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, 1995
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.
[ ]
As of March 11, 1996, the aggregate market value of the Registrant's voting
stock held by nonaffiliates was $15,208.
As of March 11, 1996, Registrant had 4,641,522 shares of its no par value
common stock issued and outstanding.
Total Pages __
<PAGE>
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 Orion Financial Services
Corporation, completed the acquisition and reorganization of FNRS Acquisition
Corporation, formerly known as FN Acquisition, an indirect subsidiary of the
Company, including the purchase of FN Realty Services ("FN Realty"), and the
formation of 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 Services, Inc.,
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 Orion Financial, Ltd., 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 of the Company and who was previously 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 at this time the Company is 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.
(ii) Status of Product. There has been no public announcement of, nor has
the Company otherwise made public information about, any new product or industry
segment 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.
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<PAGE>
(x) Competition. The Company has no operations.
(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 operations.
ITEM 2. PROPERTIES
The Company has no properties.
ITEM 3. LEGAL PROCEEDINGS
The Company is not involved in any material pending 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, 1995.
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 range of 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.
<TABLE>
<CAPTION>
Common Stock
---------------------
Fiscal Quarter Ended High Low
- -------------------- ---- -----
<S> <C> <C>
September 1993...................................... .01 .005
December 1993....................................... .02 .01
March 1994.......................................... .01 .005
June 1994........................................... .005 .005
September 1994...................................... .005 .005
December 1994....................................... .005 .005
March 1995.......................................... .005 .005
June 1995........................................... .005 .005
</TABLE>
(b) Holders. As of March 8, 1996, the Company had approximately 1,029
holders of record of its no ------- par value common stock.
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<PAGE>
(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.
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.
<TABLE>
<CAPTION>
For the Years Ending June 30,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands except per share information)
<S> <C> <C> <C> <C> <C>
Revenue .............................. $ -- $ 7 $ 14 $ 25 $ 32
Net income (loss) .................... 90 $ (57) $ (129) $(1,668) $ (22)
Net income (loss) per
Common Share ........................ 0.02 $ (0.01) $ (0.03) $ (0.36) --
Weighted Average Number of
Shares Outstanding ................... 4,642 4,642 4,642 4,642 4,853
<CAPTION>
For the Years Ending June 30,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(In thousands except per share information)
<S> <C> <C> <C> <C> <C>
Working Capital....................... $ 246 $ 79 $ 126 $ 158 $ 415
Total Assets ......................... 266 163 213 379 5,094
Total Long-Term Liabilities .......... -- -- -- -- 143
Total Stockholders' Equity ........... 246 156 213 342 2,009
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company has working capital of approximately $246,000 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 was relieved of its major debt guaranty due to the sale of its
subsidiaries in June 1993. At the time of the sale, the Company had guaranteed
approximately $485,000 of a subsidiary's bank debt.
The Company has no material commitments for capital expenditures.
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<PAGE>
Results of Operations
The Company had no significant operations during fiscal 1995, 1994 and 1993
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 fiscal 1995 and resulted in the Company realizing
net income of $90,488 for fiscal 1995. The Company reported a loss of
approximately $57,000 in fiscal 1994 and a loss of approximately $129,000 in
fiscal 1993. The loss in fiscal 1994 was less than in fiscal 1993 because
approximately $70,000 of the loss in fiscal 1993 was a one time loss that
related to depreciation and writedown of obsolete computer equipment utilized by
the bankrupt subsidiaries. Revenue in each fiscal year consisted of interest
income on the remaining cash on hand.
On July 13, 1992, the subsidiaries of the Company filed for protection
under Chapter 11 of the federal bankruptcy laws. The filings were precipitated
by a breach of contract by the Resolution Trust Corporation with FNRS Financial
Corp. These subsidiaries were sold to an officer of the Company for a nominal
amount in June 1993.
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, 1995, and 1994.
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:
<TABLE>
<CAPTION>
Name and Position in the Company Age Director Since
- -------------------------------- --- -------------
<S> <C> <C>
Dean H. Boedeker ..................................... 61 1981
President, Chief Executive Officer and
Director
Thomas A. Breen ...................................... 39 1987
Director
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<PAGE>
<CAPTION>
Name and Position in the Company Age Director Since
- -------------------------------- --- -------------
<S> <C> <C>
Donald W. Diones ..................................... 64 1981
Secretary and Director
William J. White ..................................... 58 1995
Director
</TABLE>
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:
<TABLE>
<CAPTION>
Name of Executive Officer and Position in Company Age Officer Since
- ------------------------------------------------- --- -------------
<S> <C> <C>
Dean H. Boedeker...................................... 61
Chairman of the Board 1991
President and Chief Executive Officer 1993
Donald W. Diones...................................... 64
Secretary 1993
</TABLE>
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:
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 from June 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.
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<PAGE>
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 invest-ment banking firm, from
March 1992 to October 1992; President 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.
(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,
1995, the only director, officer or more than 10% shareholder of the Company
failed to timely file a Form 3, Form 4 or Form 5 was William J. White who was
late in filing a Form 3.
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, 1995. No executive officer of the Company was paid over $100,000
in compensation from the Company and its subsidiaries during the Company's
fiscal year ended June 30, 1995.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
-------------------------------------------------- -----------
Other
Year Annual Securities All Other
Name and Ended Compen- Underlying Compensa-
Principal Position June 30, Salary($) Bonus($) sation($) Options(#) tion($)
- ------------------ -------- --------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dean H. Boedeker ...................... 1995 14,000(1) -- -- -- --
President and ........................ 1994 10,000(1) -- -- 400,000 --
Chief Executive ...................... 1993 -- -- -- -- --
Officer
- ---------------------
</TABLE>
(1) Mr. Boedeker is entitled to $1,000 per month for serving as the President
and Chief Executive Officer of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted by the Company to Dean H. Boedeker during the
Company's fiscal year ended June 30, 1995.
FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the unexercised
options held by Dean H. Boedeker as of June 30, 1995.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of In-the-Money
Options at Options at
June 30, 1995(#) June 30, 1995($)(1)
------------------------- --------------------------
Name Exercisable/ Unexercisable Exercisable/ Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Dean H. Boedeker..... 400,000 - 0 - - 0 - - 0 -
- ------------------------
</TABLE>
(1) Value of unexercised in-the-money options is the market price of the
underlying shares of common stock at June 30, 1995, less the exercise price
of the options.
Mr. Boedeker did not exercise any options during the Company's fiscal year
ended June 30, 1995.
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.
None.
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<PAGE>
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 March 11, 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:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name of Beneficial Owner Ownership (1) of Class
- ------------------------ ---------------- --------
<S> <C> <C>
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.................. 72,250 1.6%
All officers and directors
as a group (4 Persons)............ 1,611,269(5) 27.6%
Thomas J. Bonomo.................. 582,929(6) 11.6%
- ------------------
</TABLE>
(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 1700 Lincoln Street, 32nd Floor, Denver, Colorado 80203.
(3) Includes 400,000 shares underlying a stock option. Thomas A. Breen's
address is 116 North Maryland, Lower Level, Glendale, California 91206.
(4) Includes 400,000 shares underlying a stock option. Donald W. Diones'
address is 1401 Seventeenth Street, Suite 1300, Denver, Colorado 80202.
(5) Includes shares underlying the stock options held by Messrs. Boedeker,
Breen and Diones.
(6) Includes 400,000 shares underlying a stock option. Thomas J. Bonomo's
address is 388 Market Street, No. 900, San Francisco, California 94111.
(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.
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<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a)(b) Transactions With Management and Others and Certain Business
Relationships.
Effective June 25, 1993, the Company sold all the outstanding shares of
common stock of Orion Broadcast of Rockford, Inc. and Orion Services Company to
Thomas A. Breen, the former President and a current director of the Company.
Orion Broadcast of Rockford, Inc. directly or indirectly held a controlling
interest in Orion Financial Services Corporation, FNRS Acquisition Corporation,
FNRS Financial Corporation and FN Realty Services, Inc. Because of the
bankruptcy of FNRS Financial Corporation and FN Realty Services, Inc., the Board
of Directors of the Company determined that there was no possible benefit to the
Company in retaining any direct ownership of Orion Broadcast of Rockford, Inc.
or its subsidiaries. The total amount paid by Thomas A. Breen for the shares was
$10.00. In addition, the Company was released from the Company's guarantee of
approximately $500,000 of debt owed by FNRS Financial Corporation. In addition,
Thomas A. Breen agreed for a two year period to provide services to the Company
in the connection with the preparation of financial records and statements and
in connection with the Company's filing requirements under the federal
securities laws.
At the same time, the Company entered into an agreement with Orion
Broadcast of Rockford, Inc. pursuant to which the Company agreed to advance
funds to enable Orion Broadcast of Rockford, Inc. to file lawsuits against
certain persons who owed funds to Orion Broadcast of Rockford, Inc. In
consideration for the advance of the funds, the Company agreed with Orion
Broadcast of Rockford, Inc. that the Company would receive all amounts paid or
advanced to collect on the debts and 50% of any amount over and above such
amounts. The Company received a total of $1,000.
In addition, the Company entered into an agreement with FNRS Acquisition
Corporation pursuant to which the Company agreed to advance funds or directly
pay all costs and expenses of pursuing the litigation of FNRS Acquisition
Corporation, against First Nationwide Financial Corporation and others. The
Company's total obligation was $50,000, which the Company would be entitled to
receive out of the proceeds of the litigation. The balance of the proceeds would
be divided so that the Company would receive 80% of the first $100,000, 70% of
the next $100,000, 60% of the next $100,000 and 50% of any balance. As a result
of settlement of the lawsuits, the Company has received approximately $208,500.
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, 1995 and 1994
Statements of Operations--Years ended June 30, 1995, 1994, and 1993
Statement of Changes in Stockholders' Equity--For the Period from July 1,
1992 through June 30, 1995
Statements of Cash Flows--Years ended June 30, 1995, 1994, and 1993
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, 1995.
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<PAGE>
(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.
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) Agreement dated as of April 7, 1993, between the Company
and Thomas A. Breen (incorporated by reference to Exhibit 10(D)
to Orion Financial, Ltd.'s Annual Report on Form 10-K for the
fiscal years ended June 30, 1993 and 1992.
Exhibit 10(E) Agreement dated as of April 7, 1993, between the Company
and Orion Broadcast of Rockford, Inc. (incorporated by reference
to Exhibit 10(E) to Orion Financial, Ltd.'s Annual Report on Form
10-K for the fiscal years ended June 30, 1993 and 1992.
Exhibit 10(F) Agreement dated as of April 7, 1993, between the Company
and FNRS Acquisition Corporation (incorporated by reference to
Exhibit 10(F) to Orion Financial, Ltd.'s Annual Report on Form
10-K for the fiscal years ended June 30, 1993 and 1992.
- 11 -
<PAGE>
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 Accou ting Officer
Dated April 9, 1996
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
- ---- ---------------- ----------
April 9, 1996 Thomas A. Breen /s/ Thomas A. Breen
Director ----------------------
April 9, 1996 Dean H. Boedeker /s/ Dean H. Boedeker
Director ----------------------
April 9, 1996 Donald W. Diones /s/ Donald W. Diones
Director -----------------------
April 9, 1996 William J. White /s/ William J. White
Director -----------------------
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<PAGE>
Orion Financial, Ltd.
Report on Audit of
Financial Statements
For the Years Ended
June 30, 1995, 1994, and 1993
<PAGE>
ORION FINANCIAL, LTD.
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditor's Report................................................F-2
Balance Sheets - June 30, 1995 and 1994.....................................F-3
Statements of Operations - For the Years Ended June 30, 1995,
1994, and 1993........................................................F-4
Statement of Changes in Stockholders' Equity - For the Period
from July 1, 1992 through June 30, 1995...............................F-5
Statements of Cash Flows - For the Years Ended June 30, 1995,
1994, and 1993.........................................................F-6
Notes to Financial Statements................................................F-7
<PAGE>
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, 1995 and 1994, and the related statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended June 30,
1995. 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, 1995 and 1994, and the results of its operations and its cash flows for
each of the three years in the period ended June 30, 1995, in conformity with
generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
February 8, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
ORION FINANCIAL, LTD.
BALANCE SHEETS
JUNE 30,
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 18,443 $ 85,881
Marketable securities ............................................. 247,272 --
----------- -----------
Total current assets .......................................... 265,715 85,881
FURNITURE AND EQUIPMENT, at cost:
Furniture, fixtures, and equipment ................................ -- 27,549
Less accumulated depreciation ..................................... -- (25,549)
----------- -----------
-- 2,000
OTHER ASSETS:
Restricted cash ................................................... -- 50,000
Advance to affiliate .............................................. -- 25,000
----------- -----------
TOTAL ASSETS .......................................................... $ 265,715 $ 162,881
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES -
Accounts payable and accrued expenses ............................. $ 19,241 $ 6,895
COMMITMENTS AND CONTINGENCIES (Note 6)
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 ............................................... (4,764,030) (4,854,518)
----------- -----------
Total stockholders' equity ................................ 246,474 155,986
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................ $ 265,715 $ 162,881
=========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
ORION FINANCIAL, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,
----------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
REVENUE ................................ $ -- $ -- $ --
COSTS AND EXPENSES:
General and administrative ......... 42,430 53,525 74,390
Depreciation and amortization ...... 2,000 10,000 15,550
----------- ----------- -----------
Total expenses ............ 44,430 63,525 89,940
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income .................... 5,937 6,794 824
Other income ....................... 128,981 -- 13,566
Write-off of fixed assets .......... -- -- (53,638)
----------- ----------- -----------
134,918 6,794 (39,248)
----------- ----------- -----------
NET INCOME (LOSS) ...................... $ 90,488 $ (56,731) $ (129,188)
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE ..... $ .02 $ (.01) $ (.03)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING ....................... 4,641,522 4,641,522 4,641,522
=========== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ORION FINANCIAL, LTD.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 1, 1992 THROUGH JUNE 30, 1995
Additional Total
COMMON STOCK Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
--------- ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCES,
July 1, 1992 .... 4,641,522 $ 371,322 $ 4,639,182 $(4,668,599) $ 341,905
Net loss .... -- -- -- (129,188) (129,188)
--------- ----------- ----------- ----------- -----------
BALANCES
June 30, 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
========= =========== ========== ========== ==========
</TABLE>
See accompanying notes to these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ORION FINANCIAL, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
-----------------------------------
1995 1994 1993
--------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................................... $ 90,488 $ (56,731) $(129,188)
Adjustments to reconcile net loss to net cash from operating
activities:
Depreciation and amortization ................................ 2,000 10,000 15,550
Write-off of fixed assets .................................... -- -- 53,638
Gain from settlement of litigation ........................... (128,981) -- --
Gain on sale of land ......................................... -- -- (13,566)
Changes in operating assets and liabilities: ................. --
(Increase) decrease in Restricted Cash ................... 50,000 -- --
Increase (decrease) in Accounts
payable and accrued expenses.......................... 12,346 6,895 (36,859)
-------- ------- --------
Net cash provided by (used in) operating activities .......... 25,853 (39,836) (110,425)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities ..................................... (247,272) -- --
Advance to affiliate .................................................. (54,571) -- 26,018
Proceeds from settlement of litigation ................................ 208,552 -- (25,000)
Payments received from subsidiaries ................................... -- -- --
Proceeds from sale of land ............................................ -- -- 39,832
------- ------- ---------
Net cash provided by (used in) investing activities .......... (93,291) -- 40,850
------- ------- ---------
NET DECREASE IN CASH AND EQUIVALENTS ..................................... (67,438) (39,836) (69,575)
CASH AND CASH EQUIVALENTS, beginning of year ............................. 85,881 125,717 195,292
------- ------- -------
CASH AND CASH EQUIVALENTS, end of year ................................... $ 18,443 $ 85,881 $ 125,717
========= ========= =========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest ................................................ $ -- $ -- $ --
========= ========= =========
Cash paid for taxes ................................................... $ -- $ -- $ --
========= ========= =========
</TABLE>
See accompanying notes to these financial statements.
F-6
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS:
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.
On 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 (see Note 3). 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.
Furniture, Fixtures, and Equipment - Such amounts are
stated at cost with depreciation computed principally using
the straight-line method over the estimated useful lives of
the assets, ranging from three to six years.
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, 1995.
F-7
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
3. SALE OF SUBSIDIARIES:
On July 13, 1992, all of the Company's active subsidiaries
declared bankruptcy under Chapter 11 of the bankruptcy
code, due to, among other things, cash flow difficulties
experienced after the loss of a major customer. The
subsidiaries attempted to reorganize, but effective June
25, 1993, due to continuing losses, the Company sold its
entire interest in the subsidiaries to the former president
of the Company for a nominal amount and a release of the
Company's guarantee on certain debt of FNRS.
The transaction resulted in no gain or loss.
4. RESTRICTED CASH:
Restricted cash is comprised of collateral on a bond posted
by the Company for FNRS. The bond was required by a state
in which FNRS previously conducted business. FNRS has
voluntarily withdrawn from doing business in this state and
surrendered its license. The underlying bond was released
in August 1994.
5. 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.
The Company paid approximately $8,000 in legal expenses on
behalf of some of its former subsidiaries during fiscal
1993. The legal expenses related to the bankruptcies of the
former subsidiaries.
The Company received $39,832 in repayments in July 1992 on
amounts owed to it from VRC and Orion Rockford.
6. COMMITMENTS AND CONTINGENCIES:
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.
F-8
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
7. 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.
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. No options have been granted under this plan.
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 through April 1998. None
have been exercised to date.
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.
F-9
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
8. 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, 1995, are as follows:
Net operating loss carryforward..... $ 450,000
Valuation allowance ................ (450,000)
--------
Net deferred tax asset (liability).. $ --
=========
At June 30, 1995, the Company had net operating losses (NOL)
carryforwards for income tax purposes of approximately
$1,200,000 that will expire between 1997 and 2010. 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.
9. SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARIES:
Following are the results of operations of FNRS Acquisition:
Statement of Operations
<TABLE>
<CAPTION>
FOR THE
PERIOD ENDED
JUNE 25,
1993
------------
(Unaudited)
<S> <C>
Revenue................................. $3,713,000
Operating expenses...................... 3,532,000
----------
Net income.............................. $ 181,000
==========
</TABLE>
F-10
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
3(A) Articles of Incorporation of Orion Financial, N/A
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.
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 N/A
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.
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 N/A
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.
10(D) Agreement dated as of April 7, 1993, between the N/A
Company and Thomas A. Breen (incorporated by
reference to Exhibit 10(D) to Orion Financial,
Ltd.'s Annual Report on Form 10-K for the fiscal
years ended June 30, 1993 and 1992.
10(E) Agreement dated as of April 7, 1993, between the N/A
Company and Orion Broadcast of Rockford, Inc.
(incorporated by reference to Exhibit 10(E) to
Orion Financial, Ltd.'s Annual Report on Form 10-K
for the fiscal years ended June 30, 1993 and 1992.
10(F) Agreement dated as of April 7, 1993, between the N/A
Company and FNRS Acquisition Corporation
(incorporated by reference to Exhibit 10(F) to
Orion Financial, Ltd.'s Annual Report on Form 10-K
for the fiscal years ended June 30, 1993 and 1992.
