UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ______________
Commission File Number 333-119566
DYNAMIC ALERT LIMITED
(Exact name of registrant as specified in its charter)
| Nevada | | 98-0430746 |
| State or other jurisdiction of | | (I.R.S. Employer |
| incorporation or organization | | Identification No.) |
1414 Eighth Street S.W., Suite 260, Calgary, Alberta T2R 1J6, Canada
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (403) 399-9047
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company X
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No X
Number of shares outstanding of the registrant’s class of common stock as of November 5, 2009: 80,000,000
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
Balance Sheets | F-2 |
| | |
Interim Statements of Operations | F-3 |
| | |
Interim Statements of Cash Flows | F-4 |
| | |
Interim Statement of Changes in Stockholders’ (Deficit) | F-5 |
| | |
Notes to Interim Financial Statements | F-6 to F-7 |
Item 2. Management’s Discussion and Analysis 10
Item 3. Quantitative and Qualitative Disclosure about Market Rick 11
Item 4. Controls and Procedures 11
Item 4(A) T. Controls and Procedures 11
PART II – OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Not Applicable 12
Item 3. Defaults upon Senior Securities – Not Applicable 12
Item 4. Submission of Matters to a Vote of Security Holders – Not Applicable 12
Item 5. Other Information 12
Item 6. Exhibits ; 12
SIGNATURES ; 13
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DYNAMIC ALERT LIMITED
INTERIM FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
| | Page |
| | |
| Financial Statements: | |
| | |
Balance Sheets | F-2 |
| | |
Interim Statements of Operations | F-3 |
| | |
Interim Statements of Cash Flows | F-4 |
| | |
Interim Statement of Changes in Stockholders’ (Deficit) | F-5 |
| | |
Notes to Interim Financial Statements | F-6 to F7 |
DYNAMIC ALERT LIMITED
BALANCE SHEETS
| | | September 30, 2009 (Unaudited) | | June 30, 2009 (See Note 1) |
| | | | | |
| ASSETS | | | | |
| | | | | |
| Current | | | | |
| Cash | $ | - | $ | 170 |
| Prepaid expenses | | 2,006 | | 679 |
| Total Current Assets | | 2,006 | | 849 |
| | | | | |
| Computer Equipment | | - | | 823 |
| | | | | |
| TOTAL ASSETS | $ | 2,006 | $ | 1,672 |
| | | | | |
| | | | | |
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | | | | |
| | | | | |
| LIABILITIES | | | | |
| | | | | |
| Current | | | | |
| Accounts payable | $ | 1,550 | $ | 5,803 |
| Accrued liabilities | | 9,100 | | 9,000 |
| Total Current Liabilities | | 10,650 | | 14,803 |
| | | | | |
| STOCKHOLDERS’ (DEFICIT) | | | | |
| | | | | |
| Capital Stock | | | | |
| Authorized: | | | | |
250,000,000 common shares, par value $0.001 per share 10,000,000 preferred shares, par value $0.001 per share | | | | |
| | | | | |
| Issued and outstanding: | | | | |
| 80,000,000 common shares | | 80,000 | | 80,000 |
| Additional paid-in capital | | 51,185 | | 45,585 |
| Accumulated comprehensive income | | 6,153 | | 6,153 |
| Accumulated (Deficit) | | (145,982) | | (144,869) |
| Total Stockholders’ (Deficit) | | (8,644) | | (13,131) |
| | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) | $ | 2,006 | $ | 1,672 |
The accompanying notes are an integral part of these statements.
F-2
DYNAMIC ALERT LIMITED
INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
| | | Three-month Period ending September 30, 2009 | | Three-month Period ending September 30, 2008 |
| | | | | |
| Revenue | $ | 3,840 | $ | - |
| | | 3,840 | | - |
| Expenses | | | | |
| Depreciation and amortization | | - | | 388 |
| Office and administration | | 512 | | 4,066 |
| Professional Fees | | 4,818 | | 9,137 |
| | | 5,330 | | 13,591 |
| | | | | |
| Net (Loss) from Operations | | (1,490) | | (13,591) |
| | | | | |
| Other Income and Expenses | | | | |
| Gain on sale of assets | | 377 | | - |
| | | 377 | | - |
| | | | | |
| Net (Loss) For The Period | $ | (1,113) | $ | (13,591) |
| | | | | |
| | | | | |
| Basic And Diluted Loss Per Share | $ | Nil | $ | Nil |
| | | | | |
| | | | | |
| Weighted Average Number of Shares Outstanding | | 80,000,000 | | 80,000,000 |
| | | | | |
The accompanying notes are an integral part of these statements.
F-3
DYNAMIC ALERT LIMITED
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
| | | Three-month period ending September 30, 2009 | | Three-month period ending September 30, 2008 |
| | | | | |
| Cash Flows from Operating Activities | | | | |
| Net (loss) for the period | $ | (1,113) | $ | (13,591) |
| | | | | |
| Adjustments to Reconcile Net Profit (Loss) to Net Cash Provided by (Used in) Operating Activities | | | | |
| Gain on sale of assets | | (377) | | - |
| Prepaid expenses | | (1,327) | | 125 |
| Depreciation and amortization | | - | | 387 |
| Accounts payable and accrued liabilities | | (4,153) | | 2,394 |
| Net Cash (Used in) Operating Activities | | (6,970) | | (10,685) |
| | | | | |
| Cash Flows from Investing Activities | | | | |
| Disposal of capital assets | | 1,200 | | - |
| Net Cash Provided by Investing Activities | | 1,200 | | - |
| | | | | |
| Cash Flows From Financing Activities | | | | |
| Increase in additional paid-in capital | | 5,600 | | |
| Foreign currency translation adjustment | | - | | (19) |
| Net Cash Provided by (Used in) Financing Activities | | 5,600 | | (19) |
| (Decrease) in Cash during the Period | | (170) | | (10,704) |
| | | | | |
| Cash, Beginning Of Period | | 170 | | 26,903 |
| | | | | |
| Cash, End Of Period | $ | - | $ | 16,199 |
| | | | | |
| | | | | |
| Supplemental Disclosure Of Cash Flow Information | | | | |
| Cash paid for: | | | | |
| Interest | $ | - | $ | - |
| Income taxes | $ | - | $ | - |
The accompanying notes are an integral part of these statements.
F-4
DYNAMIC ALERT LIMITED
STATEMENT OF STOCKHOLDERS’ EQUITY
For the Period from July 1, 2008 to September 30, 2009
| | | | | CAPITAL STOCK | | | ACCUMULATED | |
| | | | | | | ADDITIONAL | | | COMPRE- | |
| | PREFERRED | | COMMON | | | PAID-IN | ACCUMULATED | | HENSIVE | |
| | SHARES | AMOUNT | SHARES | | AMOUNT | CAPITAL | (DEFICIT) | | INCOME (LOSS) | TOTAL |
| | | | | | | | | | | | | | | | |
| Balance, July 1, 2008 | - | $ | - | 80,000,000 | $ | 80,000 | $ | 45,000 | $ | (109,181) | $ | 6,235 | $ | | 22,054 |
| | | | | | | | | | | | | | | | |
| Foreign currency translation adjustment | - | | - | - | | - | | - | | - | | (82) | | | (82) |
| Increase in additional paid-in capital | - | | - | - | | | | 585 | | - | | - | | | 585 |
| | | | | | | | | | | | | | | | |
| Net loss for the year | - | | - | - | | - | | - | | (35,688) | | - | | | (35,688) |
| | | | | | | | | | | | | | | | |
| Balance June 30, 2009 | - | | - | 80,000,000 | | 80,000 | | 45,585 | | (144,869) | | 6,153 | | | (13,131) |
| | | | | | | | | | | | | | | | |
| Increase in additional paid-in capital | - | | - | - | | | | 5,600 | | - | | | | | 5,600 |
| | | | | | | | | | | | | | | | |
| Net (loss) for the period | - | | - | - | | - | | - | | (1,113) | | - | | | (1,113) |
| | | | | | | | | | | | | | | | |
Balance, September 30, 2009 | - | $ | - | 80,000,000 | $ | 80,000 | $ | 51,185 | $ | (145,982) | $ | 6,153 | $ | | (8,644) |
The accompanying notes are an integral part of these statements.
F-5
DYNAMIC ALERT LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
Note 1 Basis of Presentation
While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows in the interim periods presented. Except as disclosed below, these interim financial statements follow the same accounting policies and methods of their application as Dynamic Alert Limited’s audited June 30, 2009 annual financial statements. It is suggested that these interim financial statements be read in conjunction with Dynamic Alert Limited’s June 30, 2009 audited financial statements.
The information as of June 30, 2009 is taken from the audited financial statements of this date.
Note 2 Basis of Presentation – Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates our continuation as a going concern. However, the Company has negative working capital and a stockholders’ deficit and has losses to date of approximately $146,000. These matters raise substantial doubt about our ability to continue as a going concern. In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon the Company’s ability to meet its financing requirements, raise additional capital, and the success of its future operations. The Company is seeking additional means of financing to fund its business plan. There is no assurance that the Company will be successful in raising sufficient funds to assure the eventual profitability of the Company. Management believes that actions planned and presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from these uncertainties.
Note 3 Income Taxes
We are subject to U.S. federal income taxes. We have had losses to date, and therefore, have paid no income tax.
Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. Our deferred tax assets consist entirely of the benefit from net operating loss (“NOL”) carryforwards. Our deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the NOL carryforwards. The net operating loss carry forward, if not used, will expire in various years through 2009. NOL carryforwards may be further limited by a change in company ownership and other provisions of the tax laws.
The Company’s deferred tax assets, valuation allowance and change in valuation allowance are as follows:
| Period Ending | | Estimated NOL Carryforward | | NOL Expires | | Estimated Tax Benefit from NOL | | Valuation Allowance | Change in Valuation Allowance | Net Tax Benefit |
| June 30, 2009 | | 144,869 | | Various | | 36,217 | | (36,217) | (8,922) | — |
| September 30, 2009 | | 145,982 | | Various | | 36,496 | | (36,496) | (279) | - |
Income taxes at the statutory rate are reconciled to our actual income taxes as follows:
Income tax benefit at statutory rate resulting from NOL carryforwards | | (25%) |
Deferred income tax valuation allowance | | 25% |
Actual tax rate | | 0% |
Note 4 Sale of Assets
On July 10, 2009, the Company sold fixed assets with a net book value of $822 for cash of $1,200, resulting in a gain on sale of $377.
DYNAMIC ALERT LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We incorporated as Dynamic Alert Limited (referred to herein as “we”, “us”, “our” and similar terms) on June 17, 2004, in the State of Nevada. Our principal executive offices are located at 1414 Eighth Street S.W., Suite 260, Calgary, Alberta T2R 1J6, Canada. Our telephone number is (403)399-9047, Our fiscal year end is June 30.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Over the last two (2) years, we have continued to build a business that assists consumers with their security needs. Our goal has been to help our customers create and implement a personalized security plan. We offer a three-fold service.
Our first focus is to assist our clients in developing personalized security plans. Our second focus is to source and market personal security products. Our third focus is to provide personal protection on an as-needed basis. We are actively seeking to add new products and/or services that we can offer. A new marketing strategy will be developed as new products and services are identified.
For the immediate quarter, we are continuing with our initial core business in marketing security products. However, we believe that we need to enlarge our business activity. Therefore, we will continue to review opportunities with the objective of bringing additional revenue to the Company. Since we intend to operate with very limited administrative support, our officers will continue to be responsible for these tasks for at least the next six (6) months.
Material Changes in Financial Condition
At September 30, 2009, we had a working capital deficit of ($8,644), compared to a working capital deficit of ($13,954), at June 30, 2009. At September 30, 2009, our total assets consisted of prepaid expenses of $2,006. This compares with total assets at June 30, 2009 consisting of cash of $170, prepaid expenses of $679 and capital assets of $823.
At September 30, 2009, our total current liabilities decreased to $10,650 from $14,803 at June 30, 2009. During the 3 months ended September 30, 2009, accounts payable and accrued liabilities decreased by $4,153.
We recognized $3,840 in revenues from operations during the three months ending September 30, 2009. Our short and long-term survival is dependent on funding from sales of securities as necessary or from shareholder loans.
As we do not have an existing cash balance, we do not have sufficient funds to carry out normal operations over the next three (3) months. Our short and long-term survival is dependent on funding from sales of securities as necessary or from shareholder loans, and thus, to the extent that we require additional funds to support our operations or the expansion of our business, we may attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Recent events in worldwide capital markets may make it more difficult for us to raise additional equity or capital. There can be no assurance that additional financing, if required, will be available to us or on acceptable terms.
The recent and continuing downturn in the U.S. economy has had an effect on our ability to generate revenues and to attract long-term financing for our operations. The products that we offer could be viewed by many consumers as discretionary purchases and as such do not fit within consumers current budget restrictions, which have become much tighter due to the loss of jobs, job insecurity, the increase of foreclosures on residential homes and overall decreased economic activity. The downturn in the U.S. economy has also made it more difficult to find investors that either have capital to invest or are willing to put capital at risk by investing in our company. We anticipate that both effects of the current economic rescission will continue to hinder our abilities to become a profitable company and to grow our operations
Material Changes in Results of Operations
For The Three Months Ended September 30, 2009, Compared To The Three Months Ended September 30, 2008.
We recognized $3,840 in revenues from the sale of security products and services during the three months ending September 30, 2009. This compares with nil revenues during the three months ended September 30, 2008. The increase in our revenue was due to an increase in our operational activities over the prior period.
For the three months ended September 30, 2009, operating expenses were $5,330 compared to $13,591 during the three months ended September 30, 2008. The decrease was principally due to a decrease in our professional fees and our office and administration costs from the prior period.
Operating expenses during the three months ended September 30, 2009, consisted of professional fees of $4,818, office and administration expenses of $512, compared to professional fees of $9,137, office and administration cost of $4,066 and depreciation and amortization costs of $388 for the quarter ended September 30, 2008.
During the three month period ended September 30, 2009, we recognized a net loss from operations of $1,113 compared to a net loss from operations of $13,591 for the three-month period ended September 30, 2008. The decreased loss of $12,478 was due to an increase in our operational activities over the prior period as discussed above.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the quarter ended September 30, 2009. We believe that our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. Specifically, management identified the following control deficiency:
| · | The Company uses accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein or incorporated by reference.
Exhibit
Number Description
3.1 Articles of Incorporation*
3.2 By-laws*
31.1 CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. ss. 1350, SECTION 302
31.2 CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. ss. 1350, SECTION 302
32.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, SECTION 906
32.2 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, SECTION 906
* Incorporated by reference to our SB-2 Registration Statement, file number 333-119566, filed on October 30, 2006.
DYNAMIC ALERT LIMITED
NOTES TO INTERIM FINANCIAL STATEMENTS
September 30, 2009
(Unaudited)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 12th day of November, 2009.
DYNAMIC ALERT LIMITED
Date: November 12, 2009 By: /s/ David Robinson
Name: David Robinson
Title: Chairman of the Board/Chief Executive Officer, principal executive officer
Date: November 12, 2009 By: /s/ Donald Cameron
Name: Donald Cameron
Title: Secretary, Treasurer, principal financial officer and principal accounting officer
