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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
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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 29, 1999
US WATS, INC.
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(Exact name of Registrant as Specified in its Charter)
0-22944
(Commission File Number)
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<S> <C>
New York 22-3055962
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(State of Other Jurisdiction of Incorporation) (IRS Employer Identification Number)
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2 Greenwood Square, Suite 275
3331 Street Road
Bensalem, Pennsylvania 19020
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(Address, including zip code, of Registrant's Principal Executive Offices)
(215) 633-9400
(Registrant's telephone number, including area code)
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Item 5. Other Events
In June, 1997, the former President of US WATS, Mark Scully, commenced
litigation against the Company and some of its then officers and directors in
the United States District Court for the Eastern District of Pennsylvania.
Mr. Scully asserted, inter alia, that the Company breached a stock option
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agreement and an oral employment contract, and that the Company and the other
defendants engaged in fraud and misrepresentation in connection with the options
and Mr. Scully's employment. Claims were asserted for breach of contract,
violation of the Pennsylvania Wage Payment and Collection law, fraud and
negligent misrepresentation. Mr. Scully sought compensatory and punitive
damages in excess of $1.5 million, as well as liquidated damages and attorneys'
fees.
On June 9, 1999, the Court issued its decision and judgment was entered
in favor of Mr. Scully and against the Company and two former officers for the
sum of $626,442.20. The Company intends to appeal the decision and maintains
that the Court made a number of errors of law and that the Court applied the
wrong measure of damages. Mr. Scully has advised that he intends to appeal as
well, and that he intends to request attorneys' fees from the Court.
There can be no assurance that the Company will prevail in its appeal
or that Mr. Scully will not prevail in his appeal. In the event that the Company
is unsuccessful in prevailing in their appeal, or if Mr. Scully is successful in
prevailing in his appeal, the amount of damages could have a material adverse
effect on the Company.
SIGNATURE
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Pursuant to the requirements of the Securities and 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.
Date: June 29, 1999 By: /s/ Michael McAnulty
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Title: Chief Financial Officer
