SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 10-Q/A
_________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the quarterly period ended June 30, 1999.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the transition period from __________ to
__________.
Commission file number: 0-26394
ACCENT SOFTWARE INTERNATIONAL LTD.
________________________________________________________________
(Exact Name of Registrant in its Charter)
Israel N/A
____________________________________ ______________________________________
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
C/O Yigal Arnon & Co., 22 Rivlin Street, Jerusalem 91000, Israel
011-972-2-623-9200
___________________________________________________________________________
(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices.)
N/A
________________________________________________________________________________
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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 (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 [ ]
On August 10, 1999, the registrant had outstanding 29,291,504 Ordinary Shares
(including 2,000 Ordinary Shares included in the registrant's outstanding
Units)
Part I - Financial Information
Item 1. Financial Statements
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars and shares in thousands
June 30, December 31,
1999 1998
--------------- -----------------
Assets (Unaudited) (Audited)
Current Assets
Cash and cash equivalents $ 7 $ 141
Trade receivables, net of allowance of
$102 in 1999 and $219 in 1998 190 265
Other receivables 107 91
Prepaid expenses - 5
Inventories - 7
--------------- -----------------
Total current assets 304 509
Equipment
Cost 111 238
Less - Accumulated depreciation 106 198
--------------- -----------------
Equipment, net 5 40
Other Long Term Assets - 50
--------------- -----------------
Total assets $ 309 $ 599
=============== =================
Liabilities and Shareholders' Deficit
Current Liabilities
Short-term and current maturities of long-term debt $ - $ 1,180
Accounts payable and accrued expenses 683 785
--------------- -----------------
Total current liabilities 683 1,965
Accrued severance liability - 15
--------------- -----------------
Total liabilities 683 1,980
--------------- -----------------
Shareholders' Deficit
Preferred Shares, par value NIS 0.01, authorized
10,000 shares, issued and outstanding 2,889 at
June 30, 1999 and 4 at December 31, 1998 7 -
Ordinary Shares, par value NIS 0.01, authorized
130,000 shares, issued and outstanding 29,292
at June 30,1999 and 29,223 at December 31, 1998 77 77
Share premium 52,086 50,589
Accumulated deficit (52,544) (52,047)
--------------- -----------------
Total shareholders' deficit (374) (1,381)
--------------- -----------------
Total liabilities and shareholders' deficit $ 309 $ 599
=============== =================
The accompanying notes are an integral part of these consolidated statements.
2
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars and shares in thousands (except per share information)
(Unaudited)
Three months ended June 30, Six months ended June 30,
---------------------------------- ----------------------------
1999 1998 1999 1998
------------ -------------- ------------ ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $ 540 $ 490 $ 1,011 $ 1,195
Operating costs and expenses
Cost of sales 305 170 548 375
Product development costs 33 718 54 1,843
Marketing expenses 148 331 278 789
General and administrative expenses 384 689 889 1,403
------------- -------------- ------------ ----------
Total operating costs and expenses 870 1,908 1,769 4,410
------------- -------------- ------------ ----------
Operating loss (330) (1,418) (758) (3,215)
Other Expense (397) (19) (624) (64)
-------------- -------------- ------------ ----------
Loss before extraordinary item (727) (1,437) (1,382) (3,279)
Extraordinary gain from debt
extinguishment (less income taxes of $0) - - 885 -
-------------- ------------- ------------ ----------
Net loss (727) (1,437) (497) (3,279)
Deemed dividends on preferred stock - 2,535 - 2,535
-------------- -------------- ------------ ----------
Net loss applicable to common stockholders $ (727) $ (3,972) $ (497) $ (5,814)
============= ============== ============= ==========
Basic and diluted loss per common share:
Loss before extraordinary item $ (0.02) $ (0.14) $ (0.05) $ (0.24)
Extraordinary item - - 0.03 -
------------- -------------- ------------ ----------
Net loss per common share $ (0.02) $ (0.14) $ (0.02) $ (0.24)
============= ============== ============ =========
Basic and diluted weighted average number
of common shares outstanding 29,292 27,620 29,292 24,127
============= ============== ============ ==========
The accompanying notes are an integral part of these consolidated statements.
3
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars and shares in thousands (except per share information)
(Unaudited)
For the six months ended June 30,
1999 1998
----------------- ------------------
(Unaudited) (Unaudited)
Operating activities
Net loss $ (497) $ (3,279)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 36 371
Change in realizable value of trade credits 50 -
Change in allowance for doubtful accounts (117) -
Non-cash interest expense 600 -
Extraordinary gain (885) -
Changes in assets and liabilities
(Increase) decrease in trade receivables 192 (205)
(Increase) decrease in other receivables (16) (77)
Decrease in prepaid expenses 5 645
Decrease in inventories 7 15
Increase (decrease) in payables & accruals (93) (341)
Increase (decrease) in severance liability (15) (215)
----------------- ------------------
Net cash used in operating activities (733) (3,086)
----------------- ------------------
Investing activities
Acquisition of equipment (1) (25)
Increase in other long term assets - 2
----------------- ------------------
Net cash used in investing activities (1) (23)
----------------- ------------------
Financing activities
Net proceeds received on issuance of preferred shares - 3,768
Ordinary shares issued in satisfaction of accounts payable - 264
Loan proceeds 600 -
Cancellation of shares issued in payment for services - (61)
----------------- ------------------
Net cash used for financing activities 600 3,971
----------------- ------------------
Increase (Decrease) in cash and cash equivalents (134) 862
Cash and cash equivalents, beginning of period 141 2,499
----------------- ------------------
Cash and cash equivalents, end of period $ 7 $ 3,361
================= ==================
Supplemental Schedule of Non-Cash Investing and Financing
Activities
Debt extinguished in exchange for warrants $ 306 $ -
================= ==================
Issuance of stock warrants in connection with $ 600 -
convertible preferred stock ================= ==================
Preferred shares issued in satisfaction
of convertible debt $ 625 $ -
================= ==================
The accompanying notes are an integral part of these consolidated statements.
4
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
Note 1 - RESTATEMENT
During the completion of the Company's Form 10-K for the year ended
December 31, 1999, the Company determined that it did not properly
record certain debt and equity transactions.
During 1997, the Company did not properly account for the intrinsic
value of the beneficial conversion feature associated with the
convertible debenture and warrants issued in August 1997 or the
beneficial conversion feature and warrants associated with the November
and December 1997 issuance of the convertible debentures, Series B
convertible preferred shares and warrants.
During 1998, the Company should have recorded $2,535 in deemed
dividends associated with the beneficial conversion feature on the June
1998 issuance of the Series B convertible preferred shares and
warrants. For the three months ended June 30, 1998, the Company
decreased other expense to $19 from $46, decreased net loss to $1,437
from $1,464, increase net loss applicable to common stockholders to
$3,972 from $1,464, and increased basic and diluted loss per common
share to $.14 from $.05. For the six months ended June 30, 1998, the
Company decreased other expense to $64 from $91, decreased net loss to
$3,279 from $3,306, increased net loss applicable to common
stockholders to $5,814 from $3,306, and increased basic and diluted
loss per common share to $.24 from $.14.
During January 1999, the Company determined that it did not properly
record the value associated with the issue of stock warrants in
connection with the debt extinquishment. In addition, the Company did
not properly account for the intrinsic value of the beneficial
conversion feature associated with the $600 short-term financing
entered into during the first quarter of 1999.
As a result of the above, the Company has restated the financial
statements contained in the Form 10-Q for the three and six months
ended June 30, 1999. For the three months ended June 30, 1999, the
Company increased interest expense, included in other expense, from $11
to $411, increased net loss to $727 from $327 and increased basic loss
per common share to $.02 from $.01. For the six months ended June 30,
1999, the Company increased interest expense, included in other
expense, from $11 to $611, decreased extraordinary gain on debt
extinguishment from $1,117 to $885, increased net loss to $497 from net
income of $335, increased basic and diluted loss per common share to
$.02 from basic and diluted income per common share of $.01. As of June
30, 1999, the Company decreased share premium to $52,086 from $52,674,
decreased accumulated deficit to $52,544 from $53,205, and decreased
warrants to $0 from $73. As of December 31, 1998, the Company decreased
share premium to $50,589 from $52,082 and decreased accumulated deficit
to $52,047 from $53,540.
Note 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Accent Software International Ltd., and its subsidiaries ("Accent"
or "the Company") have been prepared in accordance with United States
generally accepted accounting principles for interim financial
information. The significant accounting policies, certain financial
5
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
information and footnote disclosures which are normally included in
financial statements prepared in accordance with generally accepted
accounting principles, but which are not required for interim
reporting purposes, have been condensed or omitted. In the opinion of
management, all adjustments (consisting of adjustments of a normal,
recurring nature) necessary for a fair presentation of these financial
statements have been reflected in the interim periods presented.
Operating results for the three and six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. Although the Company believes that the
disclosures presented herein are adequate to make the information
presented not misleading, it is suggested that these condensed
consolidated financial statements be read in conjunction with the
audited financial statements and footnotes included in the Company's
1998 Annual Report on Form 10-K for the year ended December 31, 1998.
Note 3 - GOING CONCERN
The consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The report of the Company's
Independent Auditors (included in the Company's 1998 Annual Report on
Form 10-K), however, raises doubt about the Company's ability to
continue as a going concern. Management acknowledges that the
Company's history of operating losses and operating cash flow deficits
raises legitimate concern about the Company's longer term prospects.
To enhance the Company's longer term prospects, management will
continue to focus on increasing revenue, reducing expenses and
obtaining additional external financing.
To increase revenue, the Company has developed new products to serve
the language information industry, has redirected its operations
toward Internet products and services, entered into alliances with
other companies in the industry aimed at broadening the Company's
market reach and has expanded its translation services business.
To reduce expenses, the Company has reduced its staffing level (which
is its largest element of expense) from approximately 170 employees at
its peak in 1996 to 15 at June 30, 1999.
Related expenses such as rent, telephone, travel and training costs
have been reduced proportionately. The shift away from the retail
market has led to reductions in production and inventory carrying
costs. Product development costs have been reduced by closing the
Company's product development facility in Jerusalem, narrowing the
number of new products under development and focusing on those
opportunities that provide the greatest near-term revenue potential.
The Company has reduced discretionary spending on advertising and
marketing as well as the amount it spends on exhibitions and trade
shows and has closed its sales offices in London, England, and Newport
Beach. The sale in 1998 of the assets of the Company's subsidiary,
AgentSoft, also reduced costs with no decrease in total revenue.
6
To obtain additional external financing, the Company sold convertible
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
debentures and convertible preferred stock in the third and fourth
quarters of 1997 and again in the second quarter of 1998. In the first
quarter of 1999 the Company obtained $600 in the form of a short-term
loan convertible, at the discretion of the lender, into convertible
preferred stock. Effective June 30, 1999, the lender elected to
convert the loan, plus accrued interest, into 2.9 million shares of
Series D convertible preferred stock. In July 1999, the Company
entered into an agreement which provides for an investor to purchase,
at $0.21 per share, up to 9.5 million shares of the Company's ordinary
shares for $2.0 million. At closing, the investor paid $500 thousand
for 2.4 million shares and is required to purchase the remaining 7.1
million shares in the event the Company obtains a strategic partner
and enters into a strategic alliance with such partner. The Company
continues to explore sources of additional financing to satisfy its
continuing operational requirements.
In the first quarter of 1999, an extraordinary gain of $885 was
recognized by the Company related to the extinguishment of $1,180 of
long-term debt, plus $11 of accrued interest, in exchange for the
issuance of a warrant to the lender to receive 2,448,000 shares of the
Company's Ordinary Shares anytime after January 25, 2001, but before
January 25, 2006 (See Note 5).
The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability or classification of asset
carrying amounts or the amounts and classification of liabilities that
may result should the Company be unable to continue as a going
concern.
Note 4 - LIQUIDITY
As of June 30, 1999 and December 31, 1998, the Company had accumulated
deficits of $52,544 and $52,047, respectively. For the six months
ended June 30, 1999, the Company incurred a loss of $1,382 before the
extraordinary gain from debt extinguishment mentioned above and
recognizes that it may continue to incur operating losses through the
remainder of 1999 and possibly beyond. Furthermore, the Company has
not generated sufficient cash to finance its operations and has been
dependent upon external sources to meet its liquidity requirements.
In addition to the cost reduction initiatives completed during the
first quarter of 1999 and the fourth quarter of 1998, the Company will
continue to explore new methods to increase revenues and reduce costs
and working capital requirements.
As mentioned above the Company obtained $600 of short-term financing
under a loan agreement it executed with L&H Investment Company, N.V.
("LHIC") on February 19, 1999. On June 30, 1999, pursuant to the terms
of the loan agreement, the principal of the loan, plus $25 of accrued
interest, was converted into 2,884,874 Series D convertible Preferred
Shares of the Company. Additionally, pursuant to the terms of the loan
agreement, the Company issued to LHIC a warrant to purchase 3,000,000
7
Ordinary Shares of the Company at a price of $0.269 per share.
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
Additionally, as mentioned above, in July 1999, the Company entered
into an agreement which provides for an investor to purchase, at $0.21
per share, up to 9.5 million shares of the Company's ordinary shares
for $2.0 million. At closing, the investor paid $500 thousand for 2.4
million shares and is required to purchase the remaining 7.1 million
shares in the event the Company obtains a strategic partner and enters
into a strategic alliance with such partner. There can be no assurance
the Company will be able to locate and enter into a definitive
agreement with a strategic partner as required by the agreement, in
which case the Company would not receive from the investor up to $1.5
million in exchange for the issuance to it of 7.1 million of the
Company's Ordinary Shares.
The Company continues to explore sources of additional financing to
satisfy its operational requirements.
Note 5 - SHARE CAPITAL
Accent executed a Preferred Share Purchase Agreement with Lernout &
Hauspie Speech Products, N.V. ("L&H"), an affiliate of LHIC, on June
4, 1998 pursuant to which the Company issued 4,000 Series C
convertible Preferred shares in exchange for $4,000. Fees and expenses
related to the transaction totaled approximately $232 resulting in net
proceeds to the Company of $3,768. The Series C convertible Preferred
Shares held by L&H and LHIC do not pay interest but do provide the
investors with a preference over Ordinary Shareholders in the event of
liquidation. The investor also has the right to vote the shares as if
they had all been converted into Ordinary Shares and has been granted
one seat on Accent's Board of Directors.
The Series C convertible Preferred Shares issued to LHIC are
convertible at any time into Ordinary Shares of Accent at a conversion
price of $.45 per share. Conversion of all 4,000 Series C convertible
Preferred Shares held by L&H would result in the issuance of 8,888,889
Ordinary Shares and would dilute existing shareholders by
approximately 28%. L&H also received warrants to purchase 4,444,444
Ordinary Shares of the Company at an exercise price of $0.55 per
share. The warrants are exercisable for five years, the conversion of
which would dilute existing shareholders by an additional 13%. The
Company has recorded the beneficial conversion feature in the amount
of $445 as original issued discount on the Series C convertible
Preferred shares and is being amortized as a deemed dividend over the
period in which the holders can first convert the Series C convertible
Preferred shares using the interest method. The Company has recorded
the $2,090 value of the warrants as original issue discount on the
Series C convertible Preferred shares and is being amortized to deemed
dividends over the period in which the holders can first convert the
Series C convertible Preferred shares using the interest method. On
June 30, 1999 LHIC received warrants, also exercisable for five years,
to purchase 3,000,000 Ordinary Shares of the Company at an exercise
price of $0.269 per share. Exercise of the warrants would dilute
existing shareholders by an additional 9%.
8
On July 14, 1999, subsequent to the date of the financial statements
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
presented herein, the Company entered into a stock purchase agreement
with an investor, Gotham Bay Partners LLC ("Gotham") which provides
for Gotham to purchase, at $0.21 per share, up to 9.5 million shares
of the Company's Ordinary Shares for $2.0 million. At closing, the
investor paid $500 thousand for 2.4 million shares and is required to
purchase the remaining 7.1 million shares, one half (3.55 million
Ordinary Shares) of which it will be required to purchase if the
Company enters into a letter of intent with a strategic partner and
the remaining one half if the Company subsequently executes a
definitive agreement of strategic alliance with such partner. Gotham
will not be required to purchase the remaining 7.1 million shares if
the Company does not perform the requirements stated above. If the
entire 9.5 million Ordinary Shares are purchased by Gotham, existing
shareholders would be diluted by approximately 25%.
During 1998, the Company entered into an agreement with the government
of Israel and various Israeli officials, which allowed the Company to
convert a portion of its government-guaranteed long-term debt into
common stock of the Company. In 1998 approximately $229 of debt was
converted into 732,000 shares of the Company's Ordinary Shares. During
January 1999, the Company agreed to issue the Bank warrants to
purchase 2,448,000 shares of the Company's Ordinary Shares at no
exercise price in exchange for payment on the outstanding $1,180 in
debt and $11 in accrued interest. The warrants were valued at $306
using the Black-Scholes option pricing model and are exercisable on
January 25, 2001 and expire on January 25, 2006. The Company
recognized a $885 extraordinary gain from this debt extinguishment in
1999.
During February 1999, the Company issued a $600,000 convertible
debenture to an existing stockholder of the Company. The debenture
bears interest at 11.75% and matures on June 30, 1999. At the maturity
date of the debenture, the holder can elect to convert the debenture
into the Company's Series D convertible preferred shares at a price
per share equal to 85% of the average closing bid price of the
Company's Ordinary Shares for the 20 days prior to conversion. If the
Company's Ordinary Shares are delisted from NASDAQ as of the date of
conversion, the price per share shall be equal to the average closing
bid price of the Company's Ordinary Shares as of the last 20 days
before being delisted. The Series D convertible preferred shares are
convertible any time at the option of the holder into one share of
Ordinary Share for each preferred share converted. In addition, the
holder received 3,000,000 warrants to purchase shares of the Company's
Ordinary Shares at an exercise price equal to 85% of the Company's
Ordinary Shares for the twenty trading days preceding the date of
conversion. The warrants expire on February 18, 2004. The Company
recorded a $600,000 discount on the convertible debenture attributable
to the value of the warrants issued as of the date of the convertible
debenture. The Company has amortized the discount as interest expense
over the term of the debenture. On June 30, 1999, the holder converted
the $600,000 debenture, plus $25,000 in accrued interest, into
2,884,874 shares of the Company's Series D convertible preferred
shares. The Series D convertible preferred shares do not pay
dividends. The holder of the Series D convertible preferred shares
have the right to vote its shares as if it had all been converted into
Ordinary Shares.
9
ACCENT SOFTWARE INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except per share information
(Unaudited)
Note 6 - IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
(a) SOP 97-2, regarding software revenue recognition became effective for
all transactions entered into, in fiscal years commencing December 15,
1997. The Company recognizes revenue in accordance with this Standard.
(b) The Financial Accounting Standards Board has recently issued Statement
on Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133,
amended by SFAS No. 137, established standards for recognizing all
derivative instruments including those for hedging activities as
either assets or liabilities in the statement of financial position
and measuring those instruments at fair value. This Statement is
effective for all fiscal quarters of all fiscal years beginning after
June 15, 2000. Management believes the adoption of this statement will
have no material impact on the Company's consolidated financial
statements.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition. (U.S. dollars in thousands, except per share
information.)
Introduction
This Form 10-Q for Accent Software International Ltd., and its subsidiaries
("Accent" or "the Company") contains historical information and forward-looking
statements. Statements looking forward in time are included in this Form 10-Q
pursuant to the "safe harbor" provision of the Private Securities Litigation
Reform Act of 1995. Such statements involve known and unknown risks and
uncertainties including, but not limited to, the timely availability of new
products, market acceptance of the Company's existing products and products
under development, the impact of competing products and pricing, the
availability of sufficient resources including short- and long-term financing to
carry out the Company's product development and marketing plans, and quarterly
fluctuations in operating results. The Company's actual results in future
periods may be materially different from any future performance suggested
herein. Further, the Company operates in an industry sector where securities'
values may be volatile and may be influenced by economic and other factors
beyond the Company's control. In the context of the forward-looking information
provided in this Form 10-Q, please refer to the Company's most recent Form 10-K
and the Company's other filings with the Securities and Exchange Commission.
Accent designs, develops and markets Language Information Technologies
(LIT) over the Internet. These technologies include software products and
services that help businesses easily localize their products and information
into other natural languages. Accent commenced operations in 1988 in Jerusalem,
Israel, and has since moved its operations to Colorado Springs, Colorado in
1997. Over the last year Accent has changed its direction toward Internet
products and services for corporate customers that are reaching international
markets. Revenues are currently being generated through Internet portals,
translation services and software products that increase the efficiencies of
localizing media and products.
10
The Company has accumulated deficits in excess of $52 million since its
inception through June 30, 1999, and it may continue to incur deficits through
the remainder of 1999 and possibly beyond. Accent historically has generated
operating cash flow deficits and its liquidity is essentially exhausted. To
enhance the Company's longer term prospects, management has focused on
increasing revenue by changing its direction toward Internet products and
services, reducing expenses and obtaining additional external financing. There
can be no assurance that the Company will be successful in reversing the trend
of operating losses and in generating sufficient working capital to meet its
operating requirements and any failure on the part of the Company to do so will
have a material adverse impact on the Company and could force it to cease
operations. Although the Company believes it has made substantial progress in
penetrating Internet markets and reducing its operating expenses and annual
losses, its historical failure to generate adequate operating income and cash
flow to meet its working capital requirements create doubt about the Company's
ability to continue as a going concern and there can be no assurance that the
Company will be able to continue as a going concern.
The Company completed a restructuring during 1998 designed to reduce its
working capital requirements and to align its operating expenses with its
revised revenue projections. The restructuring eliminated the Company's Israeli-
based product development, sales and marketing functions and various general and
administrative activities. Staffing was reduced to 15 people during the first
quarter of 1999.
The Company is continuing to work on significant new sales opportunities
and intends to gradually expand its sales and marketing operations through the
expanded use of sales representatives and cooperative agreements with other
businesses. There can be no assurance, however, that future revenue will meet
management's expectations.
The Company's ability to generate increased revenue and to fund planned
expenditures is dependent on a number of factors, some of which are outside its
control. In particular, revenue growth and profitability, if any, will depend on
the ability of the Company to develop and market new products and product
enhancements, demand for the Company's products, the level of product and price
competition, the success of the Company in attracting and retaining motivated
and qualified personnel, the ability of the Company to control its costs and
general economic conditions. There can be no assurance that the Company will
meet such challenges successfully. Any of these or other factors could have a
material adverse effect on the Company's business, operating results or
financial condition.
Results of Operations
The Company's operations produced an operating loss of $727 during the
second quarter of 1999 on revenue of $540 compared with an operating loss of
$1,437 on revenue of $490 during the second quarter of 1998. For the first six
months of 1999, the Company's loss before an extraordinary gain from debt
extinguishment of $885, was $1,382 on revenue of $1,011 compared to an
operating loss of $3,279 on revenue of $1,195 during the comparable period of
1998.
The improvement in the Company's operating results was achieved through
significant cost reduction efforts in all facets of the business, coupled with
the redirection of the Company's operating strategy as mentioned above. The
Company believes it has now reduced spending to the minimum sustainable level
and has recently begun to rebuild the sales and marketing organization in the
11
United States to pursue its new operating strategy.
Net Sales. Commencing early in the first quarter of calendar 1999,
management has shifted Accent's focus to generating revenue through Internet
portals. Customer interest in Accent's newest products offered on the Internet,
Loc@le and LanquageWare, has been positive. Additionally, the Company is
encouraged by the number of requests for proposals for translation services from
customers visiting the Company's web site.
Revenue recorded in the three and six month periods of 1998 included sales
of products that were dropped and/or not supported by the Company in the
comparable periods of 1999. Revenues in the comparable periods of 1999 primarily
include sales of translation services generated through traditional sales
methods. Because the Company is in the early stages of focusing its marketing
and sales efforts over the Internet, the benefits, if any, from such efforts
have yet to be realized.
Cost of Sales. Manufacturing, production, warehousing and shipping expenses
have all been eliminated or significantly reduced from the year earlier period
consistent with the Company's shift away from the retail market and toward the
business-to-business market through Internet portals where manufacturing and
support costs are significantly lower. At the same time, the Company has
increased its emphasis on translation services which have a relatively high cost
of sales due to a reliance on external translators to meet fluctuating demand.
Cost of sales during the second quarter of 1999 was $305, or 56% of sales,
compared to $170 in cost of sales, 35% of sales, during the same quarter of
1998. For the first six months of 1999, cost of sales totaled $548, or 54% of
sales, compared to $375, or 31% of sales, reported during the same period of
1998.
The increased emphasis on translation services with its relatively higher
cost of sales than products previously offered by the Company in the comparable
periods of 1998 is reflected in the above comparisons of cost of sales.
Product Development Costs. Product development costs were $33 and $54
during the second quarter and first six months of 1999, respectively, compared
to $718 and $1,843 during the comparable periods of 1998. The reduction in such
costs from the 1998 periods reflects primarily the cost savings realized from
the closure of the Company's product development center in Jerusalem coincident
to the change in the Company's operating strategy.
Product development costs historically included costs incurred by the
Company's subsidiary, AgentSoft. Founded in 1996, AgentSoft was a Jerusalem-
based start-up business focused on developing "intelligent agent" technology for
use on the Internet. Because the Company did not anticipate near-term revenue or
profit from AgentSoft and to allow the Company to focus all of its energies on
its core competencies in the Language Information Industry, the Board of
Directors concluded early in 1998 that the divestiture of AgentSoft would be in
the best interests of all concerned. The assets of AgentSoft were sold for $225
in September, 1998.
Marketing Expenses. The Company's marketing expenses were $148 for the
quarter ended June 30,1999; a reduction of 55% from $331 in the comparable
period in 1998. Marketing expenses for the first six months of 1999 were reduced
approximately 65% to $278 from $789 for the first half of 1998.
Sales and marketing personnel were eliminated from the Jerusalem operation
during the third quarter of 1998 as the Company concluded it would be more
economical to rely on sales representatives for its Middle East activity rather
12
than full time employees. At the same time, the Company commenced establishing
the sales and marketing capability at its U.S. base in Colorado Springs,
Colorado. The Company's shift away from the retail market allows it to function
with fewer sales and marketing personnel and has also led to reductions in non-
personnel expenses such as trade shows, advertising and public relations costs.
General and Administrative Expenses. General and administrative expenses
during the second quarter of 1999 were $384 compared to $689 during the same
quarter of 1998 for a reduction of $305, or 44%. Such costs were $889 for the
six months ended June 30, 1999, a reduction of 37% from $1,403 for the same
period of 1998. The reductions in general and administrative expenses are
primarily attributable to staff reductions from the closure of the Company's
offices in Jerusalem.
Other expenses, net. The Company had other expense of $397 during the three
months ended June 30, 1999, primarily as a result of the amortization of the
discount related to the convertible debenture converted to Series D convertible
Preferred Shares by LHIC on June 30, 1999. For the comparable period of 1998,
$19 in net other expenses was incurred consisting primarily of interest expense
and expense arising from foreign exchange rate fluctuations. For the most recent
six month period, the Company's other expenses totaled $624 compared to $64
during the previous period. As with the three month periods, other expenses
consisted primarily the amortization of the discount related to the convertible
debenture, interest and foreign exchange rate fluctuations.
Loss before extraordinary item. Accent's loss before extraordinary item
during the second quarter of 1999 of $727 was less than the previous period
of $1,437. On a per share basis, the Company lost $0.02 per share before the
extraordinary item during the second quarter of 1999 compared to a loss of
$0.05 per share during the second quarter of 1998. For the first half of 1999
the loss before an extraordinary item was $1,382, or $0.05 per share, compared
to $3,279, or $0.14 per share, during the first half of 1998. The significant
reductions in losses before the extraordinary item recorded in 1999 reflect
the impact of the Company's cost reduction initiatives and change in operating
strategy.
Extraordinary gain from debt extinguishment. As previously mentioned, the
Company recognized an extraordinary gain of $885 in the first quarter of 1999
as a result of the extinguishment of $1,180 of long-term debt, plus $11 of
accrued interest, in exchange for the issuance of a warrant to the lender to
receive 2,448,000 shares of the Company's Ordinary Shares anytime after January
25, 2001, but before January 25, 2006. No such gain or loss was reported in the
first half of 1998. The extraordinary gain amounted to $0.03 per share on a per
share basis for the six months ended June 30, 1999.
Net Loss. The Company recognized a net loss of $497 for the six months
ended June 30, 1999 compared to a net loss of $3,279 for the comparable period
of 1998.
Deemed Dividends on Preferred Stock. As previously mentioned, the Company
recorded $2,535 in deemed dividends associated with the beneficial conversion
feature on the June 1998 issuance of the Series C convertible preferred shares
and warrants, increasing the net loss applicable to common shareholders to
$3,972 or $.14 per share and $5,814 or $.24 per share respectively for the three
months and six months ended June 30, 1998. No such dividend was reported in
1999.
Liquidity and Capital Resources
For the six month period ended June 30, 1999, the Company's operating
activities used cash of $733 compared to $3,086 used during the comparable
13
period of 1998.
The Company has been successful on several occasions during the past two
and one half years in raising additional working capital through the sale of
convertible securities. The Company secured $600 in additional working capital
during the first quarter of 1999 in the form of short-term debt which was
converted to Series D convertible Preferred Shares on June 30, 1999. Those
funds, coupled with cost reduction efforts which substantially reduced its
working capital requirements, were sufficient to meet its requirements through
June, 1999. In July 1999, the Company sold 2.4 million Ordinary Shares for $500
under an agreement more fully described above. In the event current working
capital falls short of its requirements due to (1) the inability of the Company
to locate and enter into a strategic alliance with a strategic partner under the
terms of the stock purchase agreement with Gotham, (2) revenue shortfalls, or
(3) other unanticipated contingencies, the Company will need to seek additional
financing. Although management currently is seeking additional financing, there
is no assurance that the Company will be successful in securing additional
working capital and any failure on the part of the Company to do so will have a
material adverse impact on the Company and may cause the Company to cease
operations.
On January 25, 1999, the Company entered into an agreement with the
government of Israel and various Israeli banking officials whereby the Company
issued a warrant to the bank to issue to the bank 2,448,000 Ordinary Shares in
full satisfaction of the balance of the loan. The warrant vests on the second
anniversary of the grant (that is, January 25, 2001) and expires on January 25,
2006.
Management has taken additional steps in securing additional external
financing and increasing revenues. At its annual meeting held on June 25,
1999, shareholders gave the Board of Directors of the Company the authority to
approve a reverse stock split and an increase in the Company's capitalization.
Management believes these actions will provide a sufficient number of unreserved
and unissued shares to pursue, among other things, equity financing transactions
and strategic alliances and enhance the marketability of the Company's
outstanding Ordinary Shares to the investment community.
Additionally, shareholders approved a change in the Company's name with a
".net" extension which would, in the opinion of management, better reflect the
Company's movement toward Internet products and services and away from its
historical product line. The name change currently is going through the
approval process of the Israeli Registrar of Companies.
The Company's investing activities for both the first six months of 1999
and 1998 were immaterial wherein cash of $1 was used by such activities in
the 1999 period and cash of $23 was used during the 1998 period.
Financing activities provided cash of $600 and $3,971 during the six month
periods ended June 30, 1999, and 1998, respectively. Proceeds from a short-term
loan provided cash of $600 during the first half of 1999, whereas the majority
of the cash provided during the comparable period of 1998 was from proceeds from
the sale of Series C convertible Preferred Shares to L&H.
The Company obtained $600 of short-term financing under a Loan Agreement it
executed with L&H Investment Company, N.V. ("LHIC") on February 19, 1999. The
principal amount of the loan, plus $25 of accrued interest, was converted into
2,884,874 Series D convertible Preferred Shares on June 30, 1999. Additionally,
pursuant to the terms of the loan agreement, the Company issued to LHIC a
warrant to purchase three million Ordinary Shares of the Company at a price of
$0.269 per share.
14
On July 14, 1999, the Company entered into an agreement with an investor,
Gotham Bay Partners, LLC, to purchase, at $0.21 per share, up to 9.5 million
shares of the Company's ordinary shares for $2.0 million. At closing, the
investor paid $500 thousand for 2.4 million shares and is required to purchase
the remaining 7.1 million shares for $1.5 million when and if the Company
obtains a strategic partner and enters into a strategic alliance with such
partner. Under the terms of the agreement , in the event the Company is unable
to find and enter into a definitive agreement with a strategic partner, the
investor will not be required to purchase the remaining 7.1 million ordinary
shares. The Company believes that its operations may not generate adequate cash
flow to meet its needs without additional external financing. The inability of
the Company to find and enter into a strategic alliance with a strategic
partner, or obtain other external financing in the event it is unable to do so
will have a material adverse impact and may cause the Company to cease
operations.
Year 2000
The Company has reviewed its operations in relation to the Year 2000 issue
and has concluded that the likelihood of this issue having a material adverse
impact on the Company is remote. Any costs incurred in relation to the Year 2000
issue are expected to be immaterial.
Accent develops all of its software products in compliance with Year 2000
industry guidelines. The Company's software products are not date sensitive and,
therefore, are not likely to be adversely impacted by Year 2000. The Company,
therefore, believes that it has minimal, if any, exposure to contingencies
related to the Year 2000 issue for the products it manufactures and sells. The
Company has reviewed the third-party custom-written software it uses in its
operations and has determined that this software is also not date sensitive and
poses minimal, if any, Year 2000 risk.
Accent has a policy of purchasing only information technology ("IT")
hardware that is warranted to be Year 2000 compliant and, therefore, believes
its only Year 2000 exposure in this regard is if the hardware fails to perform
as warranted, which is unlikely. The Company also utilizes "off-the-shelf"
software products in its operations. Such software is issued with frequent
updates which have or which are expected to address the Year 2000 issue.
The potential impact of the Year 2000 issue on the Company's non-IT systems
that may include embedded technology, such as microprocessors, is more difficult
to assess. The Company believes, however, that its operations are small enough
that any Year 2000 issue that may arise in its non-IT systems will amount to
inconveniences, which it can work around, rather than significant business
problems.
Because the Company believes the possibility that a Year 2000 issue
significantly disrupting its operations is remote, it has not developed a
contingency plan in this regard. The Company will continue to monitor and assess
the Year 2000 issue, particularly the extent to which its operations are
vulnerable from interactions with its vendors, customers and financial
institutions.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
15
On June 25, 1999, the Company held its Annual Meeting of Shareholders
at its offices in Colorado Springs, Colorado. Matters voted on at the meeting
and the results of such voting are as follows:
1. The election of five directors to hold office until the next Annual
Meeting of Shareholders or until their respective successors shall be
elected and qualified. The following persons were elected as
directors of the Company and received the number of votes set forth
below:
Director For
-------- ---
Todd A. Oseth 21,924,968
Esther Dyson 21,924,968
Chantal Mestdagh 21,924,968
Bob Kutnick 21,924,968
Francis Vanderhoydonck 21,924,968
2. To increase authorized share capital by New Israel Shekels (NIS)
650,000, divided into 65,000,000 Ordinary Shares with nominal value
NIS 0.01 each, following which the total number of Ordinary Shares,
nominal value NIS 0.01 per share (the "Ordinary Shares") shall be
130,000,000, and to approve a corresponding amendment to the
Company's Memorandum of Association and Articles of Association
For: 30,113,689
Against: 703,877
Abstain: 101,850
3. To approve a reverse stock split of the Company's outstanding shares
on such ratio (a one-for-seven basis, a one-for-ten basis or a one-
for-fifteen basis) as the Board of Directors shall determine; (ii) to
approve a corresponding increase in the nominal value of the
Company's Ordinary Shares from NIS 0.01 (to NIS 0.07, NIS 0.10 or NIS
0.15, depending on the ratio of the reverse stock split determined by
the Board of Directors); and (iii) to approve amendments to the
Memorandum of Association and Articles of Association to reflect
these matters; such reverse stock split to take place at the sole
discretion of the Board Directors at any time prior to January 1,
2000;
For: 29,784,322
Against: 1,060,494
Abstain: 0
4. To increase the number of options to purchase Ordinary Shares which may be
granted under the Employee Share Option Plan (1995) by 625,000, from
1,875,000 to 2,500,000;
For: 13,247,709
Aginst: 770,577
Abstain: 79,990
5. To approve the adoption of the CEO Share Option Plan (1999), and the grant
of certain options pursuant thereto;
16
For: 13,062,490
Against: 969,727
Abstain: 101,300
6. To approve a change in the name of the Company to "LanguageWare.net
Ltd." or such other similar name as shall be determined by the Board of
Directors and approved by the Israeli Registrar of Companies;
For: 30,734,964
Against: 92,235
Abstain: 92,217
7. To appoint Luboshitz, Kasierer & Co., a member firm of Arthur Andersen,
as independent auditors to audit the Financial Statements of the
Company and its subsidiaries for the year ended December 31, 1999, and
to authorize the Board of Directors to determine their level of
compensation
For: 30,671,774
Against: 148,475
Abstain: 99,167
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(a) - Memorandum of Association of Registrant (filed as Exhibit 3.1(a) to
the Company's Registration Statement No. 33-92754).*
3.1(b) - Certificate of Name Change dated October 23, 1994 (filed as Exhibit
3.1(b) to the Company's Registration Statement No. 33-92754).*
3.1(c) - Certificate of Name Change dated April 23, 1995 (filed as Exhibit
3.1(c) to the Company's Registration Statement No. 33-92754).*
3.2(a) - Articles of Association of Registrant (filed as Exhibit 3.2 to the
Company's Registration Statement No. 33- 92754).*
3.2(b) - Authorization of Registration of Increase in Share Capital dated July
18, 1999.
4.1 - Form of Ordinary Share Certificate (filed as Exhibit 4.1 to the
Company's Registration Statement No. 33-92754).*
4.2 - Form of Underwriter's Warrant Agreement (filed as Exhibit 4.4 to the
Company's Registration Statement No. 33-92754).*
4.3 - Form of Bridge Financing Warrant dated as of May 22, 1995 between the
Company and each of the Holders (filed as Exhibit 4.5 to the Company's
Registration Statement No. 33-92754).*
4.4 - Form of Representative's Warrant Agreement, between the Company and
Sands Brothers & Co, Ltd., as representative of the several
underwriters (filed as Exhibit 4.4 to the Company's Registration
Statement No. 333-7637). *
- --------------------------
*Incorporated by reference
17
4.5 - Form of IMR Warrant dated as of November 22, 1996 between the
Company and IMR Fund, L.P. (filed as Exhibit 4.5 to the Company's
Registration Statement No. 333-7637).*
4.6 - Form of Redeemable Warrant Agreement dated as of Exhibit 4.6 to the
Company's Registration November 22, 1996 between the Company, Sands
Statement No. 333-7637).* Brothers & Co., Ltd., as representative of
the several underwriters, and American Stock Transfer & Trust
Company (filed as Exhibit 4.6 to the Company's Registration
Statement No. 333-7637).*
4.7 - Form of Redeemable Warrant Certificate (filed as Exhibit 4.6 to the
Company's Registration Statement No. 333-7637).*
4.8 - Form of Unit Certificate (filed as Exhibit 4.6 to the Company's
Registration Statement No. 333-7637).*
4.9 - Securities Purchase Agreement dated August 5, 1997, between CC
Investments LDC and Accent Software International Ltd., which
includes the Convertible Debenture, two Warrant Agreements and the
Registration Rights Agreement as exhibits thereto. (filed as Exhibit
4.1 to the Company's Registration Statement filed on August 27,
1997, Reg. No. 333-34455).*
4.10 - Warrant Agreement with The Shemano Group, Inc. (filed as Exhibit 4.6
to the Company's Registration Statement filed on October 16, 1997,
Reg. No. 333-380043).*
4.11 - Warrant Agreement with Equity Management Partners LLP (filed as
Exhibit 4.7 to the Company's Registration Statement filed on October
16, 1997, Reg. No. 333-38043).*
4.12 - Warrant Agreement with Brad Gillingham (filed as Exhibit 4.8 to the
Company's Registration Statement filed on October 16, 1997, Reg. No.
333-38043).*
4.13 - Form of Warrant Agreement covering warrant agreements with Robert J.
Laikin, Michael Mosher and Manufacturers Indemnity and Insurance
Company of America (filed as Exhibit 4.9 to the Company's
Registration Statement filed on October 16, 1997, Reg. No. 333-
38043).*
4.14 - Form of Securities Purchase Agreement dated November 6, 1997,
between Accent Software International Ltd., and CC Investments LDC,
Nelson Partners, Olympus Securities, Ltd., Marshall Companies,
Profinsa Investments, which includes the Convertible Debenture, the
Warrant Agreement, Registration Rights Agreement and Certificate of
Designation as exhibits thereto. (filed as Exhibit 4.1 to the
Company's Registration Statement filed on November 6, 1997, Reg. No.
333-39697).*
4.15 - Warrant Agreement with The Shemano Group, Inc. (filed as Exhibit 4.1
to the Company's Form S-3 filed on November 6, 1997, Reg. No. 333-
39697).*
4.16 - Form of Warrant to Lernout & Hauspie Speech Products, N.V.(filed as
Exhibit 4.16 to the Company's Form 10-Q on May 12, 1999).*
- --------------------------
*Incorporated by reference
18
4.17 - Form of Warrant to L&H Investment Company, N.V.(filed as Exhibit 4.17
to the Company's Form 10-Q on May 12, 1999).*
10.1 - Stock Purchase Agreement between IMR Investments V.O.F. and Kivun
Computers Company (1988), Ltd., Robert Rosenschein, Jeffrey
Rosenschein, Accent Software Partners, Pal-Ron Marketing, Ltd., and
KZ Overseas Holding Corp., dated as of May 11, 1994, as amended July
20, 1995 (filed as Exhibit 10.1 to the Company's Form 10-K on April
1, 1996).*
10.2 - Shareholders' Agreement by and among Kivun Computers Company (1988)
Ltd., Robert Rosenschein, Dr. Jeffrey Rosenschein, Pal-Ron Marketing,
Ltd., Accent Software Partners, KZ Overseas Holding Corp. and IMR
Investments V.O.F., dated May 11, 1994, as amended July 20, 1995
(filed as Exhibit 10.2 to the Company's Form 10-K on April 1, 1996).*
10.3(a) - Option Agreement dated March 23, 1993 between the Company and Robert
S. Rosenschein (filed as Exhibit 10.3(a) to the Company's
Registration Statement No. 33-92754).*
10.3(b) - Schedule of other option agreements substantially identical in all
material respects to the option agreement filed as Exhibit 10.3(a)
(filed as Exhibit 10.3(b) to the Company's Registration Statement No.
33-92754).*
10.4(a) - Warrant Acquisition Agreement dated January 1, 1995 between the
Registrant and Robert S. Rosenschein (filed as Exhibit 10.4(a) to the
Company's Registration Statement No. 33-92754).*
10.4(b) - Schedule of other warrant acquisition agreements substantially
identical in all material respects to the warrant agreement (filed as
Exhibit 10.4(b) to the Company's Registration Statement No. 33-
92754).*
10.5 - Form of Registration Rights Agreements dated as of May 22, 1995
between the Company and each of the Holders (filed as Exhibit 10.5 to
the Company's Registration Statement No. 33-92754).*
10.6(a) - Employee Share Option Plan (1995) (filed as Exhibit 10.7(a) to the
Company's Registration Statement No. 33-92754).*
10.6(b) - Amended and Restated Employee Share Option Plan (1995) (filed as
Exhibit 4.2 to the Company's Registration Statement No. 333-04285).*
10.6(c) - Non-Employee Director Share Option Plan (1995) (filed as Exhibit
10.7(b) to the Company's Registration Statement No. 33-92754).*
10.6(d) - Amended and Restated Non-Employee Share Option Plan (1995) (filed as
Exhibit 4.2 to the Company's Registration Statement No. 333-07965).*
10.6(e) - Amended and Restated Non-Employee Share Option Plan (1995) (filed as
Exhibit 10-6(e) to the Company's Form 10-K on March 31, 1998).*
10.6(f) - CEO Share Option Plan (1999) (filed as Exhibit 10.6f to the Company's
Form 10-Q on August 11, 1999).*
10.6(g) - Non-Employee Share Option Plan (1998) (filed as Exhibit B to the
Company's Form DEF14A on April 29, 1998)*
__________________________
*Incorporated by reference
19
10.7(b) - Employment Agreement between the Company and Todd A. Oseth, dated
February 3, 1997 (filed as exhibit 10.7(b) to the Company's Form 10-K
on March 31, 1998).*
10.8 - Consulting Agreement, dated August 4, 1997, between the Company and
Investor Resource Services, Inc. (filed as Exhibit 4.1 to the
Company's Registration Statement filed on October 16, 1997, Reg. No.
333-38043).*
10.9 - Amendment to the Consulting Agreement, dated January 30, 1998,
between Company and Investor Resource Services, Inc. (filed as
Exhibit 10-9 to the Company's Form 10-K on March 31, 1998).*
10.10 - Shareholders Agreement by and between Accent Software International
Limited and Gilad Zlotkin, dated February 21, 1996 (filed as Exhibit
10.10 to the Company's Form 10-K on April 1, 1996).*
10.11 - Debenture between the Company and Bank Leumi (filed as Exhibit 10.11
to the Company's Registration Statement No. 333-7637).*
10.12 - Agreement between the Company and The Bank for Industrial Development
(filed as Exhibit 4-1 to the Company's Form S-3 on August 4, 1998)*
10.13 - Stock Purchase Agreement between the Company and Gotham Bay Partners
LLC dated July 14, 1999 (filed as Exhibit 10.13 to the Company's Form
10-Q on August 11, 1999).*
21 - Subsidiaries of Registrant (filed as Exhibit 21 to the Company's Form
10-K filed on April 2, 1996).*
27 - Financial Data Schedule.
(b) Reports on Form 8-K
None.
__________________________
*Incorporated by reference
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.
ACCENT SOFTWARE INTERNATIONAL LTD.
(Registrant)
Date: by: /S/ Thomas B. Foster
--------------- -----------------------
Thomas B. Foster
(Principal Financial Officer)
20