UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2010
For the transition period from __________ to __________
APOLLO CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
| FLORIDA | | 001-34296 | | 22-3962092 |
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
20900 N.E. 30thAvenue, 8th Floor
Aventura, FL 33180
(Address of principal executive offices) (Zip Code)
(786) 871-4858
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if change since last report)
Check whether the registrant has (1) filed all reports required to be filed by Section 13 of 15(d) of the Exchange Act during the past 12 months (or for such shorter period the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 16,644,659 as of May 24, 2010.
TABLE OF CONTENTS
| | | | Page Number |
| | | | |
| PART I. | FINANCIAL INFORMATION | | |
| | | | |
| Item 1. | Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009 (unaudited) | | 3 |
| | | | |
| | Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) | | 4 |
| | | | |
| | Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the year ended December 31, 2009 and the three months ended March 31, 2010 (unaudited) | | 5 |
| | | | |
| | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) | | 6 |
| | | | |
| | Notes to Condensed Consolidated Financial Statements (unaudited) | | 7 |
| | | | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 11 |
| | | | |
| Item 3. | Quantitative and Qualitative Discussion About Market Risk | | 13 |
| | | | |
| Item 4. | Controls and Procedures | | 13 |
| | | | |
| PART II. | OTHER INFORMATION | | |
| | | | |
| Item 6. | Exhibits | | 13 |
| | | | |
| Signatures | | | 14 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2010 AND DECEMBER 31, 2009
| | | March 31, 2010 | | | December 31, 2009 | | |
| ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 60,549 | | | $ | 11,948 | | |
| Accounts receivable, net | | | 9,026 | | | | 15,959 | | |
| Inventory | | | 2,025 | | | | 3,561 | | |
| Total current assets | | | 71,600 | | | | 31,468 | | |
| | | | | | | | | | |
| Equipment, net of accumulated depreciation | | | 8,165 | | | | 9,048 | | |
| | | | | | | | | | |
| Due from related parties | | | 1,750 | | | | 1,750 | | |
| | | | | | | | | | |
| Total assets | | $ | 81,515 | | | $ | 42,266 | | |
| | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | | |
| | | | | | | | | | |
| Current liabilities: | | | | | | | | | |
| Accounts payable | | $ | 38,043 | | | $ | 30,179 | | |
| Accrued liabilities | | | 12,271 | | | | 9,835 | | |
| Accrued salaries | | | 149 | | | | 7,149 | | |
| Accrued liabilities - related party | | | 2,100 | | | | - | | |
| Total current liabilities | | | 52,563 | | | | 47,163 | | |
| | | | | | | | | | |
| Convertible notes payable - related party | | | 85,461 | | | | 67,442 | | |
| Loan payable - stockholder | | | 90,000 | | | | - | | |
| | | | | | | | | | |
| Total Liabilities | | | 228,024 | | | | 114,605 | | |
| | | | | | | | | | |
| Stockholders' deficit: | | | | | | | | | |
| Common stock, $0.001 par value per share; 100,000,000 authorized 16,644,659, issued and outstanding | | | 16,645 | | | | 16,645 | | |
| Additional paid in capital | | | 259,446 | | | | 259,446 | | |
| Accumulated deficit | | | (422,600 | ) | | | (348,430 | ) | |
| | | | | | | | | | |
| Total stockholders' deficit | | | (146,509 | ) | | | (72,339 | ) | |
| | | | | | | | | | |
| Total liabilities and stockholders' deficit | | $ | 81,515 | | | $ | 42,266 | | |
See accompanying notes to the condensed consolidated financial statements.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
| | | 2010 | | | 2009 | |
| | | | | | | |
| Sales | | $ | 14,922 | | | $ | 28,517 | |
| | | | | | | | | |
| Cost of sales | | | 14,175 | | | | 19,556 | |
| | | | | | | | | |
| Gross profit | | | 747 | | | | 8,961 | |
| | | | | | | | | |
| General and administrative expenses | | | 73,196 | | | | 68,456 | |
| | | | | | | | | |
| Operating loss | | | (72,449 | ) | | | (59,495 | ) |
| | | | | | | | | |
| Other expense: | | | | | | | | |
| Interest expense | | | (1,721 | ) | | | (7 | ) |
| | | | | | | | | |
| Net loss | | $ | (74,170 | ) | | $ | (59,502 | ) |
| | | | | | | | | |
| Basic and diluted loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | |
| Basic and diluted weighted average shares outstanding | | | 16,644,659 | | | | 14,017,034 | |
See accompanying notes to the condensed consolidated financial statements.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2009 AND THE THREE MONTHS ENDED MARCH 31, 2010
| | | Common Stock | | | Paid in | | | Accumulated | | | | |
| | | Shares | | | Amount | | | Capital | | | Deficit | | | Total | |
| | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 as previously stated | | | 13,110,150 | | | $ | 13,110 | | | $ | 64,130 | | | $ | (126,410 | ) | | $ | (49,170 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Restatement adjustment | | | - | | | | - | | | | - | | | | (8,121 | ) | | | (8,121 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 as restated | | | 13,110,150 | | | $ | 13,110 | | | $ | 64,130 | | | $ | (134,531 | ) | | $ | (57,291 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Issuance of common shares from settlement of liabilities | | | 3,534,509 | | | | 3,535 | | | | 67,155 | | | | - | | | | 70,690 | |
| | | | | | | | | | | | | | | | | | | | | |
| Forgiveness of liabilities from stockholders | | | - | | | | - | | | | 113,682 | | | | - | | | | 113,682 | |
| | | | | | | | | | | | | | | | | | | | | |
| Company expenses paid by stockholders | | | - | | | | - | | | | 14,479 | | | | - | | | | 14,479 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | - | | | | - | | | | - | | | | (213,899 | ) | | | (213,899 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2009 | | | 16,644,659 | | | | 16,645 | | | | 259,446 | | | | (348,430 | ) | | | (72,339 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | - | | | | - | | | | - | | | | (74,170 | ) | | | (74,170 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, March 31, 2010 | | | 16,644,659 | | | $ | 16,645 | | | $ | 259,446 | | | $ | (422,600 | ) | | $ | (146,509 | ) |
See accompanying notes to the condensed consolidated financial statements.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
| | | 2010 | | | 2009 | | |
| Cash flows from operating activities: | | | | | | | |
| Net loss | | $ | (74,170 | ) | | $ | (59,502 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | |
| Depreciation and amortization | | | 883 | | | | 983 | | |
| Stock issued for services | | | - | | | | 13,300 | | |
| Decrease in: | | | | | | | | | |
| Accounts receivable, net | | | 6,933 | | | | 5,868 | | |
| Inventory | | | 1,536 | | | | 2,235 | | |
| (Increase) decrease in: | | | | | | | | | |
| Accounts payable | | | 7,864 | | | | 6,273 | | |
| Accrued liabilities | | | 2,436 | | | | (1,158 | ) | |
| Accrued salaries | | | (7,000 | ) | | | (918 | ) | |
| Accrued liabilities - related party | | | 2,100 | | | | 15,929 | | |
| Net cash used in operating activities | | | (59,418 | ) | | | (16,990 | ) | |
| | | | | | | | | | |
| Cash flows from investing activities: | | | - | | | | - | | |
| | | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | | |
| Proceeds from related party advances | | | - | | | | 19,453 | | |
| Proceeds from related party convertible note payable | | | 18,019 | | | | - | | |
| Loan from stockholder | | | 100,000 | | | | - | | |
| Repayment on loan from stockholder | | | (10,000 | ) | | | - | | |
| Net cash provided by financing activities | | | 108,019 | | | | 19,453 | | |
| | | | | | | | | | |
| Net increase in cash and cash equivalents | | | 48,601 | | | | 2,463 | | |
| | | | | | | | | | |
| Cash and cash equivalents, beginning of year | | | 11,948 | | | | 2,884 | | |
| | | | | | | | | | |
| Cash and cash equivalents, end of year | | $ | 60,549 | | | $ | 5,347 | | |
| | | | | | | | | | |
| Supplemental cash flow information: | | | | | | | | | |
| Cash paid for interest | | $ | - | | | $ | - | | |
See accompanying notes to the condensed consolidated financial statements.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Note 1 – Nature of Operations
Apollo Capital Group, Inc. (“The Company” or “Apollo”) f/k/a Apollo Entertainment Group, Inc. was incorporated in the State of Florida on April 12, 2007 under the name Pop Starz Publishing Corp. as a wholly owned subsidiary of Pop Starz Records, Inc. On June 24, 2008, the Company changed its name to Apollo Entertainment Group, Inc. and on the same date, the authorized number of shares was increased from 10,000 to 100,000,000 and the par value of the common stock was changed from $ .01 to $.001.
On September 15, 2008, the Company filed an S-1 registration with the Securities and Exchange Commission registering 4,553,081 shares of Apollo’s Company stock. These registered shares were distributed by Pop Starz Records, Inc. at which time Pop Starz Records, Inc. ceased to be the Company’s parent. The registration statement was declared effective on October 3, 2008. Following a stock sale agreement on October 19, 2009, the Company changed its name to Apollo Capital Group, Inc. on December 10, 2009.
Apollo is a holding corporation. All of its operations were conducted through its subsidiary, Alpha Music Mfg. Corp. which is a Florida corporation, incorporated on June 24, 2008. The Company, through its subsidiary, Alpha Music Mfg. Corp. (“Alpha”), offers the services of audio CD/CD Rom duplication and replication, DVD duplication, and vinyl record pressing throughout the United States.
On October 19, 2009, the Company entered into a Stock Purchase and Sale Agreement between two outside, unrelated parties and the current stockholders of record comprising approximately 96% of the outstanding shares of the Company. Pursuant to the Stock Purchase and sale Agreement, the Company has filed a registration statement on Form S-1 to register the shares of Alpha. Upon effectiveness of the registration statement, the Company has agreed to distribute the Alpha shares to the Company shareholders of record at October 18, 2009.
On October 19, 2009, the sole officer and director of the Company resigned her position and all contracts and agreements between the sellers and the Company were deemed cancelled. In addition, all financial obligations owed to Apollo by Alpha Music Mfg. Corp. were forgiven and cancelled.
The accompanying unaudited interim financial statements as of March 31, 2010 and for the three months ended March 31, 2010 and 2009 have been prepared in accordance with generally accepted accounting principles generally accepted for interim financial statement presentation and in accordance with the with the instructions to Form 10-Q and rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2010 and the results of operations for the three months ended March 31, 2010 and 2009, and cash flows for the three months ended March 31, 2010 and 2009. The results of operations for the three months ended March 31, 2010 and 2009 are not necessarily indicative of the results to be expected for the full year ended December 31, 2010. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s 2009 Annual Report on Form 10-K.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Note 2 – Summary of Significant Accounting Policies
Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and are of an original maturity of three months or less.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to short-term maturities of these instruments.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Alpha Music Mfg. Corp. All significant inter-company balances and transactions have been eliminated upon consolidation.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable.
Cash
At various times during the year, the Company may have deposits with financial institutions in excess of the federally insured limits. However, the Company maintains its cash with high quality financial institutions, which the Company believes limits these risks.
Accounts Receivable
The Company does business and extends credit based on an evaluation of the customer’s financial condition, generally without requiring collateral. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company obtains detailed credit evaluations of customers and establishes credit limits as required. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances.
Accounts Receivable
Accounts receivable are carried at the amount billed to customers, net of the allowance for doubtful accounts. The allowance for doubtful accounts is an estimate for credit losses based on a review of all outstanding amounts on a periodic basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed un-collectible. Recoveries of accounts receivable previously written off are recorded when received.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Note 2 – Summary of Significant Accounting Policies, continued
Inventories
Inventories are valued at the lower of cost or market, with cost determined on the first in, first out (FIFO) method. Inventories consist of supplies and finished goods. The Company performs periodic assessments to determine the existence of expired, damaged or obsolete inventories and records necessary provisions to reduce such inventories to net realizable value.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line and over the estimated useful lives of the assets which range from 5-7 years. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.
Management reviews property and equipment for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. If the carrying amount of an asset may not be recoverable, a write-off is recorded. No impairments were recorded during the period ended March 31, 2009.
Revenue Recognition
Revenues are recognized when the products are shipped.
Shipping and Handling Costs
Shipping and handling costs are included in prices charged to customers and are reflected as part of income in reported revenues.
Advertising
Advertising costs are charged to operations in the year incurred.
Income Tax
The Company accounts for income taxes under the provisions of FASB Accounting Standards Codification (“ASC”) 740, Income Taxes (formerly referenced as FASB Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109). Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws.
Income (Loss) Per Share
Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants. At December 31, 2009, the Company did not have any dilutive shares outstanding.
APOLLO CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
Note 3 – Going Concern
At March 31, 2010, the Company had an accumulated deficit of $422,600. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company currently does not have sufficient working capital for its planned activities, which raises substantial doubt about its ability to continue as a going concern.
Continuation of the company as a going concern is dependent upon obtaining additional working capital. Management of the Company has developed a strategy, which it believes will accomplish this objective, through cash flows from future operations, short-term loans from its stockholders and additional equity investments, which will enable the Company to continue operations for the coming year.
Note 4 – Convertible Notes Payable – Related Party
The former officers and stockholders of the Company have advanced funds to the Company and its subsidiary for its operations. On December 2, 2009, these advances were converted to subsidiary notes payable bearing an annual interest of 8%. The notes are convertible into shares of subsidiary common stock at the rate of $0.01 per share and mature on December 1, 2011. In 2010, additional advances in the amount of $18,019 were converted into subsidiary notes payable with the same terms.
Note 5 – Loan Payable – Stockholder
In February 2010, the Company received a $100,000 loan from a principal stockholder. The Company repaid $10,000 of the loan late in February 2010. Interest on the loan accrues at five percent (5%) per annum, with both principal and accrued interest due and payable in February 2013. Accrued interest on this loan was $375 at March 31, 2010.
Note 6 – Subsequent Events
As of May 24, 2010, the Alpha registration statement on Form S-1 has not been declared effective.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As used throughout this report, unless the context otherwise requires the terms “Apollo,” “we,” “us,” “the Company” and “our Company” refer to Apollo Capital Group, Inc. and Alpha Music Mfg. Corp., its wholly-owned subsidiary, which is in the process of being spun off.
Forward Looking Statements
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects upon the Company. There can be no assurance that future developments affecting the Company will be those anticipated by management. Actual results may differ materially from those included in the forward-looking statements. You should not assume that the information contained in this report is accurate as of any date other than the date of this report. Changes to the information contained in this report may occur after that date and the Company does not undertake any obligation to update the information unless required to do so by law.
General
Over the next twelve (12) months, Apollo intends to become a fully operating company engaged in mining exploration and reforestation.
Apollo was incorporated in the state of Florida on April 12, 2007 under the name “Pop Starz Publishing Corp.” as a wholly-owned subsidiary of Pop Starz Records , Inc. (“PSR”) and on June 24, 2008 changed its name to “Apollo Entertainment Group, Inc.” in connection with its spin-off to shareholders of PSR.
Apollo’s initial business, which was concluded through its wholly-owned subsidiary, Alpha Music Mfg. Corp. (“Alpha”) was the pressing of vinyl records, CD/CD Rom duplication and DVD duplication.
On October 19, 2009, pursuant to a Stock Purchase and Sale Agreement dated October 1, 2009, Mr. Manfred H. Wutzer acquired 15,950,237 shares (or approximately 95.8%) of the Company’s outstanding common stock from Mrs. Michelle Tucker, the Company’s then President, Chief Executive Officer, sole director and principal shareholder (the “Change in Control Transaction”). Upon consummation of the Change in Control Transaction,
Ms. Tucker resigned from her positions with the Company and the following persons were appointed to the offices set forth beside their respective names:
| Name | | Positions |
| | | |
| Guenter Bauer | | Chairman of the Board and Director |
| Anthony J. Finn | | Chief Executive Officer |
| Sigfried M. Klein | | President |
| Joerg W. Linder | | Secretary-Treasurer |
Mr. Linder resigned from his positions in February 2010 for personal reasons.
Mr. Wutzer, as our Company’s new majority shareholder, and new management elected to redirect the Company’s business activities into the fields of mining exploration and reforestation as they believed they afforded Apollo and its shareholders greater long-term growth potential. Accordingly, in connection with the Change in Control Transaction, Apollo agreed to distribute the shares of Alpha, its wholly-owned subsidiary, to Apollo’s shareholders of record immediately prior to the Change in Control Transaction. A registration statement to effect such spin-off has been filed with the Securities and Exchange Commission, but has not yet been declared effective.
Since completion of the Change in Control Transaction, we have focused our efforts on expanding our Company’s management, identifying potential properties for mining exploration and reforestation and seeking funding for Apollo’s transition into a fully operating company engaged in mining exploration and reforestation. On December 10, 2009, we changed our name to “Apollo Capital Group, Inc.” to better reflect our intended business plan.
In March 2010, we expanded our board of directors and management with the addition of Humberto Medeiros de Moraes as Vice President, Ramon Cachafeiro Troitiño as Secretary-Treasurer and João Borges Andrade, Thorsten Barth and Ciaran Sheamus Kelly as directors.
The Company is currently exploring various options for financing its transition into an operating company engaging in mining exploration and reforestation, including private placements of our common stock in exchange for the contribution to the Company of securities and other assets. We have not entered into any agreements with respect to any such transaction and there can be no assurance that we can do so.
We have also identified and are exploring and evaluating the acquisition of various land parcels or interests on which we plan to conduct our mining exploration and reforestation activities. We have not entered into any agreements in this regard and there can be no assurance that we can do so, or in any case, effectively transition into an operating company.
Results of Operations for the Three (3) Months ended March 31, 2010 as Compared to the Three (3) Months ended March 31, 2009
Sales for the three (3) months ended March 31, 2010 were $14,922, a decrease of $13,595 or 48% from net sales of $28,517 for the three (3) months ended March 31, 2009. Almost all of the sales were attributable to production of vinyl records by Alpha.
Gross profit margin decreased to 5% of net sales for the 2010 quarter as compared to 31% for the 2009 quarter.
Selling, general and administrative (“SG&A”) expenses for the three (3) months ended March 31, 2010, were $73,196 ($35,271 of which was attributable to Alpha), as compared to $68,456 (all of which was attributable to Alpha).
Net loss for the three (3) months ended March 31, 2010 was $74,170 ($43,393 of which was attributable to Alpha), as compared to $59,502 for the three (3) months ended March 31, 2009 (all attributable to Alpha).
Net loss per share for the three (3) months ended March 31, 2010 was ($0.0045) based on 16,644,659 average shares outstanding.
Liquidity and Capital Resources
Through October 19, 2009, the date the Change in Control Transaction was consummated, our Company relied on a note payable from an affiliate of its former President and principal shareholder and other short term cash advances made to us by our President and principal shareholder and/or her affiliates. All such advances were satisfied prior to consummation of the Change in Control Transaction, as were any inter-company transactions from Alpha.
Subsequent to consummation of the Change in Control Transaction, we have relied on a loan in the amount of $100,000 made in February 2010 by Eurospaininvest, S.L., a principal shareholder, and guaranteed by Manfred H. Wutzer, another principal shareholder, to meet our capital needs. The loan is due and payable in February 2013, together with interest at the rate of five percent (5%) per annum. The loan may be repaid at any time. There can be no assurance that any of our principal shareholders or any members of management and our board of directors or any of their respective affiliates will make any future loans to meet our working capital needs.
In order to transition into an operating company engaged in mining exploration and reforestation, we will require and ability to continue as a gains concern is dependent upon our security significant capital. We are currently exploring various options for raising the necessary capital, including without limitation, private placements of our common stock in exchange for the contribution to the Company of securities and other assets. However, we have not reached any definitive agreements to raise capital and there can be no assurance given that we can successfully do so on favorable terms or otherwise. If we are unable to meet our capital needs, there is a substantial likelihood that we may have to cease operations.
Item 3. Quantitative and Qualitative Discussion About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to our Company, including our consolidated subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported with the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and our Secretary-Treasurer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control Over Financial Reporting
Our management has also evaluated our internal controls over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation.
PART II. OTHER INFORMATION
Item 6. Exhibits.
| 31.1 | Section 302 Certification of Chief Executive Officer |
| | |
| 31.2 | Section 302 Certification of Chief Financial Officer |
| | |
| 32.1 | Section 906 Certification of Chief Executive Officer |
| | |
| 32.2 | Section 906 Certification of Chief Financial Officer |
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 thereunto duly authorized.
| | APOLLO CAPITAL GROUP, INC. | |
| | | | |
| Date: May 24, 2010 | By: | /s/ Ramon Cachafeiro Troitiño | |
| | | Name: Ramon Cachafeiro Troitiño | |
| | | Title: Secretary-Treasurer principal financial officer | |
