SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-8489
APOGEE ROBOTICS, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-0916585
(State of incorporation) (IRS Employer
Identification NO.)
1625 Broadway, Suite 1600
Denver, Colorado 80202
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: (303) 573-1600
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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.
X
YES NO
APPLICABLE ONLY TO CORPORATE ISSUES:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Stock No. of Shares Outstanding Date
- -------------- -------------------------- ----
Common Stock 18,195,022 January 24, 1996
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APOGEE ROBOTICS, INC.
10-Q INDEX
March 31, 1995
PAGE NO.
Part I - Financial Information
Item 1. - Financial Reports
Balance Sheets - March 31, 1995 and
June 30, 1994 3 - 4
Statements of Operations - Three and nine
months Ended March 31, 1995 and 1994 5
Statements of Cash Flows - Nine months
Ended March 31, 1995 and 1994 6
Notes to Financial Statements 7 - 8
Item 2. - Management's Discussion and Analysis of
the Financial Condition and Results of
Operations 9 - 10
Part II - Other Information
Item 1. - Legal Proceedings 11
Item 5. - Other Information 2 - 16
Item 6. - Exhibits and Reports on Form 8-K 16
Signatures 17
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PART I - FINANCIAL INFORMATION
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
BALANCE SHEET
<TABLE>
<CAPTION>
March 31, June 30,
1995 1994
ASSETS
<S> <C> <C>
Current Assets
Cash $ 7,511 $ 49,675
Certificates of deposit - 200,000
Contract receivables 7,317
Inventories 10,491 299,738
Costs and estimated earnings in excess of billings on
uncompleted contracts - 176,650
Nonmarketable securities at net realizable value, aggregate
cost of $1,726,665 and $1,595,675, respectively 500,000 824,250
Other current assets - 106,133
---------- -------
Total current assets 518,002 1,663,763
---------- ---------
OTHER ASSETS
Investment in AGVI 150,000 -
Purchased AGVS software, net 40,000 345,126
Equipment, net - 130,873
Deposits and other assets 10,848 17,397
------ -------------
Total other assets 200,848 493,396
------- ------------
TOTAL ASSETS $ 718,850 $2,157,159
---------- ----------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ $ 526,105
Note payable - related party 288,534
Accounts payable 268,719
Estimated losses on uncompleted contracts 107,766
Other accrued liabilities 39,538 178,018
Billings in excess of costs and estimated earnings on
uncompleted contracts 219,231
------------- ------------
Total current liabilities 39,538 1,588,373
----------- -----------
LIABILITIES SUBJECT TO COMPROMISE 3,697,132 -
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 100,000 shares authorized;
1,082,912 shares outstanding in 1994 10,829
Common stock, no par value; 50,000,000 shares authorized;
18,205,151 and 16,472,110 shares issued and outstanding in
1995 and 1994, respectively 10,683,590 9,968,153
Redeemable preferred stock of investee received in
exchange for common stock (600,000)
Other capital 33,349 853,414
Accumulated deficit (13,734,759) (9,663,610)
------------ -----------
Total stockholders' equity (3,017,820) 568,786
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 718,850 $2,157,159
------------ ----------
</TABLE>
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APOGEE ROBOTICS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
--------------- ---------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
CONTRACT REVENUES AND SALES $ $454,563 $ 457,234 $ 852,890
COSTS OF REVENUES AND SALES 415,873 1,622,174 1,250,909
-------------- --------- --------- ---------
GROSS PROFIT (LOSS) 38,690 (1,164,941) (398,019)
--------------- ---------- ----------- ----------
OPERATING EXPENSES:
Selling, G & A 65,737 187,354 (1,104,009) 612,148
Loss on AGVI 636,083 -
Research & Development - 899 - 6,503
--------------- ------------ ------------ ----------
Total Operating Expenses (65,737) (188,254) (1,740,092) 618,651
--------- ----------- ----------- -----------
LOSS FROM OPERATIONS (65,737) (149,564) (2,905,033) (1,016,670)
OTHER INCOME (EXPENSES), net 5,719 1,754 (61,031) (40,495)
---------- ------------ ------------ -------------
LOSS BEFORE REORGANIZATION ITEMS $(60,018) $(47,810) $(2,966,064) (1,057,165)
REORGANIZATION ITEMS:
Interest income 1,447 1,447
Provision for rejected contracts (1,066,994)
Professional fees (29,390) (39,538)
------------ ------------
Net loss $ (87,961) $(147,810) $(4,071,149) (1,057,165)
------------ ---------- ------------ ----------
LOSS PER COMMON SHARE $ - $ (.01) $ $ (.11)
---------- ---------- ------------ ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 18,195,022 9,962,110 18,003,587 9,428,094
---------- ---------- ---------- ---------
</TABLE>
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APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS ENDED
MARCH 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,071,149) $ (170,104)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amoritization 83,016 102,168
Write-down of property and software to net realizable
value 352,220
Equity in net loss of affiliate 39,931
Loss on investment in AGVI 636,083
Increase (decrease) from changes in assets and liabilities:
Liabilities subject to compromise 2,239,365
Contract receivables (297,925)
Inventories 289,247 (111,397)
Cost and estimated earnings in excess of billings on
uncompleted contracts 176,650 (363,188)
Precontract costs 217,133
Accounts payable and accrued liabilities (333,577) 327,749
Billings in excess of costs and estimated earnings on
uncompleted contracts (219,231)
Other 10,020 (6,230)
---------- ----------
Net cash used in operating activities (837,356) (261,868)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemptions of certificates of deposit 200,000
Proceeds from investments 71,250 -
Purchase of AGVS software - (107,704)
Other (42,553) (13,780)
---------- ------------
Net cash provided by (used in) investing activities 228,697 (121,484)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash advance from an affiliate of a former director 115,000 -
Repayments under short-term debt agreements (212,426)
Proceeds from issuance of common stock and preferred stock 663,921
Proceeds from issuance of preferred shares 242,013
Payments of deferred offering costs - (330)
---------- -------------
Net cash provided by financing activities 566,495 241,683
----------- -------------
INCREASE (DECREASE) IN CASH (42,164) (141,669)
CASH, at beginning of year 49,675 331,952
---------- -------------
CASH, at end of year $ 7,511 $ 190.283
---------- ------------
</TABLE>
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APOGEE ROBOTICS, INC.
Notes to Financial Statements
1. In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (all of which were normal recurring accruals) necessary
to present fairly the Company's financial position as of March 31, 1995 and June
30, 1994, the results of its operations for the three and nine month periods
ended March 31, 1994 and 1995; and the statements of cash flows for the nine
month period ended December 31, 1994 and 1995.
The accounting policies followed by the Company are set forth in the 1994 Apogee
Robotics, Inc. 10-K Annual Report.
2. Inventories at March 31, 1995 and June 30, 1994 consisted of robot
components, assembly parts and AGVS vehicles.
3. Earnings (loss) per common share is based on the weighted average number of
common shares outstanding during the period. Outstanding convertible preferred
stock, common stock warrants and options have not been included in the
computation of net (loss) per common share when the effect would have been
antidilutive.
4. Contingencies.
(a) Conagher & Co., Inc. ("Conagher") revoked its obligations under the
amended subscription agreement on November 21, 1994. This revocation caused the
collapse of the SI acquisition resulting in the suspension of operations
November 28, 1994 and the declaration of bankruptcy on December 9, 1994.
Conagher initiated legal action against the Company and certain of its officers
and directors on December 2, 1994 alleging financial misrepresentation (See Part
II, Item 1 - Legal Proceedings and Item 5 - Other Information discussed below).
(b) As reported in footnote 5 hereunder, AGV Acquisitions, Inc. ("AGV")
(which became Apogee's wholly owned subsidiary simultaneous with the
acquisition) acquired the AGVS assets of SI Handling Systems, Inc. ("SI") on
October 4, 1994 for $2,000,000 cash and $1,000,000 in convertible preferred
stock. Closing was evidenced by the payment of $250,000 cash (which management
subsequently discovered was funded by Quadrax Corporation rather than Conagher
under the Revised Agreement). Amendment #2 to the Asset Purchase Agreement
between AGV and SI, required SI to furnish Apogee with certain assignment
consents and lein waivers no later than November 4, 1994, which items were
omitted under the original purchase documentation. After receipt of those
consents and waivers, Apogee would be required to pay an additional $250,000 to
close the transaction. SI subsequently failed to provide these consents and
waivers. Apogee management attempted to restructure certain terms and conditions
of the Asset Purchase Agreement to avoid declaration of default. Hayton's abrupt
resignation from Apogee's Board of Directors and revocation of Conagher's stock
subscription agreements with Apogee terminated those negotiations.
The Company initiated an Adversary Proceeding against SI in the Denver
Bankruptcy Court on January 20, 1995. A compromise agreement between the parties
was entered into on September 12, 1995, that was approved by the Bankruptcy
Court on October 30, 1995.
(c) Management is unable to ascertain with any certainty to amount and
extent of creditor claims that may be filed against the bankruptcy estate.
5. Proceedings Under Chapter 11.
On December 9, 1994 (petition date), the Company and it's wholly owned
subsidiary, AGV, filed a voluntary petition for reorganization under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court. The Company
continues business operations as a debtor-in-possession, subject to the approval
of the Court for certain of its proposed actions.
As of the petition date, actions to collect pre-petition indebtedness
were stayed and other contractual obligations may not be enforced against the
Company. In addition, the Company may reject executory contracts and lease
obligations during pendency of the Chapter 11 proceedings, and parties affected
by these rejections may file claims with the Bankruptcy Court in accordance with
the reorganization process. Substantially all unsecured liabilities of the
Company as of the petition date are
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subject to compromise under a plan of reorganization which has not yet been
completed; when completed, the plan of reorganization must be voted upon by all
impaired classes of creditors and equity security holders and approved by the
Bankruptcy Court.
6. Acquisition of AGV
On October 5, 1994, the Company acquired the net assets of AGV, a
company wholly owned by certain of the Company's directors, which on the same
date acquired substantially all of its net assets from SI. The acquired assets
consisted primarily of technology, inventories, equipment and machinery, and
contract rights. Quadrax Corporation, an affiliate of Conagher advanced $250,000
at closing of the acquisition on behalf of the Company. SI failed to provide
certain consents and waivers, and subsequent to the Company filing for
bankruptcy, SI seized control of the disputed assets. Apogee and SI reached a
compromise agreement in September, 1995 resolving all claims between the Company
and SI arising from this transaction. The agreement was approved by the
bankruptcy court in October, 1995. The Company's investment in AGV, originally
recorded at $250,000 paid at closing, was reduced to the $150,000 which SI
agreed to remit to the Company in accordance with the compromise as disputed
claims.
The Company did not consolidate the assets of AGV as of March 31, 1995
since control was temporary; claims filed by its creditors and employees have
been included in liabilities subject to compromise as disputed claims.
7. Liabilities Subject to Compromise.
The Company is in the process of disputing certain claims filed,
including all claims filed by former cimpoyees and trade creditors of AGV.
Management of the Company believes that such liabilities represent a liability
of SI. The Company is unable to predict whether or not it will be successful in
disupting claims filed.
No provision has been made for the effect of preference or other
actions as they cannot be determined at this time.
8
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
On November 28, 1994, Apogee suspended operations and filed a petition
under Chapter 11 of the Federal Bankruptcy Rules on December 9, 1994. During the
quarterly period ended March 31, 1995, the Company conducted no operations.
Liquidity and Capital Resources
Apogee's current assets decreased 68.8% to $518,002 for the period
ended March 31, 1995 from $1,663,763 for the fiscal year ended June 30, 1994.
This decrease was a result of the following conditions:
1) Surrender of a Certificate of Depost of $200,000 to the lender
holding this deposit as security for a line of working capital;
2) Elimination of all Costs and estimated earnings in excess of
billings on uncompleted contracts as a result of the suspension of
the Company's operations on November 28, 1994;
3) Write-off of other current assets of $106,133 consisting of
prepaid expenses and the cash surrender value of life insurance
policies; and
4) Write-down of inventories to reflect salvage value only to the
bankruptcy estate.
The Company's other assets decreased 59.3% as a result of the reduction
of value in the purchased AGVS software and equipment to reflect salvage value
only as a consequence of the Company's bankruptcy filing. This reduction was
partially offset by the inclusion of value for the acquisition of AGV
Acquisitions, Inc. (a by-product of the Company's acquisition of the AGVS assets
of SI Handling, Inc.) (See Part II. Item 5 - Other Information discussion
below). This amount was posted at the eventual settlement value in the Company's
dispute with SI Handling Systems Inc. (See Part II. Item 5 - Other Information
discussion below).
Historically, the Company's operations have not generated cash. Apogee
has derived working capital through public and private sales of its Common Stock
and from short-term borrowings. Since 1983, the Company has received
approximately $10.5 million from the sale of its Common Stock.
During the period ended December 31, 1994, Conagher revoked it's
subscription agreements with the Company on November 21, 1994, which caused the
collapse of negotiations with SI Handling Systems, Inc. over defaults in the
agreement to purchase their AGVS assets; the Company suspended operations
effective November 28, 1994; and filed for bankruptcy under Chapter 11 of the
Federal Bankruptcy Codes on December 9, 1994 (See Part II, Item 1 - Legal
Proceedings and Item 5 - Other Information discussions below).
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Results of Operations
The Company conducted no operations during the fiscal quarter ended
March 31, 1995. Operating expenses consisted solely of consulting fees to the
officers and other outsiders for purposes of administering the bankruptcy
estate. The consulting fees provided a loss of operations of $65,737, or a
reduction of 56% from the comparable prior period ended March 31, 1994. The
Company realized other income of $5,719 from several miscellaneous refunds as
well as interest income of $1,447 for the current period ended March 31, 1995.
Legal and accounting professional fees were accrued for $29,390. All of the
foregoing was responsible for the net loss of $87,961 for the quarter ended
March 31, 1995 compared with a net loss of $147,810 in the comparable prior
period ended March 31, 1994.
For the nine month period discussion please refer to the Company's Form
10-Q for the period ended December 31, 1994 since no significant changes
occurred during the current three month period ended March 31, 1995.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The following legal proceedings involving the Company are currently
pending:
1) Case No. 94-22193-CEM, Chapter 11 and Case No. 94-22194-MSK, Chapter
11, Jointly administered under Case No. 94-22193-CEM filed in the
United States Bankruptcy Court, District of Colorado December 9, 1994.
Apogee and it's wholly owned subsidiary, AGV sought protection from its
creditors under Chapter 11 of the Federal Bankruptcy Statutes
appertaining thereto. Management believes that the Company is current
in all of its bankruptcy filings.
2) Case No. CV-ED94-270-RT (GAKX) filed in the U. S. District Court,
Central District of California, December 2, 1994 and subsequently
removed to the U.S. District Court, District of Colorado on February
16, 1995. This action was filed by Conagher against Apogee; certain
Company managers and directors; and the Company's outside auditors,
Brock & Co., Inc., alledging various securities violations and
misrepresentations. These proceeding are currently under an automatic
stay provided under bankruptcy statutes. As a result of a Proof of
Claim filed by Conagher, these claims, in addition to counterclaims,
will be defended in the bankruptcy court under Claims Objection
proceedings. Company management believes that it will be successful in
the defense of these claims and the assertion of counterclaims against
Conagher in the bankruptcy court, which, management believes, should
result in the dismissal of the district court action.
3) Case No. 95-1071 PAC, an Adversary Proceeding under Case No.
94-22193-CEM in the U.S. Bankruptcy Court for the District of Colorado,
January 20, 1995 by AGV Acquisitions, Inc., a wholly owned subsidiary
of Apogee against SI Handling Systems, Inc. AGV alledged default by SI
under the AGV/SI Asset Purchase Agreement of October 4, 1994. A
compromise agreement between the parties was entered into on September
12, 1995, with notice issued and motion filed on September 13, 1995.
Approval of the bankruptcy court was granted October 30, 1995.
Item 5. Other Information.
1) Relationship with Conagher
On May 12, 1994, Apogee entered into a Stock Subscription Agreement
(hereinafter the "Subscription Agreement") with Conagher & Co., Inc.
("Conagher"), wherein Apogee exchanged 6,000,000 shares of its Common Stock for
6,000,000 shares of Conagher's Preferred Stock. The Subscription Agreement
provided that between June 15, 1994 and September 15, 1994, Conagher would
redeem all or a portion of its Preferred Shares for $2,000,000. At the end of
that period, shares of Conagher Preferred Stock that remained unredeemed could
be exchanged by Apogee for an equal number of shares of Apogee's Common Stock
held by Conagher. Subsequent to the execution of the Subscription
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Agreement, Conagher assigned, conveyed, transferred, or sold (which cannot be
determined by Apogee) 5,200,000 shares of the Apogee Common Stock it acquired
from Apogee under the Subscription Agreement, to Importationes y Exportationes,
SA ("IMEXSA"), a Nicaraguan company, that subsequently filed a Regulation S
registration of the Apogee Common Stock. On June 5, 1994, Conagher agreed to
purchase an additional 3,000,000 shares of Apogee's Common Stock for $1,000,000.
On September 23, 1994, officers of Apogee and Conagher executed an
Amended and Restated Stock Acquisition Agreement (hereinafter the "Revised
Agreement"), amending the May 12, 1994 Subscription Agreement and terminating
the June 5, 1994 agreement. This Revised Agreement reduced the total payments to
Apogee from $3,000,000 to $1,200,000. It also provided for the purchase of an
additional 1,750,000 shares of Apogee's Common Stock for $310,000 prior to
October 1, 1994. The Revised Agreement was purportedly ratified by Apogee's
Board of Directors consisting of Hayton, principal officer, director, and
shareholder of Conagher, and Apogee's Chairman; Sven Kraumanis and William G.
Conway, both nominees of Conagher; and Robert Oliphant. The Company contends
that the Revised Agreement never closed.
Subsequent to the foregoing events, Apogee's management determined that
the ratification of the Revised Agreement by Apogee's then current Board of
Directors on September 23, 1994 was improper. Further investigation by Apogee
management revealed other irregularities relating to Conagher's actions on
behalf of Apogee, in addition to their ongoing obligations to Apogee under the
various agreements. Negotiations with Conagher to cure these irregularities were
complicated as a result of Hayton's chairmanship of the Company and his
effective control of the Company's Board of Directors, as well as overseas
travel by Mr. Hayton. Furthermore, an article in the October 13, 1994 edition of
The Wall Street Journal revealed serious allegations regarding Hayton's
character, integrity, and business practices that effectively terminated
Apogee's access to public financial markets and damaged Apogee's reputation such
that it could not execute it's published business plan.
On or about November 1, 1994, Hayton reached an agreement with a
Canadian company, 480452 B.C. Ltd. ("480452"), to acquire substantially all of
Conagher's obligations to Apogee. These negotiations were conducted without any
participation from Apogee management, but required Apogee's consent to close the
transaction. At the same time, Company management was advised by NASDAQ that
Apogee would be delisted immediately as a result of its affiliation with
Conagher and Hayton, which delisting notification, Conagher and Hayton failed to
disclose to the principal of 480452. Company management's subsequent disclosure
of the delisting notice to the principal of 480452 resulted in the termination
of the agreement between Conagher and 480452.
Subsequent negotiations with Conagher contained various unfulfilled
commitments for funding the Company, which were ultimately terminated by the
abrupt resignation of Hayton and his designees from Apogee's Board of Directors
on November 21, 1994. In a press release by Conagher dated on the same day,
Hayton accused Apogee and certain of its managers and directors of fradulent
misrepresentation.
On December 2, 1994, Conagher filed an action against Apogee and
certain of its managers and directors in the United States District Court for
the Central District of California, Case #CV-ED94-270
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RT (GAKX), alledging various securities violations and financial
misrepresentations. This case was removed February 16, 1995 to the U.S. District
Court for the District of Colorado. By operation of the bankruptcy rules any
prosecution of this action against the Company remains under an automatic stay.
(See Part I, Item 3. Legal Proceedings below for a discussion of these matters.)
Additionally, on December 2, 1994, Conagher filed a complaint against
James R. Currier, Sr., Apogee's newly appointed President and CEO, in the
Superior Court for the State of California for the County of Riverside, Palm
Stprings Branch (Case #079188), alledging misrepresentation of certain financial
conditions of Apogee. This action was dismissed May 1, 1995 due to the lack of
personal jurisdiction. On May 1,1995, Currier filed an action against Conagher
and Hayton in the U.S. District Court for the Western District of North Carolina
(Case #3:95CV207H) seeking a declaratory judgement relative to Conagher's
California claims and asserting claims of fraud and misrepresentation against
Conagher and Hayton The Company is not a party to this action.
On December 4, 1994, prior to the declaration of bankruptcy by the
Company on December 9, 1994, Robert Oliphant and James W. Jones were reelected
directors of Apogee. Oliphant subsequently resigned December 30, 1994 to pursue
other employment interests. Jones and Currier remain the Company's sole
directors.
As a result of the declaration of bankruptcy and the failure of the
subscription agreements between Apogee and Conagher, settlement agreements
described in Apogee's Annual Report on Form 10K for the period ended June 30,
1994 under the section "Company Restructuring," with certain persons to whom
Apogee owed approximately $500,000 were not ratified by Apogee's Board of
Directors, and remain obligations of the bankruptcy estate, with the exception
of shares in Princeton Electronic Products that collateralized a loan to the
Company, were subsequently transferred to the security holder by bankruptcy
court order dated August 15, 1995.
2) Acquisition of SI Handling AGVS Division
As reported in prior filings, AGV Acquisitions, Inc. ("AGV") (which
became Apogee's wholly owned subsidiary simultaneous with the acquisition)
acquired SI's AGVS Division on October 4, 1994. Under Amendment #2 to the Asset
Purchase Agreement between AGV and SI, SI was required to furnish Apogee with
certain assignment consents and lein waivers no later than November 4, 1994,
which items were omitted under the original purchase documentation. After
receipt of those consents and waivers, Apogee would be required to pay $250,000
to close the transaction. SI subsequently failed to provide these consents and
waivers. Apogee management attempted to restructure certain terms and conditions
of the Asset Purchase Agreement to avoid declaration of default. Hayton's abrupt
resignation from Apogee's Board of Directors and revocation of Conagher's stock
subscription agreements with Apogee terminated those negotiations.
In early January, 1995, SI seized control of the disputed assets.
Thereafter, Apogee filed an adversary proceeding against SI in the Denver
bankruptcy court on January 20, 1995 to resolve the dispute over ownership of
the purchased assets. In a Compromise Agreement between Apogee and SI,
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dated September 12, 1995, a motion was filed with the bankruptcy court and
notice issued, to dismiss the adversary proceeding with prejudice and unwind the
Asset Purchase Agreement of October 4, 1994. This matter received approval of
the bankruptcy court on October 30, 1995. (See Part II, Item 1. Legal
Proceedings above for a discussion of these matters.)
3) Bankruptcy Filing
On December 9, 1994, Apogee and it's wholly owned subsidiary, AGV filed
for protection from its creditors under Chapter 11 of the Federal Bankruptcy
codes in the Federal Bankruptcy Court in Denver, CO. This filing was the
consequence of transactions involving Apogee and Congher, including certain
stock subscription agreements which, in the view of management, Conagher and
Hayton filed to honor. Management believes the satisfaction of Conagher's
obligations under the stock subscription agreements with Apogee would have
provided adequate liquidity for the Company to prosecute it's ongoing business
objectives. Company management believes Apogee is current in all of its
bankruptcy filings. A Creditor's Committee has been appointed by the court and
relations between this committee and the Company are cooperative and amicable.
Significant events being addressed within the bankruptcy estate are as
follows:
1) Administrative consolidation of the Apogee and AGV bankruptcy
estates (Case Nos. 94- 22193-CEM and 94-22194 MSK respectively);
2) Sale of 40,000 shares of common stock in Loronix Information
Systems, Inc. on or about June 12, 1995 for $128,000;
3) Sale of certain technology and products to FMC Corporation, Inc.
("FMC") for $40,000.00 pursuant to the terms and conditions of and
Asset Purchase Agreement between the Company and FMC dated July
12, 1995 and approved by the court September 13, 1995;
4) Commencement and settlement of the adversary complaint against SI
pursuant to a Settlement Agreement dated September 12, 1995
wherein general releases are granted between Apogee and SI, and SI
pays to Apogee $150,000;
5) Sale of various inventory items for sums not in excess of $20,000;
and
6) Establishment of October 31, 1995 Bar Date.
Company management, in cooperation with Company bankruptcy counsel are
vigorously pursuing the following items:
1) Filing of a Reorgainzation Plan on or about March 1, 1996 under
which outstanding claims relating to employees, creditors, and
equity holders will be settled. Company management believes
settlement of all debt will be accomplished inder the plan.
Management intends to
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pursue merger opportunities with other companies involved in the
factory automation industry, and believes that Apogee's
technology, substantial NOL carryforwards, and its public status,
will make it an attractive merger candidate with successful and
profitable privately owned operations. Management is currently
investigating several such opportunities. No assurance can be
given that such a merger can be negotiated on terms acceptable to
Apogee's shareholders or the bankruptcy court. Nor can any
assurances be given that management's intention to exit the
bankruptcy estate as a non-operating entity for purposes of
arranging a merger will be ratified by Company creditors, equity
holders, or the bankruptcy court.
2) Apogee management has appointed special counsel for purposes of
litigating claims that the Company plans to assert against various
entities and individuals, in addition to defense of claims
asserted by Conagher. Management believes there is a significant
probability of successful defense against the Conagher complaint
as well as a number of affirmative claims and mandatory
counterclaims which management expects to assert against Conagher
and Hayton in the near future. (See Part II, Item 1. Legal
Proceedings above for a discussion of these matters.)
4) Employees
On November 28, 1994 as a result of Conagher's revocation of its
subscription agreements with Apogee, all employess of the Company were
discharged. Currently, the Company contracts services from it's officers, and
other outside contractors from time to time as the circumstances dictate.
Item 6. Exhibits and Reports on Form 8-K.
The Company filed no reports on Form 8-K for the fiscal quarter ended
March 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned therunto duly authorized.
APOGEE ROBOTICS, INC.
Date: /s/ James R. Currier, Sr.
James R. Currier, Sr.
Chairman, President, C.E.O., & C.F.O.
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