<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
_____________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 16, 1998
US WATS, INC.
-------------
(Exact name of Registrant as Specified in its Charter)
0-22944
(Commission File Number)
New York 22-3055962
-------- ----------
(State of Other Jurisdiction of Incorporation) (IRS Employer Identification
Number)
111 Presidential Boulevard
Suite 114
Bala Cynwyd, Pennsylvania 19004
-------------------------------
(Address, including zip code, of Registrant's Principal Executive Offices)
(610) 660-0100
(Registrant's telephone number, including area code)
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Item 5. Other Events.
As a result of the receipt of $2,034,125 for the exercise of stock options by
two board members and the receipt of $1,439,638 in short-swing profits obtained
by a major shareholder's violation of Section 16(b) of the Securities and
Exchange Act of 1934 (see press release filed as exhibit 99.2 to this Form 8-
K), the Company is in compliance with the continued listing requirements of the
Nasdaq SmallCap Market.
Item 7. Financial Statements and Exhibits.
(a) None.
(b) The following is a balance sheet and statement of operations of the Company
as of April 30, 1998, which reflects the exercise of stock options and the
receipt of proceeds turned into the Company as a result of short-swing
profits from a shareholder, as stated in Item 5 above.
US WATS, INC.
BALANCE SHEET
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS 4/30/98
- ------ --------
Current Assets
Cash and Cash Equivalents $ 3,895
Accounts Receivable, Net of Allowance 7,289
Prepaid expenses and other 232
--------
Total Current Assets 11,416
--------
Property, Equipment & Leaseholds
Telecommunications equipment $ 3,885
Equipment 1,615
Software 652
Office furniture and fixtures 156
Leasehold improvements 36
--------
6,344
Less accumulated depreciation and amortization 3,623
--------
Total Property, Equipment & Leaseholds 2,721
--------
Other assets, principally deposits 197
--------
Total Assets $ 14,334
========
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities
Note payable $ 865
Capital lease obligations, current portion 268
Accounts payable 6,565
Accrued commissions 855
Accrued expenses and other 771
State and Federal taxes payable 1,172
--------
Total Current Liabilities 10,496
--------
Long-Term Liabilities, Capital Lease 296
Shareholders' Equity & Surplus 3,542
--------
Total Liabilities & Shareholders' Equity $ 14,334
========
</TABLE>
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US WATS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Four Months Ended
April 30, 1998
-----------------
<S> <C>
Revenue $15,624
Cost of sales 11,284
------
Gross profit 4,340
Selling, general and administrative expenses 4,653
------
Income (loss) from operations (313)
Other income
Interest income 24
Interest expense (79)
Other income 1,440
------
Income (loss) before income taxes 1,072
Income taxes --
------
Net income (loss) $ 1,072
======
(b) Exhibits
99.2 US WATS, Inc. Press Release dated April 22, 1998
</TABLE>
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SIGNATURE
---------
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 hereunto duly authorized.
US WATS, INC.
By:
--------------------------------
Name: Michael McAnulty
Title: Chief Financial Officer
Dated: June 16, 1998
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Exhibit 99.2
US WATS
- --------------------------------------------------------------------------------
for immediate release
Contact: Aaron Brown, Investor Relations
610-660-0100
US WATS, Inc. Receives $3.4 Million in New Capital;
Announces 1st Quarter 1998 Results
Bala Cynwyd, Pennsylvania (April 21, 1998) - US WATS, Inc. (NASDAQ: USWI)
announced today the following First Quarter 1998 vs. First Quarter 1997 results:
<TABLE>
<CAPTION>
Quarter Ended March 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenue $11,871,000 $13,507,000
Net Loss $ (398,000) $ (129,000)
Net Loss Per Share $ (.02) $ (.01)
</TABLE>
Stephen Parker, President and Chief Executive Officer, said, "Revenues for each
Quarter of 1997 were in the $13-14 million range except for the 2nd Quarter when
the Company hit a high of $15.8 million due to a higher than usual carrier-to-
retail mix of business. The Company now limits the amount of lower margin
carrier business it accepts. Revenues for the 1st Quarter of 1998 vs. 1997 were
down $1,636,000 or 12% while losses, including non-operating losses, increased
to $269,000. However, operating losses have now significantly slowed as we
continue to get our costs under control.
"The Board decided that the Company needed a stronger balance sheet while
pursuing strategic alliances and growth initiatives. Consequently, Aaron Brown,
Chairman, and I have recently exercised over $2 million worth of options. Also,
Gold & Appel Transfer, S.A., the Company which as previously reported, allegedly
violated Section 16(b) of the Securities Exchange Act of 1934, has upon demand,
turned over approximately $1.4 million in short-swing profits. Thus, as of
today, the Company goes forward with an additional $3.4 million in cash and its
strongest balance sheet in its history. These funds come without any outside
financing and no additional dilution to our shareholders and will support an
aggressive, regionally focused expansion program.
"From October 1997 through March 1998, the Company was constrained in several
respects by a Definitive Merger Agreement which terminated in March.
Significant sales and operating initiatives were delayed during this period.
Given the cash infusion described above, the Company now intends to proceed with
those initiatives, which include a highly aggressive agent recruitment program
in all our on-net markets, more aggressive pricing to our agents, and new
switching facilities, which will allow us to expand more rapidly, and to better
support our entry into local service for our business customers. The Company is
scheduled to enter the lucrative business of providing local service and
packaging it with its full array of services in the third quarter including
internet services. Our ownership interest in NetReach, a regional Internet
access provider, enables us to offer businesses a full range of Internet
services. We anticipate that a significant number of our current business
customers will select us as their local carrier and we
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anticipate substantial additional revenues as a result. We expect that revenues
will increase to previous levels and beyond in the near term."
This release contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to documents filed by US WATS with the U.S.
Securities and Exchange Commission, specifically the most recent Form 10-K.
US WATS' most recent news releases and quarterly summary reports are available
via facsimile by calling "Company News On-Call" at 800-758-5804, extension
number 926713. This electronic, menu-driven system of PR NEWSWIRE, allows
callers to receive, at no charge, specific "USWI" news releases and quarterly
reports within minutes of request.
________________________________________________________________________________
111 Presidential Boulevard, Suite 114, Bala Cynwyd, Pennsylvania 19004
telephone - 610/660-0100 -- fax - 610/660-0335
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