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 MARCH 31, 2004
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 Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
4501 Sunny Dunes, Unit B, Palm Springs, California 92263
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: (760) 327-7163
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 March 31, 2004, the Registrant had 41,952,414 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
CONDENSED BALANCE SHEET (UNAUDITED)
AS OF MARCH 31, 2004 3
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31, 2004 AND MARCH 31, 2003,
AND FOR THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH
MARCH 31, 2004 4
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31, 2004 AND MARCH 31, 2003,
AND FOR THE PERIOD FROM FEBRUARY 3, 1998
(DATE OF INCEPTION) THROUGH
MARCH 31, 2004 5
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED) 7
ITEM 2. PLAN OF OPERATION 9
ITEM 3. CONTROLS AND PROCEDURES 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 2. CHANGES IN SECURITIES 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
SIGNATURES 18
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
EVERLERT, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
MARCH 31, 2004
(Unaudited)
ASSETS
Current assets
Cash $ -
Total current assets -
Fixed assets, net 5,000
Total assets 5,000
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable 3,100
Accrued liabilities 292,811
Due to related parties 69,175
Notes payable - related parties 447,459
Total current liabilities 812,545
Total liabilities 812,545
Commitments and contingencies -
Stockholders' deficit
8% cumulative preferred stock; $0.001 par value;
5,000,000 shares authorized, 16,000 shares
issued and outstanding 16
Common stock; $0.001 par value; 800,000,000
shares authorized, 41,952,414 shares
issued and outstanding 41,952
Additional paid-in capital 2,294,115
Accumulated deficit (3,143,628)
Total stockholders' deficit (807,545)
Total liabilities and stockholders' deficit 5,000
See Accompanying Notes to Condensed Financial Statements
EVERLERT, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Period from
February 3, 1998
For the Three Months Ended (Date of Inception)
March 31, Through
2004 2003 March 31, 2004
Revenue $ - $ - $ -
Operating expenses
Amortization and depreciation - 2,675 434,787
Bad debt - - 917,625
Research and development - - 237,149
General and administrative 54,853 66,507 1,329,108
Total operating expenses 54,853 69,182 2,918,669
Loss from operations (54,853) (69,182) (2,918,669)
Other expense
Interest expense (10,288) (10,288) (201,118)
Impairment of fixed assets - - (22,241)
Loss before provision for income taxes (65,141) (79,470) (3,142,028)
Provision for income taxes (800) (800) (1,600)
Net loss (65,941) (80,270) (3,143,628)
Basic and diluted loss per common share (0.00) (0.00) (0.15)
Basic and diluted weighted average
common shares outstanding 41,952,414 39,074,637 21,092,955
See Accompanying Notes to Condensed Financial Statements
EVERLERT, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
February 3, 1998
For the Three Months Ended (Date of Inception)
March 31, Through
2004 2003 March 31, 2004
Cash flows from operating activities:
Net loss $ (65,941) $ (80,270) $ (3,143,628)
Adjustments to reconcile net
loss to net cash used in operating
activities:
Amortization and depreciation - 2,675 434,787
Bad debt - - 917,625
Interest and financing costs satisfied
in exchange of common stock - - 23,375
Impairment of fixed assets - - 22,241
Stock based compensation - 64,007 585,349
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable 2,300 800 3,100
Increase in accrued liabilities 56,641 10,289 293,811
Net cash used in operating activities (7,000) (2,499) (863,340)
Cash flows from investing activities:
Purchase of fixed assets - - (53,500)
Net cash used in investing activities - - (53,500)
Cash flows from financing activities:
Increase in due to related parties - - 133,175
Net proceeds from issuance of
notes payable - related parties 7,000 2,499 483,459
Net proceeds from issuance of note payable - - 57,500
Net proceeds from issuance of other
liabilities - - 48,001
Proceeds from issuance of common stock - - 116,932
Proceeds from issuance of stock
subscriptions payable - - 77,773
Net cash provided by financing activities 7,000 2,499 916,840
Net change in cash - - -
Cash, beginning of period - - -
Cash, end of period - - -
Supplemental disclosure of cash flow:
Cash paid for interest - - 14,000
Schedule of non-cash investing and
financing activities:
Other liability satisfied through issuance of
11,499,999 common shares - 57,500 57,500
1,500,000 common shares issued in relation to
the president's employment agreement - 27,740 27,740
See Accompanying Notes to Condensed Financial Statements
EVERLERT, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed 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 Form 10-KSB for the year ended December 31, 2003
of Everlert, Inc. ("Company").
The interim financial statements present the condensed balance sheet,
statements of operations, stockholders' deficit and cash flows of the
Company. The financial statements have been prepared in accordance
with accounting principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial
position of the Company as of March 31, 2004 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. NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consist of the following as of March
31, 2003:
Promissory note payable to Wyvern Technologies, Inc.
(an entity controlled by the former 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 former director and current
stockholder 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 director of the Company,
unsecured, bearing an interest rate of 0% 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 15,500
Promissory note payable to a stockholder 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 20,429
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 169,600
$ 447,459
3. GOING CONCERN
The Company incurred a net loss of approximately $66,000 for the three
months ended March 31, 2004, and the Company's current liabilities
exceed its current assets by approximately $813,000 as of March 31,
2004, raising substantial doubt about the Company's ability to
continue as a going concern. The Company has determined, after
obtaining an independent study of the market for the voice record and
playback smoke detector, that the size of the market is not as large
as previously estimated and probable cost of market entry and
development along with other factors are likely to be substantially
greater than previously estimated. Due to these findings, the Company
has suspended development of the products and will concentrate on
finding a profitable business combination or other transaction that
has better prospects for success. The Company will seek additional
sources of capital through the issuance of debt or equity financing to
continue to explore the possible combinations that may result in
profitable operations in the future, but there can be no assurances
that the Company will develop such a relationship for future
profitable business operations or that it will obtain the financing
necessary to accomplish 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.
The following plan of operation is based upon, and should be read
in conjunction with, its unaudited financial statements and related
notes included elsewhere in this Form 10-QSB, which have been prepared
in accordance with accounting principles generally accepted in the
United States.
Twelve-Month Plan of Operation.
The operational period for the period from February 3, 1998
(inception) through March 31, 2004 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 devoted substantially all of its past 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.
On August 8, 2002, the board of directors determined that some
changes were indicated because of lack of progress in bringing the
smoke detection products to market. On that date the board of
directors agreed to elect a new slate of officers and directors and
subsequently a board of directors meeting held on August 18, 2002,
elected a new slate and the existing officers directors resigned
concurrently with the election of the new officers and directors. The
new board of directors consisted of James H. Alexander, president, Ed
Fowler, secretary, Dannie Shaver, and David Paulson. Mr. Paulson,
also served as a director prior to the new board election.
The new board of directors decided to retain the services of an
independent business consultant to evaluate the Everlert products and
business plan. The primary purposes of the evaluation were to:
- determine the overall feasibility of the plan;
- make an independent evaluation of the projected market size and
estimates of revenues in the business plan;
- evaluate and enumerate the "patentability" of the intellectual
property owned or assigned to the registrant; and
- make suggestions to the new management team as to how to proceed
in pursuit of the existing business plan or to make suggestions
as to options or modifications of the business plan.
The new management team hired Select University Technologies,
Inc. ("SUTI") of Costa Mesa, California to perform the evaluation and
report (see Exhibit 10.13 to this Form 10-KSB). SUTI, is a multi-
project business accelerator, devoted to the launch of new technology
companies. SUTI carefully selects patented laboratory discoveries and
transforms them into unique and compelling commercial products and
enterprises. More information can be obtained about SUTI by visiting
the SUTI website at www.suti.com.
The final SUTI report was received on March 22, 2004, and
indicates that the market for Everlert products may not be easily
penetrated by the Registrant. As a result of this report, the board of
directors determined that a change of direction of the company was indicated.
Effective as of March 22, 2004, the board of directors determined
that because the company has had no revenues from operations since it
was formed, it should not continue the business activities that it
previously conducted. The Registrant now plans to pursue a business
combination or other strategic transaction. The Registrant believes
its status as a public company may be attractive to a private company
wishing to merge with it, but there is no guarantee that a business
combination or other strategic transaction will be consummated. If a
business combination or other strategic transaction is not consummated
in a suitable timeframe or cannot be consummated due to excessive cost
or for any other reason, there is substantial doubt the Registrant
will be able to continue as a going concern.
The Registrant is considered a development stage enterprise.
Current management of the Registrant believes that the need for
additional capital going forward cannot immediately be derived from
earnings generated from the sale of its products. Because of this, it
is the intent of the Registrant to seek to raise additional capital.
There can be no assurance that any such financing can be obtained or,
if obtained that it will be on reasonable terms. In the interim,
certain stockholders, including the president, have agreed to provide
such funds as are necessary to meet its ongoing obligations. The
Registrant currently has no arrangements or commitments for accounts
and accounts receivable financing.
At the time of this filing, realization of sales of the
Registrant's products for the 12 months ended on December 31, 2003,
previously deemed by management as being "vital to its plan of
operations," did not occur. The Registrant's past inability 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 incurred a significant accumulated deficit for the
period from February 3, 1998 (inception) through March 31, 2004
totaling $3,143,628. Expenditures for the three months ended March
31, 2004 were primarily due to costs incurred for amortization,
consulting fees, and accounting services. Comparison of the three
months ended March 31, 2004 to the three months ended March 31, 2003
shows a decrease of $11,654 for general and administrative expenses.
The decrease is due in large part to a decrease in consulting and
other fees paid during the three months ended March 31, 2004 as the
Registrant did not timely file its Form 10-QSB's during that period.
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 continuing net losses: $411,547 for the
fiscal year ended December 31, 2002, $185,334 for the fiscal year
ended December 31, 2003, $65,941 for the three months ended March 31,
2004, and $3,143,628 for period from February 3, 1998 (date of
inception) to March 31, 2004. The Registrant's current liabilities
exceed its current assets by $731,536 as of December 31, 2002,
$746,604 as of December 31, 2003, and $812,545 as of March 31, 2004.
At March 31, 2004, the Registrant had an accumulated deficit of
$3,143,628; 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, there is a promissory note between the
Registrant and a former director totaling $68,260, a promissory note
between the Registrant and Wyvern Technologies, Inc. totaling
$173,670, and a promissory note between the Registrant and James T.
Marsh, a former consultant to the company, totaling $169,600. 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.
While the Registrant's management believes it will be
successful in arranging adequate lines of equity or debt financing to
implement a new business for the company, there is no assurance of
that occurring. The Registrant's continued operations 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 up to $1,000,000 or more over the next twelve
months 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. The Registrant's independent
accountant audit report included in this Form 10-KSB includes a
substantial doubt paragraph regarding the Registrant's ability to
continue as a going concern.
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, or may be required to reduce the
scope of its planned product development and marketing efforts, any of
which could have a negative impact on its business, operating results
and financial condition. In addition, insufficient funding may have a
material adverse effect on the company's financial condition, which
could require the company to:
- curtail operations significantly;
- sell significant assets;
- seek arrangements with strategic partners or other parties that
may require the company to relinquish significant rights to
products, technologies or markets; or
- explore other strategic alternatives including a merger or sale
of the company.
To the extent that the Registrant raises additional capital
through the sale of equity or convertible debt securities, the
issuance of such securities will result in dilution to existing
stockholders. If additional funds are raised through the issuance of
debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such
debt could impose restrictions on the Registrant's operations.
Regardless of whether the Registrant's cash assets prove to be
inadequate to meet the Registrant's operational needs, the Registrant
may seek to compensate providers of services by issuance of stock in
lieu of cash, which will also result in dilution to existing
shareholders.
(c) Control by Officers and Directors Over Affairs of the Registrant
May Override Wishes of Other Stockholders.
The Registrant's officers and directors, and other significant
shareholders, 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 Securities and Exchange
Commission ("SEC"), 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.
(j) 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.
(k) 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.
(l) Sale of Shares Eligible For Future Sale Could Adversely Affect
the Market Price.
All of the approximate 25,400,000 shares of common stock that are
currently held, directly or indirectly, by the significant
shareholders of the Registrant 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, 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.
(m) 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.
Critical Accounting Policies.
The SEC has issued Financial Reporting Release No. 60,
"Cautionary Advice Regarding Disclosure About Critical Accounting
Policies" ("FRR 60"), suggesting companies provide additional
disclosure and commentary on their most critical accounting policies.
In FRR 60, the SEC has defined the most critical accounting policies
as the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to
make its most difficult and subjective judgments, often as a result of
the need to make estimates of matters that are inherently uncertain.
Based on this definition, the Registrant's most critical accounting
policies include: (a) use of estimates in the preparation of financial
statements; and (b) stock-based compensation arrangements. The
methods, estimates and judgments the Registrant uses in applying these
most critical accounting policies have a significant impact on the
results the company reports in its financial statements.
(a) Use of Estimates in the Preparation of Financial Statements.
The preparation of these financial statements requires the
Registrant to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going
basis, the Registrant evaluates these estimates, including those
related to revenue recognition and concentration of credit risk. The
Registrant bases its estimates on historical experience and on various
other assumptions that is believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.
(b) Stock-Based Compensation Arrangements.
The Registrant intends to issue shares of common stock to various
individuals and entities for management, legal, consulting and
marketing services. These issuances will be valued at the fair market
value of the service provided and the number of shares issued is
determined, based upon the open market closing price of common stock
as of the date of each respective transaction. These transactions
will be reflected as a component of selling, general and
administrative expenses in the accompanying statement of operations.
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. The words "believe," "expect," "anticipate," "intends,"
"forecast," "project," and similar expressions identify forward-
looking statements. These are statements that relate to future
periods and include, but are not limited to, statements as to the
Registrant's estimates as to the adequacy of its capital resources,
its need and ability to obtain additional financing, the features and
benefits of its products, its growth strategy, the need for additional
sales and support staff, its operating losses and negative cash flow,
its critical accounting policies, its profitability and factors
contributing to its future growth and profitability. Forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected. These
risks and uncertainties include, but are not limited to, those
discussed above, as well as its ability to find additional financing.
These forward-looking statements speak only as of the date hereof.
The Registrant expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in its expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ITEM 3. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
Within the 90 days prior to the end of the period covered by this
report, the Registrant carried out an evaluation of the effectiveness
of the design and operation of its disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as
amended ("Exchange Act"). This evaluation was done under the
supervision and with the participation of the Registrant's president
and treasurer. Based upon that evaluation, they concluded that the
Registrant's disclosure controls and procedures are effective in
gathering, analyzing and disclosing information needed to satisfy the
Registrant's disclosure obligations under the Exchange Act.
Changes in Disclosure Controls and Procedures.
There were no significant changes in the Registrant's disclosure
controls and procedures, or in factors that could significantly affect
those controls and procedures since their most recent evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
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 file any reports on Form 8-K during the
first quarter of the fiscal year covered by this Form 10-QSB.
SIGNATURES
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: June 8, 2004 By: /s/ James H. Alexander
James H. Alexander, President
Dated: June 8, 2004 By: /s/ Dannie Shaver
Dannie Shaver, Secretary/Treasurer
EXHIBIT INDEX
Number 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, dated February 3, 1998
(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, dated
February 5, 1998 (incorporated by reference to Exhibit 3.2
of the Form 10-SB/A filed on October 3, 2001)
3.3 Certificate of Amendment of Articles of Incorporation, dated
July 2003 (incorporated by reference to Exhibit 3.3 of the
Form 10-KSB filed on April 27, 2004).
3.4 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).
4.6 Amended and Restated Non-Employee Directors and Consultants
Retainer Stock Plan, dated June 3, 2002 (incorporated by
reference to Exhibit 4 of the Form S-8 filed on June 17, 2002).
4.7 2002 Stock Compensation Plan, dated December 16, 2002
(incorporated by reference to Exhibit 4 of the Form S-8
filed on January 24, 2003).
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).
10.10 Definitive Agreement and Management Plan between the
Registrant and certain individuals, dated August 27, 2002
(the following Schedules have been omitted: (1.4) List of
Directors & Officers of Everlert, Inc. following
Consummation; (2.2.1) Allocation of Shares to Managers or
Designees; (3) Everlert Disclosure Schedule; (5) List of
Everlert Affiliates; and (7.1.10) List of Everlert
Officers/Directors/Employees to Enter Into Non-Competition
Agreements)(the following Exhibits have been omitted: (5.8)
Form of Everlert Affiliates Agreement; and (7.1.10) Form of
Non-Competition Agreement) (incorporated by reference to
Exhibit 10.10 of the Form 10-QSB filed on November 26, 2002).
10.11 Employment Agreement between the Registrant and James H.
Alexander, dated August 28, 2002 (incorporated by reference
to Exhibit 10.11 of the Form 10-KSB filed on April 27, 2004).
10.12 Consulting Services Agreement between the Registrant and
Jerry G. Hilbert, dated August 28, 2002 (incorporated by
reference to Exhibit 10.11 of the Form 10-QSB filed on
November 26, 2002).
10.13 Business Advisory and Consulting Services Agreement between
the Registrant and Select University Technologies, Inc.,
dated September 20, 2002 (incorporated by reference to
Exhibit 10.12 of the Form 10-QSB filed on November 26, 2002).
10.14 Promissory Note issued by the Registrant in favor of James
Alexander, dated April 10, 2003 (incorporated by reference
to Exhibit 10.14 of the Form 10-KSB filed on April 27, 2004).
10.15 Promissory Note issued by the Registrant in favor of James
Alexander, dated April 9, 2004 (incorporated by reference to
Exhibit 10.15 of the Form 10-KSB filed on April 27, 2004).
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/A 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).
23 Consent of Independent Certified Public Accountants
(incorporated by reference to Exhibit 23 of the Form 10-KSB
filed on April 27, 2004).
31.1 Rule 13a-14(a)/15d-14(a) Certification of James H.
Alexander (see below).
31.2 Rule 13a-14(a)/15d-14(a) Certification of Dannie Shaver (see below).
32 Section 1350 Certification of James H. Alexander and Dannie
Shaver (see below).