UNITED STATES
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, 2000
_ 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., Suite 1020
Los Angeles, California 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 September 30, 2000, 1,102,157 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>
<CAPTION>
Three Months Three Months Nine Months Nine Months October 19,
1995
Ended Ended Ended Ended (inception)
September 30, September 30, September 30, September 30, To September 30
2000 1999 2000 1999 2000
-------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
Interest income ........... $ 23,980 $ 45,778 $ 64,124 $ 240,125 $1,453,316
Operating expense ......... (47,246) (28,843) (112,791) (51,212) (767,313)
Stock-based compensation
expense .................. -- -- -- -- (100,000)
Interest expense .......... -- -- -- -- (57,694)
--------- --------- --------- --------- ---------
Income (loss) before
income taxes ............. (23,266) 16,935 (48,667) 188,913 528,309
Provision for income
taxes ................... -- (7,958) -- (94,817) (293,782)
--------- ---------- --------- --------- ---------
Net income (loss) ......... $(23,266) 8,977 (48,667) $ 94,096 $234,527
========= ========= ========= ========= =========
Earnings per share:
Basic .................. $ (0.02) 0.01 (0.04) $ 0.10
========= ========= ========= =========
Diluted ................ $ (0.02) 0.01 (0.04) $ 0.10
========= ======== ========= =========
Weighted average common
shares outstanding:
Basic .................. 1,102,157 890,000 1,102,157 890,000
======== ======== ========= ==========
Diluted ................ 1,102,157 890,000 1,102,157 890,000
======== ======== ========= ==========
</TABLE>
See notes to accompanying unaudited financial statements.
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ORION ACQUISITION CORP. II
(a corporation in the development stage)
BALANCE SHEETS
September 30, December 31,
2000 1999
(unaudited)
ASSETS
Cash $ 615,864 $ 522,187
US Treasury bills 1,564,192 1,506,615
Other Current Assets 29,628 17,060
---------- ----------
Total assets $ 2,209,684 $ 2,045,862
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $ 36,732 $ 121,263
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 at December 31,
1999 and 1,102,157 shares issued and
outstanding at September 30, 2000 11,022 8,900
Additional paid-in capital 2,203,043 1,908,145
Deficit accumulated during development
stage (41,114) (7,553)
---------- ---------
Total stockholders' equity 2,214,065 1,924,599
--------- ---------
Total liabilities and stockholders' equity $ 2,209,684 $ 2,045,862
=========== ===========
See notes to accompanying unaudited financial statements.
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<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
October 19, 1995
Nine Months Ended (inception)
September 30, through September 30,
2000 1999 2000
---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net(loss) income $ (48,667) $ 94,096 $ 234,527
Adjustments to reconcile net
(loss) to net cash provided by
(used in)operating activities:
Note discount amortization - - 37,500
Stock based compensation expense - - 100,000
Changes in working capital:
Increase in other assets (12,568) - (29,628)
Increase (decrease) in
accrued expenses (84,531) 100,878 36,732
--------- --------- ----------
Cash provided by (used in)
operating activities (145,766) 194,974 379,131
-------- --------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase (Sale)of U.S. Treasury
bills and other increases
in restricted cash (57,577) 6,960,263 (1,564,192)
--------- -------- ---------
Cash provided by (used in)
investing activities (57,577) 6,960,263 (1,564,192)
--------- -------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividend - - (7,200,000)
Issuance of units and
redeemable Class B purchase
warrants, net of public
offering expenses - - 8,677,905
Issuance of common stock 297,020 - 297,020
Issuance of unsecured
promissory notes - - 100,000
Repayment of unsecured
promissory notes - - (100,000)
Due to Affiliate - 35,000 10,000
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) -
-------- -------- ---------
Cash provided by (used in)
financing activities 297,020 (7,165,000) 1,810,925
-------- -------- ---------
NET (DECREASE) INCREASE IN CASH 93,678 (9,763) 615,864
Cash at beginning of period 522,187 2,139 -
-------- -------- ---------
Cash at end of period $ 615,864 $ 10,137 $ 615,864
======== ======== ==========
See notes to accompanying unaudited financial statements.
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<PAGE>
ORION ACQUISITION CORP. II
(a corporation in the development stage)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - PRESENTATION OF INTERIM INFORMATION
The amounts included in this report are unaudited; however, in the
opinion of management, all adjustments necessary for a fair statement of results
for the stated periods have been included. These adjustments are of a normal
recurring nature. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB under the Securities Act of 1934 as filed with the Securities and
Exchange Commission. The results of operations for the nine months ended
September 30, 2000 are not necessarily indicative of operating results for the
entire year.
NOTE 2 - LEGAL PROCEEDINGS
On July 1, 1999, a Class B Warrant holder of the Company brought
suit against the Company, its former directors and certain others. On January
31, 2000, the plaintiff filed a notice dismissing the action without prejudice.
On January 28, 2000 the court ordered the notice of dismissal. The Company and
the plaintiff agreed that the Company will make an exchange offer to all holders
of the Class B Warrants. The Company filed a registration statement relating to
this offer on July 17, 2000. (See Note 4 - Registration of Securities). Upon
payment of an exercise price of $0.125 per Class B Warrant, each Class B Warrant
will be exchanged for one share of Common Stock, one Class A Warrant and one
Right. The Right will provide for the issuance of additional shares of common
stock based on a formula in the event that the Company makes an acquisition or
consummates a merger and the post-transaction company does not meet the
specified targets of a $7,000,000 net worth immediately after the transaction
and a minimum common stock price of $5.75 for ten days during the two year
period following the transaction, subject to certain adjustment, terms and
conditions. The record date of the proposed exchange offer has not been
determined.
The former directors of Orion Acquisition Corp. II who were named as
defendants in the suit, have made a demand upon the company for reimbursement of
unspecified attorney's fees incurred in defense of the suit prior to its
voluntary dismissal. The former directors contend they are entitled to
reimbursement of attorneys' fees under a provision of Delaware corporate law.
The Company believes the directors will not be entitled to reimbursement. No
accrual has been made for any potential reimbursement in the accompanying
financial statements.
NOTE 3 - ISSUANCE OF COMMON STOCK
On June 15, 2000, the Company sold 212,157 shares of common stock
for $1.40 per share, or aggregate proceeds of $297,020. The sale was made to
seven investors pursuant to an offering under Rule 506 promulgated by the
Securities and Exchange Commission under Section 4(2) of the Securities Act of
1933.
NOTE 4 - REGISTRATION OF SECURITIES
On July 17, 2000 a registration statement on SEC Form S-1 was filed
for up to 358,100 shares of common stock, 358,100 Class A Warrants and 358,100
shares of common stock rights on exercise of Class B Warrants, up to 358,100
shares of common stock on exercise of Class A Warrants and up to 671,438 shares
of common stock on conversion of the common stock rights. The registration
statement also relates to the resale of up to 212,157 shares of common stock by
selling stockholders
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<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results for the quarterly period ended September 30, 2000, consisted of
investment income earned from Treasury bills less expenses associated with
general and administrative overheads and litigation expenses relating to legal
proceedings as described in Note 2 of the financial statements. Results for the
quarterly period ended September 30, 1999 consisted of investment income earned
from Treasury bills held in escrow less expenses associated with general and
administrative overheads.
The Company continues to search for a suitable company to complete a
business combination or merger. There remains adequate cash on hand to bear the
costs of due diligence and legal fees necessary to locate and evaluate potential
candidates for a business combination. If a candidate is found the company may
need to raise additional funds to complete the acquisition.
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27: Financial Data Schedule for the Quarterly Form 10-QSB
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<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/ Anthony DiGiandomenico
Dated: November 20, 2000 -------------------------
Anthony DiGiandomenico,
Authorized Signatory and
Chief Accounting Officer
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