-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IQfCV27yB0BK/uZLp1GGj0qFqz6cxEWEZmBPDLi+26nyPv5Wrkc3N55jXq5qPEle fUPV1ipx/wnATmLvF9Ln5A== 0001021890-97-000014.txt : 19970225 0001021890-97-000014.hdr.sgml : 19970225 ACCESSION NUMBER: 0001021890-97-000014 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19970204 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORION FINANCIAL LTD CENTRAL INDEX KEY: 0000711210 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531] IRS NUMBER: 840858679 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-11043 FILM NUMBER: 97517494 BUSINESS ADDRESS: STREET 1: 80 NORTH HOYT ST CITY: DENVER STATE: CO ZIP: 80226 BUSINESS PHONE: 8183044167 MAIL ADDRESS: STREET 1: 80 NORTH HOYT STREET CITY: DENVER STATE: CO ZIP: 80226 FORMER COMPANY: FORMER CONFORMED NAME: ORION BROADCAST GROUP INC DATE OF NAME CHANGE: 19900130 10-K405 1 ANNUAL REPORT ON FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1996 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: 0-11043 ORION FINANCIAL, LTD. ---------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Colorado 84-0858679 ------------------------------ ------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 80 North Hoyt Street Denver, Colorado 80226 -------------------------------------- (Address of Principal Executive Offices) Registrant's telephone number, including area code: (303) 238-0937 Securities registered pursuant to Section 12(g) of the Act: No Par Value Common Stock ------------------------- (Title of Class) 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 Exchange Act of 1934 during the preceding 12 months and, (2) has been subject to such filing requirements for the past 90 days. YES [ ] NO [X] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of December 31, 1996, the aggregate market value of the Registrant's voting stock held by nonaffiliates was $70,811.76. As of December 31, 1996, Registrant had 4,641,522 shares of its no par value common stock issued and outstanding. PART I ITEM 1. BUSINESS (a) General Development of Business. Orion Financial, Ltd. (the "Company," formerly known as Orion Broadcast Group, Inc.), is a Colorado corporation formed on October 7, 1981. In May 1987, the Company, through its subsidiary, Orion Financial Services Corporation, completed the acquisition and reorganization of FNRS Acquisition Corporation, formerly known as FN Acquisition and an indirect subsidiary of the Company. In fiscal 1988, FNRS Acquisition Corporation acquired FN Realty Services ("FN Realty") and formed FNRS Financial Corporation, both wholly-owned subsidiaries of FNRS Acquisition Corporation. The principal activities of these corporations included providing loan servicing and collection, accounting, data processing and portfolio administration services to the real estate and finance industries. On July 13, 1992, FNRS Financial Corporation, FN Realty, FNRS Acquisition Corporation, Orion Services Company, Orion Financial Services Corporation and Orion Broadcast of Rockford, Inc., all of which were direct or indirect subsidiaries of the Company, filed voluntary petitions in the United States Bankruptcy Court for the District of Colorado to reorganize under Chapter 11 of the Federal Bankruptcy laws. Effective June 25, 1993, the Company sold to Thomas A. Breen, who is currently a director and was formerly the President of the Company, all of the outstanding common stock of Orion Broadcast of Rockford, Inc. and all of the outstanding common stock of Orion Services Company for $10.00. As a result, the Company no longer has any operations. The Company is seeking to enter into a business combination that would provide the Company with operations. Although the Company is currently investigating business combinations, the Company has not agreed upon any specific business combination. (b) Financial Information About Industry Segments. The Company has no industry segments. (c) Narrative Description of Business. The Company has no operations to describe. (i) Products and Services. The Company has no operations and, therefore, has no products or services. (ii) Status of Product. There has been no public announcement of, nor has the Company otherwise made public information about, any new products or industry segments of the Company requiring the investment by the Company of a material amount of its total assets, or which is otherwise material to the Company's operations. (iii) Raw Materials. The availability of raw materials is not applicable to the Company because the Company has no operations. (iv) Patents, Trademarks and Licenses. Not applicable. (v) Seasonality. The Company has no operations that could be seasonal in nature. (vi) Working Capital Items. The Company has no operations and, therefore, has no need to carry any significant amount of inventory or accounts receivable or other items which would require a large amount of working capital. (vii) Customer Dependence. The Company has no customers. (viii) Backlog of Orders. The Company has no operations that would give rise to a backlog of orders. (ix) Government Contracts. The Company has no government contracts. (x) Competition. The Company has no operations and, therefore, it has no competitors. (xi) Research and Development. The Company has not engaged in any material research and development activities during its last three years. (xii) Environmental Regulation. Compliance with federal, state and local provisions regulating the discharge of materials into the environment does not have any material effect on the capital expenditures, earnings and competitive positions of the Company. (xiii) Employees. The Company currently has one part-time employee, Dean H. Boedeker, the Company's President, who receives compensation of $1,000 per month. (d) Financial Information About Foreign and Domestic Operations and Export Sales. The Company has no foreign or domestic operations and no export sales. ITEM 2. PROPERTIES The Company has no properties. ITEM 3. LEGAL PROCEEDINGS The Company is a party to no legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of the Company's security holders during the Company's fiscal quarter ended June 30, 1996. 2 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Information. The Company's common stock is traded in the over-the-counter market. The following table shows the closing high and low bid quotations for the common stock, for the periods indicated, as reported by the National Quotation Bureau, Inc. These quotations represent inter-dealer prices without adjustment for retail markup, markdown, or commission and may not necessarily represent actual transactions. Common Stock ------------------ Fiscal Quarter Ended High Low - -------------------- ---- --- September 1994........................................... .005 .005 December 1994............................................ .005 .005 March 1995............................................... .005 .005 June 1995................................................ .005 .005 September 1995........................................... .005 .005 December 1995............................................ .005 .005 March 1996............................................... .005 .005 June 1996................................................ .005 .005 (b) Holders. As of December 31, 1996, the Company had approximately 999 holders of record of its no par value common stock. (c) Dividends. The Company has not declared cash dividends on its common stock since its inception and the Company does not anticipate paying any dividends in the foreseeable future. (d) Sales of Unregistered Securities. No unregistered equity securities were sold by the Company between July 1, 1995 and June 30, 1996. ITEM 6. SELECTED FINANCIAL DATA The following is selected consolidated financial information concerning the Company. This information should be read in conjunction with the consolidated financial statements appearing elsewhere in this Annual Report. 3
For the Years Ending June 30, ------------------------------------------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- (In thousands except per share information) Revenue .............................. $ -- $ -- $ 7 $ 14 $ 25 Net income (loss) .................... (25) 90 (57) (129) (1,668) Net income (loss) per Com- mon Share ............................ (.01) 0.02 (0.01) (0.03) (0.36) Weighted Average number of Shares Outstanding ................ 4,642 4,642 4,642 4,642 4,642 For the Years Ending June 30, ------------------------------------------------ 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- (In thousands except per share information) Working Capital ...................... 222 246 79 126 158 Total Assets ......................... 222 266 136 213 379 Total Long-Term Liabilities .......... -- -- -- -- -- Total Stockholders' Equity ........... 222 246 156 213 342
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Company has working capital of approximately $221,900 which should be sufficient for the Company to fund its obligations for the next 18 to 24 months provided the Company does not enter into a business combination that provides the Company with business operations. The Company's minimal cash position limits the Company in its future direction because it does not have the ability to raise additional funds through borrowings or equity offerings given its lack of business operations. The long term survivability of the Company depends on whether or not the Company is able to enter into a business combination that would provide the Company with successful business operations. The Company has no material commitments for capital expenditures. Results of Operations The Company had no significant operations during the Company's fiscal years ended June 30, 1996, 1995 and 1994 other than occasional supervision of the bankruptcy proceedings of its subsidiaries. In January 1995, the Company received $208,000 from the settlement proceeds of a lawsuit in which FNRS Acquisition Corporation, a former subsidiary of the Company, was the plaintiff. The settlement proceeds were the only source of cash for the Company during the fiscal year ended June 30, 1995 and resulted in the Company realizing net income of $90,488 for the fiscal year ended June 30, 1995. The Company reported a loss of approximately $25,000 for the fiscal year ended June 30, 1996 and a loss of approximately $57,000 for the fiscal year ended June 30, 1994. Revenue in each fiscal year consisted of interest income on the remaining cash on hand. 4 Inflation The effects of inflation of the Company's operations is not material and is not anticipated to have any material effect in the future. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Item 14(a) for a list of the Financial Statements included in this report following the signature page. The supplementary financial information required by Item 302 of Regulation S-K does not apply to the Company. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in accountants or disagreements of the type required to be reported under this item between the Company and its independent accountants during the fiscal years ended June 30, 1996 and 1995. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Identification of Directors The present term of office of each director will expire at the next annual meeting of shareholders. The name, position with the Company, age of each director and the period during which each director has served are as follows: Name and Position in the Company Age Director Since - -------------------------------- --- -------------- Dean H. Boedeker................................... 62 1981 President, Chief Executive Officer and Director Thomas A. Breen.................................... 40 1987 Director Donald W. Diones................................... 64 1981 Secretary and Director William J. White................................... 58 1995 Director 5 There was no arrangement or understanding between any director or any other person pursuant to which any director was selected as such. (b) Identification of Executive Officers. Each executive officer will hold office until his successor duly is elected and qualified, until his resignation or until he shall be removed in the manner provided by the Company's Bylaws. The Company's executive officers, their ages, positions with the Company and periods during which they served are as follows: Name of Executive Officer and Position in Company Age Officer Since - ------------------------------------------------- --- ------------- Dean H. Boedeker........................................ 62 Chairman of the Board 1991 President and Chief Executive Officer 1993 Donald W. Diones........................................ 64 Secretary 1993 There was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected as an executive officer. (c) Identification of Certain Significant Employees. Not applicable. (d) Family Relationships. Not applicable. (e) Business Experience. Background. The following is a brief account of the business experience during the past five years of each director and executive officer of the Company: 6 Name of Director or Officer Principal Occupation During the Last Five Years - ---------------- ----------------------------------------------- Thomas A. Breen Senior Vice President of WestStar Loan Servicing, Inc., which services loans, since January 1, 1995; President of Orion Broadcast of Rockford, Inc., a holding company which through its subsidiaries provides loan servicing, since June 1991; President of the Company fromJune 1991 to September 1993; Chief Financial Officer of the Company from January 1984 to September 1993; Secretary of the Company from May 1985 through June 1991; and director of the Company since July 1987. Dean H. Boedeker Director of the Company since 1981; Chairman of the Board of Directors of the Company since July 1991; President and Chief Executive Officer of the Company since September 1993; Senior Vice President or Vice President of R A F Financial Corporation, an investment banking firm, since March 1992; Secretary and Treasurer and a director of Diones, Broom, Battreall & Boedeker, Inc., an investment banking firm, from June 1985 to March 1992. Donald W. Diones Director of the Company since 1981; Senior Vice President of Bigelow & Company, an investment banking firm, since May 1995; Senior Vice President of Dougherty Dawkins Strand & Bigelow, Incorporated, an investment banking firm, from October 1992 to May 1995; Senior Vice President of R A F Financial Corporation, an investment banking firm, from March 1992 to October 1992; Presi- dent and a director of Diones, Broom, Battreall & Boedeker, Inc., an investment banking firm, from June 1982 to March 1992. William J. White Director of the Company since 1995; Chairman of Bigelow & Company, an investment banking firm, since May 1995; President and owner of First Denver Financial Corporation, a private investment firm, since April 1992; President of the Affiliated Capital Markets division of Affiliated National Bank Denver (now BankOne), a national bank, from June 1990 to April 1992. Directorships. No director of the Company is a director of an entity that has its securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. 7 (f) Involvement in Certain Legal Proceedings. No event required to be reported hereunder has occurred during the past five years. (g) Promoters and Control Persons. No event required to be reported hereunder has occurred during the past five years. (h) Compliance With Section 16(a) of the Securities Exchange Act of 1934. To the Company's knowledge, during the Company's fiscal year ended June 30, 1996, no director, officer or greater than 10% shareholder of the Company failed to timely file a Form 3, Form 4 or Form 5. ITEM 11. EXECUTIVE COMPENSATION The following table provides certain information pertaining to the compensation paid by the Company and its subsidiaries for services rendered to Dean H. Boedeker, the President of the Company during the Company's fiscal year ended June 30, 1996. No executive officer of the Company was paid over $100,000 in compensation from the Company and its subsidiaries during the Company's fiscal year ended June 30, 1996.
SUMMARY COMPENSATION TABLE Long Term Compensation Annual Compensation Awards ---------------------------------- ------------ Other Year Annual Securities All Other Name and Ended Compen- Underlying Compensa- Principal Position June 30, Salary($) Bonus($) sation($) Options(#) tion($) - ------------------ -------- -------- ------- -------- ---------- ---------- Dean H. Boedeker ......... 1996 12,000(1) -- -- -- -- President and ........... 1995 14,000(1) -- -- -- -- Chief Executive ......... 1994 10,000(1) -- -- 400,000 -- Officer - --------------------
(1) Mr. Boedeker is entitled to $1,000 per month for serving as the President and Chief Executive Officer of the Company. OPTION GRANTS IN LAST FISCAL YEAR No options were granted by the Company to Dean H. Boedeker during the Company's fiscal year ended June 30, 1996. 8 FISCAL YEAR END OPTION VALUES The following table sets forth information with respect to the unexercised options held by Dean H. Boedeker as of June 30, 1996.
Number of Securities Underlying Unexercised Value of In the-Money Options at Options at June 30, 1996(#) June 30, 1996($)(1) -------------------------- -------------------------- Name Exercisable/ Unexercisable Exercisable/ Unexercisable Dean H. Boedeker............ 400,000 - 0 - - 0 - - 0 - - ------------------------
(1) The value of unexercised in-the-money options is the market price of the underlying shares of common stock at June 30, 1996, less the exercise price of the options. Mr. Boedeker did not exercise any options during the Company's fiscal year ended June 30, 1996. Compensation of Directors--Standard Arrangement. Directors of the Company who are not employees or officers receive $500.00 plus expense reimbursement for each Board of Directors meeting which they attend. The Chairman of the Board and President receives $1,000 per month, as a stipend for the services he performs. Compensation of Directors--Other Arrangements. In September 1996, the Board of Directors of the Company extended the expiration dates of options relating to 2,000,000 shares of the Company's common stock that are exercisable at $.03 per share from April 27, 1998, to September 16, 2001. Included in the persons for whom the options were extended were Dean H. Boedeker, Thomas A. Breen, Donald W. Diones, all directors of the Company, and Thomas J. Bonomo, a former director of the Company who currently beneficially owns more than 5% of the Company's outstanding shares of common stock. In September 1996, the Board of Directors of the Company also granted an option to purchase 400,000 shares of the Company's common stock to William J. White, a director of the Company. Mr. White's option is exercisable at $.03 per share until September 16, 2001. 9 Employment Contracts and Termination of Employment and Change-In-Control Arrangements. There is no employment contract between the Company and Dean H. Boedeker or any compensatory plan or arrangement between the Company and Dean H. Boedeker. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (a)(b) Security Ownership of Certain Beneficial Owners and Management. The following table sets forth as of December 31, 1996, the number of shares of the Company's outstanding common stock beneficially owned by each of the Company's current directors and officers, sets forth the number of shares of the Company's common stock beneficially owned by all of the Company's current directors and officers as a group and sets forth the number of shares of the Company's common stock owned by each person who owned of record, or was known to own beneficially, more than 5% of the Company's outstanding shares of common stock:
Amount and Nature of Beneficial Percent Name of Beneficial Owner Ownership (1) of Class - ------------------------ ------------ -------- Dean H. Boedeker........................... 573,072(2) 11.4% Thomas A. Breen............................ 434,375(3) 8.6% Donald W. Diones........................... 531,572(4) 10.5% William J. White........................... 472,250(5) 9.4% All officers and directors as a group (4 Persons)..................... 2,011,269(6) 32.2% Thomas J. Bonomo........................... 582,929(7) 11.6% Edward O. Byrne............................ 400,938(8) 8.0% - ------------------
(1) Each person has the sole voting and investment power over the shares indicated. (2) Includes 400,000 shares underlying a stock option. Dean H. Boedeker's address is 80 North Hoyt Street, Denver, Colorado 80226. (3) Includes 400,000 shares underlying a stock option. Thomas A. Breen's address is 225 South Lake Avenue, 11th Floor, Pasadena, California 91101. 10 (4) Includes 400,000 shares underlying a stock option. Donald W. Diones' address is 1401 Seventeenth Street, Suite 1300, Denver, Colorado 80202. (5) Includes 400,000 shares underlying a stock option. William J. White's address is 1401 Seventeenth Street, Suite 1300, Denver, Colorado 80202. (6) Includes shares underlying the stock options held by Messrs. Boedeker, Breen, Diones and White. (7) Includes 400,000 shares underlying a stock option. Thomas J. Bonomo's address is 388 Market Street, No. 900, San Francisco, California 94111. (8) Includes 400,00 shares underlying a stock option. Edward O. Byrne's address is 303 East Seventeenth Avenue, Suite 700, Denver, Colorado 80203. (c) Changes in Control. There are presently no arrangements of any kind which may at a subsequent date result in a change in control of the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (a)(b) Transactions With Management and Others and Certain Business Relationships. In September 1996, the Board of Directors of the Company extended the expiration dates of options relating to 2,000,000 shares of the Company's common stock that are exercisable at $.03 per share from April 27, 1998, to September 16, 2001. Included in the persons for whom the options were extended were Dean H. Boedeker, Thomas A. Breen, Donald W. Diones, all directors of the Company, and Thomas J. Bonomo, a former director of the Company who currently beneficially owns more than 5% of the Company's outstanding shares of common stock. In September 1996, the Board of Directors of the Company also granted an option to purchase 400,000 shares of the Company's common stock to William J. White, a director of the Company. Mr. White's option is exercisable at $.03 per share until September 16, 2001. 11 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements. Independent Auditor's Report Balance Sheets--As of June 30, 1996 and 1995 Statements of Operations--Years ended June 30, 1996, 1995, and 1994 Statement of Changes in Stockholders' Equity--For the Period from July 1, 1993 through June 30, 1996 Statements of Cash Flows--Years ended June 30, 1996, 1995, and 1994 Notes to Financial Statements (a)(2) Financial Statement Schedules. None. (b) Current Reports on Form 8-K: No Current Reports on Form 8-K were filed during the fiscal quarter ended June 30, 1996. (c) Exhibits. Exhibit 3(A) Articles of Incorporation of Orion Financial, Ltd., as amended (incorporated by reference to Exhibit 3(A) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). Exhibit 3(B) Bylaws of Orion Financial, Ltd., as amended (incorporated by reference to Exhibit 3(B) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). Exhibit 10(A) Orion Financial, Ltd. 1991 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 10(A) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 12 Exhibit 10(B) Form of Option Agreement dated April 27, 1993 (incorporated by reference to Exhibit 10(B) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). Exhibit 10(C) Form of Amendment to Option Agreement dated September 27, 1993 (incorporated by reference to Exhibit 10(C) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). Exhibit 10(D) Form of Amendment No. 2 to Option Agreement. Exhibit 10(E) Form of Option Agreement effective September 16, 1996 between Orion Financial, Ltd. and William J. White. Exhibit 27 Financial Data Schedule. 13 SIGNATURES Pursuant to the requirements of Section 13 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. ORION FINANCIAL, LTD., a Colorado corporation By: /s/ Dean H. Boedeker --------------------------------------- Dean H. Boedeker President, Principal Executive Officer, Chief Financial Officer, and Principal Accounting Officer Dated: February 4, 1997 Pursuant to the requirements of 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. Date Name and Title Signature - ---- -------------- --------- Thomas A. Breen Director --------------------------- February 4, 1997 Dean H. Boedeker /s/ Dean H. Boedeker Director --------------------------- February 4, 1997 Donald W. Diones /s/ Donald W. Diones Director --------------------------- February 4, 1997 William J. White /s/ William J. White Director --------------------------- 14 EXHIBIT INDEX Exhibit Description Page No. - ------- ----------- ------- 3(A) Articles of Incorporation of Orion Financial, Ltd., as N/A amended (incorporated by reference to Exhibit 3(A) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 3(B) Bylaws of Orion Financial, Ltd., as amended N/A (incorporated by reference to Exhibit 3(B) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 10(A) Orion Financial, Ltd. 1991 Non-Qualified Stock Option N/A Plan (incorporated by reference to Exhibit 10(A) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 10(B) Form of Option Agreement dated April 27, 1993 N/A (incorporated by reference to Exhibit 10(B) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 10(C) Form of Amendment to Option Agreement dated September N/A 27, 1993 (incorporated by reference to Exhibit 10(C) to Orion Financial, Ltd.'s Annual Report on Form 10-K for the fiscal years ended June 30, 1993 and 1992). 10(D) Form of Amendment No. 2 to Option Agreement. 10(E) Form of Option Agreement effective September 16, 1996 between Orion Financial, Ltd. and William J. White. 27 Financial Data Schedule. ORION FINANCIAL, LTD. INDEX TO FINANCIAL STATEMENTS Page ---- Independent Auditor's Report.................................................F-2 Balance Sheets - June 30, 1996 and 1995......................................F-3 Statements of Operations - For the Years Ended June 30, 1996, 1995, and 1994................................................................F-4 Statement of Changes in Stockholders' Equity - For the Period from July 1, 1993 through June 30, 1996......................................F-5 Statements of Cash Flows - For the Years Ended June 30, 1996, 1995, and 1994................................................................F-6 Notes to Financial Statements................................................F-7 INDEPENDENT AUDITOR'S REPORT Board of Directors Orion Financial, Ltd. Denver, Colorado We have audited the accompanying balance sheets of Orion Financial, Ltd. as of June 30, 1996 and 1995, and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended June 30, 1996. 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 audits. We conducted our audits in accordance with generally accepted auditing standards. 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 audits provide 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 Financial, Ltd., as of June 30, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 1996, in conformity with generally accepted accounting principles. /s/ HEIN + ASSOCIATES LLP HEIN + ASSOCIATES LLP Denver, Colorado December 12, 1996 F-2
ORION FINANCIAL, LTD. BALANCE SHEETS JUNE 30, ------------------------- 1996 1995 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents ................................................... $ 27,188 $ 18,443 Marketable securities ....................................................... 194,888 247,272 ----------- ----------- TOTAL CURRENT ASSETS ............................................................ $ 222,076 $ 265,715 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES - Accounts payable and accrued expenses ....................................... $ 176 $ 19,241 CONTINGENCY (Note 4) STOCKHOLDERS' EQUITY: Preferred stock, no par value; 200,000,000 shares authorized; no shares issued or outstanding ............................................ -- Common stock, stated value of $.08 a share; 200,000,000 shares authorized; 4,641,522 shares issued and outstanding ..................... 371,322 371,322 Additional paid-in capital .................................................. 4,639,182 4,639,182 Accumulated deficit ......................................................... (4,788,604) (4,764,030) ----------- ----------- Total stockholders' equity .......................................... 221,900 246,474 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................................... $ 222,076 $ 265,715 =========== ===========
See accompanying notes to these financial statements. F-3
ORION FINANCIAL, LTD. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, --------------------------------------- 1996 1995 1994 ---- ---- ---- REVENUE ................................ $ -- $ -- $ -- COSTS AND EXPENSES: General and administrative ......... 37,774 42,430 53,525 Depreciation and amortization ...... -- 2,000 10,000 ----------- ----------- ----------- Total expenses ............ 37,774 44,430 63,525 ----------- ----------- ----------- OTHER INCOME (EXPENSE): Interest income .................... 13,200 5,937 6,794 Other income ....................... -- 128,981 -- ----------- ----------- ----------- 13,200 134,918 6,794 ----------- ----------- ----------- NET INCOME (LOSS) ...................... $ (24,574) $ 90,488 $ (56,731) =========== =========== =========== NET INCOME (LOSS) PER COMMON SHARE ..... $ (.01) $ .02 $ (.01) =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,641,522 4,641,522 4,641,522 =========== =========== ===========
See accompanying notes to these financial statements. F-4
ORION FINANCIAL, LTD. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JULY 1, 1993 THROUGH JUNE 30, 1996 COMMON STOCK Additional Total ----------------------------- Paid-In Accumulated Stockholders' Shares Amount Capital Deficit Equity ------ ------ ---------- ----------- ------------- BALANCES, July 1, 1993 ............ 4,641,522 $ 371,322 $ 4,639,182 $(4,797,787) $ 212,717 ---------- ----------- ----------- ----------- ----------- Net loss ........................ -- -- -- (56,731) (56,731) ---------- ----------- ----------- ----------- ----------- BALANCES, June 30, 1994 ........... 4,641,522 371,322 4,639,182 (4,854,518) 155,986 ---------- ----------- ----------- ----------- ----------- Net income ...................... -- -- -- 90,488 90,488 ---------- ----------- ----------- ----------- ----------- BALANCES, June 30, 1995 ........... 4,641,522 371,322 4,639,182 (4,764,030) 246,474 ---------- ----------- ----------- ----------- ----------- Net loss ........................ -- -- -- (24,574) (24,574) ---------- ----------- ----------- ----------- ----------- BALANCES, June 30, 1996 ........... 4,641,522 $ 371,322 $ 4,639,182 $(4,788,604) $ 221,900 =========== =========== =========== =========== ===========
See accompanying notes to these financial statements. F-5
ORION FINANCIAL, LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, ---------------------------------- 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ..................................................... $ (24,574) $ 90,488 $ (56,731) Adjustments to reconcile to net cash from operating activities: Depreciation and amortization ................................ -- 2,000 10,000 Gain from settlement of litigation ........................... -- (128,981) -- Changes in operating assets and liabilities: (Increase) decrease in -- Restricted cash ..................................... -- 50,000 -- Increase (decrease) in -- Accounts payable and accrued expenses ............... (19,065) 12,346 6,895 --------- --------- --------- Net cash provided by (used in) operating activities .......... (43,639) 25,853 (39,836) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of marketable securities ..................................... (394,661) (247,272) -- Proceeds from sale of marketable securities ........................... 447,045 -- -- Advance to affiliate .................................................. -- (54,571) -- Proceeds from settlement of litigation ................................ -- 208,552 -- --------- --------- --------- Net cash provided by (used in) investing activities .......... 52,384 (93,291) -- --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS ........................... 8,745 (67,438) (39,836) CASH AND CASH EQUIVALENTS, beginning of year .............................. 18,443 85,881 125,717 --------- --------- --------- CASH AND CASH EQUIVALENTS, end of year .................................... $ 27,188 $ 18,443 $ 85,881 ========= ========= ========= SUPPLEMENTAL DISCLOSURES: Cash paid for interest ................................................ $ -- $ -- $ -- ========= ========= ========= Cash paid for taxes ................................................... $ -- $ -- $ -- ========= ========= =========
See accompanying notes to these financial statements. F-6 ORION FINANCIAL, LTD. NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND NATURE OF OPERATIONS: Orion Financial, Ltd. (the Company) was incorporated in Colorado in 1981. Through June 25, 1993, the Company had the following wholly-owned subsidiaries: Orion Services Company (formerly Vehicle Resource Corporation or VRC), Orion Broadcast of Rockford, Inc. (Orion Rockford), and United Leasing Company (inactive). In 1987, Orion Rockford formed Orion Financial Services Corporation (Orion Financial), a 94% owned subsidiary, to enter into the acquisition of FNRS Acquisition Corporation (FNRS Acquisition). FNRS Acquisition acquired FN Realty Services, Inc. (FN Realty) and formed FNRS Financial Corporation (FNRS) in fiscal 1988. The operations of VRC were discontinued in fiscal 1990, while the operations of FN Realty were discontinued during fiscal 1991. July 13, 1992, all of the Company's active subsidiaries declared bankruptcy under Chapter 11 of the bankruptcy code. Effective June 25, 1993, the Company sold its entire interest in VRC and Orion Rockford to the former president of the Company. At present, the Company has no operations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash Equivalents - Cash equivalents are generally comprised of highly liquid instruments with original maturities of three months or less, such as money funds and certificates of deposit. These investments are stated at cost which approximates market value. Net Income (Loss) Per Share - Net income (loss) per share has been computed based on the weighted average number of shares outstanding during the period. Stock options have been excluded from the computation because their effect would be anti-dilutive. Income Taxes - The Company accounts for income taxes on the liability method, which requires 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 tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Marketable Securities - Marketable securities consist of U.S. Treasury bills, which have been classified as trading securities. Trading securities are carried at market value (which approximates cost) at June 30, 1996. Use of Estimates - The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires the Company's management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. F-7 ORION FINANCIAL, LTD. NOTES TO FINANCIAL STATEMENTS Recently Issued Accounting Standards - In October 1995, the Financial Accounting Standards Board issued a new statement titled "Accounting for Stock-Based Compensation" (FAS 123). The new statement is effective for fiscal years beginning after December 15, 1995. FAS 123 encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options, and other equity instruments to employees based on fair value. Companies that do not adopt the fair value accounting rules must disclose the impact of adopting the new method in the notes to the financial statements. Transactions in equity instruments with non-employees for goods or services must be accounted for on the fair value method. The Company currently does not intend to adopt the fair value accounting prescribed by FAS 123 for its employees, and will be subject only to the disclosure requirements prescribed by FAS 123. However, the Company intends to continue its analysis of FAS 123 and may elect to adopt its provisions in the future. 3. RELATED PARTY TRANSACTIONS: On April 7, 1993, the Company entered into an agreement with FNRS Acquisition to advance it funds for a lawsuit it had brought against another party. The agreement limited such advances to a maximum of $50,000, of which $25,000 had been advanced at June 30, 1993. The Company was to be reimbursed for any advances made out of the proceeds of any settlement or judgment received, with proceeds in excess of advances allocated between the Company and FNRS Acquisition. The litigation was settled in January 1995, and the Company received approximately $208,000 from the settlement proceeds, resulting in a gain of approximately $129,000. 4. CONTINGENCY: The Company was named as a co-defendant in a lawsuit brought against FNRS by a former vendor, which alleged breach of contract. Damages were not specified. The claim was dismissed pending settlement of FNRS's bankruptcy, but if the claim is not disposed of in the bankruptcy settlement, it could be refiled. The Company believes it has valid defenses against this claim. 5. STOCKHOLDERS' EQUITY: The Company adopted an incentive stock option plan in 1984 reserving 312,500 shares of common stock for certain employees, officers, and directors. The exercise price was required to be at least the fair market value of the stock on the date of the grant, and the term of each option granted was not to be for more than ten years from the date of the grant. The plan expired in February 1994. If options were granted to individuals owning more than ten percent (10%) of the outstanding common stock, the exercise price had to be at least one hundred ten percent (110%) of the fair market value of the stock on the date of the grant and the term for each option granted would not be for more than five years from the date of the grant. F-8 ORION FINANCIAL, LTD. NOTES TO FINANCIAL STATEMENTS On July 13, 1987, the Board of Directors of the Company granted a stock option under the 1984 stock option plan for 187,500 shares of the Company's common stock to a director and officer of the Company. The option was exercisable at $.72 per share with 62,500 options expiring in July 1992, 1993, and 1994. No options were exercised and they have all expired. In June 1991, the Board granted a stock option under the 1984 plan to an officer of the Company for 30,000 shares exercisable at $.47 per share through 2001. None of these options have been exercised. On November 8, 1991, the Company adopted a 1991 Non-Qualified Stock Option Plan for the directors, officers and employees of the Company. Two million shares are reserved under this plan. The terms of each option granted will not be for more than ten years from date of grant, and no options can be granted under the plan after November 8, 2001. In April 1993, the Board of Directors of the Company granted stock options covering 2,000,000 shares of the Company's common stock, 400,000 shares each to four directors of the Company at that time (including the president of the Company), and 400,000 shares to an individual from the Company's legal counsel. The options are exercisable at $.03 per share. In September 1996, the Board of Directors extended the expiration date of these options to September 2001. None have been exercised to date. In September 1996, the Board of Directors granted stock options covering 400,000 shares to a director, exercisable at $.03 per share through September 2001. The Company has authorized, but unissued, preferred stock which may be issued in series with such preferences as determined by the Company's Board of Directors. 6. INCOME TAXES: There was no provision for income taxes for the year ended June 30, 1995 due to the use of net operating loss carryforwards. The amounts which give rise to the net deferred tax asset (liability) as of June 30, 1996, are as follows: Net operating loss carryforward ......... $ 408,000 Valuation allowance ..................... (408,000) --------- Net deferred tax asset .............. $ -- ========= At June 30, 1996, the Company had net operating losses (NOL) carryforwards for income tax purposes of approximately $1,200,000 that will expire between 1997 and 2011. Upon the sale of the Company's subsidiaries in June 1993, a substantial portion of the NOL carryforwards were lost for use by the Company, as they had been incurred at the subsidiary level. F-9 EX-1 2 EXHIBIT 10(D)--AMEND. NO. 2 TO OPTION AGREEMENT AMENDMENT NO. 2 TO OPTION AGREEMENT THIS AMENDMENT NO. 2 TO OPTION AGREEMENT ("Amendment") is made and entered into effective as of the 16th day of September, 1996, by and between ORION FINANCIAL, LTD., a Colorado corporation ("Company"), and ______________________, an individual ("____________"). Unless otherwise defined herein, defined terms shall have the meaning assigned to them in that certain Option Agreement dated as of April 27, 1993, as amended September 27, 1993, between the Company and Boedeker ("Option"). RECITALS A. ---------- is entitled to subscribe for, purchase and receive 400,000 fully paid and nonassessable shares of the no par value common stock (the "Stock") of the Company pursuant to the Option. B. The Company and ---------- desire to amend the Option as set forth below. AGREEMENT NOW, THEREFORE, in consideration for --------------------- having continued to serve as a director of the Company since the date the Option was granted and of other good and valuable consideration, the receipt, value and sufficiency of which are hereby acknowledged, the Company hereby agrees that the expiration date under Section 2 of the Option shall be extended from April 27, 1998 to September 16, 2001. Except as modified herein and except as modified by the Amendment to Option Agreement dated September 27, 1993, the terms and conditions of the Option are hereby ratified and confirmed. IN WITNESS WHEREOF, the Company and ---------- have executed this Amendment to the Option effective as of September 16, 1996. ORION FINANCIAL, LTD., a Colorado corporation By: -------------------------------- Dean H. Boedeker, President ------------------------------------- EX-2 3 EXHIBIT 10(E)--FORM OF OPTION AGREEMENT THIS OPTION AND THE SHARES ISSUABLE UPON EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE BLUE SKY LAWS. THIS OPTION AND THE SHARES ISSUABLE UPON EXERCISE OF THIS OPTION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN ANY MANNER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH TRANSFER, OR EXCEPT UPON RECEIPT BY ORION FINANCIAL, LTD. OF AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH SALE OR TRANSFER IS NOT IN VIOLATION OF THE ACT OR ANY APPLICABLE SECURITIES LAWS. OPTION AGREEMENT THIS OPTION AGREEMENT ("Agreement") is effective as of the 16th day of September, 1996, by and between Orion Financial, Ltd. ("Orion") and William J. White ("Recipient"). 1. Grant of Option. Orion hereby grants to Recipient an option to purchase 400,000 shares of Common Stock of Orion at a price of $.03 per share. 2. Exercise. Recipient may exercise the option in whole at any time or in part from time to time by giving written notice of exercise together with payment of the option price. The option shall expire on September 16, 2001. 3. Dilution or Other Agreement. a. In the event that additional shares of Common Stock are issued pursuant to a stock split, a stock dividend or similar event, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be increased proportionately with no increase in the total purchase price of the shares then so covered. b. In the event that the shares of Common Stock of the Company from time to time issued and outstanding are reduced by a combination of shares, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be reduced proportionately with no reduction in the total price of the shares then so covered. c. In the event that the Company should transfer assets to another corporation and distribute the stock of such other corporation without the surrender of Common Stock of the Company, then the total purchase price of the shares covered by each outstanding option shall be reduced by an amount which bears the same ratio to the total purchase price then in effect as the market value of the stock distributed in respect of a share of the Common Stock of the Company, immediately following the distribution, bears to the aggregate of the market value at such time of a share of the Common Stock of the Company and the stock distributed in respect thereof. d. In the event of a merger of the Company into another corporation, then any options shall be exercisable into the number of shares and any other consideration which the option holder would have received if he had owned the shares subject to the option on the effective date of the merger. All such adjustments shall be made by the Board, whose determination upon the same shall be final and binding upon the optionees. No fractional shares shall be issued, and any fractional shares resulting from the computations pursuant to this Section shall be eliminated from the respective option. No adjustment shall be made for cash dividends or the issuance to stockholders of rights to subscribe for additional Common Stock or other securities. 2 4. Listing and Registration of Shares. Each option shall be subject to the requirement that if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. 5. Representations and Warranties. a. Recipient hereby makes the following covenants, representations and warrants to Orion: i) The shares of Common Stock to be acquired hereunder will be acquired for his own account, are for investment, and without view to the distribution of any portion thereof. ii) That he is aware that no federal or state agency has made any finding or determination as to the fairness of this investment, nor any recommendation nor endorsement with respect to this investment. iii) That he understands that he must bear the economic risk of this investment for an indefinite period of time because the securities have not been registered under the Securities Act of 1933 or any state securities laws and, therefore, cannot be sold unless registered under such Act or such laws or an exemption from such registration is available. 3 b. It shall be a condition to the transfer of the Common Stock to be acquired hereunder that Recipient and any transferee take all steps which in the opinion of Orion are necessary to ensure compliance with all state and federal securities laws. c. Recipient agrees that the certificates representing the Common Stock to be acquired hereunder shall contain the legend set forth below and that appropriate instructions shall be given to any transfer agent of such stock to insure compliance with such legend: The shares represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") or any state blue sky laws. The shares represented by this certificate may not be sold or otherwise transferred in any manner except pursuant to an effective registration statement covering such transfer, or except upon receipt by Orion Financial, Ltd. of an opinion of counsel satisfactory to it that such sale or transfer is not in violation of the Act or any applicable securities laws. d. Recipient agrees that this Option and the shares issuable upon exercise hereof shall be transferable only in accordance with, in the case of this Option, the legend hereon and in the case of the shares, the legend set forth in Section c above. 6. Attorney Fees. In the event of litigation to enforce any of the provisions of this Agreement, the prevailing party shall be entitled to payment of all its costs and attorneys' fees incurred in connection therewith. 7. Notices. All notices required or authorized by this Agreement shall be in writing and shall refer to this Agreement. All notices shall be effective upon delivery if delivered in person or upon mailing if mailed first-class mail, postage prepaid, as follows: 4 If to Orion: Orion Financial, Ltd. c/o Dean H. Boedeker Orion Financial, Ltd. 80 North Hoyt Street Denver, Colorado 80226 If to Recipient: William J. White 4582 South Ulster Street Parkway Suite 1500 Denver, CO 80237 Either party may change its address for receipt by notice given as indicated herein. 8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. 9. Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, this Agreement shall be deemed amended to delete herefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this paragraph in the particular jurisdiction in which such adjudication is made. 10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute but one and the same instrument. 11. Entire Agreement. This instrument sets forth the entire agreement and understanding among the parties and supersedes all prior agreements, 5 arrangements and understandings related to the subject matter hereof. No provision of this Agreement shall be altered, amended or revoked except by an instrument in writing signed by the parties hereto. 12. Successors and Assigns. Except as herein set forth, this Agreement shall extend to and be binding upon the successors, assigns, heirs and legal representatives of the parties hereto. No party hereto shall have further rights under this Agreement when he ceases to own any shares of Orion. If Recipient, prior to his death, elects or becomes obligated to purchase shares hereunder, the estate of Recipient shall purchase such shares and comply with all the provisions hereof. 13. Miscellaneous. Words used herein, regardless of the number or gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. As used herein "person" shall mean any natural person, corporation, partnership, trust, state or other entity. DATED as of October ___, 1996. ORION FINANCIAL, LTD., a Colorado corporation By: ------------------------------- Dean H. Boedeker, President RECIPIENT: ----------------------------------- WILLIAM J. WHITE 6 EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ORION FINANCIAL, LTD. FOR THE YEAR ENDED JUNE 30, 1996 12-MOS JUN-30-1996 JUL-01-1995 JUN-30-1996 27,188 194,888 0 0 0 222,076 0 0 222,076 176 0 0 0 371,322 4,639,182 222,076 0 0 0 37,774 0 0 0 (24,574) 0 (24,574) 0 0 0 (24,574) (.01) 0
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