U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment 2 to
Form 10-KSB
(Mark One)
[X] AMENDED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: February 29, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to ________________
Commission File No.: 0-26475
Orange Productions, Inc.
--------------------------------------------
(Name of small business registrant in its charter)
Florida 65-0844436
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
277 Royal Poinciana Way, PMB 202
Palm Beach, FL 33480
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (404) 321-1192
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange
on which registered
None
-------------------------- -------------------------
Securities registered under Section 12(g) of the Exchange 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
<PAGE>
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State registrant's revenues for its most recent fiscal year. $0.00
Of the 2,054,000 shares of voting stock of the registrant issued and
outstanding as of February 29, 2000, 403,500 shares are held by non-affiliates.
Because of the absence of an established trading market for the voting stock,
the registrant is unable to calculate the aggregate market value of the voting
stock held by non-affiliates as of a specified date within the past 60 days.
2
<PAGE>
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 277 Royal Poinciana Way, PMB 202, Palm Beach,
Florida 33480 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 III, Item 10.
"Executive Compensation - Employee Contracts and Agreements"; Part III, Item 11.
"Security Ownership of Certain Beneficial Owners and Management"; and Part III,
Item 12. "Certain Relationships and Related Transactions".
In May, June and September 1998, the Company sold 403,500 shares of its
Common Stock to nineteen (19) investors for a total of $20,175. These shares
included a total of 114,500 shares to Mintmire & Associates (Counsel to the
Company) through the 100% sole ownership of the common stock of another company
that has invested in the Company. 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 (b) "Business of Registrant" immediately below for a description of
the Company's business.
3
<PAGE>
(b) Business of Registrant
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. This individual will devote such time and
effort as may be necessary to participate in the day-to-day management of the
Company.
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.
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.
The Company will also work traditionally, in pen and ink, watercolor
and colored pencil.
4
<PAGE>
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.
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 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.
5
<PAGE>
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.
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
6
<PAGE>
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.
The Company plans to closely monitor its operations in the new
locations. 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 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
7
<PAGE>
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.
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.
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.
8
<PAGE>
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 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.
Status of Publicly Announced Products and Services
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.
Competition
Graphic Arts Services can involve the simple printing of stationary to
the major production of a highly visible publication such as a magazine or a
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.
9
<PAGE>
Sources and Availability of Raw Materials
The computer hardware needed to perform graphic arts services is widely
available from numerous third parties for rent or for sale. No shortage of
materials is expected in the foreseeable future. Numerous software products are
also available.
Dependence on one or few customers
At this time, the Company has no customers and therefore no dependence
on any one or few customers.
Research and Development
The Company believes that research and development is an important
factor in its future growth. The Company expects to continuously engage in
market research in order to monitor new market trends and other critical
information deemed relevant to OPI's business. No assurance can be made that the
Company will have sufficient funds to purchase technological advances as they
become available. Additionally, due to the rapid advance rate at which
technology advances, the Company's equipment may be outdated quickly, preventing
or impeding the Company from realizing its full potential profits.
Patents, Copyrights and Trademarks
The Company intends to protect its original intellectual property with
patents, copyrights and/or trademarks as appropriate.
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.
Governmental Regulation
Currently there is no government regulation of the Company's business
nor of the Company's products.
State and Local Licensing Requirements
Currently there are no state or local licensing requirements which
apply to the Company's business or to its products
Effect of Probable Governmental Regulation on the Business
Currently there is no government regulation of the Company's business.
10
<PAGE>
Cost of Research and Development
For fiscal year 2000, the Company expended no measurable amount of
money on research and development efforts. At the current time, none of the
costs associates with research and development are bourne directly by the
customer; however there is no guarantee that such costs will not be bourne by
customers in the future and, at the current time, the Company does not know the
extent to which such costs will be bourne by the customer, if at all.
Cost and Effects of Compliance with Environmental Laws
The Company's business is not subject to regulation under the state and
Federal laws regarding environmental protection and hazardous substances
control. The Company is unaware of any bills currently pending in Congress which
could change the application of such laws so that they would affect the Company.
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 III, Item 10. "Executive Compensation - Employee
Contracts and Agreements"; Part III, Item 11. "Security Ownership of Certain
Beneficial Owners and Management"; and Part III, Item 12. "Certain Relationships
and Related Transactions".
Item 2. Description of Property
The Company's headquarters are at the home of Sam Peroulas. Its mailing
address is 277 Royal Poinciana Way, PMB 202, Palm Beach, Florida 33480. Its
telephone number is (404) 321- 1192. The Company pays no rent for its space. The
Company owns no real or personal property.
Item 3. Legal Proceedings
No legal proceedings have been initiated either by or against the
Company to date.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the Company's shareholders,
through the solicitation of proxies or otherwise from the Company's inception to
the close of the fiscal year 2000 ended February 29, 2000, covered by this
report.
11
<PAGE>
Item 5. Market for Common Equity and Related Stockholder Matters.
Shares of the Company's Common Stock have previously been registered
with the Securities and Exchange Commission (the "Commission").
The Company is not aware of any existing trading market for its Common
Stock. The Company's Common Stock has never traded in a public market. There are
no plans, proposals, arrangements or understandings with any person(s) with
regard to the development of a trading market in any of the Company's
securities.
As of February 29, 2000, there were 20 holders of record of the
Company's Common Stock.
As of February 29, 2000, the Company had 2,054,000 shares of its Common
Stock issued and outstanding, 1,650,500 of which were restricted Rule 144 shares
and 403,500 of which were free-trading. Of the Rule 144 shares, 1,650,500 shares
have been held by affiliates of the Company for more than one (1) year.
Dividend Policy
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 6. Management's Discussion and Analysis or Plan of Operation
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 February 29, 2000 the Company generated cumulative net losses
of $12,212. Due to the Company's limited operating history and limited
resources, among other factors, there can be no assurance that profitability or
significant revenues on a quarterly or annual basis will occur in the future.
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 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.
12
<PAGE>
Results of Operations - Full Fiscal Years - February 28, 1999 and February 29,
2000
Revenues
Revenues for the twelve month period ended February 29, 2000 was $0 and
for the twelve (12) month period ended February 28, 1999 was $0.
Operating Expenses
Operating Expenses for the twelve (12) months ending February 29, 2000
were $3,616 versus $8,847 for the twelve (12) months ending February 28, 1999.
Net loss was $3,549 and $8,663 respectively. This change resulted from a
decrease in organizational expenses.
Assets and Liabilities
Assets were $12,288 as of February 29, 2000 and $20,177 as of February
28, 1999. As of February 28, 1999, assets consisted primarily of cash and a loan
receivable with accrued interest. As of February 29, 2000, assets consisted
entirely of cash. Liabilities were $4,160 and $8,500 as of February 29, 2000 and
February 28, 1999 respectively. As of February 29, 2000, liabilities consisted
primarily of accrued expenses.
Stockholders' Equity
Stockholders' equity was $8,128 as of February 29, 2000 and $11,677 as
of February 28, 1999. The Company had 2,054,000 and 2,054,00 shares of common
stock issued and outstanding at February 29, 2000 and 1999, respectively.
Financial Condition, Liquidity and Capital Resources
At February 29, 2000 the Company had cash of $12,288 as compared to
$9,993 at February 28, 1999.
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 have recognized the date using 00 as the
year 1900 rather than the year 2000. This may have resulted 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.
The Company has confirmed that its systems are Year 2000 Compliant. It
has experienced no Y2K problems to date.
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
13
<PAGE>
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.
Item 7. Financial Statements
The Company's financial statements have been examined to the extent
indicated in their reports by Durland & Company, CPAs, P.A., independent
certified accountants, and have been prepared in accordance with generally
accepted accounting principles and pursuant to Regulation S-B as promulgated by
the Securities and Exchange Commission and are included herein, on Page F-1
hereof in response to Part F/S of this Form 10-KSB.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
The Company has used the accounting firm of Durland & Company, CPAs,
P.A. since inception. Their address is 340 Royal Palm Way, Third Floor, Palm
Beach, FL 33480.
14
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report................................................F-2
Balance Sheets..............................................................F-3
Statements of Operations....................................................F-4
Statements of Stockholders' Equity..........................................F-5
Statements of Cash Flows....................................................F-6
Notes to Financial Statements...............................................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Orange Productions, Inc.
Palm Beach, Florida
We have audited the accompanying balance sheet of Orange Productions, Inc., a
development stage enterprise, as of February 29 and 28, 2000 and 1999 and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from May 20, 1998 (Inception) through February 28, 1999 and the
year ended February 29, 2000. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Orange Productions, Inc. as of
February 29 and 28, 2000 and 1999 and the results of its operations and its cash
flows for the period from May 20, 1998 (Inception) through February 28, 1999 and
the year ended February 29, 2000 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
Durland & Company, CPAs, P.A.
Palm Beach, Florida
June 5, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Balance Sheets
February 29 and 28,
2000 1999
--------------------- -------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 12,288 $ 9,993
Loan and accrued interest receivable 0 10,184
--------------------- -------------------
Total current assets 12,288 20,177
--------------------- -------------------
Total Assets $ 12,288 $ 20,177
===================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 0 $ 4,500
Accrued expenses - related party 4,160 4,000
--------------------- -------------------
Total current liabilities 4,160 8,500
--------------------- -------------------
Total Liabilities 4,160 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 (12,212) (8,663)
--------------------- -------------------
Total Stockholders' Equity 8,128 11,677
--------------------- -------------------
Total Liabilities and Stockholders' Equity $ 12,288 $ 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
Period from
May 20, 1998 Period from
(Inception) May 20, 1998
Year Ended through (Inception)
February 29, February 28, through
2000 1999 February 29, 2000
----------------- ----------------- ---------------------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 0
----------------- ----------------- ---------------------
Expenses
General and administrative 539 182 721
Consulting fees - related party 0 1,165 1,165
Professional fees 2,917 4,500 7,417
Professional fees - related party 160 3,000 3,160
----------------- ----------------- ---------------------
Total expenses 3,616 8,847 12,463
----------------- ----------------- ---------------------
Loss from operations (3,616) (8,847) (12,463)
Other income (expense)
Interest income 67 184 251
----------------- ----------------- ---------------------
Net loss $ (3,549)$ (8,663)$ (12,212)
================= ================= =====================
Net loss per weighted average share, basic $ (0.01)$ (0.01)
================= =================
Weighted average number of shares 2,054,000 1,916,576
================= =================
</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 Stockholders' Equity
Deficit
Accumulated
Additional During the Total
Number of Preferred Common Paid-in Development Stockholders'
Shares Stock Stock Capital Stage Equity
------------ ------------ ---------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCE, May 20, 1998 0 $ 0 $ 0 $ 0 $ 0 $ 0
May 1998 - services ($0.0001/sh) 1,650,500 0 165 0 0 165
May 1998 - cash ($0.05/sh) 4,000 0 1 199 0 200
June 1998 - cash ($0.05/sh) 56,000 0 6 2,794 0 2,800
September 1998 - cash ($0.05/sh) 343,500 0 34 17,141 0 17,175
Net loss 0 0 0 0 (8,663) (8,663)
------------ ------------ ---------- ------------ -------------- ---------------
BALANCE, February 28, 1999 2,054,000 0 206 20,134 (8,663) 11,677
Net loss 0 0 0 0 (3,549) (3,549)
------------ ------------ ---------- ------------ -------------- ---------------
ENDING BALANCE, February 29, 2000 2,054,000 $ 0 $ 206 $ 20,134 $ (12,212)$ 8,128
============ ============ ========== ============ ============== ===============
</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
Period from
May 20, 1998 Period from
(Inception) May 20, 1998
Year Ended through (Inception)
February 29, February 28, through
2000 1999 February 29, 2000
---------------- -------------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (3,549) $ (8,663) $ (12,212)
Adjustments to reconcile net loss to net cash used by
development activities
Stock issued in lieu of cash - related party 0 165 165
Changes in assets and liabilities
(Increase) decrease in accrued interest receivable 184 (184) 0
Increase (decrease) in accrued expenses (4,500) 4,500 0
Increase in accrued expenses - related party 160 4,000 4,160
---------------- -------------- ------------------
Net cash used by development activities (7,705) (182) (7,887)
---------------- -------------- ------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Increase in issuance of loan receivable 0 (10,000) (10,000)
Repayment of loan receivable 10,000 0 10,000
---------------- -------------- ------------------
Net cash used by investing activities 10,000 (10,000) 0
---------------- -------------- ------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 20,175 20,175
---------------- -------------- ------------------
Net cash provided by financing activities 0 20,175 20,175
---------------- -------------- ------------------
Net increase in cash 2,295 9,993 12,288
CASH, beginning of period 9,993 0 0
---------------- -------------- ------------------
CASH, end of period $ 12,288 $ 9,993 $ 12,288
================ ============== ==================
</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
(1) Summary of Significant Accounting Principles
The Company 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.
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. 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 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, 2000. The loan principal and accrued interest
amounting to $251 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. The
Company had 2,054,000 and 0 shares of common and preferred stock issued
and outstanding, respectively, at February 29, 2000. The Company, on
May 20, 1998, issued 1,650,500 restricted 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 $12,200,
expiring $8,700 and $3,500 at February 28, 2019 and 2020.
The amount recorded as deferred tax assets as of February 29, 2000 is
$1,800, which represents the amount of tax benefit of the loss
carryforward. The Company has established a 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 $12,200 for the period from May 20, 1998
(Inception) through February 29, 2000. 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.
As of February 29, 2000, the Company owed legal counsel for services
performed in the amount of $3,160, 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.
During the period ended February 28, 1999, the Company incurred certain
legal and consulting fees, from related parties, in the amount of
$4,165. Professional fees rendered by the Company's legal counsel and
shareholders amounted to $3,000 and are presented in Professional fees
- related party. Consulting fees rendered by the Company's officers,
Directors and shareholders amounted to $1,165 and are presented in
Consulting fees - related party.
F-8
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
(a) Set forth below are the names, ages, positions, with the Company
and business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
------------ ---- ----------------------------------
Sam Peroulas 34 President, Secretary, Chief Executive Officer & Director
All 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. The officers and
directors will devote such time and effort to the business and affairs of the
Company as may be necessary to perform their responsibilities as executive
officers and/or directors of the Company.
Family Relationships
There are no family relationships between or among the executive
officers and directors 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
No Director, Officer, Beneficial Owner of more than ten percent (10%)
of any class of equity securities of the Company failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act during the most
recent fiscal year or prior fiscal years.
23
<PAGE>
Item 10. Executive Compensation
Name Year Annual Annual Annual LT Comp LT LTIP All
and Post Comp Comp Comp Rest Comp Payouts Other
Salary Bonus Other Stock Options (1)
(1) ($)
--------- ---- ------ ----- ------ ------ ------- ------- -------
Sam 1999 $0 (2)
Peroulas,
President, 2000 $0
Secretary,
Chief
Executive
Officer &
Director
(1) All other compensation includes certain health and life insurance benefits
paid by the Company on behalf of its employees.
(2) 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 III, Item 11.
"Security Ownership of Certain Beneficial Owners and Management"; and Part
III, Item 12. "Certain Relationships and Related Transactions".
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 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of February 29, 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 percent (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 share of Common Stock
beneficially owned.
24
<PAGE>
Name and Address of Title of Amount and Nature of Percent of
Beneficial Owner Class Beneficial Owner Class
------------------------- -------- -------------------- -----------
Sam Peroulas (2)(3) Common 1,650,500 80.35%
1506 Briarhill Lane NE
Atlanta, Georgia 30324
Mintmire & Associates (4) Common 114,500 5.6%
265 Sunrise Avenue
Suite 204
Palm Beach, FL 33480
All Executive
Officers, Directors Common 1,650,500 80.35%
-------------------
(1) Based upon 2,054,000 shares of the Company's Common Stock issued and
outstanding as of February 29, 2000.
(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 III, Item 12. "Certain Relationships and Related
Transactions".
(4) Counsel to the Company indirectly owns 114,500 shares of the Company through
the beneficial ownership of the Common Stock of another company that has
invested in the Company.
There are no arrangements which may result in the change of control of
the Company.
Item 12. 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.
In May, June and September 1998, the Company sold 403,500 shares of its
Common Stock to nineteen (19) investors for a total of $20,175. These shares
included a total of 114,500 shares to Mintmire & Associates (Counsel to the
Company) through the 100% sole ownership of the common stock of another company
that has invested in the Company. For such offering, the Company relied upon
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.
25
<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
(a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as
described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Exhibit Name
----------- ---------------------
3(i).1 (1) Articles of Incorporation of Orange Productions, Inc.,
effective May 20, 1998
3(ii).1 (1) Bylaws of Orange Productions, Inc.
27.1 * Financial Data Schedule
-----------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
* Filed herewith
(b) No Reports on Form 8-K were filed during the last fiscal year ended February
29, 2000, covered by this Annual Report on Form 10-KSB.
26
<PAGE>
SIGNATURES
In accordance with Section 13 and 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Orange Productions, Inc.
(Registrant)
Date: July 24, 2000 By:/s/ Sam Peroulas
------------------------
Sam Peroulas
President, Secretary,
Chief Executive Officer & Director
Pursuant to the requirements of the Exchange Act, this report has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
/s/Sam Peroulas
----------------- President, Secretary, Chief Executive 7/24/00
Sam Peroulas Officer and Director
27
