SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ORANGE PRODUCTIONS, INC.
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(Exact name of registrant as specified in its charter)
Florida 65-00844436
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 113
West Palm Beach, FL 33401
(561) 832-5696
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(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Copies of all communications to:
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, Florida 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(a) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment, filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed
Amount to be Aggregate Price Maximum Amount of
Title of Shares to registered per Share Aggregate Registration
be Registered (1) (2) (3) Offering Price Fee
- ------------------- ------------ --------------- -------------- -------------
Common Stock, 2,000,000 $0.60 $1,200,000 $316.80
$.0001 par value
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(1) Common Stock issuable upon conversion of the Issuer's notes held by Selling
Shareholders.
(2) The number of shares initially to be registered for resale by the Selling
Shareholders is contained in a registration rights agreements covering the
notes issued.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the securities act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
The information in the preliminary prospectus in Part I hereof is not
complete and may be changed. The Selling Shareholders may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This preliminary prospectus is not an offer to
sell these securities and is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
Subject to completion. Dated November 30, 2000.
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PART I
PROSPECTUS
2,000,000 Shares
ORANGE PRODUCTIONS, INC.
Common Stock
The 2,000,000 shares of Orange Productions, Inc. ("OPI" or the
"Company") Common Stock covered by this prospectus are all being offered for the
account of the Selling Shareholders listed on page 26. OPI will not receive any
of the proceeds from any sales of these securities.
Each of the Selling Shareholders may offer and sell from time to time
shares of OPI Common Stock directly or through broker-dealers or underwriters
who may act solely as agents, or who may acquire shares as principals. The price
to the public and the net proceeds to the Selling Shareholders from the sale of
the shares will depend on the nature and timing of the sales and therefore will
not be known until the sales are actually made.
OPI Common Stock is not quoted on the OTC BB but application therefore
is being made prior to or upon effectiveness.
See "Risk Factors" on page 19 to read about factors you should consider
before buying shares of the Company's Common Stock.
The Company's principal executive offices are located at 222 Lakeview
Avenue, Suite 113, West Palm Beach, FL 33401, its telephone number is (561)
832-5696 and its facsimile number is (561) 659-5371.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus is dated October 30, 2000.
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PROSPECTUS SUMMARY
This summary highlights information incorporated by reference or
contained elsewhere in this prospectus. It is not complete and may not contain
all of the information that you should consider before investing in our
securities. You should read the entire prospectus carefully, including the "Risk
Factors" section, and you must consult the more detailed financial statements,
and notes to the financial statements, incorporated by reference to this
prospectus.
This prospectus and the documents incorporated by reference contain
certain forward-looking statements. These statements can be identified by the
use of forward-looking terminology such as "may", "will", "could", "expect",
"anticipate", "estimate", "continue", "plan" or other similar words. These
statements discuss future expectations, contain projections of results of
operations or of financial condition or state other forward-looking information.
Examples of forward-looking statements can be found in the discussion set forth
under "Management Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-KSB for the fiscal year ended
February 28, 2000, and subsequent filings, incorporated in this prospectus by
reference. Such statements are based on current expectations that involve a
number of uncertainties including those set forth in the risk factors below.
When considering forward-looking statements, you should keep in mind that the
risk factors noted below and other factors noted throughout this prospectus or
incorporated by reference could cause our actual results to differ significantly
from those contained in any forward-looking statement.
The Company
Business Development.
Orange Productions, Inc. (hereinafter referred to as the "Company" or
"OPI") was organized under the laws of the State of Florida on May 20, 1998. The
Company was organized by Mr. Sam Peroulas, the executive officer and director of
the Company, for the purpose of providing graphic arts services for use in
educational textbooks, medical journals, anatomical charts, patient education
materials and in the courtroom to clarify medical evidence for a jury. It may
also be used in other settings such as advertisements. The Company's executive
offices are presently located at 222 Lakeview Avenue, Suite 113, West Palm
Beach, Florida 33401 and its telephone number is (404) 321-1192.
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
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and Consultants"; Part I, Item 4. "Security Ownership of Certain Beneficial
Owners and Management"; Part 1, Item 6. "Executive Compensation - Employee
Contracts and Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
In May 1998, the Company sold 403,500 shares of its Common Stock to
nineteen (19) investors for a total of $20,175. For such offering, the Company
relied upon Section 3(b) of the Act, Rule 504 of Regulation D promulgated
thereunder ("Rule 504"), Section 10-5-9(13) of the Georgia Code and Section
517.061(11) of the Florida Code. See Part II, Item 4. "Recent Sales of
Unregistered Securities."
Business of Issuer
General
Since its inception, the Company has conducted no business operations
except for organizational activities and an offering of its Common Stock
pursuant to which it has received gross offering proceeds in the amount of
$20,175. Further, the Company has had no employees since its organization. It is
anticipated that the Company's sole executive officer and director will receive
a reasonable salary for services as executive officer at such time as the
Company commences business operations. (See Part I, Item 6. "Executive
Compensation.") This individual will devote such time and effort as may be
necessary to participate in the day-to-day management of the Company. (See Part
I, Item 5. "Directors, Executive Officers, Promoters and Control Persons -
Executive Officers and Directors.")
The following discussion of the graphic arts services market, as it
relates to the Company's business objectives, is of course pertinent only if the
Company is successful in obtaining sufficient debt and/or equity financing to
commence operations and, in addition thereto, is able to generate significant
profits from operations (which are not expected in the foreseeable future)
and/or additional financing to continue in business and/or fund the anticipated
growth, assuming OPI's proposed business is successful. There can be no
assurance such financing can be obtained or that the Company's proposed business
will be successful.(See Part I. Item 1.-" ( b) Business of Issuer - Risk
Factors" )
The Company will create high quality images for a wide variety of
applications. It intends to specialize however in medical illustration. The
Company expects that its artwork will be used in educational textbooks, medical
journals, anatomical charts, patient education materials and in the courtroom to
clarify medical evidence for a jury. It may also be used in other settings such
as advertisements.
The Company intends to retain the copyright to the artwork it creates,
and to therefore reuse images in other projects. This will potentially save
consumers the time and expense of regenerating images which the Company has
already been previously hired to create. In fact, after time, the Company hopes
to accumulate a significant library of images previously created by the Company.
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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.
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.
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.
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
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$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 anticipates that it will require $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.
During the first quarter in which the second office location is
operating, the Company will need 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 expectations 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 funds 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. 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
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. 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
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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.
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.
Management
The Company will be largely dependent upon Mr. Peroulas to develop the
client base of the business. Mr. Peroulas has experience in the graphic arts
industry and has managed his own graphic arts business for the last two (2)
years. While Mr. Peroulas has been successful in the past, there can be no
assurance that he will be successful in building the client base necessary for
the successful operation of the Company.
Conflicts of interest may also arise due to corporate opportunities
which present themselves to Mr. Peroulas. It may difficult or even impossible to
determine whether the opportunity arose as a result of Mr. Peroulas's activities
outside the Company or as an officer and director of the Company. At times, Mr.
Peroulas's business activities outside OPI may be considered to compete with the
business of the Company.
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
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any of these techniques will be used or will be successful. The Company intends
to compete, assuming that it is successful in obtaining sufficient financing,
with other companies in its target markets.
The Company anticipates that its initial marketing efforts will be in
the area of direct sales. Good quality presentations and professional follow-up
with consumers will be essential to the 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.
Graphic Arts Services involve the simple printing of stationary to the
major production of highly visible publication such as a magazine and newspaper.
The Company is expected to experience intense competition in the graphic arts
publishing and printing business both on an a consumer market basis and on a
commercial account basis. There are a number of smaller companies as well as
larger established companies that compete for graphic arts services in the
Atlanta, Georgia, market. Many of the larger companies are better capitalized
that the Company and/or have greater personnel resources and technical
expertise. Some of the principal companies in the graphic arts business with
whom the Company can expect to compete include but are not limited to the
following: Western Publishing Company, Inc., Greenwich Work Shop, Haddly House
and Lighthouse Publishing. In view of the Company's extremely limited financial
resources, the Company will be at a significant competitive disadvantage as
compared to the Company's competitors.
Facilities
The Company maintains its office rent free at the residence of Mr. Sam
Peroulas, the sole Officer and Director of the Company. Its mailing address is
222 Lakeview Avenue, Suite 113, West Palm Beach, Florida 33401. Its telephone
number is (404) 321-1192. The Company anticipates that it will have continued
use of this office on a rent-free basis for the foreseeable future and that this
arrangement will be adequate for the Company's needs while it is in the
development stage.
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Assuming that OPI obtains the necessary additional financing and is successful
in implementing its business plan, no assurance of which can be made, the
Company will require its own commercial facility in Atlanta, Georgia. In such
event, management believes that OPI would be able to locate adequate facilities
at reasonable rental rates in Atlanta, Georgia, suitable for its future needs.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized any revenues since its inception. As a result, from inception
May 1998 through August 31, 2000 the Company has realized loss of $18,000.00.
Total Company operations and operating expenses as of August 31, 2000 were
$18,000.00. Such operating expenses are primarily made up of an initial start up
cost consisting of legal, accounting and administrative costs. The Company
proposes to engage in providing graphic arts services to individual and
commercial consumers.
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. The Company has set a goal of $500,000
in business revenues in the next twelve (12) months to satisfy cash requirements
and to justify expansion plans.
Mr. Peroulas, at least initially, will be solely responsible for
developing OPI's business. However, at such time, if ever, as sufficient
operating capital becomes available, management expects to employ additional
staffing and marketing personnel. In addition, the Company expects to
continuously engage in market research in order to monitor new market trends,
seasonality factors and other critical information deemed relevant to OPI's
business.
In addition, at least initially, the Company intends to operate out of
the home of Mr. Peroulas. Thus, it is not anticipated that OPI will lease or
purchase office space in the foreseeable future. OPI may in the future establish
its own facilities and/or acquire equipment if the necessary capital becomes
available.
Financial Condition, Capital Resources and Liquidity
At August 31, 2000, the Company had assets totaling $6,700.00 and
liabilities of $4,160.00 attributable to accrued professional fees and
organizational expenses. Since the Company's inception, it has received
$20,175.00 in cash contributed as consideration for the issuance of shares of
Common Stock.
OPI's working capital is presently minimal and there can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working
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capital or a working capital deficit as a result of current liabilities. The
Company, at inception, issued 1,650,500 shares of the Company's Common Stock to
Mr. Sam Peroulas, executive officer and director of OPI, for services rendered
on behalf of the Company. During May, June & September, 1998, the Company issued
and sold an aggregate of 403,500 shares of Common Stock to Georgia and Florida
residents for cash consideration totaling $20,175.00. No underwriter was
employed in connection with the offering and sale of the shares. The Company
claimed an exemption from registration in connection with each of the offerings
provided under Section 3(b) of the Act, Rule 504, Section 10-5-9(13) of the
Georgia Code and Section 517.061(11) of the Florida Code. Even though management
believes, without assurance, that it will obtain sufficient capital from either
limited revenues or further financing by Mr. Peroulas with which to implement
its business plan in its initial location, the Company is not expected to
continue for an extended period of time in operation without an infusion of
capital. In order to obtain additional equity financing, management may be
required to dilute the interest of existing shareholders or forego a substantial
interest of its revenues, if any. (See Part I, Item 4. "Security Ownership of
Certain Beneficial Owners and Managers;" and Part I, Item 7. "Certain
Relationships and Related Transactions.")
The Company has no potential capital resources from any outside sources
at the current time. In its initial stages, the Company will operate out of the
facility provided by Mr. Peroulas. Mr. Peroulas will begin by finding clients
for the Company. To attract clients, Mr. Peroulas will visit potential clients
in order to determine their business needs. The Company plans to place
advertising in local area newspapers in Atlanta, Georgia to directly solicit
prospective customers. In the event the Company requires additional capital
during this phase, Mr. Peroulas has committed to fund the operation until such
time as additional capital is available.
The ability of the Company to continue as a going concern is dependent
upon its ability to obtain clients who will utilize the Company's services and
whether the Company can attract an adequate number of direct clients.
The Company believes that in order to be able to expand upon its
current operations, it will be necessary to rent offices in Atlanta, Georgia,
hire clerical staff and acquire through purchase or lease computer and office
equipment to maintain accurate financial accounting and client data. The Company
believes that there is adequate and affordable rental space available in
Atlanta, Georgia and sufficiently trained personnel to provide such clerical
services at affordable rates. Further, the Company believes that the type of
equipment necessary for the operation is readily accessible at competitive
rates.
The Company will eventually need to either rent or own computer
equipment and software to expand to new locations. Currently it uses the
equipment and software owned by Mr. Peroulas. Funding to open new locations,
including the cost of equipment, will come from both revenues generated at the
initial location and any further private placement monies raised.
To implement such plan, also during this initial phase, the Company
intends to initiate a self- directed private placement under Rule 506 in order
to raise additional capital. In the event the Company is not successful in
raising such funds and also does not generate significant revenue, the
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Company believes that it will not be able to continue operations for an extended
period of time.
Net Operating Losses
The Company has net operating loss carry-forwards of $17,800.00
expiring beginning at February 28, 2019. The company has a $2,700.00 deferred
tax asset resulting from the loss carry- forwards, for which it has established
a 100% valuation allowance. Until the Company's current operations begin to
produce earnings, it is unclear as to the ability of the Company to utilize such
carry-forwards.
Year 2000 Compliance
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize the date using 00 as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (Year 2000) approaches. The
Company has confirmed that its systems are Year 2000 Compliant.
The Company believes that it has disclosed all required information
relative to Year 2000 issues relating to its business and operations. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely also will be timely converted or that any such failure to
convert by another company would not have an adverse affect on the Company's
systems.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
business strategy, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of
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the Company. Consequently, all of the forward-looking statements made in this
Form 10-SB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or operations.
The Company assumes no obligations to update any such forward-looking
statements.
The "safe harbor" for forward looking information only applies to
statements made by companies that are already subject to the reporting
requirements of Section 13(a) or Section 15(d) of the Exchange Act. Until such
time as the Company is a reporting company, the safe harbor provisions do not
apply to the Company.
Item 3. Description of Property
The Company's headquarters are at the home of Sam Peroulas. Its mailing
address is 222 Lakeview Avenue, Suite 113, West Palm Beach, Florida 33401. Its
telephone number is (404) 321- 1192. The Company pays no rent for its space. The
Company owns no real or personal property.
Item 4. Security Ownership of Certain Beneficial Owners and Managers
The following table sets forth information as of October 30, 2000,
regarding the ownership of the Company's Common Stock by each shareholder known
by the Company to be the beneficial owner of more than five per cent (5%) of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group. Except as otherwise indicated, each of the shareholders
has sole voting and investment power with respect to the shares of Common Stock
beneficially owned.
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class (1)
---------------- ----- ---------
Sam Peroulas (2)(3) 1,650,500 80.35%
1506 Briarhill Lane NE
Atlanta, Georgia 30324
Mintmire & Associates(4) 114,500 5.6%
265 Sunrise Avenue
Suite 204
Palm Beach, FL 33480
All Executive Officers, Directors 1,650,500 80.35%
- -------------------
(1) Based upon 2,054,000 shares of the Company's Common Stock issued and
outstanding as of October 15, 2000.
13
(2) Sole Executive and Director of the Company.
(3) In May 1998, the Company issued 1,650,500 shares of its Common Stock to Sam
Peroulas, the current President and Treasurer of the Company, as consideration
and in exchange for services in connection with the organization of OPI, which
services were valued at a total of $165.00. For such offering, the Company
relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of the
Georgia Code. See Part 1, Item 6. "Executive Compensation - Employee Contracts
and Agreements"; Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4.
"Recent Sales of Unregistered Securities."
(4) Counsel to the Company indirectly owns 114,500 shares of the Company through
the 100% sole ownership of the Common Stock of another company that has invested
in the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons; Compliance
Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- ------ --- ------------------------
Sam Peroulas 34 President, Secretary, Chief Executive Officer & Director
Directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. Mr. Peroulas will devote such
time and effort to the business and affairs of the Company as may be necessary
to perform his responsibilities as executive officer and/or director of the
Company.
Family Relationships
There are no family relationships between or among the executive
officer and director of the Company.
Business Experience
Sam Peroulas has served as the sole Executive of the Company since its
inception in May 1998. He attended Emory University from 1987 to 1991 where he
received a Bachelor of Science degree in Biology and Philosophy as well as a
minor in graphic arts design. Mr. Peroulas subsequently attended Georgia State
University from 1993 to 1997 where he received a Masters of Science degree in
Microbiology. Since 1997, Mr. Peroulas has been a Certified Microbiologist by
the American Academy of Microbiology. From 1991 to present (either full time or
part time depending on school demands) Mr. Peroulas has consulted and
free-lanced as a graphic artist and as a
14
microbiologist. He has two (2) years experience in computer graphic modeling for
biological application and brings key graphic art skills to the Company. His
work as a graphic artist and specifically his work as a graphic arts
microbiologist (a person who designs graphic arts relating to microbiology) is
expected to attract both commercial and individual consumers in the field of
microbiology and other areas.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934:
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership, of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, Mr. Peroulas comprises all of the Company's
executive officers, directors and greater than 10% beneficial owners of its
common Stock, and has complied with Section 16(a) filing requirements applicable
to him.
Item 6. Executive Compensation
The Company, in consideration for various services performed for the
Company, issued to Mr. Sam Peroulas, the Company's sole executive officer and/or
director 1,650,500 shares of restricted common stock. Except for the
above-described compensation, it is not anticipated that any executive officer
of the Company will receive any cash or non-cash compensation for his or her
services in all capacities to the Company until such time as the Company
commences business operations. At such time as OPI commences operations, it is
expected that the Board of Directors will approve the payment of salaries in a
reasonable amount to each of its officers for their services in the positions of
President/Treasurer, Executive Vice President and Secretary respectively, of the
Company. At such time, the Board of Directors may, in its discretion, approve
the payment of additional cash or non-cash compensation to the foregoing for
their services to the Company.
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of
the Georgia Code. See Part I, Item 7. "Certain Relationships and Related
Transactions"; and Part II, Item 4. "Recent Sales of Unregistered Securities."
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future.
15
Compensation of Directors
The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.
Item 7. Certain Relationships and Related Transactions
In May 1998, the Company issued 1,650,500 shares of its Common Stock to
Sam Peroulas, the current President and Treasurer of the Company, as
consideration and in exchange for services in connection with the organization
of OPI, which services were valued at a total of $165.00. For such offering, the
Company relied upon Section 4(2) of the Act, Rule 506 and Section 10-5-9(13) of
the Georgia Code. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
At the current time, the Company has no provision to issue any
additional securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued Common Stock and Preferred Stock which may be issued
without further shareholder approval or notice, the Company intends to reserve
such stock for the Rule 506 offerings contemplated to implement continued
expansion, for acquisitions and for properly approved employee compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer.")
Item 8. Description of Securities
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.0001 par value. The issued and outstanding shares of Common Stock being
registered hereby are validly issued, fully paid and non-assessable. The holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by the stockholders. A majority vote is required on all corporate action.
Cumulative voting in the election of directors is not allowed, which means that
the holders of more than 50% of the outstanding shares can elect all the
directors as they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any directors. The shares of Common
Stock have no preemptive, subscription, conversion or redemption rights and can
only be issued as fully paid and non-assessable shares. Upon liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to receive a pro rata of the assets of the Company which are legally
available for distribution to stockholders.
16
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, $0.0001 par value. Currently there are no issued and outstanding
preferred shares of the Company.
Transfer Agent
The company will serve as its transfer agent until it is eligible for
quotation on the OTC: Bulletin Board.
Certain Provision of Florida Law
Section 607.0902 of the Florida Business Corporation Act prohibits the
voting of shares in a publicly-held Florida corporation that are acquired in a
"control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition or
unless the acquisition of incorporation or bylaws specifically state that this
section does not apply. A "control share acquisition" is defined as an
acquisition that immediately thereafter entitles the acquiring party to vote in
the election of directors within each of the following ranges of voting power:
(i) one-fifth or more, but less than one-third of such voting power: (ii)
one-third or more, but less than a majority of such voting power; and, (iii)
more than a majority of such voting power. The Amended Articles of Incorporation
of the Company specifically state that Section 607.0902 does not apply to
control-share acquisitions of shares of the Company.
Current Financial Commitment
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 this 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 held by Capital in escrow for the
potential conversion of the notes. The Company granted Capital registration
rights and is 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. The Company has sought several other potential
funding sources; however, to date, has not concluded terms for any financing
which it feels appropriately meets the requirements of the Company under such
agreements. 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.
17
RISK FACTORS
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
We Are a Development Stage Company
OPI was recently organized in May 1998, and accordingly, is in the
early form of development stage and must be considered promotional. Management's
efforts, since inception, have been allocated primarily to organizational and
fund raising activities. The ability of the Company to establish itself as a
going concern is dependent upon the receipt of additional funds from operations
or other sources to continue those activities. Potential investors should be
aware of the difficulties normally encountered by a new enterprise in its
development stage, including under-capitalization, cash shortages, limitations
with respect to personnel, technological, financial and other resources and lack
of a client base and market recognition, most of which are beyond the Company's
control. The likelihood that the Company will succeed must be considered in
light of the problems, expenses and delays frequently encountered in connection
with the competitive environment in which the Company will operate. The
Company's success depends to a large extent on establishing a client base. There
is no guarantee that the Company's proposed activities will attain the level of
recognition and acceptance necessary for the Company to find a niche in the
industry. There are numerous competitors in Atlanta, Georgia, the contiguous
areas and the remaining State of Georgia and nationwide, several of which are
large public companies, which are already positioned in the business and which
are better financed than the Company. There can be no assurance that the
Company, with its very limited capitalization, will be able to compete with
these companies and achieve profitability.
Our Company Has No Operating History, Revenues or Exchanges
As of the date hereof, the Company has not yet commenced operations
and, accordingly, has received no operating revenues or earnings. Since its
inception, most of the time and resources of OPI's management have been spent in
organizing the Company, obtaining interim financing and developing a business
plan. The Company's success is dependent upon its obtaining additional financing
from intended operations, from placement of its equity or debt or from third
party funding sources. The Company's success in the business is dependent upon
the purchasing of services by consumers and/or additional financing to enable
the Company to continue in operation. There is no assurance that OPI will be
able to obtain additional debt or equity financing from any source. The Company,
during the development stage of its operations, can be expected to sustain
substantial operating expenses without generating any operating revenues or the
operating revenues generated can be expected to be insufficient to cover
expenses. Thus, for the foreseeable future, unless the Company attains
profitable operations, the Company's financial statements will show an
increasing net operating loss.
18
Our Company Has Minimal Assets, Working Capital and Net Worth
As of August 31, 2000 , the Company's total assets in the amount of
$6,700.00, consisted entirely of cash. As a result of its minimal assets, as of
August 31, 2000, the Company has very minimal net worth presently. Further,
OPI's working capital is presently minimal and there can be no assurance that
the Company's financial condition will improve. The Company is expected to
continue to have minimal working capital or a working capital deficit as a
result of current liabilities. Even though management believes, without
assurance, that it will obtain sufficient capital with which to implement its
business plan on a limited scale, the Company is not expected to continue in
operation without an infusion of capital. In order to obtain additional equity
financing, management may be required to dilute the interest of existing
shareholders or forego a substantial interest of its revenues, if any.
We Need to Re-Sell Acquired Receivables in the Secondary Markets
The Company has minimal working capital therefore it will be critical
that any and all cash resources utilized by the Company be maximized. The
Company will bundle together its receivables, the size of which will be
determined by the quality of receivables, for the purpose of re-selling them in
a public and/or private offering for purchase by an institutional investor
and/or an individual. This reselling will restore working capital to the Company
with which it can put back to work to finance future operations. There is no
assurance, however, that the Company will be successful in its efforts to
re-sell these "bundled" securities in the secondary market and may, if
unsuccessful, be limited in its attempt to become a viable company.
Our Company Needs Additional Capital
Without an infusion of capital or profits from operations, the Company
is not expected to continue in operation. Accordingly, the Company is not
expected to become a viable business entity unless additional equity and/or debt
financing is obtained. OPI's independent certified public accountant has
expressed this as a "going concern" qualification on the Company's financial
statements. The Company does not anticipate the receipt of operating revenues
until management successfully implements its business plan, which is not
assured. Further, OPI may incur significant unanticipated expenditures which
could deplete its capital at a rapid rate because of the development stage of
its business, its limited personnel and other resources and also due to its lack
of a clients and market recognition. Due to these and other factors, management
is presently unable to predict what additional costs might be incurred by the
Company beyond those currently contemplated to obtain additional financing and
achieve market penetration on a commercial scale in its proposed line of
business. OPI has no identified sources of funds, other than Mr. Peroulas, and
there can be no assurance that resources will be available to the Company when
needed.
Our Company Is Dependent On Its Current Management
The possible success of the Company is expected to be largely dependent
on the continued services of Mr. Sam Peroulas. Virtually all decisions
concerning the clients to contact, the type of
19
services to promote and direct marketing material to disseminate and the
establishment of a client profile database by the Company will be made or
significantly influenced by Mr. Peroulas. He is presently serving as manager of
his own company and is required to devote a significant amount of time to the
conduct of that company's business. Mr. Peroulas is expected to devote such time
and effort to the business and affairs of the Company as may be necessary to
perform their responsibilities as executive officers of OPI. The loss of the
services of Mr. Peroulas would adversely affect the conduct of the Company's
business and its prospects for the future. The Company presently holds no
key-man life insurance on the life of, and has no employment contract or other
agreement with Mr. Peroulas.
Our Company Has No Client Base
The Company was recently organized. While OPI intends to engage in the
business of providing of graphic arts services the Company currently has no
clients. Further, the very limited funding currently available to the Company
will not permit it to commence business operations in the industry except on a
very limited scale. There can be no assurance that the debt and/or equity
financing, which is expected to be required by the Company in order for OPI to
continue in business will be available. The Company has no clients presently and
there can be no assurance that it will be successful in obtaining clients in its
initial prospective marketing area encompassing Atlanta, Georgia. OPI does not
expect to have long-term contracts with any clients; thus, management believes
that the Company must, in order to survive, ultimately obtain the loyalty of a
large volume of clients. The Company could be expected to experience substantial
difficulty in attracting the high volume of clients in the prospective target
market which would enable OPI to achieve commercial viability. The Company will
be dependent upon Mr. Sam Peroulas, who has approximately two (2) years of
experience in the industry.
There Are Risks And Possible Unforseen Costs
While May Be Associated With Our Entry
Into The Graphic Arts Services Industry
There can be no assurance that the cost for establishment of a client
base or for soliciting services directly with consumers by OPI will not be
significantly greater than those estimated by Company management. Therefore, the
Company may expend significant unanticipated funds or significant funds may be
expended by OPI without development of a commercially viable business. There can
be no assurance that cost overruns will not occur or that such cost overruns
will not adversely affect the Company. Further, unfavorable general economic
conditions and/or a downturn in client confidence could have an adverse affect
on the ability of the Company to perform services for its clients which in turn
could adversely affect the Company's business. Additionally, competitive
pressures and changes in client mix, among other things, which management
expects the Company to experience, could reduce the Company's gross profit
margin from time to time. Accordingly, there can be no assurance that OPI will
be capable of establishing itself in a commercially viable position locally or
nationally.
Our Management Has Conflicts of Interest
There are existing and potential conflicts of interest, including time,
effort and corporate opportunity, involved in the participation by the Company's
executive officer and director in other
20
business entities and transactions. Mr. Peroulas is the President and manager of
his own company, which in part contracts for graphic arts services and which by
virtue of his relationship to the Company is an affiliate of the Company. Mr.
Peroulas will divide his time and effort between the Company, his existing
employment and his other business obligations. Accordingly, Mr. Peroulas may
experience direct or indirect conflicts of interest with respect to business
opportunities which come to his attention. It may be difficult for Mr. Peroulas
to determine whether an opportunity has arisen as a result of his affiliation
with OPI or not. Mr. Peroulas intends to query each potential client as to what
led them to OPI or to his other business both in an attempt to appropriate the
matter properly and also to determine which methods of advertising are most
effective.
The Company's Amended Articles of Incorporation provide that any
related party contract or transaction must be authorized, approved or ratified
at a meeting of the Board of Directors by sufficient vote thereon by directors
not interested therein or the transaction must be fair and reasonable to the
Company.
We May Be Limited In Our Ability To Grow
The Company expects to grow both through internal growth and expansion
and possibly through the acquisition of complimentary businesses. The Company
plans to expand its business from its current location and by entry into other
markets. There can be no assurance that the Company will be able to create a
market presence, or if such market presence is created, to profitably expand its
market presence or successfully enter other markets. The ability of the Company
to grow will depend on a number of factors, including the availability of
working capital to support such growth, existing and emerging competition and
the Company's ability to maintain sufficient profit margins in the face of an
increasingly competitive industry. The Company must also manage costs, adapt its
infrastructure and systems to accommodate growth and recruit and train qualified
personnel.
The Company also plans to expand its business, in part, through
possible acquisitions primarily of independently owned and operated companies
with similar businesses. Although the Company will continuously review potential
acquisition candidates, it has not entered into any agreement, understanding or
commitment with respect to any acquisitions at this time. There can be no
assurance that the Company will be able to successfully identify suitable
acquisition candidates, complete acquisitions on favorable terms, or at all, or
integrate acquired businesses into its operations. Moreover, there can be no
assurance that acquisitions will not have a material adverse effect on the
Company's operating results, particularly in the fiscal quarters immediately
following the consummation of such transactions, while the operations of the
acquired business are being integrated into the Company's operations. Once
integrated, acquisitions may not achieve comparable levels of revenues,
profitability or productivity as at then existing Company-owned locations or
otherwise perform as expected. The Company is unable to predict whether or when
any prospective acquisition candidate will become available or the likelihood
that any acquisitions will be completed. The Company will be competing for
acquisition and expansion opportunities with entities that have substantially
greater resources than the Company. In addition, acquisitions involve a number
of special risks, such as diversion of management's attention, difficulties in
the integration of acquired operations and retention of personnel, unanticipated
problems or legal liabilities, and tax and
21
accounting issues, some or all of which could have a material adverse effect on
the Company's results of operations and financial condition.
We Face Stiff Competition
The market for graphic art services is highly competitive. The
Company's competitors include local, regional and national companies, many of
which are larger and have greater financial and marketing resources than the
Company. In addition, many of the Company's competitors have significantly
greater name recognition as well as greater marketing, financial and other
resources than the Company. There can be no assurance that the Company will be
able to compete effectively against such competitors in the future.
We Are Limited In Working Capital Funding Sources
The Company expects to receive payments on its receivables on a timely
basis. However, caution might require that the Company plan for a reserve to be
held for non-performing receivables. In the event that such reserve for
non-performing receivables increases substantially the Company's working capital
will be negatively impacted directly impairing operations. In addition, as new
offices are established or acquired, or as the existing office is expanded,
there will be increasing requirements for cash to fund the Company's plans for
expansion. The Company has no current source of working capital funds, and
should the Company be unable to secure additional financing on acceptable terms,
its business, financial condition, results of operations and liquidity might be
materially adversely affected.
There Is An Absence of Public Market For Our Shares
The Company's shares of Common Stock are not registered with the United
States Securities and Exchange Commission under the Act. There is no public
market for the shares of Common Stock and no assurance that one will develop.
Resales of shares of the Company's Common Stock will be subject to restrictions
on transfer imposed by both state and federal securities laws pertaining to
unregistered shares. Sales of shares of Common Stock under Rule 144 may have a
depressive effect on the market price of the Company's Common Stock, should a
public market develop for such stock. Such sales also might impede future
financing by the Company.
Our Company Has Never Declared A Dividend
While payments of dividends on the Common Stock rests with the
discretion of the Board of Directors, there can be no assurance that dividends
can or will ever be paid. Payment of dividends is contingent upon, among other
things, future earnings, if any, and the financial condition of the Company,
capital requirements, general business conditions and other factors which cannot
now be predicted. It is highly unlikely that cash dividends on the Common Stock
will be paid by the Company in the foreseeable future.
22
Our Charter Does Not Permit Cumulative Voting
The election of directors and other questions will be decided by a
majority vote. Since cumulative voting is not permitted and one-third (1/3) of
the Company's outstanding Common Stock constitute a quorum, investors who
purchase shares of the Company's Common Stock may not have the power to elect
even a single director and, as a practical matter, the current management will
continue to effectively control the Company.
Current Management Directs Affairs Of Company
The present shareholders of the Company's Common Stock will, by virtue
of their percentage share ownership and the lack of cumulative voting, be able
to elect the entire Board of Directors, establish the Company's policies and
generally direct its affairs. Accordingly, persons investing in the Company's
Common Stock will have no significant voice in Company management, and cannot be
assured of ever having representation on the Board of Directors. Mr. Peroulas,
with his 80% ownership interest in the Company, will effectively control all
actions required to be taken by the shareholders, including the election of
Directors and fundamental transactions like mergers, sales of assets,
reorganizations and dissolution and winding up of the Company.
Potential Anti-Takeover and Other Effects of Issuance of Preferred Stock May Be
Detrimental To Common Shareholders
The Company is authorized to issue up to 10,000,000 shares of preferred
stock. $.0001 par value per share (hereinafter referred to as the "Preferred
Stock"); none of which shares has been issued. The issuance of Preferred Stock
does not require approval by the shareholders of the Company's Common Stock. The
Board of Directors, in its sole discretion, has the power to issue shares of
Preferred Stock in one or more series and to establish the dividend rates and
preferences, liquidation preferences, voting rights, redemption and conversion
terms and conditions and any other relative rights and preferences with respect
to any series of Preferred Stock. Holders of Preferred Stock may have the right
to receive dividends, certain preferences in liquidation and conversion and
other rights; any of which rights and preferences may operate to the detriment
of the shareholders of the Company's Common Stock. Further, the issuance of any
shares of Preferred Stock having rights superior to those of the Company's
Common Stock may result in a decrease in the value of market price of the Common
Stock provided a market exists, and additionally, could be used by the Board of
Directors as an anti-takeover measure or device to prevent a change in control
of the Company.
Secondary Trading Of Our Shares May Not Be Possible
In the event a market develops in the Company's shares, of which there
can be no assurance, secondary trading in the Common Stock will not be possible
in each state until the shares of Common Stock are qualified for sale under the
applicable securities laws of the state or the Company verifies that an
exemption, such as listing in certain recognized securities manuals, is
available for secondary trading in the state. There can be no assurance that the
Company will be successful in registering or qualifying the Common Stock for
secondary trading, or availing itself of an exemption for secondary
23
trading in the Common Stock, in any state. If the Company fails to register or
qualify, or obtain or verify an exemption for the secondary trading of, the
Common Stock in any particular state, the shares of Common Stock could not be
offered or sold to, or purchased by, a resident of that state. In the event that
a significant number of states refuse to permit secondary trading in the
Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
Penny Stock Regulations Could Adversely Effect Trading Of Our Common Stock
In the event a market develops in the Company's shares, of which there
can be no assurance, then if a secondary trading market develops in the shares
of Common Stock of the Company, of which there can be no assurance, the Common
Stock is expected to come within the meaning of the term "penny stock" under 17
CAR 240.3a51-1 because such shares are issued by a small company; are low-priced
[under five dollars ($5)]; and are not traded on NASDAQ or on a national stock
exchange. The Securities and Exchange Commission has established risk disclosure
requirements for broker-dealers participating in penny stock transactions as
part of a system of disclosure and regulatory oversight for the operation of the
penny stock market. Rule 15g-9 under the Securities Exchange Act of 1934, as
amended, obligates a broker-dealer to satisfy special sales practice
requirements, including a requirement that it make an individualized written
suitability determination of the purchaser and receive the purchaser's written
consent prior to the transaction. Further, the Securities Enforcement Remedies
and Penny Stock Reform Act of 1990 require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure
instrument that provides information about penny stocks and the risks in the
penny stock market. Additionally, the customer must be provided by the
broker-dealer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and the salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. For so long as the Company's Common Stock is considered
penny stock, the penny stock regulations can be expected to have an adverse
effect on the liquidity of the Common Stock in the secondary market, if any,
which develops.
USE OF PROCEEDS
All of the shares of OPI Common Stock covered by this prospectus are
being offered for the account of the Selling Shareholders listed herein. We will
not receive any proceeds from this offering.
SELLING SHAREHOLDERS
All of the 2,000,000 shares of OPI Common Stock covered by this
prospectus are being offered for the account of Capital Consultants, Inc.
("Capital ") as Lender (the "Selling Shareholders") under a Loan Agreement dated
October 20, 2000 and the related Registration Rights Agreement dated October 20,
2000, as amended.
Under the terms of the Registration Rights Agreement, we have agree,
among other things, to file a registration statement of which this prospectus is
a part with the Securities and Exchange Commission to register all of the shares
which potentially could be issued if Capital makes a loan
24
in the total aggregate amount of $1,000,000, sufficient to cover the conversion
of all of the notes issued under such loan and the exercise of all of the
warrants granted under such loan. Further, under such agreement, we are to pay
all of the registration expenses incurred in connection with this registration
and the reasonable fees and expenses of one (1) counsel for the Selling
Shareholders, except that Capital is to pay all selling commissions,
underwriting discounts and disbursements, transfer taxes and fees and expenses
of separate counsel applicable to their sale of OPI Common Stock to be issued
pursuant to the agreements underlying the Capital Loan Commitment. The
agreements provide that we must keep current and effective the registration
statement covering these shares for the greater of (i) a period of at least
three (3) years from the closing date and (ii) a period of at least ninety (90)
days after all of the notes have been converted or paid and all the warrants
have been exercised or have expired.
Prior to the Capital Loan Commitment, neither Capital nor any of its
officers, directors or principal shareholders have held any position or office
nor have any of them had a material relationship with OPI or any of its
affiliates within the past three (3) years.
As of October 15, 2000, the Company had 2,054,000 shares outstanding,
none of which relate to the 2,000,000 escrow required under the Capital Loan
Commitment and are covered by this prospectus.
Assuming that all the other shares registered hereby are issued, the
total outstanding, with no other shares issued, would be 4,054,000. In such
event, Capital 's ownership of 2,000,000 shares would represent 49.3% of the
total voting shares of the Company and a minority interest in it.
PLAN OF DISTRIBUTION
The Selling Shareholders may effect the distribution of the shares in
one or more transactions that may take place through block trades or ordinary
broker's transactions, or through privately negotiated transactions, an
underwritten offering, or a combination of any such methods of sale. Sales of
shares will be made at market prices prevailing at the time of sale or at
negotiated prices. Selling Shareholders may pay usual and customary or
specifically negotiated brokerage fees or commissions in connection such sales.
We have agreed to pay registration expenses incurred in connection with this
registration of approximately $25,000.
The aggregate proceeds to the Selling Shareholders from the sale of the
shares will be the purchase price of the OPI Common Stock sold less the
aggregate agents' commissions and underwriters' discounts, if any. The Selling
Shareholders and any dealers or agents that participate in the distribution of
the shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"), and any profit from the sale of shares by
them and any commissions received by any such dealers or agents might be deemed
to be underwriting discounts and commissions under the Act..
In order to comply with the securities laws of certain states, if
applicable, the securities may be sold only through registered or licenses
brokers or dealers. In addition, in certain states, the
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securities may not be sold unless they have been registered or qualified for
sale in such state or any exemption from such registration or qualification
requirement is available and the sale is made in compliance with the
requirements.
We have agreed to indemnify the Selling Shareholders in certain
circumstances, against certain liabilities arising under the Act. The Selling
Shareholders have agreed to indemnify us and our directors and officers who sign
the registration statement against certain liabilities, including liabilities
arising under the Act.
DESCRIPTION OF SECURITIES
The securities offered by this prospectus are shares of our Common
Stock which are registered pursuant to Section 12 of the Securities and Exchange
Act of 1934 (the "Exchange Act").
The transaction under which these shares are to be issued arose in
October 2000, when the Company executed the Capital Loan Commitment with
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 this registration statement and ending on December 31, 2003. The Capital Loan
Commitment permits instalments aggregating $250,000 in any 90-day period. The
proceeds of the loan are for working capital purposes. The Capital Loan
Commitment provides that the offering has been conducted under Regulation D of
the Act. Under the terms of the Capital Loan Commitment, each installment is
supported by a convertible note and security agreement. Prior to each
instalment, the Company is obligated to escrow shares under the terms of an
escrow agreement. The convertible note bears interest at 10% per annum and may
be prepaid at any time. The notes issued are convertible at any time at the
option of Capital at the rate of$0.60 on the conversion date. The security
agreement grants Capital a security interest in all of the Company's equipment,
inventory, accounts, contract rights, chattel paper and instruments, and the
proceeds of any of the collateral. The Company was obligated to issue 2,000,000
shares of its Common Stock to be held in escrow for the potential conversion of
the notes. Capital acts as escrow agent for the shares and is authorized to
release such shares upon receipt of a notice of note conversion. The Company
granted Capital registration rights and is obligated to file a Form S-3 within
sixty (60) days of the agreement. This prospectus is part of the registration
statement required and under the terms of the agreement covers initially
2,000,000 shares. The issuance of the securities was made pursuant to Regulation
D of the Act.
LEGAL OPINIONS
Mintmire & Associates will provide OPI with an opinion that the shares
being offered in this prospectus are legally and validly issued.
EXPERTS
The financial statements of OPI as of February 29, 2000 incorporated by
reference in this prospectus and elsewhere in this registration statement, have
been audited by Durland & Co. CPA's, independent public accountants, as
indicated in their report with respect thereto and are included and
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incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information
with the Securities and Exchange Commission (the "SEC"). You may read and copy
any documents we file with the SEC at their public reference facilities in Room
1024 at 450 Fifth Street N.W., Washington, DC 20549 or at regional offices
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
7 World Trade Center, 13th Floor, New York, New York 10048. Please call the SEC
at 1-800-SEC- 0330 for further information on the public reference rooms. Our
SEC filings also are available to the public on the SEC Internet site at
http://www.sec.gov.
We filed with the SEC a registration statement on Form S-3 under the
Act which registered the shares covered by this prospectus for resale by the
Selling Shareholders. This prospectus is only part of the registration
statement. It does not contain all of the information shown in the registration
statement because the SEC rules and regulations allow us to include certain
information in the filing, but permit us to omit certain information from the
prospectus. Statements contained in this prospectus as to any contract or other
documents' contents are not necessarily complete. In each instance, if the
contract or document is filed as an exhibit to the registration statement, the
affected statement is qualified, in all aspects by reference to the applicable
exhibit to the registration statement. For further information about us and our
shares, we refer you to the registration statement and the exhibits that you may
obtain from the SEC at its principal office after you pay the SEC prescribed
fee, or you can obtain it through the Internet site listed above.
The SEC allows us to "incorporate by reference" the information we file
with them. This means that we can disclose important information to you by
referring you to these documents. The information we incorporate by reference is
an important part of this prospectus, and information that we file later with
the SEC will update or supercede automatically this information. We incorporate
by reference the following documents, which we have filed already with the SEC,
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act until the termination of the offering under this
prospectus.
o Our Annual Report on Form 10KSB for the year ended February 29, 2000.
o Our latest quarterly report on Form 10-QSB for the period ended August
31, 2000.
o The Company has not filed any current reports on Form 8K.
o The description of the Company's Common Stock, par value $.0001 per
share is contained in its Registration Statement filed under the
Exchange Act on Form 10SB (File No. 0-26475), as amended on July 24,
2000.
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You should rely only on the information we include or incorporate by
reference in this prospectus and any applicable prospectus supplement. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The information contained in this prospectus or
the applicable prospectus supplement is accurate only as of the date on the
front of those documents, regardless of the time of delivery of this prospectus
or the applicable prospectus supplement or of any sale of our securities.
Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated by reference in this prospectus is
deemed to be modified or superseded for purposes of this prospectus to the
extent that any of the following modifies or superseded a statement in this
prospectus or incorporated by reference in this prospectus:
o in the case of a statement in a previously filed document incorporated
by reference or deemed to be incorporated by reference in this
prospectus, a statement contained in this prospectus;
o a statement contained in any accompanying prospectus supplement
relating to a specific offering of shares; or
o a statement contained in any other subsequently filed document that
modifies or supersedes a statement in this prospectus.
Any modified or superseded statement will not be deemed to constitute a
part of this prospectus or any accompanying prospectus supplement, except as
modified or superseded. Except as provided by the above mentioned exceptions,
all information appearing in this prospectus and each accompanying prospectus
supplement is qualified in its entirety by the information appearing in the
documents incorporated by reference.
We will provide, without charge to each person to whom a copy of this
prospectus is delivered, after their written or oral request, a copy of any or
all of the documents incorporated by reference into this prospectus, other than
exhibits to the documents, unless the exhibits are incorporated specifically by
reference in the documents. Requests may be made by writing or telephoning the
following person:
Sam Peroulas
Investor Relations
222 Lakeview Avenue, PMB 113
West Palm Beach, FL 33401
(404) 321-1192
No person is authorized in connection with any offering of the shares
to give any information or to give any representation not contained in this
prospectus, and you should not rely on any such information or representation as
having been authorized by OPI or any Selling Shareholder. Neither the delivery
of this prospectus nor any sale made hereunder shall under any circumstances
create any implication that the information contained in this prospectus is
correct as of any time subsequent to the date of this prospectus.
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Until the later of December 31, 2003 or ninety (90) days after all
notes have been converted or paid and all warrants have been exercised or
expired, all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
TABLE OF CONTENTS
Page No.
Prospectus Summary 4
Risk Factors 18
Use of Proceeds 24
Selling Shareholders 24
Plan of Distribution 25
Description of Securities 26
Legal Opinions 26
Experts 26
Where You Can Find More Information 27
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PROSPECTUS
2,000,000 Shares
ORANGE PRODUCTIONS, INC.
Common Stock
This Prospectus is dated November 30, 2000.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be paid solely
by OPI in connection with the distribution of the securities being registered:
Securities and Exchange Registration Fee $ 316.80
Blue Sky Fees and Expenses $ 0
Printing Expenses $ 1,000
Accounting Fees and Expenses $ 1,000
Legal Fees and Expenses $ 21,433.20
Miscellaneous Expenses $ 1,250
TOTAL $ 25,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article X of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors and officers of the
Company as follows:
(a) The corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, of any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is otherwise serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, has no reasonable cause to believe his conduct is unlawful. The
termination of any action, suit or proceeding, by judgment, order, settlement,
conviction upon a plea of nolo contendere or its equivalent, shall not of itself
create a presumption that the person did not act in good faith in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe the action was unlawful.
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(b) The corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the corporation, to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in, or not, opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation, unless, and only to the extent that, the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
(c) To the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this
Article (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
officer, director and employee or agent is proper in the circumstances, because
he has met the applicable standard of conduct set forth in Section (a) or (b) of
this Article. Such determination shall be made (i) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote and represented at a meeting
called for purpose.
(e) Expenses (including attorneys' fees) incurred in defending
a civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition or such action, suit or proceeding, as
authorized in Section (d) of this Article, upon receipt of an understanding by
or on behalf of the director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that he is entitled to be indemnified
by the corporation as authorized in this Article.
(f) The Board of Directors may exercise the corporation's
power to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under this Article.
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(g) The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under these Amended Articles of Incorporation, the Bylaws,
agreements, vote of the shareholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office and shall continue as to person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the heirs
and personal representative of such a person.
The Company has no agreements with any of its directors or
executive offices providing for indemnification of any such persons with respect
to liability arising out of their capacity or status as officers and directors.
At present, there is no pending litigation or proceeding
involving a director or executive officer of the Company as to which
indemnification is being sought.
ITEM 16. EXHIBITS
Exhibit No. Description of Exhibit
- ------------ ------------------------------
3(i).1 * Articles of Incorporation of Orange Productions, Inc., effective May
20, 1998 (1)
3(ii).1 * Bylaws of Orange Productions, Inc.(1)
5.1 * Opinion of Mintmire & Associates as to the legality of the Securities to be issued.
10.38 * Effective October 20, 2000, Loan Agreement, Note, Security Agreement,,
Registration Rights Agreement and Escrow Agreement relative to the October 2000
transaction with Capital Consultants, Inc. under which the securities offered herein
arise.
23.1 * Consent of Durland & Co., CPA, P.A., Independent Public Accounts.
23.2 * Consent of Mintmire & Associates is contained in the Opinion as to legality of
Securities filed as Exhibit 5
27.1 * Financial Data Schedule (as filed with 10QSB on October 12, 2000)
- -----------------------------------------------
* Filed Herewith, all other exhibits incorporated be reference.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
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(i) To include any prospectus required by section 10(a) of the Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low and high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change in such information in the
registration statement.
Provided, however, that paragraph (1)(i) and (1) (ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3 and
the information required [or] to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for purposes of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Act, each
filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d)
of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sarasota, State of Florida, on April 3, 2000.
ORANGE PRODUCTIONS, INC.
By: /s/ Sam Peroulas
----------------------------------------
Sam Peroulas, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons, who represent a
majority of the Board of Directors, in the capacities and on the dated indicated
Signature Capacity Date
- ----------- ---------- -----
/s/ Sam Peroulas October 30, 2000
- ------------------ President
Sam Peroulas
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