SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
[ ] 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 000-22855
AMERICAN SOIL TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 86-0671974
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
215 N. Marengo, Suite 110, Pasadena, CA 91101
---------------------------------------------
(Address of principal executive offices)
(619) 521-8547
---------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of November 13, 2000, the number of shares of Common Stock issued and
outstanding was 8,791,358.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets - September 30, 2000 1
Statement of Operations - For the three
months ended September 30, 2000 and 1999 2
Statement of Stockholders' Equity 3
Statement of Cash Flows - For the three
months ended September 30, 2000 and 1999 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
American Soil Technologies, Inc.
Balance Sheets
(Unaudited)
September 30,
--------------------------
ASSETS 2000 1999
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 62,194 $ 127,030
Accounts and notes receivable 459,309 569,275
Deposits and prepaid expenses 140,379 11,894
Inventory 278,245 120,173
----------- -----------
TOTAL CURRENT ASSETS 940,127 828,372
Property, plant and equipment, net of
accumulated depreciation 674,881 691,488
Patents, net of amortization 649,251
Deferred income tax asset 2,374,000 1,933,200
Other assets 31,823 26,339
----------- -----------
TOTAL ASSETS $ 4,670,082 $ 3,479,399
=========== ===========
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 164,725 $ 130,694
Accrued expenses 9,839 47,042
Deferred income 325,855 322,604
----------- -----------
TOTAL CURRENT PAYABLE 500,419 500,340
Deferred compensation 29,577
Reserve for remediation 50,000 50,000
Notes payable stockholders 40,547
Debentures payable 1,150,000
----------- -----------
TOTAL LIABILITIES 1,770,543 550,340
STOCKHOLDERS' EQUITY
Common stock 8,730 5,507
Additional paid-in capital 6,568,570 5,936,739
Retained earnings (deficit) (3,677,761) (3,013,187)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 2,899,539 2,929,059
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,670,082 $ 3,479,399
=========== ===========
See accompanying notes to these financial statements.
1
<PAGE>
American Soil Technologies, Inc.
Statements of Operations
(Unaudited)
For the three For the three
months ended months ended
September 30, September 30,
2000 1999
----------- -----------
REVENUE:
Soil and water treatment $ 184,765 $ 218,179
Hauling and miscellaneous sales 14,143 4,296
Other revenue 10,910
----------- -----------
GROSS REVENUE 209,818 222,475
COST OF OPERATIONS:
Materials and supplies 69,381 55,180
Labor and payroll costs 73,237 59,437
Facility costs 67,107
Equipment and maintenance 30,646 15,923
Miscellaneous operating costs 2,212 2,303
----------- -----------
TOTAL COST OF OPERATIONS 242,583 132,843
----------- -----------
GROSS INCOME (32,765) 89,632
Sales and marketing costs 43,760 16,764
Depreciation and amortization 37,879 12,100
General and administrative costs 275,755 65,942
Interest expense 26,970 621
Research and development 1,958
----------- -----------
SALES AND ADMINISTRATIVE COSTS 386,322 95,427
----------- -----------
(419,087) (5,795)
Interest income 215
----------- -----------
Net loss before provision for income taxes (418,872) (5,795)
Income tax credit 167,000 2,000
----------- -----------
NET (LOSS) $ (251,872) $ (3,795)
=========== ===========
Basic loss per common share (Note 8) $ (0.03) $ 0.00
=========== ===========
Weighted average shares outstanding 8,730,431 5,507,420
=========== ===========
See accompanying notes to these financial statements.
2
<PAGE>
American Soil Technologies, Inc.
Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------ Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1999 5,507,420 $ 5,507 $ 5,936,739 $(3,009,392) $ 2,932,854
Net loss for the quarter (3,795) (3,795)
----------- -----------
Balance at September 30, 1999 5,507,420 $ 5,507 $ 5,936,739 $(3,013,187) $ 2,929,059
=========== =========== =========== =========== ===========
Balance At June 30, 2000 8,730,431 $ 8,730 $ 6,568,570 $(3,425,889) $ 3,151,411
Net loss for the quarter (251,872) (251,872)
----------- -----------
Balance at September 30, 2000 8,730,431 $ 8,730 $ 6,568,570 $(3,677,761) $ 2,899,539
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
3
<PAGE>
American Soil Technologies, Inc.
Statements of Cash Flow
(Unaudited)
For the three For the three
months ended months ended
September 30, September 30,
2000 1999
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES:
NET LOSS $(251,872) $ (3,795)
Items not requiring cash
Amortization and depreciation 37,879 12,100
Benefit on income tax credit (167,000) (2,000)
--------- ---------
Cash flow provided/(used) by operations (380,993) 6,305
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED BY OPERATING ACTIVITIES
CHANGES IN ASSETS AND LIABILITIES:
(Increase)/decrease in accounts receivable 61,771 (308,041)
(Increase)/decrease in inventory 24,067 (44,227)
Decrease in other assets 126,511
(Decrease) in accounts payable (200,586) (64,507)
Increase in accrued expenses 37,435
Increase in deferred income 288,575 320,811
--------- ---------
Total Adjustments 173,827 67,982
--------- ---------
Net cash flow provided/(used) by
operating activities (207,166) 74,287
CASH FLOW USED BY INVESTING ACTIVITIES:
Addition of property, plant & equipment (4,992) (32,939)
--------- ---------
Total cash flow used by investing activities (4,992) (32,939)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of debentures 150,000
Advances from stockholders 50,000
--------- ---------
Total cash flow from financing activities 150,000 50,000
--------- ---------
Net increase/(decrease) in cash (62,158) 91,348
Cash at beginning of period 124,352 35,682
--------- ---------
Cash at end of period $ 62,194 $ 127,030
========= =========
See accompanying notes to these financial statements.
4
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY
American Soil Technologies, Inc., formerly Soil Wash Technologies, Inc., (the
"Company") was incorporated in California on September 22, 1993. Effective
December 31, 1999 the Company completed the reverse acquisition and acquisition
described herein and changed its name from Soil Wash Technologies, Inc. to
American Soil Technologies, Inc. and changed its state of domicile to Nevada.
Until January 1, 2000 the Company operated as Soil Wash Technologies, Inc.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial statements and
notes are representations of the Company's management. Management is responsible
for their integrity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
LINE OF BUSINESS
The Company is primarily engaged in non-hazardous soil and water remediation for
commercial business and as of January 1, 2000 the production and sale of soil
enhancement products of the agricultural community.
REVENUE RECOGNITION
For remediation products revenue is recognized upon completion of the processing
cycle and freight upon shipment by the independent trucking company or upon
completion of the services and is fully earned. Revenue is recognized from the
soil enhancement products upon sale and shipment, or if the sale includes
installation, upon completion of the installation process.
ACCOUNTS RECEIVABLE
The Company provides allowances against accounts receivable to maintain
sufficient reserves to cover anticipated losses.
INVENTORY
Inventory is stated at the lower of cost or market, generally being determined
on a first-in, first-out basis. Inventory consists of materials consumed in the
soil and water remediation process, and finished products and raw materials for
sale by the agricultural division
5
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PROPERTY, PLANT AND EQUIPMENT
Depreciation has been provided on the same basis for tax and financial
accounting purposes using the straight-line, accelerated and declining balance
methods. The estimated useful lives of the assets are as follows:
Production equipment 7-10 years
Office equipment, furniture and fixtures 5-10 years
Vehicles 3 years
Leasehold improvements 3-10 years
PATENTS
Patents acquired in the purchase transaction are being amortized over their
estimated useful lives of seventeen years on a straight-line basis.
INCOME TAXES
The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." SFAS 109
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the financial statement
carrying amounts and the tax basis of assets and liabilities.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT AND PATENTS
Depreciation and amortization of property, plant and equipment for the three
months ended September 30, 2000 and 1999 is $27,890 and $12,100, respectively.
Property plant and equipment consist of the following:
September 30, September 30,
2000 1999
----------- -----------
Production equipment $ 920,051 $ 890,015
Office equipment, furniture and fixtures 70,473 53,045
Vehicles 95,872 46,332
Leasehold improvements 528,793 528,793
----------- -----------
1,615,189 1,518,185
Less accumulated depreciation and amortization (940,308) (826,697)
----------- -----------
$ 674,881 $ 691,488
=========== ===========
Amortization of capitalized patent costs for the three months ended September
30, 2000 was $9,989.
6
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 - CONVERTIBLE DEBENTURES
In March, 2000, the Company authorized the issuance of an aggregate of $
1,325,000 of convertible debentures with interest payable quarterly at 10
percent per annum. The stock is convertible to stock of the Company at a rate of
one share for each three dollars converted. The debentures mature in the first
calendar quarter of 2002. All of the debentures are subscribed and at September
30, 2000 the outstanding balance of the debt is $1,150,000. If all debt is
converted the Company would issue 441,667 and based on the current outstanding
balance 383,333 would be issued if the holders elect to convert. Interest
expense for the quarter ended September 30, 2000 was $16,028.
NOTE 5 - COMMITMENT AND CONTINGENCIES
The Company has contractual obligations for ongoing remediation work for
businesses in its geographical area.
The Company has various operating lease obligations which monthly payments. The
Company has month to month leases for its plant sites and equipment. During the
quarters ended September 30, 2000 and 1999 the aggregate lease payments were
$67,736 and $23,535, respectively. The Company expects the leases to continue or
be replaced and that the ongoing lease costs will approximate that of 2000.
In conjunction with the lease of the land associated with the operating
facilities, the Company is obligated to remediate the property to its original
condition. The Company has provided a reserve to restore the property. At
September 30, 2000 and 1999 the Company has reserved $50,000 and $50,000,
respectively, to defray the final cost of lease termination. The lease is month
to month and can be terminated by either party with notice to the other.
NOTE 6 - INCOME TAXES
At September 30, 2000 and 1999, the Company has approximately $5,836,000 and
$4,729,000 of net operating losses available to offset future income tax
liability. The reserve for remediation is not deductible for tax purposes until
paid and therefore the Company will have a deduction of the amount actually paid
in the future. There is no certainty as to the timing of such recognition nor
that the Company will be able to fully utilized these differences.
7
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - INCOME TAXES (continued)
The components of deferred tax assets and liabilities are as follows:
September 30, September 30,
2000 1999
---------- ----------
Tax effects of reserves for doubtful accounts,
deferred compensation and remediation $ 60,000 $ 42,200
Tax effects of carryforward benefits:
Net operating loss carryforwards 2,314,000 1,892,000
---------- ----------
Tax effects of carryforwards
Tax effects of future taxable differences and
carryforwards 2,364,000 1,933,200
---------- ----------
Net deferred tax asset $2,364,000 $1,933,200
========== ==========
Realization of the net deferred tax assets is dependent on generating sufficient
taxable income prior to their expiration. Tax effects are based on a 8.8% state
and 34.0% federal income tax rates for a net combined rate of 39.8%. The
realized net operating losses expire over the next 20 years, as follows:
Expiration Amount
---------- ------
2008 $ 130,000
2009 1,074,000
2010 1,058,000
2011 1,016,000
2012 915,000
2018 510,000
2019 156,000
2020 558,000
2021 419,000
----------
Total $5,836,000
==========
Management believes that it is more likely than not that the Company will
realize the benefits of the deferred tax credits before each expires through
2021, therefore, no valuation reserve has been provided for this against the
asset.
NOTE 7 - COMMON STOCK
At September 30, 2000, the Company has 8,730,431 after the issuance of 3,215,511
on December 31, 1999 for the acquisitions described herein, 5,507,420 shares
outstanding as a result of the stock split at December 31, 1999 and exercise by
the holder of 7,500 shares in May, 2000. The Company has 25,000,000 shares
authorized. The outstanding shares were increased by a stock split of 45.90 for
1 to the original stockholders of the Company and the Company changed the par
value per share to $0.001. In accordance with SFAS 128, this split has been
retroactively recorded as of July 1, 1998. Additionally, the capitalization of
notes and advances payable to shareholders has retroactively been capitalized in
the amount of $5,451,129 as part of that same transaction.
8
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - LOSS PER COMMON SHARE
Loss per share of common stock has been computed based on the weighted average
number of shares outstanding. As of September 30, 2000 and 1999, the weighted
average number of shares outstanding after giving effect to the stock split was
8,730,431 and 5,507,420, respectively. There were no dilutive items outstanding,
therefore, basic and diluted loss per share are the same.
NOTE 9 - REORGANIZATION AND ACQUISITION
On November 24, 1999, the Company entered into an exchange agreement for the
reverse acquisition of New Directions Manufacturing, Inc. ("New Directions")
wherein New Directions would acquire the assets of the Company and change its
name to American Soil Technologies, Inc. This exchange agreement was effective
as of the close of business on December 31, 1999. Under the agreement, New
Directions would sell to one of its directors the operating subsidiary in
exchange for the cancellation of options and the shareholders of New Directions
would receive one share of the Company for each fifteen shares of New
Directions. The existing officers and directors of New Directions resigned and
officers and directors nominated by the Company were appointed.
In addition, effective as of the close of business on December 31, 1999, the
Company acquired in exchange for 2,360,323 shares of stock the operating assets
of the Polymers Plus, L.L.C. ("Polymers") including its licenses, patents and
contracts.
The purchase method of accounting was performed on New Directions and the assets
and liabilities of Polymers based on the fair market value oat the transaction
date. The valuation of New Directions and Polymers, including transaction costs
estimated at $100,000 was $627,553 A summary of the assets and liabilities
acquired, at December 31, 1999 were as follows:
Assets:
Inventory $ 25,380
Deposits and prepaid expenses 3,973
Property, plant and equipment 66,870
Patents, licenses and rights 676,435
Other assets 5,925
---------
Total Assets 778,583
Liabilities:
Current liabilities (110,483)
Long-term liabilities (40,547)
---------
Fair value of acquisitions $ 627,553
=========
In conjunction with these acquisitions, the Company issued and aggregate of
3,215,511 shares of its common stock to shareholders of New Directions and to
Polymers and to consultants and promoters.
9
<PAGE>
AMERICAN SOIL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 9 - REORGANIZATION AND ACQUISITION (continued)
As a result of the closing of these acquisitions on December 31, 1999, the
accompanying financial statements do not include the results of operations of
the acquired entities for any period. The unaudited pro forma financial data
does not purport to represent what the Company's results from continuing
operations would actually have been had the transactions in fact occurred as of
an earlier date, or project the results for any future date or period.
September 30,
Pro Forma (unaudited) 1999
-----------
Revenue $ 236,706
Cost of goods sold 140,196
-----------
Gross profit 96,510
Expenses
Selling, general and administrative (137,187)
Interest expense (621)
-----------
Loss from Operations (41,298)
Tax Benefit 16,000
-----------
Net income (Loss) $ (25,298)
===========
Loss per share $ (0.01)
===========
Weighted average number of shares 8,724,806
===========
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's financial statements, including the notes thereto, appearing
elsewhere in this Report.
FORWARD-LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS STATEMENTS RELATING TO FUTURE
RESULTS OF THE COMPANY (INCLUDING CERTAIN PROJECTIONS AND BUSINESS TRENDS) THAT
ARE "FORWARD-LOOKING STATEMENTS" AS DEFINED IN THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED AS
A RESULT OF CERTAIN RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO
CHANGES IN POLITICAL AND ECONOMIC CONDITIONS; DEMAND FOR AND MARKET ACCEPTANCE
OF NEW AND EXISTING PRODUCTS, AS WELL AS OTHER RISKS AND UNCERTAINTIES DETAILED
FROM TIME TO TIME IN THE FILINGS OF THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(a) OVERVIEW
American Soil Technologies, Inc. began business as Soil Wash Technologies,
Inc. in September 1993 to develop and provide nonhazardous soil remediation
services to businesses and developers in southern California. On December 31,
1999, the Company acquired the patents and operating rights to certain polymer
based soil enhancements designed to increase production and reduce costs to the
agriculture industry. Prior to this acquisition, there was no infrastructure for
sales, marketing and distribution of the polymer product. During the last half
of fiscal year ended June 30, 2000, the Company devoted substantial resources,
including executive time and money, to the development of strategic
relationships and contracts for the marketing and distribution of its polymer
products both nationally and world-wide.
(b) RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
financial information for the Company:
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
(Unaudited) (Unaudited)
----------- -----------
Statement of Operations Date
Revenue $ 209,818 $ 222,475
(Net Loss) $(251,872) $ (3,795)
(Net Loss) per Share $ (0.03) $ 0.00
11
<PAGE>
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
(Unaudited) (Unaudited)
----------- -----------
Balance Sheet Data
Current Assets $ 940,127 $ 828,372
Total Property & Equipment, Net $ 674,881 $ 691,488
Patents, Net $ 649,251
Deferred Tax Asset $ 2,374,000 $ 1,933,200
Total Assets $ 4,670,082 $ 3,479,399
Total Current Liabilities $ 500,419 $ 500,340
Accumulated Deficit $(3,677,761) $(3,013,187)
Stockholders' Equity $ 2,899,539 $ 2,929,059
THREE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999 (UNAUDITED)
REVENUES
Revenues for the three months ended September 30, 2000 were $209,818
compared to $222,475 for the same period in 1999. Revenue from the Soil Wash
Division for the three months ended September 30, 2000 were $202,798 compared to
$209,818 for the same period in 1999. Revenue from the Agriblend Division for
the three months ended September 30, 2000 were $7,020 compared to its revenue
prior to the acquisition by the Company during the same period in 1999 of
$14,231.
COST OF SALES
Cost of goods sold for the Soil Wash Division increased from $132,843 for
the three months ended September 30, 1999 to $238,325 for the three months ended
September 30, 2000, while representing an increase as a percentage of sales from
60% to 120%. Cost of goods sold for the Agriblend Division decreased from $7,353
for the three months ended September 30, 1999 to $4,258 for the three months
ended September 30, 2000, while representing an increase as a percentage of
sales from 52% to 61% of the preacquisition activity for the 1999 period.
INVENTORY
The Company believes that adequate supplies of raw materials are available
to meet its current and anticipated requirements without disruption of its
delivery chain. The Company intends to add additional storage and distribution
facilities to the Agriblend Division as necessary to accommodate increases in
sales, provide for timely delivery and maintain an efficient supply process.
12
<PAGE>
OPERATING EXPENSES
Operating expenses increased 305% over the same period in 1999. These
increases are due to the Company's efforts in putting in place sales
representatives, employees and agents for the Agriblend Division to expand its
sales base, legal fees related to expanding its patent rights, and increased
costs, including employees, of operating a multi-site, multi-disciplined
business. These increases began in the second quarter as the Company explored
the acquisition related to the Agriblend business, and increased during the
third and fourth quarters as the Company was establishing its base sales
network. On an annual basis, the Company expects that these costs will increase
based on a full year of operations of the Agriblend Division but the
relationship as a percentage of sales should decline as the expected sales
volume increases annually. Likewise, on an annual basis the administrative costs
are expected to increase as a full year of operations are experienced for the
two divisions and costs associated with public companies are incurred. Interest
expense is expected to increase in the next year as a result of the interest on
the convertible debentures is incurred for a full year rather than approximately
one quarter and the balance of the debentures are funded and interest is paid on
the increased balance.
INCOME TAXES
The Company has recognized an income tax benefit of its current and prior
operating losses based on the Company's expectation that it will realize
sufficient income in the future, the next twenty years, to utilize the benefits
of the net operating loss carryforward and therefore reduced cash outlay for
taxes in future periods.
NET LOSS
The Company experienced a net loss of $251,872 for the three months ended
September 30, 2000 as compared to a net loss of $3,795 for the three months
ended September 30, 1999.
SEASONALITY
The Soil Wash Division does not experience seasonal fluctuation. The
efforts of the Agriblend Division in the United States have focused on the
southern states and therefore generally experience year round growing cycles,
with the sale of the Agriblend product preceding the growing cycle of various
crops. International sales have not been sufficient enough or the geographic
distribution of sales concentrated enough to determine if a seasonal trend
exists although the initial indication is that the Company's markets will become
diverse and therefore not indicate significant seasonal variations. As the
Company expands into the residential and commercial markets nationally, it is
expected that the Company will experience some seasonal declines in sales during
the fall and winter quarters in less temperate climates.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled 184,765 and $218,179 at September 30,
2000 and 1999, respectively. Net cash used by operations was $207,166 for the
three months ended September 30, 2000 compared to net cash provided by
operations of $74,287 for the comparable period in 1999. To date, the Company
has financed its operations principally through the sales activities of the Soil
Wash Division and the placement of Convertible Debentures. The Company believes
that it has and will have sufficient cash flow to continue its operations
through June 30, 2001. The Company will consider both the public and private
sale of securities and or debt instruments for expansion of its operations if
such expansion would benefit the overall growth and income objectives of the
Company. Should sales growth not materialize, the Company may look to these
public and private sources of financing. There can be no assurance, however,
that the Company can obtain sufficient capital on acceptable terms, if at all.
Under such conditions, failure to obtain such capital likely would affect
adversely the Company's ability to continue as a going concern, or at a minimum
negatively impact the Company's ability to timely meet its business objectives.
The Company's working capital and other capital requirements during the
next fiscal year and thereafter will vary based on a number of factors,
including: 1) the sales revenue generated by the Agriblend Division; 2) the
level of sales and marketing activities related to domestic sales from the
Agriblend Division; 3) the level of distributor support related to development
of international sales associated with the Agriblend Division and; 4) continuing
delivery of contaminated soil to and revenue from the Soil Wash Division.
There can be no assurance that additional public or private financing,
including debt or equity financing, will be available as needed, or, if
available, on terms favorable to the Company. Any additional equity financing
may be dilutive to shareholders and such additional equity securities may have
rights, preferences or privileges that are senior to those of the Company's
existing common stock. Furthermore, debt financing, if available, will require
payment of interest and may involve restrictive covenants that could impose
limitations on the operating flexibility of the Company. The failure of the
Company to successfully obtain additional future funding may jeopardize the
Company's ability to continue its business and operations.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Polymers Plus and the Company have been named in an arbitration brought by
Blaine Vince in which the claimant alleges damages of approximately $50,000. The
Company is indemnified by Polymers Plus for this matter because Polymers Plus
did not disclose the action to the Company. Further, management of the Company
believes that the Company should not be named in this action because the Company
only acquired Polymers Plus' rights in Ron Salestrom's patents, Ron Salestrom's
Employment Agreement, and accounts payable that were reported to the Company.
Accordingly, the Company has refused to participate in the Arbitration.
To the best knowledge of management, there are no other legal proceedings
pending or threatened against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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
The following documents are filed as part of this report:
1. The following Exhibits are filed herein:
27.1 Financial Data Schedule
2. Reports on Form 8-K filed:
None.
15
<PAGE>
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, duly authorized.
AMERICAN SOIL TECHNOLOGIES, INC.
DATED: November 14, 2000 By: /s/ Neil C. Kitchen
-------------------------------------
Neil C. Kitchen,
President, Chief Executive Officer
By: /s/ Sean Lee
-------------------------------------
Sean Lee,
Chief Financial Officer
16
