U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
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: 000-28177
EVERLERT, INC.
(Exact name of registrant as specified in its charter)
Nevada 91-1886117
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1201 East Warner Avenue, Santa Ana, California 92705
(Address of principal executive offices (Zip Code)
Registrant's telephone number: (714) 966-0710
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) been subject to such
filing requirements for the past 90 days. Yes X No .
As of June 30, 2001, the Registrant had 20,172,477 shares of common
stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEET AS OF JUNE 30, 2001 3
STATEMENTS OF OPERATIONS FOR
THE THREE AND SIX MONTHS ENDED
JUNE 30, 2001 AND JUNE 30, 2000, AND
FROM INCEPTION THROUGH JUNE 30, 2001 4
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
JUNE 30, 2001 AND JUNE 30, 2000, And
FROM INCEPTION THROUGH JUNE 30, 2001 5
NOTES TO FINANCIAL STATEMENTS 7
ITEM 2. PLAN OF OPERATION 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17
ITEM 5. OTHER INFORMATION 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURE 18
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
EVERLERT, INC.
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 2001
(Unaudited)
ASSETS
Current assets
Cash $ 608
Total current assets 608
Fixed assets, net 51,360
Other assets
Acquired technology, net 102,225
Total assets 154,193
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable 15,304
Accrued liabilities 83,814
Due to related parties 30,815
Notes payable - related party 246,930
Notes payable 184,349
Other payable 15,000
Total current liabilities 576,212
Total liabilities 576,212
Commitments and contingencies -
Stockholders' deficit
8% cumulative preferred stock; $.001 par value;
5,000,000 shares authorized, 16,000 shares issued and
outstanding 16
Common stock; $.001 par value; 50,000,000
shares authorized, 20,172,477 shares issued
and outstanding 20,172
Additional paid-in capital 1,936,946
Common stock issued for prepaid consulting services (70,000)
Notes receivable for common stock issuance, net -
Accumulated deficit (2,309,153)
Total stockholders' deficit (422,019)
Total liabilities and stockholders' deficit 154,193
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six Months February 3
Ended Ended 1998
June 30 June 30 (inception)
through
2001 2000 2001 2000 June 30 2001
(RESTATED) (RESTATED)
Revenue - - - - -
Operating expenses
Amortization and
depreciation 36,091 34,044 69,669 68,088 308,443
Bad debt - - - - 917,625
Research and
development - - - - 237,149
General and
administrative 36,369 2,905 70,702 21,409 757,989
Total operating
expenses 72,460 36,949 140,371 89,497 2,221,206
Net loss from
operations (72,460) (36,949)(140,371) (89,497) (2,221,206)
Other expense
Interest expense 10,288 8,582 20,577 17,164 87,947
Loss before provision
for income taxes (82,748) (45,531)(160,948) (106,661) (2,309,153)
Provision for income
taxes - - - - -
Net loss (82,748) (45,531)(160,948) (106,661) (2,309,153)
Basic and diluted loss
per common share (0.004) (0.002) (0.008) (0.006) (0.203)
Basic and diluted
weighted average
common shares
outstanding 20,172,477 19,279,557 20,095,129 19,068,776 11,372,426
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Six Months February 3
Ended Ended 1998
June 30 June 30 (Inception)
2001 2000 to
(RESTATED) June 30
2001
Cash flows from operating
activities:
Net loss (160,948) (106,661) (2,309,153)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Amortization and depreciation 69,669 68,088 308,443
Bad debt - - 917,625
Interest and financing costs
Satisfied in exchange of common stock - - 23,375
Stock based compensation 20,000 - 233,900
Changes in operating assets and
liabilities:
Decrease in deposits 53,500 - -
Increase (decrease) in accounts
payable (13,740) (4,679) 15,304
Increase in accrued liabilities 20,576 17,163 83,814
Increase in due to related
parties 13,415 2,350 30,815
Increase in other liabilities 15,000 - 15,000
Net cash provided (used) by
operating activities 17,472 (23,739) (680,877)
Cash flows from investing
activities:
Purchase of fixed assets (53,500) - (53,500)
Net cash used by investing
activities (53,500) - (53,500)
Cash flows from financing
activities:
Proceeds from issuance of notes
payable - related party - - 246,930
Proceeds from issuance of note
payable 2,500 - 220,349
Proceeds from issuance of
preferred stock 25,000 10,000 68,001
Proceeds from issuance of common
stock 5,000 - 121,932
Proceeds from issuance of stock
subscriptions payable - - 77,773
Net cash provided by financing
activities 32,500 10,000 734,985
Net increase (decrease) in cash (3,528) (13,739) 608
Cash, beginning of period 4,136 13,837 -
Cash, end of period 608 98 608
Supplemental disclosure of cash
flow:
Cash paid for interest - - -
Cash paid for income taxes - - -
Schedule of non-cash investing and
financing activities:
12,000,000 common shares issued in
exchange for acquired technology - - 408,528
300,000 common shares issued in
exchange for stock subscriptions
receivable - - 450,000
300,000 common shares issued in
exchange for stock subscriptions
receivable - 525,000 525,000
Debt satisfied in exchange of
common stock - - 34,000
40,000 common shares issued for
payment of debt - - 2,000
200,000 common shares issued in
exchange for prepaid consulting services - - 100,000
Subscriptions payable satisfied
through issuance of 15,000 common shares - 3,241 3,241
Subscriptions payable satisfied
through issuance of 344,992 common
shares - 74,532 74,532
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
Securities and Exchange Commission requirements for interim financial
statements. Therefore, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The financial statements should be read in conjunction
with the Form 10-KSB as of and for the year ended December 31, 2000 of
Everlert, Inc. ("the Company").
The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operation. All such adjustments are of a
normal recurring nature.
2. NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consist of the following at June 30, 2001:
Promissory note payable to Wyvern Technologies, Inc.
(an entity controlled by the president of the Company),
unsecured, bearing an interest rate of 10% and due on
demand. Holder has option to convert unpaid balances,
including accrued interest, into shares of the Company's
common stock at a price of $1.00 per share $ 173,670
Promissory note payable to a director of the Company,
unsecured, bearing an interest rate of 10% and due on
demand. Holder has option to convert unpaid balances,
including accrued interest, into shares of the Company's
common stock at a price of $1.00 per share 68,260
Promissory note payable to a stockholder of the Company,
unsecured, non-interest bearing and due on demand 5,000
$ 246,930
3. GOING CONCERN
The Company incurred a net loss of approximately $161,000 for the six months
ended June 30, 2001, and the Company's current liabilities exceed its current
assets by approximately $576,000 as of June 31, 2001, raising substantial
doubt about the Company's ability to continue as a going concern. The Company
plans to complete the development of its voice record and playback smoke
detector, along with the heat sensor Christmas tree ornaments. The Company
will seek additional sources of capital through the issuance of debt or equity
financing, but there can be no assurance the Company will be successful in
accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
ITEM 2. PLAN OF OPERATION.
Twelve Month Plan of Operation.
The operational period for the 41 months from February 3, 1998 through
June 30, 2001, achieved two main goals for the Registrant: (a) formation of
the organization to pursue the Registrant's business objective, and (b)
obtain sufficient capital to commence initial operations. The Registrant is a
developmental stage enterprise, and has not generated any revenues to date.
The Registrant has devoted substantially all of its present efforts to
developing its products to be manufactured and marketed and completing its
reporting requirements with the Securities Act of 1934 and its commencement of
trading on the Over-the-Counter Bulletin Board (the Registrant was delisted
from this exchange as of November 18, 1999). In order to qualify for
relisting on the Bulletin Board, the Registrant must comply with the new
eligibility rules of this exchange, which require that all listed companies be
reporting companies. Accordingly the Registrant filed its Form 10-SB
Registration Statement with the Securities and Exchange Commission on November
18, 1999; the Registrant must clear comments on this Registration Statement to
be eligible for relisting.
Realization of sales of the Registrant's products for the 12 months
ending on December 31, 2001 is vital to its plan of operations. The
Registrant believes that its initial revenues will be primarily dependent upon
the its ability to cost-effectively and efficiently develop and market smoke
and heat detectors. The Registrant designates as its priorities for the first
next twelve months of operations as developing and marketing its products to
establish its operations by: (a) implementing and successfully executing
its business and marketing strategy, including developing and marketing its
products to establish its business in the home safety industry (this is
presently on hold pending the receipt of further financing for the Registrant;
costs are estimated to be approximately $500,000); (b) developing
relationships with strategic partners (this must await further funding for the
Registrant); (c) responding to competitive developments (the Registrant has
already accomplished this by designing its detector products to offer features
not found in competing models); and (d) attracting, retaining and motivating
qualified personnel (this must await further funding for the Registrant).
Management of the Registrant believes that the need for additional
capital going forward will be derived somewhat from earnings generated from
the sale of its products. In such case, it is the intent of the Registrant to
seek to raise additional capital via a private placement offering. The
Registrant currently has a stock subscription receivable at December 31, 2000
for common stock in the amount of $917,625. As of that date, management of
the Registrant believes the collectibility of this receivable may be in doubt.
Accordingly, an allowance for doubtful accounts was recorded in the financial
statements for the full amount of the stock subscriptions receivable. Since
the Registrant is in the process of having the debtors return the stock issued
to the Registrant, the Registrant will not pursue plans to collect these funds.
As a result, management of the Registrant plans to advance funds to the
Registrant on an as-needed basis although there is no definitive or legally
binding arrangement to do so. The Registrant currently has no arrangements or
commitments for accounts and accounts receivable financing. There can be no
assurance that any such financing can be obtained or, if obtained that it
will be on reasonable terms. The Registrant believes that its initial
revenues will be primarily dependent upon the Registrant's ability to cost
effectively and efficiently develop, manufacture and market smoke detectors
and related home safety products.
The Registrant incurred significant operating expenses for the 41 months
from February 3, 1998 through June 30, 2001 totaling $2,221,206.
Expenditures were primarily due to costs incurred for bad debt, amortization
expenses, consulting fees, engineering, and general and administrative
expenses. The Registrant's consulting expenses were incurred from its public
listing process on the Over-the-Counter Bulletin Board. Due to the
significant operating expenses, as well as interest expense in the amount of
$87,947, the Registrant experienced a net loss of $2,309,153 for this 41 month
period. The Registrant anticipated incurring this loss during the initial
commencement of operations until such time that it will realize revenues from
operations in the fiscal year 2001. As of June 30, 2001, the Registrant had
no working capital and an accumulated deficit of $2,309,153.
The Registrant's ability to distribute, and generate awareness of, the
Registrant's products must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new markets. There can be no assurance
that the Registrant will be successful in establishing a base of operations,
and the failure to do so could have a material adverse effect on the
Registrant's business, prospects, financial condition and results of
operations.
The Registrant has previously disclosed in filings with the SEC and on
its website that is expected to generate revenues of a certain amount over the
first five years of operations. However, based on the lack of funding
available to the Registrant, it has been unable to proceed with its plan of
business; therefore, the Registrant will not achieve the projected stream of
revenue, as originally anticipated. As a result, all references to such
revenues have been deleted from SEC filings and the Registrant website.
Risk Factors Connected with Plan of Operation.
(a) Limited Prior Operations, History of Operating Losses, and Accumulated
Deficit May Affect Ability of Registrant to Survive.
The Registrant has had limited prior operations to date. Since the
Registrant's principal activities to date have been limited to organizational
activities, research and development, and prospect development, it has no
record of any revenue-producing operations. Consequently, there is only a
limited operating history upon which to base an assumption that the Registrant
will be able to achieve its business plans. In addition, the Registrant has
only limited assets. As a result, there can be no assurance that the
Registrant will generate significant revenues in the future; and there can be
no assurance that the Registrant will operate at a profitable level. If the
Registrant is unable to obtain customers and generate sufficient revenues so
that it can profitably operate, the Registrant's business will not succeed.
Accordingly, the Registrant's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered in connection with the
establishment of a new business in a highly competitive industry,
characterized by new product introductions.
The Registrant incurred a net loss of $450,268 for the fiscal year ended
December 31, 1999, $1,268,621 for the fiscal year ended December 31, 2000, and
$160,948 for the six months ended June 30, 2001. The Registrant's current
liabilities exceed its current assets by $458,744 as of December 31, 1999,
$534,325 as of December 31, 2000, and $575,604 as of June 30, 2001. At June
30, 2001, the Registrant had an accumulated deficit of $2,309,153; as of that
date, the Registrant had no working capital. This raises substantial doubt
about the Registrant's ability to continue as a going concern.
(b) Need for Additional Financing May Affect Operations and Plan of Business.
Since inception, the Registrant has financed operations primarily
through private placements of common stock, and certain borrowings. In
addition to two promissory notes between the Registrant and its directors (see
"Certain Relationships and Related Transactions"), the Registrant has also
borrowed $184,349 from an unrelated party. This promissory is unsecured, due
on demand and payable in one payment including principal and interest at
maturity, bearing an interest rate of 10%. Additionally, the holder has the
option to convert any unpaid balances, including accrued interest, into shares
of the Registrant's common stock at a price of $1.00 per share.
Current funds available to the Registrant will not be adequate for it to
be competitive in the areas in which it intends to operate. The Registrant's
continued operations, as well as the implementation of its business plan,
therefore will depend upon its ability to raise additional funds through bank
borrowings, equity or debt financing. The Registrant estimates that it will
need to raise approximately $1,000,000 over the twelve months from June 1,
2001 for such purposes. However, adequate funds may not be available when
needed or may not be available on favorable terms to the Registrant. The
ability of the Registrant to continue as a going concern is dependent on
additional sources of capital and the success of the Registrant's business
plan. Regardless of whether the Registrant's cash assets prove to be
inadequate to meet the Registrant's operational needs, the Registrant might
seek to compensate providers of services by issuance of stock in lieu of cash.
If funding is insufficient at any time in the future, the Registrant
may not be able to take advantage of business opportunities or respond to
competitive pressures, any of which could have a negative impact on the
business, operating results and financial condition. In addition, if
additional shares were issued to obtain financing, current shareholders may
suffer a dilutive effect on their percentage of stock ownership in the
Registrant.
(c) No Assurance of Protection of Proprietary Rights May Affect Ability to
Manufacture Products.
The Registrant's success and ability to compete will be dependent in
part on the protection of its potential patents, trademarks, trade names,
service marks and other proprietary rights. The Registrant intends to rely
on trade secret and copyright laws to protect the intellectual property that
it plans to develop, but there can be no assurance that such laws will provide
sufficient protection to the Registrant, that others will not develop a
service that are similar or superior to the Registrant's, or that third
parties will not copy or otherwise obtain and use the Registrant's proprietary
information without authorization. In addition, certain of the Registrant's
know-how and proprietary technology may not be patentable.
The Registrant may rely on certain intellectual property licensed from
third parties, and may be required to license additional products or services
in the future, for use in the general operations of its business plan. The
Registrant currently has no licenses for the use of any specific products.
There can be no assurance that these third party licenses will be available or
will continue to be available to the Registrant on acceptable terms or at all.
The inability to enter into and maintain any of these licenses could have a
material adverse effect on the Registrant's business, financial condition or
operating results.
(d) No Assurance of Meeting Underwriters Laboratories Standard May Affect
Ability to Sell Products.
The agency testing required for Registrant products is Underwriters
Laboratories ("UL"), which is a private testing organization. The
Registrant's products have not yet been submitted to UL for testing pending
final tooling of the products. Although Registrant management believes that
the Registrant's products meet applicable UL Standard 217, there is a risk
that they may not. This testing is of importance since many state fire
marshals recognize UL testing and listing. The Registrant's products would
not be available to sale in any state which requires such certification;
although they would be in a number of foreign countries which do not require
such certification.
(e) No Assurance of Successful Manufacturing May Affect Ability of
Registrant to Survive.
The Registrant has no experience manufacturing commercial quantities of
products, but management has had experience in this area. The Registrant
presently has no plans for developing an in-house manufacturing capability.
Accordingly, the Registrant will be dependent upon securing a contract
manufacturer or other third party to manufacture the circuit boards and
plastic housing of the detectors (the final assembly and testing will be done
in-house). There can be no assurance that the terms of any such arrangement
would be favorable enough to permit the products to compete effectively in the
marketplace.
(f) Dependence on Outsourced Manufacturing May Affect Ability to Bring
Products to Market.
The risks of association with outsourced manufacturers are related to
aspects of these firms' operations, finances and suppliers. The Registrant
may suffer losses if the outside manufacturer fails to perform its obligations
to manufacture and ship the product manufactured. These manufacturers'
financial affairs may also affect the Registrant's ability to obtain product
from these firms in a timely fashion should they fail to continue to obtain
sufficient financing during a period of incremental growth. The Registrant
intends to maintains a strong relationship with these manufacturers to ensure
that any issues they may face are dealt with in a timely manner.
(g) No Assurance of Market Acceptance May Affect Ability to Sell Products.
There can be no assurance that any products successfully developed by
the Registrant or its corporate collaborators, if approved for marketing, will
ever achieve market acceptance. The Registrant's products, if successfully
developed, may compete with a number of traditional products manufactured and
marketed by major e-commerce and technology companies, as well as new products
currently under development by such companies and others. The degree of
market acceptance of any products developed by the Registrant or its corporate
collaborators will depend on a number of factors, including the establishment
and demonstration of the efficacy of the product candidates, their potential
advantage over alternative methods and reimbursement policies of government
and third party payors. There can be no assurance that the marketplace in
general will accept and utilize any products that may be developed by the
Registrant or its corporate collaborators.
(h) Substantial Competition May Affect Ability to Sell Products.
The Registrant may experience substantial competition in its efforts to
locate and attract customers for its products. Many competitors in the smoke
detector industry have greater experience, resources, and managerial
capabilities than the Registrant and may be in a better position than the
Registrant to obtain access to attract customers. There are a number of
larger companies which will directly compete with the Registrant. Such
competition could have a material adverse effect on the Registrant's
profitability or viability.
(i) Other External Factors May Affect Viability of Registrant.
The smoke detector industry in general is a speculative venture
necessarily involving some substantial risk. There is no certainty that the
expenditures to be made by the Registrant will result in commercially
profitable business. The marketability of its products will be affected by
numerous factors beyond the control of the Registrant. These factors include
market fluctuations, and the general state of the economy (including the rate
of inflation, and local economic conditions), which can affect peoples'
spending. Factors which leave less money in the hands of potential customers
of the Registrant will likely have an adverse effect on the Registrant. The
exact effect of these factors cannot be accurately predicted, but the
combination of these factors may result in the Registrant not receiving an
adequate return on invested capital.
(j) Control by Officers and Directors Over Affairs of the Registrant May
Override Wishes of Other Stockholders.
The Registrant's officers and directors beneficially own approximately
70% of the outstanding shares of the Registrant's common stock. As a result,
such persons, acting together, have the ability to exercise significant
influence over all matters requiring stockholder approval. Accordingly, it
could be difficult for the investors hereunder to effectuate control over the
affairs of the Registrant. Therefore, it should be assumed that the officers,
directors, and principal common shareholders who control these voting rights
will be able, by virtue of their stock holdings, to control the affairs and
policies of the Registrant.
(k) Loss of Any of Current Management Could Have Adverse Impact on Business
and Prospects for Registrant.
The Registrant's success is dependent upon the hiring and retention of
key personnel. None of the officers or directors has any employment or non-
competition agreement with the Registrant. Therefore, there can be no
assurance that these personnel will remain employed by the Registrant. Should
any of these individuals cease to be affiliated with the Registrant for any
reason before qualified replacements could be found, there could be material
adverse effects on the Registrant's business and prospects.
In addition, all decisions with respect to the management of the
Registrant will be made exclusively by the officers and directors of the
Registrant. Investors will only have rights associated with stockholders to
make decisions which effect the Registrant. The success of the Registrant, to
a large extent, will depend on the quality of the directors and officers of
the Registrant. Accordingly, no person should invest in the shares unless he
is willing to entrust all aspects of the management of the Registrant to the
officers and directors.
(l) Potential Conflicts of Interest May Affect Ability of Officers and
Directors to Make Decisions in the Best Interests of Registrant.
The officers and directors have other interests to which they devote
time, either individually or through partnerships and corporations in which
they have an interest, hold an office, or serve on boards of directors, and
each will continue to do so notwithstanding the fact that management time may
be necessary to the business of the Registrant. As a result, certain conflicts
of interest may exist between the Registrant and its officers and/or directors
which may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of corporate
opportunities which cannot be resolved through arm's length negotiations. All
of the potential conflicts of interest will be resolved only through exercise
by the directors of such judgment as is consistent with their fiduciary duties
to the Registrant. It is the intention of management, so as to minimize any
potential conflicts of interest, to present first to the Board of Directors to
the Registrant, any proposed investments for its evaluation.
(m) Limitations on Liability, and Indemnification, of Directors and Officers
May Result in Expenditures by Registrant.
The Registrant's Articles of Incorporation include provisions to
eliminate, to the fullest extent permitted by the Nevada Revised Statutes as
in effect from time to time, the personal liability of directors of the
Registrant for monetary damages arising from a breach of their fiduciary
duties as directors. The By-Laws of the Registrant include provisions to the
effect that the Registrant may, to the maximum extent permitted from time to
time under applicable law, indemnify any director, officer, or employee to the
extent that such indemnification and advancement of expense is permitted under
such law, as it may from time to time be in effect. Any limitation on the
liability of any director, or indemnification of directors, officer, or
employees, could result in substantial expenditures being made by the
Registrant in covering any liability of such persons or in indemnifying them.
(n) Absence of Cash Dividends May Affect Investment Value of Registrant's
Stock.
The Board of Directors does not anticipate paying cash dividends on the
common stock for the foreseeable future and intends to retain any future
earnings to finance the growth of the Registrant's business. Payment of
dividends, if any, will depend, among other factors, on earnings, capital
requirements and the general operating and financial conditions of the
Registrant as well as legal limitations on the payment of dividends out of
paid-in capital.
(o) No Cumulative Voting May Affect Ability of Some Shareholders to
Influence Mangement of Registrant.
Holders of the shares of common stock of the Registrant are not entitled
to accumulate their votes for the election of directors or otherwise.
Accordingly, the holders of a majority of the shares present at a meeting of
shareholders will be able to elect all of the directors of the Registrant, and
the minority shareholders will not be able to elect a representative to the
Registrant's board of directors.
(p) No Assurance of Continued Public Trading Market and Risk of Low Priced
Securities May Affect Market Value of Registrant's Stock.
Since August 25, 1998, there has been only a limited public market for
the common stock of the Registrant. The common stock of the Registrant is
currently quoted on the Pink Sheets LLC; the Registrant intends to reapply for
relisting on the Over the Counter Bulletin Board after clearing comments on
this Form 10-SB registration statement. As a result, an investor may find it
difficult to dispose of, or to obtain accurate quotations as to the market
value of the Registrant's securities. In addition, the common stock is subject
to the low-priced security or so called "penny stock" rules that impose
additional sales practice requirements on broker-dealers who sell such
securities. The Securities Enforcement and Penny Stock Reform Act of 1990
("Reform Act") requires additional disclosure in connection with any trades
involving a stock defined as a penny stock (generally, according to recent
regulations adopted by the U.S. Securities and Exchange Commission, any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions), including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and
the risks associated therewith. The regulations governing low-priced or
penny stocks sometimes limit the ability of broker-dealers to sell the
Registrant's common stock and thus, ultimately, the ability of the investors
to sell their securities in the secondary market.
(q) Failure to Maintain Market Makers May Affect Value of Registrant's
Stock.
If the Registrant is unable to maintain a National Association of
Securities Dealers, Inc. member broker/dealers as market makers, the liquidity
of the common stock could be impaired, not only in the number of shares of
common stock which could be bought and sold, but also through possible delays
in the timing of transactions, and lower prices for the common stock than
might otherwise prevail. Furthermore, the lack of market makers could result
in persons being unable to buy or sell shares of the common stock on any
secondary market. There can be no assurance the Registrant will be able to
maintain such market makers.
(r) The Price per Share for Sales of Unregistered Securities by Registrant
Less Than Then Current Market Price.
The price per share of all sales of unregistered securities by the
Registrant, except for 2,000 shares issued in December 1998, have been much
lower than the then current market price. Thus, the Registrant is not
receiving cash, assets, or services which are equivalent to the market price
of the stock at the time it is issued. However, the Board of Directors has
made a determination that the consideration received by the Registrant in each
instance is adequate. The factors that the Board of Directors considers when
determining the price when shares are issued above are: (a) low liquidity of
the common stock on the trading exchange (low volume and infrequent execution
of trades) and (b) the restricted nature of the shares issued.
(s) Sale of Shares Eligible For Future Sale Could Adversely Affect the
Market Price.
All of the approximate 14,000,000 shares of common stock which are
currently held, directly or indirectly, by management have been issued in
reliance on the private placement exemption under the Securities Act of 1933.
Such shares will not be available for sale in the open market without separate
registration except in reliance upon Rule 144 under the Securities Act of
1933. In general, under Rule 144 a person, or persons whose shares are
aggregated, who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
affiliates of One Touch, as defined, would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1%
of the then outstanding shares of common stock, or the average weekly reported
trading volume during the four calendar weeks preceding such sale, provided
that current public information is then available. If a substantial number of
the shares owned by these shareholders were sold under Rule 144 or a
registered offering, the market price of the common stock could be adversely
affected.
(t) Status as a Pseudo California Corporation Could Adversely Affect the
Operation of the Registrant.
Section 2115 of the California General Corporation Law subjects foreign
corporations doing business in California to various substantive provisions of
the California General Corporation Law in the event that the average of its
property, payroll and sales is more than 50% in California and more than one-
half of its outstanding voting securities are held of record by persons
residing in the State of California. Section 2115 does not apply to any
corporation which, among other things, has outstanding securities designated
as qualified for trading as a national market security on NASDAQ if such
corporation has at least eight hundred holders of its equity securities as of
the record date of its most recent annual meeting of shareholders.
Currently, the Registrant does meet the requirement of a pseudo
California corporation. Some of the substantive provisions of California
which apply to the Registrant include laws relating to annual election of
directors, removal of directors without cause, removal of directors by court
proceedings, indemnification of officers and directors, directors standard of
care and liability of directors for unlawful distributions. In addition,
Section 708 of the California General Corporation Law which mandates that
shareholders have the right of cumulative voting at the election of directors
applies to the Registrant.
Forward Looking Statements.
The foregoing Plan of Operation contains "forward looking statements"
within the meaning of Rule 175 of the Securities Act of 1933, as amended, and
Rule 3b-6 of the Securities Act of 1934, as amended, including statements
regarding, among other items, the Registrant's business strategies, continued
growth in the Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates. The words
"believe," "expect," "anticipate," "intends," "forecast," "project," and
similar expressions identify forward-looking statements. These forward-
looking statements are based largely on the Registrant's expectations and are
subject to a number of risks and uncertainties, certain of which are beyond
the Registrant's control. The Registrant cautions that these statements are
further qualified by important factors that could cause actual results to
differ materially from those in the forward looking statements, including,
among others, the following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in the market
price of ingredients used in the Registrant's products and the level of
expenses incurred in the Registrant's operations. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward looking
statements."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal proceedings
and, to the best of its knowledge, no such action by or against the Registrant
has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits.
Exhibits included or incorporated by reference herein are set forth in
the attached Exhibit Index.
Reports on Form 8-K.
The Registrant did not filed any reports on Form 8-K during the second
quarter of the fiscal year covered by this Form 10-QSB.
SIGNATURE
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.
Everlert, Inc.
Dated: August 13, 2000 By: /s/ James J. Weber
James J. Weber, President
EXHIBIT INDEX
Number Exhibit Description
2 Share Exchange Agreement between the Registrant and Safe at Home
Products, Inc., dated April 1, 1999 (incorporated by reference to
Exhibit 2 of the Form 10-SB/A filed on October 24, 2000).
3.1 Articles of Incorporation (incorporated by reference to Exhibit
3.1 of the Form 10-SB/A filed on October 24, 2000).
3.2 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.2 of the Form 10-SB/A
filed on October 24, 2000).
3.3 Bylaws (incorporated by reference to Exhibit 3.3 of the Form 10-
SB/A filed on October 24, 2000).
4 Form of Subscription Agreement used by the Registrant
incorporated by reference to Exhibit 4 of the Form 10-SB/A filed
on April 6, 2001).
10.1 Convertible Promissory Note between the Registrant and James T.
Marsh, dated March 22, 1999 (incorporated by reference to Exhibit
10.1 of the Form 10-SB/A filed on October 24, 2000).
10.2 Convertible Promissory Note between the Registrant and Wyvern
Technologies, Inc., dated March 22, 1999 (incorporated by
reference to Exhibit 10.2 of the Form 10-SB/A filed on October 24,
2000).
10.3 Technology Transfer Agreement between NuCo, Inc. and Safe at Home
Products, Inc. (including Non-Competition Agreement), dated April
1, 1999 (incorporated by reference to Exhibit 10.3 of the Form 10-
SB/A filed on April 12, 2001).
10.4 Class A Note issued by Rich Bourg Financial, Ltd. in favor of the
Registrant, dated April 5, 1999 (incorporated by reference to
Exhibit 10.4 of the Form 10-SB/A filed on April 12, 2001).
10.5 Class A Note issued by Noved Holdings, Inc. in favor of the
Registrant, dated April 5, 1999 (incorporated by reference to
Exhibit 10.5 of the Form 10-SB/A filed on April 12, 2001).
10.6 Class B Note issued by Rich Bourg Financial, Ltd. in favor of the
Registrant, dated April 5, 1999 (incorporated by reference to
Exhibit 10.6 of the Form 10-SB/A filed on April 12, 2001).
10.7 Class B Note issued by Noved Holdings, Inc. in favor of the
Registrant, dated April 5, 1999 (incorporated by reference to
Exhibit 10.7 of the Form 10-SB/A filed on April 12, 2001).
10.8 Convertible Promissory Note between the Registrant and Jerry G.
Hilbert, dated July 14, 2000 (incorporated by reference to Exhibit
10.3 of the Form 10-SB/A filed on October 24, 2000).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Form 10-KSB/A filed on September 8, 2000).