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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-QSB

þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2003ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
      OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______________   to   _______________


Commission File Number 0-27574

PowerCerv Corporation

(Name of small business issuer as specified in its charter)


Florida
    
    59-3350778(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)


400 North Ashley Drive,
Suite 2675, Tampa, Florida 33602
(Address of principal executive offices, including zip code)

(813) 226-2600
(Issuer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. Yesþ     Noo

As of May 16, 2003, there were 1,313,000 shares of the registrants common
stock, $.001 par value, outstanding.







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|                                                                  |                                                                  |  |  |  |  |  |  | 
|----------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I. FINANCIAL INFORMATION                                    
|Item 1. Financial Statements                                     
|                                                                  | Condensed Consolidated Balance Sheets                           
|                                                                  | Condensed Consolidated Statements of Operations (Unaudited)     
|                                                                  | Condensed Consolidated Statements of Cash Flows (Unaudited)     
|                                                                  | Notes to Condensed Consolidated Financial Statements (Unaudited)
|Item 2. Management Discussion and Analysis or Plan of Operations
|Item 3. Controls and Procedures                                  
|Part II. Other Information                                       
|Item 1. Legal Proceedings                                        
|Item 6. Exhibits and Reports on Form 8-K                         
|Signatures                                                       
|Certifications                                                   
|Ex-99.1 Certification of CEO & CFO                               



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PowerCerv Corporation
Form 10-QSB

Index

PagePart I. Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2003 (unaudited)
and December 31, 2002
    
    
    2Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2003 and 2002 (unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002 (unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    5-9Item 2. Managements Discussion and Analysis or Plan of Operations
    
    
    10-14Item 3. Controls and Procedures
    
    
    15Part II. Other InformationItem 1. Legal Proceedings
    
    
    16Item 6. Exhibits and Reports on Form 8-K
    
    
    16Signatures
    
    
    17Certifications
    
    
    18-19


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PowerCerv Corporation




Part I.   FINANCIAL INFORMATION




Item 1.   Financial Statements

PowerCerv Corporation




Condensed Consolidated Balance Sheets

(In thousands)


March 31, 2003
    
    December 31, 2002(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    60
    
    
    $
    245Other current assets
    
    
    221
    
    
    
    276Total current assets
    
    
    281
    
    
    
    521Notes receivable, net
    
    
    136
    
    
    
    136Total assets
    
    $
    417
    
    
    $
    657Liabilities and Shareholders DeficitCurrent liabilities:Accounts payable
    
    $
    18
    
    
    $
    194Accrued expenses
    
    
    468
    
    
    
    472Total current liabilities
    
    
    486
    
    
    
    666Shareholders deficit
    
    
    (69
    )
    
    
    (9
    )Total liabilities and
shareholders deficit
    
    $
    417
    
    
    $
    657


See accompanying notes to condensed consolidated financial statements.

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PowerCerv Corporation




Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)


Three months ended March 31,2003
    
    2002Revenues:License fees
    
    $
    
    
    
    $
    230Service fees
    
    
    
    
    
    
    730Total revenues
    
    
    
    
    
    
    960Costs and expenses:Cost of licenses
    
    
    
    
    
    
    72Cost of services
    
    
    
    
    
    
    301General and administrative
    
    
    59
    
    
    
    271Sales and marketing
    
    
    
    
    
    
    215Research and development
    
    
    
    
    
    
    259Work force reduction and other
    
    
    
    
    
    
    25Total costs and expenses
    
    
    59
    
    
    
    1,143Operating loss
    
    
    (59
    )
    
    
    (183
    )Interest income, net
    
    
    2
    
    
    
    6Loss before income taxes
    
    
    (57
    )
    
    
    (177
    )Income tax expense
    
    
    3
    
    
    
    Net loss
    
    $
    (60
    )
    
    $
    (177
    )Basic and diluted net loss per share
    
    $
    (0.05
    )
    
    $
    (0.13
    )Shares used in computing net loss per share:Basic
    
    
    1,313
    
    
    
    1,313Diluted
    
    
    1,313
    
    
    
    1,313


See accompanying notes to condensed consolidated financial statements.

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PowerCerv Corporation




Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


Three months ended March 31,2003
    
    2002Cash flows from operating activities:Net loss
    
    $
    (60
    )
    
    $
    (177
    )Adjustments to reconcile net lossTo net cash used in operating activities:Depreciation and amortization
    
    
    
    
    
    
    54Deferred revenue
    
    
    
    
    
    
    (123
    )Changes in assets and liabilities
    
    
    (146
    )
    
    
    (325
    )Net cash flows used in operating activities
    
    
    (206
    )
    
    
    (571
    )Cash flows from investing activities:Payment received on notes receivable
    
    
    21
    
    
    
    122Net cash flows used in investing activities
    
    
    21
    
    
    
    122Cash flows from financing activities:Net proceeds from issuance of preferred stock
    
    
    
    
    
    
    85Net cash flows provided by financing activities
    
    
    
    
    
    
    85Net decrease in cash and cash equivalents
    
    
    (185
    )
    
    
    (364
    )Cash and cash equivalents, beginning of period
    
    
    245
    
    
    
    635Cash and cash equivalents, end of period
    
    $
    60
    
    
    $
    271


See accompanying notes to condensed consolidated financial statements.

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PowerCerv Corporation




Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands)


1.       Organization and Operations

The condensed consolidated balance sheet of PowerCerv Corporation and its
subsidiary (collectively, the Company) as of March 31, 2003, and the
condensed consolidated statements of operations for the three months ended
March 31, 2003 and 2002 and the condensed consolidated statements of cash flows
for the three months ended March 31, 2003 and 2002 have been prepared by the
Company, without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 2003, and
for all periods presented have been made. The condensed consolidated balance
sheet at December 31, 2002, has been derived from the Companys audited
consolidated financial statements at that date.

On December 1, 2002, the Company completed the sale of substantially all
of its operating assets to PCV Acquisition, Inc., a subsidiary of ASA
International, Ltd (collectively referred to as ASA), a holding company of
vertical enterprise software solutions based in Framingham, Massachusetts. As a
result of this transaction, the Company has no current operations. Following
the closing, the Company has used its best efforts to settle its remaining
liabilities with the transaction proceeds and certain other receivables. The
Company plans to continue as a separate public entity, seek to merge with
another operating business and not compete in its former line of business;
however, there can be no assurance that these plans will be successfully
implemented. Until such a merger transaction is effected, there will be no
significant expected operations of PowerCerv.

Prior to December 1, 2002 the Company focused its resources, including
product development, marketing and sales efforts, on the needs and requirements
of small and medium size discrete manufacturing companies with annual revenues
between $5 million and $250 million in this market. In addition, PowerCerv
provided professional and business consulting services relating to its software
applications. The Company marketed its products and services throughout the
United States and also marketed its software products outside the United States
through distributors. PowerCerv Corporation and PowerCerv Technologies
Corporation are herein referred to as the Company.

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 Securities and
Exchange Commission (SEC) rules and regulations. These condensed consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 2002, included in the Companys 2002 Annual Report on Form 10-KSB filed
with the SEC on April 15, 2003 (2002 Annual Report).

The results of operations for the three months ended March 31, 2003, are
not necessarily indicative of results that may be expected for any other
interim period or for the full fiscal year.

The report of the Companys independent auditors for the year ended
December 31, 2002 contains an explanatory paragraph as to the substantial doubt
of the Companys ability to continue as a
going concern. No adjustments have been made to the accompanying
financial statements to give effect to this uncertainty.

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2.       Significant Accounting Policies

Revenue Recognition

Prior to December 1, 2002, the Company recognized revenue in accordance
with the American Institute of Certified Public Accountants (AICPA)
Statement of Position 97-2, Software Revenue Recognition (SOP 97-2), as
amended by Statement of Position 98-4 (SOP 98-4), Deferral of the Effective
Date of a Provision of SOP 97-2. Revenue was recognized from licenses of the
Companys software products when the contract has been executed, the product(s)
has been shipped, collectibility is probable and the software license fees are
fixed or determinable. In the event that the contract provided for multiple
elements (e.g., software products, post-contract customer support, consulting
services), the total fee was allocated to these elements based on
vendor-specific objective evidence of fair value. If any portion of the
license fees was subject to forfeiture, refund or other contractual
contingencies, the Company would postpone revenue recognition until these
contingencies have been removed. The Company generally accounted for
consulting and education services separate from software license fees for those
multi-element arrangements where services were a separate element and are not
essential to the customers functionality requirements and there is
vendor-specific objective evidence of fair value for these services. If any
portion of the license fees is subject to forfeiture, refund or other
contractual contingencies, the Company would postpone revenue recognition until
these contingencies have been removed. Historically, product returns and
allowances have been immaterial. Revenue from support and maintenance
activities was recognized ratably over the term of the maintenance period and
the unrecognized portion is recorded as deferred revenue.

New Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141,
Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of the Statement
apply to goodwill and other intangible assets acquired between July 1, 2001 and
the effective date of SFAS 142. The adoption of this statement did not have a
significant effect on the Companys results of operations or financial
position. As of March 31, 2003, goodwill amounted to $0.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The provisions
of the statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The adoption of this statement on January
1, 2002 did not have a significant effect on the Companys results of
operations or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged. Management does not believe that adoption of this
pronouncement will have a material effect on the Companys financial position
or results of operations.

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In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which (i) amends SFAS 123, Accounting
for Stock-Based Compensation, to provide alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation (ii) amends the disclosure provisions of
SFAS 123 to require prominent disclosure about the effects on reported net
income of an entitys accounting policy decisions with respect to stock-based
employee compensation and (iii) requires disclosure about those effects in
interim financial information. Items (ii) and (iii) of the new requirements in
SFAS 148 are effective for financial statements for fiscal years ending after
December 15, 2002. There were no equity instruments issued to employees
therefore this adoption of the standard has no impact on the financial
statements.

In November 2002, the FASB issued FASB Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantors, including Indirect
Guarantors of Indebtedness to Others(FIN 45). FIN 45 creates new disclosure
and liability recognition requirements for certain guarantees, including
obligations to stand ready to perform. The initial recognition and measurement
requirements of FIN 45 are effective prospectively for guarantees issued or
modified after December 31, 2002, and the disclosure requirements are effective
for financial periods ending after December 31, 2002. In accordance with FIN
45, the Company has disclosed guarantee information. There are no guarantees
therefore the adoption of this standard has no impact on the financial
statements.

3.       Net Loss Per Share Data

The following table sets forth the computation of basic and diluted loss
per share (EPS) for the periods indicated:

(dollars in thousands, except per share amounts)Three Months EndedMarch 31,2003
    
    2002Basic:Net loss
    
    $
    (60
    )
    
    $
    (177
    )Average shares outstanding
    
    
    1,313
    
    
    
    1,313Basic EPS
    
    $
    (0.05
    )
    
    $
    (0.13
    )Diluted:Net loss
    
    $
    (60
    )
    
    $
    (177
    )Average shares outstanding
    
    
    1,313
    
    
    
    1,313Diluted EPS
    
    $
    (0.05
    )
    
    $
    (0.13
    )


Common stock equivalents in the three-month periods ended March 31, 2003
and 2002, were anti-dilutive due to the net losses sustained by the Company
during these periods, thus the diluted net loss per share in these periods is
the same as the basic net loss per share.

4.       Commitments

The Company has entered into employment agreements with certain of its
executive officers. Information regarding these agreements is available in the
Companys 2002 Annual Report.

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Indemnifications

The Company indemnified its officers and directors against costs and
expenses related to shareholder and other claims (i.e. only actions taken in
their capacity as officers and directors) that are not covered by the Companys
directors and officers insurance policy. This indemnification is ongoing and
does not include a limit on the maximum potential future payments, nor are
there any recourse provisions or collateral that may offset the cost. As of
March 31, 2003, the Company has not recorded a liability for any obligations
arising as a result of these indemnifications.

5.       Contingencies

The Company, in the normal course of business, may also be subject
to miscellaneous legal proceedings, which management does not believe
will have a significant impact on the financial statements.

6.       Income Taxes

The Companys federal income tax returns for the years ended December 31,
1996 and 1995 were subject to a routine examination by the Internal Revenue
Service (IRS) that resulted in an assessment of approximately $66,000 of
federal tax. The Company recorded a charge for estimated federal and state
income tax and related interest costs upon receiving the notice of assessment
in 2000. During October 2002, the Company settled this matter with the IRS by
agreeing to pay an additional income tax liability of $63,000 plus applicable
interest through the date of payment. During April 2003, the Company received
a Statement of Adjustment from the IRS regarding the assessment totaling
$183,000 which is included in accrued expenses. This settlement amount is
consistent with the amount provided for federal taxes and interest in an
earlier period. The Company plans to continue addressing this matter with the
IRS in an effort to obtain a reduction in the balance due; however there can be
no assurance that the Company will be successful.

7.       Segment Reporting

The Company has identified its operating segments as its services and
license product segments. In 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information. The services segment
provides consulting, education, support and maintenance services and the
license product segment provides Integrated Enterprise Response Software
Solutions with innovative e-Commerce application products.

The following tables provide the various segment data (dollars in
thousands):

For the Three-month Period Ended March 31, 2003LicenseProduct
    
    Services
    
    Unallocated
    
    TotalRevenues from external
Customers
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    Segment loss
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    (60
    )


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For the Three-month Period Ended March 31, 2002LicenseProduct
    
    Services
    
    Unallocated
    
    TotalRevenues from external
Customers
    
    $
    230
    
    
    $
    730
    
    
    
    
    
    
    $
    960Segment profit (loss)
    
    
    (316
    )
    
    
    429
    
    
    
    (290
    )
    
    
    (177
    )


There were no transactions between segments. The unallocated amounts are
made up of the following items:

For the Three-month PeriodEnded March 31,2003
    
    2002General and administrative costs
    
    $
    (59
    )
    
    $
    (271
    )Work force reduction
    
    
    
    
    
    
    (25
    )Interest income (expense), net
    
    
    2
    
    
    
    6Income tax expense
    
    
    (3
    )
    
    
    $
    (60
    )
    
    $
    (290
    )


8.       Work Force Reduction and Other

During the first quarter of 2002, the Company announced and completed a
minor work force reduction. The Company recorded a restructuring charge of $25
related to the severance costs of 3 employees (2 non-senior level services
employees and 1 non-senior level research and development employee) and
relocation costs. As of March 31, 2003, these costs were paid.

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PowerCerv Corporation




Item 2.   Management Discussion and Analysis or Plan of Operations

(dollars in thousands)


Overview

On December 1, 2002, the Company completed the sale of substantially all
of its operating assets to PCV Acquisition, Inc., a subsidiary of ASA
International, Ltd (collectively referred to as ASA), a holding company of
vertical enterprise software solutions based in Framingham, Massachusetts.
This transaction was approved by PowerCervs shareholders on November 26, 2002.
In the future, the Company may merge with another operating company. Until
such a merger transaction is effected, there will be no significant expected
operations of PowerCerv.

Prior to December 1, 2002 the Company focused its resources, including
product development, marketing and sales efforts, on the needs and requirements
of small and medium size discrete manufacturing companies with annual revenues
between $5 million and $250 million in this market. In addition, PowerCerv
provided professional and business consulting services relating to its software
applications. The Company marketed its products and services throughout the
United States and also marketed its software products outside the United States
through distributors. PowerCerv Corporation and PowerCerv Technologies
Corporation are herein referred to as the Company.

This Quarterly Report on Form 10-QSB and any documents incorporated herein
by reference contain forward-looking statements that have been made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about the Companys industry, managements beliefs and certain
assumptions made by the Companys management. Words such as anticipates,
expects, intends, plans, believes, seeks, estimates, variations of
such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions
that are difficult to predict; therefore, actual results may differ materially
from those expressed or forecasted in any such forward-looking statements.
Forward-looking statements include, without limitation, statements regarding
the extent and timing of future revenues and expenses and customer demand for
the Companys products and services as described in the Companys 2002 Annual
Report on Form 10KSB filed with the SEC on April 15, 2003, under Managements
Discussion and Analysis of Financial Condition and Results of Operations 
Plan of Operations  Forward-Looking Statements and Associated
Considerations;
Fluctuations in Quarterly Activity and Results of
Operations; Competition; Economic
and Market Condition Risks; Lengthy Sales Cycle; Ability to Manage Change;
Liquidity; Availability of Consulting Personnel, Dependence on Product Development
and Associated Risks, Dependence on New Products; Dependence on
PowerBuilder® and others; Dependence on Proprietary Technology; Risks of
Third-Party Claims for Infringement; Expansion of Indirect Channels;
Potential for Channel Conflict; Voting Control by
Management; Dependence on Key Personnel; and Possible Volatility of Stock Price.
The Company assumes no obligation to update any such forward-looking statement.
It is important to note that the Companys actual results could differ
materially from those in such forward-looking statements.

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Results of Operations

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys revenues derived from license fees and
service fees:

Revenues
    
    Three months ended March 31,2003
    
    Change
    
    2002License fees
    
    $
    
    
    
    
    (100
    )%
    
    $
    230Percentage of total revenues
    
    
    
    
    
    
    
    
    
    
    24
    %Service fees
    
    $
    
    
    
    
    (100
    )%
    
    $
    730Percentage of total revenues
    
    
    
    
    
    
    
    
    
    
    76
    %


License Fees. Prior to December 1, 2002, the Companys license fees were
derived from licensing the Companys application products. In addition, any
royalty fees earned were included in license fees. The Company established its
licensing fees using a tiered pricing approach based on the number of
concurrent servers and users. Source code licenses were available at an
additional cost.

License fees decreased 100% in the first quarter of 2003 compared to the
first quarter of 2002. The decrease was due to the sale of the Companys
operations to ASA.

Service fees.Prior to December 1, 2002, the Companys service fees
consisted of revenue from consulting, education and support and maintenance
services for the Companys application software licenses. Consulting services
were primarily provided on a time and materials basis, education services were
generally priced on a per-student basis and annual support and maintenance were
based on a percentage of related license fees.

Service fees decreased 100% in the first quarter of 2003 compared to the
first quarter of 2002 as a result of the sale to ASA.

Costs and expenses

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys costs associated with its license fees
and services:

Cost of revenues:
    
    Three months ended March 31,2003
    
    Change
    
    2002Cost of licenses
    
    $
    
    
    
    
    (100
    )%
    
    $
    72Gross profit percentage
    
    
    
    
    
    
    
    
    
    
    69
    %Cost of services
    
    $
    
    
    
    
    (100
    )%
    
    $
    301Gross profit percentage
    
    
    
    
    
    
    
    
    
    
    59
    %


Cost of Licenses. Prior to December 1, 2002, the cost of licenses
consisted primarily of production costs, royalties associated with certain
modules of the Companys application products and the
amortization of intangible assets. The cost of license decreased 100% in the
first quarter of 2003 compared to the first quarter of 2002 due to the sale to
ASA.

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Cost of Services. Prior to December 1, 2002, the cost of services
consisted primarily of compensation and travel costs associated with providing
consulting, product support and maintenance, technical services and education.
The cost of services decreased 100% in the first quarter of 2003 compared to
the first quarter of 2002 as a result of the sale to ASA.

The following table sets forth, for the periods indicated, certain
financial data regarding the Companys operating expenses:

Operating expenses:
    
    Three months ended March 31,2003
    
    Change
    
    2002General and administrative
    
    $
    59
    
    
    
    (78
    )%
    
    $
    271Percentage of total revenues
    
    
    
    
    
    
    
    
    
    
    28
    %Sales and marketing
    
    
    
    
    
    
    (100
    )%
    
    
    215Percentage of total revenues
    
    
    
    
    
    
    
    
    
    
    22
    %Research and development
    
    
    
    
    
    
    (100
    )%
    
    
    259Percentage of total revenues
    
    
    
    
    
    
    
    
    
    
    27
    %


General and Administrative (G&A).G&A expenses primarily include
accounting, legal and related corporate expenses. The decrease in G&A expenses
for the three-month period ended March 31, 2003, compared to the three-month
period ended March 31, 2002, resulted from the sale of the Companys operations
to ASA.

Sales and Marketing. Prior to December 1, 2002, sales and marketing
expenses primarily consisted of compensation paid to sales and marketing
personnel; costs of marketing, including direct mail and telemarketing
activities; and related communications costs. Sales and marketing expense
decreased 100% in the first quarter of 2003 compared to the first quarter of
2002 due to the sale to ASA.

Research and Development(R&D). Prior to December 1, 2002, R&D costs
consisted primarily of compensation and related facilities expenses, software
and equipment costs associated with developing, maintaining and enhancing the
Companys products. Historically, the Company did not capitalize any internal
R&D costs as the costs incurred during the period between the point in time
that technological feasibility is established and a product is released to the
market were insignificant. R&D costs decreased 100% in the first quarter of
2003 compared to the first quarter of 2002 due to the sale to ASA.

Work Force Reduction and Other Charges

During the first quarter of 2002, the Company announced and completed a
minor work force reduction. The Company recorded a restructuring charge of $25
related to the severance costs of 3 employees (2 non-senior level services
employees and 1 non-senior level research and development employee) and
relocation costs. As of March 31, 2003, these costs were paid.

Income taxes.

The Companys federal income tax returns for the years ended December 31, 1996
and 1995 were subject to a routine examination by the Internal Revenue Service
(IRS) that resulted in an assessment of approximately $66,000 of federal tax.
The Company recorded a charge for estimated federal and state income tax and
related interest costs upon receiving the notice of assessment in 2000. During
October 2002, the Company settled this matter with the IRS by agreeing to pay
an additional income tax liability of $63,000 plus applicable interest through
the date of payment. During April 2003, the Company received a Statement of
Adjustment from the IRS regarding the assessment totaling $183,000. This
settlement amount is consistent with the amount provided for federal taxes and
interest in an earlier
period. The Company plans to continue addressing this matter with the IRS in
an effort to obtain a reduction in the balance due; however there can be no
assurance that the Company will be successful.

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Liquidity and Capital Resources

PowerCerv is dependent on identifying an acceptable merger candidate in
order to continue as a going concern. PowerCervs auditors have issued a
going concern opinion on the financial statements for the year ended December
31, 2002, indicating that the Company had current liabilities in excess of its
current assets and had sold its principal business assets on December 1, 2002
and ceased revenue generating activities on that date. These factors raise
substantial doubt in PowerCervs ability to continue as a going concern. If
PowerCerv is unable to identify acceptable merger candidates, it is unlikely
that PowerCerv will remain as a viable going concern.

The following tables sets forth, for the periods indicated, certain
financial data regarding the Companys working capital balances, cash and cash
equivalents, cash used in operating activities, cash provided by investing
activities and cash provided by financing activities:

As ofMarch 31,
    
    
    
    
    
    December 31,2003
    
    Change
    
    2002Working capital deficit
    
    $
    (205
    )
    
    
    (41
    )%
    
    $
    (145
    )Cash and cash equivalents
    
    $
    60
    
    
    
    (76
    )%
    
    $
    245


Cash and cash equivalents decreased as of March 31, 2003, compared to
December 31, 2002, due to discontinued operations and losses for the quarter.

For theThree months ended March 31,2003
    
    Change
    
    2002Cash flows used in operating activities
    
    
    (206
    )
    
    
    64
    %
    
    
    (570
    )Cash flows provided by investing activities
    
    
    21
    
    
    
    (83
    )%
    
    
    122Cash flows provided by financing activities
    
    
    
    
    
    
    (100
    )%
    
    
    85


For the three-month period ended March 31, 2003, cash used by operating
activities totaled $206 due principally to no significant operations, resulting
losses for the quarter and the timing of payments and cash collections.

The Companys cash provided by investing activities totaled $21 and $122
for the three-month periods ended March 31, 2003 and 2002, respectively,
principally due to payments received on notes receivable.

The Companys cash provided by financing activities totaled $85 for the
three-month period ended March 31, 2002, due to payment received on notes
receivable associated with convertible preferred stock issued in 2001.

At March 31, 2003, the Companys primary source of liquidity consisted of
its cash and cash equivalents balance of $60.

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##### Table of Contents



To date, inflation has not had a material effect on the Companys
financial results. There can be no assurance, however, that inflation may not
adversely affect the Companys financial results in the future.

See Liquidity and Capital Resources and Forward Looking Statements and
Associated ConsiderationsLiquidity as set forth in the Companys 2002 Annual
Report.

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##### Table of Contents



PowerCerv Corporation




Item 3.   Controls and Procedures

(dollars in thousands)


ITEM 3.       CONTROLS AND PROCEDURES.

As
required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
Exchange Act), the Company carried out an evaluation of the effectiveness of
the design and operation of the disclosure controls and procedures within the
90 days prior to the filing date of this report. This evaluation was carried
out under the supervision and with the participation of the Companys Chairman.
Based upon that evaluation, the Chairman concluded that the disclosure
controls and procedures are effective in timely alerting management to material
information relating to the Company required to be included in our periodic SEC
filings. There have been no significant changes in the internal controls or in
other factors that could significantly affect internal controls subsequent to
the date the evaluation was carried out.

Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in
the Companys reports
filed or submitted under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in the Companys
reports filed under the Exchange Act is accumulated and communicated to the
Chairman, to allow timely decisions regarding required disclosure.

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##### Table of Contents



PowerCerv Corporation




Part II.   Other Information




Item 1.     Legal Proceedings

The Company, in the normal course of business, may also be subject
to miscellaneous legal proceedings.




Item 6.     Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------



| |  | 99.1       Certification of Chairman pursuant to 18 U.S.C. Section 1350.
| |  | ------------------------------------------------------------------------



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

On May 19, 2003, the Company filed a report on Form 8-K to report a change in
its principal independent accountants and the resignation of the Companys CEO
who will remain on the Companys Board of Directors.

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##### Table of Contents



PowerCerv Corporation

Form 10-QSB

(for the quarterly period ended March 31, 2003)




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.

POWERCERV CORPORATIONDate: May 20, 2003
    
    /s/ Marc J. FratelloMarc J. Fratello,Chairman, Principal Financial Officer
and Principal Accounting Officer
(Duly Authorized Officer)


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##### Table of Contents



Rider A




Certifications

I, Marc J. Fratello, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of PowerCerv
Corporation (the Registrant);

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.     I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and 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 conclusions about the effectiveness
of the disclosure controls and procedures based on the evaluation as of
the Evaluation Date;

5.     I have disclosed, based on my 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.     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 the most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

May 20, 2003/s/ Marc J. FratelloName:
    
    Marc J. FratelloTitle:
    
    Chairman of the
Board,(Principal Financial Officer and Principal Accounting
Officer)


18