UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
--------------------------------
Commission file number 000-22327
CONCERO INC.
Incorporated Pursuant to the Laws of the State of Delaware
--------------------------------
Internal Revenue Service-Employer Identification No. 74-2796054
6300 Bridgepoint Parkway, Building 1, Suite 100, Austin Texas 78730
(512) 343-6581
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 |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 10,233,090 shares of the
Company's Common Stock, $.01 par value, were outstanding as of October 31, 2002.
CONCERO INC.
Table of Contents
Page
----
Part I - Financial Information
Item 1. Financial Statements (Unaudited).......................................3
Condensed Consolidated Statement of Net Assets in Liquidation
(Liquidation Basis) -
September 30, 2002.................................................3
Condensed Consolidated Statement of Changes in Net Assets in
Liquidation (Liquidation Basis) -
Three Months Ended September 30, 2002..............................4
Condensed Consolidated Balance Sheet (Going Concern) -
December 31, 2001..................................................5
Condensed Consolidated Statement of Operations (Going Concern) -
Six Months Ended June 30, 2002.....................................6
Condensed Consolidated Statement of Cash Flows (Going Concern) -
Six Months Ended June 30, 2002.....................................7
Notes to Condensed Consolidated Financial Statements...................8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................12
Item 3. Quantitative and Qualitative Disclosures about Market Risks...........14
Item 4. Controls and Procedures...............................................14
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K......................................15
Signatures............................................................16
Certifications........................................................17
2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CONCERO INC.
Condensed Consolidated Statement of Net Assets in
Liquidation (Liquidation Basis)
(In thousands, except per share data)
September 30,
2002
-------------
(Unaudited)
Assets
Cash ........................................................ $ 1,059
Short-term investments ...................................... 6,229
Accounts receivable, net of allowance for
doubtful accounts of $38 ................................. 7
Assets held for sale ........................................ 500
Other assets ................................................... 254
-------
Total assets ................................................... $ 8,049
-------
Liabilities
Accounts payable ............................................ 145
Accrued expenses and other liabilities ...................... 4,054
-------
Net assets in liquidation ...................................... $ 3,850
=======
Shares used .................................................... 10,381
=======
Net assets in liquidation per share of common stock ............ $ 0.37
=======
See accompanying notes.
3
CONCERO INC.
Condensed Consolidated Statement of Changes in Net Assets
in Liquidation (Liquidation Basis)
(in thousands)
Three Months
Ended
September 30,
2002
--------------
(Unaudited)
Net assets on a going concern basis as of June 30, 2002 ........ $ 8,756
-------
Adjustments to reflect liquidation basis accounting:
Write-down to net realizable value of software and
property and equipment .................................... 584
Accrual of remaining lease obligations ...................... 1,819
Estimated expenses to be incurred through
liquidation ............................................... 2,503
-------
Net adjustments to reflect liquidation basis accounting ........ $ 4,906
-------
Net assets in liquidation as of June 30, 2002 .................. $ 3,850
=======
Changes in estimated liquidation values
Other assets ................................................ $ --
Accrued and other liabilities ............................... --
-------
Net changes in estimated liquidation values .................... $ --
=======
Net assets in liquidation as of September 30, 2002 ............. $ 3,850
=======
See accompanying notes.
4
CONCERO INC.
Condensed Consolidated Balance Sheets (Going Concern Basis)
(in thousands, except per share data)
December 31,
2001
------------
Assets
Current assets:
Cash .......................................................... $ 4,141
Short-term investments ........................................ 8,964
Accounts receivable, net of allowance for
doubtful accounts of $612 .................................. 823
Unbilled revenue under customer contracts ..................... 557
Income tax receivable ......................................... 11
Prepaid expenses and other current assets ..................... 594
----------
Total current assets ............................................. 15,090
Property and equipment, net ...................................... 1,554
----------
Total assets ..................................................... $ 16,644
==========
Liabilities and stockholders' equity
Current liabilities:
Trade payables ................................................ $ 66
Accrued expenses and other current liabilities ................ 5,445
----------
Total current liabilities ........................................ 5,511
Stockholders' equity:
Preferred stock, par value $.01 per share,
1,000 shares authorized and none issued and
outstanding ................................................. --
Common stock, par value $.01 per share, 34,000
shares authorized, 10,163 shares issued and
outstanding ................................................. 102
Additional paid-in capital ..................................... 33,734
Retained deficit ............................................... (22,703)
----------
Total stockholders' equity ....................................... 11,133
----------
Total liabilities and stockholders' equity ....................... $ 16,644
==========
See accompanying notes.
5
CONCERO INC.
Condensed Consolidated Statements of Operations (Going Concern Basis)
(in thousands, except per share data)
(Unaudited)
Six Months
Ended
June 30,
2002
----------
Revenue ........................................................ $ 996
Operating expenses:
Technical staff ............................................. 731
Research and development .................................... 1,925
Selling and administrative staff ............................ 1,088
Other expenses .............................................. 356
-------
Total operating expenses ....................................... 4,100
-------
Loss from operations ........................................... (3,104)
Interest income ................................................ 118
-------
Loss before income taxes ....................................... (2,986)
Benefit from income taxes ...................................... (605)
-------
Net loss ....................................................... $(2,381)
=======
Basic and diluted loss per share ............................... $ (0.23)
=======
Shares used in basic and diluted loss
per share calculation ....................................... 10,227
=======
See accompanying notes.
6
CONCERO INC.
Condensed Consolidated Statements of Cash Flows (Going Concern Basis)
(in thousands)
(Unaudited)
Six Months
Ended
June 30,
----------
2002
----------
Operating activities
Net loss ....................................................... $(2,381)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ............................. 356
Write-off of excess property and equipment reserve ........ 280
Bad debt expense, net of recoveries ....................... (502)
Changes in operating assets and liabilities:
Accounts receivable .................................... 1,308
Unbilled revenue under customer contracts .............. 557
Prepaid expenses and other current assets .............. 144
Trade payables ......................................... 43
Accrued expenses and other current liabilities ......... (2,777)
Income taxes ........................................... (593)
-------
Net cash used in operating activities .......................... (3,565)
-------
Investing activities
Sale (purchase) of short term investments, net ................. (12)
Acquisition of property and equipment .......................... (166)
-------
Net cash provided by investing activities ...................... (178)
-------
Financing activities
Proceeds from issuance of common stock, net of
issuance cost .................................................. 3
-------
Net cash provided by financing activities ...................... 3
-------
Net increase (decrease) in cash ................................ (3,740)
Cash, beginning of period ...................................... 4,141
-------
Cash, end of period ............................................ $ 401
=======
See accompanying notes.
7
CONCERO INC.
Notes to Condensed Consolidated Financial Statements
September 30, 2002
(Unaudited)
1. Cessation of Operations and Orderly Wind Down
With the continued deterioration of economic conditions in the United States and
the resultant negative impact on spending by cable operators and the
availability of capital, the Company's Board of Directors extensively explored
and evaluated various strategic alternatives that would protect the interests of
stockholders and enhance stockholder value. The Board of Directors concluded
that the liquidation of the Company was in the best interests of stockholders,
and accordingly, on August 8, 2002 approved a resolution directing the cessation
of the Company's operations and the liquidation of the Company, subject to
required stockholder approval. The Board of Directors anticipates that there
will be adequate net cash available to declare cash distributions to
stockholders. However, as described in note 9, no distributions have been
declared and no assurances can be given that available cash and amounts received
on the sale of assets will be adequate to make cash distributions to
stockholders following the provision for obligations, liabilities, expenses and
other claims. The Company has ceased its operating activities and has commenced
the orderly wind down of its affairs; including the release of its employees,
selling assets and settling obligations including leases for office space. The
Company has retained a small number of employees to conduct these activities.
2. Adoption of the Liquidation Basis of Accounting
As described in Note 1 above, on August 8, 2002 the Company's Board of Directors
approved the cessation of the Company's operations and the liquidation of the
Company, subject to required stockholder approval. The Company has ceased its
operating activities and has commenced the orderly wind down of its affairs. As
a result, the Company has adopted the liquidation basis of accounting for the
presentation of its consolidated financial statements for periods subsequent to
June 30, 2002. This basis of accounting is appropriate when, among other things,
liquidation of a company appears imminent and the net realizable values of its
assets are reasonably determinable. Under the liquidation basis of accounting,
the Company has stated its assets at their net realizable values, contractual
liabilities at contractual amounts, and estimated costs through the liquidation
date are recorded to the extent they are reasonably determinable. The
liquidation basis of accounting requires many estimates and assumptions, and
there are substantial uncertainties in carrying out the orderly wind down of
operations. The actual values and costs are expected to differ from the amounts
shown herein and could be higher or lower than the amounts recorded. Changes in
the estimated net realizable value of assets, contractual liabilities and
estimated costs through the liquidation date will be recorded in the period such
changes are known. Differences between the estimated net realizable values and
actual values based on cash transactions will be recognized in the period in
which the cash transactions occur.
As a result of the adoption of the liquidation basis of accounting, during the
quarter ended September 30, 2002, the Company recorded charges of $584,000 for
the net write-off of software and property and equipment and $1.8 million for
the accrual of the estimated contractual costs for its leased office space.
These changes reflect the immediate impact of the liquidation of assets and
recognition of contractual lease obligations rather than the realization through
the ordinary course of operations. During the quarter ended September 30, 2002
and in connection with the cessation of the Company's operating activities and
the release of its employees, the Company recorded payroll and severance charges
of approximately $1.7 million; professional fees of $412,000; insurance premiums
of $355,000 and miscellaneous income/expense items of $81,000.
The accompanying condensed consolidated financial statements are unaudited and,
in the opinion of management, contain all adjustments that management considers
necessary to present fairly the net assets available in liquidation at September
30, 2002, and the changes in net assets available in liquidation for the period
from July 1, 2002 through September 30, 2002. The accompanying condensed
consolidated balance sheet as of December 31, 2001 and statement of operations
and cash flows for the six months ended June 30, 2002 are presented on a going
concern basis reflecting the Company's actual operations prior to the adoption
of the liquidation basis of accounting.
8
CONCERO INC.
Notes to Condensed Consolidated Financial Statements
September 30, 2002
(Unaudited)
These financial statements should be read in conjunction with the audited
consolidated financial statements for the year ended December 31, 2001 and
related notes which are included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001. Accordingly, significant accounting policies
and other disclosures necessary for complete financial statements in conformity
with generally accepted accounting principles have been omitted since such items
are reflected in the Company's audited consolidated financial statements and
related notes thereto.
3. Assets Held For Sale
Assets held for sale at September 30, 2002 of $500,000 consist primarily of the
Company's Marquee software and related intangibles, digital television
equipment, computers and furniture. During September and October 2002, the
Company solicited indications of interest from prospective buyers of its Marquee
software and related digital television equipment, and obtained estimates of net
realizable value for its computer equipment and furniture from third party
liquidators. The proposed purchase prices reflected in the Marquee indications
of interest and purchase price estimates from third party liquidators were used
in estimating the net realizable value of the assets held for sale. These
estimates of the net realizable value of the assets held for sale may differ
materially from the actual cash transactions associated with the sale of these
assets.
4. Other Assets
Other assets at September 30, 2002 include an $188,000 certificate of deposit
pledged to secure a letter of credit issued by a bank for the benefit of the
Company's Austin facilities landlord, see Note 5 below; a $40,000 deposit on
other leased office space; and $26,000 in prepaid insurance.
5. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at September 30, 2002 include provisions
for known liabilities, including the lease obligations discussed more fully in
Note 6 below, provisions for certain asserted claims, and the estimated costs of
the liquidation of the Company including costs of the cessation of operations
and orderly wind down of the Company's affairs. These estimated costs include
salaries and related expenses of officers and employees, legal and accounting
fees, other professional fees, insurance and office expenses expected to be
incurred during the period of liquidation and include the following (in
thousands):
Lease costs ............................ $2,231
Professional fees ...................... 495
Salaries ............................... 395
Insurance .............................. 329
Royalty fee and other .................. 604
------
$4,054
======
9
CONCERO INC.
Notes to Condensed Consolidated Financial Statements (Continued)
September 30, 2002
(Unaudited)
Management anticipates that the Company's Board of Directors will adopt a plan
of complete liquidation, dissolution and distribution, subject to stockholder
approval, that will provide for the filing of a certificate of dissolution with
the Delaware Secretary of State. Upon the filing of the certificate of
dissolution, the Company intends to close its Stock transfer books and
discontinue recording transfers of its shares of common stock except by will,
intestate succession or operation of law. In order to curtail expenses, the
Company intends to petition the Securities and Exchange Commission for relief
from its periodic reporting requirements under the Securities Exchange Act of
1934 following the filing of the certificate of dissolution. The estimated
closing costs used herein assume that the Company will be granted relief from
such periodic reporting requirements, but they include costs associated with the
filing of current reports on Form 8-K to disclose material events relating to
our liquidation and dissolution.
6. Lease Obligations
The Company is obligated under lease commitments for approximately 54,800 square
feet of office space in Austin, Texas, of which 39,000 expires on January 1,
2003 with the remaining 15,800 expiring July 31, 2007. The Company has engaged a
third party real estate broker to market the space expiring July 31, 2007. The
Company estimates that the unpaid contractual obligations pursuant to its Austin
lease commitments are approximately $2 million, which is reflected in accrued
expenses and other liabilities on the balance sheet at September 31, 2002. If
the Company successfully markets this leased office space, the actual cash costs
could differ materially from the estimated contractual obligation.
Additionally, the Company is obligated under lease commitments and has sublet
approximately 4,500 square feet of office space in San Francisco through
December 13, 2004. The estimated contractual obligation, net of estimated
sublease proceeds, of $206,000 is reflected in accrued expenses and other
liabilities on the balance sheet at September 31, 2002.
7. Income Taxes
A tax benefit $605,000 was recorded during the six months ended June 30, 2002
and collected in July 2002 in connection with a carry-back made available by a
new U.S. federal income tax law which allows for a temporarily lengthened loss
carry-back period. No other tax benefit was recorded in connection with the
Company's net loss for the six months ended June 30, 2002 as a result of
limitations on the Company's ability to utilize net operating loss
carry-forwards.
8. Shares Used in Computation of Net Assets in Liquidation
The following table sets forth calculation of shares used in the computation of
net assets available in liquidation per share at September 30, 2002 (in
thousands):
Weighted average shares of common stock ............. 10,233
Effect of dilutive securities:
Employee stock options ............................ 6
Warrants .......................................... 142
--------
Shares used in computations ......................... 10,381
========
For the purpose of computing net assets available in liquidation per share at
September 30, 2002, the effect of employee stock options and warrants were
determined using the treasury share method based upon the net assets in
liquidation for those exercisable options and warrants that would be dilutive to
common stockholders.
10
CONCERO INC.
Notes to Condensed Consolidated Financial Statements
September 30, 2002
(Unaudited)
9. Stockholder Distributions
Uncertainties as to the precise net realizable value of the Company's assets,
the ultimate cash settlement amount of liabilities and actual expenses of the
liquidation and dissolution of the corporation make it impracticable to predict
the aggregate cash amount ultimately distributable to stockholders. Management
and the Company's Board of Directors anticipate that available cash and amounts
received on the sale of assets will be adequate to provide for the Company's
obligations, liabilities, expenses and claims (including contingent liabilities)
and to make cash distributions to the Company's stockholders. The Board of
Directors has not declared a distribution to stockholders, and no assurances can
be made that available cash and amounts received on the sale of assets will be
adequate to make cash distributions to the Company's stockholders following our
provision for the Company's obligations, liabilities, expenses and other claims.
11
Concero Inc.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
In addition to the historical information contained herein, the discussion in
this Form 10-Q contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties, such as statements for the plans, objectives, expectations and
intentions of Concero. Such forward looking statements are generally accompanied
by words such as "plan," "estimate," "expect," "believe," "could," "would,"
"anticipate," "may," or other words that convey uncertainty of future events or
outcomes. These forward-looking statements and other statements made elsewhere
in this report are made in reliance on the Private Securities Litigation Reform
Act of 1995. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements whenever they appear
in this Form 10-Q. Our actual results could differ materially from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
under the section below entitled "Factors That May Affect Future Results,
Financial Condition and Market Price of Securities" as well as those cautionary
statements and other factors set forth elsewhere herein.
Cessation of Operations
As previously discussed, Concero has ceased operations and is in the process of
an orderly wind down of its affairs. With continued deterioration of economic
conditions in the United States and resultant negative impact on spending by
cable operators and the availability of capital, our Board of Directors
extensively explored and evaluated various strategic alternatives that would
protect the interests of stockholders and enhance stockholder value. Our Board
of Directors concluded that the liquidation of Concero was in the best interests
of its stockholders, and accordingly, on August 8, 2002 approved a resolution
directing the cessation of the Concero's operations and the liquidation of the
corporation, subject to required stockholder approval. Management will seek
stockholder approval of a plan of complete liquidation, dissolution and
distribution upon the adoption of such a plan by Concero's Board of Directors.
Concero has adopted the liquidation basis of accounting for the presentation of
its consolidated financial statements for periods subsequent to June 30, 2002.
Under the liquidation basis of accounting, assets are stated at their net
realizable values, contractual liabilities are stated at contractual amounts,
and estimated costs through the liquidation date are recorded to the extent they
are reasonably determinable. The liquidation basis of accounting requires many
estimates and assumptions and there are substantial uncertainties in carrying
out the orderly wind down of operations. Changes in the estimated net realizable
value of assets, contractual liabilities and estimated costs through the
liquidation date will be recorded in the period such changes are known.
Differences between the estimated net realizable values and actual values based
on cash transactions will be recognized in the period in which the cash
transactions occur. The actual values and costs are expected to differ from the
amounts shown herein and could be higher or lower than the amounts recorded.
Orderly Wind Down
Concero has commenced the orderly wind down of its affairs; including the
release of its employees, selling assets and settling its obligations including
its leases for office space. We have retained a small number of employees to
conduct these activities.
During September and October 2002, we solicited indications of interest from
prospective buyers of our Marquee software and related digital television
equipment. We intend to pursue those indications of interest which suggest the
greatest potential value, and expect to sell our Marquee software and much of
our digital television equipment as a result of these solicitations. We have
consigned computer and office equipment to an Internet auction company for
auction and will engage a furniture liquidator to dispose of our furniture.
We have engaged a real estate broker to market approximately 15,800 square feet
of office space in Austin that we believe could yield reduction from our
contractual obligation if successfully marketed.
12
The valuation of assets at their estimated net realizable values, contractual
liabilities at contractual amounts and costs through the liquidation date
necessarily requires many estimates and assumptions and there are substantial
uncertainties in carrying out the orderly wind down of operations. The actual
values and costs are dependent on a variety of factors, including, without
limitation, the actual proceeds realizable from the sale of our assets, the
ultimate settlement amounts of the our liabilities and obligations, and the
actual costs incurred in the orderly wind down of our affairs including
administrative costs incurred during the liquidation period. Consequently, the
actual values and costs are expected to differ from the amounts shown herein and
could be higher or lower than the amounts recorded. Therefore, it is not
presently determinable that available cash and amounts received on the sale of
assets will be adequate to make cash distributions to our stockholders following
our provision for obligations, liabilities, expenses and other claims.
Liquidity and Capital Resources
As of September 30, 2002, we had cash, cash equivalents and short-term
investments totaling $7.3 million, down from $13.1 million at December 31, 2001.
As of September 30, 2002, we did not have any material commitments for capital
expenditures.
We are obligated for office space through non-cancelable operating lease
arrangements. At September 30, 2002, our future minimum rental commitments net
of subtenant rents totaled approximately $2.2 million. We have engaged a real
estate broker to market office space that we believe could yield a reduction of
our contractual obligations. If we are successful in marketing this leased
office space, the actual cash costs could differ materially from the estimated
contractual obligation.
The Board of Directors anticipates that there will be adequate net cash
available to declare cash distributions to stockholders, but no distributions
have been declared and no assurances can be made that available cash and amounts
received on the sale of assets will be adequate to make cash distributions to
our stockholders following our provision for obligations, liabilities, expenses
and other claims.
Factors That May Affect Future Results, Financial Condition and Market Price of
Securities
Stockholders could be liable to the extent of liquidating distributions received
if contingent reserves are insufficient to satisfy the company's liabilities.
If we fail to create an adequate contingency reserve for payment of our expenses
and liabilities each stockholder could be held liable for the payment to
creditors of such stockholder's pro rata portion of the excess, limited to the
amounts previously received by the stockholder in distributions from us.
If a court holds at any time that we have failed to make adequate provision for
our expenses and liabilities or if the amount ultimately required to be paid in
respect of such liabilities exceeds the amount available from the contingency
reserve, our creditors could seek an injunction against the making of
distributions on the grounds that the amounts to be distributed are needed to
provide for the payment of our expenses and liabilities. Any such action could
delay or substantially diminish the cash distributions to be made to
stockholders.
We may not be able to complete the liquidation of Concero in a manner that
provides maximum value to stockholders.
We have ceased operations and have begun the process of liquidating and
dissolving our company. We have retained a small number of employees to attend
to the orderly disposition of our assets and liabilities. In the course of
liquidating the company, we may not be able to find buyers for our business
assets or obtain the amount of consideration we seek for our assets. In
addition, we may not be able to negotiate the orderly extinguishment of our
obligations to creditors. These obligations include, building and facilities
leases, business agreements with third parties and agreements with vendors. The
total amount of capital, if any, returned to stockholders after the dissolution
and liquidation of the Company will depend on our ability to maximize the
consideration we receive for our assets, minimize the amount we must expend to
settle our liabilities and, to a lesser degree, expedite the liquidation
process.
In addition, we will experience negative cash flow as we complete the
dissolution and liquidation of Concero. This negative cash flow will increase
with the length of the dissolution and liquidation process and may cause a
corresponding decrease in the amount of capital, if any, returned to
stockholders.
13
Our common stock may not continue to be traded on the Over-the-Counter Bulletin
Board (OTCBB); our stock price and liquidity of our common stock may be
adversely impacted.
Our common stock was delisted from the Nasdaq Small Cap Market as of the end of
business on August 6, 2002 and began trading on the OTCBB effective as of the
opening of business on August 7, 2002. The OTCBB is a regulated quotation
service that displays real-time quotes, last-sale prices and volume information
in over-the-counter equity securities. A community of market makers trade OTCBB
securities by entering quotes and reporting trades. If market makers choose not
to make a market for our common stock on the OTCBB, our common stock will not be
quoted on the OTCBB and may, instead, be quoted in the pink sheets. Because the
OTCBB and pink sheets are generally considered to be less efficient markets, our
stock price, and the liquidity of our common stock may be adversely impacted as
a result.
We expect that our Board of Directors will adopt a plan of liquidation,
dissolution and distribution, subject to stockholder approval, that will provide
closing of Concero's transfer books and that trading of the Company's common
stock will cease on and after such closing of the transfer books. The
proportionate interests of all of our stockholders shall be fixed on the basis
of their respective stock holdings at the close of business on the final record
date, and, after the final record date, any distributions made by us shall be
made solely to the stockholders of record at the close of business on the final
record date, except as may be necessary to reflect subsequent transfers recorded
on our books as a result of any assignment by will, intestate succession or
operation of law.
We may continue to incur the expense of complying with public company reporting
requirements.
We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, even though
compliance with such reporting requirements is economically burdensome. In order
to curtail such expenses, after filing our certificate of dissolution we intend
to seek relief from the Securities and Exchange Commission from a substantial
portion of the periodic reporting requirements under the Act. In the event such
relief is granted, we will continue to file current reports on Form 8-K to
disclose material events relating to our liquidation and dissolution along with
any other reports that the Securities and Exchange Commission may require.
Item 3.
Quantitative and Qualitative Disclosures about Market Risks
Information concerning market risk is contained on page 19 of our 2001 Annual
Report on Form 10-K and is incorporated by reference to such annual report.
Item 4.
CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing date of this quarterly report on
Form 10-Q, the Company, under supervision and with the participation of the
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures.
Based upon this evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures were effective, in
all material respects, to ensure that information required to be disclosed in
the Company's Exchange Act reports is recorded, processed, summarized and
reported in a timely manner.
The Company has ceased operations and has begun the process of liquidating and
dissolving. The Company has retained a small number of employees to attend to
the orderly disposition of our assets and liabilities. The internal control
structure has been modified to adapt to the changes.
14
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter
ended September 30, 2002:
On July 31, 2002, the Company issued a press release announcing the
anticipated delisting of Concero's common stock from the Nasdaq National
Market, effective as of August 1, 2002, the temporary listing of its
common stock on the Nasdaq SmallCap Market and the anticipated listing of
its common stock on the Over-the-Counter Bulletin Board effective as of
August 7, 2002. These events along with a copy of the press release were
filed on Form 8-K on August 6, 2002.
On August 14, 2002, the Company issued a press release announcing
that the board of directors had determined to cease Concero's operations
and liquidate the corporation, subject to shareholder approval. Concero
had released all but a small number of employees. Timothy Webb continued
as Chief Executive Officer until September 6, 2002 at which time Kevin B.
Kurtzman, a Concero director, became his successor. These events along
with a copy of the press release were filed on Form 8-K on August 20,
2002.
The Company reported that the Chief Executive Officer and Chief
Financial Officer furnished to the Securities and Exchange Commission
certificates pursuant to 18 U.S.C. ss. 1350 on Form 8-K (Item 9) on August
20, 2002; the certificates were attached as exhibits.
15
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: November 14, 2002 CONCERO INC.
By: /s/ KEVIN B. KURTZMAN
--------------------------------
Kevin B. Kurtzman
Chief Executive Officer
Date: November 14, 2002 /s/ KEVIN B. KURTZMAN
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Kevin B. Kurtzman
Chief Executive Officer and Director
(principal executive officer)
/s/ KEITH D. THATCHER
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Keith D. Thatcher
Chief Financial Officer,
Senior Vice President of Finance,
Treasurer and Secretary
(principal financial officer)
16
CERTIFICATION
I, Kevin B. Kurtzman, Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Concero Inc.;
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 covered by
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 officer 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
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
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 officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
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 other certifying officer 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: November 14, 2002
/s/ KEVIN B. KURTZMAN
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Kevin B. Kurtzman
Chief Executive Officer
17
CERTIFICATION
I, Keith D. Thatcher, Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Concero Inc.;
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 covered by
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 officer 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
quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
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 officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
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 other certifying officer 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: November 14, 2002
/s/ KEITH D. THATCHER
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Keith D. Thatcher
Chief Financial Officer
18