<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 33-9782-LA
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MICROACCEL, INC.
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(Name of Small Business Issuer in its Charter)
UTAH 87-04444506
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Suite 210, 580 Hornby Street
Vancouver, British Columbia, Canada V6C 3B6
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (604)-687-6991
N/A
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(Former Name or Former Address, if changed since last Report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
June 30, 2000
Common - 19,846,170 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is
contained in Item 6 of this Report.
Transitional Small Business Issuer Format Yes X No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Company required to be filed with
this 10-QSB Quarterly Report were prepared by management and commence on the
following page, together with related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Company.
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM FINANCIAL STATEMENTS
June 30, 2000
(UNAUDITED)
(Prepared by Management)
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MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM BALANCE SHEET
(Unaudited)
ASSETS
June 30, December 31,
2000 1999
CURRENT ASSETS
Cash $3,107,718 $ 507,281
Accounts and advances receivable 111,382 -
3,219,100 507,281
NOTES RECEIVABLE 1 1
TOTAL ASSETS $3,219,101 $ 507,282
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 27,890 $ 148,662
Notes and advances payable - 1,045,075
Total Liabilities 27,890 1,193,737
STOCKHOLDERS' EQUITY
Common Stock: $0.001 par value;
authorized 200,000,000 shares;
19,846,170 shares issued
and outstanding
(December 31, 1999: 18,846,170) 19,846 18,846
Additional paid-in capital 4,386,119 387,119
Deficit accumulated prior to
November 29, 1989 (213,710) (213,710)
Deficit accumulated during
the development stage (1,001,044) (878,710)
Total Stockholders' Equity 3,191,211 (686,455)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,219,101 $ 507,282
CONTINGENCY (Note 3)
See accompanying Notes to the Interim Financial Statements
(Prepared by Management)
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
From
Inception of
Development
Stage on
November
29, 1989
For the For the through
Three Months Ended Six Months Ended June 30,
June 30, June 30,
2000 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C>
REVENUES
Interest Income $ 31,419 $ - $ 54,696 $ - $ 54,696
GENERAL AND
ADMINISTRATIVE
EXPENSES 49,391 6,104 177,030 16,218 1,055,740
NET LOSS $ (17,972) $ (6,104) $(122,334) $ (16,218) $(1,001,044)
NET LOSS PER SHARE
BASIC AND DILUTED $ 0.00 $ 0.00 $ 0.01 $ 0.00
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 19,846,170 18,846,170 19,693,156 18,846,170
</TABLE>
See accompanying Notes to the Interim Financial Statements
(Prepared by Management)
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
[CAPTION]
<TABLE>
Deficit Deficit
Accumulated Accumulated Total
Additional Prior to During Stockholders
Common Stock Paid-in November 29, Development Equity
Shares Amount Capital 1989 Stage
<S> <C> <C> <C> <C> <C> <C>
Balance,
December
31, 1998 18,846,170 18,846 387,119 - (458,102) (265,847)
Net loss
for the
year ended
December
31, 1999 - - - - (420,608) (420,608)
Balance,
December
31, 1999 18,846,170 18,846 387,119 (213,710) (878,710) (686,455)
Issue of
common
stock to
public at
$4.00
per share 1,000,000 1,000 3,999,000 - - 4,000,000
Net loss
for the
period ended
June
30, 2000 - - - - (122,334) (122,334)
Balance,
June
30, 2000 19,846,170 $19,846 $4,386,119 $(213,710) $(1,001,044) $3,191,211
</TABLE>
See accompanying Notes to the Interim Financial Statements
(Prepared by Management)
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
[CAPTION]
<TABLE>
From
Inception
of
Development
For the Stage
Six Months Ended June 30 on November 29,
1989 through
2000 1999 June 30, 2000
<S> <C> <C> <C>
CASH FLOWS
FROM OPERATING
ACTIVITIES
Income (loss)
from operations (122,334) (16,218) $(1,001,044)
Adjustments to
reconcile net
(loss) to net
cash provided
by operating
activities:
Forgiveness
of debt - - 4,759
Stock issued
for services - - 1,000
Amortization of
discount on
note receivable - - (20,212)
Changes in
operating assets
and liabilities:
(Decrease) increase
in accounts payable (120,772) 8,831 27,890
Increase in
allowance for
loss - notes receivable 14,316 - 466,530
Decrease in
accrued interest
payable (32,245) - -
Decrease in
advance payable (65,000) - -
Increase
in accounts and
advances receivable (111,382) - (111,382)
Increase in
accrued interest
note receivable (14,316) - (22,232)
Net Cash Used By
Operating Activities (451,733) (7,387) (654,691)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in
notes receivable - - (424,087)
Net Cash Used
by Investing
Activities - - (424,087)
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in
notes payable (947,830) 1,695 -
Issuance of
common stock 4,000,000 - 4,186,496
Net Cash Provided
by Financing
Activities 3,052,170 1,695 4,186,496
Increase(Decrease)
in Cash 2,600,437 (5,692) 3,107,718
CASH AT BEGINNING
OF PERIOD 507,281 19,088 -
CASH AT END
OF PERIOD 3,107,718 13,396 $ 3,107,718
</TABLE>
See accompanying Notes to the Interim Financial Statements
(Prepared by Management)
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
INTERIM STATEMENTS OF CASH FLOWS(continued)
(Unaudited)
From
Inception
of
Development
Stage on November
For the Six Months Ended June 30, 29, 1989 through
2000 1999 June 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUPPLEMENTAL CASH
FLOWS INFORMATION:
Interest Paid $ 39,548 $ - $ -
Taxes $ - $ - $ -
NON CASH
FINANCING ACTIVITIES:
Stock issued
for services $ - $ - $ 1,000
</TABLE>
See accompanying Notes to the Interim Financial Statements
(Prepared by Management)
<PAGE>
MICROACCEL, INC.
(formerly Hortitech, Inc.)
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
These unaudited interim financial statements have been prepared in accordance
with the instructions to Form 10-QSB. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such instructions. These unaudited interim financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's annual report on Form 10-KSB for
the year ended December 31, 1999.
In the opinion of the Company's management, all adjustments considered
necessary for a fair presentation of these unaudited interim financial
statements have been included and all such adjustments are of a normal
recurring nature. Operating results for the six month period ended June 30,
2000 are not necessarily indicative of the results that can be expected for
the year ended December 31, 2000.
NOTE 2 GOING CONCERN
These financial statements have been prepared on the basis that the Company
will continue as a going concern. The Company has incurred operating losses
since its incorporation and intends to raise additional equity financing to
finance its operations and any acquisitions. However, there can be no
assurance that such acquisitions will occur, or whether additional funds
required, if any, would be available to the Company when required or on terms
acceptable to the Company. Such limitations could have a material adverse
effect on the Company's business, financial condition or operations and these
financial statements do not include any adjustment that could result
therefrom.
NOTE 3 CONTINGENCY
The Company entered into an agreement on December 31, 1999 to acquire 100% of
the shares of NV Memory, Inc., a corporation owning all of the design,
programming, engineering and rights to a new type of non-volatile computer
memory. The Company agreed in principal to raise a minimum of $2,500,000 in
new financing, of which $2,000,000 was to be expended on development of the
prototype for the new technology, and patent applications. The Company agreed
to issue sufficient shares for the acquisition such that after the above
financing and on completion of the transaction Donald Stern, the vendor of the
shares of NV Memory, Inc. would own 60% of the issued shares of MicroAccel,
Inc.
The shares issued to complete the acquisition would be held in escrow to be
released at such time that the prototype was completed and the Company
received opinion letters from two expert authorities as to the viability and
patentability of the technology.
The proposed acquisition was subject to due diligence and the completion of a
definitive agreement, financing and closing by January 31, 2000 which was
later extended.
On March 30, 2000, the Company was notified by the attorneys to the vendor
that the vendor declined to go forward with the Company and negotiations were
terminated. The Company on May 1, 2000, commenced legal action in the United
States District Court, Northern District of California against the vendor and
NV Memory, Inc. (the "Defendants") claiming damages and specific performance
on the basis of breach of contract, breach of implied duty of good faith and
fair dealing, breach of fiduciary duty and fraud. The Defendants have filed
defenses against the action and have counterclaimed for rescission of a letter
of intent and damages on the basis of the same complaints as above, fraudulent
inducement and interference with economic relationship.
NOTE 4 - 2000 STOCK INCENTIVE PLAN
The Company has adopted a 2000 Stock Incentive Plan (the "Plan") to be
administrated by the Board of Directors or a Committee of the Board of
Directors (the "Plan Administrator"). The purpose of the Plan is to provide
incentive stock options as a means to attract and retain key corporate
personnel and consultants. The shares to be offered under the Plan consist of
authorized but unissued common shares of the Company. The aggregate number of
shares subject to options under the Plan at any one time shall not exceed
950,000 shares. The exercise price of the options when granted is set by the
Plan Administrator but in any event shall not be less than 75% of the fair
market value of the shares on the date the option is granted. The term of the
options granted may not extend beyond 10 years, and are subject to earlier
cancellation on termination of employment. The vesting and exercise schedule
for stock options granted is to be determined on an individual basis by the
Plan Administrator. The Plan was adopted in the current period and the
initial incentive options granted June 5, 2000. The options issued to date
are as follows:
Number of
shares
subject to Exercise
option price per share Expiry Date
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650,000 $0.625 June 4, 2003
The exercise price was determined based on the estimated fair market value of
the shares on granting of the options.
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options. Under APB 25,
when the exercise price of employee stock options is equal to the estimated
market price of the underlying stock on the date of the grant, no compensation
expense is recorded. The Company has adopted the disclosure-only provisions
of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123).
Pro forma information regarding net income (loss) per share is required by
SFAS 123, and has been determined as if the Company has accounted for its
employee stock options using the fair value method. The fair value of these
options was estimated at the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions: risk-free
interest rate of 5.0%; dividend yield of 0%; volatility factor of 97% and a
weighted-average life of three years.
The Black-Scholes valuation model was developed for use in estimating the fair
value of traded options which are fully transferable and freely traded. In
addition, option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosure, the estimated fair value of the options
have been charged to operations in the three month period ended June 30, 2000.
The Company's pro forma net loss is as follows:
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
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Pro forma net loss $(232,472) $(336,834)
Pro forma net loss per share $(0.01) $(0.02)
Pro forma results of operations under SFAS 123 may be materially different
from actual amounts reported.
The weighted-average fair value of options granted during the period was $0.33
per underlying share.
NOTE 5 - SUBSEQUENT EVENTS
On July 28, 2000 the Board of Directors resolved that the issued and
outstanding common stock of the Company be reverse split on the basis of one
for two, retaining the authorized shares at 200,000,000 and the par value at
$0.001 per share, with fractional shares to be rounded up to the nearest whole
share and with appropriate adjustments being made in the additional paid in
capital and stated capital accounts of the Company. The reverse split is to
be effective August 14, 2000.
These interim financial statements reflect the existing pre-split common stock
and no effect has been given to the upcoming reverse split.
(Prepared by Management)
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
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The Company has not engaged in any material operations or had any
revenues from operations during the last two calendar years. The Company's
plan of operation for the next 12 months is to continue to seek the
acquisition of assets, properties or businesses that may benefit the Company
and its stockholders. Management anticipates that to achieve any such
acquisition, the Company will issue shares of its common stock as the sole
consideration for any such acquisition.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing or the
payment of expenses associated with reviewing or investigating any potential
business ventures. Such funds may be advanced by management or stockholders as
loans to the Company. Because the Company has not identified any such
ventures as of the date of this Report, it is impossible to predict the amount
of any such loans or advances. However, any such loans or advances should not
exceed $25,000 and will be on terms no less favorable to the Company than
would be available from a commercial lender in an arm's length transaction.
As of the date of this Report, the Company is not involved in any negotiations
respecting any such ventures.
Results of Operations.
----------------------
Other than maintaining its good corporate standing in the State of
Utah, seeking the acquisition of assets, properties or businesses that may
benefit the Company and its stockholders, the Company has had no material
business operations during the two most recent calendar years or the three
months ended June 30, 2000.
During the quarterly periods ended June 30, 2000, and 1999, the
Company had no business operations, but recorded a net loss of ($17,972)
during the quarterly period ended June 30, 2000, compared with a net loss of
($6,104) during the quarter ended June 30, 1999.
Liquidity.
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The Company had cash on hand of $3,107,718 at June 30, 2000.
Management believes that this will be sufficient to meet its anticipated
expenses during the next 12 months.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On May 1, 2000, the Company filed a complaint against Donald Stern
and NV Memory, Inc., a California corporation, in the U. S. District Court for
the Northern District of California. The case was designated Case No. C-00
20481, and was discussed under the caption "Legal Proceedings" of the
Company's Quarterly Report on Form 10-QSB for the quarterly period ended March
31, 2000, which was filed with the Securities and Exchange Commission on May
18, 2000, and which is incorporated herein by reference. See Item 6 of this
Report.
The defendants have filed defenses against the action and have
counterclaimed for rescission of a letter of intent and damages on the basis
of breach of contract, breach of implied duty of good faith and fair dealing,
breach of fiduciary duty, fraud, fraudulent inducement and interference with
economic relationship.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
On July 28, 2000, which is subsequent to the period covered by this
Report, the Company's Board of Directors unanimously resolved to effect a
reverse split of the Company's issued and outstanding common stock in the
ratio of one for two, retaining the authorized shares at 200,000,000 and the
par value at one mill ($0.001) per share, with fractional shares to be rounded
up to the nearest whole share and with appropriate adjustments being made in
the additional paid in capital and stated capital accounts of the Company.
The reverse split is to be effective as of the close of business on Monday,
August 14, 2000.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Financial Data Schedule.
(b) Reports on Form 8-K.
None.
DOCUMENTS INCORPORATED BY REFERENCE
Quarterly Report on Form 10-QSB for the quarterly period ended
March 31, 2000, and filed with the Securities and Exchange
Commission on May 18, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
MICROACCEL, INC.
Date: 8-14-00 By /s/ Suzanne L. Wood
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Suzanne L. Wood, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
MICROACCEL, INC.
Date: 8-14-00 By /s/ Suzanne L. Wood
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Suzanne L. Wood, President and
Director
Date: 8-14-00 By /s/ Suzanne L. Wood
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Barry D. Russell, Director,
Treasurer and Secretary
