SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1996
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
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Commission File No. O-12792
APOGEE ROBOTICS, INC.
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(Name of small business Issuer)
COLORADO 84-0916585
-------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1301 Meadowood Lane
Charlotte, North Carolina 28211
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(Address of Principal Executive Offices) Zip Code
(704) 363-6816
Issuer's telephone number
Securities registered under Section 12 (b) of the Exchange Act: NONE
Securities registered under to Section 12 (g) of the Exchange Act:
Common Stock, No Par Value
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the post 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. YES [X] NO [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were $335.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]
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 October 10,
1996 was 18,195,022.
Documents Incorporated by Reference into this Report: None
Transitional Small Business Disclosure Format (check one) Yes No X
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Apogee Robotics, Inc. ("Apogee" or the "Company") was founded in 1983 for the
purpose of developing advanced material 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. ("AGV") , filed for protection from their creditors under Chapter 11 of the
Federal Bankruptcy Codes in Denver, CO and it 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 "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
vehicles (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 "Acquisition of SI Handling AGVS Division"
for a discussion of this matter). This acquisition was intended to 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 developments
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 its Orbitor line of products, the Company entered
into an Asset Purchase Agreement with FMC Corporation ("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 transaction 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 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, 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 Importations
by Exportations, SA ("IMEXSA"), a Nicaraguan company, that subsequently
distributed the Apogee Common Stock, purportedly pursuant to Regulation S. On
June 5, 1994, Conagher agreed to purchase an additional 3,000,000 shares of
Apogee's Common Stock for $1,000,000.
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<PAGE>
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, bother 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
its 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 the
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, 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 (GAKK), 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 remained under automatic stay until
subsequently withdrawn by Hayton. (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. This action resulted in a default judgement in favor of Currier on
September 26, 1996. (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 year 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 and were
subsequently transferred to the security holder by bankruptcy court order dated
August 15, 1995.
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<PAGE>
Acquisition of SI Handling AGVS Division
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 Federal Bankruptcy Court
on January 10, 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
On December 9, 1994, Apogee and AGV filed for protection from their 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
management's 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
its 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.
Company management, in cooperation with Company bankruptcy counsel are
vigorously pursuing the following items:
1) Filing of a Reorganization Plan on or about December 31, 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,
although there can be no assurance that management's Plan of
Reorganization will be confirmed by the bankruptcy court. Management
intends to pursue merger opportunities with other companies involved in
the factory automation industry, and believes that Apogee's 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
Omnibus Claims Objection, and expects to file these documents
concurrent with the Reorganization Plan.
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.
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. Certain of the Company's electro-mechanical
technology was transferred to FMC as part of an Asset Purchase Agreement with
FMC (see "Automated Guided Vehicles Systems").
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<PAGE>
As a consequence of the bankruptcy filing, Apogee has not incurred any expenses
for research and development. 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.
ITEM 2. DESCRIPTION OF PROPERTY
Facilities
Apogee has no plant or office space. The Company's principal executive offices
are located at the office of the Company's President, located at 1301 Meadowood
Lane, Charlotte, North Carolina 28211.
ITEM 3. LEGAL PROCEEDINGS
The following legal proceeding involving the Company have been successfully
resolved:
1) Case No. CV-ED94-270-RT (GAKX) filed in the US. 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 proceedings were under automatic stay
provided under bankruptcy statutes. As a result of a Proof of claim
filed by Conagher, these claims, in addition to counterclaims, were
defended in the bankruptcy court under Claims Objection proceedings.
On March 4, 1996 Apogee submitted a Motion to Amend Objection and
Assert Counterclaims against Conagher. This motion was granted by
action of the Bankruptcy Court on April 8, 1996. Furthermore, as a
result of a Release and Settlement Agreement ("Settlement Agreement")
entered into between Conagher; Apogee's Directors and Officers
Liability Insurance carrier; Hayton; and James W. Jones, Robert
Oliphant, and Dennis C. Foss; Conagher withdrew this action. Conagher's
motion to withdraw its Proof of Claim was also granted, subject to
certain conditions. (Please see the Company's Form 8-K filing of
February 27, 1996 for a discussion of this matter).
On September 10, 1996 the Bankruptcy Court entered a default against
Conagher for failure to conduct discovery and produce documents, and on
September 30, 1996 entered judgment on the default in the aggregate sum
of $2,590,336 in favor of the Company and against Conagher.
Apogee will seek to enforce this judgment in jurisdictions the Company
believes Conagher domiciles or is conducting business in. Company
Management is not optimistic any collection will be made on the
judgement.
2) 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 see 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.
On September 26, 1996 a default judgement was entered against Hayton &
Conagher jointly and severally for $773,025 in damages and $2,727 in
attorneys' fees in favor of Currier. Currier has commenced collection
proceedings.
The following legal proceedings involving the Company are still 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. 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, ("Foss") 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. Oliphant was subsequently
dismissed from the case.
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<PAGE>
On July 29, 1996 the Bankruptcy Court granted a motion by the Company
wherein the security interest of Foss in the Loronix stock was voided.
The Company subsequently filed a motion to sell the Loronix stock,
which is still pending.
Foss retained former Company counsel Hart & Trinen LLP and filed a
motion to set aside the July 29, 1996 ruling. Company management
believes this motion will be denied, in that no new evidence was
offered and the motion was not filed in a timely manner.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCK HOLDER MATTERS
The Company's Common Stock was traded in the over-the-counter market
and was quoted on the NASDAQ Small Cap Market until delisting on
February 7, 1995. Currently there is no trading or quotes. The
following table sets forth the high and low bid prices for the
Company's Common Stock for the periods indicated as reported by NASDAQ.
Prices set forth below do not reflect retail markups, markdowns or
commissions and may not necessarily represent actual transactions.
High Low
==== ====
Fiscal 1995
===========
First Quarter $0.34 $0.16
Second Quarter $0.22 $0.03
Third Quarter NO TRADES OR QUOTES
Fourth Quarter NO TRADES OR QUOTES
Fiscal 1996
===========
First Quarter NO TRADES OR QUOTES
Second Quarter NO TRADES OR QUOTES
Third Quarter NO TRADES OR QUOTES
Fourth Quarter NO TRADES OR QUOTES
As of October 10, 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 person 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
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 too 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 Federal Bankruptcy Rules on December 9, 1994.
The financial statements from the fiscal year ended June 30, 1995 reflect both
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<PAGE>
the short period of operations, as well as activities undertaken as a
debtor-in-possession. The financial statements for the period ended June 30,
1996 reflect no operations.
Liquidity and Capital Resources
Apogee's total assets decreased from $497,958 on June 30, 1995 to $288,338 on
June 30, 1996 as a result of the write-offs of the Company's investment in AGV
and purchased software.
As a result of the bankruptcy filing, 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.
Current liabilities as of June 30, 1996 consist of amounts owed primarily to the
Company's bankruptcy and litigation counsel. Additionally, the Company has
accrued amounts believed owed to certain taxing authorities.
Historically, Company operations did not generate cash. Working capital was
generated through public and private sales of the Company's Commons Stock and
from short-term, fully collateralized borrowing. 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 1996
The net loss of $289,805 for the fiscal year ended June 30, 1996 resulted from
expenses associated with the maintenance of the bankruptcy estate.
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.
ITEM 7. FINANCIAL STATEMENTS
See the financial statements attached to this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth the names, ages and positions of the Company's
directors and executive officers:
Name Age Position
- ---- --- --------
James R. Currier, Sr. 50 Chairman of the Board of Directors,
President, Chief Executive Officer,
Chief Financial Officer, and Director
James W. Jones 50 Vice-President, Secretary, and Director
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<PAGE>
There are no family relationships between 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
and a director 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 N.C. Automation, Inc.
James W. Jones has been Apogee's Vice President since September 1994 and a
director since December 1994. From June 1983 through September 1994, Jones was
Apogee's President and Chief Executive Officer. From 1968 through 1983, Jones
was employed as a research and development engineer at Hewlett-Packard Company.
ITEM 10. 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.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name/Principal Other Annual All Other
Position Fiscal Year Salary Compensation Compensation
- -------------- ----------- ------ ------------ ------------
(1) (2) (3)
<S> <C> <C> <C> <C>
James R. Currier, Sr............. 1996 $48,450 -- $48,450
President/CEO 1995 $43,750 $20,000 $43,025
</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) Compensation received for consulting services in the
post-petition bankruptcy estate.
Compensation of Directors
During the fiscal year nded June 30, 1996 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 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, which amount
is credited against the Company's salary obligation to Currier.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 10, 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.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of Class
- ---------------- ---------------- -------------------
<S> <C> <C>
Princeton Electronic Products, Inc. .......... 1,000,000 5.50%
Address Unknown
James R. Currier, Sr ......................... 30,000 .17%
1301 Meadowood Lane
Charlotte, NC 28211
James W. Jones ............................... 158,000 .87%
1428 Glenda Court
Loveland, CO 80537
All Officers and ............................. 188,000 1.04%
Directors as a Group (2 persons)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
---------
<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
Registration 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.
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
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 90 (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
Stock Acquisition 8-K dated September 23, 1994.
Agreement
- 9 -
<PAGE>
<CAPTION>
<S> <C> <C> <C>
(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 as Exhibit 10 (j) to the Company's report on Form
Between FMC Corporation 10-K dated January 29, 1996.
and Apogee
(k) Settlement Agreement Filed as Exhibit 10 (k) to the Company's report on Form
between SI and Apogee 10-K dated January 29, 1996.
21 Subsidiaries of the Registrant Filed with this report
27 Financial Data Schedule Filed with this report
(b) Reports on Form 8-K None.
</TABLE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
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 (Principal Executive, Financial and
Accounting Officer)
Date: October 10, 1996
In accordance with the Exchange Act, 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 October 10, 1996
----------------------
James R. Currier, Sr.
/s/ James W. Jones Director October 10, 1996
---------------
James W. Jones
- 10 -
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report...................................................2
Balance Sheet - June 30, 1996..................................................3
Statements of Operations - For the Years Ended June 30, 1996 and 1995..........4
Statement of Stockholders' Deficit - For the Period from July 1, 1994
through June 30, 1996.......................................................5
Statements of Cash Flows - For the Years Ended June 30, 1996 and 1995..........6
Notes to Financial Statements..................................................7
-1-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Apogee Robotics, Inc.
Charlotte, North Carolina
We have audited the accompanying balance sheet of Apogee Robotics, Inc. as of
June 30, 1996, and the related statements of operations, stockholders' deficit,
and cash flows for the years ended June 30, 1996 and 1995. 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, 1996, and the results of its operations and its cash flows for the
years ended June 30, 1996 and 1995, 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
October 10, 1996
-2-
<PAGE>
<TABLE>
<CAPTION>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
BALANCE SHEET
JUNE 30, 1996
ASSETS
<S> <C>
CURRENT ASSETS:
Cash ........................................................ $ 103,920
Inventories ................................................. 10,491
Nonmarketable securities, at estimated fair value,
aggregate cost of $438,480 ................................ 168,255
-----------
Total current assets ............................... 282,666
-----------
DEPOSITS AND OTHER ASSETS ....................................... 5,672
-----------
TOTAL ASSETS .................................................... $ 288,338
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES NOT SUBJECT TO COMPROMISE:
Accounts payable ............................................ $ 63,994
Other accrued liabilities ................................... 64,052
-----------
Total current liabilities .......................... 128,046
-----------
LIABILITIES SUBJECT TO COMPROMISE ............................... 3,497,132
-----------
COMMITMENTS AND CONTINGENCIES (NOTES 8 AND 11)
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value; 100,000 shares authorized .. --
Common stock, no par value; 50,000,000 shares authorized;
18,195,022 shares issued and outstanding ............... 10,683,590
Other capital ............................................... 33,349
Accumulated deficit ......................................... (14,053,779)
-----------
Total stockholders' deficit ........................ (3,336,840)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT .................... $ 288,338
===========
</TABLE>
The accompanying notes are an integral part to these financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
JUNE 30,
---------------------------
1996 1995
----------- ------------
<S> <C> <C>
CONTRACT REVENUES AND SALES .................... $ -- $ 457,233
COST OF REVENUES AND SALES ..................... -- 1,622,174
----------- ------------
GROSS LOSS ..................................... -- (1,164,941)
----------- ------------
OPERATING EXPENSES:
Selling, general and administrative expenses 44,445 1,104,627
Loss on investment in AGVI ................. -- 636,083
----------- ------------
Total operating expenses .............. 44,445 1,740,710
----------- ------------
LOSS FROM OPERATIONS ........................... (44,445) (2,905,651)
----------- ------------
OTHER INCOME (EXPENSE):
Investment losses .......................... -- (3,750)
Interest expense ........................... -- (72,846)
Other, net ................................. 258 11,815
----------- ------------
Net other income (expense) ............ 258 (64,781)
----------- ------------
LOSS BEFORE REORGANIZATION ITEMS ............... (44,187) (2,970,432)
REORGANIZATION ITEMS:
Interest income ............................ 77 1,482
Provision for rejected executory contracts . -- (1,066,994)
Professional fees .......................... (245,695) (64,420)
----------- ------------
NET LOSS ....................................... $ (289,805) $ (4,100,364)
=========== ============
LOSS PER COMMON SHARE .......................... $ (.02) $ (.23)
=========== ============
WEIGHTED AVERAGE SHARES OUTSTANDING ............ 18,195,022 18,051,446
=========== ============
</TABLE>
The accompanying notes are an integral part to these financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JULY 1, 1994 THROUGH JUNE 30, 1996
PREFERRED STOCK COMMON STOCK
--------------------- ------------------------ Other Accumulated
Shares Amount Shares Amount Capital Deficit
--------- -------- ---------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, July 1, 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)
Net loss for the year ended June 30, 1996 .... -- -- -- -- -- (289,805)
---------- ------- ---------- ---------- ------------ -----------
BALANCES, June 30, 1996 ........................ -- $ -- 18,195,022 $ 10,683,590 $ 33,349 $(14,053,779)
========== ======= ========== ========== ============ ===========
</TABLE>
The accompanying notes are an integral part to these financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
JUNE 30,
--------------------------
1996 1995
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................................................... $ (289,805) $(4,100,364)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ............................. -- 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
Investment losses ......................................... -- 3,750
Increase (decrease) from changes in assets and liabilities:
Liabilities subject to compromise ......................... -- 2,239,365
Contract receivables ...................................... -- 7,317
Inventories ............................................... -- 9,247
Cost and estimated earnings in excess of billings on
uncompleted contracts ................................. -- 176,650
Accounts payable and accrued liabilities not subject
to compromise ......................................... 80,185 (325,254)
Billings in excess of costs and estimated earnings on
uncompleted contracts ................................. -- (219,231)
Other ..................................................... 5,176 2,703
--------- ---------
Net cash used in operating activities ......................... (204,444) (854,498)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from AGVI Settlement ..................................... 150,000 --
Proceeds from sale of other assets ................................ 40,000 --
Proceeds from investments ......................................... -- 199,245
Other ............................................................. -- (42,553)
--------- ---------
Net cash provided by investing activities ..................... 190,000 156,692
--------- ---------
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 common stock
warrants ........................................................ -- 663,921
--------- ---------
Net cash provided by financing activities ..................... -- 766,495
--------- ---------
DECREASE IN CASH ...................................................... (14,444) 68,689
CASH, at beginning of year ............................................ 118,364 49,675
--------- ---------
CASH, at end of year .................................................. $ 103,920 $ 118,364
========= =========
</TABLE>
The accompanying notes are an integral part to these financial statements.
-6-
<PAGE>
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
its 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 6 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 6).
Reorganization items, primarily professional fees and interest income, are
reported separately in the statements of operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations - 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.
Use of Estimates - The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions that
affect the amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
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.
-7-
<PAGE>
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 consists of robotics components and assembly
supplies. Inventories are stated at lower of first-in, first-out (FIFO)
cost or market.
Investments - 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, 1996 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 were charged to expense
in 1995. 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.
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.
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.
-8-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
Cash and Cash Equivalents - For purposes of the statements of cash flows,
the Company considers all highly liquid investments purchased with an
original 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 standards 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 remitted to the Company in
accordance with the Compromise Agreement.
The Company has not consolidated the assets of AGVI during the period they
were owned since control was temporary; claims filed by AGVI's creditors
and employees have been included in liabilities subject to compromise as
disputed claims.
4. NONMARKETABLE SECURITIES:
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.
-9-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
5. NOTES PAYABLE:
Following is a summary of notes payable as of June 30, 1996:
Notes Payable
-------------
Notes payable with combined face amount of $300,000. A
$200,000 note was collateralized by securities held by the
Company. During fiscal 1995, the note holder enforced his
security interest and obtained ownership of the
securities. However, the note holder has filed a claim in
bankruptcy for both notes. The $100,000 note is included
in liabilities subject to compromise. $ 100,000
========
Notes Payable - Related Parties
-------------------------------
An unsecured note payable to a former director of the
Company. Note is included in liabilities subject to
compromise. $ 100,000
A note payable to a former director of the Company with a
face amount of $200,000. 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. $ 200,000
--------
Total notes payable - related parties $ 300,000
========
6. LIABILITIES SUBJECT TO COMPROMISE:
Liabilities recorded by the Debtor that will be subject to compromise under
a plan of reorganization as of June 30, 1996 consist of the following:
Undisputed priority claims filed by former employees ....... $ 37,753
Undisputed claims filed by former employees ................ 227,156
Undisputed claims filed by trade creditors and 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
----------
-10-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
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
==========
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.
7. STOCKHOLDERS' EQUITY:
During August 1994, all shares of preferred stock outstanding were
converted to 1,712,912 shares of the Company's common stock.
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.
-11-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
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.
A summary of common stock purchase warrants outstanding at June 30, 1996 is
as follows:
Number of Exercise Expiration
Issued For Shares Price Date
-------------------------------- ---------- -------- -------------
Common stock ................... 506,456 $ 2.00 October 1996
Services ....................... 150,000 $ 1.00 January 1998
Services ....................... 150,000 $ 0.60 December 1996
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 purchase warrants .... 1,012,706
==========
----------------------
* Warrants expired unexercised subsequent to June 30, 1996.
8. 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.
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.
-12-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
A summary of incentive stock option activity is as follows:
Number of Option Exercisable
Shares Price Option Shares
---------- ---------- -------------
Outstanding, July 1, 1994 1,624,403 $.50-$2.00 764,403
Cancelled ............ (1,624,403) $.50-$2.00 --
---------- ----------
Outstanding, June 30, 1995 -- -- --
Cancelled ............ -- -- --
---------- ---------- ----------
Outstanding, June 30, 1996 -- -- --
========== ========== ==========
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.
9. INCOME TAXES:
The Company has net operating loss carryforwards of approximately $9
million available to offset future taxable income, if any; the net
operating losses expire in varying amounts beginning in 1998 through 2011.
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:
1996
----------
Net operating loss carryforwards ............ $ 3,315,000
Disputed claims ............................. 658,000
Other, net .................................. 156,000
----------
4,129,000
Less valuation allowance .................... (4,129,000)
----------
Net deferred tax asset ...................... $ --
==========
-13-
<PAGE>
APOGEE ROBOTICS, INC.
(Debtor-in-Possession)
NOTES TO FINANCIAL STATEMENTS
10. CASH FLOW INFORMATION:
The supplemental disclosures for the statements of cash flows are as
follows:
June 30,
--------------------
1996 1995
-------- --------
Cash paid during the year for interest ............ $ -- $ 23,128
Noncash investing and financing activities:
Common stock and preferred shares issued
for common and preferred shares of
investees ................................ $ -- $ --
Common stock and compensatory stock
options and warrants issued for services
and premiums on short-term debt .......... $ -- $ 50,000
Exchange of preferred shares for common
shares ................................... $ -- $830,894
Advance from affiliate of Conagher paid for
acquisition of AGVI ...................... $ -- $250,000
Surrender of investments in payment of debt ... $ -- $400,000
11. CONTINGENCIES:
The Company is a defendant in certain legal actions with creditors,
investors and former investors. All pre-petition claims will be subject to
settlement in accordance with a plan of reorganization.
-14-
List of Subsidiaries
Name Jurisdiction of Incorporation
---- -----------------------------
AGV Acquisitions, Inc. Delaware
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 103,920
<SECURITIES> 168,255
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 10,491
<CURRENT-ASSETS> 282,666
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 288,338
<CURRENT-LIABILITIES> 128,046
<BONDS> 0
0
0
<COMMON> 10,683,590
<OTHER-SE> 33,349
<TOTAL-LIABILITY-AND-EQUITY> 288,338
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 44,445
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (289,805)
<INCOME-TAX> 0
<INCOME-CONTINUING> (289,805)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (289,805)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
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