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 June 30, 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 July, 31, 1996
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Common Stock, par value 833,250 shares
$.01 per share
<PAGE>
INITIAL ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENTAL STAGE)
INDEX
Page Number
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
STATEMENTS OF OPERATIONS -
Three Months Ended June 30, 1996 and
and June 30, 1995 and
Six Months ended June 30, 1996 and
June 30, 1995
Period January 1, 1993 to June 30, 1996 1
BALANCE SHEETS -
June 30, 1996 and December 31, 1995 2
STATEMENT OF STOCKHOLDERS' EQUITY -
Six Months Ended June 30, 1996 3
STATEMENTS OF CASH FLOWS -
Six Months ended June 30, 1996 and
June 30, 1995
Period January 1, 1993 to June 30, 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
None
<PAGE>
INITIAL ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENTAL STAGE)
STATEMENTS OF OPERATIONS
3 Months Ended 3 Months Ended 6 Months Ended
June 30, 1995 June 30, 1996 June 30, 1995
-------------- -------------- --------------
Interest income 35,895 84,687 35,895
General and
administrative (3,500) (28,722) (5,133)
Provision for taxes -- (10,250) --
------- ---------
Net income 32,395 45,715 30,762
======= ======= ========
Earnings per share $0.06 $0.05 $0.08
===== ===== =====
Weighted average
common shares
outstanding 533,250 833,250 383,250
======= ======= ========
6 Months Ended Period January 1, 1993
June 30, 1996 June 30, 1996
--------------- ----------------------
Interest income 176,944 $401,249
General and
administrative (38,064) (124,032)
Provision for taxes (19,650) (71,650)
-------- --------
Net income 119,230 $205,567
======== ========
Earnings per share $0.14
======
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
ASSETS June 30, 1996 December 31, 1995
------------- -----------------
Current Assets:
Cash and cash equivalents $ 242,781 $ 305,171
Investment in .S. Treasury Bills 6,383,730 6,213,588
---------- -----------
Total $6,626,511 $6,518,759
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accrued expenses $ 6,512 $ 37,640
Income taxes payable 71,650 52,000
Preferred stock, $.01 par value-shares
authorized 5,000; none issued -- --
Common stock, subject to possible
redemption, 89,940 shares at
conversion value 956,921 932,316
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 accumulated
during development stage 147,929 53,304
---------- ------------
Total $6,626,511 $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 -- -- -- 24,605
------- ------ ------ --------
Balance at
June 30, 1996 743,310 $7,434 89,940 $956,921
======== ======= ====== ========
Additional Earnings (deficit)
Paid-in accumulated during
Capital the development stage
------------------ ---------------------
Balance at December
31, 1995 $5,436,065 $ 53,304
Net Income 119,230
Accretion to redemption
value of common stock -- (24,605)
---------- ----------
Balance at June 30, 1996 $5,436,065 $147,929
========== ==========
See accompanying notes to financial statements
<PAGE>
INITIAL ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENTS OF CASH FLOWS
6 Months 6 Months Period
Ended Ended January 1,
June 30, June 30, 1993 To June
1996 1995 30, 1996
Cash flows from operating -------- --------- ------------
activities:
Net income $ 119,230 $ 30,762 $ 205,567
Adjustments to reconcile
net income to net cash
used in operating activities: (169,651) (34,665) (384,021)
Accrued interest income
Change in assets and liabilities:
Accrued expenses (31,128) 5,000 6,512
Income taxes payable 19,650 (6,000) 71,650
-------- ------- --------
Net cash used in operating
activities (61,899) (4,903) (100,292)
--------- ------- ---------
Cash flows from investing activities:
Purchase of US Treasury Bills (6,332,491) (5,999,218) (12,331,709)
Proceeds from US Treasury Bills 6,332,000 - 6,332,000
----------- ---------- ------------
Net Cash used in Investing Activities (491) (5,999,218) (5,999,709)
----------- ---------- ------------
Cash flows from financing
activities:
Proceeds from sale of
common stock - 6,260,457 6,260,457
Net proceeds from
public offering - 63,043 82,325
---------- ---------- ----------
Net cash provided by
financing activities - 6,323,500 6,342,782
---------- ----------- -----------
Net increase (decrease) in
cash and cash equivalents (62,390) 319,379 242,781
Cash and cash equivalents,
beginning of period 305,171 11,096 -
---------- -------- ----------
Cash and cash equivalents, end
of year $ 242,781 $ 330,475 $ 242,781
=========== ========== ===========
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.
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 August of 1996.
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) None.
<PAGE>
SIGNATURES
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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: July 31, 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> JUN-30-1996
<CASH> 242,781
<SECURITIES> 6,383,730
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,626,511
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,626,511
<CURRENT-LIABILITIES> 78,162
<BONDS> 0
0
0
<COMMON> 7,434
<OTHER-SE> 6,540,915
<TOTAL-LIABILITY-AND-EQUITY> 6,626,511
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (28,722)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 55,965
<INCOME-TAX> (10,250)
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<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 45,715
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
