U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended: November 30, 2000
Commission file no.: 0-26475
ORANGE PRODUCTIONS, INC.
------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0790763
------------------------------------ -------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 113 33401
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(Address of principal executive offices) (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 registered
None None
----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
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(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (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
--- ---
As of November 30, 1999, there were 2,054,000 shares of voting stock
of the registrant issued and outstanding.
<PAGE>
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheets............................................................F-2
Statements of Operations..................................................F-3
Statements of Stockholders' Equity........................................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements.............................................F-6
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Balance Sheets
November February 29,
30, 2000
2000
---------------------- -----------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 5,650 $ 12,288
---------------------- -----------------------
Total current assets 5,650 12,288
---------------------- -----------------------
Total Assets $ 5,650 $ 12,288
====================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 0 $ 0
Accrued expenses - related party 4,160 4,160
---------------------- -----------------------
Total current liabilities 4,160 4,160
---------------------- -----------------------
Total Liabilities 4,160 4,160
---------------------- -----------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized 10,000,000
shares: 0 0
none issued
Common stock, $0.0001 par value, authorized 50,000,000
shares: 206 206
2,054,000 issued and outstanding
Additional paid-in capital 20,134 20,134
Deficit accumulated during the development stage (18,850) (12,212)
---------------------- -----------------------
Total Stockholders' Equity 1,490 8,128
---------------------- -----------------------
Total Liabilities and Stockholders' Equity $ 5,650 $ 12,288
====================== =======================
</TABLE>
The accompanying notes are an integral part of
the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
Period from
Three Months Ended Nine Months Ended May 20, 1998
November 30, November 30, (Inception)
--------------------------- ---------------------------- through
2000 1999 2000 1999 November 30, 2000
------------- ------------ ------------ -------------- -------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
------------- ------------ ------------ -------------- -------------------
Expenses
General and administrative 80 75 388 459 1,109
Consulting fees - related party 0 0 0 0 1,165
Professional fees 1,000 1,653 6,250 2,918 13,667
Professional fees - related party 0 0 0 0 3,160
------------- ------------ ------------ -------------- -------------------
Total expenses 1,080 1,728 6,638 3,377 19,101
------------- ------------ ------------ -------------- -------------------
Loss from operations (1,080) (1,728) (6,638) (3,377) (19,101)
------------- ------------ ------------ -------------- -------------------
Other income (expense)
Interest income 0 0 0 67 251
------------- ------------ ------------ -------------- -------------------
Net loss $ (1,080) $ (1,728) $ (6,638) $ (3,310) $ (18,850)
============= ============ ============ ============== ===================
Net loss per weighted average share, basic $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============= ============ ============ ==============
Weighted average number of shares 2,054,000 2,054,000 2,054,000 2,054,000
============= ============ ============ ==============
</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 Stockholders'
Equity Period from May 20, 1998
(Inception) through November 30, 2000
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
Year Ended February 28, 1999:
----------------------------
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
Year Ended February 29, 2000:
----------------------------
Net loss 0 0 0 0 (3,549) (3,549)
------------ -------------- ------------ -------------- -------------- ---------------
BALANCE, February 29, 2000 2,054,000 0 206 20,134 (12,212) 8,128
Nine Months Ended November 30, 2000:
-----------------------------------
(unaudited)
Net loss 0 0 0 0 (6,638) (6,638)
------------ -------------- ------------ -------------- -------------- ---------------
ENDING BALANCE, November 30, 2000
(unaudited) 2,054,000 $ 0 $ 206 $ 20,134 $ (18,850)$ 1,490
============ ============== ============ ============== ============== ===============
</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 Cash Flows
Nine Months Ended November 30,
(Unaudited)
Period from
May 20, 1998
(Inception)
through
2000 1999 November 30, 2000
------------------- ----------------- -------------------------
<S> <C> <C> <C>
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (6,638) $ (3,309)$ (18,850)
Adjustments to reconcile net loss to net cash used by
development activities
Stock issued in lieu of cash - related party 0 0 165
Changes in assets and liabilities
(Increase) decrease in accrued interest receivable 0 184 0
Increase (decrease) in accrued expenses 0 (4,500) 0
Increase in accrued expenses - related party 0 0 4,160
------------------- ----------------- -------------------------
Net cash used by development activities (6,638) (7,625) (14,525)
------------------- ----------------- -------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Increase in issuance of loan receivable 0 0 (10,000)
Repayment of loan receivable 0 10,000 10,000
------------------- ----------------- -------------------------
Net cash used by investing activities 0 10,000 0
------------------- ----------------- -------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 0 20,175
------------------- ----------------- -------------------------
Net cash provided by financing activities 0 0 20,175
------------------- ----------------- -------------------------
Net increase (decrease) in cash (6,638) 2,375 5,650
CASH, beginning of period 12,288 9,993 0
------------------- ----------------- -------------------------
CASH, end of period $ 5,650 $ 12,368 $ 5,650
=================== ================= =========================
</TABLE>
The accompanying notes are an integral part of
the financial statements.
F-5
<PAGE>
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months ended
November 30, 2000 and 1999 is unaudited)
(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.
c) Interim financial information The financial statements for the
nine months ended November 30, 2000 and 1999 are unaudited and
include all adjustments which in the opinion of management are
necessary for fair presentation, and such adjustments are of a normal
and recurring nature. The results for the nine months are not
indicative of a full year results.
(2) 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 November 30, 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.
(3) 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 $18,800, expiring $8,700, $3,500 and $6,600 at February
28, 2019, 2020 and 2021.
The amount recorded as deferred tax assets as of November 30, 2000 is
$2,800, 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-6
<PAGE>
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $18,800 for the period from May 20,
1998 (Inception) through November 30, 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.
(5) 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. Also, Counsel's adult son,
Vice President and Director of the Company, directly owns 49,500
shares in the Company. The Company's President, Secretary, Treasurer
and Director directly owns a 78% interest in the Company, consisting
of 1,601,000 shares
As of November 30, 2000, the Company owed legal counsel for services
performed in the amount of $3,160. These amounts are presented in
Accrued expenses - related party.
F-7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized significant revenues since its inception due to the fact that
it has generally has been inactive, having conducted no business operations
except organizational and fund raising activities since its inception. As a
result, from inception (May 20, 1998) through November 30, 2000, the Company had
interest income of $251.00 from a loan to a related party. Cumulative operating
expenses as of November 30, 2000 were $19,101.00. Such operating expenses are
primarily made up of an initial start up cost consisting of legal, accounting
and administrative costs. 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.
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.
The Company will, at least initially, be dependent upon Mr. Peroulas
to develop the client base with whom to arrange funding. Mr. Peroulas has
extensive experience in the business and has managed his own 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.
<PAGE>
Plan of Operation
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 filed a Form S-3 Registration Statement publicly
registering 2,000,000 shares of of Common Stock pursuant to Rule 415 under the
Securities Act of 1933 on November 1, 2000. The Form S -3 Registration Statement
was filed with the SEC in accordance with the '33 Act and became effective on
November 20, 2000. The proceeds of the offering are expected to be used to
continue business operations and expand the scope of the business with
particular emphasis on enhancing the Company's credit lines.
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. Mr. Peroulas will begin by finding clients for the
Company. 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.
For the period from May 20, 1998 through November 30, 2000, the
Company had a cumulative loss from operations aggregating $19,101.00.
Financial Condition, Capital Resources and Liquidity
At November 30, 2000, the Company had assets totaling $5,650.00 and
liabilities of $4,160.00 attributable to accrued expenses. 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 the exemption from registration in connection
with each of the offerings provided under Section 3(b) of the Act and Rule 504
of Regulation D promulgated thereunder, Section 10-5-9(13) of the Georgia Code
and Section 517.061(11) of the Florida Code.
The Company has been seeking debt or equity financing in the amount
of $1,000,000. In October 2000, the Company executed a Loan Agreement with
Capital Consultants, Inc. ("Capital "), as Lender, whereby Capital agreed to
make loans to the Company of up to $1,000,000 in installments during the period
commencing with the effective date of the Form S-3 registration statement and
ending on December 31, 2003 (the "Capital Loan Commitment"). Under the terms of
the Capital Loan Commitment, each installment is supported by a convertible note
and security agreement. Further, 2,000,000 shares are to be held by Capital in
escrow for the potential conversion of the notes. The Company granted Capital
registration rights and was obligated to file a Form S-3 within sixty (60) days
of the agreement covering initially 2,000,000 shares of its Common Stock.
<PAGE>
The S-3 registration statement became effective on November 20, 2000. The
issuance of the securities was made pursuant to Regulation D of the Act. The
Capital Loan Commitment, once interest payments begin to accrue, will increase
both the short or long term debt of the Company. With the Capital Loan
Commitment it will incur future interest expenses. The Capital Loan Commitment,
if fully converted, will dilute the interest of existing shareholders and in the
event additional equity is raised, management may be required to dilute the
interest of existing shareholders further or forgo a substantial interest in
revenues, if any. In the event that the Company is successful in securing
additional debt financing, the amount of such financing, depending upon its
terms, would increase either the short or long term debt of the Company or both.
The ability of the Company to continue as a going concern is
dependent upon the availability of obtaining additional capital and financing
from such third parties.
Net Operating Losses
The Company has net operating loss carryforwards of $18,800.00,
expiring $8,700, $3,500 and $6,600 at February 28, 2019, 2020 and 2021. Until
the Company's current operations begin to produce earnings, it is unclear
whether the Company can utilize such carryforwards.
Year 2000 Compliance
The Company's information technology for Year 2000 is currently in
full compliance. The Company does not anticipate any material disruption in its
operations as a result of any failure by the Company's suppliers to be in
compliance.
Forward-Looking Statements
This Form 10-QSB 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-QSB 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),
finding suitable merger or acquisition candidates, 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-QSB 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.
<PAGE>
PART II
Item 1. 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 2. Changes in Securities and Use of Proceeds
The Company filed a Form S-3 Registration Statement publicly
registering 2,000,000 shares of of Common Stock pursuant to Rule 415 under the
Securities Act of 1933 on November 1, 2000. The Form S -3 Registration Statement
was filed with the SEC in accordance with the '33 Act and became effective on
November 20, 2000. The proceeds of the offering are expected to be used to
continue business operations and expand the scope of the business with
particular emphasis on enhancing the Company's credit lines.
The Company has been seeking debt or equity financing in the amount
of $1,000,000. In October 2000, the Company executed a Loan Agreement with
Capital Consultants, Inc. ("Capital "), as Lender, whereby Capital agreed to
make loans to the Company of up to $1,000,000 in installments during the period
commencing with the effective date of the Form S-3 registration statement and
ending on December 31, 2003 (the "Capital Loan Commitment"). Under the terms of
the Capital Loan Commitment, each installment is supported by a convertible note
and security agreement. Further, 2,000,000 shares are to be held by Capital in
escrow for the potential conversion of the notes. The Company granted Capital
registration rights and was obligated to file a Form S-3 within sixty (60) days
of the agreement covering initially 2,000,000 shares of its Common Stock. The
issuance of the securities was made pursuant to Regulation D of the Act. The
Capital Loan Commitment, once interest payments begin to accrue, will increase
both the short or long term debt of the Company. With the Capital Loan
Commitment it will incur future interest expenses. The Capital Loan Commitment,
if fully converted, will dilute the interest of existing shareholders and in the
event additional equity is raised, management may be required to dilute the
interest of existing shareholders further or forgo a substantial interest in
revenues, if any. In the event that the Company is successful in securing
additional debt financing, the amount of such financing, depending upon its
terms, would increase either the short or long term debt of the Company or both.
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending November 30, 2000,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None
<PAGE>
Item 6. 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. Description
----------- ----------------------------------------------------
3(i).1 Articles of Incorporation of OPI effective May 20, 1998(1)
3(ii).1 Bylaws of OPI(1)
----------------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
(b) No Reports on Form 8-K were filed during the quarter ended November 30,
2000.
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 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: January 15, 2000 By: /s/ Sam Peroulas
--------------------------------------
Sam Peroulas, President, Secretary,
Chief Executive Officer & Director
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
January 15, 2000 By: /s/ Sam Peroulas
---------------------------
Sam Peroulas President, Secretary,
Chief Executive
Officer & Director