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)
September 30, 2000 0-27187
(For the Quarter Ended) (Commission File Number)
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. YES [X] NO [ ]
Number of shares outstanding of each of the issuer's classes of common equity,
as of November 10, 2000 39,568,638
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
ACCORD ADVANCED TECHNOLOGIES, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
Consolidated Balance Sheet at September 30, 2000 3
Consolidated Statements of Operations for the nine months
and three months ended September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and 1999 5
Notes to Financial Statements 6
Item 2 - Management's Discussion and Analysis 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Default Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 114,508
Accounts receivable, net of allowance of $24,890 156,907
Inventories 1,209,506
Deferred income taxes 82,361
Prepaid expenses and other assets 130,209
-----------
Total current assets 1,693,491
-----------
PROPERTY, MACHINERY AND EQUIPMENT, net 1,735,897
DEFERRED INCOME TAXES --
DEFERRED LOAN COSTS 26,208
DEFERRED INCOME TAXES 82,659
OTHER ASSETS 52,432
-----------
TOTAL ASSETS $ 3,590,687
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short term debt $ 810,645
Accounts payable 653,590
Accrued liabilities 551,312
Accrued warranty and installation expense 92,473
Income taxes payable 62,198
Customer deposits 448,000
Legal settlements payable-current portion 280,000
Capital lease obligations - current portion 26,957
Note payable - current portion 1,740,918
-----------
Total current liabilites 4,666,093
-----------
CAPITAL LEASE OBLIGATIONS - long-term portion 44,245
NOTE PAYABLE - long-term portion --
-----------
Total liabilities 4,710,338
-----------
STOCKHOLDERS' DEFICIT:
Preferred stock, $.0001 par value, 3,000,000 shares
authorized, none issued
Common stock, $.0001 par value, 47,000,000 shares
authorized, 39,568,638, issued and outstanding 3,957
Paid in capital 1,465,973
Retained earnings (2,589,581)
-----------
Total stockholders' deficit (1,119,651)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 3,590,687
===========
3
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ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30, THREE MONTHS ENDED SEPT. 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 2,169,165 $ 5,021,818 $ 356,527 $ 3,113,774
COST OF SALES 1,371,095 3,174,336 225,757 2,117,262
------------ ------------ ------------ ------------
Gross profit 798,070 1,847,482 130,770 996,512
------------ ------------ ------------ ------------
OTHER (INCOME) AND EXPENSES
General and administrative expense 1,427,683 767,843 435,170 263,281
Selling and marketing expense 251,602 681,642 74,141 330,486
Interest expense 786,132 74,508 445,353 43,836
Impairment loss 337,100 -- 50,000 --
Loss on legal settlements 500,000 -- -- --
Other (income) expense (50,592) 6,564 (75,920) 14,051
------------ ------------ ------------ ------------
Total other expense 3,251,925 1,530,557 928,744 651,654
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (2,453,855) 316,925 (797,974) 344,858
INCOME TAX BENEFIT (PROVISION) -- (102,208) -- (114,028)
------------ ------------ ------------ ------------
NET (LOSS) INCOME BEFORE EXTRAORDINARY ITEM (2,453,855) 214,717 (797,974) 230,830
EXTRAORDINARY ITEM - DEBT FORGIVENESS INCOME
(net of income taxes of $341,484) -- 716,650 -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (2,453,855) $ 931,367 $ (797,974) $ 230,830
============ ============ ============ ============
NET (LOSS) INCOME PER COMMON SHARE
Basic:
Before extraordinary item $ (0.06) $ * $ (0.02) $ 0.01
Extraordinary item -- 0.02 -- --
------------ ------------ ------------ ------------
Total $ (0.06) $ 0.02 $ (0.02) $ 0.01
============ ============ ============ ============
Diluted:
Before extraordinary item $ (0.06) $ * $ (0.02) $ 0.01
Extraordinary item -- 0.02 -- --
------------ ------------ ------------ ------------
Total $ (0.06) $ 0.02 $ (0.02) $ 0.01
============ ============ ============ ============
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
============ ============ ============ ============
</TABLE>
* less than $0.01
4
<PAGE>
ACCORD ADVANCED TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(2,453,855) 844,974
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 57,276 38,673
Amortization of discount on convertible debenture 500,000 --
Deferred income taxes (2,951) 460,245
Forgiveness of Long Term Debt -- (1,058,134)
Impairment losses 337,099 --
Changes in assets and liabilities:
Accounts receivable 602,139 (741,010)
Inventory (518,123) 380,428
Prepaid expenses and other assets (86,232) 1,615
Deferred financing costs and other noncurrent assets (6,437) (24,188)
Accounts payable (20,299) (328,437)
Accrued liabilities 223,226 205,955
Income taxes payable 8,850 69,790
Accrued warranty and installation expense (44,314) 501,486
Legal settlements payable 280,000 --
Customer deposits 26,147 (96,037)
----------- -----------
Net cash provided by operating activities (1,097,474) 255,360
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, machinery and equipment (10,428) (16,015)
----------- -----------
Net cash (used in) provided by investing activities (10,428) (16,015)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on short-term debt 810,645
Borrowings on long-term debt -- 965,000
Borrowings on convertible debenture 500,000 --
Principal payments on capital lease obligations (17,162) (995,000)
Principal payments on long-term debt (84,388) (68,586)
----------- -----------
Net cash (used in) provided by financing activities 1,209,095 (98,586)
----------- -----------
INCREASE IN CASH 101,193 140,759
CASH, BEGINNING OF PERIOD 13,315 157,078
----------- -----------
CASH, END OF PERIOD $ 114,508 $ 297,837
=========== ===========
SUPPLEMENTAL INFORMATION:
Computer equipment purchased through capital lease $ 24,135 $ --
=========== ===========
Interest Paid $ 82,339
=========== ===========
</TABLE>
5
<PAGE>
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 September 30, 2000, and the results
of operations for the nine months and three months ended September 30, 2000 and
1999, and cash flows for the nine months ended September 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.
6
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales decreased from $5,021,818 for the nine months ended September 30,
1999 to $2,169,165 for the nine months ended September 30, 2000, a decrease of
$2,852,653 or 57%. The sales decrease is mostly attributable to a decrease in
the number of orders that were received in the third quarter. Our business is
such that a significant portion of revenue is generally generated from a small
number of orders. We have not had success in the nine months ended September 30,
2000 booking new orders at the pace achieved in the previous year.
The gross profit decreased from $1,847,482 for the nine months ended
September 30, 1999 to $798,070 for the nine month period ended September 30,
2000, a decrease of $1,049,412 or 57%. Therefore, our profit margin has remained
constant on the lower volume of orders.
General and administrative expenses increased to $1,427,683 in the period
ended September 30, 2000, from $767,843 in the period ended September 30, 1999,
an increase of $659,840 or 86%. 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 3
months of 1999. The increase is also due to increased costs of benefits related
to the additional personnel.
Selling and marketing expenses decreased to $251,602 in the period ended
September 30, 2000, from $681,642 in the period ended September 30, 1999, a
decrease of $430,004 or 63%. Selling and marketing expenses include sales
commissions as well as accrued warranty costs which are a factor of the sales
volume, sales volume decreased by 57% in this reporting period. Selling and
marketing expenses, as a percentage of sales, was 12% as of September 30, 2000
compared to 14% as of September 30, 1999.
Interest expense increased to $786,132 in the period ended September 30,
2000, from $74,508 in the period ended September 30, 1999, an increase of
$711,624. Approximately $83,000 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
September 30, 1999 only included 6 months of interest expense on this debt while
the period ended September 30, 2000 includes 9 months interest expense on this
debt. Approximately $128,000 of the increase is due to finance charges incurred
on funding of purchase orders during the reporting period. he remaining $500,000
of the increase is due to recording of interest expense related to a Secured
Convertible Debenture Agreement which the company entered into in June and July
2000. This charge relates to the amortization of the discount arising from the
favorable conversion feature. See further details on this agreement under
Liquidity and Capital Resources.
7
<PAGE>
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 September 30, 2000. Subsequent to
December 31, 1999, the Company has borrowed approximately $750,000. The Majority
of those borrowings have been in the form of convertible debt. More than 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 September 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.
Two Hundred and Twenty Thousand Dollars ($220,000) has been paid toward that
settlement. The Company has not met its obligation to remit the next payment of
$100,000 and a consent judgement has been entered in the court against the
Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has had a working capital deficiency. The Company
had a net working capital deficit of $2,889.943 at September 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 September 30,
2000, as well as payables due to legal settlements and the classification of
long term debt as short term due to default on certain covenants . 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
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
8
<PAGE>
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 September 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.
During the reporting period the Company entered into agreements with two
separate entities to obtain financing for customer purchase orders.
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 September 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. The company recorded and additional
impairment loss of $50,000 on this asset for the three months ended September 30
and sold this asset for the net book value in October 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. The Company has
paid half of that settlement amount as is required to pay the balance over a 12
month period.
9
<PAGE>
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
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 is dependent upon additional equity capital to meet its current
obligations to trade vendors, banks and it legal settlement obligation. We
believe that that outstanding convertible debt will ultimately be converted to
common stock. However, given the present cash flow difficulties, the Company
will likely require approximately $1to$2 million in new equity to meet its
obligations and provide some working capital expand operations.
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.
10
<PAGE>
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.
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.
11
<PAGE>
"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.
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.
12
<PAGE>
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.
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.
13
<PAGE>
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.
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.
14
<PAGE>
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. Two Hundred and Twenty
Thousand Dollars ($220,000) has been paid toward that settlement. The Company
has not met its obligation to remit the next payment of $100,000 and a consent
judgement has been entered in the court against the Company.
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
The shareholders, by a majority vote, agreed to amend the Articles of
incorporation and increase the number of authorized common stock from 47,000,000
to 100,000,000.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
September 3, 1999 advising that the Company's securities had been deleted
from trading on the OTC BB.
November4, 1999 advising that the Company has been reinstated to trade it
securities on the OTC BB.
April 25, 2000 advising that a director has resigned from the Board of
Directors.
15
<PAGE>
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.
November 14, 2000 By: /s/ Travis Wilson
-------------------------------------
Travis Wilson, Director and President
16
