U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 1-1200
EUROWEB INTERNATIONAL CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3696015
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
445 Park Avenue, 15th Floor, New York, NY 10022
(Address of principal executive offices)
(212) 758-9870
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $.001 par value 6,534,916 Shares
(Class) (Outstanding at March 31, 1999)
Transitional Small Business Disclosures Format (Check one): Yes
No X
<PAGE>
EUROWEB INTERNATIONAL CORP.
INDEX
PART I. Financial Information
Item 1. Financial Statements
Consolidated balance sheets as of March 31, 1999 (unaudited)
and December 31, 1998 (audited) 2
Consolidated statements of operations and comprehensive loss
(unaudited) for the three months ended March 31, 1999 and 1998 3
Consolidated statements of stockholders' equity (unaudited) for
the three months ended March 31, 1999 and 1998 4
Consolidated statements of cash flows (unaudited) for the three
months ended March 31, 1999 and 1998 5
Notes to consolidated financial statements (unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II. Other Information 15
Signature 18
<PAGE>
EUROWEB INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
March 31, 1999 December 31, 1998
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $2,331,748 $1,688,280
Certificate of deposit 1,016,482 1,006,567
Current portion of note receivable 144,699 641,785
Current portion of loan receivable 85,954 -
Receivable from Euroweb Rt. 35,388 101,103
Investment in Hungarian Broadcasting Corp. 147,417 156,443
Prepaid and other current assets 110,818 128,027
Total current assets 3,872,506 3,722,205
Note receivable, less current portion 820,742 858,215
Loan receivable, less current portion 43,988 -
Investment in Euroweb Rt., at equity 744,837 730,813
$5,482,073 $5,311,233
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 196,574 $ 225,590
Deposit payable 200,000 -
Total current liabilities 396,574 225,590
Commitments
Stockholders' Equity
Preferred stock, $.001 par value - shares
authorized 5,000,000; no shares outstanding
Common stock, $.001 par value - shares
authorized 15,000,000; issued and
outstanding 6,534,916 and 6,444,916 6,535 6,445
Additional paid-in capital 20,976,762 20,886,852
Accumulated deficit (15,822,711) (15,760,679)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (45,086) (26,000)
Unrealized loss on investment in Hungarian
Broadcasting Corporation (30,001) (20,975)
Total stockholders' equity 5,085,499 5,085,643
$5,482,073 $5,311,233
See accompanying notes to consolidated financial statements.
<PAGE>
EUROWEB INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
March 31,
1999 1998
Revenues
Internet $ - $ 384,900
Expenses(Income)
Compensation and related costs 73,472 156,946
Network costs - 171,240
Consulting and professional fees 70,477 43,450
Rent 6,056 33,004
Depreciation and amortization - 19,073
Amortization of goodwill - 97,000
Interest and dividend income (57,862) (16,708)
Interest expense - 1,795
Equity in net income of Euroweb Rt. (33,110) -
Other 2,999 43,680
Total 62,032 549,480
Loss from continuing operations (62,032) (164,580)
Loss from discontinued operations - (90,505)
Net loss (62,032) (255,085)
Other comprehensive loss:
Foreign currency translation loss (19,086) (12,135)
Unrealized loss on investment in
Hungarian Broadcasting Corporation (9,026) -
Comprehensive loss $(90,144) $(267,220)
Net loss per share - basic and diluted
Continuing operations $ (.01) $ (.03)
Discontinued operations (.- ) (.02)
$ (.01) $ (.05)
Weighted average number of shares
outstanding 6,475,694 5,026,039
See accompanying notes to consolidated financial statements
<PAGE>
EUROWEB INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
Accumulated Other
Comprehensive Gains(Losses)
Unrealized
Loss on
Foreign Investmentin
Additional Currency Hungarian
Common Stock Paid-in Accumulated Translation Broadcasting
Shares Amount Capital Deficit Adjustment Corporation
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1999:
Balance, January 1, 1999 6,444,916 $6,445 $20,886,852 $(15,760,679) $(26,000) $(20,975)
Exercise of common stock options 90,000 90 89,910 - - -
Foreign currency translation loss - - - - (19,086) -
Unrealized loss on investment
in Hungarian Broadcasting
Corporation - - - - - (9,026)
Net loss for the period - - - (62,032) - -
Balance, March 31, 1999 6,534,916 $6,535 $20,976,762 $(15,822,711) $(45,086) $(30,001)
THREE MONTHS ENDED
MARCH 31, 1998:
Balance, January 1, 1998 4,949,936 $4,950 $19,770,725 $(16,188,203) $(35,900) $ -
Issuance of shares on
conversion of debentures 228,310 228 49,772 - - -
Net loss for the period - - - (255,085) - -
Foreign currency
translation loss - - - - (12,135) -
Balance, March 31, 1998 5,178,246 $5,178 $19,820,497 $(16,443,288) $(48,035) $ -
See accompanying notes to consolidated financial statements.
<PAGE>
EUROWEB INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1999 1998
Cash flows from operating activities
Net loss $ (62,032) $(255,085)
Adjustments to reconcile net loss to net cash
provided by(used in) operating activities:
Depreciation and amortization of property
and equipment - 19,073
Amortization of goodwill - 97,000
Equity in net income of Euroweb Rt. (33,110) -
Foreign currency loss - 41,576
Changes in operating assets and liabilities:
(Increase)decrease in:
Accounts receivable - (224,433)
Receivable from Euroweb Rt. 65,715 -
Prepaid and other current assets 17,209 8,189
Increase(decrease) in:
Accounts payable and accrued expenses (29,016) 200,972
Deposit payable 200,000 -
Deferred revenue - 50,000
Net cash provided by (used in) operating activities 158,766 (62,708)
Cash flows from investing activities
Receivable from Hungarian Broadcasting Corporation - (1,159)
Certificates of deposit (9,915) -
Repayment of note receivable 534,559 -
Proceeds of loan receivable (150,000) -
Repayment of loan receivable 20,058 -
Acquisition of intangibles - (22,056)
Payable to former owners of business acquired - (15,000)
Net cash provided by(used in) investing activities 394,702 (38,215)
Cash flows from financing activities
Exercise of common stock options 90,000 -
Effect of foreign exchange rate changes on cash - (53,711)
Increase(decrease) in cash and cash equivalents 643,468 (154,634)
Cash and cash equivalents at beginning of period 1,688,280 697,948
Cash and cash equivalents at end of period $2,331,748 $ 543,314
See accompanying notes to consolidated financial statements.
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of
Euroweb International Corp., (the "Company") and its wholly-owned
subsidiaries. The operations of Euroweb Rt., a wholly-owned Hungarian
subsidiary in the Internet business, were included in the consolidated
financial statements through November 20, 1998, at which date the
Company sold 51% of its interest in Euroweb Rt. The remaining 49%
interest is carried on the equity method. All material intercompany
balances and transactions have been eliminated.
Certain 1998 items have been reclassified to conform to the 1999
presentation.
(b) Use of Estimates and Assumptions
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(c) Fiscal Year
The Company's reporting period is the fiscal year ending
December 31.
(d) Revenue Recognition
Revenues from monthly Internet services were recognized in the
month in which the services were provided.
(e) Foreign Currency Translation
The Company uses the local currency, the Hungarian forint, as
the functional currency for measuring the accounts of Euroweb
Rt., in which it reduced its interest from 100% to 49% on
November 20, 1998. It translates all assets and liabilities at
exchange rates in effect at the balance sheet date and all
income and expense accounts at average rates, and records
adjustments resulting from the translation in a separate
component of stockholders' equity.
(f) Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(g) Fair Value of Financial Instruments
The carrying values of cash equivalents, certificates of
deposit, note and loan receivable, accounts payable and accrued
expenses approximate fair values.
(h) Investment in Euroweb Rt.
The Company's 49% equity interest in Euroweb Rt. is accounted
for using the equity method, under which the Company records as
income its share of the earnings, net of the amortization of
goodwill, and dividends are credited against the investment
account when declared. The excess of the carrying value of the
Company's investment over its equity in the fair value of the
underlying net assets (goodwill) of approximately $586,000 at
the acquisition date is amortized over an estimated remaining
useful life of three years.
(i) Income Taxes
The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." This statement requires
a liability approach for measuring deferred taxes based on
temporary differences between the financial statement and income
tax bases of assets and liabilities existing at the balance
sheet date, using enacted rates for the years in which the taxes
are expected to be paid or recovered.
(j) Net Loss Per Share
During 1997, the FASB issued SFAS No. 128, "Earnings per Share,"
("SFAS No. 128"), which provides for the calculation of "basic"
and "diluted" earnings per share. This statement became
effective for financial statements issued for periods ending
after December 15, 1997. Basic earnings per share include no
dilution and are computed by dividing income available to common
stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflect,
in periods in which they have a dilutive effect, the effect of
common shares issuable upon exercise of stock options and
warrants.
(k) Comprehensive Income
The Company adopted SFAS No. 130, "Reporting Comprehensive
Income", which established standards for reporting and display
of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures,
SFAS 130 requires that all items that are required to be
recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial
statements.
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
2. Organization, Business and Discontinued Operations
The Company is a Delaware corporation which was organized on November 9,
1992. On January 2, 1997, the Company acquired three Hungarian
Internet service companies for a purchase price of approximately
$1,913,000. These acquisitions were accounted for using the purchase
method of accounting. The Company operated the Internet service
companies through its wholly-owned subsidiary, Euroweb Rt.
On November 20, 1998, the Company sold a 51% interest in Euroweb Rt.
for $2,200,000, recognizing a gain of $1,516,548 on the sale.
Pursuant to the non-compete provision of the shareholders' agreement,
the Company cannot: (i) engage in any business activity in Hungary
listed in the scope of activities of Euroweb Rt.'s charter, (ii) own
or control any equity interest in any person or entity that engages
in any such business activity or (iii) permit any of its employees
to act as a director, officer, manager or consultant to any person
or entity that engages in any such business activity. If the Company
breaches its obligation set forth under this provision, the Company
will be required to sell to the other shareholder all its shares at
the time of such breach at a price equal to the nominal value of such
shares.
The Company's consolidated statements of operations include the
equity in net income of Euroweb Rt. for the three months ended March
31, 1999 and the results of operations of Euroweb Rt. for the three
months ended March 31, 1998. Operating data for Euroweb Rt. for the
three months ended March 31, 1999 include the following:
Revenues $625,718
Net Income $159,167
Company's 49% equity in net income $ 77,992
Amortization of the excess of the
carrying value of the Company's
investment over its equity in the
fair value of the underlying net
assets (44,882)
Equity in net income of Euroweb Rt. $ 33,110
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
The Company is currently seeking to acquire other Internet service
companies in Central and Eastern Europe.
During 1998, the Company completed the sale of all of the apartments
in one of two condominium buildings constructed by the Company. The
purchaser of all of the apartments, except for one, was the Company's
former President. In December 1998, the former President also
purchased all of the outstanding shares of stock of the Company's
wholly-owned construction subsidiary for $1,500,000, which yielded
a loss of $119,678. The subsidiary's only significant asset was the
second condominium building. The sales price was satisfied by a
payment of $500,000 in January 1999 and the issuance of a promissory
note of $1,000,000 payable in sixty equal monthly installments
including interest at approximately 7.3% per annum. The note is
collateralized by the building. With the sale of the construction
subsidiary, the Company has exited the construction business and,
accordingly, the construction operations have been classified as
discontinued for the three months ended March 31, 1998. Revenues for
that period were $1,723,870 and the loss from operations was $90,505
($.02 per share).
3. Interim Periods
The accompanying consolidated financial statements for the three
months ended March 31, 1999 and 1998 are unaudited but, in the
opinion of management, include all adjustments, consisting mainly of
normal recurring accruals necessary for fair presentation. Results
for the interim periods are not necessarily indicative of the results
for a full year.
4. Incorporation by Reference
Reference is made to the Company's annual report on Form 10-KSB for
the fiscal year ended December 31, 1998 and to the notes to the
consolidated financial statements included therein, which are
incorporated herein by reference.
5. Cash Concentration
At March 31, 1999, cash and cash equivalents included $102,076 and
$542,460 on deposit in the United States with a money market fund and
major money center bank, respectively, and four certificates of
deposit of a major U.S. money center bank aggregating $1,680,605.
In addition, $6,607 was on deposit in a Hungarian bank.
6. Investment in Hungarian Broadcasting Corp.
On June 30, 1998, the Company settled its receivable of $177,418 from
Hungarian Broadcasting Corp. ("HBC"), a public company, by receiving
68,732 restricted shares of HBC common stock which are subject to a
lock-up through June 30, 1999. The 68,732 shares represent less than
3% of HBC's total outstanding shares of common stock. The valuation
of the stock represented a discount of 30% from its market value on
that date. The investment is carried at current market value and the
Company has classified it as available for sale with the unrealized
loss of $30,001 recorded in a separate component of stockholders'
equity.
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
7. Loan Receivable
In January 1999, the Company loaned $150,000 to its Vice-President
for the purpose of buying an apartment in Budapest. The loan is
repayable in 21 monthly installments of $8,000, including interest
at 11% per annum. The loan is collateralized by the Vice-President's
apartment.
8. Capital Stock, Stock Options and Warrants
During the first quarter of 1999, options which were previously
granted to two officers for the purchase of shares of the Company's
common stock were exercised. One officer exercised options for
35,000 shares at $1.00 per share; the second officer exercised
options for 55,000 shares at $1.31 per share.
During April and May 1999, the Company sold the following shares of
its common stock in four private placements:
152,380 shares at $1.31 per share to a company owned
by the Company's former President for which
a $200,000 deposit was received in March 1999
565,141 shares at $1.31 per share
942,841 shares at $1.75 per share
500,000 shares at $1.50 per share
Total 2,160,362 shares
The purchasers of the 942,841 shares also received three-year
warrants to purchase 942,841 shares at $2.00 per share and 942,841
shares at $2.25 per share.
A private placement agent received 106,520 warrants to purchase
shares of common stock at $2.10 per share. In addition, the Company
issued 200,000 warrants exercisable at $2.00 per share to three
public relations consulting firms.
During April 1999, the Company also granted a total of 1,000,000
common stock options to its Chairman of the Board, President and Vice
President. The options are exercisable over seven years at a price
of $1.625 per share.
The Board of Directors has approved an increase in the number of
shares issuable under the Company's 1993 Incentive Stock Option Plan
from 350,000 to 670,000. This increase is subject to approval by the
stockholders at the annual meeting to be held on May 21, 1999.
9. Commitments
Employment agreements with the three officers of the Company provide
for aggregate annual compensation of $318,000 through September 30,
2004 and $150,000 thereafter through December 31, 2005.
The Company will also provide the Chairman of the Board with a split
dollar life insurance policy in the face amount of $2,000,000 to be
structured so that the premium and other costs paid by the Company
would be recovered by the Company out of the insurance proceeds.
<PAGE>
EUROWEB INTERNATIONAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
10. Subsequent Events
The Company has signed a letter of intent to acquire a 51% interest
in EUnet Slovakia, a Slovakian Internet provider for $80,000 cash and
$200,000 worth of the Company's common stock. In addition, the
Company would contribute $100,000 as additional capital. During the
next two years, the Company may, under certain conditions, pay an
additional $30,000 per year to the original owners. The Company will
also have a four-year option to buy an additional 25% interest for
$350,000 cash.
The Company has also signed a letter of intent to acquire a 100%
interest in Luko Czech Net, an Internet service provider in the Czech
Republic for $900,000 cash and up to $900,000 of the Company's stock
(450,000 shares at $2 per share).
At May 10, 1999, both of the above acquisitions are subject to
completion of satisfactory due diligence procedures.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operations
The Company is a Delaware corporation which was organized on November 9,
1992. It was a development stage company through December 31, 1993.
Its wholly-owned Hungarian subsidiary, Teleconstruct Epitesi Kft
("Teleconstruct"), a limited liability company, was organized on March
19, 1993. The subsidiary had two operating business segments: (1)
building of condominium apartments and building renovation and (2)
design and civil engineering, and laying of underground fiber optic
telephone and cable lines. The latter segment was discontinued in 1994.
The shares of the subsidiary, Teleconstruct, were sold in December 1998.
With the sale of Teleconstruct, the Company has exited the construction
business and accordingly, the construction operations have been
classified as discontinued operations for the first quarter of 1998.
In January 1997, the Company acquired three operating Internet service
provider businesses and consolidated the three businesses under one
roof. At present, Euroweb Rt. ("Euroweb") is a leading Internet service
provider operating in Hungary that provides full Internet and Web Site
solutions and services primarily to businesses. Euroweb's services
include providing access to an international backbone and design of web
sites. Euroweb markets its services principally to medium-sized and
large companies.
On November 20, 1998, the Company sold a 51% interest in Euroweb Rt.
The Company's consolidated statements of operations include the equity
in net income of Euroweb Rt. for the three months ended March 31, 1999
and the results of its operations for the three months ended March 31,
1998.
Revenues of Euroweb Rt. for the first quarter of 1999 amounted to
$625,718. This represented a substantial increase from the revenues of
$384,900 for the first quarter of 1998 and was primarily due to the sale
of more leased lines to business customers. Net income of Euroweb Rt.
before amortization of goodwill for the 1999 period was $159,167
compared to net income of $43,987 in 1998.
Equity in net income of Euroweb Rt. of $33,110 represents 49% of the
subsidiary's net income less amortization of goodwill.
The consolidated net loss for the three months ended March 31, 1999
amounted to $62,032 ($.01 per share) compared to a net loss of $255,085
($.05 per share) in 1998.
The loss from discontinued operations of $90,505 ($.02 per share) in the
1998 period represents the first quarter's loss from operations incurred
by the construction business which was sold in December 1998.
Liquidity and Capital Resources
During November 1998, the Company sold 51% of its interest in Euroweb
Rt. for $2,200,000.
In December 1998, the Company sold its holdings of shares in its
subsidiary Teleconstruct Epitesi Kft. for $1,500,000 consisting of
$500,000 in cash and a mortgage for $1,000,000 payable over six years
with interest of 8 1/8% per year.
During the first quarter of 1999, options which were previously granted
to two officers for the purchase of shares of the Company's common stock
were exercised. One officer exercised options for 35,000 shares at
$1.00 per share; the second officer exercised options for 55,000 shares
at $1.31 per share.
<PAGE>
During April and May 1999, the Company sold the following shares of its
common stock in four private placements:
152,380 shares at $1.31 per share to a company owned
by the Company's former President for which
a $200,000 deposit was received in March 1999
565,141 shares at $1.31 per share
942,841 shares at $1.75 per share
500,000 shares at $1.50 per share
Total 2,160,362 shares
The purchasers of the 942,841 shares also received three-year warrants
to purchase 942,841 shares at $2.00 per share and 942,841 shares at
$2.25 per share.
A private placement agent received 106,520 warrants to purchase shares
of common stock at $2.10 per share. In addition, the Company issued
200,000 warrants exercisable at $2.00 per share to three public
relations consulting firms.
During April 1999, the Company also granted a total of 1,000,000 common
stock options to its Chairman of the Board, President and Vice
President. The options are exercisable over seven years at a price of
$1.625 per share.
The Board of Directors has approved an increase in the number of shares
issuable under the Company's 1993 Incentive Stock Option Plan from
350,000 to 670,000. This increase is subject to approval by the
stockholders at the annual meeting to be held on May 21, 1999.
At March 31, 1999, the Company's cash and cash equivalents aggregated
$2,331,748 and it owned a one-year certificate of deposit for
$1,016,482. The Company presently anticipates that its current cash
position and its cash flows from current operations as well as the
issuances of additional shares of capital stock discussed above will be
sufficient to meet its presently anticipated working capital and capital
expenditure requirements for at least the next 12 months.
The Company has signed a letter of intent to acquire a 51% interest in
EUnet Slovakia, a Slovakian Internet provider for $80,000 cash and
$200,000 worth of the Company's common stock. In addition, the Company
would contribute $100,000 as additional capital. During the next two
years, the Company may, under certain conditions, pay an additional
$30,000 per year to the original owners. The Company will also have a
four-year option to buy an additional 25% interest for $350,000 cash.
The Company has also signed a letter of intent to acquire a 100%
interest in Luko Czech Net, an Internet service provider in the Czech
Republic for $900,000 cash and up to $900,000 of the Company's stock
(450,000 shares at $2 per share).
At May 10, 1999, both of the above acquisitions are subject to
completion of satisfactory due diligence procedures.
The Year 2000
Euroweb utilizes a significant number of computer software programs and
operating systems throughout its organization, including applications
used in operating the basic Internet service, network access, providing
content and fulfilling various administrative and billing functions.
Since Internet technology is constantly improving, both the hardware and
software elements which are provided by third parties must be upgraded
at intervals ranging from three to twelve months. A survey by Euroweb
has shown that approximately 90% of these elements are standard software
such as Unix and hardware such as Cisco routers and Sun computers which
have already been corrected. The remaining hardware and software will
be updated or replaced in the near future. Furthermore, Euroweb has
developed some of its own special software applications which
have already incorporated the necessary modifications to operate
properly in the Year
<PAGE>
2000. The Company is prepared to replace certain computer elements
wherever necessary during calendar year 1999, but management does not
believe that this would have any material adverse effect on the
Company's operations or its financial results.
Euroweb does not separately identify costs incurred in connection with
Year 2000 compliance activities. To date, however, the Company does not
believe such costs to be significant since most of the hardware must be
replaced at intervals ranging from three to twelve months. Future
expenditures are not expected to be significant.
Inflation and Seasonality
Internet operations are not seasonal.
Cautionary Statement for Purpose of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.
Except for historical information provided in the Management's
Discussion and Analysis, statements made throughout this document are
forward-looking and contain information about financial results,
economic conditions, trends and known uncertainties. The Company
cautions the reader that actual results could differ materially from
those expected by the Company, depending on the outcome of certain
factors (some of which are described with the forward-looking
statements) including: 2) heightened competition, particularly price
competition, reducing margins; and 2) slower growth than expected in the
market for Internet services in Hungary.
<PAGE>
PART II
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits (numbers below reference Regulations S-B)
(3)(a) Certificate of Incorporation filed November 9, 1992(1)
(b) Amendment to Certificate of Incorporation filed July 9,
1997
(c) By-laws(1)
(4)(a) Form of Common Stock Certificate(1)
(b) Form of Underwriters' Warrants to be sold to Underwriters(1)
(c) Placement Agreement between Registrant and J.W. Barclay
& Co., Inc. and form of Placement Agent Warrants issued
in connection with private placement financing(1)
(d) Form of 10% Convertible Debenture used in connection
with offshore private placement financing pursuant to
Regulation S(3)
(e) Form of Common Stock Purchase Warrant in connection
with private placement financing under Section 506 of
Regulation D(3)
(10)(a) Consulting agreement between Registrant and Klenner
Securities Ltd.(1)
(b) Consulting agreement between Registrant and Robert Genova(1)
(c) Consulting agreement between Registrant and Laszlo Modransky(1)
(d) 1993 Incentive Stock Option Plan(1)
(e) Sharing agreement for space and facilities between
Registrant and Hungarian Telephone and Cable Corp.(1)
(f) Articles of Association (in English) of Teleconstruct
Building Corp.(1)
(g) Articles of Association (in English) of Termolang
Engineering and Construction Ltd.(1)
<PAGE>
(h) Letter of intent between Teleconstruct Building Corp.
and Pilistav(1)
(i) Employment agreement between Registrant and Robert
Genova(2) and termination agreement dated February 5,
1997(3)
(j) Employment agreement between Registrant and Peter E.
Klenner(2) and termination agreement dated October 30,
1996, and agreement for sale of condominium unit to M&A
as amended(3)
(k) Employment agreement between Registrant and Frank R.
Cohen(2) and modifications of employment agreement(3)
(l) Letter of Intent agreement between Registrant and Raba-Com
Rt.(3)
(m) Letter of Intent agreement between Registrant and
Kelet-Nograd Rt.(3)
(n) Letter of Intent agreement between Registrant and 3
Pilistav villages for installation of cable in those
areas(3)
(o) Lease agreement between Registant's subsidiary EUNET
Kft. and Varosmajor Passage, Kft. for office space(3)
(p) Acquisition agreement between Registrant and KFKI
Computer Systems Corp. dated December 13, 1996(3)
(q) Acquisition agreement between Registrant and E-Net
Hungary(3)
(r) Acquisition agreement between Registrant and MS Telecom
Rt.(3)
(s) Employment agreement between Registrant and Imre
Kovats(3)
(t) Employment agreement between Registrant and Csaba
Toro(3)
(u) Promissory Note from Registrant to HBC(3)
(v) Communication Services Agreement between Registrant and
MCI Global Resources, Inc.(4)
(w) Lease and Option Agreement for Building B as of April 1,
1998 with Hafisa Kft.(5)
(x) License Agreement between GRIC Communications, Inc. and
Euroweb International Corp.(5)
(y) Consulting Agreement between Registrant and Eurus
Capital Corporation and Rescission Agreement(7)
(y)(i) Agreement rescinding Option Agreement with Eurus Capital
Corporation(8)
(z) Financial Consulting Agreement between Registrant and
J.W. Barclay & Co., Inc.(7)
(aa) Mergers and Acquisitions Agreement between Registrant
and J.W. Barclay(7)
(bb) Placement Agreement between Registrant and J.P. Carey,
Inc. and form of Placement Agent Warrants issued in
connection with private placement financing(9)
(cc) Private Placement Agreement between Registrant and
Peter E. Klenner(9)
(dd) Employment Agreement between Registrant and Csaba
Toro(9)
(ee) Employment Agreement between Registrant and Robert
Genova(9)
(ff) Employment Agreement between Registrant and Frank R.
Cohen(9)
(gg) Placement Agreement between Registrant and JP Carey
Securities Inc. and Warrant Agreement in connection
with private placement financing(10)
<PAGE>
(hh) Private placement agreement between Registrant and M&A
Management(10)
(ii) Form of Subscription agreement in connection with
private offering of Common Stock and Warrants pursuant
to Rule 506 of Regulation D under Section 4(2) of the
Securities Act of 1933(10)
(1) All Exhibits are incorporated by reference to Registrant's
Registration Statement on Form SB-2 dated May 12, 1993
(Registration No. 33-62672-NY, as amended)
(2) Filed with Form 8-K as of February 17, 1994
(3) Filed with Form 10-KSB for year ended December 31, 1996
(4) Filed with Form 10-QSB for quarter ended September 30, 1997
(5) Filed with Form 10-KSB for year ended December 31, 1997
(6) Filed with Registration Statement 333-52841
(7) Filed with Amendment No. 1 to Registration Statement 333-52841
(8) Filed with Amendment No. 2 to Registration Statement 333-52841
(9) Filed with Form 8-K as of October 14, 1998
(10) Filed with Form 8-K as of April 21, 1999
<PAGE.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 11th
day of May 1999.
Euroweb INTERNATIONAL CORP.
By
Frank R. Cohen
Chairman of the Board
<PAGE>
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