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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0-29281
CYPRESS COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
__________
Delaware 58-2330270
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Fifteen Piedmont Center, Suite 710
Atlanta, GA 30305
(Address of principal executive offices, including zip code)
(404) 869-2500
(Registrant's telephone number, including area code)
(Former name, if changed since last report)
__________
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 was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
The number of shares of common stock outstanding at April 28, 2000 was
47,317,014.
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Cypress Communications, Inc.
QUARTERLY REPORT ON FORM 10-Q
For the Three Months Ended March 31, 2000
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements. 3
Balance Sheets as of December 31, 1999 and March 31, 2000
(Unaudited) 3
Statements of Operations (Unaudited) for the three months
ended March 31, 1999 and 2000 4
Statements of Cash Flows (Unaudited) for the three months
ended March 31, 1999 and 2000 5
Notes to Interim Financial Statements (Unaudited) March
31, 1999 and 2000 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 12
Item 2. Changes in Securities and Use of Proceeds. 12
Item 3. Defaults Upon Senior Securities. 12
Item 4. Submission of Matters to a Vote of Security Holders. 12
Item 5. Other Information. 13
Item 6. Exhibits and Reports of Form 8-K. 13
Signatures 14
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2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CYPRESS COMMUNICATIONS, INC.
BALANCE SHEETS
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DECEMBER 31, MARCH 31,
1999 2000
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ASSETS (UNAUDITED)
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CURRENT ASSETS:
Cash and cash equivalents $ 69,475,288 $ 224,344,600
Accounts receivable, net of allowance for doubtful
accounts of $367,805, and $329,265 in 1999 and
2000, respectively 1,665,203 1,728,951
Prepaid expenses and other 320,516 727,275
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Total current assets 71,461,007 226,800,826
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PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$2,733,443 and $3,689,551 in 1999 and 2000 respectively 27,028,102 35,938,603
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OTHER ASSETS:
Cost in excess of net assets acquired, net of
accumulated amortization of $15,556 and $17,677 in 1999
and 2000, respectively 75,656 73,535
Tenant contracts, net of accumulated amortization of $262,778
and $298,611 in 1999 and 2000, respectively 274,722 238,889
Real estate access rights, net of accumulated amortization of
$0 and $2,382,211 in 1999 and 2000, respectively 23,398,094 184,412,753
Other 617,020 644,636
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Total other assets 24,365,492 185,369,813
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Total assets $122,854,601 $ 448,109,242
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 12,672,121 $ 2,643,098
Accrued expenses 2,696,133 4,810,222
Current portion of capital lease obligations 217,468 213,131
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Total current liabilities 15,585,722 7,666,451
LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS 283,469 230,958
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Total liabilities 15,869,191 7,897,409
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CONVERTIBLE REDEEMABLE PREFERRED STOCK:
$.001 par value; Series A; 1,211,140 and 0 shares issued and outstanding in
1999 and 2000, respectively 6,040,856 0
$.001 par value; Series B; 1,339,575 and 0 shares issued and outstanding in
1999 and 2000, respectively 10,705,636 0
$.001 par value; Series B-1; 579,613 and 0 shares issued and outstanding in
1999 and 2000, respectively 4,632,137 0
$.001 par value; Series C; 4,161,974 and 0 shares issued and outstanding in
1999 and 2000, respectively 78,899,121 0
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Total preferred stock 100,277,750 0
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STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 58,620,758 and 150,000,000 shares authorized in 1999
and 2000, respectively; 2,759,806 and 47,313,839 shares issued and outstanding in
1999 and 2000, respectively 2,760 47,315
Additional paid-in capital 109,339,640 388,541,336
Warrants outstanding 23,398,094 186,794,965
Deferred compensation (27,124,250) (24,833,218)
Accumulated deficit (98,908,584) (110,338,565)
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Total stockholders' equity 6,707,660 440,211,833
------------ -------------
Total liabilities and stockholders' equity $122,854,601 $ 448,109,242
============ =============
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The accompanying notes are an integral part of these balance sheets.
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CYPRESS COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000
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1999 2000
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REVENUES $ 1,581,197 $ 2,530,680
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OPERATING EXPENSES:
Cost of services 960,176 2,354,231
Sales and marketing, including noncash compensation
expense of $18,473 and $272,888 in 1999 and 2000,
respectively 616,910 2,425,481
General and administrative, including noncash
compensation expense of $110,305 and $1,089,587 in
1999 and 2000, respectively 1,403,760 7,824,543
Amortization of real estate access rights 0 2,382,211
Depreciation and other amortization 385,806 1,031,512
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Total operating expenses 3,366,652 16,017,978
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OPERATING LOSS (1,785,455) (13,487,298)
INTEREST INCOME, net 98,353 2,057,318
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LOSS BEFORE INCOME TAXES (1,687,102) (11,429,980)
INCOME TAX BENEFIT 0 0
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NET LOSS (1,687,102) (11,429,980)
NET LOSS PER COMMON SHARE:
Basic and diluted $(0.64) $(0.41)
=========== ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic and diluted 2,636,906 27,746,241
=========== ==========
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The accompanying notes are an integral part of these statements.
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CYPRESS COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000
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1999 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,687,102) $(11,429,980)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and other amortization 385,806 3,413,723
Amortization of deferred compensation 128,778 1,362,475
Changes in operating assets and liabilities:
Accounts receivable, net (144,937) (63,748)
Prepaid expenses and other current assets (72,852) (406,759)
Other assets (23,664) (127,608)
Accounts payable and accrued expenses 154,940 1,265,486
----------- ------------
Net cash used in operating activities (1,259,031) (5,986,411)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,406,797) (19,629,701)
Repayment of advance to MTS Communications 200,000 0
Other 19,400 (252,291)
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Net cash used in investing activities (1,187,397) (19,881,992)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 0 190,434
Principal payments on capital lease obligations (48,734) (56,848)
Proceeds from initial public offering, net of offering costs 0 180,604,129
----------- ------------
Net cash (used in) provided by financing activities (48,734) 180,737,715
----------- ------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,495,162) 154,869,312
CASH AND CASH EQUIVALENTS, beginning of year 11,057,696 69,475,288
----------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 8,562,534 $224,344,600
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
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CYPRESS COMMUNICATIONS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999 AND 2000
1. Organization and Nature of Business
Cypress Communications, Inc. ("Cypress" or the "Company") provides a full
range of communications services to small and medium-sized businesses in multi-
tenant office buildings. These buildings are located in major metropolitan
markets throughout the United States. These communications services include
high speed, dedicated Internet access and data services, local and long distance
voice services, feature rich digital telephone systems, digital satellite
business television, voicemail, e-mail, website hosting, security/monitoring
services and other advanced communications services. The Company delivers these
services over state-of-the-art fiber-optic, digital and broadband networks that
Cypress designs, constructs, owns and operates inside large and medium-sized
office buildings.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the information set forth
therein have been included. The accompanying condensed consolidated financial
statements should be read in conjunction with the financial statements and
footnotes included in the Annual Report on Form 10-K of Cypress for the year
ended December 31, 1999. Operating results for the three-month period ended
March 31, 2000 are not necessarily an indication of the results that may be
expected for the year ended December 31, 2000.
3. Capital Transactions
Stock Split
In February 2000, a committee appointed by the Company's board of directors
approved a 4.5-for-1 stock split with respect to its outstanding common stock.
All shares of common stock and per share amounts in the accompanying financial
statements have been retroactively adjusted to reflect this split.
Initial Public Offering
On February 15, 2000, the Company completed its initial public offering.
The Company sold an aggregate of 11,500,000 shares of common stock (including
1,500,000 shares which were issued upon the exercise of the underwriters'
overallotment option) at a per share price of $17.00, for an aggregate offering
price of approximately $195.5 million.
In connection with the initial public offering, the Company incurred
offering expenses of approximately $15.8 million (including underwriting
discounts). Approximately $0.3 million of these expenses were incurred in the
fourth quarter of 1999 and the remaining $15.5 million of expenses were incurred
in the first quarter of 2000. After deducting these expenses, the Company
received approximately $179.7 million in net proceeds from the initial public
offering. The Company intends to use the proceeds from the offering for working
capital and general corporate
6
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purposes, the construction of in-building networks and the purchase of
communications equipment.
Conversion of Preferred Stock
Simultaneous with the closing of the Company's initial public offering, all
outstanding shares of the Company's preferred stock automatically converted into
32,815,359 shares of common stock.
4. Real Estate Access Rights
In November and December 1999, the Company entered into master license
agreements and stock warrant agreements with several property owners and
operators. Under the terms of these agreements, the Company issued warrants to
purchase up to an aggregate of approximately 11 million shares of the Company's
common stock at a price of $4.22 per share. These warrants are exercisable for
periods of five to ten years. The number of warrants was based on the gross
leaseable area of the buildings subject to the master license agreements. The
final number of warrants was determined upon the completion of a due diligence
period and finalization of the building schedules in the master license
agreements. Upon the completion of the due diligence period and the
finalization of the building schedules, the Company recorded the fair value of
the warrants as an intangible asset, real estate access rights, which is being
amortized on a straight-line basis over the terms of the related license
agreements, which are generally ten years. Amortization of real estate access
rights was $2,382,211 for the three months ended March 31, 2000.
As of December 31, 1999, the Company had recorded approximately $23.4
million for the fair value of warrants earned through December 31, 1999. During
the three months ended March 31, 2000, the Company recorded an additional $163.4
million for the fair value of warrants earned during that period.
5. Subsequent Events
Real Estate Access Rights
In April 2000, the Company entered into an additional master license
agreement and a stock warrant agreement with a property owner and operator.
Under the terms of these agreements, the Company issued warrants to purchase up
to an aggregate of 74,084 shares of the Company's common stock at an exercise
price of $24.87 per share. These warrants are exercisable for a period of 10
years. The exact number of shares of common stock underlying the warrants,
which is based on the gross leaseable area of the buildings set forth in the
master license agreement, will be determined upon the completion of a due
diligence period and the finalization of the building schedules, which is
expected to be complete in June 2000. The measurement date for valuing the
warrants will be the date(s) upon which the property owner and operator enters
into communications license agreements with the Company. The fair market value
of warrants earned will be recorded as an intangible asset, real estate access
rights, and will be amortized over the terms of the related communications
license agreements, which are expected to be ten years.
SiteConnect Acquisition
In April 2000, the Company acquired all of the outstanding common stock of
SiteConnect, Inc., a Seattle-based in-building communications service provider,
in exchange for approximately 581,450 shares of the Company's common stock. The
number of shares of the Company's common stock issued in connection with the
acquisition may be increased or decreased based on certain post-closing
adjustments.
7
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
We provide a full range of broadband communications services to small and
medium-sized businesses located in multi-tenant office buildings in major
metropolitan markets in the United States. This comprehensive bundle of
services currently includes high-speed dedicated Internet access, local and long
distance voice services, digital telephone systems, business television,
voicemail, e-mail, web hosting and other advanced services. Since the inception
of our predecessor company in August 1995, our principal activities have
included securing license agreements with building owners and real estate
managers that enable us to install our in-building fiber-optic, digital and
broadband networks, marketing our communications services to tenants and hiring
qualified personnel to support our rapid growth. We began operating in-building
networks in June 1996 and as of March 31, 2000, we were providing services in
approximately 200 buildings representing approximately 55 million rentable
square feet. To date, we have secured agreements giving us the right to operate
our networks in over 800 buildings representing more than 230 million rentable
square feet.
Results of Operations
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999
Revenues. Revenues for the three months ended March 31, 2000 increased 60%
to $2.5 million from $1.6 million for the same period in the prior year. The
increase in revenues relates to the addition of new customers and providing
additional services to existing customers.
Cost of Services. Cost of services for the three months ended March 31,
2000 increased 145% to $2.4 million from $1.0 million for the same period in the
prior year. The increase in cost of services was due primarily to an increase in
the number of leased facilities connecting our licensed buildings to local, long
distance and Internet providers and the greater volume of voice and data
traffic. As of March 31, 2000, we had networks installed in approximately 200
buildings versus approximately 50 buildings installed at March 31, 1999.
Sales and Marketing Expenses. Sales and marketing expenses for the three
months ended March 31, 2000 increased 293% to $2.4 million from $0.6 million for
the same period in the prior year. $1.1 million of this increase in expenses was
due to an increase in the number of sales and marketing personnel and their
related compensation and expenses; $0.1 million of this increase was due to
increased revenue sharing payments made to property owners with whom we have
license agreements; $0.3 million of this increase was due to increased promotion
of our services via direct marketing and advertising in our licensed buildings
and $0.3 million of this increase was due to an increase in amortization of non-
cash deferred compensation expense related to the issuance of stock options at
exercise prices lower than fair value on their dates of grant. We expect sales
and marketing expenses to continue to grow as we hire additional personnel and
incur additional expenses to market our services to potential customers.
General and Administrative Expenses. General and administrative expenses
for the three months ended March 31, 2000 increased 457% to $7.8 million from
$1.4 million for the same period in the prior year. The increase in general and
administrative expenses was due to a $3.9 million increase in salaries, benefits
and recruiting and training expenses related to the hiring of additional
personnel, a $1.0 million increase in amortization of non-cash deferred
compensation related to the issuance of stock options at exercise prices lower
than fair value on their dates of grant, a $0.3 million increase in travel and
entertainment expenses primarily related to marketing to property owners and
operators and expenses associated with personnel traveling to oversee and
conduct the installation of our networks in additional buildings, a $0.2 million
increase in accounting, consulting, legal and billing outsourcing fees, and a
$1.0 million increase in office space rent and other growth-driven operating
expenses. We expect general and administrative expenses to continue to grow as
we hire additional personnel and incur additional expenses to support the growth
of our operations.
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Amortization of Real Estate Access Rights. The amortization of real estate
access rights represents the amortization of the value of warrants issued to
property owners or operators over the terms of the related license agreements,
which are generally ten years. Amortization of these amounts began in the first
quarter of 2000. See note 4 to our interim financial statements.
Depreciation and Other Amortization. Depreciation and other amortization
for the three months ended March 31, 2000 increased 167% to $1.0 million from
$0.4 million for the same period in the prior year. $0.5 million of this
increase was due to increased capital expenditures related to deploying our in-
building networks and related equipment, and $0.1 million of this increase was
due to depreciation of computers and other back-office equipment.
Interest Income, net. Interest income, net for the three months ended
March 31, 2000 increased to $2.0 million from $0.1 million for the same period
in the prior year. The increase in interest income, net was due to interest
income on short-term interest bearing investments as a result of investing the
proceeds of our Series C preferred stock offering in the third quarter of 1999
and initial public stock offering of common stock in February 2000. Interest
expense was nominal in both periods.
Liquidity and Capital Resources
The results of our operations have generated a net cash outflow due to the
rate at which we have grown. Cash flow from operations totaled $(1.3 million)
and $(6.0 million) for the three months ended, March 31, 1999, and 2000,
respectively. The expansion of our operating and administrative personnel,
office space costs, and other operating expenses were the principal contributors
to the increases in the net cash outflow between the periods. As we continue to
expand our operations, these increases in period-over-period operating cash
outflows are expected to continue.
Cash used in investing activities was $(1.2 million) and $(19.9 million)
for the three months ended March 31, 1999 and 2000, respectively. Cash used in
investing activities has primarily been expended to construct our in-building
networks. As of March 31, 2000, we had made capital expenditures of
approximately $34.6 million since inception. We expect that capital
expenditures will increase substantially in future periods as we construct our
networks and purchase more communications equipment. We will continue to seek
access to additional buildings. If we are successful in gaining access to
additional buildings, we will have substantial needs for additional capital for
an indefinite period. We also expect to have substantial and increasing negative
adjusted EBITDA and net losses.
Cash provided by financing activities was $(0.01 million) and $180.7
million and for the three months ended March 31, 1999 and 2000,respectively.
Cash provided by financing activities during the three months ending March 31,
2000 was from the Company's initial public offering in which we sold 11,500,000
shares of our common stock at $17 per share, netting proceeds of approximately
$180.6 million after deducting first quarter offering expenses (approximately
$0.3 million of offering expenses were incurred in the fourth quarter of 1999).
We intend to use the net proceeds from this offering for construction of in-
building networks and the purchase of communications equipment and for
implementation and modification of information support systems. The remainder
of the net proceeds will be available for working capital and general corporate
purposes. We may also use a portion of the net proceeds to acquire or invest in
complementary businesses, technologies, services or products. However, we
currently have no material commitments or agreements with respect to any of
these types of transactions.
During the first quarter of 2000, we recorded an additional $163.4 million
for warrants that were earned during the three months ended March 31, 2000,
which are exercisable for an aggregate of approximately 9.5 million shares of
our common stock at an exercise price of $4.22 per share. These warrants were
issued to several property owners and operators in connection with their
execution of master license agreements in November and December 1999. See note
4 to our interim financial statements. These master license agreements gave us
the right to operate our networks in more than 600 buildings representing more
than 194 million rentable square feet.
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In April 2000, the Company acquired all of the outstanding common stock of
SiteConnect, Inc., a Seattle-based in-building communications service provider,
in exchange for approximately 581,450 shares of the Company's common stock. The
number of shares of the Company's common stock issued in connection with the
acquisition may be increased or decreased based on certain post-closing
adjustments.
We are currently operational in 17 markets, and plan to expand our presence
to approximately 27 markets by the end of 2000 and approximately 50 markets by
the end of 2001. We estimate that this expansion will require capital
expenditures of approximately $50.0 million in 2000 and approximately $90.0
million in 2001.
We estimate that the net proceeds from our initial public offering in
addition to cash on hand will be sufficient to fund operations and the projected
deployment of our network through mid-2001. We do, however, expect to continue
our growth, expansion and the further development of our network and services
beyond that point. Accordingly, we expect that we will eventually need to
arrange for additional sources of capital through the issuance of debt or equity
or bank borrowings. There are no commitments for any such additional financing,
and we cannot be sure that we will be able to obtain any such additional
financing at the times required and on acceptable terms and conditions. In such
event, our growth could slow and operations could be adversely affected.
The actual amount and timing of our future capital requirements may differ
materially from our estimates as a result of many factors, some of which we
cannot control. These factors include:
. the timing of execution of license agreements;
. the ability to meet or exceed construction schedules;
. the ability to obtain favorable prices for purchases of equipment;
. our ability to develop, acquire and integrate the necessary operational
support systems;
. the cost of network development in each of our markets;
. demand for our services;
. the successful deployment of new services that we may offer;
. the timing and extent of future acquisitions or investments, if any, and our
ability to integrate these acquisitions or investments;
. regulatory changes; and
. changes in technology and competitive developments beyond our control.
Recent Accounting Pronouncements
The Securities and Exchange Commission has released SAB No. 101, "Revenue
Recognition in Financial Statements." We are reviewing our policies with
respect to SAB No. 101 and do not anticipate the impact of adoption to be
material.
Risks Associated with Forward-Looking Statements Included in this Form 10-Q
This Report on Form 10-Q contains forward-looking statements, including,
without limitation, statements about our plans, objectives, expectations,
intentions, assumptions and prospects. You can identify forward-looking
statements by the use of words such as "expect," "anticipate," "intend," "plan,"
"believe," "seek," "estimate," "assume" and similar expressions which predict or
indicate future events and trends which do not relate to historical matters.
You should not rely on forward-looking statements because they involve
known and unknown risks, uncertainties and other factors, some of which are
beyond our control. These risks, uncertainties and other factors may cause our
actual results, performance or achievements to differ materially from the
anticipated future results, performance or achievements expressed or implied by
the forward-looking statements. These risks, uncertainties and factors,
include, without limitation, our ability to obtain additional license agreements
with property owners and managers, the intense competition for our service
offerings, our dependence on growth in demand for our services, our ability to
manage the growth of our operations and our ability to raise additional capital.
In addition, the factors described under "Risk Factors That May Affect Future
Results" in our Annual Report on Form
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10-K for the year ended December 31, 1999 may result in these differences. You
should carefully review all of these factors, and you should be aware that there
may be other factors that could cause these differences. These forward-looking
statements represent our estimates and assumptions only as of the date of this
report, and we do not undertake to update these forward-looking statements to
reflect future events or developments.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Our exposure to financial market risk, including changes in interest rates,
relates primarily to our investment portfolio. We typically do not attempt to
reduce or hedge the market exposure on our investment securities because our
investments are in fixed-rate, short-term securities. We do not have any
derivative instruments. The fair value of our investment portfolio or related
income would not be significantly impacted by either a 100 basis point increase
or decrease in interest rates due mainly to the fixed-rate, short-term nature of
our investments. As of March 31, 2000, we had no debt outstanding, other than
capital leases.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently involved in any pending legal proceedings that are
expected to have a material adverse effect on our business.
Item 2. Changes in Securities and Use of Proceeds.
We completed our initial public offering in February 2000. The initial
public offering was made pursuant to a Registration Statement on Form S-1,
originally filed with the Securities and Exchange Commission on December 3,
1999, as amended (Commission File No. 333-92011), which was declared effective
on February 9, 2000. The initial public offering commenced on February 10, 2000
and terminated shortly thereafter, after the sale into the public market of all
of the registered shares of common stock.
The shares of common stock sold in the initial public offering (including
1,500,000 shares which were issued upon the exercise of the underwriters'
overallotment option) were offered for sale by a syndicate of underwriters
represented by Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and J.C. Bradford & Co.
We registered an aggregate of 11,500,000 shares of common stock (including
1,500,000 shares which were issued upon the exercise of the underwriters'
overallotment option) for sale in the initial public offering at a per share
price of $17.00, for an aggregate offering price of approximately $195.5
million.
We incurred the following expenses in connection with the initial public
offering:
Underwriting discounts and commissions of approximately: $13,685,000
Other expenses of approximately: $ 2,108,000
---------------
Total expenses of approximately: $15,793,000
===============
No payments were made to (i) any of our directors, officers, general
partners or associates, (ii) any person(s) owning 10% or more of our common
stock, or (iii) any of our affiliates.
After deducting the expenses set forth above, we received approximately
$179.7 million in net proceeds from the initial public offering. We have not
yet used any of the net proceeds from the initial public offering. The net
proceeds have been invested in cash, cash equivalents and short-term
investments. Consistent with the description of the use of proceeds set forth
in the prospectus contained in the Registration Statement, we intend to use the
proceeds from the offering for working capital and general corporate purposes,
the construction of in-building networks and the purchase of communications
equipment.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
On February 8, 2000, our stockholders, in connection with our initial
public offering, approved the filing of the Second Amended and Restated
Certificate of Incorporation by written consent in lieu of a special meeting.
On the date of such
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consent there were 35,791,124 shares of common stock outstanding, and
stockholders holding 35,791,124 shares of common stock executed such consent,
representing 100.0% of the then outstanding shares of common stock.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed by the Company on Form 8-K during the quarter ended
March 31, 2000.
13
<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.
CYPRESS COMMUNICATIONS, INC.
Date: May 15, 2000 By: /s/ Barry L. Boniface
----------------------------
Barry L. Boniface
Vice President, Chief Financial
Officer and Treasurer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 224,344,600
<SECURITIES> 0
<RECEIVABLES> 1,728,951
<ALLOWANCES> 329,265
<INVENTORY> 0
<CURRENT-ASSETS> 226,800,826
<PP&E> 35,938,603
<DEPRECIATION> 3,689,551
<TOTAL-ASSETS> 448,109,242
<CURRENT-LIABILITIES> 7,666,451
<BONDS> 0
0
0
<COMMON> 47,315
<OTHER-SE> 440,164,518
<TOTAL-LIABILITY-AND-EQUITY> 448,109,242
<SALES> 0
<TOTAL-REVENUES> 2,530,680
<CGS> 0
<TOTAL-COSTS> 2,354,231
<OTHER-EXPENSES> 13,663,747
<LOSS-PROVISION> 25,391
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,429,980)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,429,980)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,429,980)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>