SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES ACT OF 1934
For the Quarterly Period ended December 31, 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 December 31, 1995 the number of shares outstanding of the issuer's
Common Stock was 2,210,000
<PAGE>
UNSI CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31 June 30
1995 1995
<S> <C> <C>
Current Assets
Cash and equivalents $ 482,217 $ 100,035
Short-term investments 287,500 --
Accounts receivable -- 115,346
Loans receivable 48,000 --
Other current assets 463 3,300
-------- ---------
Total Current Assets 818,180 1,017,491
Property and equipment, at cost,
less accumulated depreciation -- 284,036
Escrowed sale proceeds 133,333 --
Other Assets 31,500 39,358
-------- ---------
$983,013 $542,075
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Accounts payable $ 17,662 $ 292,265
Unearned revenue -- 194,587
Accrued expenses 127,493 221,114
Notes payable, current -- 580
Notes and advances payable
to related parties 53,496 853,496
Other current liabilities 84,700 84,700
-------- ---------
Total Current Liabilities 283,351 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;
no 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 (1,655,857) (3,460,187)
---------- ----------
Total Stockholders'(Deficiency) (1,263,825) (3,068,155)
---------- ----------
$983,013 $542,075
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
UNSI CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31 December 31
1995 1994 1995 1994
-------- -------- -------- ------
<S> <C> <C> <C> <C>
Revenue
Interest income $ 26,231 $ 10,529 $ 24,775 $ 4,232
Costs and Expenses
Operating expenses 29,466 30,095 25,555 5,035
Interest expense 107,487 58,246 44,827 21,143
-------- -------- -------- --------
$136,953 $ 88,341 $ 70,382 $ 26,178
-------- -------- -------- --------
(Loss) From Continuing Operations $(110,722) $( 77,812) $( 45,607) $( 21,946)
Discontinued operations
Loss from operations
of discontinued business (239,933) (636,168) ( -- ) (307,524)
Gain on disposal of
discontinued business 2,154,984 -- -- --
---------- --------- --------- ---------
Net Income (Loss) $1,804,329 $(713,980) $( 45,607) $(329,470)
=========== ========= ========= =========
Income (Loss) Per Share from
Continuing Operations $(0.05) $(0.04) $(0.02) $(0.01)
Discontinued operations 0.87 (0.28) -- (0.14)
------ ------ ------ ------
Income(Loss) Per Share $0.82 $(0.32) $(0.02) $(0.15)
======= ======= ======= =======
Weighted average number of
shares of common stock
outstanding 2,210,000 2,210,000 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>
Six Months Ended December 31
1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C>
Net Income (loss) $1,804,329 $(713,980)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 25,403 17,550
Changes in operating assets
and liabilities:
Decrease in accounts receivable 115,346 2,065
Decrease in other current assets 2,837 17,562
Decrease(Increase) in other assets 7,858 (200)
Increase (Decrease) in accounts payable (274,603) 71,296
Increase (Decrease) in unearned revenue (194,587) 43,630
Increase (Decrease) in accrued expenses (93,621) 50,187
Increase in other current liabilities -- 5,369
--------- ----------
Net cash (used in) operating
activities 1,392,962 (506,521)
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to short-term investments (287,500) --
Additions to/disposals of
property and equipment 258,633 ( 31,832)
Additions to notes receivable (48,000) ( 56,625)
Additions to escrow receivable (200,000) --
--------- ----------
Net cash used in investing activities (276,867) ( 88,457)
--------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds of subordinated debentures -- 175,340
Principal payments on notes and
Advances to related parties (800,000) (13,500)
Principal payments on notes payable (580) (259,122)
--------- ----------
Net cash provided by financing
activities (800,580) (97,282)
--------- ----------
NET INCREASE (DECREASE) IN CASH 315,515 (692,262)
CASH - BEGINNING 100,035 726,624
--------- ----------
CASH - ENDING $415,550 $ 34,362
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
UNSI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 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.
As a result of the sale of IFSI's business as discussed in Note B, the results
of IFSI's operations have been reported as a discontinued business.
Note B - Sale of Business
On September 5, 1995, the Company sold all of its operating assets, with
concomitant assumption by CDA Investment Technologies, Inc. (the "purchaser") 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 (commencing September 1995), subject to
payment from the account of any unrecorded liabilities that may arise related to
pre-transaction activities. The initial scheduled payment of one-third of the
escrow has been received and Company does not believe that there are any
material liabilities to be paid from the remaining escrow funds. Additionally,
the Company could 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 first fiscal quarter of 1996, the Company recorded a gain of
approximately $2,155,000 related to the sale of the IFSI assets.
5
<PAGE>
Item 2. Management's Discussion and Analysis and Plan of Operation
Results of Operations:
Three and Six Months Ended December 31, 1995
During the three and six months ended December 31, 1995, revenue
consisted of interest earned of $24,775 and $26,231, compared to
$4,232 and $10,259, for the corresponding periods of the prior year, or an
increase of 485% and 149%, respectively. The increase was due to the fact that
the Company had higher average cash balances resulting from the sale of the
assets and business of its former operating subsidiary, Investors' Fiduciary
Services, Inc. ("IFSI"), in September, 1995. See notes A and B herein.
Operating expenses for the three-months ended December 31, 1995 increased to
$25,555 from $5,035 for the corresponding period in the prior year. During the
current six-month period, operating expenses were $29,466, compared to $30,095
for the comparable period in the prior year. Substantially all of the expense
increase for the three-month period was attributed to fees associated with the
sale of IFSI's assets. Interest expense for the three and six months period
ended December 31, 1995 was $44,827 and $107,487, respectively, and for the
corresponding periods in the prior year was $21,143 and $58,246, respectively.
Interest expense for fiscal 1996 increased from fiscal 1995 due primarily to the
short-term loans that were outstanding prior to the IFSI sale and the increased
face amount of pay-in-kind debentures outstanding.
For the three months ended December 31, 1995, the Company had a net operating
loss of $45,607, compared to a net operating loss of $21,946 during the
comparable period in the prior year. For the six months ended December 31, 1995,
the Company recorded a net operating loss of $110,722, compared to a net
operating loss of $77,812 during the comparable period in the prior year.
For the six-month period ending December 31, 1995, the Company reported a loss
from discontinued operations of $239,933 compared to $636,168 for the comparable
period in the prior year. The decrease is attributable to the sale by IFSI of
its assets and business. In addition, during the three-month period ended
December 31, 1994, the Company had a loss from discontinued operations of
$307,524. In the current six-month period the Company recorded a gain of
$2,154,936 from the sale of the assets and business of IFSI, resulting in net
income of $1,804,329 for the six months ended December 31, 1995.
Liquidity and Capital Resources
As of December 31, 1995, the Company had total current assets of $818,180 and
working capital of $534,829 (inclusive of loans receivable of $48,000). The
Company's cash position (exclusive of short-term investments) at December 31,
1995 increased by $315,515 from June 30, 1995, primarily because of the proceeds
from the IFSI sale.
6
<PAGE>
Item 2. Management's Discussion and Analysis and Plan of Operation
Liquidity and Capital Resources (continued)
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. It is anticipated that interest expense on the
Company's Pay-in-kind debentures will be paid by the issuance of additional
debentures. 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.
7
<PAGE>
Part II.
Item 6. Exhibits and Reports on Form 8-K.
None during this period.
8
<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 A. Lusk
Peter A. Lusk, Chairman of the Board
(Principal Executive Officer and
Principal Financial and
Accounting Officer)
Dated: February 20, 1996
New York, New York
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 482,217
<SECURITIES> 287,500
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 818,180
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 983,013
<CURRENT-LIABILITIES> 283,351
<BONDS> 1,963,488
0
0
<COMMON> 22,100
<OTHER-SE> (1,277,957)
<TOTAL-LIABILITY-AND-EQUITY> 983,013
<SALES> 26,231
<TOTAL-REVENUES> 26,231
<CGS> 0
<TOTAL-COSTS> 136,953
<OTHER-EXPENSES> 239,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,487
<INCOME-PRETAX> 1,804,329
<INCOME-TAX> 0
<INCOME-CONTINUING> (110,722)
<DISCONTINUED> (239,933)
<EXTRAORDINARY> 2,154,984
<CHANGES> 0
<NET-INCOME> 1,804,329
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> 0.82
</TABLE>
