UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM 10-SB
Orange Productions, Inc.
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(Name of Small Business Issuer in its charter)
FLORIDA 65-00844436
- ---------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization )
222 Lakeview Avenue, PMB 113
West Palm Beach, FL 33401
- ----------------------------- -----------------------------
(Address of principal place of business) (Zip Code)
Issuer's telephone number: (404) 321-1192
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
None
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Securities to be registered under Section 12(g) of the Act:
(Common Stock, $.0001 par value)
--------------------------------
(Title of class)
Copies of Communications Sent to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480;
Tel: (561) 832-5696
Fax: (561) 659-5371
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TABLE OF CONTENTS
Part I ......................................................................3
Item 1. Description of Business...............................................3
Item 2. Management's Discussion and Analysis or Plan of Operation............17
Item 3. Description of Property:.............................................20
Item 4. Security Ownership of Certain Beneficial Owners and Managers.........20
Item 5. Directors, Executive Officers, Promoters and Control.................21
Persons; Compliance
Item 6. Executive Compensation...............................................22
Item 7. Certain Relationships and Related Transactions.......................23
Item 8. Description of Securities............................................24
PART II .....................................................................25
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters................................25
Item 2. Legal Proceedings...................................................25
Item 3. Changes In and Disagreements with Accountants.......................25
Item 4. Recent Sales of Unregistered Securities.............................25
Item 5. Indemnification of Directors and Officers...........................27
PART F/S .....................................................................29
Part III .....................................................................37
Item 1. Index to Exhibits...................................................37
SIGNATURES....................................................................38
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Part I
Item 1. Description of Business.
(a) Business Development.
Orange Productions, Inc. (hereinafter referred to as the "Company" or
"OPI") was organized under the laws of the State of Florida on May 20, 1998. The
Company was organized by Mr. Sam Peroulas, the executive officer and director of
the Company, for the purpose of providing graphic arts services for use in
educational textbooks, medical journals, anatomical charts, patient education
materials and in the courtroom to clarify medical evidence for a jury. It may
also be used in other settings such as advertisements. The Company's executive
offices are presently located at 222 Lakeview Avenue, PMB 113, West Palm Beach,
Florida 33401 and its telephone number is (404) 321- 1192.
The Company is filing this Form 10-SB on a voluntary basis so that the
public will have access to the required periodic reports on the Company's
current status and financial condition. The Company will file periodic reports
in the event its obligation to file such reports is suspended under the
Securities and Exchange Act of 1934 (the "Exchange Act".)
The Company generally has been inactive, having conducted no business
operations except organizational and fund raising activities since its
inception.
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Securities Act of 1933, as amended (the
"Act"), Rule 506 of Regulation D promulgated thereunder ("Rule 506") and Section
10-5-9(13) of the Georgia Code. See Part I, Item 1. "Description of Business -
(b) Business of Issuer - Employees and Consultants"; Part I, Item 4. "Security
Ownership of Certain Beneficial Owners and Management"; Part 1, Item 6.
"Executive Compensation - Employee Contracts and Agreements"; Part I, Item 7.
"Certain Relationships and Related Transactions"; and Part II, Item 4. "Recent
Sales of Unregistered Securities."
In May 1998, the Company sold 403,500 shares of its Common Stock to
nineteen (19) investors for a total of $20,175. For such offering, the Company
relied upon Section 3(b) of the Act, Rule 504 of Regulation D promulgated
thereunder ("Rule 504"), Section 10-5-9(13) of the Georgia Code and Section
517.061(11) of the Florida Code. See Part II, Item 4. "Recent Sales of
Unregistered Securities."
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See (b) "Business of Issuer" immediately below for a description of the
Company's business.
(b) Business of Issuer.
General
Since its inception, the Company has conducted no business operations
except for organizational activities and an offering of its Common Stock
pursuant to which it has received gross offering proceeds in the amount of
$20,175. Further, the Company has had no employees since its organization. It is
anticipated that the Company's sole executive officer and director will receive
a reasonable salary for services as executive officer at such time as the
Company commences business operations. (See Part I, Item 6. "Executive
Compensation.") This individual will devote such time and effort as may be
necessary to participate in the day-to-day management of the Company. (See Part
I, Item 5. "Directors, Executive Officers, Promoters and Control Persons -
Executive Officers and Directors.")
The following discussion of the graphic arts services market, as it
relates to the Company's business objectives, is of course pertinent only if the
Company is successful in obtaining sufficient debt and/or equity financing to
commence operations and, in addition thereto, is able to generate significant
profits from operations (which are not expected in the foreseeable future)
and/or additional financing to continue in business and/or fund the anticipated
growth, assuming OPI's proposed business is successful. There can be no
assurance such financing can be obtained or that the Company's proposed business
will be successful.(See Part I. Item 1.-" ( b) Business of Issuer - Risk
Factors" )
The Company will create high quality images for a wide variety of
applications. It intends to specialize, however in medical illustration. The
Company expects that its artwork will be used in educational textbooks, medical
journals, anatomical charts, patient education materials and in the courtroom to
clarify medical evidence for a jury. It may also be used in other settings such
as advertisements.
The Company intends to retain the copyright to the artwork it creates,
and to therefore reuse images in other projects. This will potentially save
consumers the time and expense of regenerating images which the Company has
already been previously hired to create. In fact, after time, the Company hopes
to accumulate a significant library of images previously created by the Company.
Upon doing so, the Company plans to advertise its existing library of graphic
images in the hopes of attracting new clients to the Company.
The Company also plans to provide such other services as: a) web page
design including: layout, design and animation, technical and product
illustration; b) image compositing and retouching; and c) photo manipulation for
special effects, particularly in advertising. In addition, the Company plans
graphic design, such as brochures, logo design and textbook layout.
To produce the artwork, the Company will generally work digitally,
using the most current versions of Adobe Photoshop and Illustrator, and Quark
XPress. These software programs offer the advantage of not having to scan
artwork for placement into a layout application.
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The Company will also work traditionally, in pen and ink, watercolor
and colored pencil.
Business Strategy
The Company intends to initially prospect graphic arts services to
consumers in the Atlanta, Georgia area, then enlarging to the entire State of
Georgia and thereafter in selected areas nationwide. The Company plans to be
able to provide a full spectrum of graphic arts services for its clients.
Graphic arts work will be made available to newspapers and magazines as well as
to individual consumers.
At the inception of operations, the Company is expected to, and
currently does, operate out of a facility owned by Mr. Peroulas.
Mr. Peroulas is expected to find clients for the Company through his
business contacts in the graphic arts industry.
Mr. Peroulas has already begun to solicit clients for the Company,
although no clients have hired the Company to perform services to date. The
Company is prepared to render graphics arts services upon engagement by a
client. The Company will utilize the equipment necessary to render such services
owned by Mr. Peroulas.
In the event the Company requires additional capital to fund its
initial operations, Mr. Peroulas has committed to loan the Company such funds
until such time as additional capital becomes available to the Company. This
verbal commitment by Mr. Peroulas includes the cost of '34 Act compliance.
Due to the limited capital currently available to the Company, the
principal risks during this phase are that the Company is entirely dependent
upon Mr. Peroulas' efforts to bring potential clients to the Company, to provide
the services on behalf of the Company and to fund operations until such time as
the Company can employ more persons and support its operations financially. (See
Part I, Item 1. "Description of Business," (b) "Business of Issuer - Risk
Factors", "Dependence on Management")
To launch the Company into the operational stage, the Company intends
to initiate a self- directed private placement under Rule 506 to raise an
additional $100,000. In the event such placement is successful, the Company
believes that it will have sufficient operating capital to meet its initial
plans to operate in the Atlanta, Georgia area and also to pay administrative
operating costs for a period of approximately six (6) months.
Even if the Company is successful at raising additional money and
therefore becoming fully operational, there can be no assurance that the
implementation of its plan will increase the number of potential customers. By
launching its operations, the Company may face unforeseen costs associated with
entry into the business. The Company will still be largely dependent upon Mr.
Peroulas to find suitable clients on a profitable and timely basis.
Additionally, Mr. Peroulas may have a conflict
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between the time demands of an expanding business and the time requirements of
his existing business. Although the Company believes $100,000 is sufficient to
cover operations for the projected period, there can be no assurance that such
funding can cover the additional risks associated with operations. (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer - Risk Factors",
"Conflict of Interest.")
Extended Plans
If the Company is able to generate enough revenue during the initial
phase to support the initial business in Atlanta, Georgia, the Company plans to
open one (1) additional office each quarter until such time as it has four (4)
new offices (five (5) total) operating. The Company estimates that $500,000 in
annual revenues must be achieved by the initial office to justify the four (4)
additional office openings. The Company intends to open the first expansion
office outside Atlanta, Georgia, in other metropolitan areas in Georgia, since
Mr. Peroulas is familiar with the business environment there.
The Company further anticipates that it will require an additional
$100,000 to fund one (1) year of operations at this second location, including
acquisition of office space, equipment and wages for clerical staff. The Company
also believes that Mr. Peroulas will be capable of managing the Atlanta,
Georgia, operation at this time, while a third party will oversee any new
location. To fund the expansion to a second office, the Company intends to
initiate another self-directed Rule 506 offering to raise $100,000. If the
Company is not successful in raising such additional funds, the Company believes
that it will not be able to operate a second location without creating a
financial drain on the first location and will therefore not open the second
location. Even if it is successful, there can be no assurance that the Company
will achieve any acceptance in the marketplace and may not establish a
sufficient client base to make the venture viable.
During the first quarter in which the second office location is
operating, the Company intends to seek funding through an additional Rule 506
offering, seeking an additional $200,000. Such funds will be utilized to open
the third and fourth offices during the next two (2) quarters. While office
space, clerical help, equipment costs and operations for a six (6) month period
are not anticipated to exceed $100,000 per office, the Company believes that Mr.
Peroulas may have to lend money to these expanded locations as well to help fund
operations. It is the Company's belief that Mr. Peroulas will begin to receive
an annual salary and that advertising and promotional costs will be increased
upon the expansion, in order to increase the accessability to a broader range of
potential clients. Also, to be competitive with others in the industry, the
Company plans to implement some type of employee benefit program. The Company
believes that the additional $100,000 of the planned offering, in addition to
anticipated revenues should be sufficient to cover these increased costs. The
Company plans to open its third and fourth offices immediately contiguous to
Atlanta, Georgia. The Company believes that by covering these contiguous
counties in Georgia, that it will have access to a broader range of potential
clients. Further, it believes that operations in the contiguous counties and in
Atlanta, Georgia, will lead to economies of scale which will increase the
potential profitability of the Company. Areas in which the Company believes it
will have the benefit of the greatest economies of scale are advertising,
expenses and the availability of a larger market.
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The principal risks of these expanded operations would be unforeseen
costs associated with entry into the expanded market, increased costs associated
with a larger geographic area of coverage and additional clerical employee
related claims associated with a larger support staff, inability to establish a
presence in the expanded market place, increased competition and increased risk
associated with the lapse between costs associated with the additional locations
and the receipt of the stream of cash flows related to each location. Should the
Company incur any large liabilities because of its operations, which risk
increases as the Company's geographic coverage expands, such liabilities could
have a substantially detrimental affect upon the Company's financial condition.
Further, should the Company be unable to secure the financing required for the
additional expansion, the anticipated revenues from a reduced operation, while
potentially able to meet the operating needs of the Company, would impede the
likelihood of incremental revenue increases necessary for the long term
financial success of the Company. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer - Risk Factors", "Need to Re-Sell Acquired Receivable
in Secondary Markets", "Lack of Working Capital Funding Source.")
The Company plans to closely monitor its operations in the new
locations. (See Part I, Item 1. "Description of Business - (b) Business of
Issuer - "Business Strategy.") Even if they have been successful in securing the
necessary financing and if even if each of the operations is capable of
sustaining itself, the Company intends to seek additional financing through the
offering of additional equity securities of Rule 506, conventional bank
financing, small business administration financing, venture capital or the
private placement of corporate debt for a total of approximately $1,000,000.
These additional monies will be used to further expansion efforts both at sites
already in existence and possibly to expand to new sites, should the Company
deem it in the best interest of the Company. There can be no assurance that any
of these financing sources will be available to the Company. If the Company plan
to seek additional financing is successful, the Company intends to open
additional offices which compliment the Atlanta, Georgia and contiguous
operations, and to add a regional manager to oversee these additional
operations. The Company believes that such expansion will achieve similar
economies of scale as those which are anticipated by the initial locations.
Further, the Company believes that such expansion will place the Company in a
position to be a major force in the industry in the State of Georgia. If such
expansion is implemented, Mr. Peroulas believes that they will be able to
oversee the operation with the addition of the regional manager.
The Company has not, to date, sought debt financing. The Company
believes that any qualified venture capital firm would require the Company to be
fully reporting prior to such financing. Once the Company becomes fully
reporting, the Company intends to seek out funds from licensed venture capital
firms and to negotiate terms which will fit the financial capabilities and plans
of the Company. The Company also does not intend to seek debt financing until
such time as it has several locations operating successfully. This is based upon
the belief that it can negotiate appropriate placement and repayment terms for
such borrowings. However, there can be no assurance that such funds will be
available to the Company or that suitable terms which are most advantageous to
the Company can be negotiated. In addition, the Company does not, at this time,
anticipate that it will require substantial leverage to fund the expanded
operations. However, in the event the Company did receive debt financing and in
the event the Company is not successful in sustaining operations or meeting such
debt and defaulted in its payments on the debt, then such debt financing might
result in foreclosure upon the
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Company's assets to the detriment of its shareholders.
Although the Company is authorized to borrow funds, as discussed, it
does not intend to do so until such time as it becomes fully reporting and
expands to additional locations. At such time as the Company seeks borrowed
funds, it does not intend to use the proceeds to make payments to the Company's
promoters (if any), management (except as reasonable salaries, benefits and to
reimburse out-of-pocket expenses) or their respective affiliates or associates,
if any. The Company has no present intention to acquire any assets or other
property owned by any promoter, management or their respective affiliates or
associates or to acquire or merge with a business or company in which the
Company's promoters, management or their respective affiliates or associates
directly or indirectly have an ownership interest. Although there is no present
intended related party transaction, in the event such transaction is effected,
the matter will be disclosed to the security holders in compliance with its
reporting requirements.
There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. There are no arrangements, agreements or
understandings under which non-management shareholders will exercise their
voting rights to continue to elect the current directors to the Company's Board
of Directors.
In the event the Company is successful in securing the additional
financing for its expansion plans, it may seek the acquisition of companies in
related businesses which the Company believes will compliment its overall
strategy inside and outside of the State of Georgia. The Company would seek
acquisitions of related companies in order to expand its operations to
eventually encompass the entire United States. At such time as the Company
enters the market outside the State of Georgia, the Company will be required to
comply with applicable state regulations regarding such entities. (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer - Industry
Regulations - ;and (b) "Business of Issuer - Risk Factors", Governmental
Regulation and Litigation")
Such increased expansion may greatly increase the risks associated with
the Company's operations. The Company will continue to be dependent upon
obtaining a sufficient client base which possesses an adequate number of
consumer contracts. Increased operations and expansion into other geographical
areas may expose the Company to the potential for unfavorable interpretation of
government regulations. In addition, the larger the geographic market, the
greater the chance of increased support staff costs. Furthermore, expansion will
expose the Company to additional competition from larger and more established
firms, many of whom have greater resources than the Company. Also, the Company
will be required to pay wages to a larger support staff while still experiencing
delays in direct payments received from the new receivables. In addition, with
expansion and implementation of an employee benefit plan which is necessary in
order to be competitive for qualified employees, in the event such plan were to
be disallowed, loss of qualified status could have an adverse effect upon the
Company. Finally, as a larger Company, it could face possible adverse affects
from fluctuations in the general economy and business of its clients. (See Part
I, Item 1. "Description of Business," (b) "Business of Issuer - Risk Factors",
"Competition", "Sensitivity to Interest Rates.")
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Management
Mr. Peroulas has chosen to pursue the graphic arts services business by
and through the use of a public company rather than a private company based upon
the belief that it will have the advantages of, among other things, greater
availability of capital and potential for growth.
The time required to be devoted to manage the day-to-day affairs of the
Company is presently estimated to be approximately five (5) to ten (10) hours
per week. The time commitment on the part Mr. Peroulas is currently such time
and effort as may be necessary to manage the Company, currently estimated to be
approximately five (5) to ten (10) hours per week. The time necessary to manage
the day-to-day affairs of the Company and the time commitment of Mr. Peroulas
are both expected to increase at such time, if ever, as OPI obtains sufficient
funding with which to commence operations. Mr. Peroulas is ready to increase his
time commitment to the Company when and if it becomes necessary for him to do
so. (See Part I, Item 1. "Description of Business," (b) "Business of Issuer -
Risk Factors.")
The Company will be largely dependent upon Mr. Peroulas to develop the
client base of the business. Mr. Peroulas has experience in the graphic arts
industry and has managed his own graphic arts business for the last two (2)
years. While Mr. Peroulas has been successful in the past, there can be no
assurance that he will be successful in building the client base necessary for
the successful operation of the Company. (See Part I, Item 1. "Description of
Business" (b) "Business of Issuer - Risk Factors", "Dependence on Management.")
Conflicts of interest may also arise due to corporate opportunities
which present themselves to Mr. Peroulas. It may difficult or even impossible to
determine whether the opportunity arose as a result of Mr. Peroulas's activities
outside the Company or as an officer and director of the Company. At times, Mr.
Peroulas's business activities outside OPI may be considered to compete with the
business of the Company. (See Part I, Item 1. "Description of Business" (b)
"Business of Issuer - Risk Factors", "Conflicts of Interest.")
Sales and Marketing
The Company plans to market its service and programs through a
combination of marketing channels including direct sales and strategic
alliances. The Company believes that this multi-channel approach will allow the
Company to quickly acquire a critical mass of customers, penetrate a pool of
business and commercial clients, develop regional awareness and ultimately
become a market leader in the provision of graphic arts services. Of the two (2)
marketing channels intended to be employed by the Company, direct sales is
recognized as the most common in the industry; furthermore, strategic alliances
have often been used. Nevertheless, there can be no assurance that any of these
techniques will be used or will be successful. The Company intends to compete,
assuming that it is successful in obtaining sufficient financing, with other
companies in its target markets.
The Company anticipates that its initial marketing efforts will be in
the area of direct sales. Good quality presentations and professional follow-up
with consumers will be essential to the
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Company's success. Initially, Mr. Peroulas will secure the Company's client
base. However, the Company anticipates that it will eventually employ qualified
sales personnel to establish new customer accounts. The Company believes that by
employing its own sales personnel it will be able to penetrate additional
markets at a minimal cost since sales associates receive compensation in the
form of commissions based upon a client's purchase of the Company's products.
This commission based compensation program should reduce overhead costs for the
Company.
The Company's ability to develop markets through the efforts of Mr.
Peroulas and, eventually a sales force is, of course dependent upon management's
ability to obtain necessary financing, of which there can be no assurance.
Assuming the availability of adequate funding, OPI intends to stay abreast of
changes in the marketplace by ensuring that it remain in the field where clients
and competitors can be observed firsthand.
The Company will attempt to maintain diversity within its client base
in order to decrease its exposure to downturns or volatility in any particular
industry. As part of this client selection strategy, the Company intends to
offer its services to those clients which have a reputation for reputable
dealings and, eliminating clients that it believes present a higher credit risk.
Where feasible, the Company will evaluate beforehand each client for their
creditworthiness.
Competition
Graphic Arts Services involve the simple printing of stationary to the
major production of highly visible publication such as a magazine and newspaper.
The Company is expected to experience intense competition in the graphic arts
publishing and printing business both on an a consumer market basis and on a
commercial account basis. There are a number of smaller companies as well as
larger established companies that compete for graphic arts services in the
Atlanta, Georgia, market. Many of the larger companies are better capitalized
that the Company and/or have greater personnel resources and technical
expertise. Some of the principal companies in the graphic arts business with
whom the Company can expect to compete include but are not limited to the
following: Western Publishing Company, Inc., Greenwich Work Shop, Haddly House
and Lighthouse Publishing. In view of the Company's extremely limited financial
resources, the Company will be at a significant competitive disadvantage as
compared to the Company's competitors.
Industry Regulation
Overview
As an employer, the Company is subject to all federal, state and local
statutes and regulations governing its relationship with its employees and
affecting businesses generally.
Seasonality
The Company believes that its results of operations will not be
significantly impacted by seasonal fluctuations either in the general economy or
with regard to general seasonal climactic changes
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until it expands its operations outside of the Atlanta, Georgia area and then
only in those expanded areas.
Employees and Consultants
Mr. Peroulas, (the Company's sole executive officer and director), has
served in those positions without compensation through the date hereof. Mr.
Peroulas was compensated, in the form of shares of the Company's Common Stock
for management services relating to the formation of the Company and for
financial consulting services.
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of
the Georgia Code. See Part I, Item 4. "Security Ownership of Certain Beneficial
Owners and Management"; Part 1, Item 6. "Executive Compensation - Employee
Contracts and Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
Facilities
The Company maintains its office rent free at the residence of Mr. Sam
Peroulas, the sole Officer and Director of the Company. Its mailing address is
222 Lakeview Avenue, PMB 113, West Palm Beach, Florida 33401. Its telephone
number is (404) 321-1192. The Company anticipates that it will have continued
use of this office on a rent-free basis for the foreseeable future and that this
arrangement will be adequate for the Company's needs while it is in the
development stage. Assuming that OPI obtains the necessary additional financing
and is successful in implementing its business plan, no assurance of which can
be made, the Company will require its own commercial facility in Atlanta,
Georgia. In such event, management believes that OPI would be able to locate
adequate facilities at reasonable rental rates in Atlanta, Georgia, suitable for
its future needs.
Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
1. Development Stage Company. OPI was recently organized in May 1998,
and accordingly, is in the early form of development stage and must be
considered promotional. Management's efforts, since inception, have been
allocated primarily to organizational and fund raising activities. The ability
of the Company to establish itself as a going concern is dependent upon the
receipt of additional funds from operations or other sources to continue those
activities. Potential investors should be aware of the difficulties normally
encountered by a new enterprise in its development stage, including
under-capitalization, cash shortages, limitations with respect to personnel,
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technological, financial and other resources and lack of a client base and
market recognition, most of which are beyond the Company's control. The
likelihood that the Company will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
competitive environment in which the Company will operate. The Company's success
depends to a large extent on establishing a client base. There is no guarantee
that the Company's proposed activities will attain the level of recognition and
acceptance necessary for the Company to find a niche in the industry. There are
numerous competitors in Atlanta, Georgia, the contiguous areas and the remaining
State of Georgia and nationwide, several of which are large public companies,
which are already positioned in the business and which are better financed than
the Company. There can be no assurance that the Company, with its very limited
capitalization, will be able to compete with these companies and achieve
profitability.
2. No Operating History, Revenues or Earnings. As of the date hereof,
the Company has not yet commenced operations and, accordingly, has received no
operating revenues or earnings. Since its inception, most of the time and
resources of OPI's management have been spent in organizing the Company,
obtaining interim financing and developing a business plan. The Company's
success is dependent upon its obtaining additional financing from intended
operations, from placement of its equity or debt or from third party funding
sources. The Company's success in the business is dependent upon the purchasing
of services by consumers and/or additional financing to enable the Company to
continue in operation. There is no assurance that OPI will be able to obtain
additional debt or equity financing from any source. The Company, during the
development stage of its operations, can be expected to sustain substantial
operating expenses without generating any operating revenues or the operating
revenues generated can be expected to be insufficient to cover expenses. Thus,
for the foreseeable future, unless the Company attains profitable operations,
the Company's financial statements will show an increasing net operating loss.
3. Minimal Assets, Working Capital and Net Worth. As of November 30,
1999, the Company's total assets in the amount of $12,368, consisted entirely of
cash. As a result of its minimal assets, as of November 30, 1999, the Company
has very minimal net worth presently. Further, OPI's working capital is
presently minimal and there can be no assurance that the Company's financial
condition will improve. The Company is expected to continue to have minimal
working capital or a working capital deficit as a result of current liabilities.
Even though management believes, without assurance, that it will obtain
sufficient capital with which to implement its business plan on a limited scale,
the Company is not expected to continue in operation without an infusion of
capital. In order to obtain additional equity financing, management may be
required to dilute the interest of existing shareholders or forego a substantial
interest of its revenues, if any.
4. Need to Re-Sell Acquired Receivables in the Secondary Markets. The
Company has minimal working capital therefore it will be critical that any and
all cash resources utilized by the Company be maximized. The Company will bundle
together its receivables, the size of which will be determined by the quality of
receivables, for the purpose of re-selling them in a public and/or private
offering for purchase by an institutional investor and/or an individual. This
reselling will restore working capital to the Company with which it can put back
to work to finance future operations. There is no assurance, however, that the
Company will be successful in its efforts to re-sell these "bundled"
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securities in the secondary market and may, if unsuccessful, be limited in its
attempt to become a viable company.
5. Need for Additional Capital. Going Concern Qualification Expressed
by Auditor. Without an infusion of capital or profits from operations, the
Company is not expected to continue in operation. Accordingly, the Company is
not expected to become a viable business entity unless additional equity and/or
debt financing is obtained. OPI's independent certified public accountant has
expressed this as a "going concern" qualification on the Company's financial
statements. The Company does not anticipate the receipt of operating revenues
until management successfully implements its business plan, which is not
assured. Further, OPI may incur significant unanticipated expenditures which
could deplete its capital at a rapid rate because of the development stage of
its business, its limited personnel and other resources and also due to its lack
of a clients and market recognition. Due to these and other factors, management
is presently unable to predict what additional costs might be incurred by the
Company beyond those currently contemplated to obtain additional financing and
achieve market penetration on a commercial scale in its proposed line of
business. OPI has no identified sources of funds, other than Mr. Peroulas, and
there can be no assurance that resources will be available to the Company when
needed.
6. Dependence on Management. The possible success of the Company is
expected to be largely dependent on the continued services of Mr. Sam Peroulas.
Virtually all decisions concerning the clients to contact, the type of services
to promote and direct marketing material to disseminate and the establishment of
a client profile database by the Company will be made or significantly
influenced by Mr. Peroulas. He is presently serving as manager of his own
company and is required to devote a significant amount of time to the conduct of
that company's business. Mr. Peroulas is expected to devote such time and effort
to the business and affairs of the Company as may be necessary to perform their
responsibilities as executive officers of OPI. The loss of the services of Mr.
Peroulas would adversely affect the conduct of the Company's business and its
prospects for the future. The Company presently holds no key-man life insurance
on the life of, and has no employment contract or other agreement with Mr.
Peroulas.
7. No Client Base. The Company was recently organized. While OPI
intends to engage in the business of providing of graphic arts services the
Company currently has no clients. Further, the very limited funding currently
available to the Company will not permit it to commence business operations in
the industry except on a very limited scale. There can be no assurance that the
debt and/or equity financing, which is expected to be required by the Company in
order for OPI to continue in business will be available. The Company has no
clients presently and there can be no assurance that it will be successful in
obtaining clients in its initial prospective marketing area encompassing
Atlanta, Georgia. OPI does not expect to have long-term contracts with any
clients; thus, management believes that the Company must, in order to survive,
ultimately obtain the loyalty of a large volume of clients. The Company could be
expected to experience substantial difficulty in attracting the high volume of
clients in the prospective target market which would enable OPI to achieve
commercial viability. The Company will be dependent upon Mr. Sam Peroulas, who
has approximately two (2) years of experience in the industry.
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8. High Risks and Unforeseen Costs Associated with OPI's Entry into the
Graphic Arts Services Industry. There can be no assurance that the cost for
establishment of a client base or for soliciting services directly with
consumers by OPI will not be significantly greater than those estimated by
Company management. Therefore, the Company may expend significant unanticipated
funds or significant funds may be expended by OPI without development of a
commercially viable business. There can be no assurance that cost overruns will
not occur or that such cost overruns will not adversely affect the Company.
Further, unfavorable general economic conditions and/or a downturn in client
confidence could have an adverse affect on the ability of the Company to perform
services for its clients which in turn could adversely affect the Company's
business. Additionally, competitive pressures and changes in client mix, among
other things, which management expects the Company to experience, could reduce
the Company's gross profit margin from time to time. Accordingly, there can be
no assurance that OPI will be capable of establishing itself in a commercially
viable position locally or nationally.
9. Conflicts of Interest. There are existing and potential conflicts of
interest, including time, effort and corporate opportunity, involved in the
participation by the Company's executive officer and director in other business
entities and transactions. Mr. Peroulas is the President and manager of his own
company, which in part contracts for graphic arts services and which by virtue
of his relationship to the Company is an affiliate of the Company. Mr. Peroulas
will divide his time and effort between the Company, his existing employment and
his other business obligations. Accordingly, Mr. Peroulas may experience direct
or indirect conflicts of interest with respect to business opportunities which
come to his attention. It may be difficult for Mr. Peroulas to determine whether
an opportunity has arisen as a result of his affiliation with OPI or not. Mr.
Peroulas intends to query each potential client as to what led them to OPI or to
his other business both in an attempt to appropriate the matter properly and
also to determine which methods of advertising are most effective.
The Company's Amended Articles of Incorporation provide that any
related party contract or transaction must be authorized, approved or ratified
at a meeting of the Board of Directors by sufficient vote thereon by directors
not interested therein or the transaction must be fair and reasonable to the
Company.
10. Ability to Grow. The Company expects to grow both through internal
growth and expansion and possibly through the acquisition of complimentary
businesses. The Company plans to expand its business from its current location
and by entry into other markets. There can be no assurance that the Company will
be able to create a market presence, or if such market presence is created, to
profitably expand its market presence or successfully enter other markets. The
ability of the Company to grow will depend on a number of factors, including the
availability of working capital to support such growth, existing and emerging
competition and the Company's ability to maintain sufficient profit margins in
the face of an increasingly competitive industry. The Company must also manage
costs, adapt its infrastructure and systems to accommodate growth and recruit
and train qualified personnel.
The Company also plans to expand its business, in part, through
possible acquisitions primarily of independently owned and operated companies
with similar businesses. Although the Company will
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continuously review potential acquisition candidates, it has not entered into
any agreement, understanding or commitment with respect to any acquisitions at
this time. There can be no assurance that the Company will be able to
successfully identify suitable acquisition candidates, complete acquisitions on
favorable terms, or at all, or integrate acquired businesses into its
operations. Moreover, there can be no assurance that acquisitions will not have
a material adverse effect on the Company's operating results, particularly in
the fiscal quarters immediately following the consummation of such transactions,
while the operations of the acquired business are being integrated into the
Company's operations. Once integrated, acquisitions may not achieve comparable
levels of revenues, profitability or productivity as at then existing
Company-owned locations or otherwise perform as expected. The Company is unable
to predict whether or when any prospective acquisition candidate will become
available or the likelihood that any acquisitions will be completed. The Company
will be competing for acquisition and expansion opportunities with entities that
have substantially greater resources than the Company. In addition, acquisitions
involve a number of special risks, such as diversion of management's attention,
difficulties in the integration of acquired operations and retention of
personnel, unanticipated problems or legal liabilities, and tax and accounting
issues, some or all of which could have a material adverse effect on the
Company's results of operations and financial condition.
11. Competition. The market for graphic art services is highly
competitive. The Company's competitors include local, regional and national
companies, many of which are larger and have greater financial and marketing
resources than the Company. In addition, many of the Company's competitors have
significantly greater name recognition as well as greater marketing, financial
and other resources than the Company. There can be no assurance that the Company
will be able to compete effectively against such competitors in the future.
12. Lack of Working Capital Funding Source. The Company expects to
receive payments on its receivables on a timely basis. However, caution might
require that the Company plan for a reserve to be held for non-performing
receivables. In the event that such reserve for non-performing receivables
increases substantially the Company's working capital will be negatively
impacted directly impairing operations. In addition, as new offices are
established or acquired, or as the existing office is expanded, there will be
increasing requirements for cash to fund the Company's plans for expansion. The
Company has no current source of working capital funds, and should the Company
be unable to secure additional financing on acceptable terms, its business,
financial condition, results of operations and liquidity might be materially
adversely affected.
13. Absence of Public Market for Shares. The Company's shares of Common
Stock are not registered with the United States Securities and Exchange
Commission under the Act. There is no public market for the shares of Common
Stock and no assurance that one will develop. Resales of shares of the Company's
Common Stock will be subject to restrictions on transfer imposed by both state
and federal securities laws pertaining to unregistered shares. Sales of shares
of Common Stock under Rule 144 may have a depressive effect on the market price
of the Company's Common Stock, should a public market develop for such stock.
Such sales also might impede future financing by the Company.
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14. No Dividends. While payments of dividends on the Common Stock
rests with the discretion of the Board of Directors, there can be no assurance
that dividends can or will ever be paid. Payment of dividends is contingent
upon, among other things, future earnings, if any, and the financial condition
of the Company, capital requirements, general business conditions and other
factors which cannot now be predicted. It is highly unlikely that cash dividends
on the Common Stock will be paid by the Company in the foreseeable future.
15. No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third (1/3) of the Company's outstanding Common Stock constitute a quorum,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company.
16. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. Mr. Peroulas, with his 80% ownership interest in the
Company, will effectively control all actions required to be taken by the
shareholders, including the election of Directors and fundamental transactions
like mergers, sales of assets, reorganizations and dissolution and winding up of
the Company.
17. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. Potential Anti-Takeover and
Other Effects of Issuance of Preferred Stock May Be Detrimental to Common
Shareholders. The Company is authorized to issue up to 10,000,000 shares of
preferred stock. $.0001 par value per share (hereinafter referred to as the
"Preferred Stock"); none of which shares has been issued. The issuance of
Preferred Stock does not require approval by the shareholders of the Company's
Common Stock. The Board of Directors, in its sole discretion, has the power to
issue shares of Preferred Stock in one or more series and to establish the
dividend rates and preferences, liquidation preferences, voting rights,
redemption and conversion terms and conditions and any other relative rights and
preferences with respect to any series of Preferred Stock. Holders of Preferred
Stock may have the right to receive dividends, certain preferences in
liquidation and conversion and other rights; any of which rights and preferences
may operate to the detriment of the shareholders of the Company's Common Stock.
Further, the issuance of any shares of Preferred Stock having rights superior to
those of the Company's Common Stock may result in a decrease in the value of
market price of the Common Stock provided a market exists, and additionally,
could be used by the Board of Directors as an anti-takeover measure or device to
prevent a change in control of the Company.
18. No Secondary Trading Exemption. In the event a market develops
in the Company's shares, of which there can be no assurance, secondary trading
in the Common Stock will not be possible in each state until the shares of
Common Stock are qualified for sale under the applicable securities laws of the
state or the Company verifies that an exemption, such as listing in certain
recognized securities manuals, is available for secondary trading in the state.
There can be no
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assurance that the Company will be successful in registering or qualifying the
Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
19. Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in any Secondary Market. In the event a market develops in the
Company's shares, of which there can be no assurance, then if a secondary
trading market develops in the shares of Common Stock of the Company, of which
there can be no assurance, the Common Stock is expected to come within the
meaning of the term "penny stock" under 17 CAR 240.3a51-1 because such shares
are issued by a small company; are low-priced [under five dollars ($5)]; and are
not traded on NASDAQ or on a national stock exchange. The Securities and
Exchange Commission has established risk disclosure requirements for
broker-dealers participating in penny stock transactions as part of a system of
disclosure and regulatory oversight for the operation of the penny stock market.
Rule 15g-9 under the Securities Exchange Act of 1934, as amended, obligates a
broker-dealer to satisfy special sales practice requirements, including a
requirement that it make an individualized written suitability determination of
the purchaser and receive the purchaser's written consent prior to the
transaction. Further, the Securities Enforcement Remedies and Penny Stock Reform
Act of 1990 require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure instrument that provides information
about penny stocks and the risks in the penny stock market. Additionally, the
customer must be provided by the broker-dealer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and the
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. For so long as the
Company's Common Stock is considered penny stock, the penny stock regulations
can be expected to have an adverse effect on the liquidity of the Common Stock
in the secondary market, if any, which develops.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized any revenues since its inception. As a result, from inception
May 1998 through November 30, 1999 the Company has realized income of $ 251.00.
Total Company operations and operating expenses as of November 30, 1999 were
$12, 224. Such operating expenses are primarily made up of an initial start up
cost consisting of legal, accounting and administrative costs. The Company
proposes to engage in providing graphic arts services to individual and
commercial consumers.
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity
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financing, including but not limited to private and public securities offerings.
The Company has set a goal of $500,000 in business revenues in the next twelve
(12) months to satisfy cash requirements and to justify expansion plans.
Mr. Peroulas, at least initially, will be solely responsible for
developing OPI's business. However, at such time, if ever, as sufficient
operating capital becomes available, management expects to employ additional
staffing and marketing personnel. In addition, the Company expects to
continuously engage in market research in order to monitor new market trends,
seasonality factors and other critical information deemed relevant to OPI's
business.
In addition, at least initially, the Company intends to operate out of
the home of Mr. Peroulas. Thus, it is not anticipated that OPI will lease or
purchase office space in the foreseeable future. OPI may in the future establish
its own facilities and/or acquire equipment if the necessary capital becomes
available.
Financial Condition, Capital Resources and Liquidity
At November 30, 1999, the Company had assets totaling $12,368 and
liabilities of $4,000 attributable to accrued professional fees and
organizational expenses. Since the Company's inception, it has received $20,175
in cash contributed as consideration for the issuance of shares of Common Stock.
OPI's working capital is presently minimal and there can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working capital or a working capital
deficit as a result of current liabilities. The Company, at inception, issued
1,650,500 shares of the Company's Common Stock to Mr. Sam Peroulas, executive
officer and director of OPI, for services rendered on behalf of the Company.
During May, June & September, 1998, the Company issued and sold an aggregate of
403,500 shares of Common Stock to Georgia and Florida residents for cash
consideration totaling $20,175. No underwriter was employed in connection with
the offering and sale of the shares. The Company claimed an exemption from
registration in connection with each of the offerings provided under Section
3(b) of the Act, Rule 504, Section 10-5- 9(13) of the Georgia Code and Section
517.061(11) of the Florida Code. Even though management believes, without
assurance, that it will obtain sufficient capital from either limited revenues
or further financing by Mr. Peroulas with which to implement its business plan
in its initial location, the Company is not expected to continue for an extended
period of time in operation without an infusion of capital. In order to obtain
additional equity financing, management may be required to dilute the interest
of existing shareholders or forego a substantial interest of its revenues, if
any. (See Part I, Item 4. "Security Ownership of Certain Beneficial Owners and
Managers;" and Part I, Item 7. "Certain Relationships and Related
Transactions.")
The Company has no potential capital resources from any outside sources
at the current time. In its initial stages, the Company will operate out of the
facility provided by Mr. Peroulas. Mr. Peroulas will begin by finding clients
for the Company. To attract clients, Mr. Peroulas will visit potential clients
in order to determine their business needs. The Company plans to place
advertising
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in local area newspapers in Atlanta, Georgia to directly solicit prospective
customers. In the event the Company requires additional capital during this
phase, Mr. Peroulas has committed to fund the operation until such time as
additional capital is available.
The ability of the Company to continue as a going concern is dependent
upon its ability to obtain clients who will utilize the Company's services and
whether the Company can attract an adequate number of direct clients.
The Company believes that in order to be able to expand upon its
current operations, it will be necessary to rent offices in Atlanta, Georgia,
hire clerical staff and acquire through purchase or lease computer and office
equipment to maintain accurate financial accounting and client data. The Company
believes that there is adequate and affordable rental space available in
Atlanta, Georgia and sufficiently trained personnel to provide such clerical
services at affordable rates. Further, the Company believes that the type of
equipment necessary for the operation is readily accessible at competitive
rates.
The Company will eventually need to either rent or own computer
equipment and software to expand to new locations. Currently it uses the
equipment and software owned by Mr. Peroulas. Funding to open new locations,
including the cost of equipment, will come from both revenues generated at the
initial location and any further private placement monies raised.
To implement such plan, also during this initial phase, the Company
intends to initiate a self- directed private placement under Rule 506 in order
to raise additional capital. In the event the Company is not successful in
raising such funds and also does not generate significant revenue, the Company
believes that it will not be able to continue operations for an extended period
of time.
Net Operating Losses
The Company has net operating loss carry-forwards of $11,972 expiring
at February 28, 2020. The company has a $2,300 deferred tax asset resulting from
the loss carry-forwards, for which it has established a 100% valuation
allowance. Until the Company's current operations begin to produce earnings, it
is unclear as to the ability of the Company to utilize such carry-forwards.
Year 2000 Compliance
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize the date using 00 as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
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The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (Year 2000) approaches. The
Company has confirmed that its systems are Year 2000 Compliant.
The Company believes that it has disclosed all required information
relative to Year 2000 issues relating to its business and operations. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely also will be timely converted or that any such failure to
convert by another company would not have an adverse affect on the Company's
systems.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
business strategy, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-SB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
The "safe harbor" for forward looking information only applies to
statements made by companies that are already subject to the reporting
requirements of Section 13(a) or Section 15(d) of the Exchange Act. Until such
time as the Company is a reporting company, the safe harbor provisions do not
apply to the Company.
Item 3. Description of Property:
The Company's headquarters are at the home of Sam Peroulas. Its mailing
address is 222 Lakeview Avenue, PMB 113, West Palm Beach, Florida 33401. Its
telephone number is (404) 321- 1192. The Company pays no rent for its space. The
Company owns no real or personal property.
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Item 4. Security Ownership of Certain Beneficial Owners and Managers
The following table sets forth information as of April 30, 2000,
regarding the ownership of the Company's Common Stock by each shareholder known
by the Company to be the beneficial owner of more than five per cent (5%) of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group. Except as otherwise indicated, each of the shareholders
has sole voting and investment power with respect to the shares of Common Stock
beneficially owned.
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class (1)
---------------- ----- ---------
Sam Peroulas (2)(3) 1,650,500 80.35%
1506 Briarhill Lane NE
Atlanta, Georgia 30324
Mintmire & Associates(4) 114,500 5.6%
265 Sunrise Avenue
Suite 204
Palm Beach, FL 33480
All Executive Officers, Directors 1,650,500 80.35%
- -------------------
(1) Based upon 2,054,000 shares of the Company's Common Stock issued and
outstanding as of April 30, 1999.
(2) Sole Executive and Director of the Company.
(3) In May 1998, the Company issued 1,650,500 shares of its Common Stock to Sam
Peroulas, the current President and Treasurer of the Company, as consideration
and in exchange for services in connection with the organization of OPI, which
services were valued at a total of $165.00. For such offering, the Company
relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of the
Georgia Code. See Part 1, Item 6. "Executive Compensation - Employee Contracts
and Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
(4) Counsel to the Company indirectly owns 114,500 shares of the Company through
the 100% sole ownership of the Common Stock of another company that has invested
in the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons; Compliance
Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
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Name Age Position(s) with Company
- ------ --- ------------------------
Sam Peroulas 34 President, Secretary, Chief Executive Officer & Director
Directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. Mr. Peroulas will devote such
time and effort to the business and affairs of the Company as may be necessary
to perform his responsibilities as executive officer and/or director of the
Company.
Family Relationships
There are no family relationships between or among the executive
officer and director of the Company.
Business Experience
Sam Peroulas has served as the sole Executive of the Company since its inception
in May 1998. He attended Emory University from 1987 to 1991 where he received a
Bachelor of Science degree in Biology and Philosophy as well as a minor in
graphic arts design. Mr. Peroulas subsequently attended Georgia State University
from 1993 to 1997 where he received a Masters of Science degree in Microbiology.
Since 1997, Mr. Peroulas has been a Certified Microbiologist by the American
Academy of Microbiology. From 1991 to present (either full time or part time
depending on school demands) Mr. Peroulas has consulted and free-lanced as a
graphic artist and as a microbiologist. He has two (2) years experience in
computer graphic modeling for biological application and brings key graphic art
skills to the Company. His work as a graphic artist and specifically his work as
a graphic arts microbiologist (a person who designs graphic arts relating to
microbiology) is expected to attract both commercial and individual consumers in
the field of microbiology and other areas.
Compliance with Section 16(a) of the Securities Exchange Act of 1934:
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership, of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, Mr. Peroulas comprises all of the Company's
executive officers, directors and greater than 10% beneficial owners of its
common Stock, and has complied with Section 16(a) filing requirements applicable
to him.
Item 6. Executive Compensation:
The Company, in consideration for various services performed for the
Company, issued to Mr.
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Sam Peroulas, the Company's sole executive officer and/or director 1,650,500
shares of restricted common stock. Except for the above-described compensation,
it is not anticipated that any executive officer of the Company will receive any
cash or non-cash compensation for his or her services in all capacities to the
Company until such time as the Company commences business operations. At such
time as OPI commences operations, it is expected that the Board of Directors
will approve the payment of salaries in a reasonable amount to each of its
officers for their services in the positions of President/Treasurer, Executive
Vice President and Secretary respectively, of the Company. At such time, the
Board of Directors may, in its discretion, approve the payment of additional
cash or non-cash compensation to the foregoing for their services to the
Company.
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of
the Georgia Code. See Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.
Item 7. Certain Relationships and Related Transactions:
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of
the Georgia Code. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
At the current time, the Company has no provision to issue any
additional securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued Common Stock and Preferred Stock which may be issued
without further shareholder approval or notice, the Company intends to reserve
such stock for the Rule 506 offerings contemplated to implement continued
expansion, for acquisitions and for properly approved employee compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer.")
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Item 8. Description of Securities.
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.0001 par value. The issued and outstanding shares of Common Stock being
registered hereby are validly issued, fully paid and non-assessable. The holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by the stockholders. A majority vote is required on all corporate action.
Cumulative voting in the election of directors is not allowed, which means that
the holders of more than 50% of the outstanding shares can elect all the
directors as they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any directors. The shares of Common
Stock have no preemptive, subscription, conversion or redemption rights and can
only be issued as fully paid and non-assessable shares. Upon liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to receive a pro rata of the assets of the Company which are legally
available for distribution to stockholders.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, $0.0001 par value. Currently there are no issued and outstanding
preferred shares of the Company.
Transfer Agent
The company will serve as its transfer agent until it is eligible for
quotation on the OTC: Bulletin Board.
Certain Provision of Florida Law.
Section 607.0902 of the Florida Business Corporation Act prohibits the
voting of shares in a publicly-held Florida corporation that are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition or
unless the acquisition of incorporation or bylaws specifically state that this
section does not apply. A "control share acquisition" is defined as an
acquisition that immediately thereafter entitles the acquiring party to vote in
the election of directors within each of the following ranges of voting power:
(i) one-fifth or more, but less than one-third of such voting power: (ii)
one-third or more, but less than a majority of such voting power; and, (iii)
more than a majority of such voting power. The Amended Articles of Incorporation
of the Company specifically state that Section 607.0902 does not apply to
control-share acquisitions of shares of the Company.
24
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
No matter was submitted during the Third Quarter of the fiscal year
ended April 30, 1999, covered by this report to a vote of the Company's
shareholders, through the solicitation of proxies or otherwise.
(a) Market Information.
There has been no established public trading market for the Common
Stock since the Company's inception in May 1998.
(b) Holders.
As of April 30, 2000, the Company had 20 shareholders of record of its
2,054,000 outstanding shares of Common Stock.
(c) Dividends.
The Company has never paid or declared any dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company
Item 3. Changes In and Disagreements with Accountants
Because the Company has been generally inactive since its inception, it
has had no independent accountant until the retention in July 1998 of Durland
and Company, CPA's, P.A., 340 Royal Palm Way, Suite 204, Palm Beach, Florida
33480. There has been no change in the Company's independent accountant during
the period commencing with the Company's retention of Durland and Company,
CPA's, P.A. through the date hereof.
Item 4. Recent Sales of Unregistered Securities
The Company relied upon Section 4(2) of the Act and Rule 506 for
several transactions regarding the issuance of its unregistered securities. In
each instance, such reliance was based upon the fact that (i) the issuance of
the shares did not involve a public offering, (ii) there were no more than
thirty-five (35) investors (excluding "accredited investors"), (iii) each
investor who was not an
25
<PAGE>
accredited investor either alone or with his purchaser representative(s) has
such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment, or the
issuer reasonably believes immediately prior to making any sale that such
purchaser comes within this description, (iv) the offers and sales were made in
compliance with Rules 501 and 502, (v) the securities were subject to Rule 144
limitations on resale and (vi) each of the parties was a sophisticated purchaser
and had full access to the information on the Company necessary to make an
informed investment decision by virtue of the due diligence conducted by the
purchaser or available to the purchaser prior to the transaction.
The Company relied upon Section 3(b) of the Act and Rule 504 for
several transactions regarding the issuance of its unregistered securities. In
each instance, such reliance was based on the following: (i) the aggregate
offering price of the offering of the shares of Common Stock and warrants did
not exceed $1,000,000, less the aggregate offering price for all securities sold
with the twelve months before the start of and during the offering of shares in
reliance on any exemption under Section 3(b) of, or in violation of Section 5(a)
of the Act; (ii) no general solicitation or advertising was conducted by the
Company in connection with the offering of any of the shares; (iii) the fact
that the Company had not been since its inception (a) subject to the reporting
requirements of Section 13 or 15(d) of the Securities Act of 1934, as amended,
(b) and an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, or (c) a development stage company that either had no
specific business plan or purpose or had indicated that its business plan was to
engage in a merger or acquisition with an unidentified company or companies or
other entity or person.
The Company relied upon Florida Code Section 517.061(11) for several
Rule 504 or Rule 506 transactions. In each instance, such reliance is based on
the following: (i) sales of the shares of Common Stock were not made to more
than thirty-five (35) persons; (ii) neither the offer nor the sale of any of the
shares was accomplished by the publication of any advertisement; (iii) all
purchasers either had a preexisting personal or business relationship with one
or more of the executive officers of the Company or, by reason of their business
or financial experience, could be reasonably assumed to have the capacity to
protect their own interests in connection with the transaction; (iv) each
purchaser represented that he was purchasing for his own account and not with a
view to or for sale in connection with any distribution of the shares; and (v)
prior to sale, each purchaser had reasonable access to or was furnished all
material books and records of the Company, all material contracts and documents
relating to the proposed transaction, and had an opportunity to question the
executive officers of the Company. Pursuant to Rule 3E-500.005, in offerings
made under Section 517.061(11) of the Florida Statutes, an offering memorandum
is not required; however each purchaser (or his representative) must be provided
with or given reasonable access to full and fair disclosure of material
information. An issuer is deemed to be satisfied if such purchaser or his
representative has been given access to all material books and records of the
issuer; all material contracts and documents relating to the proposed
transaction; and an opportunity to question the appropriate executive officer.
In the regard, the Company supplied such information and was available for such
questioning (the "Florida Exemption").
The Company relied upon Geogia Code Section 10-5-9(13) for several
transactions. In each instance such reliance is based on the following: (i) the
number of Georgia purchasers did not exceed
26
<PAGE>
fifteen (15); (ii) the securities were not offered for sale by means of any form
of general or public solicitations or advertisements; (iii) a legend was placed
upon the certificates; and (iv) each purchaser represented that he purchased for
investment. (the "Georgia Exemption").
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and the Georgia Exemption.
In May 1998, the Company sold 403,500 shares of its Common Stock to
nineteen (19) investors for a total of $20,175. For such offering, the Company
relied upon Section 3(b) of the Act, Rule 504, the Georgia Exemption and the
Florida Exemption.
Item 5. Indemnification of Directors and Officers.
Article X of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors and officers of the
Company as follows:
(a) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is otherwise serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he 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, has no reasonable cause to believe his conduct is unlawful. The
termination of any action, suit or proceeding, by judgment, order, settlement,
conviction upon a plea of nolo contendere or its equivalent, shall not of itself
create a presumption that the person did not act in good faith 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
reasonable cause to believe the action was unlawful.
(b) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in, or not, opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the
27
<PAGE>
corporation, unless, and only to the extent that, the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability, but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnification for such expenses
which such court deems proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections (a) and (b) of this Article,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the officer,
director and employee or agent is proper in the circumstances, because he has
met the applicable standard of conduct set forth in Section (a) or (b) of this
Article. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote and represented at a meeting
called for purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in advance
of the final disposition or such action, suit or proceeding, as authorized in
Section (d) of this Article, upon receipt of an understanding by or on behalf of
the director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
(f) The Board of Directors may exercise the corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Amended Articles of Incorporation, the Bylaws, agreements,
vote of the shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the heirs
and personal representative of such a person.
The Company has no agreements with any of its directors or executive
offices providing for indemnification of any such persons with respect to
liability arising out of their capacity or status as officers and directors.
28
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or executive officer of the Company as to which indemnification is
being sought.
PART F/S
The Financial Statements of OPI required by Item 310 of
Regulation SB commence on page F-1 hereof in response to Part F/S of this
Registration Statement on Form 10-SB and are incorporated herein by this
reference.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report.........................................F-2
Balance Sheets.......................................................F-3
Statements of Operations.............................................F-4
Statements of Changes in Stockholders' Equity........................F-5
Statements of Cash Flows.............................................F-6
Notes to Financial Statements........................................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO: The Board of Directors
Orange Productions, Inc.
Palm Beach, Florida
We have audited the accompanying balance sheet of Orange Productions, Inc., a
development stage enterprise, as of February 28, 1999 and the related statements
of loss, changes in stockholders' equity and cash flows for the period from May
20, 1998 (Inception) through February 28, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit 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
misstatements. 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 principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Orange Productions, Inc. as of
February 28, 1999 and the results of its operations and its cash flows for the
period from May 20, 1998 (Inception) through February 28, 1999 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has experienced a loss since inception. The
Company's financial position and operating results raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Durland & Company, CPAs, P.A.
Durland & Company, CPAs, P.A.
Palm Beach, Florida
April 9, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Balance Sheets
November 30, 1999 February 28, 1999
-------------------- --------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 12,368 $ 9,993
Loan and accrued interest receivable 0 10,184
-------------------- --------------------
Total current assets 12,368 20,177
-------------------- --------------------
Total Assets $ 12,368 $ 20,177
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $0 $ 4,500
Accrued expenses - related party 4,000 4,000
-------------------- --------------------
Total current liabilities 4,000 8,500
-------------------- --------------------
Total Liabilities 4,000 8,500
-------------------- --------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000
shares: none issued 0 0
Common stock, $0.0001 par value, authorized 50,000,000
shares: 2,054,000 issued and outstanding 206 206
Additional paid-in capital 20,134 20,134
Deficit accumulated during the development stage (11,972) (8,663)
-------------------- --------------------
Total Stockholders' Equity 8,368 11,677
-------------------- --------------------
Total Liabilities and Stockholders' Equity $ 12,368 $ 20,177
==================== ====================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Operations
For the Year For the Nine Months From May 20, 1998 From May 20, 1998
Ended Ended (Inception) Through (Inception) Through
February 28, 1999 November 30, 1999 November 30, 1998 November 30, 1999
------------------ ------------------- --------------------- ---------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0
------------------ ------------------- --------------------- ---------------------
Expenses
Bank charges 15 0 0 0
General and administrative expenses 1,165 459 182 641
Consulting fees - related party 167 0 0 1,165
Professional fees 4,500 2,918 0 7,418
Professional fees - related party 3,000 0 0 3,000
------------------ ------------------- --------------------- ---------------------
Total expense 8,847 (3,377) (182) (12,224)
------------------ ------------------- --------------------- ---------------------
Loss from operations (8,847) (3,377) (182) (12,224)
Other income (expense)
Interest income 184 67 12 251
------------------ ------------------- --------------------- ---------------------
Net loss $ (8,663)$ (3,310)$ (170)$ (11,973)
================== =================== ===================== =====================
Net loss per weighted average share, basic $ (.005)$ (.00)$ (.00)$ (.00)
================== =================== ===================== =====================
Weighted average number of shares 1,916,576 2,054,000 1,852,822 1,984,182
================== =================== ===================== =====================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Development Stockholders'
Shares Stock Capital Stage Equity
----------- ----------- ------------ --------------- -----------------
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE, May 20, 1998 (Inception) 0 $ 0 $ 0 $ 0 $ 0
May 1998 - services ($0.0001/sh) 1,650,500 165 0 0 165
May 1998 - cash ($0.05/sh) 4,000 1 199 0 200
June 1998 - cash ($0.05/sh) 56,000 6 2,794 0 2,800
September 1998 - cash ($0.05/sh) 343,500 34 17,141 0 17,175
Net loss 0 0 0 (8,663) (8,663)
----------- ----------- ------------ --------------- -----------------
BALANCE, February 28, 1999 2,054,000 $ 206 $ 20,134 $ (8,663)$ 11,677
----------- ----------- ------------ --------------- -----------------
Net loss 0 0 0 (3,309) (3,309)
----------- ----------- ------------ --------------- -----------------
BALANCE, November 30, 1999 (Unaudited) 2,054,000 $206 $20,134 $ (11,972)$ 8,368
=========== =========== ============ =============== =================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Cash Flows
From From
For the May 20, 1998 May 20, 1998
For the Year Nine Months (Inception) (Inception)
Ended Ended Through Through
February 28, November 30, November 30, November 30,
1999 1999 1998 1999
-------------------- ------------------ ----------------- ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (8,663)$ (3,309)$ (8,663)$ (11,972)
Adjustments to reconcile net loss to net cash used
by operating activities:
Stock issued in lieu of cash - related party 165 0 165 165
Changes in assets and liabilities:
Increase (decrease) in accrued interest receivable (184) 184 (184) 0
Increase in accrued expenses 4,500 (4,500) 4,500 0
Increase in accrued expenses - related party 4,000 0 4,000 4,000
-------------------- ------------------ ----------------- ------------------
Net cash provided (used) by operating activities (182) (7,625) (182) (7,807)
-------------------- ------------------ ----------------- ------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Increase in issuance of loan receivable (10,000) 0 (10,000) (10,000)
Proceeds from repayment of loan receivable 0 10,000 0 10,000
-------------------- ------------------ ----------------- ------------------
Net cash provided by investing activities (10,000) 10,000 (10,000) 0
-------------------- ------------------ ----------------- ------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 20,175 0 20,175 20,175
-------------------- ------------------ ----------------- ------------------
Net cash provided by financing activities 20,175 0 20,175 20,175
-------------------- ------------------ ----------------- ------------------
Net increase in cash 9,993 2,375 9,993 12,368
CASH, beginning of period 0 9,993 0 0
-------------------- ------------------ ----------------- ------------------
CASH, end of period $ 9,993 $ 12,368 $ 9,993 $ 12,368
==================== ================== ================= ==================
</TABLE>
The accompanying notes are an integral part of the
financial statements.
F-6
<PAGE>
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months
ended November 30, 1999 is unaudited)
(1) Summary of Significant Accounting Principles
TheCompany Orange Productions, Inc. is a Florida chartered development
stage corporation which conducts business from its headquarters in Palm
Beach, Florida. The Company was incorporated on May 20, 1998, and has
elected February 28 as its fiscal year end.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to provide graphic art services to
various consumer groups. Current activities include raising additional
equity and negotiating with potential key personnel and facilities.
There is no assurance that any benefit will result from such
activities. The Company will not receive any operating revenues until
the commencement of operations, but will nevertheless continue to incur
expenses until then.
The financial statements have been prepared in conformity with
generally accepted accounting principles. The financial statements for
the nine months ended November 30, 1999 and the period from May 20,
1998 (Inception) through November 30, 1998 include all adjustments
which in the opinion of management are necessary for fair presentation,
and such adjustments are of a normal and recurring nature. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and revenues
and expenses for the period then ended. Actual results may differ
significantly from those estimates.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic net loss per weighted average share is
computed by dividing the net loss by the weighted average number of
common shares outstanding during the period.
(2) Loan Receivable The Company authorized a loan in the amount of $10,000
at the rate of 7% per year, payable on demand. Interest of $184 was
accrued at February 28, 1999. The loan principal and accrued interest
were paid in full during March 1999.
(3) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock are
to be determined by the Board of Directors prior to issuance. On May
20, 1998, the Company issued 1,650,500 restricted, under Rule 144,
founders shares to its Officers and Directors for the value of services
rendered in connection with the organization of the Company. In May,
1998, the Company issued 4,000 shares at $0.05 per share for $200 in
cash. In June 1998, the Company issued 56,000 shares of common stock at
$0.05 per share for $2,800 in cash. In September 1998, the Company
issued 343,500 shares at $0.05 per share for $17,175 in cash.
(4) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company has net operating loss
carry- forwards for income tax purposes of approximately $12,000, with
$8,700 expiring in 2019 and $3,300 in 2020.
The amount recorded as deferred tax assets as of November 30, 1999 is
approximately $2,300, which represents the amount of tax benefit of the
loss carryforward. The Company has established a 100% valuation
allowance against this deferred tax asset, as the Company has no
history of profitable operations.
F-7
<PAGE>
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(5) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $12,000 for the period from May 20, 1998
(Inception) through November 30, 1999. The ability of the Company to
continue as a going concern is dependent upon commencing operations and
obtaining additional capital and financing. The financial statements do
not include any adjustments that might be necessary if the Company is
unable to continue as a going concern. The Company is currently seeking
financing to allow it to begin its planned operations.
(6) Related Parties
Counsel to the Company indirectly owns 114,500 shares of the Company
through the 100% sole ownership of the common stock of another company
that has invested in the Company. The Company's President, Secretary,
Treasurer and Director directly owns an 80.36% interest in the Company,
consisting of 1,650,500 shares
As of November 30, 1999 and February 28, 1999, the Company owed legal
counsel for services performed during the year in the amount of $3,000,
and owed the former Vice President and former Director of the Company
$1,000 for consulting services rendered. These amounts are presented in
Accrued expenses - related party.
F-8
<PAGE>
Part III
Item 1. Index to Exhibits
3(i).1 Articles of Incorporation of Orange Productions, Inc.,
effective May 20, 1998 (filed with original 10SB on 6/23/99)
3(ii).1 Bylaws of Orange Productions, Inc.
(filed with original 10SB on 6/23/99)
27.1 * Financial Data Schedule
- -------------------------
(* Filed herewith)
37
<PAGE>
SIGNATURES
----------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Orange Productions, Inc.
------------------------------
(Registrant)
Date: May 17, 2000 By:/s/ Sam Peroulas
----------------- ----------------------------
Sam Peroulas
Sole Officer and Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001065803
<NAME> Orange Productions, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-START> Mar-01-1999
<PERIOD-END> Nov-30-1999
<EXCHANGE-RATE> 1
<CASH> 12,368
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,368
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,368
<CURRENT-LIABILITIES> 4,000
<BONDS> 0
0
0
<COMMON> 206
<OTHER-SE> 8,368
<TOTAL-LIABILITY-AND-EQUITY> 12,368
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,377
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,377)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,377)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
