SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996...Commission File Number 0-24672
INITIAL ACQUISITION CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-3197002
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(State of other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
810 Seventh Avenue, 27th Floor, New York, NY 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 333-2620
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Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and
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.
Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at April, 30, 1996
------------------------- ------------------------------
Common Stock, par value 833,250 shares
$.01 per share
<PAGE>
INITIAL ACQUISITION CORP.
INDEX
Page Number
-----------
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations -
Three Months Ended March 31, 1996 and
Period January 1, 1993 to March 31, 1996 1
Balance Sheets -
March 31, 1996 and December 31, 1995 2
Statements of Stockholders' Equity -
Three Months Ended March 31, 1996 3
Statements of Cash Flows -
Three Months Ended March 31, 1996 and
Period January 1, 1993 to March 31, 1996 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
<PAGE>
INITIAL ACQUISITION CORP.
(a corporation in the developmental stage)
STATEMENTS OF OPERATIONS
Three Months Ended Period January 1, 1993
March 31, 1996 To March 31, 1996
------------------ -----------------------
Interest income $ 92,257 $316,562
General and administrative (9,342) (95,310)
Provision for Taxes (9,400) (61,400)
-------- ---------
Net income $73,515 $159,852
======== =========
Earnings per share $ 0.09
========
Weighted average common shares
outstanding 833,250
========
See accompanying notes to financial statements
<PAGE>
INITIAL ACQUISITION CORP.
(a corporation in the development stage)
BALANCE SHEETS
March 31, 1996 December 31, 1995
--------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 264,676 $ 305,171
Investment in
U.S. Treasury Bills 6,301,858 6,213,588
----------- -----------
Total $6,566,534 $6,518,759
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accrued expenses $ 2,500 $ 37,640
Income taxes payable 61,400 52,000
Stockholders' equity:
Preferred stock, $.01 par value-
shares authorized 5,000; none
issued --- ---
Common stock, subject to possible
redemption, 89,940 shares at
conversion value 944,649 932,316
Common stock, $.01 par value-
shares authorized 10,000,000;
issued and outstanding 833,250
(which includes 89,940 shares
subject to possible conversion)
respectively 7,434 7,434
Additional paid-in capital 5,436,065 5,436,065
Earnings (deficit) accumulated
during development stage 114,486 53,304
--------- ----------
Total stockholders' equity $6,566,534 $6,518,759
========== ==========
See accompanying notes to financial statements
<PAGE>
INITIAL ACQUISITION CORP.
(a corporation in the development stage)
STATEMENTS OF COMMON STOCK, COMMON STOCK SUBJECT TO
POSSIBLE REDEMPTION, PREFERRED STOCK,
ADDITIONAL PAID-IN CAPITAL AND EARNINGS ACCUMULATED
DURING THE DEVELOPMENT STAGE
Common Stock subject to
Common Stock possible redemption
----------------- -------------------
Shares Amount Shares Amount
------ ------ ------ ------
Balance at December
31, 1995 743,310 $7,434 89,940 932,316
Net Income -- -- -- --
Accretion to redemption
value of common stock -- -- -- 12,333
------- ------ ------ ------
Balance at March 31,
1996 743,310 $7,434 89,940 $944,649
======= ====== ====== ========
Earnings (deficit)
Additional accumulated during
paid-in capital the development stage
-------------- ----------------------
Balance at December
31, 1995 $5,436,065 $ 53,304
Net Income 73,515
Accretion to redemption
value of common stock --- (12,333)
---------- --------
Balance at March 31,
1996 $5,436,065 $114,486
========== ========
See accompanying notes to financial statements
<PAGE>
INITIAL ACQUISITION CORP.
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
Three Months Ended Period January 1, 1993
March 31, 1996 March 31, 1996
------------------ ----------------------
Cash flows from operating
activities:
Net income (loss) $ 73,515 $ 159,852
Adjustments to reconcile
net income (loss) to
net cash used in
operating activities:
Accrued interest income (88,270) (302,640)
Change in assets and liabilities:
Accrued expenses 9,400 2,500
Income taxes payable (40,495) 61,400
-------- ----------
Net cash used in operating
activities (40,495) (78,888)
-------- ----------
Cash flows from investing activities:
Purchase of US Treasury Bills -- (5,999,218)
Cash flows from financing activities:
Proceeds from sale of common stock -- 82,325
Net proceeds from public offering -- 6,260,457
-------- ----------
Net cash provided by
financing activities -- 6,342,782
-------- ----------
Net increase (decrease) in cash
and cash equivalents (40,495) 264,676
Cash and cash equivalents,
beginning of period 305,171 -0-
-------- ----------
Cash and cash equivalents,
end of year $ 264,676 $ 264,676
========= ==========
See accompanying notes to financial statements
<PAGE>
INITIAL ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The financial statements are presented in accordance with the requirements
of Form 10-Q and Regulation 210 of S-X and consequently do not include all
of the disclosures normally made in an annual Form 10-K filing.
Accordingly, the financial statements included herein should be reviewed in
conjunction with the financial statements and footnotes therein included
within the Company's Annual Report on Form 10-K for the year ended December
31, 1995.
The financial information has been prepared in accordance with the
Company's customary accounting practices and has not been audited. In the
opinion of management, the information presents all adjustments necessary
for a fair statement of interim results. All such adjustments are of a
normal and recurring nature. The foregoing interim results are not
necessarily indicative of the results of operations to be expected for a
full year.
The three months ended March 31, 1995 is not presented since the activity
for that period was not significant.
2. Investments
The Company has invested the majority of the proceeds from the initial
public offering in United States Treasury Bills. These treasury bills,
which were purchased at a discount, are presented at their accreted cost.
The treasury bills mature in July of 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Initial Acquisition Corp. (the "Company") is a "blank check" or "blind
pool" company which was formed on November 18, 1992 to serve as a vehicle
to effect a merger, exchange of capital stock, asset acquisition or other
business combination (a "Business Combination") with an operating business
(a "Target Business"). The business objective of the Company is to effect
a Business Combination with a Target Business which the Company believes
has significant growth potential. To date, the Company has not effected a
Business Combination.
On May 23 1995 (the "Closing Date"), the Company consummated its
initial public offering (the "Offering") of (a) 600,000 units (the
"Units"), each Unit consisting of (i) one share of common stock, $.01 par
value per share (the "Common Stock"), and (ii) one Class A Common Stock
Purchase Warrant (the "Class A Warrants") entitling the holder thereof to
purchase one share of Common Stock, and (b) 240,000 Redeemable Class B Unit
Purchase Warrants (the "Class B Warrants"), each such Class B Warrant
entitling the holder thereof to purchase one Unit. On the Closing Date,
the Registrant received net proceeds of $6,330,680 (the "Net Proceeds"),
after giving effect to the payment of all underwriting discounts, the
underwriters' non-accountable expense allowance and offering expenses.
Pursuant to the terms of the Offering, $6 million of the Net Proceeds,
representing an amount equal to the gross proceeds from the sale of the
Units, was placed in escrow with The Chase Manhattan Bank, N.A., subject to
release in accordance with the terms of the Offering. These Net Proceeds
have been invested in United States Treasury Bills and Commercial Paper.
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(b) Exhibit 27. Financial Data Schedule.
<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.
INITIAL ACQUISITION CORP.
By: /s/ Salvatore J. Zizza
---------------------------
Salvatore J. Zizza
Chairman of the Board,
President,
Chief Executive Officer and
Principal Financial Officer
Dated: April 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
STATEMENTS OF OPERATIONS, BALANCE SHEETS, STATEMENTS OF STOCKHOLDERS'
EQUITY AND STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 264,676
<SECURITIES> 6,301,858
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,566,534
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 63,900
<BONDS> 0
0
0
<COMMON> 7,434
<OTHER-SE> 6,495,200
<TOTAL-LIABILITY-AND-EQUITY> 6,566,534
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (9,342)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 92,257
<INCOME-TAX> (9,400)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 73,515
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
