SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d
of the Securities Exchange Act of 1934
For the Quarterly period Ended June 30, 1996
Commission File Number 0-25056
FINANCIAL SERVICES ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-3262958
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
667 Madison Avenue
New York, New York 10021
(Address of principal executive office)
(212) 317-1000
(Registrant's telephone
number, including area code)
Indicate by check mark whether 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 registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
Yes ___X___ No_______
The number of shares of common stock, par value $.001 per
share, of registrant outstanding as of August 14, 1996 was 4,416,666.
The Exhibit Index is on Page 20
FINANCIAL SERVICES ACQUISITION CORPORATION
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Contents F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Common Stock, Common Stock Subject to
Possible Conversion, Preferred Stock, Additional
Paid-in Capital and Retained Earnings
Accumulated During the Development Stage F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 19
Exhibit Index 20
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Financial Services
Acquisition Corporation
(a corporation in the
development stage)
______________________________________________________________________
Financial Statements
Periods Ended June 30, 1995 and 1996
Financial Services Acquisition Corporation
(a corporation in the development stage)
Contents
FINANCIAL STATEMENTS:
Balance sheets F-3
Statements of operations F-4
Statement of common stock, common stock subject
to possible conversion, preferred stock,
additional paid-in capital and retained earnings
accumulated during the development stage F-5
Statements of cash flows F-6
Notes to financial statements F-7-F-12
Financial Services Acquisition Corporation
a corporation in the development stage
Balance Sheets
December 31, June 30,
1995 1996
________________________________________________________________________
Assets (audited) (unaudited)
Cash and cash equivalents $ 159,657 $ 230,922
Short-term investment and accrued
interest thereon 1,116,214 754,637
U.S. Government security deposited in
Trust Fund and accrued interest thereon
(Note 2) 18,489,353 18,944,960
Deferred acquisition costs (Note 8) 60,000 734,672
Prepaid expenses 5,000 -
Organization costs, less amortization of
$13,937 and $20,483 51,526 44,980
_____________________________________________________________________
$19,881,750 $20,710,171
_____________________________________________________________________
Liabilities and Stockholders' Equity
Accrued expenses and taxes $ 253,496 $ 851,123
Deferred income taxes 42,000 42,000
Commitment (Note 4)
Common stock, subject to possible
conversion, 716,666 shares at conver-
sion value (Note 2) 3,696,022 3,787,098
Preferred stock, $.001 par value - shares
authorized 1,000,000; none issued
(Note 5) - -
Common stock, $.001 par value - shares
authorized 14,000,000; issued and
outstanding 4,416,666 (which includes
716,666 shares subject to possible
conversion) (Notes 3 and 6) 3,700 3,700
Additional paid-in capital 15,710,140 15,710,140
Retained earnings accumulated during the
development stage 176,392 316,110
____________________________________________________________________
$19,881,750 $20,710,171
____________________________________________________________________
See accompanying notes to financial statements.
Financial Services Acquisition Corporation
(a corporation in the development stage)
Statements of Operations
(Unaudited)
_____________________________________________________________________________
Period from
August 18,
Three months Six months ended 1994 (incept
ended June 30, June 30, ion) to
____________________ ____________________ June 30,
1995 1996 1995 1996 1996
______________________________________________________________________________
Income:
Interest $ 283,218 $ 238,119 $ 558,884 $ 482,237 $1,651,278
______________________________________________________________________________
Expenses:
General and
administrative 49,065 46,362 97,389 86,737 266,568
Acquisition costs
(Note 7) 199,000 - 199,000 - 239,817
Occupancy (Note 4) 15,000 15,000 30,000 30,000 95,000
Amortization of
financing costs,
debt discount and
organization costs 3,273 3,273 6,546 6,546 59,983
State franchise
taxes 5,000 5,910 9,550 9,160 26,124
Interest (Note 3) - - - - 3,836
___________________________________________________________________________
Total expenses 271,338 70,545 342,485 132,443 691,328
___________________________________________________________________________
Net income
before taxes on
income 11,880 167,574 216,399 349,794 959,950
Taxes on income 6,000 57,000 92,000 119,000 338,000
___________________________________________________________________________
Net income for the
period $ 5,880 $ 110,574 $ 124,399 $ 230,794 $ 621,950
___________________________________________________________________________
Net income per
share $ .00 $ .03 $ .03 $ .05
___________________________________________________________________________
Weighted average
common shares
outstanding 4,416,666 4,416,666 4,416,666 4,416,666
___________________________________________________________________________
See accompanying notes to financial statements.
Financial Services Acquisition Corporation
(a corporation in the development stage)
<TABLE>
<CAPTION>
Statement of Common Stock, Common Stock Subject to Possible Conversion,
Preferred Stock, Additional Paid-In Capital and Retained Earnings
Accumulated During the Development Stage
Period from August 18, 1994 (inception) to June 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Common stock Retained
subject to earnings
Common stock possible conversion Preferred stock accumulated
------------------------- -------------------- ---------------- Additional during
Number Number of Number of paid-in the develop-
of shares Amount shares Amount shares Amount capital ment stage
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, August 18, 1994 -- $ -- -- $ -- - $ -- $ - $ --
Original issuance of common stock 833,333 833 -- -- - -- 24,167 --
Issuance of warrants to purchase
common stock -- -- -- -- - -- 20,000 --
Sale of 3,583,333 units, net of
underwriting discounts and
offering expenses 2,866,667 2,867 716,666 3,481,258 - -- 15,665,973 --
Net loss for the period -- -- -- -- - -- -- (6,976)
Accretion to conversion value
of common stock -- -- -- 12,114 - -- -- (12,114)
_________________________________________________________________________________________________________________________________
Balance, December 31, 1994 3,700,000 3,700 716,666 3,493,372 - -- 15,710,140 (19,090)
Net income for the period -- -- -- -- - -- -- 398,132
Accretion to conversion value
of common stock -- -- -- 202,650 - -- -- (202,650)
_________________________________________________________________________________________________________________________________
Balance, December 31, 1995 3,700,000 3,700 716,666 3,696,022 - -- 15,710,140 176,392
Net income for the period
(unaudited) -- -- -- -- - -- -- 230,794
Accretion to conversion value
of common stock (unaudited) -- -- -- 91,076 -- (91,076)
_________________________________________________________________________________________________________________________________
Balance, June 30, 1996 (unaudited) 3,700,000 $ 3,700 716,666 $ 3,787,098 - $-- $15,710,140 $ 316,110
_________________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Cash Flows
(Unaudited)
Period from
Six months ended June 30, August 18, 1994
----------------------------------- (inception) to
1995 1996 June 30, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 124,399 $ 230,794 $ 621,950
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Deferred income taxes -- -- 42,000
Amortization of financing costs,
debt discount and organization costs 6,546 6,546 59,983
Interest on U.S. Government securities
in Trust Fund (508,637) (455,607) (1,529,962)
Interest on short-term investments -- (23,469) (39,691)
(Increase) decrease in prepaid expenses (30,212) 5,000 --
Increase in accrued expenses 190,799 597,627 851,123
_______________________________________________________________________________________________________________________________
Net cash provided by (used in)
operating activities (217,105) 360,891 5,403
_______________________________________________________________________________________________________________________________
Cash flows from investing activities:
U.S. Government security deposited
in Trust Fund - December 1994 -- -- (17,414,998)
Cumulative maturities of U.S. Government
securities deposited in Trust Fund 35,544,253 56,311,000 128,355,713
Cumulative acquisitions of U.S. Government
securities reinvested in Trust Fund (35,544,253) (56,311,000) (128,355,713)
Cumulative maturities of short-term
investments -- 3,144,000 3,144,000
Cumulative acquisitions of short-term
investments -- (2,758,954) (3,858,946)
Deferred acquisition costs -- (674,672) (734,672)
_______________________________________________________________________________________________________________________________
Net cash used in investing activities -- (289,626) (18,864,616)
_______________________________________________________________________________________________________________________________
Cash flows from financing activities:
Proceeds from notes payable and issuance
of warrants -- -- 200,000
Proceeds from public offering of 3,583,333
units, net of underwriting discounts and
offering expenses -- -- 19,150,098
Repayment of notes payable -- -- (200,000)
Proceeds from sale of 833,333 shares of
common stock to founding stockholders -- -- 25,000
Deferred financing costs -- -- (19,500)
Organization costs -- -- (65,463)
________________________________________________________________________________________________________________________________
Net cash provided by financing activities -- -- 19,090,135
________________________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents (217,105) 71,265 230,922
Cash and cash equivalents, beginning of period 1,783,022 159,657 --
________________________________________________________________________________________________________________________________
Cash and cash equivalents, end of period $ 1,565,917 $ 230,922 $ 230,922
________________________________________________________________________________________________________________________________
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ -- $ -- $ 3,836
Income taxes -- -- 179,680
________________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
Financial Services Acquisition Corporation
(a corporation in the development stage)
Notes to Financial Statements
(Information as of June 30, 1996 and for the
three months ended June 30, 1995 and 1996 is unaudited).
1. Summary of Income Taxes
Accounting
Policies Financial Services Acquisition Corporation (the
"Company") follows Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes". SFAS No. 109 is an
asset and liability approach that requires the
recognition of deferred tax assets and liabilities
for the expected future tax consequences of events
that have been recognized in the Company's
financial statements or tax returns. ("temporary
differences"). Temporary differences resulted from
the Company using the cash basis for income tax
purposes.
Organization Costs
Organization costs are amortized over 60 months.
Net Income Per Share
Net income per common share is computed on the
basis of the weighted average number of common
shares outstanding during the period including
common stock equivalents (unless antidilutive)
which would arise from the exercise of stock
warrants.
Cash Equivalents
For purposes of the statements of cash flows, the
Company considers all highly liquid debt
instruments purchased with an original maturity of
three months or less to be cash equivalents (other
than instruments deposited in Trust Fund or
described below under "Short-term Investment").
Trust Fund
U.S. Government security deposited in Trust Fund
at December 31, 1995 represents a U.S. Treasury
bill purchased on November 16, 1995 which matured
on February 15, 1996. The cost of the security was
$18,364,716.
U.S. Government security deposited in Trust Fund
at June 30, 1996 represents a U.S Treasury bill
purchased on June 26, 1996 which matures on
July 25, 1996. The cost of the security was
$18,919,111.
Short-term Investment
The short-term investment at December 30, 1995
represents a U.S. Treasury bill purchased on
September 22, 1995 at a cost of $1,099,942 which
matured on January 25, 1994.
The short-term investment at June 30, 1996
represents a U.S. Treasury bill purchased on
June 3, 1996 at a cost of $751,698 which matures
on July 5, 1996.
Investments
The Company follows Statement of Financial
Accounting Standards No. 115 ("SFAS No. 115"),
"Accounting for Certain Investments in Debt and
Equity Securities", with no material impact on the
Company's financial position.
Interim Results (unaudited)
The accompanying balance sheet as of June 30,
1996, the statements of operations for the three
and six months ended June 30, 1995 and 1996, the
statement of common stock, common stock subject to
possible conversion, preferred stock, additional
paid-in capital and retained earnings accumulated
during the development stage as of June 30, 1996
and the statements of cash flows for the six
months ended June 30, 1995 and 1996 are unaudited.
In the opinion of management, these financial
statements have been prepared on the same basis as
the audited financial statements and include all
adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation
of financial data for such periods. The interim
operating results are not necessarily indicative
of the results for a full year.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make 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.
2. Organization The Company was incorporated in Delaware on
and Business August 18, 1994 with the objective of acquiring or
Operations merging with an operating business in the
financial services industry. The Company's
founding stockholders (the "Initial Stockholders")
purchased 833,333 of its common shares, $.001 par
value (the "Pre-IPO Shares"), for $25,000 in
August 1994.
The registration statement for the Company's
initial public offering ("Offering") was declared
effective November 30, 1994. The Company
consummated the Offering in December 1994 and
raised net proceeds of $19,150,098 (Note 3). The
Company's management had broad discretion with
respect to the specific application of the net
proceeds of the Offering, although substantially
all of the net proceeds of the Offering were
intended to be generally applied toward
consummating a business combination with an
operating business in the financial services
industry ("Business Combination"). There is no
assurance that the Company will be able to
successfully effect a Business Combination. The
Company deposited $17,414,998 of the Offering's
proceeds in an interest-bearing trust account
("Trust Fund") to be held until the earlier of
(i) the consummation of a Business Combination or
(ii) liquidation of the Company. The Trust Fund
indenture limits investments to U.S. Government
securities with maturities of 180 days or less.
The remaining proceeds will be used to pay for
business, legal and accounting due diligence on
prospective acquisitions, and continuing general
and administrative expenses in addition to other
expenses.
The Company, after signing a definitive agreement
for a Business Combination, is required to submit
such transaction for stockholder approval. In
connection with the vote on such Business
Combination all of the Initial Stockholders,
consisting of all of the current officers and
directors of the Company, have agreed that all
Pre-IPO Shares owned by them will be voted with
the majority of all the shares of common stock
sold in the Offering (the "Public Shares"). After
consummation of the Company's first Business
Combination, this voting provision will no longer
be applicable.
With respect to the first Business Combination
which is approved and consummated, any holder of
Public Shares who votes against the Business
Combination may demand that the Company convert
his or her shares into cash. The per share
conversion price will equal the amount in the
Trust Fund as of the record date for determination
of stockholders entitled to vote on the Business
Combination divided by the number of Public
Shares. The Company will not consummate a Business
Combination if 20% or more of the Public Shares
are voted against the Business Combination and
have conversion rights with respect to them
exercised. Accordingly, 19.99% of the aggregate
number of Public Shares may be converted to cash
in the event of a Business Combination. Holders of
shares exercising such conversion rights are
entitled to receive their per share interest in
the Trust Fund computed without regard to the
Pre-IPO Shares. Accordingly, a portion of the net
proceeds from the Offering (19.99% of the amount
held in the Trust Fund) has been classified as
common stock subject to possible conversion in the
accompanying balance sheets at the conversion
value.
The Company's Certificate of Incorporation
provides for mandatory liquidation of the Company
in the event that the Company does not consummate
a Business Combination within 24 months from the
consummation of the Offering. In the event of
liquidation, it is likely that the per share value
of the residual assets remaining available for
distribution (including Trust Fund assets) will be
less than the initial public offering price per
share in the Offering (assuming no value is
attributed to the Warrants contained in the Units
offered in the Offering discussed in Note 3).
3. Public Offering On December 7, 1994, the Company sold 3,333,333
units ("Units") in the Offering. On December 30,
1994, a further 250,000 Units were sold. Each Unit
consists of one share of the Company's common
stock, $.001 par value, and two Redeemable Common
Stock Purchase Warrants ("Warrants"). Each Warrant
entitles the holder to purchase from the Company
one share of common stock at an exercise price of
$5.00 during the period commencing on the
consummation of a Business Combination and ending
November 30, 2001. The Warrants will be redeemable
at a price of $.01 per Warrant upon 30 days'
notice at any time, only in the event that the
last sale price of the common stock is at least
$8.50 per share for 20 consecutive trading days
ending on the third day prior to the date on which
notice of redemption is given.
The Company issued an aggregate of $200,000 of
promissory notes to certain accredited investors.
These notes bore interest at the rate of 10% per
annum and were repaid on the consummation of the
Company's Offering with accrued interest thereon
of $3,836. In addition, the investors were issued
400,000 warrants ("Bridge Warrants") (valued at
$0.05 per warrant - aggregate $20,000) which are
identical to the Warrants discussed above, except
that they are not redeemable by the Company until
90 days after the consummation of a Business
Combination.
In connection with the Offering, the Company also
sold 333,333 Unit Purchase Options (the "IPO
Options") to the Offering underwriters and certain
of their designees. Each IPO Option entitles the
holder thereof to acquire a unit, at $9.90 per
unit, consisting of one share of common stock and
two warrants (which are identical to the Warrants
discussed above, except that the exercise price
per warrant is $6.25 and their expiration date is
November 30, 1999).
4. Commitment The Company presently occupies office space
provided by an affiliate of certain stockholders
of the Company. Such affiliate has agreed that,
commencing on the effective date of the Offering
through the acquisition of a target business by
the Company, it will make its office space and
certain office and secretarial services available
to the Company, as may be required by the Company
from time to time. The Company has been paying
$5,000 per month for such services.
5. Preferred Stock The Company is authorized to issue 1,000,000
shares of preferred stock with such designations,
voting and other rights and preferences as may be
determined from time to time by the Board of
Directors.
6. Common Stock At June 30, 1996, 8,566,665 shares of common stock
were reserved for issuance upon exercise of
Warrants, Bridge Warrants and certain
underwriters' options to acquire 333,333 Units.
7. Acquisition On May 16, 1995, the Company executed a letter of
Costs intent to acquire all of the outstanding capital
stock of Cedar Street Securities Corp. and a seat
on the New York Stock Exchange. On July 14, 1995,
the letter of intent was terminated. The costs of
$239,817 relating to this proposed acquisition
were expensed during the year ended December 31,
1995.
8. Proposed On March 8, 1996, the Company entered into an
Acquisition agreement to acquire Euro Brokers Investment
Corporation ("Euro Brokers"), a privately held
international and domestic inter-dealer broker for
a broad range of financial instruments. Under the
terms of the agreement, each outstanding share of
Euro Brokers common stock will be converted into
the right to receive, subject to certain
adjustments and escrow arrangements, approximately
(i) 2.64 shares of the Company's common stock
(approximately 4,416,666 shares), (ii) 4.53 of the
Company's redeemable common stock purchase
warrants (approximately 7,566,666 warrants), and
(iii) $9.57 in cash (which, if the transaction had
been consummated as of June 30, 1996, would have
been adjusted to approximately $12.03 per share,
aggregating to approximately $20.1 million).
Completion of this transaction is subject to
certain conditions, including stockholders'
approvals and receipt of certain regulatory
approvals. Costs relating to this proposed
acquisition, primarily professional fees,
aggregated $734,672 at June 30, 1996, and have
been deferred.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Services Acquisition Corporation (the
"Company") is a Specified Purpose Acquisition Company , the
objective of which is to acquire an operating business in the
financial services industry (a "Target Business") by merger,
exchange of capital stock, asset or stock acquisition or other
similar type of transaction (a "Business Combination").
In August 1994, the Company issued 833,333 shares (the
"Pre-IPO Shares") of its Common Stock, par value $.001 per
share ("Common Stock"), to six initial stockholders. In
September 1994, the Company raised $200,000 in bridge
financing (the "Bridge Financing") in order to pay certain
organizational expenses, the costs of the Bridge Financing and
certain costs of its initial public offering ("IPO").
Thirteen investors in the Bridge Financing loaned an aggregate
of $200,000 to the Company and were issued promissory notes in
that amount payable at the consummation of the IPO, bearing
interest at the rate of 10% per annum, and 400,000 bridge
warrants (the "Bridge Warrants").
The IPO was consummated in December 1994, with the
Company selling 3,583,333 units ("Units") (which includes
250,000 Units sold as part of the underwriters' over-allotment
option). Each Unit consists of one share of Common Stock and
two Redeemable Common Stock Purchase Warrants (the "Public
Warrants"). The Company also sold 333,333 Unit Purchase
Options (the "UPOs") to the IPO underwriters and certain of
their designees. In the IPO, the Company received net
proceeds of approximately $19,150,000 after payment of
offering expenses. From these proceeds, the Company repaid
the Bridge Financing promissory notes (and interest thereon).
The Company's management had broad discretion with respect to
the specific application of the net proceeds of the IPO,
although substantially all of the net proceeds were intended
to be applied toward consummating a Business Combination with
a Target Business. There is no assurance that the Company will
be able to successfully effect a Business Combination. A
majority of the net proceeds (approximately $17,415,000) was
placed in an interest-bearing trust account (the "Trust Fund")
until the earlier of (i) consummation of a Business
Combination or (ii) liquidation of the Company. The Trust
Agreement relating to the Trust Fund limits investments to
U.S. Government securities with a maturity of 180 days or
less. As of June 30, 1996 and December 31, 1995, the Trust
Fund consisted of approximately $18,945,000 and $18,489,000,
respectively, of U.S. Government securities (including accrued
interest thereon). The remaining proceeds of the IPO, and the
interest thereon, have been and are being used to pay for
business, legal and accounting due diligence on prospective
acquisitions, and for the general and administrative expenses
and taxes of the Company, including, but not limited to, legal
and accounting fees and administrative support expenses in
connection with the Company's reporting obligations to the
Securities and Exchange Commission. During the quarter and
six months ended June 30, 1996, general and administrative
expenses were approximately $46,000 and $87,000, respectively,
as compared to $49,000 and $97,000 in the quarter and six
months ended June 30, 1995, respectively. As of June 30, 1996
and December 31, 1995, the Company had approximately $986,000
and $1,276,000, respectively, of cash and cash equivalents and
short-term investments, other than assets held in the Trust
Fund.
On May 16, 1995, the Company announced that it had
entered into a letter of intent with respect to a potential
Business Combination. On July 14, 1995, the Company announced
that negotiations with respect to the proposed acquisition had
been terminated. Approximately $240,000 of costs relating to
negotiation of the proposed transaction were expensed during
the year ended December 31, 1995.
On March 8, 1996, the Company announced that it had
entered into an Agreement and Plan of Merger, dated as of
March 8, 1996 (the "Merger Agreement"), with Euro Brokers
Investment Corporation ("Euro Brokers"), pursuant to which a
newly-formed wholly owned subsidiary of the Company ("Sub")
will merge with and into Euro Brokers (the "Merger"), with
Euro Brokers thereafter becoming a direct, wholly owned
subsidiary of the Company. Consummation of the Merger is
subject to a number of conditions, including, but not limited
to, receipt of stockholder approvals and certain regulatory
approvals.
In connection with the proposed Merger, the Company
entered into an UPO Exchange and Custodial Agreement, dated as
of June 24, 1996 (the "UPO Agreement"), with the holders of
the outstanding UPOs, providing for the exchange, contingent
upon and effective immediately following the Merger, of all
UPOs for an aggregate of 225,000 newly-issued shares of Common
Stock. A copy of the UPO Agreement is included as an Exhibit
to this Form 10-Q and incorporated herein by reference, and
the foregoing description of the UPO Agreement is qualified in
its entirety by reference to the full text thereof.
Euro Brokers held a special meeting of Euro Brokers
stockholders on July 15, 1996, at which the Merger Agreement
was approved. A special meeting of the Company's
stockholders in connection with the Merger Agreement is
scheduled to be held on August 15, 1996.
In the event the Company does not consummate the
Merger or an alternative business combination by December 7,
1996, the Company will be dissolved and will distribute to all
holders of Common Stock sold in the IPO (the "Public Shares"),
in proportion to their respective interests in all such Public
Shares, an aggregate sum equal to the amount in the Trust
Fund, inclusive of any after tax interest thereon, plus any
remaining net assets of the Company. Pre-IPO Shares, Public
Warrants and Bridge Warrants will have no right to participate
in any such distribution from the Trust Fund. During the
quarter and six months ended June 30, 1996, the Company earned
interest of approximately $238,000 and $482,000, respectively,
as compared to $283,000 and $559,000 during the quarter and
six months ended June 30, 1995, respectively. Pursuant to the
Company's Certificate of Incorporation, a holder of Public
Shares also is entitled to receive funds from the Trust Fund
in the event that such holder votes against a Business
Combination and demands conversion of his or her shares into
cash ("Redemption Rights"), and such Business Combination is
actually consummated by the Company, although the Company is
not permitted to consummate a Business Combination if 20% or
more of the Public Shares (or 716,667 shares) exercise such
Redemption Rights. Moreover, pursuant to the terms of the
Merger Agreement, Euro Brokers is not obligated to consummate
the Merger if Redemption Rights are exercised with respect to
a number of shares in excess of 10% of all outstanding shares
of Common Stock (including shares issued in connection with
the UPO Agreement).
Substantially all of the Company's working capital
needs are attributable to the identification, evaluation and
selection of a suitable Target Business and, thereafter, to
the structuring, negotiation and consummation of a Business
Combination with such Target Business. Such working capital
needs have been, and are expected to continue to be, satisfied
from the net proceeds of the IPO not deposited in the Trust
Fund.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Description
4.5 UPO Exchange and Custodial Agreement, dated as of June
24, 1996, by and among GKN Securities Corp., Barington
Capital Group, L.P. the Registrant and Graubard,
Mollen & Miller, as custodian (incorporated herein by
reference to Exhibit 4.5 of the Registrant's
Registration Statement on Form S-4 (No. 333-06753)
dated June 25, 1996).
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
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.
FINANCIAL SERVICES ACQUISITION CORPORATION
(Registrant)
Date: August 14 , 1996 /s/ Gilbert D. Scharf
_________________________________________
Gilbert D. Scharf, Chairman of the Board,
President and Chief Executive Officer
Date: August 14, 1996 /s/ Michael J. Scharf
________________________________________
Michael J. Scharf, Vice President,
Secretary and Treasurer (Chief Financial
and Principal Accounting Officer)
EXHIBIT INDEX
EXHIBIT
DESCRIPTION PAGE
4.5 UPO Exchange and Custodial Agreement, dated as
of June 24, 1996, by and among GKN Securities
Corp., Barington Capital Group, L.P. the
Registrant and Graubard, Mollen & Miller, as
custodian (incorporated herein by reference to
Exhibit 4.2 of the Registrant's Registration
Statement on Form S-4 (No. 333-06753) dated
June 25, 1996).
27.1 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information
extracted from the Financial Statements of Financial
Services Acquisition Corporation for the period ended
June 30, 1996 and is qualified in its entirety by refer-
ence to such Financial Statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> APR-01-1996 JAN-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 231 231
<SECURITIES> 755 755
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 19931 19931
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 20710 20710
<CURRENT-LIABILITIES> 893 893
<BONDS> 0 0
0 0
0 0
<COMMON> 4 4
<OTHER-SE> 16026 16026
<TOTAL-LIABILITY-AND-EQUITY> 20710 20710
<SALES> 0 0
<TOTAL-REVENUES> 238 482
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 71 132
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 167 350
<INCOME-TAX> 57 119
<INCOME-CONTINUING> 110 231
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 110 231
<EPS-PRIMARY> .03 .05
<EPS-DILUTED> .03 .05
</TABLE>
