UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Amendment No. 1)
[ x ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______________
Commission File No. ___________
ORIGIN INVESTMENT GROUP, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 36-4286069
------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
980 North Michigan Avenue, Suite 1400, Chicago, Illinois 60611
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(312) 988-4836
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
has been required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
The registrant has 4,121,390 shares of common stock outstanding as of June
6, 2000.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
MARCH 31, 2000 DECEMBER 31, 1999
(Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents................................... $ 13,869 $ 908
Advances to Officer for business expenses................... $ - $ 12,103
Miscellaneous receivable.................................... $ - $ 4,250
Prepaid Expense............................................. $ - $ 25,000
Other....................................................... $ - $ 8,550
--------------- ---------------
Total Current Assets $ 13,869 $ 50,811
Restricted Cash $ 638,763 $ -
Property and Equipment:
Office Equipment............................................ $ 4,211 $ 4,211
Less: accumulated depreciation.............................. 789 389
--------------- ---------------
Remaining Balance:..................................... $ 3,422 $ 3,882
Total Assets: $ 656,054 $ 54,633
--------------- ---------------
--------------- ---------------
LIABILITIES
Current Liabilities:
Due to Investors............................................ $ 882,513 $ -
Accounts Payable............................................ $ 98,703 $ 58,062
Total Current Liabilities $ 98,703 $ 58,062
--------------- ---------------
STOCKHOLDERS' EQUITY
Preferred Stock
$.001 par value, 5,000,000 authorized
none issued and outstanding................................. $ - $ -
Common Stock
$.001 par value, 50,000,000 shares
authorized, 4,121,390 issued and outstanding................ $ 4,121 $ 4,000
Paid in capital.................................................. $ 598,877 $ 396,000
Less: Subscription receivable................................... (198,000) $ (198,000)
Deficit accumulated during development stage..................... (727,160) $ (205,429)
Total Stockholders' Equity $ (325,162) $ (3,429)
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 656,054 $ 54,633
--------------- ---------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS
FROM DATE OF
INCEPTION
(APRIL 6,2000) THREE MONTHS
THROUGH ENDED
MARCH 31, 2000 MARCH 31, 2000
--------------- ---------------
<S> <C> <C>
Operating Expenses
Professional Fees.......................................... $ 213,593 $ 104,151
Travel and Entertainment................................... $ 130,565 $ 98,910
Office Rent................................................ $ 43,615 $ 20,608
Payments to Officers/Directors............................. $ 47,369 $ 47,369
Other...................................................... $ 86,070 $ 50,804
--------------- ---------------
TOTAL OPERATING EXPENSES $ 521,212 $ 321,842
OTHER EXPENSES, net............................................. $ 206,059 $ 200,000
Interest Income $ 111 $ 111
--------------- ---------------
NET (loss) $ (727,160) $ (521,731)
--------------- ---------------
--------------- ---------------
Net (LOSS) per common share- BASIC AND DILUTED $ (.05) $ (.05)
Weighted Average Common Shares Outstanding $ 2,777,357 $ 2,777,357
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY DEFICIENCY
For the Period Ending March 31, 2000
<TABLE>
Deficit
Accumulated
Common Stock During the
-------------------- Paid-In Development Subscription
Shares Amount Capital Stage Receivable Total
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Shares of
Common Stock 121,3900 $ 199,998 $ 199,998 - $ (198,000) $ 202,000
Net Loss - - - $ (521,731) $ (198,000)
------------------------------------------------------------------------------------------------------------------------------
Balance, at December 31, 1999 121,390 $ 199,998 $ 199,998 $ (521,731) $ (198,000) $ 202,000
See accompanying notes to financial statements
</TABLE>
F-6
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS
FROM DATE OF
INCEPTION
(APRIL 6,2000) THREE MONTHS
THROUGH ENDED
MARCH 31, 2000 MARCH 31, 2000
--------------- ---------------
<S> <C> <C>
Cash provided (applied):
Operating activities:
Net loss................................................... $ (727,160) $ (521,731)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation.......................................... $ 789 $ 400
Decrease in miscellaneous receivable.................. -- 4,250
Decrease in advances to officer....................... -- 12,103
Decrease in prepaid expenses.......................... 2,000 33,550
Increase in accounts payable.......................... 98,703 40,641
TOTAL FROM OPERATING ACTIVITIES $ (627,688) $ (430,787)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment............................... $ (4,211) $ -
--------------- ---------------
Financing activities
Proceeds from Common Stock Issuances $ 401,998 $ 199,998
Increase due to Investors $ 882,513 $ 882,513
Increase in Restricted Cash $ (638,763) $ (638,763)
Proceeds from Common Stock/Series A Preferred Issuances $ 1,284,511 $ 1,082,511
--------------- ---------------
TOTAL FROM FINANCING ACTIVITIES $ 1,284,511 $ 1,082,511
--------------- ---------------
Increase in cash.............................................. $ 13,869 $ 12,961
Cash balance, beginning of period............................. $ - $ 908
Cash balance, end of period................................... $ 13,869 $ 652,631
--------------- ---------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
F-7
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. Origin Investment Group, Inc. ("the Company") was incorporated on
April 6, 1999 and is in the business of venture capital, which is
providing growth capital to emerging companies. The Company has
elected to be regulated as a business development company under the
Investment Company Act of 1940 and will operate as a nondiversified
company. Since its inception, the Company's efforts have been devoted
to raising capital and seeking out companies to acquire. Accordingly,
through the date of these financial statements, the Company is
considered to be in the development stage and the accompanying
financial statements represent those of a development stage
enterprise.
The Company has experienced losses since inception and has negative
cash flows from operations and has a stockholders' equity deficiency.
For the quarter ended March 31, 2000, the Company experienced a net
loss of 521,731.
The Company's ability to continue as a going concern is contingent
upon its ability to raise additional capital. In addition, the
Company's ability to continue as a going concern must be considered in
light of the problems, expenses and complications frequently
encountered by entrance into established markets and the competitive
environment in which the Company operates.
Management is pursuing various sources to raise capital and has
purchase agreements in place to acquire certain companies, contingent
on due diligence and the ability to raise capital when needed or
obtain such on terms satisfactory to the Company, if at all. Failure
to raise capital may result in the Company depleting its available
funds and not being able to fund its investment pursuits.
NOTE 2. The accompanying financial statements for the three months ended
March 31, 2000 have been prepared, without audit, pursuant to the
rules and regulations of the Securities ad Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. The condensed financial statements and these notes should
be read in conjunction with the financial statements of th Company
included in the Company's Annual Report of Form 10-K for the period
from inception (April 6, 1999) through December 31, 1999. The
balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date and condensed.
NOTE 3. The information furnished herein reflects all adjustments
(consisting only of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the interim period. Results of operations
for the three months ended March 31, 2000 are not necessarily
indicative of results to be expected for the entire year.
NOTE 4. RELATED PARTY TRANSACTIONS
During the quarter ended March 31, 2000 the Company paid $18,888 for
legal fees to Rizvi & Associates, LLP, a law firm managed by Mr. Omar
A. Rizvi, in connection with the proposed acquisition of Encore/Sigma.
Mr. Rizvi is an officer and director of the Company and accordingly,
this transaction cannot be construed as occurring at arms length.
NOTE 5. STATUS OF PURCHASE OF ENCORE INVESTMENTS AND SIGMA SOLUTIONS
The Company was not able to raise the requisite amount of capital
necessary to close the purchase of stock of Encore Investments, Inc.
and Sigma Solutions, Inc. as outlined in the agreement dated December
31, 1999. The closing was to occur on or before May 16, 2000. Thus, at
the present time, the Company and Encore Investments, Inc. and Sigma
Solutions, Inc. are currently no longer contractually obligated to
consummate a purchase and sale of Encore Investments, Inc. and Sigma
Solutions, Inc. stock. The Company has been in discussions with the
principals of Encore/Sigma and the principals have agreed to revisit
the purchase opportunity upon the Company's ability to secure funds
necessary to purchase Encore Investments, Inc. and Sigma Solutions,
Inc. stock. Accordingly, the break up fee paid to the principals of
Encore/Sigma by the Company in the amount of $200,000 has been
forfeited by the Company.
NOTE 6. EQUITY TRANSACTIONS
The Company sold 100,000 shares of common stock to an investor on
January 18, 2000 for $100,000 and sold 21,390 shares of common stock
for $99,998 to another on February 12, 2000. The price of the common
stock for the January 19, 2000 sale was based on the Company's
reasonable estimate as to the market value of the stock, as the
Company's stock had not commenced trading as of that date. This
estimate had no basis on the net asset value of the stock, which was
considerably lower, nor was any other quantifiable factor used to
determine the stock price offered to the accredited investor at the
time. The price of the common stock for the February 12, 2000 sales
was equal to the closing bid price of the common stock on the date of
sale. These investors were persons personally known to Origin
officers. Each of the sales was conducted according to the
requirements of Regulation E, exempting the shares issued from
registration.
The Company sold 50,000 shares of common stock on April 14, 2000 to an
investor personally known to Origin officers. These shares are
restricted from resale pursuant to Rule 144 of the Securities Act of
1933. On May 8, 2000 the Company sold 142,000 Units to several
accredited investors at an aggregate price of $106,500 or $0.75 per
Unit. Each Unit offered is comprised of one common stock and one Class
A common stock purchase warrant which is redeemable for one common
stock upon the payment of $0.75 to the Company by the warrant holder.
On May 30, 2000 the Company converted each Class 2 Series A
Convertible Preferred Stock and restricted stock award issued in
connection therewith into 383.33 Units. Each Class 2 Series A
Convertible Preferred shareholder agreed to the conversion. Each Unit
offered to the Class 2 Series A shareholder was comprised of one
common stock and one Class A Common Stock Purchase Warrant where each
Class A Common Stock Purchase Warrant is redeemable for one common
stock upon the payment of $1.50 to the Company by the warrant holder.
ORIGIN INVESTMENT GROUP, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Except for historical information, the following discussion of our
financial condition and results of operations contains forward looking
statements based on current expectations that involve certain risks and
uncertainties. Our actual results could differ materially from those set forth
in these forward-looking statements as a result of a number of factors. Unless
specified otherwise, the terms, "we", "us", "our", "the company", and "Origin"
refer to Origin Investment Group, Inc.
Overview
We are a business development company incorporated in the State of Maryland
on April 6, 1999. We are in the start up stage and we have not had any revenues
to date and we have not made any investments. Thus far, our operations have
primarily been limited to:
A) completing our due diligence investigation and financial audit of two
eligible portfolio companies that we have identified: Encore
Investment, Inc. and Sigma Solutions, Inc.;
B) initiating discussions with several e-business solutions companies,
systems integrators and value-added resellers for possible future
investment and to become our future eligible portfolio companies; and
C) negotiating with several venture capital funds, investment funds,
accredited investor groups and individual accredited investors in
connection with raising capital through the sale of our equity
securities.
Our financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
We have experienced a loss since inception and have negative cash flows
from operations and have a stockholder's equity deficiency. For the period ended
March 31, 2000, we experienced a net loss of $521,731.
Our ability to continue as a going concern is contingent upon our ability
to raise additional capital. In addition, the ability to continue as a going
concern must be considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the competitive
environment in which we operate.
The report of the Company's Independent Certified Public Accountants'
includes an explanatory paragraph expressing substantial doubt about the our
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from our possible inability to continue as a going concern.
Liquidity and Capital Resources
Since our inception, we have funded our operations solely through payments
received from the sale of our equity securities. Our current liquidity and
capital resources are contingent on our ability to continue to fund our
operations through the sale of our equity securities. If we are unsuccessful in
continuing to raise capital through the sale of our securities, we will have
difficulty in meeting our short term obligations and may cease to continue as a
going concern. Our ability to sell our equity securities to fund operations and
to make investments within identified eligible portfolio companies, in large
part, is contingent upon the depth and liquidity of our secondary market of our
common stock. Any failure to raise sufficient capital pursuant to the current or
future Origin offerings could require us to substantially curtail our
portfolio-investment acquisition efforts in general, and could require us to
cease operations.
Our cash flow requirements have continuously exceeded our capital resources
during the quarter, requiring us to issue additional equity securities for sale
to meet our short term obligations. We anticipate operating at such a deficit
for the next several months until we are able to secure additional working
capital.
At the time of filing this Amendment to our quarterly report, we had
rescinded the sale of our Series A Convertible Preferred Stock and had issued
refund checks to our Class 1 Series A Convertible Preferred Shareholders. The
Class 1 shareholders were those Series A holders which had elected to have their
funds placed within an escrow account. The refund amount consisted of the
principal amount each Class 1 Series A holder had originally invested plus a pro
rata share of the interest which had accumulated within the Escrow Account. In
addition, on May 30, 2000 we offered to convert each Class 2 Series A
Convertible Preferred shareholders Series A shares into Units, where each Unit
was comprised of one common stock and one class A common stock purchase warrant.
Each original Class 2 Series A Convertible Preferred Shareholder had received
one Series A Convertible Preferred share for every $287.50 invested and he/she
also received an additional restricted common stock for every $10 they invested
by placing their funds "at risk" and not within the escrow account afforded to
the Class 1 Series A Shareholders. Each Class 2 Series A Convertible Preferred
shareholder of the Company agreed to convert their Series A Convertible
Preferred Shares and award of restricted stock in connection therewith in
exchange for receiving Units from the Company priced at $0.75 per Unit. Each
Unit is comprised of one common stock and one Class A common stock purchase
warrant which is redeemable for one common stock upon the payment of $1.50 to
the Company.
On April 14, 2000 we sold 50,000 shares of restricted common stock to an
accredited investor who was also personally known to Origin officers. These
shares are restricted from resale pursuant to Rule 144 of the Securities Act of
1933. In addition the Company sold 142,000 Units to several accredited investors
on May 8, 2000 for an aggregate of $106,500, or $0.75 per Unit. Each Unit
offered to these investors is comprised of one common stock and one Class A
common stock purchase warrant which is redeemable for one common stock upon the
payment of $0.75 to the Company.
During the quarter ended March 31, 2000 the Company paid $18,888 in legal
fees to a law firm which is managed by Mr. Omar A. Rizvi, an officer and
director, in connection with legal services performed on behalf of the Company
with respect to the Encore/Sigma transaction. We also paid Holleb & Coff, LLP, a
law firm located in Chicago, Illinois a retainer in the amount of $40,000 in
connection with corporate legal services including preparation of our annual
report for fiscal year 1999 and in connection with the Encore/Sigma transaction.
Results of Operations
Our operations have been limited to obtaining additional capital through
the sale of our equity securities and negotiating with additional potential
eligible portfolio companies for possible investment. To date we have had
negative cash flows and anticipate continuing to do so in the near future. We
anticipate that upon completion of an investment within an eligible portfolio
company, our operational costs will increase substanially in light of the need
to hire additional personnel, including a Chief Financial Officer and additional
support staff within our Chicago offices.
Our strategy and plan for the remainder of this fiscal year is to raise
additional debt and equity capital to fund our current operations and invest to
acquire eighty percent of the issued and outstanding capital stock of Encore
Investments, Inc. and eighty percent of the issued and outstanding capital of
Sigma Solutions, Inc. In addition, we anticipate raising additional equity
capital for making additional investments in other eligible portfolio companies
that we have identified and in others that come to our attention later this
year. Our current investment strategy is to create a profitable e-business
solutions company that provides its customers with web/e-commerce applications,
IT consulting and solutions and other value added services and which utilizes
ASP delivery and co-location hosting strategies to provide such applications and
services. We intend on creating such an eligible portfolio company by
consolidating one or more systems integrators, value added resellers and a
cutting edge e-business solutions companies that we have identified and will
identify over the next several months.
SPECIAL NOTICE REGARDING FORWARD LOOKING STATEMENTS
This Form 10-Q, the quarterly report, and certain information provided
periodically in writing or orally by the Company's Officers or its agents
contains statements which constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act, as amended and Section 21E of the
Securities Exchange Act of 1934. The words "expect," "believe," "plan,"
"intend," "estimate", "anticipate", "strategy", "goal" and similar expressions
and variations thereof if used are intended to specifically identify
forward-looking statements. Those statements may appear in a number of places in
this Form 10-Q and in other places, particularly, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things:
(i) the successful completion of investment(s) within one or more eligible
portfolio companies that we have identified, including but not limited to,
Encore Investments, Inc. and Sigma Solutions, Inc.; (ii) our liquidity and
capital resources; and (iii) our future performance and operating results.
Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following:
(i) any adverse effect or limitations caused by any governmental
regulations or actions; (ii) any increased competition in our business of
providing venture capital to eligible portfolio companies; (iii) successfully
identifying, negotiating, structuring and making investments within one or more
eligible portfolio companies; (iv) our ability to raise necessary investment
capital within the time frame agreed to between us and the principals of an
eligible portfolio company in order to successfully invest in such eligible
portfolio company; (v) the continued relationship with and success of the
management and owners of an eligible portfolio company after our investment; and
(vi) the continued performance of our eligible portfolio companies with
respect to their operations, including, but not limited to:
a. continued employment of key personnel, hiring of qualified additional
personnel;
b. the eligible portfolio company's mitigation of excessive and
extraordinary costs, and achieving projected profits and additional
customers for their growth.
c. Any other factors which would otherwise impede our eligible portfolio
company in achieving its performance goals upon which we based a
favorable return on our investment.
We undertake no obligation to publicly update or revise the forward looking
statements made in this Form 10-Q or annual report to reflect events or
circumstances after the date of this Form 10-Q and annual report or to reflect
the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have no securities that are subject to interest rate fluctuations,
foreign currency risk, commodity price or any other relevant market risks during
the period covered by this Quarterly Report. We have not entered into any
hedging transactions or acquired any derivative instruments during the period
covered by this Quarterly Report.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
1. Exhibits
Exhibit Description
3.1 Articles of Incorporation of Origin filed on April 6, 1999
(incorporated by reference to Exhibit 3(i) to Form 10 filed by Origin
on August 16, 1999)
3.2 Bylaws of Origin. (Incorporated by reference to Exhibit 3(ii) to Form
10 filed by Origin on August 16, 1999)
4.1 Offering Circular for Series A Convertible Preferred Stock Offering
dated February 14, 2000. (Incorporated by reference to Exhibit A(1) to
Form 1-E filed by Origin on February 15, 2000)
27 Financial Data Schedule.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf on June 28,
2000 by the undersigned thereunto duly authorized.
ORIGIN INVESTMENT GROUP, INC.
/s/ OMAR A. RIZVI, ESQ., LL.M.
---------------------------------
Omar A. Rizvi, Esq., LL.M.
President, Chairman of the Board of Directors
/s/ SCOTT K. LINDENBERGER
----------------------------------
Scott K. Lindenberger
Corporate Secretary, Vice President - Operations
