SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Event Requiring Report: June 13, 2001
APO HEALTH, INC.
(Exact name of registrant as specified in its charter)
Nevada 00030074 86-0871787
(State of Incorporation) (Commission (IRS Employer
File Number) Identification #)
3590 Oceanside Rd., Oceanside, New York 11575
----------------------------------------
(Address of Principal Executive Offices)
(800) 365-2839
----------------------------------------
(Registrant's telephone number, including area code)
InternetFinancialCorp.com, Inc.
1055 W. Hastings St., Ste. 900
Vancouver, British Columbia, Canada
---------------------------------------------------
(Registrant's Former Name and Address)
ITEM 1 CHANGES IN CONTROL OF REGISTRANT, and
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
(a) Pursuant to a Tax-Free Reorganization Agreement (the "Agreement")
effective June 13, 2001, InternetFinancialCorp.com, Inc. ("IFAN" or, "the
Company"), a Nevada corporation acquired 3,046,300 of the 3,209,563
outstanding shares of common stock of APO Health, Inc., a New York
corporation, or 91%.
The basic and germane terms and conditions of the Agreement were that
APO Health, Inc. conveyed, assigned and transferred to IFAN, free and clear of
all liens, encumbrances or mortgages, all of APO's business, properties, and
assets of every kind and description, real or personal, including, but not
being limited to, APO Health, Inc.'s goodwill and all of its right, title, or
interest in and to the name, APO Health, Inc. (collectively the "Assets"),
subject to all disclosed unpaid and unsatisfied liabilities and obligations of
APO Health, Inc. at the time of closing including such liens and security
interests as may at that time be held by APO Health, Inc.'s lender, HSBC Bank,
534 Broad Hollow Rd., Mellville, New York 11747. Whereupon, IFAN became the
sole owner and operator of the business and properties of APO Health, Inc.
Prior to the transaction, IFAN was authorized to issue 125,000,000
shares of its common stock, and that as of June 13, 2001, it had issued
15,000,000 shares of its capital stock to its shareholders. In accordance
with the terms of this Agreement and subject to the conditions set forth
herein, the "Selling Shareholders", who at the time of closing owned 91% of
the APO Health, Inc. common stock, exchanged their shares of stock with IFAN.
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In exchange for the Assets of APO Health, Inc., IFAN, after giving
effect to a 1:6 reverse split of its common shares, transferred and delivered
to APO Health, Inc., certificates on a 5.94 to one basis representing
16,600,000 Shares of Common Stock of IFAN (the "Purchase Price Shares") which
Purchase Price Shares constituted 75.45% of the total outstanding Shares of
IFAN outstanding subsequent to the transaction. The Selling Shareholders
conveyed their 3,046,300 shares of APO Health, Inc. to IFAN in exchange for
15,523,170 shares of IFAN and the remainder of the shares. To wit: 963,521
will be held in the treasury of APO Health, Inc. Thereafter and in accordance
with the terms of the Agreement, APO Health, Inc. will convey 5.94 shares of
IFAN stock which it holds in its treasury for each share of APO Health, Inc.
held by all shareholders of APO Health, Inc. who were not Selling
Shareholders. Thus, at the conclusion of the combined stock transfer and
dissolution, each of APO Health, Inc.'s shareholders will have received in
exchange for the transfer of the assets of APO Health, Inc. to IFAN, 5.94
shares of IFAN for each share of APO Health, Inc. issued and outstanding at
the time of closing.
The Shares of Common Stock of IFAN which were transferred and delivered
to APO Health, Inc. in exchange for its Assets, as hereinabove provided, were
issued with a legend restricting its transfer or resale. APO Health, Inc.
agreed not to permit the sale, transfer or re-offer thereof for sale, prior to
the first anniversary date of the share issuance, except upon a duly filed and
effective registration statement with the Securities and Exchange Commission
or any applicable exemption from registration, provided that such exemption is
based upon the opinion of counsel to the issuer, reasonably acceptable to
counsel to IFAN herein, provided, however, that the foregoing shall not
preclude the distribution of such shares of stock to APO Health, Inc.'s
Shareholders ratably in complete liquidation of APO Health, Inc., so long as
the APO Health, Inc. Shareholders take the IFAN Shares subject to the
foregoing restriction.
On June 1, 2001, the shareholders of IFAN held a meeting where they,
along with the Company's officers and director, approved the terms and
conditions of the Agreement. Also approved at that shareholder meeting was
one for six (1:6) reverse split of the issued IFAN common stock. In
anticipation of the acquisition of the assets of APO Health, Inc. by IFAN, the
shareholders approved changing the name of InternetFinancialCorp.com, Inc. to
APO Health, Inc.
On June 13, 2001, the shareholders of the New York corporation, APO
Health, Inc., held a shareholders' meeting whereby they, along with the
officers and directors of the APO Health, Inc., approved the terms and
conditions of the aforementioned Tax-Free Reorganization Agreement between
IFAN and APO Health, Inc.
A copy of the Agreement is filed as an exhibit to this Form 8-K and is
incorporated in its entirety herein. The foregoing description is modified by
such reference.
(b) The following table contains information regarding the
shareholdings of the Company's current directors and executive officers and
those persons or entities who beneficially own more than 5% of the Company's
common stock:
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NAME AMOUNT OF COMMON STOCK PERCENT OF COMMON STOCK
BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
- ------------------------------------------------------------------------------
Dr. Jan Stahl, CEO, 8,169,878 37%
Secretary & Director
3590 Oceanside Rd.
Oceanside, New York
11575
Herman Peter Stiel, 6,499,294 29%
President, CFO & Director
3590 Oceanside Rd.
Oceanside, New York
11575
Kenneth Leventhal, 350,000 2%
Director
3590 Oceanside Rd.
Oceanside, New York
11575
All directors and
executive officers
as a group 15,019,172 68%
(1) Based upon 22,095,667 outstanding shares of common stock.
COMPANY'S BUSINESS AND SUBSIDIARIES
The company was incorporated in 1987 under the name of Xetal, Inc. In
1994, Xetal Inc., in a transaction accounted for by a reverse merger, merged
with Insurance Kingdom, Inc., a Utah public company. In connection with that
transaction Insurance Kingdom changed its name to Xetal, Inc., and Xetal,
Inc., the New York corporation changed its name to APO Health, Inc. APO
Health, Inc. then became a wholly owned subsidiary of Xetal, Inc., the Utah
corporation.
In December 1999, Xetal, Inc., entered into an agreement with
Sickbay.com., Inc., where the two companies were merged and its name changed
to Sickbay.com., Inc. As part of the transaction, Xetal spun off its wholly
owned subsidiary APO Health, Inc. which became a private company. All of
Xetal's assets flowed to APO Health, Inc., which assumed Xetal's debt.
The Company presently distributes medical, dental and veterinary
supplies which are manufactured by others. These products include protective
garments such as disposable isolation gowns, face masks and gauzes as well as
other medical disposable items including latex gloves, needles, syringes and
health and beauty aids. Products are marketed and sold primarily (i) on a
wholesale basis to other distributors (approximately 70% of total revenues);
(ii) directly to doctors, dentists and veterinarians (approximately 25% of
total revenues); (iii) to others including to consumers and through export to
foreign countries (approximately 5% of total revenues).
Several of the principal products distributed by the Company are:
Dental: The Company markets and distributes protective gloves, needles,
prophy angles, barrier protection products, gowns, face masks, gauze products,
topical anesthetics and infection control chemicals to the dental industry.
Medical: The Company markets and distributes protective gloves, tapes,
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syringes, needles, protective barrier gowns and gauze products to the medical
and health care industry.
Veterinarian: The Company markets and distributes protective gloves, needles,
gowns, tapes, and a full line of veterinary products to the veterinary
industry.
Dr. Stahl's Dental First Aid Kit: This is a new proprietary product which the
Company plans to market and distribute for direct consumer use. This kit is
designed to allow the consumer to perform limited emergency dental functions
such as replacing lost fillings and repairing broken dentures.
In addition to the foregoing, which represent the most popular product
lines, the Company distributes a wide range of other medical, dental and
veterinary supplies and products. The Company obtains its products from third
party manufacturers and suppliers. At the present time, the Company does not
have any contractual arrangements with any of its suppliers or manufacturers.
Although the Company does not have any such contractual arrangements, the
Company believes that there are adequate alternative manufactures which would
be able to provide adequate manufacturing capabilities in the event its
present manufacturers were unable, or unwilling to continue to provide the
Company with manufacturing services.
The Company's primary business strategy is to attain a larger share of
the medical, dental and veterinary supply business for its merchandise while
also developing a new proprietary line of products which it will be able to
produce at a low cost. The Company seeks to implement its business strategy
as follows:
Expand Product Distribution. Many of the Company's existing customers
purchase only a portion of its full line of products. Management seeks to
increase the number of its products sold to existing customers both by
displacing competitors and by encouraging the adoption by retailers of
additional product lines offered by the Company through increased solicitation
for related product sales. The Company attempts to offer retailers the cost
savings and ease of administration, which results from dealing with one
supplier for many diverse products and believes that his approach enhances its
relationship with retailers by minimizing their costs.
Pursue Strategic Acquisitions. Management believes that the medical,
dental and veterinary products distribution market, which is presently
typified by a large number of small distributors, suppliers, and
manufacturers, will undergo additional consolidation as these companies are
required to grow in order to meet the demands of the marketplace for flexible
manufacturing and sales support services to what is already a consolidating
retail market. Based upon this belief, the Company seeks to acquire companies
which can strengthen its market share of existing products or which can add
private label product lines compatible with the Company's present distribution
channels. One such strategic acquisition was the Company's acquisition of
Universal Medical Distributors, Inc., which was completed in April 1996.
Management continues to evaluate other potential acquisition candidates
although as of the date of this Prospectus no additional viable acquisition
candidates have been identified by management. While a portion of the
proceeds from this Offering has been allocated as a future reserve for this
purpose, management believes that for the most part it will be able to utilize
its own securities to make acquisitions, either in whole or in part, in the
future thereby preserving cash for the expansion of its operations. There are
not present plans, proposals, arrangements or understandings to make any
further acquisitions. At present there are also no plans, controls or
policies with respect to future transactions with related parties and no such
transactions are in contemplation.
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The Company expects to remain in the same or similar type of business
and will primarily consider acquiring similar types of products and related
business operations in its planned expansion.
Emphasize Customer Service. The Company seeks to build and maintain
strong relationships with its customers by providing improved product pricing,
consistently high quality control and an improved responsiveness to customer
needs through the reliable, timely processing and shipment of orders. In
today's highly competitive market, customers demand quality products with
dependable and expeditious service at the lowest possible price. A portion of
the proceeds from this Offering has been allocated to the expansion of the
Company's inventory, including both existing products and new, proprietary
products. Management believes that by increasing inventories, it will be
better able to meet two key factors in satisfying customer demands in the
future. First by being able to buy in quantity management believes it will be
able to take advantage of volume discounts from its suppliers thereby allowing
it to pass on a part of the savings in the form of lower prices to customers.
Second, by expanding inventories of fast moving items, management believes it
can improve shipping and delivery time by reducing or possibly eliminating
those occasions when popular items are out of stock and customers are forced
to endure delays while product stocks are replenished.
Ensure Product Quality. Management considers its commitment to quality
to be one of the most important factors in acquiring and maintaining
customers. For this reason management seeks to distribute products
manufactured by reliable and quality conscious manufacturers with proven
safety and quality control records. Furthermore, with respect to its own
private label products, management plans to establish a quality control and
testing procedure utilizing both internal controls and outside testing by
independent laboratories in an attempt to meet quality levels of nationally
recognized products.
PROPERTY
The Company maintains its administrative offices and warehouse
facilities at 3590 Oceanside Rd., Oceanside, New York, 11575.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 125,000,000 shares of
common stock, $0.0002 par value per share and no authorized preferred stock.
After execution of the June 13, 2001 Tax-Free Reorganization Agreement, the
Company had issued and outstanding, shares of common stock.
The Company is a reporting, publicly traded company on the Over The
Counter Bulletin Board stock exchange ("OTCBB"), trading under the symbol
"APOA".
MANAGEMENT
The officers and directors of the Company, and further information
concerning them, are as follows:
Name Age Position
- ---- --- --------
Dr. Jan Stahl 53 Chief Executive Officer, Secretary &
Director
Herman Peter Steil 53 President, Chief Financial Officer,
Treasurer & Director
Kenneth Leventhal 46 Director
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Dr. Stahl and Mr. Steil may be deemed to be organizers of the Company,
as that term is defined in the Securities Act of 1933. There are no
committees of the Board of Directors. The Board of Directors meets once each
year following its shareholder's meeting and at other times at the call of the
President. Each of the Directors has been represent at all of the Company's
meetings during the past year.
Profile of Officers and Directors:
DR. JAN STAHL is a New York State licensed dentist. Dr. Stahl founded APO
Health, Inc., in 1987, and has been its Chairman, Chief Executive Officer,
Secretary and a Director since such time. Dr. Stahl'' primary
responsibilities for the Company are in the area of sales and marketing.
Prior to founding the Company, Dr. Stahl was a practicing dentist in the state
of New York. Dr. Stahl received his DDS Degree from New York University in
1974.
HERMAN PETER STEIL co-founded the company along with Dr. Stahl in 1987 and has
been its President and Chief Financial Officer since such time. From 1981 to
1987 Mr. Steil was President of LBS Interdent, Inc. a company engaged in
dental product sales. From 1974 to 1981 Mr. Steil was employed as Director of
International Technical Support and Sales by Degussa, a European based
manufacturer and distributor of dental and medical supplies. Subsequently
(from 1984 to 1986), he was employed by Orbident International, the
international sales division of Darby Drugs. Mr. Steil's training is in
mechanical engineering having received this Technical Degree from Tuebingen
University, Germany, in 1974.
KENNETH Leventhal founded Universal Medical Distributors, Inc. ("Universal"),
in 1985 and has served as its president since such time. Universal is a
recently acquired subsidiary of the Company. Prior to founding Universal, Mr.
Leventhal had been employed as Executive Vice President of Medarco Crop., a
division of Omnicare, Inc., having been employed by Medarco Corp. since 1977,
prior to and following its acquisition by W.R. Grace & Co. (the parent company
of Omnicare Inc.). Omnicare consisted of various health care companies, with
Medarco specializing in the sale of veterinary products as part of its Veratex
Group which sold medical products to physicians, dentists and veterinarians.
Mr. Leventhal graduated from Boston University in 1977 receiving his Bachelors
Degree.
EXECUTIVE COMPENSATION
The following sets forth the aggregate cash compensation and non-cash
compensation which is to be paid by the Company during the ensuing 12 months
to each of the highest paid executive officers whose aggregate remuneration is
contemplated to exceed $425,000 and for all officers as a group:
Name of Individual Amount
- ------------------ ------
1. Dr. Jan Stahl, CEO $250,000
2. Herman Peter Steil, President $125,000
3. Kenneth Leventhal $ 75,000
All officers as a group
(3 persons) $425,000
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Dr. Stahl and Mr. Steil have "incentive employment agreements" with the
Company which, in general, state as follows: Dr. Stahl would receive a 1%
bonus if the Company receives more than $20,000,000 in net revenues for 1
calendar year. Mr. Steil would receive a 1/2% bonus if the Company receives
more than $30,000,000 in net revenues for 1 calendar year. Both Dr. Stahl and
Mr. Steil receive a monthly stipend of $1,200 as a car allowance.
There are no agreements, plans or other arrangements between the Company
or its subsidiaries and any of its officers which would provide payment in the
event of resignation, retirement or termination of employment arising from a
change-in-control of such entity or a change in an officer's responsibilities
following any such change in control.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS' SHARE VALUE
The Company's Articles of Incorporation, as amended, authorizes the
issuance of 125,000,000 shares of common stock. The future issuance of all or
part of the remaining authorized common stock may result in substantial
dilution in the percentage of the Company's common stock held by its then
existing shareholders. Moreover, any common stock issued in the future may be
valued on an arbitrary basis by the Company. The issuance of the Company's
shares for future services or acquisitions or other corporate actions may have
the effect of diluting the value of the shares held by investors, and might
have an adverse effect on any trading market, should a trading market develop
for the Company's common stock.
On April 24, 2001, APO Health, Inc. offered for purchase 300 Units at a
price of $1,000 per Unit, each Unit consisting of 1,667 shares of the
Company's Common Stock, valued at $0.60 per share, par value $0.001, and three
warrants exercisable at $1.00 per share, par value $0.001 per share
(collectively, the "Units".) The Warrant Termination Date is April 24, 2004
("Warrant Termination Date"), which is three (3) years from the date of the
publication of this Prospectus, and entitles the warrant holder to purchase
three (3) warrants, each warrant representing 1,667 shares of the Company's
Common Stock, exercisable at $1.00 per share up and through the Warrant
Termination Date. The Offering was conducted on a "best efforts" basis by the
Company pursuant to an exemption from registration provided by Rule 506 of
Regulation D under the Securities and Exchange Act of 1933, as amended (the
"Act'). If all warrants were exercised, an additional 1.5M of the Company's
common stock shares would be issued.
Also, the parties agreed, post closing, to the issuance of 2.1 million
warrants for the purchase of APO Health, Inc. common shares at a purchase
price of $1.00 per warrant for the first 700,000 shares; $1.50 per warrant for
the second 700,000 shares, and at $2.00 for the remaining 700,000 shares. The
warrants shall be issued to those parties and/or entities as directed by
counsel for IFAN.
Furthermore, the Company has contracted with Columbia Financial Group,
1301 York Rd. Ste. 400, Lutherville, MD 21093, which provides for 1,000,000
warrants as follows: 334,000 warrants @ $1.00 per warrant ; 333,000 @ $1.50
per warrant and, 333,000 warrants @ $2.00 per warrant.
If each of the aforementioned warrant options were to be completely
exercised, it would result in an additional 4,600,000 of the Company's common
stock shares being issued which would significantly dilute the shareholders'
interest.
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national
securities exchanges or quoted on the NASDAQ Stock Market, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The Company's securities
may be subject to "penny stock rules" that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited
7
investors (generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the "penny stock rules" require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission relating
to the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information on the limited
market in penny stocks. Consequently, the "penny stock rules" may restrict
the ability of broker-dealers to sell the Company's securities. The
foregoing required penny stock restrictions will not apply to the Company's
securities if such securities maintain a market price of $5.00 or greater.
There can be no assurance that the price of the Company's securities will
reach or maintain such a level.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
The Company retained Malone & Bailey, PLLC, 5444 Westheimer Rd., Ste.
2080, Houston, Texas 77056, as the Company's independent accountants.
ITEM 5. OTHER EVENTS
On or about June 15, 2001, the Company's 1:6 reverse split took effect.
Also, on or about June 15, 2001, the Company's name was formally changed from
InternetFinancialCorp.com, Inc, to APO Health, Inc. Accordingly, the Company
was assigned a new CUSIP number and the Company's symbol was changed by NASDAQ
from "IFAN" to "APOA", which symbol the Company is presently trading under on
the OTCBB.
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As a condition of Closing, the parties approved, post closing, the
issuance of 1.1 million shares of common stock of the trading entity to certain
officers, directors, attorneys and/or consultants under a Form S-8
registration statement. Said parties and specific amounts to be designated as
recipients of said 1 million shares of common stock of the trading entity had
not been determined at the time of Closing on June 13, 2001.
The parties further agreed, post closing, the issuance of 895,667 shares
of common stock of the trading entity to certain consultants, attorneys and/or
individuals and/or entities. Said parties and specific amounts to be
designated as recipients of said 895,667 shares of common stock of the trading
entity had not been determined at the time of Closing on June 13, 2001.
Furthermore, the parties agreed, post closing, to the issuance of 2.1
million warrants for the purchase of APO Health, Inc. common shares at a
purchase price of $1.00 per warrant for the first 700,000 shares; $1.50 per
warrant for the second 700,000 shares, and at $2.00 for the remaining 700,000
shares. The warrants shall be issued to those parties and/or entities as
directed by counsel for IFAN. (Said parties and specific amounts to be
designated as recipients of said 2.1 million warrants of the trading entity
had not been determined at the time of Closing on June 13, 2001.)
On April 24, 2001, APO Health, Inc. offered for purchase 300 Units at a
price of $1,000 per Unit, each Unit consisting of 1,667 shares of the
Company's Common Stock, valued at $0.60 per share, par value $0.001, and three
warrants exercisable at $1.00 per share, par value $0.001 per share
(collectively, the "Units".) The Warrant Termination Date is April 24, 2004
("Warrant Termination Date"), which is three (3) years from the date of the
publication of this Prospectus, and entitles the warrant holder to purchase
three (3) warrants, each warrant representing 1,667 shares of the Company's
Common Stock, exercisable at $1.00 per share up and through the Warrant
Termination Date. The Offering was conducted on a "best efforts" basis by the
Company pursuant to an exemption from registration provided by Rule 506 of
Regulation D under the Securities and Exchange Act of 1933, as amended (the
"Act'). The offering formally closed on June 12, 2001. APO Health Inc.
raised $300,000 through the offering and issued 500,000 shares of its common
stock. The stock was issued with a restricted legend. APO Health, Inc.'s
shareholders who purchased shares in the aforementioned APO Health, Inc.'s
Rule 506 offering of April 24, 2001, each were to receive copies of the
Information Statements IFAN filed under Rule 14(c) of the Securities Exchange
Act of 1934 on May 11, 2001 and May 22, 2001.
Each shareholder who subscribed to the aforementioned APO Health, Inc.'s
Rule 506 offering of April 24, 2001, received one (1) share of IFAN stock for
each share owned in APO Health, Inc. The shareholders who subscribed to the
Rule 506 offering dated April 24, 2001, were not entitled to participate in
the 5.94 stock exchange as outlined hereinabove with IFAN.
Furthermore, on June 5, 2001, the Company has contracted with Columbia
Financial Group, 1301 York Rd. Ste. 400, Lutherville, MD 21093, which provides
for 1,000,000 warrants as follows: 334,000 warrants @ $1.00 per warrant;
333,000 @ $1.50 per warrant and, 333,000 warrants @ $2.00 per warrant.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the terms of the aforementioned Agreement, the Registrant has
accepted the resignation of Michael Harrison as President and Director and
Julie May as Secretary on June 13, 2001 to be effective June 22, 2001, and
appointed Dr. Jan Stahl as CEO, Secretary and Director, Herman Peter Steil as
President, Chief Financial Officer and Director, and Kenneth Leventhal as a
Director, effective June 22, 2001.
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ITEM 7. FINANCIAL STATEMENTS
Financial statements for InternetFinancialCorp.com, Inc. and APO Health,
Inc. are filed herewith and are listed below:
Page Description
- ---- -----------
H-1 - H-2 Pro Forma Consolidated Condensed Balance Sheet derived from the
balance sheet of Internetfinancialcorp.com, Inc. at April 30, 2001
and adjusts such information to give effect to the acquisition of
APO Health, Inc. as if the acquisition had occurred at September
30, 2000.
G-1 - G-4 APO Health, Inc. unaudited financial statements - March 31, 2001
and September 30, 2000.
F-1 - F-12 APO Health, Inc. audited financial statements - September 30, 2000
and 1999.
E-1 - E-6 Internetfinancialcorp.com, Inc. audited financial statements -
April 30, 2001 and 2000.
ITEM 8. CHANGE IN FISCAL YEAR
The Company has changed its April 30 fiscal year end to a September 30
fiscal year end.
EXHIBITS
2.1 Tax-Free Reorganization Agreement
between IFAN and APO Health, Inc.,
dated June 13, 2001.
*3.1 Articles of Incorporation,
as amended
*3.2 By-Laws
*24.1 Consent of accountants
______________________________
*To be filed by amendment, if required.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized this 28th day of June 2001.
By /S/
_____________________________
Peter Steil, President & Director
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Pro Forma Consolidated Condensed Balance Sheet
The following pro forma balance sheet has been derived from the balance sheet
of Internetfinancialcorp.com Inc. ("IFAN") at April 30, 2001 and adjusts such
information to give effect to the acquisition of APO Health, Inc. ("APO"), a
New York corporation, as if the acquisition had occurred at September 30,
2000. The pro forma balance sheet is presented for informational purposes
only and does not purport to be indicative of the financial condition that
would have resulted if the acquisition had been consummated at September 30,
2000. The pro forma balance sheet should be read in conjunction with the
notes thereto and the Company's consolidated financial statements and related
notes thereto contained elsewhere in this filing.
04/30/01 09/30/00 09/30/00
IFAN (6) APO Adjustments Pro Forma
---------- ---------- ----------------- ----------
Cash $ 90,732 (2) $300,000
(5) (100,000) $ 290,732
Accounts receivable, net 2,167,261 2,167,261
Inventory 1,895,334 1,895,334
Other current assets 80,099 80,099
---------- ----------
4,233,426 4,433,426
Property and equipment, net 57,289 57,289
Goodwill, net 125,537 125,537
Deposit 7,500 7,500
---------- ----------
$4,423,752 $4,623,752
========== ==========
Accounts payable and
accrued expenses $ 1,100 $1,653,513 $1,654,614
Bank notes payable 1,892,670 1,892,670
---------- ---------- ----------
1,100 3,546,184 3,547,284
Stockholders' Equity
Common stock, $.0002 par
value, 125,000,000 shares
authorized, 21,982,088
issued and outstanding 3,000 (1) ( 354)
(2) ( 100)
(3) 2,500
(4) ( 2,843)
(5) ( 399)
(6) ( 200) 4,396
Common stock, $.001 par
value, 20,000,000 shares
authorized, 2,409,563
issued and outstanding 2,409 (4) 2,709 0
Additional paid in capital 983,779 (1) ( 86,046)
(2) (299,900)
(3) ( 2,500)
(4) 434
(5) 399
(6) ( 48,610) 1,420,002
Retained deficit (4,100) ( 108,620) (1) 86,400
(5) 100,000
(6) 48,810 ( 347,930)
------- ---------- ----------
(1,100) 877,568 1,076,468
------- ---------- ----------
$ 0 $4,423,452 $4,623,752
======= ========== ==========
H-1
Notes to Pro Forma Consolidated Condensed Balance Sheet
(1) 300,000 APO shares valued at $.2880 per share issued to officers as a
bonus for the six months ended March 31, 2001. These shares were
exchanged for 1,770,000 IFAN shares.
(2) 500,000 shares APO sold for $.60 per share between April 2001 and June
2001 in a private offering in contemplation of the combination of APO
and IFAN. Additionally, 1,500,000 APO warrants exercisable at $1.00 per
share expiring April 2003 were issued. The shares and warrants were
exchanged on a one for one basis for IFAN shares and warrants.
(3) Six-for-one reverse stock split of IFAN stock effected on June 13, 2001.
(4) Acquisition by IFAN of the APO shares outstanding as of September 30,
2000, which totaled 2,409,563 shares, with the issuance of 14,216,421
shares of IFAN common stock.
(5) Payment to consultants, attorneys, and professionals for services
performed in conjunction with the combination with $100,000 cash and
issuance of 1,995,667 IFAN shares and warrants to purchase 700,000 APO
shares at $1.00, 700,000 shares at $1.50, and 700,000 shares at $2.00.
(6) In connection with the reorganization, the Company hired an investor
relations/public relations firm for a 12-month contract beginning June
01, 2001, for total compensation of 1,000,000 shares and warrants to
purchase 334,000 APO shares at $1.00, 333,000 shares at $1.50, and
333,000 shares at $2.00.
(7) IFAN balance sheet is from the most recent audited financial statements,
April 30, 2001. No material transactions occurred between April 30,
2001 and June 13, 2001.
H-2
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED BALANCE SHEETS
March 31, 2001 (Unaudited) and September 30, 2000
2001 2000
ASSETS ---------- ----------
Current Assets
Cash $ 136,297 $ 90,732
Accounts receivable, net of allowance
for doubtful accounts of $59,800 and $59,800 2,022,571 2,167,260
Inventory 1,570,736 1,895,334
Due from officers 79,244 15,294
Deferred tax asset 19,683 34,563
Other current assets 6,781 30,242
---------- ----------
Total Current Assets 3,835,312 4,233,426
---------- ----------
Property and Equipment, net of accumulated
depreciation of $85,417 and $78,001 49,873 57,289
Goodwill, less accumulated amortization
of $59,780 and $53,802 119,559 125,537
Deposits 7,500 7,500
---------- ----------
TOTAL ASSETS $4,012,244 $4,423,752
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank notes payable $1,949,600 $1,892,670
Accounts payable 924,293 1,449,550
Accrued expenses 88,129 203,963
Loan payable to stockholder 59,718
---------- ----------
Total Current Liabilities 3,021,740 3,546,183
---------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 2,709,563 and 2,409,563
shares issued and outstanding 2,709 2,409
Additional paid in capital 1,069,879 983,779
Retained deficit ( 82,084) ( 108,620)
---------- ---------
Total Stockholders' Equity 990,504 877,568
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,012,244 $4,423,752
========== ==========
G-1
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Month Periods Ended March 31, 2001 and 2000 (Unaudited)
- - - - - - 2001 - - - - - - - - - - 2000 - - - - - -
3 Months 6 Months 3 Months 6 Months
----------- ----------- ----------- -----------
Revenues $ 6,587,885 $12,956,273 $ 7,970,505 $15,668,589
Cost of revenues 5,920,606 11,515,780 6,978,297 13,653,557
----------- ----------- ----------- -----------
Gross Margin 667,279 1,440,493 992,208 2,105,032
----------- ----------- ----------- -----------
Operating Expenses
Selling expenses 201,881 363,460 182,608 362,826
General and administrative
expenses 486,895 944,008 587,057 1,075,562
Holding company spinoff costs 137,135 137,135
----------- ----------- ----------- -----------
688,775 1,307,468 906,800 1,575,523
----------- ----------- ----------- -----------
Income (loss) from operations ( 21,497) 133,025 85,408 439,509
Interest expense 47,745 93,047 19,950 66,621
----------- ----------- ----------- -----------
Income (loss) before provision
for income taxes and
extraordinary item ( 69,242) 39,978 65,458 372,888
Provision (benefit) for
income tax ( 121) 13,443 74,003 196,975
----------- ----------- ----------- -----------
Income (loss) before
extraordinary item ( 69,121) 26,535 ( 8,545) 175,913
Extraordinary item, net
- debt forgiveness ( 58,575) ( 58,575)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ ( 69,121) $ 26,535 $( 67,120) $ 117,338
=========== =========== =========== ===========
Earnings per common share
- before extraordinary item $ ( .03) $ 0.01 $( 0.01) $ .14
- from extraordinary item ( 0.03) ( .05)
---------- ----------- ----------- -----------
Net income per common share $( .03) $ 0.01 $( 0.04) $ .09
=========== =========== =========== ===========
Weighted average common shares
outstanding 2,550,563 2,484,563 1,653,263 1,253,263
G-2
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 2001 and 2000 (Unaudited)
2001 2000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 26,535 $ 117,338
Adjustments to reconcile net income to
net cash flows from operating activities
Depreciation and amortization 13,394 16,725
Bad debts ( 19,400)
Deferred taxes 14,880 2,400
Stock issued for services 86,400 87,840
Changes in:
Accounts receivable 144,690 (193,943)
Inventory 324,598 (310,904)
Other current assets 23,461 52,936
Accounts payable (525,257) (336,992)
Accrued expenses (115,835) 83,149
Income taxes payable 108,304
--------- ---------
CASH FLOWS (USED IN) OPERATING ACTIVITIES ( 7,133) (392,547)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from officer, net ( 4,232) 77,313
Proceeds from bank notes payable, net 56,930 300,200
--------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 52,698 377,513
--------- ---------
Net increase (decrease) in cash 45,565 ( 15,034)
Cash balances
Beginning of period 90,732 41,239
--------- ---------
End of period $ 136,297 $ 26,205
========= =========
G-3
APO HEALTH, INC.
(formerly Xetal, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of APO Health, Inc.
have been prepared in accordance with generally accepted accounting principles
and the rules of the Securities and Exchange Commission ("SEC"), and should be
read in conjunction with the audited financial statements and notes thereto
contained in the Company's latest Annual Report filed with the SEC . In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year,
2000, have been omitted.
NOTE 2 - COMMON STOCK
During the quarter ended March 31, 2001, 300,000 shares of stock valued at
$86,400 were issued to two officers as a bonus. Beginning April 2001, the
Company began raising funds in a private offering of common stock priced at
$.60 per share. Investors also receive for each common share purchased three
warrants with an exercise price of $1.00 per share, expiring April 24, 2004.
The company seeks to sell 300,000 shares.
G-4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
APO Health, Inc. (formerly Xetal, Inc.)
Oceanside, New York
We have audited the accompanying consolidated balance sheet of APO Health,
Inc. as of September 30, 2000 and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of APO
Health, Inc. as of September 30, 2000 and the results of its operations and
its cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States.
Our audit was made to form an opinion on the basic financial statements taken
as a whole. The supplemental schedule listed in the index to the financial
statements and schedule are presented to comply with the rules and regulations
under the Securities and Exchange Act of 1934 and are not otherwise a required
part of the basic financial statements. The supplemental schedule for the
year ended September 30, 2000 has been subjected to the auditing procedures
applied in the audit of the basic financial statements. In our opinion, the
supplemental schedule referred to above fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
MALONE & BAILEY, PLLC
April 5, 2001
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
APO Health, Inc. (formerly Xetal, Inc.)
Oceanside, New York
We have audited the accompanying consolidated balance sheet of APO Health,
Inc. as of September 30, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for the two years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of APO
Health, Inc. as of September 30, 1999 and the results of its operations and
its cash flows for the two years then ended, in conformity with accounting
principles generally accepted in the United States.
Our audits were made to form an opinion on the basic financial statements
taken as a whole. The supplemental schedule listed in the index to the
financial statements and schedule are presented to comply with the rules and
regulations under the Securities and Exchange Act of 1934 and are not
otherwise a required part of the basic financial statements. The supplemental
schedule for each of the two years ending September 30, 1999 and 1998 have
been subjected to the auditing procedures applied in the audits of the basic
financial statements. In our opinion, the supplemental schedule referred to
above fairly states in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
Linder & Linder
Certified Public Accountants
Dix Hills, New York
December 15, 1999
F-2
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED BALANCE SHEETS
September 30, 2000 and 1999
2000 1999
ASSETS ---------- ----------
Current Assets
Cash $ 90,732 $ 41,239
Accounts receivable, net of allowance
for doubtful accounts of $59,800 and $89,200 2,167,261 2,482,718
Inventory 1,895,334 1,275,577
Due from officers 15,294 131,939
Deferred tax asset 34,563 41,500
Other current assets 30,242 52,936
---------- ----------
Total Current Assets 4,233,426 4,025,909
---------- ----------
Property and Equipment, net of accumulated
depreciation of $78,001 and $100,140 57,289 68,422
Goodwill, less accumulated amortization
of $53,802 and $42,647 125,537 140,692
Deposits 7,500 24,957
---------- ----------
TOTAL ASSETS $4,423,752 $4,259,980
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank notes payable $1,892,670 $ 906,850
Accounts payable 1,449,550 1,898,553
Accrued expenses 203,964 534,272
Income taxes payable 107,491
---------- ----------
Total Current Liabilities 3,546,184 3,447,166
Loans Payable - former stockholders 162,038
---------- ----------
Total Liabilities 3,546,184 3,609,204
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 2,000,000
shares authorized, 0 shares issued
Common stock, $.001 par value, 20,000,000
shares authorized, 2,409,563 and 928,263
shares issued and outstanding 2,409 928
Paid in capital 983,779 614,012
Retained earnings (deficit) ( 108,620) 36,016
Treasury stock, 180,000 shares ( 180)
---------- ----------
Total Stockholders' Equity 877,568 650,776
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,423,752 $4,259,980
========== ==========
See accompanying summary of accounting policies
and notes to financial statements
F-3
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999, AND 1998
2000 1999 1998
----------- ----------- -----------
Revenues $30,232,347 $32,147,128 $33,170,600
Cost of revenues 27,225,517 29,315,258 29,987,343
----------- ----------- -----------
Gross Margin 3,006,830 2,831,870 3,183,257
----------- ----------- -----------
Operating Expenses
Selling 819,145 833,764 1,335,930
General and administrative 2,044,602 1,795,606 1,403,554
Holding company spinoff costs 137,135
----------- ----------- -----------
3,000,882 2,629,370 2,739,484
----------- ----------- -----------
Income from operations 5,948 202,500 443,773
Interest expense 141,704 91,759 162,083
----------- ----------- -----------
Income before provision for income
taxes and extraordinary item ( 135,756) 110,741 281,690
Provision (benefit) for income tax 46,569 50,840 ( 29,000)
----------- ----------- -----------
Income before extraordinary item ( 182,325) 59,901 310,690
Extraordinary item, net
- debt forgiveness ( 58,575) 211,323 36,533
----------- ----------- -----------
NET INCOME (LOSS) $( 240,900) $ 271,224 $ 347,223
=========== =========== ===========
Earnings per common share
- before extraordinary item $( .13) $ 0.07 $ 0.33
- from extraordinary item ( .04) 0.24 0.04
----------- ----------- -----------
Net income per common share $( .17) $ 0.31 $ 0.37
=========== =========== ===========
Weighted average common shares
outstanding 1,453,263 885,763 928,263
See accompanying summary of accounting policies
and notes to financial statements
F-4
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999, AND 1998
Retained
Common Stock Paid in Earnings Treasury
Shares Amount Capital (Deficit) Stock Totals
--------- ------ -------- --------- ----- --------
Balances,
September 30, 1997 928,263 $ 928 $614,012 $(582,431) $ 32,509
Net income 347,223 347,223
--------- ------ -------- --------- ----- --------
Balances,
September 30, 1998 928,263 928 614,012 (235,208) 379,732
Stock acquired with
debt forgiveness $(180) ( 180)
Net income 271,224 271,224
--------- ------ -------- --------- ----- --------
Balances,
September 30, 1999 928,263 928 614,012 36,016 (180) 650,776
Cancellation of
treasury stock ( 180,000) ( 180) 180
Spin-off of Xetal, Inc. ( 96,264) 96,264
Issuance of stock for
debt 600,000 600 161,438 162,038
Issuance of stock for
services 1,061,300 1,061 304,593 305,654
Net (loss) (240,900) (240,900)
--------- ------ -------- --------- ----- --------
Balances,
September 30, 2000 2,409,563 $2,409 $983,779 $(108,620) $ 0 $877,568
========= ====== ======== ========= ===== ========
See accompanying summary of accounting policies
and notes to financial statements
F-5
APO HEALTH, INC.
(formerly Xetal, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999, AND 1998
2000 1999 1998
---------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $( 240,900) $ 271,044 $ 347,223
Adjustments to reconcile net income to
net cash flows from operating activities
Depreciation and amortization 30,370 29,545 28,827
Bad debts ( 29,400) ( 5,200) 36,580
Deferred taxes 6,937 ( 18,500) (23,000)
Stock issued for services 305,654
Write off of a deposit 20,000
Gain on asset retirement 3,105
Gain on debt forgiveness (314,643) (48,533)
Write-off of registration costs 49,523
Write-off of joint venture 23,800
Changes in:
Accounts receivable 344,857 123,956 (104,964)
Inventory ( 619,757) (299,245) 24,887
Other current assets 22,694 ( 31,777) 43,840
Accounts payable ( 449,002) ( 38,897) 304,111
Accrued expenses ( 330,309) (120,625) 348,113
Income taxes payable ( 107,491) 101,491 6,000
---------- --------- ---------
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES (1,043,242) (253,328) 986,884
---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ( 7,187) ( 6,225)
Increase in deposits ( 2,543) (20,000)
---------- --------- ----------
CASH FLOWS (USED IN)
INVESTING ACTIVITIES ( 9,730) ( 6,225) (20,000)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loans payable (135,357) (16,042)
Advances from officer, net 116,645 116,335 (150,325)
Proceeds from bank notes payable, net 985,820 293,878 (826,916)
---------- --------- ---------
CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES 1,102,465 274,856 (993,283)
---------- --------- ---------
Net increase (decrease) in cash 49,493 15,303 ( 26,399)
Cash balances
Beginning of period 41,239 25,936 52,335
---------- --------- ---------
End of period $ 90,732 $ 41,239 $ 25,936
========== ========= =========
See accompanying summary of accounting policies
and notes to financial statements
F-6
APO HEALTH, INC.
(formerly Xetal, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Nature of business and basis of consolidation. APO Health, Inc. ("Company")
was incorporated under the laws of the state of New York in August 1978. The
Company and its wholly-owned subsidiary, Universal Medical Distributors, Inc.
("Universal") distribute disposable medical products principally to dental,
medical and veterinary professionals and wholesalers in the United States,
principally on the East Coast. In September 1994, The Company had acquired an
inactive public company, Xetal, Inc. ("Xetal") in a reverse acquisition
transaction. On December 23, 1999, the Company assumed all of the assets and
liabilities of Xetal and 100% of the Company shares held by Xetal were
distributed to the existing shareholders of Xetal on a pro rata basis as a
stock dividend. The spin-off is treated as a reverse spin-off, as if the
Company had spun off Xetal, in order to reflect the substance of the
transaction. These consolidated financial statements reflect consolidated
accounts of all three companies up to December 23, 1999, the effective date of
the spin-off, and of the Company and Universal thereafter.
Cash and cash equivalents. For purposes of the statements of cash flows, cash
equivalents include all highly liquid investments with original maturities of
three months or less.
Revenue recognition occurs when products are shipped.
Advertising is expensed as incurred.
Merchandise inventory is stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
Property and equipment is stated at cost. Depreciation is provided for on the
straight-line method over the useful estimated life. The cost of maintenance
and repairs is expensed as incurred.
Goodwill represents the excess of the cost of two companies acquired over the
fair value of their net assets at the dates of acquisition in 1996 and is
being amortized using the straight line method over 15 years.
The Company follows Statement of Financial Accounting Standards No. 121,
Impairment of Long-Lived Assets, by reviewing such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
Income taxes are computed using the tax liability method of accounting,
whereby deferred income taxes are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates that will be in effect when the differences
reverse.
Basic net income per share has been calculated based on the weighted average
number of shares of common stock outstanding during the period. Diluted net
income per share is computed by dividing the net income by the weighted
average number of common shares outstanding plus potential dilutive
securities.
Reclassifications. Certain reclassifications of certain prior year amounts
were made to conform with the current year presentation.
F-7
Estimates and assumptions. Preparing financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue and expenses at the balance sheet date and for the period then ended.
Actual results could differ from these estimates.
NOTE 2 - SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES
2000 1999 1998
---------- --------- ---------
Cash paid during the year for
Interest $144,381 $84,721 $159,790
Income taxes 65,000 65,349
Non-cash transactions:
Spinoff of Xetal, Inc. $ 96,624
Note payable paid by issuance of stock 162,038
NOTE 3 - BANK NOTES PAYABLE
As of April 5, 2001, the date of this report, the Company's credit facility
with HSBC Bank USA provides for total borrowings which may not exceed
$2,000,000. Bankers acceptances and letters of credit, which relate to
specific importation transactions, may not exceed $500,000 each and own-note
borrowing, which does not relate to specific transactions, may not exceed
$1,500,000. The credit facility is collateralized by substantially all of the
Company's assets and is personally guaranteed by the two majority Company
stockholders. Interest of prime + 1% on the own-note borrowings is payable
monthly and the bankers acceptance fees of 200 basis points above the discount
rate are paid at the inception of the bankers acceptance. Borrowings on the
credit facility are payable on demand, or upon maturity, which is up to 180
days after the initiation of a bankers acceptance or March 31, 2002, for own-
note borrowings, whichever is earlier. On March 31, 2001, the date the credit
facility was renewed, outstanding own-note borrowings were $1,949,000, and the
$449,600 excess over the sublimit was converted to a term loan payable over
one year in monthly installments of prime + 1%.
Own-note borrowings were $1,121,600 and $752,000 as of September 30, 2000 and
1999, respectively. As of September 30, 2000, four bankers acceptances
maturing in November and December 2000 totaled $771,070 and there were no
additional letters of credit outstanding. As of September 30, 1999, one
bankers acceptance of $154,850 was outstanding and two letters of credit and a
standby letter of credit totaling $294,343 were outstanding.
As of April 5, 2001, the Company was in technical violation of one of the
financial ratio loan covenants.
NOTE 4 - DEBT FORGIVENESS
During 1996 and 1997, the Company raised $500,000 in total notes payable to
several individuals. In connection with the 1997 offering, 200,000 shares of
common stock and warrants to purchase 2,500,000 shares of common at $5 were
issued.
During 1999 and 1998, the Company settled the above debts for $150,357 and
return of 180,000 shares and 2,250,000 warrants, and recorded extraordinary
gains of $211,323 and $36,533, net of tax of $103,500 and $12,000,
respectively.
F-8
During 2000, several noteholders demanded a renegotiation of the settlement
and the Company paid another $88,750, which is shown in the current year as an
extraordinary expense.
NOTE 5 - RELATED PARTY NOTES PAYABLE
As of September 30, 1999 and 1998, $162,038 of notes payable owed to the two
majority stockholders were outstanding. In October 2000, these stockholders
exchanged the notes for 600,000 shares of post-spinoff Company stock.
NOTE 6 - INCOME TAXES
Income taxes consist of the following:
2000 1999 1998
-------- -------- --------
Current $ 76,273 $ 62,766 $ 2,073
Deferred (29,704) ( 11,926) ( 31,073)
-------- -------- --------
$ 46,569 $ 50,840 $(29,000)
======== ======== ========
A reconciliation of income tax at the federal statutory income tax rate to
total income taxes is as follows:
2000 1999 1998
-------- -------- --------
Computed at the federal
statutory rate of 34% $ 7,641 $ 29,004 $106,096
State income tax 8,146 20,000
Valuation allowance adjustment 30,782
Utilization of net operating
loss carryover (125,617)
Utilization of contributions
carryover ( 8,835)
Other adjustments 1,836 ( 644)
-------- -------- --------
$ 46,569 $ 50,840 $(29,000)
======== ======== ========
The components of deferred taxes are as follows:
2000 1999
-------- --------
Deferred tax assets
Allowance for doubtful accounts $ 59,268 $ 37,000
Depreciation 4,563 4,500
Miscellaneous 125
-------- --------
63,956 41,500
-------- --------
Deferred tax liabilities
Deferred officer compensation 4,299
Goodwill 18,702
State franchise taxes 6,392
-------- --------
29,394
-------- --------
Current net deferred tax assets $ 34,563 $ 41,500
======== ========
F-9
NOTE 7 - COMMON STOCK ISSUANCES
During the year ended September 30, 2000, the Company issued 600,000 shares of
stock to extinguish $162,038 of notes payable and 1,061,300 shares valued at
$.288 per share, which is a multiple of earnings less a marketability
discount, as bonuses to officers. As of April 5, 2001, the date of this
report, the Company had issued an additional 300,000 shares to officers.
In 1998, the Board of Directors of the Company authorized a 1-for-2 stock
split. On December 10, 1999, the Company filed an amendment to its Certificate
of Incorporation to effectuate such reverse split; on December 22, 1999, the
Company filed a further amendment rescinding the reverse split.
NOTE 8 - HOLDING COMPANY SPINOFF COSTS
$137,135 in legal and accounting fees were incurred in connection with the
spinoff of Xetal in December 1999.
NOTE 9 - LEASES
The Company leases 11,800 square feet in New York and a small sales office in
Florida. Both leases are month-to-month with affiliated companies owned by
Company officers and shareholders. The affiliate's underlying New York lease
expires in 2004 and the affiliate's underlying Florida lease expires in
September 2001. Lease payments made by the Company approximate the payments
due by the affiliated companies. Rental expense was $76,665, $53,752, and
$56,362 for the years ended September 30, 2000, 1999, and 1998, respectively.
Future minimum lease payments are $76,020 in 2001, $69,468 in 2002, $71,916 in
2003, $74,364 in 2004, and $18,744 in 2005.
NOTE 10 - PROFIT SHARING PLAN
The Company established a profit sharing plan in 1992. All full-time
employees as defined within the plan are eligible to participate.
Contributions to the plan are discretionary and are determined at the
Company's year end. The amount contributed or accrued to the profit sharing
plan for the years ended September 30, 2000, 1999, and 1998, respectively were
$50,000, $99,011, and $0.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company was named in a lawsuit involving broadcast faxes sent in the state
of Indiana. Indiana law allows for large awards for the recipients of
broadcast faxes. The potential liability may be up to $2,000,000 if the suit
becomes certified as a class-action suit; however, the Company's insurance
covers this contingency, and the suit has not been certified as a class
action. Management believes any liability to the Company is insignificant.
NOTE 12 - CONCENTRATION OF CREDIT RISK
The Company maintains bank accounts at one bank. As of September 30, 2000,
The Company had $244,710 on deposit, and only $100,000 in each bank is insured
under federal law.
The concentration of credit risk due to receivables are minimal due to the
Company's diverse customer base. Two customers account for approximately 34%
of sales for the year ended September 30, 2000. No single customer accounted
for greater than 10% of sales in the years ended September 30, 1999 and 1998.
No single vendor accounts for greater than 10% of purchases.
F-10
NOTE 13 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summary data relating to the results of operations for each of quarter of the
years ended September 30, 2000 and 1999 follows (in thousands except per share
amounts):
Three Months Ended
Dec. 31 Mar. 31 June 30 Sept. 30
-------- -------- -------- --------
Fiscal year 2000:
Net sales $7,698 $7,967 $7,295 $7,273
Gross profit 1,023 992 930 62
Income before extraordinary
item 184 ( 9) 148 ( 506)
Net income (loss) 184 ( 67) 148 ( 506)
Basic and diluted income (loss)
before extraordinary item
per share $ .12 $( .01) $ .09 $( .33)
Basic and diluted net
income (loss) per share $ .12 $( .05) $ .09 $( .33)
Fiscal year 1999:
Net sales $8,881 $7,677 $8,173 $7,486
Gross profit 820 710 756 545
Income before extraordinary
item 34 123 35 ( 131)
Net income 34 237 96 ( 96)
Basic and diluted income (loss)
before extraordinary item
per share $ .04 $ .14 $ .04 $( .15)
Basic and diluted
net income per share $ .04 $ .27 $ .12 $( .11)
Fourth quarter 2000 contains the following non-recurring adjustments: a
$186,000 write-off of bad debts, an inventory adjustment of $216,000 in
conjunction with the year-end adjustment to correct inventory from the use of
a periodic inventory system in effect during the fiscal year, and $306,000
associated with year-end bonuses paid in stock.
F-11
APO HEALTH, INC.
(formerly Xetal, Inc.)
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 2000, 1999, AND 1998
Balance, Balance,
Year Ended Beginning of End of
September 30, Account Period Additions Reduction Period
- ------------- ------------------ ---------- --------- --------- ---------
1998 Allowance for
doubtful accounts $ 57,820 $ 36,580 $ - $94,400
======== ======== ========= =======
Allowance for
deferred taxes $228,000 $ - $(228,000) $ -
======== ======== ========= =======
1999 Allowance for
doubtful accounts $ 94,400 $ - $( 5,200) $89,200
======== ======== ========= =======
2000 Allowance for
doubtful accounts $ 89,200 $ - $( 29,400) $59,800
======== ======== ========= =======
F-12
Michael L. Stuck CPA, PC
7641 E. Gray Road, Suite G
Scottsdale, AZ. 85260
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Internetfinancialcorp.com, Inc.
Vancouver, BC
We have audited the accompanying balance sheets of
Internetfinancialcorp.com, Inc., as of April 30, 2001 and April 30, 2000 and
the related statements of income, stockholders' equity, and cash flows for the
years ended April 30, 2001, April 30, 2000 and the period April 28, 1997 (date
of inception) through April 30, 2001. 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
from 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 basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Internetfinancialcorp.com, Inc. as of April 30, 2001 and April 30 2000 and its
results of operations, and cash flows for the years ended April 30, 2001,
April 30, 2000 and the period April 28, 1997 (date of inception) through April
30, 2001, in conformity with Generally Accepted Accounting Principles.
/s/
Michael L. Stuck
Certified Public Accountant
June 12, 2001
Scottsdale, Arizona
E-1
INTERNETFINANCIALCORP.COM, INC.
(a development stage enterprise)
Balance Sheets
April 30, 2001 and April 30, 2000
April 30, 2001 April 30, 2000
_______________ _______________
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ - $ -
PROPERTY AND EQUIPMENT - -
_______________ _______________
$ - $ -
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan payable $ 1,100 $ -
_______________ _______________
STOCKHOLDER'S EQUITY
Common stock, $.0002 par value, 125,000,000 shares authorized, 3,000 3,000
15,000,000 shares issued and outstanding
Deficit accumulated during development stage (4,100) (3,000)
_______________ _______________
Total stockholders' equity (1,100) -
$ - $ -
=============== ===============
E-2
INTERNETFINANCIALCORP.COM, INC.
(a development stage enterprise)
Statements of Income
For the Years Ended April 30, 2001 and April 30, 2000
and the Period April 28, 1997 (inception) to April 30, 2001
Year Ended April 28, 1997
___________________________________ (inception) to
April 30, 2001 April 30, 2000 April 30, 2001
________________ ________________ ________________
Revenue $ - $ - $ -
Cost of Sales - - -
Gross Profit - - -
Operating Expenses
Amortization Expense - - 101
Professional Fees 1,100 - 3,700
________________ ________________ ________________
1,100 - 3,801
________________ ________________ ________________
Net Income (Loss) before Income Taxes (1,100) - (3,801)
Income Taxes - - -
________________ ________________ ________________
Income before extraordinary item (1,100) - (3,801)
Adjustment due to accounting change - (299) (299)
________________ ________________ ________________
Net Income (Loss) $ (1,100) $ (299) $ (4,100)
================ ================ ================
Earnings Per Share of Common Stock
Income before extraordinary items $ - $ - $ -
Net income (loss) $ - $ - $ -
Weighted Average Number of Shares Outstanding 15,000,000 15,000,000
E-3
INTERNETFINANCIALCORP.COM, INC.
(a development stage enterprise)
Statement of Stockholders' Equity
April 30, 2001
Deficit
Accumulated
Paid in During
Preferred Stock Common Stock Capital Development
Stock Amount Stock Amount Amount Stage Total
__________ __________ __________ __________ __________ __________ __________
Balance April 28, 1997 - $ - - $ - $ - $ - $ -
Stock issued - - 3,000,000 3,000 - - 3,000
Retained earnings (loss) - - - - - (2,600) (2,600)
__________ __________ __________ __________ __________ __________ __________
Balance April 30, 1997 - - 3,000,000 3,000 - (2,600) 400
Retained earnings (loss) - - - - - - -
__________ __________ __________ __________ __________ __________ __________
Balance April 30, 1998 - - 3,000,000 3,000 - (2,600) 400
Retained earnings (loss) - - - - - (101) (101)
__________ __________ __________ __________ __________ __________ __________
Balance April 30, 1999 - - 3,000,000 3,000 - (2,701) 299
Forward stock split - - 12,000,000 -
Retained earnings (loss) - - - - - (299) (299)
__________ __________ __________ __________ __________ __________ __________
Balance April 30, 2000 - - 15,000,000 3,000 - (3,000) -
Retained earnings (loss) - - - - - (1,100) (1,100)
__________ __________ __________ __________ __________ __________ __________
Balance April 30, 2001 - $ - 15,000,000 $ 3,000 $ - $ (4,100) $ (1,100)
========== ========== ========== ========== ========== ========== ==========
E-4
INTERNETFINANCIALCORP.COM, INC.
(a development stage enterprise)
Statements of Cash Flows
For the Years Ended April 30, 2001 and April 30, 2000
and the Period April 28, 1997 (inception) to April 30, 2001
April 28, 1997
Year Ended Year Ended (inception) to
April 30, 2001 April 30, 2000 April 30, 2001
________________ ________________ ________________
Net income (loss) $ (1,100) $ (299) $ (4,100)
Adjustments to reconcile net income to net
cash provided by operating activities:
Adjustment due to accounting change - 299 299
Organizational costs - - (400)
Amortization expense - - 101
Loan payable 1,100 - 1,100
________________ ________________ ________________
Cash Used in Operations - - (3,000)
________________ ________________ ________________
Cash Used in Investing Activities - - -
________________ ________________ ________________
Cash Provided by Financing Activities
Stock issued - - 3,000
________________ ________________ ________________
Net Change in Cash
Beginning Balance - - -
________________ ________________ ________________
Ending Cash Balance $ - $ - $ -
================ ================ ================
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Professional fees incurred by the Company were paid directly by a shareholder
of the Company.
E-5
INTERNETFINANCIALCORP.COM, INC.
(a development stage enterprise)
Notes to Financial Statements
April 30, 2001 and April 30, 2000
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Operations
-------------------------
Internetfinancialcorp.com, Inc. was incorporated in the State of Nevada
as Dom Caribe, Ltd. in 1997, changed its name to Caribbean Ventures,
Inc. on July 1, 1998, and changed its name to Internetfinancialcorp.com,
Inc. on February 11, 2000, and is authorized to do business in the
United States. The Company has no revenue from operations during the
period covered by this financial statement.
Method of Accounting
--------------------
These financial statements are prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.
Consequently, revenues are recognized when earned and expenses are
recognized when the obligation is actually incurred.
Income Taxes and Cash Flows
---------------------------
The Company accounts for income taxes and the statement of cash flows in
accordance with Financial Accounting Standards Board Statement No. 109
and No. 95.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include all highly liquid investments with a
maturity of three months or less when purchased.
NOTE 2: CASH
The Company has no bank accounts at this time.
NOTE 3 - EARNINGS PER SHARE
Earnings per share has been computed by dividing net income/(loss) by
the weighted average number of common shares outstanding for the period.
There are no items which are deemed to be common stock equivalents
during the accounting period.
NOTE 4: COMMON STOCK
As of April 30, 2001 and April 30, 2000 the Company had 15,000,000
shares of common stock, par value $0.0002, issued and outstanding..
NOTE 5 - LEASE COMMITMENTS
The Company currently has no commitments for leases or contingencies.
NOTE 6 - USE OF ESTIMATES
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
E-6