however, we perform according to our expectations, we believe
that additional sources of financing would become available to us.
WE ARE FACED WITH INTENSE COMPETITION AND RAPIDLY CHANGING TECHNOLOGIES,
AND WE MAY BECOME UNABLE TO EFFECTIVELY COMPETE IN OUR MARKETPLACE.
We operate in a highly competitive marketplace. Over the years, our
marketplace has become subject to more rapid technological change as
communications systems have been evolving from stand-alone voice systems to
more highly integrated, software-driven systems. Since we principally sell
Avaya products, our competitive position in the marketplace is highly
dependent upon Avaya's ability to continue to be a market leader in the
product lines that we sell. Our competitors principally include Avaya and
other new equipment manufacturers that similarly compete against Avaya
products, including Nortel Networks Corporation, Siemens
Aktiengesellschaft, Alcatel S.A. and NEC Corporation along with their local
and regional dealers, and the other Avaya business partners. We believe
that key competitive factors in our market are price, timeliness of
delivery, service and product quality and reliability. Due to the reduction
in business capital spending on telecommunications products, which has
developed in the U.S. over the past few years, competitive pressures have
intensified. We also anticipate intensified competition from larger
companies having substantially greater technical, financial and marketing
resources, as well as larger customer bases and name recognition. As the
industry further develops voice and data converged products, we anticipate
encountering a broader variety of competitors, including new entrants from
related computer and communication industries.
IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY MANAGEMENT AND SALES
EMPLOYEES, WE WILL NOT BE ABLE TO COMPETE EFFECTIVELY AND OUR
BUSINESS MAY NOT BE SUCCESSFUL.
Our success is highly dependent upon our ability to hire and retain
key technical, sales and executive personnel. Competition for such
personnel is currently intense in our industry, and our deterioration in
revenues over the past two years has been partly due to turnover of such
key employees. If we fail to hire and retain a sufficient number of high-
quality personnel, we may not be able to maintain or expand our business.
We have been attempting to expand our systems sales business, which
requires more highly skilled technical and sales personnel than our
aftermarket parts business, and a failure to hire and retain such personnel
would restrict our ability to effectively develop this sales growth
strategy.
FUTURE EQUITY TRANSACTIONS, INCLUDING EXERCISE OF OPTIONS OR
WARRANTS, COULD RESULT IN SIGNIFICANT DILUTION.
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From time to time, the Company may sell restricted stock and
warrants, and
convertible debt, to investors in private placements conducted by broker-
dealers, or in negotiated transactions. Because the stock is restricted,
the stock is sold at a greater discount to market prices compared to a
public stock offering, and the exercise price of the warrants sometimes is
at or even lower than market prices. These transactions cause dilution to
existing shareholders. Also, from time to time, options are issued to
employees and third parties, with exercise prices equal to market. Exercise
of in-the-money options and warrants will result in dilution to existing
shareholders; the amount of dilution may depend on the spread between
market and exercise price, and the number of shares involved. The Company
will continue to grant options to employees with exercise prices equal to
market price at the grant date, and in the future may sell restricted stock
and warrants, all of which may result in dilution to existing shareholders.
For example, the selling shareholders who hold the notes have the
right to convert their notes at a set price of $1.54 per share, and all of
the selling shareholders can exercise their warrants at $1.82 per share,
regardless of market price. Depending on market price at the time, these
conversions and/or exercises could result in dilution to current
shareholders.
TERMS OF SUBSEQUENT FINANCING MAY ADVERSELY IMPACT YOUR INVESTMENT.
We may have to raise equity, issue debt or preferred stock financing
in the future. Your rights and the value of your investment in the common
stock could be reduced. For example, if we issue secured debt, the
creditors would have a claim to our assets that would be prior to the
rights of stockholders until the debt is paid. Debt service would increase
costs and negatively impact operating results. Preferred stock could be
issued in series from time to time with such designations, rights,
preferences, and limitations as needed to raise capital. The terms of
preferred stock could be more advantageous to those investors than to the
holders of common stock. In addition, if we need to raise more equity
capital from the sale of common stock, institutional or other investors may
negotiate terms at least and possibly more favorable than the terms of this
offering. Shares of common stock which we sell could be sold into the
market, which could adversely affect market price.
WE COULD BE DELISTED BY THE AMERICAN STOCK EXCHANGE.
On May 7, 2004 we received notice from the American Stock Exchange
(the "Amex") that we did not meet certain of the Amex's continued listing
standards as a result of having stockholders' equity less than $4 million
and net losses in three out of our four most recent fiscal years, as set
forth in Section 1003 (a) (ii) of the Amex Company Guide. We were afforded
the opportunity to submit a plan of compliance to the Amex and on June 15,
2004 presented our plan. On July 19, 2004 the Amex notified us that it
accepted our plan of compliance and granted us an extension of time to
regain compliance with the continued listing standards. We are subject to
periodic review by Amex Staff during the extension period which expires
November 7, 2005. Failure to make progress consistent with our plan or to
regain compliance with the continued listing standards by the end of the
extension period could result in our being delisted from the Amex.
Should we continue to record operating losses, remain below minimum
required levels of stockholders' equity, remain below required minimum
shareholder or market capitalization levels and /or if our common stock
continues to trade at a "low price per share", we could be subject to
delisting from the Amex. In considering whether a security warrants
continued trading and/or listing on the Amex, many factors are taken into
account, such as the degree of investor interest in the company, its
prospects for growth, the reputation of its management, the degree of
commercial acceptance of its products, and whether its securities have
suitable characteristics for auction market trading. Thus, any developments
which substantially reduce the size of a company, the nature and scope of
its operations, the value or amount of its securities available for the
market, or the number of holders of its securities, may occasion a review
of continued listing by the Amex. The determination as to whether a
security warrants
7
continued trading is not based on any precise mathematical formula rather,
each case is considered on the basis of all relevant facts and circumstances
and in light of the objectives of the Amex's policies regarding continued
listing.
OTHER RISKS
In addition to the specific risks and uncertainties discussed above,
our future operating performance can also be affected by: performance and
reliability of products; the maintenance of our level of customer service
and customer relationships; adverse publicity; business disruptions; acts
of terrorism within the U.S., and the impact of those acts on the U.S.
economy; and other events that can impact revenues and business costs. The
risks included here are not exhaustive. Other sections of this report may
include additional factors, which could adversely affect our business and
financial performance. Moreover, we operate in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and
it is not possible for management to predict all such risk factors, nor can
it assess the impact of all such risk factors on its business or the extent
to which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place undue
reliance on forward-looking statements as a prediction of actual results.
Investors should also be aware that while we do, from time to time,
communicate with securities analysts, it is against our policy to disclose
to them any material information unless such information shall have been
previously or is simultaneously disclosed in a manner intended to provide
broad, non-exclusionary distribution of the information to the public.
Accordingly, shareholders should not assume that we agree with any
statement or report issued by any analyst irrespective of the content of
the statement or report. Furthermore, we have a policy against issuing or
confirming financial forecasts or projections issued by others. Thus, to
the extent that reports issued by securities analysts contain any
projections, forecasts or opinions, such reports are not our
responsibility.
WE MAY BE THE SUBJECT OF SECURITIES CLASS ACTION LITIGATION DUE TO
FUTURE STOCK PRICE VOLATILITY.
In the past, when the market price of a stock has been volatile,
holders of that stock have often instituted securities class action
litigation against the company that issued the stock. If any of our
stockholders brought a lawsuit against us, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention
of our management.
PROVISIONS OF DELAWARE LAW COULD DELAY OR PREVENT A CHANGE OF CONTROL.
As a Delaware corporation, we are subject to the General Corporation
Law of the State of Delaware, including Section 203, an anti-takeover law
enacted in 1988. In general, Section 203 restricts the ability of a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. Subject
to exceptions, an interested stockholder is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more
of a corporation's voting stock. As a result of the application of Section
203, potential acquirers may be discouraged from attempting to acquire us,
thereby possibly depriving our stockholders of acquisition opportunities to
sell or otherwise dispose of our stock at above-market prices typical of
acquisitions.
THE PRICE OF OUR COMMON STOCK COULD BE VOLATILE.
Our common stock is quoted on the American Stock Exchange and has
experienced, and is likely to experience in the future, significant price
and volume fluctuations which could adversely affect the market price of
our common stock without regard to our
8
operating performance. In addition, the trading price of our common stock
could be subject to significant fluctuations in response to actual or
anticipated variations in our quarterly operating results, announcements by
us or our competitors, factors affecting the telecommunications industry
generally, changes in national or regional economic conditions, changes in
securities analysts' estimates for our competitors' or industry's future
performance or general market conditions. The market price of our common
stock could also be affected by general market price declines or market
volatility in the future or future declines or volatility in the prices of
stocks for companies in our industry.
FUTURE SALES OF SHARES OF OUR COMMON STOCK COULD AFFECT THE MARKET PRICE
OF OUR COMMON STOCK AND OUR ABILITY TO RAISE ADDITIONAL CAPITAL.
Under the Laurus transaction, we are obligated to register within
thirty (30) days common stock issuable upon conversion of any notes then
outstanding. Depending upon the amount outstanding under the revolving
facility and the current market price of the Company's shares, Laurus
could, subject to certain restrictions,elect to convert its debt into
additional common shares significantly in excess of the number of shares
being registered under this Prospectus. The Company however does have the
option to redeem the notes being converted for a cash premium. We have also
registered a substantial number of shares of common stock that are issuable
upon the exercise of options. If holders of options choose to exercise
their purchase rights and sell shares of common stock in the public market,
or if holders of currently restricted common stock or common stock issuable
upon conversion of our convertible debt choose to sell such shares of
common stock in the public market under Rule 144 or otherwise, or if the
selling stockholders whose shares are being offered pursuant to this
prospectus sell or attempt to publicly sell such shares all at once or in a
short time period, the prevailing market price for our common stock may
decline. Future public sales of shares of common stock may adversely affect
the market price of our common stock or our future ability to raise capital
by offering equity securities.
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We have never declared or paid a dividend on our common stock. We
intend to retain earnings, if any, for use in the operation and expansion
of our business and therefore do not anticipate declaring or paying any
dividends in the foreseeable future.
OUR DIRECTORS AND MANAGEMENT WILL EXERCISE SIGNIFICANT CONTROL OVER
OUR COMPANY.
Our directors and executive officers and their affiliates
collectively control or beneficially own approximately 45% of our
outstanding common stock. As a result, these stockholders, if they act
together, will be able to influence our management and affairs and all
matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. The concentration of
ownership may have the effect of delaying or preventing a change in control
of our company and might affect the market price of our common stock.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of our
common stock by the selling stockholders named in this prospectus. Any
proceeds we receive from any exercise for cash by the selling stockholders
of warrants held by them will be used for working capital.
We have agreed to pay certain expenses in connection with the
registration of the shares being offered by the selling stockholders.
9
SELLING STOCKHOLDERS
Laurus Master Fund Ltd.
On March 31, 2005, the Company entered into a financing transaction
with Laurus Master Fund, Ltd, ("Laurus"), providing for a three-year, $3
million ("Capital Availability Amount") revolving loan credit facility
which includes a Secured Revolving Note (the "Revolving Note") and a Secured
Convertible Minimum Borrowing Note (together with the Revolving Note, the
"Laurus Notes"). The initial Secured Convertible Minimum Borrowing Note was
set at $500,000, the proceeds of which were advanced to the Company on
April 4, 2005. Amounts outstanding under the Laurus Notes will either be
paid in cash at their March 31, 2008 maturity date or, at Laurus' option, by
converting such amounts into shares of the Company's common stock from time
to time. The Company also issued Laurus a five-year warrant (the "Warrant")
to purchase an aggregate of 500,000 shares of common stock of the Company at
an exercise price of $1.82 per share. The warrant exercise price was set at
130% of the average closing price of the Company's common stock over the ten
trading days preceding the execution of the agreement, and is subject to
anti-dilution protection adjustments. This transaction was completed in a
private offering pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933, as amended. This new credit facility
replaced the $1.7 million revolving credit facility the Company had with
Business Alliance Capital Corporation.
The following describes certain of the material terms of the
financing transaction with Laurus. The description below is not a complete
description of the material terms of the financing transaction and is
qualified in its entirety by reference to the agreements entered into in
connection with the financing which were included as exhibits to the
Current Report on Form 8-K filed April 5, 2005:
Principal Borrowing Terms and Prepayment: Borrowings are advanced
pursuant to a formula consisting of (i) 90% of eligible accounts
receivable, as defined (primarily receivables that are less than 90 days
old), and (ii) 30% of eligible inventory, as defined (primarily inventory
classified as "finished goods"), up to a maximum inventory advance of
$600,000, less any reserves required by Laurus. Interest on the outstanding
borrowings is charged at the per annum rate of two percentage points (2%)
above the prime rate, but not less than 6%. The interest rate charged,
however, will be decreased by 2% (or 200 basis points) for every 25%
increase in the market price of the Company's common stock above the fixed
conversion price, down to a minimum interest charge of 0.0%. The Company
will additionally be charged a fee equal to 0.25% of the unused portion of
the facility. Should the Company terminate the financing agreement with
Laurus prior to the maturity date, the Company will incur an early payment
fee equal to 4%, 3% and 2% of the Capital Availability Amount if terminated
in the first, second or third year, respectively, of the term.
Security and Events of Default. The Laurus Notes are secured by a lien
on substantially all of the Company's assets. The Security Agreement contains
no specific financial covenants; however, it defines certain circumstances
under which the agreement can be declared in default and subject to
termination, including among others if (i) there is a material adverse change
in the Company's business or financial condition; (ii) an insolvency
proceeding is commenced; (iii) the Company defaults on any of its material
agreements with third parties or there are material liens or attachments
levied against the Company's assets; (iv) the Company's common stock ceases
to be publicly traded; and (v) the Company fails to comply with the terms,
representations and conditions of the agreement. Upon the occurrence of an
Event of Default, the interest rate charged will be increased by 1-1/2 % per
month until the default is cured; should the default continue beyond any
applicable grace period, then Laurus could require the Company to repay 120%
of any principal and interest outstanding under the agreement.
Conversion Rights. All or a portion of the outstanding principal and
interest due
10
under the Laurus Notes may be converted, at the option of the Holder, into
shares of the Company's common stock, subject to certain limitations as
defined in the Laurus Notes, if the market price of the common stock is 15%
above the Fixed Conversion Price of $1.54 per share for five consecutive
trading days in any month. The fixed conversion price was originally set at
110% of the average closing price of the Company's common stock over the ten
trading days preceding the execution of the agreement, and is subject to
anti-dilution protection adjustments. The fixed conversion price will be
reset once $1.5 million of debt has been converted. Upon receipt of a
conversion notice from the Holder, the Company can elect to pay cash to the
Holder in lieu of issuing shares of common stock, at a price per share equal
to the intraday high price of the stock.
Registration Rights. Pursuant to the terms of a Registration Rights
Agreement, the Company is obligated to file and obtain effectiveness for a
registration statement registering the resale of shares of the Company's
common stock issuable upon conversion of the Laurus Notes and the exercise
of the Warrant. If the registration statement is not timely filed, or
declared effective the Company will be subject to certain penalties.
Jean-Marc Stiegemeier
On October 1, 2004, the Company entered into an employment agreement
(the "Agreement") with Mr. Stiegemeier (the "Executive") through December
31, 2009. Concurrent with the effective date of the Agreement, Executive
was issued a Warrant to purchase up to Four Hundred Thousand (400,000)
shares of common stock at fair market value. The Warrant is exercisable
immediately. The underlying common stock is unregistered as of the date of
issuance of the warrant. The Warrant includes the obligation of the Company
to register the underlying shares as soon as practical.
Alfred Stein
On January 6, 2005, the Company and Mr. Stein have reached agreement
on the principal terms of a two-year employment agreement. Concurrent with
the effective date of the agreement, Mr. Stein received a warrant to
purchase up to 250,000 shares of common stock at an exercise price equal to
the fair market value of the common stock on the effective date of his
employment. The Company has agreed to register a portion of the underlying
shares for the Executive with this prospectus.
Nevelle Johnson
On March 1, 2005, the Company and Mr. Johnson have entered into an
employment agreement (the "Agreement") expiring December 31, 2008 which
includes the following key provisions: (i) an initial annual base salary of
$200,000; (ii) an annual bonus of up to 50% of base salary based upon
attaining earnings targets approved by the Board of Directors; (iii) the
grant of a warrant to purchase up to 250,000 shares of common stock at an
exercise price equal to the fair market value of the common stock on the
effective date of his employment. The Company has agreed to register a
portion of the underlying shares for the Executive with this prospectus.
Based on information provided by the selling stockholders, the
following table sets forth certain information regarding the selling
stockholders.
The table below assumes for calculating each selling stockholder's
beneficial and percentage ownership that options, warrants or convertible
securities that are held by such stockholder (but not held by any other
person) and are exercisable within 60 days from the date of this prospectus
have been exercised and converted. The table also assumes the sale of all
of the shares being offered.
11
Common Stock Beneficially
Owned After the Offering (1)
Number of Shares of -----------------------------
Common Stock
Beneficially Owned Shares Number Percent of
Selling Security Holder Prior to the Offering Being Offered of Shares Outstanding Shares
----------------------- --------------------- ------------- --------- ------------------
Laurus Master Fund, Ltd. (1) 175,500 (2) 825,000 --
Jean-Marc Stiegemeier 400,000 400,000 --
Alfred Stein 250,000 150,000 100,000 2.8%
Nevelle Johnson 260,000 100,000 160,000 4.5%
--------------------
We do not know when or in what amounts the selling stockholders may
offer for sale the shares of common stock pursuant to this offering.
The selling stockholders may choose not to sell any of the shares
offered by this prospectus. Because the selling stockholders may,
subject to certain restrictions, offer all or some of the shares of
common stock pursuant to this offering we cannot estimate the number
of shares of common stock that the selling stockholders will hold
after completion of the offering. For purposes of this table, we have
assumed that the selling stockholders will have sold all of the
shares covered by this prospectus upon the completion of the offering
and that the selling stockholders will not have entered into any
other transactions with respect to our securities.
Laurus (i) has made an investment in the Note and, subject to certain
conditions noted below, may convert this investment into up to
325,000 shares of our common stock at the conversion price set forth
in the Note and (ii) holds warrants to purchase up to 500,000 shares
of common stock and, subject to certain conditions noted below, these
warrants are exercisable within 60 days at an exercise price of $1.82
per share. The Note and warrants are not exercisable to the extent
that the number of shares of our common stock beneficially held by
Laurus after giving effect to such conversion or exercise would
result in beneficial ownership by Laurus of more than 4.99% of our
outstanding shares of common stock. Laurus may only waive these
restrictions (x) upon 90 days' prior notice to us, or (y) upon the
occurrence of an event of default under the Notes. Laurus
beneficially owns 175,500 shares of our common stock underlying
warrants and the Notes that are exercisable or convertible, as the
case may be, within 60 days. Laurus' address is 825 Third Avenue, New
York, NY 10022.
PLAN OF DISTRIBUTION
All costs, expenses and fees in connection with the registration of
the shares offered by this prospectus shall be borne by us. Brokerage
costs, if any, attributable to the sale of shares will be borne by the
selling stockholder.
Subject to certain contractual restrictions noted above, the shares
may be sold by the selling stockholder by one or more of the following
methods:
* under a 10b5-1 trading plan;
* block trades in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell
a portion of the shares as principal to facilitate the
transaction;
12
* purchases by a broker or dealer as principal and resale by such
broker dealer for its account pursuant to this prospectus;
* an exchange distribution in accordance with the rules of the
applicable exchange;
* ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
* through put and call options relating to the shares;
* negotiated transactions;
* a combination of any such methods of sale at market prices
prevailing at the time of the sale or at negotiated prices; and
* any other method permitted pursuant to applicable law.
The transactions described above may or may not involve brokers or
dealers.
The selling stockholders will not be restricted as to the price or
prices at which the selling stockholders may sell their shares. Sales of
shares by the selling stockholders may depress the market price of our
common stock since the number of shares which may be sold by the selling
stockholders is relatively large compared to the historical average weekly
trading of our common stock. Accordingly, if the selling stockholders were
to sell, or attempt to sell, all of such shares at once or during a short
time period, we believe such a transaction could adversely affect the
market price of our common stock.
From time to time a selling stockholder may pledge its shares under
margin provisions of customer agreements with its brokers or under loans
with third parties. Upon a default by the selling stockholder, the broker
or such third party may offer and sell any pledged shares from time to
time.
In effecting sales, brokers and dealers engaged by a selling
stockholder may arrange for other brokers or dealers to participate in the
sales as agents or principals. Brokers or dealers may receive commissions
or discounts from the selling stockholder or, if the broker-dealer acts as
agent for the purchaser of such shares, from the purchaser in amounts to be
negotiated, which compensation as to a particular broker dealer might be in
excess of customary commissions which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree
with the selling stockholder to sell a specified number of such shares at a
stipulated price per share, and to the extent the broker-dealer is unable
to do so acting as agent for a selling stockholder, to purchase as
principal any unsold shares at the price required to fulfill the broker-
dealer commitment to the selling stockholder. Broker-dealers who acquire
shares as principal may then resell those shares from time to time in
transactions
* in the over-the counter market or otherwise;
* at prices and on terms prevailing at the time of sale;
* at prices related to the then-current market price; or
* in negotiated transactions.
These resales may involve block transactions or sales to and through
other broker-dealers, including any of the transactions described above. In
connection with these sales, these broker-dealers may pay to or receive
from the purchasers of those shares commissions as described above. The
selling stockholders may also sell the shares in open market transactions
under Rule 144 under the Securities Act, rather than under this
13
prospectus.
The selling stockholders and any broker-dealers or agents that
participate with the selling stockholders in sales of the shares may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with these sales. In this event, any commissions received by
these broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the
shares against certain liabilities, including liabilities arising under the
Securities Act.
The selling stockholders are subject to applicable provisions of the
Securities Exchange Act of 1934 and the SEC's rules and regulations,
including Regulation M, which provisions may limit the timing of purchases
and sales of the shares by the selling stockholders.
In order to comply with certain states' securities laws, if
applicable, the shares may be sold in those jurisdictions only through
registered or licensed brokers or dealers. In certain states the shares may
not be sold unless the shares have been registered or qualified for sale in
such state, or unless an exemption from registration or qualification is
available and is obtained.
LEGAL MATTERS
Pepe & Hazard LLP of Boston, Massachusetts will pass upon the
validity of the shares of common stock being offered by this prospectus.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from Farmstead Telephone
Group, Inc.'s Annual Report on Form 10-K for the year ended December 31,
2004 have been audited by Carlin, Charron & Rosen, LLP, independent
registered public accounting firm, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and we file reports and other information with the
SEC.
You may read and copy any of the reports, statements, or other
information we file with the SEC at the SEC's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site at
http://www.sec.gov that contains reports, proxy statements and other
information regarding issuers that file electronically with the SEC. The
American Stock Exchange maintains a Web site at http://www.amex.com that
contains reports, proxy statements and other information filed by us.
You may also obtain information about us, including copies of our SEC
reports, through our website at http://www.farmstead.com. This website
address is not an active link to the registration statement of which this
prospectus is a part, and any documents, references, links or other
materials of any kind contained or referred to on such website are not part
of the registration statement of which this prospectus is a part.
14
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have filed with the SEC, Washington, D.C., a registration
statement on Form S-3 under the Securities Act of 1933, covering the
securities offered by this prospectus. This prospectus does not contain all
of the information that you can find in our registration statement and the
exhibits to the registration statement. Statements contained in this
prospectus as to the contents of any contract or other document referred to
are not necessarily complete and in each instance such statement is
qualified by reference to each such contract or document filed or
incorporated by reference as an exhibit to the registration statement.
The SEC allows us to "incorporate by reference" the information we
file with them. This means that we can disclose important information to
you by referring you to other documents that are legally considered to be
part of this prospectus, and later information that we file with the SEC
will automatically update and supersede the information in this prospectus
and the documents listed below. We incorporate by reference the documents
listed below, and any future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the selling
stockholders sell all the shares.
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
2004;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004;
4. Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2004;
5. The description of the Registrant's common stock, contained in the
Registrant's Registration Statement on Form SB-2 (Registration No.
333-5103) dated June 3, 1996 (as amended by Forms SB-2/A dated July
22, 1996, and August 12, 1996), and Form 8-A dated September 10,
1996, including any amendments or reports filed for the purpose of
updating that description.
6. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 subsequent to the date
of this prospectus and prior to the termination of this offering,
except the Compensation Committee Report on Executive Compensation
and the performance graph included in any Proxy Statement filed by us
pursuant to Section 14 of the Exchange Act; and
7. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 subsequent to the date
of the initial filing of this registration statement and prior to the
effectiveness of this registration statement, except the Compensation
Committee Report on Executive Compensation and the performance graph
included in any Proxy Statement filed by us pursuant to Section 14 of
the Exchange Act.
The SEC file number for all of these filings is 000-15938.
You may request and we will provide a copy of these filings to you at
no cost, other than the exhibits, by writing or telephoning us at Farmstead
Telephone Group, Inc., 22 Prestige Park Circle, East Hartford, Connecticut
06108, telephone number (860)610-6000.
We have not authorized anyone else to provide you with information
different from that contained or incorporated by reference in this
prospectus. This prospectus is not an offer to sell nor is it a
solicitation of an offer to buy any security in any jurisdiction where the
offer or sale is not permitted. Neither the delivery of this prospectus nor
any sale made under this prospectus shall, under any circumstances, imply
that there has been no change in our affairs since the date of this
prospectus or that
15
the information contained in this prospectus or incorporated by reference
herein is correct as of any time subsequent to its date.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered (estimated
except for the SEC Registration fee) are as follows:
SEC Registration Fee $ 230.90
American Stock Exchange Listing Fee $29,500.00*
Accounting Fees and Expenses $ 2,500.00*
Printing Expenses $ 5,000.00*
Legal Fees and Expenses $15,000.00*
Miscellaneous Expenses $ 2,769.10*
Total $55,000.00*
* Estimated pursuant to Item 511 of Regulation S-K
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
("GCL") provides for the indemnification of officers and directors under
certain circumstances against expenses incurred in successfully defending
against a claim and authorizes Delaware corporations to indemnify their
officers and directors under certain circumstances against expenses and
liabilities incurred in legal proceedings involving such persons because of
their being or having been an officer or director.
Section 102(b) of the GCL permits a corporation, by so providing in
its certificate of incorporation, to eliminate or limit director's
liability to the corporation and its shareholders for monetary damages
arising out of certain alleged breaches of their fiduciary duty. Section
102(b)(7) of the GCL provides that no such limitation of liability may
affect a director's liability with respect to any of the following: (i)
breaches of the director's duty of loyalty to the corporation or its
shareholders; (ii) acts or omissions not made in good faith or which
involve intentional misconduct of knowing violations of law; (iii)
liability for dividends paid or stock repurchased or redeemed in violation
of the GCL; or (iv) any transaction from which the director derived an
improper personal benefit. Section 102(b)(7) does not authorize any
limitation on the ability of the corporation or its shareholders to obtain
injunctive relief, specific performance or other equitable relief against
directors.
The registrant's Certificate of Incorporation and the registrant's
By-laws provide for indemnification to the fullest extent permitted or
authorized by the GCL or judicial or administrative decisions of each
person who was or is a party or threatened to be made a party, or was, or
is a witness, to any threatened pending or completed action, suit, or
proceeding against any liability or cost or expense asserted against him or
incurred by him by reason of the fact that he is or was a director, officer
or employee of the registrant or is or was an agent of the registrant to
whom the registrant has agreed to grant such indemnity or is serving or was
serving, at the registrant's request, as an
16
officer , director or employee of another entity or is serving as an agent
of another entity to whom the Corporation has agreed to grant indemnity. The
foregoing right of indemnification shall not be deemed to be exclusive of
any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of shareholders or disinterested directors, or
otherwise.
The registrant's Certificate of Incorporation provides that no
director of the registrant shall be personally liable to the registrant or
its stockholders for any monetary damages for breaches of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty
of loyalty to the registrant or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the GCL; or (iv) for
any transaction from which the director derived an improper personal
benefit.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS.
5 Opinion of Pepe & Hazard LLP
23.1 Consent of Carlin, Charron & Rosen, LLP
23.4 Consent of Pepe & Hazard LLP (included in Exhibit 5)
24 Power of Attorney (included on the signature page of the
Registration Statement)
ITEM 17. UNDERTAKINGS
Undertaking Required by Regulation S-K, Item 512(a).
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
i. To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
ii. 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;
iii. To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that clauses (i) and (ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by such
clauses is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement;
17
(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 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.
Undertaking Required by Regulation S-K, Item 512(b).
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 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 initial bona fide offering
thereof.
Undertaking required by Regulation S-K, Item 512(h).
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling
persons pursuant to the foregoing provisions, or otherwise, the registrant
has been advised 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. 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant 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 and authorized this Amendment No. 1 to this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of East Hartford, State of Connecticut on the 27th day of May,
2005.
Farmstead Telephone Group, Inc.
By: /s/ Jean-Marc Stiegemeier
-------------------------------------
Jean-Marc Stiegemeier
Chief Executive Officer and President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Jean-Marc Stiegemeier and
Robert G. LaVigne, or any of them, each acting alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and re-
substitution, for such person and in his name, place and stead, in
any and all capacities, in connection with the Registrant's Registration
Statement on Form S-3 under the Securities Act of 1933, including to sign
the Registration Statement in the name and on behalf of the undersigned as
a director or officer of the Registrant and any and all amendments or
supplements thereto, including any and all stickers and post-effective
amendments thereto, and any and all additional registration statements
relating to the same offering of securities as those that are covered by
18
the Registration Statement that are filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his
or their 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.
Signature Title(s)
--------- --------
/s/ Jean-Marc Stiegemeier Chairman of the Board, President, Chief
---------------------------- Executive Officer and Director
Jean-Marc Stiegemeier (Principal Executive Officer)
Dated: May 27, 2005
/s/ Robert G. LaVigne Executive Vice President, Chief Financial
---------------------------- Officer, Secretary and Treasurer
Robert G. LaVigne (Principal Financial and Accounting Officer)
Dated: May 27, 2005
/s/ George J. Taylor, Jr. Director
----------------------------
George J. Taylor, Jr.
Dated: May 27, 2005
/s/ Harold L. Hansen Director
----------------------------
Harold L. Hansen
Dated: May 27, 2005
/s/ Joseph J. Kelley Director
----------------------------
Joseph J. Kelley
Dated: May 27, 2005
/s/ Ronald P. Pettirossi Director
----------------------------
Ronald P. Pettirossi
Dated: May 27, 2005
/s/ Hugh M. Taylor Director
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Hugh M. Taylor
Dated: May 27, 2005
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