0001094891-01-500351.txt : 20011119
0001094891-01-500351.hdr.sgml : 20011119
ACCESSION NUMBER: 0001094891-01-500351
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011106
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ORION ACQUISITION CORP II
CENTRAL INDEX KEY: 0001011835
STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770]
IRS NUMBER: 133863260
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-20837
FILM NUMBER: 1775719
BUSINESS ADDRESS:
STREET 1: 100 WILSHIRE BOULEVARD SUITE 1750
STREET 2: 13TH FL
CITY: SANTA MONICA
STATE: CA
ZIP: 90401
BUSINESS PHONE: 2123911392
MAIL ADDRESS:
STREET 1: 100 WILSHIRE BOULEVARD SUITE 1750
CITY: SANTA MONICA
STATE: CA
ZIP: 90401
10QSB
1
orion_10qsb-93001.txt
10QSB FOR 9/30/01 QUARTER END
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended: September 30, 2001
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-20837
Orion Acquisition Corp. II
(Exact name of registrant as specified in its charter)
Delaware 13-3863260
(State of Incorporation) (IRS Employer Identification No.)
401 Wilshire Blvd., Suite 1020
Los Angeles, California 90401
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (310) 526-5000
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 ___
As of September 30, 2001, 1,102,157 shares of Common Stock were issued
and outstanding.
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 2001 (unaudited)
--------------------------------------------------------------------------------
ASSETS
Assets
Cash $ 455,858
Investments - held to maturity 1,643,052
Income taxes receivable 27,232
Deferred income taxes 221
Other assets 29,628
----------------
Total assets $ 2,155,991
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 23,932
----------------
Total current liabilities 23,932
----------------
Contingencies
Stockholders' equity
Preferred stock, $0.01 par value
1,000,000 shares authorized
110 shares issued and outstanding 1
Common stock, $0.01 par value
10,000,000 shares authorized
1,102,157 shares issued and outstanding 11,022
Additional paid-in capital 2,203,043
Deficit accumulated during the development stage (82,007)
----------------
Total stockholders' equity 2,132,059
----------------
Total liabilities and stockholders' equity $ 2,155,991
==================
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2001 and 2000 (unaudited) and
for the Period from October 19, 1995 (Inception) to September 30, 2001 (unaudited)
------------------------------------------------------------------------------------------------------------------
For the
Period from
For the For the October 19,
Three Months Ended Nine Months Ended 1995
September 30, September 30, (Inception) to
--------------------------------- -------------------------------- September 30,
2001 2000 2001 2000 2001
--------------- --------------- ---------------- --------------- ----------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Operating expenses
General and
administrative
expenses $ 50,546 $ 47,246 $ 128,180 $ 112,791 $ 931,546
Stock-based
compensation
expense - - - - 100,000
--------------- --------------- ---------------- --------------- ----------------
Total operating
expenses 50,546 47,246 128,180 112,791 1,031,546
--------------- --------------- ---------------- --------------- ----------------
Loss from
operations (50,546) (47,246) (128,180) (112,791) (1,031,546)
--------------- --------------- ---------------- --------------- ----------------
Other income
(expense)
Interest income 16,010 23,980 66,323 64,124 1,550,002
Interest expense - - - - (57,694)
--------------- --------------- ---------------- --------------- ----------------
Total other income
(expense) 16,010 23,980 66,323 64,124 1,492,308
--------------- --------------- ---------------- --------------- ----------------
Income (loss) before
provision for
income taxes (34,536) (23,266) (61,857) (48,667) 460,762
Provision for income taxes - - - - 267,129
--------------- --------------- ---------------- --------------- ----------------
Net income (loss) $ (34,536) $ (23,266) $ (61,857) $ (48,667) $ 193,633
================ ================ ================ ================ ================
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2001 and 2000 (unaudited) and
for the Period from October 19, 1995 (Inception) to September 30, 2001 (unaudited)
------------------------------------------------------------------------------------------------------------------
For the
Period from
For the For the October 19,
Three Months Ended Nine Months Ended 1995
September 30, September 30, (Inception) to
--------------------------------- -------------------------------- September 30,
2001 2000 2001 2000 2001
--------------- --------------- ---------------- --------------- ----------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Basic and diluted
Loss per common
share $ (0.03) $ (0.02) $ (0.06) $ (0.40)
=============== =============== ================ ==============
Weighted-average
common shares
outstanding 1,102,157 1,102,157 1,102,157 1,102,157
================ =============== =============== ===============
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2001 and 2000 (unaudited) and
for the Period from October 19, 1995 (Inception) to September 30, 2001 (unaudited)
------------------------------------------------------------------------------------------------------------------
For the
Period from
October 19,
For the 1995
Nine Months Ended (Inception) to
September 30, September 30,
---------------------------------
2001 2000 2001
---------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities
Net income (loss) $ (61,857) $ (48,667) $ 193,633
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Note discount amortization - - 37,500
Stock-based compensation expense - - 100,000
(Increase) decrease in
Income taxes receivable - - (27,232)
Deferred income taxes - - (221)
Other assets - (12,568) (29,628)
Increase (decrease) in
Accounts payable and accrued expenses (16,916) (84,531) 23,933
---------------- --------------- ----------------
Net cash provided by (used in) operating activities (78,773) (145,766) 297,985
---------------- --------------- ----------------
Cash flows from investing activities
Purchase of United States Treasury bills - (57,577) (1,506,615)
Sales or maturities of investments (50,849) - (136,437)
---------------- --------------- ----------------
Net cash used in investing activities (50,849) (57,577) (1,643,052)
---------------- --------------- ----------------
Cash flows from financing activities
Dividend - - (7,200,000)
Issuance of units and redeemable Class B
purchase warrants, net of offering costs - - 8,677,905
Issuance of unsecured promissory notes - - 100,000
Repayment of unsecured promissory notes - - (100,000)
Proceeds from related party note - - 35,000
Repayment of related party note - - (35,000)
Issuance of founders' shares - - 7,500
Issuance of common stock - 297,020 304,520
Issuance of convertible preferred stock - - 11,000
---------------- --------------- ----------------
Net cash provided by financing activities - 297,020 1,800,925
---------------- -------------- ----------------
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2001 and 2000 (unaudited) and
for the Period from October 19, 1995 (Inception) to September 30, 2001 (unaudited)
------------------------------------------------------------------------------------------------------------------
For the
Period from
October 19,
For the 1995
Nine Months Ended (Inception) to
September 30, September 30,
---------------------------------
2001 2000 2001
---------------- --------------- ----------------
(unaudited) (unaudited) (unaudited)
Net increase (decrease) in cash $ (129,622) $ 93,677 $ 455,858
Cash, beginning of period 585,480 522,187 -
---------------- --------------- ----------------
Cash, end of period $ 455,858 $ 615,864 $ 455,858
================ =============== ================
Supplemental disclosures of cash flow
information
Income taxes paid $ - $ - $ 121,000
================ ============== ===============
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 (unaudited)
-------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
Orion Acquisition Corp II (the "Company") was incorporated in Delaware
on October 19, 1995 for the purpose of raising capital to fund the
acquisition of an unspecified operating business. All activity to date
relates to the Company's formation and fundraising. To date, the
Company, as a development stage company, has not effected a Business
Combination (as defined below).
The registration statement for the Company's Initial Public Offering
(the "Offering") became effective on July 2, 1996. The Company
consummated the Offering, raising net proceeds of approximately
$8,700,000. Subsequently, in 1999 the Company pad a dividend of
$7,200,000. The Company's management has broad discretion with respect
to the specified 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 ("Business Combination").
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation
S-B. Accordingly, they 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
normal, recurring adjustments considered necessary for a fair
presentation have been included. The financial statements should be
read in conjunction with the audited financial statements included in
the Company's annual report on Form 10-KSB for the year ended December
31, 2000. The results of operations for the nine months ended September
30, 2001 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2001.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7, "Accounting and
Reporting by Development Stage Enterprises." The Company is evoting all
of its present efforts to its formation and to fundraising, and its
planned principal operations have not yet commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 (unaudited)
-------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loss per Share
The Company calculates loss per share in accordance with SFAS No. 128,
"Earnings per Share." Basic loss per share is computed by dividing the
loss available to common stockholders by the weighted-average number of
common shares outstanding. Diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. Because the Company has
incurred net losses, basic and diluted loss per share are the same. The
following potential common shares have been excluded from the
computation of diluted net loss per share for all periods presented
because they are not exercisable until after a Business Combination:
For the Nine Months Ended
September 30,
------------------------------
2001 2000
------------ ----------
(unaudited) (unaudited)
Class A Warrants - 880,000
Class B Warrants 358,100 390,100
Series A Convertible Preferred Stock 110,000 110,000
Stock option 10,000 10,000
Option to purchase Common Stock 100,000 100,000
Estimates
The preparation of financial statements 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
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 3 - INVESTMENTS - HELD TO MATURITY
A substantial portion of the assets of the Company are invested in
United States Treasury bills having various original maturities of
less than six months. The Company classifies these securities as
held to maturity. The United States treasury bills have matured and
have been invested in money market funds held at Wells Fargo
Investments as of September 30, 2001.
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 (unaudited)
-------------------------------------------------------------------------------
NOTE 4 - CONTINGENCIES
Litigation
On July 1, 1999, a Class B Warrant-holder of the Company brought suit
against the Company, its former directors, and certain other third
parties. On January 31, 2000, the plaintiff filed a notice dismissing
the action without prejudice. On January 28, 2000, the court ordered
the notice of dismissal. The Company and the plaintiff agreed that the
Company will make an exchange offer to all holders of the Class B
Warrants. Upon payment of an exercise price of $0.125 per Class B
Warrant, each Class B Warrant will be exchanged for one share of common
stock, one Class A Warrant, and one Right. The Right will provide for
the issuance of additional shares of common stock based on a formula in
the event that (a) the Company makes an acquisition or consummates a
merger and (b) the post-transaction company does not meet the specified
targets of a $7,000,000 net worth immediately after the transaction and
a minimum common stock price of $5.75 for 10 days during the two-year
period following the transaction, subject to certain adjustment, terms,
and conditions.
The former directors of the Company who were named as defendants in the
suit have made demand upon the Company for reimbursement of attorneys'
fees incurred in defense of the suit prior to its voluntary dismissal.
The former directors contend that they are entitled to reimbursement of
attorneys' fees under a provision of Delaware corporate law. The
Company is considering the reimbursement request. No accrual has been
made for any potential reimbursement in the accompanying financial
statements.
On October 31, 2000, the Company filed with the Supreme Court of the
State of New York, County of New York, a summons and complaint in an
action entitled Orion Acquisition Corp. II v. Mentmore Holdings
Corporation, Mentmore Holdings, Inc., Richard L. Kramer, William L.
Remley, Richard C. Hoffman, Robert D. Frankel, J. Thomas Chess, and
Michael Schenker. Messers. Kramer, Remley, Hoffman, Frankel, and Chess
are former directors of the Company. Messrs. Remley and Kramer were
officers and/or directors of one or more of the Mentmore defendants.
Mr. Hoffman is or was and officer of one or more of the Mentmore
defendants. In the complaint, the Company alleges a series of causes of
action, including a claim against the Company's former directors for
breach of fiduciary duty in connection with the diversion of a
corporate opportunity, and against other defendants for aiding and
abetting the claimed breach of fiduciary duty and duty of loyalty. The
defendants have filed answers in which they deny the material
allegations of the Company's complaint. The action will be entering the
discovery stage.
ORION ACQUISITION CORP. II
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001 (unaudited)
-------------------------------------------------------------------------------
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company uses the services and some of the employees of an
affiliated company and has its executive offices at the offices of the
affiliate. The Company does not pay any amount to or for the employees
of the affiliate or any rent for these offices. The Company reimburses
the affiliate for documented out-of-pocket expenses incurred on its
behalf.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results for the nine-month period ending September 30, 2001, consisted
of investment income earned from money market accounts less expenses
associated with general and administrative overheads and litigation
expenses.
The Company continues to search for a suitable company to complete a
business combination or merger. There remains adequate cash on hand to
bear the costs of due diligence or legal fees necessary to locate and
evaluate potential candidates for a business combination. If a
candidate is found the Company may need to raise additional funds to
complete the acquisition.
PART II. OTHER INFORMATION
ITEM 1: Legal Proceedings
On July 1, 1999, a Class B Warrantholder of Orion brought an action
("July Action") against Orion, its former directors and certain others.
On January 31, 2000, the plaintiff filed a notice dismissing the July
Action without prejudice. On January 28, 2000 the court ordered the
notice of dismissal. The Company and the plaintiff agreed that Orion
will make an exchange offer to all holders of the Class B Warrants. The
exchange offer must be made after Orion completes its first business
combination of a target company that results in the acquisition of one
or more companies with operating businesses and results in Orion having
assets in excess of $5,000,000. The terms of the exchange offer will
require each holder to pay the $.125 exercise price of the Class B
Warrant and surrender the warrant for one share of common stock, one
Class A Warrant and one Right. The Right will provide for the issuance
of additional shares of common stock based on a formula in the event
that Orion makes an acquisition or consummates a merger and the post
transaction company does not meet the specified targets of a $7,000,000
net worth immediately after the transaction and a minimum common stock
price of $5.75 for ten days during the two year peiod following the
transaction, subject to certain adjustment, terms and conditions.
On October 31, 2000, Orion filed with the Supreme Court of the State of
New York, County of New York, a summons and complaint in an action
entitled Orion Acquisition Corp. II v. Mentmore Holdings Corporation,
Mentmore Holdings, Inc., Richard L. Kramer, William L. Remley, Richard
C. Hoffman, Robert D. Frankel, J. Thomas Chase, and Michael D.
Schenker. Messrs. Karmer, Remley, Hoffman, Frankel and Chess are former
directors and/or officers of Orion. Messrs. Remley and Kramer are or
were officers and/or directors of one or more of the Mentmore
defendants. Mr. Hoffman is or was an officer of one or more of the
Mentmore defendants. In the complaint, Orion alleges a series of causes
of action, including a claim against the former Orion directors for
breach of fiduciary duty in connection with the diversion of a
corporate opportunity, and against other defendants for aiding and
abetting the claimed breach of fiduciary duty and duty of loyalty. The
defendants have filed answers in which they deny the material
allegations of Orion's complaint. The action will be entering the
discovery phase.
ITEM 2: Changes in Securities
None.
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matters to a Vote of Security Holders
None
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(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.
ORION ACQUISITION CORP. II
Dated: November 5, 2001 /s/ Anthony Digiandomenico
-------------------------------
Anthony Digiandomenico
Chief Financial Officer