-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QJCiD5trmOqdadQg4oaEuT/tXBwa5vc1am0UTv5yxdel0lp8/A343KjWc7tcfxfC 7COfa78Unn0c5ZDFrTbP9w== 0001047469-99-002893.txt : 19990202 0001047469-99-002893.hdr.sgml : 19990202 ACCESSION NUMBER: 0001047469-99-002893 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19990201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITY FIRST ACQUISITION CORP CENTRAL INDEX KEY: 0001021435 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133899021 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21683 FILM NUMBER: 99518389 BUSINESS ADDRESS: STREET 1: 245 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126964282 MAIL ADDRESS: STREET 1: 245 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 10-Q 1 FORM 10-Q United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended October 31, 1998 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-21683 Unity First Acquisition Corp. (Exact name of registrant as specified in its charter) Delaware 13-3899021 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 245 Fifth Avenue, Suite 1500 New York, New York 10016 (Address of principal executive offices) (Zip Code) (212) 696-4282 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the 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 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 Issuers Involved in Bankruptcy Proceeding During the Preceding Five Years: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No Applicable Only to Corporate Issuers: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 1,875,000 shares of Common Stock at February 1, 1999 PART I - FINANCIAL INFORMATION Item 1. Financial Statements The condensed financial statements included herein have been prepared by Unity First Acquisition Corp. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. While certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures made herein are adequate to make the information presented not misleading. UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) BALANCE SHEETS - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
ASSETS OCTOBER 31, 1998 JULY 31, 1998 ---------------- ------------- (Unaudited) CASH AND CASH EQUIVALENTS $ 1,587 $ 196 RESTRICTED CASH AND INVESTMENTS 6,548,275 6,489,707 ----------- ----------- TOTAL ASSETS $ 6,549,862 $ 6,489,903 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: ACCRUED EXPENSES $ 639,044 $ 379,082 ADVANCES FROM AFFILIATE 48,000 33,000 ----------- ----------- TOTAL LIABILITIES 687,044 412,082 ----------- ----------- COMMITMENTS AND CONTINGENCIES: Common stock, $.0001 par value, 249,875 shares subject to possible conversion, at conversion value 1,308,995 1,297,301 ----------- ----------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 5,000 shares authorized, no shares issued or outstanding -- -- Common stock, $.0001 par value, 20,000,000 shares authorized, 1,625,125 shares issued and outstanding (excluding 249,875 shares subject to possible conversion) 163 163 Additional paid-in capital 5,093,017 5,104,711 Deficit accumulated during the development stage (539,357) (324,354) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 4,553,823 4,780,520 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,549,862 $ 6,489,903 ----------- ----------- ----------- -----------
See Selected Notes to Financial Statement. 1 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) STATEMENTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
FOR THE CUMULATIVE THREE MONTHS ENDED AMOUNTS OCTOBER 31, FROM INCEPTION ------------------------------- -------------- 1998 1997 ----------- ----------- REVENUE $ -- $ -- $ -- ----------- ----------- ----------- EXPENSES: General and administrative 289,550 55,956 1,109,276 ----------- ----------- ----------- OTHER INCOME: Interest and dividends 74,547 75,524 573,494 ----------- ----------- ----------- OPERATING (LOSS) INCOME (215,003) 19,568 (535,782) PROVISION FOR INCOME TAXES -- 7,863 3,575 ----------- ----------- ----------- NET (LOSS) INCOME $ (215,003) $ 11,705 $ (539,357) ----------- ----------- ----------- ----------- ----------- ----------- NET (LOSS) INCOME PER COMMON SHARE-BASIC AND DILUTED $ (.11) $ .01 ----------- ----------- ----------- ----------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED 1,875,000 1,875,000 ----------- ----------- ----------- -----------
See Selected Notes to Financial Statement. 2 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
(DEFICIT) ACCUMULATED COMMON STOCK ADDITIONAL DURING THE ---------------------------- PAID-IN DEVELOPMENT SHARES PAR VALUE CAPITAL STAGE TOTAL --------- ----------- ----------- ----------- ----------- Balance, July 31, 1998 1,875,000 $ 163 $ 5,104,711 $ (324,354) $ 4,780,520 Net loss for the three months ended October 31, 1998 -- -- -- (215,003) (215,003) Increase in value attributable to common shares subject to possible conversion -- -- (11,694) -- (11,694) --------- ----------- ----------- ----------- ----------- Balance, October 31, 1998 1,875,000 $ 163 $ 5,093,017 $ (539,357) $ 4,553,823 --------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- -----------
See Selected Notes to Financial Statement. 3 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) STATEMENTS OF CASH FLOWS (UNAUDITED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
FOR THE THREE MONTHS CUMULATIVE ENDED AMOUNTS OCTOBER 31, FROM INCEPTION ----------------------- -------------- 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (215,003) $ 11,705 $ (539,357) CHANGES IN CERTAIN ASSETS AND LIABILITIES: Increase (decrease) in accrued expenses and taxes 259,962 (3,995) 664,044 ----------- ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 44,959 7,710 124,687 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock -- -- 6,402,175 Advances from affiliate 15,000 -- 143,917 Repayment to affiliate -- -- (95,917) Deferred registration costs -- -- (25,000) ----------- ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES (15,000) -- 6,425,175 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) in restricted cash and investments (58,568) (72,934) (6,548,275) ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,391 (65,224) 1,587 CASH AND CASH EQUIVALENTS, beginning of period 196 266,533 -- ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 1,587 $ 201,309 $ 1,587 ----------- ----------- ----------- ----------- ----------- -----------
See Selected Notes to Financial Statement. 4 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) SELECTED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 1 - FINANCIAL STATEMENTS The financial statements have been prepared by Unity First Acquisition Corp. ("Unity"), without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at October 31, 1998 and for all periods presented have been made. The results of operations for the period ended October 31, 1998 are not necessarily indicative of the operating results for a full year. Certain information and footnote disclosures prepared in accordance with general accepted accounting principles and normally included in the financial statements have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in Unity's annual report Form 10-k for the year ended July 31, 1998. NOTE 2 - ORGANIZATION AND OPERATIONS Unity was incorporated in the State of Delaware on May 30, 1996 to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition or other similar business combination (a "Business Combination"). Unity is currently in the development stage. All activity of Unity to date relates to its formation, fund-raising, and search to effect a Business Combination. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UTILIZATION OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and 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. 5 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) SELECTED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". This statement establishes standards for computing and presenting earnings per share ("EPS"), replacing the presentation of primary EPS with a presentation of Basic EPS. For entities with complex capital structures, the statement requires the dual presentation of both Basic EPS and Diluted EPS on the face of the statement of operations. Under this new standard, Basic EPS is computed based on the weighted average number of shares actually outstanding during the year. Diluted EPS includes the effect of potential dilution from the exercise of outstanding dilutive stock operations and warrants into common stock using the treasury stock method. SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997, and early application is not permitted. The adoption of this statement did not have a material effect on Unity's financial position or on the results of its operations. NOTE 4 - RESTRICTED CASH AND INVESTMENTS Unity, pursuant to the terms of its initial public offering (the "Offering"), placed $6,007,500 as of November 19, 1996, in a trust account which was primarily invested in a short-term U.S. Government Security. These funds are subject to release upon the earlier of (i) written notification by the Unity of its need for all or substantially all of the net proceeds for the purpose of implementing or facilitating the implementation of a Business Combination or (ii) the liquidation of the Unity (See note 5). 6 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) SELECTED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 5 - PENDING ACQUISITION On May 6, 1998, Unity entered into a letter of intent to effectuate a Business Combination ("Merger") with Worlds, Inc. ("Worlds"), a company engaged in developing music-oriented content applications for its proprietary 3D Internet technology for consumer markets, as well as developing select business oriented applications. On June 25, 1998, Unity and Worlds entered into a definitive Agreement and Plan of Merger and Reorganization (the "Merger Agreement") to effectuate the Merger. On October 29, 1998, Unity's stockholders, at a special meeting convened to consider whether to approve or reject the Merger contemplated by the Merger Agreement, rejected the Merger. As a consequence of the rejection of the Worlds Merger by the Unity Public Stockholders, Article SEVENTH, paragraph (c) of Unity's Certificate of Incorporation would have required the liquidation and dissolution of Unity (the "Liquidation") no later than January 11, 1999. Had such Liquidation taken place on that date, the Unity Public Stockholders, collectively, would have received a liquidating distribution representing their respective pro rata interest in a trust fund established for their benefit upon the consummation of the IPO, which currently approximates $6.5 million. On December 10, 1998, Unity entered into a letter of intent to effectuate a Business Combination with GraphOn Corporation ("GraphOn"), a privately owned developer and marketer of proprietary "thin client" software that enables a diverse range of desktop computing devices ("desktops") to easily access and utilize UNIX applications from an location, over both fast networks and slow internet connections. Unity's Board of Directors has unanimously concluded that a Business Combination with GraphOn would be in the best interests of both Unity and its stockholders, including the Unity Public Stockholders. Consequently, Unity's Board of Directors has sought and obtained an opinion from special Delaware counsel to the effect that such Article SEVENTH, paragraph (c), which attempts to waive Unity's statutory right to amend the Unity Certificate of Incorporation, is contrary to Delaware law and cannot prevent Unity and its stockholders from amending the Unity Certificate of Incorporation. 7 UNITY FIRST ACQUISITION CORP. (A DEVELOPMENT STAGE ENTITY) SELECTED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 10 - PENDING ACQUISITION (CONT'D) Subject to its submission under the Securities Exchange Act of 1934, as amended, of proxy solicitation material, Unity's Board of Directors intends to seek the approval of the Unity Public Stockholders to (i) amend the Unity Certificate of Incorporation to remove the provision therein that would have required Unity to commence the Liquidation as a consequence of its inability to consummate a Business Combination within the period defined by Article SEVENTH, paragraph (c) of the Unity Certificate of Incorporation and, if such approval is obtained, to (ii) consider and vote upon a proposal to approve Unity's Business Combination with GraphOn. There can be no assurance that the Unity Stockholders will approve the proposed amendment to the certificate of Incorporation, or the proposed Business Combination with GraphOn Corporation. The proposed amendment to the Unity Certificate of Incorporation will not affect the right of any Unity Public Stockholder to convert his shares of Unity Common Stock into cash, as provided in Article SEVENTH of the Unity Certificate of Incorporation, should such Unity Public Stockholder object to the GraphOn Business Combination and such Business Combination is approved by a majority in equity interest of the Unity Public Stockholders and thereafter consummated. Depending upon the voting of the Unity Public Stockholders as to the amendment to the Unity Certificate of Incorporation or the Business Combination with GraphOn, Unity may liquidate. The accompanying financial statements have not been presented on a liquidation basis of accounting as Unity has not decided to liquidate. Additionally, it is not expected that the carrying value of Unity's assets and liabilities would be materially different if presented under a liquidation basis based on the nature of such assets and liabilities. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unity First Acquisition Corp. ("Unity") was incorporated in May 1996 for the purpose of raising money to fund a vehicle to effect a Business Combination with an operating business. On November 12, 1996 the Unity's Registration Statement covering 1,250,000 Units was declared effective by the Securities and Exchange Commission. Each Unit consists of one share of Unity's Common Stock, one Class A Redeemable Warrant and one Class B Redeemable Warrant (hereafter the "Units"). Unity, after the Offering, had net proceeds of approximately $6,402,000. Approximately $6,007,500 was invested in an interest bearing Trust Fund at The Bank of New York and the balance at the same banking institution in checking and money market accounts. For the three months ended October 31, 1998, Unity had a net loss of $215,003 attributable to interest income of $74,547, offset by operating expenses of $289,550, primarily consisting of unsuccessful deal fees of $205,163, management and professional fees of $79,137, and taxes of $5,250. 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (A) Exhibits (i) Financial Data Schedule (Exhibit 27) (B) Reports on Form 8-K Inapplicable 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. UNITY FIRST ACQUISITION CORP. (Registrant) Dated: February 1, 1999 By: /s/ Lawrence Burstein --------------------------------- Lawrence Burstein President (Principal Executive Officer) By: /s/ Norman Leben --------------------------------- Norman Leben Secretary (Principal Financial and Accounting Officer) EX-27 2 EXHIBIT 27
5 3-MOS JUL-31-1999 OCT-31-1998 1,587 0 0 0 0 6,549,862 0 0 6,549,862 687,044 0 0 0 163 5,862,655 6,549,862 0 0 0 289,550 0 0 0 (215,003) 0 (215,003) 0 0 0 (215,003) (.11) (.11)
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