UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

(Mark One)

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
    [X]    THE SECURITIES EXCHANGE ACT OF 1934
           For the quarterly period ended June 30, 1998

                                       OR

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

                         Commission File Number 0-22365

                     APOLLO INTERNATIONAL OF DELAWARE, INC.
          -------------------------------------------------------------
         (Exact name of Small Business Issuer specified in its charter)


           DELAWARE                                    59-3285046
------------------------------                      -------------------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)


                         6542 U.S. HIGHWAY 41, SUITE 215
                           APOLLO BEACH, FLORIDA 33572
                    ----------------------------------------
                    (Address of principal executive offices)
                    

                                 (813-645-7677)
                            --------------------------
                           (Issuer's telephone number)

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X]  No [ ].

The number of shares of the Registrant's common stock outstanding at August 1,
1998 was 3,655,115 shares.


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1:  FINANCIAL STATEMENTS

                     APOLLO INTERNATIONAL OF DELAWARE, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                     ASSETS

                                                  JUNE 30,         DECEMBER 31,
                                                    1998              1997
                                                 ----------        ------------
CURRENT ASSETS
  Cash                                           $      852        $   41,600
  Accounts receivable                                45,556            57,512
  Inventory                                         963,212         1,121,870
  Other  assets                                     161,827            89,541
                                                 ----------        ----------

        TOTAL CURRENT ASSETS                      1,171,447         1,310,523

DEFERRED SOFTWARE COSTS                           2,609,458         2,425,583
FIXED ASSETS                                        226,507           207,077
OTHER ASSETS                                         13,652            15,492
                                                 ----------        ----------

        TOTAL ASSETS                             $4,021,064        $3,958,675
                                                 ==========        ==========



                                   (CONTINUED)

                                       2

<PAGE>


                     APOLLO INTERNATIONAL OF DELAWARE, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)

                                   (CONTINUED)

                      LIABILITIES AND STOCKHOLDER'S EQUITY

                                                  JUNE 30,     DECEMBER 31,
                                                   1998           1997
                                                 -----------   -----------

CURRENT LIABILITIES
  Overdraft                                   $    39,416    $     7,047
   Trade notes and accounts payable
     and accrued expenses                       1,175,340        718,550
   Payroll taxes payable                          116,962         55,153
   Notes payable - stockholders                 1,562,831      1,399,321
   Current portion of  notes
     Payable equipment                              4,453          4,871
                                              -----------    -----------

        TOTAL CURRENT LIABILITIES             $ 2,899,002    $ 2,184,942

ACCOUNTS PAYABLE - NONCURRENT                     125,000        125,000
NOTES PAYABLE - EQUIPMENT                          10,998          9,720
NOTES PAYABLE - LONG-TERM                       1,142,983           --
                                              -----------    -----------

        TOTAL LIABILITIES                     $ 4,177,983    $ 2,319,662
                                              -----------    -----------
STOCKHOLDERS' EQUITY
  Preferred stock, $.01 par value;
    Authorized: 5,000,000 shares;
    issued and outstanding:  none
  Common stock, $.01 par value;
    Authorized: 15,000,000 shares;
    issued and outstanding: 3,655,115
    as of June 30, 1998 and 3,555,115 as of
    December 31, 1997                              29,717         28,717
  Additional paid-in capital                    7,014,805      6,830,725
  Common stock warrants                           200,000
  Deficit                                      (7,395,307)    (5,193,170)
  Less prepaid rent                                (6,134)       (27,259)
                                              -----------    -----------

        TOTAL STOCKHOLDERS' EQUITY            $  (156,919)   $ 1,639,013
                                              -----------    -----------
         TOTAL LIABILITIES
         AND STOCKHOLDER'S EQUITY             $ 4,021,064    $ 3,958,675
                                              ===========    ===========

                                       

<PAGE>
<TABLE>
<CAPTION>

                     APOLLO INTERNATIONAL OF DELAWARE, INC.

                                 AND SUBSIDIARY

                             STATEMENT OF OPERATIONS

                                   (UNAUDITED)

                                         THREE  MONTHS                 SIX MONTHS
                                         ENDED JUNE 30,              ENDED JUNE 30,
                                     1998          1997            1998          1997
                                 ------------   -----------    ------------   -----------
<S>                              <C>            <C>            <C>            <C>        
SALES                            $    38,299    $     5,460    $   147,263    $   443,259
COST OF SALES                        (32,991)        (4,734)      (126,193)      (239,259)
                                 -----------    -----------    -----------    -----------

           GROSS PROFIT                5,308            726         21,070        204,000
                                 -----------    -----------    -----------    -----------
EXPENSES
  Research and development           (84,880        (94,830)      (176,195)      (201,196)
  General and administrative        (894,144)      (442,947)    (1,889,010)      (837,407)
                                 -----------    -----------    -----------    -----------

          TOTAL EXPENSES            (979,024)      (537,777)    (2,065,205)    (1,038,603)
                                 -----------    -----------    -----------    -----------

    LOSS FROM OPERATIONS            (973,716)      (537,051)    (2,044,135)      (834,603)

INTEREST EXPENSE AND
  AMORTIZATION OF DISCOUNT
  AND DEFERRED FINANCING COSTS       (85,733)       (44,306)      (135,752)       (93,092)
                                 -----------    -----------    -----------    -----------
LOSS BEFORE INCOME TAXES          (1,059,449)      (581,357)    (2,179,887)      (927,695)

INCOME TAXES                     -----------    -----------    -----------    -----------

              NET LOSS           $(1,059,449)   $  (581,357)   $(2,179,887)   $  (927,695)
                                 ===========    ===========    ===========    ===========
AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING               3,052,929      2,811,434      3,052,929      2,811,434
                                 ===========    ===========    ===========    ===========

LOSS PER COMMON SHARE            $     (0.35)   $     (0.21)   $     (0.71)   $     (0.33)
                                 ===========    ===========    ===========    ===========
</TABLE>

                                       4

<PAGE>


                     APOLLO INTERNATIONAL OF DELAWARE, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                   (UNAUDITED)

                                                        SIX MONTHS
                                                       ENDED JUNE 30,
                                                   1998            1997
                                                -----------     ----------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                      ($2,179,886)    ($927,695)
    Adjustments to reconcile net loss
    to net cash used in operating
    Activities:
      Amortization of discount
        And deferred financing costs                               17,308
      Amortization of deferred software cost       191,054         85,646
      Depreciation and amortization                 30,132         15,549
      Amortization of prepaid rent                  21,125          3,333
      Capitalization of software costs            (211,961)      (157,203)
      Increase (decrease) in cash from
        Accounts receivable                         11,955       (356,065)
        Inventory                                  158,658        (49,772)
        Other current assets                      (197,462)         5,927
        Other assets
        Trade notes and accounts
          Payable and accrued expenses             857,986        503,409
        Payroll taxes payable                       63,538        105,755
                                                -----------     ---------

       NET CASH USED IN OPERATING ACTIVITIES   ($1,254,861)     ($753,808)
                                               -----------      ---------
NET  CASH USED IN INVESTING ACTIVITIES
  Purchases of fixed assets                    ($   49,323)     ($ 30,211)
                                               -----------      ---------


                                   (CONTINUED)

                                       5

<PAGE>


                        APOLLO INTERNATIONAL OF DELAWARE, INC.
                                    AND SUBSIDIARY

                         CONSOLIDATED STATEMENT OF CASH FLOWS

                                      (UNAUDITED)

                                      (CONTINUED)

                                                       SIX MONTHS
                                                      ENDED JUNE 30,
                                                    1998         1997
                                                 -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common Stock         $  200,000         
  Proceeds from loans payable -  stockholders                 $  498,875
  Proceeds from note payable - other              1,142,983      183,700
  Proceeds from loans payable - line of credit                   257,241
  Cost of proposed public offering                              (187,560)
  Payments of loans payable                         (72,500)       

        NET CASH PROVIDED BY FINANCING
         ACTIVITIES                               1,270,483      752,256
                                                 ----------   ----------

        INCREASE (DECREASE)  IN CASH                (33,701)     (31,763)

CASH - beginning                                     34,553       34,099
                                                 ----------   ----------

CASH - ENDING                                    $      852   $    2,336
                                                 ==========   ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
  Cash paid for interest                         $   47,709   $   45,816
                                                 ==========   ==========

                                       6

<PAGE>



                        APOLLO INTERNATIONAL OF DELAWARE, INC.

                             NOTES TO FINANCIAL STATEMENTS

                                      (UNAUDITED)

1.  DESCRIPTION OF BUSINESS

    Apollo International of Delaware, Inc. (Company) develops, manufactures and
    distributes worldwide electric power protection and control products,
    utilizing computer and fiber optics technologies for industry and electric
    utilities.

2.  FINANCIAL STATEMENTS

    The accompanying unaudited financial statements have been prepared in
    accordance with generally accepted accounting principles for interim
    financial information. Accordingly, they do not include all the information
    and footnotes required by generally accepted accounting principles for
    financial statements. For further information, refer to the audited
    financial statements and notes thereto for the year ended December 31, 1997.

    In the opinion of the Company, all adjustments, consisting only of normal
    recurring adjustments necessary for a fair presentation of the financial
    statements have been made.

    The accompanying unaudited financial statements have been prepared assuming
    that the Company will continue operations on a going-concern basis, which
    contemplates the realization of assets and the satisfaction of liabilities
    in the normal course of business. However, the Company has incurred net
    losses since inception and, as of June 30, 1998, its current liabilities
    exceeded its current assets by approximately $1,727,555. These factors raise
    doubt about the Company's ability to continue as a going concern. The
    Company's ability to continue as a going concern is dependent upon obtaining
    additional financing and significantly increasing its sales. Management has
    received additional financing for working capital, however, there is no
    assurance that the Company will be able to obtain additional financing if
    necessary, or if such financing is obtained, attain profitable operations
    and continue operations as a going concern.

3.  LOSS PER SHARE

    Loss per share was computed based upon the weighted average number of common
    shares and common share equivalents outstanding during the three months and
    six months ended June 30, 1998 and 1997. Fully-dilutive loss per common
    share has not been presented because it was anti-dilutive.

    In February 1997, the FASB issued Statement No. 128, "Earnings Per Share",
    which changes the calculations and disclosures of earnings per share. As of
    January 1, 1997 the Company adopted Statement No. 128 without material
    effect.

                                       7

<PAGE>

4.  PUBLIC OFFERING

    In July 1997, the Company closed its initial public offering and sold
    800,000 shares of common stock at $5.00 per share, and 920,000 warrants at
    $.25 per warrant, resulting in net proceeds of approximately $3.16 million,
    all of which proceeds have been utilized.

5.  CONVERTIBLE NOTES PAYABLE

    Through March 19, 1998, the Company borrowed an aggregate of $1,000,000,
    payable in two years, with interest at 8%, per annum, payable quarterly as
    to $250,000 and monthly as to $750,000. The notes are collateralized by
    accounts receivable and inventory and are convertible into common stock at
    $3.25 per share. In connection with the borrowing, the Company paid a fee to
    a consultant of $100,000 and 325,000 warrants. Each warrant is exercisable
    to purchase one share of common stock at $3.25 per share, commencing July
    11, 1999 through February 8, 2003.

    On June 22, 1998, the Board of Directors of the Company approved the terms
    of an agreement (Omnibus Agreement) with Oak Point Investments, Inc. as
    Lender, and Frank J. Mancini as Line Lender, whereby the Company would
    receive cash advances up to an aggregate of $790,000 for operating capital,
    and up to a total of $250,000 as a creditors fund for the payment of
    outstanding accounts payable of the Company. In addition, a revolving line
    of credit up to $100,000 was set up for the sole purpose of purchasing
    material required to produce products. The cash advances and funds paid from
    the creditors fund shall be evidenced by a secured convertible promissory
    note, which note shall be convertible into the Company's common stock at a
    $1.00 per share conversion price (subject to underwriter's lock-up until
    July 10, 1999). The security for the cash advances and creditors funds drawn
    down by the Company will be a first security interest in the common stock of
    the Company's subsidiary, Trans-World Powernet, Inc. The line of credit will
    be evidenced by a secured promissory note, and will be secured by the
    Company's accounts receivable. Through June 30, 1998, the Company received
    $53,000.

    As part of the above Omnibus Agreement, the Company's outstanding debt as of
    May 31, 1998, in the amount of $2,428,045 (exclusive of accounts payable or
    funds subsequently received under the Omnibus Agreement) shall be
    convertible on a pro rata basis into the Company's common stock at a $1.00
    per share conversion price subject to the underwriter's lock-up, and the
    exercise price for certain outstanding common stock purchase warrants shall
    be reduced to $1.00 per share also on a pro rata basis. The pro rata basis
    will be equal to the amount Lender provides the Company as a percentage of
    the total funding of $1,040,000. A finders fee is payable to G.A.R., Inc.,
    equal to 4% of the loan proceeds actually advanced to or on behalf of the
    Company under the Omnibus Agreement.

6.  LOANS PAYABLE

    On April 24, 1998, the Company entered into a 60 day loan agreement with
    Rainfest, Ltd. in the amount of $50,000. The loan was non-interest bearing,
    but included the issuance of 20,000 shares of common stock of the Company,
    subject to the underwriter's lock-up. The loan was secured by the accounts
    receivable of Trans-World Powernet, Inc., a subsidiary of Apollo, and
    personal guarantees by David W. Clarke, President, and Christine Clewes,
    Vice 

                                       8

<PAGE>


    President of Marketing. On June 2, 1998, the loan to Rainfest was repaid
    through a personal loan by John Tang, President of Trans-World Powernet,
    Inc. in the amount of $25,000, and a personal loan by Christine Clewes in
    the amount of $13,000. The balance of the amount due Rainfest of $12,000 was
    paid by the Company from operating funds. Both John Tang and Christine
    Clewes have their loan secured by the accounts receivable of Trans-World.

    On June 5, 1998, the Company entered into a loan agreement with Oak Point
    Investments, Inc. in the amount of $60,000. Repayment of the loan is to be
    made from the first $60,000 received by the Company of Trans-World Powernet,
    Inc. accounts receivable, with said receivables secured by a Lock Box. As
    part of this loan, 24,000 shares of the common stock of the Company, subject
    to the underwriter's lock-up, shall be issued to Oak Point Investments, Inc.

7.  SECURITIES AND EXCHANGE COMMISSION

    In March 1998 the Company received an informal letter of inquiry from the
    Securities and Exchange Commission ("SEC") requesting copies of certain
    documentation. The letter indicated that the inquiry was confidential and
    should not be regarded as an indication by the SEC that any violation of law
    has occurred, or as a reflection upon the merits of the Company's securities
    or upon any person or entity who effected transactions in the Company's
    securities. However, although the inquiry is informal, there is no assurance
    that a more formal inquiry will not follow. As a result of the preliminary
    nature of the inquiry, the Company is unable to predict whether this will
    result in adverse consequences to the Company. As of June 30, 1998, the
    Company had provided the SEC with copies of all requested documentation. The
    Company had not been notified by the SEC of any change to the status of this
    informal inquiry.

8.   OBSOLETE INVENTORY

     Due to the difficulties the Company experienced with the FPR1 and the CMPR2
     in the field, major redesigns of both units were undertaken (See Factors
     Affecting Operating Results). As a result of these engineering redesigns,
     certain inventories became obsolete. After taking advantage of all returns
     to vendors, the net effect to the Company was a write-down of inventory in
     the amount of $202,714.39.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which represent the Company's expectations and beliefs, including, but not
limited to statements concerning the Company's expected growth. The words
"believe," "anticipate," "estimate," "project," "intend," and similar
expressions identify forward looking statements, which speak only as of the date
such statements were made. These statements by their nature involve substantial
risks and uncertainties, certain of which are beyond the Company's control and
cannot be predicted or quantified. Actual results may differ materially
depending on a variety of important factors, including, among others referenced
herein and in the Company's annual report on Form 10-KSB (File No. 0-22365),
problems commonly encountered by companies seeking to commercialize new products
such as unexpected delays in product development, production, and marketing;
sources for sufficient capital for the Company's growth and operations; economic
and political factors in nations of the Company's international customers;
changes in economic conditions; demand for the Company's products and changes in
the competitive environment.

                                       9

<PAGE>


RESULTS OF OPERATIONS

The following table sets forth for the periods indicated certain selected
historical operating results for the Company as a percentage of net sales.

                                                  SIX MONTHS
                                                 ENDED JUNE 30,
                                              1998           1997
                                            -------         ------

Net Sales                                     100.0%         100.0%
Cost of Goods Sold                             85.7%          54.0%
                                            -------         ------  
Gross Profit                                   14.3%          46.0%
Operating Expenses                           1402.4%         234.3%
                                            -------         ------  
Loss from Operations                        (1388.1)%       (188.3)%
                                            
                                          
        REVENUES. Gross revenues for the three months and six months ended June
30, 1998 were $38,299 and $147,263 respectively, generating gross profits of
$5,308 and $21,070 for those same periods. During the comparable prior year
periods, revenues were $5,460 and $443,259, which generated gross profits of
$726 and $204,000. The increase in revenues between the second quarter of 1998
as compared to the same quarter in 1997 is due to an increase in the number of
relays that were shipped during the period. For the six months ended June 30,
1998 and 1997, revenues were $295,996 less in 1998 primarily because of fewer
overall relays that were shipped. This reduction in shipments was due to both
financial constraints as well as the impact on sales caused by the need for the
Company to redesign its FPR1 relay. Because of problems encountered in the
field, a quality committee was formed late in 1997 to analyze all the problems
experienced in the field and to determine and correct all of the root causes for
defects. Based on this approach, it was decided by the Company that the
mechanical portion of the relay had to be redesigned. The Company has engineered
additional mechanical features into the FPR1 feeder protection relay, now called
the FPR1A, which the Company completed on June 15, 1998. Subject to test
results, this improved version of the FPR1 is expected to be in production in
the third quarter of 1998.

     OPERATING EXPENSES. Operating expenses for the three months ended June 30,
1998 and 1997 were $894,144 and $442,947, respectively. This increase of
$451,197, or 101.9.1%, while extremely significant, was primarily due to the
transition undertaken by the Company in moving forward from a development stage
company with no infrastructure to an operating company. For the six months ended
June 30, 1998 and 1997, operating expenses were $1,051,603 greater in 1998 as
compared to 1997. Through most of 1997, the Company proceeded to slowly build
the infrastructure, leased its own manufacturing facility, developed sales and
marketing literature, hired several regional sales managers, and other personnel
as needed. Because of the transition from a development stage company to an
operating company, the increase in operating expenses is not entirely
comparable. Some of the major increases are the amortization of deferred
software costs, payroll expenses, rent, telephone, travel, professional fees
including legal, accounting, and consulting, manufacturing rework, the scrapping
of obsolete inventory (See Note 8 to Financial Statements), and business
insurance. Further, some of these increases relate to the integration of
Trans-World Powernet, Inc., an acquisition the Company made on November 24,
1997.

                                       10

<PAGE>


        When sales did not grow as expected (due to product and production
difficulties), the Company embarked on a cost reduction program in December 1997
which continued into 1998. In order to reduce its payroll and payroll related
costs, the Company terminated some employees and eliminated certain personnel
positions at the start of 1998. The Company also combined some other positions
and responsibilities as it deemed necessary. On April 24, 1998, Steven D. Smith,
the Company's Executive Vice President of Operations and a Director resigned
both his position as an executive of the Company as well as his position as a
member of the Company's Board of Directors. In April, 1998, the Company reduced
the salary of David W. Clarke, the Company's President and Chief Executive
Officer, to $100,000 from $150,000. On May 27, 1998, Christine Clewes, the
Company's Vice President of Marketing and a Director resigned her position as an
executive of the Company. On June 22, 1998 the Board of Directors accepted her
resignation. On June 22, 1998, the Employment Agreement between David W. Clarke,
President, and the Company was mutually terminated, except that the
confidentiality and non-competition provisions of the Employment Agreement shall
survive termination of such agreement. Mr. Clarke will be employed by the
Company on an "at will" basis as the Company's President at a base salary of
$100,000 per year. On June 22, 1998, Stuart M. Frank, the Company's Chief
Financial Officer was appointed Chief Executive Officer, replacing Mr. Clarke in
that position. Mr. Frank will retain his duties and position as Chief Financial
Officer of the Company. The net dollar effect reduction of these personnel
changes will amount to approximately $1,000,000 on an annualized basis.

        RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and consulting fees to support technological product
development. Costs of software to be sold and incurred after technological
feasibility has been established and available for general release are
capitalized. Salaries and other material costs are expensed. The Company
believes that continuous development will occur for new products and to enhance
and upgrade existing products to provide an extra package of protective relay
products for the Company's heavy industrial and utility customers.

        For the three months ended June 30, 1998 and June 30, 1997, the Company
incurred $84,880 and $94,830 of research and development costs respectively. The
decrease of $9,950 was due primarily to less development costs being capitalized
during this comparable period. For the six months ended June 30, 1998 and 1997,
research and development costs were $176,195 and $201,196 respectively. The
reduction in engineering staff also contributed to this decrease.

FACTORS AFFECTING OPERATING RESULTS

        As a result of the Company's limited operating history, the Company does
not have historical financial data for a significant number of periods on which
to base planned operating expenses. Additionally, the Company's expense levels
are based entirely on its expectations as to future revenues and to a large
extent are variable.

           The Company anticipated that beta testing of the CMPR1, FPR2, and
FPR3 products would commence in the second quarter of 1997 and would be ready
for commercial marketing in the second and third quarter of 1997. Further, the
Company anticipated that its most advanced NOVA relays would commence beta
testing in the third quarter of 1997. However, the development, testing and
commercialization of these products were delayed beyond the control of the
Company. The Company experienced some difficulty with field units of the CMPR2,
which product is the foundation from which the CMPR1 and other motor protection
relays are derived.

                                       11

<PAGE>


After various modifications and tests done in-house by the Company, the Company
realized that a major redesign of the hardware was necessary in order to satisfy
customer demands and to enhance the product's marketability. This project, which
began in August, 1997, was completed in February 1998. The focusing of
engineering on the further enhancement of the CMPR2 caused delays in anticipated
shipments. However, the redesigned CMPR2 has been successfully shipped and
installed beginning in February, with current outstanding orders from a number
of customers for this unit. Although the Company believes that all issues
regarding the CMPR2 product have been resolved, there is no assurance that new
issues will not arise in the field which would require further modification.

        The Company also experienced some difficulty with the FPR1, a feeder
protection relay in the Company's Solaris family of products. A team of
engineers was established as a "quality circle" to identify and correct the root
causes for each reported problem. Although the FPR1 was marketable in its
present form, the Company redesigned the unit in order to improve its
performance and to make manufacturing the product easier by significantly
reducing the production labor content of each unit. The Company recently
completed the engineering phase and is in the process of beta testing this unit.
Depending on test results, it is anticipated that marketing and production will
commence in the third quarter of this year.

        Although the Company believes that it has resolved functional and
quality control issues with its commercialized CMPR2 and FPR1 products, there is
no assurance that new issues regarding these or other products will not arise in
the future. Any delays in production and marketing as a result of new problems
with existing products or products in development may demand more financial and
other resources than available to the Company which will have a material adverse
effect on the Company and its operations.

        The Company, being cognizant of the fact that its product development
schedules have been delayed, has entered into an agreement with a foreign
protective relay manufacturer that will provide the Company with additional
products to sell that are the functional equivalent of the Company's more
advanced Solaris products that the Company planned to develop. The Company and
its European counterpart are currently having translated into English the
product software, documentation and spec sheets, which, for the most part, has
been accomplished. These products will enable the Company to market this proven
technology in the third quarter of 1998 while continuing to develop
strategically positioned advanced products.

        The Company expects to experience significant fluctuations to future
quarterly operating results that may be caused by many factors, including demand
for the Company's products, introduction of new technological developments, the
introduction, enhancement, and market acceptance of new and existing products,
the introduction of competing products, and general economic conditions.
Further, the Company's products have long sales cycles. As a result, the Company
believes that period to period comparisons of its results of operations will not
necessarily be meaningful and should not be relied upon as any indication of
future performance.

IMPACT OF THE YEAR 2000

           The Year 2000 issue is the result of computer programs and other
business systems being written using two digits rather than four to represent
the year. All of the Company's software applications used in all of its products
are in compliance with the Year 2000 issue, and therefore, the Company believes
there will be no material impact on its business.

                                       12

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

        The Company's principal sources of capital have been the sales of its
equity securities in the form of an initial public offering of common stock
which occurred on July 16, 1997, proceeds from stockholders loans, proceeds from
the Company's line of credit, and the proceeds from other loans payable.

        The Company's negative cash flow from operating activities was
$1,254,861 in the first six months of 1998 as compared to a negative cash flow
of $753,808 during the comparable prior year period. The decrease in cash from
operating activities between the comparable periods resulted primarily from the
net loss sustained due to lower sales and higher costs, reflective of the need
to build an infrastructure, and the transition from a development stage company
to an operating company. Also contributing to the negative cash flow from
operating activities was an increase in capitalization of software costs.

        The Company received $1,270,483 net cash provided by financing
activities for the six months ended June 30, 1998 as compared to $752,256 in the
first six months of 1997. Proceeds from loans in the amount of $1,142,983 and
the conversion of warrants in the amount of $200,000 accounted for the net cash
provided by financing activities.

        As is typical of Company's which seek to develop new technologies or
introduce products to a new market, delays in development and production of the
Company's products have occurred, resulting in decreased revenues which the
Company had otherwise anticipated would be available. The Company's learning
curve and production problems encountered in the past resulted in higher costs
than anticipated, which will be reflected in a higher cost of sales and
continued pressure on gross profit margins for the products the Company delivers
during 1998. Thus, the Company may not show profitability during 1998 and could
show losses at the end of the 1998 fiscal year. Further, as indicated in Note 2
in the Notes to Financial Statements accompanying this Report, the Company has
incurred net losses since inception and, as of June 30, 1998, its current
liabilities exceeded its current assets by approximately $1,727,555. These
factors raise doubt about the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern is dependent upon its
ability to obtain additional financing and significantly increase sales. The
Company is in the process of seeking immediate additional financing for
operations and to further fund product development and expansion through
marketing existing products during the next six months. Such additional capital
may be accomplished through equity or debt financings. Although the Company
expected certain funding under the Omnibus Agreement (See Note 5 to the
Financial Statement), as of August 7, 1998, the Company has received net cash
advances of $288,080. There is no assurance that any additional financing will
be available to the Company on acceptable terms, or at all. To the extent that
the Company's available cash resources are insufficient to allow the Company to
engage in operations sufficient to generate meaningful revenues or achieve
profitable operations, the inability to obtain additional financing will have a
material adverse effect on the Company and the Company may have to curtail its
operations. Additional equity financing may involve substantial dilution to the
interests of the Company's existing shareholders.

                                       13

<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

          The Company's subsidiary, Trans-World, and certain of Trans-World's
employees, and Chihkai John Tang, President of Trans-World and a director of the
Company, are defendants in a suit instituted by Tasnet, Inc. ("Tasnet") in or
about May 1997 in the Circuit Court for the 6th Judicial District of Pinellas
County, Florida. The plaintiff's complaint seeks injunctive relief and
unspecified damages against certain employees of Trans-World based upon their
alleged violations of covenants not to compete and against Trans-World and Mr.
Tang for tortious interference with contractual relationships between Tasnet and
the defendant-employees, and seeking to enjoin Trans-World from marketing its
products and disgorgement of profits from sale of its products. Trans-World and
the other defendants have denied liability. Mr. Tang and the other selling
shareholders of Trans-World have agreed to indemnify the Company against any
losses incurred in connection with this litigation and plan to vigorously defend
the lawsuit. Trans-World and the Company believe that the lawsuit is without
merit. However, there can be no assurance as to the outcome of the litigation. A
result adverse to Trans-World would have a material adverse impact on the
Company's business.

          The Company is involved in other litigation relating to claims arising
out of its operations in the normal course of business, none of which claims
exceed ten percent of the Company's current assets. The Company does not believe
that the adverse outcome of any such litigation would have a material adverse
effect on the Company's operations.

ITEM 2.  CHANGES IN SECURITIES

          The foregoing securities will be issued in reliance on Section 4(2) of
the 1933 Act because the transactions did not involve a public offering. The
recipients were provided information about the Company and afforded an
opportunity to ask questions about the information received, and the securities
were acquired with investment intent and will bear a legend accordingly.

          On June 22, 1998, the Board of Directors of the Company approved the
issuance of 95,000 shares of Rule 144 common stock to several key employees of
the Company. These shares were vested at 50% on July 17, 1998 with the balance
being vested on December 31, 1998, provided they are employed by the company on
that date.

          On June 5, 1998, the Company approved the issuance of 24,000 shares of
common stock of the Company to Oak Point Investments, Inc. in connection with a
loan of $60,000.

          On April 24, 1998, the Company approved the issuance of 20,000 shares
of common stock of the Company to Rainfest, Ltd. in connection with a loan of
$50,000.

          On June 22, 1998, The Board of Directors of the Company approved for
Stuart M. Frank, as an incentive for remaining with the Company and for assuming
the additional duties of Chief Executive Officer, a common stock purchase
warrant exercisable for 100,000 shares of the Company's common stock at an
exercise price of $1.00 per share, and 100,000 shares of Rule 144 common stock
as bonus shares. The warrant has a term of five years and is first exercisable
as to 

                                       14

<PAGE>

the number of shares and schedule as follows, provided on each such date Mr.
Frank's employment with the Company has not been terminated for cause under his
employment agreement with the Company or Mr. Frank has not voluntarily
terminated his employment with the Company: 50,000 shares on June 14, 1998;
25,000 shares on September 30, 1998; and 25,000 shares on December 31, 1998. The
Rule 144 common stock as bonus shares according to the following schedule, with
the same employment requirements as under the warrant provisions above: 50,000
shares on December 31, 1998; 25,000 shares on March 31, 1999; and 25,000 shares
on June 30, 1999.

          On June 22, 1998, as part of the Omnibus Agreement (See Note 5 to
Financial Statements), the Board of Directors of the Company approved the
issuance of a common stock purchase warrant to Helene W. Mancini, the wife of a
Director and shareholder of the Company, exercisable for 160,000 shares of the
Company's common stock at an exercise price of $1.00 per share, subject to the
underwriter's lock-up. If Lender provides the Company with less than $1,040,000
(the loan proceeds), then such warrant shall be converted to $1.00 per share on
a pro rata basis equal to the amount Lender provides the Company as a percentage
of the total loan proceeds.

          On June 22, 1998, as part of the Omnibus Agreement (See Note 5 to
Financial Statements), the Board of Directors of the Company approved the
issuance a common stock purchase warrant to Frank J. Mancini, a Director and a
shareholder of the Company, exercisable for 40,000 shares of the Company's
common stock at an exercise price of $1.00 per share, subject to the
underwriter's lock-up. If Lender provides the Company with less than $1,040,000
(the loan proceeds), then such warrant shall be converted to $1.00 per share on
a pro rata basis equal to the amount Lender provides the Company as a percentage
of the total loan proceeds.

ITEM 5.   OTHER INFORMATION

          On June 22, 1998, as part of the Omnibus Agreement (See Note 5 to
Financial Statements), the Board of Directors of the Company approved the
re-pricing of outstanding stock options of current employees to $2.00 per share,
the fair market value at that date as set forth under the Company's 1996 Stock
Option Plan. Also in connection with the Omnibus Agreement, the Board of
Directors approved the change in exercise price for outstanding common stock
purchase warrants held by Perryman Corporation, N.V. from $3.00 per share to
$1.00 per share; a change in exercise price for outstanding common stock
purchase warrants held by East Jet, Inc. from $3.25 per share to $1.00 per
share; and a change in exercise price for outstanding common stock purchase
warrants held by Imagine Holdings, Inc. from $5.50 per share and $4.00 per share
to $1.00 per share. The Omnibus Agreement states that in the event Lender
provides the Company with less than $1,040,000 (the loan proceeds), then the
outstanding common stock purchase warrants indicated above as held by Perryman
Corporation, N.V., East Jet, Inc., and Imagine Holdings, Inc. shall be converted
to $1.00 per share on a pro rata basis equal to the amount Lender provides the
Company as a percentage of the total loan proceeds.

                     [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

                                       15

<PAGE>


ITEM 6. EXHIBITS AND FORM 8-K.

        REPORTS ON FORM 8-K: None

        EXHIBITS:
<TABLE>
<CAPTION>

EXHIBIT                                                         FILING-STATUS-INCORPORATED
NUMBER                    EXHIBIT DESCRIPTION                         BY REFERENCE TO
--------                  -------------------               ------------------------------------
<S>          <C>                                           <C>
    3.1       Amended and Restated Articles of             Exhibit 3.1 to Form SB-2 Registration     
              Incorporation                                Statement, filed on December 17, 1997,    
                                                           File No. 333-18071

    3.2       Amended and Restated ByLaws                  Exhibit 3.2 to Form SB-2 Registration
                                                           Statement, filed on December 17, 1996,
                                                           File No. 333-18071

    3.2.1     Amendment to ByLaws                          Exhibit 3.2.1 to Amendment No. 2 to Form
                                                           SB-2 Registration Statement, filed on
                                                           April 29, 1996, File No. 333-18071

    4.1       Specimen of Common Stock Certificate         Exhibit 4.1 to Amendment No. 2 to Form
                                                           SB-2 Registration Statement, filed on
                                                           April 29, 1997, File No. 333-18071

    4.2       Specimen of Warrant Certificate              Exhibit 4.2 to Report on Form 10-QSB,
                                                           filed on August 14, 1997, File No.
                                                           0-22365

    4.3       Warrant Agreement between the Company and    Exhibit 4.3 to Report on Form 10-QSB,
              American Stock Transfer & Trust Company,     filed on August 14, 1997, File No.
              as Warrant Agent, dated July 16, 1997        0-22365

   10.1       Form of Warrant issued to investors in the   Exhibit 4.4 to Form SB-2 Registration
              Company's private placement, dated August    Statement, filed on December 17, 1996,
              5, 1996 through November 14, 1996            File No. 333-18071

   10.2        Warrant dated September 26, 1996 in favor   Exhibit 4.5 to Form SB-2 Registration
               of Steven D. Smith, as amended              Statement, filed on December 17, 1996,
                                                           File No. 333-18071

   10.3        Warrant dated September 26, 1996 in favor   Exhibit 4.6 to Form SB-2 Registration
               of Don P.Louw, as amended                   Statement, filed on December 17, 1996,
                                                           File No. 333-18071

   10.4        Amended Warrant dated October 29, 1996 in   Exhibit 10.4 to Form 10-QSB filed on
               favor of Perryman Corporation N.V.          August 14, 1997, File No. 0-22365

   10.5        Warrant dated June 25, 1996 in favor of     Exhibit 4.10 to Form SB-2 Registration
               Imagine Holdings                            Statement filed on December 17, 1996,
                                                           File No. 333-18071
</TABLE>


                                       16

<PAGE>
<TABLE>
<CAPTION>

EXHIBIT                                                         FILING-STATUS-INCORPORATED
NUMBER                    EXHIBIT DESCRIPTION                         BY REFERENCE TO
--------                  -------------------               ------------------------------------
<S>           <C>                                           <C> 
   10.6       Warrant dated  December 15, 1996 in favor of  Exhibit 4.11 to Amendment No. 1 to
              Matthias E. Lukens, Jr.                       Form SB-2  filed on March 6, 1997,
                                                            File No. 333-18071

   10.7       Form of Registration Rights Agreement         Exhibit 4.12 to Form SB-2 Registration
              between the Company and private placement     Statement filed on December 17, 1996 
              investors dated August 5, 1996 through        File No. 333-18071
              November 14, 1996

   10.8       Form of Registration Rights Agreement         Exhibit 4.13 to Form SB-2 Registration
              between the Company and certain investors     Statement filed on December 17, 1996,
              dated in May, 1996                            File No. 333-18071

   10.9       Warrant dated June 30, 1996 in favor of       Exhibit 4.14 to Amendment No. 1
              Imagine Holdings                              Form SB-2 Registration Statement
                                                            filed on March 6, 1996,
                                                            File No. 333-18071

   10.10      Warrant dated November 1, 1996 in favor of    Exhibit 4.15 to Amendment No. 1 to
              Robert Swatland                               Form SB-2 Registration Statement
                                                            filed on March 6, 1997,
                                                            File No. 333-18071

   10.11      Underwriters' Warrant dated July 16, 1997     Exhibit 10.11 to Form 10-QSB filed
                                                            on August 14, 1997, File No. 0-22365

   10.12      1996 Stock Option Plan                        Exhibit 10.1 to Form SB-2 Registration
                                                            Statement filed on December 17, 1996,
                                                            File  No. 333-18071

   10.13      Stock Purchase Agreement between the          Exhibit 10.2 to Form SB-2 Registration
              Company and Christine Clewes, dated June      Statement filed on December 17, 1996, 
              13, 1996                                      File No. 333-18071

   10.14      Stock Purchase Agreement between the          Exhibit 10.3 to Form SB-2 Registration
              Company and Frank Mancini, dated              Statement filed on December 17, 1996,
              June 24, 1996                                 File No. 333-18071

   10.15      Stock Purchase Agreement between the          Exhibit 10.4 to Form SB-2 Registration
              Company and Framan, a business entity,        Statement filed on December 17, 1996,
              dated June 24, 1996                           File No. 333-18071

   10.16      Consulting Agreement between the Company      Exhibit 10.5 to Form SB-2 Registration
              and Perryman Corporation, N.V., dated         Statement filed on December 17, 1996,
              May 10, 1996                                  File No. 333-18071

   10.17      Amended and Restated Consulting Agreement     Exhibit 10.6 to Form SB-2 Registration
              between the Company and Imagine Holdings,     Statement filed on December 17, 1996,
              dated June 1, 1996                            File No. 333-18071

   10.18      Lease between the Company and South           Exhibit 10.7 to Amendment No. 1 to
              Hillsborough Community Bank Office/Complex,   Form SB-2 Registration Statement,
              Richard L. Phagan, dated October 31, 1995     filed on March 6, 1997,
                                                            File No. 333-18071
</TABLE>


                                       17

<PAGE>
<TABLE>
<CAPTION>

EXHIBIT                                                         FILING-STATUS-INCORPORATED
NUMBER                    EXHIBIT DESCRIPTION                         BY REFERENCE TO
--------                  -------------------               ------------------------------------
<S>           <C>                                           <C> 
   10.18.1    Lease between the Company and South           Exhibit 10.7.1 to Form SB-2 Registration
              Hillsborough Community Bank Office/Complex,   Statement filed on December 17, 1996,
              dated October 24, 1996                        File No. 333-18071

   10.19      Amended and Restated Consulting Agreement     Exhibit 10.8 to Form SB-2 Registration 
              between the Company and Matthias E. Lukens,   Statement filed on December 17, 1996,
              Jr. dated November 30, 1996                   File No. 333-18071

   10.20      Consulting Agreement between the Company      Exhibit 10.9 to Form SB-2 Registration
              and Frank J. Mancini dated December 20, 1996  Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.21      Agreement between the Company and             Exhibit 10.10 to Form SB-2 Registration
              Phasetronics, Inc. dated January 31, 1996     Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.22      Agreement between the Company and             Exhibit 10.11 to Form SB-2 Registration
              Phasetronics, Inc. dated January 31, 1996     Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.23      Sale of Accounts Receivable Agreement         Exhibit 10.12 to Form SB-2 Registration
              between the Company and Queensbury, Inc.      Statement filed on December 17, 1996, 
              dated October 31, 1996                        File No. 333-18071

   10.24      Cash Advance and Security Agreement and       Exhibit 10.13 to Form SB-2 Registration 
              amendment thereto between Frank J. Mancini    Statement filed on December 17, 1996,
              and the Company                               File No. 333-18071

   10.24.1    Second Amendment to Cash Advance and          Exhibit 10.13.1 to Form SB-2 Registration
              Security Agreement dated May 19, 1997         Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.24.2    Third Amendment to Cash Advance and           Exhibit 10.13.2 to Form SB-2 Registration
              Security Agreement dated May 27, 1997         Statement filed on December 17, 1996,
                                                            File  No. 333-18071

   10.25      Form of Indemnification Agreement for         Exhibit 10.14 to Form SB-2 Registration
              directors and officers                        Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.26      Revolving Line of Credit Agreement between    Exhibit 10.15 to Form SB-2 Registration
              the Company and Queensbury, Inc.              Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.27      Amended and Restated License Agreement        Exhibit 10.16 to Form SB-2 Registration
              between the Company and Matthias E. Lukens,   Statement filed on December 17,
              Jr., d/b/a WHR Partners, dated                File No. 1997 333-18071
              December 16, 1996,


</TABLE>

                                       18

<PAGE>
<TABLE>
<CAPTION>

EXHIBIT                                                         FILING-STATUS-INCORPORATED
NUMBER                    EXHIBIT DESCRIPTION                         BY REFERENCE TO
--------                  -------------------               ------------------------------------
<S>           <C>                                           <C> 
   10.28      Stock Purchase Agreement between the          Exhibit 10.17 to Form SB-2 Registration
              Company and Matthias E. Lukens, Jr., d/b/a    Statement filed on December 17, 1996,
              WHR Partners dated December 16, 1997          File No. 333-18071

   10.29      Executive Employment Agreement between the    Exhibit 10.18 to Form SB-2 Registration
              Company and David W. Clarke                   Statement filed on December 17, 1996,
                                                            File  No. 333-18071

   10.30      Executive Employment Agreement between the    Exhibit 10.19 to Form SB-2 Registration
              Company and Christine Clewes                  Statement filed on December 17, 1996,
                                                            File  No. 333-18071

   10.31      Executive Employment Agreement between the    Exhibit 10.20 to Form SB-2 Registration
              Company and Donald P. Louw                    Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.32      Executive Employment Agreement between the    Exhibit 10.21 to Form SB-2 Registration
              Company and Steven D. Smith                   Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.33      Executive Employment Agreement between the    Exhibit 10.22 to Form SB-2 Registration
              Company and Robert Swatland                   Statement filed on December 17, 1996,
                                                            File No. 333-18071

   10.34      Financial Advisor and Investment Banking      Exhibit 10.23 to Amendment  No. 1
              Agreement between the Company and May Davis   to Form SB-2 Registration Statement 
              Group, Inc. dated July 16, 1997               filed on March 6, 1997, File No. 333-18071.

   10.35      Lease Agreement dated September 1, 1997       Exhibit 10.35 to Form 10QSB filed
                                                            on November 18, 1997, File No. 0-22365

   10.36      Agreement and Plan of Merger                  Exhibit 10.1 to Form 8-K filed on
                                                            December 9, 1997, File 0-22365

   10.37      Executive Employment Agreement between        Exhibit 10.2 to Form 8-K  filed on
              Trans-World and Chihkai J. Tang               December 9, 1997, File 0-22365

   10.38      Shareholder's Voting Agreement dated          Exhibit 10.3 to Form 8-K filed on
              November 24, 1997                             December 9, 1997, File 0-22365

   10.39      Form of Loan and Security Agreement           Exhibit 10.39 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.40      Secured Convertible Note for $750,000         Exhibit 10.40 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.41      Secured Convertible Note for $100,000         Exhibit 10.41 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364
</TABLE>

                                       19

<PAGE>
<TABLE>
<CAPTION>

EXHIBIT                                                         FILING-STATUS-INCORPORATED
NUMBER                    EXHIBIT DESCRIPTION                         BY REFERENCE TO
--------                  -------------------               ------------------------------------
<S>           <C>                                           <C> 
   10.42      Secured Convertible Note for $100,000         Exhibit 10.42 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.43      Secured Convertible Note for $50,000          Exhibit 10.43 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.44      Form of Registration Rights Agreement         Exhibit 10.44 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.45      Consolidated Promissory Note for $750,000     Exhibit 10.45 to Form 10-KSB filed
                                                            on May 15, 1998, File 0-22364

   10.46      Warrant in favor of Polynos Investments,      Exhibit 10.45 to Form 10-KSB filed
              N.V.                                          on May 15, 1998, File 0-22364

   10.47      Warrant in favor of East Jet, Inc.            Exhibit 10.47 to Form 10-QSB filed
                                                            on May 20, 1998, File 0-22365

   10.48      Warrant in favor of East Jet, Inc.            Exhibit 10.48 to Form 10-QSB filed
                                                            on May 20, 1998, File 0-22365

   27         Financial Data Schedule                       Filed herewith

   99.1       Form of domestic distribution agreement       Exhibit 99.3 to Amendment No. 1 to
                                                            Form  SB-2  Registration Statement
                                                            filed on March 6, 1997, File No.
                                                            333-18071

   99.2       Form of international distribution agreement  Exhibit 99.4 to Amendment No. 1 to
                                                            Form  SB-2 Registration Statement
                                                            filed on March 6, 1997, File No.
                                                            333-18071
</TABLE>

                                       20

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:   August _____, 1998.                        APOLLO INTERNATIONAL OF
                                                   DELAWARE, INC.

                                                   By: 
                                                      -------------------------
                                                      David W. Clarke
                                                      President

                                                   By:
                                                      -------------------------
                                                      Stuart Frank
                                                      Chief Financial Officer

                                       21