UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
- -----
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2000
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: 001-15301
EQUITYALERT.COM, INC.
(exact name of registrant as specified in its charter)
NEVADA 58-2377963
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 216 - 1628 West 1st Avenue, Vancouver, BC, V6J 1G1
(Address of principal executive offices)
Registrant's telephone number, including area code: (604) 659-5009
Indicate by check mark whether the registrant: (1) has filed all reports
required 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 the Registrant's Common Stock, $0.00001 par value, as of
November 6, 2000: 41,398,186
EQUITYALERT.COM, INC.
FORM 10-QSB, QUARTER ENDED September 30, 2000
INDEX
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheet as of September 30, 2000......................... 3
Consolidated Statement of Operations for the Quarter Ended
September 30, 2000 and 1999.................................................. 4
Consolidated Statement of Cash Flows for the Quarter Ended
September 30, 2000........................................................... 5
Notes to Interim Consolidated Financial Statements........................... 6
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Item 2 Management's Discussion and Analysis................................. 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings..................................................... 9
Item 2 Changes in Securities................................................. 9
Item 3 Defaults Upon Senior Securities....................................... 9
Item 4 Submission of Matters to a Vote of Security Holders................... 9
Item 5 Other Information..................................................... 9
Item 6 Exhibits and Reports on Form 8-K...................................... 9
Financial Data Table and Signatures.......................................... 10
2
Item 1 Financial Statements
EQUITYALERT.COM, INC.
Interim Consolidated Balance Sheet
September 30, 2000 and December 31, 1999
(Unaudited)
ASSETS 2000 1999
---- ----
Current Assets
Cash $ 776,509 $ 591,980
Accounts Receivable 262,812 0
Prepaid Expenses 10,212 9,074
Security Deposits 345
----------- -----------
Total Current Assets $ 1,049,878 $ 601,054
Property and Equipment, Net (Note 4) 84,202 19,252
----------- -----------
Total Assets $ 1,134,080 $ 620,306
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 39,357 $ 24,978
Other Advances (Note 5) 10,000 10,000
Income Taxes Payable 80,620 0
----------- -----------
Total Current Liabilities $ 129,977 $ 34,978
Stockholders' Equity
Preferred Stock: $0.001 Par Value; Authorized Shares,
1,000,000 None None
Common Stock: $0.00001 Par Value; Authorized Shares,
100,000,000; Issued and Outstanding, 41,398,186
41,398,186, at September 30, 2000 and December 31,1999, respectively
414 414
Additional Paid In Capital 1,568,534 1,568,534
Retained Earnings (A Deficit) (570,481) (989,256)
Accumulated Other Comprehensive Income 5,636 5,636
----------- -----------
Total Stockholders' Equity 1,004,103 585,328
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,134,080 $ 620,306
=========== ===========
3
EQUITYALERT.COM, INC.
Interim Consolidated Statement of Operations
For the Three and Nine months ended September 30, 2000 and 1999
(Unaudited)
For The Nine For The Nine For The Three For The Three
Months Ended Months Ended Months Ended Months Ended
Sep. 30, 2000 Sep. 30, 1999 Sep. 30, 2000 Sep. 30, 1999
------------- ------------- ------------- -------------
Revenues $ 1,156,689 $ 0 $ 366,131 $ 0
Cost of Revenues 162,800 0 78,642 0
----------- ----------- ----------- -----------
Gross Profit 993,889 0 287,489 0
Expenses
General and Administrative 518,279 179,383 165,754 137,808
----------- ----------- ----------- -----------
Operating Income (Loss) 475,610 (179,383) 121,735 (137,808)
Other Income
Interest Income 23,785 24,596 7,802 10,752
----------- ----------- ----------- -----------
Net Income (Loss) Before Provision For
Income Taxes $ 499,395 $ (154,787) $ 129,537 $ (127,056)
Provision (Benefit) For Income Taxes 80,620 0 20,912 0
----------- ----------- ----------- -----------
Net Income (Loss) Available To Common
Stockholders $ 418,775 $ (154,787) $ 108,625 $ (127,056)
----------- ----------- ----------- -----------
Basic Earning (Loss) Per Common Share $ 0.010 $ (0.004) $ 0.003 $ (0.003)
=========== =========== =========== ===========
Basic Weighted Average Common Shares
Outstanding 41,398,186 41,391,186 41,398,186 41,391,186
=========== =========== =========== ===========
4
EQUITYALERT.COM, INC.
Interim Consolidated Statement of Cash Flows
For the Nine months period ended September 30, 2000 and 1999
(Unaudited)
Nine Months Nine Months
Ended Sep. 30, Ended Sep. 30,
2000 1999
-------------- --------------
Cash Flows From Operating Activities
Net Income (Loss) $ 418,775 $(154,787)
Adjustments to Reconcile Net Loss to Net Cash
Provided By (Used In) Operating Activities
Depreciation 8,141
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable (262,812)
(Increase) Decrease in Prepaid Expenses (1,138) (21,917)
(Increase) Decrease in Security Deposits (345)
(Increase) Decrease In Income Tax Payable 80,620
Increase (Decrease) in Accounts Payable 14,379 (4,306)
--------- ---------
Total Adjustments (161,155) (26,223)
--------- ---------
Net Cash Provided By (Used In) Operating Activities $ 257,620 $(181,010)
Cash Flows From Investing Activities
Purchase of Property and Equipment (356,091) (9,955)
--------- ---------
Net Cash Flows Used In Investing Activities $(356,091) $ (9,955)
Cash Flows From Financing Activities
Proceed From Sales of Common Stock 925,000
Proceed From Exercise of Common Stock 18,000
Proceeds From Sale of Subsidiary 283,000
--------- ---------
Net Cash Provided By Financing Activities 283,000 $ 943,000
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents $ 184,529 $ 752,035
Cash and Cash Equivalents, Beginning of Year 591,980 3,551
--------- ---------
Cash and Cash Equivalents, End of Year $ 776,509 $ 755,586
========= =========
5
EQUITYALERT.COM, INC.
Notes to Interim Consolidated Financial Statements
September 30, 2000
Note 1: Statement of Information Furnished
The accompanying unaudited interim financial statements have been prepared in
accordance with Form 10QSB instructions, and in the opinion of management,
contains all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of September 30, 2000, the
results of operations for the three and nine months periods ended September 30,
2000, and the statement of cash flows for the nine months ended September 30,
2000. These results have been determined on the basis of generally accepted
accounting principles and practices and applied consistently with those used in
the preparation of the Company's 1999 Annual Report on 10-SB.
Certain information and footnote disclosure normally included in the financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the accompanying financial
statements be read in conjunction with the accompanying financial statements and
notes thereto incorporated by reference in the Company's 1999 Annual Report on
Form 10-SB.
Note 2: Development Stage Status
The Company was classified as a development stage company in the prior year.
Note 3: Significant Accounting Policies
EquityAlert.com, Inc. is a re-distributor of public company and mutual fund news
alerts via email. Additionally, the Company offers a wide range of other free
information and services through its website (www.equityalert.com), such as
"live chat," message boards, insider trading, insurance, mortgage and loan
information, online banking, and consumer credit and charge card products.
Revenues are derived from the sale of non-refundable advertising agreements and
are recognized over the period the service is performed, which is typically a
one-day period.
Note 4: Property and Equipment
Property and Equipment consists of the following at September 30, 2000:
Computer Hardware $ 62,048
Computer Software 24,258
Furniture and Fixtures 7,558
--------
Total $ 93,864
Less Accumulated Depreciation 9,662
--------
Net Book Value $ 84,202
========
Depreciation expense charged to operations during 2000 was $8,141.
On September 13, 2000, EquityAlert.com, Inc. entered into an agreement to sell
100 % of the voting Common shares of its wholly owned subsidiary, Email
Solutions, Inc., a Nevada Corporation, to Entheos Technologies, Inc. for
$283,000. Email Solutions, Inc.'s assets consist primarily of software and
computer hardware equipment used in the emailing of the EquityAlert.com's public
company and mutual
6
fund news alerts. Subsequent to the purchase of Email Solutions, Inc., Entheos
Technologies will provide emailing services for Equityalert.com.
Note 5: Income Taxes
The provision for income taxes includes federal income taxes payable of $80,620
computed at an average rate of 34%. The Company is not required to pay any state
income taxes.
The provision was computed as follows:
Net Income $ 499,395
Expenses Deductible for Tax Purposes (262,278)
---------
Total $ 237,117
Tax Rate 34%
---------
Net Book Value $ 80,620
=========
Expenses not currently deductible for tax purposes primarily consist of start-up
costs, which are amortized over a five-year period for income tax purposes.
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
When used in this discussion, the words "believes", "anticipates", "expects" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, which could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to republish
revised forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events. Readers are
also urged to carefully review and consider the various disclosures made by the
Company which attempt to advise interested parties of the factors which affect
the Company's business, in this report, as well as the Company's periodic
reports on Forms 10-KSB, 10QSB and 8-K filed with the Securities and Exchange
Commission.
Overview
With the proliferation of financial information on the Internet, more and more
individuals are taking greater control of their investments and trading
securities through an online broker versus the traditional securities broker.
The online investor represents one of the most desirable of any demographic on
the web, being better educated, having a higher income and net worth than most
other online users. Consequently, since launching EquityAlert.com on June 7,
1999, the Company's main focus has been to build its subscriber base of online
investors by offering individuals free subscriptions to its website.
Subscribers to EquityAlert's free website enjoy a broad suite of financial news
and information, including live chat, message boards, insider trading,
insurance, mortgage and loan information, online banking, consumer credit and
charge card products, mutual fund news alerts via email, conference calls, and
much more, including EquityAlert's most popular feature - free real time public
company news alerts via email.
7
With upwards of 1,000,000 emails sent on a daily basis, EquityAlert.com, Inc.
has become one of the largest re-distributors of public company and mutual fund
news alerts via email. In January, 2000, the Company began to sell advertising
on these email alerts.
Results of Operations
Revenues. The Company generated $366,131 and $1,156,689 in revenues for the
three months and nine months periods ended September 30, 2000, respectively,
versus no revenues for the same periods in 1999. The revenues generated during
the three and nine months periods ended September 30, 2000, were exclusively
from the sale of advertising on its email alerts.
Gross Profit. During the three and nine month periods ended September 30, 2000,
the Company had gross profit margins of 78.5% and 85.9%, or $287,489 and
$993,889, respectively. This 7.4% decrease in gross profit margin is a result of
the hiring of additional sales personnel to support the Company's growth.
During the next several years, the Company expects to derive the majority of its
potential revenues from the sale of advertising on its e-mail alerts in the
United States, Canada and possibly select foreign markets. However, there can be
no assurances that customers will continue to purchase advertising on the
Company's email alerts or web pages, that advertisers will not make smaller
purchases, or that market prices for the Company's advertising will not decrease
due to competitive or other factors.
General and Administrative Expenses. During the three and nine month periods
ended September 30, 2000, the Company incurred $165,754 and $518,279 in general
and administrative expenses, respectively, an increase of 20% and 189% when
compared with the corresponding periods in 1999. This significant increase in
general and administrative expenses is primarily due to the development and
launch of the Company's business, resulting in additional salary, operating and
marketing expenses.
Interest Income. Interest income was $7,802 and $23,785 for the three and nine
months periods ended September 30, 2000, respectively, versus $10,752 and
$24,596 for the corresponding period in 1999. Interest earned in the future will
be dependent on Company funding cycles and prevailing interest rates.
Provision for Income Taxes. As at September 30, 2000, the Company has recorded a
provision for income taxes of $80,620. A portion of the net income tax was
offset by amortization of start-up costs for tax purposes.
Net Income. For the three and nine month periods ended September 30, 2000, the
Company recorded net income of $108,625, or $0.003 per share, and $418,775, or
$0.01 per share, respectively, compared to a net loss of $127,056, or $0.003 per
share, and a net loss of $154,787 or $0.004 per share, for the same periods in
1999.
Liquidity and Capital Resources
As at September 30, 2000, the Company had a cash balance of $776,509, compared
to $591,980 as at December 31, 1999. The Company has financed its operations
primarily through net income generated from its operations during the three and
nine months periods ended September 30, 2000.
8
Net cash flows used in investing activities was $356,091 for the nine month
period ending September 30, 2000, compared to $9,955 for the same period in
1999. The increase in the net cash flows from investing activities was due
mainly to purchasing equipment for the Company's website and e-mailing
facilities during 2000.
Net cash provided by financing activities was $283,000 for the nine month period
ending September 30, 2000, which was derived from the sale of the Company's
wholly owned subsidiary, Email Solutions, Inc., a Nevada Corporation, to Entheos
Technologies.
Net cash provided by financing activities was $943,000 for the nine month period
ending September 30, 1999, which was derived from the sale of common stock for
cash to raise working capital to fund operations.
At present, the Company plans to fund its operations from cash in bank and does
not anticipate a need for additional financing within the next twelve months.
The Company's future funding requirements will depend on numerous factors. These
factors include the Company's ability to operate its business profitably in the
future, recruit and train qualified management, technical and sales personnel,
and the Company's ability to compete against other, better capitalized
corporations who offer similar web based services.
The Company may raise additional funds through private or public equity
investment in order to expand the range and scope of its business operations. In
doing so, the Company may seek access to the private or public equity, but there
is no assurance that such additional funds will be available for the Company to
finance its operations on acceptable terms, if at all.
PART II -- OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
9
None
Item 6 Exhibits and Reports on Form 8-K
None
On September 28, 2000, the Company filed a Form 8-K reporting that, on September
15, 2000, it had entered into an agreement with Entheos Technologies, Inc. to
sell 100% of the voting common shares of EquityAlert.com's wholly owned
subsidiary, Email Solutions, Inc., a Nevada Corporation, for $283,000. Email
Solutions, Inc.'s assets consist primarily of software and computer hardware
equipment used in the emailing of the EquityAlert.com's public company and
mutual fund news alerts. Entheos Technologies will provide emailing services for
EquityAlert.com.
Mr. Harmel S. Rayat, a Director and majority shareholder of Entheos
Technologies, Inc. is also a Director and majority shareholder of
EquityAlert.com, Inc.
Signature Page
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.
EQUITYALERT.COM, INC.
/s/ Bhupinder Mann
---------------------
Bhupinder Mann
CEO and President
/s/ Harmel S. Rayat
---------------------
Harmel S. Rayat
Director and Chairman
/s/ Gurmukh S. Kundan
---------------------
Gurmukh S. Rayat
Director and Chairman
Dated: November 6, 2000
10