SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2002.
OR
For the transition period from to
Commission File Number: 000-29387
IPET HOLDINGS, INC.
(FORMERLY PETS.COM, INC.)
(Exact name of registrant as specified in its charter)
c/o Diablo Management Group2010 Crow Canyon Place, Suite 280San Ramon, CA 94583(Address of principal executive offices)
Registrant’s telephone number: (925) 275-0215
(Former name or former address, if changed since last year)
Indicate by check 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 [ ]
The number of shares of Common Stock, $.00125 par value, outstanding on January 18, 2001 (the effective date of filing of the Company’s Certificate of Dissolution with the Delaware Secretary of State) was 34,741,080 (assuming the conversion of 1,143,895 shares of outstanding non-voting Series A Preferred Stock into Common Stock).
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
STATEMENTS OF NET ASSETS IN LIQUIDATION(in thousands, except shares outstanding and per share data)
See accompanying notes to condensed consolidated financial statements.
STATEMENTS OF LIQUIDATING ACTIVITIES(in thousands)
NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)
1. Basis of Presentation.
The accompanying unaudited financial statements of IPET Holdings, Inc., formerly Pets.com, Inc. (the “Company”), have been prepared in conformity with generally accepted accounting principles for a company in voluntary liquidation for interim financial information and with consideration given to the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company’s management, the statements include all adjustments necessary (which are of a normal and recurring nature) for the fair presentation of the results of the interim period presented. These financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2001, as filed with the Securities and Exchange Commission on March 29, 2002 in the Company’s 2001 Annual Report on Form 10-K, and for the year ended December 31, 2000, as filed with the Securities and Exchange Commission on July 10, 2002 in the Company’s 2000 Annual Report on Form 10-K/A. The results of operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.
On November 4, 2000 the board of directors of the Company approved the orderly wind down and cessation of the Company’s operations and on January 16, 2001 the stockholders of the Company approved the Company’s Plan of Complete Liquidation and Dissolution (See Note 2). The accompanying financial statements have been prepared in conformity with generally accepted accounting principles for a company in voluntary liquidation in order to provide more relevant information as of September 30, 2002 and December 31, 2001 and for the liquidation periods from January 1, 2002 through September 30, 2002 and November 5, 2000 through December 31, 2001.
2. Background and Summary of Significant Developments.
On November 4, 2000, the Board of Directors of the Company unanimously approved the orderly wind down of its operations. On January 16, 2001, the Company’s stockholders approved the Company’s Plan of Complete Liquidation and Dissolution, and the Company filed a Certificate of Dissolution with the Delaware Secretary of State which became effective as of January 18, 2001. Until November 4, 2000, the Company was engaged in the sale, over the Internet, of pet products, services, and information primarily in the United States.
On November 7, 2000, the Company commenced the process of winding down and ceasing its operating activities to include terminating its employees, selling its assets and settling its obligations, including leases. Through January 16, 2001, such activities were managed and conducted by the Company’s executive officers, management team and personnel. On January 16, 2001, the Company engaged Diablo Management Group to handle the remaining issues in connection with winding down and dissolution and retained Richard G. Couch of Diablo Management Group to act as sole director and Chief Executive Officer of the Company. During the nine month period ended September 30, 2002, Diablo Management Group has been paid $215,819 for its services.
Between January 1, 2002 and September 30, 2002, the Company (i) finalized the termination of its 401K plan and completed the required distributions to plan participants; (ii) filed its Federal and State tax returns for 2001; (iii) filed and distributed all required IRS Forms W-2 and Forms 1099 for 2001; (iv) paid all taxes due to the State of Indiana and received a tax clearance from the State of Indiana; (v) completed an audit of its financials for the years 2000 and 2001; (vi) filed its 2001 Annual Report on Form 10-K with the Securities and Exchange Commission; (vii) filed its 2000 Annual Report on Form 10-K/A with the Securities and Exchange Commission; (viii) entered into a settlement agreement with National Distribution Agency, Inc. (“Landlord”) for the termination of the Union City warehouse facility sublease; (ix) settled its remaining business tax obligations with the City of San Francisco; and (x) distributed $0.075 per share to stockholders of record as of the Company’s final record date of January 18, 2001.
On August 31, 2001, the sole director of the Company approved an initial cash distribution of $0.09 per share to be paid out of net available assets to stockholders of record as of the Company’s final record date of January 18, 2001. On September 28, 2001, the Company distributed the initial cash distribution payments in the aggregate amount of $3,127,000 to the stockholders of record. The Company expects to make subsequent distributions, as appropriate, during the course of the wind down period as liabilities are settled.
On September 12, 2002, the sole director of the Company approved a liquidating cash distribution of $0.075 per share to be paid out of net available assets to stockholders of record as of the Company’s final record date of January 18, 2001. On September 27, 2002, the Company distributed the liquidating cash distribution payments in the aggregate amount of $2,605,581 to the stockholders of record. The Company has retained a contingency reserve which it believes will be adequate to meet its remaining legal obligations during the wind down period, which is expected to be completed in 2003. The Company may make a small, final liquidating distribution at the end of the wind down period.
On June 12, 2002, the Company filed a complaint against Fun-4-All Corporation in the Superior Court of California for Alameda County for breach of contract seeking to recover $152,567 of royalty payments past due under that certain License Agreement between the Company and Fun-4-All Corporation dated May 15, 2000. On August 22, 2002, Fun-4-All Corporation filed a cross-complaint against us for breach of the same contract and claimed damages “in excess of $250,000.” We are currently in discussions with Fun-4-All Corporation to resolve these claims.
On October 17, 2002, the Company entered into a settlement agreement with Sam Nappi, an individual, that provided for the payment of $7,500 owed for the purchase of certain domain names. On August 6, 2002, the Company entered into a settlement agreement with the landlord of its Union City facility that, among other things, terminated the Company’s remaining obligations under its sublease of such facility.
3. Lease Obligation.
The Company established a distribution center in Union City, California in July of 1999 and subleased a warehouse comprised of approximately 143,000 square feet for a term of five years ending on August 14, 2004. Monthly rent in the approximate amount of $60,000 (plus additional charges) has been paid during the nine month liquidation period ended September 30, 2002, notwithstanding the fact that the warehouse has been vacant since January of 2001. Since February 2001, the Company has aggressively pursued opportunities to sublease the space. On August 6, 2002 the Company entered into a settlement agreement with National Distribution Agency, Inc., for the termination of the sublease. Pursuant to the settlement agreement, the Company paid Landlord a lump sum of approximately $490,000, Landlord returned a $100,264 security deposit to the Company, the Company paid $60,000 in commissions to certain real estate brokers, the Company was released from its further obligations under the sublease, and the Company and Landlord mutually released all liability with regard to the sublease to include the complaint previously filed by the Company against Landlord in the Superior Court of California for Alameda County.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This discussion contains forward-looking statements. These statements relate to future events or our future financial performance including, by way of example, statements concerning the effective liquidation of the Company’s assets,
the orderly wind down of the Company, the settlement of all creditor and other claims against the Company, or the distribution of any cash or other assets to stockholders. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in (i) the Risk Factors section under Item 2 of this Report, (ii) the Risk Factors section of our 2001 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 29, 2002, and (iii) other reports we filed from time to time with the SEC. The forward-looking statements in this Quarterly Report on Form 10-Q should be considered in the context of these risk factors.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, the effective liquidation of the Company’s assets, the orderly wind down of the Company, the settlement of all creditor and other claims against the Company, or the distribution of any cash or other assets to stockholders. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward looking statements after the date of this Quarterly Report on Form 10-Q to conform such statements to actual results or to changes in our expectations.
OVERVIEW
On November 4, 2000, the Board of Directors of IPET Holdings, Inc. (formerly Pets.com, Inc.) approved an orderly winding down and cessation of the Company’s operations and liquidation of the Company’s assets and settlement of the Company’s liabilities pursuant to the Plan of Complete Liquidation and Dissolution. Until November 4, 2000, the Company was engaged in the sale, over the Internet, of pet products, services, and information primarily in the United States. Based upon the Board’s approval of the Plan of Complete Liquidation and Dissolution, the Company changed its basis of accounting for periods subsequent to November 4, 2000, from the going concern to the liquidation basis.
DISSOLUTION
On January 16, 2001, our stockholders approved the Plan of Complete Liquidation and Dissolution as well as a proposal to change our name from Pets.com, Inc. to IPET Holdings, Inc. On January 16, 2001, we filed with the Delaware Secretary of State an amendment to our Certificate of Incorporation to effect the name change and we filed a Certificate of Dissolution that took effect on January 18, 2001. At the close of business on January 18, 2001, we closed our stock transfer books, discontinued recording transfers of Common Stock, and our Common Stock was delisted from the Nasdaq Stock Market. Thereafter, certificates representing our Common Stock were no longer assignable or transferable on the books of the Company. Accordingly, the proportionate interests of all of our stockholders are fixed on the basis of their respective stock holdings at the close of business on January 18, 2001, and any distributions made by the Company after this date will be made solely to the stockholders of record at the close of business on January 18, 2001. In addition, all officers and directors of the Company resigned on January 16, 2001, effective immediately after the stockholder meeting. Richard G. Couch of Diablo Management Group was retained by our former Board of Directors to act as the sole Director and Chief Executive Officer, President, Chief Financial Officer, Treasurer, and Secretary for the Company after this date. Diablo Management Group currently handles the remaining affairs of the Company, including the final disposition of our remaining assets and settlement of outstanding liabilities.
UNION CITY LEASE
In July 1999, the Company established a distribution center in Union City, California, and subleased a warehouse from Landlord comprised of approximately 143,000 square feet for a period of five years. The sublease provided for monthly rent payments of approximately $60,000 (plus additional charges) through August 4, 2004, plus annual base-rent increases of up to 6%. On August 6, 2002 the Company entered into a settlement agreement with Landlord for the termination of the sublease. Pursuant to the settlement agreement, the Company paid Landlord a lump sum of approximately $490,000, Landlord returned a $100,264 security deposit to the Company, the Company paid $60,000 in commissions to certain real estate brokers, the Company was released from its further obligations under the sublease, and the Company and Landlord mutually released all liability with regard to the sublease to include the
complaint previously filed by the Company against Landlord in the Superior Court of California for Alameda County.
DELISTED STOCK
On January 16, 2001, the stockholders of the Company approved the Plan of Complete Liquidation and Dissolution of the Company and changed the corporate name from Pets.com, Inc., to IPET Holdings, Inc. On January 18, 2001, the Company closed its stock transfer books, discontinued recording transfers of Common stock and the Company’s common stock was delisted from the Nasdaq Stock Market. Since the close of trading on January 18, 2001, the certificates representing the Common Stock of the Company have not been assignable or transferable on the books of the Company and any distributions made by the Company will be made solely to the stockholders of record as of such final record date. The Company expects that its Common Stock will ultimately be deregistered under Rule 12g-4 of the Securities Exchange Act of 1934 in connection with the Company’s execution of the Plan of Complete Liquidation and Dissolution.
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 expenses, after filing our Certificate of Dissolution we sought relief from the Securities and Exchange Commission from the reporting requirements under the Exchange Act. Until such relief is granted we will continue to make obligatory Exchange Act filings. We anticipate that even if such relief is granted in the future, 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.
ACTIVITIES WHILE IN LIQUIDATION
The following table sets forth our unaudited liquidating-period activities data for the nine month period ended September 30, 2002 and for the period from November 5, 2000 to December 31, 2001. This unaudited periodic information has been derived from our unaudited financial statements and, in the opinion of management, includes all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of such information in accordance with generally accepted accounting principles for a company in voluntary liquidation for interim financial information.
On January 16, 2001, the Company’s stockholders approved the Company’s Plan of Complete Liquidation and Dissolution and on January 18, 2001 the Company filed a Certificate of Dissolution with the Delaware Secretary of State which became effective as of that date. In addition, on January 16, 2001, Company engaged Diablo Management Group to handle the remaining issues in connection with winding down and dissolution and retained Richard G. Couch of Diablo Management Group to act as sole director and Chief Executive Officer, President, Chief Financial Officer, Treasurer, and Secretary of the Company. Diablo Management Group currently handles all remaining affairs for IPET Holdings, Inc., including the final disposition of our remaining assets and settlement of outstanding liabilities.
Expenses and Income During Reporting Period. The Company has paid a monthly rent of approximately $60,000 under the terms of its sublease with Landlord on the Union City, California warehouse facility for seven months during the reporting period. On August 6, 2002 the Company entered into a settlement with Landlord pursuant to which the Company paid Landlord a lump sum of approximately $490,000, Landlord received a $100,264 security deposit to the Company, the Company paid $60,000 in commissions to certain real estate brokers, and the Company was released from its further obligations under the sublease. The Company has also retained the services of various professionals to manage and assist with the liquidation process. Liabilities of $180,115 for taxes and $550,000 for the settlement of lease obligations and related commissions were paid during the reporting period. All cash in excess of a minimum amount held for routine operating expenses was invested in interest-bearing accounts including money market funds, savings accounts and certificates of deposit.
On August 31, 2001, the sole director of the Company approved an initial cash distribution to be paid from net available assets in the amount of $0.09 per share to stockholders of record holding an aggregate of 34,741,080 shares of the Company’s common stock on the January 18, 2001 final record date. The Company distributed the cash payments to the stockholders of record on September 28, 2001.
On September 12, 2002, the sole director of the Company approved a liquidating cash distribution to be paid out of net available assets in the amount of $0.075 per share to stockholders of record holding an aggregate of 34,741,080 shares of the Company’s common stock on the January 18, 2001 final record date. The Company distributed the cash payments on September 27, 2002.
The Company has retained a contingency reserve which it believes will be adequate to meet its remaining legal obligations during the wind down period, which is expected to be completed in 2003. The statement of net assets in liquidation includes accrued expenses of $130,000 as of September 30, 2002, which amount incorporates an accrual of $100,000 for the contingent costs associated with an audit of the Company’s 2002 financial statements and the filing of an Annual Report on Form 10-K with the Securities and Exchange Commission for 2002 and certain other expenses associated with our wind down. Such accrual reduces the net assets in liquidation to $161,000 (approximately $0.005 per share) as of September 30, 2002. The Company may make a small, final liquidating distribution at the conclusion of its wind down.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
RISK FACTORS
This Quarterly Report on Form 10-Q contains certain forward looking statements, including statements concerning the Company’s future financial results from the settlement of liabilities, dissolution proceedings, and distribution of proceeds to stockholders. No assurance can be given that the amount to be received in liquidation will equal or exceed the price or prices at which the Common Stock traded prior to our dissolution. In addition, you should keep in mind that the risks described below are not the only risks that we face. The risks described below are the risks that we currently believe are material to the Company. However, additional risks not presently known to us, or risks that we currently believe are immaterial, may also impair our ability to distribute proceeds to our stockholders. You should also refer to the other information set forth in this Quarterly Report on Form 10-Q, including the discussions set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Business, as well as our financial statements and the related notes.
Our business, financial condition or results could be adversely affected by any of the following risks. If we are adversely affected by such risks, then the proceeds we plan to distribute to our stockholders may be adversely affected.
STOCKHOLDERS MAY BE LIABLE TO CREDITORS OF THE COMPANY FOR UP TO AMOUNTS RECEIVED FROM THE COMPANY IF THE COMPANY’S RESERVES ARE INADEQUATE.
A Certificate of Dissolution was filed with the State of Delaware and became effective as of January 18, 2001, dissolving the Company as of that date. Pursuant to the Delaware General Corporation Law, the Company will continue to exist for three years after the dissolution became effective or for such longer period as the Delaware Court of Chancery shall direct, for the purpose of prosecuting and defending suits against it and enabling the Company gradually to close its business, to dispose of its property, to discharge its liabilities and to distribute to its stockholders any remaining assets. Under the Delaware General Corporation Law, in the event the Company fails to create an adequate contingency reserve for payment of its expenses and liabilities during this three year period, each stockholder could be held liable for payment to the Company’s creditors for such stockholder’s pro rata share of amounts owed to creditors in excess of the contingency reserve. The liability of any stockholder would be limited, however, to the amounts previously received by such stockholder from the Company (and from any liquidating trust or trusts). Accordingly, in such event a stockholder could be required to return all distributions previously made to such stockholder. In such event, a stockholder could receive nothing from the Company under the Plan of Complete Liquidation and Dissolution. Moreover, in the event a stockholder has paid taxes on amounts previously received, a repayment of all or a portion of such amount could result in a stockholder incurring a net tax cost if the stockholder’s repayment of an amount previously distributed does not cause a commensurate reduction in taxes payable. There can be no assurance that the contingency reserve maintained by the Company will be adequate to cover any expenses and liabilities.
SHARES OF OUR SERIES A PREFERRED STOCK WILL BE ENTITLED TO SHARE ON A PRO-RATA BASIS IN ANY DISTRIBUTION OF FUNDS MADE TO HOLDERS OF OUR COMMON STOCK.
Pursuant to our Certificate of Designation of Rights, Preferences and Privileges of Series A Preferred Stock filed with the Secretary of State of Delaware on July 6, 2000, the 1,143,895 outstanding shares of our Series A Preferred Stock will be entitled to share on a pro-rata basis in the general distribution of proceeds remaining from the sale of our assets to be made to all Common stockholders, as if their shares of Series A Preferred Stock have been converted to an equal number of shares of Common Stock.
SUCCESS OF THE PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION DEPENDS ON QUALIFIED PERSONNEL TO EXECUTE IT.
The success of the Plan of Complete Liquidation and Dissolution depends in large part upon our ability to retain the services of qualified personnel to handle the sale of our remaining assets and settlement of remaining liabilities. Although we have retained the services of Diablo Management Group for this purpose, the retention of qualified personnel is particularly difficult under the Company’s current circumstances.
OUR STOCK TRANSFER BOOKS WERE CLOSED ON JANUARY 18, 2001, THE FINAL RECORD DATE, AFTER WHICH ANY TRADES WILL NOT BE RECORDED BY THE COMPANY.
We closed our stock transfer books and discontinued recording transfers of Common Stock at the close of business on January 18, 2001, the date of effectiveness of the Certificate of Dissolution we filed with the Delaware Secretary of State. Thereafter, certificates representing the Common Stock are not assignable or transferable on our books except by will, in testate succession or operation of law. The proportionate interests of all of our stockholders was fixed on the basis of their respective stock holdings at the close of business on the final record date of January 18, 2001, and any distributions made by the Company will 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 assignments by will, in testate succession or operation of law. For any other trades after the January 18, 2001 final record date, the seller and purchaser of the Common Stock will need to negotiate and rely on due-bill contractual obligations between themselves with respect to the allocation of stockholder proceeds arising from ownership of the shares.
OUR STOCK WAS DELISTED FROM THE NASDAQ STOCK MARKET ON JANUARY 18, 2001 AND IS SIGNIFICANTLY LESS LIQUID THAN BEFORE.
Our Common Stock was delisted from trading on the Nasdaq Stock Market on January 18, 2001 due to its filing of a Certificate of Dissolution with the State of Delaware. After this delisting, the ability of stockholders to buy and sell our shares has been materially impaired, and is limited primarily to over-the-counter quotation services, such as Pink Sheets, that handle high-risk ventures and are not regulated by the Securities and Exchange Commission.
AFTER THE COMPANY’S WIND-DOWN THERE MAY BE NO ADDITIONAL CASH TO DISTRIBUTE TO OUR STOCKHOLDERS AND IF THERE IS ADDITIONAL CASH TO DISTRIBUTE, THE TIMING OF ANY SUCH FUTURE DISTRIBUTION IS UNCERTAIN.
There is currently no firm timetable for the distribution of proceeds to our stockholders, because of contingencies inherent in winding up the Company’s business. The liquidation is expected to be concluded prior to the third anniversary of the filing of the Certificate of Dissolution in Delaware by a final liquidating distribution either directly to the stockholders or to a liquidating trust. The proportionate interests of all of our stockholders was fixed on the basis of their respective stock holdings at the close of business on the final record date of January 18, 2001, and any future distributions made by the Company will be made solely to stockholders of record on the close of business on January 18, 2001, except to reflect permitted transfers. We are, however, currently unable to predict the precise nature, amount or timing of any future distribution to stockholders. The actual nature, amount and timing of all distributions will be determined by our Board of Directors, in its sole discretion, and will depend in part upon our ability to resolve our remaining contingencies.
Uncertainties as to the precise net value of our non-cash assets and the ultimate amount of our liabilities make it impracticable to predict the aggregate net value ultimately distributable to stockholders. Claims, liabilities and expenses from operations (including costs associated with Diablo Management Group’s efforts to sell our remaining assets and settle our remaining liabilities, taxes, legal and accounting fees and miscellaneous office expenses) will continue to be incurred. These expenses will reduce the amount of cash available for ultimate distribution to stockholders. However, no assurances can be given that available cash and amounts received on the sale of assets will be adequate to provide for our obligations, liabilities, expenses and claims and to make cash distributions to stockholders. If such available cash and amounts received from the sale of assets are not adequate to provide for our obligations, liabilities, expenses and claims, we may not be able to distribute meaningful cash, or any cash, to our stockholders.
OUR INABILITY TO REACH CASH BREAK-EVEN AND OUR RESULTING DISSOLUTION COULD GIVE RISE TO SECURITIES CLASS ACTION CLAIMS AGAINST US, WHICH COULD DEPLETE THE PROCEEDS THAT ARE TO BE DISTRIBUTED TO STOCKHOLDERS.
Securities class action claims have been brought against companies in the past where the market price of the Company’s securities has fallen due to an inability of the Company to achieve operational profitability. Any such litigation could be very costly and divert our remaining resources from being available for distribution to our stockholders. Any adverse determination in this kind of litigation could also deplete our cash position, and reduce proceeds that would otherwise be distributed to our stockholders.
WE WILL CONTINUE TO INCUR THE EXPENSE OF COMPLYING WITH PUBLIC COMPANY REPORTING REQUIREMENTS.
Item 4. Controls and Procedures.
We have evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Securities Exchange Act of 1934 and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of Richard G. Couch, our Chief Executive Officer and Chief Financial Officer, within the 90-day period prior to the filing of this Quarterly Report on Form 10-Q. Mr. Couch has concluded, based on his review, that our disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. No significant changes were made to our internal controls or other factors that could significantly affect these controls subsequent to the date of Mr. Couch’s evaluation.
PART IIOTHER INFORMATION
ITEM 1. Legal Proceedings.
Pursuant to the settlement agreement between the Company and Landlord, on August 12, 2002, the Company dismissed the action it had filed against Landlord in the Superior Court of California for Alameda County concerning the Union City facility.
ITEM 2. Changes in Securities and Use of Proceeds.
None.
ITEM 3. Defaults Upon Senior Securities.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
ITEM 5. Other Information.
In accordance with Section 10A(i)(2) of the Securities Exchange Act of 1934, as added by Section 202 of the Sarbanes-Oxley Act of 2002, we are required to disclose the non-audit services that our sole director has approved Stempek and Associates, our external auditor, to perform. Non-audit services are defined in the Sarbanes-Oxley Act of 2002 as services other than those provided in connection with an audit or a review of the financial statements of a company. Our sole director approved the engagement of Stempek and Associates for the following non-audit services: tax matter consultations concerning federal, state and municipal taxes.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index.
(b) Current Reports on Form 8-K: We filed a Current Report on Form 8-K on September 16, 2002 with the Securities and Exchange Commission announcing that the sole director of the Company had approved a liquidating cash distribution to be paid out of net available assets of $0.075 per share to stockholders of record as of the Company’s final record date of January 18, 2001. On September 27, 2002, the Company distributed the initial cash distribution payments to the stockholders of record.
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 13, 2002
CERTIFICATIONS
I, Richard G. Couch, certify that:
1. I have reviewed this quarterly report on Form 10-Q of IPET Holdings, 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 our financial condition, results of operations and cash flows as of, and for, the periods presented in this quarterly report.
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14 and 15d-14) for the registrant and I have:
a) designed such disclosure controls and procedures to ensure that material information relating to IPET Holdings, Inc. is made known to me by others within our organization, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of our disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report; and
c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the filing date of this quarterly report.
5. I have disclosed, based on my most recent evaluation, to our external auditors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect our ability to record, process, summarize and report financial data and have identified for our external auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or others who have a significant role in our internal controls.
6. 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 my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
EXHIBIT INDEX