Securities and Exchange Commission
Washington, D. C.
20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended March 31, 1996
Commission file number 33-15750-LA
Optifund, Inc.
(Exact name of registrant as specified in its charter)
(Effective as of July 3, 1989, Optifab, Inc. changed its
name to Optifund, Inc.)
Arizona 86-0259995
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
3720 East Mountain View 85028
Phoenix, Arizona (Zip Code)
(Address of principal
executive offices)
Registrant's telephone
number, including area code: (602) 996-0800
Securities registered
pursuant to Section 12(b)
of the act: None
(Report is filed pursuant to Section 15(d) of the Securities
Exchange Act of 1934.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 of 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for 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.
Yes [X] No [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which
the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to
the date of filing. (See definition of affiliate in Rule
405, 17 CFR 239.405.)
Because no trades for the Company's issued and outstanding
Class A Common Stock have been reported recently by the
National Association of Securities Dealers (pink sheets),
management believes that the aggregate market value for the
Company's Class A Common Stock is minimal. As of May 31,
1996, the aggregate market value of all Class A Stock held
by non-affiliates of the registrant was estimated by
management not to exceed $16,875., the par value of all
issued and outstanding stock, and is likely less than that
amount due to the Company's negative net worth and the
illiquidity of its shares. The market value of the
registrant's Class A Stock is speculative, inasmuch as the
registrant's balance sheet, reflects a negative net worth
and the Company has no tangible assets. No shares of the
registrant's Class B Common Stock are issued and
outstanding.
Note
If a determination as to whether a particular person or
entity is an affiliate cannot be made without involving
unreasonable effort and expense, the aggregate market value
of the Common Stock held by non-affiliates may be calculated
on the basis of assumptions reasonable under the
circumstances, provided that the assumptions are set forth
in this form.
APPLICABLE ONLY TO REGISTRANT'S INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 1,
or 15(d) of the Securities Exchange Act of 1934 subsequent
to the districution of securities under a plan confirmed by
a court:___________Yes __________No.
Not applicable.
-1-
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date:
As of March 31, 1996, there were 5,460,005 shares of the
registrant's Class A Common Stock issued and outstanding and
no shares of the registrant's Class B Common Stock were
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Applicable Form 10-K Section
Part I, II, and III
Document Incorporated
Notice of Special Meeting of Shareholders and Proxy
Statement of Optifab, Inc. dated June 1, 1989, and filed
with the Securities and Exchange Commission (SEC) June 2,
1989, (File No. 33-15750-LA) and Form 8-K dated June 28,
1989 and filed with the SEC on June 29, 1989, (File No. 33-
15750-LA).
ITEM 1. BUSINESS
The registrant, Optifund, Inc. (formerly Optifab, Inc.)
(hereafter "Optifund") is a corporation organized under the
laws of the State of Arizona. Optifund has one subsidiary,
Phoenix Technology, Inc. (formerly Optifab Printed Circuits,
Inc.). References to the "Company" are to both Optifund and
its subsidiary, Phoenix Technology, unless otherwise
indicated.
On June 22, 1989, the Company sold substantially all of its
assets to Kamar Corporation, (which subsequently changed its
name to Dynaco Corporation). Since then, the Company has
not actively engaged in any trade or business, but the
Company has continued to explore the possibility of other
business opportunities.
Information regarding the Purchase Agreement and the sale of
the Company's Assets to Kamar was set forth in detail in the
Notice of Special Meeting of Shareholders and Proxy
Statement of Optifab, Inc. filed with the Securities and
Exchange Commission (the SEC) on June 2, 1989 (the "Proxy
Statement") and in the Form 8-K for Optifab filed with the
Sec on June 29, 1989 (File No. 33-15750-LA). The Proxy
Statement and the Form 8-K are hereby incorporated herein by
reference.
-2-
The Company's executive offices are located at 3720 East
Mountain View, Phoenix, Arizona 85028.
History
Optifund and Phoenix Technology were incorporated under the
laws of the State of Arizona in 1971 and 1978 respectively.
Optifund was formed in 1971 to provide precision
photographic work to the electronics industry and transacted
business under the name Optifab, Inc. In 1973, Optifund
expanded its operations to provide precision glass
photomasks for the semiconductor industry and precision
photo-tooling for the manufacture of circuit boards. In
1975, Optifund formed Phoenix Technology, which then
transacted business under the name Optifab Printed Circuits,
Inc. as a subsidiary to manufacture circuit boards. The
Company manufactured printed circuit boards until March
1989.
Effective June 22, 1989, the Company sold substantially all
of its assets to Kamar, Inc. which changed its name to
Dynaco Corporation. Following the sale, Optifab, Inc.
changed its name to Optifund, and Optifab Printed Circuits,
Inc. changed its name to Phoenix Technology, Inc. Since
June 1989, the Company has not actively conducted any
business.
The future of the Company is undetermined at this time.
Because the Company has no significant assets, its options
for the conduct of future business are limited. The Company
is continuing to explore the feasibility of engaging in a
new business related to its former printed circuit business
and is attempting to determine whether some benefit from its
tax loss carryforward and its publicly held status may be
obtained for the benefit of shareholders.
Mr. Robert G. Loeb, the Company's Chief Executive Officer
and principal shareholder, has been associated with the
Company since 1972, and first acquired a controlling
interest in the Company in 1976.
ITEM 2 PROPERTIES
Present Facilities
The Company's executive offices, which are provided rent
free by Mr. Robert G. Loeb, are located at 3720 East
Mountain View, Phoenix, Arizona.
The only material asset of the Company is a tax loss
carryforward in the amount of approximately $3,045,731. as
of March 31, 1996.
-3-
ITEM 3 LEGAL PROCEEDINGS
As of the date this report is filed and as of March 31,
1996, the Company was not involved in any legal proceedings.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matter was submitted to a vote of securities holders
during the fiscal year ended March 31, 1996.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Optifund has two classes of common equity stock issued and
outstanding.
Optifund's Class A Stock has been eligible for trade in the
over-the-counter market since September 2, 1987. The Class
A Stock was, until January 19, 1989, listed on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ"), but due to the decline in the Company's net
worth, Optifund ceased to qualify for NASDAQ listing. The
Class A Stock is currently eligible for trading on the
National Association of Securities Dealers ("NASD") over the
counter market (pink sheets), but is not actively traded.
The Company has been unable to identify any over the counter
trades in its Class A Common Stock for the 60 month period
ending March 31, 1996. Additional shares of the Company's
Class A Stock have been purchased by the controlling
shareholder for $0.02 per share.
No shares of the Company's Class B Stock are issued and
outstanding. As of July 23, 1992, all shares of the
Company's Class B Common Stock were redeemed by the Company
at a price of $0.01 per share, pursuant to the mandatory
redemption provision of the Company's Articles of
Incorporation for a promissory note in the amount of
$16,875. The promissory note has been paid through the
issuance of 843,750 restricted shares of the Company's Class
A Common Stock.
Shareholders
As of March 31, 1996, there were approximately 311 record
holders of Optifund's Class A Stock and no holders of
Optifund's Class B Stock.
-4-
DIVIDENDS
Optifund has not paid a dividend on its Class A or Class B
Stock since incorporation. It is Optifund's policy not to
pay dividends.
ITEM 6 SELECTED FINANCIAL DATA
The following table sets forth in summary form certain
consolidated financial data of the Company for each year of
the unaudited five year period ended March 31, 1996. This
summary is qualified in its entirely by the detailed
information and financial statements included elsewhere
herein and incorporated by reference. See Item 8, Financial
Statements and Supplementary Data, below. The information
presented for the years ended March 31, 1992, 1993, 1994,
1995 and 1996 is unaudited.
-5-
SELECTED FINANCIAL DATA
For Each of the Five Year Ended March 31,
(Unaudited)
1996 1995 1994 1993 1992
Dollars in Thousands
CONSOLIDATED SUMMARY OF INCOME
Net Sales $ $ $ $ $
Cost of Goods Sold
_____________________________________________
Gross Profit or
(Loss) $ -0- $ -0- $ -0- $ -0- $ -0-
Operating
Expenses $ 10 $ (12) $ (6) $ 7 $ 8
Net Income or
(Loss) $ (10) $ 12 $ 6 $ (7) $ (8)
Net Income or
(Loss)per share -0- -0- -0- -0- -0-
CONSOLIDATED BALANCE SHEET DATA
Current Assets $ 1 $ 3 $ 1 $ 1 $ 0
Total Assets $ 1 $ 3 $ 1 $ 1 $ 0
Current Liab-
ilities $ 8 $ -0- $ 26 $ 44 $ 59
Redeemable Common Stock
0 0 0 0 17
Common Stock 2465 2465 2444 2433 2394
Retained Earnings
(Deficit) (2472) (2462) (2469) (2476) (2470)
$ 1 $ 3 $ 1 $ 1 $ 0
-6-
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Company's Financial Statements and Notes, included
herein and incorporated by reference.
Results of Operations
The Company has engaged in no operations since the sale of
substantially all of it's assets in June 1989. For the year
ending March 31, 1996 the Company reported a net loss of
$9,575. for the year ending March 31, 1995 the Company
reported net income of $7.710. and net income of $5,925. for
the year ending March 31, 1994. The income for the year
ended March 31, 1995, resulted primarily from an adjustment
of $5,771. due to a settlement of a $15,000. Federal Tax
Liability with the Internal Revenue Service for alternative
minimum tax related to the sale of the Company's assets to
Dynaco in 1989, and an $6,000. adjustment of accounting
costs incurred by the Company. The income of $5,925. earned
by the Company for the year ended March 31, 1994, resulted
from the adjustment of legal fees by the Company's legal
counsel. The net loss of $9,575 for the year ended March
31, 1996 resulted primarily from continued legal and
accounting costs related to maintaining the Company. The
Company has been unable to conduct any operations during
this period to produce offsetting income.
Liquidity and Capital Resources
As a result of continued operating losses incurred by the
Company through June, 1989 the Company's equity capital and
borrowing base, was severely eroded, ultimately, requiring
the Company to sell its core business in order to pay its
obligations.
As a result of continuing financial difficulties, in June
1989, the Company entered into an agreement to sell
substantially all of its assets to Dynaco. Pursuant to the
terms of the purchase agreement, Dynaco purchased
substantially all of the Company.s assets and assumed
certain of the Company's liabilities as of June 22, 1989.
The Company continues to exist, but no longer operates as a
manufacturer of printed circuits.
The Company currently has no liquidity, because it is
conducting no operations. The Company's only source of
liquidity has been loans made by Mr. Robert G. Loeb the
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Company's largest shareholder. The Company has no means of
paying the loans, other than through the issuance of stock.
Loan proceeds have been applied to pay expenses necessary to
continue the Company's existence and wind down operations.
Management of the Company continues to explore possibilities
of merging the Company with a business interested in
becoming publicly owned and, in that connection, management
has explored a number of different opportunities, none of
which have come to fruition. The Company periodically
contacts investment bankers to assist in identifying
possible merger candidates who may be able to take advantage
of the Company's tax loss carryforward or its publicly held
status or other strategies that may allow the Company to
recover some portion of the shareholders' investment.
Management believes that a merger with another company
seeking to acquire a publicly owned corporation is the only
means by which shareholders will obtain any return of their
investment. The future of the Company is undetermined at
this time. The Company has no significant assets other than
its tax loss carryforward and has no tangible assets.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Unaudited Financial Statements and
Supplementary Data are set forth on Pages 11 through 21,
following.
NOTE: The financial information for the fiscal years ended
March 31, 1996, 1995, and 1994 are unaudited.
-8-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31
1996 1995
ASSETS
CURRENT ASSETS:
Cash in Bank $ 1,116. $ 2,692.
TOTAL ASSETS $ 1,116. $ 2,692.
LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses and
other liabilities $ 8,000. $ -0-
TOTAL LIABILITIES $ 8,000. $ -0-
DEFICIT IN STOCKHOLDERS' EQUITY
Class A Common Stock no
par value
Authorized 15,000,000
Issued 5,460,005
$2,464,734. $2,464,734.
Accumulated
deficit ($2,471,618.) ($2,462,043.)
$ 1,116. $ 2,692.
<FN>
See notes to Consolidated Financial Statements
-9-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Year Ended March 31
1996 1995 1994
NET SALES $ $ $
COST OF GOODS SOLD $ $ $
OPERATING EXPENSES:
Selling, General and
Administrative Costs
$ 9575. $(7710.) $(5925.)
PROFIT OR LOSS FROM
OPERATIONS $(9575.) $ 7710. $ 5925.
NET INCOME (LOSS) PER
SHARE -0- -0- -0-
AVERAGE NUMBER OF SHARES
OUTSTANDING 5,460,005 5,460,005 4,460,005
-10-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
CONSOLIDATED STATEMENTS OF DEFICIT IN STOCKHOLDER'S EQUITY
1994, 1995 AND 1996 (Unaudited)
Class A Common Stock Accumulated Total
Shares Amount Deficit
Balance
3-31-93 3,860,005 $2,432,734. $(2,475,678.) $(42,944.)
1994
Net Profit 5,925. 5,925.
Shares Common
Stock Issued
600,000 12,000. 12,000.
Balance
3-31-94 4,460,005 $2,444,734. $(2,469,753.) $(25,019.)
1995
Net Profit 7,711. 7,711.
Shares Common
Stock Issued
1,000,000 20.000. 20,000.
Balance
3-31-95 5,460,005 $2,464,734. $(2,462,042.) $ 2,692.
1996
Net Loss $( 9,575.) $(9,575)
Balance
3-31-96 5,460,005 $2,464,734. $(2,471,617.) $(6,883)
<FN>
See notes to Consolidated Financial Statements
-11-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Year Ended March 31,
1996 1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
Loss from operations $ 9575. $ (4060) $ (1035)
Increase (decrease) in
accrued expenses and
other liabilities $ (25981) $ (18460)
Non-cash reduction in
accrued liabilities $ 11711 $ 7885
NET CASH USED IN OPERATING
ACTIVITIES $ 9575. $ (18270) $ (11610)
Advances from principal
stockholder $ 8000. $ 20000. $ 12000.
Net increase (decrease) in
cash $ (1576) $ 1730. $ 390.
Cash at beginning of
year $ 2692. $ 962. $ 572.
Cash at end of Year $ 1116. $ 2692. $ 962.
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Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
for each of the Three Years in the Period
Ended March 31, 1996
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting and financial
policies used in the preparation of the consolidated
financial statements of Optifund, Inc. (formerly Optifab,
Inc.) and subsidiary (the Company).
Consolidated Financial Statements include the accounts of
the Company and its wholly-owned subsidiary. All
significant inter-company balances and transactions have
been eliminated.
Net income (loss) per common share is calculated by dividing
net income (loss) by the weighted average number of shares
of common stock outstanding during the year.
B. SALE OF BUSINESS AND ASSETS
On March 23, 1989, the Company signed a letter of intent to
sell the printed circuit manufacturing and all other
businesses, and substantially all of its assets to Kamar
Corporation (which changed its name to Dynaco Corporation
hereafter called Dynaco), an unrelated corporation. In
connection with the transaction, the buyer advanced
$150,000. to the Company under a promissory note for working
capital, and an additional $30,000. was later advanced to
allow the Company to complete the move to its new building.
The parties subsequently signed an Asset Purchase Agreement
dated May 10, 1989, and amended on May 30, 1989, (the
Agreement) which was approved by a majority of the
stockholders at a special meeting held on June 10, 1989.
The sale of the Company's assets to Dynaco closed effective
June 22, 1989, however, the transactions contemplated by the
closing were not consummated until June 23, 1989.
The sale price, after application of all reductions called
for by the Agreement, and after taking into account
concessions made by certain of the Company's creditors,
including the individual holding of the Company's $500,000.
subordinated convertible note payable, was paid to the
Company on the closing date as follows:
1. The cancellation of the $180,000. notes payable to
Dynaco.
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Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
B. SALE OF BUSINESS AND ASSETS (cont'd)
2. $125,000. in cash, less the payment or assumption by
Dynaco of rent, taxes and other charges past due to the
lessor of the Company's office and manufacturing facility.
The remaining cash received by the Company was used to pay
costs of the sale and certain creditors.
3. The issuance of a $250,000. subordinated note, payable
by Dynaco to the Company. This note was assigned by the
Company to a creditor in full satisfaction of the $500,000.
subordinated convertible note payable.
4. Dynaco's assumption of certain liabilities of the
Company as of June 22, 1989, in an amount not to exceed
$3,600,000. Actual liabilities assumed by Dynaco totaled
$3,357,000.
The Company's net gain from this transaction consisted of
the following:
Cash proceeds $ 125,000.
Notes from Dynaco 430,000.
Net liabilities assumed
by Dynaco 914,160.
Balance of $500,000. sub-
ordinated convertible note
payable forgiven by
creditor 250,000.
Other debts forgiven and
adjustments 171,157.
Gain on sale $ 1,890,317.
Estimated income taxes
(Note D) (15,000.)
Net gain on sale $ 1,875,317.
Management of the Company continues to explore possibilities
of merging the Company with a business interested in
becoming publicly owned and, in that connection, management
has explored a number of different opportunities, none of
which have come to fruition. The Company periodically
contacts investment bankers to assist in identifying
possible merger candidates who may be able to take advantage
of the Company's tax loss carryforward or its publicly held
status. The Company is presently exploring whether a joint
venture with another business entity is feasible.
-14-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
Management believes that a merger with another company
seeking to acquire a publicly owned corporation is the best
means by which shareholders will obtain any return of their
investment. The future of the Company is undetermined at
this time. The Company has no significant assets other than
its tax loss carryforward and has no tangible assets.
C. STOCKHOLDERS EQUITY
In preparation for a public offering in 1987, the Company's
Board of Directors authorized the issuance of up to
2,000,000 shares of no par value Class B common stock which
is convertible into Class A common stock for a period of 60
calendar months which began on September 1, 1987, and ended
on August 31, 1992 ("Conversion Period). However, if the
Company's retained earnings, as reflected on the Company's
audited financial statements for the year ended March 31,
1992, exceed the Company's audited retained earnings as of
March 31, 1987 ("Base Amount"), by the sum of $1,400,000 or
more, the Conversion Period, one share of Class B common
stock is convertible into one share of Class A common stock
for each $1.25 per share by which the Company's existing
retained earnings exceed the March 31, 1987 retained
earnings.
On the last day of each fiscal year-end during the
Conversion Period ("Conversion Date"), the Base Amount is
increased by the product obtained by multiplying the $1.25
times the total number of shares of Class B Common stock
which have become convertible into Class A common stock.
In addition to the conversion rights specified above, so
long as the Company's ratio of current assets to current
liabilities, as reflected in the Company's audited financial
statements issued as of a Conversion Date, is not less than
1.2 to 1, holders of Class B common stock have the right to
convert Class B common stock to Class A common stock to the
extent that the number of shares of Class B common stock so
converted does not reduce the book value per share below
$2.00, excluding all outstanding options, warrants and any
Class B common stock not otherwise converted.
In addition to the conversion formulas discussed above, the
Company has an additional conversion formula if
substantially all of the Company's assets are purchased or
an offer is made for more than 50% of its Class A Common
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Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
stock. However, the conversion can not occur if the offer
price per share is less than $2.50. The price as contained
within the Agreement consummated in 1989, as discussed in
Note B, was less than $2.50 per share.
Under the Company's Articles of Incorporation, any Class B
Common Stock not converted into Class A Stock by the end of
the conversion period was subject to a mandatory redemption
by the Company at a price of $0.01 per share.
As of July 23, 1992, pursuant to the mandatory redemption
provision of the Company's Articles of Incorporation,
described above, the Company redeemed Mr. Loeb's Class B
Common Stock in consideration for a promissory note in the
amount of $16,875. The Company has paid such note by the
issuance of 843,750 shares of Class A Common Stock. An
additional 1,716,255 shares of Class A Common Stock were
issued to Mr. Loeb at a price of $0.02 per share, for a
total of $34,325.10, in exchange for advances Mr. Loeb had
made to the Company.
On September 2, 1987, the Company completed its initial
public offering ("IPO"). The Company sold 1,000,000 shares
of its Class A Common Stock at $2.50 per share resulting in
proceeds to the Company, net of $530,306. of IPO costs, of
$1,969,694.
On May 29, 1987, the Company completed a private offering.
The Company sold 380,000 shares of its Class A Common Stock
at $1.25 per share resulting in proceeds available to the
Company of $475,000. (less private offering costs of
$99,190). As required by the Company's private offering,
the Company entered into a Redemption Agreement with its
principal stockholder pursuant to which the Company
exchanged 1,043,855 shares of Class B Common Stock for
1,135,250 shares of Class A Common Stock. The Company also
agreed to exchange 643,645 shares of Class B Common Stock
for 700,000 shares of Class A Common Stock. The Class B
shares are redeemable by the Company at a price of $0.01 per
share.
Since 1984, the Company has maintained a Stock Option Plan
(the "Plan"), in which certain key personnel are eligible to
participate. Eligibility is determined by a committee (the
"Committee") appointed by the Company's Board of Directors.
The Plan consists of two divisions, A and B. Division A
provides for the granting of qualified incentive stock
-16-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
options. Division B provides for the granting of non-
qualified stock options. The Company has reserved 400,000
shares of its Common Stock to be granted under the Plan.
The Plan requires that the exercise price of such shares be
not less than fair market value of the shares on the date of
grant, unless the Committee elects to grant an option at an
exercise price which is less than the fair market value of
the shares as of the date of grant.
The Company's Stock Option Plan expired in 1994. Options
granted under the Plan expire not later than ten years after
the date of grant. Generally, options are exercisable in
one-third increments over a three-year period, beginning one
year from the date of grant. Shares acquired through the
exercise of a stock option granted under the Plan are
subject to a Stock Restriction Agreement. The agreement
requires the employee-stockholder to resell his shares to
the Company for a specified price upon termination of his
employment. Upon termination of employment, except by
reason of disability or a retirement approved by the
Committee, all unexercised stock options shall immediately
terminate. Due to the sale of the Company's business in
1989, all employees, except for three executive officers,
were terminated which caused the cancellation of all
outstanding stock options except for the stock options owned
by the three remaining executive officers.
Changes in options are summarized as follows:
Total number
of options avail- Division A
able for grant Outstanding Exercisable
Balance March 31,
1996 190,000 -0- 190,000
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Optifund, In. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
C. STOCKHOLDERS EQUITY (cont'd)
In 1988, the Company granted an option to an outside
consultant and Mr. Loeb to purchase an aggregate of 10,000
shares of Class A Common Stock at an exercise price of $1.00
per share. The option expires on February 16, 1998.
D. INCOME TAXES
The Company files consolidated federal and state income tax
returns.
The Company incurred operating losses on both a financial
and tax basis during each of the years ended March 31, 1996,
1995, 1994, 1993, 1992, 1991 and 1989 and, accordingly, did
not record an income tax liability or provision. For the
year ended March 31, 1990, the Company recorded a liability
of $15,000. for federal alternative minimum tax due as a
result of the gain on the sale of its assets to Dynaco and
limitations on the use of net operating losses in the
calculation of the alternative minimum tax. This liability
was settled in 1995.
The Company has available federal net operating loss carry
forwards as follows:
Amount Expires
$ 655,582 2002
2,390,149 2003
$3,045,731
For income tax purposes, the Company has investment tax
credits totalling $7,327 available to reduce future taxes
payable. The credits expire in 2000 and 2001.
-18-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
E. COMMITMENTS AND CONTINGENCIES
The Arizona Department of Revenue has contacted the Company
regarding a potential sales and use tax audit related to
certain manufacturing materials used in the manufacturing
process on or before June 22, 1989. The status of this
audit and its results and any potential liability have not
been determined. The Company has no ability to pay any such
sales tax liability if it should be assessed.
F. RELATED PARTY TRANSACTIONS
On March 15, 1994, the Company issued 600,000 shares of its
Class A Common Stock, for a value of $0.02 per share to
Robert G. Loeb, the Company's Chief Executive Officer and
principal shareholder in payment of a $12,000. loan made to
the Company to enable the Company to pay for legal,
accounting and other services.
On March 14, 1995 the Company issued 1,000,000 shares of its
Class A Common Stock, for a value of $0.02 per share to
Robert G. Loeb, the Company's Chief Executive Officer and
principal shareholder in payment of a $20,000 loan made to
the Company to enable the Company to pay for legal,
accounting and other services.
On March 31, 1996, the Company agreed to issue 1,000,000
shares of its Class A Common Stock to Mr. Robert G. Loeb to
cover legal and accounting expenses in consideration for the
sum of $20,000, $5,000 of which is to be paid through
discharge of indebtedness.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Due to the Company's inactive status, the Company has not
prepared audited financial statements and has not retained
an independent public accountant to prepare or review the
Company's financial statement.
-19-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
For Each of the Three Years in the Period
Ended March 31, 1996
The financial statements for the years ended March 31, 1994,
1995 and 1996 have not been audited due to the Company's
inactivity and inability to pay for an audit.
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
Board of Directors
The Company is managed by a Board of Directors, the members
of which consisted of the following persons as of March 31,
1996; the Board of Directors was elected by shareholders at
the annual meeting held on September 26, 1989, and will
continue to serve until the next annual meeting of
shareholders. The Company has not held a meeting of
shareholders since September 26, 1989.
Year
First Principal
Name Age Elected Occupation
Henry S. Fraenkel 70 1979 Vice President, Treasurer
and Secretary of Optifund
and Phoenix Technology
Robert G. Loeb 47 1972 Chief Executive Officer
of Optifund and Phoenix
Technology
Wallace L. Estfan 65 1988 President and Chief
Operating Officer of
Optifund and Phoenix
Technology
Executive Officers
Officers are elected and serve at the discretion of the
Board of Directors. The name, age and position of each of
the Company's executive officers as of March 31, 1996, who
were elected by the Board of Directors on September 26,
1989, and have continued to serve, are set forth below:
-20-
Name Age Position
Robert G. Loeb 47 Chairman of the Board and
Chief Executive Officer of
Optifund and Phoenix
Technology
Wallace L. Estfan 65 President and Chief Oper-
ating Officer of Optifund
and Phoenix Technology
Henry S. Fraenkel 70 Vice President, Treasurer
and Secretary of Optifund
and Phoenix Technology
Biographical Information - Executive Officers, Directors and
Key Employees.
Mr. Robert G. Loeb, Chief Executive Officer and Chairman of
the Board, purchased an interest in and became an officer of
Optifund in 1972. Mr. Loeb has been the principal
shareholder of Optifund since 1976. Mr. Loeb holds a
Bachelor of Science Degree in Electrical Engineering from
Carnegie-Mellon University, Pittsburgh, Pennsylvania. He is
Past Chairman of the Arizona Council of the American
Electronics Association, and a member of the Association for
Corporate Growth, and a past member of the Young President's
Organization.
Mr. Wallace L. Estfan, President and Chief Operating
Officer, joined the Company as of January 1, 1988. For the
four year period prior to joining the Company, Mr. Estfan
was Vice President of Manufacturing for Phaze Information
Machines Corp., a start-up company. Before joining Phaze,
Mr. Estfan had 26 years of engineering and manufacturing
experience with General Electric Corporation and Honeywell,
Inc., more than ten years of which involved the manufacture
of circuit boards. Mr. Estfan was director of Circuit Board
Manufacturing for Honeywell, Inc., prior to joining Phaze.
For four months prior to joining the Company Mr. Estfan
worked as a consultant for Training & Technology, Inc., an
international consulting firm specializing in providing
production, manufacturing and engineering consulting
services to circuit board manufacturers. In this capacity,
Mr. Estfan performed consulting services for the Company.
Mr. Estfan holds a Bachelor of Science Degree in engineering
from Arizona State University.
-21-
Mr. Henry S. Fraenkel has served as Vice President,
Treasurer and Secretary of the Company since 1981. Before
joining the Company, Mr. Fraenkel was employed for 28 years
by Honeywell, Inc. in Engineering Management. Mr. Fraenkel
has at various times been responsible for supervising
virtually every phase of the Company's business. He holds a
Bachelor of Science Degree in Chemical Engineering and a
Master's Degree in Mathematics from the University of
Minnesota.
ITEM II EXECUTIVE COMPENSATION
Remuneration of Officers
The following table sets forth the annual cash compensation
paid by the Company to its three executive officers and its
officers as a group for the last fiscal year:
Cash Compensation Table
Securities
and other
Name of Individual Capacities in Cash Personal
or Group which Served Remuneration Benefits
Robert G. Loeb Chief Executive None None
Officer and Chair-
man of the Board
Wallace L. Estfan President, Chief None None
Operating Officer
and Director
Henry S. Fraenkel Vice President, None None
Treasurer, Secretary
and Director
Officers as a Group None None
Directors' Compensation
The directors of the Company do not currently receive
Compensation for attending meetings.
Compensation Pursuant to Plans
The Company currently maintains no qualified or non-
qualified plans of deferred compensation or stock option
plans. The Company's former stock option plan expired in
1994, although a number of options granted while the plan
was in effect are still outstanding.
-22-
STOCK OPTIONS
Effective as of September 26, 1989, the Board of Directors
granted each of Mr. Loeb, Mr. Fraenkel and Mr. Estfan stock
options to purchase an additional 50,000 shares of Class A
Stock, under the former stock option plan, in order to
compensate such officers in the event they are able to
infuse new value into the Company. The exercise price for
the option shares was the greater of the most recent
independent bid price for the Company's Class A Stock as of
September 26, 1989 (the most recent date such information is
available) or $0.02 per share. The options granted are not
exercisable until one year after the date of grant. As of
March 31, 1996, the Company had granted three employees
options to purchase a total of 190,000 shares of the
Company's Class A Stock at an average price of $.20 per
share. All were granted as incentive stock options. No
stock options have been granted by the Company during 1996.
The following executive officers of the Company named in the
Cash Compensation Table have been granted the options
described below:
Total Shares
Subject to Exercise Dates of
Name Option Price Grant
Robert G. Loeb 50,000 $ 0.02 09/26/89
Wallace L. Estfan 80,000 $.02-1.00 01/01/88,
09/26/89
Henry S. Fraenkel 60,000 $.02-.50 12/20/84,
09/26/89
As of the date hereof, the value of a share of the Company's
Class A Common Stock is in the opinion of management, equal
to or less than the exercise price set forth in any
outstanding stock options, and, in the opinion of
management, such options have no value.
Amounts Realized Through Option Exercise
During the years ended March 31, 1994 and 1995 respectively,
no options were exercised. At March 31, 1996 options for
190,000 shares were exercisable for a total aggregate
exercise price of $38,000, or an average exercise price of
$0.20.
Compensation Committee
Because the Company is not currently operating and has no
revenues to pay compensation, the Board of Directors of the
Company has not appointed a Compensation Committee. To the
-23-
extent the Company required a Compensation Committee,
present members of the Board of Directors fills that roll.
Since 1989, the three present members of the Board of
Directors, including Mr. Robert G. Loeb, the Company's
largest shareholder, and Mr. Wallace Estfan, the Company's
President, have made all decisions concerning compensation,
including the approval of the stock options granted the
officers and directors of the Company in 1989.
The Board of Directors has not adopted a formal policy
concerning compensation, due to the Company's inactivity and
inability to pay compensation. In 1989, the Board of
Director's granted the Company's remaining officers the
stock options described above in order to provide a method
for compensating the officers that did not involve the
payment of cash and which would provide an incentive if the
officers were able to arrange a transaction that would
revive the Company's operations in a manner consistent with
the Company's contract with Dynaco, Inc. If the Company is
able to resume operations, the Board of Director's expects
that compensation would be set based upon the Board of
Director's judgment of the value of each officer and
incentive compensation, such as stock options, would be
granted to officers or others in a key position to affect
the Company's future performance and profitability and would
be designed to reward long term performance.
Stock Performance
In the opinion of management, the Company's issued and
outstanding shares have little or no value.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables set forth as of March 31, 1996,
information as to the beneficial ownership of the Company's
Class A Stock and Class B Stock by (i) each officer and
director and all officers and directors as a group, and (ii)
each person known to the Company who owns 5% or more of the
outstanding Class A or Class B Stock.
-24-
Class A Stock: Beneficial
Ownership
Number of Percent of
shares class
Robert G. Loeb 4,060,005 74.36%
3720 East Mountain View
Phoenix, Az. 85028
Henry S. Fraenkel 20,000 .37%
1940 E. Cactus Wren Drive
Phoenix, Az. 85020
Wallace L. Estfan -0-
3720 East Mountain View
Phoenix, Az. 85028
Officers and Directors
as a group 4,080,005 74.73%
Percentages shown are percentages of Class A Common Stock of
which 5,460,005 shares are outstanding.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Interest of Directors and Management
Since 1989, the Company has entered into transactions with
its Chief Executive Officer and largest shareholder, Mr.
Robert G. Loeb, in order to provide funds to cover legal and
accounting expenses, and pay taxes and other costs
associated with the wind down of the Company's operations.
The Company continues to have a need for legal and
accounting services to maintain its existence and wind-down
its operations. To date, these services and other expenses
have been funded by Mr. Robert G. Loeb, the principal
shareholder, who has loaned monies to the Company to pay
such expenses. As of July 23, 1991, Mr. Loeb agreed to
discharge $15,324. in debts owed him by the Company in
exchange for the issuance of 750,000 share of the
Company's Class A Common Stock. Such shares were issued to
Mr. Loeb at a stated value of $0.02 per share. In
addition, Mr. Loeb contributed an additional $6,000. to the
Company in exchange for 300,000 shares of the Company's
Class A Common Stock, at $0.02 per share stated value. Such
amounts were applied by the Company to pay legal and
accounting expenses.
-25-
In addition to paying the Company's expenses, Mr. Loeb
previously delivered a personal note to the Company's legal
counsel agreeing to pay attorneys' fees. As of July 23,
1992, the Company's Board of Directors authorized the
issuance of up to 1,250,000 shares of the Class A Common
Stock to members of the Board of Director's and other
sophisticated persons in order to obtain funds to pay the
Company's obligations.
Effective as of August 1, 1992, the Company redeemed
1,687,500 shares of Mr. Loeb's Class B Common Stock at a
price of $0.01 per share. Mr. Loeb's Class B shares have
been surrendered and cancelled. Notwithstanding the fact
the Company did not have sufficient cash to pay the
redemption price, Mr. Loeb agreed to accept a demand note in
the amount of $16,875. from the Company for the redemption
price. The Company has paid this note by issuance to Mr.
Loeb of 843,750 shares of its Class A Common Stock at a
price of $0.02 per share. In addition 1,116,255 shares of
Class A Common Stock were issued to Mr. Loeb in exchange for
advances Mr. Loeb has paid to the Company.
As of March 15, 1994, the Board of Directors authorized the
issuance of an additional 600,000 shares of the Company's
Class A Common Stock to Mr. Loeb in exchange for $12,000.
advanced by Mr. Loeb to the Company to cover the Company's
operating expenses.
As of March 14, 1995, the Board of Directors authorized the
issuance of 1,000,000 shares of the Company's Class A Common
Stock to Mr. Loeb to cover operating expenses as payment for
$20,000. Mr. Loeb had advanced to the Company.
As of March 31, 1996, the Company agreed to issue an
additional 1,000,000 shares of its Class A Common Stock to
Mr. Loeb in consideration of $20,000, $5,000 of which will
be paid through Mr. Loeb agreeing to discharge indebtedness
owed to him by the Company. Proceeds from the sale will be
used to pay the expenses of maintaining the Company.
-26-
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) (1) Financial Statements
The following documents are filed as part of this report and
are included at Item 8 hereof:
Consolidated Balance Sheets as of March 31, 1996 and 1995.
Consolidated Statements of Operations for the years ended
March 31, 1996, 1995 and 1994.
Consolidated Statements of Deficits in Stockholders' Equity
for the years ended March 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended
March 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
(a) (2) Financial Statement Schedules
The financial statement schedules required to be filed by
Item 8 of the Form 10-K are set forth following the
Company's financial statements:
None applicable.
(a) (3) Exhibits
List of Exhibits to Form 10-K required by Item 601 of
regulation S-K and Financial Statements.
Exhibit 3 Articles of Incorporation and ByLaws:
A. Articles of Incorporation and ByLaws: Filed as Exhibit
3 to Optifund's Registration Statement on Form S-18
(File No. 33-15750-LA), effective September 2, 1987,
and incorporated herein by reference.
B. Articles of Amendment to the Articles of Incorporation
of Optifab, Inc. dated June 23, 1989, changing the
Company's name to Optifund, Inc.
Exhibit 4 Instruments defining the rights of securities
holders, including indentures.
A. Article IV of the Articles of Incorporation of
Optifund, filed as Exhibit 4.A to Optifund's
-27-
Registration Statement on Form S-18 (File No. 33-15750-
LA), effective September 2, 1987, and incorporated
herein by reference.
B. Section 5 of Optifund's ByLaws filed as Exhibit 4.B to
Optifund's Registration Statement on Form S-18 (File
No. 33-15750-LA). effective September 2, 1987, and inc-
corporated herein by reference.
Exhibit 10 Material Contracts
A. Stock Option Plan dated November 30, 1994, filed as
Exhibit 10.A to Optifund's Registration Statement on Form S-
18 (File No. 33-15750-LA), effective September 2, 1987, and
incorporated herein by reference.
B. First Amendment to Stock Option Plan dated as of
December 31, 1987, filed as Exhibit 10.B to Optifund's
Annual Report on Form 10-K for the year ended March 31, 1988
(File No. 33-15750-LA), and incorporated herein by
reference.
C. Consulting Agreements between the Company and John J.
Anderson, Neil Shaw, Thomas Gleason, Kenneth A. MacLennan
and Thomas B. Pickens, III, filed as Exhibits 10.G.1 through
10.G.5., respectively, to Optifund's Registration Statement
on Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
D. Consulting and Option Agreements between the Company
and Thomas G. Kiley, Howard W. Shannon and Jack R.
Wilkinson, dated February 17, 1988, filed as Exhibit 10,1 to
Optifund's Annual Report on Form 10-K for the year ended
March 31, 1988 (File No. 33015750-LA), and incorporated
herein by reference.
E. Option granted by Robert G. Loeb to Charles Markos, filed
as Exhibit 10.H.3 to Optifund's Registration Statement on
Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
Exhibit 11 Statement re Computation of Per Share Earn-
ings.
Exhibit 12 Not Applicable
Exhibit 13 Not Applicable
Exhibit 16 Not Applicable
Exhibit 18 Not Applicable
-28-
Exhibit 19 Not Applicable
Exhibit 22 Subsidiaries of the Registrant:
Filed as Exhibit 22 to Optifund's Registration Statement on
Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
Exhibit 23 Not Applicable
Exhibit 24 Not Applicable
Exhibit 25 Not Applicable
Exhibit 28 Not Applicable
Exhibit 29 Not Applicable
(b) Reports on Form 8-K
Optifund has filed no reports on Form 8-K during the last
quarter of the period covered by this report.
-29-
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.
OPTIFUND, INC., Registrant
Robert G. Loeb
Robert G. Loeb
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
Robert G. Loeb Chief Executive June 30, 1996
Officer and Director
(Principal Executive
Officer)
Wallace L. Estfan President, Chief June 30, 1996
Operating Officer
and Director
Henry S. Fraenkel Vice-President, June 30, 1996
Treasurer, Secretary
and Director
-30-
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
EXHIBITS
TO
FORM 10-K
Annual Report Under Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Year Ended March 31, 1996
Commission File Number:
33-15750-LA
OPTIFUND, INC.
(Exact name of registrant as
specified in its charter)
Arizona
(State of Incorporation)
86-0259995
(I. R. S. Employer Identification No.)
3720 East Mountain View
Phoenix, Arizona 85028
(Address of principal executive offices)
Registrant's Telephone Number
including area code:
(602) 996-0800
OPTIFUND, INC.
INDEX TO EXHIBITS TO FORM 10-K
Exhibit Description
Exhibit 3 Articles of Incorporation and ByLaws
A. Articles of Incorporation and ByLaws: Filed as Exhibit
to Optifund;s Registration Statement on Form S-18 (File No.
33-15750-LA), effective September 2, 1987, and incorporated
herein by reference.
B. Articles of Amendment to the Articles of Incorporation
of Optifab, Inc. dated June 23, 1989, changing the Company's
name to Optifund, Inc.
Exhibit 4 Instruments defining the rights of
securities holders, including
indentures:
A. Article IV of the Articles of Incorporation of Optifund,
filed as Exhibit 4.A to Optifund's Registration Statement on
Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
B. Section 5 of Optifund's ByLaws filed as Exhibit 4.B to
Optifund's Registration Statement on Form S-18 (File No. 33-
15750-LA), effective September 2, 1987, and incorporated
herein by reference.
Exhibit 10 Material Contracts:
A. Stock Option Plan dated November 30, 1984, filed as
Exhibit 10.A to Optifund;s Registration Statement on Form S-
18 (File No. 33-15750-LA), effective September 2, 1987, and
incorporated herein by reference.
B. First Amendment to Stock Option Plan dated as of
December 31, 1987, filed as Exhibit 10.B to Optifund's
Annual Report on Form 10-K for the year ended March 31,
1988, (File No. 33-15750-LA), and incorporated herein by
reference.
C. Consulting Agreements between the Company and John J.
Anderson, Neil Shaw, Thomas Gleason, Kenneth A. MacLennan
and Thomas B. Pickens III, filed as Exhibits 10.G.1 through
10.G.5., respectively, to Optifund's Registration Statement
on Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
-1-
D. Consulting and Option Agreements between the Company and
Thomas G. Kiley, Howard W. Shannon and Jack R. Wilkinson,
dated February 17, 1988, filed as Exhibit 10.1 to Optifund's
Annual Report on Form 10-K for the year ended March 31,
1988, (File No. 33-15750-LA), and incorporated herein by
reference.
E. Option granted by Robert G. Loeb to Charles Markos,
filed as Exhibit 10.H.3 to Optifund's Registration Statement
on Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
Exhibit 11 Statement re Computation of Per Share
Earnings.
Exhibit 12 Not Applicable
Exhibit 13 Not Applicable
Exhibit 16 Not Applicable
Exhibit 18 Not Applicable
Exhibit 19 Not Applicable
Exhibit 22 Subsidiaries of the Registrant:
Filed as Exhibit 22 to Optifund's Registration Statement on
Form S-18 (File No. 33-15750-LA), effective September 2,
1987, and incorporated herein by reference.
Exhibit 23 Not Applicable
Exhibit 24 Not Applicable
Exhibit 25 Not Applicable
Exhibit 28 Not Applicable
Exhibit 29 Not Applicable
-2-
Optifund, Inc. (formerly Optifab, Inc.) and Subsidiary
EXHIBIT 11
Statements Regarding Computation of Per Share Earnings
Year Ended March 31,
1994 1995 1996
Net (loss) income $ 5925. $ 7711. $ (9575).
Average shares of common
stock outstanding: Weighted
average Class A common shares
outstanding 4,460,005 5,460,005 5,460,005
Net (loss) income per common
shares outstanding $ -0- $ -0- $ -0-
-3-