FTNW FTE Networks Inc

Introduction

This Amendment No. 5 (“ Amendment No.  5 ”) amends and supplements the statement on Schedule 13D initially filed on May 15, 2017 (the “ Original 13D ”) as subsequently amended on November 14, 2017, December 12, 2017, December 18, 2018, and February 12, 2019. This Amendment No. 5 relates to shares of Common Stock, par value $0.001 per share (“ Common Stock ”), of FTE Networks, Inc., a Nevada corporation (the “ Issuer ”). Each Item below amends and supplements the information disclosed under the corresponding Item of the Original 13D. Except as specifically provided herein, this Amendment No. 5 does not modify any of the information previously reported in the Original 13D. Unless otherwise indicated herein, capitalized terms used but not defined in this Amendment No. 5 shall have the same meanings herein as are ascribed to such terms in the Original 13D.

Item 2. Identity and Background.

Item 2 is amended and restated in its entirety as follows:

This Schedule 13D is being filed by Lateral Investment Management, LLC, a Delaware limited liability company (“ Lateral Management ”), Lateral FTE Feeder LLC, a Delaware limited liability company (“ Lateral FTE ”), Lateral U.S. Credit Opportunities Fund, L.P., a Delaware limited partnership (“ Lateral Fund ”), Niagara Nominee, LP, a Delaware limited partnership (“ Niagara ”), Lateral Credit Opportunities, LLC, a Delaware limited liability company (“ Lateral GP ”), Dhamitha Richard de Silva, an individual (“ De Silva ”), and Patrick Feeney, an individual (“ Feeney ”). Lateral Management, Lateral FTE, Lateral Fund, Niagara, Lateral GP, De Silva and Feeney are together referred to herein as “ Reporting Persons ,” and each of them are individually referred to herein as a “ Reporting Person .” Lateral Management is the sole manager of Lateral FTE and has a management agreement with Lateral Fund. Lateral GP is the sole general partner of Lateral Fund. De Silva and Feeney are the sole managers of Lateral Management and Lateral GP. Niagara and the other Reporting Persons have agreed to act in concert with respect to the Common Stock and agree to be treated as a group for Schedule 13D filing purposes.

Lateral FTE owns 350,539 shares of the Issuer’s Common Stock and does not own any shares of the Issuer’s Common Stock underlying warrants. Lateral Fund owns 3,146,690 shares of the Issuer’s Common Stock and an additional 2,470,220 shares of the Issuer’s Common Stock underlying warrants with an exercise price of $3.00 per share (subject to adjustment as described below), and an additional 761,750 shares of the Issuer’s Common Stock underlying warrants which are out of the money; Niagara owns 2,166,085 shares of the Issuer’s Common Stock and does not own any shares of the Issuer’s Common Stock underlying warrants. Other funds managed by Lateral Management own 695,978 shares of the Issuer’s common stock and an additional 703,510 shares of the Issuer’s Common Stock underlying warrants with an exercise price of $3.00 per share (subject to adjustment as described below).

Due to its relationship with Lateral FTE and Lateral Fund, Lateral Management may be deemed to have shared voting and investment power with respect to the shares owned by Lateral FTE and Lateral Fund. Lateral Management, however, disclaims beneficial ownership of such shares.

Due to its relationship with Lateral Fund, Lateral GP may be deemed to have shared voting and investment power with respect to the shares owned by Lateral Fund. Lateral GP, however, disclaims beneficial ownership of such shares.

Due to their relationships with Lateral Management and Lateral GP, De Silva and Feeney may be deemed to have shared voting and investment power with respect to the shares owned by Lateral Fund and Lateral FTE. De Silva and Feeney, however, disclaim beneficial ownership of such shares.

Due to the group status agreed to between the parties, Lateral Management, Lateral FTE, Lateral Fund, Lateral GP, De Silva and Feeney may be deemed to have beneficial ownership of the shares owned by Niagara, however each party disclaims beneficial ownership of such shares.

The percentages used herein are based on an aggregate total of 24,390,743 shares of Common Stock outstanding, comprised of 20,455,262 shares of Common Stock issued and outstanding as of July 2, 2019, as confirmed by the Issuer on July 9, 2019, plus 3,935,481 shares of Common Stock underlying warrants held by the Reporting Persons (all on a post-Reverse Stock Split basis).

Each Reporting Person that is an entity is organized under the state of Delaware. Each Reporting Person that is an individual is a U.S. citizen. The principal business of each Reporting Person is to engage in the business of investing in securities and other investment opportunities. The principal business address of each Reporting Person is 400 South El Camino Real, Suite 1100, San Mateo, CA 94402.

During the period beginning five years prior to the Event Date, none of the Reporting Persons or any of the natural persons described in this Item 2 has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

Item 3 is amended by adding the following at the end thereof:

On July 2, 2019, Lateral Fund received 1,049,285 shares of Common Stock from the Issuer and an additional 2,470,220 shares of the Issuer’s Common Stock underlying warrants with an exercise price of $3.00 per share (subject to adjustment as described below); other funds managed by Lateral Management received 450,715 shares of Common Stock from the Issuer and an additional 703,510 shares of the Issuer’s Common Stock underlying warrants with an exercise price of $3.00 per share (subject to adjustment as described below); and Niagara received 505,724 shares of Common Stock from the Issuer; in each case, in connection with the extension of additional credit under the Credit Agreement, as described below.

Item 5. Interest in Securities of the Issuer.

Item 5 is amended and restated in its entirety as follows:

(a)

As of July 2, 2019, the Reporting Persons beneficially own in the aggregate 7,121,042 shares of Common Stock, representing approximately 29.2% of the outstanding shares of Common Stock (based on an aggregate total of 24,390,743 shares of Common Stock outstanding, comprised of 20,455,262 shares of Common Stock issued and outstanding as of July 2, 2019, as confirmed by the Issuer on July 9, 2019, plus 3,935,481 shares of Common Stock underlying warrants held by the Reporting Persons (all on a post-Reverse Stock Split basis).

Lateral Fund is the record owner of a portion of the shares of Common Stock referred to above. Lateral GP is the sole general partner of Lateral Fund. Due to its relationship with Lateral Fund, Lateral GP may be deemed to have shared voting and investment power with respect to the Common Stock owned by Lateral Fund. Lateral GP, however, disclaims beneficial ownership of such shares. Lateral Management has a management agreement with Lateral Fund. Due to its relationship with Lateral Fund, Lateral Management may be deemed to have shared voting and investment power with respect to the Common Stock owned by Lateral Fund. Lateral Management, however, disclaims beneficial ownership of such shares. De Silva and Feeney are the sole managers of Lateral Management and Lateral GP. Due to their relationships with Lateral Management and Lateral GP, De Silva and Feeney may be deemed to have shared voting and investment power with respect to the Common Stock owned by Lateral Fund. De Silva and Feeney, however, disclaim beneficial ownership of such shares.

Niagara and the other Reporting Persons have agreed to act in concert with respect to the Common Stock and agree to be treated as a group for Schedule 13D filing purposes. Due to the group status agreed to between the parties, Lateral Management, Lateral FTE, Lateral Fund, Lateral GP, De Silva and Feeney may be deemed to have beneficial ownership of the shares owned by Niagara, however each party disclaims beneficial ownership of such shares.

Lateral FTE is the record owner of a portion of shares of the Common Stock referred to above. Lateral Management is the sole manager of Lateral FTE. Due to its relationship with Lateral FTE, Lateral Management may be deemed to have shared voting and investment power with respect to the Common Stock owned by Lateral FTE. Lateral Management, however, disclaims beneficial ownership of such shares. De Silva and Feeney are the sole managers of Lateral Management. Due to their relationships with Lateral Management, De Silva and Feeney may be deemed to have shared voting and investment power with respect to the Common Stock owned by Lateral FTE. De Silva and Feeney, however, disclaim beneficial ownership of such shares.

(b)

Except as described in Item 3, no transactions in shares of Common Stock or preferred shares convertible into shares of Common Stock have been effected during the past 60 days by the Reporting Persons.

(c) Not applicable.

(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Undertakings or Relationships with Respect to Securities of the Issuer.

Item 6 is amended by adding the following at the end thereof:

On July 2, 2019, the Issuer completed its previously announced debt restructuring by entering into an amended and restated Credit Agreement (the “Credit Agreement Amendment”) by and among the Issuer and its subsidiaries, Lateral Juscom, and the Reporting Persons, and by amending and restating its Series A convertible notes (the “Series A Notes”) and Series B promissory notes (the “Series B Notes”) issued to Fred Sacramone and Brian McMahon (together, the “Benchmark Sellers”) and a super-senior bridge loan note (the “Bridge Note,” and together with the Series A Notes and the Series B Notes, the “Notes”) issued to Mr. Sacramone.

Credit Agreement Amendment Summary

Pursuant to the Credit Agreement Amendment, terms of the $12.9 million super-senior bridge loan (the “Lateral Bridge Loan”) were amended to extend the maturity to September 30, 2020, to amend the interest rate to 12% per annum payable in cash, to add a 4% extension fee to the principal amount (subject to reduction) and to provide for monthly amortization payments based on available cash flow. In addition, the terms of the $37.9 million senior debt were amended to extend the maturity to April 30, 2021, amend the interest rate to 12% per annum payable in cash, to add a 4% extension fee to the principal amount thereof (subject to reduction) and to include monthly amortization payments based on available cash flow.

As consideration for the Credit Agreement Amendment, the Reporting Entities received 1,500,000 shares of the Issuer’s Common Stock and warrants exercisable to purchase 3,173,731 shares of the Company’s common stock (collectively, the “Lender Securities”) with an initial exercise price of $3.00 per share. Pursuant to the terms of the warrants, in the event the Lateral Bridge Loan has not been paid by the Issuer by October 31, 2019, the exercise per share of half of the warrants shall be automatically reset to $0.01 and in the event the Lateral Bridge Loan has not been paid by the Issuer by December 31, 2019, the exercise per share of the other half of the warrants shall be automatically reset to $0.01. The Issuer also agreed that on December 31, 2019, the aggregate number of shares of the Issuer’s common stock issuable upon exercise of the warrants will be automatically adjusted on December 31, 2019 such that that the Reporting Persons will beneficially own, in the aggregate, inclusive of all shares of common stock previously issued, 25% of the outstanding shares of the Issuer’s common stock on a fully-diluted basis, subject to certain exceptions.

Registration Rights Agreement

As additional consideration for the Credit Agreement Amendment, the Reporting Persons entered into a registration rights agreement with the Issuer (the “Registration Rights Agreement”) whereby the Issuer agreed to customary terms for the registration of the common stock issued to the Reporting Persons.

Investor Rights Agreement

The Reporting Persons and the Issuer also entered into an investor rights agreement (the “Investor Rights Agreement”) whereby the Issuer agreed that within sixty days of its execution, the Issuer shall set the number of directors on its Board of Directors at seven and the Reporting Persons shall be entitled to nominate one of such seven directors.

The foregoing descriptions of the Credit Agreement Amendment, form of Warrant, Registration Rights Agreement and Investor Rights Agreement does not purport to be complete and are qualified in its entirety by reference to the full text of the same, copies of which are filed herewith as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively.

SIGNATURES

After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

JOINT ACQUISITION STATEMENT

PURSUANT TO RULE 13D-1(k)(1)

The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him, her or it contained herein, but shall not be responsible for the completeness and accuracy of the information concerning the other entities or persons, except to the extent that he, she or it knows or has reason to believe that such information is accurate.