ASCENDANT SOLUTIONS INC - 10-Q Quarterly Report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨

	June 30, 2002			December 31, 2001
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	3,280		$	4,204
Accounts receivable		64			26
Due from affiliate		5			—
Prepaid expenses		49			120

Total current assets		3,398			4,350
Property and equipment, net		15			6
Investment in limited partnership		400			—
Other assets		—			5

Total assets	$	3,813		$	4,361

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	96		$	234
Payable to affiliate		18			—
Accrued liabilities		18			116

Total current liabilities		132			350

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—7,500,000
Issued and outstanding—none		—			—
Common stock, $0.0001 par value:
Authorized shares—50,000,000
Issued and outstanding shares—21,230,900 at June 30, 2002 and December 31, 2001		2			2
Additional paid-in capital		59,822			59,718
Deferred compensation		(104	)		—
Accumulated deficit		(56,039	)		(55,709	)

Total stockholders’ equity		3,681			4,011

Total liabilities and stockholders’ equity	$	3,813		$	4,361

	Three Months Ended June 30,						Six Months Ended June 30,
	2002			2001			2002			2001
Revenues	$	—		$	957		$	—		$	2,284

Operating expenses:
Cost of revenues		—			410			—			2,242
Selling, general and administrative expenses		212			4,902			392			7,951
Depreciation and amortization		3			1,015			3			2,098
Write-down of property held for sale		—			1,047			—			1,047

Total operating expenses		215			7,374			395			13,338

Operating loss		(215	)		(6,417	)		(395	)		(11,054	)
Investment income		33			—			33			—
Interest income (expense), net		15			100			32			279

Net loss	$	(167	)	$	(6,317	)	$	(330	)	$	(10,775	)


Basic and diluted net loss per share	$	(0.01	)	$	(0.30	)	$	(0.02	)	$	(0.51	)


Shares used in computing basic and diluted net loss per share		21,231			21,231			21,231			21,231

	Six Months Ended June 30,
	2002			2001
Operating Activities
Net cash used in operating activities	$	(518	)	$	(7,210	)


Investing Activities
Investment in limited partnership		(400	)		—
Proceeds from sale of assets		6			1,000
Purchases of property and equipment		(12	)		(3,777	)

Net cash used in investing activities		(406	)		(2,777	)


Financing Activities
Payments of long-term debt		—			(170	)

Net cash used in financing activities		—			(170	)


Net decrease in cash and cash equivalents		(924	)		(10,157	)
Cash and cash equivalents at beginning of year		4,204			16,837

Cash and cash equivalents at end of quarter	$	3,280		$	6,680


Non-cash investing activities:
Purchase of software licenses and development under contracts with deferred payment terms (included in accounts payable)	$	—		$	(1,032	)

The unaudited financial statements included herein reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state Ascendant Solutions, Inc.’s (“Ascendant Solutions” or the “Company”) financial position, results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission. The results of operations for the period ended June 30, 2002 are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire fiscal year ending December 31, 2002. The December 31, 2001 balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. These financial statements are presented on the basis that the Company is an on-going enterprise and do not reflect adjustments, if any, necessary if management is unable to execute its business strategy (see Note 2 – Reduction of Size and Scope of Operations).

After the Company reviewed its preliminary operating results for the first quarter of 2001 as well as the overall economic and market environment for e-commerce businesses, it determined that the capital requirements under its existing business plan were greater than the capital resources then currently available. As a result, beginning in May 2001, the Company reduced the size and scope of its operations and implemented a plan to preserve assets and reduce its expenditures, liabilities and commitments. In connection with this action, the Company effected a reduction in workforce, whereby all but the two remaining full time employees were terminated during 2001.

In connection with its asset preservation plan, the Company took actions to reduce expenditures, liabilities and commitments and to preserve cash. As of March 31, 2002, the Company had substantially eliminated all liabilities and commitments associated with its prior operations that were discontinued in 2001.

The Company is currently seeking to (1) most effectively deploy its remaining cash, debt capacity (if any) and its net operating loss carryforwards and (2) capitalize on the experience and contacts of its officers and directors. Toward that end, it is pursuing, among other things, the acquisition of manufacturing, distribution or service companies and is actively seeking out possible acquisition candidates. We are also exploring the establishment of a capital markets subsidiary which, if formed, could provide the Company with a future source of revenue. If a capital markets subsidiary is formed, it would provide real estate financial advisory services to corporate clients on a fee basis. These services would include, but not be limited to, analysis, consulting, acquisition and/or disposition of property, capital placement and acquisition, contract negotiation, and other matters related to real estate finance. There can be no assurance that the Company will be successful in any of its acquisition endeavors or in the establishment of a capital markets subsidiary. We face all of the risks of a new business and the special risks inherent in the investigation, acquisition, or involvement in a new business opportunity. We must be regarded as a new or “start-up” venture with all of the unforeseen costs, expenses, problems, and difficulties, to which such ventures are subject.

As of May 1, 2002, the Company sublets its office space from Leslie Enterprises, L.P. (“Landlord”), an entity controlled by Jim Leslie, our Chairman. The Company currently pays monthly rent of approximately $1,700. In connection with the relocation to, and the construction of, its new office, both the Company and Landlord incurred certain shared costs which gave rise to payables to both the Company and the Landlord. These amounts are reflected on the balance sheet as “Due from affiliate” and “Payable to affiliate”. The Company believes that such lease arrangement has been on terms no less favorable to the Company than could have been obtained in a transaction with an independent third party.

Safety Tools division of Ampco Metals Incorporated of Milwaukee, Wisconsin in a Chapter 11 bankruptcy proceeding. Ampco Safety Tools, founded in 1922, is a leading manufacturer of non-sparking, non-magnetic and corrosion resistant safety tools. Income received from this investment is reflected in “Investment income” in the accompanying statements of operations.

On August 1, 2002, the Company formed a new wholly owned subsidiary, Ascendant VTE, LLC, which serves as the corporate general partner of VTE, L.P., a partnership which acquired the assets of Venue Ticket Exchange, Inc. VTE, L.P. is seeking to rollout an online, electronic ticket exchange for the purchase and sale of secondary tickets to sporting events and other entertainment venues. Mr. Leslie, our Chairman, and Mr. Bowe, our President and CEO, are also limited partners of VTE, L.P.

During the second quarter, the Company issued, pursuant to a registration statement on Form S-8, 435,000 shares of restricted stock under the 2002 Equity Incentive Plan. Under the restricted stock agreements, the restricted shares will vest annually over a three-year period. These shares have not been included in the EPS calculation, as they have not yet vested.

	Three Months ended June 30,						Six months ended June 30,
	2002			2001			2002			2001
Net loss	$	(167,000	)	$	(6,317,000	)	$	(330,000	)	$	(10,775,000	)
Weighted average number of shares outstanding		21,230,900			21,230,900			21,230,900			21,230,900
Basic and diluted net loss per share	$	(0.01	)	$	(0.30	)	$	(0.02	)	$	(0.51	)

The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this report together with the financial statements, notes and management’s discussion contained in our Form 10-K for the year ended December 31, 2001. Except for the historical information contained herein, the discussion in this report contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. In addition, the realization of our expectations depends on, among other things, our ability to successfully defend outstanding litigation, our ability to preserve the Company’s assets and reduce expenditures, and our ability to successfully make one or more profitable acquisitions or investments. Our actual results could differ significantly from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below under “Risks Related to Our Business” and “Other Risks.” Our forward-looking statements are based on the current expectations of management, and we assume no obligation to update this information. The cautionary statements made in this report should be read as being applicable to all related forward-looking statements, wherever they appear in this report.

On May 11, 2001, the Company’s stock was delisted from the Nasdaq National Market and began trading on the OTC Bulletin Board (“OTCBB”). The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (“OTC”) securities. An OTC security is not listed or traded on Nasdaq or a national securities exchange, and Nasdaq has no business relationship with the issuers quoted in the OTCBB. Issuers of all securities quoted on the OTCBB are subject to periodic filing requirements with the Securities and Exchange Commission or other regulatory authority. OTCBB requirements include, among other things, a broker-dealer acting as a market maker willing to enter a quote for the securities and requires the Company to remain current in its periodic filings under the Securities Exchange Act of 1934, as amended. Even with OTCBB eligibility and trading, delisting adversely affects the ability or willingness of investors to purchase the common stock, which, in turn, severely affects the market liquidity of the Company’s securities. There can be no assurance that the Company’s stock will indefinitely continue to be traded on the OTCBB. See “Other Risks” below.

During the second quarter, the Company invested $400,000 cash for a 10% limited partnership interest in Ampco Partners, Ltd., a newly formed entity, which acquired the assets and intellectual property of the Ampco Safety Tools division of Ampco Metals Incorporated of Milwaukee, Wisconsin in a Chapter 11 bankruptcy proceeding. Income received from this investment is reflected in “Investment income” in the accompanying statements of operations.

Ampco Safety Tools, founded in 1922, is a leading manufacturer of non-sparking, non-magnetic and corrosion resistant safety tools. These tools meet Occupational Safety and Health Administration and National Fire Protection Association requirements for use in locations where flammable vapors of combustible residues are present. Safety tools are used in industrial applications, primarily in manufacturing and maintenance operations. Typical safety tool users include, but are not limited to, the armed forces, federal, state and local governments, chemical manufacturers, explosives and pyrotechnics; petrochemicals handling; petroleum refining; steel and aluminum mills; hazardous material handling; confined space and grain storage facilities maintenance; shipyards and non-magnetic applications.

As a result of our reduction in operations, period-to-period comparison of our operating results is not meaningful and should not be relied upon as an indicator of future performance. Beginning July 1, 2001, the Company had no revenue producing contracts. We expect our future operating results to fluctuate. Factors that are likely to cause these fluctuations include:

Delaware		75-2900905
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

16250 Dallas Parkway, Suite 102, Dallas, Texas		75248
(Address of principal executive offices)		(Zip Code)


Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001		2

Unaudited Statements of Operations for the Three and Six Months Ended June 30, 2002 and 2001		3

Unaudited Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001		4

Notes to Interim Financial Statements		5

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