<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 January 31, 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 March 16, 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.
2
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
BALANCE SHEETS
================================================================================
ASSETS
------
January 31, 1998 July 31, 1997
(Unaudited)
Cash and cash equivalents $ 131,718 $ 266,533
Restricted cash and investments 6,343,621 6,198,488
------------ ------------
TOTAL ASSETS $ 6,475,339 $ 6,465,021
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Accrued expenses $ 47,426 $ 67,634
Income taxes payable 3,575 3,575
------------ ------------
TOTAL LIABILITIES 51,001 71,209
------------ ------------
COMMITMENTS AND CONTINGENCIES
Common stock, $.0001 par value,
249,875 shares subject to possible
conversion, at conversion value 1,268,116 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 5,133,896 5,162,632
Retained earnings (deficit)accumulated
during the development stage 22,163 (8,363)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 5,156,222 5,154,432
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,475,339 $ 6,465,021
------------ ------------
------------ ------------
See Selected Notes to Financial Statements
3
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The For The Cumulative
Six Months Ended Three Months Ended Amounts
January 31, January 31, from Inception
------------------------ ------------------------ --------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
--------- --------- --------- --------- ---------
EXPENSES:
General and administrative 110,100 78,707 54,144 56,207 317,589
--------- --------- --------- --------- ---------
OTHER INCOME:
Interest and dividends 149,594 67,698 74,070 67,698 352,295
--------- --------- --------- --------- ---------
OPERATING INCOME (LOSS) 39,494 (11,009) 19,926 11,491 34,706
PROVISION FOR INCOME TAXES 8,968 - 1,105 - 12,543
--------- --------- --------- --------- ---------
NET INCOME (LOSS) $ 30,526 $ (11,009) $ 18,821 $ 11,491 $ 22,163
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
NET INCOME (LOSS) PER
COMMON SHARE $ .02 $ (.01) $ .01 $ .01
--------- --------- --------- ---------
--------- --------- --------- ---------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,875,000 871,527 1,875,000 1,118,056
--------- --------- --------- ---------
--------- --------- --------- ---------
See Selected Notes to Financial Statements
</TABLE>
4
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
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 income for the
six months ended
January 31, 1998 - - - 30,526 30,526
Increase in value
attributable to
common shares
subject to possible
conversion - - (28,736) - (28,736)
---------- ---------- ---------- ---------- ----------
Balance,
January 31, 1998 1,875,000 $ 163 $5,133,896 $ 22,163 $5,156,222
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
See Selected Notes To Financial Statements
</TABLE>
5
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
For The
Six Months
Ended
January 31, Cumulative
-------------------------------- Amounts
1998 1997 from Inception
---------------- ------------ --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 30,526 $ (11,009) $ 22,163
CHANGES IN CERTAIN ASSETS AND LIABILITIES:
(Decrease) increase in accrued expenses (20,208) 127,529 72,397
Increase in income taxes payable - - 3,604
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 10,318 116,520 98,164
----------- ----------- -----------
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 (145,133) (6,071,041) (6,343,621)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (134,815) 407,091 131,718
CASH AND CASH EQUIVALENTS,
beginning of period 266,533 563 -
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
end of period $131,718 $407,654 $131,718
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See Selected Notes to Financial Statements
6
<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 January 31, 1998 and for all periods presented have been made. The
results of operations for the period ended January 31, 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.
7
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
SELECTED NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
- ------------------------------------------------------------
Net Income (Loss) Per Common Share
----------------------------------
Net income (loss) per common share is computed based on the weighted
average number of common shares outstanding and common stock equivalents,
if not anti-dilutive.
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" .
This statement establishes standards for computing and presenting earnings
per share ("EPS"), replacing the presentation of currently required primary
EPS with a presentation of Basic EPS. For entities with complex capital
structures, the statement requires the dual presentation of both Basic EPS
and Diluted EPS on the face of the statement of operations. Under this new
standard, Basic EPS is computed based on the weighted average number of
shares actually outstanding during the year. Diluted EPS includes the
effect of potential dilution from the exercise of outstanding dilutive
stock operations and warrants into common stock using the treasury stock
method. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997, and early application is not
permitted. The adoption of this statement did not have a material effect
on the computation of EPS.
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.
8
<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.
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.
9
<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 six months ended January 31, 1998, the Company had net income of $30,526
attributable to interest income of $149,594, offset by operating expenses of
$110,100, primarily consisting of management and professional fees, and income
taxes of $8,968.
10
<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
11
<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: March 16, 1998 By: /s/ Lawrence Burstein
-------------------------------
Lawrence Burstein
President
(Principal Executive Officer)
By: /s/ Norman Leben
--------------------------------
Norman Leben
Secretary
(Principal Financial and
Accounting Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 131,718
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,475,339
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,475,339
<CURRENT-LIABILITIES> 51,001
<BONDS> 0
0
0
<COMMON> 163
<OTHER-SE> 1,268,116
<TOTAL-LIABILITY-AND-EQUITY> 6,475,339
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 110,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 39,494
<INCOME-TAX> 8,968
<INCOME-CONTINUING> 30,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,526
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
