-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FWKBrRlyNWIs8et4f056pL/NWAvEEex4ZG5X73rJ9iNDS3coUythkIfXloIc7EPo 6t7wlio13j9nmV7iPca2HA== 0001050502-03-000226.txt : 20030314 0001050502-03-000226.hdr.sgml : 20030314 20030314154736 ACCESSION NUMBER: 0001050502-03-000226 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030131 FILED AS OF DATE: 20030314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCELR8 TECHNOLOGY CORP CENTRAL INDEX KEY: 0000727207 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 841072256 STATE OF INCORPORATION: CO FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11485 FILM NUMBER: 03604201 BUSINESS ADDRESS: STREET 1: 303 E 17TH AVE STREET 2: SUITE 108 CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 3038638088 MAIL ADDRESS: STREET 1: 303 E 17TH ST STREET 2: SUITE 108 CITY: DENVER STATE: CO ZIP: 80203 FORMER COMPANY: FORMER CONFORMED NAME: HYDRO SEEK INC DATE OF NAME CHANGE: 19880802 10QSB 1 accelr80103.txt 10QSB 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 January 31, 2003 ------------------ [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _______to_______ Commission file number 0-11485 ------------------ ACCELR8 TECHNOLOGY CORPORATION --------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) COLORADO 84-1072256 ------------------------------ ----------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 303 East Seventeenth Avenue, Suite 108, Denver, Colorado 80203 ------------------------------------- (Address of principal executive office) (303) 863-8088 ------------------------- (Issuer's telephone number) (Former name, former address and former fiscal year, 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Number of shares outstanding of the issuer's Common Stock: Class Outstanding at January 31, 2003 ----- ------------------------------- Common Stock, no par value 9,411,210 - -------------------------- --------- Accelr8 Technology Corporation INDEX ----- Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - as of January 31, 2003 and July 31, 2002 3 Statements of Operations for the three months and six months ended January 31, 2003 and January 31, 2002 4 Statements of Cash Flows for the six months ended January 31, 2003 and January 31, 2002 5 Notes to Financial Statements 6-14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15-21 Item 3. Controls and Procedures 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings 21 Item 2. Changes in Securities 21 Item 3. Defaults Upon Senior Securities 22 Item 4. Submission of Matters to a Vote of Security Holders 22 Item 5. Other Information 22 Item 6. Exhibits and Reports on Form 8-K 22 SIGNATURES 23 -2-
PART I. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- Accelr8 Technology Corporation Balance Sheet January 31, July 31, 2003 2002 ------------ ------------ ASSETS (Unaudited) Current Assets: Cash and cash equivalents $ 9,176,734 $ 8,631,192 Accounts receivable, net 80,907 24,767 Prepaid expenses and other current assets 96,339 61,665 Insurance recovery receivable (Note 6) -- 825,000 Income tax receivable and deferred tax asset 257,255 336,500 ------------ ------------ Total current assets 9,611,235 9,879,124 Property and equipment, less accumulated depreciation of $61,635 and $49,335, respectively 78,305 76,620 Investments 493,118 445,286 Intellectual property, less accumulated amortization of $278,681 and $158,801, respectively (Note 4) 4,516,974 4,622,904 ------------ ------------ Total assets $ 14,699,632 $ 15,023,934 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 145,627 $ 87,599 Accrued liabilities 30,752 29,489 Accrued settlement loss (Note 6) 450,000 450,000 Deferred maintenance revenue 162,462 164,879 Other deferred revenue 3,290 2,200 ------------ ------------ Total current liabilities 792,131 734,167 ------------ ------------ Long-Term Liabilities: Deferred tax liabilities 40,348 24,833 Deferred compensation 530,618 520,286 ------------ ------------ Total long-term liabilities 570,966 545,119 ------------ ------------ Total liabilities 1,363,097 1,279,286 ------------ ------------ Shareholders' Equity (Note 3) Common stock, no par value; 11,000,000 shares authorized; 9,411,210 shares issued and outstanding 12,342,020 12,342,020 Stock to be issued (Note 6) 375,000 375,000 Contributed capital 349,069 329,809 Retained earnings 544,046 971,419 Shares held for employee benefit (1,129,110 shares at cost) (273,600) (273,600) ------------ ------------ Total shareholders' equity 13,336,535 13,744,648 ------------ ------------ Total liabilities and shareholders' equity $ 14,699,632 $ 15,023,934 ============ ============ See accompanying notes to unaudited financial statements. -3- Accelr8 Technology Corporation Statements of Operations (Unaudited) Three Months Ended Six Months Ended -------------------------- -------------------------- January 31, January 31, January 31, January 31, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Revenues: Consulting fees $ 20,000 $ -- $ 20,000 $ -- Product license and customer support fees 85,320 87,517 115,732 117,276 Resale of software purchased 85,448 100,528 242,125 163,857 OptiChem(TM)revenue 13,227 -- 18,601 -- Provision for returns and allowances (1,955) (1,390) (3,955) (2,445) ----------- ----------- ----------- ----------- Net Revenues 202,040 186,655 392,503 278,688 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of services 11,851 35,394 21,671 87,078 Cost of software purchased for resale 8,173 15,548 38,763 25,206 General and administrative 214,588 214,851 381,925 377,223 Marketing and sales 69,425 45,914 143,968 99,207 Research and development 140,347 84,662 228,920 154,270 Amortization 59,940 -- 119,880 6,345 Depreciation 6,150 5,325 12,300 10,650 ----------- ----------- ----------- ----------- Total Costs and Expenses 510,474 401,694 947,427 759,979 ----------- ----------- ----------- ----------- Loss from operations (308,434) (215,039) (554,924) (481,291) ----------- ----------- ----------- ----------- Other income (expense): Interest income 28,034 45,136 61,467 120,151 Unrealized (loss) gain on investments (18,935) 24,465 (27,539) (31,236) Realized (loss) gain on investments (1,150) (1,228) (2,593) (4,262) Abandoned trademark -- -- -- (3,930) Gain on asset disposal -- 2,034 -- 10,453 ----------- ----------- ----------- ----------- Total other income 7,949 70,407 31,335 91,176 ----------- ----------- ----------- ----------- Loss before income taxes (300,485) (144,632) (523,589) (390,115) Income tax benefit 96,216 -- 96,216 -- ----------- ----------- ----------- ----------- Net Loss $ (204,269) $ (144,632) $ (427,373) $ (390,115) =========== =========== =========== =========== Net loss per share - basic and diluted $ (.02) $ (.02) $ (.05) $ (.05) =========== =========== =========== =========== Weighted average shares outstanding - basic and diluted 9,411,210 7,763,849 9,411,210 7,698,871 =========== =========== =========== =========== See accompanying notes to unaudited financial statements. -4- Accelr8 Technology Corporation Statements of Cash Flows (Unaudited) Six Months Ended January 31, January 31, 2003 2002 ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (427,373) (390,115) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization 119,880 6,345 Depreciation 12,300 10,650 Increase in fair value of stock options granted for consulting services 19,260 -- Gain from disposal of assets -- (10,453) Loss on abandoned trademarks -- 3,929 Unrealized holding loss on investments 27,539 30,939 Realized (gain) loss on sale of investments, interest and dividends reinvested (371) 282 Income tax receivable and deferred income tax asset 94,760 -- Net change in assets and liabilities: Accounts receivable (56,140) (29,390) Insurance recovery receivable 825,000 -- Inventory -- 875 Prepaid expenses (34,674) (30,364) Accounts payable 58,028 (51,963) Accrued liabilities 1,263 (190,511) Deferred maintenance revenue (2,417) (29,550) Other deferred revenue 1,090 (825) Other long-term liabilities 10,332 6,235 ----------- ----------- Net cash provided by (used in) operating activities 648,477 (673,916) ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: Purchase of fixed assets, net (13,985) -- Proceeds on disposal of assets -- 11,636 Purchase of intellectual property (13,950) (47,660) Purchase of investments (75,000) (75,000) ----------- ----------- Net cash used in investing activities (102,935) (111,024) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Repurchase of common stock -- (46,674) Employee stock option exercised -- 1,800 ----------- ----------- Net cash provide by (used in) financing activities -- (44,874) ----------- ----------- Net increase (decrease) in cash and cash equivalents 545,542 (829,814) Cash and cash equivalents, beginning of period 8,631,192 9,522,343 ----------- ----------- Cash and cash equivalents, end of period $ 9,176,734 $ 8,692,529 =========== =========== Supplemental information: Cash received from income tax refunds $ 190,977 $ -- =========== =========== See accompanying notes to unaudited financial statements -5-
Accelr8 Technology Corporation Notes to Financial Statements For the six months ended January 31, 2003 and 2002 Note 1. Basis of Presentation The financial statements included herein have been prepared by Accelr8 Technology Corporation (the "Company") without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with our annual audited financial statements dated July 31, 2002, included in our annual report on Form 10-KSB as filed with the SEC. Management believes that the accompanying unaudited financial statements are prepared in conformity with generally accepted accounting principles, which require the use of management estimates, and contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the periods presented. The results of operations for the three and six month periods ended January 31, 2003 may not be indicative of the results of operations for the year ended July 31, 2003. Note 2. Reclassification Certain reclassifications have been made in the fiscal 2002 financial statements to conform to the classifications used in fiscal 2003. Note 3. Shareholders' Equity Repurchase of Common Stock On July 30, 1998, our Board of Directors authorized the repurchase of up to 500,000 shares of our common stock. The decision to repurchase our common stock was based upon the Board of Directors' belief that our common stock was undervalued considering the potential earnings and prospects for future operations. Repurchases may be made periodically in the open market, block purchases or in privately negotiated transactions, depending on market conditions and other factors. We have no commitment or obligation to repurchase all or any portion of the common stock. Between August 1, 2002 and January 31, 2003, we did not repurchase any shares of our common stock. During the six month period ended January 31, 2002, we repurchased a total of 19,900 shares of our common stock at a cost of $46,674. -6- Common Stock Options At January 31, 2003, there were 740,000 stock options outstanding at prices ranging from $1.45 to $3.25 with expiration dates between July 31, 2003 and August 2, 2011, plus 100,000 stock options outstanding at a price of $0.36 that do not expire as long as the recipient remains an employee of the Company. The remaining number of option shares available for issuance under our stock option plans is 257,500. For the six months ended January 31, 2003 and 2002, stock options exercisable into 840,000 and 739,500 shares of common stock were not included in the computation of diluted earnings per share because their effect was antidilutive. During the six months ended January 31, 2002, five thousand stock options were exercised at a price of $.36 and totaling $1,800. On May 7, 2002, we granted options to purchase 100,000 shares of our common stock to consultants for services to be provided at an exercise price of $2.25 per share, expiring on May 7, 2006. The consultant options are subject to a vesting schedule of 50% after the first year of grant and 50% after the second year of grant. The incremental increase in the fair value of the options of $19,260 during the six months ended January 31, 2003 was recorded as a charge to operations. Stock to be Issued See Note 6 to unaudited financial statements for discussion. Note 4. Intellectual Property Intellectual property consisted of the following: January 31, July 31, 2003 2002 ----------- ----------- OpTestTM Technologies $ 4,616,312 $ 4,614,872 Patents 137,177 128,434 Trademarks 42,166 38,399 ----------- ----------- 4,795,655 4,781,705 Less: Accumulated amortization (278,681) (158,801) ----------- ----------- $ 4,516,974 $ 4,622,904 =========== =========== Intellectual properties are recorded at cost and are being amortized on a straight-line basis over their estimated useful lives of 20 years, which approximates the patents and trademarks application life of the OpTestTM Technologies. Effective August 1, 2001, we adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets". In accordance with SFAS No. 142, we completed an impairment test of our intangible assets and determined that no impairment existed as of August 1, 2001 or July 31, 2002. Intangible assets will be tested annually and whenever events and circumstances occur indicating that the assets may be impaired. -7- Upon the adoption of SFAS No. 142, we evaluated the estimated useful lives of the existing intangible assets and determined that the existing useful lives were appropriate. Future amortization expense for the intangible assets is estimated as follows: Years Ending July 31, 2003 (6 months) $ 119,880 2004 239,390 2005 239,390 2006 239,390 2007 239,390 Thereafter 3,439,534 ---------- $4,516,974 ========== -8-
Note 5. Business Segment Information The Company operates in two business segments: (i) software tools and related consulting services and (ii) biosciences, which includes DNA/RNA assays, protein-based assays and biosensors. Operating results and other financial data for the three and six months ended January 31, 2003 and 2002 are presented for the principal business segments as follows: Software Tools Three Months Ended Support and Biosciences January 31, 2003 Consulting Business Total - --------------------------- ------------ ------------ ------------ Revenues $ 188,813 $ 13,227 $ 202,040 Costs and expenses 216,197 294,277 510,474 Interest income 28,034 -- 28,034 Segment loss (19,435) (281,050) (300,485) Tax benefit 6,254 89,962 96,216 Total assets 9,876,748 4,822,884 14,699,632 Intellectual property, net -- 4,516,974 4,516,974 Depreciation and amortization expense 1,800 64,290 66,090 Software Tools Three Months Ended Support and Biosciences January 31, 2002 Consulting Business Total - --------------------------- ------------ ------------ ------------ Revenues $ 186,655 $ -- $ 186,655 Costs and expenses 278,435 123,259 401,694 Interest income 45,136 -- 45,136 Segment loss (21,373) (123,259) (144,632) Total assets 9,450,960 2,855,492 12,306,452 Intellectual property, net -- 2,798,892 2,798,892 Depreciation and amortization expense 1,890 3,435 5,325 Software Tools Six Months Ended Support and Biosciences January 31, 2003 Consulting Business Total - --------------------------- ------------ ------------ ------------ Revenues $ 373,902 $ 18,601 $ 392,503 Costs and expenses 421,601 525,826 947,427 Interest income 61,467 -- 61,467 Segment loss (16,364) (507,225) (523,589) Tax benefit 6,254 89,962 96,216 Total assets 9,876,748 4,822,884 14,699,632 Intellectual property, net -- 4,516,974 4,516,974 Depreciation and amortization expense 3,600 128,580 132,180 -9- Software Tools Six Months Ended Support and Biosciences January 31, 2002 Consulting Business Total - --------------------------- ------------ ------------ ------------ Revenues $ 278,688 $ -- $ 278,688 Costs and expenses 514,262 245,717 759,979 Interest income 120,151 -- 120,151 Segment loss (140,469) (249,646) (390,115) Total assets 9,450,960 2,855,492 12,306,452 Intellectual property, net -- 2,798,892 2,798,892 Depreciation and amortization expense 3,780 13,215 16,995
Note 6. Legal Proceedings We are a party to certain legal proceedings, the outcome of which management believes will not have a significant impact upon our financial position. We are not able to predict the outcome of the pending legal matters described below with any degree of certainty, and there can be no assurance that the resolution of one or more of the cases described below may not have a material adverse effect on the Company. Concluded legal matters On November 16, 1999, the SEC filed suit in the United States District Court for the District of Colorado against Accelr8 Technology Corporation, Thomas V. Geimer, Harry J. Fleury, and James Godkin, captioned Securities and Exchange Commission v. Accelr8 Technology Corporation, et al., and Civil Action No. 99-D-2203. The SEC sought an injunction permanently restraining and enjoining each defendant from violating Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5 promulgated thereunder; Section 13(a) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder, and, in addition, that Mr. Geimer and Mr. Godkin be enjoined from future violations of Section 13(b)(2) of the Exchange Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder related to securities fraud, Section 13 of the Exchange Act and the rules thereunder relate to reporting and record keeping. The SEC alleged that the Defendants made material misrepresentations of fact regarding the capability of certain of the Company's products, and the Company's financial condition, including its revenues and earnings. The SEC also alleged that Mr. Geimer and Mr. Godkin failed to implement, or circumvented, a system of internal accounting controls, falsified books and records, and made misrepresentations to the Company's accountants. On July 12, 2001, the Defendants, without admitting or denying the allegations of the Third Amended Complaint filed by the SEC, consented to the entry of Final Orders in which the court dismissed the securities fraud claims against all Defendants with prejudice, made no findings that any violation of law occurred, and enjoined the Defendants from future violations of Section 13 of the Exchange Act, and the regulations thereunder referred to above. In addition, Mr. Geimer paid a civil penalty of $65,000, Mr. Fleury paid a civil penalty of $20,000, and Mr. Godkin paid a civil penalty of $20,000. All costs, expenses, civil penalties, and liabilities incurred by the Defendants in defending and settling this matter were borne by the Company. No further action is anticipated in this matter. -10- On May 24, 2000, William Dews, an alleged shareholder filed a derivative action on behalf of the Company, against Thomas V. Geimer, A. Alexander Arnold III and David Wilhelm, captioned John William Dews v. Thomas V. Geimer, et al., Civil Action No. 00-CV-2785 (District Court, City and County of Denver, Colorado). That action alleged various breaches of fiduciary duty arising out of the Company's accounting and public reporting during 1997 through 1999. On January 4, 2002, the Denver District Court approved a settlement between the parties pursuant to which the complaint was dismissed without prejudice, with no payments to be made by or on behalf of the defendants. On August 14, 2000, Derrick Hongerholt filed in the United States District Court for the District of Colorado a shareholder derivative action against Thomas V. Geimer, David C. Wilhelm, A. Alexander Arnold III, Harry J. Fleury, James Godkin and Accelr8 Technology Corporation as a nominal defendant. The defendants have answered the Hongerholt derivative complaint, and have denied all claims. In connection with this proceeding, the Company's Board of Directors appointed David G. Palmer, Esquire, as independent counsel to serve as a Special Litigation Committee to investigate the claims and circumstances relating to the derivative action filed by Derrick Hongerholt and to determine whether the derivative action should be terminated. On September 10, 2002, the Special Litigation Counsel determined, after investigation, that the derivative claims were without factual merit, and should be dismissed. On October 30, 2002, the parties agreed to a settlement of the derivative action, under which that action would be dismissed with prejudice upon an exchange of releases, with no payments made by or on behalf of any of the Defendants. A hearing on the approval of the settlement was held December 19, 2002 at which time the Court approved a settlement between the parties pursuant to which the complaint was dismissed without prejudice, with no payments to be made by or on behalf of the defendants. On July 14, 2000, the Agricultural Excess and Surplus Insurance Company ("AESIC"), which is the carrier of the Company's director and officer liability policy, filed in the United States District Court for the District of Colorado an action for a declaratory judgment seeking to rescind Accelr8's directors and officers liability policy, captioned Agricultural Excess and Surplus Insurance Company v. Accelr8 Technology Corporation, Civil Action No. 00-B-1417. That policy has a $1 million limit with a $100,000 deductible. The Company and certain individuals made demand for coverage under that policy relating to third party claims involving the Company's accounting and public reporting from 1997 to 1999. AESIC alleged that it was fraudulently induced to enter into the contract of insurance through knowing material misrepresentations made by the Company in its Form 10-KSB filed with the SEC, concerning the capabilities of certain of the Company's products. The defendants answered the complaint, in which they denied the claim for rescission, and filed a counterclaim seeking damages for the insurer's refusal to provide the benefits of insurance. Subsequent to July 31, 2002, the parties settled this lawsuit and AESIC paid $825,000 to the Company on November 5, 2002 in full satisfaction of all claims. -11- Pending legal matters On May 4, 2000, Harley Meyer filed in the United States District Court for the District of Colorado a putative class action against Accelr8 Technology Corporation, Thomas V. Geimer and Harry J. Fleury. On June 2, 2000, Charles Germer filed in the United States District Court for the District of Colorado a putative class action against Accelr8 Technology Corporation, Thomas V. Geimer and Harry J. Fleury. On June 8, 2000, William Blais filed in the United States District Court for the District of Colorado a putative class action against Accelr8 Technology Corporation, Thomas V. Geimer and Harry J. Fleury. On June 20, 2000, Diana Wright filed in the United States District Court for the District of Colorado a putative class action against Accelr8 Technology Corporation, Thomas V. Geimer and Harry J. Fleury. These actions have been consolidated under the caption In re Accelr8 Technology Corporation Securities Litigation, Civil Action No. 00-K-938. On October 16, 2000, a Consolidated Amended Class Action Complaint was filed which added James Godkin as a defendant. The Consolidated Amended Complaint alleges violations of Section 10(b) of the Exchange, and Rule 10b-5 thereunder, relating to the Company's accounting and public disclosure from October 1997 to November 1999. The Defendants have answered the Amended Complaint, in which they denied liability and raised affirmative defenses. On January 23, 2001, the Court granted the Plaintiff's Motion for Class Certification. The parties to the Consolidated Amended Class Action Complaint ("Class Action") have reached an agreement in principle to settle the Class Action against all parties. Under the contemplated settlement, the Company will contribute to a Settlement Fund $450,000 and 375,000 chares of common stock in the Company. The Settlement Fund will be distributed in a manner over which the Company has no control. This agreement in principle is subject to Court approval. On February 28, 2003, the Court issued a Preliminary Order Approving Settlement and Attached Documents, and scheduled a settlement fairness hearing for May 20, 2003. Under the terms of the agreement, on March 4, 2003 the Company deposited $450,000 into an escrow account pending final approval of the settlement. In the event that final approval of the settlement is not given, the escrowed funds will be returned, less expenses incurred for the cost of notification to class members. Although management believes that it is probable that the settlement agreement will receive final court approval, there can be no assurance that court approval will occur. In the event that the settlement is not completed, the litigation will continue. While management believes it has substantial defenses to the Class Action claims, there is no assurance that the resolution of the Class Action will not have a material adverse effect on the Company. SFAS No. 5, "Accounting for Contingencies," requires loss contingencies to be accrued if it is probable an asset has been impaired or a liability incurred at the balance sheet date and the amount of loss can be reasonably estimated. Since the settlement terms discussed above satisfy the criteria for accrual of a loss contingency under SFAS No. 5, the $450,000 cash settlement has been accrued as a current liability and the value of the 375,000 shares of stock to be issued have been recorded in the statement of shareholders' equity as of January 31, 2003 and July 31, 2002. The stock to be issued was valued using the market price of the Company's common stock on the date the parties agreed to the terms of the settlement. If the final settlement terms are amended from those stated above, adjustments to the Company's financial statements would be necessary for the year ended July 31, 2003. Furthermore, the $825,000 settlement receivable from AESIC was recorded as a current receivable in the Company's financial statements as of October 31, 2002 and July 31, 2002. Payment was received on November 5, 2002. -12- On November 20, 2002, the Company initiated an action against Deloitte & Touche, LLP, ("Deloitte"), the Company's former auditors, captioned Accelr8 Technology Corporation v. Deloitte & Touche, LLP., Case No. 02CV8102, District Court, City and County of Denver, State of Colorado. In that action, the Company seeks damages from Deloitte for breach of contract. On January 13, 2003, Deloitte answered the Complaint and filed a counterclaim against the Company, and third-party claims against Thomas V. Geimer and Harry J. Fleury. The counter-claim asserts claims for breach of contract, deceit based on fraud, and negligent misrepresentation and seeks unspecified damages. Third-party claims allege deceit based on fraud and negligent misrepresentation, and also seek unspecified damages. On February 18, 2003, the Company, as Counter-claim Defendant, and Messrs. Geimer and Fleury, as Third-party Defendants, moved to dismiss the counterclaims and third-party complaint. That motion is pending. While the Company and Messrs. Geimer and Fleury believe they have substantial defenses to the counterclaims and third-party claims respectively, and intend to contest those claims vigorously, there can be no assurance that the resolution of the counterclaims and third party claims will not have a material adverse effect on the Company. Note 7. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. We adopted this statement on August 1, 2002 and it had no material impact on our financial statements. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value, less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. We adopted this statement August 1, 2002 and it had no material impact on our financial statements. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This statement eliminates the current requirement that gains and losses on debt extinguishment must be classified as extraordinary items in the income statement. Instead, such gains and losses will be classified as extraordinary items only if they are deemed to be unusual and infrequent, in accordance with the current generally accepted accounting standards criteria for extraordinary classification. In addition, SFAS No. 145 eliminates an inconsistency in lease accounting by requiring that modifications of capital leases that result in reclassification as operating leases be accounted for consistent with sale-leaseback accounting rules. The statement also contains other nonsubstantive corrections to authoritative accounting literature. We adopted this standard August 1, 2002 and it had no effect on our financial statements. -13- In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses accounting for restructuring and similar costs. SFAS No. 146 supersedes previous accounting guidance, principally Emerging Issues Task Force ("EITF") Issue No. 94-3. We adopted the provisions of SFAS No. 146 for restructuring activities initiated after December 31, 2002. SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized at the date of a company's commitment to an exit plan. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS No. 146 may affect the timing of the recognition of future restructuring costs as well as the amount recognized. Adoption of this standard did not have any effect on our financial statements. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures about the method of accounting for stock-based employee compensation and the effect of the method used on reported results in both annual and interim financial statements. We are required to follow the prescribed format and provide the additional disclosures required by SFAS No. 148 in our annual financial statements for the year ended July 31, 2003 and must also provide the disclosures in our quarterly reports containing condensed financial statements for interim periods beginning with the quarter ending April 30, 2003. We will continue to account for stock based compensation using the intrinsic value method. In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," which disclosures are effective for financial statements issued after December 15, 2002. This statement did not have any effect on our financial statements as of January 31, 2003. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities," which requires the consolidation of variable interest entities, as defined. FIN No. 46 is applicable to our financial statements to be issued after July 31, 2003. This statement did not have any effect on our financial statements as of January 31, 2003. -14- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------------------ Information contained in the following discussion of results of operations and financial condition and in certain of the notes to the financial statements included in this document contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of words such as "may," "will," "expect," "anticipate," "estimate," or "continue," or variations thereon or comparable terminology. In addition, all statements other than statements of historical facts that address activities, events, or developments the Company expects, believes, or anticipates will or may occur in the future, and other such matters, are forward-looking statements. The following discussion should be read in conjunction with the Company's financial statements and related notes included elsewhere herein. The Company's future operating results may be affected by various trends and factors which are beyond the Company's control. These include, among other factors, general public perception of issues and solutions, and other uncertain business conditions that may affect the Company's business. The Company cautions the reader that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, including its 10-KSB for the year ended July 31, 2002, could affect the Company's actual results and cause actual results to differ materially from those discussed in forward-looking statements. Overview - -------- Accelr8 Technology Corporation has been a provider of software tools and consulting services for the modernization of software applications running on the VMS operating systems developed by Digital Equipment Corporation ("DEC") and which are proprietary to Compaq Computer Corporation ("COMPAQ") as a result of its purchase of DEC. These assets were merged into Hewlett Packard Company ("HP") in 2002. Our consulting services and software conversion tools enable the Company's customers to analyze and implement conversions to UNIX, Linux and NT operating systems from VMS in a predictable and cost-effective manner. Our clients include a number of Fortune 1000 companies and government agencies. Based upon the significant decline in sales of our software tools and related consulting services, we have taken steps to limit the costs associated with the conduct of this business. These steps included the reduction of the number of personnel whose efforts are directed towards this business, not renewing the contracts of several members of management whose primary activities related to this business and reducing the amount of space occupied by the Company. Management intends to operate this business at a level that is sufficient to service the needs of existing customers and to support future sales of software tools. We do not expect to continue our consulting activities, although if such opportunities arise, management believes that it may be able to subcontract for the performance of the necessary services from third parties or former employees. We are also investigating the possibility of selling these business operations to another party although no arrangements or understandings currently exist with respect to the sale of these assets. Management believes that the merger of HP and COMPAQ provides an opportunity for the Company to provide a practical strategy for the Digital VMS installed base of customers to adapt their computer software programs to the next generation of HP hardware solutions, as well as hardware solutions provided by Sun Microsystems and IBM. -15- On January 18, 2001, we purchased the OpTest technology assets ("OpTest") from DDx, Inc. and commenced investment in development and optimization of OpTest's surface chemistry (OptiChem(TM)) and quantitative instruments (QuanDx(TM) and OTER(TM)). Our goal is to compete in the general area of biosciences, including DNA/RNA assays, protein-based assays and biosensors. Our proprietary surface chemistry and its quantitative instruments (QuanDx (TM) and Oter(TM)) support real-time assessment of medical diagnostics, food-borne pathogens, water-borne pathogens and bio-warfare assessments. We have received minimal revenues to date from these products and there is no assurance that we will be successful in marketing the new products. However, during the six months ended January 31, 2003, the Company's OptiChem(TM) slides have been offered commercially in the microarray marketplace and have resulted in sales revenue of $18,601. The scientific agenda has also included the manufacture of a customized surface for a proteomics customer who is committed to the use of proprietary probe technology. We believe that successful implementation of this unique application could, when licensed, contribute to immediate recognition of the OptiChem(TM) surface chemistry as a new benchmark for diagnostic applications and could attract other DNA "content" providers for use as a microarray platform. Changes in Results of Operations: Six months ended January 31, 2003 compared to six months ended January 31, 2002 Consulting fees for the six months ended January 31, 2003 were $20,000, as compared to none for the six months ended January 31, 2002, and represented 5.1% of net revenues, due to a code analysis project for a single customer. Product license and customer support fees for the six months ended January 31, 2003, were $115,732 a decrease of $1,544 or 1.3% as compared to the six months ended January 31, 2002, and represented 29.5% of net revenues. Revenues from the resale of purchased software including purchased maintenance for the six months ended January 31, 2003 were $242,125, an increase of $78,268 or 47.8% as compared to the six months ended January 31, 2002, and represented 61.7% of net revenues. This increase largely resulted from the sale of three software tools to a single customer. OptiChem(TM) revenues for the six months ended January 31, 2003 were $18,601 as compared to none for the six months ended January 31, 2002 and represented 4.74% of net revenues. This product was not available for sale in the period ended January 31, 2002. Due to the above factors, net revenues for the six months ended January 31, 2003, were $392,503 after a provision of $3,955, or 1% of net revenues for possible returns and allowances, which represented an increase of $113,815 or 40.8% as compared to the six months ended January 31, 2002. -16- During the six months ended January 31, 2003, sales to our three largest customers were $140,781, $67,200, and $50,725 representing 35.9%, 17.1% and 12.9% of our net revenues. In comparison, sales to our two largest customers were $79,400 and $55,743, representing 28.5% and 20.0% of net revenues for the six months ended January 31, 2002. The loss of a major customer could have a significant impact on our financial performance in any given year. Cost of services for the six months ended January 31, 2003 was $21,671, a decrease of $65,407 or 75.1%, as compared to the six months ended January 31, 2002. This decrease resulted largely from a reduction in engineering salaries of $57,125 and rent of $8,912. Cost of software purchased for resale including purchased maintenance for the six months ended January 31, 2003 was $38,763 an increase of $13,557 or 53.8%, as compared to the six months ended January 31, 2002. The increase results from increased revenue from resale of purchased software including purchased maintenance and variations in the product mix of items sold. General and administrative expenses for the six months ended January 31, 2003 were $381,925, an increase of $4,702 or 1.3% as compared to the six months ended January 31, 2002. Marketing and sales expenses for the six months ended January 31, 2003, were $143,968 an increase of $44,761 or 45.1% as compared to the six months ended January 31, 2002. This increase was mainly due to increased consulting fees of $27,130 and $21,633 in marketing, which include advertising, promotional material and attendance at trade shows offset by a decrease in communications of $10,909 resulting from a change in telephone system. These increased costs were incurred in developing a market for the OpTest(TM) technologies. Research and development expenses for the six months ended January 31,2003 were $228,920 an increase of $74,650, or 48.4% as compared to the six months ended January 31, 2002. This increase was largely due to an increase in salaried scientific personnel of $26,270, consulting fees of $16,496, rent of $4,975, and laboratory expense and supplies in the amount of $26,738 for the continued development of the OpTest technologies. Amortization for the six months ended January 31, 2003 was $119,880, an increase of $113,535 as compared to the six months ended January 31, 2002. During the second and third quarters of the year ended July 31, 2002, the gross asset base of intellectual properties increased significantly due to the purchase of the OpTest(TM) technologies (see discussion in the Company's Form 10-KSB for the year ended July 31, 2002). The increase in amortization expense results from the amortization of the OpTest(TM) technologies. Depreciation for the six months ended January 31, 2003 was $12,300, an increase of $1,650 or 15.5% compared to the six months ended January 31, 2002. As a result of these factors, loss from operations for the six months ended January 31, 2003 was $554,924 an increased loss of $73,633 or 15.3% as compared to loss from operations of $481,291 for the six months ended January 31, 2002. -17- Interest income for the six months ended January 31, 2003, was $61,467 a decrease of $58,684 or 48.9% as compared to the six months ended January 31, 2002. This decrease was primarily due to decreased interest rates in government money market funds. Realized loss on marketable securities held in the deferred compensation trust for the six months ended January 31, 2003 was $2,593, a decreased loss of $1,669 as compared to the six months ended January 31, 2002. This loss was the result of selling trust investments offset by interest earned of $2,965. Unrealized loss on marketable securities held in the deferred compensation trust for the six months ended January 31, 2003 was $27,539 a decreased loss of $3,697, as compared to the six months ended January 31, 2002. This loss was the result of changing market value of securities held by the trust. There was no gain on asset disposal for the six months ended January 31, 2003 as compared to a gain of $10,453 for the six months ended January 31, 2002. There was no loss from abandoned trademarks for the six months ended January 31, 2003 as compared to a loss of $3,930 for the six months ended January 31, 2002. The Company recorded an income tax receivable of $96,216 during the six months ended January 31, 2003, resulting from the year to date tax operating loss to be carried back. There was no benefit in the previous year as carryback of net operating loss was limited to three years. The number of carryback years was extended to five years as a result of the Job Creation and Workers Assistance Act of 2002. As a result of these factors, net loss for the six months ended January 31, 2003 was $427,373, an increased loss of $37,258 or 9.6% as compared to the six months ended January 31, 2002. Changes in Results of Operations: Three months ended January 31, 2003 compared to three months ended January 31, 2002 Consulting fees for the three months ended January 31, 2003 were $20,000, as compared to none for the three months ended January 31, 2002 and represented 9.9% of net revenues due to a code analysis project for a single customer. Product license and customer support fees for the three months ended January 31, 2003, were $85,320 a decrease of $2,197 or 2.5% as compared to the three months ended January 31, 2002, and represented 42.2% of net revenue. Revenues from the resale of purchased software for the three months ended January 31, 2003, were $85,448 a decrease of $15,080 or 15.0% as compared to the three months ended January 31, 2002, and represented 42.3% of net revenue. This license was largely due to not selling a major tool during the period. -18- OptiChem(TM) revenues for the three months ended January 31, 2003, were $13,227, as compared to none for the three months ended January 31, 2002 and represented 6.6% of net revenues. This product was not available for sale in fiscal 2002. Due to the factors above, net revenues for the three months ended January 31, 2003 were $202,040, after a provision of $1,955 or 1% of net revenues for possible returns and allowances, an increase of $15,385 or 8.2% as compared to the three months ended January 31, 2002. During the three months ended January 31, 2003, sales to our two largest customers were $59,406 and $50,000 representing 29.4% and 24.7% of our net revenues. In comparison, sales to our largest customer was $79,400 representing 42.5% of net revenues for the three months ended January 31, 2002. The loss of a major customer could have a significant impact on our financial performance in any given year. Cost of services for the three months ended January 31, 2003 was $11,851 a decrease of $23,543 or 66.5% as compared to the three months ended January 31, 2002. This decrease resulted largely from a reduction in engineering salaries of $22,184. Cost of software purchased for resale for the three months ended January 31, 2003, was $8,173 a decrease of $7,375 or 47.4% as compared to the three months ended January 31, 2002. The decrease in software purchased for resale results from decreased revenue from resale of purchased software and variations in the product mix of items sold. General and administrative expenses for the three months ended January 31, 2003 were $214,588 a decrease of $263 as compared to the three months ended January 31, 2002. Marketing and sales expenses for the three months ended January 31, 2003 were $69,425 an increase of $23,511 or 51.2% as compared to the three months ended January 31, 2002. This increase was largely due to increased consulting fees of $17,505. These increased costs were incurred in developing a market for the OpTest(TM) technologies. Research and development expenses for the three months ended January 31, 2003 were $140,347 an increase of $55,685 or 65.8% as compared to the three months ended January 31, 2003. This increase was largely due to an increase in salaried scientific personnel of $16,598, consulting fees of $18,588, rent of $3,705, and laboratory expense and supplies of $14,720 for the continued development of the OpTest technologies. Amortization for the three months ended January 31, 2003 was $59,940, as compared to none for the three months ended January 31, 2002. During the second and third quarters of the year ended July 31, 2002, the gross asset basis of intellectual properties increased significantly due to the purchase of the OpTest(TM) technologies (see discussion in the Company's Form 10-KSB for the year ended July 31, 2002). The increase in amortization expense results from the amortization of the OpTest(TM) technologies. Depreciation for the three months ended January 31, 2003 was $6,150, an increase of $825 or 15.5% compared to the three months ended January 31, 2002. -19- As a result of these factors, loss from operations for the three months ended January 31, 2003 was $308,434 an increased loss of $93,395 or 43.4% as compared to loss from operations for the three months ended January 31, 2002. Interest income for the three months ended January 31, 2003 was $28,034 a decrease of $17,102 or 37.9% as compared to the three months ended January 31, 2002. This decrease was primarily due to decreased interest rates in government money market funds. Realized loss on marketable securities held in the deferred compensation trust for the three months ended January 31, 2003 was $1,150 a decrease of $78 as compared to the three months ended January 31, 2002. Unrealized loss on marketable securities held in the deferred compensation trust for the three months ended January 31, 2003 was $18,935 an increased loss of $43,400 as compared to the three months ended January 31, 2002. This loss was the result of changing market value of securities held by the trust. There was no gain or loss on asset disposal for the three months ended January 31, 2003 as compared to a gain of $2,034 for the three months ended January 31, 2002. The Company recorded an income tax receivable of $96,216 during the three months ended January 31, 2003, resulting from the year to date tax operating loss to be carried back. There was no benefit in the previous year as carryback of net operating loss was limited to three years. The number of carryback years was extended to five years as a result of the Job Creation and Workers Assistance Act of 2002. As a result of these factors net loss for the three months ended January 31, 2003 was $204,269, an increased loss of $59,637 or 41.2% as compared to the three months ended January 31, 2002. Capital Resources and Liquidity At January 31, 2003, as compared to July 31, 2002, our current assets decreased 2.7% from $9,879,124 to $9,611,235 and our liquidity, as measured by cash and cash equivalents, increased by 6.3% from $8,631,192 to $9,176,734. At January 31, 2003, as compared to July 31, 2002, our working capital decreased 3.6% from $9,144,957 to $8,819,104. During the same period, shareholders' equity decreased 3.0% from $13,744,648 to $13,336,535, largely as a result of the net loss of $427,373 during the six months ended January 31, 2003. We have historically funded our operations primarily through equity financing and cash flow generated from operations. We anticipate that current cash balances and working capital plus future positive cash flow from operations will be sufficient to fund our capital and liquidity needs in the foreseeable future. -20-
Contractual Obligations The following tables set forth information with respect to our contractual obligations and commercial commitments as of January 31, 2003. Payments due by Period - -------------------------------- ---------------- --------------- ------------------- ------------------------ Total 1 to 3 years 4 to 5 years More than 5 years - -------------------------------- ---------------- --------------- ------------------- ------------------------ Laboratory Lease Payments(1) $111,077 $111,077 0 0 - -------------------------------- ---------------- --------------- ------------------- ------------------------ Thomas V. Geimer $1,189,615 $720,000 469,615 0 Employment Contract(2) - -------------------------------- ---------------- --------------- ------------------- ------------------------ (1) We have a three year lease agreement that began on October 1, 2002 for our laboratory located at 7000 Broadway, Denver Colorado 80221. (2) Calculated as of January 31, 2003. Effective December 1, 2002, a new employment agreement was negotiated and approved by the Compensation Committee. The new agreement provides for an annual base salary of $165,000 with annual deferred compensation of $75,000. The new agreement expires on December 31, 2007. Additionally, in the event of a change in control, any unpaid amounts due under the initial term of the agreement for both base salary and deferred compensation would be payable plus five times the sum of the base salary and deferred compensation. A copy of Mr. Geimer's employment contract is attached hereto as Exhibit 10.1. Item 3. Controls and Procedures - ------- ----------------------- Within the 90-day period prior to the date of this report, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in this quarterly report on Form 10-QSB. There have been no significant changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date that the Chief Executive Officer and Chief Financial Officer carried out the evaluation. PART II. OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- Please see Note 6 to the unaudited financial statements for information with respect to concluded and pending legal proceedings. Item 2. Changes in Securities - ------------------------------ None. -21-
Item 3. Defaults Upon Senior Securities - ---------------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None. Item 5. Other Information - -------------------------- None. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- a) Exhibits: 1. Exhibit 10.1 Thomas V. Geimer Employment Agreement 2. Exhibit 99.01 Certification of Officers Pursuant to 18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 3. Exhibit 99.02 Certification of Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 4. Exhibit 99.03 Certification of Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. b) Reports on Form 8-K: None. -22- 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. Date: March 14, 2003 ACCELR8 TECHNOLOGY CORPORATION --------------- /s/ Thomas V. Geimer ----------------------------------- Thomas V. Geimer, Secretary, Chief Executive Officer and Chief Financial Officer /s/ James Godkin ----------------------------------- James Godkin, Principal Accounting Officer -23- EX-10.1 3 accelr8ex10-1.txt AGREEMENT EXHIBIT 10.1 ACCELR8 TECHNOLOGY CORPORATION EMPLOYMENT AGREEMENT WITH THOMAS V. GEIMER This Employment Agreement is made and entered into this 1st day of December, 2002, by and between Accelr8 Technology Corporation, a Colorado corporation (the "Company"), and Thomas V. Geimer, an individual ("Executive"). RECITALS A. The Company desires to be assured of the association and services of Executive for the Company. B. Executive is willing and desires to be employed by the Company, and the Company is willing to employ Executive, upon the terms, covenants and conditions hereinafter set forth. AGREEMENT NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions hereinafter set forth, the parties hereto agree as follows: 1. Employment. The Company hereby employs Executive as its Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, and Secretary. 2. Term. The term of this Agreement shall be for a period of five (5) years and one (1) month effective as of December 1, 2002, and ending on December 31, 2007 (the "Initial Term"), unless terminated earlier pursuant to Section 7 below; provided, however, that Executive's obligations in Sections 6 and 8 below shall continue in effect after such termination. This Agreement shall be automatically renewed for successive one year periods (the "Renewal Term") unless, at least 90 days prior to the expiration of the Initial Term or any Renewal Term, either party gives written notice to the other party specifically electing to terminate this Agreement at the end of the Initial Term or any such Renewal Term. 3. Compensation; Reimbursement. 3.1 Base Salary. For all services rendered by Executive under this Agreement, the Company shall pay Executive a base salary of One Hundred Sixty Five Thousand Dollars ($165,000) per year (the "Base Salary"). The Base Salary shall be payable in equal, consecutive monthly installments. Payment of the Salary shall be subject to the customary withholding tax and other employment taxes as required with respect to compensation paid by a corporation to an employee. It is expressly understood and agreed that the Base Salary may be increased upon the approval of the Company's Compensation Committee (if such a committee exists) or a subcommittee of the Board of Directors consisting only of members of the Board who are not employees of the Company (if a Compensation Committee does not exist). 3.2 Deferred Compensation. In addition to Executive's Base Salary provided for in Section 3.1, the Company shall contribute at least Seventy Five Thousand Dollars ($75,000) per year to the Company's deferred compensation plan for Executive ("Deferred Compensation"). 3.3 Bonus. In addition to the Base Salary and the Deferred Compensation, the Company shall pay Executive such Bonus or Bonuses as the Board of Directors shall determine in their sole discretion. 3.4 Key Man Life Insurance. In addition to the Base Salary, the Deferred Compensation, and any Bonuses, the Company shall carry key man life insurance in the amount of five million dollars ($5,000,000) on Executive's life (the "Key Man Life Insurance"). Pursuant to a resolution passed by the Board of Directors, Executive shall designate a beneficiary who shall be entitled to one-half of the proceeds of the Key Man Life Insurance. 3.5 Additional Benefits. In addition to the Base Salary, Deferred Compensation, Bonuses and the Key Man Life Insurance, Executive shall be entitled to all other benefits of employment provided to the employees of the Company. 3.6 Reimbursement. Executive shall be reimbursed for all reasonable "out-of-pocket" business expenses for business travel and business entertainment incurred in connection with the performance of his duties under this Agreement (1) so long as such expenses constitute business deductions from taxable income for the Company and are excludable from taxable income to Executive under the governing laws and regulations of the Internal Revenue Code (provided, however, that Executive shall be entitled to full reimbursement in any case where the Internal Revenue Service may, under Section 274(n) of the Internal Revenue Code, disallow to the Company some percentage of meals and entertainment expenses); and (2) to the extent such expenses do not exceed the amounts allocable for such expenses in budgets that are approved from time to time by the Company. The reimbursement of Executive's business expenses shall be upon monthly presentation to and approval by the Company of valid receipts and other appropriate documentation for such expenses. 4. Scope of Duties. 4.1 Assignment of Duties. Executive shall have such duties as may be assigned to him from time to time by the Company's Board of Directors commensurate with his experience and responsibilities in the positions for which he is employed pursuant to Section 1 above. Such duties shall be exercised subject to the control and supervision of the Board of Directors of the Company. 4.2 General Specification of Duties. Executive's duties shall include, but not be limited to those duties that are generally associated with the positions of Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer and Secretary of a company similarly situated to the Company, and as such duties and responsibilities are more particularly described in the Company's Bylaws. The foregoing specifications are not intended as a complete itemization of the duties which Executive shall perform and undertake on behalf of the Company in satisfaction of his employment obligations under this Agreement. 4.3 Executive's Devotion of Time. Executive hereby agrees to devote his full time abilities and energy to the faithful performance of the duties assigned to him and to the promotion and forwarding of the business affairs of the Company, and not to divert any business opportunities from the Company to himself or to any other person or business entity. 4.4 Conflicting Activities. (a) Executive may, during the Initial Term or any Renewal Term of this Agreement, be engaged in other business activities without the prior consent of the Board of Directors of the Company; provided, however, that Executive may not compete directly with the Company. Further, nothing in this Agreement shall be construed as preventing Executive from investing his personal assets in passive investments in business entities which are not in competition with the Company or its affiliates, or from pursuing business opportunities as permitted by Section 4.4(b). (b) Executive hereby agrees to promote and develop all business opportunities that come to his attention relating to current or anticipated future business of the Company, in a manner consistent with the best interests of the Company and with his duties under this Agreement. Should Executive discover a business opportunity that does not relate to the current or anticipated future business of the Company, he shall first offer such opportunity to the Company. Should the Board of Directors of the Company not exercise its right to pursue this business opportunity within a reasonable period of time, not to exceed sixty (60) days, then Executive may develop the business opportunity for himself; provided, however, that such development may in no way conflict or interfere with the duties owed by Executive to the Company under this Agreement. Further, Executive may develop such business opportunities only on his own time, and may not use any service, personnel, equipment, supplies, facility or trade secrets of the Company in their development. As used herein, the term "business opportunity" shall not include business opportunities involving investment in publicly traded stocks, bonds or other securities, or other investments of a personal nature. 5. Change of Control. If any time during the Initial Term or any Renewal Term of this Agreement there is a change of control of the Company, as defined below, and Executive's employment is terminated by the Company under Section 7.1(a), (b), (d) or (e) within the greater of one (1) year following the change of control or the remaining term of this Agreement (the "Change of Control Date"), the Company shall pay to Executive (a) the balance of all amounts due from the Change of Control Date until the end of the Initial Term, including deferred compensation, due under this Agreement plus (b) an amount equal to five times the sum of (i) his annual Base Salary as in effect on the date of termination plus (ii) the amount of $75,000 in recognition of Deferred Compensation payments made on behalf of Executive, and (c) any other amounts due to Executive under any other provision of this Agreement. This amount shall be paid to Executive in one lump sum as soon as practicable, but in no event later than one hundred twenty (120) days, after the date that Executive's employment is terminated. In addition to the lump sum payment referenced in the preceding sentence, the Company shall pay to Executive any accrued and unpaid Bonuses as provided for in Section 3.3 at the same time as the lump sum payment is made. For example, if the Change of Control Date was January 1, 2003, the amount paid to would be equal to $2,400,000 ([$165,000 (Base Salary) + $75,000 (Deferred Compensation) X 5 (years remaining on contract)] + [$165,000 (base salary) + $75,000 (deferred compensation) X 5]). For purposes of this subsection, a change of control shall mean the occurrence of one or more of the following three events: (1) After the effective date of this Agreement, any person becomes a beneficial owner (as such term is defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) directly or indirectly of securities representing 33% or more of the total number of votes that may be cast for the election of directors of the Company; (2) Within two years after a merger, consolidation, liquidation or sale of assets involving the Company, or a contested election of a Company director, or any combination of the foregoing, the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board; or (3) Within two years after a tender offer or exchange offer for voting securities of the Company, the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board. 6. Confidentiality of Trade Secrets and Other Materials. 6.1 Executive acknowledges that in his employment hereunder, he will be making use of, acquiring and adding to the Company's trade secrets and its confidential and proprietary information of a special and unique nature and value relating to such matters as, but not limited to, the Company's business operations, manufacturing processes, manufacturing techniques, manufacturing methods, manufacturing technology, internal structure, financial affairs, programs, software, systems, procedures, manuals, confidential reports, lists of clients and prospective clients and sales and marketing methods, as well as the amount, nature and type of services, equipment and methods used and preferred by the Company's clients and the fees paid by such clients, all of which shall be deemed to be confidential information. Executive acknowledges that such confidential information has been and will continue to be of central importance to the business of the Company and that disclosure of it to or its use by others could cause substantial loss to the Company. In consideration of employment by the Company, Executive agrees that during the term of this Agreement and any renewal or extension of his employment by the Company and upon and after leaving the employ of the Company for any reason whatsoever, Executive shall not, for any purpose whatsoever, directly or indirectly, divulge or disclose to any person or entity any of such confidential information which was obtained by the Executive as a result of Executive's employment with the Company or any trade secrets of the Company, but shall hold all of the same confidential and inviolate. 6.2 All contracts, agreements, financial books, records, instruments and documents; client lists; memoranda; data; reports; programs; software; tapes; rolodexes; telephone and address books; letters; research; card decks; listings; programming; and any other instruments, records or documents relating or pertaining to clients serviced by the Company or the Executive, the services rendered by the Executive, or the business of the Company (collectively, the "Records") shall at all times be and remain the property of the Company. Upon termination of this Agreement and the Executive's employment under this Agreement for any reason whatsoever, Executive shall return to the Company all Records (whether furnished by the Company or prepared by the Executive), and Executive shall neither make nor retain any copies of any of such Records after such termination. 6.3 All inventions and other creations, whether or not patentable or copyrightable, made or conceived in whole or in part by Executive while employed by the Company and within eighteen months thereafter, which relate directly to the business, existing or proposed, of the Company or any other business or research or development effort in which the Company or any of its subsidiaries or affiliates engages during Executive's employment by the Company will be disclosed promptly by Executive to the Company and shall be the sole and exclusive property of the Company. All copyrightable works created by Executive and covered by this Section 6.3 shall be deemed to be works for hire. Executive shall cooperate with the Company in patenting or copyrighting all such inventions and other creative works, shall execute, acknowledge, seal and deliver all documents tendered by the Company to evidence its ownership thereof throughout the world, and shall cooperate with the Company in obtaining, defending, and enforcing its rights therein. 7. Termination. 7.1 Bases for Termination. (a) Executive's employment hereunder may be terminated at any time by mutual agreement of the parties. (b) This Agreement shall automatically terminate on the last day of the month in which Executive dies or becomes permanently incapacitated. "Permanent incapacity" as used herein shall mean mental or physical incapacity, or both, reasonably determined by the Company's Board of Directors based upon a certification of such incapacity by, in the discretion of the Company's Board of Directors, either Executive's regularly attending physician or a duly licensed physician selected by the Company's Board of Directors, rendering Executive unable to perform substantially all of his duties hereunder and which appears reasonably certain to continue for at least six consecutive months without substantial improvement. Executive shall be deemed to have "become permanently incapacitated" on the date the Company's Board of Directors has determined that Executive is permanently incapacitated and so notifies Executive. (c) Executive's employment may be terminated by the Company "with cause," effective upon delivery of written notice to Executive given at any time (without any necessity for prior notice) if any of the following shall occur: (1) any action by Executive which would be grounds for termination under applicable law (currently covering any willful breach of duty, and habitual neglect of duty); (2) any material breach of Executive's obligations in Sections 4 or 6 above; or (3) any material acts or events which inhibit Executive from fully performing his responsibilities to the Company in good faith, such as (i) a felony criminal conviction; (ii) any other criminal conviction involving Executive's lack of honesty or Executive's moral turpitude; (iii) drug or alcohol abuse; or (iv) acts of dishonesty, gross carelessness or gross misconduct. (d) Executive's employment may be terminated by the Company "without cause" (for any reason or no reason at all) at any time by giving Executive 60 days prior written notice of termination, which termination shall be effective on the 60th day following such notice. If Executive's employment under this Agreement is so terminated, the Company shall (i) make a lump sum cash payment to Executive within 10 days after termination is effective of an amount equal to (1) Executive's Base Salary accrued to the date of termination; (2) unreimbursed expenses accrued to the date of termination; (3) an amount equal to the greater of (a) Executive's annual Base Salary (i.e., 12 months of Base Salary), or (b) amounts remaining due to Executive as Base Salary (assuming that payments under this Agreement were made until expiration of the Initial Term or if applicable the Renewal Term), and (4) any other amounts due to Executive under any other provision of this Agreement. For purposes of this provision, Executive's annual Base Salary and the remaining portion of the term of the Agreement shall be calculated as of the termination date. After the Company's termination of Executive under this provision, the Company shall not be obligated to provide the benefits to Executive described in Section 3.3 (except as may be required by law). In addition to the lump sum payment referenced in the preceding sentence, the Company shall pay to Executive the Bonus provided for in Section 3.2 based upon the number of days in the year that Executive was employed by the Company, within one hundred five days after the end of the fiscal year in which Executive was terminated. (e) Executive may terminate his employment hereunder by giving the Company 60 days prior written notice, which termination shall be effective on the 60th day following such notice. 7.2 Payment Upon Termination. Upon termination under Sections 7.1(a), (b), (c) or (e), the Company shall pay to Executive within 10 days after termination an amount equal to the sum of (1) Executive's Base Salary accrued to the date of termination; (2) unreimbursed expenses accrued to the date of termination, and (3) any other amounts due to Executive under any other provision of this Agreement. Except for the foregoing compensation then due and owing and the compensation provided for in Section 8.1(d), the Company shall not be obligated to compensate Executive, his estate or representatives after any such termination. Further, Executive shall not be entitled to any of the benefits described in Section 3.3 (except as provided by law) after such termination. 7.3 Dismissal from Premises. At the Company's option, Executive shall immediately leave the Company's premises on the date notice of termination is given by either Executive or the Company. 8. Restrictive Covenants. 8.1 The Company and Executive acknowledge and agree that Executive's services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with the Company could cause serious harm to the Company. Further, Executive and the Company also recognize that an important part of Executive's duties will be to develop good will for the Company through his personal contact with customers, agents and others having business relationships with the Company, and that there is a danger that this good will, a proprietary asset of the Company, may follow Executive if and when his relationship with the Company is terminated. Accordingly, Executive covenants that for a period of eighteen months after Executive ceases to be employed by the Company for any reason whatsoever, Executive shall not, within the State of Colorado, without the prior written consent of the Company, directly or indirectly: (a) Offer to render any services or solicit the rendition of any services which were rendered by the Company during the two year period immediately preceding such cessation of Executive's employment with the Company to any clients, customers or accounts of the Company who were such at any time during such two year period to or for the benefit or account of Executive or to or for the benefit or account of any other person or entity. (b) Render or attempt to render any services which were rendered by the Company during the two year period immediately preceding such cessation of Executive's employment with the Company to any clients, customers or accounts of the Company who were such at any time during such two year period to or for the benefit or account of Executive or to or for the benefit or account of any other person or entity. (c) Solicit for employment or employ to or for the benefit or account of Executive or to or for the benefit or account of any other person or entity any employee of the Company, nor shall Executive urge, directly or indirectly, any client or referrer of clients, customers, or accounts of the Company to discontinue, in whole or in part, business with the Company or not to do business with the Company. For purposes of this Section 8.1(c) of this Agreement, the term "referrer of clients" shall mean any person or entity who or which referred a client, customer or account to the Company at any time prior to such cessation of Executive's employment with the Company. (d) Engage, either as a consultant, independent contractor, proprietor, stockholder, partner, officer, director, employee or otherwise, in any business which (i) designs or sells software for the migration or conversion of computer applications or software, or (ii) designs, sells, or competes in the surface chemistry and quantitative instruments industry, or the DNA/RNA assays, protein-based assays and biosensors industries, or (iii) any business that otherwise competes with the Company in any state of the United States or in any foreign country, in each such case where the Company sold, licensed or otherwise its products or related services at any time during the two year period immediately preceding such cessation of Executive's employment with the Company. The Company and the Executive agree that the Company may elect to either enforce or waive this Section 8.1(d); provided however, that if the Company elects to enforce this Section 8.1(d), then subject to the provisions of the immediately following sentence, the Company agrees to pay Executive on a monthly basis an amount equal to his monthly Base Salary at the time of termination for each month that the Company elects to keep this provision in effect. It is expressly understood and agreed that if Executive is paid any amounts pursuant to Section 7.1(d), then the provisions of this Section 8.1(d) shall remain in full force and effect without the Company being obligated to make the additional payments contemplated in the immediately preceding sentence. 8.2 The parties hereto agree that to the extent that any provision or portion of Section 8.1 of this Agreement shall be held, found or deemed to be unreasonable, unlawful or unenforceable by a court of competent jurisdiction, then any such provision or portion thereof shall be deemed to be modified to the extent necessary in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by applicable law; and the parties hereto do further agree that any court of competent jurisdiction shall, and the parties hereto do hereby expressly authorize, request and empower any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law. 8.3 The provisions of Sections 8.1(a), 8.1(b), 8.1(c) and 8.1(d) of this Agreement are cumulative. Compliance with Sections 8.1(a), 8.1(b), 8.1(c) and 8.1(d) of this Agreement is a condition precedent to the Company's obligation to make any payments of any nature to Executive, whether under this Agreement or otherwise. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for a breach or threatened breach of Sections 6 and 8 of this Agreement. 8.4 As used in this Section 8, "clients", "customers" and "accounts" shall include any person or entity that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any such "clients", "customers" or "accounts." 9. Injunctive Relief. The Company and Executive hereby acknowledge and agree that any violation of the provisions of Sections 6 or 8 hereunder will cause irreparable injury to the Company and there is no adequate remedy at law for such violation. Accordingly, in addition to any other relief to which the Company may be entitled, the Company shall be entitled to such injunctive relief as may be ordered by any court of competent jurisdiction including, but not limited to, an injunction restraining any violation of Sections 6 or 8 above without the proof of actual damages. 10. Miscellaneous. 10.1 Transfer and Assignment. This Agreement is personal as to Executive and shall not be assigned or transferred by Executive without the prior written consent of the Company. This Agreement shall be binding upon and inure to the benefit of all of the parties hereto and their respective permitted heirs, personal representatives, successors and assigns. 10.2 Severability. Nothing contained herein shall be construed to require the commission of any act contrary to law. Should there be any conflict between any provisions hereof and any present or future statute, law, ordinance, regulation or other pronouncement having the force of law, the latter shall prevail, but the provision of this Agreement affected thereby shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law, and the remaining provisions of this Agreement shall remain in full force and effect. 10.3 Governing Law. This Agreement is made under and shall be construed pursuant to the laws of the State of Colorado. 10.4 Counterparts. This Agreement may be executed in several counterparts and all documents so executed shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all of the parties did not sign the original or the same counterparts. 10.5 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior oral or written agreements, arrangements and understandings with respect thereto. No representation, promise, inducement, statement or intention has been made by any party hereto that is not embodied herein, and no party shall be bound by or liable for any alleged representation, promise, inducement or statement not so set forth herein. 10.6 Modification. This Agreement may be modified, amended, superseded or cancelled, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by the party or parties to be bound by any such modification, amendment, supersession, cancellation or waiver. 10.7 Attorneys' Fees and Costs. In the event of any dispute arising out of the subject matter of this Agreement, the prevailing party shall recover, in addition to any other damages assessed, its attorneys' fees and court costs incurred in litigating or otherwise settling or resolving such dispute whether or not an action is brought or prosecuted to judgment. In construing this Agreement, none of the parties hereto shall have any term or provision construed against such party solely by reason of such party having drafted the same. 10.8 Waiver. The waiver by either of the parties, express or implied, of any right under this Agreement or any failure to perform under this Agreement by the other party, shall not constitute or be deemed as a waiver of any other right under this Agreement or of any other failure to perform under this Agreement by the other party, whether of a similar or dissimilar nature. 10.9 Cumulative Remedies. Each and all of the several rights and remedies provided in this Agreement, or by law or in equity, shall be cumulative, and no one of them shall be exclusive of any other right or remedy, and the exercise of any one or such rights or remedies shall not be deemed a waiver of, or an election to exercise, any other such right or remedy. 10.10 Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. 10.11 Notices. Any notice under this Agreement must be in writing, may be telecopied provided that evidence of the transmission and receipt is created at the time of transmission, sent by express 24-hour guaranteed courier, or hand-delivered, or may be served by depositing the same in the United States mail, addressed to the party to be notified, postage-prepaid and registered or certified with a return receipt requested. The addresses of the parties for the receipt of notice shall be as follows: If to the Company: Accelr8 Technology Corporation 303 East Seventeenth Avenue, Suite 108 Denver, Colorado 80203 If to Executive: Thomas V. Geimer 303 East Seventeenth Avenue, Suite 108 Denver, Colorado 80203 Each notice given by registered or certified mail shall be deemed delivered and effective on the date of delivery as shown on the return receipt, and each notice delivered in any other manner shall be deemed to be effective as of the time of actual delivery thereof. Each party may change its address for notice by giving notice thereof in the manner provided above. 10.12 Survival. Any provision of this Agreement which imposes an obligation after termination or expiration of this Agreement shall survive the termination or expiration of this Agreement and be binding on Executive and the Company. 10.13 Right of Set-Off. Upon termination or expiration of this Agreement, the Company shall have the right to set-off against the amounts due Executive hereunder the amount of any outstanding loan or advance from the Company to Executive. 10.14 Effective Date. This Agreement shall become effective as of the date set forth on page 1 when signed by Executive and the Company. IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed as of the date first set forth above. THOMAS V. GEIMER ACCELR8 TECHNOLOGY CORPORATION ________________________________ By:_________________________________ David Wilhelm, Director By: ________________________________ A. Alexander Arnold III, Director EX-99.01 4 ex99-01.txt CERTIFICATION Exhibit 99.01 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section1350, chapter 63 of title 18, United States Code), I, Thomas V. Geimer, the Chief Executive Officer and Chief Financial Officer of Accelr8 Technology Corporation (the "Corporation"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge: The Quarterly Report on Form 10-QSB for the quarter ended January 31, 2003 (the "Form 10-QSB") of the Corporation fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Corporation. Dated: March 14, 2003 /s/ Thomas V. Geimer ----------------------------------- Thomas V. Geimer Chief Executive Officer and Chief Financial Officer EX-99.02 5 ex99-02.txt CERTIFICATION Exhibit 99.02 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Thomas V. Geimer, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Accelr8 Technology Corporation; 2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period presented in this Quarterly Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure control and procedures as of a date within 90 days prior to the filing date of this Quarterly Report (the "Evaluation Date") and; c) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls, and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's certifying officers and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 14, 2003 /s/ Thomas V. Geimer ----------------------------------- Thomas V. Geimer, Chief Executive Officer and Chief Financial Officer EX-99.03 6 ex99-03.txt CERTIFICATION Exhibit 99.03 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, James Godkin certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Accelr8 Technology Corporation; 2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period presented in this Quarterly Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: c) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; d) evaluated the effectiveness of the registrant's disclosure control and procedures as of a date within 90 days prior to the filing date of this Quarterly Report (the "Evaluation Date") and; e) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls, and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's certifying officers and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 14, 2003 /s/ James Godkin ----------------------------------- James Godkin, Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----