-----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, NMM7gTgTxXopP05MKnBJLBXIre5jY28Tl6kDBYdP9ovMvr9C8gi1OL/X8qW/KC5K VTkPn/cTT51ZApfelDxHiw== 0001144204-04-012964.txt : 20040823 0001144204-04-012964.hdr.sgml : 20040823 20040823162430 ACCESSION NUMBER: 0001144204-04-012964 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040823 DATE AS OF CHANGE: 20040823 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: 04992161 BUSINESS ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD STREET 2: SUITE 1020 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 310-526-5000 MAIL ADDRESS: STREET 1: 401 WILSHIRE BOULEVARD STREET 2: SUITE 1020 CITY: SANTA MONICA STATE: CA ZIP: 90401 10QSB 1 v06118_10qsb.txt 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 June30, 2004 ------------ |_| 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 July 1, 2004, 1,030,907 shares of Common Stock were issued and outstanding. ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) CONTENTS JUNE 30, 2004 (UNAUDITED) - -------------------------------------------------------------------------------- Page FINANCIAL STATEMENTS Balance Sheets 3 Statements of Operations 4 Statements of Cash Flows 5 - 6 Notes to Financial Statements 7 - 10 2 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS - -------------------------------------------------------------------------------- ASSETS
June 30, December 31, 2004 2003 ----------- ----------- ASSETS (unaudited) Cash $ 1,196,613 $ 1,492,921 Convertible notes receivable 750,000 500,000 Other receivable 31,697 31,697 Deferred tax assets 221 221 ----------- ----------- TOTAL ASSETS $ 1,978,531 $ 2,024,839 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 89,835 $ 22,652 Related party payable 1,585 -- ----------- ----------- Total current liabilities 91,420 22,652 ----------- ----------- SHAREHOLDERS' EQUITY Preferred stock, $0.01 par value, 1,000,000 shares authorized, 110 shares (unaudited) issued and outstanding 1 1 Common stock, $0.01 par value, 10,000,000 shares authorized, 1,030,907 shares (unaudited) issued and outstanding 10,309 10,309 Additional paid-in capital 2,203,756 2,203,756 Deficit accumulated during the development stage (326,955) (211,879) ----------- ----------- Total shareholders' equity 1,887,111 2,002,187 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,978,531 $ 2,024,839 =========== ===========
The accompanying footnotes are an integral part of these financial statements. 3 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED) AND FOR THE PERIOD FROM OCTOBER 19, 1995 (INCEPTION) TO JUNE 30, 2004 (UNAUDITED) - --------------------------------------------------------------------------------
For the Period from October 19, For the Three Months Ended For the Six Months Ended 1995 June 30, June 30, (Inception) -------------------------- ------------------------- to June 30, 2004 2003 2004 2003 2004 ----------- ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) OPERATING EXPENSES General and administrative expenses $ 77,286 $ 11,498 $ 120,223 $ 33,933 $ 1,265,678 Stock-based compensation expense -- -- -- -- 100,000 ----------- ----------- ----------- ----------- ----------- Total operating expenses 77,286 11,498 120,223 33,933 1,365,678 ----------- ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (77,286) (11,498) (120,223) (33,933) (1,365,678) ----------- ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE) Other income -- -- -- -- 2,183 Interest income 915 5,383 5,147 8,820 1,607,445 Interest expense -- -- -- -- (57,694) ----------- ----------- ----------- ----------- ----------- Total other income (expense) 915 5,383 5,147 8,820 1,551,934 ----------- ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (76,371) (6,115) (115,076) (25,113) 186,256 ----------- ----------- ----------- ----------- ----------- PROVISION FOR INCOME TAXES -- -- -- -- 237,570 ----------- ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (76,371) $ (6,115) $ (115,076) $ (25,113) $ (51,314) =========== =========== =========== =========== =========== BASIC AND DILUTED LOSS PER SHARE $ (0.07) $ (0.01) $ (0.11) $ (0.02) =========== =========== =========== =========== WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 1,030,907 1,030,907 1,030,907 1,030,907 =========== =========== =========== ===========
The accompanying footnotes are an integral part of these financial statements. 4 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED) AND FOR THE PERIOD FROM OCTOBER 19, 1995 (INCEPTION) TO JUNE 30, 2004 (UNAUDITED) - --------------------------------------------------------------------------------
For the Period from October 19, For the Six Months Ended 1995 June 30, (Inception) ------------------------- to June 30, 2004 2003 2004 ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(115,076) $(25,113) $(51,314) 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 -- -- (33,549) Deferred tax assets -- -- (221) Prepaid assets -- -- (3,212) Other assets -- -- 5,064 Increase (decrease) in Accounts payable and accrued expenses 67,183 5,696 89,835 Related party payable 1,585 -- 1,585 ----------- ----------- ----------- Net cash provided by (used in) operating Activities (46,308) (19,417) 145,688 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of United States Treasury bills -- -- (1,506,615) Funds used for convertible notes receivable (250,000) -- (750,000) Sales or maturities of investments -- -- 1,506,615 ----------- ----------- ----------- Net cash used in investing activities (250,000) -- (750,000) ----------- ----------- -----------
The accompanying footnotes are an integral part of these financial statements. 5 ORION ACQUISITION CORP. II (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED) AND FOR THE PERIOD FROM OCTOBER 19, 1995 (INCEPTION) TO JUNE 30, 2004 (UNAUDITED) - --------------------------------------------------------------------------------
For the Period from October 19, For the Six Months Ended 1995 June 30, (Inception) ------------------------- to June 30, 2004 2003 2004 ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) 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 ----------- ----------- ----------- New cash provided by financing activities -- -- 1,800,925 ----------- ----------- ----------- Net increase (decrease) in cash (296,308) (19,417) 1,196,613 CASH, BEGINNING OF PERIOD 1,492,921 2,032,710 -- ----------- ----------- ----------- CASH, END OF PERIOD $1,196,613 $2,013,293 $1,196,613 =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION INCOME TAXES PAID $ -- $ -- $61,800 =========== =========== ===========
The accompanying footnotes are an integral part of these financial statements. 6 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. The activities of the Company have included its formation and capital raising and more recently identifying and negotiating an acquisition. The Company, as a development stage company, has not effected a business combination (as defined below) to date. 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 accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America 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, 2003. The results of operations for the six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. 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 shareholders 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. 7 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Loss Per Share (Continued) The following potential common shares have been excluded from the computation of diluted net loss per share for the six months ended June 30, 2004 and 2003 because they are not exercisable until after a business combination: 2004 2003 ----------- ----------- (unaudited) (unaudited) Class B Warrants 358,000 358,000 Series A Convertible Preferred Stock 110,000 110,000 Stock option 10,000 10,000 As of July 1, 2004, the Company entered into an agreement to cancel 132,600 of the Class B Warrants. 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 - CONVERTIBLE NOTES RECEIVABLE On March 9, 2004 and July 2, 2004, in connection with a proposed merger, the Company entered into convertible notes for principal amounts of $250,000 and $250,000, respectively. These sums were in addition to the December 9, 2003 loan of $500,000, and were on the same terms as that loan. On June 23, 2004, the maturity dates of both the December 9, 2003 and March 9, 2004 loans were extended to July 31, 2004, and then as of July 31, 2004, the maturity dates of all three notes were extended to September 15, 2004. All the notes earn interest at the rate of 10% per annum, and they are secured by substantially all the assets of the borrower. No interest is payable if the merger is consummated, and upon the merger the notes will be extinguished. If the merger does not close, the notes are convertible at the Company's option into a total of 1,000,000 shares of the borrower's Class E Preferred Stock, and the borrower will issue a warrant to purchase a total of 1,000,000 shares of the borrower's common stock. The warrants issuable on conversion of the notes will permit the Company to purchase up to 1,000,000 shares of the borrower's common stock at an exercise price of $.10 per share. The warrants, if issued, will expire in December 2006. 8 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. For the quarter ended June 30, 2004, the Company incurred expenses and a payable to a related party for printing and miscellaneous expenses relating to the proposed merger. NOTE 5 - MERGER AGREEMENT On June 23, 2004, the Company entered into an Agreement and Plan of Merger with Citadel Media Inc. ("Citadel"), in which the Company will be the surviving corporation. The Company will acquire all the outstanding common stock of Citadel by issuing 443,526 shares of Series B preferred stock. The Company will reserve 241,474 shares of Series B preferred stock for issuance on exercise of the Citadel options and warrants that it will assume by operation of law and agreement upon consummation of the merger. The reserved shares will be distributed from time to time to the former Citadel stockholders to the extent the options and warrants are not exercised. The aggregate Series B preferred stock that may be issued for the acquisition of Citadel is 685,000 shares. The Series B preferred stock is convertible into 10 shares of common stock for each share of preferred stock. The conversion rate is subject to adjustment for stock splits, reverse splits and other events affecting the capital of Orion. The conversion will take place once Orion has amended its certificate of incorporation to increase its authorized equity to not less than 25,000,000 shares of common stock which number will be sufficient to allow conversion of the Series B preferred stock. Orion will require a stockholders meeting to approve this amendment, and has committed to holding the meeting as soon as possible. The Series B preferred stock will vote on all matters with the common stock, voting as a single class, except where a class vote is required by law. The Series B preferred stock will vote the equivalent number of shares of common stock equal to the conversion rate. The Series B preferred stock has certain preferences and other protections prior to conversion. In connection with the proposed merger and as a condition to it, the Company is authorized to sell in a private placement, on a minimum-maximum basis, between 1,000,000 and 3,000,000 shares of its common stock at $2.00 per share to investors, which may include principals of the Company and the target and their affiliates. The offering is being made under the terms as set forth in a Private Placement Memorandum dated April 5, 2004. The proceeds will be used to fund the operations of the Company after the merger. MDB Capital Group, LLC, a company controlled by the directors of the Company, is acting as placement agent for the private placement. As its compensation for acting as placement agent, MDB will receive up to 300,000 shares of common stock of the Company upon consummation of the offering. As a continuing director of the Company, upon consummation of the merger, Christopher A. Marlett will be granted an option to purchase up to 100,000 shares of common stock at $2.00 per share. The options will vest equally over three years, and once vested, they will be exercisable until the fifth anniversary of the merger consummation. There are various conditions to closing the merger transaction which must be satisfied by one or the other of the parties. 9 NOTE 6 - SUBSEQUENT EVENTS Litigation - Settlement Modification 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 28, 2000, the court ordered the notice of dismissal. On January 31, 2000, the plaintiff filed a notice dismissing the action without prejudice. On July 1, 2004, the plaintiff and the Company concluded a revision to the original settlement agreement and final resolution of all outstanding issues. Originally, the plaintiff had brought a suit against the Company based on certain breaches of fiduciary duty by the directors and management that took the Company public in 1997, which events were prior to the change to the current management that occurred in 1999. As a settlement to that suit in 2000, the Company agreed to convert the Class B Warrants held by the plaintiff on a one for one basis and issue only to the plaintiff certain rights to acquire additional shares under various specified conditions in the future. The Company had the discretion to make a conversion offer to the other Class B Warrant holders, on whatever terms it decided, if at all. Subsequently, as a result of certain negotiations arising out of the need to modify some of the terms of the original settlement agreement with the plaintiff, the plaintiff required that the Company would issue the same rights to which it was entitled to all the holders of the Class B Warrants, if the Company consummated a merger transaction that met certain criteria. Under the July 1, 2004 final revision to the settlement agreement, which was required by the target company in the currently proposed merger, the plaintiff agreed to eliminate the requirement to issue any rights to itself and others, now or in the future, in connection with any conversion of the Class B Warrants, which provision had been imposed in the original agreement and the prior modification of the original agreement. To achieve a full and final settlement agreement to the law suit of the plaintiff, to satisfy certain outstanding breaches of various terms of the settlement agreement, to obtain the cancellation of the plaintiff's 132,600 Class B Warrants, to obtain the mutual releases of all claims between the parties, and to maintain the covenant not to sue by the plaintiff, the Company has agreed to issue 182,500 shares of common stock to the plaintiff. The finality of the settlement is not contingent on the proposed merger. 10 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results for the six-month period ending June 30, 2004, consisted of investment income earned from Treasury bills less expenses associated with general and administrative overheads and the expenses associated with negotiating a merger agreement with Citadel Media Inc. and preparing private offering documentation to be consummated in connection with that merger. Income for the six months ended June 30, 2004, was less than the comparable period for the prior year because of a fall in interest rates on the types of treasury securities in which the Company invests its cash balances and having less capital to invest in such securities as a result of the loans made December 9, 2003 and March 9, 2004. This decline in income is expected to continue because of the lower interest rates and the extension of an additional loan on July 2, 2004. The aggregate amount of the loans is $1,000,000 in principal amount. Results for the prior period six months ended June 30, 2003, consisted of investment income earned from Treasury bills, less expenses associated with general and administrative overheads. The Company continues to search for a suitable company to complete a business combination or merger. It is actively negotiating with and working to conclude the announced merger with Citadel Media Inc. pursuant to an agreement dated June 23, 2004. Citadel is a leading operator of a network of affinity content publishers that consist of websites and printed magazines providing in-depth, original content to a specific affinity group. Currently, the only affinity group for which Citadel has a network and content publishers is sports. In connection with the negotiations, the Company has lent to Citadel $1,000,000 for working capital. This amount currently is due September 15, 2004, if the merger does not occur before that date and is convertible at the option of the Company in the event of default. Upon a merger with Citadel, the interest will not be due and the notes will be extinguished, as Citadel will merge with and into the Company, with the Company being the survivor. In connection with the Citadel transaction, the Company is seeking to raise additional capital by the sale of common stock. The Company is offering the common stock on a private placement basis. The Company must raise a minimum of $2,000,000 to consummate the acquisition of Citadel. At June 30, 2004, the Company had $1,196,613 in cash and equivalents which was subsequently reduced by the July 2004 loan to Citadel. Orion will invest its cash assets in U.S. Treasury bills and/or cash until such time as assets are needed for a business combination or use in an acquired business. The Company has not incurred any debt in connection with its organizational activities. No cash compensation is currently or will be paid to any officer director until after the consummation of a business combination. Since the role of present management after a business combination is uncertain, the Company has no ability to determine what remuneration, if any, will be paid to such persons after a business combination. The Company believes it has adequate capital to fund its operations pending a business combination. 11 The Company will use its current working capital and capital resources to consummate a business combination. In addition, because the resources of the Company are not considered sufficient to fund a business combination or its acquired business operations after acquisition, it will have to raise additional capital. The capital may be in the form of equity or debt, and will likely be based solely on the business operations and financial condition of the target business. Therefore, it is not possible at this time to determine the amount of capital that will be needed or available for a business combination. There currently are no limitations on its ability to privately obtain funds for a business combination. Because of certain SEC interpretations and related rules, the Company does not believe it can publicly raise funds prior to a business combination with an operating company unless it has in excess of $5,000,000 in assets. The Company's limited resources and lack of operating history may make it difficult to obtain funds. The amount and nature of any funding will depend on numerous considerations, including its capital requirements, potential lenders' evaluation of its ability to meet debt service on borrowings and the then prevailing conditions in the financial markets, as well as general economic conditions. The Company does not have any arrangements with any bank or financial institution to secure additional financing, and there can be no assurance that such arrangements, if required, will be obtainable or otherwise in the best interests of the Company. The inability of the Company to obtain the funds required to complete a business combination, or to provide funds for an additional infusion of capital into a target business, may have material adverse effects on its business prospects, including the ability to negotiate and consummate a business combination. If the Citadel transaction does not occur for any reason, it is expected that the Company will need to raise additional funds to complete an alternative business combination. ITEM 3. CONTROLS AND PROCEDURES. An evaluation of the effectiveness of the Company's disclosure controls and procedures as of June 30, 2004 was made under the supervision and with the participation of the Company's management, including the chief executive officer and chief financial officer. Based on that evaluation, they concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. During the most recently completed fiscal quarter, there has been no significant change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS 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 28, 2000, the court ordered the notice of dismissal. On January 31, 2000, the plaintiff filed a notice dismissing the action without prejudice. On July 1, 2004, the plaintiff and the Company concluded a revision to the original settlement agreement and final resolution of all outstanding issues. Originally, the plaintiff had brought a suit against the Company based on certain breaches of fiduciary duty by the directors and management that took the Company public in 1997, which events were prior to the change to the current management that occurred in 1999. As a settlement to that suit in 2000, the Company agreed to convert the Class B Warrants held by the plaintiff on a one for one basis and issue only to the plaintiff certain rights to acquire additional shares under various specified conditions in the future. The Company had the discretion to make a conversion offer to the other Class B Warrant holders, on whatever terms it decided, if at all. Subsequently, as a result of certain negotiations arising out of the need to modify some of the terms of the original settlement agreement with the plaintiff, the plaintiff required that the Company would issue the same rights to which it was entitled to all the holders of the Class B Warrants, if the Company consummated a merger transaction that met certain criteria. Under the July 1, 2004 final revision to the settlement agreement, which was required by the target company in the currently proposed merger, the plaintiff agreed to eliminate the requirement to issue any rights to itself and others, now or in the future, in connection with any conversion of the Class B Warrants, which provision had been imposed in the original agreement and the prior modification of the original agreement. To achieve a full and final settlement agreement to the law suit of the plaintiff, to satisfy certain outstanding breaches of various terms of the settlement agreement, to obtain the cancellation of the plaintiff's 132,600 Class B Warrants, to obtain the mutual releases of all claims between the parties, and to maintain the covenant not to sue by the plaintiff, the Company has agreed to issue 182,600 shares of common stock to the plaintiff. The finality of the settlement is not contingent on the proposed merger. The remaining 225,400 outstanding Class B Warrants continue to be exercisable for one share of common stock at an exercise price of $0.12 per share, commencing upon the consummation of a business combination and ending one year later. The Company will not issue any other securities on their exercise. There can be no assurance that the Class B Warrants will ever be exercisable. 13 ITEM 2: CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY 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: 31.1 - Section 302 Certification by CEO 31.2 - Section 302 Certification by CFO 32.1 - Section 906 Certification by CEO 32.2 - Section 906 Certification by CFO (b) Reports on Form 8-K: On June 28, 2004, the Company filed a Form 8-K, disclosing under Item 5, disclosing that it had entered into an agreement and plan of merger with Citadel Media, Inc. for the merger of Citadel with and into the Company, with the Company as the surviving corporation under Delaware law. 14 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: August 23, 2004 /s/ Christopher A. Marlett ---------------------------- Christopher A. Marlett Chairman, President, and CEO /s/ Anthony DiGiandomenico ---------------------------- Anthony DiGiandomenico Chief Financial Officer 15 EX-31.1 2 v06118_ex31-1.txt Exhibit 31.1 FORM OF SECTION 302 CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED CERTIFICATIONS I, Christopher A. Marlett, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Orion Acquisition Corp II; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 23, 2004 /s/ Christopher A. Marlett -------------------------------------------- Name: Christopher A. Marlett Title: President and Chief Executive Officer EX-31.2 3 v06118_ex31-2.txt Exhibit 31.2 FORM OF SECTION 302 CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED CERTIFICATIONS I, Anthony DiGiandomenico, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Orion Acquisition Corp. II.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this respect our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: August 23, 2004 /s/ Anthony DiGiandominco -------------------------------- Name: Anthony DiGiandominco Title: Chief Financial Officer EX-32.1 4 v06118_ex32-1.txt Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Orion Acquisition Corp. II (the "Company") on Form 10-QSB for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. August 23, 2004 By: /s/ Christopher A. Marlett ------------------------------------------ Christopher A. Marlett President and Chief Executive Officer EX-32.2 5 v06118_ex32-2.txt Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Orion Acquisition Corp. II (the "Company") on Form 10-QSB for the period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. August 23, 2004 By: /s/ Anthony DiGiandomenico ---------------------------- Anthony DiGiandomenico Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----