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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: June 30, 1998
_ 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.)
1430 Broadway, 13th Floor
New York, New York 10018 10018
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (212) 391-1392
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 August 1, 1998, 890,000 shares of Common Stock were issued and
outstanding.
<PAGE>
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PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF OPERATIONS
(Unaudited)
October 19,
Three Months Six Months 1995
Ended Ended (inception)
June 30, June 30, through
June 30,
1998 1997 1998 1998
---- ---- ---- ----
Interest income ........... $ 109,528 $ 119,704 $ 219,670 $ 917,226
Operating expense ......... (28,117) (41,098) (140,501) (557,046)
Stock-based compensation
expense .................. -- -- -- (100,000)
Interest expense .......... -- -- -- (57,694)
--------- --------- --------- ---------
Income (loss) before
income taxes ............. 81,411 78,606 79,169 202,486
Provision for income)
taxes ................... (17,403) (37,334) (24,758) (101,158)
--------- --------- --------- ---------
Net income (loss) ......... $ 64,008 $ 41,272 $ 54,411 $ 101,328
========= ========= ========= =========
Earnings per share:
Basic .................. $ 0.07 $ 0.05 $ 0.06
========= ========= =========
Diluted ................ $ 0.07 $ 0.05 $ 0.06
========= ========= =========
Weighted average common
shares outstanding:
Basic .................. 890,000 890,000 890,000
========= ========= =========
Diluted ................ 890,000 890,000 890,000
========= ========= =========
See notes to accompanying unaudited financial statements
2
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
ASSETS
Cash $ 114,390 $ 312,010
Restricted cash 184,989 453,209
US Treasury bills - restricted 8,637,530 7,999,895
Accrued investment interest receivable 51,791 208,100
Deferred acquisition costs 845 8,072
---------- ----------
Total assets $ 8,989,545 $ 8,981,286
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $ 46,811 $ 92,964
Common stock, subject to possible conversion of
160,000 shares at redemption value 1,774,862 1,732,240
Commitments and contingencies - -
Stockholders' equity:
Convertible preferred stock, $.01 par value,
1,000,000 shares authorized: 1 1
110 shares issued and outstanding
Common stock, $.01 par value 10,000,000
shares authorized; 890,000 shares
issued and outstanding (which includes
shares subject to possible redemption) 8,900 8,900
Additional paid-in capital 7,232,504 7,232,504
Earnings accumulated during development
stage (73,533) (85,323)
---------- ---------
Total stockholders' equity 7,167,872 7,156,082
--------- ---------
Total liabilities and stockholders' equity $ 8,989,545 $ 8,981,286
=========== ===========
See notes to accompanying unaudited financial statements
3
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
Six Months October
Ended 19, 1995
Three Months Ended June 30, (inception)
June 30, through
June 30,
1998 1997 1998 1998
---- ---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 64,008 $ 41,272 $ 54,411 $ 101,328
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Note discount amortization - - - 37,500
Stock based compensation expense - - - 100,000
Changes in working capital:
Decrease (increase) in accrued
investment receivables 43,946 174,157 156,309 (51,791)
Decrease in prepaids and other - 256 - -
(Decrease) increase in accrued
expenses (73,633) 37,631 (46,153) 46,811
--------- -------- --------- ---------
Cash provided by operating
activities 34,321 253,316 164,567 233,848
-------- -------- -------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of U.S. Treasury
bills and other increases
in restricted cash (150,981) (287,351) (369,414) (8,822,518)
(Increase) decrease in deferred
acquisition costs (845) - 7,227 (845)
--------- -------- -------- ---------
Cash used by investing
activities (151,826) (287,351) (362,187) (8,823,363)
--------- --------- --------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of units and
redeemable Class B purchase
warrants, net - - - 8,677,905
Issuance of unsecured
promissory notes - - - 100,000
Repayment of unsecured
promissory notes - - - (100,000)
Issuance of founders' shares - - - 7,500
Issuance of private placement
shares - - - 7,500
Issuance of convertible
preferred stock - - - 11,000
-------- -------- -------- ---------
Cash provided by financing
activities - - - 8,703,905
-------- -------- -------- ---------
NET (DECREASE) INCREASE IN CASH (117,505) (34,035) (197,620) 114,390
Cash at beginning of period 231,895 538,438 312,010 -
-------- -------- -------- ---------
Cash at end of period $114,390 $504,403 $114,390 $ 114,390
======== ======== ======== =========
See notes to accompanying unaudited financial statements.
4
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with instructions to Form 10-QSB and do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation which were of a normal and recurring nature
have been included. The results of operations for any interim period are not
necessarily indicative of the results for the year. These unaudited financial
statements should be read in conjunction with the financial statements and
related notes included on Form 10-KSB for the year ended December 31, 1997 and
period October 19, 1995 (Date of inception) to December 31, 1997.
NOTE 2. INVESTMENTS
On April 30, 1998 U.S. Treasury Bills with a cost basis of $8,639,852
matured. The proceeds of $8,797,267 are included under restricted cash on the
balance sheet and are held in an escrow account with a bank. On May 31, 1998
U.S. Treasury Bills having maturities in August of 1998 were purchased at a cost
of $8,637,530 and a maturity value of $8,750,000.
The ultimate use of these funds is restricted and subject to release at
the earlier of (i) consummation of its first business combination, or (ii)
liquidation of the Company.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In July of 1998, the Company signed a non-binding letter of intent to
acquire a mortgage banking business ("the Target"). Under the terms of the
letter of intent, the former owners of the Target will receive shares of a new
class of Orion common stock which will initially equal one percent (1%) of
Orion's issued and outstanding common stock, but have a vote equal to sixty-six
and two-thirds percent (66 2/3%) of Orion's total voting power. This new class
of Orion common stock would be exchangeable into ordinary Orion common stock at
amounts computed according to a market-value based computation at the option of
the holders for a period of seven years from completion of the transaction.
Completion of the transaction is subject to, among other things, completion of
due diligence, negotiation and execution of definitive documentation and
approval by the shareholders of Orion, who will also be presented with the
alternative option to liquidate Orion in accordance with Delaware law.
Results for the three and six month periods through June 30, 1998 and
1997, respectively, consisted of investment income earned from Treasury Bonds
held in escrow less expenses associated with general and administrative
overheads and due diligence activities.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
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:
Exhibit 27: Financial Data Schedule for the Quarterly Form 10-QSB
(b) Reports on Form 8-K:
None.
5
<PAGE>
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
By: /s/William L. Remley
Dated: August 13, 1998 William L. Remley
President & Treasurer
6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 299,379
<SECURITIES> 8,637,530
<RECEIVABLES> 51,791
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,989,545
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,989,545
<CURRENT-LIABILITIES> 46,811
<BONDS> 0
<COMMON> 8,900
0
1
<OTHER-SE> 8,933,833
<TOTAL-LIABILITY-AND-EQUITY> 8,989,545
<SALES> 0
<TOTAL-REVENUES> 109,528
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 81,411
<INCOME-TAX> 17,403
<INCOME-CONTINUING> 64,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,008
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
