U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999
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 No X .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-B is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [ ].
The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of March 31, 2000: Common Stock,
par value $0.001 per share -- $10,454,023. As of April 7, 2000,
the Registrant had 19,207,485 shares of common stock issued and
outstanding.
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. DESCRIPTION OF BUSINESS 3
ITEM 2. DESCRIPTION OF PROPERTY 5
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. SUBMISSION TO MATTERS TO A VOTE OF SECURITY HOLDERS 5
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 5
ITEM 6. PLAN OF OPERATION 7
ITEM 7. FINANCIAL STATEMENTS 14
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 14
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT 15
ITEM 10. EXECUTIVE COMPENSATION 16
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 17
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 18
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 19
PART I.
ITEM 1. DESCRIPTION OF BUSINESS.
Business Development.
Everlert, Inc., a Nevada corporation ("Registrant"), was
originally incorporated on February 3, 1998, and has adopted a
December 31 year-end. At December 31, 1999, the Registrant was a
development stage company, since it has not commenced its planned
principal operations.
On April 1, 1999, the Registrant entered into an agreement
to purchase certain smoke and heat dectector technology from Safe
at Home Products, Inc., a California corporation, in exchange for
12,000,000 shares of the Registrant's common stock valued at
$6,000,000; this technology was owned by NuCo, Inc., a Nevada
corporation and subsidiary of Safe at Home. In return, the
Registrant received all of the issued and outstanding common
stock of NuCo, Inc. (12,000,000 shares, valued at fifty cents per
share) (see Exhibit 2 to this Form 10-KSB).
Business of Registrant.
The Registrant has a principal business objective to develop,
manufacture and market smoke and heat detectors and related
products for residential and commercial fire safety.
Activities to date have been limited primarily to organization,
initial capitalization, finding and securing an experienced
management team and board of directors, the development of a
business plan and commencing with initial operational plans. The
Registrant, however, has yet to establish a base of operations
and must be considered a start-up company with no current
established source of revenues until operations commence.
The Registrant seeks to establish a base of operations in the
fire safety industry. Through the share exchange agreement with
SAHP, the Registrant has acquired the technology and rights to
develop and produce smoke and heat detector product lines for
residential and commercial application. The first technology is
a plastic Christmas tree ornament-styled smoke detector. The
second is smoke and heat detector technology designed to replace
or supplement existing smoke detectors. The Registrant has not
yet manufactured or sold any products to date. Management seeks
to introduce the products for retail sales in approximately eight
months. The Registrant intends to outsource the manufacturing of
prinited circuit boards and plastic housing for the detectors,
with the final assembly and testing to be done directly by the
Registrant.
The Registrant believes that recent developments in technology,
specifically the growth of the Internet as a means of
communication, will increase the ability of the Registrant to
reach more individuals and businesses. Planned advertising
activities include retail trade magazines, mail order catalogs
and possibly television commercials and infomercials. The use of
these advertising media also have the advantage of educating the
consumer for the need to install multiple smoke detectors, thus
increasing home safety.
The Registrant does not have any relationships with suppliers
to acquire materials for production of its yet to be
manufactured products. The Registrant, however, is currently
seeking suppliers over its Internet site at www.everlert.com and
expects to establish relationships with suppliers it seeks to
provide smoke and heat detector products. The Registrant plans to
reach prospective customers via retail and wholesale stores, its
web site, strategic relationships and mail order catalogs.
Presently, the Registrant has yet to begin these efforts, but
plans to establish a base of operations in approximately to
twelve months. As of September 30, 1999, no sales revenues have
been generated by the Registrant. The Registrant does not
anticipate that its revenues will be dependent, however, on any
one or even a few major customers once its revenues begin.
Policing unauthorized use of the Registrant's proprietary and
other intellectual property rights could entail significant
expense and could be difficult or impossible. In addition, there
can be no assurance that third parties will not bring claims
of copyright or trademark infringement against the Registrant
or claim that certain of the Registrant's processes or features
violates a patent. There can be no assurance that third parties
will not claim that the Registrant has misappropriated their
creative ideas or formats or otherwise infringed upon their
proprietary rights. Any claims of infringement, with or without
merit, could be time consuming to defend, result in costly
litigation, divert management attention, or require the
Registrant to enter into costly royalty or licensing
arrangements, to prevent further infringement which could have a
material adverse effect on the Registrant's business, financial
condition or operating results.
The Registrant's products are subject to the provisions of the
Federal Consumer Product Safety Act ("FCPS Act") and the rules
and regulations promulgated thereunder. The FCPS Act authorizes
the Consumer Product Safety Commission ("CPSC") to protect the
public against unreasonable risks of injury associated with
consumer products. The CPSC can require the repurchase or
recall by a manufacturer such as the Registrant of its products
and can impose fines or other penalties in the event of
violations of the FCPS Act. Similar laws exist in states and
municipalities and in foreign countries in which the Registrant
may market its products.
The Registrant will also be subject to various federal, state and
foreign laws and regulations pertaining to the use of potentially
dangerous materials, to the discharge of materials into the
environment or otherwise relating to the protection of the
environment, which may require the Registrant to allocate a
portion of its operating budget for use in ensuring its full
compliance with such regulations.
The Registrant believes that it will be able to comply in all
material respects with laws and regulations governing the fire
safety industry, and that such laws will not have a material
effect on its operations. However, various federal and state
agencies may propose new legislation that may adversely affect
the Registrant's business, financial condition and results of
operations. The Registrant is not aware of any other federal,
state or local environmental laws that would affect its
operations.
The Registrant has incurred minimal research and development
costs, although the Registrant believes that the long-term
success of its business may require substantial research and
development. The Registrant plans to direct its product
development efforts towards introducing heat and smoke detectors
in the retail market. The Registrant does not currently have any
products available for sale. The Registrant seeks to develop its
products internally through research and development or
strategic partnerships, but if the Registrant can purchase or
license products, services or technologies from third-parties at
reasonable costs, it will do so in order to avoid the time and
expense involved in developing such products, services or
technologies.
As a start up company in the research and development phase the
Registrant presently has three full time employees and no part
time employees. The Registrant's employees are currently not
represented by a collective bargaining agreement, and the
Registrant believes that its relations with its employees are
good. Management does anticipate changes in the number of
employees over the next twelve months to approximately eleven
total employees.
ITEM 2. DESCRIPTION OF PROPERTY.
The Registrant leases its office space from Wyvern Technologies.
The terms of this lease are for $1.00 per square foot per month
($2,500.00 per month) on a month to month basis. This facility
consists of 2,500 square feet, and management believes this is
currently suitable as the main administrative office and should
remain so for the next twelve months. The Registrant does not
have any additional facilities. Additionally, there are currently
no proposed programs for the renovation, improvement or
development of the property currently being utilized by the
Registrant.
ITEM 3. 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 company has been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
From August 25, 1998 to November 17, 1999, the
Registrant's common stock was traded on the Over the Counter
Bulletin Board. After the latter date, the shares have been
traded in the National Quotation Bureau's Pink Sheets (symbol
"EVRL") and the range of closing bid prices shown below is
reported while trading on the Bulletin Board and the Pink Sheets.
The quotations shown reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily
represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 2000
High Low
Quarter Ended March 31, 2000 * 2.62 0.01
Quarter Ended June 30, 2000 ** 2.25 2.25
* The stock only traded on 11 days during this quarter.
** The common stock only traded on two days during this quarter
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 1999
High Low
Quarter Ended March 31, 1999 3.25 1.00
Quarter Ended June 30, 1999 3.50 0.12
Quarter Ended September 30, 1999 2.25 1.25
Quarter Ended December 31, 1999 3.00 2.00
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 1998
High Low
Quarter Ended September 30, 1998 *** 3.25 1.75
Quarter Ended December 31, 1998 1.56 0.01
*** The shares of common stock of the Registrant commenced
trading on the Bulletin board on August 25, 1998.
In order to qualify for relisting on the Bulletin Board, the
Registrant must comply with the new eligibility rules of the
Bulletin Board (that is, all listed companies must be reporting
companies), and accordingly the Registrant filed its Form 10-SB
Registration Statement with the Securities and Exchange
Commission on November 18, 1999.
Holders of Common Equity.
As of April 7, 2000, there were approximately 95 shareholders of
record of the Registrant's common stock.
Dividend Information.
The Registrant has not declared or paid a cash dividend to
stockholders since it became a "C" corporation. The Board of
Directors presently intends to retain any earnings to finance
Registrant operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash
dividends in the future will depend upon the Registrant's
earnings, capital requirements and other factors.
Equity Securities Sold Without Registration.
The following equity securities of the Registrant were sold
without registration during the fiscal year ended on December 31,
1999:
On March 25,1999, the Registrant issued 12,000 shares of its
common stock for services rendered in the amount of $12,900.
On April 5, 1999, the Registrant issued 12,000 share of common
stock for services rendered in the amount of $12,900
On April 5,1999, the Registrant issued 300,000 shares of its
common stock in exchange for warrants and notes receivable in the
amount of $450,000.
On April 15, 1999, the Registrant issued 11,000 shares of
preferred stock for $33,000 in cash.
On September 2, 1999, the Registrant issued 12,000,000 shares of
its common stock per an asset purchase agreement with Safe at
Home Products, Inc, dated April 1, 1999.
On September 2, 1999, the Registrant issued 125,000 shares of its
common stock for $125.00 in cash.
On October 29, 1999, the Registrant issued 2,000,000 shares of
its common stock for services rendered in the amount of $20,000.
On November 11, 1999, the Registrant issued 759,485 of its common
stock for $106,007 in cash.
No commissions or fees were paid in connection with these
sales. All of the above sales, except for the last one, were
undertaken pursuant to the limited offering exemption from
registration under the Securities Act of 1933 as provided in Rule
506 under Regulation D as promulgated by the U.S. Securities and
Exchange Commission, and all the offerings were made to
sophisticated investors; that is, the investor either alone or
with his purchaser representative(s) has such knowledge and
experience in financial and business matters that he is capable
of evaluating the merits and risks of the prospective investment,
or the issuer reasonably believes immediately prior to making any
sale that such purchaser comes within this description.
ITEM 6. PLAN OF OPERATION.
Twelve Month Plan of Operation.
The operational period from February 3, 1998 to December 31,
1999, achieved two main goals for the Corporation: (a) formation
of the organization to pursue the Registrant's business
objective, and (b) obtain sufficient capital to commence initial
operations. Everlert 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.
Realization of sales of the Registrant's products during the
fiscal year ending December 31, 2000 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 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; (b) developing
relationships with strategic partners; (c) responding to
competitive developments; and (d) attracting, retaining and
motivating qualified personnel.
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 raise additional capital
via a private placement offering. The Registrant currently has
a note receivable for common stock in the amount of approximately
$393,000. The Registrant believes that realization of this
capital will sustain it for at least twelve months of operations.
In the meantime, 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 expenses for the operating
period February 3, 1998 to December 31, 1999 of approximately
$1,568,000. Expenditures were primarily due to costs incurred
for 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, the Registrant
experienced a net loss of approximately $1,597,000. The
Registrant anticipated incurring such losses during the initial
commencement of operations until such time that it can generate
revenues from operations in the fiscal year 2000.
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.
Risk Factors Connected with Plan of Operation.
(a) Only Limited Prior Operations.
The Registrant has only limited operations and is subject to all
the risks inherent in the creation of a new business. Since the
Registrant's principal activities to date have been limited to
organizational activities 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.
(b) Need for Additional Financing May Affect Operations.
Current funds available to the Registrant will not be adequate
for it to be competitive in the areas in which it intends to
operate. Therefore, the Registrant will need to raise additional
funds in order to fully implement its business plan. However,
there can be no assurance that the Registrant will be successful
in raising such additional funds. 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.
Since inception, the Registrant has financed operations
primarily through private placements of common stock. The
Registrant has significant ongoing liquidity needs to support its
existing business and continued growth. The Registrant's
continued operations therefore will depend upon its ability to
raise additional funds through bank borrowings, equity or debt
financing. Adequate funds may not be available when needed or
may not be available on favorable terms. 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.
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 company'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 Successful Manufacturing.
The company has no experience manufacturing commercial quantities
of products, but management has had experience in this area. The
company presently has no plans for developing an in-house
manufacturing capability. Accordingly, the company 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.
(e) Dependence on Outsourced Manufacturing.
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 company intends to maintain a strong
relationship with these manufacturers to ensure that any issues
they may face are dealt with in a timely manner.
(f) No Assurance of Market Acceptance.
There can be no assurance that any products successfully
developed by the company or its corporate collaborators, if
approved for marketing, will ever achieve market acceptance. The
company'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
company 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 company or its corporate collaborators.
(g) Substantial Competition.
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.
(h) Other External Factors May Affect Viability of Registrant.
The smoke detector industry in general is a speculative venture
necessarily involving some substantial risk. There is no certainty
that the expenditures to be made by the Registrant will result in
commercially profitable business. The marketability of its
products will be affected by numerous factors beyond the control
of the Registrant. These factors include market fluctuations, and
the general state of the economy (including the rate of
inflation, and local economic conditions), which can affect
peoples' spending. Factors which leave less money in the hands
of potential customers of the Registrant will likely have an
adverse effect on the Registrant. The exact effect of these
factors cannot be accurately predicted, but the combination of
these factors may result in the Registrant not receiving an
adequate return on invested capital.
(i) Control of the Registrant by Officers and Directors
Over Affairs of the Registrant.
The Registrant's officers and directors beneficially own
approximately 61% 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.
(j) Success of Registrant Dependent on Management.
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 minority ownership interest rights to make decision 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.
(k) Conflicts of Interest May Affect Independence of Officers
and Directors.
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.
(l) Limitations on Liability, and Indemnification, of
Directors and Officers May Result in Expenditures by the
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.
(m) Absence of Cash Dividends.
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.
(n) No Cumulative Voting.
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.
(o) No Assurance of Continued Public Trading Market; Risk
of Low Priced Securities.
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 National
Quotation Bureau's Pink Sheets; the Registrant intends to reapply
for relisting on the Over the Counter Bulletin Board after
clearing comments on this 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) Effects of Failure to Maintain Market Makers.
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) Uncertainty Due to Year 2000 Problem.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced after January 1, 2000, and if not addressed,
the impact on operations and financial reporting may range from
minor errors to significant system failure which could affect the
Registrant's ability to conduct normal business operations. This
creates potential risk for all companies, even if their own
computer systems are Year 2000 compliant. It is not possible to
be certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of consumers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
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."
ITEM 7. FINANCIAL STATEMENTS.
Financial statements as of and for the year ended December
31, 1999, and for the year ended December 31, 1998 are presented
in a separate section of this report following Part III, Item 13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
(a) In February 1998, the Registrant engaged its initial
independent accountant, Barry Friedman, C.P.A.. This engagement
was approved by the Board of Directors. Mr. Friedman prepared
and audited financial statement for the period of February 3,
1998 (date of inception of the Registrant) through March 16, 1998
in connection with a private offering of shares of common stock.
In March 1999, Mr. Friedman resigned in such capacity.
(b) Effective in March 1999, James Slayton, C.P.A. was engaged
to serve as the new independent accountant for the Registrant.
During the Registrant's initial fiscal year and the subsequent
interim period prior to engaging that accountant, neither the
Registrant (nor someone on its behalf) consulted the newly
engaged accountant regarding any matter. Mr. Slayton audited the
Registrant's financial statements for the fiscal years 1998 and
1999. Mr. Slayton's report on these financial statements was
modified as to uncertainty that the Registrant will continue as a
going concern. Effective on or about May 11, 2000, Mr. Slayton
was dismissed. The decision to change accountants was approved
by the Board of Directors.
(c) Effective on May 11, 2000, the firm of L.L. Bradford &
Company was engaged to serve as the new principal accountants to
audit the Registrant's financial statements for the 1998 and 1999
fiscal years. During the Registrant's two most recent fiscal
years, and the subsequent interim period prior to engaging those
accountants, neither the Registrant (nor someone on its behalf)
consulted the newly engaged accountants regarding any matter.
During the Registrant's two most recent fiscal years and any
subsequent interim period preceding such changes, there have been
no disagreements with former accountants on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. In addition, there
were no "reportable events" as described in Item
304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred
within the Registrant's two most recent fiscal years and the
subsequent interim period preceding such changes.
PART III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS: COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers.
The names, ages, and respective positions of the directors and
executive officers of the Registrant are set forth below; there
are no promoter and control persons of the Registrant.. The
Directors named below will serve until the next annual meeting
of the Registrant's stockholders or until their successors are
duly elected and have qualified. Directors are elected for a
one-year term at the annual stockholders' meeting. Officers
will hold their positions at the will of the Board of Directors,
absent any employment agreement, of which none currently exist
or are contemplated. There are no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management shareholders may directly
or indirectly participate in or influence the management of the
Registrant's affairs.
(a) James J. Weber, President/Treasurer/Director.
Mr. Weber, age 61, received his Bachelor of Science Degree in
Industrial Engineering from Gannon University in 1962. He
received a Master of Science Degree in Industrial Engineering
from New Mexico State University in 1969. During the Viet Nam
war, he served as a regular Army officer, rising to the rank of
Major; he was decorated with the Silver Star, Distinguished
Flying Cross, Bronze Star, three air medals and other
decorations.
From 1970 to 1977, Mr. Weber held progressively more responsible
positions in manufacturing and sales and marketing of electronic
systems, and became CEO of a medical instrument company in 1978.
In 1984, he founded Wyvern Technologies, Inc., a prime
manufacturer of defense electronic systems. Continuing to date
as President of this firm, Mr. Weber has negotiated exclusive
license agreements with Northrop Grumman, where Wyvern is the
sole manufacturer of all OEM electronics on the F-5 fighter and
the B-2 bomber. Additionally, this company has manufactured
electronics used on most of the current United States military
aircraft, including the new F-22 fighter.
(b) Jerry G. Hilbert, Vice President/Director.
Mr. Hilbert, age 57, earned his Electrical Engineering degree
from West Coast University in 1970. Upon graduation, he worked
for several electronics companies; he has gained nearly 28 years
experience developing electronics related products. His career
began in 1964 through 1970 as a Senior Project Manager at Ford
Aeronautics. From 1970 to 1980, he was the Systems Design
Manager for MAI/Basic Four, a computer firm. From 1980 through
1984, Mr. Hilbert has held various positions at Philips
Ultrasound. During the latter part of the 1980's and continuing
through 1988, he was a senior project engineer for Palamar
Systems and Machines. As this firm, Mr. Hilbert, was
instrumental in the coordination of turn-key automated factories
in the Peoples Reuplic of China. Since he left this firm, he has
been an independent consultant to many electronnics companies,
where he has helped to develop new products.
(c) Anthony G. Lagomarsino, Secretary/Director.
Mr. Lagomarsino, age 44, was awarded his Bachelor of Arts degree
from California State University, Fullerton, and his Juris Doctor
from Loyola Law School of Los Angeles. As an attorney and
member of the State Bar of California for 17 years, Mr,
Lagomarsino has been in private practice primarily in the field
of business and commercial law matters. His practice includes
business formations, acquisitions, financial reorganization and
insolvency. Mr. Lagomarsino resigned from the Board of
Directors, effective on June 15, 2000.
The Registrant does not have standing audit, nominating or
compensation committees of the Board of Directors, or committees
performing similar functions. During the last fiscal year, the
Board of Directors met on ten occasions.
Compliance with Section 16(a) of the Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires
executive officers and directors, and persons who beneficially
own more than 10% of any class of the Registrant's equity
securities to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors and beneficial owners of
more than 10% of any class of the Registrant's equity securities
are required by SEC regulations to furnish the Registrant with
copies of all Section 16(a) forms they file.
Based solely on a review of the with respect to fiscal 1999 and
subsequently, the Registrant is aware that the directors and
executive officers, and 10% shareholders inadvertently failed to
file Form 3's at the time the Registrant became a reporting
company on January 17, 2000. These Form 3's are now in the
process of being prepared and will be filed shortly. The
Registrant is unaware of any other filings that have not been
timely made.
ITEM 10. EXECUTIVE COMPENSATION.
(a) The current officers and directors have not received
any compensation to date. They will not be remunerated until the
Registrant turns profitable.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
Registrant in the event of retirement at normal retirement date
as there is no existing plan provided for or contributed to by
the Registrant.
(c) No remuneration is proposed to be paid in the future
directly or indirectly by the Registrant to any officer or
director since there is no existing plan which provides for such
payment, including a stock option plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information regarding
the beneficial ownership of shares of common stock as of April 7,
2000 (issued and outstanding common stock of 19,207,485) by (i)
all stockholders known to the Registrant to be beneficial owners
of more than 5% of the outstanding common stock; and (ii) all
officers and directors of the Registrant, and as a group (each
person has sole voting power and sole dispositive power as to the
shares shown):
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial of
Ownership(1) class
Common Safe at Home Products, Inc., 10,000,000 52.06%
Stock 1201 East Warner Avenue
Santa Ana, California 92705
Common Rich Bourg Financial Ltd. 2,111,750 10.99%
Stock 6281 Tweedholm Court
San Jose, California 95120
Common James J. Weber 1,500,000 7.81%
Stock 1201 East Warner Avenue
Santa Ana, California 92705
Common Sigam Investments, Inc. 1,500,000 7.81%
Stock 1201 East Warner Avenue
Santa Ana, California 92705
Common Jerry G. Hilbert 200,000 1.04%
Stock 1201 East Warner Avenue
Santa Ana, California 92705
Common Anthony Lagomarsino 25,000 0.01%
Stock 1201 East Warner Avenue
Santa Ana, California 92705
Common Shares of all directors and 11,725,000 (2) 61.04%
Stock executive officers as a group (3
persons)
(1) None of these security holders has the right to acquire any
amount of the Shares from options, warrants, rights, conversion
privilege, or similar obligations.
(2) Includes the shares owned by Safe at Home Profucts, Inc.
since Mr. Weber, Mr. Hilbert, and Mr. Lagomarsino are principals
of that firm. The other major shareholder of that firm is Sigam
Investements, Inc., which is controlled by Todd T. Marsh.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On February 10, 1998, the initial meeting of the Board of
Directors convened. At this meeting, the Registrant accepted a
written offer from the following to purchase shares of common
stock of the Registrant: James J. Weber, 1,500,000 shares; Sigam
Investments, Inc., 1,500,000 shares; Jerry G. Hilbert, 200,000
shares; and Anthony Lagrmarsino, 25,000 shares.
The initial acquisition of the Registrant's technology was
consummated on March 17, 1998, when the Registrant entered into
a Technology Purchase Agreement with Safe at Home Products, Inc.
("SAHP"); the principals of this firm are the same as the
Registrant. In connection with the acquisition, SAHP's
principal stockholders were to receive royalties equal to the sum
of 10% of the gross revenues generated from the use of the
technologies. These royalties were to be paid for a period of
sixty (60) months, with the first payment due on or before April
10, 1998 in exchange for all patent, product and legal rights to
SAHP's technologies. In addition, the Registrant agreed to pay
SAHP the sum of $100,000 as an advance against future royalties
on or before September 15, 1998. The founding shareholders of
the Registrant are also the founding majority shareholders of
SAHP. On April 1, 1999, the Registrant renegotiated and signed
an amended Share Exchange Agreement whereby it paid 12,000,000
shares valued at $0.50 per share of restricted common stock of
the Registrant to SAHP to acquire 12,000,000 of the outstanding
shares, valued at $0.50 per share, of NuCo, Inc., a Nevada
corporation in a similar line of business as the Registrant that
SAHP transferred the technology to after Everlert failed to meet
the payment terms of the original Technology Purchase Agreement
dated March 17, 1998.
The Registrant leases its office space from Wyvern Technologies.
Mr. Weber is the principal and director of Wyvern Technologies.
Ana, California 92705. The terms of this lease are for $1.00
per square foot per month ($2,500.00 per month) on a month to
month basis.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index to Financial Statements and Schedules Page
Report of Independent Accountants 21
Balance Sheet of the Registrant as
of December 31, 1999 22
Statements of Operations for the year ended
December 31, 1999 and the period ended December 31, 1998 23
Statements of Stockholders' Equity for the year ended
December 31, 1999 and the period ended December 31, 1998 24
Statements of Cash Flows for the year ended
December 31, 1999 and the period ended December 31, 1998 26
Notes to Financial Statements 27
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed during the last quarter of the fiscal year covered by this
report.
(c) Exhibits. For Exhibits included or incorporated by
reference herein, see Exhibit Index set forth after the Financial
Statements.
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: September 7, 2000By: /s/ James J. Weber
James J. Weber, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated:
Signature Title Date
/s/ James J. Weber President/Treasurer/Director September 7, 2000
James J. Weber
/s/ Jerry G. Hilbert Vice President/Director September 7, 2000
Jerry G. Hilbert
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Everlert, Inc.
(A Development Stage Company)
Santa Ana, California
We have audited the accompanying balance sheet of Everlert, Inc.
as of December 31, 1999, and the related statements of
operations, stockholders' equity, and cash flows for the year
ended December 31, 1999 and the period from February 3, 1998
(date of inception) through December 31, 1998. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Everlert, Inc. as of December 31, 1999, and the results of its
activities and cash flows for the year ended December 31, 1999
and the period the period from February 3, 1998 (date of
inception) through December 31, 1998 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company has suffered
losses from operations and current liabilities exceed current
assets, all of which raise substantial doubt about its ability to
continue as a going concern. Management's plans in regards to
these matters are also described in Note 8. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
L.L. Bradford & Company, LLC
August 14, 2000
Las Vegas, Nevada
EVERLERT, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current assets
Cash $ 13,837
Total current assets 13,837
Other assets
Acquired technology, net 5,100,000
Deposits 53,500
Total other assets 5,153,500
Total assets $ 5,167,337
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 20,793
Accrued liabilities 25,746
Stock subscriptions payable 77,773
Notes payable - related party 178,669
Note payable 169,600
Total current liabilities 472,581
Total liabilities 472,581
Commitments and contingencies --
Stockholders' equity
8% cumulative preferred stock; $.001 par
value; 5,000,000 shares authorized, 11,000
shares issued and outstanding 11
Common stock; $.001 par value;
50,000,000 shares authorized, 18,892,485 shares
issued and outstanding 18,892
Additional paid-in capital 6,665,930
Stock subscriptions receivable (392,625)
Accumulated deficit (1,597,452)
Total stockholders' equity 4,694,756
Total liabilities and stockholders' equity $ 5,167,337
See Accompanying Notes to Financial Statement
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
February 3 February 3
1998 1998
(Date of (Date of
inception) inception)
Year Ended through through
December 31 December 31 December 31
1999 1998 1999
Revenue $ - $ - $ -
Operating expenses
Amortization 900,000 - 900,000
Research and development 733 67,650 68,383
General and
administrative 239,391 359,799 599,190
Total operating
expenses 1,140,124 427,449 1,567,573
Loss from operations (1,140,124) (427,449) (1,567,573)
Other expense
Interest expense 28,012 1,867 29,879
Loss before provision
for income taxes (1,168,136) (429,316) (1,597,452)
Provision for income
taxes - - -
Net loss $(1,168,136) $(429,316) (1,597,452)
Basic and diluted
loss per common share $ (0.15) $ (0.14) $ (0.28)
Basic and diluted
weighted average
common shares
outstanding 7,816,424 2,993,359 5,696,891
See Accompanying Notes to Financial Statement
EVERLERT, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Pre Common Pre Common Add'l Stock Accumu Total
Ferred ferred stock paid subscrip lated stock
stock in tion deficit holders
capital receiv equity
able
Balance at
February 3
1998
(Date of
inception) - - - - - - - -
Common stock
issued for
cash, $0.002
weighted
average price
per share - 3,154,000 - 3,154 2,646 - - 5,800
Common stock
issued for
expenses,
$0.086 weighted
average price
per share - 490,000 - 490 41,610 - - 42,100
Common stock
issued for
payment of
debt, $0.05 - 40,000 - 40 1,960 - - 2,000
Net loss - - - - - - (429,316) (429,316)
Balance
December 31
1998 - 3,684,000 - 3,684 46,216 - (429,316) (379,416)
Preferred
stock issued
for cash-$3.00 11,000 - 11 - 32,990 - - 33,001
Common stock
issued for
expenses,
$0.025
weighted
average price
per share - 2,024,000 - 2,024 43,776 - - 45,800
Common stock
issued for
acquired
technology,
$0.50 - 12,000,000 - 12,000 5,988,000 - - 6,000,000
Common stock
issued for
stock
subscription
receivable
$1.50 - 300,000 - 300 449,700 (450,000) - -
$57,375 debt
(including
interest and
financing cost
of $23,375)
satisfied
through
transfer of
common stock,
$1.50 - - - - - 57,375 - 57,375
Common stock
issued for
cash, $0.12
weighted
average price
per share - 884,485 - 884 105,248 - - 106,132
Net loss - - - - - - (1,168,136)(1,168,136)
Balance
December 31,
1999 11,000 18,892,485 11 18,892 6,665,930 (392,625) (1,597,452)4,694,756
See Accompanying Notes to Financial Statement
EVERLERT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period from Period from
February 3 February 3
1998 1998
(Date of inception) (Date of inception)
Year Ended through through
December 31 December 31, 1998 December 31,1999
Cash flows from
operating
activities:
Net loss (1,168,136) (429,316) (1,597,452)
Adjustments to
reconcile net
loss to net
cash used by
operating
activities:
Amortization 900,000 - 900,000
Interest and
financing costs
satisfied
in exchange of
common stock 23,375 - 23,375
Common stock
issued for
expenses 45,800 42,100 87,900
Changes in
operating assets
and liabilities:
Increase in
deposits (53,500) - (53,500)
Increase (decrease)
in accounts payable (318,489) 339,282 20,793
Increase in accrued
Liabilities 23,879 1,867 25,746
Net cash used by
operating activities (547,071) (46,067) (593,138)
Cash flows from
financing
activities:
Proceeds from
issuance of notes
payable-related
party 173,669 5,000 178,669
Proceeds from
issuance of note
payable 169,600 36,000 205,600
Proceeds from
issuance of
preferred stock 33,001 - 33,001
Proceeds from
issuance of common
stock 106,132 5,800 111,932
Proceeds from
issuance of stock
subscriptions
payable 77,773 - 77,773
Net cash provided
by financing
activities 560,175 46,800 606,975
Net increase
in cash 13,104 733 13,837
Cash, beginning
of period 733 - -
Cash, end of
Period 13,837 733 13,837
Supplemental
disclosure of cash
flow:
Cash paid for
Interest - - -
Schedule of non
cash investing
and financing
activities:
12,000,000 common
shares issued
in exchange for
acquired technology 6,000,000 - 6,000,000
300,000 common
shares issued in
exchange for stock
subscriptions
receivable 450,000 - 450,000
Debt satisfied
in exchange of
common stock 34,000 - 34,000
40,000 common
shares issued for
payment of debt - 2,000 2,000
See Accompanying Notes to Financial Statement
EVERLERT, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT
POLICIES
Description of business - Everlert, Inc. (hereinafter referred to
as the "Company") is a development stage company that plans to
develop, manufacture, and market voice record and playback smoke
detectors and related products including heat sensor Christmas
tree ornaments. The Company was incorporated in the State of
Nevada on February 3, 1998.
Use of estimates - The preparation of consolidated financial
statements in conformity with generally accepted accounting
principles 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 revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
Fixed assets - Fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the
assets. The cost of repairs and maintenance is charged to
expense as incurred. Expenditures for property betterments and
renewals are capitalized. Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed
from the accounts and any gain or loss is reflected in other
income (expense). Currently, the Company has no fixed assets.
Acquired technology - The acquired technology is amortized
principally on the straight-line method over a period of 5 years.
The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the
estimated useful life of the acquired technology or whether the
remaining balance of the acquired technology should be evaluated
for possible impairment. The Company uses an estimate of the
related undiscounted cash flows over the remaining life of the
intangible asset in measuring their recoverability.
Earnings (loss) per share - Basic earnings (loss) per share
excludes any dilutive effects of options, warrants and
convertible securities. Basic earnings (loss) per share is
computed using the weighted-average number of outstanding common
shares during the applicable period. Diluted earnings per share
is computed using the weighted average number of common and
common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation
if their effect is antidilutive.
Income taxes - The Company accounts for its income taxes in
accordance with Statement of Financial Accounting Standards No.
109, which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in operations in the period that includes the
enactment date.
As of December 31, 1999, the Company has available net operating
loss carryovers of approximately $1.6 million that will expire in
various periods through 2014. Such losses may not be fully
deductible due to the significant amounts of non-cash service
costs and the change in ownership rules under Section 382 of the
Internal Revenue Code. The Company has established a valuation
allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.
Comprehensive income (loss) - The Company has no components of
other comprehensive loss. Accordingly, net loss equals
comprehensive loss for all periods.
Advertising costs - The Company recognizes advertising expenses
in accordance with Statement of Position 93-7 "Reporting on
Advertising Costs." Accordingly, the Company expenses the costs
of producing advertisements at the time production occurs, and
expenses the costs of communicating advertisements in the period
in which the advertising space or airtime is used. The Company
has recorded no significant advertising costs for the year ended
December 31, 1999 and period ended December 31, 1998.
Research and development costs - Research and development costs
are charged to expense as incurred.
Stock-based compensation - The Company accounts for stock-based
employee compensation arrangements in accordance with provisions
of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statements of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is based
on the difference, if any, on the date of the grant, between the
fair value of the Company's stock and the exercise price. The
Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task
Force ("EITF") Issue No. 96-18.
2. ACQUIRED TECHNOLOGY
In April 1999, the Company entered into an agreement to purchase
technology from Safe at Home Products, Inc. in exchange for
12,000,000 shares of the Company's common stock valued at
$6,000,000. Acquired technology is amortized over 5 years, and
is calculated as follows:
Acquired technology $6,000,000
Less: accumulated amortization 900,000
Acquired technology, net $5,100,000
3. NOTE PAYABLE
As of December 31, 1999 the Company borrowed $169,600. The note
is unsecured, bearing an interest rate of 10%, and is due on
demand. Additionally, the holder has the option to convert any
unpaid balances, including accrued interest, into shares of the
Company's common stock at a price of $1.00 per share.
4. STOCK SUBSCRIPTIONS RECEIVABLE
The Company entered into several Common Stock Subscription
Agreements ("Subscription Agreements") during 1999. These
Subscription Agreements entitle the Company to receive funds of
$450,000 for the issuance of 300,000 shares of the Company's
common stock. In September 1999, the stock subscriptions
receivable was reduced by $57,375 to satisfy the Company's debt.
Accordingly, 38,250 shares of the Company's common stock were
transferred from a stock subscription holder to the debt holders
for full satisfaction of such debts. As of December 31, 1999,
stock subscriptions receivable totaled $392,625.
5. STOCKHOLDERS' EQUITY
Preferred stock - As of December 31, 1999, 11,000 shares of
preferred stock have a conversion feature which may be converted
into shares of the Company's common stock on a basis of 10 shares
of common stock for 1 share of preferred stock. In addition,
these shares of preferred stock are callable 2 years from the
date of issuance, but before 3 years from the date of issuance at
a redemption rate of 110% of the liquidation value. Accordingly,
the liquidation value is stated at $3.00 per share of preferred
stock.
6. RELATED PARTY TRANSACTIONS
Note payable - related party - As of December 31, 1999, the
Company borrowed $173,669 from a related party. The note is
unsecured, payable in one payment including principal and
interest at maturity, bearing an interest rate of 10%, and
maturing September 2000. Additionally, the holder has the option
to convert any unpaid balances, including accrued interest, into
shares of the Company's common stock at a price of $1.00 per
share.
As of December 31, 1999, the Company borrowed $5,000 from a
related party. The balance is non-interest bearing and due on
demand.
7. COMMITMENTS AND CONTINGENCIES
Stock Subscription Agreements - In April 1999, the Company
entered into several Common Stock Subscription Agreements
("Subscription Agreements") whereby entitling the Company to
receive funds of $525,000 through the issuance of 300,000 shares
of the Company's common stock. The common stock related to these
Subscription Agreements was issued in March 2000, as further
discussed in Note 9. As of December 31, 1999, no shares of the
Company's common stock were issued or funds received in relation
to these Subscription Agreements.
Non-competition agreement - In April 1999, the Company signed a
non-competition agreement with Safe at Home Products, Inc. for a
period of 5 years. The Company will not engage or conduct,
directly or indirectly, any business in competition with Safe at
Home Products, Inc.
Other - The Company is involved in a dispute which has arisen in
the ordinary course of business. While the results of this
matter cannot be predicted with certainty, the Company's
management believes that losses, if any, resulting from the
ultimate resolution of this matter will not have a material
adverse effect on the Company's results of operations, cash flows
or financial position.
8. GOING CONCERN
The Company incurred a net loss of approximately $1,100,000 for
the year ended December 31, 1999, and its current liabilities
exceed the Company's current assets by approximately $380,000 as
of December 31, 1999. 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.
9. SUBSEQUENT EVENTS
In March 2000, the Company issued 300,000 shares of the Company's
common stock to satisfy an existing Subscription Agreement as
described in Note 7. The Subscription Agreement entitles the
Company to receive funds of $525,000.
During various dates from March 2000 to May 2000, the Company
issued 557,202 shares of the Company's common stock pursuant to
its stock subscriptions payable balance of $77,773 at December
31, 1999.
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 filed on November 18,
1999).
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of the Form 10-SB filed on November 18, 1999).
3.2 Bylaws (incorporated by reference to Exhibit 3.2 of the Form 10-
SB filed on November 19, 1999).
21 Subsidiaries of the Registrant (see below).
27 Financial Data Schedule (see below).
