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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1997
COMMISSION FILE NO. 333-25521
_________________
UNIFI COMMUNICATIONS, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-3097640
- ------------------------------ -----------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
900 CHELMSFORD STREET
LOWELL, MASSACHUSETTS 01851
----------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 551-7500
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT HAS REQUIRED TO FILE SUCH REPORTS), AND 2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES NO X
----- ----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
3,805,984 SHARES OF COMMON STOCK, $0.01 PAR VALUE, OUTSTANDING JUNE 30,
1997.
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UNIFI COMMUNICATIONS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION: PAGE
-----
<S> <C>
Consolidated Condensed Balance Sheets........................ 1 - 2
Consolidated Condensed Statements of Operations.............. 3
Consolidated Condensed Statement of Cash Flows............... 4 - 5
Notes to Consolidated Condensed Financial Statements......... 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 9 - 14
PART II. OTHER INFORMATION:
Item 2: Changes in Securities................................ 15
Item 4: Submission of Matters to a Vote of Security Holders.. 15
Item 5: Other Information.................................... 16
Item 6: Exhibits and Reports on Form 8-K..................... 17
Signatures 18
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, December 31,
1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 87,782,330 $ 4,538,343
Restricted cash 24,688,233 1,091,484
Accounts receivable, net 6,958,441 4,700,403
Prepaid expenses and other current assets 1,036,971 811,374
------------ -----------
Total current assets 120,465,975 11,141,604
------------ -----------
Property and Equipment, net 23,802,411 24,824,329
Restricted Cash - net of current portion 22,677,797 ---
Minority Interest in Fax Japan 1,000,000 1,000,000
Deferred Financing Costs, net 8,955,372 2,764,152
Other Assets, net 1,993,938 1,454,323
------------ -----------
$178,895,493 $41,184,408
============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
1
<PAGE>
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of notes payable $ 2,826,579 $ 2,776,753
Current portion of notes payable to principal
stockholder 4,786,243 4,232,348
Current portion of capital lease obligation 1,074,929 1,483,413
Advances from principal stockholder 2,980,322 4,317,563
Accounts payable 3,543,813 13,659,604
Accrued expenses 19,688,833 10,608,224
------------- ------------
Total current liabilities 34,900,719 37,077,905
------------- ------------
Long-term Liabilities:
Senior notes payable 165,074,487 ---
Capital lease obligations, net of current portion 1,358,499 1,821,074
Notes payable, net of current portion 3,505,295 3,433,020
Notes payable to principal stockholder 41,420,912 41,359,176
------------- ------------
Total long-term liabilities 211,359,193 46,613,270
------------- ------------
Stockholders' Equity (Deficit):
Convertible preferred stock; $1 par value,
24,715,500 shares authorized, and 13,515,030
shares issued and outstanding in 1997 and
1996, respectively 13,515,030 13,515,030
Common stock; $.01 par value, 50,000,000
shares authorized; and 3,805,984 and
3,786,025 issued and outstanding in
1997 and 1996, respectively 38,056 37,856
Additional paid-in capital 35,815,935 23,664,373
Accumulated deficit (117,294,990) (80,286,448)
Cumulative translation adjustment 561,550 562,422
------------- ------------
Total stockholders' equity (deficit) (67,364,419) (42,506,767)
------------- ------------
Total Liabilities and Stockholders' Equity(Deficit) $ 178,895,493 $ 41,184,408
============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
2
<PAGE>
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 11,213,174 $ 5,606,359 $ 20,450,495 $ 9,649,738
------------ ------------ ------------ ------------
Cost of Revenues 9,628,902 5,604,524 17,778,308 8,990,994
Cost of Revenues - Depreciation 918,301 962,519 1,960,796 1,656,569
------------ ------------ ------------ ------------
Total Cost of Revenues 10,547,203 6,567,043 19,739,104 10,647,563
Gross Margin 665,971 (960,684) 711,391 (997,825)
Operating expenses:
Selling, general and administrative 10,516,706 7,918,003 20,616,610 12,937,569
Research and development 3,217,165 2,994,598 5,394,605 4,638,080
Depreciation and amortization 1,182,461 712,175 2,290,256 1,218,369
------------ ------------ ------------ ------------
Total operating expenses 14,916,332 11,624,776 28,301,471 18,794,018
Loss from operations (14,250,361) (12,585,460) (27,590,080) (19,791,843)
Interest Income 1,914,357 109,967 2,744,175 109,967
Interest Expense (7,884,923) (693,063) (12,162,636) (755,294)
------------ ------------ ------------ ------------
Loss before minority interest (20,220,927) (13,168,556) (37,008,541) (20,437,170)
Minority Interest in Fax Japan --- 358,837 --- 760,977
------------ ------------ ------------ ------------
Net Loss $(20,220,927) $(12,809,719) $(37,008,541) $(19,676,193)
============ ============ ============ ============
Net Loss per common share $ (5.33) $ (3.43) $ ( 9.75) $ (5.26)
============ ============ ============ ============
Weighted Average Common Shares
Outstanding 3,792,066 3,736,032 3,794,970 3,738,242
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
3
<PAGE>
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
---------------------------
1997, 1996,
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $(37,008,541) $(19,676,193)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 4,130,037 2,922,836
Amortization of financing costs and warrants 956,426 328,223
Minority interest in Fax Japan --- (760,977)
Loss on disposal of property and equipment 72,822 ---
Changes in assets and liabilities:
Accounts receivable (2,327,386) (1,237,742)
Prepaid expenses and other current assets (251,783) (1,472,225)
Accounts payable (10,055,810) 2,191,129
Accrued expenses 9,349,833 3,952,797
------------ ------------
Net cash used in operating activities (35,134,402) (13,752,152)
------------ ------------
INVESTING ACTIVITIES:
Purchases of property and equipment (3,239,132) (8,681,330)
Proceeds from sale of property and equipment (247,988) ---
Purchase of short-term investments --- (791,414)
Increase in other assets (635,378) (375,152)
Cash acquired in purchase of SingCom --- 162,004
------------ ------------
Net cash (used in) investing activities (4,122,498) (9,685,892)
------------ ------------
FINANCING ACTIVITIES:
Net proceeds from issuance of in long-term debt 5,337,221 13,909,657
Net proceeds from issuance of Senior Notes 163,276,004 ---
Proceeds from exercise of stock options and warrants 239,999 23,256
------------ ------------
Net cash provided by financing activities 168,853,224 13,932,913
------------ ------------
EFFECTS OF EXCHANGE RATES ON CASH (77,791) (125,481)
------------ ------------
INCREASE IN RESTRICTED CASH (47,366,030) ---
------------ ------------
(DECREASE) INCREASE IN CASH AND EQUIVALENTS 82,152,503 (9,630,612)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 5,629,827 11,123,620
------------ ------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 87,782,330 $ 1,493,008
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
4
<PAGE>
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITY:
In conjunction with the debt restructuring agreement with SingTel NA in the
first quarter of 1997, the Company recorded a $5 million non-cash transaction
relating to the conversion of advances from stockholder to senior notes and
$11.9 million relating to the discount on senior notes and notes payable to
stockholder.
In conjunction with related fixed assets associated with hardware and software
equipment, the Company recorded $0.2 million which was classified as accrued
liabilities at June 30, 1997.
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $0.7 million
Income Taxes $0
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
5
<PAGE>
UNIFI COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FORM 10-Q, JUNE 30, 1997
(UNAUDITED)
NOTE 1: INTERIM FINANCIALS
The accompanying consolidated financial statements have been presented by UNIFI
Communications (together with its consolidated subsidiaries, the "Company") in
accordance with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Regulation S-X pertaining
to interim financial statements. Accordingly, these interim financial
statements do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. The financial
statements reflect all adjustments and accruals which management considers
necessary for a fair presentation of the Company's financial position as of June
30, 1997 and December 31, 1996, and results of operations for the three and six
months ended June 30, 1997 and June 30, 1996. The results for the interim
periods presented are not necessarily indicative of results to be expected for
any future period. The financial statements should be read in conjunction with
the audited financial statements and the notes thereto included in the Company's
Registration Statement on Form S-4 (Registration No. 333-25521).
NOTE 2: NET LOSS PER COMMON SHARE
Net loss per common share is computed using the weighted average number of
common shares outstanding during each period in accordance with the treasury
stock method.
NOTE 3: NEW ACCOUNTING STANDARDS
In February 1997, the Financial Standards Board (FASB) issued SFAS No. 128,
Earnings Per Share which is effective for the fiscal year ending December 15,
1997 and early adoption is not permitted. The Company does not expect the
adoption of this standard to have a material effect on its net loss per common
share as currently presented.
NOTE 4: SENIOR NOTE OFFERING
On February 21, 1997, the Company sold 175,000 Units, each consisting of $1,000
principal amount of 14% Senior Notes due March 1, 2004 and one Warrant to
purchase 27.524674 shares of the Company's common stock, $.01 par value per
share ("Common Stock") at an exercise price per share of $0.25, for an aggregate
purchase price of $175 million. Interest is due semi-annually on March 1 and
September 1 of each year beginning September 1, 1997. The sale of the Senior
Notes resulted in net proceeds to the Company of approximately $105 million,
after offering expenses and the payment of certain obligations including
approximately $46 million which has been escrowed for certain Senior Note
interest payments.
On July 28, 1997, the Company commenced an exchange offer for the Senior Notes,
pursuant to which holders of the Senior Notes may exchange the Senior Notes for
Senior Notes of like tenor that have been registered under the Securities Act of
1933, as amended.
The Senior Notes are redeemable, in whole or in part, at the option of the
Company at any time on or after March 1, 2001 at the redemption price, as
defined in the Indenture governing the Senior Notes, plus any accrued interest.
Upon a change of control, as defined in the Indenture, each noteholder will have
the right to require the Company to repurchase the Senior Notes at 101% of face
value, plus accrued interest. The Indenture contains certain restrictive
operating covenants, including among other things restrictions
6
<PAGE>
UNIFI COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
FORM 10-Q, JUNE 30, 1997
(UNAUDITED)
on payment of dividends, incurrence of additional indebtedness, mergers, and
sales by the Company of its assets.
Each Warrant becomes exercisable on or after the earlier of (i) one year from
the date of issuance, and (ii) the occurrence of another exercise event, as
defined in the Warrant Agreement. Unless exercised, the Warrants will
automatically expire on March 1, 2007. In addition, in the event that the
Company does not consummate an initial public offering of its equity securities
("IPO"), resulting in gross proceeds to the Company of at least $35 million, by
September 1, 1999, the Company will be required to issue additional Warrants to
the holders of the Senior Notes in an amount equal to 8% of the Company's then
outstanding fully diluted Common Stock. If an IPO has not occurred by March 1,
2002, the Company will be required to repurchase the Warrants at their then-fair
market value, as determined in accordance with the Warrant Agreement. The
Company has valued these Warrants using the Black-Scholes method and has reduced
the face carrying amount of the Senior Notes by $10.2 million, which represents
the aggregate fair value of the Warrants issued with the Senior Notes. The
company will record additional interest expense of $10.2 million over the term
of the Senior Notes. For the quarterly period ended June 30, 1997, the Company
recorded $0.3 million of such interest expense.
NOTE 5: SINGAPORE TELECOMMUNICATIONS FINANCING
Effective on February 21, 1997, the Company entered into a debt restructuring
agreement with SingTel (Netherlands Antilles) Pte N.V. ("SingTel NA"), an
affiliate of SingTel Global Services Pte Ltd. ("SingTel Global"), a principal
stockholder of the Company. SingTel NA and SingTel Global are affiliates of
Singapore Telecommunications Limited ("SingTel"), a major provider of
telecommunications services in Singapore. The debt agreement amended the
Company's credit facility and asset facility with SingTel NA to provide for a
final maturity under each of such facilities on the later of (i) March 1, 2005
or (ii) the date on which the Senior Notes are paid, defeased, redeemed or
otherwise satisfied in full (provided that if the Senior Notes are repaid in
full prior to March 1, 2005, borrowings under the credit and asset facilities
will become due 91 days after the date on which the Senior Notes are so repaid).
Also as part of the debt restructuring agreement, the Company granted SingTel
Global a warrant to purchase 2,000,000 shares of the Company's Common Stock at
an exercise price of $1.83. The value ascribed to this warrant, using the
Black-Scholes valuation method, is approximately $0.85 per warrant share. The
Company recorded a discount of the SingTel NA debt of approximately $1.7 million
in respect of this warrant, which will be amortized to interest expense over the
remaining life of the SingTel NA debt. The unamortized value of the warrant at
June 30, 1997 approximately $1.6 million.
NOTE 6: CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
On February 21, 1997, the Company filed a Certificate of Amendment to its
Certificate of Incorporation, as amended, with the Delaware Secretary of State.
The Amendment eliminated the Company's authorized but unissued Series H
Convertible Preferred Stock, $1.00 par value per share and authorized 8,570,000
shares of new Series I Convertible Preferred Stock, $1.00 par value per share.
At June 30, 1997, no shares of Series I Convertible Preferred Stock were issued
and outstanding.
7
<PAGE>
UNIFI COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
FORM 10-Q, JUNE 30, 1997
(UNAUDITED)
NOTE 7: SHARE PURCHASE BETWEEN FAX INTERNATIONAL JAPAN, INC. (FIJ) AND ORIX
CORPORATION (ORIX)
On May 27, 1997, the Company was notified by ORIX Corporation, a minority
stockholder of Fax International Japan, Inc., UNIFI's Japanese subsidiary, that
it had elected to exercise its special exit right under the Stockholders
Agreement among the Company, FIJ and the other stockholders of FIJ. On June 25,
1997 FIJ entered into an agreement with ORIX to purchase all 80 shares of FIJ
stock held by ORIX and its affiliates for an aggregate purchase price of
approximately $1.00. FIJ intends to retire the shares repurchased from ORIX.
Under the Japanese Commercial Code, FIJ is required to give public notice to its
creditors requesting them to state their objections to FIJ's proposed reduction
of its capital. As of June 30, 1997, FIJ is still in the process of notifying
its creditors. FIJ recorded treasury stock of $1 at June 30, 1997. As a result
of the repurchased shares, the relative ownership interest in FIJ held by the
Company and Nichimen Corporation (the remaining minority FIJ stockholder) are
63% and 37%, respectively, as of June 30, 1997
NOTE 8: RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the current
year presentation.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1997
CAUTIONARY STATEMENTS WITH RESPECT TO FORWARD LOOKING STATEMENTS
This Quarterly Report contains "forward -looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Although the Company believes that
its plans, intentions and expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such plans, intentions
or expectations will be achieved. Important factors that could cause actual
results to differ materially from the Company's forward-looking statements are
described in the Company's Registration Statement on Form S-4 (Registration No.
333-25521) and the accompanying Prospectus dated July 28, 1997, each as filed
with the Securities and Exchange Commission, under the caption "Risk Factors".
OVERVIEW
- --------
UNIFI is a rapidly growing multinational telecommunications company that
provides business-to-business international fax document delivery services. The
Company commenced operations in April 1992, offering international fax document
delivery services between the United States and Japan. From April 1992 to the
present, the company has continued to expand its Intelligent Delivery Network
and its telecommunications service operations by means of funds received in
numerous equity and debt financings and from operations. As of June 30, 1997,
UNIFI, either directly (including through wholly-owned subsidiaries) or through
affiliates, offered its fax document delivery services in the United States,
Canada, United Kingdom, France, Germany, Hong Kong, the Republic of Korea (South
Korea), Japan, Australia, Singapore, the Republic of China (Taiwan) and the
People's Republic of China.
The Company's revenues are derived primarily from monthly service charges based
on the actual number of minutes (or fractions thereof) of international fax
document transmission provided to customers. The Company's principal operating
costs are sales and customer service personnel, fax document transmission costs,
and research and development expense. There are two broad categories of
transmission cost: on-net costs, which are the costs of transmission and
delivery to countries in which the Company has installed a network node, and
(ii) off-net costs, which are the costs of transmission and delivery to
countries where the Company has no network facilities. Typically, off-net
transmission and delivery costs are higher than on-net costs. As the Company
continues to expand its Intelligent Delivery Network, the Company expects to
experience improvements in gross margins by reducing the percentage of its
international fax document traffic that is off-net.
OPERATING RESULTS
- -----------------
Revenues. Revenues increased to $11.2 million and $20.5 million for the
- --------
three and six months ended June 30, 1997, respectively, from $5.6 million and
$9.6 million, respectively, for the comparable periods in 1996. These increases
are due primarily to increases in fax document traffic and number of active
customers in geographical markets in which the Company first began offering its
services during 1996 and early 1997. Revenues derived from international markets
were approximately $8.1 million and $14.6 million for the three and six months
ended June 30, 1997, respectively, compared to $3.1 million and $4.8 million,
respectively for the comparable periods in 1996.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1997
OPERATING RESULTS (CONTINUED)
- -----------------------------
The Company derived ten percent or more of its consolidated revenues from
operations in North America (excluding Canada), Japan, and Hong Kong, and from
the operations of the Company's Singapore affiliate, as follows:
<TABLE>
<CAPTION>
Revenues as Percentage of UNIFI Total Consolidated Revenues for
Three Months Ended June 30, Six Months Ended June 30,
UNIFI CI Unit 1997 1996 1997 1996
- ------------- ---- ----- ---- ----
<S> <C> <C> <C> <C>
North America 28.0% 45.2% 28.8% 49.9%
Japan 18.3% 28.0% 18.9% 29.7%
Hong Kong 11.9% 1.5% 11.4% 0.9%
Singapore 10.5% 15.1% 10.7% 13.1%
</TABLE>
With respect to the Company's operations in North America and Japan and, through
an affiliate, in Singapore, the percentages of the Company's total revenues
derived from these operations decreased between the comparable 1996 and 1997
periods due to the increase in revenues derived from the Company's operations in
other geographic markets during the first half of 1997. The Company expects
that revenues from its North America operations will continue to represent ten
percent or more of the Company's total consolidated revenues for the foreseeable
future, primarily because of the significant size of the market for
telecommunications services in North America and because the Company's line of
desktop computer-based fax services, currently under development, will be
deployed initially in North America. While the Company expects the absolute
amount of revenues from operations in all of its geographic markets to increase,
the Company anticipates that revenues from operations in Japan, Hong Kong and,
through an affiliate, in Singapore, will decline as percentages of total
revenues due to the expected increase in revenues derived from the Company's
newer geographic markets. However, there can be no assurance that adverse
political, regulatory or market conditions in any of the Company's geographic
markets will not develop and adversely affect the Company's revenues derived
from such markets. Moreover, following deployment of the Company's line of
desktop-computer-based fax services, the Company believes that the percentages
of its total revenues derived from Asian markets may decline relative to
percentages of total revenues derived from North American and European markets,
as customers in Asian markets are expected to adopt such new services at a
slower rate than customers in North America and Europe.
Revenues from the Company's core FI-Direct service were approximately $10.3
million and $18.7 million for the three and six months ended June 30, 1997,
respectively, compared to $5.0 million and $8.8 million, respectively, in the
comparable period in 1996. FI-Direct service revenues as a percentage of total
revenues were 92% and 91.2% for the three and six months ended June 30, 1997,
respectively, compared to 89.3% and 91.7%, respectively, in the comparable
period in 1996. The number of active customers increased to approximately
10,435 (excluding Australia and the People's Republic of China) at June 30,
1997, as compared to 5,458 at June 30, 1996. The Company believes that the
general decline in worldwide telecommunications rates resulting from the WTO
Agreement and from deregulation efforts underway in many of the Company's
markets will continue into the foreseeable future. The worldwide environment of
declining telecommunications prices will require the Company to lower its per-
minute transmission charges to users of its FI-Direct service in order to remain
competitive with other data telecommunications service providers. Consequently,
the Company does not expect revenues from its FI-Direct service to continue to
grow at historical rates, even though the Company expects the total number of
FI-Direct
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1997
OPERATING RESULTS (CONTINUED)
- -----------------------------
transmission minutes to continue to increase. The Company anticipates that
revenues from its broadcast fax service and from its line of desktop-computer-
based fax services will contribute increasing percentages of the Company's total
consolidated revenues in future periods as such services are deployed and gain
market acceptance. However, the failure of the Company to successfully develop
and deploy such services or to gain market acceptance or, if required,
regulatory approval, of such services would have a material adverse effect on
the Company's revenues.
Cost of Revenues. Cost of revenues increased to $10.5 million
- ----------------
and $19.7 million for the three and six months ended June 30, 1997,
respectively, compared to $6.6 million and $10.6 million, respectively, for the
comparable periods in 1996. These increases are due primarily to increases in
the third-party transmission and delivery costs the Company must pay in
connection with increases in off-net customer transmissions and the Company's
continued expansion of its Intelligent Delivery Network during such periods.
Cost of revenues as a percentage of revenues decreased to 94.1% and 96.5% for
the three and six months ended June 30, 1997, respectively, as compared to
117.1% and 110.3%, respectively, for the comparable periods in 1996. The
Company believes that its ongoing efforts to reduce off-net costs through least-
cost routing techniques, negotiation of favorable rates with telecommunications
service providers and other means, combined with the Company's continued
expansion of its network and the corresponding reduction in the percentage of
customer transmissions that are off-net, will result in a continued decline in
cost of revenues as a percentage of revenues. However, there can be no
assurance that changes in customer transmission patterns will not result in
greater than expected transmissions to off-net destinations, thereby increasing
the Company's off-net transmission costs beyond current expectations, or that
the Company will be able to install and operate network facilities in countries
that are currently off-net. Moreover, the Company expects that users of its
desktop-computer-based fax services, currently under development, will use such
services to make a substantial number of domestic fax transmissions, whereas the
Company's core FI-Direct service permits only international fax transmissions.
There can be no assurance that the Company's third party transmission and
delivery costs incurred in connection with such domestic fax transmissions of
customers will not substantially increase the Company's cost of revenues as a
percentage of revenues.
Gross Margin. Gross margin as a percentage of revenues
- ------------
improved to 5.9% and 3.5% for the three and six months ended June 30, 1997,
respectively, as compared to (17.1%) and (10.3%), respectively, for the
comparable periods in 1996. The positive improvement in gross margin is due
primarily to the Company's ongoing cost reduction efforts as well as to
increases in the percentage of the Company's total fax document traffic that is
delivered on-net, made possible by the Company's continued expansion of its
network in new geographical markets. The Company's on-net/off-net traffic ratio
improved to 69:31 in the month of June, 1997 as compared to 64:36 in the month
of June, 1996.
The improvement to the Company's gross margin for the three and six months ended
June 30, 1997 occurred despite the fact that the Company's average net revenue
per minute of international fax traffic decreased by 14% to $0.66 per minute at
June 30, 1997 from $0.77 per minute June 30, 1996. The Company anticipates
further declines in its average net revenue per minute of international fax
traffic as worldwide telecommunications prices continue to decline as a result
of the WTO Agreement and deregulation of telecommunications markets, requiring
the Company to further lower its per minute transmission charges to customers in
order to remain competitive. Notwithstanding these anticipated declines in the
Company's average net revenue per minute, the Company expects its gross margin
to continue to improve as a result of the Company's ongoing cost reduction
efforts and increased percentages
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1997
OPERATING RESULTS (CONTINUED)
- -----------------------------
of the Company's fax traffic that is delivered on-net. However, there can be no
assurance that worldwide telecommunications prices will not decline faster or
more steeply than the Company currently anticipates, requiring the Company to
lower its average per minute rates faster or more steeply than currently
anticipated and having an adverse effect on the Company's gross margin.
Moreover, to the extent that the
Company derives higher than expected revenues from operations in geographic
markets where gross margins are lower than in other markets, the Company's
consolidated gross margin could be adversely affected. In addition, gross
margins associated with revenues from the Company's line of desktop-computer-
based fax services, currently under development, could be lower than expected by
the Company and hence reduce the Company's consolidated gross margin.
General, selling and administrative expenses. General, selling and
- --------------------------------------------
administrative expenses increased to $10.5 million and $20.6 million for the
three and six months ended June 30, 1997, respectively, compared to $7.6 million
and $15.9 million, respectively, for the comparable periods in 1996. Included
in general, selling and administrative expenses are related sales and customer
service expense which increased to $8.2 million and $16.3 million for the three
and six months ended June 30, 1997, respectively, compared to $5.9 million and
$10.1 million, respectively, for the comparable periods in 1996. These
increases were primarily the result of additions to sales and customer service
personnel from approximately 153 at June 30, 1996 to approximately 325 at June
30, 1997. In addition, general and administrative expenses increased to $2.2
million and $3.3 million for the three and six months ended June 30, 1997,
respectively, compared to $1.5 million and $1.9 million, respectively in the
comparable periods in 1996 primarily as a result of start-up expenses incurred
to support the geographic country expansion. General, selling and
administrative expenses as a percentage of revenues decreased to 93.8% for the
three months and increased to 100.8% for the six months ended June 30, 1997 as
compared to 141.2% and 134.1%, respectively in the comparable periods in 1996.
The Company expects general, selling and administrative expenses to continue to
decline as a percentage of revenues.
Research and development expenses. Research and development expenses increased
- ---------------------------------
to $3.2 million and $5.4 million for the three and six months ended June 30,
1997, respectively, compared to $3.0 million and $4.6 million, respectively, for
the comparable periods in 1996. The number of research and development
personnel remained relatively constant between reported periods, increasing
slightly from approximately 108 at June 30, 1996 to approximately 110 at June
30, 1997. Research and development expenses as a percentage of revenues
decreased to 28.7% and 26.4% for the three and six months ended June 30, 1997,
respectively, compared to 53.4% and 48.1%, respectively, for the comparable
periods in 1996. The Company's research and development expenditures are made
for the purpose of developing new services as well as maintaining and enhancing
existing services. The most substantial component of research and development
expense is personnel, including full-time employees and independent contractors.
The Company expects research and development expenses to remain relatively
constant in absolute terms, and hence to continue to decline as a percentage of
revenues. However, there can be no assurance that problems or delays
encountered in deploying or supporting the Company's desktop-computer-based fax
services, currently under development, or new services the Company determines
are required to be developed in order to remain competitive in the
telecommunications services market, will not result in an increase in research
and development expenses over the Company's current expectations.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10Q, JUNE 30, 1997
OPERATING RESULTS (CONTINUED)
- -----------------------------
Interest income and expense. Interest income increased to $1.9 million
- ---------------------------
and $2.7 million for the three and six months ended June 30, 1997, respectively.
Interest income for the comparable periods in 1996 were not significant. These
increases were primarily the result of interest earned on net proceeds received
from the sale of Units by the Company on February 21, 1997.
Interest expense increased to $7.9 million and $12.2 million for the three and
six months ended June 30, 1997, respectively, compared to $0.7 million and $0.8
million, respectively, for the comparable periods in 1996. The increase was
primarily the result of borrowings by the Company evidenced by the Senior Notes.
Interest expense relating to borrowings totaled $8.2 million for the six months
ended June 30, 1997.
As a result of the above, the Company reported a net loss of $20.2 million and
$37.0 million for the three and six months ended June 30, 1997, respectively, as
compared to $12.8 and $19.8 million, respectively, in the comparable periods in
1996.
EBITDA. Gross margin EBITDA (revenues less cost of revenues, excluding
- ------
depreciation associated with cost of revenues) increased to $1.58 million and
$2.67 million for the three and six months ended June 30, 1997, respectively,
from $1,835 and $658,744, respectively, for the comparable periods in 1996.
EBITDA gross margin percentage increased to 14% and decreased to .03%,
respectively, for the three and six months ended June 30, 1997 compared to 13.1%
and 6.8%, respectively, for the periods in 1996. EBITDA (revenues less cost of
revenues and operating expenses, excluding depreciation, amortization and
interest expense) improved slightly to approximately $(10.2) million for the
three months ended June 30, 1997 compared to approximately $(10.4) million for
the comparable period in 1996, but decreased to approximately $(20.6) million
for the six months ended June 30, 1997 from approximately $(16) million for the
comparable period in 1996. The substantial improvement in the Company's gross
margin EBITDA between reported periods is due to the increase in revenues
derived from the seven new geographic markets in which the Company commenced
operations between June 30, 1996 and June 30, 1997, as well as the Company's
ongoing cost reduction efforts. The slight improvement in Q2 1997 EBITDA over Q2
1996 EBITDA, and the actual decline in EBITDA in the six months ended June 1997
from EBITDA for the six months ended June 30, 1996, are due primarily to the
start-up costs incurred by the Company in connection with the commencement of
operations in seven new geographic markets between June 30, 1996 and June 30,
1997. The Company expects both gross margin EBITDA and EBITDA to improve in
future periods as the Company continues its ongoing cost reduction efforts and
as the Company generates revenues from additional services (including desktop-
computer-based fax services, currently under development) that utilize the
Company's existing network infrastructure. However, there can be no assurance
that the Company's gross margin EBITDA and/or EBITDA will not be materially
adversely affected by factors beyond the Company's control, particularly third-
party transmission and delivery costs incurred by the Company in connection with
its off-net delivery of international faxes and its domestic delivery of faxes
by users of the Company's desktop-computer-based fax services. In addition,
gross margin EBITDA and/or EBITDA could be materially adversely affected if the
Company is required to lower its per-minute transmission charges to customers
faster or more steeply than currently anticipated due to faster or more steep
declines in worldwide telecommunications prices. Failure by the Company to
sustain improvements to its gross margin EBITDA and EBITDA would have a material
adverse effect on the Company's operations and could cause the Company to
default on its payment obligations under the Senior Notes after the final
disbursement of the escrowed interest payments.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1997
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company has historically financed its cash requirements for operations and
investments primarily through private sales of equity and debt securities as
well as equipment financing arrangements and other borrowings. Cash and
equivalents increased to $82.2 million at June 30, 1997 compared to $5.6 million
at December 31, 1996 and $11.1 million at June 30, 1996. This increase is due
primarily to the approximately $105 million in net proceeds received from the
Company's sale of Units (consisting of Senior Notes and Warrants to purchase
the Company's Common Stock) on February 21, 1997. Under the Escrow Agreement,
the Company was required to place the first four interest payments on the Senior
Notes in an escrow account as restricted cash. The Company has restricted cash
of $47.4 million at June 30, 1997 compared to $1.1 million at December 31,
1996. The Company's current ratio at June 30, 1997 increased to 3.5 from 0.3 at
December 31, 1996 and 0.5 at June 30, 1996.
Increases in accounts receivable, driven solely by the growth in revenue, and in
other current assets used cash of $2.3 million and $0.3 million, respectively,
for the six months ended June 30, 1997. The average age of the Company's
accounts receivable increased by approximately five days at June 30, 1997 over
the comparable figure for June 30, 1996, primarily as a result of longer payment
cycles in certain of the Company's emerging European markets.
Property and equipment expenditures for the six months ended June 30, 1997 of
$3.2 million were offset by $0.2 million of proceeds generated from the sale of
property and equipment. Additions to property and equipment were primarily for
equipment and software used to build out the Company's Intelligent Delivery
Network and FaxLink autodialers used by the Company's customers.
Net cash provided by financing activities was $168.9 million in the six months
ended June 30, 1997. The most significant of these financing activities was the
sale of Units by the Company on February 21, 1997. Gross proceeds to the
Company from the sale of the Units were $175 million, of which $5.0 million was
used to repay certain advances from SingTel under the Intercompany Operating
Agreement between the Company and SingTel, $6.7 million was allocated to
deferred costs incurred in connection with the offering and sale of the Units,
$12 million was used to retire certain accrued trade payables, and $46 million
was deposited into an escrow account as restricted cash for the purpose of
payment of the first four interest installments on the Company's Senior Notes.
Cash flow related to Senior Notes net of deferred offering costs totaled $163.3
million during the six months ended June 30, 1997. Other proceeds from
financing activities include $5.9 million received from SingTel as advances
under the Intercompany Operating Agreement between the Company and SingTel
during the six months ended June 30, 1997.
The Company does not have a significant source of liquidity other than the net
proceeds (less the amount placed in escrow) received from the sale of the Units.
If the Company's current projection of its future net operating losses or future
cash flows from operations is inaccurate in any material respect, the Company's
cash needs could exceed its cash availability, which would have a material
adverse impact on the Company. The Indenture governing the Senior Notes permits
the Company and its subsidiaries to incur additional indebtedness under certain
circumstances to fund the expansion of the Company's network and for other
permitted purposes. However, there can be no assurance that the Company will be
able to secure additional indebtedness as permitted under the Indenture on terms
satisfactory to the Company, or at all. The Company believes that its existing
cash balances, funds generated from operations, and borrowings permitted under
the Indenture will be sufficient to finance the Company's operations for the
next twelve months.
14
<PAGE>
PART II: OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
- ------------------------------
(C) UNREGISTERED SALES OF EQUITY SECURITIES DURING THE QUARTER ENDED JUNE 30,
1997
On April 1, 1997, the Company issued a 2 year, 14% Convertible Term Note in
principal amount of $2,049,315 (the "Exchange Note") and a Warrant (the
"Exchange Warrant") to purchase up to 56,406 shares of the Company's Common
Stock to Control Data Systems, Inc. ("CDS"). The Exchange Note is convertible
by CDS prior to maturity at any time following a publicly registered offering of
Common Stock by the Company at a conversion price per share equal to the lesser
of the price to the public for shares of Common Stock sold by the Company in
such offering or $15. The Exchange Warrant is exercisable by CDS in whole or in
part until April 1, 2007 at an exercise price per share of $0.25, which exercise
price may, at the election of CDS, be satisfied by surrender of indebtedness
evidenced by the Exchange Note. The Exchange Note and Exchange Warrant were
issued to CDS in consideration for the surrender by CDS for cancellation of a
certain 2 year, 10% Convertible Term Note issued by the Company to CDS on
December 31, 1996 in original principal amount of $2 million, plus accrued and
unpaid interest thereon. The Exchange Note and Exchange Warrant were issued by
the Company to CDS pursuant to the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933, as amended.
During the three months ended June 30, 1997, the Company issued shares of
Common Stock to employees, contractors and/or consultants of the Company
pursuant to such persons' exercises of stock options granted under the Company's
Amended and Restated 1993 Stock Option Plan, as follows:
<TABLE>
<CAPTION>
Number of Shares of Aggregate Cash
Date of Sale Common Stock Exercise Price
- ------------ -------------- --------------
<S> <C> <C>
4/8/97 95 $ 99.75
5/9/97 334 718.10
5/16/97 1,694 592.90
6/2/97 343 737.45
6/4/97 520 764.90
6/9/97 422 729.10
6/12/97 191 410.65
6/13/97 582 1,251.30
6/16/97 224 481.60
6/18/97 519 863.95
6/25/97 172 369.80
6/27/97 2,448 2,110.20
</TABLE>
All of the foregoing sales by the Company were made pursuant to the exemption
from registration set forth in Rule 701 under the Securities Act of 1933, as
amended.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Pursuant to applicable provisions of the General Corporation Law of the State of
Delaware, on April 28, 1997, holders of a majority of the issued and outstanding
capital stock entitled to vote of the Company, by written consent in lieu of
annual meeting of stockholders, re-elected the following directors of the
Company: Douglas J. Ranalli, Thomas P. Sosnowski, John B. Beinecke, Chua Sock
Koong and Lim Eng. In such written consent, the stockholders also approved the
appointment of Arthur Andersen LLP as the Company's independent public
accountants and auditors for the year ended December 31, 1996.
15
<PAGE>
ITEM 5: OTHER INFORMATION
- --------------------------
CERTAIN CHANGES IN UNIFI EXECUTIVE MANAGEMENT
On July 17, 1997 Paula P. Litscher announced her intention to resign from the
offices of Vice President of Corporate Finance and Chief Financial Officer. Ms.
Litscher's resignation, made for personal reasons, is expected to occur during
the month of August 1997. Thereafter, Ms. Litscher is expected to remain as a
part-time consultant to the Company through the end of 1997. The Company is
currently seeking a replacement for Ms. Litscher. Upon Ms. Litscher's
resignation and until the Company hires her replacement, Douglas J. Ranalli, the
Company's President and Chief Executive Officer, will serve as the Company's
Chief Financial Officer.
On July 21, 1997, the Company re-organized the management of its Customer
Interaction units. Alvorado Stoddard, previously the Company's Vice President,
Worldwide Customer Interaction became a Company Vice President, and President of
the North America Customer Interaction Division. In such offices, Mr. Stoddard
is responsible for management of the Company's North America sales division.
Mr. Stoddard's previous office was eliminated and replaced by a CI Board
responsible for coordination and direction of all of the Company's Customer
Interaction units. The CI Board is a three-person board consisting of the
Company's Chief Executive Officer and Chief Financial Officer, and Mr. Steve
Darrington, who is a Vice President of the Company and Chairman of the CI Board.
On August 6, 1997, the Company re-organized the management of its Technology
department. Robert Huebner, previously the Company's Vice President of
Technology responsible for management of all research and development
activities, became the Company's Vice President and Chief Technology Officer.
In such office, Mr. Huebner will be responsible for management of the Company's
technology architecture and strategy. The office of Vice President of
Development was created to manage the Company's product development efforts.
Until the Company identifies and hires a suitable person for this office,
Douglas J. Ranalli, the Company's President and Chief Executive Officer, will
serve as the Company's Vice President of Development.
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(A) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
11 Statement re: Computation of Net Loss per
Common Share.
27 Financial Data Schedule.
</TABLE>
(B) There were no reports on Form 8-K filed during the quarter ended June 30,
1997.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIFI Communications, Inc.
By: /s/ Paula P.Litscher
------------------------------
Paula P. Litscher
Vice President of Corporate
Finance
(Principal Financial Officer)
Date: August 15, 1997
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
+3.1 --Certificate of Incorporation, as amended, of UNIFI Communications, Inc.
+3.2 --By-Laws of UNIFI Communications, Inc.
+4.1 --Indenture, dated as of February 21, 1997, between UNIFI Communications,
Inc. and Fleet National Bank, as trustee, relating to $175,000,000 in
aggregate principal amount of 14% Senior Notes due 2004.
+4.2 --Specimen Certificate of 14% Senior Notes due 2004 (the "Private Notes")
(included in Exhibit 4.1).
+4.3 --Specimen Certificate of 14% Senior Notes due 2004 (the "Exchange
Notes") (included in Exhibit 4.1).
+4.4 --Registration Rights Agreement, dated as of February 21, 1997, between
UNIFI Communications, Inc. and Smith Barney Inc.
+4.5 --Unit Agreement, dated as of February 21, 1997, between UNIFI
Communications, Inc. and Fleet National Bank, as unit agent.
+4.6 --Escrow Agreement, dated as of February 21, 1997, between UNIFI
Communications, Inc. and Fleet National Bank, as escrow agent.
+10.1 --Credit Agreement, dated as of April 10, 1995, among UNIFI
Communications, Inc. and SingTel (Netherlands Antilles) Pte N.V.
+10.2 --Amendment, dated as of February 21, 1997, to the Credit Agreement,
dated as of April 10, 1995, among UNIFI Communications, Inc. and
SingTel (Netherlands Antilles) Pte N.V.
+10.3 --Term Loan Agreement-Equipment, dated as of April 10, 1995, among UNIFI
Communications, Inc. and SingTel (Netherlands Antilles) Pte N.V.
+10.4 --Amendment, dated as of February 21, 1997, to the Term Loan Agreement-
Equipment, dated as of April 10, 1995, among UNIFI Communications, Inc.
and SingTel (Netherlands Antilles) Pte N.V.
+10.5 --Intercompany Operating Agreement, dated as of April 10, 1995, between
UNIFI Communications, Inc. and Singapore Telecommunications Limited, as
amended by Amendment No. 1 dated as of September 30, 1996 (the
"Intercompany Operating Agreement").
+10.6 --Amendment No. 1 to the Intercompany Operating Agreement dated September
30, 1996 between UNIFI Communications, Inc. and Singapore
Telecommunications Limited.
+10.7 --Amendment, dated as of February 21, 1997, to the Intercompany Operating
Agreement, dated as of April 10, 1995, among UNIFI Communications, Inc.
and Singapore Telecommunications Limited.
+10.8 --Series G Convertible Preferred Stock Purchase Agreement, dated as of
April 10, 1995, among UNIFI Communications, Inc., SingTel Global
Services Pte Ltd.
+10.9 --First Amendment, dated as of February 5, 1997 to the Series G
Convertible Preferred Stock Purchase Agreement, dated as of April 10,
1995, between UNIFI Communications, Inc. and SingTel Global Services
Pte Ltd.
+10.10 --Second Amendment, dated as of February 21, 1997, of the Series G
Convertible Preferred Stock Purchase Agreement, dated as of April 10,
1995, among UNIFI Communications, Inc., SingTel Global Services Pte
Ltd, as amended.
+10.11 --Amended and Restated Registration Rights Agreement, dated as of April
10, 1995 among UNIFI Communications, Inc. and various investors named
therein.
+10.12 --Amendment, dated as of February 21, 1997, to the Amended and Restated
Registration Rights Agreement, dated as of April 10, 1995 among UNIFI
Communications, Inc. and various investors named therein.
+10.13 --Consent and Waiver, dated as of February 20, 1997, of the Amended and
Restated Registration Rights Agreement, dated as of April 10, 1995
among UNIFI Communications, Inc. and various investors named therein.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
*10.14 --Stockholders Agreement, dated as of April 10, 1995, among UNIFI
Communications, Inc. and the stockholders named therein.
+10.15 --First Amendment to the Stockholders Agreement, dated February 21, 1997,
among UNIFI Communications, Inc., SingTel Global Services Pte Ltd and
certain stockholders named therein.
+10.16 --Employment Agreement, dated as of April 10, 1995, among UNIFI
Communications, Inc. and Douglas J. Ranalli.
+10.17 --Warrant to purchase 2,000,000 shares of the Company's Common Stock,
issued to SingTel Global Services Pte Ltd, dated February 21, 1997.
+10.18 --Warrant Agreement, dated as of February 21, 1997, between UNIFI
Communications, Inc. and Fleet National Bank, as warrant agent.
+10.19 --Specimen Warrant Certificate (included in Exhibit 10.25).
+10.20 --Warrant Shares Registration Rights Agreement, dated as of February 21,
1997, between UNIFI Communications, Inc. and Smith Barney Inc.
+10.21 --Lease dated August 2, 1996 between UNIFI Communications, Inc. and Cross
Point Limited Partnership.
+10.22 --Agreement dated August 2, 1996 between UNIFI Communications, Inc. and
Cross Point Limited Partnership (included in exhibit 10.21 hereto).
+10.23 --Subordination Agreement dated August 2, 1996 between UNIFI
Communications, Inc., Cross Point Limited Partnership and SingTel
(Netherland Antilles) Pte N.V. (included in Exhibit 10.21).
*10.24 --Software License and Services Agreement dated September 20, 1996
between UNIFI Communications, Inc. and Control Data Systems, Inc.
+10.25 --$2,049,315 Convertible Term Note, dated as of April 1, 1997, of UNIFI
Communications, Inc. in favor of Control Data Systems, Inc.
+10.26 --Warrant to purchase up to 56,406 shares of Common Stock of UNIFI
Communications, Inc., dated as of April 1, 1997, issued to Control Data
Systems, Inc.
*11 --Statement re: Computation of Net Loss per Common Share.
*27.1 --Financial Data Schedule.
</TABLE>
- -----------------
* Filed herewith.
+ Previously filed with registrant's Registration Statement on Form S-4
(Registration No. 333-25521).
20
<PAGE>
EXHIBIT 11.0
UNIFI COMMUNICATIONS, INC.
COMPUTATION OF NET LOSS PER SHARE (1)
FORM 10-Q, JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- -------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net loss $(20,220,927) $(12,809,719) $(37,008,541) $(19,676,193)
============ ============ ============ ============
Weighed average number of common
shares outstanding during period. 3,792,066 3,736,032 3,794,970 3,738,242
============ ============ ============ ============
Net loss per common shares $ (5.33) $ (3.43) $ (9.75) $ (5.26)
============ ============ ============ ============
</TABLE>
(1) Fully diluted net loss per share has not been separately presented, as the
amounts would not be meaningful.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 FOR UNIFI COMMUNICATIONS
INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 135,148,360
<SECURITIES> 0
<RECEIVABLES> 7,483,070
<ALLOWANCES> 524,629
<INVENTORY> 0
<CURRENT-ASSETS> 120,465,975
<PP&E> 37,422,970
<DEPRECIATION> 13,620,559
<TOTAL-ASSETS> 178,895,493
<CURRENT-LIABILITIES> 34,900,719
<BONDS> 0
0
13,515,030
<COMMON> 38,056
<OTHER-SE> (80,917,505)
<TOTAL-LIABILITY-AND-EQUITY> 178,895,493
<SALES> 11,213,174
<TOTAL-REVENUES> 11,213,174
<CGS> 9,628,902
<TOTAL-COSTS> 10,547,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,884,923
<INCOME-PRETAX> (20,220,927)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,220,927)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,220,927)
<EPS-PRIMARY> (5.33)
<EPS-DILUTED> 0
</TABLE>
