<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23239
UBICS, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 34-1744587
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization
333 TECHNOLOGY DRIVE, SUITE 210, CANONSBURG, PENNSYLVANIA 15317
(Address of Principal Executive Offices) (Zip Code)
(724) 746-6001
(Registrant's Telephone Number, Including Area Code)
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 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock as of the latest practicable date:
Class Outstanding at May 3, 1999
----- --------------------------
Common Stock, $.01 par value 6,479,800
<PAGE> 2
UBICS, INC.
Form 10-Q
TABLE OF CONTENTS
PART I - - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of December 31, 1998 and March 31, 1999
Statements of Operations for the three months ended March 31, 1998 and
1999
Statements of Cash Flows for the three months ended March 31, 1998 and
1999
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
PART II - - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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UBICS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
----------- --------
1998 1999
----------- --------
ASSETS (audited) (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ........................... $ 11,470 $ 11,552
Accounts receivable, net of allowance for
doubtful accounts of $305 and $405, respectively.. 4,152 4,294
Unbilled receivables ................................ 2,973 3,509
Employee advances ................................... 164 144
Prepaids and other .................................. 258 515
Due from affiliates, net ............................ 174 196
Deferred tax asset ................................. 206 259
-------- --------
Total current assets ............................. 19,397 20,469
-------- --------
Property and equipment:
Leasehold improvements .............................. 40 40
Vehicles ............................................ 72 72
Computer equipment and software ..................... 1,026 1,128
Furniture and fixtures .............................. 623 654
Office and other equipment .......................... 30 33
-------- --------
Total property and equipment ..................... 1,791 1,927
Accumulated depreciation ............................ (170) (235)
-------- --------
Net property and equipment ....................... 1,621 1,692
-------- --------
Other long-term assets .............................. 200 200
-------- --------
Total assets ................................ $ 21,218 $ 22,361
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 2,034 $ 2,545
Payroll liabilities ................................. 1,628 1,924
Accrued taxes ....................................... 46 --
Other current liabilities ........................... 230 319
-------- --------
Total current liabilities ........................ 3,938 4,788
Total liabilities ................................ 3,938 4,788
-------- --------
Stockholders' equity:
Preferred stock, $0.01 par value, 2,000,000
shares authorized, no shares issued and
outstanding ..................................... -- --
Common stock, $0.01 par value, 20,000,000
shares authorized, 6,500,000 shares issued ....... 65 65
Additional paid-in capital .......................... 13,160 13,160
Treasury stock - 0 and 20,200 shares, respectively,
at cost .......................................... (100) (100)
Retained earnings ................................... 4,155 4,448
-------- --------
Total stockholders' equity ....................... 17,280 17,573
-------- --------
Total liabilities and stockholders' equity .. $ 21,218 $ 22,361
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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UBICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------------
1998 1999
(unaudited) (unaudited)
----------------------------
<S> <C> <C>
Revenues $6,215 $9,085
Cost of revenues 4,096 6,610
----- -----
Gross profit 2,119 2,475
Selling, general and
administrative expense 1,203 2,130
----- -----
Income from operations 916 345
Interest income (expense), net 165 130
---- ----
Income before income taxes 1,081 475
Provision for income taxes 440 182
---- ----
Net income $641 $293
===== =====
Basic and diluted earnings per share $0.10 $0.05
===== =====
Weighted average shares 6,646,743 6,480,648
outstanding
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 5
UBICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------------
1998 1999
(Unaudited) (Unaudited)
----------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 641 $ 293
Adjustments to reconcile net
income to net cash provided by
operating activities--
Depreciation 11 65
Changes in operating assets and
liabilities--
Accounts receivable, net 400 (142)
Unbilled receivables (332) (536)
Employee advances 28 20
Due to affiliates, net (61) (22)
Deferred tax asset -- (53)
Prepaids and other (184) (257)
Accounts payable 269 511
Payroll liabilities 262 296
Accrued taxes and other
current liabilities (80) 43
-------- --------
Net cash (used) provided by
operating activities 954 218
-------- --------
Cash flows from investing activities:
Purchases of property and
Equipment (160) (136)
-------- --------
Net cash used by investing
activities (160) (136)
-------- --------
Cash flows from financing activities:
Net cash provided by financing
activities -- --
-------- --------
Net increase (decrease) in cash
and cash equivalents 794 82
Cash and cash equivalents, at
beginning of period 12,790 11,470
-------- --------
Cash and cash equivalents, at
end of year $ 13,584 $ 11,552
======== ========
Supplemental data:
Cash payments for interest $ -- $ --
Cash payments for income taxes $ 505 $ 362
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
UBICS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The financial statements of UBICS, Inc. ("UBICS" or "the Company") presented
herein are unaudited. Certain information and footnote disclosures normally
prepared in accordance with generally accepted accounting principles have been
either condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the Company believes that all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation have been made, interim periods are not necessarily indicative
of the financial results of operations for a full year. As such, these 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 its fiscal year
ended December 31, 1998 filed on March 31, 1999.
Reclassifications
Certain prior year balances have been reclassified to conform to the current
period presentation.
2. OPERATIONS:
UBICS, a Delaware corporation, provides information technology professional
services to large and mid-sized organizations. The Company provides its clients
with a wide range of professional services in such areas as client/server design
and development, enterprise resource planning package implementation and
customization, e-commerce applications design and development, applications
maintenance programming and database and systems administration.
3. REVOLVING CREDIT FACILITY:
The Company has available borrowings under a revolving credit facility with
PNC Bank, National Association ("PNC"). Borrowings under this arrangement are
limited to $1,000, bear interest at prime (7.75% at December 31, 1998 and March
31, 1999) as defined plus 0.5% and are payable upon demand. The revolving credit
facility is secured by the assets of the Company.
There were no borrowings outstanding as of December 31, 1998 and March 31,
1999, respectively.
4. RELATED PARTY TRANSACTIONS:
As of December 31, 1998 and March 31, 1999, the Company had a net
receivable from the UB Group, totaling $174 and $196, respectively, resulting
from expenses incurred by the Company on behalf of the UB Group.
5. EARNINGS PER SHARE:
Under Financial Accounting Standards Board Statement on Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share," earnings per share are
classified as basic earnings per share and diluted earnings per share. Basic
earnings per share included only the weighted average common shares outstanding.
Diluted earnings per share included the weighted average common shares
outstanding and any dilutive common stock equivalent shares in the calculation.
All prior periods have been restated to reflect the Company's adoption of SFAS
No. 128. Treasury shares are treated as retired for earnings per share purposes.
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The following table reflects the calculation of earnings per share under
SFAS No. 128:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31 1998 1999
---- ----
(Dollars in thousands, except per share data)
<S> <C> <C>
BASIC EARNINGS PER SHARE
Net income $641 $293
DIVIDED BY:
Weighted average common shares 6,500,000 6,479,800
--------- ---------
Basic Earnings per share $0.10 $0.05
DILUTED EARNINGS PER SHARE:
Net income $641 $293
DIVIDED BY:
Weighted average common shares 6,500,000 6,479,800
Dilutive effect of options 146,743 848
--------- ---------
Dilutive average common shares 6,646,743 6,480,648
Diluted earnings per share $0.10 $0.05
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the financial statements and notes thereto
included in Item 1 of this report.
The following Management's Discussion and Analysis of Results of
Operations and Financial Condition contains certain forward looking statements
that involve substantial risks and uncertainties. When used in this section, the
words "anticipate," "believe," "estimate," "expect" and similar expressions as
they relate to the Company or its management are intended to identify such
forward looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward looking statements.
OVERVIEW
UBICS, Inc. ("UBICS" or the "Company"), founded in 1993, provides IT
professional services to large and mid-sized organizations. UBICS provides its
clients with a wide range of professional services in such areas as
client/server design and development, enterprise resource planning ("ERP")
package implementation and customization, e-commerce applications design and
development, applications maintenance programming and database and systems
administration. UBICS' services are provided on a time-and-materials basis to
client-managed projects, with UBICS IT professionals providing integral support
as project team members. The Company currently has offices in the Canonsburg,
Pennsylvania and San Francisco, California areas. UBICS is an affiliate of the
UB Group, a multinational group of companies headquartered in India (the "UB
Group").
The Company's revenues are based on the hourly billing of its IT
professionals. Revenue is recognized as services are provided. The Company has
increased the average billing rates of its IT professionals as the demand for
skilled and experienced professionals has expanded, in particular for IT
professionals placed on ERP package implementation and customization projects.
As of March 31, 1999, 79 IT professionals, or over one-fourth of the Company's
deployed IT professionals, were placed on such projects.
UBICS effectively minimizes the number of days IT professionals are not
assigned to projects by proactively marketing these professionals to clients.
Resource managers closely monitor the availability of IT professionals and
utilize subcontractors when UBICS IT professionals are unavailable. The Company
maintains strong relationships with nearly 50 subcontractors located worldwide.
Approximately 42% of the Company's revenues were derived from IT professionals
deployed from subcontractors for the three months ended March 31, 1999. As of
March 31, 1999, IT professionals deployed from subcontractors comprised 119 of
the Company's 290 deployed IT professionals. The Company believes that its
network of subcontractors enables it to maintain closer relationships with
clients by fulfilling more of their needs for IT professional services.
Management believes that as the Company increases its investment in recruiting
and retaining qualified IT professionals, the ratio of UBICS IT professionals to
subcontractor IT professionals will increase.
Since inception the Company has developed relationships with 347
clients in a range of industries and currently has IT professionals deployed at
over 170 of these clients. Although the Company's five largest clients accounted
for approximately 21% of revenues for the first three months of 1999, this
revenue concentration has been declining since the Company's inception. The
Company believes that the continuing growth in its client base and revenues
would further reduce the percentage of revenue attributable to its largest
clients. The Company's strategy is to continue to provide services to clients
across the U.S. in a range of industries, in order to reduce credit risk from
conditions or occurrences within any specific industry or region in which these
clients operate.
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RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
statements of operations data as a percentage of revenues:
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
----------------------
THREE MONTHS
ENDED MARCH 31,
---------------
1998 1999
--------- -------
<S> <C> <C>
Revenues............................. 100.0% 100.0%
Cost of revenues..................... 65.9 72.8
-------- --------
Gross profit......................... 34.1 27.2
Selling, general and administrative
expense.............................. 19.4 23.4
-------- --------
Income from operations............... 14.7 3.8
-------- --------
Interest income
expense), net...................... 2.7 1.4
-------- --------
Income before income taxes........... 17.4 5.2
-------- --------
Provision for income taxes........... 7.1 2.0
-------- --------
Net income........................... 10.3% 3.2%
======== ========
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998.
Revenues
Revenues for the quarter ended March 31, 1999 were $9.1 million,
compared to $6.2 million for the quarter ended March 31, 1998, an increase of
$2.9 million, or 46%. Approximately 80% of the increase in revenues was due to
an increase in the number of IT professionals deployed to provide services to
new and existing clients and approximately 20% of the increase in revenues was
due to higher average hourly billing rates resulting from a shift toward higher
value-added services including ERP-related services as well as increased demand
for IT professionals.
Gross Profit
Gross profit for the first quarter of 1999 was $2.5 million, compared
to $2.1 million for the first quarter of 1998, an increase of $356,000, or 17%.
Gross profit as a percentage of revenues decreased to 27.2% for the first
quarter of 1999, compared to 34.1% for the first quarter of 1998. The decrease
in gross profits as a percentage of revenues was primarily due to increases in
the rates paid for subcontractor professionals and an increase in the number of
employee professionals waiting to be deployed.
Selling, General and Administrative Expense
Selling, general and administrative expense for the quarter ended March
31, 1999 was $2.1 million, compared to $1.2 million for the same quarter of
1998, an increase of $927,000, or 77%. Selling, general and administrative
expense as a percentage of revenues increased to 23.4% for the first quarter of
1999 from 19.4% for the first quarter of 1998. The increase in expense was
primarily due to increases in salaries, commissions and other costs to support
the Company's growth.
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Interest Income (Expense) Net
Interest income for the first quarter of 1999 was $130,000, compared to
interest income of $165,000 for the first three months of 1998. The decrease
resulted from a reduction in the amount of net proceeds of the Company's 1997
initial public offering available for investment.
Provision for Income Taxes
The Company's effective tax rate was 38.3% for the quarter ended March
31, 1999 compared to 40.7% for the quarter ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
In November 1997, the Company generated net proceeds of approximately
$13.2 million from its underwritten initial public offering of 1,500,000 shares
of Common Stock (the "Offering"). Since that time the Company has used
approximately $775,000 of the net proceeds of the Offering to repay its
outstanding indebtedness under a $1,000,000 Committed Line of Credit from PNC
Bank, National Association (the "Line of Credit"). The Company also has used a
portion of the net proceeds of the Offering for general corporate purposes and
intends to use a portion of such net proceeds for the capital expenditures
described below.
The Company's principal uses of cash have been to fund receivables and
other working capital, reflecting the Company's growth. Prior to completion of
the Offering, the Company financed its working capital requirements through
internally generated funds, borrowings under the Line of Credit and loans and
advances from certain UB Group affiliates. Amounts outstanding under the Line of
Credit bear interest at a variable annual rate equal to 0.5% in excess of PNC's
prime rate (as of March 31, 1999, the annual interest rate under the Line of
Credit was 8.25%). As of March 31, 1999, no borrowings were outstanding under
the Line of Credit. Net cash generated by operating activities was $218,000 for
the first three months of 1999 compared to net cash generated by operating
activities of $954,000 for the same period in 1998.
Capital expenditures for the first three months of 1999 and 1998 were
$136,000 and $160,000, respectively. The Company intends to use approximately
$2.0 million of the remaining net proceeds of the Offering to expand its
existing operations, including approximately $1.2 million for the expansion of
the Company's recruiting and training center in India. The initial phase of the
center was placed in operation in the fall of 1998 and the expansion is expected
to be operational by the end of 1999 (including additional purchase of hardware
and software with respect thereto). Because the Company currently has a
sufficient supply of IT professionals awaiting deployment, as well as a shift in
the Company's strategic focus in favor of domestic sales growth, the Company has
deferred previously disclosed plans to establish offshore recruiting offices in
various foreign locations (except that the Company expects to establish a sales
and recruiting office in the United Kingdom within the next four to six months).
Except as set forth above, the Company currently has no material commitments for
capital expenditures.
The Company currently anticipates that the proceeds from the Offering,
together with the existing sources of liquidity and cash generated from
operations, will be sufficient to satisfy its cash needs at least through the
next twelve months.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including
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<PAGE> 11
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that the changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company must formally document, designate, and assess the effectiveness
of transactions that receive hedge accounting. SFAS No. 133 is effective for
fiscal years beginning after June 15, 1999.
The Company has not yet quantified the impact of adopting SFAS No. 133
but does not believe that it will have a significant impact.
YEAR 2000 COMPLIANCE
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from the
use of computer programs which have been written using two digits, rather than
four, to define the applicable year of business transactions. The Company has
evaluated its principal staffing and financial systems, which are licensed from
and maintained by third party software development companies, and believes that
such systems are Year 2000 compliant. The Company is currently in the process of
selecting additional staffing and financial systems which management expects to
be Year 2000 compliant. The Company's total costs with respect to Year 2000
compliance as of December 31, 1998 have not been material. Management does not
anticipate that any remaining costs associated with assuring that its internal
systems will be Year 2000 compliant will be material to its business, operations
or financial condition.
The Company has initiated an assessment to determine the preparedness
level of its significant clients, vendors, and other service providers with
respect to Year 2000 issues and the subsequent impact on the Company. If a
significant client of the Company encounters Year 2000 problems, such client
could be forced to reduce its expenditures on IT projects involving the
Company's IT professionals, either because the client would have to divert
resources from such projects to address its Year 2000 problem or because of the
adverse financial effects of such problems on the client. In addition, clients
which incur significant costs in achieving Year 2000 compliance could be forced
or could elect to reallocate funds being used for projects involving the
Company's IT professionals to address Year 2000 compliance issues. The Company
does not believe its current projects will be adversely affected by problems its
clients may encounter resulting from lack of Year 2000 compliance because most
such projects will be completed before the Year 2000. However, reallocation of
IT-related expenditures by a client in connection with achieving Year 2000
compliance could affect the duration of the Company's existing projects with
such client or the availability to the Company of future IT projects.
In addition, a small number of the Company's IT professionals perform
Year 2000 work for certain clients as an adjunct to other projects performed for
such clients. The Company has a $5 million professional liability insurance
policy which covers, among other things, Year 2000 compliance work performed by
UBICS at client sites. Some of the Company's clients have requested the Company
to warrant that the services performed by the Company's IT professionals are
Year 2000 compliant. The Company is evaluating such requests from clients to
determine whether and the extent to which it is appropriate for UBICS to make
such certifications.
The Company's review of client and vendor readiness with respect to
Year 2000 is expected to be completed by the first half of 1999, although there
can be no assurance that all third parties requested by the Company to confirm
their Year 2000 preparedness will do so. Based upon the results of the review,
ongoing Year 2000 impact analysis and risk assessment will continue as
management deems appropriate. Such review also will involve the development of
an appropriate contingency plan to help limit the impact of any failure of
clients, vendors or other third parties with respect to Year 2000 compliance.
The Company expects to incur internal staff costs related to the assessment
project but is unable to form an estimate of such costs at this time.
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U.S. REGULATION OF IMMIGRATION
The Company's services historically have been performed in the U.S. and
the Company has recruited most of its IT professionals outside the U.S. The
Company's business, therefore, is subject to U.S. immigration laws. Over 90% of
the Company's IT professionals are citizens of other countries, with most of
those in the U.S. working under H-1B temporary work permits. There is a limit on
the number of new H-1B permits that may be approved in any U.S. government
fiscal year. In the federal fiscal year ended September 30, 1997, this limit was
reached in August and in the federal fiscal year ended September 30, 1998, this
limit was reached in May. The inability to obtain additional H-1B permits during
the federal fiscal year ended September 30, 1998 resulted in increased use of
subcontractor professionals by UBICS. If in future years the limit on H-1B
permits is reached, the Company may again be unable to obtain enough H-1B
permits to meet its requirements. If the Company were unable to obtain H-1B
permits for its IT professionals in sufficient quantities or at a sufficient
rate, the Company's business, operating results and financial condition could be
materially adversely affected. The U.S. government has increased the limit on
the number of new H-1B permits to 115,000 for each of fiscal years 1999 and
2000, and to 107,500 for fiscal year 2001 before reverting to existing limits
from fiscal year 2002 onwards. The U.S. Government, in addition to increasing
the limits, has also imposed a fee to be paid by companies for new approvals and
for renewals. However, in April 1999, the U.S. Immigration and Naturalization
Service ("INS") announced that approximately 95,000 new H-1B permits had already
been issued for the 1999 federal fiscal year, and subsequently INS announced
that it had put a temporary hold on further H-1B visa processing to enable INS
to determine the number of H-1B permits (if any) remaining for issuance during
such fiscal year. Accordingly, it is likely that the limit for the current
fiscal year has already been reached or will be reached as early as mid to late
May of 1999.
Furthermore, Congress and administrative agencies with jurisdiction
over immigration matters have periodically expressed concerns over the levels of
legal and illegal immigration into the U.S. These concerns have often resulted
in proposed legislation, rules and regulations aimed at reducing the number of
work permits that may be issued. Any changes in such laws making it more
difficult to hire foreign nationals or limiting the ability of the Company to
retain foreign employees could require the Company to incur additional
unexpected labor costs and expenses. Any such restrictions or limitations on the
Company's hiring practices could have a material adverse effect on the Company's
business, operating result and financial condition.
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<PAGE> 13
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings -- Not Applicable
Item 2. Changes in Securities and Use of Proceeds -- Not applicable
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) The following information relates to the Company's use of the
net proceeds of the Company's initial public offering (the "Offering"):
On October 27, 1997, the Company's registration statement on
Form S-1, No. 333-35171, became effective. The Company sold a total of
1,500,000 shares of common stock, par value $.01 per share at a price
per share of $10.00 pursuant to the Offering. The Offering, which was
managed by Parker/Hunter Incorporated, as lead underwriter, and Scott &
Stringfellow, Inc., as co-manager, closed on November 4, 1997.
The following table summarizes the expenses incurred for the
Company's account in connection with the Offering:
<TABLE>
<S> <C>
Underwriting discounts $1,050,000
Finder's fees --
Expenses paid to or for underwriters --
Other expenses 775,000
----------
TOTAL $1,825,000
</TABLE>
The following table summarizes the amount of net offering
proceeds to the Company ($13,175,000) used for the purposes listed
below:
<TABLE>
<S> <C>
Construction of plant, building $0
and facilities
Purchase and installation of machinery 1,768,000
and equipment
Acquisition of other business(es) 0
Repayment of indebtedness 775,000
Working capital 1,007,000
Temporary investments* 9,625,000
Other Purposes 0
-----------
Total $13,175,000
</TABLE>
- ----------
*Such amount is currently invested in a nine-month ready access certificate of
deposit with PNC Bank.
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Item 3. Defaults Upon Senior Securities -- Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders -- Not Applicable
Item 5. Other Information -- Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 Acquisition and Stock Exchange Agreement dated March
18, 1999 among the Company, R Systems, Inc., Satinder
Singh Rekhi, Harpreet K. Rekhi and the shareholders
of R Systems, Inc.(1)
2.2 Acquisition and Stock Exchange Agreement dated March
18, 1999 among the Company, R Systems (India) Private
Limited and the shareholders of R Systems (India)
Private Limited(1)
2.3 Acquisition and Stock Exchange Agreement dated March
18, 1999 among the Company, R Systems (Singapore) Pte
Limited and the shareholders of R Systems (Singapore)
Pte Limited(1)
10.1 UBICS, Inc. 1997 Stock Option Plan(2)
10.2 Noncompetition Agreement dated October 27, 1997 among
the Company, Vijay Mallya and UB Information
Consultancy Services Ltd.(3)
10.3 Employment Agreement between the Company and Vijay
Mallya(3)
10.4 Employment Agreement between the Company and Manohar
B. Hira(3)
10.5 Employment Agreement between the Company and O'Neil
Nalavadi(3)
10.6 Employment Agreement between the Company and Babu
Srinivas(3)
10.7 Agreement of Severance, Waiver and Release dated
March 18, 1999 between the Company and Manohar B.
Hira(1)
10.8 Lease dated May 28, 1996 between the Company and
Marin Executive Park, as amended(2)
10.9 Services Agreement dated October 27, 1997 among the
Company, Vijay Mallya and United Breweries Limited(3)
10.10 Letter Agreement dated July 26, 1996 between PNC
Bank, National Association and the Company, and
Amendment to Note and Letter Agreement dated November
1, 1996, Second Amendment to Note and Letter
Agreement dated April 1, 1997, Third Amendment to
Note and Letter Agreement dated August 29, 1997 and
Fourth Amendment to Note and Letter Agreement dated
September 5, 1997(2)
10.11 Form of Director Indemnification Agreement(3)
10.12 Form of Sublease and Consent among the Company, Marin
Executive Park and United Breweries of America,
Inc.(3)
10.13 Noncompetition Agreement dated October 27, 1997 among
the Company, Vijay Mallya and United Breweries
Limited(3)
10.14 Noncompetition Agreement dated October 27, 1997 among
the Company, Vijay Mallya and UB International
Limited(3)
14
<PAGE> 15
10.15 Services Agreement dated October 27, 1997 among the
Company, Vijay Mallya and UB International Limited(3)
10.16 Lease Agreement dated June 30, 1998 between the
Company and Stealth Technology Associates(4)
10.17 Amendment to Loan Documents dated December 18, 1998
between PNC Bank, National Association and the
Company(1)
27 Financial Data Schedule(1)
- ----------
(1) Incorporated by reference to the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed on March 31,
1999.
(2) Incorporated by reference to the registrant's Registration Statement on
Form S-1, No. 333-35171, filed September 8, 1997.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form S-1, No. 333-35171, filed
October 29, 1997.
(4) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the three months ended March 31,
1999.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
UBICS, Inc.
(Registrant)
Date: May 14, 1999
By: /s/Manohar B. Hira
-------------------------------------
Manohar B. Hira
President
By: /s/O'Neil Nalavadi
-------------------------------------
O'Neil Nalavadi
Senior Vice President and Chief
Financial Officer
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description Page
- --- ----------- ----
<C> <S> <C>
2.1 Acquisition and Stock Exchange Agreement dated March 18, 1999 among the Company, R Systems, Inc., Satinder
Singh Rekhi, Harpreet K. Rekhi and the shareholders of R Systems, Inc.(1)
2.2 Acquisition and Stock Exchange Agreement dated March 18, 1999 among the Company, R Systems (India) Private
Limited and the shareholders of R Systems (India) Private Limited(1)
2.3 Acquisition and Stock Exchange Agreement dated March 18, 1999 among the Company, R Systems (Singapore) Pte
Limited and the shareholders of R Systems (Singapore) Pte Limited(1)
10.1 UBICS, Inc. 1997 Stock Option Plan(2)
10.2 Noncompetition Agreement dated October 27, 1997 among the Company, Vijay Mallya and UB Information
Consultancy Services Ltd.(3)
10.3 Employment Agreement between the Company and Vijay Mallya(3)
10.4 Employment Agreement between the Company and Manohar B. Hira(3)
10.5 Employment Agreement between the Company and O'Neil Nalavadi(3)
10.6 Employment Agreement between the Company and Babu Srinivas(3)
10.7 Agreement of Severance, Waiver and Release dated March 18, 1999 between the Company and Manohar B. Hira(1)
10.8 Lease dated May 28, 1996 between the Company and Marin Executive Park, as amended(2)
10.9 Services Agreement dated October 27, 1997 among the Company, Vijay Mallya and United Breweries Limited(3)
10.10 Letter Agreement dated July 26, 1996 between PNC Bank, National Association and the Company, and Amendment
to Note and Letter Agreement dated November 1, 1996, Second Amendment to Note and Letter Agreement dated
April 1, 1997, Third Amendment to Note and Letter Agreement dated August 29, 1997 and Fourth Amendment to
Note and Letter Agreement dated September 5, 1997(2)
10.11 Form of Director Indemnification Agreement(3)
10.12 Form of Sublease and Consent among the Company, Marin Executive Park and United Breweries of America, Inc.(3)
10.13 Noncompetition Agreement dated October 27, 1997 among the Company, Vijay Mallya and United Breweries Limited(3)
10.14 Noncompetition Agreement dated October 27, 1997 among the Company, Vijay Mallya and UB International Limited(3)
10.15 Services Agreement dated October 27, 1997 among the Company, Vijay Mallya and UB International Limited(3)
10.16 Lease Agreement dated June 30, 1998 between the Company and Stealth Technology Associates(4)
10.17 Amendment to Loan Documents dated December 18, 1998 between PNC Bank, National Association and the Company(1)
27 Financial Data Schedule(1)
</TABLE>
17
<PAGE> 18
- ----------
(1) Incorporated by reference to the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, filed on March 31,
1999.
(2) Incorporated by reference to the registrant's Registration Statement on
Form S-1, No. 333-35171, filed September 8, 1997.
(3) Incorporated by reference to Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form S-1, No. 333-35171, filed
October 29, 1997.
(4) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF UBICS, INC. AS OF MARCH 31, 1999 AND THE
CONSOLIDATED STATEMENTS OF OPERATIONS OF UBICS, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1999, INCLUDED IN THE QUARTERLY REPORT ON FORM 10-Q OF UBICS, INC. FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 11,552
<SECURITIES> 0
<RECEIVABLES> 3,889
<ALLOWANCES> 405
<INVENTORY> 0
<CURRENT-ASSETS> 20,469
<PP&E> 1,927
<DEPRECIATION> (235)
<TOTAL-ASSETS> 22,361
<CURRENT-LIABILITIES> 4,788
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 17,608
<TOTAL-LIABILITY-AND-EQUITY> 22,361
<SALES> 0
<TOTAL-REVENUES> 9,085
<CGS> 0
<TOTAL-COSTS> 6,610
<OTHER-EXPENSES> 2,130
<LOSS-PROVISION> 405
<INTEREST-EXPENSE> (130)
<INCOME-PRETAX> 475
<INCOME-TAX> 182
<INCOME-CONTINUING> 293
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 293
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
