<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
--------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT: NOVEMBER 24, 1997
(Date of earliest event reported)
--------------------
APOLLO INTERNATIONAL OF DELAWARE, INC.
(Exact name of registrant as specified in its charter)
--------------------
<TABLE>
<CAPTION>
DELAWARE 0-22365 59-3285246
<S> <C> <C>
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation or organization)
</TABLE>
6542 U.S. HIGHWAY 41, SUITE 215
APOLLO BEACH, FLORIDA 33572
(Address of principal executive offices, zip code)
(813) 645-7677
(Registrant's telephone number, including area code)
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<PAGE> 2
This Amendment No. 1 supplements the Report on Form 8-K filed with the
Securities and Exchange Commission on December 9, 1997 by Apollo International
of Delaware, Inc. (the "Registrant") to file (a) the financial statements of the
acquired company, Trans-World Powernet, Inc., and (b) the pro forma financial
information relating to the business combination of the Registrant and the
acquired company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the acquired company are included
herein pursuant to Item 7(a):
TRANS-WORLD POWERNET, INC.
Independent Auditors' Report
Balance Sheet as of November 23, 1997
Statement of Operations from January 1, 1997 (inception) to November 23,
1997
Statement of Cash Flows from January 1, 1997 (inception) to November 23,
1997
Notes to Financial Statements
(b) Pro Forma Financial Information
The following pro forma financial information is included herein pursuant
to Item 7(b):
APOLLO INTERNATIONAL OF DELAWARE, INC. AND SUBSIDIARY
Pro Forma Consolidated Financial Statements (with explanatory headnote)
(unaudited)
Pro Forma Balance Sheet as of September 30, 1997 (unaudited)
Pro Forma Statement of Operations as of September 30, 1997 (unaudited)
Notes to the Pro Forma Consolidated Financial Statements
(c) Exhibits
23.1 Consent of Most Horowitz & Company, LLP
99.1 Financial Statements of Trans-World Powernet, Inc. as of
November 23, 1997, and the related statements of operations,
statement of cash flows, together with the report of Most
Horowitz & Company, LLP
99.2 Pro Forma Financial Statements
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Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this amended report to be signed on its behalf by
the undersigned hereunto duly authorized.
APOLLO INTERNATIONAL OF DELAWARE, INC.
(Registrant)
Date: February 6, 1998 By: /s/ David W. Clarke
---------------------------------
David W. Clarke
President and Chief Executive Officer
By: /s/ Stuart M. Frank
----------------------------------
Stuart M. Frank
Chief Financial Officer
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<PAGE> 1
Exhibit 23.1
MOST HOROWITZ & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1133 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
TEL: (212) 764-4910
FAX: (212) 575-2017
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent the use in this Form 8-K/A of our report dated February 4,
1998 relating to the financial statements of Trans-World Powernet, Inc.
/s/ Most Horowitz & Company, LLP
New York, New York
February 6, 1998
<PAGE> 1
EXHIBIT 99.1
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
--------------------------------------
FINANCIAL STATEMENTS
JANUARY 1, 1997 (INCEPTION)
TO NOVEMBER 23, 1997
<PAGE> 2
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
JANUARY 1, 1997 (INCEPTION) TO NOVEMBER 23, 1997
INDEX
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CASH FLOWS 4
NOTES TO FINANCIAL STATEMENTS 5-7
</TABLE>
<PAGE> 3
Stockholders and Board of Directors
Trans-World Powernet, Inc.
Clearwater, Florida
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Trans-World Powernet,
Inc., (A Development Stage Enterprise) as of November 23, 1997, and the related
statements of operations and cash flows for the period from January 1, 1997
(inception) to November 23, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Trans-World Powernet, Inc.,
as of November 23, 1997, and the results of its operations and its cash flows
for the period January 1, 1997 (inception) to November 23, 1997, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, although, as discussed in Note 6,
certain conditions indicate that the Company may be unable to continue as a
going concern. The accompanying financial statements do not include any
adjustments that might be necessary should the Company be unable to continue as
a going concern.
/S/ Most Horowitz & Company, LLP
New York, New York
February 4, 1998
<PAGE> 4
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
NOVEMBER 23, 1997
<TABLE>
<S> <C>
ASSETS
CURRENT ASSET
Cash................................................ $ 1,147
Other current assets................................ 4,617
--------
TOTAL CURRENT ASSETS........................... 5,764
DEFERRED SOFTWARE COSTS.................................. 105,284
FIXED ASSETS (net of accumulated and
depreciation of $1,760).................................. 16,525
OTHER ASSETS............................................. 2,100
--------
TOTAL ASSETS................................... $129,673
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses............... $ 16,797
Deferred rent....................................... 1,457
--------
TOTAL CURRENT LIABILITIES...................... 18,254
DEFERRED RENT............................................ 6,514
--------
TOTAL LIABILITIES.............................. 24,768
--------
COMMITMENT AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY (Note 2)
Common stock, $1 par value;
authorized: 10,000 shares; issued
and outstanding: 1,000 shares....................... 1,000
Additional paid-in capital.......................... 184,080
Deficit accumulated during the development stage.... (80,175)
--------
TOTAL STOCKHOLDERS' EQUITY..................... 104,905
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $129,673
========
</TABLE>
See notes to financial statements
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<PAGE> 5
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
JANUARY 1, 1997 (INCEPTION) TO NOVEMBER 23, 1997
<TABLE>
<S> <C>
REVENUES $13,367
--------
EXPENSES
Research and development (10,280)
General and administrative (Note 4) (83,262)
--------
TOTAL EXPENSES (93,542)
NET LOSS AND DEFICIT ACCUMULATED
DURING THE DEVELOPMENT STAGE AT
NOVEMBER 23, 1997 ($80,175)
=========
</TABLE>
See notes to financial statements
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<PAGE> 6
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
JANUARY 1, 1997 (INCEPTION) TO NOVEMBER 23, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss............................................................ $(80,175)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization................................... 9,617
Deferred rent................................................... 7,971
Capitalization of software costs................................ (113,141)
Increase (decrease) in cash flows from
Other current assets.......................................... (4,617)
Other assets.................................................. (2,100)
Accounts payable and accrued expenses......................... 16,797
---------
NET CASH USED IN OPERATING ACTIVITIES......................... (165,648)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets........................................... (18,285)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock.............................. 185,080
---------
INCREASE IN CASH AND CASH EQUIVALENTS
AT NOVEMBER 23, 1997........................................ $ 1,147
=========
</TABLE>
See notes to financial statements
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<PAGE> 7
TRANS-WORLD POWERNET, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Nature of Operations
Trans-World Powernet, Inc. (Company) was incorporated January 1, 1997 to
design, develop and market electrical sub-station automation equipment. The
Company has devoted substantially all of its efforts to the development and
marketing of their equipment and have no revenues from product sales.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fixed Assets
Equipment and furniture were stated at cost and are being depreciated on
the straight-line method over their estimated useful lives of five years.
Software Costs
Costs of software to be sold incurred after technological feasibility has
been established and until it is available for general release have been
capitalized and are being amortized on the straight-line method over the
estimated economic lives of the related products or three years, whichever is
less.
Deferred Income taxes
Deferred income taxes have been provided on timing differences between
financial statement and income tax reporting resulting from computer software
costs and net operating loss carryforward.
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Research and Development Costs
Research and development costs have been charged to operations as incurred.
Rent
Minimum rents are being recognized on the straight-line method over the
term of the lease (Note 4).
3. CAPITALIZATION
In January 1997, the Company incorporated authorizing 10,000 shares of $1
par value common stock. During the period of January 1, 1997 through November
23, 1997, the Company issued 1,000 shares of common stock to founding
stockholders in exchange for $185,080 in cash.
4. COMMITMENT AND CONTINGENCIES
Lease
The Company is committed under a noncancellable lease for office and
research space through November 30, 2000. The lease provided for a four month
rent free period. As of November 23, 1997, aggregate future minimum lease
payments were as follows:
<TABLE>
<CAPTION>
Years Ending
November 23,
-----------
<S> <C>
1998 $25,800
1999 27,000
2000 28,200
-------
$81,000
=======
</TABLE>
For the period January 1, 1997 (inception) to November 23, 1997, rent
expense was $15,144.
Insurance
The Company was self-insured for fire, theft, liability and workers'
compensation and, through February 4, 1998, the Company has not been notified of
any claims for losses. The Company is unable to determine the effect, if any, of
its self-insurance.
<PAGE> 9
5. INCOME TAXES
For the period January 1, 1997 (inception) to November 23, 1997, the tax
effects of timing differences which gave rise to deferred income taxes and the
deferred tax asset as of November 23, 1997, were as follows:
<TABLE>
<S> <C>
Net operating loss carryforward $ 70,000
Software costs (40,000)
Valuation allowance (30,000)
--------
NONE
========
</TABLE>
As of November 23, 1997, realization of the Company's deferred tax asset
of $30,000, resulting from the net operating loss carryforward is not
considered more likely than not, and accordingly, a valuation allowance of
$30,000 has been established.
As of November 23, 1997, the Company had net operating loss carryforwards
available to reduce future taxable income of approximately $185,000, expiring
through 2012.
6. GOING CONCERN
As discussed in Note 1, the Company has been in the development stage
since its inception on January 1, 1997 and through November 23, 1997, has
incurred losses. The Company's ability to meet future financing requirements
for continued product development and operating expenses raise substantial
doubt about the Company's ability to continue as a going concern.
7. SUBSEQUENT EVENTS
Merger
On November 24, 1997, the stockholders of the Company exchanged 100% of
the outstanding shares of common stock of the Company for $200,000, payable
$100,000 at closing and $100,000 on November 24, 1998, and 240,000 shares of
common stock of Apollo International of Delaware, Inc. (Apollo). The Company
and an inactive subsidiary of Apollo merged, with the Company as the surviving
entity and a wholly-owned subsidiary of Apollo.
Employment Agreement
On November 24, 1997, the Company entered into an employment agreement
with its president for a period of two years. Base salary under the agreement
is $88,000, per year, subject to increases for CPI on January 1 of each year.
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<PAGE> 1
EXHIBIT 99.2
APOLLO INTERNATIONAL OF DELAWARE, INC.
AND SUBSIDIARY
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma consolidated financial statements of Apollo
International of Delaware, Inc. and Subsidiary (Company) have been prepared
based on certain pro forma adjustments to reflect the Merger of the Company and
Trans-World Powernet, Inc. (Trans-World) applied to the historical financial
statements of the Company and should be read in conjunction with the notes
hereto and the historical financial statements of the Company as of September
30, 1997 and Trans-World as of November 23, 1997. The financial statements of
Trans-World as of November 23, 1997 have been assumed to be those of September
30, 1997, as they were the only financial statements available and the actual
financial statements as of September 30, 1997 would not be materially different.
The pro forma consolidated balance sheet of the Company as of September 30,
1997 gives effect to the Merger as if it occurred on September 30, 1997. The pro
forma consolidated statement of operations of the Company for the nine months
September 30, 1997 gives effect to the Merger as if it occurred on January 1,
1997, the date Trans-World was organized. These pro forma adjustments are
described in the accompanying notes and are based upon available information and
certain assumptions that the Company believes are reasonable. These pro forma
consolidated financial statements do not purport to be indicative of the
consolidated financial position or consolidated results of operations that
would have actually been obtained had the Merger occurred on the dates assumed
or which may be obtained in the future.
On November 24, 1997, the Company acquired 100% of the outstanding shares
of common stock of Trans-World for $200,000, payable $100,000 in cash at closing
and $100,000 on November 24, 1998, and 240,000 shares of common stock of the
Company. Trans-World and an inactive subsidiary of the Company then merged,
with Trans-World as the surviving entity, and a wholly-owned subsidiary of the
Company.
In addition, on November 24, 1997, Trans-World entered into an employment
agreement with its president for a period of two years. Base salary under the
agreement is $88,000, per year, subject to increases for CPI on January 1 of
each year.
<PAGE> 2
APOLLO INTERNATIONAL OF DELAWARE, INC.
AND SUBSIDIARY
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
ASSETS
PRO FORMA PRO FORMA
APOLLO TRANS-WORLD ADJUSTMENTS CONSOLIDATED
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 230,890 $ 1,147 $ (100,000)(1) $ 72,037
(10,000)(1)
(50,000)(2)
Accounts receivable 410,523 410,523
Inventory 685,597 685,597
Other current assets 112,932 4,617 117,549
---------- -------- ----------- ----------
TOTAL CURRENT ASSETS 1,439,942 5,764 (160,000) 1,285,706
DEFERRED SOFTWARE COSTS 803,332 105,284 1,401,095 (1) 2,236,711
25,000 (2)
(98,000)(3)
FIXED ASSETS 166,509 16,525 183,034
OTHER ASSETS 56,762 2,100 58,862
---------- -------- ----------- ----------
TOTAL ASSETS $2,466,545 $129,673 $1,168,095 $3,764,313
========== ======== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade notes and accounts payable
and accrued expenses $ 269,852 $ 16,797 $ 286,649
Loans payable $ 100,000 (1) 100,000
Other current liabilities 48,975 1,457 50,432
---------- -------- ----------- ----------
TOTAL CURRENT LIABILITIES 318,827 18,254 100,000 437,081
NONCURRENT LOANS PAYABLE - STOCKHOLDERS 589,475 589,475
OTHER LIABILITIES 125,000 6,514 131,514
---------- -------- ----------- ----------
TOTAL LIABILITIES 1,033,302 24,768 100,000 1,158,070
---------- -------- ----------- ----------
STOCKHOLDERS' EQUITY
Common Stock 26,287 1,000 2,400
(1,000)(1) 28,687
Additional paid-in capital 5,526,653 184,080 1,293,600 (2)
(184,080)(1) 6,820,253
Deficit (4,078,271) (80,175) 80,175 (1) (4,201,271)
(25,000)(2)
(98,000)(3)
Less prepaid rent (41,426) (41,426)
---------- -------- ----------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,433,243 104,905 1,068,095 2,606,243
---------- -------- ----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,466,545 $129,673 $1,168,095 $3,764,313
========== ======== =========== ==========
</TABLE>
<PAGE> 3
APOLLO INTERNATIONAL OF DELAWARE, INC.
AND SUBSIDIARY
PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
APOLLO TRANS-WORLD ADJUSTMENTS CONSOLIDATED
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
SALES $ 311,758 $ 13,367 $ 325,125
COST OF SALES (147,068) (147,068)
----------- -------- -----------
GROSS PROFIT 164,690 13,367 178,057
----------- -------- -----------
EXPENSES
Research and development (274,707) (10,280) $ (11,000)(2) (295,987)
General and administrative (1,640,567) (83,262) (14,000)(2)
(98,000)(3) (1,835,829)
----------- -------- --------- -----------
TOTAL EXPENSES (1,915,274) (93,542) (123,000) (2,131,816)
----------- -------- --------- -----------
LOSS FROM OPERATIONS (1,750,584) (80,175) (123,000) (1,953,759)
INTEREST EXPENSE AND AMORTIZATION OF
DISCOUNT AND DEFERRED FINANCING COSTS (174,662) (174,662)
----------- -------- --------- -----------
NET LOSS $(1,925,246) $(80,175) $(123,000) $(2,128,421)
=========== ======== ========= ===========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 3,181,956
===========
NET LOSS $(.67)
=====
</TABLE>
<PAGE> 4
APOLLO INTERNATIONAL OF DELAWARE, INC.
AND SUBSIDIARY
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. The pro forma consolidated financial statements assumes the Merger has been
recorded on the purchase method and the total purchase price, including assumed
expenses of the Merger of $10,000, have been allocated to the fair values of
the net assets acquired and the excess to deferred software cost. The common
stock issued has been recorded at its fair value as of the date of the merger.
2. The pro forma consolidated financial statements assume compensation expense
has been increased by $50,000, the compensation expense under the employment
agreement in excess compensation actually paid. The pro forma compensation of
TransWorld has been allocated between deferred software costs, research and
development expense and general and administrative expenses.
3. The pro forma consolidated financial statements assume additional
amortization of deferred software costs based on the pro forma additions to
deferred software costs.
