UNSI CORPORATION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 1995
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-16117
UNSI CORPORATION
(Exact name of small business issuer as specified in charter)
Delaware 22-2661940
(State of Incorporation) (I.R.S. Employer Identification No)
c/o Forstmann-Leff Associates, Inc.
55 East 52nd Street, New York, New York 10055
(Address of Principal Executive Offices) (Zip Code)
(212) 407-9450
(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 of 1934 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 requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 1994 the number of shares outstanding of the issuer's Common
Stock was 2,210,000.
<PAGE>
UNSI CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
<S> <C> <C>
ASSETS
Current Assets
Cash $ 745,173 $ 100,035
Accounts receivable 13,200 115,346
Other current assets 29,000 3,300
-------- ---------
Total Current Assets 787,373 218,681
Property and equipment, at cost,
less accumulated depreciation -- 284,036
Escrowed sale proceeds 200,000 --
Other Assets 31,500 39,358
-------- ---------
$1,018,873 $542,075
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Accounts payable $ 1,014 $ 292,265
Unearned revenue -- 194,587
Accrued expenses 134,394 221,114
Notes payable -- 580
Notes and advances payable
to related parties 53,496 853,496
Other current liabilities 84,700 84,700
-------- ---------
Total Current Liabilities 273,604 1,646,742
-------- ---------
Long-term Obligations
Notes payable, shareholder 438,825 438,825
Pay-in-kind convertible debentures 1,193,413 1,193,413
5% subordinated convertible debenture 331,250 331,250
--------- ---------
1,963,488 1,963,488
--------- ---------
Stockholders' Equity (Deficiency)
Preferred stock, $.01 par value;
1,000,000 shares authorized;
10,000 shares outstanding -- --
Common stock, $.01 par value;
authorized; 2,210,000 and
2,210,000 shares outstanding 22,100 22,100
Capital in excess of par 369,932 369,932
Accumulated deficit (1,610,251) (3,460,187)
---------- ----------
Total Stockholders' Deficiency (1,218,219) (3,068,155)
---------- ----------
$1,018,873 $542,075
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
UNSI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30, September 30,
1995 1994
---- ----
<S> <C> <C>
Revenue
Earned revenue $ 65,712 $ 106,846
Interest income 1,456 6,297
Miscellaneous income -- --
-------- --------
67,168 113,143
-------- --------
Costs and Expenses
Direct costs of services 188,468 266,060
Selling, general and
administrative expenses 121,088 194,491
Interest expense 62,660 37,103
--------- ---------
372,216 497,654
--------- ---------
(Loss) From Operations (305,048) $(384,511)
Extraordinary gain from
sale of assets 2,154,984 --
--------- ---------
Net Income (Loss) $1,849,936 $(384,511)
========= =========
(Loss) Per Share $0.84 $(0.17)
===== =====
Weighted average number of
shares of common stock
outstanding 2,210,000 2,210,000
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
UNSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $1,849,936 $(384,511)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 25,403 8,775
Changes in operating assets
and liabilities:
Decrease in accounts receivable 102,146 43,559
(Increase) decrease in
other current assets (25,700) 22,216
(Increase) decrease in
other assets 7,858 ( 200)
Increase (decrease) in
accounts payable (291,251) 1,507
Increase (decrease) in
unearned revenue (194,587) 9,711
Increase (decrease) in
accrued expenses payable (86,720) 31,708
Increase in other current
liabilities -- 1,309
--------- ----------
Net cash (used in) operating
activities 1,387,085 (265,926)
--------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to/disposals of
property and equipment 258,633 ( 332)
Additions to notes receivable -- (36,625)
Additions to escrow receivable (200,000) --
Investment in marketable securities -- (295,000)
--------- ----------
Net cash (used in) investing activities 58,633 (331,957)
--------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
UNSI CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Continued-
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds of subordinated debentures -- 175,340
Proceeds of notes payable - stockholder -- --
Principal payments on notes payable (800,580) (4,846)
--------- ----------
Net cash provided by financing
activities (800,580) 170,494
--------- ----------
NET INCREASE (DECREASE) IN CASH 645,138 (427,389)
CASH - BEGINNING 100,035 726,624
--------- ----------
CASH - ENDING $745,173 $299,235
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
UNSI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1995
NOTE A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. These statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
The Company acquired all of the outstanding preferred and common stock of
Investors' Fiduciary Services, Inc. ("IFSI") on January 3, 1994. For accounting
purposes the acquisition has been treated as a recapitalization of IFSI, with
IFSI as the acquiror (a reverse acquisition). For further information, refer to
the financial statements and footnotes included in the Company's Annual Report
on Form 10-KSB for the year ended June 30, 1995. As a result of the reverse
acquisition accounting, financial statements for the periods prior to the merger
reflect only the financial position and results of operations of IFSI, while the
current period and most immediate prior period financial statements represent
consolidated operations of IFSI and UNSI.
Note B - Sale of Business
On September 5, 1995, IFSI, the Company's operating subsidiary sold all of its
operating assets, with concomitant assumption by CDA Investment Technologies,
Inc of essentially all liabilities associated with IFSI's operating activities.
The base purchase price of $2,249,600 was comprised of assumption of liabilities
of the Company of approximately $351,600 and payment of cash to the Company of
approximately $1,698,000. Additionally, the purchaser placed $200,000 of the
sale proceeds into an escrow account. The escrow balance is payable to the
Company over an eighteen-month period, subject to payment from the account of
any unrecorded liabilities that may arise related to pre-transaction activities.
The Company does not believe that there are any material liabilities to be paid
from the escrow funds.
Additionally, the Company would receive up to an additional $750,000 on the sale
of the IFSI assets, subject to the achievement by the purchaser of certain
customer retention and product development goals. The contingent consideration
has not been recorded as part of the sale price and would be recognized as the
retention and development goals are met.
During the current quarter, the Company has recorded an extraordinary gain of
approximately $2,155,000 related to the sale of the assets.
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations:
Three Months Ended September 30, 1995 and 1994
During the three months ended September 30, 1995, revenues were $67,168,
compared to $113,143 for the comparable period of the prior year, or a 40.4%
decline. The decline was due to the fact that the assets and business of the
IFSI, were sold on or about September 5, 1995 (the "IFSI Sale").
Direct expenses of operations for the three month period ended September 30,
1995 decreased by $77,592 from the corresponding period in the prior year.
Operating expenses consist primarily of employee salaries and associated costs,
information and data purchased from third parties, and fixed expenses associated
with IFSI's facilities and equipment. Selling, general, and administrative
expenses for the current three-month period decreased by $73,403 from the
corresponding period in the prior year. The decrease in these expenses is
primarily attributable to the IFSI Sale. Interest expense in the current three
month period increased by $25,557 from the corresponding period in the prior
year as a result of the higher rate of interest on the increased debt
outstanding during the current three months.
For the three months ended September 30, 1995, the Company had a net operating
loss of $305,048, compared to a net operating loss of $384,511 during the
comparable prior period. During the current period, the Company recorded an
extraordinary gain of $2,154,984 from the sale of the assets and business of
IFSI, producing overall net income of $1,849,936 for the current three-month
period.
Liquidity and Capital Resources
As of September 30, 1995, the Company had total current assets of $787,373 and
working capital of $513,769. The Company's cash position at the end of the first
quarter of fiscal 1996 increased by $645,138 from June 30, 1995, primarily
because of the proceeds from the IFSI Sale.
The Company currently engages in no operating activities other than the
investment of its cash and the search for possible merger or acquisition
opportunities. Accordingly, the Company's expenditures will consist primarily of
legal and accounting fees. The Company's working capital is sufficient to meet
its present and anticipated near term operating needs. The Company has no
commitments for any material capital expenditure.
Part II.
Item 6. Exhibits and Reports on Form 8-K.
One report on Form 8-K dated on or about September 5, 1995 was filed during this
period disclosing the IFSI Sale.
7
<PAGE>
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.
UNSI CORPORATION
By: /s/Peter Lusk
Peter Lusk, Chairman of the Board
(Principal Executive Officer and
Principal Financial and Accounting
Officer)
Dated: November 10, 1995
New York, New York
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 745,173
<SECURITIES> 0
<RECEIVABLES> 13,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 787,373
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,018,873
<CURRENT-LIABILITIES> 273,604
<BONDS> 1,963,488
<COMMON> 22,100
0
0
<OTHER-SE> (1,240,319)
<TOTAL-LIABILITY-AND-EQUITY> 1,018,873
<SALES> 65,712
<TOTAL-REVENUES> 67,168
<CGS> 188,468
<TOTAL-COSTS> 372,216
<OTHER-EXPENSES> 121,088
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,660
<INCOME-PRETAX> (305,048)
<INCOME-TAX> 0
<INCOME-CONTINUING> (305,048)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,154,984
<CHANGES> 0
<NET-INCOME> 1,849,936
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
