-----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, TgQaNWW9+P50N6REAgoCpTqwLMDfpmo2oAhV8G7s49zfO0quY7YLx1VfshphgxfP PvkBJ5zFYNcnUY2PWV43rQ== 0001094891-02-000225.txt : 20020515 0001094891-02-000225.hdr.sgml : 20020515 20020515160455 ACCESSION NUMBER: 0001094891-02-000225 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 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: 02652318 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 orion3312002_10qsb.txt ORION ACQUISITION II 10QSB FOR 3-31-2002 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: March 31, 2001 __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-20837 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 Boulevard - Suite 1020 Santa Monica, CA 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 May 1, 2002, 1,102,157 shares of Common Stock were issued and outstanding. PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) CONTENTS March 31, 2002 (unaudited) - -------------------------------------------------------------------------------- Page FINANCIAL STATEMENTS Balance Sheet 1 Statements of Operations 2 Statements of Cash Flows 3 - 4 Notes to Financial Statements 5 - 8 i ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET March 31, 2002 (unaudited) - -------------------------------------------------------------------------------- ASSETS Assets Cash $ 2,043,591 Income taxes receivable 26,694 Deferred tax assets 221 Other assets 15,780 ----------------- Total assets $ 2,086,286 ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accrued expenses $ 25,332 ---------------- Total current liabilities 25,332 ---------------- Contingencies Stockholders' equity Preferred stock, $0.01 par value 1,000,000 shares authorized 110 shares (unaudited) issued and outstanding 1 Common stock, $0.01 par value 10,000,000 shares authorized 1,102,157 shares (unaudited) issued and outstanding 11,022 Additional paid-in capital 2,203,043 Deficit accumulated during the development stage (153,112) ---------------- Total stockholders' equity 2,060,954 ---------------- Total liabilities and stockholders' equity $ 2,086,286 ================ The accompanying notes are an integral part of these financial statements. 1 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2002 and 2001 (unaudited) and for the Period from October 19, 1995 (Inception) to March 31, 2002 (unaudited) - --------------------------------------------------------------------------------
For the Period from October 19, For the Three Months Ended 1995 March 31, (Inception) to -------------------------------- March 31, 2002 2001 2002 ---------------- --------------- ---------------- (unaudited) (unaudited) (unaudited) Operating expenses General and administrative expenses $ 59,534 $ 64,355 $ 1,021,012 Stock-based compensation expense - - 100,000 ---------------- --------------- ---------------- Total operating expenses 59,534 64,355 1,121,012 ---------------- --------------- ---------------- Loss from operations (59,534) (64,355) (1,121,012) ---------------- --------------- ---------------- Other income (expense) Interest income 6,642 30,319 1,567,519 Other income - - 2,183 Interest expense - - (57,694) ---------------- --------------- ---------------- Total other income (expense) 6,642 30,319 1,512,008 ---------------- --------------- ---------------- Income (loss) before provision for income taxes (52,892) (34,036) 390,996 Provision for income taxes - - 268,467 ---------------- --------------- ---------------- Net income (loss) $ (52,892) $ (34,036) $ 122,529 ================ =============== ================ Basic and diluted Loss per common share $ (0.05) $ (0.03) ================ ============== Weighted-average common shares outstanding 1,102,157 1,102,157 ================ ===============
The accompanying notes are an integral part of these financial statements. 2 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2002 and 2001 (unaudited) and for the Period from October 19, 1995 (Inception) to March 31, 2002 (unaudited) - --------------------------------------------------------------------------------
For the Period from October 19, For the Three Months Ended 1995 March 31, (Inception) to -------------------------------- March 31, 2002 2001 2002 ---------------- --------------- ---------------- (unaudited) (unaudited) (unaudited) Cash flows from operating activities Net income (loss) $ (52,892) $ (34,036) $ 122,529 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 in Income taxes receivable - - (26,694) Deferred income taxes - - (221) Other assets - - (15,780) Increase (decrease) in Accrued expenses (15,564) (16,916) 25,332 ---------------- --------------- ---------------- Net cash provided by (used in) operating activities (68,456) (50,952) 242,666 ---------------- --------------- --------------- Cash flows from investing activities Purchase of United States Treasury bills - - (1,506,615) Sales or maturities of investments - (23,364) (84,029) ---------------- --------------- --------------- Net cash used in investing activities - (23,364) (1,590,644) ---------------- --------------- --------------- 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 private placement shares - - 304,520 Issuance of convertible preferred stock - - 11,000 ---------------- --------------- ---------------- Net cash provided by financing activities - - 1,800,925 ---------------- --------------- ----------------
The accompanying notes are an integral part of these financial statements. 3 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2002 and 2001 (unaudited) and for the Period from October 19, 1995 (Inception) to March 31, 2002 (unaudited) - --------------------------------------------------------------------------------
For the Period from October 19, For the Three Months Ended 1995 March 31, (Inception) to -------------------------------- March 31, 2002 2001 2002 ---------------- --------------- ---------------- (unaudited) (unaudited) (unaudited) Net increase (decrease) in cash $ (68,456) $ (74,316) $ 452,947 Cash, beginning of period 2,112,047 585,480 - ---------------- --------------- ---------------- Cash, end of period $ 2,043,591 $ 511,164 $ 452,947 ================ =============== ================ Supplemental disclosures of cash flow information Income taxes paid $ - $ - $ 61,000 ================ =============== ================
The accompanying notes are an integral part of these financial statements. 4 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS March 31, 2002 (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 Company's management has broad discretion with respect to the specified application of the assets of the Company, although substantially all of the assets are currently 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, 2001. The results of operations for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. 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 devoting 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. 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. 5 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Loss per Share (Continues) 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 Three Months Ended March 31, ----------------------------------- 2002 2001 --------------- ---------------- (unaudited) (unaudited) Class A Warrants - 880,000 Class B Warrants 358,000 390,100 Series A Convertible Preferred Stock 110,000 110,000 Stock option 10,000 10,000 Option to purchase Class A Warrants 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 - 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. The exchange offer must be made after the Company completes its first Business Combination with a target company that results in the acquisition of one or more companies with operating businesses and results in the Company having assets in excess of $5,000,000. 6 NOTE 3 - CONTINGENCIES (Continued) Litigation (Continued) 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 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. Messrs. 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 an 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. On March 28, 2002, the terms of a settlement between the Company and the Mentmore defendants was reached, subject to execution and court approval. The settlement calls for certain of the defendants to surrender 71,250 shares of the Company's common stock that are owned by those defendants, certain of the defendants to surrender a warrant to purchase 100,000 shares of the Company's common stock, which the Company will cancel, and the former directors to withdraw their claims for reimbursement by the Company of their defense costs. 7 NOTE 4 - 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 three-month period ending March 31, 2002, consisted of investment income earned from Treasury bills less expenses associated with general and administrative overheads and litigation expenses. Results for the three months ended March 31, 2001 consisted of investment income earned from Treasury bills held in escrow less expenses associated with general and administrative overheads. 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. 8 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. On March 28, 2002, the terms of a settlement were reached between the Company and the Mentmore defendents, subject to execution and court approval. The settlement calls for certain of the defendents to surrender 71,250 shares of Orion's common stock which are owned by those defendents, certain of the defendents to surrender a warrant to purchase 100,000 shares of the Company's stock, which the Company will cancel, and the former directors to withdraw their claim for reimbursement by the Company of their defense costs. 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 9 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: May 14, 2002 /s/ Christopher A. Marlett -------------------------------- Christopher A. Marlett Chairman, President, and CEO /s/ Anthony DiGiandomenico ------------------------------- Anthony DiGiandomenico Chief Financial Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----