UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
ACCORD ADVANCED TECHNOLOGIES, INC.
----------------------------------
(Name of Small Business Issuer)
For the Quarter Ended June 30, 2000 Commission File Number 0-27187
------------- ------------------------------
Nevada 88-0361127
------------------------ ----------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number.)
5002 South Ash Avenue, Tempe, Arizona 85282
-----------------------------------------------------------
(Address of Principal Executive Offices Including Zip Code)
(480) 820 1400
--------------------------
(Issuers 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 such shorter
period that the registrant was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days. [X] YES [ ] NO
Number of shares outstanding of each of the issuer's classes of common equity,
as of August 14, 2000: 39,568,638
Transitional Small Business Disclosure Format: [ ] Yes [X] No
ACCORD ADVANCED TECHNOLOGIES, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet at June 30, 2000 3
Consolidated Statements of Operations for the
Six months ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the
Six months ended June 30, 2000 and 1999 5
Item 2 - Management's Discussion and Analysis 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds
Item 3. Default Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 (UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ 27,644
Accounts receivable 57,880
Inventories 483,392
Deferred income taxes 82,361
Prepaid expenses and other assets 67,057
-----------
Total current assets 718,334
-----------
PROPERTY, MACHINERY AND EQUIPMENT, net 1,805,441
DEFERRED INCOME TAXES --
DEFERRED LOAN COSTS 26,978
DEFERRED INCOME TAXES 82,659
OTHER ASSETS 54,325
-----------
TOTAL ASSETS $ 2,687,737
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank line of credit $ 144,732
Accounts payable 623,679
Accrued liabilities 315,205
Accrued warranty and installation expense 120,713
Income taxes payable 62,198
Customer deposits 57,500
Legal settlements payable-current portion 400,000
Capital lease obligations - current portion 25,517
Note payable - current portion 201,562
-----------
Total current liabilites 1,951,106
-----------
CAPITAL LEASE OBLIGATIONS - long-term portion 51,588
NOTE PAYABLE - long-term portion 1,156,683
LEGAL SETTLEMENTS PAYABLE - LONG TERM PORTION 100,000
-----------
Total liabilities 3,259,377
-----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value, 3,000,000
shares authorized, none issued --
Common stock, $.0001 par value, 47,000,000 share
authorized, 39,568,638, issued and outstanding 3,957
Paid in capital 1,215,973
Retained earnings (1,791,570)
-----------
Total stockholders' equity (571,640)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,687,737
===========
3
ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, Three Months Ended June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
SALES $ 1,812,638 $ 1,908,044 $ 259,500 $ 902,284
COST OF SALES 1,145,338 1,057,074 207,799 402,651
------------ ------------ ------------ ------------
Gross profit 667,300 850,970 51,701 499,633
------------ ------------ ------------ ------------
OTHER (INCOME) AND EXPENSES
General and administrative expense 992,513 504,562 517,562 235,170
Selling and marketing expense 177,461 351,156 66,097 180,202
Interest expense 340,779 30,672 308,598 (10,872)
Impairment Loss 287,100 -- 287,100 --
Loss on Legal Settlements 500,000 -- 500,000 --
Other (income) expense 25,328 (7,487) 34,147 (6,992)
------------ ------------ ------------ ------------
Total other expense 2,323,181 878,903 1,713,504 397,508
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (1,655,881) (27,933) (1,661,803) 102,125
INCOME TAX BENEFIT (PROVISION) -- 11,820 -- (39,194)
------------ ------------ ------------ ------------
NET (LOSS) INCOME BEFORE EXTRAORDINARY ITEM (1,655,881) (16,113) (1,661,803) 62,931
EXTRAORDINARY ITEM - DEBT FORGIVENESS INCOME
(net of income taxes of $341,484) -- 716,650 -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (1,655,881) $ 700,537 $ (1,661,803) $ 62,931
============ ============ ============ ============
NET (LOSS) INCOME PER COMMON SHARE
Basic:
Before extraordinary item $ (0.04) $ * $ (0.04) $ *
Extraordinary item -- 0.02 -- *
------------ ------------ ------------ ------------
Total $ (0.04) $ 0.02 $ (0.04) $ *
============ ============ ============ ============
Diluted:
Before extraordinary item $ (0.04) $ * $ (0.04) $ *
Extraordinary item -- 0.02 -- *
------------ ------------ ------------ ------------
Total $ (0.04) $ 0.02 $ (0.04) $ *
============ ============ ============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 39,568,638 39,548,638 39,568,638 39,548,638
============ ============ ============ ============
Diluted 39,568,638 39,600,592 39,568,638 39,600,592
============ ============ ============ ============
* less than $0.01
4
ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(1,655,881) 700,537
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 37,732 29,999
Amortization of discount on convertible debenture 250,000 0
Deferred income taxes (2,951) 329,614
Forgiveness of Long Term Debt -- (1,058,134)
Impairment losses 287,100 0
Changes in assets and liabilities:
Accounts receivable 701,166 (180,976)
Inventory 207,990 (491,853)
Prepaid expenses and other assets (23,080) (6,489)
Deferred financing costs and other noncurrent assets (9,100) (19,035)
Accounts payable (50,210) (233,739)
Accrued liabilities (12,881) 18,020
Income taxes payable 8,850 --
Accrued warranty and installation expense (16,074) 181,730
Legal settlements payable 500,000 --
Customer deposits (364,353) 1,293,288
----------- -----------
Net cash provided by operating activities (141,692) 562,962
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, machinery and equipment (10,428) (293)
----------- -----------
Net cash (used in) provided by investing activities (10,428) (293)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt -- 965,000
Borrowings on convertible debenture 250,000 --
Principal payments on capital lease obligations (11,259) (995,000)
Principal payments on line of credit (4,018) --
Principal payments on long-term debt (68,274) (24,485)
----------- -----------
Net cash (used in) provided by financing activities 166,449 (54,485)
----------- -----------
INCREASE IN CASH 14,329 508,184
CASH, BEGINNING OF PERIOD 13,315 157,078
----------- -----------
CASH, END OF PERIOD $ 27,644 $ 665,262
=========== ===========
SUPPLEMENTAL INFORMATION:
Computer equipment purchased through capital lease $ 24,135 --
=========== ===========
Interest Paid $ 82,339 --
=========== ===========
5
STATEMENT OF INFORMATION FURNISHED
The accompanying financial statements have been prepared in accordance with
Form 10-QSB instructions and in the opinion of management contain all
adjustments (consisting of only normal and recurring accruals) necessary to
present fairly the financial position as of June 30, 2000, and the results of
operations for the six months ended June 30, 2000 and 1999, and cash flows for
the six months ended June 30, 2000 and 1999. These results have been determined
on the basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's 1999 financial
statements included in Form 10-KSB.
Certain information and footnote disclosure normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the accompanying financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-KSB.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Sales decreased from $1,908,044 for the six months ended June 30, 1999 to
$1,812,638 for the six months ended June 30, 2000, a decrease of $95,406 or 5%.
The sales decrease is mostly attributable to a decrease in the number of orders
that were received in the second quarter.
The gross profit decreased from $850,970 for the six months ended June 30,
1999 to $667,300 for the six month period ended June 30, 2000, a decrease of
$183,670 or 22%. The Company's gross profit margins are subject to volatility
because of the factor that each contract is unique and the cost of the basic
tool or piece of equipment for remanufacturing may vary significantly depending
on availability. In addition, sales were down during this reporting period.
General and administrative expenses increased to $992,513 in the period
ended June 30, 2000, from $504,562 in the period ended June 30, 1999, an
increase of $487,951 or 49%. This increase is due to expenses related to the
addition of a service division in February 2000 and increased salary expense due
to hiring of additional technical and management personnel during the last 4
months of 1999. The increase is also due to increased costs of benefits related
to the additional personnel.
Selling and marketing expenses decreased to $177,461 in the period ended
June 30, 2000, from $351,156 in the period ended June 30, 1999, a decrease of
$173,695 or 49%. Selling and marketing expenses include sales commissions which
is a factor of the sales volume as well as whether the sales are made through
outside sales representatives or direct (inside) sales representatives. Sales
commissions for outside representatives are higher than inside. For the period
ended June 30, 2000 most sales were made by direct sales representatives. For
6
the period ended June 30, 1999 a significant sale was by an outside
representative. Selling and marketing expenses, as a percentage of sales, was
9.7% as of June 30, 2000 compared to 18% as of June 30, 1999.
Interest expense increased to $340,779 in the period ended June 30, 2000,
from $30,672 in the period ended June 30, 1999, an increase of $310,107.
Approximately $60,000 of the increase is due primarily to refinancing of
equipment which occurred in March 1999. As of April 1999 the company began
servicing a debt of $1 million on a piece of equipment. As such the period ended
June 30, 1999 only included 2 months of interest expense on this debt while the
period ended June 30, 2000 includes 6 months interest expense on this debt. The
remaining $250,000 of the increase is due to recording of interest expense
related to a Secured Convertible Debenture Agreement which the company entered
into in June 2000. See further details on this agreement under Liquidity and
Capital Resources.
Due to the lack of profitable operations and difficulties raising
additional capital, the Company has experienced significant cash flow
difficulties in the three months ended June 30, 2000. Subsequent to December 31,
1999, the Company has borrowed approximately $500,000. The Majority of those
borrowings have been in the form of convertible debt. One half of the borrowings
were used to partially settle litigation with its former debenture holder. The
Company has had difficulties meeting its obligations. In addition, the Company
has failed to meet certain financial covenants on its bank debt as of June 30,
2000.
The Company was involved in a dispute with its original debenture holders.
The debenture holders have filed a claim against the Company. The Company has
reached a settlement with the debenture holders and will pay the debenture
holders approximately $500,000 over a period of one year. One half of the
borrowings discussed above have been designated for payment of that settlement.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has had a working capital deficiency. The Company
had a net working capital deficit of $1,232,772 at June 30, 2000 as compared to
a deficiency of $246,000 at December 31, 1999. The increase in the deficit is
due to the decrease in sales during the quarter ended June 30, 2000, as well as
a decrease in inventory due to recording of impairment losses and payables due
to legal settlements. The Company has suffered material operating losses and is
experiencing difficulties meeting its current obligations, which included some
payroll obligations. Due to lack of consistent ongoing revenue, the Company has
not had adequate working capital and since March 31, 2000, cash has mostly come
from borrowings and collections of accounts receivable. The Company is
attempting to raise sufficient equity capital to meet its current obligations
and to increase its marketing efforts to generate a higher volume of revenue.
However, there can be no assurances that it will be successful in raising
capital and achieve profitable operations.
The Company has attempted to secure cash deposits from customers at the
time purchase orders are submitted to assist in much of the up front costs that
are incurred in completing customer orders. The largest component of cost of
sales is the cost of acquiring the primary tool or machine. The Company may also
7
request the customer to purchase the used tool or machine as well as some of the
parts required for the refurbishing. The Company has historically borrowed funds
from certain purchase order lenders. In the year ended December 31, 1999, the
Company secured a $150,000 bank line of credit. The line of credit expired in
May, 2000. The Company has refinanced this line of credit to a 3-year term loan
as of May 15, 2000. At June 30, 2000, the Company's annual debt service is
approximately $330,000 including capital lease obligations excluding the bank
line of credit. The Company believes that at its current operating levels it can
continue to require customer deposits and that it has several sources to obtain
financing upon obtaining a customer purchase order.
The Company is holding for sale two pieces of equipment that have been idle
since they were acquired. The Company had intended to use this equipment to
expand its product line but now has postponed those plans. The net book value of
this equipment was $1,646,000 at June 30, 2000. The Company will continue its
efforts to sell this equipment and believes that it will eventually recognize
proceeds equal to or greater than the carrying value. The Company recorded an
impairment loss of $95,000 on one of these pieces of equipment during the period
ended June 30, 2000. In addition, the Company wrote down leasehold improvements
with a net book value of $57,000 related to this asset.
The Company also recorded an impairment loss of $135,000 during the period
ended June 30, 2000 on inventory it held for sale. This equipment was sold in
August 2000 at book value after the write-down.
The Company does not intend to require material capital expenditures in the
short term.
The Company has not experienced material losses on receivables from its
customers. Its customers generally are large companies with significant
resources. The Company requires final payment upon delivery, installation and
completion of testing.
The Company is attempting to raise additional debt or equity capital to
allow it to expand the current level of operations.
The Company has settled a lawsuit by a shareholder pursuant to a series of
debentures. The effect of the was a one-time charge of $500,000.
On June 22, 2000, the company executed a Secured Convertible Debenture
Purchase Agreement in the amount of $1,000,000. On that same date, the company
issued 12% Secured Convertible Debentures due June 30, 2001 in the aggregate
principal amount of $250,000, with accompanying warrants to purchase up to an
aggregate 250,000 common shares. On July 17, 2000, the company issued to the
same investors, additional 12% Convertible Debentures due July 18, 2001 in the
aggregate principal amount of $250,000 with accompanying warrants to purchase up
to an additional aggregate of 250,000 common shares. The purchase price of the
shares supporting the debentures is $.23 or 60% of the lowest three inter day
price. The strike price for the warrants is $.253. The debentures and warrants
were purchased by two accredited investors in a private placement transaction
which was not a public offering. The shares of common stock issuable under the
8
terms of the convertible debentures and the underlying warrants may be sold from
time to time by the investors subsequent to the effectiveness of a registration
statement now being prepared. The company will register 200% of the shares
required for conversion and it is anticipated that the debentures will be
converted.
The Company may require additional capital to continue a trend of greater
volume which would require higher levels of inventory, accounts receivable and
higher operating expenses for marketing. The Company is presently negotiating
with sources for additional equity capital to allow it to expand the current
level of operations.
There can be no assurances that the Company will be successful in obtaining
such capital.
SEASONALITY
The Company's operations are not affected by seasonal fluctuation. However,
cash flows may at times be affected by fluctuations in the timing of cash
receipts from large contracts.
OTHER
The Company noted that there were certain timing differences in interim and
quarterly information filed on Form-10SB and Form-10QSB for the periods ended
June 30, 1999, and September 30, 1999. The Company is presently analyzing that
financial information and will file amendments to those forms upon completion of
that analysis.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
ADDITIONAL FINANCING. The Company will require additional financing to achieve
growth in operations and to support its working capital requirements. The
Company may seek additional financing through private placements of debt or
equity financing.
TECHNOLOGICAL CHANGE. The nature of the Company's service and product is such
that changes are continually made to the tools and machines. The Company has
been able to keep pace with those changes and hire qualified personnel that are
well trained and experienced with the design and manufacturing of the equipment.
The Company has historically hired much of its personnel from the original
equipment manufacturers.
COMPETITION. The Company faces competition from many sources, including the
original equipment manufacturers. Many of these competitors are larger and have
significantly more resources than the Company.
9
FORWARD LOOKING INFORMATION
The issuer has and will continue to market all the prospective customers
World Wide rather than relying on only those customers with whom it has
historically done business. The company plans to increase its sales and
marketing presence through the use of its web site, more advertising and adding
more sales and technical personnel. The company will also continue the
development of its patents.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company believes that the results of its operations in any quarterly
period may be impacted by factors such as delays in completion and the shipment
of products, difficulty in acquiring critical product components of acceptable
quality and in the required quantity, increased competition, the effect of
marketing efforts, growth rates in the Company's markets and adverse changes in
economic conditions. The Company's volume may be affected by changes in
conditions in the semiconductor industry.
"CAUTION REGARDING FORWARD LOOKING STATEMENTS"
CERTAIN STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT RELATED TO
HISTORICAL RESULTS, INCLUDING, WITHOUT LIMITATIONS, STATEMENTS REGARDING THE
COMPANY'S BUSINESS STRATEGY AND OBJECTIVES AND FUTURE FINANCIAL POSITION, ARE
FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT AND INVOLVE RISKS AND UNCERTAINTIES.
ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS ON WHICH THESE FORWARD
LOOKING STATEMENTS ARE BASED ARE REASONABLE, THERE CAN BE NO ASSURANCE THAT SUCH
ASSUMPTIONS WILL PROVE TO BE ACCURATE AND ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE BUT ARE NOT LIMITED TO, THOSE SET
FORTH IN THE PRECEDING PARAGRAPH, AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS
REPORT. ALL FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT ARE QUALIFIED IN
THEIR ENTIRETY BY THIS CAUTIONARY STATEMENT.
10
PART II OTHER INFORMATION
GENERAL INFORMATION
ACCORD ADVANCED TECHNOLOGIES, INC. (AVTI) is in the business of providing
refurbishing services and engineering consulting to semiconductor manufacturers.
ACCORD SEMICONDUCTOR EQUIPMENT GROUP, INC., the wholly owned subsidiary of
Accord Advanced Technologies, Inc. was formed in 1993 under the name Integrated
Semiconductor Service. It is the only operating company of Accord Advanced
Technologies, Inc. This company recognized an opportunity for full-service
re-manufacturing and support of advanced semiconductor manufacturing systems and
components.
Accord Semiconductor Equipment Group, Inc (SEG) specializes in
re-manufacturing and modifying multi-chamber systems for chemical vapor
deposition (CVD), physical vapor deposition (PVD) and Etch processes. These
precision systems are responsible for transforming individual silicon wafers
into integrated-circuit (IC) products such as computer chips. Refurbishing
provides Accord SEG's customers an equally high quality alternative to new OEM
equipment and enables the customer to immediately produce its IC products at a
reduced cost due to lower manufacturing equipment costs. The company also
provides system decommissioning, commissioning, after-sales service and supplies
parts and process technology as needed by the customer Accord SEG is unique
among equipment re-manufacturers because of its ability to custom-engineer
modifications to customers' systems. The company primarily re-manufactures the
equipment of Applied Materials, the largest original equipment manufacturer
(OEM) of semiconductor manufacturing equipment in the world.
The market serviced by the company consists of all facilities in North
America (approximately 378) manufacturing integrated circuits. The issuer has an
internal marketing and sales force as well as a highly skilled technical staff.
It also has very experienced outside sales representatives. The company utilizes
trade shows, trade journal advertising and its web site along with its
technical, marketing and sales force to distribute and market its services.
The Company's acquisition of Accord Semiconductor Equipment Group, Inc.
("Accord SEG") was effected through the exchange of common stock that resulted
in 100% of the common stock of Accord SEG being held by the Company and the
shareholders of Accord SEG owning approximately 95% of the Company.
Accord SEG has completed work for such well-known companies as American
Microsystems, Honeywell, Rockwell International, Integrated Solutions, Motorola,
Intel, MRC (Sony), California Micro Devices, Eastman Kodak, National
Semiconductor, Siemens Semiconductor Group, Lockheed, IDT and Texas Instruments.
In that there are numerous other prospective customers, the issuer feels that it
has been dependent on a few customers and is changing that dependency.
11
PATENTS
The issuers operating subsidiary has received two patents and are awaiting
a third.
The first patent was issued on April 28, 1998 (US Patent #5,744,400) for an
ion beam process that has advantages over the existing Chemical Mechanical
Planarization.
Traditional Chemical/Mechanical Planarization employs a combination of
mechanical pressure, abrasive slurry and chemical etchant to grind flat the thin
film layers of an IC. There is potential for damage to the IC if the layers are
ground too thin or if any residue from the CMP process remains. Accord's
planarization process yields greater consistency at a lower cost than does CMP.
The Company expects to complete a prototype incorporating its new technology
during 2000. The process is dry, slurry-free, environmentally safe, adaptable to
standard cluster deposition/etch tools and is cost effective with rapid
planarization rates.
CVD WAFER HANDLING SYSTEM
Every semiconductor processing system uses spare parts that are affected by
the gases and other materials within a process chamber. These "consumable parts"
must be replaced regularly; creating a potentially lucrative market to those
companies that can design and manufacture replacement parts. All Chemical Vapor
Deposition chambers in a multi-chamber processing tool use a handling system to
support and heat the wafer inside the chamber. Through a combination of thermal
stress and exposure to corrosive gases over time, these wafer handlers fail
during production and need to be replaced. The issuer's subsidiary has developed
and on September 1, 1998 received a patent on a wafer-handling system, or
susceptor (US Patent # 5,800,623). It incorporates distinctive metallurgy to
offer greater reliability and longer durability at a significantly reduced cost.
ENVIROCLEAN' CHAMBER KIT
The Company through its subsidiary has a patent-pending (docket #
08/730849) product known as EnviroClean(TM) chamber upgrade kit. This product
offers a solution to concerns about greenhouse gas production in the
semiconductor industry. Greenhouse gases are believed to have a detrimental
effect on the earth's atmosphere through global warming. Semiconductor
manufacturing is currently responsible for producing a significant volume of
these gases each year. Consequently, pending legislation to curtail the
production of greenhouse gases will likely require semiconductor manufacturers
in the near future to install relatively expensive abatement systems that meet
strict emission specifications.
The Company's EnviroClean kit enables semiconductor manufacturers to retool
existing multi-chamber equipment less expensively. Its technology replaces
harmful greenhouse gases with relatively benign process-gas. The issuer may need
local government approval for the use of certain gases used in the testing of
the equipment re-manufactured on its premises. To date, the company has all the
approvals necessary.
12
The issuer is unaware of any effect existing governmental regulations has
on its business. The issuer is also unaware of any probable regulation. The
issuer has not expended any funds for Research and Development during the past
two years.
The company complies with all environmental laws. The costs to meet these
requirements were expended when the private company moved into its present
rented facility in 1994. There has been no need for further expenditures since
that time.
The issuer has fifteen (15) full time employees; three (3) contracted
employees and two (2) independent sales representative groups as of June 30,
2000.
ITEM 1. LEGAL PROCEEDINGS
A former employee has brought a lawsuit against the company claiming unpaid
commissions. The company has denied any amounts due and filed a counterclaim for
damages in that the employee acted beyond his authority. It is management's
position that the matter will be resolved in its favor. The company has entered
into a settlement agreement with GEM Partners et al which calls for the company
to make cash payments of $500,000.00 within one year.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.2 Secured Convertible Debenture Purchase Agreement dated as of
June-22, 2000 between the investors named therein and the
registrant.
4.3 12% Convertible Debenture due June 30, 2001 by the Registrant and
in favor of New Millenium Capital Partners II, LLC.
4.4 12% Convertible Debenture due June 30, 2001 by the Registrant and
in favor of AJW Partners, LLC
4.5 Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to New Millenium Capital Partners II, LLC.
4.6 Stock Purchase Warrant dated June 22, 2000 issued by the
registrant to AJW Partners, LLC.
4.7 Registration Rights Agreement dated as of June 22, 2000 between
the Registrant and the investors.
4.8 First Amendment to the Secured Convertible Debenture Purchase
Agreement dated as of July 14, 2000 between the investors named
therein and the registrant
4.9 12% Convertible Debenture due June 30, 2001 by the Registrant and
in favor of New Millenium Capital Partners II, LLC.
4.10 12% Convertible Debenture due June 30, 2001 by the Registrant and
in favor of AJW Partners, LLC
4.11 Stock Purchase Warrant dated July 17, 2000 issued by the
registrant to New Millenium Capital Partners II, LLC.
4.12 Stock Purchase Warrant dated July 17, 2000 issued by the
registrant to AJW Partners, LLC.
4.13 Security Agreement
27 Financial Data Schedule
(b) Reports on Form 8-K
April 25, 2000 advising that a director has resigned from the Board of
Directors.
14
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized.
ACCORD ADVANCED TECHNOLOGIES, INC.
September 14, 2000 By: /s/ Travis Wilson
-------------------------------------
Travis Wilson, Director and President
15