FTE Networks Inc (fka FTNW)

[Ed Ajootian]

Mike, this news was out many moons ago -- the company made a filing with the SEC about it on 1/8. See excerpt from that filing below:

The Purpose and Reason for the Common Share Increase

The Board effectuated a reverse stock split of our Common Stock at a 1-for-25 ratio (the “Reverse Split”) on November 6, 2017, which increased the per share price of our Common Stock and enabled the Company to satisfy certain bid and closing price requirements for an initial listing on the NYSE American Exchange.

As a result of the Reverse Split, our authorized shares of our Common Stock reduced from 200,000,000 to 8,000,000 shares. The Common Share Increase would increase the number of authorized shares from 8,000,000 to 100,000,000 shares. The Board believes that the Common Share Increase will provide the Company with greater flexibility in raising additional capital in the future. In this regard, the Board believes that the Common Share Increase will position the Company to take advantage of future business opportunities that are consistent with the Company’s growth strategy, including but not limited to, potentially establishing strategic relationships with corporate partners and engaging in possible acquisitions or financings. The Company does not currently have plans to issue any shares of Common Stock. However, should it decide to do so, the Common Share Increase will allow the Company to issue shares of Common Stock without the expense and delay of a special stockholders’ meeting.

Pursuant to the NRS, the Board approved the Reverse Split and authorized the filing of a Certificate of Change to the Company’s Articles of Incorporation, a copy of which is attached hereto as Appendix C. Pursuant to Section 78.207 of the NRS, stockholder approval is not required to effect the Reverse Split if (i) both the number of authorized shares of Common Stock and the number of outstanding shares of Common Stock are proportionally reduced as a result of the Reverse Split; (ii) the Reverse Split does not adversely affect any other class of stock of the Company; and (iii) the Company does not pay money or issue scrip to stockholders who would otherwise be entitled to receive a fractional share as a result of the Reverse Split.

So as you can see, as of 1/8/18 the company had no plans to issue more stock. Maybe those plans have changed at this point. I actually hope that they do a secondary offering soon, to get enough funds to de-lever the company and get their current senior lender Lateral Investment out of the picture. Lateral is charging them onerous amounts to lend money to them and while those terms made sense in the past, now that they are generating a steady, increasing amount of EBITDA, its time to move on to someone that will treat them a lot better.

If they do decide to offer more stock I believe they will do so via a public offering vs. a private placement, so as to avoid the haircut that usually happens when you do a private placement.