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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: September 30, 1999
_ 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.)
401 Wilshire Blvd., Ste. 1020
Santa Monica, California 90402
(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 November 21, 1999 890,000 shares of Common Stock were issued and
outstanding.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
October 19,
Three Months Nine Months 1995 (inception)
Ended Ended through
September 30 September 30 September 30
1999 1998 1999 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income 45,778 110,684 240,125 1,373,973
General and administrative expense (28,843) (18,645) (51,212) (620,453)
Stock based compensation expense - - - (100,000)
Interest expense - - - (57,694)
(Loss) income before income taxes 16.935 92,039 188,913 595,826
Provision for income taxes (7,958) (46,417) (94,817) (314,296)
-------- -------- -------- ---------
Net (loss) income 8,977 46,622 94,096 281,530
====== ====== ====== =======
Earnings per share:
Basic 0.01 $0.05 0.10 0.31
===== ===== ====
Diluted 0.01 $0.05 0.10 0.31
===== ===== ==== ====
Weighted average common shares outstanding:
Basic 890,000 890,000 890,000 890,000
======= ========== ======= =======
Diluted 890,000 890,000 890,000 890,000
======= ========== ======= =======
</TABLE>
See notes to accompanying unaudited financial statements
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
BALANCE SHEETS
(Unaudited)
<TABLE>
September 30, December 31,
1999 1998
---- ------
<S> <C> <C>
ASSETS
Cash 2,139 $11,902
Restricted cash 196,121 190,383
US Treasury bills - restricted 1,932,238 8,898,239
Total Assets 2,130,498 $9,100,524
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses 172,564 71,685
Common stock, subject to possible conversion of
160,000 shares at redemption value 418,368 1,817,724
Due from Affiliate 35,000 -
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 1,472,503 7,232,504
Earnings accumulated during development stage 23,162 (30,290)
------ --------
Total stockholders' equity 1,504,566 7,211,115
--------- ---------
Total liabilities and stockholders' equity 2,130,498 $9,100,524
========== ==========
</TABLE>
See notes to accompanying unaudited financial statements.
<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
October 19, 1995
(inception)
Nine Month through
Three Months Ended Ending September 30,
September 30, September 30
1999 1998 1999 1999
---- ---- ----- ----
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ 8,977 $ 45,622 $94,096 281,530
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 - 6,230 - -
Decrease in prepaids and other - -
-
Increase in accrued expenses 3,516 14,228 100,878 172,563
------ ------------
Cash provided by operating activities: 12,493 66,080 194,974 591,593
======= ============ ======== =======
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of U.S. Treasury bills and other
increases in restricted cash (7,154,509) (115,433) 6,960,263 (2,128,359)
Decrease in deferred acquisitions costs 845
------------
Cash used by investing activities 7,154,509 (114,588) 6,960,263 (2,128,359)
---------- ------------- ---------- -----------
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)
Due from Affiliate 25,000 - 35,000 35,000
Issuance of founders' shares - - 7,500
Issuance of private placement shares - - 7,500
Issuance of convertible preferred stock - - 11,000
------------ --------- ------
Return of Capital (7,200,000) - (7,200,000) 11,000
------------ --------- ------
Cash provided by financing activities (7,175,000) - (7,165,000) 1,539,905
------------ ------------ ------------ ---------
NET (DECREASE) INCREASE IN CASH (7,998) (48,508) (9,763) 2,139
Cash at beginning of period 10,137 114,390 2,139 0
======= ============ ========== ========
Cash at end of period 2,139 $ 65,882 10,137 2,139
====== ============ ======= =====
</TABLE>
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, 1998 and
period October 19, 1995 (Date of inception) to December 31, 1998.
NOTE 2. INVESTMENTS
At September 30, 1999 held $2,139 in cash, $196,121 in restricted cash and
$1,932,238 in restricted U.S. Treasury Bills.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On July 15, 1999 the Company declared a $9.00 cash distribution per share
of common stock from the escrow account established in connection with its
public offering consummated in 1996. The distribution was paid July 26, 1999 to
only those holders of shares of common stock sold in the public offering as of
July 22, 1999.
After giving effect to the cash distribution, the Company has $2,130,498 in
cash, restricted cash and U.S. Treasury Bills and $207,564 in liabilities
including unpaid taxes and accrued expenses.
The Company held a special meeting of the shareholders to vote on two
proposals. The proposal to approve the final liquidation of escrow funds to the
company held at Chase Manhattan Bank N.A. to fund the ongoing operations and
payment of outstanding liabilities of the Company and the proposal to change the
provisions in the Company's Certificate of Incorporation to eliminate the
requirement that a vote of two-thirds of the outstanding shares of the Company
are required to approve a business combination, merger, consolidation or
acquisition of assets were approved. Pursuant to the first resolution, the
escrow was liquidated.
It is management's intention to continue to operate the Company with a view
to entering into a merger or business combination or to satisfy the outstanding
obligations and distribute any remaining cash, if any, to the shareholders
eligible to receive any further distributions. The Company anticipates that it
will require financing to consummate a business combination. Currently it does
not have any arrangements for financing, because it is likely that the
availability of funds will depend on the nature of the transaction.
<PAGE>
Results for the three and nine month periods through September 30, 1999
and 1998, respectively, consisted of investment income earned from Treasury
Bonds held in escrow less expenses associated with general and administrative
overheads and due diligence activities.
On May 5, 1999 and July 20, 1999, MDB Capital Group LLC lent to the Company
the aggregate principal sum of $35,000. These loans are represented by unsecured
promissory notes due on demand. The proceeds of these loans have been used for
working capital. Each of Christopher A. Marlett, Anthony DiGiandomenico, James
D. Bowyer and Dyana Williams Marlett are officers and/or directors of the
Company and principals and/or employees of MDB Capital Group LLC.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
On July 1, 1999 a complaint was filed in the United States District Court
for the Southern District of New York (Case No. 99Civ.4782SHS) against Orion
Acquisition Corp. II, Mentmore Holdings Corporation and Mentmore Holdings, Inc.
and Messrs. Kramer, Remley, Hoffman, Frankel and Chess. The suit seeks damages
and equitable relief for violations of Section 12(2) of the Securities Act of
1933, and Rule 419 relating to offerings of blank check companies; Section 10(b)
of the Securities and Exchange Act of 1934 and SEC Rule 10b-5 promulgated
thereunder; Section 7,8(a) and 36 (a) of the Investment Company Act of 1940; and
for damages pursuant to certain pendent state law claims.
The plaintiff in the suit is a record holder of 132,600 Redeemable Class B
Warrants and a record holder of 1,400 shares of Common Stock. The Company sought
and was granted an extension to answer the claim until September 4, 1999. The
Company believes it has meritorious defenses and will pursue the defense of this
litigation vigorously.
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.
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 22, 1999 By: /s/ Christopher A. Marlett
--------------------------------
Christopher A. Marlett
Chairman, President, and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,139
<SECURITIES> 2,128
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,130,498
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,130,498
<CURRENT-LIABILITIES> 625,932
<BONDS> 0
<COMMON> 8,900
0
0
<OTHER-SE> 1,472,503
<TOTAL-LIABILITY-AND-EQUITY> 2,130,498
<SALES> 0
<TOTAL-REVENUES> 45,778
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,935
<INCOME-TAX> 7,958
<INCOME-CONTINUING> 8,977
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,977
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
