UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2001
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______________
Commission File No. ___________
ORIGIN INVESTMENT GROUP, INC.
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(Exact name of registrant as specified in its charter)
Maryland 36-4286069
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1620 26th Street, Third Floor, Santa Monica, CA 90266
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(Address of principal executive offices) (Zip Code)
(310) 255-8834
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(Registrant's telephone number, including area code)
980 North Michigan Avenue, Suite 1400, Chicago, Illinois 60611
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
has been required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
The registrant has 7,085,569 shares of common stock outstanding as of
September 1, 2001.
PART I - FINANCIAL INFORMATION
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
CONDENDED BALANCE SHEETS
June 30, 2001 (Unaudited) and December 31, 2000
ASSETS
June 30, 2001 December 31,2000
(Unaudited) (Audited)
-------------------------------------------
Cash and Cash Equivalents $ 32,963 $ 66,458
Advances to Officer for Business Expenses - 9,791
Prepaid Expenses 77,600 77,600
------ ------
Total Current Assets 110,563 153,849
Property and Equipment, net: 14,544 12,033
------- -------
TOTAL ASSETS $125,107 $165,882
======= =======
The accompanying notes are an integral part of these financial statements.
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
June 30, 2001 (Unaudited) and December 31, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2001 December 31,2000
(Unaudited) (Audited)
-------------------------------------------
LIABILITIES
Accounts Payable and Accrued Expenses $154,860 $28,550
Loans Payable 75,000 --
------- -------
TOTAL LIABILITIES 229,860 28,550
COMMITMENTS
STOCKHOLDERS' (DEFICIENCY)EQUITY
Common stock, $.001 par value,
50,000,000 shares authorized;
5,585,569 and 5,353,216 issued and
outstanding respectively 5,585 5,353
Paid-in-capital 1,756,780 1,609,770
Less subscription receivable - (198,000)
Deficit accumulated during
development stage (1,867,118) (1,279,791)
----------- -----------
TOTAL STOCKHOLDERS' (DEFICIENCY)EQUITY (104,753) 137,332
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIENCY) EQUITY $125,107 $165,882
========= =========
The accompanying notes are an integral part of these financial statements.
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Six Months ended June 30, 2001 and 2000 and for the
Period April 6, 1999 (Inception) Through June 30, 2001
For the Period
April 6, 1999
(Inception)
Three Months Ended Six Months Ended Through
June 30, June 30, June 30,
2001 2000 2001 2000 2001
------------------------------------------------------------------------
OPERATING EXPENSES
Professional fees $ 99,686 $ 51,024 $ 168,578 $155,175 $524,298
Travel and Entertainment 12,101 54,738 26,429 153,648 275,211
Office Expenses 32,280 25,527 57,941 46,135 297,304
Payments to officers/directors 37,296 14,410 290,241 61,780 485,022
Other -- 801 -- 51,605 -
------- ------- -------- -------- ---------
TOTAL OPERATING EXPENSES 181,363 146,500 543,189 468,343 1,581,835
OTHER EXPENSES ( INCOME) - - -
Interest expense 50,442 (45) 57,476 (156) 92,562
Break up fee - - - 200,000 200.000
Other expenses (13,338) - (13,338) (7,279)
------- ------- -------- --------- ----------
TOTAL OTHER EXPENSES (INCOME) 37,104 (45) 44,138 199,844 285,283
-------- ------- ------- --------- ----------
NET LOSS $(218,467) $(146,455) $(587,327) $(668,187) $1,867,118
======== ======== ======== ======== ==========
NET LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.04) $(0.03) $(0.11) (0.16)
======== ======== ======== =========
WEIGHTED AVERAGE SHARES OUTSTANDING 5,526,885 4,228,127 5,441,517 4,228,127
========= ========= ========= ==========
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2001 and 2000 and for the period April
6, 1999 (Inception) Through June 30, 2000
For the period
Six Months Ended April 6, 1999
June 30, (inception) to
2001 2000 June 30, 2001
-------------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(587,327) $(668,186) $(1,867,118)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 1,678 800 3,219
Officer and Directors Compensation 207,791 207,791
Amortization of Deferred Financing Costs 55,867 98,992
Interest Receivable Officer (9,791)
Stock Based Compensation 6,375 -- 6,375
Changes in assets and liabilities
Miscellaneous receivable -- 4,250
Advances to Officer -- 12,103
Prepaid expenses -- 25,000 (77,600)
Other assets -- 8,550
Accounts payable and accrued expenses 126,311 (5,061) 154,860
------- ------- -------
Total Adjustments 398,022 45,642 383,846
------- ------- -------
NET CASH USED IN OPERATING ACTIVITIES (189,305) (622,544) (1,483,272)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Office Equipment (4,190) - (17,763)
Purchase of Investment Securities - (676) -
------- ----- ------
NET CASH (USED IN) INVESTING ACTIVITIES (4,190) (676) (17,763)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from common stock issuance 85,000 625,248 1,458,998
Proceeds from notes payable 75,000 - 75,000
Repayment of notes payable - - -
-------- -------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 160,000 625,248 1,533,998
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS, FORWARD $(33,495) $2,028 $ 32,963
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (UNAUDITED)CONTINUED
For the Six Months Ended June 30, 2001 and 2000 and for the period April
6, 1999 (Inception) Through June 30, 2000
For the period
Six Months Ended April 6, 1999
June 30, (inception) to
2001 2000 June 30, 2001
-------------------- ---------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS, FORWARD $(33,495) $2,028 $32,963
CASH AND CASH EQUIVALENTS - Beginning 66,458 908 -
--------- ------ --------
CASH AND CASH EQUIVALENTS - Ending 32,963 2,936 $32,963
========= ======== ========
Cash paid during the periods for:
Interest $ - $ - $ -
======== ======== ========
Taxes $ - $ - $ -
======== ======== ========
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - Description of Business
Origin Investment Group, Inc. (the "Company") was incorporated on April 6,
1999 and is in the business of venture capital, which is providing growth
capital to emerging companies. The Company has elected to be regulated as a
business development company under the Investment Company Act of 1940 and will
operate as a non-diversified company. Since its inception, the Company's efforts
have been devoted to raising capital and seeking out companies to invest in.
Accordingly, through the date of these financial statements, the Company is
considered to be in the development stage and the accompanying financial
statements represent those of a development stage enterprise.
The Company has experienced losses since inception and has negative cash
flows from operations and has a stockholders' deficiency. For the six months
ended June 30, 2001, the Company experienced a net loss of $580,952.
The Company's ability to continue as a going concern is contingent upon its
ability to raise additional capital. In addition, the Company's ability to
continue as a going concern must be considered in light of the problems,
expenses and complications frequently encountered by entrance into established
markets and the competitive environment in which the Company operates.
Management is pursuing various sources to raise capital on terms
satisfactory to the Company, if at all. Failure to raise capital may result in
the Company depleting its available funds and not being able to fund its
investment pursuits.
NOTE 2 - Presentation and Significant Accounting Policies
The accompanying balance sheet of the Company as of June 30, 2001, the
related statements of operations and cash flow for the six and three months
ended June 30, 2001 have been prepared, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. The
condensed financial statements and these notes should be read in conjunction
with the financial statements of the Company included in the Company's Annual
Report of Form 10-K for the year ended December 31, 2000 as filed with the
commission. The information furnished herein reflects all adjustments consisting
only of normal recurring accruals, which are, in the opinion of management,
necessary for a fair presentation of the results of operations for the interim
period. Results of operations for the six months ended June 30, 2001 are not
necessarily indicative of results to be expected for the entire year.
Derivative Instruments and Hedging Activities
During the period ended March 31, 2001, the Company adopted SFAS No. 133.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
This statement requires that an entity recognize all derivatives as either
assets or liabilities in its balance sheet and measure those instruments at fair
value. The accounting for changes in the fair value of a derivative instrument
depends on its intended use and the resulting designation. Implementation of
SFAS 133 did not have any material impact on the financial statements of the
Company.
NOTE 3 - Stock purchase agreements
On March 15, 2001, the Company entered into a letter of Intent and
subsequently on April 30, 2001 entered into a share exchange agreement and
investment and conversion agreement whereby the Company would acquire 100% of
the outstanding stock of Vivocom, Inc ("Vivocom") in exchange for 2,000,000
shares of the Company's common stock, subject to an adjustment amount, and
1,000,000 shares of the Company's Series B Convertible preferred stock. The
1,000,000 shares of the Company's Series B Convertible preferred stock will be
convertible into 18,000,000 shares of the Company's common stock provided that
Vivocom meets certain target revenue amounts over a three-year period starting
at the closing date. The Company would also be required to invest a minimum of
$3,250,000 within Vivocom during the first year commencing from the closing date
for development and marketing of which $250,000 would be paid at closing. This
$250,000 will constitute the adjustment amount whereby the number of the
Company's common shares due at closing will be reduced by dividing $250,000 by
the bid price of the Company's common stock on the closing date. The closing of
this acquisition is subject to due diligence by the Company and Vivocom and the
ability of the Company to raise the required capital, among other requirements.
As of the date of this filing the period to close on this transaction has
elapsed and the Company no longer has intensions in pursuing this or any other
transactions with Vivocom.
NOTE 4 - Equity Transactions
On March 28, 2001 the Company sold 33,333 units to an investor for an
aggregate of $10,000 or $.30 per share. Each unit is comprised of one share of
common stock and one common stock warrant. Each warrant is redeemable for one
share of common stock upon the payment of $.40, vests immediately and expires on
July 2, 2005
On April 4, 2001 the Company sold 100,000 units to an investor for an
aggregate of $30,000 or $.30 per unit. Each unit is comprised of one share of
common stock and one and one half common stock warrants or 150,000 common stock
warrants. Each common stock warrant is redeemable for one share of common stock
upon the payment of $.40 per warrant.
On April 17, 2001, the Company offered to sell 150,000 units for $1,500,000
or $10.00 per unit. Each unit is comprised of one Series A Convertible Preferred
stock and ten class C common stock purchase warrants. The Series A Convertible
Preferred Stock is convertible into a certain number of common stock based on a
beneficial conversion price of 75% of the average closing bid price of the
Company's common stock subject to a minimum of $0.40 and a maximum of $5.00 per
share. This preferred stock is convertible in stages commencing 90 days from the
closing date of the offering and occurring thereafter at 90 day intervals over a
12-month period. Each warrant is redeemable for one share of common stock upon
the payment of $0.40 and vests over the twelve-month period. The holders of the
Series A Convertible Preferred stock will also be entitled to a dividend in the
amount of $0.95 per share , which will be paid at the end of the twelve-month
period in cash or common stock at the holder's election. As of the date of this
filing the Company has not completed any subscription agreements and has
terminated the offering
On May 9, 2001 the Company sold 50,000 units to an investor for an
aggregate of $20,000 or $.40 per unit. Each unit is comprised of one share of
common stock and one common stock warrant. Each common stock warrant is
redeemable for one share of common stock upon the payment of $.40 per warrant.
On May 31, 2001 the Company sold 49,019.6 units to an investor for an
aggregate of $25,000 or $.51 per unit. Each unit is comprised of one share of
common stock and six and 1/5 common stock warrant (300,000 warrants). Each
common stock warrant is redeemable for one share of common stock upon the
payment of $.40 per warrant.
NOTE 5 - Short Term Bridge Loan
During the six months ended June 30, 2001, the Company received an
aggregate of $75,000 in the form of short-term bridge loans from investors.
These loans mature from thirty to ninety days after issuance and bear interest
at 12% per annum. In addition the Company granted warrants to purchase 152,500
shares of Common Stock with an exercise price of $0.40 per share. The values of
these warrants have been recorded as deferred financing costs and were amortized
over original the life of these loans. As of June 30, 2001 all of these bridge
loans are past due and the Company has accrued interest through June 30, 2001.
NOTE 6 -Forgiveness of Debt
On March 19, 2001 by consent of the Board of Directors and the advisory
directors, all principal and interest in relation to the stock subscription
receivable from the Chairman of the Board and the Chief Executive Officer in the
amount of $207,791 was forgiven. This debt forgiveness was recognized as
compensation expense during six months ended June 30, 2001.
NOTE 7 - Subsequent Events
Short term bridge loan
On July 15, 2001, the Company received an aggregate of $12,000 in the form
of short-term bridge loan from an investor. This loan matures sixty days after
issuance and bears interest at 12% per annum. In addition the Company granted
warrants to purchase 50,000 shares of Common Stock with an exercise price of
$0.40. The value of these warrants will be recorded as deferred financing costs
and will be amortized over the life of the loan. As of the filing date of this
Form 10-Q, this note is past due.
Equity Transactions
On August 20, 2001 the Company offered to sell pursuant to a private
placement of 5,400,000 shares of its common stock at $0.02 per share for an
aggregate of $108,000. Said shares shall be restricted pursuant to Rule 144 of
the Securities Act of 1933. Proceeds from the sale shall be used for covering
outstanding liabilities of the company and to pay for costs associated with its
continual listing on the NASDAQ OTC:BB exchange. At the time of filing of this
Form 10-Q, One investor for an aggregate had purchased 1,500,000 of these shares
for an aggregate purchase price of $30,000.
ORIGIN INVESTMENT GROUP, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Except for historical information, the following discussion of our
financial condition and results of operations contains forward looking
statements based on current expectations that involve certain risks and
uncertainties. Our actual results could differ materially from those set forth
in these forward-looking statements as a result of a number of factors. Unless
specified otherwise, the terms, "we", "us", "our", "the company", and "Origin"
refer to Origin Investment Group, Inc.
Overview
We are a business development company incorporated in the State of Maryland
on April 6, 1999. We are in the start up stage and we have not had any revenues
to date and we have not made any investments. Since inception our operations
have been limited to identifying, investigating and conducting due diligence
upon private companies involved within the Information Technology industry for
the purpose of investing in such companies. Our strategy has been to identify
several profitable IT service businesses, invest in such companies, consolidate
their operations and technologies to create a profitable e-business solutions
company. As of the date of this filing, we have not made any such investments
and have experienced substantial losses from our operations. We are considering
realigning our focus and business objectives to effectuate a merger with a
private company and have begun investigating merger opportunities with several
private companies. Should we decide to realign our focus to merge with a private
company, we will need to elect out of our status as a business development
company, which may require a vote by our shareholders.
Our financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
We have experienced a loss since inception and have negative cash flows
from operations and have a stockholder's equity deficiency. For the period ended
June 30, 2001, we experienced a net loss of $580,952, as compared to a net loss
of $668,187, for the period ending June 30, 2000.
Our ability to continue as a going concern is contingent upon our ability
to raise additional capital. In addition, the ability to continue as a going
concern must be considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the competitive
environment in which we operate.
These matters raise substantial doubt about the our ability to continue as
a going concern. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from our
possible inability to continue as a going concern.
Liquidity and Capital Resources
Since our inception, we have funded our operations solely through payments
received from the sale of our equity securities and from short term bridge loans
received from certain accredited investors. Our current liquidity and capital
resources are contingent on our ability to continue to fund our operations
through the sale of our equity securities. If we are unsuccessful in continuing
to raise capital through the sale of our securities, we will have difficulty in
meeting our short-term obligations and may cease to continue as a going concern.
Our ability to sell our equity securities to fund operations and to make
investments within identified eligible portfolio companies, in large part, is
contingent upon the depth and liquidity of our secondary market of our common
stock. Any failure to raise sufficient capital pursuant to the current or future
Origin offerings could require us to substantially curtail our
portfolio-investment acquisition efforts in general, and could require us to
cease operations.
Our cash flow requirements have continuously exceeded our capital resources
during the quarter, requiring us to issue additional equity securities for sale
to meet our short-term obligations. We anticipate operating at such a deficit
for the next several months until we are able to secure additional working
capital.
STOCK PURCHASE OF VIVOCOM, INC.
One April 30, 2001 we entered into a share exchange agreement ("Share
Exchange Agreement") and an investment and conversion agreement ("Investment
Agreement") with Vivocom, Inc., a San Jose, California based Internet software
company, which has developed and owns a proprietary and patent pending Internet
routing technology known as the "Smart Internet Switch(TM)". The "Smart Internet
Switch(TM)" or "SIS" is a technology which allows all forms of digital data:
voice, video, remote control, remote application sharing and all other forms of
data to be routed, queued and translated from one device to another, utilizing a
single Internet Protocol (IP) channel. Pursuant to the Share Exchange Agreement,
we have agreed to acquire one hundred percent of the issued and outstanding
capital stock of Vivocom, in exchange for (a) $250,000 cash, (b) 2,000,000
shares of Origin common stock, subject to a downward adjustment ("Adjustment"),
and (c) 1,000,000 Series B Convertible Preferred Stock of Origin ("Series B
Stock"). Pursuant to the Investment Agreement, we agreed to invest an aggregate
of $3,250,000 cash within the operations of Vivocom during the first twelve
months after the closing of the transaction. Also, in the event that Vivocom
achieves certain revenue milestones from the sale and/or licensing of its SIS
technology and related products, the Series B Stock will convert into additional
Origin common stock. In addition, should Vivocom achieve a minimum of $5,000,000
in revenues during the first 12 months of operations after closing, as defined
within the Investment Agreement, Origin agreed to invest an additional
$10,000,000 during the twelve months beginning one year after the date of close
of the transaction. At the time of filing this Form 10-Q, the time to close this
transaction had elapsed and the Company no longer wishes to pursue investing in
or purchasing any interest in Vivocom.
Series A Convertible Preferred Offering
On April 17, 2001 we filed an exempt offering pursuant to Rule 602 of
Regulation E with the Securities and Exchange Commission. Pursuant to this
filing, we are currently offering via private placement to accredited investors
an offering of 150,000 units for $1,500,000 or $10.00 per Unit ("Unit
Offering"). Each unit is comprised of one Series A Convertible Preferred Stock
("Series A Stock") and ten Class C common stock purchase warrants. Each Series A
Stock converts into a certain number of common stock based on a conversion price
calculated on the date of conversion, as described below. The Series A Stock
will automatically convert on four conversion dates, converting one fourth or
twenty five percent (25%) on each such date. The four conversion dates for the
Series A Stock will occur every 90 days, beginning on the date this offering is
closed. The conversion dates are 3, 6, 9, and 12 months after the close of this
offering, which shall occur on the earlier of (1) subscriptions for $1,500,000
is received or (2) July 31, 2001. On each conversion date, 25% of Series A Stock
held by each Series A Stock holder will convert into an amount of common stock
equal to the following formula: Total common shares received on each conversion
date by each holder of Series A Stock= 10*[25% of Total Shares of Series A Stock
held of record by holder as of Close of Private Placement/Conversion Price]. The
conversion price ("Conversion Price") will be calculated as 75% of the average
closing bid price, as quoted by Bloomberg, L.P., for the ten days on which the
NASDAQ Stock Market is open for regular trading immediately preceding the
conversion date, subject to a minimum or "floor" or $0.40 and a maximum or "cap"
of $5.00. For example, an investor who invests $10,000 will receive 1,000 Series
A Stock and 10,000 Class C Warrants. On the first conversion date, assuming the
conversion price as calculated is equal to $2.00, that investor will receive
10*[250/2.00] or 1,250 common shares and will receive a stock certificate for
his/her 750 shares of Series A Stock remaining. At each conversion date, each
Unit holder will be allowed to redeem 25% of his/her warrants upon payment of
redemption price of $0.40 per Class C Warrant. Holders of Series A Stock will
also be entitled to a dividend payment in the amount of $0.95 per Series A Stock
which will be paid on the last conversion date in the form of cash or an amount
of common stock at the Conversion Price, as calculated above, on the final
conversion date, at the holder's election. We intend on utilizing the proceeds
from this Unit Offering to meet our funding obligations pursuant to the Share
Exchange Agreement and Investment Agreement with Vivocom and for working capital
purposes. At the time of filing of this Form 10-Q, this offering was terminated
and no subscription agreements had been received.
Finders Fee Agreement
On April 2, 2001, we entered into a finder's fee agreement ("Finder's
Agreement") with Technology Ventures, LLC, ("TV") in connection with our Unit
Offering. Pursuant to the Finder's Agreement, and as consideration for retaining
TV, we agreed to pay TV a one-time cash payment of $5,000 and common stock
purchase warrants to purchase 75,000 shares of our common stock upon the payment
of a redemption price of $0.30 per warrant. In addition, we agreed to pay 12.5%
of any proceeds received by us from the sale of our Units to any investor
introduced by TV. In addition, for every $10,000 invested by an investor
introduced by TV, we agreed to issue to TV an additional 2,000 common stock
purchase warrants, redeemable for 2,000 shares of our common stock upon the
Payments of $0.30 per warrant. No investors were introduced by TV that purchased
any Units pursuant to our Unit Offering and we terminated this agreement with TV
at the termination of the Unit Offering.
Conversion of Vested Stock Options into Warrants
On August 13, 2001 we agreed to convert 425,000 vested options, which were
previously issued to one director and two former officers and directors of the
company, into warrants to purchase 425,000 shares of common stock of the
Company. 225,000 of the original options were exercisable at a conversion price
of $.10 per share and 200,000 of the original options were exercisable at a
conversion price of $0.20 per share. The newly issued 425,000 warrants are
exercisable as follows: 225,000 warrants are exercisable at $0.10 per warrant
and 200,000 are exercisable at $0.20 per warrant. The warrants are also exempt
from adjustment if exercised within 10 business days from the date the 5
consecutive trading day average closing bid price of the common stock of the
Company exceeds 150% of the redemption price of the warrants.
Results of Operations
Our operations have been limited to obtaining additional capital through
the sale of our equity securities, obtaining short term bridge loans and
negotiating with additional potential eligible portfolio companies for possible
investment. To date we have had negative cash flows and anticipate continuing to
do so in the near future. We anticipate that upon completion of an investment
within an eligible portfolio company, our operational costs will increase
substantially in light of the need to hire additional personnel, including a
Chief Financial Officer and additional support staff. However, we may consider
exploring other alternatives other than seeking investments within eligible
portfolio companies, as the market value of our common stock has significantly
decreased and has made raising capital extremely difficult to fund our
operations as well as accumulating sufficient capital to invest in one or more
eligible portfolio companies. The Company is current evaluating the possibility
of shifting its business focus and may elect out of the business development
company status of the Company. If such a decision is made by the Company, the
shareholders of the Company will vote on the matter of electing out of business
development company status.
Our strategy and plan for the remainder of this fiscal year is to raise
additional capital for operations through the sale of our stock and purchase
interests within one or more profitable private businesses involved in the
Internet infrastructure and services sector of the IT industry. Our investment
strategy has been to acquire controlling interests within two or more "core"
profitable IT businesses involved in ASP, Systems Integration and Internet
Services to create, on consolidation of such entities, a profitable e-business
Solutions Company that provides its customers with web/e-commerce applications,
IT consulting and solutions and other value added services and which utilizes
ASP delivery and co-location hosting strategies on a cost effective basis to end
users. However, in light of the fact that this industry sector is no longer as
favored by the market as it has been in the past and that the market value of
our stock has decreased significantly, we have begun to explore alternative
investment strategies as well as seeking merger candidates for the Company.
SPECIAL NOTICE REGARDING FORWARD LOOKING STATEMENTS
This Form 10-Q, the quarterly report, and certain information provided
periodically in writing or orally by the Company's Officers or its agents
contains statements which constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act, as amended and Section 21E of the
Securities Exchange Act of 1934. The words "expect," "believe," "plan,"
"intend," "estimate", "anticipate", "strategy", "goal" and similar expressions
and variations thereof if used are intended to specifically identify
forward-looking statements. Those statements may appear in a number of places in
this Form 10-Q and in other places, particularly, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things:
(i) the successful completion of investment(s) within one or more eligible
portfolio companies that we have identified, (ii) our liquidity and capital
resources; and (iii) our future performance and operating results.
Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following:
(i) any adverse effect or limitations caused by any governmental
regulations or actions; (ii) any increased competition in our business of
providing venture capital to eligible portfolio companies; (iii) successfully
identifying, negotiating, structuring and making investments within one or more
eligible portfolio companies; (iv) our ability to raise necessary investment
capital within the time frame agreed to between us and the principals of an
eligible portfolio company in order to successfully invest in such eligible
portfolio company; (v) the continued relationship with and success of the
management and owners of an eligible portfolio company after our investment; and
(vi) the continued performance of our eligible portfolio companies with
respect to their operations, including, but not limited to:
a. continued employment of key personnel, hiring of qualified additional
personnel;
b. the eligible portfolio company's mitigation of excessive and
extraordinary costs, and achieving projected profits and additional
customers for their growth.
c. Any other factors which would otherwise impede our eligible portfolio
company in achieving its performance goals upon which we based a
favorable return on our investment.
We undertake no obligation to publicly update or revise the forward looking
statements made in this Form 10-Q or annual report to reflect events or
circumstances after the date of this Form 10-Q and annual report or to reflect
the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We have no securities that are subject to interest rate fluctuations,
foreign currency risk, commodity price or any other relevant market risks during
the period covered by this Quarterly Report. We have not entered into any
hedging transactions or acquired any derivative instruments during the period
covered by this Quarterly Report.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
Equity Transactions
On April 4, 2001, we sold 100,000 units to an investor for an aggregate of
$30,000 or $.030 per Unit. Each unit is comprised of one share of common stock
and one and one half common stock warrants, or 150,000 common stock warrants.
Each common stock warrant is redeemable for one share of common stock upon
Payments of $.40 per warrant.
On May 9, 2001 we sold 50,000 units to an investor for an aggregate of
$20,000, or $0.40 per unit. Each unit is comprised of one share of common stock
and one common stock warrant, or 50,000 warrants. Each common stock warrant is
redeemable for one share of common stock upon the payment of $0.40 per warrant.
On May 31, 2001 we sold 49,019.60 units to an investor for an aggregate of
$25,000, or $0.51 per unit. Each unit is comprised of one share of common stock
and six common stock purchase warrants or 300,000 warrants. Each common stock
warrant is redeemable for one share of common stock upon the payment of $0.40
per warrant.
On August 20, 2001 we offered to sell pursuant to a private placement of
5,400,000 shares of its common stock at $0.02 per share for an aggregate of
$108,000. Said shares shall be restricted pursuant to Rule 144 of the Securities
Act of 1933. Proceeds from the sale shall be used for covering outstanding
liabilities of the company and to pay for costs associated with its continual
listing on the NASDAQ OTC:BB exchange. At the time of filing of this Form 10-Q,
One investor for an aggregate had purchased 1,500,000 of these shares
purchase price of $30,000.
Short Term Bridge Loans
On May 15, 2001, we received $10,000 in the form of a short-term bridge
loan from an investor. The duration of this loan is one month and has an
interest rate of 12% per annum. This investor also received common stock
warrants to purchase an aggregate of 15,000 shares of our common stock
originally exercisable at $.51 per share but adjusted to $0.40 per share and
also received an additional 10,000 common stock purchases warrants to purchase
an additional 10,000 shares of our common stock for extending the due date of
the note.
On May 17, 2001 we received $7,500 in the form of a short-term bridge loan
from an investor and on May 21, 2001 we received an additional $2,500 from that
investor as a short-term bridge loan. The duration of the loans were 90 days and
jointly due on August 21, 2001 and has an interest rate of 12% per annum. This
investor also received common stock purchase warrants to purchase an aggregate
of 25,000 shares of our common stock exercisable at $0.40 per share.
On May 21, 2001 we received $20,000 in the form of a short-term bridge loan
from an investor. The duration of the loan was 90 days and due on August 21,
2001 and has an interest rate of 12% per annum. This investor also received
common stock purchase warrants to purchase an aggregate of 50,000 shares of our
common stock exercisable at $0.40 per share.
On July 15, 2001 we received $12,000 in the form of a short-term bridge
loan from an investor. The duration of the loan was 60 days and due on September
15, 2001 and has an interest rate of 12% per annum. This investor also received
common stock purchase warrants to purchase an aggregate of 50,000 shares of our
common stock exercisable at $0.40 per share.
Item 6. Exhibits and Reports on Form 8-K.
1. Exhibits
Exhibit Description
3.1 Articles of Incorporation of Origin filed on April 6, 1999
(incorporated by reference to Exhibit 3(i) to Form 10 filed by Origin
on August 16, 1999)
3.2 Bylaws of Origin. (Incorporated by reference to Exhibit 3(ii) to Form
10 filed by Origin on August 16, 1999)
4.1 Offering Circular of Unit Offering (Incorporated by reference to Form
1-E filed on April 17, 2001 in connection with Rule 602 Regulation E
Unit Offering.)
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf on September
28, 2001 by the undersigned thereunto duly authorized.
ORIGIN INVESTMENT GROUP, INC.
/s/ Greg H. Laborde
---------------------------------
Greg H. Laborde
Chief Executive Officer