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, 2002
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: 0-28177
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, 2002, the Registrant had 22,042,477 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 (UNAUDITED)
AS OF JUNE 30, 2002 3
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2002 AND JUNE 30, 2001,
AND FOR THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH
JUNE 30, 2002 4
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 30, 2002 AND JUNE 30, 2001,
AND FOR THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH
JUNE 30, 2002 5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 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 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
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, 2002
(Unaudited)
ASSETS
Current assets
Cash $ 28
Total current assets 28
Fixed assets, net 40,660
Other assets
Acquired technology, net -
Total assets 40,688
LIABILITIES AND STOCKHOLDERS'DEFICIT
Current liabilities
Accounts payable 8,648
Accrued liabilities 124,967
Due to related parties 67,675
Notes payable - related party 411,529
Total current liabilities 612,819
Total liabilities 612,819
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, 22,042,477 shares
issued and outstanding 22,042
Additional paid-in capital 2,074,826
Common stock issued for prepaid consulting Services (30,000)
Notes receivable for common stock issuance, net -
Accumulated deficit (2,639,015)
Total stockholders'deficit (572,131)
Total liabilities and stockholders'deficit 40,688
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Period from
February 3, 1998
(Date of inception)
For the three months ended For the six months ended through
June 30, June 30, June 30, 2002
2002 2001 2002 2001
Revenue $ - $ - $ - $ - $ -
Operating expenses
Amortization and
depreciation 2,669 36,091 38,884 69,669 421,368
Bad debt - - - - 917,625
Research and development - - - - 237,149
General and administrative 37,094 96,369 98,749 130,702 933,773
Total operating expenses 39,763 132,460 137,633 200,371 2,509,915
Loss from operations (39,763) (132,460) (137,633) (200,371) (2,509,915)
Other expense
Interest expense 10,288 10,288 20,576 20,577 129,100
Loss before provision for
income taxes (50,051) (142,748) (158,209) (220,948) (2,639,015)
Provision for income taxes - - - - -
Net loss (50,051) (142,748) (158,209) (220,948) (2,639,015)
Basic and diluted loss per
common share (0.00) (0.01) (0.01) (0.01) (0.19)
Basic and diluted weighted
average common shares
outstanding 21,742,477 20,172,477 21,066,234 20,095,129 13,991,086
See Accompanying Notes to Financial Statements
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
February 3, 1998
(Date of
inception)
For the six months ended June 30 through
2002 2001 June 30, 2002
Cash flows from
operating activities:
Net loss $ (158,209) $ (220,948) $ (2,639,015)
Adjustments to reconcile
net loss to net
cash provided (used) by
operating activities:
Amortization and
depreciation 38,884 69,669 421,368
Bad debt - - 917,625
Interest and financing
costs satisfied
in exchange of common stock - - 23,375
Stock based compensation 83,750 80,000 373,650
Changes in operating assets and
liabilities:
Decrease in deposits - 53,500 -
Increase (decrease) in
accounts payable (5,569) (13,740) 8,648
increase in accrued
liabilities 20,577 20,576 124,967
Increase (decrease) in
due to related parties 20,560 38,415 132,675
Increase in other
Liabilities - 15,000 -
Net cash provided (used) by
operating activities (7) 42,472 (636,707)
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:
Net proceeds from issuance of
notes payable - related parties - - 241,930
Net proceeds from issuance of note
Payable - 2,500 205,599
Proceeds from issuance of
preferred stock - - 48,001
Proceeds from issuance of common
Stock - 5,000 116,932
Proceeds from issuance of stock
subscriptions payable - - 77,773
Net cash provided by financing
activities - 7,500 690,235
Net increase (decrease) in cash (7) (3,528) 28
Cash, beginning of period 35 4,136 -
Cash, end of period 28 608 28
Supplemental disclosure
of cash flow:
Cash paid for interest - - 14,000
Schedule of non-cash investing
and financing activities:
12,000,000 common shares issued
in exchange for
acquired technology - - 408,528
00,000 common shares issued in
exchange
for notes receivable for common
stock issuance - - 450,000
300,000 common shares issued in
exchange
for notes receivable for common
stock issuance - - 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
Other payable satisfied through
issuance of
15,000 common shares - - 3,241
Other payable satisfied through
issuance of
344,992 common shares - - 74,532
Other payables satisfied through
issuance of
359,992 common shares - - 77,773
975,000 common shares issued in
exchange
for due to related parties 65,000 - 65,000
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 accounting principles generally
accepted in the United States for complete financial statements. The
financial statements should be read in conjunction with the Forms 10-
KSB for the year ended December 31, 2001 of Everlert, Inc. (the
"Company").
The interim financial information is unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial
position as of June 30, 2002 and the results of operations and cash
flows presented herein have been included in the financial statements.
Interim results are not necessarily indicative of results of
operations for the full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. RELATED PARTY TRANSACTIONS
Notes payable - related parties consist of the following at June 30,
2002:
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 James T. Marsh,
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 169,599
$ 411,529
During the six months ended June 30, 2002, the Company issued 975,000
shares of the Company's common stock to satisfy the $65,000 due to
Safe at Home Products, Inc.
3. STOCKHOLDERS' DEFICIT
During the six months ended June 30, 2002, the Company issued 900,000
common shares for legal services totaling $45,000.
During the six months ended June 30, 2002, the Company recognized
$20,000 of the $100,000 ($0.50 per share) prepaid consulting services
for the August 3, 2000 issuance of 200,000 shares of its common stock.
During the six months ended June 30, 2002, 125,000 shares of the
Company's common stock was issued for consulting services totaling
$18,750.
4. GOING CONCERN
The Company incurred a net loss of approximately $158,200 for the six
months ended June 30, 2002, and the Company's current liabilities
exceed its current assets by approximately $612,800 as of June 30,
2002, 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 53 months from February 3, 1998
through June 30, 2002 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, but relisted on February 12, 2002
after the Securities and Exchange Commission ("SEC") had no further
comments on its Form 10-SB filing).
Realization of sales of the Registrant's products for the 12
months ending on December 31, 2002 is vital to its plan of operations.
The Registrant believes that its initial revenues will be primarily
dependent upon 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.
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 53
months from February 3, 1998 through June 30, 2002 totaling
$2,509,915. Expenditures for the six months ended June 30, 2002 were
primarily due to costs incurred for amortization, consulting fees, and
accounting services. Comparison of the six months ended June 30, 2002
to the six months ended June 30, 2001 shows a decrease of $31,953 for
general and administrative expenses. The decrease in general and
administrative expenses is due to a decrease in consulting fees during
the year. Provided funds are available, additional research and
development expenditures may be required as needs are identified to
meet laboratory testing requirements and/or as product enhancements
are identified.
Due to the significant operating expenses, as well as interest
expense in the amount of $129,100, the Registrant experienced a net
loss of $2,639,015 for this 53 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, 2002, the Registrant had no working
capital and an accumulated deficit of $2,639,015.
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 it 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 $1,268,621 for the fiscal
year ended December 31, 2000, $332,601 for the fiscal year ended
December 31, 2001, and $158,209 for the six months ended June 30,
2002. The Registrant's current liabilities exceed its current assets
by $534,325 as of December 31, 2000, $642,216 as of December 31, 2001,
and $612,791 as of June 30, 2002. At June 30, 2002, the Registrant
had an accumulated deficit of $2,639,015; 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, two promissory notes between the Registrant
and its directors totaling $241,930, and a promissory note between the
Registrant and James T. Marsh totaling $169,599 (both figures as of
June 30, 2002). These promissory notes are 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, 2002 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 that requires such certification; although they
would be in a number of foreign countries that 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 that 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 that 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 that 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
that may not be susceptible to resolution.
In addition, conflicts of interest may arise in the area of
corporate opportunities that 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 Over the Counter Bulletin
Board. 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 that 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 13,000,000 shares of common stock that 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 that 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.
The Registrant sold the following securities without registration
(restricted) during the three months ended June 30, 2002:
(a) On April 19, 2002, the Registrant issued 975,000 shares of
its common stock to satisfy the $65,000 due to Safe at Home Products,
Inc., an affiliate of the company.
(b) On June 18, 2002, the Registrant issued 125,000 shares of
its common stock for consulting services totaling $18,750.
No commissions were paid in connection with these sales. These
sales were undertaken under Rule 506 of Regulation D under the
Securities Act of 1933, as amended ("Act"), by the fact that:
- each sale was made to a sophisticated investor as defined in Rule 502;
- the Registrant 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 Registrant 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
Registrant advised each purchaser of the limitations on resale in
the manner contained in Rule 502(d)2 of this section;
- neither the Registrant nor any person acting on its behalf sold
the securities by any form of general solicitation or general
advertising; and
- the Registrant exercised reasonable care to assure that each
purchaser of the securities is not an underwriter within the
meaning of Section 2(11) of the Act 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.
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
first 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, 2002 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)
4.1 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)
4.2 Non-Employee Directors and Consultants Retainer Stock Plan,
dated July 10, 2001 (incorporated by reference to Exhibit
4.1 of the Form S-8 filed on August 7, 2001).
4.3 Consulting Services Agreement between the company and Tracy
Marsh, dated July 17, 2001 (incorporated by reference to
Exhibit 4.2 of the Form S-8 filed on August 7, 2001).
4.4 Consulting Services Agreement between the company and James
J. Weber, dated July 17, 2001 (incorporated by reference to
Exhibit 4.3 of the Form S-8 filed on August 7, 2001).
4.5 Consulting Services Agreement between the company and Jerry
G. Hilbert, dated July 17, 2001 (incorporated by reference
to Exhibit 4.4 of the Form S-8 filed on August 7, 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).
10.9 Promissory Note between the Registrant and Safe at Home
Products, Inc., dated October 6, 2001 (incorporated by
reference to Exhibit 10.9 of the Form 10-KSB filed on April
2, 2002).
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).