May 20, 2015
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
Attention: Mr. Larry Spirgel, Assistant Director
Attention: Ms. Kathleen Krebs, Special Counsel
Attention: Ms. Emily Drazan, Staff Attorney
Re: | FTE Networks, Inc. |
Amendment No. 1 to Registration Statement on Form 10 | |
Filed May 6, 2015 | |
File No. 000-31355 |
Dear Mr. Spirgel:
FTE Networks, Inc. (the “Company”) confirms receipt of the letter dated May 13, 2015 (the “Comment Letter”) from the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) with respect to the above-referenced filing (the “Registration Statement”). The following are the Company’s responses to the Comment Letter. The Company’s responses are numbered to correspond to the Staff’s comments as numbered in the Comment Letter. For your convenience, each of the Staff’s comments contained in the Comment Letter have been restated below in their entirety, with the Company’s corresponding response set forth immediately under such comment in bold.
Employment Agreements, page 39
Comment 1: | Please file all employment agreements with your named executive officers as exhibits. Please also file the agreements evidencing the material promissory notes with your shareholders disclosed on page 40. You may wish to refer to Item 601 of Regulation S-K. |
Response: | In response to the Staff’s comment above, the Company shall file an amendment to the Registration Statement (“Amendment No. 2”). Related thereto, attached hereto as Exhibit A, please find all employment agreements with our named executive officers, and attached hereto as Exhibit B, please find copies of the material promissory notes with our shareholders referenced on page 40 of the Registration Statement, that shall all be filed as Exhibits under Amendment No. 2. |
Item 10. Recent Sales of Unregistered Securities, page 45
Comment #2: | We note that you issued securities to 52 persons in connection with the Beacon Merger and that you relied upon the exemption from registration under Section 4(a)(2) and Regulation D. Please provide a more detailed analysis of the facts you relied upon to make these exemptions available, such as the sophistication of the persons and their status as accredited or non-accredited investors. |
Response: | Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) exempts from registration transactions “by an issuer not involving a public offering”. The Commission has provided guidelines with respect to when a Section 4(a)(2) exemption is available, looking at the facts surrounding a non-public offering. The Company relied on several factors to determine that the issuance of the Beacon Preferred Shares (as defined in the Form 10) issued to former holders of capital stock of Focus Venture Partners, Inc. (“Focus”), as merger consideration did not involve a public offering, including: (1) a limited number of shareholders who were pre-existing shareholders of Focus, received Beacon Preferred Shares; (2) several shareholders were issued shares as equity compensation for their services and did not purchase shares; (3) there was no public solicitation or advertising with respect to the issuance of the Beacon Preferred Shares; and (4) the securities are restricted and are subject to limitations on resale. Further, Beacon had a reasonable belief that the former Focus stockholders were sophisticated when they received the Beacon Preferred Shares because the holders of outstanding shares of Focus were required to deliver to Beacon letters certifying such holder’s ownership interest in Focus and providing investment representations necessary to support an exemption from registration of the Beacon Preferred Shares, pursuant to Section 4(a)(2). Accordingly, we respectfully believe the exemption provided by Section 4(a)(2) thereunder is available and the issuance of the Beacon Preferred Shares pursuant to the Beacon Merger did not require registration under the Securities Act. |
U.S. Securities and Exchange Commission
May 20, 2015
Page 2
Requested Acknowledgment
FTE Networks, Inc. acknowledges that:
· | the Company is responsible for the adequacy and accuracy of the disclosure in the filing; |
· | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
· | the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
We trust this response satisfactorily responds to your request. Should you require further information, please contact our outside legal counsel Clayton E. Parker, Esq. of K&L Gates LLP at 305.539.3306.
Sincerely,
/s/ Michael Palleschi
Michael Palleschi
Chief Executive Officer
FTE Networks, Inc.
5495 Bryson Drive, Suite 423
Naples, Florida 34109
1-877-878-8136
cc: Clayton Parker, Esq., K&L Gates, LLP
4. | Entire Agreement: The terms of this Amendment #1 supersede any conflicting terms in the Employment Agreement. All other terms of the Employment Agreement shall remain in full force and effect. |
5. | Amendments: No amendment or modification of the terms of this Amendment #1 or Employment Agreement shall be valid unless made in writing and duly executed by both parties. |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
THE COMPANY:
Focus Venture Partners, Inc.
/s/ Michael Palleschi
By: Michael Palleschi
Title: CEO
EXECUTIVE:
/s/ Theresa Carlise
Theresa Carlise
6. Compensation: (Section 4) Executive shall be paid a base salary (“Base Salary”) at the annual rate of One Hundred and Seventy Five Thousand Dollars ($175,000), of which $25,000 will be payable in arrears and shall accrue until such time that additional equity is received. Executive’s Salary will be adjusted to $150,000 annually upon commencement of this agreement in semiweekly installments consistent with Company’s payroll practices.
Initial here:
The Company:/s/ Michael Palleschi Executive:/s/ Theresa Carlise
IN WITNESS WHEREOF and intending to be legally bound hereby, the undersigned Maker has executed this Note as of the date first set forth above.
MAKER:
FOCUS VENTURE PARTNERS, INC.
/s/ Michael Palleschi
By: Michael Palleschi, Chief Executive Officer
GUARANTOR:
BEACON ENTERPRISE SOLUTIONS, INC.
/s/ Michael Palleschi
By: Michael Palleschi, Chief Executive Officer