U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT UNDER 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.
--------------------------------------------
(Name of small business issuer in its charter)
Colorado 84-0858679
------------------------------ ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 North Hoyt Street
Denver, Colorado 80226
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 238-0937
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
No Par Value Common Stock
-------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The issuer had no revenues for the fiscal year ended June 30, 1997.
As of October 2, 1997, the aggregate market value of the issuer's voting
stock held by nonaffiliates was $70,811.76.
As of October 2, 1997, the issuer had 4,641,522 shares of its no par value
common stock issued and outstanding.
Transitional Small Business Format. YES [ ] NO [X]
<PAGE>
ORION FINANCIAL, LTD.
1997 FORM 10-KSB ANNUAL REPORT
TABLE OF CONTENTS
PART I PAGE NUMBER
- ------ -----------
Item 1. Description of Business 3
Item 2. Description of Property 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to Vote of Security Holders 3
PART II
- -------
Item 5. Market for Common Equity and Related Stockholder Matters 3
Item 6. Management's Discussion and Analysis or Plan of Operation 4
Item 7. Financial Statements 4
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 4
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange Act 5
Item 10. Executive Compensation 6
Item 11. Security Ownership of Certain Beneficial Owners and Management 8
Item 12. Certain Relationships and Related Transactions 9
Item 13. Exhibits and Reports on Form 8-K 9
Signatures 10
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a)(b) BUSINESS DEVELOPMENT AND BUSINESS OF THE ISSUER. Orion Financial,
Ltd. (the "Company," formerly known as Orion Broadcast Group, Inc.), is a
Colorado corporation formed on October 7, 1981. 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.
The Company recently planned to enter the business of manufacturing and
selling children's shoes through the acquisition of the assets of a shoe company
that is no longer in business. The Company loaned the acquisition candidate
$10,000 and paid $60,000 as a standby letter of credit fee. The transaction has
not been consummated because certain financing pre-conditions were not
satisfied. The Company believes that it will recover the $60,000 fee but will
not recover the $10,000 loan.
The Company currently has one part-time employee, Dean H. Boedeker, the
Company's President.
ITEM 2. DESCRIPTION OF PROPERTY
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, 1997.
PART II
ITEM 5. MARKET FOR 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
3
<PAGE>
without adjustment for retail markup, mark down, or commission and may not
necessarily represent actual transactions.
Common Stock
----------------------
Fiscal Quarter Ended High Low
-------------------- ---- ---
September 1995 .......................... .005 .005
December 1995 ........................... .005 .005
March 1996 .............................. .005 .005
June 1996 ............................... .005 .005
September 1996 .......................... .005 .005
December 1996 ........................... .005 .005
March 1997 .............................. .005 .005
June 1997 ............................... .005 .005
(b) HOLDERS. As of October 2, 1997, the Company had approximately 1,025
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) RECENT SALES OF UNREGISTERED SECURITIES. No unregistered equity
securities were sold by the Company between July 1, 1996 and June 30, 1997.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The Company has working capital of approximately $203,041, which should be
sufficient for the Company to fund its obligations for the next 12 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.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are attached following the signature page.
ITEM 8. 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, 1997 and 1996.
4
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
(a) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
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
Donald W. Diones ................ 65 1981
Secretary and Director
William J. White ................ 59 1995
Director
There was no arrangement or understanding between any director or any other
person pursuant to which any director was selected as such.
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 ................ 65
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.
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:
5
<PAGE>
Name Of Director
or Officer Principal Occupation During The Last Five Years
- ---------------- -----------------------------------------------
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.
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.
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.
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.
(b) IDENTIFY SIGNIFICANT EMPLOYEES.
Not applicable.
(c) FAMILY RELATIONSHIPS.
Not applicable.
(d) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.
No event required to be reported hereunder has occurred during the past
five years.
(e) PROMOTERS AND CONTROL PERSONS.
No event required to be reported hereunder has occurred during the past
five years.
(f) SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the registrant under Rule 16a-3(d) during its most recent fiscal
year and Form 5 and amendments thereto furnished to the registrant with respect
to its most recent fiscal year, no director, officer, or greater than 10%
shareholder failed to timely file a Form 3, Form 4, or Form 5.
ITEM 10. EXECUTIVE COMPENSATION
The following table provides certain information pertaining to the
compensation paid by the Company to Dean H. Boedeker, the President of the
Company, for services rendered during the Company's fiscal years ended June 30,
1997, 1996, and 1995. No executive officer of the Company was paid over $100,000
6
<PAGE>
in compensation from the Company during the Company's fiscal year ended June 30,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------------------- ------------
Other
Year Annual Securities All Other
Name and Ended Compen- Underlying Compensa-
Principal Position June 30, Salary($) Bonus($) sation($) Options(#) tion($)
- ------------------ ------- -------- ------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dean H. Boedeker 1997 12,000(1) -- -- -- --
President and 1996 12,000(1) -- -- -- --
Chief Executive 1995 14,000(1) -- -- -- --
Officer
- -----------------------
</TABLE>
(1) Mr. Boedeker is entitled to $1,000 per month for serving as the
President and Chief Executive Officer of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted by the Company to Dean H. Boedeker during the
Company's fiscal year ended June 30, 1997.
FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the unexercised
options held by Dean H. Boedeker as of June 30, 1997.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of In-the-Money
Options at Options at
June 30, 1997(#) June 30, 1997($)(1)
------------------------- --------------------------
Name Exercisable/ Unexercisable Exercisable/ Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Dean H. Boedeker ........... 400,000 - 0 - - 0 - - 0 -
- -------------------
</TABLE>
(1) The value of unexercised in-the-money options is the market price of
the underlying shares of common stock at June 30, 1997, less the exercise price
of the options.
Mr. Boedeker did not exercise any options during the Company's fiscal year
ended June 30, 1997.
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
7
<PAGE>
attend. The Chairman of the Board and President receives $1,000 per month, as a
stipend for the services he performs.
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 11. 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 October 2, 1997, 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 Percent
Name of Beneficial Owner Beneficial Ownership(1) of Class
------------------------ ----------------------- --------
Dean H. Boedeker ................... 573,072(2) 11.4%
Donald W. Diones ................... 531,572(3) 10.5%
William J. White ................... 472,250(4) 9.4%
All officers and directors
as a group (3 Persons) ............. 1,576,894(5) 27.0%
Thomas J. Bonomo ................... 582,929(6) 11.6%
Thomas A. Breen .................... 434,375(7) 8.6%
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. Donald W. Diones'
address is 1401 Seventeenth Street, Suite 1300, Denver, Colorado 80202.
(4) Includes 400,000 shares underlying a stock option. William J. White's
address is 1401 Seventeenth Street, Suite 1300, Denver, Colorado 80202.
(5) Includes shares underlying the stock options held by Messrs. Boedeker,
Diones and White.
(6) Includes 400,000 shares underlying a stock option. Thomas J. Bonomo's
address is 388 Market Street, No. 900, San Francisco, California 94111.
(7) Includes 400,000 shares underlying a stock option. Thomas A. Breen's
address is 225 South Lake Avenue, 11th Floor, Pasadena, California 91101.
(8) Includes 400,00 shares underlying a stock option. Edward O. Byrne's
address is 303 East Seventeenth Avenue, Suite 700, Denver, Colorado 80203.
8
<PAGE>
(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 12. 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 and Donald W. Diones, directors of the Company, and Thomas A. Breen
and Thomas J. Bonomo, former directors of the Company who currently beneficially
own 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.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) 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 Broadcast Group, Inc., 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) Form of Amendment No. 2 to Option Agreement (incorporated by
reference to Exhibit 10(D) to Orion Financial, Ltd.'s Annual
Report on Form 10-K for the fiscal year ended June 30,
1996).
Exhibit 10(E) Form of Option Agreement effective September 16, 1996
between Orion Financial, Ltd. and William J. White
(incorporated by reference to Exhibit 10(E) to Orion
Financial, Ltd.'s Annual Report on Form 10-K for the fiscal
year ended June 30, 1996).
(b) CURRENT REPORTS ON FORM 8-K:
No Current Reports on Form 8-K were filed during the fiscal quarter ended
June 30, 1997.
9
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, 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: October 13, 1997
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Name and Title Signature
- ---- -------------- ---------
October 13, 1997 Dean H. Boedeker
Director /s/Dean H. Boedeker
----------------------------
October 13, 1997 Donald W. Diones
Director /s/Donald W. Diones
----------------------------
October 13, 1997 William J. White
Director /s/William J. White
----------------------------
10
<PAGE>
Orion Financial, Ltd.
Report on Audit of
Financial Statements
For the Years Ended
June 30, 1997 and 1996
<PAGE>
ORION FINANCIAL, LTD.
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditor's Report................................................ F-2
Balance Sheet - June 30, 1997............................................... F-3
Statements of Operations - For the Years Ended June 30, 1997 and 1996....... F-4
Statement of Changes in Stockholders' Equity - For the Period from
July 1, 1995 through June 30, 1997......................................F-5
Statements of Cash Flows - For the Years Ended June 30, 1997 and 1996....... F-6
Notes to Financial Statements............................................... F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Orion Financial, Ltd.
Denver, Colorado
We have audited the accompanying balance sheet of Orion Financial, Ltd. as of
June 30, 1997 and 1996, and the related statements of operations, stockholders'
equity and cash flows for the years ended June 30, 1997 and 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, 1997, and the results of its operations and its cash flows for the
years ended June 30, 1997 and 1996, in conformity with generally accepted
accounting principles.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES LLP
Denver, Colorado
September 9, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
ORION FINANCIAL, LTD.
BALANCE SHEET
JUNE 30,
1997
--------
ASSETS
------
<S> <C>
CURRENT ASSETS -
Cash and cash equivalents ............................................. $ 203,041
----------
TOTAL CURRENT ASSETS ........................................................ $ 203,041
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES -
Accounts payable and accrued expenses ................................. $ 8,923
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
Additional paid-in capital ............................................ 4,639,182
Accumulated deficit ................................................... (4,816,386)
----------
Total stockholders' equity ................................ 194,118
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................................. $ 203,041
==========
</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,
----------------------------
1997 1996
---- ----
<S> <C> <C>
REVENUE ...................................................... $ -- $ --
GENERAL AND ADMINISTRATIVE EXPENSES .......................... 38,579 37,774
OTHER INCOME (EXPENSE) -
Interest income .......................................... 10,797 13,200
----------- -----------
NET LOSS ..................................................... $ (27,782) $ (24,574)
=========== ===========
NET LOSS PER COMMON SHARE .................................... $ (.01) $ (.01)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ......... 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, 1995 THROUGH JUNE 30, 1997
COMMON STOCK ADDITIONAL TOTAL
-------------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
------ ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, July 1, 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
Net loss ...................... -- -- -- (27,782) (27,782)
----------- ----------- ----------- ----------- -----------
BALANCES, June 30, 1997 ........... 4,641,522 $ 371,322 $ 4,639,182 $(4,816,386) $ 194,118
=========== =========== =========== =========== ===========
</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,
----------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................................... $ (27,782) $ (24,574)
Adjustments to reconcile to net cash from operating activities:
Increase (decrease) in -
Accounts payable and accrued expenses ......................... 8,747 (19,065)
--------- ---------
Net cash used in operating activities .............................. (19,035) (43,639)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities ....................................... -- (394,661)
Proceeds from sale of marketable securities ............................. 194,888 447,045
--------- ---------
Net cash provided by investing activities .......................... 194,888 52,384
--------- ---------
NET INCREASE IN CASH AND EQUIVALENTS ........................................... 175,853 8,745
CASH AND CASH EQUIVALENTS, beginning of year ................................... 27,188 18,443
--------- ---------
CASH AND CASH EQUIVALENTS, end of year ......................................... $ 203,041 $ 27,188
========= =========
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 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.
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. 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.
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.
Accounting for Stock-Based Compensation - In fiscal 1997, the Company
adopted the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (FAS 123). 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
F-7
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
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
has elected not to adopt the fair value accounting prescribed by SFAS
123 for its employees, and is subject only to the disclosure
requirements. The adoption of SFAS 123 had no effect on the Company's
financial statements.
3. 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.
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 market price of the Company's common stock was $.005 per share. If
compensation cost had been recognized using the fair value approach
prescribed by SFAS 123 rather than the intrinsic value method under APB
25, there would have been no change to the Company's reported net loss.
F-8
<PAGE>
ORION FINANCIAL, LTD.
NOTES TO FINANCIAL STATEMENTS
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.
4. INCOME TAXES:
The amounts which give rise to the net deferred tax asset (liability)
as of June 30, 1997, are as follows:
Net operating loss carryforward $ 444,000
Valuation allowance (444,000)
--------
Net deferred tax asset $ --
========
At June 30, 1997, the Company had net operating losses (NOL)
carryforwards for income tax purposes of approximately $1,200,000 that
will expire between 1997 and 2012. 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.
5. SUBSEQUENT EVENTS:
Subsequent to June 30, 1997, the Company advanced approximately $60,000
for a standby letter of credit fee related to a proposed acquisition
candidate. In addition, the Company loaned $10,000 to the acquisition
candidate. Certain preconditions to the acquisition have not occurred
and it is currently unlikely that the acquisition will be consummated.
The Company's advance for the standby letter of credit fee is being
held by a law firm in Hong Kong, China and the Company has requested
its return. The $10,000 loan will be recorded as a bad debt in the
first quarter of fiscal 1998.
F-9
<PAGE>
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 Broadcast Group, Inc., 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 Plan N/A
(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 (incorporated N/A
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 27, N/A
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 (incorporated by N/A
reference to Exhibit 10(D) to Orion Financial, Ltd.'s Annual
Report on Form 10-K for the fiscal year ended June 30,
1996).
10(E) Form of Option Agreement effective September 16, 1996 N/A
between Orion Financial, Ltd. and William J. White
(incorporated by reference to Exhibit 10(E) to Orion
Financial, Ltd.'s Annual Report on Form 10-K for the fiscal
year ended June 30, 1996).
