U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(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, 2000
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, 2000, the Registrant had 19,552,477 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 (RESTATED)
AS OF JUNE 30, 2000 3
STATEMENTS OF OPERATIONS (RESTATED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2000 AND JUNE 30, 1999, AND FOR
THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH JUNE 30, 2000 4
STATEMENTS OF CASH FLOWS (RESTATED)
FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND JUNE 30, 1999, AND FOR
THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH JUNE 30, 2000 5
NOTES TO FINANCIAL STATEMENTS (RESTATED) 7
ITEM 2. PLAN OF OPERATION 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 21
ITEM 5. OTHER INFORMATION 22
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
SIGNATURE 22
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
EVERLERT, INC.
(A development stage company)
BALANCE SHEET
JUNE 30, 2000
(Unaudited)
(Restated)
ASSETS
Current assets
Cash $ 98
Total current assets 98
Other assets
Acquired technology, net 238,308
Deposits 53,500
291,808
Total assets 291,906
LIABILITIES AND STOCKHOLDERS' DEFCIT
Current liabilities
Accounts payable 16,114
Accrued liabilities 42,909
Due to related party 2,350
Notes payable - related party 178,669
Note payable 169,600
Total current liabilities 409,642
Total liabilities 409,642
Commitments and contingencies -
Stockholders' deficit
8% cumulative preferred stock; $.001 par value;
5,000,000 shares authorized, 14,333 shares
issued and outstanding 14
Common stock; $.001 par value; 50,000,000
shares authorized, 19,552,477 shares
issued and outstanding 19,552
Additional paid-in capital 1,766,568
Stock subscriptions receivable (917,625)
Accumulated deficit (986,245)
Total stockholders' deficit (117,736)
Total liabilities and stockholders' deficit 291,906
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Six Months Period from
Ended June 30 Ended June 30 February 3 1998
2000 1999 2000 1999 (date of inception)
(RESTATED) (RESTATED) through
June 30 2000
Revenue $ - $ - $ - $ - $ -
Operating expenses
Amortization 34,044 34,044 68,088 34,044 170,220
Research and development - - - 733 168,383
General and
administrative 2,905 23,826 21,409 86,352 600,599
Total operating expenses 36,949 57,870 89,497 121,129 939,202
Net loss from
Operations (36,949) (57,870) (89,497) (121,129) (939,202)
Other expense
Interest expense 8,582 8,582 17,164 8,582 47,042
8,582 8,582 17,164 8,582 47,042
Net loss before provision
for income taxes (45,531) (66,452) (106,661) (129,711) (986,244)
Provision for income
taxes - - - - -
Net loss (45,531) (66,452) (106,661) (129,711) (986,244)
Basic and diluted
loss per common share (0.00) (0.00) (0.01) (0.04) (0.11)
Basic and diluted
weighted average
common shares
outstanding 19,279,557 3,987,560 19,068,776 3,696,066 8,749,138
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
(Unaudited)
(Restated)
For the Six Months Period from
Ended June 30 February 3 1998
(Date of
inception)
through
2000 1999 June 30
(RESTATED) 2000
Cash flows from operating activities:
Net loss $ (106,661) $(129,710) $ (986,244)
Adjustments to reconcile net
loss to net cash used by operating
activities:
Amortization 68,088 34,044 170,220
Interest and financing costs satisfied
in exchange of common stock - - 23,375
Common stock issued for expenses - 25,800 87,900
Changes in operating assets and
liabilities:
Increase in deposits - - (53,500)
Increase (decrease) in accounts payable (4,679) (288,700) 16,114
Increase in accrued liabilities 17,163 6,715 42,909
Increase in due to related party 2,350 - 2,350
Net cash used by operating activities (23,739) (351,851) (616,877)
Cash flows from financing activities:
Proceeds from issuance of notes payable
- related party - 173,669 178,669
Proceeds from issuance of note payable - 169,600 205,600
Proceeds from issuance of preferred stock 10,000 33,001 43,001
Proceeds from issuance of common stock - - 111,932
Proceeds from issuance of stock
subscriptions payable - - 77,773
Net cash provided by financing activities 10,000 993,245 616,975
Net increase (decrease) in cash (13,739) 641,394 98
Cash, beginning of period 13,837 733 -
Cash, end of period 98 642,127 98
Supplemental disclosure of cash flow:
Cash paid for interest - - -
Schedule of non-cash investing
and financing activities:
40,000 common shares issued for payment
of debt - - 2,000
300,000 common shares issued in exchange
for stock subscriptions receivable - 450,000 450,000
Debt satisfied through transfer of
common stock - - 34,000
12,000,000 common shares
issued in exchange for
acquired technology - 408,528 408,528
Subscriptions payable
satisfied through issuance of
359,992 common shares 77,773 - 77,773
300,000 common shares issued
in exchange for stock subscriptions
receivable 525,000 - 525,000
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(Restated)
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 for the
year ended December 31, 1999 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. GOING CONCERN
The Company incurred a net loss of approximately $107,000 for the six
months ended June 30, 2000, and the Company's current liabilities
exceed its current assets by approximately $400,000 as of June 30,
2000. 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 29 months from February 3, 1998
through June 30, 2000 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 Exchange 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 SEC must
have no further comments on this registration statement for the
Registrant to be eligible for relisting.
Realization of sales of the Registrant's products 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 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 note
receivable for common stock issuance at December 31, 1999 in the
amount of $392,625. 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 29
months from February 3, 1998 through June 30, 2000 totaling $939,202.
Expenditures were primarily due to costs incurred for 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 $47,042, the Registrant experienced a net
loss of $986,244 for this 29 month period. The Registrant anticipated
incurring this loss during the initial commencement of operations
until such time that it will realize revenues from operations. As of
June 30, 2000, the Registrant's working capital deficit was $458,744,
and it had an accumulated deficit of $879,584.
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 $429,316 for the period
from inception (February 3, 1998 through December 31, 1998, $450,268
for the fiscal year ended December 31, 1999, and $106,661 for the six
months ended June 30, 2000. The Registrant's current liabilities
exceed its current assets (working capital deficit) by $458,744 as of
June 30, 2000. At June 30, 2000, the Registrant had an accumulated
deficit of $879,584. 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, the Registrant has also borrowed
$169,600 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 30, 2000 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
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 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 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 apply for relisting on the Over the Counter
Bulletin Board after the Securities and Exchange Commission has no
further comments on the 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.
(p) 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.
(q) 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.
(r) 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 the
Registrant, 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.
(s) 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.
Specific Sales.
The following securities of the Registrant were sold without
registration during the three months ended June 30, 2000:
On May 3 and May 17, 2000, the Registrant sold a total of 344,992
shares of common stock to two investors. This sale was part of an
offering between March 3, 2000 and May 17, 2000, during which the
Registrant sold a total of 359,992 shares of common stock pursuant to
its stock subscriptions payable balance of $77,773 at December 31,
1999. During this period, the closing per share price of the
Registrant's common stock was $2.25 (only traded on three days).
General Information.
No commissions or fees were paid in connection with these sales.
All of theses sales were undertaken pursuant to the limited offering
exemption from registration under the Securities Act of 1933 as
provided in Rule 506 of Regulation D by the fact that:
the sales were made to sophisticated investors as defined in Rule 502;
the information specified in paragraph (b)2(ii)(B) and paragraph
(b)(2)(ii)(C) of this section was provided to each investor;
the Company gave each purchaser the opportunity to ask questions
and receive answers concerning the terms and conditions of the
offering and to obtain any additional information which the
Company possessed or could acquire without unreasonable effort or
expense that is necessary to verify the accuracy of information
furnished;
at a reasonable time prior to the sale of securities, the Company
advised the purchasers of the limitations on resale in the manner
contained in paragraph Rule 502(d)2 of this section;
neither the Company nor any person acting on its behalf sold the
securities by any form of general solicitation or general
advertising; and
the company exercised reasonable care to assure that the
purchasers of the securities are not underwriters within the
meaning of section 2(11) of the Securities Act of 1933 in
compliance with Rule 502(d).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
Effective on June 15, 2000, Anthony Lagormarsino resigned as a
director and officer of the Registrant. There were no disagreements
between Mr. Lagomarsino and the Registrant on any matter relating to
the Registrant's operations, policies or practices.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits.
Exhibits included or incorporated by reference herein: See
Exhibit Index.
Reports on Form 8-K.
No reports on Form 8-K were filed 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: November 1, 2001 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
3, 2001).
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of the Form 10-SB/A filed on October 3, 2001).
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 3, 2001)
3.3 Bylaws (incorporated by reference to Exhibit 3.3 of the Form
10-SB/A filed on October 3, 2001)
4 Form of Subscription Agreement used by the Registrant
(incorporated by reference to Exhibit 4 of the Form 10-SB/A
filed on October 3, 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 3, 2001).
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 3, 2001).
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 October 3, 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
October 3, 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 October 3, 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
October 3, 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 October 3, 2001).
10.8 Convertible Promissory Note between the Registrant and Jerry
G. Hilbert, dated July 14, 2000 (incorporated by reference
to Exhibit 10.8 of the Form 10-SB/A filed on October 3, 2001).
16.1 Letter on change in certifying accountant, dated January 11,
2001 (incorporated by reference to Exhibit 16.1 of the Form
10-SB/A filed on October 3, 2001).
16.2 Letter on change in certifying accountant, dated January 31,
2001 (incorporated by reference to Exhibit 16 of the Form 8-
K filed on February 7, 2001).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Form 10-KSB/A filed on September 8, 2000).