10-Q Very Much

Ascendant Solutions finds itself in a serious financial bind

Dallas  May 11, 2001  To say that Ascendant Solutions has defied its name is the understatement of the year. In an announcement today, which reads like a eulogy, the company came clean to its shareholders, warning that, after reviewing the company's preliminary operation results for the first quarter 2001, the capital requirements for its existing business plan for fiscal year 2001 is greater than currently available capital resources.

As a result, the company's board of directors has taken action to immediately reduce the size and scope of operations and to reduce the company's work force. In order to enhance and to maximize shareholder value, the board is considering a variety of financial and strategic alternatives, including a strategic alliance or the possible sale of all or a portion of the company.

In addition to its profits problems, the company is also involved in a Nasdaq Staff Determination as of March 27, 2001, concerning allegations that the company failed to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4450(a)(b), and that its securities were, therefore subject to delisting from The Nasdaq National Market. Further, on March 16, the company received notification from Nasdaq that it failed to meet the Market Value of Public Float requirement for continued listing also set forth in Marketplace Rule 4450(a)(b) and that the company has until June 14, 2001 to comply with this requirement. The company requested a hearing before a Nasdaq Listing Qualifications Panel to review the March 27 Staff Determination, and such hearing was scheduled for May 11, 2001. In the meantime, the company's securities continued to trade on the Nasdaq National Market pending the outcome of this hearing. In light of today's action by the board of directors, the company is withdrawing its request for a hearing before the Nasdaq Listing Qualifications Panel. As a result, the company has been informed that it is eligible to trade on the electronic bulletin board, rather than either the Nasdaq National Market or SmallCap Systems. But even with bulletin board trading, delisting will adversely affect the ability or willingness of investors to purchase the common stock, which, in turn, will severely affect the market liquidity of the company's securities.

Effective May 10, 2001, Mr. Kevin Yancy resigned as chairman of the board. The board accepted his resignation, resolved to reduce the size of the board from four members to three, and elevated current board member Mr. Jonathan Bloch to serve as the new chairman of the board and a Class C board member. Mr. David Bowe, the company's president and CEO, and Mr. Paul Sherer will continue as the other members of the board.

As a consequence of the recent actions by the company's board of directors, the annual stockholders' meeting scheduled for May 31, 2001 has been canceled. The company also anticipates filing an extension with the Securities and Exchange Commission for the filing of its Form 10-Q so that a report can be prepared that reflects the prospects of the company's continuing business. The company anticipates filing the Form 10-Q no later than May 21, 2001.