U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: May 31, 2001
Commission file no.: 0-26475
ORANGE PRODUCTIONS, INC.
------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0790763
- ------------------------------------ -------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 113
West Palm Beach, FL 33401
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (404) 321-1192
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
- ----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
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(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
Indicate by Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
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As of May 31, 2001, there were 2,054,000 shares of voting stock of the
registrant issued and outstanding.
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheets..............................................................F-2
Statements of Operations....................................................F-3
Statements of Stockholders' Equity..........................................F-4
Statements of Cash Flows....................................................F-5
Notes to Financial Statements...............................................F-6
Orange Productions, Inc.
(A Development Stage Enterprise)
Balance Sheets
May 31, February 28,
2001 2001
--------------------- ------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 71 $ 119
Loan and accrued interest receivable 5,205 5,090
--------------------- ------------------
Total current assets 5,276 5,209
--------------------- ------------------
Total Assets $ 5,276 $ 5,209
===================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accrued expenses $ 0 $ 0
Accrued expenses - related party 4,160 4,160
Loan and accrued interest payable - related party 4,002 0
--------------------- ------------------
Total current liabilities 8,162 4,160
--------------------- ------------------
Total Liabilities 8,162 4,160
--------------------- ------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value, authorized 10,000,000 shares:
none issued 0 0
Common stock, $0.0001 par value, authorized 50,000,000 shares:
2,054,000 issued and outstanding 206 206
Additional paid-in capital 20,134 20,134
Deficit accumulated during the development stage (23,226) (19,291)
--------------------- ------------------
Total Stockholders' Equity (Deficit) (2,886) 1,049
--------------------- ------------------
Total Liabilities and Stockholders' Equity (Deficit) $ 5,276 $ 5,209
===================== ==================
The accompanying notes are an integral part of
the financial statements.
F-2
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Operations
Three Months Ended May 31,
(Unaudited)
Period from
May 20, 1998
(Inception)
through
2001 2000 May 31, 2001
------------------- ----------------- -----------------
Revenues $ 0 $ 0 $ 0
------------------- ----------------- -----------------
Expenses
General and administrative 48 229 1,188
Consulting fees - related party 0 0 1,165
Professional fees 4,000 4,500 18,167
Professional fees - related party 0 0 3,160
------------------- ----------------- -----------------
Total expenses 4,048 4,729 23,680
------------------- ----------------- -----------------
Loss from operations (4,048) (4,729) (23,680)
Other income (expense)
Interest expense (2) 0 (2)
Interest income 115 0 456
------------------- ----------------- -----------------
Net loss $ (3,935)$ (4,729) $ (23,226)
=================== ================= =================
Net loss per weighted average share, basic $ (0.01)$ (0.01)
=================== =================
Weighted average number of shares 2,054,000 2,054,000
=================== =================
The accompanying notes are an integral part of
the financial statements.
F-3
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Stockholders' Equity (Deficit)
Period from May 20, 1998 (Inception) through May 31, 2001
Deficit
Accumulated Total
Additional During the Stockholders'
Number of Preferred Common Paid-in Development Equity
Shares Stock Stock Capital Stage (Deficit)
------------ ------------ ---------- ----------- -------------- --------------
BEGINNING BALANCE, May 20, 1998 0 $ 0 $ 0 $ 0 $ 0 $ 0
Year Ended February 28, 1999:
- ----------------------------
May 1998 - services ($0.0001/sh) 1,650,500 0 165 0 0 165
May 1998 - cash ($0.05/sh) 4,000 0 1 199 0 200
June 1998 - cash ($0.05/sh) 56,000 0 6 2,794 0 2,800
September 1998 - cash ($0.05/sh) 343,500 0 34 17,141 0 17,175
Net loss 0 0 0 0 (8,663) (8,663)
------------ ------------ ---------- ----------- -------------- --------------
BALANCE, February 28, 1999 2,054,000 0 206 20,134 (8,663) 11,677
Year Ended February 29, 2000:
- ----------------------------
Net loss 0 0 0 0 (3,549) (3,549)
------------ ------------ ---------- ----------- -------------- --------------
BALANCE, February 29, 2000 2,054,000 0 206 20,134 (12,212) 8,128
Year Ended February 28, 2001:
- ----------------------------
Net loss 0 0 0 0 (7,079) (7,079)
------------ ------------ ---------- ----------- -------------- --------------
BALANCE, February 28, 2001 2,054,000 0 206 20,134 (19,291) 1,049
Three Months Ended May 31, 2001: (unaudited)
- -------------------------------
Net loss 0 0 0 0 (3,935) (3,935)
------------ ------------ ---------- ----------- -------------- --------------
ENDING BALANCE, May 31, 2001
(unaudited) 2,054,000 $ 0 $ 206 $ 20,134 $ (23,226)$ (2,886)
============ ============ ========== =========== ============== ==============
The accompanying notes are an integral part of
the financial statements.
F-4
Orange Productions, Inc.
(A Development Stage Enterprise)
Statements of Cash Flows
Three Months Ended March 31,
(Unaudited)
Period from
May 20, 1998
(Inception)
through
2001 2000 May 31, 2001
------------------- ----------------- ----------------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (3,935) $ (4,729)$ (23,226)
Adjustments to reconcile net loss to net cash used by
development activities
Stock issued in lieu of cash - related party 0 0 165
Changes in assets and liabilities
(Increase) decrease in accrued interest receivable (115) 0 (205)
Increase (decrease) in accrued expenses 0 4,500 0
Increase (decrease) in accrued expenses - related party 0 0 4,160
Increase (decrease) in accrued interest payable 2 0 2
------------------- ----------------- ----------------------
Net cash used by development activities (4,048) (229) (19,104)
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CASH FLOW FROM INVESTING ACTIVITIES:
Increase in issuance of loan receivable 0 0 (15,000)
Repayment of loan receivable 0 0 10,000
------------------- ----------------- ----------------------
Net cash used by investing activities 0 0 (5,000)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from loan payable 4,000 0 4,000
Proceeds from issuance of common stock 0 0 20,175
------------------- ----------------- ----------------------
Net cash provided by financing activities 4,000 0 24,175
------------------- ----------------- ----------------------
Net increase (decrease) in cash (48) (229) 71
CASH, beginning of period 119 12,288 0
------------------- ----------------- ----------------------
CASH, end of period $ 71 $ 12,059 $ 71
=================== ================= ======================
The accompanying notes are an integral part of
the financial statements.
F-5
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the three months
ended May 31, 2001 and 2000 is unaudited)
(1) Summary of Significant Accounting Principles
The Company Orange Productions, Inc. is a Florida chartered development
stage corporation which conducts business from its headquarters in
Palm Beach, Florida. The Company was incorporated on May 20, 1998.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to provide graphic art services to
various consumer groups. Current activities include raising additional
equity and negotiating with potential key personnel and facilities.
There is no assurance that any benefit will result from such
activities. The Company will not receive any operating revenues until
the commencement of operations, but will nevertheless continue to
incur expenses until then.
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the
date of the statements of financial condition and revenues and
expenses for the period then ended. Actual results may differ
significantly from those estimates.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic is computed by dividing the net loss by
the weighted average number of common shares outstanding during the
period.
c) Interim financial information The financial statements for the
three months ended May 31, 2001 and 2000 are unaudited and include all
adjustments which in the opinion of management are necessary for fair
presentation, and such adjustments are of a normal and recurring
nature. The results for the three months are not indicative of a full
year results.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock
are to be determined by the Board of Directors prior to issuance. The
Company had 2,054,000 and 0 shares of common and preferred stock
issued and outstanding, respectively, at May 31, 2000. The Company, on
May 20, 1998, issued 1,650,500 restricted shares to its Officers and
Directors for the value of services rendered in connection with the
organization of the Company. In May, 1998, the Company issued 4,000
shares at $0.05 per share for $200 in cash. In June 1998, the Company
issued 56,000 shares of common stock at $0.05 per share for $2,800 in
cash. In September 1998, the Company issued 343,500 shares at $0.05
per share for $17,175 in cash.
(3) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company has net operating loss
carry- forwards for income tax purposes of approximately $23,300,
expiring $4,000, $7,100, $3,500 and $8,700 at February 28, 2022, 2021,
2020 and 2019.
The amount recorded as deferred tax assets as of May 31, 2001 is
$3,500, which represents the amount of tax benefit of the loss
carryforward. The Company has established a valuation allowance
against this deferred tax asset, as the Company has no history of
profitable operations.
F-6
Orange Productions, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $23,300 for the period from May 20,
1998 (Inception) through May 31, 2001. The ability of the Company to
continue as a going concern is dependent upon commencing operations
and obtaining additional capital and financing.
The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. The
Company is currently seeking financing to allow it to begin its
planned operations.
(5) Related parties
Counsel to the Company indirectly owns 114,500 shares of the Company
through the 100% sole ownership of the common stock of another company
that has invested in the Company. Also, Counsel's adult son, Vice
President and Director of the Company, directly owns 49,500 shares in
the Company. The Company's President, Secretary, Treasurer and
Director directly owns a 78% interest in the Company, consisting of
1,601,000 shares.
As of May 31, 2001, the Company owed legal counsel for services
performed in the amount of $3,160, and owed the Vice President and
Director of the Company $1,000 for consulting services rendered. These
amounts are presented in Accrued expenses - related party.
On May 29, 2001, counsel loaned the Company $4,000 to cover certain
expenses of the Company. This loan is a demand note carrying a 9%
interest rate.
F-7
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business operations
except for organizational and capital raising activities. The Company has not
realized significant revenues since its inception due to the fact that it has
generally has been inactive, having conducted no business operations except
organizational and fund raising activities since its inception. As a result,
from inception (May 20, 1998) through May 31, 2001, the Company had interest
income of $456 from loans to related parties. Cumulative operating expenses as
of May 31, 2001 were $23,680. Such operating expenses are primarily made up of
an initial start up cost consisting of legal, accounting and administrative
costs. The Company will create high quality images for a wide variety of
applications. It intends to specialize however in medical illustration. The
Company expects that its artwork will be used in educational textbooks, medical
journals, anatomical charts, patient education materials and in the courtroom to
clarify medical evidence for a jury. It may also be used in other settings such
as advertisements.
The Company intends to retain the copyright to the artwork it creates, and
to therefore reuse images in other projects. This will potentially save
consumers the time and expense of regenerating images which the Company has
already been previously hired to create. In fact, after time, the Company hopes
to accumulate a significant library of images previously created by the Company.
Upon doing so, the Company plans to advertise its existing library of graphic
images in the hopes of attracting new clients to the Company.
The Company also plans to provide such other services as: a) web page
design including: layout, design and animation, technical and product
illustration; b) image compositing and retouching; and c) photo manipulation for
special effects, particularly in advertising. In addition, the Company plans
graphic design, such as brochures, logo design and textbook layout.
To produce the artwork, the Company will generally work digitally, using
the most current versions of Adobe Photoshop and Illustrator, and Quark XPress.
These software programs offer the advantage of not having to scan artwork for
placement into a layout application.
The Company will also work traditionally, in pen and ink, watercolor and
colored pencil.
If the Company is unable to generate sufficient revenue from operations to
implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. The Company has set a goal of $500,000
in business revenues in the next twelve (12) months to satisfy cash requirements
and to justify expansion plans.
The Company will, at least initially, be dependent upon Mr. Peroulas to
develop the client base with whom to arrange funding. Mr. Peroulas has extensive
experience in the business and has managed his own business for the last two (2)
years. While Mr. Peroulas has been successful in the past, there can be no
assurance that he will be successful in building the client base necessary for
the successful operation of the Company.
Plan of Operation
If the Company is unable to generate sufficient revenue from operations to
implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings.
The Company filed a Form S-3 Registration Statement publicly registering
2,000,000 shares of of Common Stock pursuant to Rule 415 under the Securities
Act of 1933 on November 1, 2000. The Form S -3 Registration Statement was filed
with the SEC in accordance with the '33 Act and became effective on November 20,
2000. The proceeds of the offering are expected to be used to continue business
operations and expand the scope of the business with particular emphasis on
enhancing the Company's credit lines.
Mr. Peroulas, at least initially, will be solely responsible for developing
OPI's business. However, at such time, if ever, as sufficient operating capital
becomes available, management expects to employ additional staffing and
marketing personnel. In addition, the Company expects to continuously engage in
market research in order to monitor new market trends, seasonality factors and
other critical information deemed relevant to OPI's business.
In addition, at least initially, the Company intends to operate out of the
home of Mr. Peroulas. Mr. Peroulas will begin by finding clients for the
Company. In the event the Company requires additional capital during this phase,
Mr. Peroulas has committed to fund the operation until such time as additional
capital is available.
For the period from May 20, 1998 through May 31, 2001, the Company had a
cumulative loss from operations aggregating $23,680.
Financial Condition, Capital Resources and Liquidity
At May 31, 2001, the Company had assets totaling $5,276 and liabilities of
$8,162 attributable to accrued expenses. During May, June & September, 1998, the
Company issued and sold an aggregate of 403,500 shares of Common Stock to
Georgia and Florida residents for cash consideration totaling $20,175. No
underwriter was employed in connection with the offering and sale of the shares.
The Company claimed the exemption from registration in connection with each of
the offerings provided under Section 3(b) of the Act and Rule 504 of Regulation
D promulgated thereunder, Section 10-5-9(13) of the Georgia Code and Section
517.061(11) of the Florida Code.
The Company has been seeking debt or equity financing in the amount of
$1,000,000. In October 2000, the Company executed a Loan Agreement with Capital
Consultants, Inc. ("Capital"), as Lender, whereby Capital agreed to make loans
to the Company of up to $1,000,000 in installments during the period commencing
with the effective date of the Form S-3 registration statement and ending on
December 31, 2003 (the "Capital Loan Commitment"). Under the terms of the
Capital Loan Commitment, each installment is supported by a convertible note and
security agreement. Further, 2,000,000 shares are to be held by Capital in
escrow for the potential conversion of the notes. The Company granted Capital
registration rights and was obligated to file a Form S-3 within sixty (60) days
of the agreement covering initially 2,000,000 shares of its Common Stock. The
S-3 Registration statement became effective on November 20, 2000. The issuance
of the securities was made pursuant to Regulation D of the Act. The Capital Loan
Commitment, once interest payments begin to accrue, will increase both the short
or long term debt
of the Company. With the Capital Loan Commitment it will incur future
interest expenses. The Capital Loan Commitment, if fully converted, will dilute
the interest of existing shareholders and in the event additional equity is
raised, management may be required to dilute the interest of existing
shareholders further or forgo a substantial interest in revenues, if any. In the
event that the Company is successful in securing additional debt financing, the
amount of such financing, depending upon its terms, would increase either the
short or long term debt of the Company or both.
The ability of the Company to continue as a going concern is dependent upon
the availability of obtaining additional capital and financing from such third
parties.
Net Operating Losses
The Company has net operating loss carryforwards of $23,300, expiring
$8,700, $3,500 and $7,100 and $4,000 at February 28, 2019, 2020, 2021 and 2022.
Until the Company's current operations begin to produce earnings, it is unclear
whether the Company can utilize such carryforwards.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), finding
suitable merger or acquisition candidates, expansion and growth of the Company's
business and operations, and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
or developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
The Company filed a Form S-3 Registration Statement publicly registering
2,000,000 shares of of Common Stock pursuant to Rule 415 under the Securities
Act of 1933 on November 1, 2000. The Form S -3 Registration Statement was filed
with the SEC in accordance with the '33 Act and became effective on November 20,
2000. The proceeds of the offering are expected to be used to continue business
operations and expand the scope of the business with particular emphasis on
enhancing the Company's credit lines.
The Company has been seeking debt or equity financing in the amount of
$1,000,000. In October 2000, the Company executed a Loan Agreement with Capital
Consultants, Inc. ("Capital "), as Lender, whereby Capital agreed to make loans
to the Company of up to $1,000,000 in installments during the period commencing
with the effective date of the Form S-3 registration statement and ending on
December 31, 2003 (the "Capital Loan Commitment"). Under the terms of the
Capital Loan Commitment, each installment is supported by a convertible note and
security agreement. Further, 2,000,000 shares are to be held by Capital in
escrow for the potential conversion of the notes. The Company granted Capital
registration rights and was obligated to file a Form S-3 within sixty (60) days
of the agreement covering initially 2,000,000 shares of its Common Stock. The
issuance of the securities was made pursuant to Regulation D of the Act. The
Capital Loan Commitment, once interest payments begin to accrue, will increase
both the short or long term debt of the Company. With the Capital Loan
Commitment it will incur future interest expenses. The Capital Loan Commitment,
if fully converted, will dilute the interest of existing shareholders and in the
event additional equity is raised, management may be required to dilute the
interest of existing shareholders further or forgo a substantial interest in
revenues, if any. In the event that the Company is successful in securing
additional debt financing, the amount of such financing, depending upon its
terms, would increase either the short or long term debt of the Company or both.
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending May 31, 2001, covered by
this report to a vote of the Company's shareholders, through the solicitation of
proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- --------------------------------------------------------------
3(i).1 Articles of Incorporation of OPI effective May 20, 1998(1)
3(ii).1 Bylaws of OPI(1)
99.1 Form S-3 Registration Statement Under the Securities Act of 1933(2)
- ----------------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
(2) Incorporated herein by reference to the Company's Form 3 Registration
Statement filed with the Securities and Exchange commission on November 1,
2000.
(b) No Reports on Form 8-K were filed during the quarter ended May 31,
2001.
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ORANGE PRODUCTIONS, INC..
(Registrant)
Date: July 12, 2001 By: /s/ Sam Peroulas
--------------------------------------
Sam Peroulas
President, Secretary,
Chief Executive Officer & Director
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
July 12, 2001 By: /s/ Sam Peroulas
----------------------
Sam Peroulas President, Secretary,
Chief Executive Officer & Director