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To
OTC Journal Members:
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Update on
MicroAccel (OTC BB: MIXL) |
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Our policy has always been to share
both the good and bad news on companies that we cover. This weekend
we have bad news to share with investors in MicroAccel. Unfortunately,
this bad news comes on the heels of a particularly tough week in the market
for technology stocks. The NASDAQ is currently experiencing its fourth
major correction this year, which was probably overdue. 10 years
ago Bear Markets took six months to run their course. In today's
high speed world, bear markets seem to take six days to run their course.
In case you are wondering, we believe that the bull market for technology
stocks is far from over. Technology is where the growth is, and Wall
Street will always pay up for growth. For the time being money is
flowing into the "Old Economy" stocks that Wall Street ignored last year.
Once the valuations in the technology stocks become irresitably attractive,
money will go back into that sector. Until that happens expect stocks
to go lower than you could have imagined, just as they have gone higher
than you could have imagined.
MicroAccel issued a press
release today which announced the termination of the NV Memory merger,
effectivey leaving MicroAccel with no debt, $4 million in cash,
and no operating business. That's is the bad news. On the good
news side, if you are still holding the stock, most of the damage has already
been done, and there is probably very little downside from here.
In defense of the management of MicroAccel,
it appears from the tone of the press release that they acted in very good
faith in their attempt to complete the merger. We have no idea why
NV Memory abandoned the merger. Perhaps they got a better offer.
It seems that after signing a letter of intent and allowing MicroAccel
to
raise $4 million on their behalf they would at least be honorable
enough to move forward with the transaction.
We believed and stated in our original
profile that the merger was likely to go through. However, we did
warn investors about this risk factor. Below is the last five paragraphs
of our original profile (when the company was named Horititech) which we
issued on January 21st:
| Conclusion
This is a high risk situation.
Now that you have read it you can understand why we are referring to it
as our "Just In Case" pick of 2000. You have to consider owning this
stock at this early stage "Just In Case" the acquisition of MicroAccel
goes as planned on February 1st, and this technology is patented and then
commercially developed.
There are many risk factors.
If they don't have this technology or it cannot be commercially developed
it is likely that you will lose money if you invest in the stock.
It may take five years longer than Mr. Stern anticipates to have a commercially
viable product, and who knows where the stock could go in that time frame.
On the other hand, if they do
have this technology, and they can develop it for commercial application,
the potential value for this stock over the coming years is unlimited.
The company will be worth billions.
If you are concerned about the
entry level price we have no comment. This stock was $8 earlier in
January, and the $200 million market cap at the date of this publication
is a non-event as far as we are concerned. We believe that if Wall
Street believes that they have this technology, and it can be commercially
deployed, a one billion market cap will be just the beginning. However,
it could be a long road to that point or they may never reach it.
It may be early for us to write about this Company, but early stage/high
risk is our theme.
Please examine your tolerance
for risk before you invest in this stock. Don't invest more
than you can afford to lose, but you might want to invest "Just
In Case". |
The timing of this unfortunate development
could not be worse as it coincides with one of the worst weeks for Technology
stocks in recent memory. However, life goes on, and so do the markets.
If you still have a position in this
stock you would probably be well advised to hold it at this point in time
unless you are compelled to take a tax loss. The management of MicroAccel
now has $4 million in the bank and is seeking another opportunity
for the company. They will eventually find one, and the stock will
probably rebound then. Since they have plenty of cash and almost
no burn rate they will not be going out of business.
This past week has been tough for
small stocks. We don't see any real volume sell offs, but stocks
like Blue Zone (OTC BB: BLZN) and Pawnbroker.com (OTC BB: PBRR)
are drifting down on light volume in the absence of buyers. When
this market turns this sell-off might represent a great buying opportunity
for investors with cash on the sidelines.
Here is the full text of the MicroAccel
(OTC BB: MIXL) press release for your review:
Friday March 31, 9:30 am Eastern
Time
Company Press Release
SOURCE: MicroAccel, Inc.
MicroAccel's negotiations with NV Memory,
Inc. terminated
VANCOUVER, March 31 /CNW-PRN/
- MicroAccel, Inc. (OTCBB Symbol: MIXL - news) announced that its negotiations
to acquire NV Memory, Inc. with the co-founders of NV Memory have terminated.
``We are very disappointed in
that we could not complete the transactions for the acquisition of NV Memory,
Inc. We fully intended to complete the transaction and demonstrated our
intent by responding to the NV Memory's co-founders concerns several times
during our preparation of definitive agreements,'' commented Suzanne Wood,
President of MicroAccel.
MicroAccel put a substantial amount
of time, effort and expense into the negotiations and will consider all
legal recourse against NV Memory and the Sterns.
In December 1999, MicroAccel entered
into negotiations with the co-founders of NV Memory, Inc., Donald S. Stern
and Robert B. Stern, for the acquisition of NV Memory, Inc. The company
and the Sterns entered into a letter of intent on December 31, 1999 for
the acquisition subject to completion of definitive agreements and due
diligence in connection with the memory chip technology that NV Memory
was developing. In January 2000, MicroAccel completed a private placement
of $4 million in connection with the acquisition of NV Memory to finance
the completion of the development of a working sample and preparation of
a patent application related to NV Memory's technology. In addition, Donald
S. Stern and Robert B. Stern were appointed to the board of directors of
MicroAccel on February 1, 2000.
Donald Stern and Robert Stern
resigned from the company's board on February 28th after they completed
a reorganization of NV Memory's capital without the knowledge of MicroAccel
and after they advised the company that they would not proceed with the
acquisition as set out in the December letter of intent due to confidentiality
constraints regarding the technology.
In an attempt to accommodate the
confidentiality issues raised by the Sterns, MicroAccel renegotiated the
transaction with the Sterns so that the company would provide a loan to
finance the completion of the development of the technology and in return
would receive an option to purchase all of the shares on NV Memory on completion
of an independent technical review by MicroAccel.
Subsequent to the company's March
7th press release announcing the renegotiated transaction, the Sterns advised
MicroAccel that NV Memory had accepted subscriptions for Series A Preferred
stock and that NV Memory would now only contemplate issuing Series B Preferred
stock to MicroAccel. As in the loan arrangement, MicroAccel would also
receive, at the time of subscribing to the Series B Preferred stock, an
option to acquire all of the common stock and Series A Preferred stock
on completion of the development of a working sample and a technical review
of the memory chip technology.
In order to continue to accommodate
NV Memory's co-founders and new shareholders, MicroAccel agreed to the
new structure as proposed by the Sterns to invest in Series B Preferred
stock with an option to acquire all of the remaining issued and outstanding
shares in NV Memory. The exercise of the option was subject to NV Memory's
delivery of a working sample of the memory chip technology and a filed
patent in connection with the technology. To that effect, MicroAccel provided
a written offer to the shareholders of NV Memory for a reply by March 24,
2000 and the company extended that deadline to March 29, 2000.
On March 30, 2000, the attorney
for NV Memory and Donald Stern notified MicroAccel that both NV Memory
and Mr. Stern declined to go forward with MicroAccel.
MicroAccel is now actively seeking
other viable business opportunities.
This press release may contain
certain forward-looking information and statement concerning the company's
operations, performance and financial condition, including, in particular,
the likelihood of the company's success in developing and expanding its
business. These statements are based upon a number of uncertainties and
contingencies, many of which are beyond the control of the company. Actual
results may differ materially from those expressed or implied by such forward-looking
statements. This press release is not intended to be and is not an advertisement
for any securities of the company.
SOURCE: MicroAccel, Inc. |
Hopefully we'll see a good bottom
in this market next week and have some good news to report on some of the
other companies we follow. Have a great weekend.
 |
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