-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IeiQpDj4pkeDb/7jJY3Fd+UWtE0w0eIg142Vlo74fpPctqZ/7HA0Pc5JcC6H8NIr Pho/YEbR4h2YfMU+GTmBOA== 0001111865-01-500095.txt : 20010704 0001111865-01-500095.hdr.sgml : 20010704 ACCESSION NUMBER: 0001111865-01-500095 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010613 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APO HEALTH INC /NV/ CENTRAL INDEX KEY: 0001076607 STANDARD INDUSTRIAL CLASSIFICATION: [9995] IRS NUMBER: 860871787 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-30074 FILM NUMBER: 1674544 BUSINESS ADDRESS: STREET 1: 33590 OCEANSIDE ROAD STREET 2: - CITY: OCEANSIDE STATE: NY ZIP: 11575 BUSINESS PHONE: 800-365-2839 MAIL ADDRESS: STREET 1: 33590 OCEANSIDE ROAD STREET 2: - CITY: OCEANSIDE STATE: NY ZIP: 11575 FORMER COMPANY: FORMER CONFORMED NAME: INTERNETFINANCIALCORP COM INC DATE OF NAME CHANGE: 20000229 FORMER COMPANY: FORMER CONFORMED NAME: CARIBBEAN VENTURES INC /NV/ DATE OF NAME CHANGE: 19990112 8-K/A 1 apo8ka1_master.txt FORM 8-K/A (AMENDMENT NO. 1) - JUNE 13, 2001 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 1) 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. 1 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: 2 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, 3 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. 4 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 5 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 6 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. 8 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. 9 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. 10 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 11
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 $32,170,600 Cost of revenues 27,225,517 29,315,258 28,987,343 ----------- ----------- ----------- 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. 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 EX-2 2 reorg_agree.txt TAX-FREE REORGANIZATION AGREEMENT DATED 04/30/01 TAX-FREE REORGANIZATION AGREEMENT --------------------------------- UNDER I.R.C. Section 368(c) -------------------- REORGANIZATION AGREEMENT entered into as of this 30th day of April, 2001, by and between APO Health, Inc., a New York Corporation (hereinafter referred to as "APO") and InternetFinancialCorp.Com, Inc., a Nevada corporation (hereinafter referred to as "IFAN") and Jan Stahl, DDS., Peter Steil, Kenneth Leventhal, and certain other shareholders of APO identified in this Agreement, collectively referred to as Selling Shareholders. WHEREAS, it is the desire of APO to transfer, and of IFAN to acquire, all the assets, business and properties of APO, including, without limitation hereby, all intellectual property, trademarks, trade names, franchises, licenses, leases, contracts, goodwill, inventory, and name of APO, subject to all of APO's liabilities, and solely in exchange for shares of IFAN's Common Stock; and WHEREAS, this Agreement and the performance by APO hereunder prior to closing will have been authorized, approved, and found advisable by the Board of Directors of APO, and by the affirmative vote of at least two-thirds of the Shareholders thereof, by the requisite affirmative vote of such holders; and WHEREAS, this Agreement and the performance by IFAN hereunder prior to closing will have been authorized and approved by the Board of Directors of IFAN and by at least two-thirds of its shareholders entitled to vote thereon at a meeting to be called for such purpose; and WHEREAS, the Board of Directors of APO, as part of its approval of this agreement, will have further approved a Plan of Liquidation and Dissolution of APO 1 pursuant to which the shares of IFAN's Common Stock received by APO will be distributed by APO ratably to its shareholders in exchange for, and in complete cancellation and retirement of all its issued and outstanding capital stock (consisting solely of common stock) of APO and in complete liquidation of APO, followed by the dissolution of APO immediately thereafter, which Plan of Complete Liquidation and Dissolution will also be submitted to the shareholders of APO for their approval. NOW, THEREFORE, on the terms, and subject to the conditions hereof, it is agreed as follows: 1. Transfer of Assets and Assumption of Liabilities. ------------------------------------------------- 1.1 On the terms of this Agreement, subject to the conditions set forth herein at the time and place of Closing, as hereinafter defined, APO shall convey, assign, transfer, and deliver to IFAN, by appropriate warranty deeds, bills of sale, assignments, or other instruments, free and clear of all liens, encumbrances, mortgages, chattel mortgages, all of APO's business, properties, and assets of every kind and description, real or personal, including, but not being limited to, APO'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 at the time of closing including such liens and security interests as may at that time be held by APO's lender HSBC Bank. 1.2 On the terms of this Agreement, and subject to the conditions set forth herein, IFAN shall purchase and pay for the Assets of APO, and thereby become the sole owner and operator of the business and properties of APO; 2 1.3 Promptly after the Closing of the transactions contemplated hereunder, IFAN shall change the name of such corporation to APO Health, Inc., and shall thereupon thereafter be known as APO Health, Inc. 1.4 IFAN represents that it is authorized to issue 125,000,000 shares of its common stock, and that as of the date hereof and at the time of closing, it will have issued 15,026,000 shares of its capital stock to its shareholders. 1.5. APO represents that it is authorized to issue 20,000,000 shares of its common stock and that as of the date hereof and at the time of closing it will have issued 3,209,563 shares of its capital stock to its shareholders of which 3,046,300 shares will have been issued to the Selling Shareholders. There is only one class of capital stock. 2. Transfer and Delivery of Stock. ------------------------------- 2.1 In accordance with the terms of this Agreement and subject to the conditions set forth herein, the Selling Shareholders shall exchange their shares of stock with IFAN. 2.1 In accordance with the terms of this Agreement, and subject to the conditions set forth herein, in exchange for the Assets of APO, IFAN shall, after giving effect to a 6:1 reverse split of its common shares, authorize, issue, transfer and deliver to APO, at the time and place of closing, certificates on an approximately five point nine (5.9) to one basis representing 16,600,000 Shares of Common Stock of IFAN (the "Purchase Price Shares") which Purchase Price Shares will constitute 75.45% of the total outstanding Shares of IFAN outstanding subsequent to the transaction. Following 3 such transaction, IFAN shall then hold One hundred (100%) percent of the issued and outstanding shares of APO. 2.2 Initially, the Selling Shareholders will convey their 3,046,300,300 shares of APO to IFAN in exchange for 15,523,170 shares of IFAN and the remainder of the shares, to wit 963,251 will be held in the treasury of APO. Thereafter and in accordance with the terms of this Agreement, APO shall dissolve and convey four shares of IFAN stock which it holds in its treasury for each share of APO held by all shareholders of APO who were not Selling Shareholders. Thus, at the conclusion of the combined stock transfer and dissolution, each of APO's shareholders will have received in exchange for the transfer of the assets of APO to IFAN five point nine (5.9) shares of IFAN for each share of APO issued and outstanding at the time of closing. 2.3 That the Shares of Common Stock of IFAN which are to be transferred and delivered to APO in exchange for its Assets, as hereinabove provided, shall bear a legend restricting its transfer or resale, and that APO will not 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's Shareholders ratably in complete liquidation of APO, so long as the APO Shareholders take the IFAN Shares subject to the foregoing restriction. 4 2.4 Thereupon following exchange of Shares of Common Stock of IFAN for Shares of APO and the proper dissolution of APO, the Shares of APO shall be canceled in the complete liquidation of APO and the name of IFAN shall be changed to APO. 3. Time and Place of Closing. -------------------------- 3.1 The transactions contemplated hereunder shall be closed on June 1, 2001, at 10:00 a.m.(the "Closing Date"), or such other date and time as may be agreed to in writing by the parties at the offices of Weber & Pullin, LLP, 7600 Jericho Turnpike, Woodbury, New York, or such other place as may be agreed upon in writing by the parties. 3.2 That after the execution of this Agreement and prior to the time of closing, the stock books and records of IFAN may be reviewed or inspected by representatives of APO at any time or from time to time during regular business hours, and that IFAN will make the same reasonably available for such purpose. 3.3 That after the execution of this Agreement and prior to the time of closing, the stock books and records of APO may be reviewed or inspected by representatives of IFAN at any time or from time to time during regular business hours, and that APO will make the same reasonably available for such purpose. 4. Representations of Warranties of APO ------------------------------------ APO represents and warrants to, and agrees with, IFAN as follows: (a) It is a New York Corporation, duly organized, and validly existing and qualified to undertake and operate its businesses in the form the same are buying 5 conducted where they are presently conducted; (b) Annexed hereto as Schedule 4(d) hereof is: a) the most current unaudited financial statement including profit and loss information and balance sheet of APO and the most recent audited financial statement of APO, both of which have been prepared under generally accepted accounting principals; b) a list of substantially all of its business assets; c) a list of all of its current shareholders as of the date hereof; and d) a list of its major contracts. (c) Except for the obligations to IFAN hereunder, it has no debts or liabilities, other than those arising in the ordinary course of the business activities of APO and such debts or liabilities, in the aggregate, do not exceed either the Company's tangible assets or its cash on hand to meet such obligations; (d) It has no debts or liabilities to Shareholders not otherwise disclosed in its financial documents; (e) This Agreement will have been authorized and approved by the Board of Directors of APO and by the requisite affirmative vote of holders of not less than a two thirds majority of the APO Shares outstanding as of and at the time of this Agreement; (f) There is no suit, action or threatened proceeding outstanding against APO seeking to enjoin the transactions contemplated hereunder, or seeking any other relief which, if granted, would have a material adverse effect on the business or assets of APO and that there are no law suits which are not otherwise reasonably covered by insurance maintained by APO; and 6 (g) It holds all necessary licenses, permits and authorities to carry on and conduct the business which it presently conducts. 5. Representations of Warranties of IFAN ------------------------------------- IFAN represents and warrants to, and agrees with, APO as follows: (a) It is a Nevada corporation, duly organized and validly existing and duly qualified to undertake the transactions required of it hereunder, without any further license, permit, consent or exemption whatsoever from any applicable governmental law, rule or regulation, from any creditor of IFAN, or any other person or party with an interest in the past and prior businesses of IFAN, except as otherwise provided in Schedule 5(a) to this Agreement, and as to each such license, permit, consent or exemption set forth on Schedule 5(a), if any, the requisite license, permit, consent or exemption has been obtained; (b) IFAN shall not have transferred any of IFAN's pre-existing business and assets; (c) IFAN has filed all forms, documents and returns (including all tax returns which it is obligated to file and with all appropriate governmental authorities and has paid all taxes required to be paid and/or escorted all sums required to be paid which will accrue through the date of closing and is not currently under examination by the Internal Revenue Service), including, but not limited to all documents required to be filed with the Securities and Exchange commission. (d) After provision for the transactions relating to APO, IFAN has no remaining debts or liabilities of any kind, whether current or long-term, actual or 7 contingent, either to its Shareholders or to any other person or party, except as set forth on Schedule 5(d) hereto, and as to the items set forth on Schedule 5(d) hereto, APO has further agreed to indemnify and hold IFAN harmless with respect thereto; (e) This Agreement has been authorized and approved by the Board of Directors of IFAN and by the requisite two-thirds vote of holders of the IFAN Shares outstanding as of and at the time of this Agreement; (f) Attached hereto as Schedule 6(f) hereof is a true and correct certified list of the shareholders of IFAN as of a date not more than three (3) days prior to the date of this Agreement; (g) Executive Registrar & Transfer, Inc. P.O.Box 56517, 3118 W. Thomas Road, Suite 707, Phoenix, Arizona 85079 (602-415-1273) is the transfer agent for the Common Stock of IFAN, such transfer agent has been continuously serving as such since ____________, and all debts and fees to the transfer agent billed thereon the date hereof have been paid and extinguished in full; (h) The Common Stock of IFAN is listed on the NASD Electronic Bulletin Board and trades thereon under the symbol IFAN; (i) Except as set forth in Section ________ hereof, IFAN, and its successor, APO, shall be responsible for the delivery and completion of audited financial statements of IFAN for the fiscal period commencing on January 1, 2001 and ending on the Closing Date (the "Interim Period"), and for all income, franchise or other taxes, if any, applicable to the Interim Period; 8 (j) there is no suit, action or threatened proceeding outstanding against IFAN seeking to enjoin the transactions contemplated hereunder, or seeking any other relief which, if granted, would have a material adverse effect on the continued use or operations of the entity heretofore known as IFAN. (k) IFAN is authorized to issue only one class of stock. There are no warrants or other rights to purchase or acquire shares of IFAN except as specifically set forth in this Agreement. 6. Consents to Assignment and Transfer. ------------------------------------ 6.1 APO shall obtain, prior to the time of closing, all consents, agreements, and other actions required for the transfer to IFAN of all leases, contracts, options, licenses, permits, easements, rights of occupancy, names and franchises to which APO is a party or which it owns of holds or uses at the time of closing. 6.2 IFAN shall obtain, prior to the time of transfer of its assets a business to APO, all consents, agreements and other actions required therefore, including, specifically, release of IFAN with respect to all lease, contract, and debt obligations of IFAN being assumed by APO. 7. Conditions to IFAN's Obligations to Close ----------------------------------------- (a) The representations and warranties of APO as set forth herein are on the date hereof and as of the date of closing are substantially correct subject to any change made because of any action approved by IFAN and that there has been no material omission to any such representation; 9 (b) The directors and shareholders of APO have approved and the holders of all of the outstanding shares of APO have voted in favor of the consummation of this Agreement and the matters provided herein; (c) No litigation or proceeding is threatened or pending for the purpose or with the probable effect of enjoining or preventing the consummation of this Agreement or which would materially affect APO's operation of the properties and business to be conveyed hereunder; (d) APO has complied with its agreements herein to be performed prior to the time of closing. (e) APO shall have approved, post closing, the issuance of 1.1 million shares of stock of IFAN to certain officers, directors, attorneys and/or consultants under a Form S-8 registration statement as designated by counsel to IFAN. (f) APO shall have approved, post closing, the issuance of 895,667shares of stock of IFAN to certain consultants, attorneys and/or individuals and/or entities as designated by counsel to IFAN. (g) APO shall have approved, post closing, the issuance of 2.1 million warrants for the purchase of APO Health, Inc. common shares at a purchase price of 700,000 at $1.00, 700,000 at $1.50 and 700,000 at $2.00. The warrants shall be issued to those parties and/or entities as directed by counsel for IFAN. (h) APO's 506 shareholders who purchase shares in APO Health, Inc. shall receive copies of the Information Statement of IFAN filed under Rule 14(c) of the Securities Exchange Act of 1934 and shall have consented to the receipt of one share 10 ( if all of the 506 shares are subscribed for) of IFAN stock for each share owned in APO Health, Inc. 8. Conditions to APO's Obligations to Close ---------------------------------------- (a) The representations and warranties of IFAN as set forth herein are on the date hereof and as of the date of closing are substantially correct subject to any change made because of any action approved by APO and that there has been no material omission to any such representation; (b) The directors and shareholders of IFAN have approved and the holders of all of the outstanding shares of IFAN have voted in favor of the consummation of this Agreement and the matters provided herein; (c) No litigation or proceeding is threatened or pending for the purpose or with the probable effect of enjoining or preventing the consummation of this Agreement or which would materially affect IFAN's operation of the properties and business to be conveyed hereunder; (d) IFAN has complied with its agreements herein to be performed prior to the time of closing; (e) IFAN shall be in complete compliance with all filing requirements respecting publicly traded companies as required by the SEC and all state and local governmental agencies and bodies; and (f) IFAN's present management and those persons considered "controlled persons" pursuant to the rules of the SEC shall have entered into an agreement placing restrictions on the sale of their stock following closing. 11 (g) that no press release shall have been made by IFAN without the written consent of APO's counsel after May 9, 2001. 9. Opinion of IFAN's Counsel ------------------------- IFAN shall furnish APO at the time and place of closing the opinion of IFAN's counsel, (a) IFAN is duly organized, existing, and in good standing under the laws of Nevada, and is duly authorized in Nevada and the other jurisdictions in which it has qualified to do business to conduct the business it is then engaged in therein; (b) That the shares of IFAN's common stock which are to be transferred and delivered by IFAN to APO in exchange for the assets of APO constitute duly authorized, issued, fully paid and non-assessable shares of the common stock of IFAN, and that the Selling Shareholders of APO and the non-selling shareholders of APO will acquire good title to such shares in exchange for, and upon the receipt by IFAN of the assets of APO and the delivery in exchange therefore of such shares of common stock of IFAN, and upon the liquidation of APO; (c) Neither this Agreement for the transfer and delivery, nor the transfer and delivery as herein agreed, of shares of IFAN's Common Stock to APO requires any qualification or authorization under the laws of Nevada applicable to the issuance or sale of stock or other securities in Nevada; (d) That since March 31, 2001, IFAN has not authorized, declared, paid, or effected any stock dividend or split-up (other than a 6:1 reverse split) of shares of its common stock or any issuance, pro rata, to its common shareholders, or options or 12 rights to subscribe to shares of its common stock, or any extraordinary cash dividend upon its shares of common stock; and (e) That this Agreement and the requisite related Certificate of Merger under the laws of Nevada and the execution, delivery, and performance thereof by IFAN have been properly authorized and approved by the Board of Directors of IFAN and its shareholders, and will not constitute a violation of any provision of any agreement to which IFAN is a party or of its Charter or Bylaws. 10. Opinion of APO's Counsel ------------------------ APO shall furnish IFAN at the time and place of closing the opinion of APO's counsel in form and substance reasonably acceptable to IFAN's counsel as follows: (a) That this Agreement has been properly authorized, executed, and delivered by APO, and its performance by APO properly authorized and approved; and (b) That this Agreement constitutes the legally valid and enforceable obligation and undertaking of APO in accordance with its terms and provisions, subject to the conditions herein; and (c) That, upon execution and delivery of a bill of sale and other conveyance documents, all the assets, leases, contracts (other than this contract), franchises, permits, options, names, trademarks, trade names, copyrights, formulas, trade secrets, and all other property to be transferred by APO to IFAN as hereinabove provided, have been validly and effectively transferred to IFAN. (d) That, upon consummation of this Agreement, the dissolution and liquidation of APO is duly authorized and proper under the laws of the State of New 13 York and that all rights of dissent are duly provided for or non-existent. 11. Post Closing and Additional Agreements of the Parties ----------------------------------------------------- 11.1 Prior to the time of closing, APO will not have changed its name and neither APO nor any of the shareholders will have given permission to any corporation, firm, or organization to use the name "APO Health, Inc." alone or in combination with any other word or words; and at the time of closing or immediately thereafter, APO will authorize IFAN to change its name to "APO Health, Inc.", or any like name agreed to. 11.2 That after the time of closing, APO will file and prosecute such claims or suits for the refund of taxes, and make or file and prosecute such other claims or suits, in each case, for the recovery or collection of any sums which may or could be due it, "in the name of IFAN" or otherwise, as APO may reasonably request, or permit APO to file, present, or prosecute any such claims or suits in the name of "IFAN", in each case all for the benefit of APO, to which all amounts recovered thereby shall be remitted; and APO shall hold APO harmless of and from all costs, expenses, and liabilities of or resulting from any such claims, or suits or the making, filing, or prosecution thereof. 12. Successors ---------- This agreement shall be binding upon and inure to the benefit of the respective parties hereto, their heirs, representatives, successors, and assigns, 14 provided, however, that neither this Agreement nor the rights of either party hereunder may be assigned by IFAN or by APO. 13. Counterparts ------------ This agreement may be executed in several counterparts, which, taken together, shall constitute one document, which shall become binding when duly executed and delivered to each of the parties hereto. 14. Costs and Expenses ------------------ Each party shall be responsible for, and shall pay, the professionals retained by it, and neither party shall have any liability (except as otherwise set forth herein) to the other for payment of the other party's retained professionals. 15. Registration of Shares ---------------------- IFAN shall not be required to prepare and file a registration statement under the Securities Act of 1933 covering the shares of stock to be delivered hereunder to APO. 16. Broker's Fees ------------- APO health has incurred certain liabilities for brokerage fees or agent's commissions in connection with the transaction contemplated herein which shall be paid prior to or at closing. 17. Merger and Rules of Construction -------------------------------- This Agreement contains the entire understanding between the parties with respect to the transaction contemplated herein and has been the product of 15 negotiation between the parties. As such no rule of law or of construction which construes any ambiguity in favor of a party or against another shall apply with respect to the interpretation of this agreement. 18. Survival and Further Assurances ------------------------------- Each party hereby agrees that all representations, warranties, covenants and promises made to the other in connection with this Agreement or with respect to any closing document delivered pursuant hereto shall survive closing for a period of three (3) years from the date of such closing. Each party further agrees to deliver subsequent to closing such further instruments and perform such further acts as may be reasonably required by the other in order to carry out and effectuate the intent of this Agreement. 19. Headings -------- All paragraph headings are inserted for the convenience of the parties. Such headings are not intended to explain or modify the terms of this Agreement. 20. Mutual Representations ---------------------- Each party represents and warrants to the other that: (a) There are no dissenting shareholders with respect to the proposed merger and acquisition; (b) Since March 31, 2001 there has been no material adverse change in the assets or liabilities or in the condition, financial or otherwise except such changes as occur during the normal and ordinary course of its business; 16 (c) It is not a party to or threatened to be a party to any litigation, proceeding or controversy before any court or administrative agency which might result in a change in its business or property which is not covered by insurance, or which would have an adverse effect on the business or its assets, nor is it in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court of competent jurisdiction. (d) During the past five year period no officer or director of IFAN or any officer or director who may be appointed by APO as a director of IFAN pursuant to this Agreement has been the subject of: (i) A petition in Bankruptcy or other relief under Title 11 of the U.S. Code, or any state insolvency or creditor's rights law, nor has a receiver, financial agent or similar officer been appointed by a court for the business or property of such person, or any partnership in which he was a partner or within two years before the time of such filing or appointment, or any corporation of business association of which he was an officer at or within two years before the time of such filing or appointment; (iii) A conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations or other minor offenses); (iv) Any officer, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities; (1) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction 17 merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; (2) Engaging in any type of business practice; or (3) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal, state or other securities law or commodities law. (v) Any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal, state or local authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in the preceding sub-paragraph, or to be associated with persons engaged in any such activity; (vi) A finding by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any securities law, and the judgment of such civil action or finding by the SEC has not ben subsequently reversed, suspended or vacated; or (vii) A finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or 18 vacated. (e) Neither company nor any current or former shareholder, partner, director or officer has a (1) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expense relating to political activity; (2) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees; (3) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (4) made any false or fictitious entries on such corporation's books and records; (5) made any bribe, rebate, payoff influenced payment, kickback or other unlawful payment of any nature using corporate funds or otherwise on behalf of his or her respective company; (6) violated any provision of the Foreign Corrupt Practices Act of 1977, if applicable; or (7) made any material favor or gift that is not deductible for United States Income tax purposes using corporate funds or otherwise on behalf of his or her respective company. IN WITNESS WHEREOF, the parties hereto have hereunto set their respective hands and seals or have caused these presents to be executed in their respective names and their respective corporate seals to be hereunto affixed and attested by their respective officers there unto duly authorized, the day and year first hereinabove written. 19 APO HEALTH, INC. /s/ BY:________________________________ IFAN, INC. /s/ BY:________________________________ /s/ ___________________________________ JAN STAHL, DDS /s/ ___________________________________ PETER STEIL /s/ ___________________________________ KENNETH LEVENTHAL /s/ ___________________________________ JAN STAHL, DDS On behalf of Selling Shareholders STATE OF NEW YORK ) COUNTY OF NASSAU )s.s.: On the _____ day of ______________, 2001, before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), entity or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ ______________________________ (Notary Public) 20 STATE OF NEW YORK ) COUNTY OF NASSAU )s.s.: On the _____ day of ______________, 2001, before me, the undersigned, a Notary Public in and for said State, personally appeared ____________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), entity or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ ______________________________ (Notary Public) STATE OF NEW YORK ) COUNTY OF NASSAU )s.s.: On the _____ day of ______________, 2001, before me, the undersigned, a Notary Public in and for said State, personally appeared ____________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), entity or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ ______________________________ (Notary Public) STATE OF NEW YORK ) COUNTY OF NASSAU )s.s.: On the _____ day of ______________, 2001, before me, the undersigned, a Notary Public in and for said State, personally appeared ____________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), entity or the person upon 21 behalf of which the individual(s) acted, executed the instrument. /s/ ______________________________ (Notary Public) STATE OF NEW YORK ) COUNTY OF NASSAU )s.s.: On the _____ day of ______________, 2001, before me, the undersigned, a Notary Public in and for said State, personally appeared ____________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), entity or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ ______________________________ (Notary Public) 22 -----END PRIVACY-ENHANCED MESSAGE-----