UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended March 31, 2000

[x] 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: 0-23952

AVERT, INC.
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(Exact name of small business issuer as specified in its charter)

Colorado 84-1028716
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization

301 Remington, Fort Collins, CO 80524
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(Address of principal executive offices)

970/484-7722
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(Registrant's telephone number, including area code)

No Change
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(Former name, former address and former fiscal year,
if changed from last report).

Check 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 preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

[X] Yes [ ] No

As of May 9, 2000 the issuer had 3,302,845 shares of Common Stock, no par
value, outstanding.

Transitional Small Business Disclosure Format.

[ ] Yes [X] No

Form 10-QSB
Quarter Ended March 31, 2000

INDEX

PAGE

PART I - FINANCIAL INFORMATION

ITEM 1. Financial statements

Unaudited balance sheets................................... 3

Unaudited statements of income............................. 4

Unaudited statements of cash flows......................... 5

Notes to unaudited financial statements.................... 6

ITEM 2. Management's Discussion and Analysis or
Plan of Operations......................................... 7

PART II - OTHER INFORMATION

ITEMS 1, 2, 3, 4, 5 and 6.................................. Not applicable

Signatures........................................................... 11

PART I - FINANCIAL INFORMATION
AVERT, INC.

BALANCE SHEETS

ASSETS

MARCH 31, DECEMBER 31,
2000 1999
--------- -----------
(unaudited)

Current assets:
Cash and cash equivalents ................................ $ 770,000 $ 1,569,000
Marketable securities .................................... 7,355,000 6,361,000
Accounts receivable, net of allowance .................... 1,753,000 1,602,000
Prepaid expenses and other ............................... 164,000 99,000
----------- -----------
Total current assets ............................ $10,042,000 9,631,000

Property and equipment, net ....................................... 2,830,000 2,797,000
----------- -----------

Total assets ...................................................... $12,872,000 $12,428,000
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................................... $ 1,102,000 $ 500,000

Accrued expenses ......................................... 309,000 486,000

Income taxes payable ..................................... 49,000 150,000
----------- -----------

Total current liabilities ....................... 1,460,000 1,136,000

Deferred Taxes ........................................... 290,000 340,000
----------- -----------
Total liabilities ............................... $ 1,750,000 $ 1,476,000

Shareholders' equity:
Preferred shares, no par value; authorized
1,000,000 shares; none outstanding ..................... -- --
Common stock, no par value; authorized
9,000,000 shares; 3,302,845 shares issued
and outstanding ........................................ 4,124,000 3,924,000
Retained earnings ........................................ 6,998,000 7,028,000
----------- -----------

Total shareholders' equity ...................... $11,122,000 $10,952,000
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Total liabilities and shareholders' equity ........................ $12,872,000 $12,428,000
=========== ===========

See accompanying notes to the financial statements.

AVERT, INC.
STATEMENTS OF INCOME
(unaudited)

Three Months Ended
March 31,

2000 1999
---- ----

Net revenues:
Search and product fees ........................... $ 3,653,000 $ 2,416,000
Interest and other income ......................... 92,000 76,000
----------- -----------

3,745,000 2,492,000
Expenses:
Search and product costs .......................... 1,700,000 1,140,000
Marketing ......................................... 432,000 349,000
General and administrative ........................ 406,000 302,000
Software development .............................. 142,000 132,000
Depreciation and amortization ..................... 165,000 149,000
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2,845,000 2,072,000
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Income before income taxes ................................. 900,000 420,000

Income tax expense ................................ (334,000) (165,000)
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Net income ................................................. $ 566,000 $ 255,000
=========== ===========
Net income per common share ................................ $ .17 $ .08
=========== ===========
Weighted average common
shares outstanding ................................ 3,285,990 3,323,024
=========== ===========

See accompanying notes to the financial statements.

AVERT, INC.
STATEMENTS OF CASH FLOWS
(unaudited)

THREE MONTHS ENDED
MARCH 31,

2000 1999
---- ----

Cash Flows From Operating Activities:
Net income ......................................................... $ 566,000 $ 255,000
Adjustments to reconcile net income to net cash
(used in)/provided by operating activities:
Depreciation and amortization ................................. 165,000 149,000
Bad debt expense .............................................. 18,000 17,000
Deferred taxes ................................................ (50,000) --

Changes in operating assets and liabilities:
Accounts receivable ...................................... (169,000) (103,000)
Marketable securities .................................... (994,000) (72,000)
Prepaid expenses and other current assets ................ (77,000) (22,000)
Accounts payable ......................................... 602,000 184,000
Accrued expenses ......................................... (208,000) (21,000)
Income taxes payable ..................................... (101,000) 6,000
Deferred revenue and deposits ............................ 31,000 (2,000)

Net cash (used in)/provided by operating activities ........... $ (217,000) $ 391,000

Cash Flows from Investing Activities:
Additions to furniture and equipment .............................. (187,000) (9,000)
----------- -----------

Net cash used in investing activities ....................... (187,000) (9,000)
----------- -----------

Cash Flows from Financing Activities:
Options Exercised ............................................. 200,000 --
Dividends declared ............................................ (595,000) (419,000)
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Net cash used in financing activities ....................... (395,000) (419,000)

Increase/(Decrease) in Cash and Cash Equivalents ....................... (799,000) (37,000)

Cash and Cash Equivalents, beginning of period ......................... 1,569,000 531,000
----------- -----------

Cash and Cash Equivalents, end of period ............................... $ 770,000 $ 494,000
=========== ===========

See accompanying notes to the financial statements.

AVERT, INC.
NOTES TO FINANCIAL STATEMENTS

The financial information contained herein is unaudited, but includes all
adjustments (consisting of only normal recurring accruals) which, in the opinion
of management, are necessary to present fairly the information set forth. The
financial statements should be read in conjunction with the Notes to Financial
Statements which are included in the Annual Report on Form 10-KSB of the Company
for the year ended December 31, 1999.

The results for interim periods are not necessarily indicative of results
to be expected for the fiscal year of the Company ending December 31, 2000. The
Company believes that the three month report filed on Form 10-QSB is
representative of its financial position, its results of operations and its cash
flows as of and for the periods ended March 31, 2000 and 1999 covered thereby.

"The Company" or "Avert" is used in this report to refer to Avert, Inc. The
Company may from time to time make written or oral forward-looking statements,
including statements contained in the Company's filings with the Securities and
Exchange Commission and its reports to shareholders. This document may contain
forward-looking statements that are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
statements include, without limitation, statements relating to Avert's growth
and business strategies, regulatory matters affecting Avert, other plans and
objectives of Avert, management for future operations and activities, expansion
and growth of Avert's operations and other such matters. The words "believes,"
"expects," "intends," "strategy," "considers" or "anticipates" and similar
expressions identify forward-looking statements. The Company does not undertake
to update, revise or correct any of the forward-looking information.

New Pronouncement.

In December 1999, the SEC released SAB 101, which discusses the SEC's
interpretation of various revenue recognition matters. In March, the SEC
released SAB 101A, which provided companies with December 31, 1999 year-ends,
similar to Avert, until the second quarter to fully implement the SEC revenue
recognition policies. Avert has been recognizing as revenue non-refundable
set-up fees, generally ranging from $40 to $150 per customer, at the time such
service is provided. The fee is intended to cover Avert's internal cost
associated with entering the customer's data profile into Avert's sophisicated
online computer system. In addition, in many instances Avert will pay a referral
fee to third parties, which by agreement with the third party, is based on the
set-up fee charged. The SEC has indicated in SAB 101, that as such set-up could
not be sold separately from the companies normal services, such fees must be
amortized into income over the life of the service contract or customer life,
whichever is longer. Substantially all of Avert's customer contracts are
cancelable by either party at any time. During fiscal 1998 and 1999, and the
first quarter of 2000, Avert has recognized as income, net of referral fees and
income taxes, approximately ________, _________, and ________, respectively,
associated with start- up fees. The Company is currently conducting a sample of
customers to evaluate an appropriate customer life into which it will amortized
the start-up fees into income as well as analyzing start-up fees received by
month for prior periods. This will provide the basis by which the company will
adjust for income recognized in prior periods related to start-up fees. Pursuant
to guidance provided by the SEC, the Company will record this adjustment in the
second quarter of 2000 as a change in accounting principal with an adjustment to
retained earnings and other appropriate disclosure.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

Comparison of quarters ended March 31, 2000 and March 31, 1999

Total net revenues increased from $2,492,200 for the three-month period
ended March 31, 1999 to $3,744,600 for the comparable three-month period in 2000
or approximately 50.3%. This increase was primarily due to:

o Overall growth of Avert's customer bas
o Increased membership in Avert program and subscription models
o Increased reference checking and motor vehicle order volumes
o Continued use of Avert's criminal history products

Avert added 1,448 new customers in the first three-month period ended March
31, 2000 or approximately an 85.9% increase, over the same three-month period in
1999 in which 779 new customers were added. There were 9,190 customers that
actually used Avert services the first three months of 2000. This compares to
5,701 the first three months of 1999, and represents approximately a 61.2%
increase. The dollars spent per customer in the first quarter 2000 decreased
from $424 in the first quarter 1999 to $397 in the first quarter 2000,
representing an approximate 6.3% decrease. In addition, as a result of increased
customers, revenues generated from set up fees increased from approximately
$36,700 in the first three months of 1999 to $103,800 in the first three months
of 2000. In connection with set up fees received, the Company is also obligated
to pay a marketing fee to the referral source, which totaled $1,000 and $42,500
in the respective periods.

In first quarter 2000, the Company's distribution arrangement with ADP in
which Avert services are sold to ADP customers, generated revenues of
approximately $349,800 in total. The ADP arrangement was not in affect in first
quarter 1999. Of this amount, the EBS (employers with 1-99 employees) portion
accounted for $225,900, while the MAJORS (employers with 100- 999 employees)
portion generated $123,900 in revenues. Avert has a User Agreement with the ADP
customer, which is cancellable at any time by either party. In addition,
increased participation in the Avert Advantage and Advantage On-line programs
accounted for approximately $92,100 in the first three months of 2000, as
compared to approximately $66,000 in the first three months of 1999. Program and
user fees are included below in the category named "Services".

Revenues generated from reference checking increased from $148,200 in first
quarter 1999 to $219,500 in first quarter 2000, representing a 48.1% increase.
These revenues were generated by both existing and new customers. Revenues
generated from motor vehicle reports increased from $282,200 in first quarter
1999 to $476,100 in the same period of 2000, or approximately 68.7%. This
product line accounts for approximately 11.3% in total net revenues in the first
three months of 1999, and 12.7% in total net revenues in the first three months
of 2000. Enhanced automated features made this product attractive to several
large customers which increased the usage of this product, and positively
impacting the customer base in their quest for quicker hiring decisions.

The criminal history product line continues to represent the largest
revenue producing product, and accounts for approximately $1,871,400 or 50% of
total net revenues in first quarter 2000, as compared to approximately
$1,404,500 or 56.4% of total net revenues in first quarter 1999. This growth of
approximately 33.2% results from the continued use of the product of its
existing customers, as well as the new customers.

The breakdown of net revenues, exclusive of product discounts and other
miscellaneous income items, is as follows:

Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999 Percent of
---------------------- ---------------------- Increase
Revenues % total Revenues % total (Decrease)
-------- ------- -------- ------- ----------

Products:
Workers compensation histories ........... $ 208,400 5.6% $ 204,600 8.2% 1.9%
Criminal history reports ................. $1,871,400 50.0% $1,404,500 56.4% 33.2%
Previous employment reports/ ............. $ 366,500 9.8% $ 240,800 9.7% 52.2%
credit reports
Motor vehicle driving records ............ $ 476,100 12.7% 282,200 11.3% 68.7%
Other products ........................... $ 154,000 4.1% $ 125,100 6.5% 23.1%
Services: .................................. $ 640,800 17.1% $ 187,000 5.0% 242.7%

Interest income ............................ $ 95,600 2.6% $ 74,000 3.0% 29.2%

NET REVENUES ...................... $3,744,600 $2,492,200 50.3%

Workers' compensation histories revenue remains flat, but continued to
decline as a percentage of net revenues as previously predicted. In first
quarter, 1999 workers' compensation reports, represented, $204,600 or
approximately 8.2% of total net revenues, as compared to $208,400 in the first
three months of 2000, or approximately 5.6% of total net revenues.

Income before income taxes increased from $420,200 in first quarter 1999 to
$899,300 or approximately 114.0% and represented approximately 16.9% in 1999, as
compared to approximately 24.0% in the comparable period of 2000. The Company
believes that decreases in all expense categories were a direct result of
increased internal efficiencies and capacity. Avert's focus continues to be to
leverage technology for improved efficiencies and financial condition. There
have been some minor reclassifications of expenses for simpler internal
reporting.

Total expenses, when expressed as a percentage of total net revenues,
decreased from approximately 83.1% in the first quarter 1999, representing
$2,072,000, to approximately 76.0% in the first quarter 2000 representing
$2,845,300. A breakdown in expenses is as follows:

Three Months Ended Three Months Ended Increase (Decrease)
March 31, 2000 March 31, 1999 % of Revenues
-------------------------- --------------------------- ------------------
Expenses % of Revenue Expenses % of Revenue 1999 over 1998
-------- ------------ -------- ------------ --------------

Search and product ........................ $1,699,900 45.5% $1,140,100 45.7% (0.3)%
Marketing ................................. 432,400 11.5 349,000 14.0 (2.5)
General and administration ................ 405,900 10.8 302,500 12.1 (1.3)
Software development ...................... 142,000 3.9 131,600 5.3 (1.4)
Depreciation and amortization ............. 165,100 4.4 148,800 6.0 (1.6)
---------- ----- ---------- ----- ----

Expenses ......................... $2,845,300 76.0% $2,072,000 83.1% (7.1)%
========== ===== ========== ===== ====

Search and product fees remained relatively flat when expressed as a
percentage of total net revenues, representing approximately 45.7% of net
revenues in the first quarter 1999 as compared to 45.4% of net revenues for the
first quarter 2000. The majority of the decrease was attributable to the
improved automation of the Company's acquisition of data supplied to its
customers, specifically decreasing costs of obtaining criminal history
information from sources. Despite the level of increased product growth of
approximately 50.3% mentioned above, Avert was able to only increase head count
in the operations area by approximately 28.4% in first quarter 2000, as compared
to first quarter 1999. In addition, the actual number of reports produced in
first quarter 2000 was approximately 72% greater than the number of reports
produced in first quarter 1999.

There was an approximate 2.5% decrease as a percentage of total net
revenues in marketing expenses, in the first three months of 2000 as compared to
the same period of 1999. This resulted primarily from a decrease in 3.3
full-time equivalents in the first quarter 2000 as compared to first quarter
1999. Additionally, the company has reduced expenditures in certain lead
generation activities such as yellow pages advertising and broadcast fax as it
transitions its marketing activities to web-based lead generation programs.
Examples of web-based lead generation activities include web site links with
other human resource providers, banner advertisements, listings on Internet
portals, email messages sponsored by human resource publications, and additional
information services on our own web site. The Company believes that there will
be increased marketing expense as a result of strategic marketing arrangements
being developed and implemented with other sources, such as ADP.

General and Administrative expenses decreased approximately 1.3% of total
net revenues in first three-month period ended March 31, 2000, representing
approximately 10.8% of total net revenues, as compared to the first three-month
period ended March 31, 1999 representing 12.1% of total net revenues.

There was a decrease in software development and maintenance expenses
expressed as a percentage of total net revenues from approximately 3.9% in first
quarter 2000 to approximately 5.3% in the comparable period of 1999. The Company
continues to focus on making technology its strategic advantage in its
relationships with customers, partners and suppliers.

There was a decrease in depreciation and amortization expenses when
expressed as a percentage of total net revenues, from approximately 4.4% in the
first three months of 1999, to approximately 6.0% in the comparable period of
2000.

Income taxes for the combined federal and state statutory rate was
approximately 37.1% in first quarter 2000 and approximately 39.3% in the first
quarter 1999. The lower expense percentage in the first quarter of 2000 is a
result of an approximate $15,000 over accrual of state income taxes in the prior
year. The result was net income of $255,000 or $.08 per share on 3,323,024
shares (weighted average shares plus common stock equivalents) for the first
three months ended March 31, 1999, as compared to net income of $566,100 or $.17
per share 3,285,990 shares (weighted average shares plus common stock
equivalents) for the first three months ended March 31, 2000.

Liquidity and Capital Resources

The Company's financial position at March 31, 2000 remained strong with
working capital at that date of $8,582,000 compared to $8,495,000 at December
31,1999. Cash and cash equivalents and marketable securities at March 31, 2000
were $8,125,000 and increased from $7,930,000 at December 31, 1999. Net cash
provided from operations for the three month period ended March 31, 2000 was
$217,000 and consisted primarily of net income of $566,000, a $169,000 increase
in accounts receivable, and a $602,000 increase in accounts payable. The Company
had capital expenditures of $187,000 for the three month period ended March 31,
2000 as compared to $9,000 for the three months ended March 31, 1999. The
majority of the capital expenditures during the three months ended March 31,
2000 was attributable to ongoing development of enhancements and upgrades to
internal software programs used in servicing customers and upgrades of existing
hardware expected to be implemented in 2000. Net cash used in financing
activities for the three month period ended March 31, 2000 was $395,000 and
consisted primarily of a cash dividend of $.18 per common share payable on March
24, 2000 to shareholders of record on March 15, 2000.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

Avert currently is a defendant in a case in the Superior Court of the State
of California, in and for the County of Santa Clara, originally filed on or
about April 29, 1999 styled Obdiah Lewis v. Avert, Inc. and Does 1 to 30. The
complaint seeks monetary damages and alleges that Avert negligently obtained and
released to third parties false information about the plaintiff's criminal
history. Specifically, the complaint alleges that Avert advised the present and
a potential employer that the plaintiff had pled guilty to robbery and received
a jail term of 176 days. The complaint further alleges that because of this
information the plaintiff was terminated from a job and prevented from obtaining
new employment. The complaint asserts that the information Avert reported was
libelous and done with a conscious disregard of the plaintiff's rights. Avert
has paid the $10,000 deductible on its errors and omissions insurance policy for
this case. Avert has denied liability and intends to vigorously defend this
claim.

ITEM 6. Exhibits and Reports on Form 8-K

(a) January 13, 2000 announcing the addition of Felony+ to Avert's product
line

(b) February 1, 2000 announcing 4th Quarter and 1999 Results

SIGNATURES

In accordance with 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.

AVERT, INC.

DATE: May 10, 1999 BY: /s/ Dean A. Suposs
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Dean A. Suposs, President

DATE: May 10, 1999 BY: /s/ Jamie M. Burgat
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Jamie M. Burgat, Vice President of
Operations and Chief Financial Officer