Identify risks in planning the audit by examining client source documents: 10-K, Board Minutes, Letter to Shareholders, Organizational Chart,? and IT Systems. Apollo Shoes, Inc is a global

Copyright © 2021 McGraw-Hill Education. All rights reserved.  

MEETING HELD JANUARY 6, 2020

Larry Lancaster, chairman of the board, presided over the first meeting of the year, beginning at 3 P.M. The meeting was conducted in the boardroom of Apollo’s new global headquarters. All members were present:

Larry Lancaster Josephine Mandeville** Fritz Brenner** Ivan Gorr* Theodore Horstmann** Harry Baker* Eric Unum

* Outside director ** Outside director and member of the audit committee.

The minutes of the December 16, 2019 meeting were reviewed and approved. Reporting on the annual meeting of shareholders, Mr. Lancaster welcomed the new or reelected board members: Josephine C. Mandeville, Professor of Accountancy and Typing at the Graduate School of Business and Clerical Skills; Ivan W. Gorr, President and CEO of Far More Drugs; Harry R. Baker, Executive Vice President and Treasurer of the Iguana Growers of America Inc., Theodore Horstmann, Minister of Commerce of Anglonesia; and Fritz Brenner, President of The Widget Corporation Mr. Unum presented the forecast for the year, attached. Sales are expected to increase 10 percent, with costs of goods sold and general expenses bearing about the same relationships as experienced last year. Mr. Lancaster stated, “Well, they better increase by that much, or heads will roll!” Mr. Lancaster’s plan to move production to within the company was discussed. Over Mr. Horstmann’s vehement disagreement, the board authorized purchase of equipment totaling $1.3 million to facilitate internal production of Apollo products by a vote of 6-1. Mr. Unum reported that the Company’s short-term line of credit was refinanced as of February 2, 2020 and rolled into a note payable with the Twenty-First National Bank of Maine, due January 1, 2021. Mr. Brenner moved a declaration of dividends for the year ended the previous December 31. The motion died for lack of a second. Mr. Unum moved, and Mr. Lancaster seconded, officers’ salary increases of 10 percent for 2020 as well as stipends for outside Board Members of $90,000 each. The board approved these salaries and stipends by a 6- 1 vote:

2020 Salary

President and CEO, Larry Lancaster $466,000

Exec Sr. VP and CFO, Joe Bootwell 246,000

VP Marketing, Fred Durkin 322,000

VP Finance, Eric Unum 367,000

VP Information Systems, Sue Fultz 167,000

VP Operations, Daisy Gardner 320,000

Internal Audit Director, Karina Ramirez 167,400

Treasurer, Mary Costain 187,400

Controller, Samuel Carboy 209,600

Mr. Lancaster encouraged everyone to watch the 2020 Super Bowl to watch for Apollo’s 15- second commercial. He noted that the cost of the commercial time rose approximately 10% from last year. The cost of production and airing the ad is now approaching $1,000,000. Meeting ended 5:30 P.M. /s/ Jeff Chesnut, Secretary

Copyright © 2021 McGraw-Hill Education. All rights reserved.  

MEETING HELD JUNE 30, 2020

Larry Lancaster, chairman of the board, presided over the second meeting of the year, beginning at 3 P.M. All members were present:

Larry Lancaster Josephine Mandeville** Fritz Brenner** Ivan Gorr* Theodore Horstmann** Harry Baker* Eric Unum

* Outside director ** Outside director and member of the audit committee.

The minutes of the January 6 meeting were reviewed and approved. Mr. Lancaster reported on damage caused by a “Nor’easter” storm that hit Shoetown in April. Damages amounted to approximately $50,000, just under the insurance deductible. Mr. Unum reported that sales revenues are not meeting expectations, primarily because of parents’ growing disenchantment with spoiling their children; parents were no longer willing to buy $300 premium shoes for their kids as they did in previous years. Mr. Gorr concurred and mentioned something about “not sparing the rod.” In order to compensate for decreased sales, the Company has raised prices by about 10% with respect to product costs. Mr. Lancaster lamented that the quality of Apollo products was too high—the shoes were just not wearing out fast enough. Mr. Lancaster also stated that because of the strength of current product lines and as a cost- cutting measure, he decided to stop research and development efforts on the Phoneshoe, thereby eliminating Research and Development expense for the current year. The development lab will be modified in 2021 to house a personal gym for corporate executives. Scientists working in the lab have been reassigned to maintenance duties elsewhere in the company. The Company has also saved postage and telephone expense through increased use of e-mail.

In other business, the board authorized the write-off of one account receivable for $23,810.13 for an account that had been outstanding for over a year. Mr. Lancaster noted that he did not anticipate any other write-offs during the year, or that “heads would roll!”

Mr. Unum moved that Apollo advance $1,250,000 to Mr. Lancaster’s personal secretary as a personal loan to cover personal legal expenses related to her previous employer. Mr. Unum further suggested that the promissory note plus accrued interest of 1% per year be due on June 30, 2057. Mr. Lancaster suggested that it be recorded in “other receivables,” rather than “employee advances” so as to not trouble shareholders with needless details. After general agreement among the board that similar options be made available to other board members in the future on an as needed basis, the advance was approved unanimously. Mr. Lancaster asked Mr. Unum to have the check drawn to him immediately at the conclusion of the board meeting; he would cash it and give it to his secretary. The board unanimously supported Ernst Hathaway’s promotion from Director of MIS to VP-Information Systems. He reported on the plans for the purchase and installation of a new information system. The board authorized up to $1.2 million for the purchase of the new computer system. Ms. Mandeville offered to consult on the purchase and installation. To fund the purchase and pay other expenses, Mr. Unum requested that the board authorize a draw of $44,403,000 on the Company’s line of credit on July 1. This proposal was unanimously approved. Meeting ended 7:30 P.M. /s/ Jeff Chesnut, Secretary

AudComMins—063007.doc

Copyright © 2021 McGraw-Hill Education. All rights reserved.  

MEETING HELD JANUARY 6, 2021

Larry Lancaster, chairman of the board, presided over the regular meeting, beginning at 2 P.M. All members were present:

Larry Lancaster Josephine Mandeville** Fritz Brenner** Ivan Gorr* Theodore Horstmann** Harry Baker* Eric Unum * Outside director ** Outside director and member of the audit committee. The minutes of the June 30 meeting were reviewed and approved. The selection by the audit committee of Anderson, Olds & Watershed as auditors was ratified. The $750,000 fee was approved for the 2020 audit. Ms. Mandeville moved, and Mr. Gorr seconded, a proposal to declare retroactively a cash dividend of $860,000 payable March 1, 2021, to stockholders of record on December 31, 2020. Approved by a vote of 5– 2. Ms. Fultz, VP-Legal affairs, stated that on January 5, 2021 (yesterday), a class action suit alleging gross negligence and violation of warranty of merchantability was brought against Apollo for $12,000,000. The action stems from the use of one of the Company's products in an aquatic environment, which may have caused severe electrical shock to the wearer(s). She is working closely with Apollo’s legal counsel, Perley Stebbins, to vigorously defend Apollo’s good name. Ms.Fultz stated that the company’s current insurance does not cover these types of actions. Mr. Baker inquired as to the status of the machinery purchased in early 2020. Mr. Lancaster replied that the machinery would be set up “soon.”

Mr. Lancaster moved and Mr. Unum seconded the approval of officers’ bonuses for the year just ended December 31, 2020. Approved by a 4–3 vote.

President, Larry Lancaster $200,000

VP Marketing, Fred Durkin 50,000

VP Finance, Eric Unum 50,000

VP Information Systems, Ernst Hathaway 50,000

VP Legal Affairs, Sue Fultz 50,000

VP Operations, Daisy Gardner 50,000

The Board approved the Company’s contribution to the Employee Benefits program. Mr. Unum stated that the contribution was increased by $300,000 for 2020, up 10% over the past several years to appease growing employee dissatisfaction. Given the company’s plans to automate the distribution process, Mr. Unum stated that employee benefits will decrease significantly in future years. Mr. Unum noted also that the company decided not to air a Super Bowl ad this year.

Meeting ended 8:30 P.M. /s/ Jeff Chesnut, Secretary

Copyright © 2021 McGraw-Hill Education. All rights reserved.  

Minutes of the Audit Committee, Apollo Shoes October 17, 2020

Present at Meeting: Arnold Anderson, CPA (partner in charge of the audit); Darlene Wardlaw, CPA (auditor manager); Eric Unum (Apollo’s vice president of finance); Mary Costain (Apollo’s treasurer); Samuel Carboy (Apollo’s controller); and Karina Ramirez (Apollo’s director of internal audit). The three members of the audit committee of the board and the corporate secretary also were present, but they did not enter into the conversation.

Mr. Unum (VP finance): Well, I want to welcome the auditing firm of Anderson, Olds, and Watershed, CPAs to what we call the “Apollo Shoes Experience.” After our old auditors, Smith & Smith, CPAs, unexpectedly withdrew from the engagement, we were very happy to have a firm of your quality to come aboard.

Mr. Anderson (partner on the audit): Well, we are always looking for high quality clients. By the way, why did your previous auditors resign?

Mr. Unum (VP finance): I’d rather not talk about it. Arnold, will Darlene be in charge?

Mr. Anderson (partner on the audit): Yes, and she will be assisted by several of our best staff, including an income tax specialist and an information technology auditor. We need to keep up to date on your computer information systems. Back to your previous auditors, with your permission, we would like to contact them.

Mr. Unum (VP finance): Well, we’d rather you didn’t. There may be some litigation since they withdrew from the engagement with so little notice. Is it necessary for you to speak with them to accept the engagement? Mr. Anderson (partner on the audit): No, not really, but it does raise some concerns for our firm.

Ms. Costain (treasurer): In the past, we have never had any unpleasant discoveries of embezzlement or theft, but we always want to be vigilant. Will you plan enough in-depth auditing to give us assurances about errors and frauds in the accounts?

Ms. Wardlaw (manager on the audit): We will follow audit standards and base our audit work on samples of transactions. We plan the work to look for major errors and frauds in the accounts, but cleverly hidden schemes might not be discovered.

Ms. Ramirez (internal auditor): Darlene, I agree, it’s hard to uncover clever schemes. While I am new to Apollo, none of the projects that I have undertaken this year shows anything amiss, other than normal human error types of mistakes.

Ms. Costain (treasurer): This year, we want to add some work to the audit. I am short on staff time and need to have you prepare the state franchise tax return as well as the federal tax returns.

Ms. Wardlaw (manager on the audit): Our tax staff person can do the state and federal returns, and I will have them reviewed by Maria Olds, our tax partner. In order to perform the tax work, Sarbanes-Oxley requires that we get prior approval from the audit committee to perform both the tax work as well as the audit.

Mr. Anderson (partner on the audit): I assume you also want us to review the 10-K filing material?

Mr. Unum (VP finance): Yes. Will you need any staff help from us?

Ms. Ramirez (internal auditor): Last year, Apollo was able to save on audit fees when my staff prepared a stack of schedules and analyses that our previous auditors needed.

Ms. Wardlaw (manager on the audit): Yes, Karina, I will give you a list of schedules for various accounts. I will appreciate your having them ready when we start fieldwork near the beginning of January.

Mr. Carboy (controller): Speaking of being ready, we will be able to give you a trial balance the day after December 31, on New Year’s Day!

Mr. Unum (VP finance): How much is this going to cost us?

Mr. Anderson (partner on the audit): It is difficult to give you a fixed fee deal, but my estimate, considering the additional work, is $750,000. Darlene will let you know immediately if problems arise to cause the work to be more extensive.

Mr. Unum (VP finance): Thank you. This has been a productive meeting of the minds. We look forward to your getting started next month. Meeting ended 5:30 P.M. /s/ Jeff Chesnut, Secretary

Letter to Fellow Shareholders Dear Fellow Shareholders, You may have noticed our competitor's focus on earth-bound activities and athletes. Our focus is on exactly the opposite direction. In actuality, the technological superiority of our products is at the point where our sales are limited only by the technological inferiority of other scientific fields (specifically, current transportation means). As space communities continue to grow, we intend to be among the first to market our products in new worlds. It is there that our technological advances in light and sound can combine with our rugged footwear to propel all galactic sports participants to their fullest potential. Back here on earth, the past year has been one of the most dynamic and exciting years since I began my tenure at Apollo Shoes in the fall of 2019. From the beginning, Apollo Shoes, Inc. has adapted itself to meet the needs of all its galactic customers and to take advantage of all opportunities supplied by exploration of new frontiers. After a record year when most companies may have wanted to relax and play it safe, we have decided to use this excitement to reach out further in our continuing mission: to make a difference in this galaxy. Our product lines led by the flagship products SPOTLIGHT (for athletes who like to compete at night), and SIREN (designed specifically for attendees at large music festivals) have met widespread acceptance. We have signed with some of this world's premier athletes as spokespersons for our products, including a recent winner of the grueling Alaska Iditarod who used his SPOTLIGHTs to guide his dogs to a late-night finish line. We are currently negotiating with a soccer league to exclusively use our SIRENs; the shoe's flashing lights are designed to go off after every team goal! Our strategic management plans have allowed us to maintain a positive trend in income over the past several years, and this was no easy task, given the state of the galactic economy. Our net income for the year has been the best since we began operations four years ago. Next year is already on track to be even better! The strength of our results for the past year should not be confused with the truth of the times. This was a uniformly difficult year for all businesses. Due to the conflicts in foreign countries, and uncertainty with the Federal Reserve's adjustments of interest rates, consumer confidence specifically and the overall economy more generally, has been negatively affected; therefore, fewer Earth consumers are buying our state-of-the-art athletic equipment. All of our operating divisions were severely tested. I am proud of their responses. Although sales were not as strong as we had anticipated, our marketing plans will allow us to bounce back next year. Indeed, with the advent of significant new breakthrough technology by Apollo Shoes, Inc.'s research and development team, Apollo Shoes, Inc. now has the possibility to take a leadership role in the galactic athletic footwear market. Apollo Shoes, Inc. has always been known for its leadership position in electronic shoe technology, but we are now committed to expanding our marketing focus. With new applied technologies, Apollo Shoes, Inc. can maintain its tradition of high-tech electronic performance and style. We continue to work on and improve the SPEAKERSHOE, an athletic shoe with an amplified loudspeaker, originally designed for the international recording group "Mythic

Cockroach." We are hard at work on new ideas, such as the PHONESHOE, the sneaker with a cellular phone for those space citizens who need to remain intergalactically connected at all time. We anticipate that the PHONESHOE will capture a significant piece of this quickly expanding market. At Apollo Shoes, Inc., we like to briefly acknowledge prior achievements and then proceed to new challenges. This year was great only because it provided us with the resources to expand our operations and help enable our further technological progress. As we move forward to 2021 and beyond, we recognize that we need to provide "more, faster, and better" to our markets. It is critical to continue this tradition because production, speed, and quality are critical elements for future success. We look forward to the challenge. Larry Lancaster Chairman, President and CEO January 6, 2021

Apollo Shoes Inc. 

Organizational Chart 

As of 9/30/2020 

Susan Richards  Credit Manager 

Audit  Committee 

Board of Directors 

Samuel Carboy  Controller 

Mary Costain  Treasurer 

Fred Durkin  VP‐ 

Marketing 

Sue Fultz  Legal Affairs 

Ernst  Hathaway  VP – IT

Eric Unum  VP‐ Finance 

Daisy Gardner  VP‐  

Operations 

Joe Bootwell  Executive Sr. VP & CFO 

Larry Lancaster  Chairman, President, & 

 CEO 

Karina Ramirez  Internal Audit 

——————————–

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

————————

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019

COMMISSION FILE NUMBER 1-9Z40

APOLLO SHOES INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MAINE

(State or other jurisdiction of incorporation or organization)

X8-061325

(IRS Employer Identification No.)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH

REGISTERED ———— ————

Common Stock, Par Value, $1.00 per share

STUDS

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 7, 2020, the aggregate market value of the registrant's voting stock held by non-affiliates of the registrant was approximately $24,315,000. As of March 7, 2020, 8,105,000 shares of the registrant's Common Stock were issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE Definitive Proxy Statement dated December 12, 2019 for the Annual Meeting of Shareholders to be held on Tuesday, February 4, 2020 at the End of the Universe Restaurant in downtown Shoetown.

APOLLO SHOES INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS Item 1. Business ………………………………………………………………………………………………… i Item 2. Properties ……………………………………………………………………………………………… ii Item 3. Legal Proceedings …………………………………………………………………………………. iii Item 4. Submission of Matters to a Vote of Security Holders. ………………………………. iii! Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. … iii Item 6. Selected Financial Data ………………………………………………………………………… iv Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations …………………………………………………………v Item 8. Financial Statements and Supplementary Data ………………………………………… vi Item 9. Changes in and Disagreements with Accountants ………………………………….. xix Item 10. Directors and Executive Officers of the Registrant …………………………………. xix Item 11. Executive Compensation …………………………………………………………………….. xix Item 12. Security Ownership of Certain Beneficial Owners and Management. xix Item 13. Certain Relationships and Related Transactions. xix Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K …………….xx

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with regard to the Company's revenues, earnings, spending, margins, cash flow, orders, inventory, products, actions, plans, strategies and objectives. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "will be," "will continue," "will result," "could," "may," "might," or any variations of such words or other words with similar meanings. Any such statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially from those discussed in such forward-looking statements. Prospective information is based on management's then current expectations or forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying such expectations or forecasts, become inaccurate. ITEM 1. BUSINESS.

Apollo Shoes, Inc. (the “Company”) is a planetary distributor specializing in technologically superior athletic podiatric products. The Company’s brands– SIREN, SPOTLIGHT, and SPEAKERSHOE- – are used extensively in many athletic competitions, such as the Switzerland Watersports Games in Zurich. The Company is excited about this annual event that exhibits to the entire world the skills and spirit of outstanding Swiss aquatic athletes. The Company’s products are shipped to large and small retail outlets in a six-state area. The Company stocks a wide range of shoe products and has a large base of retail store customers. Apollo operates from a large office, operations, and warehouse facility in the Shoetown, Maine area. Apollo Shoes, incorporated in the state of Delaware, is a public corporation. Its stock is traded in the over-the-counter market. No one presently owns more than 4 percent of the outstanding common stock. The company is subject to the reporting requirements of the Securities and Exchange Act of 1934.

Organization and Personnel

Apollo Shoes is a medium-sized corporation. It has over 200 employees organized in five departments headed by vice presidents. Marketing The marketing department handles advertising and direct contact with customers. The marketing department vice president supervises the sales staff, the advertising staff, and the customer relations staff.

i

Finance The finance department has two subordinate offices—the treasurer and the controller. The treasurer supervises the cashiers and the cash management professionals. The controller’s office has the following departments and personnel: billing department, accounts receivable/cash receipts department, accounts payable/cash disbursements department, inventory records department, payroll department, general ledger department, and financial statement department. Information Systems A significant reorganization and enhancement of the information systems department was implemented this past year. At present, the staff consists of a Director of IS (information systems), a systems development project manager and two programmer/analysts, an operations manager (who also serves as the librarian and control clerk), and two machine operators. When the reorganized information systems department went into effect, the director was promoted to vice president. Apollo obtained a new wireless local area network (LAN) multiserver soon after and began testing the hardware and software. Since the new computer system was designed and customized to Apollo’s needs, every effort was made to keep as many as possible of the procedures and business documents used in the old system. This made the transition to the new system easy on the employees, thus reducing training and employee objections to the changes. Operations The operations department contains production planning specialists and some production control professionals, who assist the marketing department in technical matters and assist customers with product specifications. Operations supervisors supervise hourly workers who move products from receiving, inventory, and shipping to serve customer demand. The department also supervises the timekeepers, who maintain the workers’ time clocks and collect payroll time cards. The operations department contains the critical functions of purchasing, receiving, and shipping. Inventory storekeeping responsibility is also in this department, with some inventory managers. For reasons lost to history, the department also has the mailroom and the personnel department. ITEM 2. PROPERTIES. Until February of 2019, the Company leased most of the properties that were used in its business. Its corporate headquarters relocated at that time to office facilities in Shoetown, Maine. At its corporate headquarters, the Company occupies approximately 10,000 square feet of space. A lease on an operations facility expires on June 30, 2020. This warehouse and distribution center is located approximately one mile from the Company headquarters and contains approximately 450,000 total square feet of usable space.

ii

ITEM 3. LEGAL PROCEEDINGS. On September 12, 2019, the Company agreed to settlement of a suit brought against the Company by a competitor for patent infringement for the Company's use of the Siren. While the Company denies any wrongdoing, the Company felt that the settlement would be preferable to a long litigation process. The final settlement totaled $11,695,000 ($19,172,000, net of a tax benefit of $7,477,000). ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted during 2019 to a vote of security holders, through the solicitation of proxies or otherwise. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's common stock is quoted on the Security Traders, Underwriters, and Dealers System (STUDS) under the symbol APLS. The following table, derived from data supplied by STUDS, sets forth the quarterly high and low sale prices during 2019 and 2018.

2019 2018 High Low High Low

First $14.625 $3.375 $4.00 $3.50 Second $11.00 $2.625 $4.625 $4.25 Third $8.25 $3.25 $8.125 $4.00 Fourth $5.625 $3.125 $11.50 $5.00

The stock price at closing on December 31, 2019, was $3.25 per share. As of December 31, 2019, there were approximately 15,342 holders of record of the Company's Common Stock including those shares held i

Collepals.com Plagiarism Free Papers

Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.

Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS

Why Hire Collepals.com writers to do your paper?

Quality- We are experienced and have access to ample research materials.

We write plagiarism Free Content

Confidential- We never share or sell your personal information to third parties.

Support-Chat with us today! We are always waiting to answer all your questions.