<PAGE>
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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, 1998
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: (978) 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 X NO
---- ----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
3,878,327 SHARES OF COMMON STOCK, $0.01 PAR VALUE, OUTSTANDING AUGUST 13,
1998.
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<PAGE>
UNIFI COMMUNICATIONS, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION: PAGE
----
Consolidated Condensed Balance Sheets................. 1 - 2
Consolidated Condensed Statements of Operations....... 3
Consolidated Condensed Statements 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 - 16
PART II. OTHER INFORMATION:
Item 5: Other Information............................. 17
Item 6: Exhibits and Reports on Form 8-K.............. 18
Signatures............................................. 21
<PAGE>
PART I. FINANCIAL INFORMATION
UNIFI COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $18,925 $ 50,687
Short-term restricted investments 24,613 23,911
Accounts receivable, net 9,039 7,966
Prepaid expenses and other current assets 1,967 1,059
------- --------
Total current assets 54,544 83,623
------- --------
Property and equipment, net 23,657 25,452
------- --------
Long-term restricted investments - 11,891
Deferred financing costs, net 7,656 8,319
Other assets, net 1,305 1,217
------- --------
Total assets $87,162 $130,502
======= ========
</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)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable and capital lease obligations $ 3,399 $ 5,340
Accounts payable 1,693 4,615
Accrued expenses 19,359 20,411
-------- --------
Total current liabilities 24,451 30,366
-------- --------
Long-Term Debt:
Senior notes payable 165,974 165,506
Notes payable and capital lease obligations, net of current portion 47,922 46,540
-------- --------
Total long-term debt 213,896 212,046
-------- --------
Stockholders' Equity (Deficit):
Convertible preferred stock, $1.00 par value, 24,715,500
shares authorized; 13,515,030 issued and outstanding
in 1998 and 1997 13,515 13,515
Common stock, $0.01 par value, 50,000,000 shares
authorized; 3,878,327 and 3,862,021 issued and
outstanding in 1998 and 1997, respectively 39 39
Additional paid in capital 35,892 35,877
Accumulated deficit (200,795) (161,120)
Cumulative translation adjustment 164 (221)
-------- --------
Total stockholders' equity (deficit) (151,185) (111,910)
-------- --------
Total liabilities and stockholders' equity $ 87,162 $130,502
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
2
<PAGE>
UNIFI COMMUNICATIONS INC., AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues $ 12,594 $ 11,213 $ 25,730 $ 20,450
-------- -------- -------- --------
Cost of revenues 8,534 9,629 19,736 17,778
Cost of revenues depreciation 2,102 918 3,489 1,961
-------- -------- -------- --------
Total cost of revenues 10,636 10,547 23,225 19,739
Gross margin 1,958 666 2,505 711
Operating expenses:
Selling, general and administrative 8,632 10,517 18,949 20,617
Research and development 3,840 3,217 7,317 5,394
Depreciation and amortization 1,387 1,182 2,771 2,289
-------- -------- -------- --------
Total operating expenses 13,859 14,916 29,037 28,300
Loss from operations (11,901) (14,250) (26,532) (27,589)
Interest Income 700 1,914 1,701 2,744
Interest Expense (7,900) (7,885) (15,539) (12,163)
-------- -------- -------- --------
Loss before extraordinary item (19,101) (20,221) (40,370) (37,008)
Extraordinary gain on extinguishment of debt 695 - 695 -
-------- -------- -------- --------
Net loss $(18,406) $(20,221) $(39,675) $(37,008)
======== ======== ======== ========
Net loss per common and common equivalent
Basic loss before extraordinary item $ (4.93) $ (5.33) $ (10.55) $ (9.75)
======== ======== ======== ========
Basic and diluted extraordinary gain $ 0.18 $ - $ 0.18 $ -
======== ======== ======== ========
Basic and diluted net loss $ (4.75) $ (5.33) $ (10.37) $ (9.75)
======== ======== ======== ========
Basic and diluted weighted average common and
common equivalent shares used in computing
per share amounts $ 3,877 $ 3,792 $ 3,825 $ 3,795
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
3
<PAGE>
UNIFI Communications, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------
1998 1997
---------------- -------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(39,675) $(37,008)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 6,260 4,130
Amortization of financing costs and warrants 1,301 956
Compensation expense related to options 113
Extraordinary gain on early extinguishment of debt (696)
(Gain)Loss on disposal of property, plant, and equipment 211 (423)
Changes in assets and liabilities:
Accounts receivable (1,079) (2,327)
Prepaid expenses and other current assets (915) (252)
Accounts payable (2,913) (10,056)
Accrued expenses 617 14,424
-------- --------
Net cash used in operating activities (36,889) (30,443)
-------- --------
INVESTING ACTIVITIES:
Purchases of property and equipment (4,626) (3,239)
Proceeds from sale of property and equipment 81 248
Maturities of short-term investments 11,891 -
Net increase in other assets (96) (635)
-------- --------
Net cash provided by (used in) investing activities 7,250 (3,626)
-------- --------
FINANCING ACTIVITIES:
Proceeds (payments) on notes payable and capital leases (1,504) 372
Net proceeds from issuance of Senior Notes - 163,276
Proceeds from exercise of stock options and warrants 14 18
-------- --------
Net cash provided by (used in) financing activities (1,490) 163,666
EFFECTS OF EXCHANGE RATES ON CASH 69 (78)
NET INCREASE IN RESTRICTED CASH (702) (46,275)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,762) 83,244
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 50,687 4,538
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,925 $ 87,782
======== ========
</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 CASH FLOW INFORMATION (IN THOUSANDS):
Cash paid for June 30, 1998 June 30, 1997
------------- -------------
Interest $12,366 $ 700
Income Taxes $ --- $ ---
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, 1998
(UNAUDITED)
Note 1: Interim Financials
The accompanying consolidated condensed financial statements have been prepared
by UNIFI Communications, Inc. (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, 1998 and results of operations for the three
and six months ended June 30, 1998 and 1997. 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 financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
NOTE 2: NET LOSS PER COMMON SHARE
The Company computed net loss per share in accordance with SFAS No. 128,
Earnings per share, which requires disclosure about computing and presenting
earnings per share. Basic net loss per common share is computed based upon the
net loss available to common stockholders and the weighted average number of
common shares outstanding during the period. Basic net loss per common share
for the three and six months ended June 30, 1998 and 1997 was computed as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------------- ----------------------------------
1998 1997 1998 1997
------------------ --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Basic Net Loss Per Share Calculation
Loss before extraordinary item (19,101) (20,221) (40,370) (37,008)
Extraordinary item 695 - 695 -
-------- -------- -------- --------
Net loss $(18,406) $(20,221) $(39,675) $(37,008)
======== ======== ======== ========
Weighted average common shares
outstanding 3,877 3,792 3,825 3,795
======== ======== ======== ========
Basic Net Loss Per Share
Loss before extraordinary item (4.93) (5.33) (10.55) (9.75)
Extraordinary gain 0.18 - 0.18 -
-------- -------- -------- --------
Net loss $ (4.75) $ (5.33) $ (10.37) $ (9.75)
======== ======== ======== ========
</TABLE>
Diluted net loss per share is the same as basic net loss per common share since
the shares of stock issuable pursuant to stock options, warrants and upon the
conversion of the preferred stock are not considered as their effect would be
antidilutive. The Company had 3,239,489 shares and 2,901,906 shares of stock
options at June 30, 1998 and 1997 and 7,749,219 of warrants at June 30, 1998 and
1997 that were excluded from the net loss per common share computation.
6
<PAGE>
UNIFI COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FORM 10-Q, JUNE 30, 1998
(UNAUDITED)
NOTE 3: COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, Reporting Comprehensive Income, effective
1/1/98, which requires reporting comprehensive income separately between net
income and other comprehensive income. Other comprehensive income includes such
classifications as: foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities. The Company's component of other comprehensive income is
reported below (in thousands):
<TABLE>
<CAPTION>
JUNE 30, December 31,
1998 1997
------------------ ------------------
<S> <C> <C>
FOREIGN CURRENCY TRANSLATION
Beginning balance $ (221) $ 562
Current-period change 385 (783)
------ ------
Ending balance $ 164 $ (221)
====== ======
</TABLE>
NOTE 4: NEW ACCOUNTING STANDARDS
In June 1997, FASB issued SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information, which is effective for fiscal year beginning
after December 15, 1997 and early adoption is encouraged. The Company is not
required to adopt SFAS No. 131 for interim financial statements in the initial
year of its application. Unless impracticable, the Company will be required to
restate prior period information upon adoption.
In April 1998, AICPA issued Statement of Position 98-5, Reporting on the Costs
of Start-up Activities, which is effective for fiscal year beginning after
December 15, 1998 and early adoption is encouraged. SOP 98-5 requires costs
related to start-up activities, such as organization costs, be expensed when
7
<PAGE>
UNIFI COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FORM 10-Q, JUNE 30, 1998
(UNAUDITED)
incurred. The Company does not expect the adoption of this standard to have a
material effect on the financial statements.
In June 1998, FASB issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, which is effective for fiscal years beginning after June
15, 1999 and early adoption is allowed for interim periods beginning after
issuance. The Company does not expect the adoption of this standard to have a
material effect on the financial statements.
NOTE 5: EXTINGUISHMENT OF NOTES PAYABLE TO A LANDLORD
On June 8, 1998, the Company extinguished its indebtedness to Cross Point
Limited Partnership ("Cross Point") under the Company's 13% Term Note due June
1, 1998 in original principal amount of $1.5 million (the "Term Note"). Cross
Point, the landlord of the Company's premises at 900 Chelmsford Street, Lowell,
Massachusetts, canceled and surrendered the Term Note upon the payment by the
Company of $576,864. Under an agreement with Cross Point executed in connection
with the Company's original issuance of the Term Note, the Company had the
right, which it exercised, to extend the maturity of the Term Note until
December 1, 1998 upon issuance by the Company to Cross Point of a warrant (the
"Warrant") to purchase 10,000 shares of the Company's common stock at a purchase
price of $0.01 per share. The payment of $576,864 to Cross Point represented
$0.45 per $1.00 of principal on the $1,281,920 outstanding principal balance
under the Term Note as of June 3, 1998, plus accrued interest through such date.
In addition, Cross Point surrendered the Warrant unexercised. In connection
with this transaction, the Company recorded an extraordinary gain in the second
quarter of 1998 in the amount of $695,601.
NOTE 6: DEPRECIATION
During 1998, the Company changed the estimated useful life of certain assets.
This change in estimate, which was recorded prospectively, increased
depreciation expense by approximately $658,000 for the six months ended June 30,
1998.
NOTE 7: DISCLOSURE ABOUT THE FAIR VALUE OF SENIOR NOTES PAYABLE
The Company's Senior Notes Payable, of $175,000,000 in original principal, had a
carrying value of approximately $166,000,000 at December 31, 1997 and June 30,
1998. In accordance with SFAS No. 107, Disclosure about Fair Value of Financial
Instruments, the Company has determined the fair value of the Senior Notes
Payable, based on the current trading prices, to be approximately $33,000,000 at
June 30, 1998.
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, 1998
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 herein and in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
RECENT DEVELOPMENTS
- -------------------
Need For Additional Financing
- -----------------------------
The Company presently believes that it will exhaust its cash resources on or
around the end of September 1998. Previously, the Company had disclosed that it
would require substantial additional debt and/or equity financing prior to the
end of August 1998 in order to continue business operations as presently
conducted beyond such date. However, due to cost control measures employed by
the Company during the second and third quarters of 1998, primarily the deferral
of certain planned capital expenditures, the Company believes that it will be
able to continue its current business operations until the end of September
1998. As of the date of this Quarterly Report, the Company is able to pay its
debts generally as they become due.
The Company believes that it requires approximately $60 million in additional
equity and long-term debt financing ("permanent financing") in order to complete
development of its new services and achieve cash-flow positive operations. The
Company's senior management has been actively seeking such permanent financing,
as well as temporary or "bridge" financing in a lesser amount in advance of such
permanent financing, but, as of the date of this Quarterly Report, has not
secured a commitment from any source to provide any such financing. The failure
or inability of the Company to secure new financing, either permanent or bridge
financing, by the end of September 1998 will result in the insolvency of the
Company and force it to file a petition in liquidation under Chapter 7 of the
U.S. Bankruptcy Code (the "Code").
Management believes that a condition to obtaining new permanent financing will
be a restructuring of the Company's present finance indebtedness (as opposed to
its ordinary course trade debt). Should the Company obtain a commitment for new
permanent financing prior to exhausting its cash resources, the Company may seek
reorganization under Chapter 11 of Code. Successful implementation of any plan
of reorganization proposed by the Company under Chapter 11 will require the
approval of certain of the Company's creditors, and there can be no assurance
that such approvals will be obtained on a timely basis or at all. Therefore,
even if the Company is successful in obtaining a commitment for new permanent
financing prior to the end of September 1998, if the Company proposes a plan of
reorganization under Chapter 11 and is not able to timely obtain the required
creditor approvals, or if, prior to proposing such a plan of reorganization,
management believes that such approvals are not likely to be obtained, either on
a timely basis or at all, then the Company will be required to file a petition
for liquidation under Chapter 7 of the Code.
The Company presently intends to continue business operations until exhaustion
of its cash resources and to continue seeking new permanent and bridge financing
until such time.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
RECENT DEVELOPMENTS (CONTINUED)
- -------------------------------
Trading of Senior Notes
- -----------------------
The Company believes that its 14% Senior Notes due 2004 have traded recently at
prices substantially below face value, in the range of $0.15 to $0.20 per $1.00
of face amount. The Company believes that the recent Senior Notes trading at
such a substantial discount reflects the judgment of the parties to such trades
that the Company is likely to seek some form of financial restructuring in order
to continue its business operations.
OVERVIEW
- --------
UNIFI Communications, Inc. ("UNIFI" or the "Company") believes that it is a
leading provider of international enhanced facsimile transmission and delivery
services. The Company has developed the Intelligent Delivery Network or IDN, a
system that combines highly efficient store-and-forward network technology with
a proprietary Delivery Expert System and a 24-hour multi-lingual fax delivery
staff. The Intelligent Delivery Network provides business customers with an
international point-to-point facsimile delivery service that is secure, easy to
use, more efficient, and more reliable than the direct dial services provided by
the world's conventional long-distance carriers. In many cases, the Company's
Intelligent Delivery Network services are also less expensive than traditional
direct-dial long distance services.
The Company commenced operations in April 1992, offering international enhanced
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 with funds
received in numerous equity and debt financings and from operations. As of June
30, 1998, UNIFI, either directly (including through wholly-owned and majority-
owned subsidiaries) or through affiliates, offered its international enhanced
fax document delivery services and broadcast fax services in the United States,
Canada, United Kingdom, France, Germany, Hong Kong, the Republic of Korea (South
Korea), Japan, Australia, Singapore, and the Republic of China (Taiwan). In
addition, the Company as of such date offered domestic unenhanced fax services
in the United States, the United Kingdom and Australia, and private voice resale
services to a single customer in the United States.
With respect to its core international enhanced fax service (FI-Direct), the
Company derives its revenues primarily from monthly customer charges based on
the actual number of minutes (or fractions thereof) of fax document
transmissions made by customers. The Company also charges its customers a
monthly network access charge (and in some markets sells FaxLinks) for the use
of each FaxLink installed at the customers' offices. The Company's principal
operating costs with respect to all of its services are sales and customer
service personnel, third party telecommunications 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, at certain
volume levels, off-net transmission and delivery costs are higher than on-net
costs. As the Company continues to develop 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. Certain of
the Company's services--namely, its domestic unenhanced fax services and its
private voice resale services--are provided outside of the IDN on a resale basis
by means of third-party transmission facilities. The Company's gross margins
from these services are a function of the difference between the cost to the
Company of such third party facilities and the price the Company is able to
charge its customers for providing the services. The Company believes that its
gross margins from its non-IDN services will improve as the volume of customer
transmissions increases, although the Company does not expect such services will
ever result in gross margins above approximately 15% due to competition among
providers of resale services.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
Operating Results
- -----------------
Revenues. Revenues increased to $12.6 million and $25.7 million for the
- --------
three and six months ended June 30, 1998, respectively, from $11.2 million and
$20.4 million, respectively for the comparable periods in 1997. The increase in
revenues for the three and six months ended June 30, 1998 over 1997 is due
primarily to approximately $1 million and $4 million, respectively, in revenue
growth from the Company's broadcast fax services and private voice resale
services, which were commercially introduced in the third and fourth quarter of
1997, respectively. Revenues derived from the Company's foreign subsidiaries in
international markets were approximately $9.0 million and $17.4 million for the
three and six months ended June 30, 1998, respectively, compared to $8.1 million
and $14.5 million, respectively for the comparable periods in 1997.
During the three and six months ended June 30, 1998, 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:
Revenues as Percentage of Total Consolidated Revenues for
Three Months Ended June 30, Six Months Ended June 30,
UNIFI CI Unit 1998 1997 1998 1997
- --------------- ----- ----- ----- -----
North America 28.6% 28.1% 32.2% 28.8%
Japan 15.0% 18.3% 14.9% 18.9%
Hong Kong 13.7% 11.9% 12.3% 11.4%
Singapore 10.7% 10.5% 11.1% 10.7%
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 planned desktop computer-based fax service, which is expected for
commercial release in the fourth quarter of 1998, will be deployed initially
and, the Company believes, the most comprehensively, in North America. The
Company cannot presently project which other geographic markets, if any, will
represent ten percent or more of the Company's consolidated revenues in future
periods, due to the uncertainty surrounding the effects of the Company's change
in business strategy for 1998 and thereafter as described in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. 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 desktop-computer-based fax service, 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
service at a slower rate than customers in North America and Europe.
Revenues from the Company's core FI-Direct service were approximately $9.7
million and $19.5 million for the three and six months ended June 30, 1998,
respectively, as compared to $10.3 million and $18.7 million, respectively, for
the comparable periods in 1997. FI-Direct service revenues as a percentage of
total revenues were 77% and 75.9% for the three and six months ended June 30,
1998, respectively, as compared to 92% and 91.2%, respectively, for the
comparable periods in 1997. The decline in absolute FI-Direct revenues between
the comparable three month periods, and the modest growth in such revenues
between the comparable six month periods, is due to the Company's cessation of
active marketing of FI-Direct service in 1998, consistent with the Company's
change in business strategy as described in its Annual Report on
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
OPERATING RESULTS (CONTINUED)
- -----------------------------
Form 10-K for the year ended December 31, 1997. The decline in FI-Direct
revenues as a percentage of total revenues for the three and six months ended
June 30, 1998 is attributable to the revenues received from the Company's
broadcast fax service and private voice resale service during such periods,
which were not offered by the Company during the comparable periods in 1997. The
number of active customers increased to approximately 11,784 at June 30, 1998,
as compared to 10,435 at June 30, 1997.
During the three and six months ended June 30, 1998, the Company recognized $0.9
million and $2.8 million, respectively, in revenues from its private voice
resale service. Revenues from such service accounted for 7% and 11% of the
Company's total consolidated revenues in such respective periods. During the
second quarter of 1998, the Company reevaluated its plans to expand its offering
of private voice resale service and, based upon its analysis of the relative
costs and benefits of such expansion and in light of the Company's present
financial circumstances, determined not to expand such services during the
second half of 1998. Therefore, the Company does not expect significant
additional revenue from the private voice resale service during the remainder of
1998.
Cost of Revenues. Cost of revenues increased to $10.6 million and $23.2
- -----------------
million for the three and six months ended June 30, 1998, respectively, from
$10.5 million and $19.7 million, respectively, for the comparable periods in
1997. This increase in cost of revenues is due primarily to increases in the
third-party transmission and delivery costs incurred by the Company for on-net
and off-net transmissions and the Company's increased housing costs associated
with its Intelligent Delivery Network. The Company's third party transmission
and delivery costs for off-net customer faxes increased even though the
Company's on-net to off-net traffic ratio improved. Total volume of customer fax
transmissions increased by 60% and 65%, respectively for the three and six
months ended June 30, 1998 compared to the comparable periods in 1997. Cost of
revenues as a percentage of revenues decreased to 84.4% and 90.3% for the three
and six months ended June 30, 1998, respectively, compared to 94.1% and 96.5%
respectively, for the comparable periods in 1997. The Company believes that its
ongoing efforts to reduce these off-net costs through least-cost routing
techniques, negotiation of favorable rates with telecommunications service
providers and other means, combined with the Company's new product and service
offerings which primarily utilizes on-net traffic, the corresponding reduction
in the percentage of customer transmissions that are off-net, and the use of new
technology to increase efficiencies in data transmission, 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, or that the Company will be
able to continue to operate its network facilities in countries that are
currently on-net. Moreover, as the Company continues to introduce new service
offerings, such as voice resale service, broadcast fax services, and its
desktop-computer-based fax services currently under development, the Company
expects cost of revenues as a percentage of revenue to decline on a consolidated
basis. However, there can be no assurance that the Company's costs of revenue
associated with its newer services will not be higher than costs of revenue
associated with its core service, and consequently that as the percentage of
total revenue contributed by such newer services increases, the Company's costs
of revenue on a consolidated basis will not increase.
Gross Margin. Gross margin as a percentage of revenues improved to 15.5%
- -------------
and 9.7% for the three and six months ended June 30, 1998, respectively, from
5.9% and 3.5%, respectively, for the comparable periods in 1997. 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. The Company's on-net/off-
net traffic ratio improved to approximately 83% in June, 1998 as compared to
approximately 69% in June, 1997. The improvement in the Company's on-net to off-
net ratio between June 1998 and June 1997 is due primarily to the continued
growth in Company's broadcast fax service that has an on-net to off-net ratio of
approximately 99%.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
OPERATING RESULTS (CONTINUED)
- -----------------------------
The improvement to the Company's gross margin for the three and six months ended
June 30, 1998 occurred despite the fact that the Company's average net revenue
per minute of FI-Direct fax traffic decreased by 6% to $0.62 per minute at June
30, 1998 from $0.66 per minute at June 30, 1997. The Company anticipates
further declines in its average net revenue per minute of FI-Direct 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. As described in the Company's Annual Report on Form
10-K for the year ended December 31, 1997, this trend has led the Company to
conclude that it must focus its business growth efforts on services other than
FI-Direct, primarily its broadcast fax service, its voice resale service, and
its desktop computer-based fax service scheduled for commercial release in the
fourth quarter of 1998. The Company believes that its prices for broadcast fax
service and desktop computer-based fax service will not be as sensitive to
further declines in worldwide basic telecommunications rates as is the Company's
FI-Direct service, and that, as a result, the Company's gross margins from such
services will improve relative to FI-Direct gross margins. However, there can
be no assurance that the Company's expectations in this regard will prove
correct. In addition, the Company does not expect that its gross margins from
revenues in its different geographic markets will be uniform. 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.
Selling, General and Administrative expenses. Selling, general and
- --------------------------------------------
administrative expenses decreased to $8.6 million and $18.9 million for the
three and six months ended June 30, 1998, respectively, from $10.5 million and
$20.6 million, respectively, for the comparable periods in 1997. Included in
selling, general and administrative expenses are related sales and customer
service expense which decreased to $5.8 million and $12.4 million for the three
and six months ended June 30, 1998, respectively, from $8.2 million and $15.8
million, respectively, for the comparable periods in 1997. The decrease in
sales and customer service expense was due primarily to the 40% decrease in
sales and customer service personnel by 40% from approximately 325 at June 30,
1997 to approximately 194 at June 30, 1998. During the first and second quarters
of 1998, the Company reduced its sales and customer service personnel, as part
of the Company's strategy to refocus the Company's business development efforts
away from the marketing, sale and provision of FI-Direct service toward the
marketing, sale and provision of the Company's desktop computer-based fax
service (currently under development) and its broadcast service. General and
administrative expenses increased to $2.8 million and $6.5 million for the three
and six months ended June 30, 1998, respectively, from to $2.3 million and $4.8
million, respectively, in the comparable periods in 1997. The increase during
the six months ended June 30, 1998 over the comparable period in 1997 is due
primarily to approximately $1 million in restructuring expenses related to the
refocus of the Company's strategy. In addition, the Company incurred
approximately $0.8 million in payroll and related contract services expenses for
world-wide information support and approximately $0.3 million in facilities
related expenses for rent. Selling, general and administrative expenses as a
percentage of revenues decreased to 68.5% and 73.6% for the three and six months
ended June 30, 1998, respectively, from 93.8% and 100.8%, respectively, in the
comparable periods in 1997 primarily due to revenue growth exceeding expense
increases. The Company expects selling, general and administrative expenses to
continue to decline as a percentage of revenues as revenue growth occurs.
However, if the Company's total revenues do not continue to grow significantly
or decline during 1998, or if the Company is required to increase the absolute
levels of sales and customer support expenses in 1998 to support its anticipated
release of new desktop computer-based fax services, then selling, general and
administrative expenses could increase as a percentage of total 1998 revenues as
compared to 1997.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
OPERATING RESULTS (CONTINUED)
- -----------------------------
Research and development expenses. Research and development expenses increased
- ---------------------------------
to $3.8 million and $7.3 million for the three and six months ended June 30,
1998, respectively, from $3.2 million and $5.4 million, respectively, for the
comparable periods in 1997. The number of research and development personnel
increased from approximately 110 at June 30, 1997 to approximately 113 at June
30, 1998. Research and development expenses as a percentage of revenue increased
to 30.5% and 28.4% for the three and six months ended June 30, 1998,
respectively, from 28.7% and 26.4%, respectively, for the comparable periods in
1997. 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 that its actual research and development expenses will remain at
present levels or increase slightly until the Company completes development and
initial deployment of its desktop-computer-based fax services. As the Company's
total consolidated revenue increases, the Company expects research and
development expenses as a percentage of revenue to decline.
However, there can be no assurance that problems or delays encountered in
developing, deploying or supporting the Company's desktop-computer-based fax
services, or its development of new services the Company determines are required
in order to remain competitive, will not result in an increase in research and
development expenses beyond the Company's current expectations.
Interest income and expense. Interest income decreased to $0.7 million and $1.7
- ---------------------------
million for the three and six months ended June 30, 1998, respectively, from
$1.9 million and $2.7 million, respectively, in the comparable periods in 1997.
Interest income in the comparable periods is related primarily to the result of
interest earned on net proceeds received from the sale of Units by the Company
on February 21, 1997. See "Liquidity and Capital Resources". The Company expects
interest income to decrease as it continues to utilize non-restricted cash for
operations and as it begins to pay down interest due on its debt financing.
Interest expense was $7.9 and $15.5 million for the three and six months ended
June 30, 1998, respectively, as compared to $7.9 million and $12.2 million,
respectively, for the comparable periods in 1997. The increase was primarily the
result of borrowings by the Company evidenced by the Senior Notes. Interest
expense relating to the Senior Notes totaled $6.1 million and $8.2 million for
the three and six months ended June 30, 1998, respectively. The Company made its
second interest payment of $12.2 million on the Senior Notes from its escrow
account in the first quarter of 1998.
EBITDA. Gross margin EBITDA (revenues less cost of revenues, excluding
- ------
depreciation associated with cost of revenues) increased to $4.1 million and $6
million for the three and six months ended June 30, 1998, respectively, from
$1.6 million and $2.7 million, respectively, for the comparable periods in 1997.
EBITDA gross margin percentage increased to 32% and 23.3% for the three and six
months ended June 30, 1998, respectively, from 14.1% and 13.1%, respectively,
for the comparable periods in 1997. The improvement in the Company's gross
margin EBITDA between reported periods is due to the increase in revenues as
well as the Company's ongoing cost reduction efforts. In addition, the Company
changed its estimated useful life of certain assets and recorded additional
depreciation expense associated with cost of revenues of approximately $0.7
million for the second quarter of 1998.
EBITDA (earnings before interest expense, taxes, depreciation and amortization)
improved to approximately $(7) million and $(17.9) million for the three and six
months ended June 30, 1998, respectively, from approximately $(10.2) million and
$(20.6) million, respectively, for the comparable periods in 1997. The improved
in EBITDA between the comparable periods is due largely to normal operating
expenses and restructuring expenses incurred in the first and quarter of 1998.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
OPERATING RESULTS (CONTINUED)
- -----------------------------
There can be no assurance that the Company's gross margin EBITDA and/or EBITDA
will not be materially adversely affected by other 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 broadcast and 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.
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. Most recently, on
February 21, 1997, the Company sold units ("Units") consisting of 14% Senior
Notes due 2004 ("Senior Notes") and warrants ("Warrants") to purchase an
aggregate of 4,816,818 shares ("Warrant Shares") of the Company's Common Stock
for an aggregate price of $175,000,000. Cash and equivalents decreased to $18.9
million at June 30, 1998 compared to $50.7 million at December 31, 1997 and
$87.8 million at June 30, 1997. This decrease is due primarily to the Company
continuing to fund its operating and capital requirements from existing cash and
equivalents. Under the Escrow Agreement entered in connection with the sale of
the Units, the Company was required to place the first four interest payments on
the Senior Notes in an escrow account as restricted cash. The Company made its
second interest payment from the escrow account of approximately $12.2 million
in the first quarter of 1998. The Company has restricted cash and investments of
$24.6 million at June 30, 1998 compared to $35.8 million at December 31, 1997.
The Company's current ratio, including restricted cash, at June 30, 1998
decreased to 2.23 from 2.75 at December 31, 1997 and 3.45 at June 30, 1997.
Net cash used in operating activities was $36.9 million in the six months ended
June 30, 1998. Cash used for operating activities was primarily used to fund
operating losses.
Increases in accounts receivable, attributable to the growth in revenue used
cash of $1.1 million and increases in other current assets used cash of $0.9
million for the three and six months ended June 30, 1998. The average age of
the Company's accounts receivable increased by approximately eleven days from 55
at June 30, 1997 to 66 at June 30, 1998, primarily as a result of longer payment
cycles in certain of the Company's European markets and slow payment
collections from the Company's private voice resale services.
Net cash provided by investing activities was $7.2 million in the six months
ended June 30, 1998. These investing activities relate primarily to purchases
of property and equipment and the maturity of restricted investments. Property
and equipment expenditures for the six months ended June 30, 1998 of $4.6
million were offset by $0.1 million of proceeds generated from the sale of
property and equipment. Additions to property and equipment were primarily for
network hardware equipment, business office hardware and software, and equipment
used in the Company's private voice resale service.
Net cash used in financing activities was $1.5 million in the six months ended
June 30, 1998. These financing activities relate primarily to the paydown of
the Company's notes payable and capital lease commitments.
At August 10, 1998, the amount of unrestricted cash available to the Company was
approximately $12 million, of which $2 million resided in the Company's
subsidiaries. The Company will require additional financing to continue
business operations as presently conducted beyond the end of September 1998.
Such financing may be either equity or long-term debt financing, or short term
debt financing. While the
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORM 10-Q, JUNE 30, 1998
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- --------------------------------------------
Company's senior management has been actively seeking such additional financing,
as of the date of this Quarterly Report the Company has not obtained a
commitment from any source to provide any such financing. Any such financing
provided to the Company prior to its filing a petition for relief under federal
bankruptcy laws would be subject to certain limitations set forth in the
Company's Senior Notes Indenture, and the Company may be required to seek
waivers of, or amendments to, such Indenture in order to receive any such
financing. There can be no assurance that the Company would obtain any such
required waivers or amendments in a timely fashion or at all. If the Company is
unable to obtain at least short term debt financing prior to the date on which
its current cash resources are exhausted, the Company will be forced to seek
relief under federal bankruptcy laws.
16
<PAGE>
PART II: OTHER INFORMATION
ITEM 5: OTHER INFORMATION
- --------------------------
Certain Changes in the Board of Directors and Management. In April 1998, Mr.
- ---------------------------------------------------------
Steve Darrington was elected to the Company's Board of Directors.
In May 1998, Timothy Martel resigned as Executive Vice President and Chief
Operations Officer of the Company.
On June 1, 1998, Derrick Buluwa was appointed as acting Chief Operations
Officer. Prior to June, Mr. Buluwa served as President of Greater China.
On June 1, 1998, Steve Darrington was appointed as Chief Financial Officer
of the Company. Prior to such date, Mr. Darrington served as Vice President of
Customer Interaction.
Default under Warrant Shares Registration Rights Agreement. The Company
----------------------------------------------------------
presently is in default of its obligations under the Warrant Shares Registration
Rights Agreement executed in connection with the Company's sale of the Units.
The Warrant Shares Registration Rights Agreement required the Company to have
filed a registration statement pursuant to the Securities Act of 1933, as
amended, with the Securities and Exchange Commission relating to the issuance of
the Warrant Shares by the Company upon exercise of the Warrants and to have
caused such registration statement to become effective on or before March 1,
1998. The Company has not as of the date of this Quarterly Report Form 10-Q
filed such required registration statement, primarily because the Company is
still re-evaluating its business and growth strategy and its liquidity and
capital resource needs for 1998 and thereafter, and believed that it could not
make the disclosures required in such registration statement in compliance with
the requirements of federal securities laws until the conclusion of such re-
evaluation. The Company has not received notice from any Warrant holders that
is in default under the Warrant Shares Registration Rights Agreement, nor has it
sought a waiver from the Warrant holders of such default. The Warrant Shares
Registration Rights Agreement provides that, in the event of such a default by
the Company, in addition to other remedies the Warrant holders may have, the
Company is liable for liquidated damages in the amount of $.001 per week per
Warrant for the first 90 day period of such default, which amount shall increase
by an additional $.001 per week per Warrant for each successive 90-day period
during which such default continues, up to a maximum of $.005 per week per
Warrant. If the Company files such registration statement and causes it to
become effective prior to August 29, 1998, the Company will be liable for a
maximum liquidated damages amount of $6,825. However, in light of the Company's
present financial condition and the imminence of the Company's insolvency and
petition for relief under federal bankruptcy laws, the Company does not intend
to file such registration statement. The Company expects that the Warrants and
the Warrant Shares Registration Rights Agreement will be rejected in a
bankruptcy proceeding.
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(A) The following exhibits are filed herewith:
Exhibit No. Description
---------- -----------
+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 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, 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.
+10.10 Second Amendment, dated as of February 21, 1997, of the Series G
Convertible Preferred Stock Purchase Agreement, dated as of April
10, 1995, between UNIFI Communications, Inc., SingTel Global
Services Pte Ltd, as amended.
+10.11 Amended Restated Registration Rights Agreement, dated as of April
10, 1995 among UNIFI Communications, Inc. and various investors
named therein.
+10.12 Amended, dated as of February 21, 1997, of the Amended and
Restated Registration Rights Agreement, dated as of April 10,
1995 among UNIFI Communications, Inc. and various investors named
therein.
18
<PAGE>
+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.
+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. dated as of April 1, 1997,
issued to Control Data Systems, Inc.
+10.26 Warrant to purchase up to 50,406 shares of Common Stock of
UNIFI Communications, Inc., dated as of April 1, 1997, issued
to Control Data Systems, Inc.
+10.27 Share Sale Agreement (Fax International Australia Pty.
Limited) dated as of September 29, 1997 among UNIFI
Communications, Inc., Graham Bruce Darley and Sin Hang Boon.
+10.28 Agreement for Sale of Business dated as of June 30, 1998
between SingCom (Australia) Pty. Limited and Fax International
Australia Pty. Limited.
+10.29 First Amendment to Lease, dated as of June 25, 1997, between
UNIFI Communications, Inc. and Cross Point Limited
Partnership.
+10.30 Second Amendment to Lease, dated as of October 21, 1997,
between UNIFI Communications, Inc. and Cross Point Limited
Partnership.
++10.31 Third Amendment, dated as of March 14, 1998, to Series G
Convertible Preferred Stock Purchase Agreement dated as of
April 10, 1995, as amended, among UNIFI Communications, Inc.,
SingTel Global Services Pte. Ltd. and Douglas J. Ranalli.
++10.32 Second Amendment, dated as of March 14, 1998, to Stockholders
Agreement
19
<PAGE>
dated as of April 10, 1995, as amended, among UNIFI
Communications, Inc., SingTel Global Services Ltd., Douglas
J. Ranalli and Shelly Ranalli.
++ 10.33 Second Amendment, dated as of March 14, 1998, to Credit
Agreement dated as of April 10, 1995, as amended, among UNIFI
Communications, Inc. and SingTel (Netherlands Antilles) Pte.
N.V.
++ 10.34 Second Amendment, dated as of March 14, 1998, to Term Loan
Agreement--Equipment dated as of April 10, 1995, as amended,
among UNIFI Communications, Inc. and SingTel (Netherlands
Antilles) Pte. N.V.
*27.0 Financial Data Schedule.
- -----------------
*Filed herewith
+Previously filed with registrant's Registration Statement on Form S-4
(Registration No. 333-25521) and incorporated herein by reference.
++Previously filed with registrant's Annual Report on Form 10-K for the year
ended December 31, 1997 and incorporated herein by reference.
(b) There were no reports on Form 8-K filed during the quarter ended June 30,
1998.
20
<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\ Steve Darrington
-----------------------------
Steve Darrington
Executive Vice
President, Finance
and Chief Financial
Officer (Principal
Financial Officer)
Date: August 13, 1998
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1998 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-31-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 43,538
<SECURITIES> 0
<RECEIVABLES> 9,510
<ALLOWANCES> 471
<INVENTORY> 0
<CURRENT-ASSETS> 54,544
<PP&E> 44,288
<DEPRECIATION> 20,631
<TOTAL-ASSETS> 87,162
<CURRENT-LIABILITIES> 24,451
<BONDS> 0
0
13,515
<COMMON> 39
<OTHER-SE> (164,739)
<TOTAL-LIABILITY-AND-EQUITY> (151,185)
<SALES> 12,594
<TOTAL-REVENUES> 12,594
<CGS> 8,534
<TOTAL-COSTS> 10,636
<OTHER-EXPENSES> 13,859
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (7,900)
<INCOME-PRETAX> (19,101)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,101)
<DISCONTINUED> 0
<EXTRAORDINARY> 695
<CHANGES> 0
<NET-INCOME> (18,406)
<EPS-PRIMARY> (4.75)
<EPS-DILUTED> (4.75)
</TABLE>
