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 September 30, 1998
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: 0-23952
AVERT, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1028716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
301 Remington, Fort Collins, CO 80524
(Address of principal executive offices)
970/484-7722
(Registrant's telephone number, including area code)
No Change
(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 November 9, 1998 the issuer had 3,323,025 shares of Common Stock, no par
value, outstanding.
Transitional Small Business Disclosure Format.
[ ] Yes [ X ] No
Form 10-QSB
Quarter Ended September 30, 1998
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........................................................... 13
2
PART I - FINANCIAL INFORMATION
AVERT, INC.
BALANCE SHEETS
ASSETS
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ -----------
(unaudited)
Current assets:
Cash and cash equivalents ................................................... $ (37,000) $ 580,000
Marketable securities ....................................................... 6,355,000 6,113,000
Accounts receivable, net of allowance ....................................... 1,351,000 1,135,000
Prepaid expenses and other .................................................. 199,000 304,000
------------ ------------
Total current assets ............................................... $ 7,868,000 8,132,000
Property and equipment, net .......................................................... 3,344,000 3,399,000
------------ ------------
Total assets ......................................................................... $ 11,212,000 $ 11,531,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................ $ 464,000 $ 388,000
Accrued expenses ............................................................ 94,000 201,000
Deferred revenue ............................................................ 59,000 0
------------ ------------
Total current liabilities .......................................... 617,000 589,000
Deferred Taxes .............................................................. 507,000 507,000
------------ ------------
Total liabilities .................................................. $ 1,124,000 $ 1,096,000
Shareholders' equity:
Preferred shares, no par value; authorized
1,000,000 shares; none outstanding ........................................ -- --
Common stock, no par value; authorized
9,000,000 shares; 3,339,025 shares issued
and outstanding ........................................................... 4,786,000 5,276,000
Retained earnings ........................................................... 5,302,000 5,159,000
------------ ------------
Total shareholders' equity ......................................... $ 10,088,000 $ 10,435,000
------------ ------------
Total liabilities and shareholders' equity ........................................... $ 11,212,000 $ 11,531,000
============ ============
See accompanying notes to the financial statements.
3
AVERT, INC.
STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
Sept 30, Sept 30,
-------------------- ---------------------
1998 1997 1998 1997
---- ---- ---- ----
Net revenues:
Search and product fees ................ $ 2,504,700 $ 2,410,500 $ 7,126,800 $ 6,772,300
Interest and other income .............. 85,500 113,900 253,400 306,500
----------- ----------- ----------- -----------
$ 2,590,200 $ 2,524,400 $ 7,380,200 $ 7,078,800
Expenses:
Search and product costs ............... 1,269,400 1,104,800 3,540,700 3,050,900
Marketing .............................. 414,500 325,200 1,153,600 1,061,600
General and administrative ............. 346,000 327,500 1,043,500 945,400
Software development ................... 169,200 81,700 420,100 281,500
Depreciation and amortization .......... 150,900 113,200 412,100 291,700
----------- ----------- ----------- -----------
$ 2,350,000 $ 1,952,400 $ 6,570,000 $ 5,631,100
----------- ----------- ----------- -----------
Income before income taxes ...................... 240,200 572,000 810,200 1,447,700
Income tax expense ..................... ( 93,400) (224,900) (317,500) (568,300)
----------- ----------- ----------- -----------
Net income ...................................... $ 146,800 $ 347,100 $ 492,700 $ 879,400
=========== =========== =========== ===========
Net income per common share ..................... $ .04 $ .10 $ .15 $ .25
=========== =========== =========== ===========
Weighted average common
shares outstanding ..................... 3,366,320 3,502,758 3,381,753 3,574,525
=========== =========== =========== ===========
See accompanying notes to the financial statements.
4
AVERT, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1998 1997
---- ----
Cash Flows From Operating Activities:
Net income ............................................................. $ 492,700 $ 879,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..................................... 412,100 291,700
Bad debt expense .................................................. 27,400 19,500
(Increase)/decrease in marketable securities and
other gains .............................................. (242,500) 288,700
Changes in operating assets and liabilities:
Accounts receivable .......................................... (242,000) (510,700)
Prepaid expenses and other current assets .................... 104,900 (7,500)
Other assets ................................................. (3,500) --
Accounts payable ............................................. 123,900 ( 800)
Accrued expenses ............................................. 1,000 239,000
Income taxes payable ......................................... (106,700) 119,700
Deferred revenue and deposits ................................ 10,300 47,200
----------- -----------
Net cash provided by operating activities ......................... $ 577,600 $ 1,366,200
Cash Flows from Investing Activities:
Additions to furniture and equipment .................................. (354,900) (1,132,200)
Proceeds from sale of furniture and equipment ......................... -- --
----------- -----------
Net cash used in investing activities ........................... (354,900) (1,132,200)
Cash Flows from Financing Activities:
Purchase of Treasury Stock ........................................ (490,100) --
Warrants exercised ....................................... -- 530,800
Dividends Declared ................................................ (349,400) --
----------- -----------
Net cash provided by (used in) financing activities ............. (839,500) 530,800
Increase/(Decrease) in Cash and Cash Equivalents ........................... (616,800) 764,800
Cash and Cash Equivalents, beginning of period ............................. 579,500 360,300
----------- -----------
Cash and Cash Equivalents, end of period ................................... $ ( 37,300) $ 1,125,200
=========== ===========
See accompanying notes to the financial statements.
5
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, 1997.
The results for interim periods are not necessarily indicative of results
to be expected for the fiscal year of the Company ending December 31, 1998. 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 September 30, 1998 and 1997 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. SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued in June 1998. This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This statement is effective for the Company's
financial statements for the year ended June 30, 2001 and the adoption of this
standard is not expected to have a material effect on the Company's financial
statements.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," was issued in February 1998. This statement revises the disclosure
requirement for pensions and other postretirement benefits. This statement is
effective for the Company's financial statements for the year ended June 30,
1999 and the adoption of this standard is not expected to have a material effect
on the Company's financial statements.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was issued in June 1997. This statement establishes standards for
the way public business enterprises report information about operating segments.
It also establishes standards for related disclosure about products and
services, geographical areas and major customers. This statement is effective
for the company's financial statements for the year ended June 30, 1999 and the
adoption of this standard is not expected to have a material effect on the
Company's financial statements.
SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997. This
statement establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures, Statement 130
6
requires that all components of comprehensive income shall be classified based
on their nature and shall be reported in the financial statements in the period
in which they are recognized. A total amount for comprehensive income shall be
displayed in the financial statements where the components of other
comprehensive income are reported. This statement is effective for the Company's
financial statements for the year ended June 30, 1999 and the adoption of this
standard is not expected to have a material effect on the Company's financial
statements.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Comparison of quarters ended September 30, 1998 and September 30, 1997
Total net revenues increased from $2,524,400 for the three month period ended
September 30, 1997 to $2,590,200 for the comparable three month period in 1998
or approximately 3.0%. A key factor in third quarter depressed revenue growth
was our recent technology conversion. See "Liquidity and Capital Resources" in
this item below. In an effort to minimize impact on Avert's customers, the
Company instituted a "no questions asked" credit policy through the third
quarter. This policy resulted in extraordinary amount of credits processed
(directly reducing revenues) due to delays and inconveniences caused by the
conversion. Since the expiration of this credit policy, the amount of customer
credits being processed has returned to an average level. We have begun to see
improvements from the new system and are excited about our long-term growth
potential. The breakdown of net revenues, exclusive of product discounts and
other miscellaneous income items, is as follows:
Three Months Ended Three Months Ended
September 30, 1998 September 30, 1997 Percent of
--------------------- --------------------- Increase
Revenues % total Revenues % total (Decrease)
-------- ------- -------- ------- ----------
Products:
Workers compensation histories .......... $ 253,200 9.8% $ 297,600 11.8% (14.9)%
Criminal history reports ............... $1,461,000 56.4% $1,270,200 50.3% 15.0 %
Previous employment reports/ ........... $ 298,100 11.5% $ 329,500 13.1% (9.5)%
credit reports
Motor vehicle driving records .......... $ 243,100 9.4% $ 251,300 10.0% (3.3)%
Other products ......................... $ 91,700 3.5% $ 96,700 3.8% (5.2)%
Services: ................................ $ 160,300 6.2% $ 141,600 5.6% 13.2 %
Interest income .......................... $ 80,400 3.1% $ 80,100 3.2% 0.0 %
NET REVENUES .................... $2,590,200 $2,524,400 3.0 %
The largest product growth of approximately 15.0% occurred in Criminal
history reports. This product continues to increase both in terms of revenues
and percentage of sales. It accounts for approximately 56.4% of total net
revenues for 3rd quarter 1998 as compared to approximately 50.3% of total net
revenues for 3rd quarter 1997.
The second largest product group, Previous employment and credit reports
accounted for approximately 11.5% of total net revenues for the third nine month
period of 1998 as compared to approximately 13.1% of total net revenues for the
comparable period of 1997. Within this group, an approximate 16.5% growth
occurred in credit reports and represented approximately $101,300 in revenues in
the 3rd quarter 1998 as compared to $86,900 in the 3rd quarter 1997. Previous
7
employment revenues decreased to approximately $196,700 in the three month
period ended September 30, 1998 as compared to approximately $269,200 in the
three month period ended September 30, 1997. In addition to the extraordinary
amount of credits mentioned above, Avert has decreased its selling price for
this product from $7.32 average price in third quarter 1997 to $6.45 average
price in third quarter 1998.
As predicted, sales in the Workers' compensation histories product line
continue to decrease and represent approximately $253,200 in revenue in the
three month period ended September 30, 1998 as compared to $297,600 in revenue
in the same three month period of 1997. The Company believes this decrease is a
result of increased regulation requirements, causing a background check of this
type to be slower and more effort than desired for employers' need for quick
hiring.
Service sales experienced approximately 13.2% revenue growth from $141,600
in third quarter 1997 to $160,300 in third quarter 1998. This is primarily
attributable to growth of the customer base membership in the Avert Advantage
program, which increased from $45,000 in revenues for the third three month
period in 1997, to $81,500 in revenues for the third three month period in 1998.
In addition, the membership fees for partner and reseller customers that were
implemented earlier in 1998, represented approximately $28,200 in revenues in
third quarter 1998, as compared to $0 in the third quarter 1997. During the
third quarter 1998, Avert, Inc. announced the extension of an earlier pilot
agreement with ADP. The extension called for Avert services to be offered to ADP
customers in the greater Chicago area during a 90-day pilot. Avert and ADP
management are scheduled to begin discussions regarding the outcome of the pilot
and future marketing efforts to the ADP customer based.
Growth in the remaining sales categories remained flat as a percentage of
total net revenues in the three month period ended September 30, 1998 as
compared to the same three month period in 1997.
Income before income taxes decreased from $347,100 in third quarter 1997 to
$146,800 in third quarter 1998, or approximately 57.7% and represented
approximately 13.7% of total net revenues in 1997 compared to approximately 5.7%
in 1998, resulting from increases in several expense categories as well as
depressed revenue growth.
Total expenses increased from $1,952,400 for the three month period ended
September 30, 1997 to $2,350,000 for the comparable period in 1998 or
approximately 20.4%. A breakdown in expenses is as follows:
Three Months Ended Three Months Ended Increase (Decrease)
September 30, 1998 September 30, 1997 % of Revenues
----------------------- ---------------------- ------------------
Expenses % of Revenue Expenses % of Revenue 1998 over 1997
-------- ------------ -------- ------------ --------------
Search and product ............... $1,269,400 49.0% $1,104,800 43.8% 5.2%
Marketing ........................ 414,500 16.0 325,200 12.9 3.1
General and administration ....... 346,000 13.4 327,500 13.0 .4
Software development ............. 169,200 6.5 81,700 3.2 3.3
Depreciation and amortization .... 150,900 5.8 113,200 4.4 1.4
---------- ---- ---------- ---- ----
Expenses ................ $2,350,000 90.7% $1,952,400 77.3% 13.4%
========== ==== ========== ==== ====
8
Search and product fees increased approximately 5.2% as a percentage of net
revenues in the third quarter 1998 over the third quarter 1997. The majority of
the increase was attributable to the increasing costs from sources of obtaining
criminal history information, as well as the criminal history product, Avert's
largest product group, as the one most susceptible to market pricing pressures.
Another main area of increased expenses in this category resulted from increased
personnel costs associated with staffing an expanded customer service department
and initiation of a quality assurance department to improve overall customer
service. There was a decrease in expenses when expressed as a percentage of
total net revenues in the areas of motor vehicle records, telephone costs and
name link reports.
There was an approximate 3.1% increase in marketing expenses as a
percentage of total net revenues, in the third three months of 1998 as compared
to the third three months of 1997. There is an on-going marketing campaign
designed to target lead generation, marketing communication and market
development for both current customers and new customers. The majority of the
increase in marketing expenses was costs associated with increased lead
generation activities. In addition, there was increased commissions paid to
partners in third quarter 1998 as compared to third quarter 1997. Marketing
personnel costs decreased as a percentage of total net revenues from
approximately 5.6% in third quarter 1998 from 6.5% in third quarter 1997.
General and Administrative expenses increased slightly representing
approximately 13.4% of total net revenues in the third three month period ended
September 30, 1998, as compared to approximately 13.0% of total net revenues in
the third three month period ended September 30, 1997. The increase was
primarily due to an increase in accruals for potential uncollectible accounts
and the acquisition of errors and omission insurance in 1998.
The increase of approximately 3.3% in software development expenses as a
percentage of total net revenues in the three month period ended September 30,
1998 as compared to the three month period ended September 30, 1997, resulted
from the no longer capitalizing personnel and consultant costs associated with
software development and upgrade in third quarter 1998 as was done in third
quarter 1997. Additional consultant and training costs associated with
enhancements will continue through 1998.
The depreciation and amortization expenses have increased by approximately
1.4% of total net revenues in the three month period in 1998 as compared to the
same period in 1997 due to the fact that the software previously developed had
been put into actual use fully on April 1, 1998.
Income taxes remained stable for the combined federal and state statutory
rate at approximately 39% for both third quarter 1998 and third quarter 1997,
resulting in net income of $347,100 or $.10 per share on 3,502,758 shares for
the third three months ended September 30, 1997, as compared to net income of
$146,800 or $.04 per share on 3,366,320 shares for the third three months ended
September 30, 1998.
9
Comparison of nine months ended September 30, 1998 and September 30, 1997
Net revenues increased from $7,078,800 for the nine month period ended
September 30, 1997, to $7,380,200 for the comparable nine month period in 1998
or approximately 4.3%. The breakdown of net revenues, exclusive of product
discounts and other miscellaneous income items, is as follows:
Nine Months Ended Nine Months Ended
September 30, 1998 September 30, 1997 Percent of
------------------- ------------------- Increase
Revenues % total Revenues % total (Decrease)
-------- ------- -------- ------- ----------
Products:
Workers compensation histories .......... $ 746,100 10.1% $ 893,900 12.6% (16.5)%
Criminal history reports ............... $4,038,500 54.7% $3,535,700 49.9% 14.2 %
Previous employment reports/ ........... $ 882,000 12.0% $ 926,500 13.1% (4.8)%
credit reports
Motor vehicle driving records .......... $ 750,300 10.2% $ 773,700 10.9 (3.0)%
Other products ......................... $ 307,200 4.2% $ 273,100 3.9% 12.5 %
Services: ................................ $ 409,100 5.5% $ 374,800 5.3% 9.2 %
Interest income .......................... $ 245,100 3.3% $ 234,500 3.3% 4.5 %
NET REVENUES .................... $7,380,200 $7,078,800 4.3 %
Moderate growth in sales of most of the Company's products occurred during
the first nine months of 1998 with the largest increase being Criminal history
reports. They represented approximately 54.7% of total net revenues, or
$4,038,500 in the first nine months of 1998, as compared to approximately 49.9%
of total net revenues, or $3,535,700 in the first nine months of 1997.
Workers' compensation reports continued its downward trend, decreasing from
$893,900 in revenues for the nine month period ended September 30, 1997 to
$746,100 in revenues for the nine month period ended September 30, 1998. The
regulation requirements of this product have made it less viable in the
marketplace.
The Services category increased as a percentage of total net revenues by
approximately 9.2% when comparing first nine months of 1998 to first nine months
of 1997. The increase resulted primarily from increased membership in Avert
Advantage programs, along with the implementation of the partner and reseller
equivalent programs.
The category of "Other Products" experienced an increase of approximately
12.5% of total net revenues in the first nine months ended September 30, 1998 as
compared to the first nine months ended September 30, 1997. This increase was a
result of increased employment applications sales, Name Link, and package sales.
Packages are a direct result of increased capabilities made possible by the
recent computer conversion, allowing customers to set up custom packages,
comprised of products and services to allow ease of order entry. Avert believes
this area will have a positive impact on future revenues.
Income before income taxes decreased from $1,447,700 in the nine month
period ended September 30, 1997 to $810,200 in the nine month period ended
September 30, 1998 or approximately 44.0%, and represented approximately 11.0%
of net revenues in the first nine months of 1998 compared to approximately 20.5%
in the first nine months of 1997.
10
Total expenses increased from $5,631,100 for the nine month period
ended September 30, 1997 to $6,570,000 for the comparable period in 1998. A
breakdown in expenses is as follows:
Nine Months Ended Nine Months Ended Increase (Decrease)
September 30, 1998 September 30, 1997 % of Revenues
---------------------- ----------------------- ------------------
Expense % of Revenue Expense % of Revenue 1998 over 1997
------- ------------ ------- ------------ --------------
Search and product .................... $3,540,700 48.0% $3,050,900 43.1% 4.9%
Marketing ............................. 1,153,600 15.6 1,061,600 15.0 0.6
General and administration ............ 1,043,500 14.1 945,400 13.3 0.8
Software development .................. 420,100 5.7 281,500 4.0 1.7
Depreciation and amortization.......... 412,100 5.6 291,700 4.1 1.5
---------- ---- ---------- ---- ---
Expenses ..................... $6,570,000 89.0% $5,631,100 79.5% 9.5%
========== ==== ========== ==== ===
Total expenses increased approximately 9.5% as a percentage of total net
revenues in the first nine month period of 1998 as compared to the first nine
month period of 1997. The primary increase was in the area of Search and
Products costs, which increased due to an increasingly large proportion of
criminal history reports in Avert's product mix resulting in an increased
proportion of product costs. In addition, this product is susceptible to a high
degree of market pricing pressure, and there have been increases in data costs
directly from public sources.
The slight increase in Marketing expenses in the nine month period ended
September 30, 1998 over the nine month period ended September 30, 1997 resulted
primarily from an increase in outgoing marketing activities.
There was an increase of approximately 2.1% of total net revenues in
general and administrative expenses in the first nine month period ended
September 30, 1998 as compared to the same period in 1997, resulting primarily
from increased accruals for uncollectible accounts, and the acquisition of
errors and omissions liability insurance..
Due to the development of new software used in revenue generation
activities and increased computer hardware costs associated with this software,
depreciation and amortization and software development personnel expenses have
increased as a percent of total net revenues from the nine month period ended
September 30, 1997 to the nine month period ended September 30, 1998. Phase I of
the software began depreciating in the second quarter 1997, and Phase II
software depreciation began in April 1998.
Income taxes varied slightly for the combined federal and state statutory
rate of approximately 39% in both of the first nine months of 1997 and 1998.
This resulted in a decrease of net income of $879,400 or $.25 per share on
3,574,525 shares for the nine months ended September 30, 1997, to net income of
$492,700 or $.15 per share on 3,381,753 shares for the nine months ended
September 30, 1998.
11
Liquidity and Capital Resources
The Company's financial position at September 30, 1998 remained strong with
working capital at that date of $7,251,000 compared to $7,543,000 at December
31,1997. Cash and cash equivalents and marketable securities at September 30,
1998 were $6,318,000 and decreased from $6,693,000 at December 31, 1997. Net
cash provided from operations for the nine month period ended September 30, 1998
was $577,600 and consisted primarily of net income of $492,700, a $242,000
increase in accounts receivable, a $123,900 increase in accounts payable, and a
$412,100 increase in depreciation expenses. The Company had capital expenditures
of $354,900 for the nine month period ended September 30, 1998 as compared to
$1,132,200 for the nine months ended September 30, 1997. The majority of the
capital expenditures during the nine months ended September 30, 1998 were
attributable to the development of new software and upgrade of existing hardware
and software. The Company expects ongoing enhancements to its computer system
through 1998. Such enhancements are believed to be necessary in order to foster
cost-effective partnerships. Other enhancements are expected to directly enhance
Avert's ability to produce a higher volume of reports without incurring
additional staffing expenses. Development and upgrade of the software will be
financed by available cash derived from past or continued operations.
Implementation of the new software was April, 1998 with ongoing enhancements
throughout 1998. Net cash used in financing activities for the nine month period
ended September 30, 1998 was $839,500 and consisted of $490,100 for stock
repurchased and $349,400 for the special dividend declared in first quarter,
1998.
Year 2000 Issue
The Company believes it has fully addressed the Year 2000 issue in
connection with its internal computer software. The Year 2000 problem is a
result of computer programs being written using two digits, rather than four, to
define the applicable year. Any programs that have time sensitive data may
recognize a date using "00" as the year 1900, rather than the year 2000. The
Company has re-written its internal programs and believes that the Year 2000
will not create any major future system failure or miscalculation.
The Year 2000 problem may impact other entities, with which the Company
transacts business, and the Company cannot predict the effect of Year 2000
problems on such entities. The Company has not completed its assessment, but
currently believes that costs of addressing this issue will not have a material
adverse impact on the Company's financial position. However, if the Company and
third parties upon which it relies are unable to address this issue in a timely
manner, it could result in a material financial risk to the Company. In order to
assure that this does not occur, the Company plans to devote all resources
required to resolve any significant year 2000 issues in a timely manner.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
NONE
ITEM 6. Exhibits and Reports on Form 8-K
(a) Joint Marketing Agreement with Restrac, Inc.
(b) Second Stage Pilot with ADP
(c) Additional Funds Approved for Repurchase of Shares
12
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: November 11, 1998 BY: /s/ Dean A. Suposs
--------------------------------------
Dean A. Suposs, President
DATE: November 11, 1998 BY: /s/ Jamie M. Burgat
--------------------------------------
Jamie M. Burgat, Vice President of
Operations and Chief Financial Officer
13