As filed with the Securities and Exchange Commission on July 17, 2000.
Registration No. 333-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------------------------
ORION ACQUISITION CORP. II
(Exact Name of Registrant as Specified in Its Charter)
Delaware ____ 13-3863260
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Idetification
Organization Code Number) Number)
-----------------------------
Dyana Williams Marlett
Secretary
Orion Acquisition Corp. II
401 Wilshire Boulevard - Ste 1020
Santa Monica, California 90401
(310) 526-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------------------
Dyana Williams Marlett
Secretary
Orion Acquisition Corp. II
401 Wilshire Boulevard - Ste 1020
Santa Monica, California 90401
(310) 526-5000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
-----------------------------
Copies to:
Andrew D. Hudders, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Telephone: (212) 818-8800
Fax: (212) 818-8881
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |_|
<PAGE>
(Cover Page Continued)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum Amount of
Title of Each Class of Amount to be Maximum Aggregate Registration
Securities to be Registered Registered Offering Price Offering Price Fee
------------------------------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 358,100 $.125 $44,762.50 11.82
Class A Common Stock Purchase
Warrants 358,100 (1) - -
Common Stock, $.01 par value, issuable
upon exercise of Class A Warrants(2) 358,100 $9.00 $3,222,900.00 850.85
Rights to Acquire Common Stock 358,100 (1) - -
Common Stock, $.01 par value, issuable
upon conversion of Rights(2) 671,438(3) $1.4375(4) 965,192.13 254.81
Common Stock, $.01 par value being
sold by Selling Stockholders 212,150 1.4375(4) 304,965.63 80.51
TOTAL................................................................................................1,197.99
</TABLE>
================================================
(1) Each Class B Common Stock Purchase Warrant may be exercised upon
payment of $.125 for one share of Common Stock, $.01 par value, one
Class A Common Stock Purchase Warrant and one Right.
(2) Pursuant to Rule 416, there are also being registered such additional
securities as may be issued pursuant to the anti-dilution provisions of
the Class A Common Stock Purchase Warrants and Rights.
(3) Represents the maximum number of shares of Common Stock, $.01 par
value, issuable on conversion of the Rights subject to anti-dilution
provisions of the Rights.
(4) Calculated pursuant to Rule 457(f)(1).
(5) Represents shares to be sold by selling stockholders.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
===============================================================================
2
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registrations statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 17, 2000
ORION ACQUISITION CORP. II
We hereby offer:
o up to 358,100 shares of our common stock, 358,100 of our
Class A Warrants and 358,100 of our common stock rights on
exercise of our outstanding Class B Warrants and payment of
$.125 per Class B Warrant;
o up to 358,100 shares of our common stock on exercise of the
Class A Warrants offered hereby; and
o up to 671,438 shares of our common stock on conversion of
the common stock rights offered hereby.
This prospectus also relates to the resale of up to 212,157 shares of
our common stock by the selling stockholders. We will receive none of the
proceeds from the sale of the shares owned by the selling stockholders.
Our securities are traded on the OTC Bulletin Board under the symbols
MTMR, MTMRW and MTMRZ.
--------------------------------------------
The offer will expire at 5:00 p.m., New York City time on _______,
2000, unless extended by us.
--------------------------------------------
See "Risk Factors" beginning on Page 9 for a discussion of certain
information that should be considered in connection with the exercise of the
Class B Warrants.
--------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------------------
The date of this prospectus is ______ __, 2000
3
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY ....................................................................3
RISK FACTORS.................................................................9
THE EXERCISE OFFER..........................................................13
USE OF PROCEEDS.............................................................18
DESCRIPTION OF COMMON STOCK RIGHTS..........................................18
DESCRIPTION OF OUTSTANDING SECURITIES.......................................19
BUSINESS ...................................................................21
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................26
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...................28
MANAGEMENT..................................................................31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................32
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............33
SELLING STOCKHOLDERS........................................................34
PLAN OF DISTRIBUTION OF SELLING STOCKHOLDERS................................34
LEGAL MATTERS...............................................................35
EXPERTS ...................................................................35
WHERE YOU CAN FIND MORE INFORMATION.........................................35
2
<PAGE>
SUMMARY
Orion's business
Orion was formed on October 19, 1995 to acquire an operating business
by purchase, merger, combination or otherwise. There is no restriction on the
industry in which the target business operates. There is no dead-line by which
an acquisition of a target business must take place.
Since inception, Orion has not engaged in any substantive commercial
business. Its activities have focused on evaluating and reviewing suitable
target businesses.
Exercise Offer
As part of our initial public offering on July 2, 1996, Orion issued
358,100 Class B Warrants. We are undertaking this exercise offer to simplify the
capital structure of the company to improve our ability to acquire an operating
business and as a result of a litigation settlement entered in January 2000 with
a stockholder.
From the date of this prospectus until 5:00 pm, New York City time, on
___________, 2000, unless extended by us, Orion is offering to permit the
exercise of each outstanding Class B Warrant upon payment by the holder of $.125
per warrant exercise price, for one share of common stock, one Class A Warrant
and one common stock right. Except under this offer, the Class B Warrants are
not exercisable at this time.
Class B Warrants
The Class B Warrants currently have the following characteristics:
o exercisable commencing the date of our first business
combination;
o exercise period terminates one year after the date of our first
business combination;
o exercise price is $.125 per warrant;
o securities to be acquired under each warrant is one share of
common stock and one Class A Warrant; and
o subject to redemption in certain circumstances.
Class A Warrants
The Class A Warrants have the following characteristics:
o exercisable commencing the date of our first business
combination;
3
<PAGE>
o exercise period terminates July 2, 2001;
o exercise price is $9.00 per warrant;
o security to be acquired under each warrant is one share of common
stock; and
o subject to redemption in certain circumstances.
Common stock rights
The common stock rights have the following characteristics.
o Conversion of rights. If the closing price of our common stock
does not equal or exceed $5.75 for 10 consecutive trading days
during the two years after our first qualified business
combination, then the rights will convert into common stock,
unless we elect to make the cash payment. The business
combination, to qualify, must increase our net worth by
$7,000,000.
o Conversion rate. The conversion rate for each right is calculated
by taking the difference between $5.75 and the highest 30-day
average of the closing prices of our common stock during the two
years after the first qualified business combination and dividing
that difference by the above 30 day average. If the above 30 day
average is less than $2.00, then $2.00 will be substituted for
the average.
o Cash payment alternative. We may elect to pay cash instead of
converting the right into shares of common stock. The amount of
cash to be paid for each right will be equal to $5.75 minus the
highest 30-day average of the closing prices of the common stock
during the two years after the first qualified business
combination. If the 30 day average is less than $2.00, then the
payment will be $3.75 per right.
o Termination of conversion right. The common stock right will
terminate if they convert, we make the cash payment or if our
common stock trades at or greater than $5.75 for 10 consecutive
trading days during the two years after our first qualified
business combination.
o Adjustments. The number of shares and the amounts used in the
calculation of the conversion rate and cash payment amount are
subject to adjustment in the event of common stock dividends,
aggregations of our common stock, reorganizations and
combinations and mergers.
o Fractional shares. No fractional shares will be issued. We will
round up to nearest whole share for any fractional share to be
issued.
The common stock rights will be evidenced by certificates issued by us.
The issuing and transfer agent will be American Stock Transfer & Trust Company.
4
<PAGE>
Corporate Information
Orion was incorporated under the laws of the State of Delaware in
October 1995. Our principal executive offices are located at 401 Wilshire
Boulevard (Suite 1020), Santa Monica, California 90401. Our telephone number is
(310) 526-5000.
Summary of the Exercise Offer
Terms of the exercise offer are as follows:
Exercise offer...................... In the exercise offer, we will issue for
each outstanding Class B Warrants that is
exercised:
o one share of common stock;
o one Class A Warrant; and
o one Right.
The securities issued on exercise will be
issued as soon as possible.
Resale............................ The exercise offer is not being made to,
nor will exercises be accepted from,
holders of outstanding Class B Warrants in
any jurisdiction in which this exercises
offer would not be in compliance with the
securities laws of such jurisdiction.
The securities acquired by you on exercise
of the Class B Warrants will be registered
securities and therefore may be resold by
you.
Expiration date................... 5:00 p.m., New York City time, on _____ __,
2000, unless the offer is extended. Any
extension, if made, will be publicly
announced through a release to the Dow
Jones News Service and as otherwise
required by applicable law or regulations.
We may extend the expiration date in our
sole and absolute discretion.
Conditions to the exercise offer.. The only conditions to the exercise offer
are that it not violate applicable law, any
applicable interpretation of the staff of
the SEC or any standing order or judgment.
The exercise offer is not conditioned upon
5
<PAGE>
any minimum number of outstanding Class B
Warrants being exercised.
Procedures for exercising
outstanding Class B Warrants...... If you wish to exercise your Class B
Warrants, you must complete the form of
election to purchase on the reverse of the
warrant certificate, make sure the Class B
Warrant certificate signed by the record
owner and pay us $.125 per warrant
exercised. Send the warrant certificate and
payment to American Stock Transfer & Trust
Company, as warrant agent.
Special procedures for beneficial
owners.......................... If you are a beneficial owner whose
outstanding Class B Warrants are registered
in the name of a broker, commercial bank,
trust company or other nominee, and you
wish to take advantage of this offer and
exercise your warrant, you should contact
your registered holder promptly and
instruct the registered holder to exercise
the Warrant on your behalf. If you wish to
exercise the Warrant on your own behalf,
you must, make appropriate arrangements to
register ownership of the outstanding
warrants in your name. You should be aware
that the transfer of registered ownership
may take considerable time and may not be
able to be completed prior to the
expiration date.
Acceptance of outstanding Class B
Warrants ......................... Subject to certain qualifications, we will
accept the exercise of any and all
outstanding Class B Warrants which are
properly exercised prior to 5:00 p.m.,
New York City time, from time to time
during the offer period.
Withdrawal rights................. You may not withdraw your exercise of the
Class B Warrants.
Class B Warrant agent............. American Stock Transfer & Trust Company is
the warrant agent for the Class B Warrants.
Its address for hand deliveries is 40 Wall
Street, 46th Floor, New York, New York
10005 and its address for mail is 6201
Fifteenth Avenue, Floor 3L, Brooklyn, New
York 11219 The warrant agent's telephone
number is (718) 921-8293.
6
<PAGE>
SUMMARY FINANCIAL INFORMATION
The summary historical financial information presented below has been
derived from the audited financial statements for the year ended December 31,
1999. The summary unaudited financial information presented here has been
derived from the unaudited financial statements for the quarter ended March 31,
2000. The pro forma summary unaudited balance sheet data at June 15, 2000
reflects the sale of 212,157 shares of common stock on June 15, 2000 for
aggregate proceeds of $297,020.00.
The following table should be read in conjunction with the
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections and our historical financial
statements and the corresponding notes included elsewhere in this prospectus.
<TABLE>
October 19,
1995 (date of
incorporation) Three Months ended
Year Ended December 31, to December March 31,
Statement of Operations Data 1999 1998 1997 31, 1999 2000 1999
---------------------------- ----------- -------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Interest Income....................... 255 436 475 1,389 14 91
General and administrative expenses.. (85) (193) (294) (655) (18) (16)
Stock based compensation expense...... - - (100) (100) - -
Interest expense..................... - - - (58) - -
--- --- --- ------ --- ---
Net Income before income taxes........ 170 244 81 577 (4) 75
Provision for income taxes............ (74) (103) (76) (294) - (36)
---- ----- ---- ----- --- ----
Net income attributable to common
stock................................. 96 141 4 283 (4) 40
== === = === === ==
Earnings per share, basic and diluted. 0.11 0.16 - - 0.04
==== ==== === === ====
Weighted average common shares
outstanding........................... 890 890 890 890 890
=== === === === ===
</TABLE>
7
<PAGE>
<TABLE>
Pro Forma
Balance Sheet Data: At March 31, 2000 Pro Forma Adjustments (1) at March 31, 2000
------------------ ----------------- ------------------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Total Assets.......................... 1,966 297 2,263
Total liabilities..................... 45 -- 45
Earnings (deficit) accumulated during
development stage..................... 3 -- 3
Stockholders' equity.................. 1,920 297 2,217
</TABLE>
----------------------------
(1) Adjustment made to reflect the sale of 212,157 shares of common stock
at a per share price of $1.40 for total proceeds of $297,020.
8
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk. Each
prospective purchaser should carefully consider the following risk factors.
We may need substantial additional financing to complete a business combination.
Risk of needing additional funds. To complete a business combination in
which Orion acquires the assets of another company or acquires another company,
it is likely that Orion will have to obtain additional capital. We anticipate
that the amount of the financing will have to be substantial compared to our
current resources. We currently do not have any lines of credit or bank
financing or other sources of capital. We may not be able to raise any
additional money through equity or debt financings on acceptable terms or at
all. If we do raise additional funds by the sale and issue of equity or debt,
your investment in Orion could be substantially diluted, and those securities
could have preferences and privileges that your securities do not have.
Risk of leverage. To obtain needed financing for a business
combination, Orion may seek to leverage its cash assets and the assets of the
business being acquired. There is no legal limit on the amount of leverage that
Orion may create. Among the possible adverse effects of financial leverage are:
o Operating revenues may not be sufficient to pay debt service;
o Risk of default and foreclosure on the assets or default and
acceleration of repayment obligations;
o Pledge of assets which prevents being able to offer security for
additional borrowings;
o Loan covenants that require maintenance of financial ratios or
reserves;
o Interest rate fluctuations which impact cash available for the
operation and growth of the business; and
o Refinancing requirements at times when funds are more expensive
or not available on acceptable terms.
The need to raise capital to complete a business combination may prevent our
completing our business objective.
If Orion needs to raise additional funds to be able to complete a
business combination, this may hinder our ability to complete a business
combination. Firstly, it may cause a potential target to decide not to negotiate
with us. Secondly, it may be a condition to closing that if not achieved, will
cause us to have to terminate the proposed business combination. In the later
case, Orion may be subject to penalties or damages for not fulfilling a
condition.
A business combination will introduce additional risks to an investment in
Orion.
9
<PAGE>
Risks of the acquired business. If Orion completes a business
combination, it will become subject to all the risks of that particular
business. To the extent Orion completes a business combination with a
financially unstable company, or a company in its early stage of growth, or
without earnings, Orion will become subject to all of the risks inherent in the
operation of that business. Orion also will become subject to all the risks of
the particular industry in which the business operates, such as regulatory
requirements, environmental risks, product liability and competition. The Orion
management may not correctly assess those risks in its combination transaction.
Risks of management of acquired business. The success of a particular
business combination will depend on having adequate management. We believe
success will depend on certain of our officers and directors willing to continue
in a management role and the continuing evolvement of the management of the
acquired business. If we do not correctly assess the management of the acquired
business or do not have adequate management personnel in place, the acquisition
may not be successful.
Orion may never complete a business combination.
Even though it is our intent to identify and complete a business
combination, there can be no assurance given that management will identify a
suitable business combination candidate or consummate a business combination
once potential candidates are in identified. We may not consummate a transaction
for any number of reasons, including,
o our inability to finance the transaction and the post transaction
company;
o endemic issues of the candidate that dictate abandonment of the
transaction;
o inability of the parties to negotiate a transaction that is
acceptable to all parties; and
o inability to obtain regulatory or security holder approval where
required.
In the event Orion does not complete a business transaction, the
company may be liquidated and its assets, if any, distributed to its security
holders as entitled under applicable law.
Current stockholders of Orion may not have a right to approve or disapprove a
business combination.
Under Delaware law and applicable securities laws, there are methods of
acquiring a business that do not require us to obtain stockholder approval of
the transaction. These methods include incurring of debt or using currently
authorized but unissued capital securities. If we elect to use one of these
means, you will have to rely on management's ability to negotiate a transaction
that achieves value for the stockholders. Moreover, you may not have any
dissenters' rights. Therefore, if you believe a business combination Orion
pursues is not in your best interests as a stockholder, your only recourse may
be to sell the securities of Orion you own. There may not be a market for those
securities or the market may not result in a positive return on your investment.
10
<PAGE>
The common stock rights may not be convertible.
The common stock rights being offered in the exchange may not ever be
convertible if the common stock achieves a trading price of $5.75 or more for 10
consecutive trading days after the first business combination by Orion that
increases its net worth by $7,000,000. In addition, Orion has the option of
paying a cash amount instead of permitting the rights to convert into common
stock. Therefore, the common stock right may not ever create any value or
significant value for you.
The Orion securities trade on the OTC Bulletin Board which is a limited market.
The trading of our securities on the OTC Bulletin Board may have
certain effects. These include:
o Adverse affect on our securities' trading market and prices;
o Limit the ability of investors and market professionals to
determine the market prices of our securities;
o Diminish the likelihood that our press releases and other news
about us will be republished;
o Limit investors' interest in our securities; and
o Restrict our ability to issue additional securities or to secure
additional financing.
In connection with a business combination, we plan to apply for listing
on either a stock exchange or one of The Nasdaq Markets. We anticipate that this
will take a substantial amount of time. There are significant requirements about
the financial condition of the company and trading in our securities that will
have to be met to achieve a listing on one of these markets. There can be no
assurance that Orion will meet these requirements.
There may not be a trading market for the common stock rights.
Although the rights will be transferable and have been registered, a
public trading market for them may not develop. Our securities are currently
traded on the OTC Bulletin Board. Trading on the OTC market is dependent on a
broker-dealer applying for listing. We cannot make the listing application
ourselves. Therefore, there is no assurance that a market will exist for the
rights. Moreover, if there is trading, it is possible that the trading may not
be very active. Therefore, it may not be possible to sell the rights or sell
them at a price reflective of a holder's desired sale price.
11
<PAGE>
Exercise of outstanding securities, including Class A Warrants, may adversely
affect our stock price and your percentage ownership.
If all the Class B Warrants are exchanged, there will be 1,158,100
Class A Warrants outstanding exercisable for 1,158,100 shares of common stock.
In addition we have other securities outstanding which are exchangeable or
exercisable into 1,205,438 shares of common stock that we may be required to
issue. In the future, we may grant more securities which are convertible or
exercisable into common stock. The conversion or exercise of options, warrants,
and convertible securities will dilute the percentage actual ownership of our
stockholders. In addition, any sales or the possibility of sales in the public
market of the common stock issuable under these securities could adversely
affect the prevailing market price of our common stock.
A business combination may result in significant dilution to current security
holders.
If Orion structures an acquisition where it is obligated to issue a
significant amount of shares of common stock, now or in the future, the current
holders of common stock will experience a reduction in their ownership
percentage. It is possible that their aggregate percentage may become a minority
position. The same dilution effect may impact the holders of then outstanding
options, warrants and convertible securities.
12
<PAGE>
THE EXERCISE OFFER
Purpose and effect of the exchange offer
The purpose of the exercise offer is to eliminate the Class B Warrants.
We believe that the Class B Warrants detract from our ability to effect a
business combination. This is because a prospective target company will value
our company with the Class B Warrants outstanding differently than if they are
not outstanding: typically of less value if the Class B Warrants are
outstanding. We also are required to offer the rights to one person holding
132,600 of the Class B Warrants as the result of a settlement of litigation
initiated by that holder against us and the directors of our company in office
prior to April 28, 1999. The settlement was entered into in January 2000. That
person is committed to accepting the offer to exercise the Class B Warrants that
he owns.
Terms of the exercise offer
Upon the terms set forth in this prospectus each Class B Warrant may be
exercised, upon payment of $.125 per warrant, for one share of common stock, one
class A Warrant and one right, until 5:00 p.m., New York City time, on the
expiration date. You may exercise some or all of your outstanding Class B
Warrants. After the expiration date, the Class B Warrants will be exercisable
under their original terms for one share of common stock and one Class A Warrant
upon payment of $.125 per warrant, for one year, commencing upon the
consummation of the first business combination.
The exercise offer is not conditioned upon any minimum amount of
outstanding Class B Warrants being exercised. Exercises will be accepted on a
rolling basis during the exercise offer period. You may not withdraw an exercise
of your Class B Warrants.
You will not be required to pay brokerage commissions or fees or,
subject to the limitations stated in this prospectus, transfer taxes with
respect to the exercise offer. We will pay all charges and expenses, other than
certain taxes, in connection with the exercise offer. You must, however, pay the
$.125 per warrant exercise price as stated in the terms of the Class B Warrant.
Expiration date
The expiration date shall be 5:00 p.m., New York City time, on
_________, 2000 unless we, in our sole discretion, extend this period. Although
we have no current intention to extend the exercise offer, we reserve the right
to extend it at any time and from time to time by giving oral or written notice
to the warrant agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service.
13
<PAGE>
Amendments
We expressly reserve the right to:
o delay acceptance of any exercised outstanding Class B Warrants;
o amend the terms of the exercise offer in any manner which, in our
good faith judgment, is advantageous to the holders of the
outstanding Class B Warrants, whether before or after any
exercise of the outstanding Class B Warrants, and in compliance
with the settlement agreement.
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice to the registered
holders of outstanding Class B Warrants. If we amend the exercise offer in a
manner that we determine to constitute a material change, we will promptly
disclose the amendment in a manner reasonably calculated to inform the holders
of outstanding Class B Warrants of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exercise offer, we shall have no obligation to publish, advertise, or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
Conditions to the exercise offer
Despite any other term of the exercise offer, we will not be required
to accept for exercise, or issue any securities upon exercise of the Class B
Warrants, and we may terminate the exercise offer as provided in this prospectus
if in our reasonable judgment:
o the securities to be received upon exercise will be tradeable by
the holder, with restriction under the Securities Act, the
Securities Exchange Act and with material restrictions under the
blue sky or securities laws of substantially all of the states of
the United States;
o the exercise offer, or the exercise, would violate applicable law
or any applicable interpretation of the staff of the SEC; or
o any action or proceeding has been instituted or threatened in any
court or by or before any governmental agency with respect to the
exercise offer that, in our judgment, would reasonably be
expected to impair our ability to proceed with the exercise
offer.
These conditions are for our sole benefit and we may assert them
regardless of the circumstances that may give rise to them or waive them, in
whole or in part, at any or at various times. A failure on our part to exercise
any of the foregoing rights will not constitute a waiver of such right.
14
<PAGE>
Procedures for exercise
To exercise your outstanding Class B Warrants, you must:
o complete the form of election to purchase section on the reverse
of your warrant certificate;
o make payment of $1.25 per warrant being exercised;
o sign the warrant certificate, and have your signature guaranteed
as explained below; and
o mail or deliver to the warrant agent the completed warrant
certificate and your payment.
If outstanding Class B Warrants that are to be exercised are registered
in the name of the signer of the warrant certificate and the securities are to
be issued, and any unexercised outstanding Class B Warrants are to be reissued,
in the name of the registered holder, the signature of such signer need not be
guaranteed.
In any other case, the outstanding Class B Warrants being exercised
must be endorsed or accompanied by written instruments of transfer in form
satisfactory to us and duly executed by the registered holder and the signature
on the endorsement or instrument of transfer must be guaranteed by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act. If the securities issued upon
exercise and any outstanding Class B Warrants not exchanged are to be delivered
to an address other than that of the registered holder appearing on the register
for the outstanding Class B Warrants, the signature on the warrant certificate
or the instruments of transfer must be guaranteed.
The method of delivery of exercised Class B Warrants, required payment
of $.125 per warrant and all other documents is at your election and risk. If
delivery is made by mail, it is recommended that registered mail, properly
insured, with return receipt requested, be used. In all cases, sufficient time
should be allowed to assure timely delivery. No exercise documentation or
payment should be sent to us. Everything should be sent to the warrant agent.
All questions as to the validity, form, eligibility, including time of
receipt, and acceptance of exercise of outstanding Class B Warrants will be
determined by us, with our determination being final and binding. We reserve the
absolute right to reject any or all exercises not in proper form or the
acceptance for exercise of which may, in our counsel's opinion, be unlawful. We
also reserve the absolute right to waive any of the conditions of the exercise
offer or any defect or irregularity in the exercise of any outstanding Class B
Warrants.
15
<PAGE>
Neither the warrant agent, us, nor any other person will be under any
duty to give notification of any defects or irregularities in exercises or incur
any liability for failure to give any such notification. If any Class B Warrants
received by the warrant agent are not validly exercised by you and as to which
the defects or irregularities have not been cured or waived, or if Class B
Warrants are submitted in a number greater than being exercised by you, such
unaccepted or non-exercised Class B Warrants will be returned to you by the
warrant agent as soon as practicable following the expiration date.
We reserve the right in our sole discretion, to the extent permitted by
applicable law to:
o purchase or make offers for any outstanding Class B Warrants that
remain outstanding subsequent to the expiration date; and
o purchase outstanding Class B Warrants in the open market, in
privately negotiated transactions or otherwise.
The terms of any purchases or offers made after the expiration of the exercise
offer may differ from the terms of the exercise offer.
Warrant Agent
American Stock Transfer & Trust Company has been appointed as warrant
agent for the Class B Warrants. You should direct questions and requests for
assistance and requests for additional copies of this prospectus and deliver the
Class B Warrants being exercised together with the required payment to the
warrant agent addressed as follows:
Registered, Certified, Regular Mail or Overnight Courier:
American Stock Transfer & Trust company
6201 Fifteenth Avenue - 3L
Brooklyn, NY 11219
Tel: (718) 921-8293
By Hand Delivery:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
Delivery to any address other than one set forth above will not
constitute a valid delivery.
16
<PAGE>
Fees and Expenses
We will bear the expense of soliciting exercises. The principal
solicitation is being made by mail. However, additional solicitations may be
made by telegraph, telephone or in person by our officers and regular employees.
No additional compensation will be paid to any of these officers and employees
who engage in soliciting exercises.
We have not retained any other soliciting agent in connection with the
exercise offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the exercise offer. We, however, will pay the warrant
agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection with the offer. We may also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
prospectus and related documents to the beneficial owners of the outstanding
Class B Warrants and in handling or forwarding exercises of the Class B
Warrants.
We will pay all the cash expenses to be incurred by us in connection
with the exercise offer, including fees and expenses of the warrant agent and
accounting and legal fees, will be paid by us. We will not, however, pay the
costs incurred by a holder in delivering its outstanding Class B Warrants to the
warrant agent, broker fees, commissions or transfer taxes.
Transfer Taxes
Holders who exercise their outstanding Class B Warrants will not be
required to pay any transfer taxes. However, holders who instruct us to register
the securities to be received on exercise in the name of, or request that
outstanding Class B Warrants not exercised or not accepted in the exercise offer
be returned to, a person other than the registered exercising holder, will be
required to pay any applicable transfer tax.
Other Matters
Participation in the exercise offer is voluntary and you should
carefully consider whether to accept. You are urged to consult your financial
and tax advisors in making your decisions on what action to take.
No person has been authorized to give any information or to make any
representations in connection with the exercise offer other than those contained
in this prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by us. Neither the delivery of this
prospectus nor any exercise made hereunder shall, under any circumstances,
create any implication that there has been no change in our affairs since the
dates as of which information is given. The exercise offer is not being made to,
nor will exercises be accepted from or on behalf of, holders of outstanding
Class B Warrants in any jurisdiction in which the making of the exercise offer
or its acceptance would not be in compliance with the laws of such jurisdiction.
However, we may, at our discretion, take such action as we may deem necessary to
make the exercise offer in any such jurisdiction and extend the exercise offer
to holders of outstanding Class B Warrants in such jurisdiction.
17
<PAGE>
Holders of the outstanding Class B Warrants who do not exercise their
outstanding Class B Warrants in the exercise offer will continue to hold
outstanding Class B Warrants and will be entitled to all the rights and
limitations applicable under the warrants and warrant agreement.
USE OF PROCEEDS
We will receive $.125 from each Class B Warrant exchanged. The total
amount we might receive is $44,762.50. This amount will be used to pay a portion
of the expenses of the exercise offer. The expenses are estimated to be
$45,000.00. Any amount not used for expenses will be added to our working
capital and used for general corporate purposes.
DESCRIPTION OF COMMON STOCK RIGHTS
Each common stock right will convert into that number of shares of
common stock equal to the difference between $5.75 and the highest 30 day
average of the closing prices of the common stock during the two years after the
first qualified business combination, divided by the above 30 day average. If
the average is less than $2.00, then for the calculation, the average will be
deemed to be $2.00. The business combination must increase the net worth of
Orion by at least $7,000,000 to be qualified. The common stock to be issued on
conversion will be that of Orion or any successor.
At our election, instead of the common stock right converting into
common stock, Orion may make a cash payment. The cash payment will equal $5.75
minus the highest 30 day average of the closing prices of the common stock
during the two years after the first qualified business combination. If the 30
day average is less than $2.00, then the payment will be $3.75 per right.
The common stock right will terminate if the closing price of the
common stock of Orion during the two years after the first qualified business
combination equals or exceeds $5.75 for 10 consecutive trading days. The right
also will terminate on conversion or on payment of the amount in lieu of
conversion. The right will continue if there is no qualified business
combination.
The dollar formula amounts used in determining the conversion rate and
cash payment amount and the number of shares issuable on conversion will be
adjusted for common stock dividends or split up of the common stock, aggregation
of the common stock and changes in the common stock due to capital
reorganization, reclassification and consolidation and mergers of Orion with
another company in which it is not the survivor. The adjustment will result in
maintaining the benefits of the rights as nearly to what they are at issuance.
You will be notified of important changes in the rights.
No fractional shares will be issued on conversion of all the rights of
a holder. If a fractional share is to be issued, it will be rounded up to the
nearest whole share.
A holder of the common stock rights will not have any rights,
privileges or liabilities as a stockholder of Orion prior to the conversion of
the rights into common stock. We are required to keep available a sufficient
number of authorized shares of common stock to permit conversion of the rights.
The rights will not be convertible unless the shares issuable on conversion are
18
<PAGE>
registered for issuance or are exempt from registration. We have undertaken to
file and keep current a registration statement, if necessary, which will permit
the issuance of shares that are registered.
The rights will be represented by certificates. The registrar and
transfer agent for the rights will be American Stock Transfer & Trust Company.
DESCRIPTION OF OUTSTANDING SECURITIES
Common Stock
The certificate of incorporation authorizes us to issue up to
10,000,000 shares of common stock, par value $.01 per share. Of the shares of
common stock authorized, 890,000 shares are issued and outstanding as of the
date of this prospectus.
Holders of common stock are entitled to receive dividends in amounts
and when declared by the board of directors from funds legally available as
determined under Delaware law. On liquidation of the company, the holders of
shares of common stock are entitled to their pro rata share in any distribution
available to holders of common stock. The holders of common stock have one vote
per share on each matter to be voted on by stockholders, and they are not
entitled to vote cumulatively. Holders of common stock have no pre-emptive
rights. All of the outstanding shares of common stock are and all of the shares
of common stock to be issued in connection with this exercise offer will be,
validly issued, fully paid and non-assessable.
Preferred Stock
The certificate of incorporation authorizes the board of directors to
issue up to 1,000,000 shares of preferred stock, par value .01 per share. There
are currently designated 200 shares of preferred stock as the Class A Preferred
Stock of which 110 shares are outstanding. The board of directors is authorized
to establish one or more series of preferred stock and to determine, with
respect to each series, the preferences, rights and other terms thereof.
Class A Preferred Stock
This class of preferred stock is convertible into an aggregate of
110,000 shares of common stock at any time during the first year after our first
business combination. If Orion is liquidated, the holder of this class of
preferred stock will receive the original purchase price paid for the shares in
preference to any liquidation distribution to the holders of the common stock.
The holder has the right to have this class of preferred stock redeemed at any
time by Orion for the original purchase price paid for the shares. The original
purchase price is $100. This preferred stock has no voting rights other than as
required by law and no dividend rights.
19
<PAGE>
Class A Warrants
Each Class A Warrant which is outstanding and which will be issued in
the exercise offer entitles the holder to purchase one share of common stock.
The initial exercise price per warrant is $9.00 per share. The warrants are
exercisable commencing the date of the completion of the first business
combination by Orion and until July 2, 2001. No fractional shares of common
stock will be issued in connection with the exercise of warrants: upon exercise,
it will be rounded up if the percent is equal or greater than 50% of a share or
eliminated if the percent is less than 50% of a share.
We may redeem the Class A Warrants at any time after they become
exercisable, at a price of $.05 per warrant, upon not less than 30 days' prior
written notice, if the last sale price of the common stock has been at least
$11.00 for 10 consecutive trading days ending on the day immediately prior to
the day on which we give notice of redemption.
The Class A Warrants will not be exercisable unless at the time of
exercise there is a current prospectus covering the shares of common stock
issuable upon exercise of the warrants under an effective registration statement
and the shares have been qualified for sale or are exempt from qualification
under the securities laws of the state of residence of the holder of the
warrants. We have undertaken to file and keep current a registration statement
and prospectus to permit exercise of the Class A Warrants. Although we intend to
meet these obligations, there can be no assurance that we will be able to do so.
Holders of Class A Warrants will not have any rights, privileges or
liabilities as a stockholder of Orion prior to the exercise of the warrants. We
are required to keep available a sufficient number of authorised shares of
common stock to permit exercise of the warrants. The exercise price of the
warrants, the threshold market price of the warrants for redemption and the
number of shares issuable upon exercise of the warrants will be subject to
adjustment to protect against dilution in the event of stock dividends, stock
splits, combinations, subdivisions and reclassifications and changes as a result
of mergers and combinations of Orion. No assurance can be given that the market
price of the Orion common stock will exceed the exercise price of the warrants
at any time during the exercise period.
20
<PAGE>
BUSINESS
General
Orion was organized on October 19, 1995 to acquire by purchase, merger,
combination or otherwise an operating business. There is no restriction on the
means of acquisition or the industry in which the target business operates.
There is no time by which Orion must consummate a business combination.
Since inception, Orion has not engaged in any substantive commercial
business. Its sole activities have been to evaluate and select a suitable target
business and to structure, negotiate and consummate a business combination with
a target business.
Organizational background of Orion.
Orion was originally organized as a Specialized Merger and Acquisition
Allocated Risk Transaction(R) company. These companies have certain shareholder
protections not ordinarily found in public corporate entities . The protections
included the following features.
o A portion of the proceeds of the original public offering
was placed in an escrow account for the benefit of the
holders of common stock, excluding the 90,000 shares sold
prior to going public whose holders waived their rights to
participate in the benefits of the escrow fund.
o Any business combination had to result in a fair market
value equal to at least 80% of the net assets of Orion at
the time of such acquisition. The purpose of this
requirement was to ensure that a Business Combination will
constitute a significant acquisition.
o Two-thirds of the shares common stock were required to
approve the proposed business combination.
o Stockholders up to 20% of those entitled to participate in
the escrow fund were able to have their shares redeemed at
the time of the business combination, at their election,
without the business combination being terminated.
o The 90,000 shares issued prior to the initial public
offering were (and still are) held in escrow until the first
business combination of Orion. This prevents these holders
who had acquired their shares for a nominal sum, selling
their shares and realizing a profit prior to a business
combination.
o If Orion did not consummate a business combination within
two years of the initial public offering (July 2, 1996), the
funds held in escrow were to be distributed to those
entitled to the funds.
21
<PAGE>
The above restrictions, other than the escrow of the 90,000 shares of
common stock issued before the public offering, have been terminated. See 1999
developments below.
Recent Developments
Orion did not effect a business combination by July 2, 1998, the two
year anniversary of its initial public offering. At that time Orion was
obligated to terminate the escrow fund that had been set up with a portion of
the proceeds of the initial public offering consummated on July 2, 1996. In late
1998, Orion prepared a proxy statement and submitted for stockholder
consideration a proposal to terminate the operations and liquidate the company
under Delaware law. The proposal for liquidation would have resulted in a
distribution to the holders of the common stock sold in the initial public
offering, representing 800,000 shares of common stock, the amounts held in the
escrow account, less any expenses of Orion that were outstanding and unpaid. The
meeting was held on January 12, 1999, at which no quorum was present. Although
the meeting was adjourned, a quorum was never achieved. Therefore, the proposal
for liquidation was never adopted.
Beginning in January 1999 and continuing through April 1999, a group of
stockholders consisting of MDB Capital Group LLC and its members and officers
and ultimately 14 other persons, acquired approximately 51% of the outstanding
common stock of Orion. This amount represented control of Orion. These persons
were considered a group and filed a Schedule 13D which set forth their
securities holdings and purpose in being a group. Their declared purpose was to
cause a change in the then current directors and officers of Orion, to cause a
termination of the escrow account where substantially all of the assets were
then located and a distribution of a significant portion of those funds to those
stockholders entitled thereto, and to cause a change in the certificate of
incorporation, to eliminate the requirement that two-thirds of the stockholders
of Orion were required to approve a business combination.
On April 30, 1999, by consent action, this group elected a new board of
directors and thereafter the new directors elected new officers. The directors
and officers are the current persons in those capacities set forth in this
report. These persons were members of the group. At that time there was a
complete change in control of Orion and in its management.
On October 22, 1999, a special meeting of the stockholders was held,
and pursuant to a solicitation of proxies, the stockholders approved a change in
the certificate of incorporation to eliminate the requirement that a business
combination be approved by not less than two-thirds of the outstanding common
stock and a proposal to terminate the escrow fund and distribute the amounts
therein to Orion.
On July 26, 1999 a distribution from the escrow fund was made to the
stockholders of Orion holding shares sold in the initial public offering. The
distribution was in the amount of $9.00 per share to holders of record as of
July 22, 1999. The distribution represented a return of capital and dividend
income. Then, on November 3, 1999, after the stockholder approval of the
termination of the escrow fund, the remaining amount held in escrow was
distributed to Orion. Those funds have been used to pay accumulated and unpaid
taxes and other obligations of Orion. The remaining funds will be used to fund
the ongoing operating expenses of Orion and a portion of any expenses of a
business combination.
22
<PAGE>
On June 15, 2000, Orion sold 212,157 shares of common stock to
accredited investors in a private placement. The per share price was $1.40,
approximately the then trading price of a share in the OTC Bulletin Board
market. Orion received aggregate proceeds of $297,020. Each of the purchasers
were granted piggy-bank registration rights for two years. The shares of common
stock sold in the private placement are included in this registration statement.
Business Objective
The management of Orion intends to identify a target business and
effect a business combination with a target business. It is anticipated that any
business combination will be by negotiation rather than hostile takeover. At
this time, Orion does not have a schedule of when it will be able to initiate or
consummate a specific business combination.
Management has substantial flexibility in identifying and selecting a
prospective target business. In evaluating a prospective target business,
management will consider, among other factors, the following:
(i) the costs associated with effecting the business combination;
(ii) the amount of the equity interest it will be able to acquire in
the business and opportunity for obtain control;
(iii) the growth potential of the target business;
(iv) the experience and skill of the management of the target business
and availability of additional personnel for the target business;
(v) the current and anticipated capital requirements of the target
business;
(vi) the competitive position of the target business in its industry;
(vii) the stage of business development of the target business;
(viii) the degree of current or the potential market acceptance of the
products or services of the target business;
(ix) the existence of any proprietary features or intellectual
property of the target business;
(x) the overall financial condition of the target business; and
(xi) the regulatory environment in which the target business operates.
23
<PAGE>
In connection with its search for an acquisition opportunity, Orion may
engage investment banking firms to help it identify and approach target
businesses. Moreover, in evaluating any target business, management will
consider retaining an independent investment banking firm which is a member in
good standing of the NASD to assist Orion in appraising, structuring and
negotiating a potential business combination. In connection with its evaluation
of a prospective target business, management will conduct a due diligence review
which will encompass, among other things, meeting with incumbent management,
inspecting the facilities, and reviewing the financial, legal and other
information which will be made available to Orion.
The time and costs required to select and evaluate a target business
(including conducting a due diligence review) and to structure and consummate
the business combination (including negotiating relevant agreements and
preparing requisite documents for filing pursuant to applicable securities laws
and state "blue sky" and corporation laws) will not be ascertainable with any
degree of certainty until consummation of the business combination. Any costs
incurred in connection with the identification and evaluation of a prospective
target business with which a business combination is not ultimately consummated
will result in an expense to Orion.
Orion will use its current working capital and capital resources to
consummate a business combination. In addition, because the resources of Orion
are not likely to be sufficient to fund a business combination, it will have to
raise additional capital. The capital may be in the form of equity or debt, and
will likely be based solely on the business operation and financial condition of
the target business. Therefore, it is not possible at this time to determine the
amount of capital that will be needed or available for a business combination
There currently are no limitations on Orion's ability to borrow funds for a
business combination. Nonetheless, Orion's limited resources and lack of
operating history may make it difficult to obtain funds. The amount and nature
of any funding will depend on numerous considerations, including Orion's capital
requirements, potential lenders' evaluation of Orion's ability to meet debt
service on borrowings and the then prevailing conditions in the financial
markets, as well as general economic conditions. Orion does not have any
arrangements with any bank or financial institution to secure additional
financing, and there can be no assurance that such arrangements if required will
be obtainable or otherwise in the best interests of Orion. The inability of
Orion to obtain the funds required to effect a business combination, or to
provide funds for an additional infusion of capital into a target business, may
have material adverse effects on Orion's business prospects, including the
ability to effect a business combination.
Employees
Orion does not have any employees.
Properties
The executive office of Orion is located at 401 Wilshire Boulevard,
Suite 1020, Santa Monica, California 90401. The telephone number is (310)
526-5000.
24
<PAGE>
Pursuant to an oral agreement, MDB Capital Group, LLC. has agreed that
it will make office space and services available to Orion, as may be required at
this time and in the near future. Orion does not pay any amount for these
services. MDB Capital Group, LLC, is controlled by Christopher A. Marlett,
Anthony DiGiandomenico and James D. Bowyer, each a stockholder, officer and
director of Orion.
We believe that this facility is adequate to meet the needs of Orion
for the foreseeable future until it consummates of a business combination.
25
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The common stock, Class A Warrants and Class B Warrants are traded in
the over-the- counter market and quoted on the OTC Bulletin Board under the
symbols MTMR, MTMRW, and MTMRZ.
The following table sets forth the range of high and low closing
trading prices for the common stock, Class A Warrants, and Class B Warrants for
the last two fiscal years. The OTC Bulletin Board is an inter-dealer automated
quotation system sponsored and operated by the NASD for equity securities not
included in the Nasdaq System. The over-the-counter market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily reflect actual transactions.
<TABLE>
<CAPTION>
Class A Class B
Common Stock Warrants Warrants
High Low High Low High Low
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1998:
First Quarter ............................ 9.125 8.75 1.00 .375 5.875 4.875
Second Quarter......................... 9.45 9.031 .625 .25 4.25 1.50
Third Quarter.......................... 9.875 9.188 .75 .50 4.50 1.00
Fourth Quarter......................... 10.125 9.125 .625 .063 .50 .063
Year Ended December 31, 1999:
First Quarter............................. 10.125 8.00 N/A N/A .03125 .21875
Second Quarter............................ 11.00 8.50 N/A N/A .15625 .15625
Third Quarter............................. 7.00 1.00 N/A N/A N/A N/A
Fourth Quarter............................ 1.375 1.0625 .031 .031 N/A N/A
Year Ending December 31, 2000:
First Quarter 1.4375 1.0625 N/A N/A N/A N/A
Second Quarter 1.50 1.375 .656 .64 N/A N/A
</TABLE>
Holders
As of May 15, 2000, there were 29 holders of record of the common stock
and one holder of record of each of the Class A Warrants and the Class B
Warrants. Since the majority of the securities are held in street name, Orion
believes that there is a substantial number of beneficial holders of the
securities.
23684.5
26
<PAGE>
Dividends
Except as described below, Orion has paid no regular dividends on its
shares of common stock since its organization. Orion does not expect to pay any
dividends prior to the consummation of a business combination, and thereafter
anticipates that for the foreseeable future any earnings will be retained for
use in its business. Accordingly, it does not anticipate the payment of cash
dividends.
On July 26, 1999, Orion completed a distribution of $9.00 per share to
holders of the 800,000 shares of common stock purchased in its initial public
offering dated July 2, 1996. The distribution represented a return of capital
and dividend income.
Sales of Unregistered Securities
During the fiscal year ended December 31, 1999, Orion did not sell any
unregistered securities.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward Looking Statements
When used in this Prospectus, the words or phrases "will likely
result," "management expects," or "the company expects," "will continue," "is
anticipated," "estimated" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speak only as of the date
made. Such statements are subject to certain risks and uncertainties, some of
which are described below, that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. Orion has
no obligation to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect anticipated events or circumstances
occurring after the date of such statements.
The selected financial information for the years ended December 31,
1999, 1998, l997, 1996 and the period from inception (October 19, 1995) through
December 31, 1999 are derived from the financial statements of Orion which have
been audited by BDO Seidman, LLP, Orion's independent auditors. The unaudited
selected financial information for the quarters ended March 31, 2000 and 1999
and the pro forma balance sheet information as at June 15, 2000 reflecting the
sale of 212,157 shares of common stock for aggregate proceeds of $297,020 is
unaudited and was prepared by management. This information should be read in
conjunction with the financial statements and related notes and other financial
information included herein.
<TABLE>
Period from
Inception
Year Ended December 31, through March 31,
Statement of Operations Data 1999 1998 1997 1996 12/31/99) 2000 1999
----------------------------------------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income................... 255,344 436,292 475,112 222,444 1,389,192 14,085 91,050
General and administrative
expenses.......................... (85,281) (192,622) (294,447) (82,172) (654,522) (18,393) (15,611)
Stock based compensation expense.. - - (100,000) - (100,000) - -
Interest expense................. - - - (57,694) (57,694) - -
-------- --------- -------- -------- --------- ----------- --------
Net income before income taxes.... 170,063 243,670 80,665 82,578 576,976 (4,308) 75,439
Provision for income taxes........ (74,303) (103,153) (76,399) (39,927) (293,782) - (35,591)
-------- --------- -------- -------- --------- ----------- --------
Net income attributable to
common stock...................... 95,760 140,517 4,266 42,651 283,194 (4,308) 39,848
====== ======= ====== ====== ======= ======= ======
Earnings per share, basic and
diluted........................... 0.11 0.16 - 0.09 - 0.04
==== ==== ====== ==== ====== ======
Weighted average common shares
outstanding....................... 890,000 890,000 890,000 466,313 890,000 890,000
======= ======= ======= ======= ======= ========
</TABLE>
28
<PAGE>
<TABLE>
At December 31, At Pro Forma
Balance Sheet Data: 1999 1998 1997 1996 March 31, 2000 at June 15, 2000
---------------------------------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Total assets...................... 2,045,862 9,100,524 8,981,286 8,839,453 1,965,515 2,254,646
Total liabilities................. 121,263 71,685 92,964 55,397 45,224 36,452
Earnings (deficit) accumulated
during development stage.......... 7,553 (30,290) (85,323) 533 3,245 4,129
Common stock subject to possible
redemption at conversion value.... - 1,817,724 1,732,240 1,642,118 - -
Stockholders' equity.............. 1,924,599 7,211,115 7,156,082 7,141,938 1,920,291 2,218,194
</TABLE>
Results of Operations
Orion is a development stage company, and to date its efforts have been
limited to organizational activities, consummating an initial public offering
and seeking a business combination. Orion has not yet consummated a business
combination. Accordingly, Orion will not achieve any operating revenues (other
than investment income) until, at the earliest, the consummation of a business
combination.
In each quarterly and annual fiscal period, revenues have consisted
solely of investment income earned on United States treasury securities and
other investments. In the same periods, expenses have been those associated with
investigation possible targets for a business combination, general and
administrative expenses, professional fees, and income and other taxes.
In July 1999, Orion made a distribution of $9.00 per share of common
stock sold in the initial public offering on July 3, 1996. The aggregate
distribution was $7,200,000. The distribution was made in compliance with the
escrow agreement under which a portion of the net proceeds of the initial public
offering was held for the benefit of those stockholders.
On October 22, 1999 a special meeting of the stockholders was held, and
pursuant to a solicitation of proxies, the stockholders approved a change in the
certificate of incorporation to eliminate the requirement that a business
combination be approved by not less than two-thirds of the outstanding common
stock and a proposal to terminate the escrow fund and distribute the amounts
therein to Orion.
On November 3, 1999, after the stockholder approval of the termination
of the escrow fund, the funds then held in escrow of $2,137,243 was distributed
to Orion. Those funds have been used to pay accumulated and unpaid taxes and
other obligations of Orion. The remaining funds will be used to fund the ongoing
operating expenses of Orion, expected to include professional fees and due
diligence and research on potential acquisition targets.
Orion currently has its executive office at the location of MDB Capital
Group LLC whose principals are members of the board of directors of Orion and
significant stockholders. MDB Capital Group has agreed to make office space and
services available to Orion, as may be required at this time and in the near
future. Orion does not pay any amount for these services.
29
<PAGE>
Liquidity and Capital Resources
At December 31, 1999, Orion had $2,028,802 in cash and short term U.S.
Treasury Bills. At March 31, 2000, Orion had $1,935,887 in cash and short term
U.S. Treasury Bills. On June 15, 2000, Orion sold 212,157 shares of common stock
for aggregate proceeds of $297,020. On June 15, 2000, Orion had cash and short
term U.S. Treasury Bills of $2,225,018. Orion will continue to invest it's
assets in U.S. Treasury bills and cash until such time as assets are needed for
a business combination or acquisition.
Orion has not incurred any debt in connection with its organizational
activities. No cash compensation is currently or will be paid to any officer
director until after the consummation of a business combination. Since the role
of present management after a business combination is uncertain, Orion has no
ability to determine what remuneration, if any, will be paid to such persons
after a business combination.
Orion believes it has more than adequate capital to fund its operations
pending a business combination.
Orion will use its current working capital and capital resources to
consummate a business combination. In addition, because the resources of Orion
are not likely to be sufficient to fully fund a business combination, it will
have to raise additional capital. The capital may be in the form of equity or
debt, and will likely be based solely on the business operation and financial
condition of the target business. Therefore, it is not possible at this time to
determine the amount of capital that will be needed or available for a business
combination There currently are no limitations on Orion's ability to borrow
funds for a business combination. Nonetheless, Orion's limited resources and
lack of operating history may make it difficult to obtain funds. The amount and
nature of any funding will depend on numerous considerations, including Orion's
capital requirements, potential lenders' evaluation of Orion's ability to meet
debt service on borrowings and the then prevailing conditions in the financial
markets, as well as general economic conditions. Orion does not have any
arrangements with any bank or financial institution to secure additional
financing, and there can be no assurance that such arrangements if required will
be obtainable or otherwise in the best interests of Orion. The inability of
Orion to obtain the funds required to effect a business combination, or to
provide funds for an additional infusion of capital into a target business, may
have material adverse effects on Orion's business prospects, including the
ability to effect a business combination.
Year 2000
Y2K issues concern the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information relating to the year 2000 and beyond. Many of the world's computer
systems recorded years in a two-digit format. Computer systems configured this
way may be unable to property interpret dates beyond the year 1999. Orion has
not experienced any problems resulting from the change of dates at the beginning
of the year 2000. Because Orion does not have any operations, it does not
anticipate that it will experience any Y2K issues in the future. However, no
assurances can be given that a Y2K issue will not develop in the future that may
adversely affect Orion. Management will continue to monitor these issues.
30
<PAGE>
MANAGEMENT
Executive Officers and Directors
The current directors and officers of Orion are as follows:
<TABLE>
Name Age Director Since Position
---- --- -------------- ---------
<S> <C> <C>
Christopher A. Marlett 35 1999 Chairman of the Board, Chief Executive
Officer and Director
Anthony DiGiandomenico 33 1999 Chief Financial Officer and Director
Dyana Williams Marlett 33 1999 Chief Operating Officer, Secretary,
Treasurer and Director
James D. Bowyer 60 1999 Director
William C. Fioretti 48 1999 Director
</TABLE>
Christopher A. Marlett is a co-founder and member of MDB Capital Group
LLC, an investment banking firm formed in December 1996. MDB is an NASD member
broker-dealer which specializes in working with growth oriented companies. Prior
to forming MDB, Mr. Marlett was employed as a Managing Director by Laidlaw
Equities from May of 1995 to December of 1996 where he was in charge of
Laidlaw's West Coast investment banking activities. From March of 1991 to May of
1995 Mr. Marlett was affiliated with Drake Capital Securities where he formed a
division called Marlett/Mazzarella and directed all investment banking
activities of the division. Mr. Marlett holds a degree in Business
Administration from the University of Southern California. Mr. Marlett is the
Chairman and interim President of Lipid Sciences Inc. a company engaged in
medical research.
Anthony DiGiandomenico is a co-founder and member of MDB, an investment
banking firm formed in December 1996. Mr. DiGiandomenico served as President and
CEO of the Digian Company from 1988 through 1996, a real estate development
company and holds a Bachelors of Science Degree in Finance from the University
of Colorado and a Masters in Business Administration from the Haas Business
School at the University of California, Berkeley.
Dyana Williams Marlett is a co-founder of MDB and acts as its Chief
Operating Officer. From March of 1995 to December of 1996, Ms. Marlett was
employed by Laidlaw Equities as a Vice President handling investment banking and
syndicate activities for the West Coast. From October of 1990 through March of
1995, Ms. Marlett was employed at Drake Capital Securities where she acted as
Syndicate Manager. Ms. Marlett holds several licenses with the National
Association of Securities Dealers. Ms. Marlett is the wife of Mr. Christopher
Marlett.
James D. Bowyer is a co-founder and member of MDB, an investment
banking firm formed in December 1996. Mr. Bowyer was employed at Laidlaw
Equities from August of 1995 to December of 1996. Mr. Bowyer's career has
spanned over thirty years in the securities industry focused on financing and
investing in growth companies. In 1976 Mr. Bowyer formed MacDonald, Krieger &
Bowyer a full service broker-dealer based in Beverly Hills, California, which
31
<PAGE>
was subsequently sold in 1982. Mr. Bowyer then founded his own investment firm,
J.D. Bowyer & Co. which he operated from 1983 to 1995.
William C. Fioretti is the founder of Agritech Labs, and has served as
its president and a director since 1992. Agritech Labs is a research and
development company which concentrates on veterinary bio-pharmaceuticals. Mr.
Fioretti is also a founder of Mannatech Incorporated (NASDAQ:MTEX) a publicly
traded direct marketing company specializing in consumer health products. Mr.
Fioretti served Mannatech as the Chief Executive Officer from 1993 through 1996,
as Chief Scientific Officer from 1996 through 1997 and a director from inception
until his retirement from Mannatech in November of 1997. Mr. Fioretti completed
his undergraduate education at Appalachian State University from 1970-1974
receiving a Bachelor of Science Biology, completed his graduate training in
biochemistry at the Medical University of South Carolina from 1974-1978 and did
post graduate training at the University of Florida from 1978- 1980.
Executive Compensation
Orion does not currently compensate any of the officers or other
employees. Orion does not intend to provide any remuneration to officers or
employees until after a business combination, if any, of an operating business.
Board of Directors
Members of the board of directors generally are elected annually by the
stockholders and may be removed as provided in the General Corporation Law of
the State of Delaware and the articles of incorporation and by-laws. Officers
are appointed by the board of directors and serve at their pleasure. The board
of directors does not have any committees at this time.
Compensation of Directors
Directors of Orion receive no cash compensation for serving on the
board of directors, but they receive reimbursement of reasonable expenses
incurred in attending meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Orion uses the services and some of the employees of MDB Capital Group
LLC and has its executive offices at the offices of MDB Capital Group LLC. Orion
does not pay any amount to or for the employees of MDB Capital Group LLC or any
rent for these offices. Orion reimburses MDB Capital Group LLC for documented
out of pocket expenses incurred on its behalf.
On May 5, 1999 and July 20, 1999, MDB Capital Group LLC lent to Orion
an aggregate of $35,000. This loan was represented by unsecured promissory notes
due on demand, bearing no interest. The proceeds of these loans were used for
working capital. The principal on these loans was repaid on December 8, 1999.
Each of Christopher A. Marlett, Anthony DiGiandomenico, James D. Bowyer and
Dyana Williams Marlett are officers and/or directors of Orion and principals
and/or employees of MDB Capital Group LLC.
32
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of June 15, 2000 based on
information obtained from the persons named below. It states the beneficial
ownership of shares of the common stock by:
(i) each person known to be the owner of more than 5% of the
outstanding shares of common stock;
(ii) each director; and
(iii) all executive officers and directors as a group.
Amount and Nature Percent
of Beneficial of Class
Name of Beneficial Owner (1) Ownership (2)
----------------------------- ------------------ ---------
Christopher A. Marlett 216,000 19.6%
Anthony DiGiandomenico 75,555(3) 6.9%
Dyana Williams Marlett 68,000 6.2%
James D. Bowyer 28,200(4) 2.6%
William C. Fioretti 105,000 9.5%
All directors and executive officers 492,755(5) 44.7%
as a group (five persons)
(1) The person's address is care of Orion at 401 Wilshire Boulevard - Suite
1020, Santa Monica, California 90401.
(2) Percentage includes all outstanding shares of common stock plus any shares
of common stock that the person has the right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
(3) Includes 3,000 shares held in an individual retirement account.
(4) Includes 1,500 shares of common stock held in custodian accounts and
excludes 1,500 shares of common stock issuable on exercise of Class A
Warrants not yet exercisable.
(5) See Notes 4 and 5 above.
SELLING STOCKHOLDERS
The table below provides information about the selling stockholders'
beneficial ownership of our common stock as of June 15, 2000, and as adjusted
for the sale of all of their shares in this offering by them. The number of
shares reflected in the table has been determined using Rule 13d- 3 under the
Exchange Act. Under this rule, a person is deemed to own beneficially the number
33
<PAGE>
of shares issuable upon exercise of warrants or options it holds that are
exercisable within 60 days from the date of this prospectus. Unless otherwise
indicated, each selling stockholder possesses sole voting and investment power
of the securities shown.
<TABLE>
Shares Beneficially Shares Beneficially
Owned Owned
Before Offering After Offering
------------------- --------------------
Number of
Number of Shares Number of
Name Shares Percentage Offered Shares Percentage
---- --------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
American High Growth
Equities Retirement Fund........... 35,714 3.2% 35,714 -0- -0-
Anthony DiGiandomenico................ 75,555 6.9% 14,300 61,255 5.6%
Christopher A. Marlett................ 216,000 19.6% 90,000 126,000 11.4%
Raymond Marlett....................... 10,000 0.9% 10,000 -0- -0-
Leonard Rothstein..................... 40,000 3.6% 20,000 20,000 1.8%
William Fioretti...................... 105,000 9.5% 35,000 70,000 6.4%
Duane Clarkson........................ 7,143 0.6% 7,145 -0- -0-
</TABLE>
On June 15, 2000, Orion sold an aggregate of 212,157 shares of common
stock to the selling stockholders. The proceeds of $297,020 from these sales
will be used for working capital and general corporate purposes. The stock
purchase agreements required us to register the shares for re-offer and re-sale
and are included in this prospectus.
PLAN OF DISTRIBUTION OF SELLING STOCKHOLDERS
The shares offered by the selling stockholders may be sold from time
to time. They may be sold in transactions in the over the counter market, in
negotiated transactions, or a combination of these methods of sale. The sales
may be at fixed prices (which may be changed), at prevailing market prices or at
negotiated prices. The selling stockholders may sell their shares directly to
purchasers or to or through broker-dealers, which may act as agents or
principals. These broker- dealers may receive compensation in the form of
discounts, concessions or commission from the selling stockholders. None of the
selling stockholders have entered into agreements, understandings or
arrangements with any underwriters or broker-dealers for the sale of their
shares. The selling stockholders and any broker-dealer that assist in the sale
of the common stock may be deemed to be underwriters within the meaning of
Section 2(a)(11) of the Securities Act. The selling stockholders may agree to
indemnify any agents, dealers or broker-dealers that participates in
transactions involving sales of the common stock against certain liabilities,
including liabilities arising under the Securities Act. From time to time, the
selling stockholders may pledge, hypothecate or grant a security interest in
some or all of the shares owned by them, and the pledgees, secured parties or
persons to whom such securities have been hypothecated shall, upon foreclosure
in the event of a default, be deemed to be the selling stockholder for purposes
hereof.
We are responsible for all costs, expenses and fees incurred in
registering the shares offered hereby. The selling stockholders are responsible
for brokerage commissions, if any, attributable to the sale of such securities.
34
<PAGE>
LEGAL MATTERS
The validity of the common stock, Class A Warrants and common stock
rights will be passed upon for us by Graubard Mollen & Miller, New York, New
York.
EXPERTS
The financial statements and schedules included in this prospectus and
in the related registration statement have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report appearing elsewhere herein and in the registration
statement, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities
Act of 1933, as amended, with the SEC. This prospectus is part of that
registration statement and does not contain all of the information included in
the registration statement. For further information about us and our securities
you may refer to the registration statement and its exhibits and schedules as
well as the documents described below. You can review and copy these documents
at the public reference facilities maintained by the SEC or on the SEC's website
as described below.
We also file annual, quarterly and special reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. These documents are also available at the
public reference rooms at the SEC's regional offices in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms.
35
<PAGE>
FINANCIAL STATEMENTS
ORION ACQUISITION CORP. II
(A Corporation in the Development Stage)
CONTENTS
PAGE
Report of independent certified public accountants.......................F-2
Financial statements:
Balance sheets as of December 31,1999 and 1998
and March 31,2000 (unaudited)............................................F-3
Statements of operations for the years ended
December 31,1999,1998 and 1997, and the three months
ended March 31, 2000 and 1999 (unaudited) ...............................F-4
Statements of stockholders' equity and common stock
subject to possible redemption for the years ended
December31,1999,1998,1997,1996 and for the period
from October 19, 1995 (inception) through December
31, 1995 and the three months ended March 31, 2000 (unaudited)...........F-5
Statements of cash flows for the years ended December 31,1999,
1998 and 1997, and the three months ended March 31, 2000 and
1999(unaudited)..........................................................F-6
Notes to financial statements............................................F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
to the Board of Directors and Stockholders
of Orion Acquisition Corp. II
We have audited the accompanying balance sheets of Orion Acquisition Corp.
II (a corporation in the development stage) as of December 31, 1999 and 1998 and
the related statements of operations, stockholders' equity and common stock
subject to redemption, and cash flows for the years ended December 31, 1999,
1998 and 1997 and for the period from October 19, 1995 (Date of Inception) to
December 31, 1999. These financial statements are the responsibility of Orion's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principals used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Orion Acquisition Corp. II
at December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 and for
the period from October 19, 1995 (Date of Inception) to December 31, 1999 in
conformity with generally accepted accounting principals.
/S/ BDO Seidman, LLP
BDO SEIDMAN, LLP
Los Angeles, California
February 10, 2000
F-2
<PAGE>
ORION ACQUISITION CORP II
(a corporation in the development stage)
BALANCE SHEET
<TABLE>
March 31, December 31,
2000 1999 1998
(unaudited)
---------------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Cash $416,124 $522,187 $11,902
Restricted cash 190,383
- -
US Treasury bills - restricted 8,898,239
- -
US Treasury bills 1,519,763 1,506,615
Other assets 29,628 17,060
------------------ ----------------- ---------------
Total assets $1,965,515 $2,045,862 $9,100,524
================= ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses $45,224 $121,263 $71,685
Common stock, subject to possible
conversion of 160,000 shares at 1,817,724
160,000 shares at redemption value (Note 6)
Commitments and contingencies (Note 6)
Stockholders' equity:
Convertible preferred stock, $.01 par value 1 1 1
1,000,000 shares authorized 110 shares issued
and outstanding
Common stock, $0.01 par value 10,000,000 shares 8,900
authorized; 890,000 shares issued and outstanding 8,900 8,900
Additional paid-in capital 1,908,145 1,908,145 7,232,504
(Deficit) earnings accumulated during development
stage 3,245 7,553 (30,290)
-------------------- -------------- ---------------
Total stockholders' equity 1,920,291 1,924,599 7,211,115
-------------------- -------------- ---------------
Total liabilities and stockholders' equity $1,965,515 $2,045,862 $9,100,524
==================== ============== ==============
</TABLE>
See accompanying notes to the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
ORION ACQUISITION CORP II
(a corporation in the development stage)
STATEMENT OF OPERATIONS
Three months ended October 15, Year ended December 31, October 15,
March 31, 1995 (date of 1995 (date of
inception) inception)
to March 31, to December
2000 31, 1999
2000 1999 1999 1998 1997
(unaudited) (unaudited) (unaudited)
------------ ------------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 14,085 $ 91,050 $ 1,403,277 $ 255,344 $ 436,292 $ 475,112 $ 1,389,192
General and administrative expenses (18,393) (15,611) (672,915) (85,281) -- (100,000) (654,522)
Stock based compensation expense -- -- (100,000) -- -- -- (100,000)
Interest expense -- -- (57,694) -- -- -- (57,694)
------------ ------------- ----------- ------------ ------------ ------------- ------------
Net income before income taxes (4,308) 75,439 572,668 170,063 243,670 80,655 576,976
Provision for taxes - (35,591) (293,782) (74,303) (103,153) (76,399) (293,782)
------------ ------------- ----------- ------------ ------------ ------------- ------------
Net income $ (4,308) $ 39,848 $ 278,886 $ 95,760 $ 140,517 $ 4,266 $ 283,194
============ ============= ============= ============ ============ ============= =============
Earnings per share:
Basic $ (0.00) $ 0.04 $ 0.11 $ 0.16 $ -
============ ============= ============ ============ =============
Diluted $ (0.00) $ 0.04 $ 0.11 $ 0.16 $ -
============ ============= ============ ============ =============
Weighted average common shares outstanding:
Basic 890,000 890,000 890,000 890,000 890,000
============ ============= ============ ============ =============
Diluted 890,000 890,000 890,000 890,000 890,000
============ ============= ============ ============ =============
</TABLE>
See accompanying notes to the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ORION ACQUISITION CORP II
(a corporation in the development stage)
STATEMENT OF
STOCKHOLDERS' EQUITY AND COMMON STOCK
SUBJECT TO POSSIBLE REDEMPTION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, 1997, 1996,
AND FOR THE PERIOD FROM OCTOBER 19, 1995 (INCEPTION) THROUGH DECEMBER 31, 1995, AND THE THREE MONTHS ENDED MARCH 31, 2000
Accumulated
Common Stock Earnings
subject to Additional During the
Preferred Stock Common Stock Possible redemption Paid-in Development
Shares Amount Shares Amount Shares Amount Capital stage
------------- ------------- ------------- --------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 19, 1995 - $ - $ - $ - - $ - $ - $ -
Issuance of Founders
Shares.. - - 16,500 165 - - 1,485 -
BALANCE AT DECEMBER 31, 1995 - - 16,500 165 - - 1,485 -
Issuance of Founders Shares - - 58,500 585 - - 5,265 -
Sale of private
placement shares - - 15,000 150 - - 7,350 -
Sale of convertible
preferred stock.. 110 1 - - - - 10,999 -
Sale of 800,000 shares,
net of Underwriting
discounts and offering
costs - - 640,000 8,000 160,000 1,600,000 7,107,405 -
Net income - - - - - - - 42,651
Accretion to
redemption value of stock. - - - - - 42,118 - (42,118)
BALANCE AT DECEMBER 31, 1996. 110 1 730,000 8,900 160,000 1,642,118 7,132,504 533
Issuance of options - - - - - - 100,000 -
Net income. - - - - - - - 4,266
Accretion to redemption
value of common
stock - - - - - 90,122 - (90,122)
BALANCE AT DECEMBER 31, 1997 110 1 730,000 8,900 160,000 1,732,240 7,232,504 (85,323)
Net income. - - - - - - - 140,517
Accretion to redemption
value of common
stock - - - - - 85,484 - (85,484)
BALANCE AT DECEMBER 31, 1998 110 1 730,000 8,900 160,000 1,817,724 7,232,504 (30,290)
Net income. - - - - - - - 95,760
Elimination of redemptive
common stock provision
(Note 6) - - 160,000 - (160,000) (1,600,000) 1,600,000 -
Reversal of accretion to
redemptive value of common
stock (Note 6).. - - - - - (217,724) - 217,724
Dividend (Note 6) - - - - - - - (275,641)
Liquidating dividend
(Note 6) - - - - - - (6,924,359) -
BALANCE AT DECEMBER 31, 1999 110 1 890,000 8,900 - - 1,908,145 7,553
Net loss (unaudited) - - - - - - - (4,308)
BALANCE AT MARCH 31,
2000 (unaudited) 110 $ 1 890,000 $ 8,900 - $ - $1,908,145 $ 3,245
============= ============= ============= ============ ========= =========== =========== =========
</TABLE>
See accompanying notes to the financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ORION ACQUISITION CORP II
(a corporation in the development stage)
STATEMENTS OF CASH FLOWS
Three months ended October 19, Year ended December 31, October 19,
March 31, 1995 (date of 1995 (date of
inception) to inception) to
March 31, 2000 December 31,
1999
2000 1999 1999 1998 1997
(unaudited) (unaudited) (unaudited)
----------- ----------- ------------ ---- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in cash
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(4,308) $ 39,848 $ 278,886 $ 95,760 $ 140,517 $ 4,266 $ 283,194
Adjustments to reconcile net income
to net cash provided by operating
activities:
Note discount amortization - - 37,500 - - - 37,500
Stock based compensation expense - - 100,000 - - 100,000 100,000
Changes in working capital:
Increase in other assets (12,568) - (29,628) (17,060) - - (17,060)
Decrease (increase) in accrued - - - - 208,100 (5,518) -
receivables
(Decrease) increase in accrued expenses (76,039) 45,151 45,224 49,578 (21,279) 37,567 121,263
--------- ---------- ----------- ------- -------- ------- --------
Cash (used in ) provided by operating (92,915) 84,999 431,982 128,278 327,338 136,315 524,897
activities --------- ---------- ----------- ------- -------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale of U.S. Treasury bills -
and other (increases) decreases in - - - 9,088,622 (635,518) (445,098)
(increases) decreases in restricted cash
Purchase of U.S. Treasury bills (13,148) (90,950) (1,519,763) - - (1,506,615)
Decrease (increase) in deferred - - - - 8,072 (8,072) -
acquisition costs
--------- ---------- ----------- ------- -------- ------- --------
Cash provided by (used) in investing (13,148) (90,950) (1,519,763) 7,582,007 (627,446) (453,170) (1,506,615)
activities --------- ---------- ----------- ------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend (Note 6) - - (7,200,000)(7,200,000) - - (7,200,000)
Issue of units and redeemable Class B - - 8,677,905 - - - 8,677,905
purchase warranta, net of public
offering expenses
Issuance of unsecured promissory notes - - 100,000 - - - 100,000
Repayment of unsecured promissory notes - - (100,000) - - - (100,000)
Proceeds from related party notes - - 35,000 35,000 - - 35,000
Repayment of related party note - - (35,000) (35,000) - - (35,000)
Issuance of founders' shares - - 7,500 - - - 7,500
Issuance of private placement shares - - 7,500 - - - 7,500
Issuance of convertible preferred stock - - 11,000 - - - 11,000
Cash provided by (used) in financing - - 1,503,905 (7,200,000) - - 1,503,905
--------- ---------- ----------- ------- -------- -------- --------
NET (DECREASE) INCREASE IN CASH (106,063) (5,951) 416,124 510,285 (300,108) (316,855) 522,187
Cash, beginning of year 522,187 11,902 - 11,902 312,010 628,865 -
--------- ---------- ----------- ------- -------- -------- --------
Cash, end of year $416,124 $ 5,951 $416,124 $522,187 $11,902 $312,010 $522,187
========= ========== =========== ======== ======== ========= ========
</TABLE>
See accompanying notes to the financial statements.
F-6
<PAGE>
ORION ACQUISITION CORP II
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Orion Acquisition Corp II (the "Company") was incorporated in Delaware on
October 19, 1995 for the purpose of raising capital to fund the acquisition of
an unspecified operating business. All activity to date relates to the Company's
formation and fund raising. To date, the Company, as a development stage
company, has not effected a Business Combination (as defined below).
The registration statement for the Company's Initial Public Offering (the
"Offering") became effective on July 2, 1996. The Company consummated the
Offering raising net proceeds of approximately $8,700,000 (See Note 2). The
Company's management has broad discretion with respect to the specified
application of the net proceeds of the Offering, although substantially all of
the net proceeds of the offering were intended to be generally applied toward
consummating a business combination with an operating business ("Business
Combination").
All shares of the common stock outstanding immediately prior to the date of
the Offering have been placed in escrow until the occurrence of the first
Business Combination.
NOTE 2 - PUBLIC OFFERING
On July 9, 1996 the company sold 800,000 units ("Units") in the Offering
and 320,000 Class B redeemable common stock purchase warrants ("Class B
Warrants"). Subsequently, on August 5, 1996, the underwriters exercised their
overallotment option to purchase 38,100 Class B Warrants. Each Unit consists of
one share of the Company's common stock and one Class A Redeemable common stock
purchase warrant ("Class A Warrants"). Each Class A Warrant entitles the holder
to purchase from the Company one share of common stock at an exercise price of
$9.00 commencing on the date of a Business Combination and expiring on the fifth
anniversary from such date, and each Class B Warrant entitles the holder to
purchase one Unit at an exercise price of $0.125 commencing on the date of a
Business Combination and expiring on the first anniversary from such date. The
Class A Warrants and Class B Warrants are redeemable, each as a class, in whole
and not in part, at a price of $0.05 per warrant upon 30 days' notice at any
time provided that the Company has consummated a Business Combination and the
last sale price of the common stock on all ten trading days ending on the day
immediately prior to the day on which the Company gives notice of redemption,
has been $11.00 or higher.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Net Earnings Per Common Share
In 1997, the Financial Accounting Standards Boards issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share exclude any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. All earnings
F-7
<PAGE>
Per share amounts for all periods have been presented, and where necessary,
restated to conform to the SFAS 128 requirements.
Net earnings per common share for the years December 31, 1999, 1998 and
1997 are computed by dividing net earnings by the weighted average common shares
outstanding during the year. The assumed exercise of common stock equivalents
was not utilized due to their exercise being predicated on the consummation of a
Business Combination.
(b) Income Taxes
The Company follows the Statement of Financial Accounting Standards No.
109. This statement requires that deferred income taxes based on the
consequences of temporary differences between the financial carrying amounts and
tax bases of existing assets and liabilities be recorded based on the asset and
liability method of accounting which is adjusted periodically when statutory
income tax rates change. Deferred taxes are not material.
(c) Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principals, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
(d) Fair Value of Financial Instruments
The carrying values of financial instruments including cash, restricted
cash, U.S. Treasury bills, accrued investment interest receivable and accrued
expenses approximate fair value at December 31, 1999 and 1998.
(e) Stock Options
In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 allows companies to choose whether to
account for stock-based compensation on the fair value method or to continue to
account for stock-based compensation under the current intrinsic value method as
prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees."
The Company adopted the disclosure alternative under SFAS 123 during 1996 and
will continue to follow the provisions of APB Opinion No. 25.
(f) Comprehensive Income
Statement of Financial Accounting Standard No. 130. "Reporting
Comprehensive Income", ("SFAS 130") issued by the FASB is effective for
financial statements with fiscal years beginning after December 15, 1997.
Earlier application is permitted. SFAS 130 establishes standards for reporting
and display or comprehensive income and its components in a full set of general
purpose financial statements. The Company adopted SFAS 130 and it did not have
any effect on its financial position or results of operations.
F-8
<PAGE>
NOTE 4 - INVESTMENTS
A substantial portion of the assets of the Company are invested in U.S.
Treasury Bills having various maturities of less than 6 months. The Company
classifies these securities as held to maturity. Aggregate cost basis and market
value of these securities as of December 31, 1999 and 1998 totaled approximately
$1,506,615 and $9,080,622. No unrealized holding gains or losses have been
realized.
NOTE 5 - RELATED PARTIES
Richard C. Hoffman was secretary and a director of the Company until April
30, 1999 and during that time acted as general counsel to the Company. The
Company utilized Richard C. Hoffman, P.C., a law firm of which Mr. Hoffman is
sole shareholder, for legal services in connection with Company activities. Fees
paid by the Company for these services totaled approximately $-0-, $7,000 and
$61,000 for the years ended December 31, 1999, 1998 and 1997.
On May 5, 1999 and July 20, 1999, MDB Capital Group LLC lent to the Company
an aggregate of $35,000. This loan was represented by unsecured promissory notes
due on demand, bearing no interest. The proceeds of these loans were used for
working capital. The principal on these loans was repaid on December 8, 1999.
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.
NOTE 6 - STOCKHOLDER'S EQUITY
(a) Private Placement
In January 1996, the Company completed a private offering to a limited
group of investors which consisted, in the aggregate, of $100,000 in unsecured
promissory notes bearing interest at 8% per annum. In addition, as part of this
private placement, the Company also issued to the private placement investors
15,000 shares of common stock for $7,500. The notes were repaid as a result of
the consummation of the Company's Offering together with accrued interest
totaling $3,533. The notes were discounted $37,500 for financial statement
reporting purposes as a result of the fair value attributed to the common stock
issued to the private placement stockholders. The effective rate on the notes
was approximately 45%.
(b) Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock with
such designations, voting and other rights and preferences as may be determined
from time to time by the Board of Directors.
The Company has outstanding 110 shares of Series A preferred stock which is
owned by CDIJ Capital Partners, L.P., an indirect affiliate of Bright Licensing
Corp. The purchase price for such shares was $11,000 in the aggregate, which was
paid simultaneously with the consummation of the Offering. The Series A
preferred stock are non-voting and are each convertible into 1,000 shares of
common stock for a period of one year following the consummation of a Business
Combination.
F-9
<PAGE>
(c) Options
On July 9, 1996, the Company granted options to purchase 100,000 Units to
Cranbrooke Corporation, a Delaware corporation which is affiliated with two
officers of the Company. The option is exercisable for a period of three years
from the date of a Business Combination at an exercise price of $12.50 per Unit.
The option is fully vested; however, the options will be canceled if Mr. Kramer
and Mr. Remley cease to serve as directors or executive officers of the Company
prior to the Business Combination. The shares issuable upon exercise of the
options and underlying warrants may not be sold or otherwise transferred for 120
days subsequent to the first Business Combination.
Effective January 10, 1997 an investment bank engaged to assist the
Company, was granted an option to purchase 10,000 shares of Common Stock, par
value $.01 per share, owned by Cranbrooke at a purchase price of $.10 per share.
The Company recorded a non-cash charge of $100,000 that represents the fair
value of the option at the date of grant as calculated using the Black-Scholes
option pricing model.
(d) Warrants
In connection with the Offering, the Company issued warrants to the
underwriters for 80,000 units at an exercise price of $11.00 per unit and 32,000
Class B Warrants at an exercise price of $6.1875 per unit. These warrants are
initially exercisable for a period of four years commencing on July 2, 1997. The
underwriter's warrants contain anti-dilution provisions providing for adjustment
of the number of warrants and exercise price under certain circumstances. The
underwriter's warrants grant to the holders thereof certain rights of
registration of the Units and Class B warrants issuable upon exercise of the
underwriter's warrants.
(e) Dividend
On July 26, 1999 the Company returned an aggregate of $7,200,000, or $9.00
per share, to the owners of shares sold in the Offering. On November 3, 1999
with shareholder approval, the funds remaining in the escrow accounts were
distributed to the Company to be used for general corporate purposes. Of the
$7,200,000 returned to shareholders, $275,641 represents accumulated earnings
and $6,924,359 represents additional paid in capital.
(f) Elimination of Redemptive Common Stock Provision
On October 22, 1999, a special meeting of the stockholders was held, and
pursuant to a solicitation of proxies, the stockholders approved a change in the
certificate of incorporation to eliminate the requirement that a business
combination be approved by not less than two-thirds of the outstanding common
stock and a proposal to terminate the escrow fund and distribute the amounts
therein to the stockholders.
The elimination of the requirement that a business combination be approved
by not less than two-thirds of the outstanding common stock of the Company
removed the event that would give rise to the possible redemption of the
Company's common stock. As such, the Company eliminated the redemptive common
stock provision for the number of potentially redemptive common shares at their
initial per share price and reversed the related cumulative accretion of
earnings on those potentially redemptive funds.
F-10
<PAGE>
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended December 31, 1999 and 1998 the Company paid
approximately $61,000 and $60,000 in taxes.
NOTE 8 - INCOME TAXES
Federal and state income tax provisions are as follows:
Current: 1999 1998 1997
---- ---- ----
Federal $37,749 $ 63,323 $ 33,916
State and Local 36,554 39,830 42,483
-------- --------- ---------
Total $74,303 $103,153 $ 76,399
======= ======== =========
The effective tax rate for the years ending 1999, 1998 and 1997 differ from
the statutory federal income tax rate due to state taxes and certain
non-deductible expenses.
NOTE 9 - LEGAL PROCEEDINGS
On July 1, 1999, a Class B Warrantholder 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. 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 exchange offer will be made by means
of a registration statement filed with the Securities and Exchange Commission.
The Company anticipates that the offering will be made before June 30, 2000.
The former directors of Orion Acquisition Corp. II who were named as
defendants in the suit, have made demand upon the company for reimbursement of
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 is
considering the reimbursement request. No accrual has been made for any
potential reimbursement in the accompanying financial statements.
F-11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemized statement of the estimated expenses
payable by the Registrant in connection with the registration of the securities
offered hereby.
Registration fee...................... $ 1,197.99
Accountants fees and expenses......... $ 10,000.00
Legal fees and expenses............... $ 25,000.00
Printing.............................. $ 3,802.01
----------
Total............... $ 40,000.00
Item 14. Indemnification of Directors and Officer
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, employees, agents and
controlling persons of a corporation under certain conditions and subject to
certain limitations. Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer or agent of the corporation or another enterprise if serving
at the request of the corporation. Depending on the character of the proceeding,
a corporation may indemnify against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding if the person indemnified
acted in good faith and in a manner he reasonably believed to be in or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In the case of an action by or in the right of the corporation, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court of chancery or the court in which
such action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 further provides that to
the extent a director or officer of a corporation has been successful in the
defense of any action, suit or proceeding referred to above or in the defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
The certificate of incorporation, in article ten, provides that the
corporation will, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law indemnify any and all persons which the corporation
shall have the power to indemnify under that section, from and against all
expenses, liabilities and other matters covered by that section.
Item 15. Recent Sales of Unregistered Securities
I. On June 15, 2000, the Registrant sold 212,157 shares of Common
Stock at $1.40 per share for aggregate proceeds of $297,020.
The sale of the Common Stock was made pursuant to Rule 506 of
Regulation D to seven accredited investors.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
--------
Exhibit
Number Description
-------- ------------
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (Exhibit 3.1)(1)
3.2 Amendment dated October 22, 1999 to Amended and Restated
Certificate of Incorporation (Exhibit 3.2) (2)
3.3 By-laws of the Registrant (Exhibit 3.2)(1)
4.1 Warrant Agency Agreement between American Stock Transfer &
Company and the Registrant (Exhibit 4.2)(1)
4.2 Form of Representative's Warrant Agreement of Registrant
(Exhibit 4.5)(1)
4.3 Form of Common Stock Certificate of Registrant (Exhibit 4.1)(1)
4.4 Form of Class B Warrant of the Registrant (Exhibit 4.4)(1)
4.5 Form of Class A Common Stock Purchase Warrant Certificate of the
Registrant (Exhibit 4.3)(1)
4.6* Form of Common Stock Rights Agreement
4.7+ Form of Common Stock Rights Certificate of Registrant
5.1+ Opinion of Graubard Mollen and Miller
10.1 Underwriting Agreement (Exhibit 1.1)(1)
10.3 License Agreement, dated August 25, 1995, between Bright
Capital, Ltd. and the Company (Exhibit 10.3)(1)
10.3 Management Unit Purchase Option Plan (Exhibit 10.4)(1)
10.5+ Form of Subscription Agreement for June 2000 private placement
23.1+ Consent of Graubard Mollen & Miller (included in its opinion
filed as Exhibit 5.1 hereto)
23.2* Consent of BDO Seidman, LLP regarding the Registrant
24.1* Powers of Attorney (included on signature page)
27.1* Financial Data Schedule
--------------
* Filed herewith.
+ To be filed by amendment.
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form SB-2
(No. 33-03252).
(2) Filed as an Exhibit to the Registrant's Form 10-KSB for Fiscal Year ended
December 31, 1999.
2
<PAGE>
(b) Financial Statement Schedules:
All schedules are omitted because of the absence of conditions
under which they are required or because the required
information is given in the financial statements or notes
thereto.
Item 17. Undertakings
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than 20 percent in the maximum aggregate offering
price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do
not apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission
by the registration pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(2) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(3) The registrant undertakes that every prospectus (a) that is filed
pursuant to paragraph (2) immediately preceding, or (b) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
3
<PAGE>
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(5) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(b) For the purposes of determining any liability under the
Securities Act of 1933, each post- effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in Santa
Monica, California, on July 14, 2000.
By: /s/ Christopher A. Marlett
-----------------------------------------------
Christopher A. Marlett
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated. Each person whose signature appears below
in so signing also makes, constitutes and appoints Christopher A. Marlett and
Anthony DiGiandomenico, and each of them acting alone, his true and lawful
attorney-in-fact, with full power of substitution, for him in any and all
capacities, to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, and hereby ratifies and confirms all that said attorney-in-fact or
his substitute or substitutes may do or cause to be done by virtue hereof.
<TABLE>
Signature Title Date
---------- ------ -----
<S> <C> <C>
/s/ Christopher A. Marlett Chairman of the Board, Chief July 14, 2000
--------------------------- Executive Officer and Director
Christopher A. Marlett (Principal Executive Officer)
/s/ Anthony DiGiandomenico Chief Financial Officer and Director July 14, 2000
--------------------------- (Principal Accounting Officer)
Anthony DiGiandomenico
/s/ Dyana Williams Marlett Chief Operating Officer, Secretary, July 14, 2000
--------------------------- Treasurer and Director
Dyana Williams Marlett
/s/ James D. Bowyer Director July 14, 2000
---------------------------
James D. Bowyer
/s/ William Fioretti Director July 14, 2000
---------------------------
William Fioretti
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
-------- ------------
3.1 Amended and Restated Certificate of Incorporation of the
Registrant (Exhibit 3.1)(1)
3.2 Amendment dated October 22, 1999 to Amended and Restated
Certificate of Incorporation (Exhibit 3.2) (2)
3.3 By-laws of the Registrant (Exhibit 3.2)(1)
4.1 Warrant Agency Agreement between American Stock Transfer &
Company and the Registrant (Exhibit 4.2)(1)
4.2 Form of Representative's Warrant Agreement of Registrant
(Exhibit 4.5)(1)
4.3 Form of Common Stock Certificate of Registrant (Exhibit 4.1)(1)
4.4 Form of Class B Warrant of the Registrant (Exhibit 4.4)(1)
4.5 Form of Class A Common Stock Purchase Warrant Certificate of the
Registrant (Exhibit 4.3)(1)
4.6* Form of Common Stock Rights Agreement
4.7+ Form of Common Stock Rights Certificate of Registrant
5.1+ Opinion of Graubard Mollen and Miller
10.1 Underwriting Agreement (Exhibit 1.1)(1)
10.3 License Agreement, dated August 25, 1995, between Bright
Capital, Ltd. and the Company (Exhibit 10.3)(1)
10.3 Management Unit Purchase Option Plan (Exhibit 10.4)(1)
10.5+ Form of Subscription Agreement for June 2000 private placement
23.1+ Consent of Graubard Mollen & Miller (included in its opinion
filed as Exhibit 5.1 hereto)
23.2* Consent of BDO Seidman, LLP regarding the Registrant
24.1* Powers of Attorney (included on signature page)
27.1* Financial Data Schedule
--------------
* Filed herewith.
+ To be filed by amendment.
2
