U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

  X      Annual Report Pursuant to Section 13 or 15(d) of the Securities
-----    Exchange Act of 1934

For the fiscal year ended:  December 31, 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 Number 0-20837

                           Orion Acquisition Corp. II
                 (Name of Small Business Issuer in Its Charter)



             Delaware                                   13-3863260
      (State of Incorporation)                    (Small Business Issuer
                                                I.R.S. Employer I.D. Number)

401 Wilshire Boulevard - Ste. 1020
Santa Monica, California                                  90401
(Address of principal executive offices)                (Zip Code)

                                 (310) 526-5000
                 (Issuer's Telephone Number Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.01 par value per share
                    Redeemable Class B Unit Purchase Warrants

Check whether the Issuer (1) has 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 requirement for the past 90 days. Yes X No__

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |_|

Issuer's revenues for the fiscal year ended December 31, 2001 were $79,380.

As of March 15, 2002, the aggregate market value of the common stock held by
non-affiliates of the Registrant was approximately $423,802.

As of March 15, 2002, there were 1,102,157 shares of Common Stock, $.01 par
value per share, outstanding.

Transitional Small Business Disclosure Format (check one): Yes ___ No X

Documents Incorporated by Reference: None.


<Page>



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

Orion Acquisition Corp. II ("the Company" or "Orion") was organized on October
19, 1995 to acquire an operating business by purchase, merger, combination or
otherwise. There is no restriction on the means of acquisition or the industry
in which the target business operates.

Since its inception, Orion has not engaged in any substantive commercial
business. Its sole activities have been to evaluate and select a suitable target
business, to structure, negotiate and consummate a business combination with
a target business and to maintain its assets.

Business Objective

The management of Orion intends to identify a target business and effect a
business combination with a target business. It is anticipated that any business
combination will be by negotiation rather than hostile takeover. At this time,
Orion does not have a schedule of when it will be able to initiate or consummate
a specific business combination.

Management has substantial flexibility in identifying and selecting a
prospective target business. In evaluating a prospective target business,
management will consider, among other factors, the following:

(i) the costs associated with effecting the business combination;

(ii) the amount of the equity interest it will be able to acquire in the
business and opportunity for obtain control;

(iii) the growth potential of the target business;

(iv) the experience and skill of the management of the target business and
availability of additional personnel for the target business;

(v) the current and anticipated capital requirements of the target business;

(vi) the competitive position of the target business in its industry;

(vii) the stage of business development of the target business;

(viii) the degree of current or the potential market acceptance of the products
or services of the target business;

(ix) the existence of any proprietary features or intellectual property of the
target business;

(x) the overall financial condition of the target business; and

(xi) the regulatory environment in which the target business operates.

In connection with its search for an acquisition opportunity, Orion may engage
investment banking firms to help it identify and approach target businesses.
Moreover, in evaluating any target business, management will consider retaining
an independent investment banking firm which is a member in good standing of the
NASD to assist the Company in appraising, structuring and negotiating a
potential business combination. In connection with its evaluation of a
prospective target business, management will conduct a due diligence review
which will encompass, among other things, meeting with incumbent management,
inspecting the facilities, and reviewing the financial, legal and other
information which will be made available to Orion.

The time and costs required to select and evaluate a target business (including
conducting a due diligence review) and to structure and consummate the business
combination (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and state "blue sky"
and corporation laws) will not be ascertainable with any degree of certainty
until consummation of the business combination. Any costs incurred in connection
with the identification and evaluation of a prospective target business with
which a business combination is not ultimately consummated will result in an
expense to Orion.


<page>
Orion will use its current working capital and capital resources to consummate a
business combination. In addition, because the resources of Orion are not
sufficient to fund a business combination, it will have to raise additional
capital. The capital may be in the form of equity or debt, and will likely be
based solely on the business operation and financial condition of the target
business. Therefore, it is not possible at this time to determine the amount of
capital that will be needed or available for a business combination. There
currently are no limitations on Orion's ability to privately obtain funds for a
business combination. Nonetheless, Orion's limited resources and lack of
operating history may make it difficult to obtain funds. Because of certain SEC
interpretations and related rules, Orion does not believe it can publicly raise
funds prior to a business combination with an operating company.

The amount and nature of any funding will depend on numerous considerations,
including Orion's capital requirements, potential lenders' evaluation of Orion's
ability to meet debt service on borrowings and the then prevailing conditions in
the financial markets, as well as general economic conditions. Orion does not
have any arrangements with any bank or financial institution to secure
additional financing, and there can be no assurance that such arrangements if
required will be obtainable or otherwise in the best interests of Orion. The
inability of Orion to obtain the funds required to effect a business
combination, or to provide funds for an additional infusion of capital into a
target business, may have material adverse effects on Orion's business
prospects, including the ability to effect a business combination.

Employees

Orion does not have any employees.

ITEM 2. DESCRIPTION OF PROPERTY

Orion's executive office is located at 401 Wilshire Boulevard, Suite 1020, Santa
Monica, California 90401, and its telephone number is (310) 526-5004.

Pursuant to an oral agreement, MDB Capital Group, LLC., a limited liability
company controlled by Christopher A. Marlett, Anthony DiGiandomenico, Dyana
Williams Marlett and James D. Bowyer, each a stockholder, officer and director
of Orion, has agreed that it will make office space and services available to
Orion, as may be required at this time and in the near future. Orion does not
pay any amount for the office space or services.

Orion believes that this facility is adequate to meet its needs in the
foreseeable future pending the consummation of a business combination.

ITEM 3. LEGAL PROCEEDINGS

On July 1, 1999, a Class B Warrantholder of Orion brought an action ("July
Action") against Orion, its former directors and certain others. On January 31,
2000, the plaintiff filed a notice dismissing the July Action without prejudice.
On January 28, 2000 the court ordered the notice of dismissal. The Company and
the plaintiff agreed that Orion will make an exchange offer to all holders of
the Class B Warrants. The exchange offer must be made after Orion completes its
first business combination of a target company that results in the acquisition
of one or more companies with operating businesses and results in Orion having
assets in excess of $5,000,000. The terms of the exchange offer will require
each holder to pay the $.125 exercise price of the Class B Warrant and surrender
the warrant for one share of common stock and one Right. The Right will provide
for the issuance of additional shares of common stock based on a formula in the
event that Orion makes an acquisition or consummates a merger and the post
transaction company does not meet the specified targets of a $7,000,000 net
worth immediately after the transaction and a minimum common stock price of
$5.75 for ten days during the two year peiod following the transaction, subject
to certain adjustment, terms and conditions.

On October 31, 2000, Orion filed with the Supreme Court of the State of New
York, County of New York, a summons and complaint in an action entitled Orion
Acquisition Corp. II v. Mentmore Holdings Corporation, Mentmore Holdings, Inc.,
Richard L. Kramer, William L. Remley, Richard C. Hoffman, Robert D. Frankel, J.
Thomas Chase, and Michael D. Schenker. Messrs. Karmer, Remley, Hoffman, Frankel
and Chess are former directors and/or officers of Orion. Messrs. Remley and
Kramer are or were officers and/or directors of one or more of the Mentmore
defendants. Mr. Hoffman is or was an officer of one or more of the Mentmore
defendants. In the complaint, Orion alleges a series of causes of action,
including a claim against the former Orion directors for breach of fiduciary
duty in connection with the diversion of a corporate opportunity, and against
other defendants for aiding and abetting the claimed breach of fiduciary duty
and duty of loyalty.

On March 28, 2002, a Settlement Agreement was reached between the Company and
the Mentmore defendents, subject to execution and court approval. The settlement
calls for certain of the defendents to surrender 71,250 shares of Orion's common
stock which were owned by those defendents. In addition, certain of the
defendents will surrender a warrant to purchase 100,000 shares of the Company's
stock, which the Company will cancel.

                                       2
<Page>



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The common stock, and Class B Warrants are traded in the over-the- counter
market and quoted on the OTC Bulletin Board under the symbols MTMR and MTMRZ.

The following table sets forth the range of high and low closing trading prices
for the common stock and Class B Warrants for the last two fiscal years. The OTC
Bulletin Board is an inter-dealer automated quotation system sponsored and
operated by the NASD for equity securities not included in the Nasdaq System.
The over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily reflect actual
transactions.




                                                    Class B
                           Common Stock             Warrants
                           High     Low          High      Low
Year Ended
December 31, 2001:
   First Quarter....        .875    .875         .125     .125
   Second Quarter...        1.26    1.26         1.00     1.00
   Third Quarter....        1.40    1.01         1.01     1.00
   Fourth Quarter...        1.30    1.30          .35      .35

Year Ended
December 31, 2000:
   First Quarter....      1.375    1.375        .031     .031
   Second Quarter...      1.437    1.437        .640     .640
   Third Quarter....       -0-      -0-          -0-      -0-
   Fourth Quarter...      1.125    1.125        .125     .125



Holders

As of March 15, 2001, there were 30 holders of record of the common stock and
one holder of record of the Class B Warrants. Since many of the securities are
held in street name, Orion believes that there is a substantial number of
beneficial holders of the securities.

Dividends

Orion does not expect to pay any dividends prior to the consummation of a
business combination, and thereafter anticipates that for the foreseeable future
any earnings will be retained for use in its business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements

When used in this Form 10-KSB and in future filings by Orion with the Securities
and Exchange Commission, the words or phrases "will likely result, "management
expects," or "the company expects," "will continue," "is anticipated,"
"estimated" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Readers are cautioned not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties, some of which are
described below, that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Orion has no
obligation to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect anticipated events or circumstances
occurring after the date of such statements.

                                       3
<page>

The selected financial information for the years ended December 31, 2000 and
2001, is derived from the financial statements of Orion which have been audited
by Singer Lewak Greenbaum & Goldstein LLP, Orion's independent auditors. This
information should be read in conjunction with the financial statements and
related notes and other financial information included herein.



Statement of Operations Data                           2001            2000
----------------------------                           ----            ----

General and administrative expenses.............    (158,112)      (148,844)
Interest Income.................................      77,197         94,488
Provision for (benefit from) taxes..............       1,338        (26,653)
Net Income (loss)...............................     (80,070)       (27,703)
Weighted average common shares
Outstanding.....................................   1,102,157      1,013,758

Balance Sheet Data:

Total Assets....................................    2,154,742     2,234,764
Total liabilities...............................       40,896        40,848
(Deficit) earnings accumulated during
development stage...............................     (100,220)      (20,150)
Stockholders' equity............................    2,113,846     2,193,916



Orion is a development stage company, and to date its efforts have been limited
to organizational activities, consummating an initial public offering, seeking a
business combination and maintaing its assets. Orion has not yet consummated a
business combination. Accordingly, Orion will not achieve any revenues (other
than investment income) until, at the earliest, the consummation of a business
combination.

Orion currently has its executive office at the location of MDB Capital Group
LLC whose principals are members of the board of directors of Orion. MDB Capital
Group has agreed to make office space and services available to Orion, as may be
required at this time and in the near future. Orion does not pay any amount for
these services.

At December 31, 2001, Orion had $2,112,047 in cash. Orion will invest its assets
in U.S. Treasury bills and/or cash until such time as assets are needed for a
business combination or acquisition.

Orion has not incurred any debt in connection with its organizational
activities. No cash compensation is currently or will be paid to any officer
director until after the consummation of a business combination. Since the role
of present management after a business combination is uncertain, Orion has no
ability to determine what remuneration, if any, will be paid to such persons
after a business combination.

Orion believes it has more than adequate capital to fund its operations pending
a business combination.

Orion will use its current working capital and capital resources to consummate a
business combination. In addition, because the resources of Orion are not
sufficient to fund a business combination, it will have to raise additional
capital. The capital may be in the form of equity or debt, and will likely be
based solely on the business operations and financial condition of the target
business. Therefore, it is not possible at this time to determine the amount of
capital that will be needed or available for a business combination. There
currently are no limitations on Orion's ability to privately obtain funds for a
business combination. Because of certain SEC interpretations and related rules,
Orion does not believe it can publicly raise funds prior to a business
combination with an operating company unless it has in excess of $5,000,000 in
assets.

Orion's limited resources and lack of operating history may make it difficult to
obtain funds. The amount and nature of any funding will depend on numerous
considerations, including Orion's capital requirements, potential lenders'
evaluation of Orion's ability to meet debt service on borrowings and the then
prevailing conditions in the financial markets, as well as general economic
conditions. Orion does not have any arrangements with any bank or financial
institution to secure additional financing, and there can be no assurance that
such arrangements if required will be obtainable or otherwise in the best
interests of Orion. The inability of Orion to obtain the funds required to
effect a business combination, or to provide funds for an additional infusion of
capital into a target business, may have material adverse effects on Orion's
business prospects, including the ability to effect a business combination.

                                        4
<page>

ITEM 7. FINANCIAL STATEMENTS

                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                        CONTENTS
                                                               December 31, 2001

--------------------------------------------------------------------------------


                                                               Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS              F-2

FINANCIAL STATEMENTS

     Balance Sheet                                              F-3

     Statements of Operations                                   F-4

     Statements of Stockholders' Equity                      F-5 - F-6

     Statements of Cash Flows                                F-7 - F-8

     Notes to Financial Statements                          F-9 - F-18




                                      F-1
<Page>






               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders
Orion Acquisition Corp. II

We have audited the accompanying balance sheet of Orion Acquisition Corp. II (a
development stage company) as of December 31, 2001, and the related statements
of operations, stockholders' equity, and cash flows for each of the two years in
the period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. We have not audited
the balance sheets and the statements of operations, stockholders' equity, and
cash flows for the periods from October 19, 1995 (inception) to December 31,
1999, which constituted retained earnings aggregating to $7,553. These periods
have been audited by other auditors.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Orion Acquisition Corp. II as
of December 31, 2001, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.

/s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, California
January 17, 2002


                                      F-2


<Page>
                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                                   BALANCE SHEET
                                                               December 31, 2001

--------------------------------------------------------------------------------


                                     ASSETS

Assets
     Cash                                                      $      2,112,047
     Income taxes receivable                                             26,694
     Deferred tax assets                                                    221
     Other assets                                                        15,780
                                                               ----------------
                  Total assets                                 $      2,154,742
                                                               ================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accrued expenses                                          $         40,896
                                                               ----------------

         Total current liabilities                                       40,896
                                                               ----------------

Contingencies

Stockholders' equity
     Preferred stock, $0.01 par value
         1,000,000 shares authorized
         110 shares issued and outstanding                                    1
     Common stock, $0.01 par value
         10,000,000 shares authorized
         1,102,157 shares issued and outstanding                         11,022
     Additional paid-in capital                                       2,203,043
     Deficit accumulated during the development stage                  (100,220)
                                                               ----------------

              Total stockholders' equity                              2,113,846
                                                               -----------------

                  Total liabilities and stockholders' equity   $      2,154,742
                                                               ================





              The accompanying notes are an integral part of these
                             financial statements.

                                       F-3

<Page>


                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF OPERATIONS
                              For the Years Ended December 31, 2001 and 2000 and
           for the Period from October 19, 1995 (Inception) to December 31, 2001

--------------------------------------------------------------------------------
<Table>
<Caption>


                                                                                                      For the
                                                                                                    Period from
                                                                                                    October 19,
                                                                                                       1995
                                                                      For the Year Ended           (Inception) to
                                                                            December 31,            December 31,
                                                                --------------------------------
                                                                      2001              2000             2001
                                                                ----------------  ---------------  ----------------
<S>                                                              <C>                    <C>            <C>

Operating expenses
   General and administrative expenses                          $        158,112  $       148,844  $        961,478
   Stock-based compensation expense                                            -                -           100,000
                                                                ----------------  ---------------  -----------------

     Total operating expenses                                            158,112          148,844         1,061,478
                                                                ----------------  ---------------  -----------------

Loss from operations                                                    (158,112)        (148,844)       (1,061,478)
                                                                ----------------  ---------------  ----------------

Other income (expense)
   Other income                                                            2,183                -             2,183
   Interest income                                                        77,197           94,488         1,560,877
   Interest expense                                                            -                -           (57,694)
                                                                ----------------  ---------------  ----------------

     Total other income (expense)                                         79,380           94,488         1,505,366
                                                                ----------------  ---------------  ----------------

Income (loss) before provision for (benefit
   from) income taxes                                                    (78,732)         (54,356)          443,888

Provision for (benefit from) income taxes                                  1,338          (26,653)          268,467
                                                                ----------------  ---------------  ----------------

Net income (loss)                                               $        (80,070) $       (27,703) $        175,421
                                                                ================  ===============  ================

Basic and diluted
   Loss per share                                               $          (0.07) $         (0.03)
                                                                ================  ===============

   Weighted-average common shares
     outstanding                                                       1,102,157        1,013,758
                                                                ================  ===============

</Table>

              The accompanying notes are an integral part of these
                             financial statements.

                                       F-4


<Page>
                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF STOCKHOLDERS' EQUITY
           For the Period from October 19, 1995 (Inception) to December 31, 2001
--------------------------------------------------------------------------------
<Table>
<Caption>
                                                                                                   Common Stock Subject to
                                              Preferred Stock              Common Stock              Possible Redemption
                                            Shares       Amount        Shares         Amount         Shares        Amount
                                            ------       ------        ------         ------         ------        ------
<S>                                         <C>             <C>           <C>           <C>          <C>              <C>
October 19, 1995 (inception)                     -    $       -             -       $      -             -       $      -
Issuance of founders' shares                                           16,500            165
                                            ------       ------        ------         ------         ------        ------

Balance, December 31, 1995                       -            -        16,500            165             -              -
Issuance of founders' shares                                           58,500            585
Sale of private placement shares                                       15,000            150
Sale of convertible preferred stock            110            1
Sale of 800,000 shares, net of
     underwriting discounts and offering
     costs                                                            640,000          8,000       160,000      1,600,000
Accretion to redemption value of stock                                                                   -         42,118

Net income
                                            ------       ------        ------         ------         ------        ------

Balance, December 31, 1996                     110            1       730,000          8,900       160,000      1,642,118
Issuance of options
Accretion to redemption value of common
     stock                                                                                               -         90,122
Net income
                                            ------       ------        ------         ------         ------        ------

Balance, December 31, 1997                     110            1       730,000          8,900       160,000      1,732,240
Accretion to redemption value of common
     stock                                                                                                         85,484
Net income
                                            ------       ------        ------         ------         ------        ------
</Table>
<Table>
<Caption>

                                                                    Deficit
                                                                  Accumulated
                                               Additional           during the
                                                Paid-In            Development
                                                Capital              Stage              Total
                                              -----------         -------------      -------------
<S>                                            <C>               <C>                <C>

October 19, 1995 (inception)                  $         -         $           -      $           -
Issuance of founders' shares                        1,485                                    1,650
                                              -----------         -------------      -------------

Balance, December 31, 1995                          1,485                     -              1,650
Issuance of founders' shares                        5,265                                    5,850
Sale of private placement shares                    7,350                                    7,500
Sale of convertible preferred stock                10,999                                   11,000
Sale of 800,000 shares, net of
     underwriting discounts and offering
     costs                                      7,107,405                                8,715,405
Accretion to redemption value of stock                                 (42,118)                  -
Net income                                                              42,651              42,651
                                              -----------         -------------      -------------

Balance, December 31, 1996                      7,132,504                  533           8,784,056
Issuance of options                               100,000                                  100,000
Accretion to redemption value of common
     stock                                                              (90,122)
Net income                                                                4,266              4,266
                                              -----------         -------------      -------------

Balance, December 31, 1997                      7,232,504               (85,323)         8,888,322
Accretion to redemption value of common stock                           (85,484)
Net income                                                              140,517            140,517
                                              -----------         -------------      -------------
</Table>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-5
<Page>
                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                              STATEMENTS OF STOCKHOLDERS' EQUITY
           For the Period from October 19, 1995 (Inception) to December 31, 2001
--------------------------------------------------------------------------------
<Table>
<Caption>
                                                                                                   Common Stock Subject to
                                              Preferred Stock              Common Stock              Possible Redemption
                                            Shares       Amount        Shares         Amount         Shares         Amount
                                            ------       ------        ------         ------         ------         ------
<S>                                         <C>             <C>           <C>           <C>          <C>              <C>
Balance, December 31, 1998                    110        $    1       730,000     $   8,900          160,000      $1,817,724
Elimination of redemptive common stock                                160,000                       (160,000)     (1,600,000)
     provision
Reversal of accretion to redemptive
     value of common stock                                                                                 -        (217,724)
Dividend
Liquidating dividend
Net income
                                            ------       ------        ------         ------         ------        ------

Balance, December 31, 1999                    110             1       890,000        8,900                 -              -
Sale of private placement shares                                      212,157        2,122
Net loss
                                            ------       ------        ------         ------         ------        ------

Balance, December 31, 2000                    110             1     1,102,157       11,022                 -              -
Net loss
                                            ------       ------        ------         ------         ------        ------


Balance, December 31, 2001                    110       $     1     1,102,157     $ 11,022                 -      $       -
                                            ======       ======        ======         =======        ======       ======
</Table>
<Table>
<Caption>

                                                                    Deficit
                                                                  Accumulated
                                               Additional           during the
                                                Paid-In            Development
                                                Capital              Stage              Total
                                              -----------         -------------      -------------
<S>                                            <C>               <C>                <C>
Balance, December 31, 1998                 $       7,232,504   $         (30,290)  $       9,028,839
Elimination of redemptive common stock
     provision                                     1,600,000                                       -
Reversal of accretion to redemptive
     value of common stock                                               217,724                   -
Dividend                                                                (275,641)           (275,641)
Liquidating dividend                              (6,924,359)                             (6,924,359)
Net income                                                                95,760              95,760
                                                  -----------       -------------       -------------

Balance, December 31, 1999                         1,908,145               7,553           1,924,599
Sale of private placement shares                     294,898                                 297,020
Net loss                                                                ( 27,703)            (27,703)
                                                  -----------       -------------       -------------

Balance, December 31, 2000                         2,203,043             (20,150)          2,193,916
Net loss                                                                 (80,070)            (80,070)
                                                  -----------       -------------       -------------

Balance, December 31, 2001                 $       2,203,043    $       (100,220)  $        2,113,846
                                                  ==========       =============        =============

</Table>
              The accompanying notes are an integral part of these
                             financial statements.


                                      F-6
<page>

                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              For the Years Ended December 31, 2001 and 2000 and
           for the Period from October 19, 1995 (Inception) to December 31, 2001

--------------------------------------------------------------------------------
<Table>
<Caption>


                                                                                                      For the
                                                                                                    Period from
                                                                                                    October 19,
                                                                                                       1995
                                                                      For the Year Ended           (Inception) to
                                                                            December 31,            December 31,
                                                                --------------------------------
                                                                      2001              2000             2001
                                                                ----------------  ---------------  ----------------
<S>                                                                <C>                  <C>          <C>

Cash flows from operating activities
   Net income (loss)                                            $        (80,070) $       (27,703) $        175,421
   Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities
       Note discount amortization                                              -                -            37,500
       Stock-based compensation expense                                        -                -           100,000
       (Increase) decrease in
         Income taxes receivable                                             538          (27,232)          (26,694)
         Deferred taxes assets                                                 -             (221)             (221)
         Other assets                                                     13,848          (12,568)          (15,780)
       Increase (decrease) in
         Accrued expenses                                                     48          (80,415)           40,896
                                                                ----------------  ---------------  ----------------

Net cash provided by (used in) operating activities                      (65,636)        (148,139)          311,122
                                                                ----------------  ---------------  ----------------

Cash flows from investing activities
   Purchase of United States Treasury bills                                    -                -        (1,506,615)
   Sales or maturities of investments                                      1,559          (85,588)          (84,029)
                                                                ----------------  ---------------  ----------------

Net cash provided by (used in) investing activities                        1,559          (85,588)       (1,590,644)
                                                                ----------------  ---------------  ----------------

Cash flows from financing activities
   Dividend                                                                    -                -        (7,200,000)
   Issuance of units and redeemable Class B
     purchase warrants, net of offering costs                                  -                -         8,677,905
   Issuance of unsecured promissory notes                                      -                -           100,000
   Repayment of unsecured promissory notes                                     -                -          (100,000)
   Proceeds from related party note                                            -                -            35,000
   Repayment of related party note                                             -                -           (35,000)
   Issuance of founders' shares                                                -                -             7,500
   Issuance of private placement shares                                        -          297,020           304,520
   Issuance of convertible preferred stock                                                                   11,000
                                                                ----------------  ---------------  ----------------

Net cash provided by financing activities                                      -          297,020         1,800,925
                                                                ----------------  ---------------  ----------------

</Table>


              The accompanying notes are an integral part of these
                             financial statements.

                                       F-7
<page>


                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                        STATEMENTS OF CASH FLOWS
                              For the Years Ended December 31, 2001 and 2000 and
           for the Period from October 19, 1995 (Inception) to December 31, 2001

--------------------------------------------------------------------------------

<Table>
<Caption>

                                                                                                      For the
                                                                                                    Period from
                                                                                                    October 19,
                                                                                                       1995
                                                                      For the Year Ended           (Inception) to
                                                                            December 31,           December 31,
                                                                --------------------------------
                                                                      2001              2000             2001
                                                                ----------------  ---------------  ----------------
<S>                                                            <C>                         <C>        <C>

Net increase (decrease) in cash                                 $        (64,077) $        63,293  $        521,403

Cash, beginning of period                                                585,480          522,187                 -
                                                                ----------------  ---------------  ----------------

Cash, end of period                                             $        521,403  $       585,480  $        521,403
                                                                ================  ===============  ================


Supplemental disclosures of cash flow information

   Income taxes paid                                            $              -  $             -  $         61,000
                                                                ================  ===============  ================


</Table>


              The accompanying notes are an integral part of these
                             financial statements.

                                       F-8

<page>

                                                      ORION ACQUISITION CORP. II
                                                   (A DEVELOPMENT STAGE COMPANY)
                                                   NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 2001

--------------------------------------------------------------------------------

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

         Orion Acquisition Corp II (the "Company") was incorporated in Delaware
         on October 19, 1995 for the purpose of raising capital to fund the
         acquisition of an unspecified operating business. All activity to date
         relates to the Company's formation, fundraising and maintaining its
         assets. To date, the Company, as a development stage company, has not
         effected a Business Combination (as defined below).

         The Company's management has broad discretion with respect to the
         specified application of the assets of the Company, although
         substantially all of the assets are currently intended to be generally
         applied toward consummating a business combination with an operating
         business ("Business Combination").


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Development Stage Enterprise
         The Company is a development stage company as defined in Statement of
         Financial Accounting Standards ("SFAS") No. 7, "Accounting and
         Reporting by Development Stage Enterprises." The Company is devoting
         all of its present efforts to its formation and to fundraising, and its
         planned principal operations have not yet commenced. All losses
         accumulated since inception have been considered as part of the
         Company's development stage activities.

         Comprehensive Income
         The Company presents comprehensive income in accordance with SFAS No.
         130, "Reporting Comprehensive Income." This statement establishes
         standards for reporting comprehensive income and its components in a
         financial statement. Comprehensive income as defined includes all
         changes in equity (net assets) during a period from non-owner sources.
         Examples of items to be included in comprehensive income, which are
         excluded from net income, include foreign currency translation
         adjustments and unrealized gains and losses on available-for-sale
         securities. Comprehensive income is not presented in the Company's
         financial statements since the Company did not have any of the items of
         comprehensive income in any period presented.

         Fair Value of Financial Instruments
         The Company measures its financial assets and liabilities in accordance
         with generally accepted accounting principles. For certain of the
         Company's financial instruments, including cash and accrued expenses,
         the carrying amounts approximate fair value due to their short
         maturities.

                                      F-9
<Page>


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Accounting for Stock-Based Compensation
         The Company accounts for its stock-based compensation plans in
         accordance with the provisions of Accounting Principles Board ("APB")
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations. As such, compensation expense is recorded on the date
         of grant only if the current market price of the underlying stock
         exceeds the exercise price. The Company adopted the disclosure
         requirements of SFAS No. 123, "Accounting for Stock-Based
         Compensation." Under SFAS No. 123, the Company must disclose certain
         pro forma information related to employee stock option grants as if the
         fair value-based method defined in SFAS No. 123 had been applied.

         Income Taxes
         The Company accounts for income taxes in accordance with SFAS No. 109,
         "Accounting for Income Taxes," which requires the recognition of
         deferred tax assets and liabilities for the expected future tax
         consequences of events that have been included in the financial
         statements or tax returns. Under this method, deferred income taxes are
         recognized for the tax consequences in future years of differences
         between the tax bases of assets and liabilities and their financial
         reporting amounts at each year-end based on enacted tax laws and
         statutory tax rates applicable to the periods in which the differences
         are expected to affect taxable income. Valuation allowances are
         established, when necessary, to reduce deferred tax assets to the
         amount expected to be realized. The provision for income taxes
         represents the tax payable for the period and the change during the
         period in deferred tax assets and liabilities.

         Loss per Share
         The Company calculates loss per share in accordance with SFAS No. 128,
         "Earnings per Share." Basic loss per share is computed by dividing the
         loss available to common stockholders by the weighted-average number of
         common shares outstanding. Diluted loss per share is computed similar
         to basic loss per share except that the denominator is increased to
         include the number of additional common shares that would have been
         outstanding if the potential common shares had been issued and if the
         additional common shares were dilutive. Because the Company has
         incurred net losses, basic and diluted loss per share are the same.

                                      F-10
<Page>


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Loss per Share (Continued)
         The following potential common shares have been excluded from the
         computation of diluted net loss per share for all periods presented
         because they are not exercisable until after a Business Combination:

                                              For the Year Ended
                                                   December 31,
                                       -----------------------------------
                                             2001               2000
                                       ---------------    ----------------

             Class A Warrants                    -             880,000
             Class B Warrants              358,000             390,100
             Series A convertible
                preferred stock            110,000             110,000
             Stock option                   10,000              10,000
             Option to purchase
                Class A Warrants           100,000             100,000

         Estimates
         The preparation of financial statements requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and liabilities and disclosure of contingent assets and liabilities at
         the date of the financial statements and the reported amounts of
         revenue and expenses during the reporting period. Actual results could
         differ from those estimates.

         Recently Issued Accounting Pronouncements
         In June 2001, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 141, "Business Combinations." This statement addresses
         financial accounting and reporting for business combinations and
         supersedes APB Opinion No. 16, "Business Combinations," and SFAS No.
         38, "Accounting for Pre-Acquisition Contingencies of Purchased
         Enterprises." All business combinations in the scope of this statement
         are to be accounted for using one method, the purchase method. The
         provisions of this statement apply to all business combinations
         initiated after June 30, 2001. Use of the pooling-of-interests method
         for those business combinations is prohibited. This statement also
         applies to all business combinations accounted for using the purchase
         method for which the date of acquisition is July 1, 2001 or later. This
         statement is not applicable to the Company.


                                      F-11
<Page>


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recently Issued Accounting Pronouncements (Continued)
         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
         Intangible Assets." This statement addresses financial accounting and
         reporting for acquired goodwill and other intangible assets and
         supersedes APB Opinion No. 17, "Intangible Assets." It addresses how
         intangible assets that are acquired individually or with a group of
         other assets (but not those acquired in a business combination) should
         be accounted for in financial statements upon their acquisition. This
         statement also addresses how goodwill and other intangible assets
         should be accounted for after they have been initially recognized in
         the financial statements. It is effective for fiscal years beginning
         after December 15, 2001. Early application is permitted for entities
         with fiscal years beginning after March 15, 2001, provided that the
         first interim financial statements have not been issued previously.
         This statement is not applicable to the Company.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
         Retirement Obligations." This statement applies to legal obligations
         associated with the retirement of long-lived assets that result from
         the acquisition, construction, development, and/or the normal operation
         of long-lived assets, except for certain obligations of lessees. This
         statement is not applicable to the Company.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets." This statement addresses
         financial accounting and reporting for the impairment or disposal of
         long-lived assets. This statement replaces SFAS No. 121, "Accounting
         for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
         Disposed of," the accounting and reporting provisions of APB No. 30,
         "Reporting the Results of Operations - Reporting the Effects of
         Disposal of a Segment of a Business, and Extraordinary, Unusual, and
         Infrequently Occurring Events and Transactions," for the disposal of a
         segment of a business, and amends Accounting Research Bulletin No. 51,
         "Consolidated Financial Statements," to eliminate the exception to
         consolidation for a subsidiary for which control is likely to be
         temporary. This statement is not applicable to the Company.


NOTE 3 - CASH

         The Company maintains cash deposits at one financial institution.
         Deposits at the financial institution are insured by the Federal
         Deposit Insurance Corporation up to $100,000. As of December 31, 2001,
         the uninsured portions amounted to $364,462. The Company has not
         experienced any losses in such accounts and believes it is not exposed
         to any significant credit risk on cash.

                                      F-12
<Page>


NOTE 3 - CASH (Continued)

         The Company also maintains cash deposits at one investment brokerage.
         Deposits at the investment brokerage are insured by the Securities
         Investment Protection Corporation ("SIPC") up to $100,000 with an
         additional non-SIPC insurance coverage up to $900,000. As of December
         31, 2001, the uninsured portions amounted to $649,146. The Company has
         not experienced any losses in such accounts and believes it is not
         exposed to any significant credit risk on cash.


NOTE 4 - INVESTMENTS - HELD TO MATURITY

         On December 31, 2000, a substantial portion of the assets of the
         Company were invested in United States Treasury bills having various
         original maturities of less than six months. During the year ended
         December 31, 2001, the securities matured and were held as cash in a
         money market account.


NOTE 5 - CONTINGENCIES

         Litigation
         On July 1, 1999, a Class B Warrant-holder of the Company brought suit
         against the Company, its former directors, and certain other third
         parties. On January 31, 2000, the plaintiff filed a notice dismissing
         the action without prejudice. On January 28, 2000, the court ordered
         the notice of dismissal. The Company and the plaintiff agreed that the
         Company will make an exchange offer to all holders of the Class B
         Warrants. The exchange offer must be made after the Company completes
         its first Business Combination with a target company that results in
         the acquisition of one or more companies with operating businesses and
         results in the Company having assets in excess of $5,000,000.

         Upon payment of an exercise price of $0.125 per Class B Warrant, each
         Class B Warrant will be exchanged for one share of common stock and one
         Right. The Right will provide for the issuance of additional shares of
         common stock based on a formula in the event that (a) the Company makes
         an acquisition or consummates a merger and (b) the post-transaction
         company does not meet the specified targets of a $7,000,000 net worth
         immediately after the transaction and a minimum common stock price of
         $5.75 for 10 days during the two-year period following the transaction,
         subject to certain adjustment, terms, and conditions.

                                      F-13
<Page>


NOTE 5 - CONTINGENCIES (Continued)

         Litigation (Continued)
         The former directors of the Company who were named as defendants in the
         suit have made demand upon the Company for reimbursement of attorneys'
         fees incurred in defense of the suit prior to its voluntary dismissal.
         The former directors contend that they are entitled to reimbursement of
         attorneys' fees under a provision of Delaware corporate law. The
         Company is considering the reimbursement request. No accrual has been
         made for any potential reimbursement in the accompanying financial
         statements.

         On October 31, 2000, the Company filed with the Supreme Court of the
         State of New York, County of New York, a summons and complaint in an
         action entitled Orion Acquisition Corp. II v. Mentmore Holdings
         Corporation, Mentmore Holdings, Inc., Richard L. Kramer, William L.
         Remley, Richard C. Hoffman, Robert D. Frankel, J. Thomas Chess, and
         Michael Schenker. Messers. Kramer, Remley, Hoffman, Frankel, and Chess
         are former directors of the Company. Messrs. Remley and Kramer were
         officers and/or directors of one or more of the Mentmore defendants.
         Mr. Hoffman is or was an officer of one or more of the Mentmore
         defendants.

         In the complaint, the Company alleges a series of causes of action,
         including a claim against the Company's former directors for breach of
         fiduciary duty in connection with the diversion of a corporate
         opportunity, and against other defendants for aiding and abetting the
         claimed breach of fiduciary duty and duty of loyalty. On March 28,
         2002, a settlement agreement was signed between the Company and the
         Mentmore defendants, subject to execution and court approval. The
         settlement calls for certain of the defendants to surrender 71,250
         shares of the Company's common stock that were owned by those
         defendants. In addition, certain of the defendants will surrender a
         warrant to purchase 100,000 shares of the Company's common stock, which
         the Company will cancel.


NOTE 6 - STOCKHOLDERS' EQUITY

         Private Placements
         In January 1996, the Company completed a private offering to a limited
         group of investors which consisted, in the aggregate, of $100,000 in
         unsecured promissory notes bearing interest at 8% per annum. In
         addition, as part of this private placement, the Company also issued to
         the private placement investors 15,000 shares of common stock for
         $7,500. The notes were repaid as a result of the consummation of the
         Company's offering, together with accrued interest totaling $3,533. The
         notes were discounted $37,500 for financial statement reporting
         purposes as a result of the fair value attributed to the common stock
         issued to the private placement stockholders. The effective interest
         rate on the notes was 45%.

                                      F-14
<Page>


NOTE 6 - STOCKHOLDERS' EQUITY (Continued)

         Private Placements (Continued)
         During June 2000, the Company issued 212,157 shares of common stock in
         exchange for proceeds of $297,020. Of the shares issued, 149,300 valued
         at $209,020 were issued to related parties.

         Public Offering
         On July 9, 1996, the Company sold 800,000 units ("Units") in the
         offering and 320,000 Class B redeemable common stock purchase warrants
         ("Class B Warrants"). Subsequently, on August 5, 1996, the underwriters
         exercised their over-allotment option to purchase 38,100 Class B
         Warrants. Each Unit consists of one share of the Company's common stock
         and one Class A redeemable common stock purchase warrant ("Class A
         Warrants").

         Each Class A Warrant entitles the holder to purchase from the Company
         one share of common stock at an exercise price of $9, commencing on the
         date of a Business Combination and expiring on the fifth anniversary of
         the issuance of the Class A Warrant, and each Class B Warrant entitles
         the holder to purchase one Unit at an exercise price of $0.125,
         commencing on the date of a Business Combination and expiring on the
         first anniversary from such date.

         The Class A Warrants and Class B Warrants are redeemable, each as a
         class, in whole and not in part, at a price of $0.05 per warrant upon
         30 days' notice at any time, provided that the Company has consummated
         a Business Combination and that the last sale price of the common stock
         on all 10 trading days ending on the day immediately prior to the day
         on which the Company gives notice of redemption has been $11 or higher.
         The Class A Warrants expired on July 1, 2001.

         Convertible Preferred Stock
         The Company is authorized to issue 1,000,000 shares of preferred stock
         with such designations, voting, and other rights and preferences as may
         be determined from time to time by the Board of Directors.

         The Company has outstanding 110 shares of Series A preferred stock,
         which is owned by an indirect affiliate. The purchase price for such
         shares was $11,000 in the aggregate, which was paid simultaneously with
         the consummation of the offering. The Series A preferred stock is
         non-voting, and each share is convertible into 1,000 shares of common
         stock for a period of one year following the consummation of a Business
         Combination.

                                      F-15
<Page>


NOTE 6 - STOCKHOLDERS' EQUITY (Continued)

         Options
         On July 9, 1996, the Company granted an option to purchase 100,000
         Units to a Delaware corporation which is affiliated with two officers
         of the Company. The option is exercisable for a period of three years
         from the date of a Business Combination at an exercise price of $12.50
         per Unit. The option is fully vested; however, the option will be
         canceled if these officers cease to serve as directors or executive
         officers of the Company prior to the Business Combination. The shares
         may be issued upon exercise of the option, and underlying warrants may
         not be sold or otherwise transferred for 120 days subsequent to the
         first Business Combination. The option was canceled as part of a
         settlement agreement dated March 28, 2002.

         Effective January 10, 1997, an investment bank engaged to assist the
         Company was granted an option to purchase 10,000 shares of common
         stock, par value $0.01 per share, owned by the above affiliated company
         at a purchase price of $0.10 per share. The Company recorded a non-cash
         charge of $100,000 that represents the fair value of the option at the
         date of grant as calculated using the Black-Scholes option pricing
         model.

         Warrants
         In connection with the offering, the Company issued warrants to the
         underwriters for 80,000 Units at an exercise price of $11 per Unit and
         32,000 Class B Warrants at an exercise price of $6.1875 per Unit. These
         warrants are initially exercisable for a period of four years
         commencing on July 2, 1997. The underwriter's warrants contain
         anti-dilution provisions providing for adjustment of the number of
         warrants and exercise price under certain circumstances. The
         underwriter's warrants grant to the holders thereof certain rights of
         registration of the Units and Class B Warrants which may be issued upon
         exercise of the underwriter's warrants.

         Dividend
         On July 26, 1999, the Company returned an aggregate of $7,200,000, or
         $9 per share, to the owners of shares sold in the offering. On November
         3, 1999, with stockholder approval, the funds remaining in the escrow
         accounts were distributed to the Company to be used for general
         corporate purposes. Of the $7,200,000 returned to stockholders,
         $275,641 represents accumulated earnings and $6,924,359 represents
         additional paid-in capital.

                                      F-16
<Page>


NOTE 6 - STOCKHOLDERS' EQUITY (Continued)

         Elimination of Redemptive Common Stock Provision
         On October 22, 1999, a special meeting of the stockholders was held,
         and pursuant to a solicitation of proxies, the stockholders approved a
         change in the Certificate of Incorporation to eliminate the requirement
         that a Business Combination be approved by not less than two-thirds of
         the outstanding common stockholders and a proposal to terminate the
         escrow fund and distribute the amounts therein to the stockholders. The
         funds in the escrow account were distributed prior to December 31,
         1999.

         The elimination of the requirement that a Business Combination be
         approved by not less than two-thirds of the outstanding common
         stockholders of the Company removed the event that would give rise to
         the possible redemption of the Company's common stock. As such, the
         Company eliminated the redemptive common stock provision for the number
         of potentially redemptive common shares at their initial per share
         price and reversed the related cumulative accretion of earnings on
         those potentially redemptive funds.


NOTE 7 - INCOME TAXES

         The following table presents the current and deferred income tax
         provision for (benefit from) federal and state income taxes for the
         years ended December 31, 2001 and 2000:

                                                  2001               2000
                                            ---------------    ----------------
                Current
                    Federal                 $           538    $        (27,232)
                    State                               800                 800
                                            ---------------    ----------------

                                                      1,338             (26,432)
                                            ---------------    ----------------

                Deferred
                    Federal                               -               4,568
                    State                                 -              (4,789)
                                            ---------------    ----------------

                                                          -                (221)
                                            ---------------    ----------------

         Provision for (benefit from)
            income taxes                    $         1,338    $        (26,653)
                                            ===============    ================

                                      F-17
<Page>


NOTE 7 - INCOME TAXES (Continued)

         The provision for (benefit from) income taxes differs from the amount
         that would result from applying the federal statutory rate for the
         years ended December 31, 2001 and 2000 as follows:

                                                    2001               2000
                                                    ----               ----

                Statutory regular federal
                    income benefit rate               (34.0)%            (34.0)%
                State taxes                            (6.0)              (6.0)
                Prior year adjustments                 11.1                 -
                Change in valuation allowance          33.5                 -
                Other                                   1.5               (2.5)
                                                -------------     --------------

     Total                                              6.1%             (42.5)%
                                                =============     ==============

         The tax effects of temporary differences which give rise to the
         deferred tax provision (benefit) at December 31, 2001 consisted of the
         following:

                Deferred tax assets
                Net operating loss carryforward                $         23,176
                Less valuation allowance                                 22,955
                                                               ----------------

         Net deferred tax assets                               $            221
                                                               ================

         The valuation allowance increased by $22,955 and $0 during the years
         ended December 31, 2001 and 2000, respectively. The deferred income tax
         benefit of the loss carryforward is the only significant deferred
         income tax asset or liability of the Company and has been offset by a
         valuation allowance since management does not believe the
         recoverability of this deferred tax asset during the next fiscal year
         is more likely than not. Accordingly, a deferred income tax benefit for
         the year December 31, 2001 ended has not been recognized in these
         financial statements.

         As of December 31, 2001, the Company had net operating loss
         carryforwards for federal and state income tax purposes of
         approximately $54,000 and $132,000, respectively. The net operating
         loss carryforwards begin expiring in 2021 and 2011, respectively.


NOTE 8 - RELATED PARTY TRANSACTIONS

         The Company uses the services and some of the employees of an
         affiliated company and has its executive offices at the offices of the
         affiliate. The Company does not pay any amount to or for the employees
         of the affiliate or any rent for these offices. The Company reimburses
         the affiliate for documented out-of-pocket expenses incurred on its
         behalf.

                                      F-18

<page>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE

         (a)      Previous independent accountants

                  (i) On November 29, 2000, BDO Seidman LLP, the independent
accountants of Orion resigned.

                  (ii) The reports of BDO Seidman, LLP on the financial
statements during the past two fiscal years contained no adverse opinion or
disclaimer of opinion.

                  (iii) Orion's board of directors participated in and approved
the decision to change independent accountants on November 29, 2000.

                  (iv) In connection with its audits for the two most recent
fiscal years and review of unaudited financial statements through November 29,
2000, there have been no disagreements with BDO Seidman, LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
BDO Seidman, LLP would have caused them to make reference thereto in their
report on the financial statements.

                  (v) During the two most recent fiscal years and through
November 29, 2000, there have been no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)).

                  (vi) The Registrant requested that BDO Seidman, LLP furnish it
with a letter addressed to the Securities and Exchange Commission stating
whether or not it agrees with the above statements. A copy of such letter was
filed as Exhibit 16.1 to Form 8-K/A on December 8, 2000.

         (b)      New independent accountants

                  Orion engaged Singer Lewak Greenbaum & Goldstein LLP as its
new independent accountants as of November 29, 2000. During the two most recent
fiscal years and through November 29, 2000, Orion did not consult with Singer
Lewak Greenbaum & Goldstein LLP regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on Orion's consolidated financial
statements, and no written report or oral advice was provided to Orion by
concluding there was an important factor to be considered by Orion in reaching a
decision as to an accounting, auditing or financial reporting issue; or (ii) any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(iv) of Regulation S-K.



                                       5


<Page>







                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The current directors and officers of Orion are as follows:


                               Director
Name                      Age   Since              Position
----                      ---  --------            --------

Christopher A. Marlett    37     1999     Chairman of the Board, Chief
                                             Executive Officer and Director

Anthony DiGiandomenico    35     1999     Chief Financial Officer and Director

Dyana Williams Marlett    35     1999     Chief Operating Officer, Secretary,
                                             Treasurer and Director

James D. Bowyer           63     1999     Director

William C. Fioretti       50     1999     Director



Christopher A. Marlett is a co-founder and member of MDB Capital Group LLC, an
investment banking firm formed in December 1996. MDB is an NASD member
broker-dealer which specializes in working with growth oriented companies. Prior
to forming MDB, Mr. Marlett was employed as a Managing Director by Laidlaw
Equities from May of 1995 to December of 1996 where he was in charge of
Laidlaw's West Coast investment banking activities. From March of 1991 to May of
1995 Mr. Marlett was affiliated with Drake Capital Securities where he formed a
division called Marlett/Mazzarella and directed all investment banking
activities of the division. Mr. Marlett holds a degree in Business
Administration from the University of Southern California. Mr. Marlett is the
Chairman of Lipid Sciences Inc. (LIPD/Nasdaq)a company engaged in medical
research.

Anthony DiGiandomenico is a co-founder and member of MDB, an investment banking
firm formed in December 1996. Mr. DiGiandomenico served as President and CEO of
the Digian Company from 1988 through 1996, a real estate development company and
holds a Bachelors of Science Degree in Finance from the University of Colorado
and a Masters in Business Administration from the Haas Business School at the
University of California, Berkeley.

Dyana Williams Marlett is a co-founder of MDB and acts as its Chief Operating
Officer. From March of 1995 to December of 1996, Ms. Marlett was employed by
Laidlaw Equities as a Vice President handling investment banking and syndicate
activities for the West Coast. From October of 1990 through March of 1995, Ms.
Marlett was employed at Drake Capital Securities where she acted as Syndicate
Manager. Ms. Marlett holds several licenses with the National Association of
Securities Dealers. Ms. Marlett is the wife of Mr. Christopher Marlett.

James D. Bowyer is a co-founder and member of MDB, an investment banking firm
formed in December 1996. Mr. Bowyer was employed at Laidlaw Equities from August
of 1995 to December of 1996. Mr. Bowyer's career has spanned over thirty years
in the securities industry focused on financing and investing in growth
companies. In 1976 Mr. Bowyer formed MacDonald, Krieger & Bowyer a full service
broker-dealer based in Beverly Hills, California, which was subsequently sold in
1982. Mr. Bowyer then founded his own investment firm, J.D. Bowyer & Co. which
he operated from 1983 to 1995.

William C. Fioretti is the founder of Agritech Labs, and has served as its
president and a director since 1992. Agritech Labs is a research and development
company which concentrates on veterinary bio-pharmaceuticals. Mr. Fioretti also
founded of Mannatech Incorporated (NASDAQ:MTEX) a publicly traded direct
marketing company specializing in consumer health products. Mr. Fioretti served
Mannatech as the Chief Executive Officer from 1993 through 1996, as Chief
Scientific Officer from 1996 through 1997 and a director from inception until
his retirement from Mannatech in November of 1997. Mr. Fioretti completed his
undergraduate education at Appalachian State University from 1970-1974 receiving
a Bachelor of Science Biology, completed his graduate training in biochemistry
at the Medical University of South Carolina from 1974-1978 and did post graduate
training at the University of Florida from 1978-1980.

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Members of the board of directors generally are elected annually by the
stockholders and may be removed as provided in the General Corporation Law of
the State of Delaware and the articles of incorporation and by-laws. Officers
are appointed by the board of directors and serve at their pleasure. The board
of directors does not have any committees at this time.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
officers, directors and persons who beneficially own more than ten percent of a
registered class of the equity securities of Orion ("ten percent stockholders")
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and ten percent stockholders are charged by SEC regulation
to furnish Orion with copies of all Section 16(a) forms they file. Based solely
upon its review of the copies of such forms received by it, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, Orion believes that, during the fiscal year ended December 31,
2001, all filing requirements applicable to its executive officers, directors
and ten percent stockholders were fulfilled except that Christopher Marlett and
Dyana Williams Marlett did not file a Form 4 on a timely basis to report an
exempt transfer under Section 16a-13.

ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation

Orion does not currently compensate any of the officers or other employees.
Orion does not intend to provide any remuneration to officers or employees until
after a business combination, if any, of an operating business.

Compensation of Directors

Directors of Orion receive no cash compensation for serving on the board of
directors, but they receive reimbursement of reasonable expenses incurred in
attending meetings.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of March 15, 2001 based on
information obtained from the persons named below. It states the beneficial
ownership of shares of the common stock by (i) each person known to be the owner
of more than 5% of the outstanding shares of common stock, (ii) each director
and (iii) all executive officers and directors as a group.



                                Amount and Nature of Beneficial     Percent
Name of Beneficial Owner (1)            Ownership                  of Class (2)

Christopher A. Marlett                   246,000                     22.3%
Anthony DiGiandomenico                    81,025(3)                   7.3%
Dyana Williams Marlett                    38,000(4)                   3.4%
James D. Bowyer                           26,700(5)                   2.4%
William C. Fioretti                      105,000                      9.5%
All directors and executive
    officers as a group                  496,725(6)                  45.1%
    (five persons)



(1) The person's address is care of the Company at 401 Wilshire Boulevard -
Suite 1020, Santa Monica, California 90401.

(2) Percentage includes all outstanding shares of Common Stock plus any shares
of common stock that the person has the right to acquire within 60 days pursuant
to options, warrants, conversion privileges or other rights.

(3) Includes 3,000 shares held in an individual retirement account.

(4) Includes 3,000 shares held in custodian accounts.

(5) See Notes 3 and 4 above.


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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Orion uses the services and some of the employees of MDB Capital Group LLC and
has its executive offices at the offices of MDB Capital Group LLC. Orion does
not pay any amount to or for the employees of MDB Capital Group LLC or any rent
for these offices. Orion reimburses MDB Capital Group LLC for documented out of
pocket expenses incurred on its behalf.

On May 5, 1999 and July 20, 1999, MDB Capital Group LLC lent to Orion an
aggregate of $35,000. This loan was represented by unsecured promissory notes
due on demand, bearing no interest. The proceeds of these loans were used for
working capital. The principal on these loans was repaid on December 8, 1999.
Each of Christopher A. Marlett, Anthony DiGiandomenico, James D. Bowyer and
Dyana Williams Marlett are officers and/or directors of the Company and
principals MDB Capital Group LLC.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K



         (a) Exhibits

3.1      Amended and Restated Certificate of Incorporation of the Registrant
         (Exhibit 3.1)(1)

3.2      Amendment dated October 22, 1999 to Amended and Restated Certificate of
         Incorporation (Exhibit 3.2)(2)

3.3      By-laws of the Registrant (Exhibit 3.2)(1)

4.1      Warrant Agency Agreement between American Stock Transfer & Company and
         the Registrant (Exhibit 4.2)(1)

4.2      Form of Representative's Warrant Agreement of Registrant (Exhibit
         4.5)(1)

4.3      Form of Common Stock Certificate of Registrant (Exhibit 4.1)(1)

4.4      Form of Class B Unit Purchase Agreement of the Registrant (Exhibit
         4.4)(1)

4.5      Form of Class A Common Stock Purchase Warrant Certificate of the
         Registrant (Exhibit 4.3)(1)

10.1     Underwriting Agreement (Exhibit 1.1)(1)

10.2     License Agreement, dated August 25,1995, between Bright Capital, Ltd.
         and the Company (Exhibit 10.3)(1)

10.3     Management Unit Purchase Option Plan (Exhibit 10.4)(1)

16.1     Letter from BDO Seidman, LLP dated December 7, 2000 (Exhibit 16.1) (3)

------------------------------

(1)      Incorporated by referenced from Registration Statement 33-03252

(2)      Registrant's Annual Report on Form 10-KSB for the year ended December
         31, 1999

(3)      Registrant's Report on Form 8-K/A filed on December 8, 2000


(b) Reports on Form 8-K

(1) Registrant's Report on Form 8-K filed on December 4, 2000

                                       8
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                                   SIGNATURES

Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 29th day of
March, 2002.

                           ORION ACQUISITION CORP. II





/s/ Christopher A. Marlett
------------------------------
Christopher A. Marlett
Chairman of the Board and
Chief Executive Officer



In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.





                    Name                       Title                      Date

/s/ Christopher A. Marlett   Chairman of the Board               March 29, 2002
--------------------------   and Chief Executive Officer
Christopher A. Marlett       (Principal Executive Officer)

/s/ Anthony DiGiandomenico   Chief Financial Officer             March 29, 2002
--------------------------   and Director
Anthony DiGiandomenico       (Chief Accounting Officer and
                             Principal Accounting Officer)

/s/ Dyana Williams Marlett   Chief Operating Officer,            March 29, 2002
--------------------------   Secretary, Treasurer and
Dyana Williams Marlett       Director

                             Director                            March __, 2002
--------------------------
James D. Bowyer

                             Director                            March __, 2002
--------------------------
William C. Fioretti



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