PROSPECTUS
6,829,725 SHARES
TELEGEN CORPORATION
COMMON STOCK
This Prospectus may be used for the offer and sale, from time to time,
of up to 6,829,725 shares (the "Shares") of common stock of Telegen Corporation,
a California Corporation (the "Company" or "Telegen"), for the account of the
security holders identified below (the "Security Holders"), who received certain
securities convertible into the Shares pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
provided by Section 4(2) thereof, such Shares to be received in connection with
the conversion of Notes and the exercise of Warrants as more fully described
under the section entitled "The Company" herein. The Company will not receive
any proceeds upon conversion of the Notes and will receive up to $1,072,085.26
upon exercise of the Warrants. 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 OTC Bulletin Board for trading of its
Common Stock under the symbol "TLGN."
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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.
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The date of this Prospectus is June 4, 1998
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 Annual
Report filed on Form 10-K for the fiscal year ended December 31, 1997 filed with
the Commission on April 15, 1998 and amended on April 30, 1998, (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
(iii) the Company's Report on Form 8-K filed with the Commission on January 15,
1998, (iv) the Company's Report on Form 8-K filed with the Commission on March
24, 1998, and (v) the Company's Report on Form 8-K filed with the Commission on
April 7, 1998.
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 (650) 261-9400.
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THE COMPANY
Telegen Corporation ("Telegen" or the "Company") is a high technology
company with products in development in the flat panel display market. At
present, Telegen's only operating business is Telegen Display Laboratories, Inc.
("TDL"), a California corporation, a controlled second tier subsidiary of the
Company which 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 wholly owned subsidiary of the Company, was in the
business of developing and selling products to the telecommunications industry
until TCC sold all of its operating business assets on April 1, 1998. Telegen's
corporate offices are located at 101 Saginaw Road, Redwood City, CA 94063, (650)
261-9400.
Common Stock and Warrants Subscription. On October 7, 1997, Telegen
initiated a private offering on a subscription basis of up to 500,000 units
(each, a "Unit") to accredited investors (the "Unit Investors"), as that term is
defined in Rule 501(a) ("Rule 501(a)") of the Securities Act of 1933 (the
"Act"), with a purchase price per Unit of $2.00 (the "Unit Offering"). Each Unit
consisted of (i) one share of Common Stock, (ii) a warrant to purchase one share
of the Company's Common Stock at a $0.01 per share exercise price (each, a
"$0.01 Warrant"), and (iii) a warrant to purchase one share of the Company's
Common Stock at a $4.00 per share exercise price (each, a "$4.00 Warrant," the
$0.01 Warrants and the $4.00 Warrants are collectively the "Warrants"). As of
October 21, 1997 the Unit Offering was fully subscribed.
Units purchased under the Unit Offering are subject to lock up
provisions which limit the ability of a holder of Common Stock or to sell Common
Stock received upon exercise of the Warrants. The purchased Units are divided
into four (4) equal groups (each, a "Group"), each having a separate lock-up
period (the "Lock-Up Period") for the resale of Common Stock purchased and the
sale of Common Stock upon exercise of the Warrants. The Lock-Up Period for each
Group expires on January 1, 1998, April 1, 1998, July 1, 1998 and October 1,
1998, respectively.
On March 19, 1998, the Company made available to the Unit Investors an
exchange offer for the Common Stock held thereby and received directly in the
Unit Offering or through exercise of warrants received in the Unit Offering (the
"Exchange Offer"). Under the Exchange Offer, the Unit Investors were offered
convertible subordinated promissory notes (the"Notes") for their shares of
Common Stock with a face value equal to the number of shares of Common Stock
tendered under the Exchange Offer multiplied by the five-day average of the
Company's closing trading prices on the OTC Bulletin Board prior to March 17,
1998 (the "Conversion Price"). The Notes have a one-year term with a six percent
(6%) balloon interest payment due at the end of the term of the Note. The Notes
are subordinated to all other existing debt of the Company, both as to interest
payment and upon liquidation. The Notes are also convertible to Common Stock at
any time by a holder thereof, such number of shares of Common Stock to be
determined by dividing the amount of face value of the Note tendered by the
Conversion Price and such shares are also subject to the Lock-Up Period. The
Company in its discretion may prepay any portion of principal or interest of the
Notes in cash or stock subject to a fifteen (15) day prior written notice to
holders thereof. Under the Exchange Offer 875,000 shares of Common Stock were
exchanged for Notes by the Unit Investors, as of the date hereof.
The Notes are "restricted securities" as that term is defined in Rule
144 and this Registration Statement is used to register the issuance of up to
75,000 shares of Common Stock to the holders thereof upon conversion of $33,315
in face value of the Notes to Common Stock.
Convertible Promissory Notes and Warrants. On April 1, 1998, Telegen
initiated a private offering of Convertible Promissory Notes and Warrants to
accredited investors, as that term is defined in Rule 501(a) (the "Note and
Warrant Investors"), pursuant to certain Note and Warrant Purchase Agreements,
(the "Agreements").
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Under the terms of the Agreements, the Note and Warrant Investors each received
securities consisting of (i) a convertible promissory note, convertible to
Common Stock of the Company at a $0.38 per share conversion price (each a
"Convertible Note") and (ii) a warrant to purchase a certain number of shares of
the Company's Common Stock, at a $0.38 per share exercise price (each a "$0.38
Warrant"). As of May 7, 1998, the Company sold two (2) Convertible Notes with an
aggregate face value evidencing $1,015,532 in indebtedness and two (2) $0.38
Warrants exercisable for an aggregate of 2,672,452 shares of the Company's
Common Stock.
Each Convertible Note has a twelve (12) month term from the date of
issuance and carries simple interest at 6% per annum, payable one year from the
date of issuance. The Company in its discretion may prepay any portion of
principal or interest of the Convertible Note in cash subject to a fifteen (15)
day prior written notice to the holder thereof. The Convertible Note holder may
convert the Convertible Note at any time into Common Stock at a conversion price
of $0.38, such conversion price to be adjusted in a reorganization,
reclassification, stock split, or similar transaction. Each $0.38 Warrant has a
two (2) month term from issuance and is immediately exercisable from the
issuance date thereof. On May 29, 1998, the Company extended the termination
date of one of the $0.38 Warrants from June 1, 1998 to June 12, 1998.
In connection with placing the Convertible Notes and $0.38 Warrants
with the Note and Warrant Investors, as partial consideration for their
services, R.S. Kirpalani received a Convertible Note with a face value of
$50,000 and an immediately exercisable warrant to purchase 13,158 shares of
Common Stock with a $0.38 per share exercise price with an expiration date of
December 31, 1998 (the "Kirpalani Warrant") and Capitol Bay Securities received
an immediately exercisable warrant to purchase 135,666 shares of Common Stock
with a $0.38 per share exercise price and an expiration date of June 21, 1998
(the "CBS Warrant"). The Kirpalani Warrant and the CBS Warrant are collectively
the "Placement Agent Warrants".
The Convertible Notes, the $0.38 Warrants and the Placement Agent
Warrants are "restricted securities" as that term is defined in Rule 144 and
this Registration Statement is used to register the issuance of Common Stock, if
any, upon conversion of the Convertible Notes to Common Stock and the issuance
of Common Stock upon exercise of the $0.38 Warrants and upon exercise of the
Placement Agent Warrants.
Nevada Anderson Convertible Promissory Note. In August 1997, the
Company initiated a private offering on a subscription basis of 222,222 shares
of its common stock, no par value (the "Common Stock") to accredited investors
(the "Common Investors"), as that term is defined in Rule 501(a) of the
Securities Act of 1933, as amended (the "Act"), at a per-share price of $2.25
(the "Common Offering"). As of September 30, 1997, the Company had closed the
Common Offering and had sold 220,404 shares of Common Stock pursuant thereto.
Nevada Anderson, Inc. a Nevada corporation ("Anderson") purchased
111,111 shares of Common Stock in the Common Offering. In connection with the
Common Offering, Anderson and Three Sons, LLC, an Arizona limited liability
company ("Three Sons") entered into a Put Call Option Agreement (the "Put/Call
Agreement"). Under the Put/Call Agreement Three Sons granted to Anderson the
right to sell to Three Sons 111,111 shares of Common Stock at $2.70 per share
(the "Put"). In addition, under the Put/Call Agreement Three Sons received from
Anderson the right to purchase from Three Sons 111,111 shares of Common Stock at
$2.70 per share. Both of these rights terminate upon mutual consent of Anderson
and Three Sons. In connection with the Common Offering, the Company guaranteed
Three Sons' Put obligation, beginning on the date thirty (30) days after
Anderson's purchase of the Common Stock (the "Guarantee"). The Company and
Anderson have agreed to satisfy their respective rights and obligations under
the Put/Call Agreement and Guarantee under a Satisfaction and Release Agreement
dated May 5, 1998 whereby Anderson would surrender its shares to the Company and
release the Company from its obligations to Anderson under the Guarantee in
exchange for a convertible Promissory Note with a $300,000 face value (the
"Anderson Note").
-4-
Of the $300,000 in principal of the Anderson Note, $100,000 in
principal must be repaid on June 13, 1998 and thereafter in $50,000 installments
on the 13th day of every month until all the principal on the Anderson Note is
paid in full. The Anderson Note can be repaid in cash or in shares of Common
Stock at the Company's election, the number of such shares determined by
dividing the repayment amount by the Anderson Conversion Price. The Anderson
Conversion Price is equal to the average of the closing market prices of the
Common Stock on the five (5) trading days immediately before such repayment
date.
The Anderson Note is a "restricted security" as that term is defined in
Rule 144 and this Registration Statement is used to register the issuance of
Common Stock, if any, to Anderson upon conversion of principal repayments on the
Anderson Note.
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.
Telegen's Capital Needs
Telegen's current working capital is very limited. The Company has a
limited amount of readily available funds to cover immediate working capital
needs such as employee wages, wage taxes, social security taxes, and lease
payments. There can be no assurance that the Company will be able to obtain such
funding on acceptable terms, or if at all to meet its immediate capital demands.
If adequate funds are not available as required, Telegen will not be able to
continue operations. In connection with the Company's financial condition, the
Company's independent accountants have included in their report for the
financial statements for the fiscal year end 1997 an explanatory paragraph
related to the Company's ability to continue as a going concern.
Assuming Telegen can obtain adequate short-term capital, 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. Additionally, Telegen's general 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. Although Telegen believes it will obtain significant additional
funding through 1998, there can be no assurance that Telegen will be able to
obtain such funding or that it will not require additional funding, or that any
additional financing will be available to Telegen on acceptable terms, if at all
to meet its capital demands through 1998. If adequate funds are not available as
required, Telegen's results of operations will be materially adversely affected.
Telegen believes it requires substantial capital to complete development of a
finished prototype of its flat panel display technology, and that 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.
-5-
History of Telegen Operating Losses; Accumulated Deficit and Minimum Revenues
Telegen's predecessor, 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 March 31, 1998 was $22,718,761. In
order to become profitable, Telegen must increase sales of its existing
products, develop, commercialize and sustain volume manufacturing of its flat
panel products, develop new products for new and existing markets, 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.
Litigation
On January 7, 1998, IPC Corporation, Ltd., Transtech Electronics Pte.
Ltd., and IPC Transtech Display Pte. Ltd. (the "Plaintiffs") filed an action
(the "Complaint") in San Mateo County Superior Court against the Company,
Telegen Display Laboratories, Inc. ("TDL") and certain former officers and/or
directors of the Company. Plaintiffs allege that defendants made false and
misleading statements to the Plaintiffs when the Company sold TDL common stock
for $5,000,000 to the Plaintiffs on or about May 30, 1996. The Complaint alleges
violations of Cal. Corp. Code ss.ss. 25401, 25501, fraud and deceit and
negligent misrepresentation. It seeks rescission of the purchase of TDL common
stock and restitution of $5,000,000, unspecified compensatory and punitive
damages, interest, costs and attorneys' fees. The Company and TDL recently were
served with the Complaint. The Company believes the Complaint is without merit
and intends to defend such matter vigorously. To the extent the Plaintiffs were
to succeed in this matter, Telegen's results of operations and financial
condition would be materially adversely affected.
Telegen's Exposure to Technological and Market Change; Difficulty in Developing
Flat Panel Technology
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.
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. The Company has not
finished the development of a completed prototype of the HGED flat panel display
technology. The Company believes it can successfully scale its HGED flat panel
display technology to 10.5 inch diagonal displays. At present, the Company does
not believe that scalability of this generation of its technology beyond such
levels is feasible. However, the Company does have preliminary design concepts
for a second generation of its technology which might provide additional
scalability. 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, commercialization or
volume manufacturing which would be materially adverse to Telegen's results of
operations.
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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.
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 ten
(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. Telegen does not own or
lease a manufacturing facility for, and has not begun the process of, volume
manufacturing of flat panel displays. 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 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 technology and products. Such
protection, however, may not preclude competitors from developing products
similar to those of Telegen. In addition, the laws of certain foreign countries
do not protect Telegen's intellectual property rights to the same extent as do
the laws of the United States. There can also be no assurance that third parties
will not assert intellectual property infringement claims against Telegen. One
such matter was recently dismissed without prejudice to the Company but there is
no assurance that more claims will not be initiated from litigants with more
resources than Telegen. There is no assurance that Telegen will prevail in such
litigation seeking damages or an injunction against the sale of Telegen's
products or that Telegen will be able to obtain any necessary licenses on
reasonable terms or at all.
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Listing of the Company's Stock on the OTC Bulletin Board
The Company currently trades its stock on the OTC Bulletin Board (the
"OTC BB"). The OTC BB is a real-time electronic quotation service for
over-the-counter securities. The OTC BB is not an automated quotation system and
is characterized by low volume of trading. There is no assurance that the OTC BB
can or will provide sufficient liquidity to holders of the Company's Common
Stock. The Company was trading on the Nasdaq SmallCap Market until January 22,
1998 and intends to return to it as soon as it meets the listing and maintenance
requirements. On February 22, 1998, Nasdaq raised such listing and maintenance
requirements. There can be no assurance that trading on the OTC BB will provide
investors with sufficient liquidity for the purchase and sale of the Common
Stock or that the Company will be able to meet the higher Nasdaq SmallCap Market
("SmallCap") listing and maintenance requirements that have been in effect since
February 22, 1998, in the near future, or if at all, or that if the Company does
meet the SmallCap requirements that a broad trading market will develop in the
Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the conversion of the
Notes by the Security Holders. The Company will receive up to $1,072,085.26 from
the exercise of the $0.38 Warrants and Placement Agent Warrants (the
"Warrants"). The Company intends to use the proceeds of $1,072,085.26 from
exercise of the Warrants for working capital and general corporate purposes.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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PLAN OF DISTRIBUTION
This Prospectus registers 4,008,446 shares of Common Stock to be issued
upon the conversion of the Notes by the various security holders described
herein and 2,821,276 shares of Common Stock to be issued upon exercise of the
Warrants by the various security holders described herein. For a discussion of
the terms and placement arrangements, if any, of such Notes and Warrants, see
the section entitled "The Company" herein.
The Registrant hereby represents that it has furnished the Security
Holders 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, 401 and 403 of Regulation S-K of the Securities Act of 1933, as amended.
Upon conversion of the Notes or exercise of the Warrants, the holders
thereof shall receive registered Common Stock from the Company, which may be
sold in any one or more transactions on the OTC BB, 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 following table sets forth as of May 22, 1998 the number of Common
Stock to be issued upon the Conversion of the Notes or exercise of the Warrants
by the Security Holders.
Shares of
Common Stock to be Issued Upon
Conversion of the Notes or
Name of Security Holder Exercise of the Warrants
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Exercise of Warrants
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Denis S.K. Low ................................. 1,315,790
Stock Acquisition LLC (1) ...................... 1,356,663
R.S. Kirpalani ................................. 13,158
Capitol Bay Securities ......................... 135,666
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Sub-Total 2,821,277
Conversion of Notes
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Denis S.K. Low ................................. 1,315,790
R.S. Kirpalani ................................. 131,579
Stock Acquisition L.L.C ........................ 1,356,663
Gruber & McBain International .................. 60,000
Lagunitas Partners, L.P. ....................... 15,000
Nevada Anderson, Inc. (2) ...................... 1,129,416
---------
Sub-Total 4,008,448
Total 6,829,725
=========
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(1) The Company has been informed by Stock Acquisition LLC that Stock
Acquisition LLC will transfer such warrant to Eureka Capital Corp., a Hong
Kong corporation, prior to exercise of such warrant.
(2) For the purposes of determining the numbers of shares to which Nevada
Anderson reasonably could be entitled upon the conversion of the Note, the
number of shares to be issued was calculated by dividing the face value of
$300,000 by a conversion price $0.265624 (as of the date hereof, the lowest
closing price for the Company's Common Stock in 1998). The Company
anticipates that based on market prices for the Company's Common Stock on
the OTC BB that it will issue significantly less shares of Common Stock in
connection with such conversion.
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.
-9-
EXPERTS
The consolidated balance sheets of Telegen Corporation and Subsidiaries
as of December 31, 1997 and 1996, and the consolidated statements of operations,
shareholders' equity/(deficit), and cash flows for each of the three years in
the period ended December 31, 1997, incorporated by reference in this
Registration Statement from the Form 10-K for the fiscal year ended December 31,
1997, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
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TABLE OF CONTENTS
Page
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Available Information ..................................................... 2
Incorporation of Certain Documents by Reference ........................... 2
The Company ............................................................... 3
Risk Factors .............................................................. 5
Use of Proceeds ........................................................... 8
Plan of Distribution ...................................................... 9
Legal Matters ............................................................. 9
Experts ................................................................... 10
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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. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy the Shares
by anyone in any jurisdiction in which such offer or solicitation is not
authorized, or in which the person making the offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Under no circumstances shall the delivery of this Prospectus or
any sale made pursuant to this Prospectus, create any implication that the
information contained in this Prospectus is correct as of any time subsequent to
the date of this Prospectus.
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TELEGEN
CORPORATION
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Common Stock
PROSPECTUS
June 4, 1998
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