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 ¨

	September 30, 2002			December 31, 2001
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,268		$	4,204
Accounts receivable		54			26
Prepaid expenses		15			120

Total current assets		3,337			4,350
Property, equipment and software, net		84			6
Investments in limited partnerships		400			—
Other assets		—			5

Total assets	$	3,821		$	4,361

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	82		$	234
Accrued liabilities		18			116

Total current liabilities		100			350
Limited partnership interests		167			—
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 September 30, 2002 and December 31, 2001		2			2
Additional paid-in capital		59,822			59,718
Deferred compensation		(96	)		—
Accumulated deficit		(56,174	)		(55,709	)

Total stockholders’ equity		3,554			4,011

Total liabilities and stockholders’ equity	$	3,821		$	4,361

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2001			2002			2001
Revenues	$	—		$	—		$	—		$	2,284

Operating expenses:
Cost of revenues		—			—			—			2,242
Selling, general and administrative expenses		251			1,090			644			9,041
Depreciation and amortization		6			—			9			2,098
Write-down of assets held for sale		—			—			—			1,047
Write-down of computer software		—			4,990			—			4,990

Total operating expenses		257			6,080			653			19,418

Operating loss		(257	)		(6,080	)		(653	)		(17,134	)
Investment income		28			—			62			—
Interest income (expense), net		15			59			47			337
Minority interest		79			—			79			—

Net loss	$	(135	)	$	(6,021	)	$	(465	)	$	(16,797	)

Basic and diluted net loss per share	$	(0.01	)	$	(0.28	)	$	(0.02	)	$	(0.79	)

Shares used in computing basic and diluted net loss per share		21,230,900			21,230,900			21,230,900			21,230,900

	Nine Months Ended September 30,
	2002			2001
Operating Activities
Net cash used in operating activities	$	(700	)	$	(9,009	)


Investing Activities
Investments in limited partnerships		(400	)		—
Proceeds from sale of assets		8			1,105
Purchases of property and equipment		(15	)		(3,578	)
Acquisition of assets		(75	)		—

Net cash used in investing activities		(482	)		(2,473	)


Financing Activities
Proceeds from sale of limited partnership interests		246			—
Payments of long-term debt		—			(170	)

Net cash used in financing activities		246			(170	)

Net decrease in cash and cash equivalents		(936	)		(11,652	)
Cash and cash equivalents at beginning of year		4,204			16,837

Cash and cash equivalents at end of quarter	$	3,268		$	5,185

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 September 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).

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. In connection with its formation, VTE, L.P. received approximately $246,000 from the issuance of various limited partnership interests to outside investors. The Company invested $75,000 in this venture. Mr. Leslie, our Chairman, and Mr. Bowe, our President and CEO, are also limited partners of VTE, L.P. VTE, L.P. acquired the assets (primarily software) of Venue Ticket Exchange, Inc. for approximately $75,000. The assets, liabilities, partnership interests, and results of operations of VTE, L.P. have been included in the consolidated financial statements.

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. The Company is currently in discussion with several prospective acquisition candidates, however, there can be no assurance that the Company will be successful in these discussions or in any of its acquisition endeavors.

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 its sharing of office space with the Landlord, both the Company and Landlord incur certain shared

Our long-term investments are accounted for using the cost method accounting for investments and none represent investments in publicly traded companies. The cost method is used as the Company does not have a majority interest and does not have significant influence over the management of the respective companies. Distributions received by the Company are recorded as investment income on the statements of operations to the extent the distribution does not exceed the Company’s proportionate share of the company’s earnings.

During the second quarter, the Company invested $400,000 for a 10% limited partnership interest in Ampco Partners, Ltd. (“Ampco”), 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. 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.

In October 2002, the Company formed a capital markets subsidiary, CRESA Capital Markets Group, L.P., (“Capital Markets”) and entered into a Licensing and Co-Marketing Agreement with CRESA Partners LLC, a national real estate services firm. Capital Markets is expected to provide real estate financial advisory services to corporate clients on a fee basis which could provide the Company with a future source of revenue. These services are planned to 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. Jim Leslie, our Chairman, also serves as an advisor to the Board of Directors of CRESA Partners, LLC.

In connection with the establishment of Capital Markets, the Company is currently evaluating ways in which it might engage as a principal to acquire certain corporate real estate assets. There can be no assurances that the Company will decide to acquire real estate assets in the future or how it might do so.

In September 2002, the Board of Directors of the Company authorized the extension of the maturity of 800,000 warrants held by Jonathan Bloch, a Director of the Company, from February 5, 2004 to February 5, 2006. The warrants have an exercise price ranging from $1.00–$3.00 per share.

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 September 30,						Nine months ended September 30,
	2002			2001			2002			2001
Net loss	$	(135,000	)	$	(6,021,000	)	$	(465,000	)	$	(16,797,000	)
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	)	$	(0.28	)	$	(0.02	)	$	(0.79	)

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.

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

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


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

Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2002 and 2001		3

Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001		4

Notes to Consolidated Interim Financial Statements		5

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