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, 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 May 1, 1998, 890,000 shares of Common Stock were issued and outstanding.
- --------------------------------------------------------------------------------
1
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF OPERATIONS
(Unaudited)
October 19,
1995
Three Months (inception)
Ended through
March 31, March 31,
1998 1997 1998
---- ---- ----
Interest income ......................... $ 110,142 $116,289 $ 807,698
General and administrative expense ...... (112,384) (87,387) (528,930)
Stock based compensation expense ........ -- -- (100,000)
Interest expense ........................ -- -- (57,694)
--------- --------- ---------
(Loss) income before income taxes ....... (2,242) 28,902 121,074
Provision for income taxes .............. (7,355) (11,347) (83,754)
--------- --------- ---------
Net (loss) income ....................... $ (9,597) $ 17,555 $ 37,320
========= ========= =========
Earnings per share:
Basic $ (0.01) $ 0.02
========== =========
Diluted $ (0.01) $ 0.02
========== =========
Weighted average common shares outstanding:
Basic 890,000 890,000
========= =========
Diluted 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)
March 31, December 31,
1998 1997
---- ----
ASSETS
Cash ............................................. $ 231,895 $ 312,010
Restricted cash .................................. 31,685 453,209
US Treasury bills - restricted ................... 8,639,852 7,999,895
Accrued investment interest receivable ........... 95,737 208,100
Deferred acquisition costs
-- 8,072
----------- -----------
Total Assets ..................................... $ 8,999,169 $ 8,981,286
=========== ===========
IABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses ................................. $ 120,444 $ 92,964
Common stock, subject to possible conversion of
160,000 shares at redemption value ............. 1,753,455 1,732,240
Commitment - -
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 8,900 8,900
possible redemption)
Additional paid-in capital ..................... 7,232,504 7,232,504
Earnings accumulated during development stage .. (116,135) (85,323)
----------- -----------
Total stockholders' equity ................... 7,125,270 7,156,082
----------- -----------
Total liabilities and stockholders' equity ..... $ 8,999,169 $ 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
(Unaudited)
October 19,
1995
(inception)
Three Months Ended through
March 31, March 31,
1998 1997 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ............... $ (9,597) $ 17,555 $ 37,320
Adjustments to reconcile net
(loss) income 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 ........ 112,363 23,277 (95,737)
Decrease in prepaids and other . -- (2,500) --
Increase in accrued expenses ... 27,480 3,487 120,444
----------- ----------- -----------
Cash provided by operating
Activities: ................... 130,246 41,819 199,527
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of U.S. Treasury
bills and other increases .... (218,433) (132,246) (8,671,537)
in restricted cash
Decrease in deferred
acquisitions costs ........... 8,072 -- --
----------- ----------- -----------
Cash used by investing
activities ................... (210,361) (132,246) (8,671,537)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issue 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 ... (80,115) (90,427) 231,895
Cash at beginning of period .... 312,010 628,865 --
----------- ----------- -----------
Cash at end of period .......... $ 231,895 $ 538,438 $ 231,895
=========== =========== ===========
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
The proceeds of $8,663,206 are included under restricted cash on the
balance sheet and are held in an escrow account with a bank. On January 13, 1998
U.S. Treasury Bills having maturities in April of 1998 were purchased at a cost
of $8,639,852 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
The Company has been unsuccessful thus far in locating a viable transaction
for shareholder approval. On May 7, 1998, the Company announced that it had
terminated discussions with IVAX Corporation ("IVAX") concerning the purchase of
IVAX Corporation's DVM Pharmaceuticals subsidiary ("DVM"). The reason for the
termination of discussions was a material change in the prospective business
plan of DVM, of which IVAX would have remained the majority shareholder. The
changed business plan was deemed to be inconsistent with the market needs of the
Company. Management will continue to seek an alternative acquisition candidate
through June, failing which the Company expects to propose to Shareholders that
the Company seek liquidation. Results for the three-month periods through March
31, 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
Dated: May 13, 1998 By: /s/William L. Remley
-----------------------
William L. Remley
President & Treasurer
6
<PAGE>
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<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 263,580
<SECURITIES> 8,639,852
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,999,169
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,999,169
<CURRENT-LIABILITIES> 120,444
<BONDS> 0
<COMMON> 8,900
0
1
<OTHER-SE> 8,869,824
<TOTAL-LIABILITY-AND-EQUITY> 8,999,169
<SALES> 0
<TOTAL-REVENUES> 110,142
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 112,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,242
<INCOME-TAX> 7,355
<INCOME-CONTINUING> (9,597)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,597)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
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