- --------------------------------------------------------------------------------
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, 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 November 1, 1998, 890,000 shares of Common Stock were issued and
outstanding.
- --------------------------------------------------------------------------------
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 Nine 1995
Ended Months (inception)
September 30, Ended through
September September
30, 30,
1998 1997 1998 1998
---- ---- ---- ----
Interest income $110,684 $118,756 $ 330,354 $1,027,910
Operating expense (18,645) (103,224) (159,147) (535,766)
Stock-based compensation expense - - - (100,000)
Interest expense - - - (57,694)
------- ------- --------- ----------
Income (loss) before income taxes 92,039 15,532 171,207 334,450
Provision for income taxes (46,417) (4,264) (71,175) (187,500)
-------- -------- ---------- ----------
Net income (loss) $45,622 $11,268 $ 100,032 $ 146,950
======= ======= ========= =========
Earnings per share:
Basic $ 0.05 $ 0.01 $ 0.11
======= ======= =========
Diluted $ 0.05 $ 0.01 $ 0.11
======= ======= =========
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
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
---- ----
ASSETS
Cash $ 65,882 $ 312,010
Restricted cash 188,263 453,209
US Treasury bills - restricted 8,749,689 7,999,895
Accrued investment interest receivable 45,561 208,100
Deferred acquisition costs - 8,072
---------- ----------
Total assets $ 9,049,395 $ 8,981,286
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $ 61,041 $ 92,964
Common stock, subject to possible conversion of
160,000 shares at redemption value 1,796,703 1,732,240
Commitments and contingencies - -
Stockholders' equity:
Convertible preferred stock, $.01 par value,
1,000,000 shares authorized:
110 shares issued and outstanding 1 1
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 (49,754) (85,323)
----------- -----------
Total stockholders' equity 7,191,651 7,156,082
----------- ------------
Total liabilities and stockholders' equity $ 9,049,395 $ 8,981,286
=========== ===========
See notes to accompanying unaudited financial statements
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
October 19,
1995
(inception)
Nine Months through
Three Months Ended Ended September
September 30, September 30, 30,
1998 1997 1998 1998
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 45,622 $ 11,268 $100,032 $ 146,950
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 6,230 (93,034) 162,539 (45,561)
Decrease in pre-paids and other - (1,596) - -
(Decrease) increase in accrued
expenses 14,228 22,535 (31,923) 61,041
-------- -------- --------- ---------
Cash provided by operating
activities: 66,080 (60,827) 230,648 299,930
-------- --------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of U.S. Treasury bills
and other increases in
restricted cash (115,433) (20,091) (484,848) (8,937,953)
(Increase) decrease in deferred
acquisition costs 845 - 8,072 -
-------- -------- -------- ---------
Cash used by investing
activities (114,588) (20,091) (476,776) (8,937,953)
--------- --------- --------- -----------
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 (48,508) (80,918) (246,128) 65,882
Cash at beginning of period 114,390 504,403 312,010 -
-------- -------- -------- ---------
Cash at end of period $ 65,882 $423,485 $ 65,882 $ 65,882
======== ======== ======== =========
See notes to accompanying unaudited financial statements.
<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 August 20, 1998 U.S. Treasury Bills with a cost basis of $8,637,530
matured. The proceeds of $8,750,000 are included under restricted cash on the
balance sheet and are held in an escrow account with a bank. On August 24, 1998
U.S. Treasury Bills having maturities in November of 1998 were purchased at a
cost of $8,749,689 and a maturity value of $8,854,000.
The ultimate use of these funds is restricted and subject to release at
the liquidation of the Company.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As a result of tumultuous market conditions during August and September of
1998, negotiations with a mortgage banking business targeted for acquisition in
July 1998 deteriorated. As a result of not closing a business acquisition
subsequent to July 2, 1998, the Company will submit for stockholder
consideration, a proposal to liquidate the Company and distribute to the then
holders of Common Stock acquired as part of the Units sold in the Offering or in
the open market thereafter, the amount held in the escrow account maintained by
the Proceeds Escrow Agent. Thereafter, all remaining assets available for
distribution will be distributed to all holders of the Company's Common Stock
after payment of liabilities and after appropriate provision has been made for
the payment of liquidation distributions upon each class of stock, if any,
having preference over the Common Stock. Since all stockholders of the Company
immediately prior to the Closing Date of the Offering have agreed to waive their
respective rights to participate in a liquidation distribution occurring prior
to the first Business Combination, all of the assets of the Company, including
any income and interest earned on the escrowed proceeds of the Offering, which
may be distributed upon such liquidation would be distributed to the owners of
the Common Stock issued as part of the Units in the Offering or in the open
market thereafter. There can be no guarantee that the Company's liabilities at
liquidation will not exceed the Company's unrestricted cash on hand. In such
circumstances, there can be no assurance that creditors of the company will not
be able to obtain payment out of escrowed funds.
Results for the three and nine month periods through September 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.
<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: November 23, 1998 By: /s/ William L. Remley
---------------------------------
William L. Remley
President & Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 254145
<SECURITIES> 8749689
<RECEIVABLES> 45561
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9049395
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9049395
<CURRENT-LIABILITIES> 61041
<BONDS> 0
<COMMON> 8,900
0
1
<OTHER-SE> 8979454
<TOTAL-LIABILITY-AND-EQUITY> 9049395
<SALES> 0
<TOTAL-REVENUES> 110684
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18645
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 92039
<INCOME-TAX> 46417
<INCOME-CONTINUING> 45622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45622
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
