<PAGE>
United States
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 April 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-21683
Unity First Acquisition Corp.
(Exact name of registrant as specified in its charter)
Delaware 13-3899021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
245 Fifth Avenue, Suite 1500
New York, New York 10016
(Address of principal executive offices) (Zip Code)
(212) 696-4282
(Registrant's telephone number, including area code)
(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
required 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. [X] Yes [ ] No
Applicable Only to Issuers Involved in Bankruptcy
Proceeding During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [ ] Yes [ ] No
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
1,875,000 shares of Common Stock at June 10, 1998
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements included herein have been
prepared by Unity First Acquisition Corp. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. While 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, the Company believes that the disclosures made
herein are adequate to make the information presented not misleading.
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
BALANCE SHEETS
================================================================================
ASSETS
April 30, 1998 July 31, 1997
(Unaudited)
Cash and cash equivalents $ 39,343 $ 266,533
Restricted cash and investments 6,415,845 6,198,488
---------- ----------
TOTAL ASSETS $6,455,188 $6,465,021
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accrued expenses $ 93,266 $ 67,634
Income taxes payable 3,400 3,575
---------- ----------
TOTAL LIABILITIES 96,666 71,209
---------- ----------
COMMITMENTS AND CONTINGENCIES
Common stock, $.0001 par value, 249,875
shares subject to possible conversion,
at conversion value 1,282,608 1,239,380
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000
shares authorized, no shares issued or
outstanding - -
Common stock, $.0001 par value, 20,000,000
shares authorized, 1,625,125 shares issued
and outstanding (excluding 249,875 shares
subject to possible conversion) 163 163
Additional paid-in capital 5,119,404 5,162,632
Retained earnings (deficit) accumulated
during the development stage (43,653) (8,363)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 5,075,914 5,154,432
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $6,455,188 $6,465,021
========== ==========
See Selected Notes to Financial Statements
1
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<TABLE>
<CAPTION>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
==============================================================================================================================
For The For The Cumulative
Nine Months Ended Three Months Ended Amounts
April 30, April 30, From Inception
------------------------ ------------------------ --------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
--------- --------- --------- --------- ----------
EXPENSES:
General and administrative 236,265 136,421 126,165 57,714 443,754
--------- --------- --------- --------- ----------
OTHER INCOME:
Interest and dividends 222,268 150,454 72,674 82,756 424,969
--------- --------- --------- --------- ----------
OPERATING (LOSS) INCOME (13,997) 14,033 (53,491) 25,042 (18,785)
PROVISION FOR INCOME TAXES 21,293 5,000 12,325 8,800 24,868
--------- --------- --------- --------- ----------
NET (LOSS) INCOME $ (35,290) $ 9,033 $ (65,816) $ 16,242 $ (43,653)
========= ========= ========= ========= ==========
BASIC NET (LOSS) INCOME PER
COMMON SHARE $ (.02) $ .01 $ (.04) $ .01
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,875,000 1,375,000 1,875,000 1,875,000
========= ========= ========= =========
</TABLE>
See Selected Notes to Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
==========================================================================================
Retained Earnings
(Deficit)
Accumulated
Common Stock Additional During the
--------------------- Paid-In Development
Shares Par Value Capital Stage Total
--------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance,
August 1, 1997 1,875,000 $ 163 $5,162,632 $ (8,363) $5,154,432
Net loss for the
nine months ended
April 30, 1998 - - - (35,290) (35,290)
Increase in value
attributable to
common shares
subject to possible
conversion - - (43,228) - (43,228)
--------- ----- ---------- -------- ----------
Balance,
April 30,1998 1,875,000 $ 163 $5,119,404 $(43,653) $5,075,914
========= ===== ========== ======== ==========
</TABLE>
See Selected Notes To Financial Statements
<PAGE>
<TABLE>
<CAPTION>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For The
Nine Months
Ended Cumulative
April 30, 1998 Amounts
------------------------ from Inception
1998 1997 --------------
--------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (35,290) $ 9,033 $ (43,653)
CHANGES IN CERTAIN ASSETS AND LIABILITIES:
Increase in accrued expenses 25,632 67,068 118,237
(Decrease) increase in income taxes payable (175) 5,000 3,429
--------- ---------- ----------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES (9,833) 81,101 78,013
--------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 6,402,112 6,402,175
Advances from affiliate - 55,417 95,917
Repayment to affiliate - (95,917) (95,917)
Deferred registration costs - - (25,000)
--------- ---------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES - 6,361,612 6,377,175
--------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) in restricted cash and
investments (217,357) (6,149,649) (6,415,845)
--------- ---------- ----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (227,190) 293,064 39,343
CASH AND CASH EQUIVALENTS,
beginning of period 266,533 563 -
--------- ---------- ----------
CASH AND CASH EQUIVALENTS,
end of period $ 39,343 $ 293,627 $ 39,343
========= ========== ==========
</TABLE>
See Selected Notes to Financial Statements
4
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
SELECTED NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - FINANCIAL STATEMENTS
The financial statements have been prepared by Unity First Acquisition Corp.
(the "Company"), without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows
at April 30, 1998 and for all periods presented have been made. The results
of operations for the period ended April 30, 1998 are not necessarily
indicative of the operating results for a full year.
Certain information and footnote disclosures prepared in accordance with
general accepted accounting principles and normally included in the financial
statements have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes included in the Company's annual report Form 10K for the year ended
July 31, 1997.
NOTE 2 - ORGANIZATION AND OPERATIONS
The Company was incorporated in the State of Delaware on May 30, 1996 to
serve as a vehicle to effect a merger, exchange of capital stock, asset
acquisition or other similar business combination (a "Business Combination").
The Company is currently in the development stage. All activity of the
Company to date relates to its formation, fund-raising, and search to effect
a Business Combination.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UTILIZATION OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
5
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
SELECTED NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 4 - RESTRICTED CASH AND INVESTMENTS
The Company, pursuant to the terms of its initial public offering ("the
Offering"), placed $6,007,500 as of November 19, 1996, in a trust account
which was primarily invested in a short-term U.S. Government Security. These
funds are subject to release upon the earlier of (i) written notification by
the Company of its need for all or substantially all of the net proceeds for
the purpose of implementing or facilitating the implementation of a Business
Combination or (ii) the liquidation of the Company.
6
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
SELECTED NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 5 - PENDING ACQUISITION
On September 19, 1997, the Company entered into a letter of intent to
effectuate a Business Combination with Prism Systems, Inc. ("Prism"), a
Chicago-based computer systems integrator principally engaged in the
development and marketing of voter registration information management
systems for public sector use, in exchange for an approximately 80% interest
in the Company. In December 1997, the Company elected not to proceed with
the proposed Business Combination as a consequence of the inability of the
parties to agree upon the terms of a definitive Business Combination
Agreement.
On January 19, 1998, the Company entered into a letter of intent to
effectuate a Business Combination with Boston Optical Fiber, Inc., a producer
of plastic optical fiber for use in computer networks, local access
communications, office networks and industrial controls, as well as in
medical devices such as endoscopes and fiber optic probes, in exchange for an
approximately 62.5% equity interest in the Company. The Company elected not
to proceed with the proposed Business Combination as a consequence of the
inability of the partners to agree upon the terms of a definitive Business
Combination agreement.
On May 7, 1998, the Company entered into a letter of intent to effectuate a
Business Combination with Worlds Inc., a developer of three-dimensional
("3D") Internet technology for different markets. The acquisition, if
consummated, calls for each share of Worlds Inc., common stock being
converted into .357 shares of the Company's common stock.
Consummation of the proposed Business Combination is subject to, among other
conditions, the negotiation and execution of a definitive merger agreement
and approval by the Company's public stockholders. There can be no assurance
that the proposed Business Combination will be successfully consummated.
7
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
SELECTED NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 6 - RELATED PARTY TRANSACTIONS
For the period ended April 30, 1998, the Company incurred $67,500 of
management fees charged by Unity Venture Capital Associates, Ltd.
For the period ended April 30, 1998, the Company incurred $58,840 of
professional fees to a law firm, one of whose partners is a stockholder of
the Company.
For the period ended April 30, 1998, the Company incurred $38,985 of
professional fees to an accounting firm,one of whose partners is an Officer
and Director of the Company.
8
<PAGE>
===========================================================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Unity First Acquisition Corp. (the "Company") was incorporated in May 1996
for the purpose of raising money to fund a vehicle to effect a Business
Combination with an operating business. On November 12, 1996 the Company's
Registration Statement covering 1,250,000 Units was declared effective by the
Securities and Exchange Commission. Each Unit consists of one share of the
Company's Common Stock, one Class A Redeemable Warrant and one Class B
Redeemable Warrant (hereafter the "Units").
The Company, after the Offering, had net proceeds of approximately
$6,402,000. Approximately $6,007,500 was invested in an interest bearing
Trust Fund at The Bank of New York and the balance at the same banking
institution in checking and money market accounts.
For the nine months ended April 30, 1998, the Company had a net loss of
$35,290 attributable to interest income of $222,268, offset by operating
expenses of $236,265, primarily consisting of management and professional
fees, and income taxes of $21,293.
9
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
(i) Financial Data Schedule (Exhibit 27)
(B) Reports on Form 8-K
Inapplicable
<PAGE>
SIGNATURES
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 thereunto duly authorized.
UNITY FIRST ACQUISITION CORP.
(Registrant)
Dated: June 10, 1998 By: /s/ Lawrence Burstein
---------------------------------
Lawrence Burstein
President
(Principal Executive Officer)
By: /s/ Norman Leben
---------------------------------
Norman Leben
Secretary
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> APR-30-1998
<CASH> 39,343
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,455,188
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,455,188
<CURRENT-LIABILITIES> 96,666
<BONDS> 0
0
0
<COMMON> 163
<OTHER-SE> 6,357,639
<TOTAL-LIABILITY-AND-EQUITY> 6,455,188
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 236,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,997)
<INCOME-TAX> 21,293
<INCOME-CONTINUING> (35,290)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,290)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
