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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13
- --------- OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --------- SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
____________________
Commission file number 0-12792
APOGEE ROBOTICS, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
Colorado 84-0916585
(State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)
1301 Meadowood Lane
Charlotte, North Carolina 28211
(Address of principal executive offices) (Zip Code)
(704) 362-6816
(Registrant's telephone number, including area code)
</TABLE>
Securities registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934: NONE
Securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934:
Title of Each Class
Common Stock, No Par Value
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 report(s), and (2) has been subject to
such filing requirements for the past 90 days. Yes No X
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
------
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No X
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of a date within 60 days prior to the date of filing is not
determinable due to the absence of any bid or asked price during such period.
The number of shares of Common Stock, no par value, outstanding on
December 31, 1995 was 18,195,022
Documents Incorporated by Reference into this Report: None
Page 1 of 69 consecutively numbered pages
Index to Exhibits on page 41
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PART I
ITEM 1. BUSINESS
General
Apogee Robotics, Inc. ("Apogee" or the "Company") was founded in 1983
for the purpose of developing advanced materials handling systems utilizing
automatic guided vehicle systems ("AGVS"), for use in manufacturing plants,
warehouses, offices and other facilities. Apogee's AGVS were computer or
microprocessor controlled, driverless vehicles equipped with various material
handling devices to automatically transport materials for pick-up to various
destinations under the supervision of computer systems.
On December 9, 1994, Apogee and it's wholly owned subsidiary, AGV
Acquisitions, Inc., filed for protection from their creditors under Chapter 11
of the Federal Bankruptcy Codes in Denver, CO and is currently operating as a
debtor in possession. This filing was the consequence of transactions
involving the Company and Conagher & Co., Inc. ("Conagher"), including certain
stock subscription agreements which, in managements view, Conagher and its
principal, Pattinson Hayton III ("Hayton"), failed to honor (see Part I, Item
1. Business, section "Company Restructuring," and Part I, Item 3. Legal
Proceedings, below for a discussion of these matters). As a consequence of
Apogee's association with Conagher and Hayton, who also served as a director
and chairman of Apogee's Board of Directors, and Apogee's inability to maintain
listing requirements, the Company was delisted by NASDAQ on February 7, 1995.
(See Part I, Item 1. Business, below for a discussion of these matters.)
Automatic Guided Vehicle Systems ("AGVS")
An AGVS is a means of transportation that uses robotic vehicles to
move materials through a manufacturing plant, warehouse, office, jail, or other
such facilities, and is frequently used as an alternative to conveyors,
manually operated vehicles, and other conventional methods of materials
handling. Through a computer system, Apogee's AGVS were capable of tracking
inventory and work-in-process through an entire material handling process,
allowing a user to implement various strategies to improve productivity.
AGVS sold by Apogee followed wire, optical tape, or magnetic
guidepaths installed in or on a floor. Apogee's standard optically and
magnetically guided vehicle (the "Orbitor") represented a substantially less
expensive alternative to wire guidance. On October 5, 1994, Apogee acquired
the AGVS Division of SI Handling Systems, Inc. ("SI"), which manufactured AGVS
utilizing both wire and non-wire guidance technologies (see Part I, Item 1.
Business, Section "Acquisition of SI Handling AGVS Division" of a discussion of
this matter). This acquisition would increase Apogee's AGVS product and
distribution network and add to Apogee's technical and personnel resources.
As a result of Apogee's bankruptcy filing on December 9, 1994, all
development of AGVS technology and product, as well as all manufacturing, sales
and marketing, have been terminated, and management does not expect any
resources to be expended keeping the existing body of technology current. As a
result, any advantages that Apogee technology and product may have enjoyed
prior to Apogee's bankruptcy filing have eroded subsequent to bankruptcy and
are expected to erode further during the pendency of bankruptcy and thereafter,
unless merger candidates described in the section below entitled "Bankruptcy
Filing," devote substantial resources to update these products and technology,
and restore manufacturing, sales and marketing activities.
In an effort to mitigate the complete loss of any value in the Apogee
product and technology relating to it's Orbitor line of products, the Company
entered into an Asset Purchase Agreement with FMC on July 12, 1995, wherein FMC
acquired certain electro-mechanical technology and products of the Orbitor
line, and a quotation system for $40,000. The bankruptcy court order approving
this transactions was entered on September 13, 1995. A condition of this
agreement provides that if Apogee emerges from bankruptcy as an AGVS provider,
or if another purchaser
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emerges, interested in the acquisition of the entire body of Apogee's AGVS
products and technology, the purchase will revert to an irrevocable license to
utilize the technology.
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. Simultaneous with the execution of the Subscription
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 21, 1994, Apogee and Conagher entered into 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. The Revised Agreement reduced Conagher's obligations for
payments to Apogee from $3,000,000 to $1,028,000. The Revised Agreement also
provided Conagher with the right to purchase 1,250,000 shares of Apogee's
Common Stock for $250,000 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 was not approved by a requisite vote of disinterested board
members and, in any event, was never consummated.
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 delayed as a result of Hayton's chairmanship of the Company
and his effective control of the Company's Board of Directors, as well as his
extended absences overseas. Furthermore, an article in the October 13, 1994
edition of The Wall Street Journal revealed 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 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. If the agreement
between Conagher and 480452 had closed, it would not have been ratified by the
Company, because the principal of 480452 was under investigation by the
Vancouver (Canada) Exchange for certain securities violations, and the
agreement contained provisions unsatisfactory to the Company.
Subsequent negotiations with Conagher contained various unfulfilled
commitments for funding the Company,
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which were ultimately terminated contemporaneously with 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 the same day, Hayton accused Apogee
and certain of its managers and directors of fraudulent 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 RT (GAKX), alleging
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, this action 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
Springs Branch (Case #079188), alleging 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 them. (See Part I, Item 3. Legal Proceedings below
for a discussion of these matters.)
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.
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 lien 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 repudiation 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, 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 I, Item 3. Legal Proceedings
for a discussion of these matters.)
Bankruptcy Filing
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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 Conagher, including
certain stock subscription agreements which, in managements view, Conagher and
Hayton failed 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) Settlement of the adversary complaint against SI pursuant to a
Settlement Agreement dated September 12, 1995 wherein the
adversary proceeding is dismissed with prejudice, general
releases were granted between Apogee and SI, and SI paid 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. Since Apogee's
sales contracts provided warranty liabilities to the Company,
management cannot fully assess the nature, scope and extent of
what additional claims might arise that must be accounted for
under the bankruptcy estate.
Company management, in cooperation with Company bankruptcy counsel are
vigorously pursuing the following items:
1) Filing of a Reorganization Plan on or about March 1, 1996
under which outstanding claims relating to employees,
creditors, and equity holders will be settled. Company
management believes that settlement of all debt will be
accomplished through its Plan of Reorganization. Management
intends to pursue merger opportunities with other companies
involved in the factory automation industry, and believes that
Apogee's substantial NOL carry forwards, in addition to its
public status, will make it an attractive merger candidate
with successful and profitable privately owned operations.
Management is currently investigating several such
opportunities, although 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
proceeding as a non- operating entity for purposes of
arranging a merger will be ratified by Company creditors,
equity holders, or the bankruptcy court.
2) Company management is currently preparing a Disclosure
Statement, and expects to file a Disclosure Statement
concurrent with the Reorganization Plan.
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3) 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 I,
Item 3. Legal Proceedings below for a discussion of these
matters.)
Employees
On November 28, 1994 all employees 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 2. PROPERTIES
Licenses and Proprietary Technologies; Patents
Apogee has developed proprietary technology for AGVS, including
stationary control systems, featuring guidepath optimization, traffic control,
automatic battery charging, and automatic load transfer; interface software;
and management reporting systems. No patent protection was sought for these
software products; however the Company has copyright and trade secret
protection under applicable federal and state statutes. Apogee has received a
U.S. patent on its magnetic guidance technology.
As a consequence of the bankruptcy filing, Apogee has not incurred any
expenses for research and development, and approximately $10,000 were incurred
for the period from July 1, 1994 to December 9, 1994, the date of the
bankruptcy filing. The Company has no plans to make any further expenditures
to maintain the existing body of its AGVS technology, software or products, or
to pursue any enhancements thereof.
Facilities
Apogee has no plant or office space. Company officials may be reached
through bankruptcy counsel, Jones & Keller, PC located at 1625 Broadway, Suite
1600, Denver, CO 80202.
ITEM 3. 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. (See Item 1. Business, sections
"Company Restructuring" and "Bankruptcy Filing" for a discussion of
this proceeding.)
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., alleging 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
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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. (See Item 1. Business, sections "Company Restructuring"
and "Bankruptcy Filing" for a discussion of this proceeding.)
3) Case No. 3:95CV207H filed in the U.S. District Court, Western
District of North Carolina, May 1, 1995 by James R. Currier, Sr.
against Conagher and Hayton. This action was filed by Currier to seek
a declaratory judgement relative to claims asserted by Conagher in an
action against Currier filed in the Superior Court for the State of
California that was dismissed for the lack of personal jurisdiction.
Currier has made additional claims of fraud and misrepresentation
against Conagher and Hayton in this proceeding. This action is
scheduled for trial in November, 1996.
4) 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 alleged
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS
The Company's Common Stock was traded in the national over-the-counter
market and was quoted on the NASDAQ System until delisting on February 7, 1995.
It is currently listed on the over-the-counter pink sheets. The following
table sets forth the high and low bid prices for the Company's Common Stock for
the periods indicated. Prices set forth below do not reflect retail markups,
markdowns or commissions and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
High Low
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<S> <C> <C>
Fiscal 1994
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First Quarter $1.00 $0.50
Second Quarter $0.82 $0.62
Third Quarter $0.75 $0.56
Fourth Quarter $0.72 $0.31
Fiscal 1995
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First Quarter $0.34 $0.16
Second Quarter $0.22 $0.03
Third Quarter TRADING SUSPENDED
Fourth Quarter TRADING SUSPENDED
</TABLE>
As of January 15, 1996, there were approximately 1100 owners of the
Company's Common Stock. The number of persons owning the Company's securities
includes both record holders and persons holding the securities through banks,
brokers or other nominees. No dividends have been paid on the Company's Common
Stock and no dividends will be paid in the foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA
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<CAPTION>
STATEMENT OF Years Ended June 30,
OPERATIONS DATA 1991 1992 1993 1994 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Contract Revenues
Earned $ 1,813,928 $ 652,750 $ 1,668,849 $ 694,607 $ 457,233
Income (Loss) from
Operations $(2,530,442) $(515,399) $(1,047,505) $(1,047,505) $(2,905,651)
Net Income (Loss) $(2,473,036) $(582,198) $(1,108,436) $(3,247,907) $(4,100,364)
Income (Loss) Per
Share $ (0.50) $ (0.10) $ (0.15) $ (0.31) $ (0.23)
Weighted Number of
Shares Outstanding
4,944,274 5,781,062 7,235,625 10,508,485 18,051,446
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA 1991 1992 1993 1994 1995
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Current Assets $ 1,600,555 $1,437,686 $1,781,218 $1,663,763 $ 297,110
Total Assets $ 2,212,986 $1,935,237 $2,634,876 $2,157,159 $ 97,958
Current $ 339,170 $ 87,547 $1,082,890 $1,588,373 $ 47,861
Liabilities
Total Liabilities $ 339,170 $ 87,547 $1,082,890 $1,588,373 $3,544,993*
Working Capital $ 1,261,385 $1,350,139 $ 698,328 $ 75,390 $ 219,249
Shareholders'
Equity (Deficit) $ 1,873,816 $1,847,690 $1,551,986 $ 568,786 ($3,047,035)
</TABLE>
*Includes disputed claims under the bankruptcy estate
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
General
Revenues derived from long-term contracts are recognized according to
the percentage-of-completion method, measured by the percentage of costs
incurred to date versus the estimated total contract cost for each contract.
Costs include materials, direct labor, subcontractors, and engineering and
manufacturing overhead. Provision for estimated losses is made in the period
for which they become determinable.
Since Apogee's contract revenues have historically consisted of large
sales to a limited number of customers and since large projects are billed
under the percentage-of-completion method, certain balance sheet items will
fluctuate substantially between periods. As many large projects are billed at
certain intervals, as opposed to monthly, the balance sheet category Costs and
Estimated Earnings will increase as costs on the project accumulate. Once an
invoice is sent to the customer, such amounts are transferred to Contract
Receivables. Contract receivables in turn will vary as Costs and Earnings on
large projects are billed and subsequently collected. Conversely, if Apogee
receives an advance or down payment on an order, the amounts received are
reflected as Billings in Excess of Costs and Estimated Earnings. Such amounts
are gradually transferred to Contract Revenues Earned as Apogee progresses with
work on the particular project.
On November 28, 1994, Apogee suspended operations pending the filing
of a petition under Chapter 11 of the
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Federal Bankruptcy Rules on December 9, 1994. The financial statements for the
fiscal year ended June 30, 1995 reflect both the short period of operations, as
well as activities undertaken as a debtor-in-possession.
Liquidity and Capital Resources
Apogee's current assets decreased from $1,663,763 on June 30, 1994 to
$297,110 on June 30, 1995 as a result of the following items:
(a) Surrender of a Certificate of Deposit of $200,000 to the
lender holding this deposit as security for a line of working
capital;
(b) Write down of substantially all of Apogee's inventory to
reflect salvage value only;
(c) Write down, liquidation, and/or surrender of securities to
collateral holders;
(d) Suspension of operations as a result of bankruptcy;
(e) Consumption of prepaid expenses;
(f) Write down of other assets; and
(g) Increase in Cash as a result of the liquidation of certain
inventories.
As a result of the bankruptcy filing, all of Apogee's current
liabilities as of December 9, 1994 were reclassified and recorded as
Liabilities Subject to Compromise, and consist of all creditor claims against
Apogee's bankruptcy estate, including claims that the Company will contest. In
particular, the Company intends to contest all creditors and employee claims in
connection with the acquisition of the AGVS assets of SI and the subsequent
settlement thereof.
Historically, Company operations did not generate cash. Working
capital was generated through public and private sales of the Company's Common
Stock and from short-term, fully collateralized borrowings. Since 1983, Apogee
has received net proceeds from the sale of its Common Stock in excess of
$9,500,000.
Apogee's only material future capital commitments are funding the
extensive litigation necessitated by the Conagher lawsuit. Management believes
that sufficient funds exist for the sponsorship of this litigation as a result
of the liquidation of its remaining assets.
Results of Operations
Fiscal 1995
The net loss of $4,100,364 for the year ended June 30, 1995 resulted
from operations prior to their suspension on November 28, 1994; and the
subsequent write down of substantially all Company assets, contract
receivables, stock subscription receivables, accrual of professional fees, and
recording of creditor claims under the bankruptcy estate. Any proceeds of
liquidation will be recorded in subsequent periods and distributed pursuant to
the Company's Reorganization Plan.
Fiscal 1994
The net loss of $3,247,907 for the year ended June 30, 1994 resulted
primarily from ongoing operations, a change in the control of the Company, and
write-downs in the Company's investments in three unaffiliated
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corporations.
The Company continued to experience depressed sales throughout the
year due to delays in completing new contracts and overall lower sales
activity. The Company experienced a negative gross margin due to low sales,
costs significantly in excess of estimates for completing two large, complex
jobs, and the write-off of $430,000 in inventories.
Selling, general and administrative costs increased to $974,081 in
1994, compared to $749,759 for 1993 and $628,286 for 1992 as the result of
increased sales efforts and additional personnel needed to complete jobs.
Research and development expenses declined as the Company concentrated on
marketing existing product lines and generally limited new research and
development to job specific requirements, the costs of which were charged to
the particular contract.
Interest expense was significantly higher in fiscal 1994 as the
Company relied on debt financing to fund its operating losses.
During May, 1994, the Company exchanged 6,000,000 shares of its common
stock for 6,000,000 shares of redeemable preferred stock of Conagher.
Subsequent to this transaction, Conagher principal shareholder, officer and
director, Hayton began to participate in the Company's management and the
Company began to change its overall corporate strategy. During the fourth
quarter, the Company made certain accounting adjustments as a result of its new
focus. In this regard, the Company increased its inventory reserve from
$220,000 to $650,000, wrote off fully depreciated purchased AGVS software with
a cost of $465,403 and wrote down the remaining balance of $29,361 to net
realizable value, and expensed certain prepaid expenses.
During 1993 and 1994, the Company acquired nonmarketable equity
interests in three unaffiliated corporations. The shares of one corporation
were publicly traded and the other two corporations expected to complete
initial public offerings during 1994. The Company recorded the investments in
these corporations at the lower of cost or net realizable value. During the
fourth quarter of 1994, the Company recorded reserves of $771,425 to reflect
the investment in these corporations at net realizable value. The reserves
were necessary based upon the lower trading price of the stock in the public
corporation, the inability of the second corporation to complete its initial
public offering, and the Company's plans to transfer its investments in these
three corporations to third parties as payment for outstanding loans.
Fiscal 1993
The loss for the year ending June 30, 1993 was primarily due to low
revenues, decreased gross profit margins, increased research and development
expenses, and the Company's share of losses incurred by its European Joint
Venture. During the year ended June 30, 1993, sales of the Company's Orbitor
vehicles represented 100% of the Company's AGVS sales.
During the year ending June 30, 1993, Apogee had a negative gross
margin from sales, compared to a gross profit of 33% for the year ending June
30, 1992 due to pricing concessions extended to customers to increase sales and
cost overruns on three large projects. Research and development expenses
increased due to enhancements developed for the Orbitor vehicle and AGVS
software.
The Company's net loss during fiscal 1993 included the Company's share
($55,046) of the loss sustained by Apogee Europe, the Company's joint venture
with Stow International NV ("Stow"). In April, 1993 this joint venture was
terminated by the mutual consent of Apogee and Stow.
During the year ending June 30, 1993, selling, general and
administrative expenses decreased (as a percentage
10
<PAGE> 11
of total revenues) as the result of efforts to reduce such costs and the use of
outside distributors as opposed to salaried sales personnel.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the financial statements attached to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
See disclosure on Form 8-K filed October 18, 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
Company's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James R. Currier, Sr. 49 Chairman of the Board of Directors, President,
Chief Executive Officer, Chief Financial Officer,
and Director
James W. Jones 49 Vice-President, Secretary, and Director
</TABLE>
There are no family relationships among the Company's officers and
directors. The directors of the Company will serve in such capacity until the
next annual meeting of the Company's shareholders and until their successors
have been duly elected and qualified. The Company's officers serve at the
discretion of the Company's Board of Directors.
James R. Currier, Sr. has been Apogee's President and Chief Executive
Officer since October 5, 1994, and it's Chairman and Chief Financial Officer
since December 7, 1994. From August, 1982 through November, 1992, Currier was
Executive Vice President of NDC Automation, Inc.
James W. Jones has been Apogee's Vice President since September, 1994.
From June, 1983 through August, 1994, Jones was Apogee's President and Chief
Executive Officer. From 1968 through May, 1983, Jones was employed as a
research and development engineer at Hewlett-Packard Company.
Transactions with Related Parties
In May, 1993, Apogee borrowed $200,000 from Dr. Marvin Clothier's
("Clothier") pension plan at an interest rate of 12% per year. Clothier, at
the time was a director of the Company, but resigned his directorship in May,
1994 pursuant to the terms of the Apogee/Conagher Subscription Agreement.
$100,000 of this loan was repaid in 1993, with the balance currently pending
under the bankruptcy estate. As consideration for this loan to Apogee, the
Company paid $10,000 to the retirement plan and issued 20,000 shares of
Apogee's Restricted Common Stock to the retirement plan.
Change in Control
In connection with the Subscription Agreement between the Company and
Conagher, Jones, Oliphant, Clothier,
11
<PAGE> 12
Gerald Olesh, and Dennis Foss resigned as directors of the Company. Pat Hayton;
and Sven Kraumanis ("Kraumanis") and William G. Conway ("Conway") (nominees of
Conagher), were then elected directors of the Company. Currier was elected a
director in October, 1994. On November 2, 1995, Conway resigned as a director.
On November 21, 1994, Hayton and Kraumanis resigned as directors and Conagher
renounced its obligations to the Company, thus eliminating their control. (See
Part I, Item 1. Business, sections "Relationship with Conagher" and
"Acquisition of SI Handling AGVS Division," and Item 3. Legal Proceedings, for
other discussions of this matter).
ITEM 11. EXECUTIVE COMPENSATION
Compensation
The following table sets forth in summary form the compensation
received during each of the Company's last three completed fiscal years by (i)
the Chief Executive Officer of the Company, and (ii) by each other executive
officer of the Company who received annual compensation in the form of salary
and bonus in excess of $100,000.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
OTHER ANNUAL COMPENSATION ALL OTHER
NAME/PRINCIPAL SALARY COMPENSATION OPTIONS GRANTED COMPENSATION
POSITION FISCAL YEAR (1) (2) (3) (4)
-------- ----------- --- --- --- ---
<S> <C> <C> <C> <C> <C>
James R.
Currier, Sr.
President/CEO 1995 $43,750 $20,000 - $43,025
James W. Jones
President/CEO 1995 $23,077 $508 $18,917
1994 $71,154 $14,185 350,000 -
1993 $70,000 $13,015 -
</TABLE>
(1) The dollar value of base salary (cash and non-cash) received.
(2) Any other annual compensation not properly categorized as salary
or bonus, including prerequisites and other personal benefits,
securities or property. In the case of Jones, amount represents an
automobile allowance of $2,500 per year received from the Company, a
disability insurance premium of approximately $4,000 per year, and an
allowance for health club expenses of $1,500 per year, premiums on a
life insurance policy and funding the supplemental compensation
arrangement described below. The Company is not the beneficiary of
the disability policy or the life insurance policy and the
supplemental compensation arrangement.
(3) The shares of Common Stock to be received upon the exercise of all
stock options granted during the period covered by the Table.
(4) Compensation received for consulting services in the post-petition
bankruptcy estate.
Apogee paid the premium on one $250,000 insurance policy on the life
of Jones. During the four years beginning August, 1990, Apogee also paid
approximately $9,000 each year into a bank account for the benefit of Jones.
Upon the termination of Jones's employment on November 28, 1994, the Company
agreed to the transfer of an insurance policy and supplemental compensation
fund, provided Jones assume all tax liabilities thereof.
Stock Options
12
<PAGE> 13
There were no stock options granted during the fiscal year ended June
30, 1995. (See Part III, Item. 12 Security Ownership of Certain Beneficial
Owners and Management, for additional information concerning stock options and
warrants held by the Company's officers and directors and certain other
persons).
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
The Company The company has a defined contribution plan for the
benefit of the Company's employees. The plan was established in accordance
with the provisions of Section 401(k) of the Internal Revenue Code. Since the
401(k) plan was adopted, the Company has not made any contributions to this
plan. Other than the foregoing, the Company does not have a defined benefit,
pension plan, profit sharing or other retirement plan.
Compensation of Directors
During the fiscal year ended June 30, 1995, the directors of the
Company were paid no compensation.
Employment Contracts
Apogee entered into an employment agreement with James R. Currier, Sr.
for a three year term ending in October, 1997 at a base salary of $210,000 per
year. Under the terms of the agreement, Currier's salary would have been
increased on each anniversary of the employment agreement by a percentage equal
to the annual percentage increase in the consumer price index. Currier's
employment agreement also provides for paid vacations and the right to
participate in any employee benefit plans that the Company may, from time to
time, adopt.
The employment agreement with Currier remains in full force and effect
and constitutes an obligation of the Company under the bankruptcy estate.
Currier is compensated $75 per hour for services rendered the Company while the
Company remains a debtor in possession.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 1995, the Company did not have a
compensation committee. During that period, the following officers
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation:
<TABLE>
<S> <C> <C>
1) James R. Currier, Sr. President and Chief Executive Officer,
From October 5, 1994
2) James W. Jones President and Chief Executive Officer,
Through September 23, 1994
3) Robert Oliphant Secretary, Treasurer and Chief Financial Officer,
(resigned in October, 1994)
</TABLE>
During the fiscal year ended June 30, 1995, no director of the Company
was also an executive officer of another entity which had an executive officer
of the Company serving as a director of such entity or as a member of the
compensation committee of such entity.
13
<PAGE> 14
The Company did not have any employment or non-competition agreements with any
of its key employees. The Company does not have any pension, profit sharing or
retirement plan. All employees were covered by a group health plan provided by
the Company, but such plan lapsed on November 15, 1994 as a result of liquidity
problems associated with Conagher's default under its Subscription Agreement,
just prior to the termination of all employees on November 28, 1994 and the
bankruptcy filing of December 9, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 15, 1996 the number and
percentage of outstanding shares of Common Stock owned by each officer and
director of the Company, by all officers and directors as a group and by each
person known to own more than 5% of the Company's Common Stock. Other than the
officers and directors listed below, there are no holders of five percent or
more of the Company's Common Stock.
<TABLE>
Name and Address Number of Shares Percentage of Class
- ---------------- ---------------- -------------------
<S> <C> <C>
James R. Currier, Sr. 30,000 .17%
1301 Meadowood Lane
Charlotte, NC 28211
James W. Jones 158,000 .88%
1428 Glenda Court
Loveland, CO 80537
All Officers and 188,000 1.05%
Directors as a Group
(2 persons)
</TABLE>
Incentive Stock Options
The Company had in effect four Incentive Stock Option Plans, three of
which were approved by the Company's shareholders. The 1994 Plan, which was
adopted by the Company's Board of Directors in May, 1994 was not submitted to
the Company shareholders for approval on a timely basis, and the existing Board
of Directors terminated the plan. The remaining options granted expired in
accordance with the terms and conditions of the respective plans coincident
with the expiration of the employment of Jones and Oliphant.
Non-Qualified Options
The Company has granted to three former directors of the Company,
non-qualified options to purchase shares of the Company's Common Stock. These
options terminated pursuant to the terms and conditions of the plan.
Restricted Warrants
The Company has a number of warrants outstanding. These warrants and
the shares of Common Stock issuable upon their exercise are restricted
securities as that term is defined by Rule 144 of the Securities Act of 1933.
The following table provides certain information concerning the
Restricted Warrants:
<TABLE>
<CAPTION>
Note Warrant Issue Expiration Shares Exercise
References Holder Date Date Issuable Price
- ---------- ------ ---- ---- -------- -----
<S> <C> <C> <C> <C> <C>
(1)(2) Brookstreet Securities
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C> <C>
Corporation 12/91 12/96 150,000 $0.60
(1) W. Robert White 1/93 1/98 50,000 $0.75
(1) W. Robert White 1/93 1/98 75,000 $1.00
(1) David Jackson 1/93 1/98 50,000 $0.75
(1) David Jackson 1/93 1/98 75,000 $1.00
(1)(3) Private Investors 12/93 10/95 506,456 $1.00
(1)(3) Private Investors 12/93 10/96 506,456 $2.00
-------
TOTAL 1,412,912
</TABLE>
(1) The Company has agreed upon written request of the holder(s) of at least a
majority of the interests represented by this Warrant and any Common Stock
issued upon the exercise during the period this Warrant is exercisable, the
Company will file a registration statement or notification on Form 1-A of the
Securities Act of 1933, registering or qualifying the underlying shares of
Common Stock for sale. The Company also agreed to bear the cost of
registration or qualification of these warrants.
(2) The Company has agreed that for the life of this Restricted Warrant, if the
Company should file a registration statement pursuant to the Securities Act of
1933, it will include in such registration statement the shares of Common Stock
issuable upon exercise of the Restricted Warrant and keep such registration
statement current for a certain period of time. The cost of any such
registration will be paid by the Company.
(3) Warrants were issued as part of Units sold in a 1993 private placement.
Holders of the Restricted Warrants are protected against dilution of
the equity interest represented by the underlying shares of the Company's
Common Stock upon the occurrence of certain events, including, but not limited
to, stock splits and stock dividends. In the event of liquidation, dissolution
or winding-up of the Company, the holders of the Restricted Warrants are not
entitled to participate in the distribution of the Company's assets. The
Company believes that under bankruptcy statutes, it's covenants to register or
qualify these warrants and pay the cost thereof, is unenforceable, and as a
result, the warrants are void. Furthermore, as part of the Company's
Reorganization, the Company intends to revoke these Restricted Warrants.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements are filed with this report:
<TABLE>
<S> <C>
- Opinion of independent certified public accountants;
- Balance Sheets as of June 30, 1994 and 1995;
- Statements of Stockholders' Equity for years ended June 30, 1993, 1994 and 1995;
- Statements of Operations for years ended June 30, 1993, 1994 and 1995;
- Statements of Cash Flows for years ended June 30, 1993, 1994 and 1995; and
- Notes to Financial Statements.
</TABLE>
(b) The following reports on Form 8-K were filed during the quarter
ended December 31, 1994:
8-K Report dated December 6, 1994 describing the resignations of
Hayton, Kraumanis and Conway
15
<PAGE> 16
from the Company's Board of Directors; the reelection of Jones and
Oliphant to fill their vacancies; the dispute with SI regarding
defaults under the AGV/SI Asset Purchase Agreement; and Conagher's
lawsuit against the Company and certain of its officers and directors.
(c) Exhibits
--------
<TABLE>
<S> <C>
3 (a) Articles of Incorporation Incorporated by reference to Exhibit 3(a) to the Company's
Registration Statement on Form S-18, Registration No.
2-87181-D.
(b) Amended Articles Incorporated by reference to Exhibit 3(c) of the Company's
Registrations Statement, Registration No. 33-7805.
(c) Bylaws Incorporated by reference to Exhibit 3(b) to the Company's
Registration Statement on Form S-18, Registration No.
2-87181-D.
(d) Amended Bylaws Incorporated by reference to Exhibit 3(d) to the Company's
Registration Statement, Registration No. 33-7805.
4 (a) Specimen copy of Incorporated by reference to Exhibit 4(a) to the Company's
Stock certificate Registration Statement on Form S-18, Registration No.
2-87181-D.
(b) Warrant Agreement Incorporated by reference to Exhibit 4(c) to the Company's
respecting Redeemable Registration Statement, Registration No. 33-7805.
Purchase Warrants
(c) Form of Warrant Incorporated by reference to Exhibit 4(d) to the Company's
Certificate Registration Statement, Registration No. 33-7805.
10(a) License Agreement Incorporated by reference to Exhibit 10(b) to the
Company's Registration Statement on Form S-18,
Registration No. 2-87181-D.
(b) Supply Agreement Incorporated by reference to Exhibit 10(c) to the
Company's Registration Statement on Form S-18,
Registration No. 2-87181-D.
(c) Amendment to License Filed as Exhibit 10(e) to the Company's Registration
Agreement Statement on Form S-1, Registration No. 33-7805.
(d) License Agreement with Incorporated by reference to Exhibit 10(h) to the
Hewlett-Packard Company Company's Registration Statement, Registration No.
33-7805.
(e) Agreement with Stow Filed as Exhibit 10(e) to the Company's Registration
International NV Statement on Form S-1, Registration No. 33-42749.
(f) Amended and Restated Filed as Exhibit 10(f) to the Company's Report on Form
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C> <C>
Stock Acquisition 8-K dated September 23, 1994.
Agreement
(g) Asset Purchase Agreement Filed as Exhibit 10(g) to the Company's Report on Form
relating to SI Handling 8-K dated September 23, 1994.
Systems
(h) Consulting Agreement Filed as Exhibit 10(h) to the Company's Report on Form
(Pat Hayton) 8-K dated September 23, 1994.
(i) Employment Agreement Filed as Exhibit 10(i) to the Company's Report on Form
(James R. Currier, Sr.) 8-K dated September 23, 1994.
(j) Asset Purchase Agreement Filed with this report.
between FMC Corporation
and Apogee
(k) Settlement Agreement Filed with this report.
between SI and Apogee
11 Statement regarding computation None
of per share
earnings
18 Letter regarding change in None
accounting principles
23 Consents of experts and Filed with this report.
counsel
27 Financial Data Schedule Filed with this report.
</TABLE>
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 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.
APOGEE ROBOTICS, INC.
By: /s/ James R. Currier, Sr.
-------------------------------------------
James R. Currier, Sr., Chairman, President,
Chief Executive Officer, and Chief Financial
Officer
Date:
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ James R. Currier, Sr. Director January 29, 1996
---------------------
James R. Currier, Sr.
/s/ James W. Jones Director January 29, 1996
----------------------
James W. Jones
18
<PAGE> 19
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
BALANCE SHEETS - June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
STATEMENTS OF OPERATIONS - For the Years Ended June 30, 1995, 1994, and 1993 . . . . . . . . . . . . . . . . . . . F-5
STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY - For the Period from July 1, 1992 through June 30, 1995 . . . . . . . F-6
STATEMENTS OF CASH FLOWS - For the Years Ended June 30, 1995, 1994, and 1993 . . . . . . . . . . . . . . . . . . . F-8
NOTES TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
</TABLE>
F-1
<PAGE> 20
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Apogee Robotics, Inc.
Fort Collins, Colorado
We have audited the accompanying balance sheet of Apogee Robotics, Inc. as of
June 30, 1995, and the related statements of operations, stockholders'
(deficit) equity, and cash flows for the year then ended. 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 Apogee Robotics, Inc. as of
June 30, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has recurring operating losses and negative cash flows
from operations, and has filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. These factors raise substantial doubt about the Company's
ability to continue as an ongoing concern. Management's plans in regard to
these matters are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ HEIN + ASSOCIATES LLP
- ---------------------------------
HEIN + ASSOCIATES LLP
Denver, Colorado
December 28, 1995
F-2
<PAGE> 21
[BROCK AND COMPANY LETTERHEAD]
Independent Auditor's Report
Board of Directors and Stockholders
Apogee Robotics, Inc.
Fort Collins, Colorado
We have audited the accompanying balance sheet of Apogee Robotics,
Inc. as of June 30, 1994, and the related statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Apogee Robotics,
Inc. as of June 30, 1994, and the results of its operations and its cash flows
for each of the two years in the period ended June 30, 1994, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has recurring operating losses and negative
cash flows from operations, and has entered into commitments for the
acquisition of a business. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ BROCK AND COMPANY, CPAs, P.C.
Certified Public Accountants
Fort Collins, Colorado
October 12, 1994
F-3
<PAGE> 22
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------
1995 1994
--------------- ----------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 118,364 $ 49,675
Certificates of deposit - 200,000
Inventories 10,491 299,738
Costs and estimated earnings in excess of billings on uncompleted contracts - 176,650
Prepaid expenses - 73,408
Nonmarketable securities (1995 at estimated fair value, 1994 at net 168,255 824,250
realizable value, aggregate cost of $438,480 in 1995 and $1,595,675 in
1994)
Other current assets - 40,042
----------- ----------
Total current assets 297,110 1,663,763
----------- ----------
OTHER ASSETS:
Investment in AGVI 150,000 -
Purchased AGVS software (less accumulated amortization of $360,231 in 1995 40,000 345,126
and $51,045 in 1994)
Equipment, net, less accumulated depreciation of $581,266 and $429,400 - 130,873
Deposits and other assets 10,848 17,397
----------- ----------
Total other assets 200,848 493,396
----------- ----------
TOTAL ASSETS $ 497,958 $2,157,159
=========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) 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 47,861 178,018
Billings in excess of costs and estimated earnings on uncompleted contracts - 219,231
----------- ----------
Total current liabilities 47,861 1,588,373
----------- ----------
LIABILITIES SUBJECT TO COMPROMISE 3,497,132 -
COMMITMENTS AND CONTINGENCIES (NOTES 8 AND 14)
STOCKHOLDERS' (DEFICIT) 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;
18,195,022 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 (13,763,974) (9,663,610)
----------- ----------
Total stockholders' (deficit) equity (3,047,035) 568,786
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 497,958 $2,157,159
=========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
F-4
<PAGE> 23
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
----------------------------------------------
1995 1994 1993
--------------- ---------------- ------------
<S> <C> <C>
CONTRACT REVENUES AND SALES $457,233 $ 694,607 $ 1,668,849
COST OF REVENUES AND SALES 1,622,174 2,068,901 1,779,399
----------- ----------- -----------
GROSS LOSS (1,164,941) (1,374,294) (110,550)
----------- ----------- -----------
OPERATING EXPENSES:
Selling, general and administrative expenses 1,104,627 974,081 749,759
Loss on investment in AGVI 636,083 - -
Research and development - 18,730 187,196
---------- ----------- -----------
Total operating expenses 1,740,710 992,811 936,955
----------- ----------- -----------
LOSS FROM OPERATIONS (2,905,651) (2,367,105) (1,047,505)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Investment losses (3,750) (760,800) -
Interest expense (72,846) (122,455) (14,265)
Other, net (11,815) (2,453) (46,666)
----------- ----------- ----------
Net other income (expense) (64,781) (880,802) (60,931)
----------- ----------- ----------
LOSS BEFORE REORGANIZATION ITEMS (2,970,432) (3,247,907) (1,108,436)
Reorganization Items:
Interest income 1,482 - -
Provision for rejected executory contracts (1,066,994) - -
Professional fees (64,420) - -
----------- ----------- -----------
Net loss $(4,100,364) $(3,247,907) $(1,108,436)
=========== =========== ===========
LOSS PER COMMON SHARE $ (.23) $ (.31) $ (.15)
=========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 18,051,446 10,508,485 7,235,625
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
F-5
<PAGE> 24
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 1, 1992 THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
--------------------- -------------------------- OTHER ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
---------- -------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C>
BALANCES, JULY 1, 1992 - $- 6,505,109 $7,122,407 $32,550 $(5,307,267)
Issuance of common stock and
warrants in private
placement less offering
costs of $43,021 - - 900,001 344,979 - -
Issuance of common stock and
common stock warrants for
services - - 155,000 47,656 800 -
Issuance of Series A
preferred shares in exchange
for common stock of investee 39,000 390 - - 194,610 -
Issuance of common stock for
the conversion of Series A
preferred shares at a rate
of 10 for 1 (39,000) (390) 390,000 195,000 (194,610) -
Issuance of common stock for
short-term debt premiums - - 30,000 8,672 - -
Issuance of common stock in
exchange for common stock of
investee - - 666,666 215,625 - -
Net loss for the year ended
June 30, 1993 - - - - - (1,108,436)
---------- -------- ----------- ----------- --------- ------------
BALANCES, JUNE 30, 1993 - - 8,646,776 7,934,339 33,350 (6,415,703)
Issuance of Series B
preferred shares and Class A
and B warrants less offering
costs of $50,256 63,700 637 - - 299,457 -
Issuance of common stock for
the conversion of Series B
preferred shares at a rate
of 10 for 1 (63,700) (637) 637,000 300,094 (299,457) -
Issuance of common stock in
exchange for common stock of
investee less issuance costs
of $13,099 - - 333,334 236,991 - -
Issuance of Series C
preferred shares in private
placement less offering
costs of $81,088 1,012,912 10,129 - - 465,963 -
</TABLE>
F-6
<PAGE> 25
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
--------------------- -------------------------- OTHER ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
---------- -------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Series D
preferred shares in exchange
for common stock of investee
less issuance costs of
$7,100 60,000 600 - - 397,300 -
Issuance of common stock for
the conversion of Series D
preferred shares at a rate
of 10 for 1 (60,000) (600) 600,000 397,900 (397,300) -
Issuance of Series E
preferred shares less
offering costs of $10,400 30,000 300 - - 104,800 -
Issuance of Series F
preferred shares in exchange
for common stock of investee
less issuance of costs of
$9,049 40,000 400 - - 249,301 -
Issuance of common stock in
exchange for preferred
shares of investee less
issuance costs of $28,525 - - 6,000,000 999,475 - -
Issuance of common stock for
services less issuance costs
of $8,615 - - 250,000 96,854 - -
Exercise of options - - 5,000 2,500 - -
Net loss for the year ended
June 30, 1994 - - - - - (3,247,907)
---------- -------- ---------- ----------- --------- ------------
BALANCES, June 30, 1994 1,082,912 10,829 16,472,110 9,968,153 853,414 (9,663,610)
Conversion of preferred stock
to common stock (1,082,912) (10,829) 1,712,912 830,894 (820,065) -
Write-off unredeemed
preferred stock of investee
determined to be
uncollectible issued for
common stock - - - (165,457) - -
Issuance of common stock for
commissions payable 10,000 50,000 - -
Net loss for the year ended
June 30, 1995 - - - - - (4,100,364)
---------- -------- ---------- ----------- --------- ------------
BALANCES, June 30, 1995 - $ - 18,195,022 $10,683,590 $ 33,349 $(13,763,974)
========== ======== ========== =========== ========= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
F-7
<PAGE> 26
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
-----------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994 1993
------------- ----------- -----------
<S> <C> <C> <C>
Net loss $(4,100,364) $(3,247,907) $(1,108,436)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 83,016 175,694 142,223
Write-down of property and software to net realizable 352,220 29,361 33,600
value
Provision for inventory losses 280,000 430,000 39,020
Equity in net loss of affiliate - - 55,046
Loss on investment in AGVI 636,083 - -
Investment losses 3,750 (10,625)
Investments in excess of net realizable value - 771,425 -
Common stock and common stock warrants issued for - 105,469 57,128
services and debt premiums
Increase (decrease) from changes in assets and liabilities: 2,239,365 - -
Cost and estimated earnings in excess of billings on 176,650 219,303 (335,361)
uncompleted contracts
Precontract costs - - 217,133
Accounts payable and accrued liabilities (325,254) 122,656 286,800
Billings in excess of costs and estimated earnings on (219,231) 158,703 60,528
uncompleted contracts
Other 2,703 (22,738) (12,421)
------------- ----------- -----------
Net cash used in operating activities (854,498) (1,270,073) (543,461)
------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit - (100,000) (300,000)
Proceedsofromfinvestmentses of deposit 199,245 237,500 -
-
Purchase of AGVS software - (225,100) (147,702)
Other (42,553) (32,110) (35,385)
------------- ----------- -----------
Net cash provided by (used in) investing activities 156,692 80,290 (483,087)
------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash advance from an affiliate of a former director 115,000 - -
Borrowings under short-term debt agreements - 1,785,000 447,424
Repayments under short-term debt agreements (12,426) (1,728,757) (984)
Borrowings from related party - 185,000 183,906
Repayments of related party borrowings - (100,000) -
Proceeds from issuance of common stock and common 663,921 1,022,950 278,800
stock warrants - -
Payments of offering costs - (207,962) (43,023)
------------- ----------- -----------
Net cash provided by financing activities 766,495 1,067,931 866,123
------------- ----------- -----------
INCREASE (DECREASE) IN CASH 68,689 (121,852) (160,425)
CASH, at beginning of year 49,675 171,527 331,952
------------- ----------- -----------
CASH, at end of year $ 118,364 $ 49,675 $ 171,527
============= =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.
F-8
<PAGE> 27
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
1. PROCEEDINGS UNDER CHAPTER 11:
On December 9, 1994 (petition date), Apogee Robotics, Inc. (the Debtor)
and it's wholly owned subsidiary, AGV Acquisitions, Inc., filed a
voluntary petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court (the Chapter 11
proceedings). The Debtor continues business operations as
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 Debtor. In addition, the Debtor 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 Debtor as of the petition
date are 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 (see Note 8 for a
description of the liabilities subject to compromise).
The Company has accounted for all transactions related to the
reorganization proceedings in accordance with Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code," issued by the American Institute of Certified Public
Accountants in November 1990. Accordingly, all pre-petition liabilities
of the Debtor that are expected to be impaired under the plan of
reorganization and ultimately approved by the Bankruptcy Court are
reported separately in the Debtor's balance sheet as liabilities subject
to compromise (see Note 8). Reorganization items, primarily
professional fees and interest income, are reported separately in the
statements of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Company's Activities - The Company previously designed, manufactured,
sold, and installed comprehensive, advanced material handling and
information systems. These activities were discontinued in December
1994 when the Company filed for bankruptcy. Management plans to merge
the Company with or otherwise acquire additional operations in the same
line of business.
Contract Revenue and Cost Recognition - Revenues under long-term
contracts have been recognized on the percentage-of-completion method,
measured by the percentage of costs incurred to date to estimated total
contract costs for each contract. Costs include material, direct labor,
subcontracts, engineering and manufacturing overhead. Provisions for
estimated losses were made in the period in which they first become
determinable. All significant performance warranty costs are provided
at the time of completion of the warranted product contracts.
F-9
<PAGE> 28
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
Costs and estimated earnings in excess of billings on uncompleted
contracts represents revenue recognized in excess of amounts billed.
Billings in excess of costs and estimated earnings on uncompleted
contracts represents billings in excess of revenues recognized.
Inventories - Inventory cost includes materials, labor and overhead
costs. Inventories are stated at lower of first-in, first-out (FIFO)
cost or market.
Investments - The Company used the equity method of accounting for its
investment in an affiliated company in 1993. Investments in restricted
securities or equity securities of privately held companies were valued
at the lower of cost or net realizable value at June 30, 1994.
Effective July 1, 1994, the Company adopted Statement of Financial
Accounting (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." This pronouncement addresses the accounting and
reporting for certain investments in debt and equity securities. SFAS
No. 115 requires that certain securities be classified into one of three
categories, which then determines the accounting and reporting for that
security. The Company's investments at June 30, 1995 are considered to
be available for sale in accordance with SFAS No. 115, and are valued at
estimated fair value.
Depreciation and Amortization - The Company provided for depreciation
and amortization using the straight-line method over the estimated
useful lives of the assets which was five to twelve years for office,
plant, and promotional equipment. All property and equipment was
written down to its estimated net realizable value of $-0- as of June
30, 1995.
The purchased automated guided vehicle systems (AGVS) software was
recorded at cost and was being amortized using the greater of the
straight-line method over the estimated economic life, generally five
years, or the ratio of current revenues to estimated total revenues of
each product. The amount by which the unamortized costs of computer
software exceed the net realizable value of the software is charged to
expense in the period it is first determinable. Unamortized costs of
$243,192 and $29,361 were charged to expense in 1995 and 1994,
respectively. During 1994, fully amortized purchased AGVS software of
$465,403 was written off.
Income Taxes - In 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS 109). Under this method, deferred tax assets and
liabilities are determined, based on the difference between the
financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse. The adoption of SFAS 109 did not have a material
impact on the financial statement.
Research and Development - Acquisition of materials used in research and
development activities which had alternative future uses were
capitalized. All other research and development costs were charged to
expense as incurred.
F-10
<PAGE> 29
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
Per Share Data - Earnings (loss) per common share is based on the
weighted average number of common shares outstanding during the period.
Outstanding stock warrants, options, and convertible preferred shares
have not been included in the computation of the loss per common share
since the effect would have been antidilutive.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, the Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash equivalents.
Impact of Recently Issued Accounting Standards - In March 1995, the
Financial Accounting Standards Board issued a new statement titled
"Accounting for Impairment of Long-Lived Assets." In October 1995, the
Financial Accounting Standards Board issued a new statement titled
"Accounting for Stock-Based Compensation" (FAS 123). The new statements
are effective for fiscal years beginning after December 15, 1995. The
Company does not believe that adoption of the new standard will have a
material effect on the financial statements.
3. ACQUISITION OF AGV ACQUISITIONS INC.:
On October 5, 1994, the Company acquired the net assets of AGV
Acquisitions, Inc. (AGVI), 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 Handling Systems, Inc. (SI). The acquired
assets consisted primarily of technology, inventories, equipment and
machinery, and contract rights. An affiliate of a former director
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 to unwind the transaction. The agreement was approved by
the bankruptcy court in October 1995. The Company's investment in AGVI,
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 Agreement.
The Company has not consolidated the assets of AGVI as of June 30, 1995
since control was temporary; claims filed by AGVI's creditors and
employees have been included in liabilities subject to compromise as
disputed claims.
4. INVENTORIES:
Inventories consist of the following at June 30:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Robotics components and assembly supplies $ 10,491 $ 727,055
</TABLE>
F-11
<PAGE> 30
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
Work-in-process - 17,822
Finished vehicles - 204,861
Valuation reserve - (650,000)
---------- ---------
$ 10,491 $ 299,738
========== =========
</TABLE>
Inventory has been written down to estimated net realizable value, and
cost of revenues and sales for 1994 include a corresponding charge of
$430,000. The fourth quarter of 1994 includes a charge of $405,000 of
the annual write down.
5. NONMARKETABLE SECURITIES:
In March 1993, the Company acquired 100,000 shares of the common stock
of ACT Teleconferencing Services, Inc. (ACT), representing
approximately 7% interest, in exchange for 39,000 shares of the
Company's Series A Preferred Shares. The common stock of ACT is not
publicly traded. The investment was valued at $195,000, based on the
fair market value of the Company's stock at the date of exchange.
During March 1994, the Company sold 25,000 shares of ACT for $62,500,
realizing a gain of $10,625. During June 1994, the Company recorded a
charge of $71,250 to reflect the remaining shares at estimated net
realizable value. During fiscal 1995, the remaining 75,000 shares of
ACT were sold for a loss of $3,750.
In June 1993, the Company acquired 200,000 shares of restricted common
stock of Princeton Electronic Products, Inc. (Princeton) in exchange
for 666,666 shares of the Company's restricted common stock. The
investment was valued at $215,625, based on the fair market value of
the Company's stock at the date of exchange. In September 1993, the
Company acquired an additional 333,334 shares of restricted common
stock of Princeton, in exchange for 333,334 shares of the Company's
restricted common stock. The investment was valued at $250,000, based
on the fair market value of the Company's stock at the date of
exchange. During June 1994, the Company recorded a charge of $265,625
to reflect its entire investment in Princeton at estimated net
realizable value. All of the Princeton shares collateralized a
$200,000 note payable. In fiscal 1995, the note holder enforced his
security interest and obtained ownership of the 533,334 shares of
Princeton.
During 1994, the Company acquired 100,000 restricted common shares of
Loronix Information Systems, Inc. in exchange for 60,000 Series D
Preferred shares and 40,000 Series F preferred shares. The investment
was valued at $730,800, based on the fair market value of the
Company's stock at the date of exchange. During June 1994, the
Company recorded a charge of $434,550 to reflect the investment at
estimated net realizable value. In June 1995, the Company sold 40,000
shares of Loronix stock at no gain or loss. The remaining 60,000
shares are held by a third party until a dispute related to the shares
is resolved. A note holder claims the shares
F-12
<PAGE> 31
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
collateralize the related note payable under a pledge agreement. The
Company maintains that the return of the stock certificate to an
officer of the Company resulted in non-enforceability of the pledge
agreement.
6. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS:
The Company's costs and estimated earnings on uncompleted contracts
consist of the following components at June 30, 1994:
<TABLE>
<S> <C>
Costs incurred on uncompleted contracts $ 3,007,024
Estimated earnings (741,227)
------------
2,265,747
Less billings to date 2,308,328
------------
$ (42,581)
============
</TABLE>
Included in accompanying balance sheets under the following captions:
<TABLE>
<S> <C>
Costs and estimated earnings in excess of billings
on uncompleted contracts $176,650
Billings in excess of costs and estimated earnings
on uncompleted contracts 219,231
--------
$(42,581)
========
</TABLE>
7. NOTES PAYABLE:
Following is a summary of notes payable:
<TABLE>
<CAPTION>
1995 1994
------------ ---------
<S> <C> <C>
Notes Payable
Line-of-credit agreement with a bank, paid in full $ - $ 181,000
in October
Notes payable with a bank collateralized by contract - 31,427
receivables, inventory, equipment, and intangible
assets, paid in full in October 1994.
</TABLE>
F-13
<PAGE> 32
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Notes payable with combined face amount of $300,000. The notes 100,000 283,668
were issued with cash payments of $22,000. A $200,000 note was
collateralized by 533,334 shares of Princeton. During fiscal
1995, the note holder enforced his security interest and
obtained ownership of the Princeton stock. However, the note
holder has filed a claim in bankruptcy for both notes. The
$100,000 note is included in liabilities subject to compromise
at June 30, 1995.
Other. - 30,010
--------- ---------
Total notes payable $ 100,000 $ 526,105
========= =========
Notes Payable - Related Parties
-------------------------------
An unsecured note payable to a former director of the Company $ 100,000 $ 100,000
with a balance of $100,000 at June 30, 1994 and 1995. The note
was issued together with 20,000 shares of the Company's common
stock and $10,000 cash payments. Note is included in
liabilities subject to compromise at June 30, 1995.
A note payable to a former director of the Company with a face
amount of $200,000. The note was issued with a cash payment of
$15,000. During September 1994, the Company agreed to exchange
60,000 shares of Loronix Information Systems, Inc., with a
carrying value of $168,255, in full payment of the note. The
exchange was not completed. The note is included in liabilities
subject to compromise at June 30, 1995. 200,000 188,534
--------- ---------
Total notes payable - related parties $ 300,000 $ 288,534
========= =========
</TABLE>
F-14
<PAGE> 33
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
8. LIABILITIES SUBJECT TO COMPROMISE:
Liabilities recorded by the Debtor that will be subject to compromise
under a plan of reorganization as of June 30, 1995 consist of the
following:
<TABLE>
<S> <C>
Undisputed priority claims filed by former employees $ 37,753
Undisputed claims filed by tradercreditorssand miscellaneous 330,980
claims
Undisputed claim filed by note holder 100,000
Accrued payroll taxes 131,673
Other, including accrued interest on notes payable 174,956
----------
Subtotal - undisputed claims 1,002,518
----------
Disputed claims filed by trade creditors of AGVI 411,688
Disputed claims filed by former employees of AGVI 81,079
Disputed warranty claims by former customers 239,036
Disputed claims filed by former trade creditors 154,064
Disputed claims filed by former employees 943,747
----------
Subtotal - disputed claims 1,829,614
----------
Related Parties
---------------
Notes payable to former director 100,000
Notes payable to former director 200,000
Advances from an affiliate of a former director 365,000
----------
665,000
----------
Total $3,497,132
==========
</TABLE>
The Company is in the process of disputing certain claims filed,
including all claims filed by former employees and trade creditors of
AGV Acquisitions, Inc. Management of the Company believes that such
liabilities represent a liability of SI Handling, Inc. The Company is
unable to predict whether or not it will be successful in disputing
claims filed.
No provision has been made for the effect of preference or other
actions as they cannot be determined at this time.
F-15
<PAGE> 34
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
9. STOCKHOLDERS' EQUITY:
Following is a summary of preferred stock authorized, issued, and
outstanding as of June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Par Value
--------------------------
Title 1995 1994
---------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Series A Preferred Shares - $.01 par value; 11,000 shares authorized; no $ - $ -
shares issued or outstanding; noncumulative; convertible to ten shares of
the Company's common stock.
Series B Preferred Shares - $.01 par value; 6,300 shares authorized; no - -
shares issued or outstanding; noncumulative; convertible to ten shares of
the Company's common stock.
Series C Preferred Shares - $.01 par value; 1,200,000 shares authorized; -0- - 10,129
and 1,012,912 shares issued and outstanding, respectively; aggregate
liquidation preference $607,647; $.05 per share annual dividend, if
declared; noncumulative; convertible to one share of the Company's common
stock.
Series E Preferred Shares - $.01 par value; 200,000 shares authorized; -0- - 300
and 30,000 shares issued and outstanding, respectively; noncumulative;
convertible to ten shares of the Company's common stock.
Series F Preferred Shares - $.01 par value; 40,000 shares authorized, -0- - 400
and 10,000 shares issued and outstanding, respectively; $.70 per share
annual dividend, if declared; noncumulative; convertible to ten shares of
the Company's common stock.
Preferred Stock - $0.1 par value; 8,542,700 shares authorized; no shares - -
outstanding.
Series G Preferred Shares - $.01 par value; 100,000 shares authorized, - -
aggregated liquidation preference $1,000,000; $.20 semi-annual dividend,
cumulative; convertible to common stock of the Company based on the ratio of
$10 divided by the average closing bid price of the Company's common stock
for the 30-day period preceding conversion. This series was authorized for
purposes of the AGVI acquisition. The shares were returned to the Company
when the transaction was unwound. ----------- ----------
$ - $ 10,829
=========== ==========
</TABLE>
F-16
<PAGE> 35
During August 1994, all shares of preferred stock outstanding were
converted to 1,712,912 shares of the Company's common stock.
During 1993, the Company issued 633,637 units consisting of one share
of common stock and one common stock purchase warrant in a private
placement for $.44 per unit. Two warrants entitled the holder to
purchase one share of common stock for $.75 per share. Additionally,
the Company received subscription agreements totaling $29,200 to
purchase an additional 66,364 units. Proceeds from the subscribed
agreements were received in July 1993.
During 1993, warrants to purchase 300,000 shares of the Company's
common stock at prices ranging from $.75 to $1.00 per share were
issued to financial consultants.
During 1993, warrants to purchase 80,000 shares of common stock at
$1.50 to $1.88 per share were extended for one year from the original
expiration date.
During August 1993, the Company received net proceeds of $300,094 from
a private offering of 63,700 shares of Series B Preferred Shares and
Class A and Class B warrants entitling the holders to purchase a total
of 637,000 shares of the Company's common stock. Class A warrants
entitle the holders to purchase 318,500 shares of common stock for
$1.00 per share. Class B warrants entitle the holders to purchase
318,500 shares of common stock for $2.00 per share. All warrants
expired in July 1995. During September 1993, the outstanding Series B
Preferred Shares were converted to 637,000 shares of the Company's
common stock.
During September 1993, the Company issued 333,334 shares of common
stock in exchange for 333,334 shares of common stock of Princeton
Electronic Products, Inc.
During 1993, the Company received net proceeds of $476,092 from the
private offering of 1,012,912 shares of Series C Preferred Shares and
Class A and Class B warrants entitling the holders to purchase a total
of 1,012,912 shares of the Company's common stock. Class A warrants
entitle the holders to purchase 506,456 shares of common stock for
$1.00 per share. Class B warrants entitle the holders to purchase
506,456 shares of common stock for $2.00 per share. Class A warrants
expired in October 1995 and Class B warrants expire in October 1996.
F-17
<PAGE> 36
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
During May 1994, the Company issued 250,000 shares of common stock to
an officer of Conagher for consulting services.
On May 12, 1994, Apogee entered into a Stock Subscription Agreement
with 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. Simultaneous with the execution of the Subscription
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, Apogee and Conagher entered into an Amended and
Restated Stock Acquisition 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. The Company contends that
the Revised Agreement never closed.
As of June 30, 1994, 1,021,400 shares were redeemed for $175,000 by
Conagher. During fiscal 1995, an additional $663,921 was received
from Conagher, and $23,623 of the Company's liabilities were paid on
behalf of the Company. Additionally, $115,000 was received from
another entity which was apparently on behalf of Conagher. However,
this entity has filed claims in bankruptcy for this amount, therefore,
it has been recorded as an advance.
F-18
<PAGE> 37
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
A summary of common stock purchase warrants outstanding at June 30,
1995 is as follows:
<TABLE>
<CAPTION>
Number of Exercise Expiration
Issued For Shares Price Date
---------------------------------------- ---------------- -------------- --------------------
<S> <C> <C> <C>
Common stock 506,456 $1.00 October 1995*
Common stock 506,456 $2.00 October 1996
Common stock 293,750 $0.75 September 1995*
Common stock 318,500 $1.00 July 1995*
Common stock 318,500 $2.00 July 1995*
Services 150,000 $1.00 January 1998
Services 150,000 $0.60 December 1996
Services 100,000 $3.00 July 1995*
Services 100,000 $0.75 January 1998
Short-term debt 56,250 $0.75 September 1996
Services 50,000 $0.88 February 1998
---------
Total shares reserved for common stock 2,549,912
=========
purchase warrants
------------------------
</TABLE>
* Warrants expired unexercised subsequent to June 30, 1995.
10. STOCK OPTION PLANS:
The Company maintained the 1987 and 1988 Incentive Stock Option Plans
which provide for the grant of up to 300,000 shares of the Company's
common stock in the 1987 plan and 700,000 shares in the 1988 plan. A
1994 Incentive Stock Option Plan for 800,000 shares was terminated
when it was not submitted for approval by stockholders.
F-19
<PAGE> 38
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
Options granted pursuant to the stock option plans were incentive stock
options within the meaning of the Internal Revenue Code. The exercise
price of the options granted under the plans was not less than the fair
market value of the common stock. The options were granted for terms
of five or ten years. No options were exercisable until at least one
year following the date of the grant, and the options were subject to
certain acceleration and termination provisions.
A summary of incentive stock option activity is as follows:
<TABLE>
<CAPTION>
Number of Option Exercisable
Shares Price Option Shares
------------- ---------------- ------------------
<S> <C> <C> <C>
Outstanding, July 1, 1992 916,697 .50-$2.25 653,822
Granted 10,000 $ .53 -
Exercised - $ - -
Cancelled (2,000) $ .94 -
----------
Outstanding, June 30, 1993 924,697 $.50-$2.25 820,947
Granted 834,000 $.69-$.81 -
Exercised (5,000) $ .50 -
Cancelled (129,294) $.50-$2.25 -
---------- ----------
Outstanding, June 30, 1994 1,624,403 $.50-$2.00 764,403
Cancelled (1,624,403) $.50-$2.00
----------
Outstanding, June 30, 1995 - - -
==========
</TABLE>
Directors of the Company had nonqualified options to purchase 125,000
shares of common stock at prices ranging from $.50 to $1.375 per
share. The options were terminated in fiscal 1995 pursuant to the
terms and conditions of the plan.
F-20
<PAGE> 39
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
11. INCOME TAXES:
The Company has net operating loss carryforwards of approximately $11
million available to offset future taxable income, if any; the net
operating losses expire in varying amounts beginning in 1998 through
2010. However, the net operating losses may be limited on an annual
basis due to changes in control.
The components of deferred tax assets (liabilities) in the balance
sheet, which are fully eliminated by a valuation allowance, are as
follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net operating loss carryforwards $3,736,000 $2,303,000
Inventory reserves 66,000 182,000
Investment value reserves 105,000 216,000
Disputed claims 714,000 43,700
Other, net 78,000 -
---------- ----------
4,699,000 2,744,700
Less valuation allowance (4,699,000) (2,744,700)
---------- ----------
Net deferred tax asset $ - $ -
========== ==========
</TABLE>
12. CASH FLOW INFORMATION:
The supplemental disclosures for the statements of cash flows are as
follows:
<TABLE>
<CAPTION>
June 30,
--------------------------------------------------
1995 1994 1993
------------- ------------- ------------
<S> <C> <C> <C>
Cash paid during the year for interest $ 23,128 $ 122,455 $ 12,001
Noncash investing and financing activities:
Common stock and preferred shares
issued for common and preferred
shares of investees $ - 1,983,750 $ 410,235
Common stock and compensatory stock
options and warrants issued for
services and premiums on short-
term debt $ 50,000 $ 105,469 $ 57,128
</TABLE>
F-21
<PAGE> 40
APOGEE ROBOTICS, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
June 30,
---------------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Exchange of preferred shares for
common shares $ 830,894 $ - $ -
Advance from affiliate of Conagher $ 250,000 $ - $ -
paid for acquisition of AGVI
Surrender of investments in payment
of debt $ 400,000 $ - $ -
</TABLE>
13. MAJOR CUSTOMERS:
Two customers in 1993 and four customers in 1994 accounted for 10% or
more of the Company's revenue earned. The percentages of the
Company's revenues earned from these customers totaled 62.1% and 22.2%
in 1993 and 24.8%, 17.3%, 14.8%, and 10.1% in 1994.
14. CONTINGENCIES:
The Company is a defendant in certain legal actions with creditors,
investors and former investors. These actions include an action filed
by Conagher against Apogee, certain company managers and directors,
and the Company's former auditors and legal counsel, alleging various
securities violations and misrepresentations, seeking damages in an
unspecified amount. Conagher has filed a proof of claim for $978,436
related to this litigation, which is disputed by the Company and has
not been included in liabilities subject to compromise at June 30,
1995. The Company plans to assert counter claims against Conagher,
Pat Hayton, and others. All pre- petition claims will be subject to
settlement in accordance with a plan of reorganization.
F-22
<PAGE> 41
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------- ------------------- ----
<S> <C> <C> <C>
3 (a) Articles of Incorporation Incorporated by reference to Exhibit 3(a) to the Company's
Registration Statement on Form S-18, Registration No.
2-87181-D.
(b) Amended Articles Incorporated by reference to Exhibit 3(c) of the Company's
Registrations Statement, Registration No. 33-7805.
(c) Bylaws Incorporated by reference to Exhibit 3(b) to the Company's
Registration Statement on Form S-18, Registration No.
2-87181-D.
(d) Amended Bylaws Incorporated by reference to Exhibit 3(d) to the Company's
Registration Statement, Registration No. 33-7805.
4 (a) Specimen copy of Incorporated by reference to Exhibit 4(a) to the Company's
Stock certificate Registration Statement on Form S-18, Registration No.
2-87181-D.
(b) Warrant Agreement Incorporated by reference to Exhibit 4(c) to the Company's
respecting Redeemable Registration Statement, Registration No. 33-7805.
Purchase Warrants
(c) Form of Warrant Incorporated by reference to Exhibit 4(d) to the Company's
Certificate Registration Statement, Registration No. 33-7805.
10(a) License Agreement Incorporated by reference to Exhibit 10(b) to the
Company's Registration Statement on Form S-18,
Registration No. 2-87181-D.
(b) Supply Agreement Incorporated by reference to Exhibit 10(c) to the
Company's Registration Statement on Form S-18,
Registration No. 2-87181-D.
(c) Amendment to License Filed as Exhibit 10(e) to the Company's Registration
Agreement Statement on Form S-1, Registration No. 33-7805.
(d) License Agreement with Incorporated by reference to Exhibit 10(h) to the
Hewlett-Packard Company Company's Registration Statement, Registration No.
33-7805.
(e) Agreement with Stow Filed as Exhibit 10(e) to the Company's Registration
International NV Statement on Form S-1, Registration No. 33-42749.
(f) Amended and Restated Filed as Exhibit 10(f) to the Company's Report on Form
</TABLE>
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
- ------- ------------------- ----
<S> <C> <C> <C>
Stock Acquisition 8-K dated September 23, 1994.
Agreement
(g) Asset Purchase Agreement Filed as Exhibit 10(g) to the Company's Report on Form
relating to SI Handling 8-K dated September 23, 1994.
Systems
(h) Consulting Agreement Filed as Exhibit 10(h) to the Company's Report on Form
(Pat Hayton) 8-K dated September 23, 1994.
(i) Employment Agreement Filed as Exhibit 10(i) to the Company's Report on Form
(James R. Currier, Sr.) 8-K dated September 23, 1994.
(j) Asset Purchase Agreement Filed with this report.
between FMC Corporation
and Apogee
(k) Settlement Agreement Filed with this report.
between SI and Apogee
11 Statement regarding computation None
of per share
earnings
18 Letter regarding change in None
accounting principles
23 Consents of experts and Filed with this report.
counsel
27 Financial Data Schedule Filed with this report.
</TABLE>
<PAGE> 1
EXHIBIT 10(j)
ASSET PURCHASE AGREEMENT
BETWEEN
FMC CORPORATION
AND
APOGEE ROBOTICS, INC.
JULY 12, 1995
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of June ,
1995, by and between FMC Corporation, a Delaware corporation ("Buyer"), and
Apogee Robotics, Inc., a Colorado corporation ("Seller").
WITNESSETH
WHEREAS, Seller is a debtor and debtor-in-possession under Chapter 11
of the United States Bankruptcy Code (the "Bankruptcy Code") having filed a
petition for reorganization (the "Chapter 11 Case") on December 9, 1994, with
the United States Bankruptcy Court for the District of Colorado (the
"Bankruptcy Court");
WHEREAS, Seller conducts a business which manufactures and sells
advanced material handling and information systems including automatic guided
vehicle systems (the "Business");
WHEREAS, upon the terms and subject to the conditions of this
Agreement, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, certain of Seller's assets used or useful in conducting the Business as
set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Assets
Section 1.1 Basic Transaction
(a) Purchased Assets. For purposes of this Agreement, the term
"Purchased Assets" means all properties, assets and rights which Seller is
obligated to convey to Buyer under this Agreement. On and subject to the terms
and conditions set forth in this Agreement, Buyer hereby agrees to purchase
from Seller, and Seller hereby agrees to sell, convey, assign, transfer, and
deliver to Buyer on the Closing Date (as defined in Section 1.5(b) below), all
of the business, properties, assets and rights of any kind, whether tangible or
intangible, real or personal, of Seller, described in Exhibit A attached to and
incorporated by reference in this Agreement.
Section 1.2 Assumption of Liabilities. Buyer shall not assume or in any
manner become liable or responsible for any liability, obligation, debt, tax,
contract or commitment of Seller of any kind or nature, known or unknown,
existing prior to closing or thereafter arising, contingent or otherwise.
Without limiting the generality of the foregoing, Buyer shall not (i) assume or
in any way become liable or responsible for any of Seller's liabilities or
obligations relating to, arising out of or incurred in connection with the use
of operation of any of Seller's properties or facilities or arising under or
pursuant to any environmental laws or similar common law theories or arising
under or in connection with any employee benefit plans or arrangements or any
fringe benefits provided by Seller or (ii) have any obligation to offer
employment to any of Seller's employees.
<PAGE> 3
Section 1.3 Purchase Price.
(a) The total purchase price for the Purchased Assets (the "Purchase
Price") shall be $40,000 for Products FOB Rochester Hill, MI and for Technology
FOB Loveland, CO.
Section 1.4 Seller's Disclaimers.
(a) THE PURCHASED ASSETS WILL BE SOLD "AS-IS". SELLER EXCLUDES AND
DISCLAIMS ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
PURCHASED ASSETS, OTHER THAN THOSE WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT.
(b) Buyer shall prepare an allocation of the Purchase Price among the
Purchased Assets within 90 days after the Closing Date ("the Allocation
Schedule") and shall submit the Allocation Schedule to Seller. Buyer and Seller
shall report on an allocation of the Purchase Price among the Purchased Assets
in accordance with the Allocation Schedule in the filing of all tax returns and
in the course of any tax audit, tax review or tax litigation thereto.
Section 1.5 Closing Transaction.
(a) On the terms and subject to the conditions set forth in this
Agreement, the parties agree to consummate the following closing transactions
on the Closing Date:
(i) Buyer will deliver the Purchase Price determined in
accordance with Section 1.3 hereof;
(ii) Seller will convey all of the Purchased Assets to Buyer
and will deliver to Buyer bills of sale and all other instruments of
conveyance consistent herewith which are necessary of desirable to
effect or evidence transfer of the Purchased Assets to Buyer, free and
clear of all liens, claims, charges, interests and encumbrances, and
such other instruments and documents as are required herein to be
delivered by Seller to Buyer at the closing; and
(iii) Seller shall deliver to Buyer a certificate of Seller to
the effect that Seller has provided or caused to be provided notice
(the "Hearing Notice"), which Seller reasonably believes to be
adequate, either by publication or mailing, of the hearing on
confirmation of the Order (the "Hearing") to all persons entitled to
receive such notice under the Bankruptcy Code and the Federal rules of
Bankruptcy Procedures and to all other claimants against Seller or
which Seller has actual knowledge.
(b) The closing of the transactions contemplated by this Agreement
(the "Closing") will take place by an exchange of closing payments and
documents, which may be in counterparts, on the date which is the later to
occur of: (i) the 5th business day following entry by the Bankruptcy Court of
the Order, (ii) the first day on which
<PAGE> 4
there is no stay of such order in effect and (iii) the date on which all the
conditions to closing set forth in Article 2 have been satisfied; or on such
other date as the parties may mutually agree, but in no event on any date later
than October 31, 1995. The date and time of the Closing is herein referred to
as the "Closing Date".
ARTICLE 2
Conditions to Closing
Section 2.1 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) On or before October 31, 1995, the Bankruptcy Court shall have
entered, and the clerk of the Bankruptcy Court shall have entered on the docket,
and order pursuant to Section 363 of the Bankruptcy Code (the "Order"), in form
and substance reasonably satisfactory to Buyer, which Order shall, among other
things: (i) confirm that notice provided by Seller to all persons entitled to
receive such notice under the Bankruptcy Code and the Federal Rules of
Bankruptcy Procedure and to all other known claimants against Seller was
adequate; (ii) approve the execution, delivery and performance of this Agreement
by Seller and the consummation of the transactions contemplated hereby; (iii)
confirm that Buyer constitutes a good faith purchaser within the meaning of
Section 363 of the Bankruptcy Code; (iv) confirm that Buyer is not a successor
to the Seller including, without limitation, under or pursuant to any
Environmental Laws or similar common law theories; and (v) confirm that Buyer
shall acquire the Purchased Assets free and clear of all liens, security
interests, claims, debts, liabilities, charges, interests and other
encumbrances.
(b) The representations and warranties of Seller set forth in Article
4 hereof will be true and correct at and as of the Closing Date as though then
made and as though the Closing Date were substituted for the date of this
Agreement throughout such representations and warranties.
(c) Seller will have performed all of the covenants and agreements
required to be performed by it prior to the Closing under this Agreement.
(d) All consents by third parties that are required for the transfer
of control of any of the Purchased Assets to Buyer as contemplated hereby and
releases of all liens, charges, security interests and other encumbrances on
the Purchased Assets (other than as specifically contemplated hereby) will
have been obtained on terms and conditions reasonably satisfactory to Buyer.
(e) Other than in connection with the Chapter 11 case, no action or
proceeding by or before any court or government agency or body will be pending
or threatened wherein an unfavorable judgment, decree or order could (i)
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, (ii) declare unlawful the transactions contemplated by
this Agreement, (iii) cause such transactions to be rescinded, or (v) adversely
affect the right of Buyer to own, operate or control the Purchased Assets.
<PAGE> 5
(f) On the Closing Date, Buyer will have received all of the following:
(i) an officers' certificate in the form set forth in Exhibit B
attached hereto, dated the Closing Date, stating that the conditions
specified in subsections (a) through (e) hereof, inclusive, have been
satisfied;
(ii) copies of all necessary governmental approvals and third
party consents Seller is required to obtain prior to the Closing Date
in order to effect the transactions contemplated by this Agreement;
(iii) such instruments of sale, transfer, assignment,
conveyances and delivery, in form and substance reasonably satisfactory
to counsel for Buyer, as are required in order to transfer to Buyer
good and marketable title to the Purchased Assets free and clear of all
liens and encumbrances;
(iv) certified copies of resolutions of Seller's board of
directors authorizing and approving this Agreement and Seller's
consummation of the transactions contemplated hereby;
(v) a certified copy of the Order; and
(vi) such other documents or instruments as Buyer reasonably
requests to effect or evidence the transactions contemplated hereby.
(g) All proceedings to be taken by Seller in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all certificates, instruments and other documents
required to effect the transactions contemplated hereby reasonably requested by
Buyer will be satisfactory in form and substance to Buyer.
(h) The Closing shall have occurred on or before October 31, 1995.
Any condition specified in this Section 2.1 may be waived in a writing executed
by Buyer at or prior to the Closing.
Section 2.2 Conditions to Seller's Obligations. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warrants of Buyer set forth in Article 5
hereof will be true and correct at and as of the Closing Date as though then
made and as though the Closing Date were substituted for the date of this
Agreement throughout such representations and warranties.
(b) Buyer will have performed all of the covenants and agreements
required to be performed by it prior to the Closing under this Agreement.
(c) Other than in connection with the Chapter 11 Case, no action or
proceeding by or before any court or government agency or body will be pending
or
<PAGE> 6
threatened wherein an unfavorable judgment, decree or order could (i) prevent
the carrying out of this Agreement or any of the transactions contemplated
hereby, (ii) declare unlawful the transactions contemplated by this Agreement
(iii) cause such transactions to be rescinded.
(d) On the Closing Date, Seller will have received all of the
following:
(i) an officers' certificate in the form set forth in Exhibit B
attached hereto, dated the Closing Date, stating that the conditions
specified in subsections (a) through (c) hereof, inclusive, have been
satisfied;
(ii) such other documents or instruments as Seller reasonably
requests to effect of evidence the transactions contemplated hereby.
(e) All proceedings to be taken by Buyer in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all certificates, instruments and other documents
required to effect the transactions contemplated hereby reasonably required by
Seller will be satisfactory in form and substance to Seller.
(f) the Closing shall have occurred on or before October 31, 1995.
Any condition specified in this Section 2.2 may be waived in a writing executed
by Seller at or prior to the Closing.
ARTICLE 3
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer that:
Section 3.1 Corporate Organization and Power. Seller is a corporation duly
organized and validly existing under the laws of the State of Colorado, and
subject to the approval of this Agreement by the Bankruptcy Court, has full
corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 3.2 Authorization. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all requisite corporate action
and no other corporate proceedings on Seller's part are necessary to authorize
the execution, delivery or performance of this Agreement.
Section 3.3 No Breach; Valid and Binding Effect. The execution, delivery and
performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby do not and will not (a) conflict with or
result in any breach of, (b) constitute a default under, (c) result in a
violation of, (d) give any third party the right to terminate or accelerate any
obligation under, (d) result in the creation of any lien, security interest,
charge or encumbrance upon the Purchased Assets under, or (e)
<PAGE> 7
result in the creation of any lien, security interest, charge or encumbrance
upon the Purchased Assets under, or (f) require any authorization, consent,
approval, exemption or other action by, or notice to, any court or other
governmental body, under the provisions of Seller's certificate of incorporation
or by-laws or any indenture, mortgage, lease, loan agreement or other agreement
or Instrument to which Seller is bound or by which it is affected, or any law,
statute, rule or regulation to which Seller is subject. This Agreement and the
other agreements contemplated hereby constitute valid and binding obligations
of Seller, enforceable in accordance with their terms, except as may be limited
by (i) bankruptcy, insolvency, reorganization or other laws of general
application to or affecting the enforcement of creditors rights and (ii) the
availability of remedies under general equitable principles. The bills of
sale, assignments and other instruments to be delivered at the Closing will be
adequate to transfer good and marketable title to the Purchased Assets free
and clear of all liens, claims, debts, liabilities, security interest,
charges or other encumbrances.
Section 3.4 Title to Properties. Upon consummation of the transactions
contemplated hereby and except for any security interests in the Purchased
Assets granted by Buyer, Buyer will have good and marketable title to all of
the Purchased Assets, free and clear of all liens, claims, debts, security
interests, liabilities, charges or other encumbrances, pursuant to the Chapter
11 Plan or the Final Order authorizing the 383 Sale.
Section 3.5 Proprietary Rights.
(a) No claim by any third party contesting the validity,
enforceability, use or ownership of the Technology portion of the Purchased
Assets has been made, is currently outstanding or is threatened;
(b) There are no patents, trademarks, copyrights, trade secrets or
other intellectual property necessary for the use or ownership of the
Technology not included in the Purchased Assets;
(c) Seller has not received any notices of, nor is it aware of any
facts which indicate a likelihood of, any infringement or misappropriation by,
or conflict with, any third party with respect to rights included in the
Purchased Assets, including, without limitation, any demand or request that
Seller license rights from a third party; and
(d) Neither the Technology nor Seller has infringed,
misappropriated or otherwise come into conflict with any rights of any third
parties and Seller is not ware of any infringement, misappropriation or
conflict which will occur as a result of the continued use or ownership of the
Technology as currently conducted or as currently proposed to be conducted.
Section 3.6 Closing Date. All of the representations and warranties of
Seller contained in this Article 3 and elsewhere herein and all information
delivered in any schedule, attachment or exhibit hereto are true and correct in
all material respects on the date of this Agreement and will be true and
correct in all material respects on the Closing Date, except for inaccuracies
resulting from changes in the ordinary course of business.
<PAGE> 8
ARTICLE 4
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller that:
Section 4.1 Corporate Organization and Power. Buyer is a corporation duly
organized and validly existing under the laws of the State of Delaware with
full corporate power and authority to enter into this Agreement and perform its
obligations hereunder.
Section 4.2 Authorization. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all requisite corporate action and on
other corporate proceedings on its part are necessary to authorize the
execution, delivery or performance of this Agreement. Subject to the approval
of this Agreement by the Bankruptcy Court, this Agreement constitutes a valid
and binding obligation of Buyer, enforceable in accordance with its terms,
except as may be limited by (a) bankruptcy, insolvency, reorganization or
other laws of general application to or affecting the enforcement of
creditors' rights and (b) the availability of remedies under general equitable
principles.
Section 4.3 Litigation. There are no actions, suits, proceedings, orders
or investigations pending or, to buyer's knowledge, threatened against or
affecting Buyer at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which would adversely affect Buyer's
performance under this Agreement or the consummation of the transactions
contemplated hereby.
Section 4.4 Notification. From the date hereof to the Closing, buyer will
promptly inform Seller in writing of any material adverse variances from the
representations and warranties contained in this Article 4.
Section 4.5 Closing Date. All of the representations and warranties of
Buyer contained in this Article 4 and elsewhere herein and all information
delivered in any scheduled, attachment or exhibit hereto are true and correct
in all material respects on the date of this Agreement and will be true and
correct on the Closing Date.
ARTICLE 5
Termination
Section 5.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual consent of Seller and Buyer;
(b) by either Seller or Buyer, if there has been a material
misrepresentation or breach of warranty or material breach of covenant on
the part of the other party in
<PAGE> 9
the representations and warranties or covenants set forth in this Agreement;
(c) by Buyer or by Seller if the Closing shall not have occurred on or
prior to October 31, 1995; provided that a party shall not be entitled to
terminate this Agreement pursuant to this subsection (c) if their willful
breach of this Agreement has prevented the consummation of the transactions
contemplated hereby.
Section 5.2 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided above, this Agreement will
forthwith become void.
ARTICLE 6
Additional Agreements
Section 6.1 Survival. The representations, warranties, covenants and agreements
set forth in this Agreement, or in any writing in connection with this
Agreement, shall survive the Closing Date and the consummation of the
transactions contemplated hereby.
Section 6.2 Agreement to Support Certain Orders. Buyer and Seller hereby agree
to take all action within their power to support the entry of the Order.
Section 6.3 Transition Assistance. Following the Closing and the delivery to
Buyer of the Purchased Assets, at buyer's request Seller will make available to
Buyer the services of Jim Currier and/or Jim Jones for the purpose of assisting
Buyer in the transfer and implementation of the Technology. A request for such
assistance shall be made on Buyer's regular purchase order. Buyer shall pay
Seller for such assistance as follows:
Jim Currier - $125 per hour
Jim Jones - $75 per hour
Section 6.4 Non-Exclusivity. Should (I) Seller resume normal business
operations and notify Buyer that Seller wishes to use the Technology or (II) a
third party acquire all or part of Buyer, including the business represented by
the Apogee Orbitor 750 and 6000 products, Buyer and Seller (or a third party
purchaser) shall each have a non-exclusive right to use the Technology.
Section 6.5 Pre-Closing Covenant - Prior to Closing, Seller will comply with
all legal requirements (including all orders of the Bankruptcy Court) and will
use all reasonable efforts to obtain all third party, governmental and judicial
consents and approvals necessary or desirable to consummate the transactions
contemplated hereby.
<PAGE> 10
ARTICLE 7
Miscellaneous
Section 7.1 Expenses. Except as otherwise expressly provided herein, each
party will pay all of its expenses, including attorneys' fees, incurred in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated by
this Agreement. Seller shall be responsible for any and all sales, use,
transfer and similar tax liabilities and any other tax liabilities of Seller
arising out of the transactions contemplated by this Agreement. Seller's
expenses shall be paid by it in accordance with applicable provisions of the
Bankruptcy Code and Bankruptcy Rules.
Section 7.2 Further Transfers. Subject to the terms hereof, Seller will
execute and deliver such further instruments of conveyance and transfer and
take such additional action as Buyer may reasonably request to effect,
consummate, confirm or evidence the transfer to Buyer of the Purchased Assets.
Subject to the terms hereof, Seller will execute such documents as may be
necessary to assist Buyer in preserving or perfecting its rights in the
Purchased Assets.
Section 7.3 Amendment and Waiver.
(a) This Agreement may be amended, and any provision of this Agreement
may be waived, provided that any such amendment or waiver will be binding upon
Seller only if such amendment or waiver is set forth in a writing executed by
Seller, any any such amendment or waiver will be binding upon Buyer only if
such amendment or waiver is set forth in a writing executed by Buyer; and
provided further that any material amendment shall be approved by the
Bankruptcy Court.
(b) No course of dealing between or among any persons having any
interest in this agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement, and no oral representation by Buyer or
Seller or any representatives thereof made with regard to the subject matter of
this Agreement are binding upon Buyer or Seller respectively.
Section 7.4 Public Disclosure. Prior to the Closing, the Seller and Buyer shall
cooperate in the preparation of all press releases and other public
announcements and all announcements to the Seller's creditors, customers,
suppliers or employees relating to this Agreement and the transactions
contemplated hereby. Seller and the Buyer shall cooperate to prepare a joint
press release to be issued on the Closing Date, subject to compliance with
applicable law.
Section 7.5 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provision of this Agreement will be in
writing and will be deemed to have been given when (i) personally delivered,
sent by telecopy (with hard copy to follow) or by reputable overnight carrier
or (ii) three days following mailing by first class mail, return receipt
requested. Notices, demands and communications to Buyer and Seller will, unless
another address is specified in writing, be sent to the address indicated below:
<PAGE> 11
Notices to Seller:
Apogee Robotics, Inc.
1301 Meadowwood Lane
Charlotte, NC 28211
with a copy to:
Thomas F. Quinn, Esq.
Jones & Keller
16 Broadway
Suite 1600
Denver, CO 80202
Notices to Buyer:
FMC Corporation
200 East Randolph Drive
Chicago, IL 60601
Attn: Corporate Secretary
with copy to:
Mr. Liam Collins
Division Manager
Material Handling Systems Division
FMC Corporation
200 East Randolph Drive
Chicago, IL 60601
Section 7.6 Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of buyer and Seller and their respective
successors and assigns but may not be assigned by Seller without the prior
written consent of Buyer and may not be assigned by buyer without the prior
written consent of Seller.
Section 7.7 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
Section 7.8 Complete Agreement. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
Section 7.9 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
<PAGE> 12
party, but all such counterparts taken together will constitute one and the
same instrument.
Section 7.10 Governing Law. The local law of the State of Colorado will govern
all questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
Section 7.11 Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. Buyer and Seller acknowledge and agree that, except as
otherwise expressly provided herein, in the event of any conflict between the
terms of this Agreement and the terms of any such exhibit or schedule, the
terms of the Agreement shall control.
Section 7.12 Construction of Financial Provisions. Wherever any provision of
this Agreement calls for the application of financial tests such as, by
example, the determination of value or liability, such financial tests shall be
determined in accordance with generally accepted accounting principles,
consistently applied.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
FMC CORPORATION APOGEE ROBOTICS, INC.
By /s/ LIAM COLLINS By /s/ JAMES R. CURRIER
---------------------------- -------------------------------
Its DIVISION MANAGER Its PRESIDENT
--------------------------- ------------------------------
July 14th, 1995 July 18, 1995
<PAGE> 13
PRODUCT AND TECHNOLOGY
PURCHASE AGREEMENT BETWEEN
APOGEE ROBOTICS, INC. AND FMC CORP.
Parties to the Agreement:
Whereas, Apogee Robotics, Inc., with its principle place of business 1428
Glenda Ct., Loveland, CO 80537, desires to Sell, and FMC Corporation, MHS
Division, 400 Highpoint Drive, Chalfont, PA 18914, desires to Buy, now
therefore for mutual consideration, the parties agree as follows:
Technology Purchased:
(1) Mechanical Design of the Apogee Orbitor 750 and 8000 Products, evidenced by
complete transfer of the following packages:
- Complete set of latest revision mechanical drawings in the following
formats:
Full size hard copy & Autocad ver. 12 files on 3-1/2 or 5-1/4
diskettes.
- Complete set of latest revision electromechanical schematics in the
following formats:
Full size hard copy & Autocad ver. 12 files on 3-1/2 or 5-1/4
diskettes.
- Complete Bill of Materials for all mechanical and electromechanical
components in the following formats:
Hard copy and NMass files on 3-1/2 or 5-1/4 diskettes.
- Vendor catalog specification sheets for all components listed on
Bill of Materials
- Latest revision maintenance manual for Orbitor 6000
- Latest revision maintenance manual for Orbitor 750
(2) Orbitor 750 Software Quoting Package, including:
- Set-up documentation.
- Application software for MS Excel for Windows.
- One hard copy of a sample approximate price quotation.
Products Purchased:
(1) Chassis of one (1) Orbitor 750 vehicle, including:
- Mechanical frame and associated support brackets.
- Drive motors, wheels, brakes, transmissions and encoders.
- Power components including servo amplifiers.
(2) One (1) prototype Orbitor 6000 vehicle, including:
- Raymond 111 Walkie, 6000 lb. capacity.
- All components for a complete Apogee automation package.
(3) Two (2) Lawn II RF spread spectrum radio modems with power supplies.
<PAGE> 14
Total Purchase Price: $40,000.00, for Products FOB Rochester Hills, MI and
Technology documentation FOB Loveland, CO.
Optional Consulting Services:
FMC has the option at its sole discretion, to seek the assistance of the
following Apogee Robotics, Inc., employees at the agreed upon rates.
(1) Consulting Services for Jim Currier $125.00/hour;
(2) Consulting Services for Jim Jones $75.00/hour
These services are for the purpose of assisting FMC in transfer and
implementation of the technology acquired in this document. These consulting
services will be applicable only after all equipment and components described
in this document have been received and accepted by FMC. FMC must approve and
issue a separate FMC purchase order before any consulting work is performed.
Terms and Conditions:
(1) The Technology and Products are "as is" without warranties of any kind,
including suitability of purpose and merchantability.
(2) FMC will indemnify and hold Apogee harmless against any FMC use of the
Products or Technology which results in any action or award against FMC.
(3) Purchase of the Technology is exclusive, except for the following
conditions, in which case the purchase and subsequent use of the Technology
becomes non-exclusive to FMC, but FMC may continue to use the Products and
Technology.
(a) Apogee resumes normal business operations and uses the Product and
Technology for its own benefit; and
(b) Another third party purchases the entire Technology package from Apogee
(including guidance, electrical, etc., excluded from this arrangement).
(4) Conditions Precedent:
(a) Approval of the Apogee Creditor's Committee; and
(b) Bankruptcy Court.
(5) Governing Law: State of Colorado.
(6) Assignment: None without the express written consent of the non-assigning
party.
<PAGE> 15
(7) Apogee warrants that it is the lawful owner of the property being sold and
that all items included in this document are free and clear of any liens
and incumberances or other legal liability.
(8) Upon execution of this Agreement, Apogee agrees to ship the Orbitor 750 and
Orbitor 6000 to FMC within ten (10) working days.
SELLER: Apogee Robotics, Inc. BUYER: FMC Corporation
Material Handling Systems Div.
400 Highpoint Drive
Chalfont, PA 18914
NAME: /s/ JAMES R. CURRIER NAME: /s/ LIAM COLLINS
---------------------- ----------------------
DATE: 7/18/95 DATE: 7/14/95
---------------------- ----------------------
<PAGE> 16
EXHIBIT B
OFFICERS' CERTIFICATE OF SELLER
I, __________________________, certify that I am the duly elected and
acting President of Apogee Robotics, Inc., a Colorado corporation ("Seller"),
and that:
1. The representation and warranties of Seller contained in Article 3 of that
certain Asset Purchase Agreement, dated June ____, 1995, (the "Purchase
Agreement"), by and between FMC Corporation, a Delaware corporation (the
"Buyer") and Seller, are true and correct as of the date hereof as though
made on the date hereof and as though the date hereof was substituted for
the date of the Purchase Agreement throughout such representations and
warranties.
2. Each of the conditions set forth in Section 2.1 (a) through 2.1 (e),
inclusive, of the Purchase Agreement have been satisfied.
3. Seller has provided or caused to be provided notice, which Seller
reasonably believes to be adequate, either by publication or mailing, of
the hearing on confirmation of the Order (as defined in the Purchase
Agreement) to all persons entitled to receive such notice under the Federal
Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and to all
other claimants against Seller of which Seller has actual knowledge.
Date: ___________________________, 1995
APOGEE ROBOTICS, INC.
_______________________________
By_____________________________
Its____________________________
<PAGE> 1
EXHIBIT 10(K)
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT is among SI HANDLING SYSTEMS, INC., a
Pennsylvania corporation, ("SI Handling"), AGV ACQUISITIONS, INC., a Delaware
Corporation, ("AGV") in its capacity as debtor in possession in Chapter 11 case
No. 94-22194 MSK now pending in the United States Bankruptcy Court for the
District of Colorado (the "Bankruptcy Court") and APOGEE ROBOTICS, INC, a
Colorado Corporation, ("Apogee") in its capacity as debtor in possession in
chapter 11 Case No. 94-22193-CEM now pending in the Bankruptcy Court.
RECITALS
A. Apogee is the parent of and owns all the common stock of AGV. On
December 9, 1994 both Apogee and AGV filed petitions under Chapter 11 of the
United States Bankruptcy Code with the Bankruptcy Court.
B. On January 20, 1995, AGV commenced an adversary proceeding in the
Bankruptcy Court against SI Handling entitled "AGV Acquisitions, Inc.,
plaintiff v. SI Handling Systems, Inc., defendant, No. 1071 PAC." In this
proceeding (the "Adversary Proceeding") AGV alleges that SI Handling breached
its obligations under two agreements: (i) an agreement (the "Asset Purchase
Agreement") whereby SI Handling agreed to sell to AGV all of SI Handling's
assets (the "Assets") related to the manufacture and sale of automated guidance
vehicles and (ii) an agreement (the "Principles of Operation") whereby SI
Handling retained AGV and Apogee to complete certain contracts for its
customers. In the Adversary Proceeding AGV seeks a declaratory judgement that
it, rather than SI Handling, is the owner of and entitled to possession of the
Assets, and a judgment against SI Handling for at least $2,250,000 for
<PAGE> 2
alleged breaches of the Asset Purchase Agreement and the Principles of
Operation. SI Handling denies the material allegations of the complaint in the
Adversary Proceeding and asserts counterclaims against AGV. In its
counterclaims, SI Handling alleges that the closing of the sale of the Assets
was to occur in escrow; that the conditions of the escrow were not satisfied
because of AGV's failure to make a payment that was a condition precedent to the
closing; that, as a consequence, ownership of the Assets was never transferred
to AGV; and that AGV breached its obligations under the Asset Purchase Agreement
and the Principles of Operation. SI Handling seeks a declaratory judgment that
it is the owner of the Assets and damages against AGV for at least $4 million.
C. AGV, Apogee and SI Handling have agreed to compromise and settle
all claims and counterclaims asserted in the Adversary Proceeding pursuant to
the terms of this Agreement.
AGREEMENT
In compromise of the Adversary Proceeding and in consideration of the
matters set forth herein, the parties agree as follows:
1. A closing (the "Closing") shall be held at the time and in the
place provided for in paragraph 2 below. At the Closing, the following shall
occur:
(a) SI Handling shall pay AGV $150,000 in cash or certified
funds,
(b) AGV and Apogee shall execute and deliver to SI Handling a
Bill of Sale, Assignment and Disclaimer in the form attached hereto as
Exhibit A, whereby they transfer any right, title or interest that they
may have in the Assets to SI Handling and disclaim any interest in the
Assets.
(c) SI Handling, on the one hand, and AGV and Apogee, on the
other, shall execute and deliver a Mutual General Release, in the form
attached hereto as Exhibit B, of any
<PAGE> 3
and all claims that they may have against each other, including without
limitation, all claims asserted in the Adversary Proceeding and any
claims related to the Asset Purchase Agreement or the Principles of
Operation.
(d) SI Handling and AGV shall execute a Stipulation of
Dismissal, in the form of Exhibit C attached hereto, pursuant to which
they stipulate to dismissal, with prejudice, of all claims and
counterclaims asserted in the Adversary Proceeding. Promptly after the
Closing the parties, through their attorneys, shall present that
stipulation to the Bankruptcy Court for its approval.
3. Promptly after the parties sign this agreement, Apogee and AGV
shall file a motion with the Bankruptcy Court in their jointly administered
chapter 11 cases requesting authorization to settle and compromise the
Adversary Proceeding in accordance with the terms of this agreement. Notice of
the motion shall be given to creditors as required by Rule 2002 of the Federal
Rules of Bankruptcy Procedure and Rule 202 of the Local Rules of Bankruptcy
Procedure for the Bankruptcy Court. The Closing shall be held at 10:00 A.M. on
the eleventh day, or, if the eleventh day is a Saturday, Sunday or Holiday, on
the next business day, after the Bankruptcy Court enters an order, which is
final in all respects and not subject to appeal, approving this settlement. The
closing shall be at the offices of Holme Roberts & Owen, Suite 4100, 1700
Lincoln Street, Denver, Colorado 80203, or at such other place as the parties
may agree.
4. The Parties acknowledge that many of the persons who are listed as
creditors of AGV on the financial schedules that AGV filed with the Bankruptcy
Court are listed because AGV agreed in the Asset Purchase Agreement to assume
those liabilities of SI Handling that were related to SI Handling's automated
guidance vehicle business. AGV reserves the right to
<PAGE> 4
object to any creditor's claim on any grounds, including the grounds that AGV
never assumed the creditor's claims because the closing of the sale of the
Assets was never consummated. SI Handling does not, by entering into this
Agreement or otherwise, acknowledge that it is liable for any claims that have
been or may be asserted against AGV or Apogee. SI Handling will not, to the
extent that it has paid or may pay any claim related to its automated guidance
vehicle business, assert a claim for reimbursement, indemnity or contribution
with respect to that claim against AGV or Apogee.
5. This Agreement is binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; constitutes
(with its exhibits) the entire agreement and understanding among the parties;
supersedes all prior oral or written understandings among the parties; may be
executed in counterparts; may be amended only by a writing signed by all the
parties hereto; and shall be governed by Colorado law.
DATED this 12th day of September, 1995
SI Handling Systems, Inc.
By: /s/ LEONARD S. YURKOVIC
---------------------------
Its: President/CEO
---------------------------
AGV Acquisitions, Inc.
By: /s/ JAMES W. JONES
---------------------------
Its: President
---------------------------
Apogee Robotics, Inc.
By: /s/ JAMES R. CURRIER
---------------------------
Its: President
---------------------------
<PAGE> 5
EXHIBIT A
ASSIGNMENT, BILL OF SALE AND DISCLAIMER
This ASSIGNMENT, BILL OF SALE AND DISCLAIMER is from AGV ACQUISITIONS,
INC. ("AGV") and APOGEE ROBOTICS, INC. ("Apogee") to SI HANDLING SYSTEMS, INC.
("SI Handling").
AGV and SI Handling entered into an agreement, dated as of October 5,
1995, (the "Asset Purchase Agreement") whereby SI Handling agreed to sell to
AGV all of its assets related to its automated guidance vehicle business (the
"Purchased Assets") located for the most part in Rochester Hills, Michigan. A
dispute arose between SI Handling and AGV as to whether SI Handling in fact
transferred ownership of the Purchased Assets to AGV. In compromise of that
dispute, AGV has agreed to transfer any right, title or interest that it may
have in the Purchased Assets to SI Handling and to disclaim any interest in the
Purchased Assets. Accordingly,
1. AGV and its parent corporation Apogee, hereby sell, assign, transfer
and convey to SI Handling any right, title or interest that they may have in
the Purchased Assets, including, without limitation, any right, title or
interest that they may have acquired in any property described in any bills of
sale or other documents that were signed in connection with any closing that
may have occurred of the Asset Purchase Agreement;
2. AGV and Apogee acknowledge that they have no right, title or
interest in the Purchased Assets.
Dated this______day of September, 1995.
AGV Acquisitions, Inc.
By: /s/ JAMES W. JONES
----------------------------------
Apogee Robotics, Inc.
By: /s/ JAMES R. CURRIER
----------------------------------
<PAGE> 6
STATE OF COLORADO )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
September, 1995, by _________________________ as ______________________________
of AGV Acquisitions, Inc., a ____________________ corporation, on behalf of such
corporation.
WITNESS my hand and official seal.
My commission expires: ________________________
[SEAL]
_______________________________________________
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ______ day of
September, 1995, by ______________________________ as _______________________
of Apogee Robotics, Inc., a _____________________ corporation, on behalf of such
corporation.
WITNESS my hand and official seal.
My commission expires: ________________________
[SEAL]
_______________________________________________
Notary Public
<PAGE> 7
EXHIBIT B
MUTUAL GENERAL RELEASE
THIS MUTUAL GENERAL RELEASE is between SI HANDLING SYSTEMS, INC., and
its shareholders, directors, officers, employees, attorneys and agents, on the
one hand, ("SI Handling") and AGV ACQUISITIONS, INC. ("AGV") and APOGEE
ROBOTICS, INC. ("Apogee"), and their respective shareholders, directors,
officers, employees, attorneys and agents, on the other hand.
RECITAL
SI Handling, on the one hand, and AGV and Apogee, on the other hand
(collectively, the "Debtors"), in connection with their Settlement Agreement
dated September 12, 1995 (the "Agreement"), promised to release one another
from any claims and causes of action that either might have against the other.
RELEASE
THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, SI Handling and the Debtors hereby release one
another from all claims, debts, demands, causes of action, suits or liabilities
whatsoever of every kind and nature, whether known or unknown, in law or in
equity, which either may now have or ever have had against the other prior to
the date hereof including, without limitation, (i) all claims asserted in
Adversary Proceeding No. 95-1071-PAC in the United States Bankruptcy Court for
the District of Colorado, (ii) all claims in any way related to the Asset
Purchase Agreement, as amended, dated as of October 5, 1995 between SI Handling
and AGV and (iii) all claims related to that certain agreement between SI
Handling and Apogee known as the Principles of Operation. Excepted from this
release is any claim to enforce (but not to rescind) the Agreement.
This General Release (i) is governed by Colorado law and (ii) is
binding on the successors and assigns of the parties.
DATED this __ day of September 1995.
SI HANDLING SYSTEMS, INC.
By: LEONARD S. YURKOVIC
-----------------------------------
Its: President/CEO
-----------------------------------
AGV ACQUISITIONS, INC.
By: JAMES W. JONES
-----------------------------------
Its: Presidents
-----------------------------------
<PAGE> 8
APOGEE ROBOTICS, INC.
By: /s/ JAMES R. CURRIER
------------------------------------
Its: President
------------------------------------
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
September, 1995, by _______________________ as ____________________________
of SI Handling Systems, Inc., a_____________________ corporation, on behalf of
such corporation.
WITNESS my hand and official seal.
My commission expires:
-------------------------
[SEAL]
-------------------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
September, 1995, by _______________________ as ______________________________
of AGV Acquisitions, Inc., a __________________ corporation, on behalf of such
corporation.
WITNESS my hand and official seal.
My commission expires:
-------------------------
[SEAL]
-------------------------
Notary Public
2
<PAGE> 9
STATE OF COLORADO )
) ss.
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this __ day of
September, 1995, by ______________________ as ______________________ of Apogee
Robotics, Inc., a _______________ corporation, on behalf of such corporation.
WITNESS my hand and official seal.
My commission expires:
-----------------------------------
[SEAL]
-----------------------------------
Notary Public
3
<PAGE> 1
[BROCK AND COMPANY LETTERHEAD]
EXHIBIT 23
Consent of Independent Accountants
We consent to the use in the Annual Report on Form 10K of our report
dated October 12, 1994 relating to the financial statements of Apogee Robotics,
Inc., which appears in such Annual Report.
/s/ BROCK AND COMPANY, CPAs, P.C.
Certified Public Accountants
Fort Collins, Colorado
January 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 118,364
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10,491
<CURRENT-ASSETS> 297,110
<PP&E> 581,266
<DEPRECIATION> 581,266
<TOTAL-ASSETS> 497,958
<CURRENT-LIABILITIES> 47,861
<BONDS> 0
0
0
<COMMON> 10,683,590
<OTHER-SE> 33,349
<TOTAL-LIABILITY-AND-EQUITY> 497,958
<SALES> 457,233
<TOTAL-REVENUES> 457,233
<CGS> 1,622,174
<TOTAL-COSTS> 1,622,174
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,846
<INCOME-PRETAX> (4,100,364)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,100,364)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,100,364)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
