SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED June 30, 1998
COMMISSION FILE NUMBER: 333-46197
URSUS TELECOM CORPORATION
(Exact name of registrant as specified in its charter)
Florida 65-0398306
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
440 Sawgrass Corporate Parkway, Suite 112, Sunrise, Florida 33325
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (954-846-7887)
N/A
(Former name, former address and former fiscal year if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports 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 [ ]
As of June 30, 1998, the number of the registrant's Common Shares of $.01 par
value outstanding was 6,500,000.
<PAGE>
URSUS TELECOM CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION:
PAGE
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
March 31, 1998 and June 30, 1998 3
Condensed Consolidated Statements of Income for the
Three Month Periods Ended June 30, 1997 and 1998 4
Condensed Consolidated Statements of Cash Flows for the
Three Month Periods Ended June 30, 1997 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 12
Item 2: Changes in Securities and Use of Proceeds 12
Item 6: Exhibits 12
Signatures
<PAGE>
ITEM 1. FINANCIAL STATEMENTS ( UNAUDITED)
<TABLE>
<CAPTION>
URSUS TELECOM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS March 31, 1998 June 30, 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,035,149 $12,611,664
Accounts receivable, net 4,183,750 4,226,446
Advances and notes receivable--related parties 65,274 107,459
Other current assets 218,195 307,461
----------------------------------
Total current assets 5,502,368 17,252,030
Equipment, net 1,258,074 1,283,897
Deposit on acquisition 377,141 450,129
Deferred costs of public offering 514,619 -
Other assets, net 80,309 125,992
----------------------------------
Total assets $7,732,511 $19,113,048
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued expenses $4,154,232 $3,577,775
Current portion of capital lease obligations 48,835 46,670
Other current liabilities 207,055 363,305
----------------------------------
Total current liabilities 4,410,122 3,987,750
Long term portion of capital lease obligations 296,555 287,056
Other long-term obligations 77,614 77,614
Commitment and contingencies
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized;
1,000 shares issued and outstanding 10 10
Common stock, $.01 par value; 20,000,000 shares authorized,
5,000,000 and 6,500,000 issued and outstanding at March 31, 1998
and June 30, 1998, respectively
50,000 65,000
Additional paid-in capital 218,740 11,921,934
Accumulated other comprehensive income - foreign
currency translation adjustment (5,873) (2,764)
Retained earnings 2,685,343 2,776,448
----------------------------------
Total shareholders' equity 2,948,220 14,760,628
----------------------------------
Total liabilities and shareholders' equity $7,732,511 $19,113,048
==================================
</TABLE>
<PAGE>
URSUS TELECOM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
June 30
1997 1998
-----------------------------------
<S> <C> <C>
Revenues:
Retail $5,940,257 $5,928,197
Wholesale 503,515 539,239
-----------------------------------
Total revenues 6,443,772 6,467,436
Cost of revenues:
Retail 3,739,277 3,810,198
Wholesale 392,035 417,671
-----------------------------------
Total cost of revenues 4,131,312 4,227,869
-----------------------------------
Gross profit 2,312,460 2,239,567
Operating expenses:
Commissions 1,036,542 930,674
Selling, general and administrative 665,946 1,132,282
expenses
Depreciation and amortization 39,668 88,288
-----------------------------------
Total operating expenses 1,742,156 2,151,244
-----------------------------------
Operating income 570,304 88,323
Other income (expense):
Interest expense (8,363) (10,350)
Interest income 796 88,813
-----------------------------------
(7,567) 78,463
-----------------------------------
Income before provision
for income taxes 562,737 166,786
Provision for income taxes 211,758 75,681
-----------------------------------
Net income $ 350,979 $91,105
===================================
Pro forma net income per common
share-basic and dilutive
(historical in 1998) $ .07 $ .02
===================================
Pro forma weighted average shares
outstanding (historical in 1998) 5,000,000 5,708,791
===================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
URSUS TELECOM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months ended
June 30
1997 1998
------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 350,979 $ 91,105
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 39,668 88,288
Allowance for doubtful accounts - 28,117
Changes in operating assets and liabilities:
Accounts receivable (416,333) (143,800)
Other current assets 152,042 (89,266)
Accounts payable and accrued expenses (244,500) (576,458)
Other current liabilities (13,325) 156,250
------------------------------------
Net cash used in operating activities (131,469) (445,764)
INVESTING ACTIVITIES
Purchase of equipment (27,552) (114,112)
Increase in advances to related parties (21,705) (42,185)
Increase in other assets (24,640) (45,683)
------------------------------------
Net cash used in investing activities (73,897) (201,980)
FINANCING ACTIVITIES
Deferred costs of public offering (26,952) -
Repayments of long-term debt (100,000) -
Net proceeds from the sale of common stock - 12,232,813
Repayments on capital leases - (11,664)
------------------------------------
Net cash (used in) provided by financing activities (126,952) 12,221,149
Effect of foreign exchange rate changes on cash and cash
equivalents - 3,110
------------------------------------
Net (decrease) increase in cash and cash equivalents (332,318) 11,576,515
Cash and cash equivalents at beginning of period 740,765 1,035,149
------------------------------------
Cash and cash equivalents at end of period $ 408,447 $12,611,664
====================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 10,709 $ 10,350
====================================
Cash paid for income taxes $ 84,485 $ -
====================================
Receivable applied as a deposit on acquisition $ - $ 72,988
====================================
SEE ACCOMPANYING NOTES.
</TABLE>
<PAGE>
URSUS TELECOM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL
The financial statements included herein are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and Securities Exchange Commission ("SEC") regulations. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In management's
opinion, the financial statements reflect all adjustments (of a normal and
recurring nature) which are necessary to present fairly the financial position,
results of operations, stockholders' equity and cash flows for the interim
periods. These financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended March 31, 1998, as
set forth in Form 10-K of Ursus Telecom Corporation the "Company" or ("UTCC").
The results for the three month period ended June 30, 1998, are not necessarily
indicative of the results that may be expected for the year ending March 31,
1999.
(2) BUSINESS AND PURPOSE
The Company was incorporated in Florida on March 23, 1993 and is a provider of
international telecommunications services. The Company's revenues are derived
from the sale of telecommunications services to retail customers, who are
typically small-to medium-sized businesses and travelers; and to wholesale
customers, who are typically telecommunications carriers. The Company's retail
customers are principally located in South Africa, Latin America, the Middle
East (primarily Lebanon and Egypt), Russia and France, while the wholesale
customers are located in the United States and Europe. The Company extends
credit to both its retail and wholesale customers on an unsecured basis with the
risk of loss limited to outstanding accounts receivable balances.
The Company markets its services through a worldwide network of independent
agents and extends credit to its sales agents on an unsecured basis with the
risk of loss limited to outstanding amounts, less commissions payable to its
agents. The Company has entered into exclusive agency agreements with all of its
current agents. The initial term of the agreements has generally been for a
period of five years. Provided that agents are not in default, agents generally
have the option of renewing their agreements for two additional terms of three
years each by notifying the Company at least six months prior to the agreement's
expiration date.
(3) PRO FORMA NET INCOME PER COMMON SHARE
Pro forma basic and dilutive net income per share reflect pro forma weighted
average common shares outstanding for all periods presented assuming the stock
split and recapitalization, described in Note 5, occurred at the beginning of
the earliest year presented.
In December 1997, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 128,"EARNINGS PER SHARE." SFAS No. 128 replaced
the calculation of primary and fully diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for all periods are presented to conform to the new
requirements.
Following is a reconciliation of amounts used in the per share computations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-----------------------------------
1997 1998
-----------------------------------
<S> <C> <C>
Net income-numerator basic computation $ 350,979 $ 91,105
Effect of dilutive securities-None - -
-----------------------------------
Net income as adjusted for assumed conversion-numerator diluted
computation $ 350,979 $ 91,105
===================================
Pro forma weighted average shares-denominator basic computation
(historical in 1998) 5,000,000 5,708,791
Effect of dilutive securities-None - -
-----------------------------------
Pro forma weighted average shares as adjusted- denominator 5,000,000 5,708,791
===================================
Pro forma net income per share (historical in 1998):
Basic $ 0.07 $ 0.02
===================================
Diluted $ 0.07 $ 0.02
===================================
</TABLE>
(4) COMPREHENSIVE INCOME
The Company has adopted the provisions of SFAS 130, "REPORTING COMPREHENSIVE
INCOME" (SFAS 130) in 1998 which is required for fiscal years beginning after
December 15, 1997. The Statement requires the presentation of comprehensive
income and its components in the financial statements and the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid in capital in the equity section of the balance sheet. The
adoption of SFAS 130 has no impact on the Company's net income or stockholders'
equity. The only component of other comprehensive income in the Company's
balance sheet is foreign currency translation adjustments which even prior to
adoption of SFAS 130 would have been separately reported in stockholders'
equity.
The following is a detail of comprehensive income for the three months ended
June 30, 1998 and June 30, 1997:
THREE MONTHS ENDED
JUNE 30,
---------------------------------
1997 1998
---------------------------------
Net income $ 350,979 $ 91,105
Other comprehensive income (loss) net of tax:
Foreign currency translation - (2,764)
---------------------------------
Comprehensive income $ 350,979 $ 88,341
=================================
(5) SIGNIFICANT EVENTS
Effective May 18, 1998, the Company sold 1,500,000 shares of its common stock in
an initial public offering (the "Offering"). Net proceeds of the Offering, after
deducting underwriting discounts, commissions and professional fees amounted to
approximately $11.6 million.
On February 6, 1998, the Board of Directors and shareholders approved (i) the
filing of amended and restated Articles of Incorporation that provided for,
among other things, the authorization of 20,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock, (ii) a 923.08 for 1 stock split of the
issued and outstanding Class C Common Stock, (iii) the reclassification and
split of every four shares of outstanding Class A and Class B common stock into
3,692.32 shares of Common Stock and 1 share of preferred stock, (iv) an option
plan reserving up to 1,000,000 shares of Common Stock, and (v) the granting of
150,000 warrants for the purchase of Common Stock to the Company's underwriters.
The stock split and reclassification became effective on February 18, 1998. The
issuance of the warrants and stock option plan became effective May 18, 1998
(the effective date of the Company's Offering).
(6) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company has disputes with carriers over
billing discrepancies. Although management has historically been successful in
resolving these disputes, there can be no assurance that ongoing disputes will
be resolved as anticipated. In the event that an ongoing dispute results in an
additional liability, the Company believes that such amounts will not have a
material adverse affect on the Company's financial condition or results of
operations.
(7) SUBSEQUENT EVENTS
ACQUISITION
During the quarter the Company has agreed to acquire its agent in Uruguay.
Consideration for the agency will be $132,988. The Company has converted a
$72,988 accounts receivable balance from this agent as a deposit on the purchase
price. The acquisition will be accounted for using the purchase method of
accounting. Upon the closing of the agreement, the Agency's results will be
included in the consolidated financial statements of the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains certain "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. Forward-looking
statements are statements other than historical information or statements of
current condition. Some forward looking statements may be identified by use of
such terms as "believes", "anticipates", "intends", or "expects". These
forward-looking statements relate to the plans, objectives and expectations of
the Company for future operations. In light of the risks and uncertainties
inherent in all such projected operational matters, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved or that any of the Company's operating
expectations will be realized. The Company's revenues and results of operations
are difficult to forecast and could differ materially from those projected in
the forward-looking statements contained in this report as a result of numerous
factors including among others, the following: (i) changes in customer rates per
minute; (ii) foreign currency fluctuations; (iii) termination of certain service
agreements or inability to enter into additional service agreements; (iv)
inaccuracies in the Company's forecast of traffic growth; (v) changes in or
developments under domestic or foreign laws, regulations, licensing requirements
or telecommunications standards; (vi) foreign political or economic instability;
(vii) changes in the availability of transmission facilities; (viii) loss of the
services of key officers; (ix) loss of a customer which provides significant
revenues to the Company; (x) highly competitive market conditions in the
industry; (xi) obsolescence of and changes in telecommunications switching and
access equipment; and (xii) concentration of credit risk. The foregoing review
of the important factors should not be considered as exhaustive; the Company
undertakes no obligation to release publicly the results of any future revisions
it may make to forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE
RELATED NOTES AND OTHER INFORMATION REGARDING THE COMPANY INCLUDED ELSEWHERE IN
THIS FORM 10-Q.
OVERVIEW
The Company is a provider of international telecommunications services and
offers a broad range of discounted international and enhanced telecommunication
services, including U.S. originated long distance service and direct-dial
international service, typically to small and medium-sized businesses and
travelers. The Company's primary service is call reorigination. The Company also
sells services to other carriers on a wholesale basis. The Company's retail
customer base, which includes corporations and individuals, is primarily located
in South Africa, Latin America, the Middle East (Lebanon and Egypt), Russia and
France. The Company operates a switched-based digital telecommunications
network. The Company installed its first switch in Sunrise, Florida, which
became fully operational in October 1993. In addition, the Company began
operating a second switch in Paris, France on March 1, 1998.
The following table sets forth income statement data as a percentage of revenues
for the periods indicated:
THREE MONTHS ENDED
JUNE 30,
1997 1998
---- ----
Revenues................................. 100.0% 100.0%
Cost of revenues......................... 64.1 65.4
Gross profit............................. 35.9 34.6
Operating expenses:
Commission............................ 16.1 14.4
Selling, general and administrative... 10.3 17.5
Depreciation and amortization......... .6 1.4
Total operating expenses................. 27.0 33.2
Operating income......................... 8.9 1.4
Other (expense) income................... (.1) 1.2
Income before income taxes............... 8.7 2.6
Net income............................... 5.4 1.4
RESULTS OF OPERATIONS
REVENUES. Revenues remained unchanged at approximately $6.5 million for the
three months ended June 30,1998 as compared to the same period last year.
Revenue during this period remained unchanged despite a 25% increase in minutes
of traffic for the three months ended June 30, 1998 as compared to the same
period last year. This resulted in an average decrease of $0.20 per minute in
rate charges.
COST OF REVENUES. Cost of revenues increased $ 0.1 million (2.4%), from $4.1
million for the three months ended June 30, 1997 to $4.2 million for the three
months ended June 30, 1998. Cost of revenues as a percentage of sales increased
from 64.1% to 65.4%, This increase in the Company's costs as a percentage of
revenues primarily reflects declining retail prices, the development of the less
profitable wholesale business, and increasing incremental non-billable access
costs associated with the Company's call reorigination business.
GROSS PROFITS. Gross profit decreased $0.1 million (4.3%) from $2.3 million for
the three months ended June 30, 1997 to $2.2 million for the three months ended
June 30, 1998. As a percentage of revenue gross profit decreased 1.3% from 35.9%
during the three months ended June 30, 1997 to 34.6% for the three months ended
June 30, 1998. Gross profit decreased because sales per minute decreased faster
than cost per minute. In addition, declining retail prices tend to reduce gross
revenues before the benefits of the negotiated volume-based rate reductions by
carriers can be realized. The reduction in prices came as a result of, among
other things, a competitive deregulated market and the Company's strategic
decision to gain market share and increase minutes through more competitive
prices. By increasing total minutes purchased not only through aggressive retail
expansion, but also through expansion of its wholesale business, the Company
expects to see reductions in the rates it pays for switched minutes through
volume discounts and other mechanisms. For the three months ended June 30, 1998
as compared to the three months ended June 30, 1997 costs per minute has
decreased 18% or an average of $0.12 per minute.
OPERATING EXPENSES. Operating expenses increased $0.5 million (29.4%) from $1.7
million for the three months ended June 30, 1997 to $2.2 million for the three
months ended June 30, 1998. The increase was due to increased selling general
and administrative expenses consisting primarily of salaries, benefits and
bonuses for additional executives, and additional marketing and accounting
personnel as a result of internal expansion and the Company's Offering. As a
percentage of revenues operating expenses increased 6.2% from 27% to 33.2%.
Depreciation and amortization expense increased approximately $48,000 (120%)
from approximately $40,000 for the three months ended June 30, 1997 to
approximately $88,000 for the three months ended June 30, 1998 as a result of
switch upgrades, the purchase of additional computer equipment and software, and
leasehold improvements.
OTHER INCOME (EXPENSE). Other income(expense) was approximately $78,000 of
income for the three months ended June 30, 1998 as compared to an expense of
$8,000 for the three months ended June 30, 1997 primarily because of investment
income derived from the invested proceeds of the Offering.
OPERATING INCOME. Operating income decreased $0.5 million from $0.6 million for
the three months ended June 30, 1997 to $0.1 million for the three months ended
June 30, 1998 primarily as a result of a 1.3% decrease in gross margin, a 70%
increase in selling general and administrative expenses and a 120% increase in
depreciation.
NET INCOME. As a result of all of the foregoing factors, particularly a 29.4%
increase in operating expenses, and in light of the Company's strategic decision
to increase its gross revenues and market share through price reductions, the
Company's net income decreased approximately $0.3 million from approximately
$0.4 million for the three months ended June 30, 1997 to approximately $0.1
million for the three months ended June 30, 1998. Management believes that the
Company's strategy to increase market share thereby increasing the
underlying minutes of traffic, will result in lower costs per minute as the
benefits from negotiated volume based rate reductions by carriers may be
realized.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements consist of capital expenditures in connection
with the acquisition and maintenance of switching capacity and working capital
requirements. Historically, the Company's capital requirements have been met
primarily through funds provided by operations, term loans funded or guaranteed
by its majority shareholder and capital leases.
Net cash used in operating activities was $0.1 million for the three months
ended June 30, 1997 and $0.4 million for the three months ended June 30, 1998.
The net cash used in operating activities in the first quarter ended June 30,
1997 and 1998 mainly reflects net earnings being offset by an increase in
accounts receivable from customers resulting primarily from longer payment
cycles from the Company's agents, relative to the Company's accounts payable to
carriers.
Net cash used in investing activities was approximately $74,000 for the three
months ended June 30, 1997 and approximately $200,000 for the three months ended
June 30, 1998 reflecting an increase caused by equipment purchases.
Net cash used in financing activities was approximately $127,000 for the three
months ended June 30, 1997 as compared to $12.2 million for the three months
ended June 30, 1998. The increase was the result of the Company's Offering,
which after the expenses of such Offering accounted for an increase in cash of
approximately $11.6 million.
The Company expects that the net proceeds from the Offering, together with
internally generated funds, will provide sufficient funds for the Company to
expand its business as planned and to fund anticipated growth for the next 12 to
16 months. However, the amount of the Company's future capital requirements will
depend upon many factors, including performance of the Company's business, the
rate and manner in which it expands, staffing levels and customer growth, as
well as other factors not within the Company's control, including competitive
conditions and regulatory or other government actions. If the Company's plans or
assumptions change or prove to be inaccurate or the net proceeds of the
Offering, together with internally generated funds or other financing, prove to
be insufficient to fund the Company's growth and operations, then some or all of
the Company's development and expansion plans could be delayed or abandoned, or
the Company may be required to seek additional funds earlier than anticipated.
In order to provide flexibility for potential acquisition and network expansion
opportunities, the Company may seek in the near future to enter into a financing
arrangement. Other future sources of capital for the Company could include
public and private debt, including a high yield debt offering, and equity
financing. There can be no assurance that any such sources of financing would be
available to the Company in the future or, if available, that they could be
obtained on terms acceptable to the Company. While such a financing may provide
the Company additional capital resources that may be used to implement its
business plan, the incurrence of indebtedness could impose risks, covenants and
restrictions on the Company that may affect the Company in a number of ways,
including the following: (i) a significant portion of the Company's cash flow
from operations may be required for the repayment of interest and principal
payments arising from the financing, with such cash flow not being available for
other purposes; (ii) such a financing could impose covenants and restrictions on
the Company that may limit its flexibility in planning for, or reacting to,
changes in its business or that could restrict its ability to redeem stock,
incur additional indebtedness, sell assets and consummate mergers,
consolidations, investments and acquisitions; and (iii) the Company's degree of
indebtedness and leverage may render it more vulnerable to a downturn in its
business or in the telecommunications industry or the economy generally.
SEASONALITY
The Company has historically experienced, and expects to continue to experience,
a decrease in the use of its services in the months of August and December due
to the closing of many businesses for holidays in Europe and the United States
during those months.
YEAR 2000
The Company is currently in the process of evaluating whether it will
encounter any problems related to the year 2000. These problems, which have been
widely reported in the media, could cause malfunctions in certain software and
databases with respect to dates on or about 2000. Most of the Company's computer
systems, software and databases are proprietary to the Company and are year 2000
compliant. The Company is in the process of evaluating if carriers and other
third parties with which it contracts for services anticipate any year 2000
difficulties, and if so whether those problems would be of a nature that could
adversely affect the Company. The Company will request that such third parties
advise the Company as to whether or not they anticipate any difficulties in
addressing year 2000 problems and, if so, whether or not the Company would be
adversely affected by any of such problems. Until such time as these parties
respond to the Company, the impact of year 2000 on the Company's business,
results of operations and financial condition cannot be assessed with certainty,
although the Company does not believe year 2000 issues will have a material
adverse impact on it. The Company will continue to monitor the impact on the
Company of issues related to the year 2000.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
<TABLE>
<CAPTION>
Item 2. Changes in Securities and Use of Proceeds
<S> <C>
Effective Date of the Company's Registration Statement: May 12, 1998
Commission File Number: 333-46197
Date the Offering Commenced: May 18, 1998
Name of Managing Underwriter: Joseph Charles & Associates, Inc.
Class of Securities Registered: Common Stock
Amount registered: 1,500,000 shares of Common Stock(1)
Amount sold: 1,500,000 shares of Common Stock
Aggregate price of offering amount registered: $14,250,000
Aggregate offering price of amount sold: $14,250,000
Expenses: The expenses incurred for the Company's
account in connection with the Public Offering are as
follows:
Underwriting Discounts and Commissions $ 1,104,375
Non-accountable expense allowance 427,500
Professional fees 556,350
Consulting fees 72,000
Listing, printing and related fees 298,800
Other Expenses 152,400
--------
Total Expenses $ 2,601,425
</TABLE>
None of the expenses of the Offering consisted of direct or indirect payments to
(i) directors, officers, general partners or affiliates of the Company, (ii)
persons owning 10 percent or more of any class of equity securities of the
Company, or (iii) affiliates of the Company.
Net proceeds to the Company from the Public Offering, after deducting the total
expenses described above, were approximately $11.6 million. As of the filing of
this Form 10-Q, the Company has not utilized any of the proceeds from its
initial public offering.
- ----------------
(1) Excludes 200,000 shares of Common Stock registered on behalf of certain
shareholders of the Company. The Company will not receive any proceeds upon
the sale of these securities.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
Exhibits 27.1-- Financial Data Schedule
Reports on Form 8-K --There were no reports on Form 8-K filed by the Company
during the three months ended June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
URSUS TELECOM CORPORATION
By: /S/ JOHANNES SEEFRIED
Johannes S. Seefried
Chief Financial Officer
and authorized officer of registrant
Dated: AUGUST 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 12,611,664
<SECURITIES> 0
<RECEIVABLES> 4,226,446
<ALLOWANCES> (94,080)
<INVENTORY> 0
<CURRENT-ASSETS> 17,252,030
<PP&E> 1,647,389
<DEPRECIATION> (510,170)
<TOTAL-ASSETS> 19,113,048
<CURRENT-LIABILITIES> 3,987,750
<BONDS> 0
0
10
<COMMON> 65,000
<OTHER-SE> 14,695,618
<TOTAL-LIABILITY-AND-EQUITY> 19,113,048
<SALES> 0
<TOTAL-REVENUES> 6,467,436
<CGS> 0
<TOTAL-COSTS> 4,227,869
<OTHER-EXPENSES> 2,151,244
<LOSS-PROVISION> 28,117
<INTEREST-EXPENSE> 10,350
<INCOME-PRETAX> 166,786
<INCOME-TAX> 75,861
<INCOME-CONTINUING> 91,105
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,105
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
