SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-8489
APOGEE ROBOTICS, INC.
(Exact name of Registrant as specified in its charter)
COLORADO 84-0916585
(State of incorporation) (IRS Employer
Identification NO.)
1625 Broadway, Suite 1600
Denver, Colorado 80202
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: (303) 573-1600
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
X
YES NO
APPLICABLE ONLY TO CORPORATE ISSUES:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Stock No. of Shares Outstanding Date
- -------------- -------------------------- ----
Common Stock 18,195,022 February 21, 1996
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APOGEE ROBOTICS, INC.
10-Q INDEX
December 31, 1995
PAGE NO.
Part I - Financial Information
Item 1. - Financial Reports
Balance Sheets - December 31, 1995 and
June 30, 1995 3
Statements of Operations - Three and six month
Periods Ended December 31, 1995 and 1994 4
Statements of Cash Flows - Three month and six
Periods Ended December 31, 1995 and 1994 5
Notes to Financial Statements 6
Item 2. - Management's Discussion and Analysis of
the Financial Condition and Results of
Operations 7
Part II - Other Information
Item 1. - Legal Proceedings 8
Item 5. - Other Information 8 - 12
Item 6. - Exhibits and Reports on Form 8-K 12
Signatures 13
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
APOGEE ROBOTICS, INC
(Debtor-in-Possession)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
<S> <C> <C>
ASSETS
Current Assets
Cash $ 262,527 $ 118,364
Inventories 10,491 10,491
Nonmarketable securities at estimated fair value 168,255 168,255
------------ ------------
Total current assets 441,273 297,110
------------ ------------
OTHER ASSETS
Purchased AGVS software, net -- 40,000
Investment in AGV Acquisition, Ins -- 150,000
Deposits and other assets 5,672 10,848
------------ ------------
Total other assets 5,672 200,848
------------ ------------
TOTAL ASSETS $ 446,945 $ 497,958
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Other accrued liabilities 156,832 47,861
------------ ------------
Total current liabilities 156,832 47,861
------------ ------------
LIABILITIES SUBJECT TO COMPROMISE 3,497,132 3,497,132
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, no par value; 50,000,000 shares authorized;
18,195,022 issued 10,683,590 10,683,590
Other capital 33,349 33,349
Accumulated deficit (13,923,958) (13,763,974)
Total stockholders' equity (3,207,019) (3,047,035)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 446,945 $ 497,958
------------ ------------
</TABLE>
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APOGEE ROBOTICS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
<S> <C> <C> <C> <C>
1995 1994 1995 1994
------------ ------------ ------------ ------------
CONTRACT REVENUES AND SALES $ -- $ 33,064 $ -- $ 457,233
COSTS OF REVENUES AND SALES -- 1,189,232 -- 1,622,174
------------ ------------ ------------ ------------
GROSS INCOME (LOSS) -- (1,156,168) -- (1,164,941)
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, G & A 90,895 804,069 156,956 1,038,272
Loss on AGVI -- 636,083 -- 636,083
------------ ------------ ------------ ------------
Total Operating Expenses 90,895 1,440,152 156,956 1,674,355
------------ ------------ ------------
LOSS FROM OPERATIONS (90,895) (2,596,320) (156,956) (2,839,296)
OTHER INCOME (EXPENSES), net (163) (45,591) (3,022) (66,750)
------------ ------------ ------------ ------------
LOSS BEFORE REORGANIZATION ITEMS (91,058) (2,641,911) (159,978) (2,906,046)
------------ ------------ ------------ ------------
REORGANIZATION ITEMS:
Provision for rejected executory contracts -- (1,066,994) -- (1,066,994)
Professional fees -- (10,148) -- (10,148)
------------ ------------ ------------ ------------
Net loss $ (91,058) $ (3,719,053) $ (159,978) $ (3,983,188)
------------ ------------ ============ ------------
LOSS PER COMMON SHARE $ (.01) $ (.20) $ (.01) $ (.22)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE SHARES OUTSTANDING 18,195,022 18,195,022 18,195,022 17,907,870
------------ ------------ ------------ ------------
</TABLE>
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APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
DECEMBER 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 159,978) $(3,983,188)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amoritization -- 83,016
Write-down of property and software to net realizable
value -- 352,220
Provision for inventory losses -- 280,000
Loss on investment in AGVI -- 636,083
Loss on sale of assets 3,312 --
Changes in operating assets and liabilities
Deposits and other 5,176 --
Prepetition tax liability 64,052 --
Liabilities subject to compromise -- 2,239,365
Contract receivables -- 7,317
Inventories -- (11,262)
Cost and estimated earnings in excess of billings on
uncompleted contracts -- 176,650
Accounts payable and accrued liabilities 44,920 (362,967)
Billings in excess of costs and estimated earnings on
uncompleted contracts -- (219,231)
Other (7) 2,703
----------- -----------
Net cash used in operating activities (42,524) (799,294)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments 71,250
Proceeds from settlement with SI Handling Systems, Inc. 150,000 --
Proceeds from sale of purchased AGVS software 36,687
Other -- (42,553)
-----------
Net cash provided by investing activities 186,687 28,697
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash advance from an affiliate of a former director -- 115,000
Repayments under short-term debt agreements -- (12,426)
Proceeds from issuance of common stock and preferred stock -- 663,921
Net cash provided by financing activities -- 766,495
-----------
INCREASE (DECREASE) IN CASH 144,163 (4,012)
CASH, at beginning of year 118,364 49,675
----------- -----------
CASH, at end of year $ 262,527 $ 45,573
----------- -----------
</TABLE>
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APOGEE ROBOTICS, INC.
Notes to Financial Statements
1. In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (all of which were normal recurring accruals) necessary
to present fairly the Company's financial position as of September 30, 1995 and
June 30, 1995 and the results of its operations and the statements of cash flows
for the three month periods ended September 30, 1994 and 1995.
The accounting policies followed by the Company are set forth in the 1995 Apogee
Robotics, Inc. 10-K Annual Report.
2. Inventories at December 31, 1995 and June 30, 1995 consisted of robot
components, assembly parts and AGVS vehicles.
3. Earnings (loss) per common share is based on the weighted average number of
common shares outstanding during the period. Outstanding convertible preferred
stock, common stock warrants and options have not been included in the
computation of net (loss) per common share when the effect would have been
antidilutive.
4. Contingencies.
Conagher & Co., Inc. ("Conagher") revoked its obligations under the
amended subscription agreement on November 21, 1994. This revocation caused the
collapse of the SI acquisition resulting in the suspension of operations
November 28, 1994 and the declaration of bankruptcy on December 9, 1994.
Conagher initiated legal action against the Company and certain of its officers
and directors on December 2, 1994 alleging financial misrepresentation (See Part
II, Item 1 - Legal Proceedings and Item 5 - Other Information discussed below).
5. Proceedings Under Chapter 11.
On December 9, 1994 (petition date), the Company and it's wholly owned
subsidiary, AGV, filed a voluntary petition for reorganization under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court. The Company
continues business operations as a debtor-in-possession, subject to the approval
of the Court for certain of its proposed actions.
As of the petition date, actions to collect pre-petition indebtedness
were stayed and other contractual obligations may not be enforced against the
Company. In addition, the Company may reject executory contracts and lease
obligations during pendency of the Chapter 11 proceedings, and parties affected
by these rejections may file claims with the Bankruptcy Court in accordance with
the reorganization process. Substantially all unsecured liabilities of the
Company as of the petition date are subject to compromise under a plan of
reorganization which has not yet been completed; when completed, the plan of
reorganization must be voted upon by all impaired classes of creditors and
equity security holders and approved by the Bankruptcy Court.
6. Liabilities Subject to Compromise.
The Company is in the process of disputing certain claims filed,
including all claims filed by former cimpoyees and trade creditors of AGV.
Management of the Company believes that such liabilities represent a liability
of SI. The Company is unable to predict whether or not it will be successful in
disupting claims filed.
No provision has been made for the effect of preference or other
actions as they cannot be determined at this time.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
On November 28, 1994, Apogee suspended operations and filed a petition
under Chapter 11 of the Federal Bankruptcy Rules on December 9, 1994. During the
quarterly and six month period ended December 31, 1995, the Company conducted no
operations.
Liquidity and Capital Resources
Apogee's total assets decreased 10.2% to $446,945 for the period ended
December 31, 1995 from $497,958 for the fiscal year ended June 30, 1995. This
decrease was the result of the sale of AGVS software to FMC Corporation and the
settlement with SI Handling Systems, Inc. in the adversary proceeding initiated
by the Company in the Bankruptcy Court.
Historically, the Company's operations have not generated cash. Apogee
has derived working capital through public and private sales of its Common Stock
and from short-term borrowings. Since 1983, the Company has received
approximately $10.5 million from the sale of its Common Stock.
During the period ended December 31, 1994, Conagher revoked it's
subscription agreements with the Company on November 21, 1994, which caused the
collapse of negotiations with SI Handling Systems, Inc. over defaults in the
agreement to purchase their AGVS assets; the Company suspended operations
effective November 28, 1994; and filed for bankruptcy under Chapter 11 of the
Federal Bankruptcy Codes on December 9, 1994 (See Part II, Item 1 - Legal
Proceedings and Item 5 - Other Information discussions below).
Results of Operations
The Company conducted no operations during the fiscal quarter and six
month period ended December 31, 1995. Operating expenses consisted solely of
consulting fees to the officers and other outsiders for purposes of
administering the bankruptcy estate. These fees provided a loss from operations
of $90,895 and $156,456 for the three and six month periods ended December 31,
1995 from $2,596,320 and $2,839,296 in the comparable prior periods ended
December 31, 1994. Other expenses decreased from $45,591 and $66,750 for the
three and six month periods ended December 31, 1994 to $163 and $3,522 for the
comparable periods ended December 31, 1995. These reductions are attributable
solely to the lack of any operations at the Company.
7
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The following legal proceedings involving the Company are currently
pending:
1) Case No. 94-22193-CEM, Chapter 11 and Case No. 94-22194-MSK, Chapter
11, Jointly administered under Case No. 94-22193-CEM filed in the
United States Bankruptcy Court, District of Colorado December 9, 1994.
Apogee and it's wholly owned subsidiary, AGV sought protection from its
creditors under Chapter 11 of the Federal Bankruptcy Statutes
appertaining thereto. Management believes that the Company is current
in all of its bankruptcy filings.
2) Case No. CV-ED94-270-RT (GAKX) filed in the U. S. District Court,
Central District of California, December 2, 1994 and subsequently
removed to the U.S. District Court, District of Colorado on February
16, 1995. This action was filed by Conagher against Apogee; certain
Company managers and directors; and the Company's outside auditors,
Brock & Co., Inc., alledging various securities violations and
misrepresentations. These proceeding are currently under an automatic
stay provided under bankruptcy statutes. As a result of a Proof of
Claim filed by Conagher, these claims, in addition to counterclaims,
will be defended in the bankruptcy court under Claims Objection
proceedings. Company management believes that it will be successful in
the defense of these claims and the assertion of counterclaims against
Conagher in the bankruptcy court, which, management believes, should
result in the dismissal of the district court action.
3) Case No. 95-1653 PAC filed by Apogee on October 20, 1995 in the
United States Bankruptcy Court, District of Colorado. Apogee seeks
turnover of 60,000 shares of stock in Loronix Information Systems, Inc.
("Loronix"), from creditor Foss Realty Corporation, which claims a
perfected security interest in the stock to secure a note payable from
the Company, and from Robert Oliphant, who holds the stock certificate.
Oliphant has disclaimed any interest in the 60,000 Loronix shares and
has entered an interpleading approved by the Bankruptcy Court on
February 6, 1996. The stock is valued at approximately $172,500. No
trial date has yet been set.
Item 5. Other Information.
1) Relationship with Conagher
On May 12, 1994, Apogee entered into a Stock Subscription Agreement
(hereinafter the "Subscription Agreement") with Conagher & Co., Inc.
("Conagher"), wherein Apogee exchanged 6,000,000 shares of its Common Stock for
6,000,000 shares of Conagher's Preferred Stock. The Subscription Agreement
provided that between June 15, 1994 and September 15, 1994, Conagher would
redeem all or a portion of its Preferred Shares for $2,000,000. At the end of
that period, shares of Conagher Preferred Stock that remained unredeemed could
be exchanged by Apogee for an equal number
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of shares of Apogee's Common Stock held by Conagher. Subsequent to 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, officers of Apogee and Conagher executed an
Amended and Restated Stock Acquisition Agreement (hereinafter the "Revised
Agreement"), amending the May 12, 1994 Subscription Agreement and terminating
the June 5, 1994 agreement. This Revised Agreement reduced the total payments to
Apogee from $3,000,000 to $1,200,000. It also provided for the purchase of an
additional 1,750,000 shares of Apogee's Common Stock for $310,000 prior to
October 1, 1994. The Revised Agreement was purportedly ratified by Apogee's
Board of Directors consisting of Hayton, principal officer, director, and
shareholder of Conagher, and Apogee's Chairman; Sven Kraumanis and William G.
Conway, both nominees of Conagher; and Robert Oliphant. The Company contends
that the Revised Agreement never closed.
Subsequent to the foregoing events, Apogee's management determined that
the ratification of the Revised Agreement by Apogee's then current Board of
Directors on September 23, 1994 was improper. Further investigation by Apogee
management revealed other irregularities relating to Conagher's actions on
behalf of Apogee, in addition to their ongoing obligations to Apogee under the
various agreements. Negotiations with Conagher to cure these irregularities were
complicated as a result of Hayton's chairmanship of the Company and his
effective control of the Company's Board of Directors, as well as overseas
travel by Mr. Hayton. Furthermore, an article in the October 13, 1994 edition of
The Wall Street Journal revealed serious allegations regarding Hayton's
character, integrity, and business practices that effectively terminated
Apogee's access to public financial markets and damaged Apogee's reputation such
that it could not execute it's published business plan.
On or about November 1, 1994, Hayton reached an agreement with a
Canadian company, 480452 B.C. Ltd. ("480452"), to acquire substantially all of
Conagher's obligations to Apogee. These negotiations were conducted without any
participation from Apogee management, but required Apogee's consent to close the
transaction. At the same time, Company management was advised by NASDAQ that
Apogee would be delisted immediately as a result of its affiliation with
Conagher and Hayton, which delisting notification, Conagher and Hayton failed to
disclose to the principal of 480452. Company management's subsequent disclosure
of the delisting notice to the principal of 480452 resulted in the termination
of the agreement between Conagher and 480452.
Subsequent negotiations with Conagher contained various unfulfilled
commitments for funding the Company, which were ultimately terminated by the
abrupt resignation of Hayton and his designees from Apogee's Board of Directors
on November 21, 1994. In a press release by Conagher dated on the same day,
Hayton accused Apogee and certain of its managers and directors of fradulent
misrepresentation.
On December 2, 1994, Conagher filed an action against Apogee and
certain of its managers and
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directors in the United States District Court for the Central District of
California, Case #CV-ED94-270 RT (GAKX), alledging various securities violations
and financial misrepresentations. This case was removed February 16, 1995 to the
U.S. District Court for the District of Colorado. By operation of the bankruptcy
rules any prosecution of this action against the Company remains under an
automatic stay. (See Part II, Item 1. Legal Proceedings above for a discussion
of these matters.)
Additionally, on December 2, 1994, Conagher filed a complaint against
James R. Currier, Sr., Apogee's newly appointed President and CEO, in the
Superior Court for the State of California for the County of Riverside, Palm
Stprings Branch (Case #079188), alledging misrepresentation of certain financial
conditions of Apogee. This action was dismissed May 1, 1995 due to the lack of
personal jurisdiction. On May 1,1995, Currier filed an action against Conagher
and Hayton in the U.S. District Court for the Western District of North Carolina
(Case #3:95CV207H) seeking a declaratory judgement relative to Conagher's
California claims and asserting claims of fraud and misrepresentation against
Conagher and Hayton. The Company is not a party to this action.
On December 4, 1994, prior to the declaration of bankruptcy by the
Company on December 9, 1994, Robert Oliphant and James W. Jones were reelected
directors of Apogee. Oliphant subsequently resigned December 30, 1994 to pursue
other employment interests. Jones and Currier remain the Company's sole
directors.
As a result of the declaration of bankruptcy and the failure of the
subscription agreements between Apogee and Conagher, settlement agreements
described in Apogee's Annual Report on Form 10K for the period ended June 30,
1994 under the section "Company Restructuring," with certain persons to whom
Apogee owed approximately $500,000 were not ratified by Apogee's Board of
Directors, and remain obligations of the bankruptcy estate, with the exception
of shares in Princeton Electronic Products that collateralized a loan to the
Company, were subsequently transferred to the security holder by bankruptcy
court order dated August 15, 1995.
2) Bankruptcy Filing
On December 9, 1994, Apogee and it's wholly owned subsidiary, AGV filed
for protection from its creditors under Chapter 11 of the Federal Bankruptcy
codes in the Federal Bankruptcy Court in Denver, CO. This filing was the
consequence of transactions involving Apogee and Congher, including certain
stock subscription agreements which, in the view of management, Conagher and
Hayton 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-
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22193-CEM and 94-22194 MSK respectively);
2) Sale of 40,000 shares of common stock in Loronix Information
Systems, Inc. on or about June 12, 1995 for $128,000;
3) Sale of certain technology and products to FMC Corporation, Inc.
("FMC") for $40,000.00 pursuant to the terms and conditions of and
Asset Purchase Agreement between the Company and FMC dated July
12, 1995 and approved by the court September 13, 1995;
4) Commencement and settlement of the adversary complaint against SI
pursuant to a Settlement Agreement dated September 12, 1995
wherein general releases are granted between Apogee and SI, and SI
pays to Apogee $150,000;
5) Sale of various inventory items for sums not in excess of $20,000;
and
6) Establishment of October 31, 1995 Bar Date.
Company management, in cooperation with Company bankruptcy counsel are
vigorously pursuing the following items:
1) Filing of a Reorgainzation Plan on or about March 1, 1996 under
which outstanding claims relating to employees, creditors, and
equity holders will be settled. Company management believes
settlement of all debt will be accomplished under the plan.
Management intends to pursue merger opportunities with other
companies involved in the factory automation industry, and
believes that Apogee's technology, substantial NOL carryforwards,
and its public status, will make it an attractive merger candidate
with successful and profitable privately owned operations.
Management is currently investigating several such opportunities.
No assurance can be given that such a merger can be negotiated on
terms acceptable to Apogee's shareholders or the bankruptcy court.
Nor can any assurances be given that management's intention to
exit the bankruptcy estate as a non-operating entity for purposes
of arranging a merger will be ratified by Company creditors,
equity holders, or the bankruptcy court.
2) Apogee management has appointed special counsel for purposes of
litigating claims that the Company plans to assert against various
entities and individuals, in addition to defense of claims
asserted by Conagher. Management believes there is a significant
probability of successful defense against the Conagher complaint
as well as a number of affirmative claims and mandatory
counterclaims which management expects to assert against Conagher
and Hayton in the near future. (See Part II, Item 1. Legal
Proceedings above for a discussion of these matters.)
4) Employees
On November 28, 1994 as a result of Conagher's revocation of its
subscription agreements with
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Apogee, all employess of the Company were discharged. Currently, the Company
contracts services from it's officers, and other outside contractors from time
to time as the circumstances dictate.
Item 6. Exhibits and Reports on Form 8-K.
The Company filed a Form 8-K on October 18, 1995 announcing the
disposition of assets, declaration of bankruptcy, changes in certifying
accountant, and other events including the Company's delay in promptly filing
its 1934 Act filings and litigation by Conagher.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned therunto duly authorized.
APOGEE ROBOTICS, INC.
Date: /s/ James R. Currier, Sr.
James R. Currier, Sr.
Chairman, President, C.E.O., & C.F.O.
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