COTELLIGENT, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State of incorporation) |
94-3173918 (I.R.S. ID) |
655 Montgomery Street, Suite 1000, San Francisco, CA 94111
(Address of principal executive offices)
(415) 477-9900
(Registrant’s telephone number, including area code)
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 by checkmark whether the registrant is an accelerated filer (as defined in Rule 123-2 of the Act).
Yes No X
At May 12, 2004, there were 24,861,620 shares of common stock outstanding.
Item 4 of the Form 10/Q filed by the
Company on May 17, 2004 is hereby amended and restated as follows.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation of
the effectiveness of the design and operation of the Company’s disclosure controls
and procedures as of March 31, 2004 was carried out by the Company under the supervision
and with the participation of the Company’s management, including the Chief Executive
Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and
procedures as of the end of the period covered by this report were not designed nor were
functioning effectively to provide reasonable assurance that the information required to
be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms. The identified weakness in internal control over financial
reporting and in the disclosure controls is described below under the heading Change in
Internal Control over Financial Reporting.
Change in Internal Control over FinancialReporting
In connection with the audit for the fiscal year ended December 31, 2003, the Company’s independent auditors, KPMG LLP, identified a reportable condition in internal control that KPMG LLP considered to be a material weakness under standards established by the American Institute of Certified Public Accountants.
The material weakness noted by KPMG occurred in the year ended December 31, 2003 and was the reason why KPMG identified an audit adjustment that reduced an accrual for income taxes by $2.549 million.
The Company reflected in its financial statements included in annual reports on Form 10-K for prior years the $2,618 accrual for income taxes related to certain income tax contingencies. The Company continued to maintain the accrual for income taxes while the statute of limitations for the tax years of the respective contingencies remained open.
In connection with its 2003 audit, KPMG concluded that the income tax accrual should be reduced by $2,549 because the Company had sufficient net operating losses available to apply against the tax contingencies. KPMG pointed to the fact that the Company continued to have operating losses in years subsequent to the years related to the tax contingencies and to the more recent change in tax law allowing operating losses to be carried back five years.
The Company understands that KPMG determined that the accounting adjustment had not been identified by the Company because the Company failed to monitor business activities and changing circumstances to identify events that necessitate a more in-depth written and contemporaneous analysis or revaluation of prior management judgments and accounting estimates.
The Company addressed KPMG’s comment regarding its failure to monitor business activities and changing circumstance in order to identify events that necessitate a more in-depth written and contemporaneous analysis or revaluation of prior management judgments and accounting estimates. Within one month after receiving KPMG’s comment, the Company modified its internal control to require a written analysis prior to the filing of each quarter’s Form 10-Q and the Form 10-K that identifies changes in the Company’s business activities and changing circumstances and considers potential revaluation of prior management judgments and accounting estimates. This analysis is applied to those areas of accounting identified under Critical Accounting Estimates on the Form 10-K. This analysis was performed in May 2004, in relation and prior to the filing of the Form 10-Q for the quarter ended March 31, 2004, filed with the Securities and Exchange Commission May 17, 2004.
In addition, immediately after receiving KPMG’s comment, the Company prepared a written analysis to support the $2,549 million reduction to the accrual for income taxes prior to the filing of Form 10-K for the year ended December 31, 2003.
| (a) Exhibits |
| 31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act** |
| 31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act** |
| 32.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
| 32.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
| ** Filed herewith. |
| (b) Reports on Form 8-K |
| Form8-K/A filed May 3, 2004 with the Securities and Exchange Commission in
connection with amending Items 7(a) and (b) related to the acquisition of OnSite Media, Inc. |
| Form 8-K filed May 14, 2004 with the Securities and Exchange Commission in
connection with press release announcing the appointment of Harlan Kleiman to Cotelligent's Board of Directors. |
| Form 8-K filed June 14, 2004 with the Securities and Exchange Commission in
connection with press release announcing that James Lavelle, CEO of Cotelligent, was interviewed by CEOCast.com on June 7, 2004. |
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 12, 2004 | COTELLIGENT, INC. /s/ Curtis J. Parker —————————————— Curtis J. Parker Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit 31.1
Certifications Pursuant
to Section 302
of the Sarbanes-Oxley Act of 2002
I, James R. Lavelle, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A (Amendment No. 1) of Cotelligent, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others with those entities, particularly during the period in which this report is being prepared:
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting: and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation to the registrant’s auditors and the audit committee of the registrant’s board of directors;
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 12, 2004
| /s/ James R. Lavelle —————————————— James R. Lavelle Chairman of the Board and Chief Executive Officer |
Exhibit 31.2
Certifications Pursuant
to Section 302
of the Sarbanes-Oxley Act of 2002
I, Curtis J. Parker, certify that:
1. I have reviewed this quarterly report on Form 10-Q/A (Amendment No. 1) of Cotelligent, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others with those entities, particularly during the period in which this report is being prepared:
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting: and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation to the registrant’s auditors and the audit committee of the registrant’s board of directors;
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 12, 2004
| /s/ Curtis J. Parker —————————————— Curtis J. Parker Executive Vice President and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF CHIEF
EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, James R. Lavelle, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, Cotelligent, Inc.‘s Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q/A (Amendment No. 1) fairly presents in all material respects the financial condition and results of operations of Cotelligent, Inc.
| Date: November 12, 2004 | By: /s/ James R. Lavelle —————————————— James R. Lavelle Chairman of the Board and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF CHIEF
EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
I, Curtis J. Parker, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, Cotelligent, Inc.‘s Quarterly Report on Form 10-Q/A (Amendment No. 1) for the period ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q/A (Amendment No. 1) fairly presents in all material respects the financial condition and results of operations of Cotelligent, Inc.
| Date: November 12, 2004 | By: /s/ Curtis J. Parker —————————————— Curtis J. Parker Executive Vice President and Chief Financial Officer |