SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,
2000.
[ _ ]TRANSITION REPORT PURSUANT TO SECTION 13 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to
___________________
Commission File Number: 000-28509
NATIONAL SORBENTS, INC.
(Exact name of Registrant as specified in its Charter)
Nevada
31-1291923
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
10139 Commerce Park Drive
Cincinnati, Ohio 45246
(Address of principal executive offices)
(513) 860-4144
(Registrant's telephone number)
(Former Name, Former Address and Former Fiscal Year, if changed
since last Report)
Check whether the registrant (1) has 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 June 30, 2000, 9,764,000 shares of the issuer's common
stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes __
No X
NATIONAL SORBENTS, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED June 30, 2000
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 2
Balance Sheets as of June 30, 2000 2
Statements of Operations for the three months 3
And six months ended June 30, 2000 and 1999
Statements of Shareholders' Deficit for the six months ended
June 30, 2000 4
Statements of Cash Flows for the six months ended June 30,
2000 and 1999 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
-1-
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
National Sorbents, Inc.
Balance Sheets
(Unaudited)
As of June 30,
<TABLE>
<S> <C> <C>
2000 1999
Assets
Cash and cash equivalents $ 36,710 $ 139,675
Account receivable 323,146 288,917
Inventory 277,966 169,585
Other current assets 37,626 7,980
Total current assets 675,448 606,156
Property and equipment, net 823,243 841,645
Other assets 31,423 630
Total assets $ 1,530,114 $ 1,448,431
Liabilities and Shareholders' Deficit
Accounts payable $941,129 $735,746
Accrued liabilities 190,521 345,660
Notes payable, current portion 1,993 6,000
Total current liabilities 1,133,644 1,087,406
Long term debt, less current portion 1,870,430 1,859,325
Total liabilities 3,004,074 2,946,731
Common stock, $0.001 par value, 25,000,000 9,764 5,500
shares authorized,
9,764, 000 issued and outstanding
Additional paid-in capital 4,898,180 4,765,600
Accumulated deficit (6,381,904) (6,269,400)
Total shareholders' deficit (1,473,960) (1,498,300)
Total liabilities and shareholders' deficit $ 1,530,114 $ 1,448,431
</TABLE>
-2-
National Sorbents, Inc.
Statements of Operations
(Unaudited)
For the six months and three months ended June 30,
<TABLE>
<S> <C> <C> <C> <C>
Six months ended Three Months ended
2000 1999 2000 1999
Revenues $1,929,661 $1,689,045 $ 853,693 $ 949,895
Cost of revenues 1,547,379 1,354,034 652,805 769,377
Gross profit 382,282 335,011 200,888 180,518
Selling, general and 672,505 564,790 321,745 298,967
administrative expenses
Loss from operations (290,222) (229,780) (120,858) (118,449)
Other expense, net 29,944 15,560 17,270 6,906
Loss before provision for (320,167) (245,340) (138,127) (125,355)
income taxes
Provision for income taxes 0 0 0 0
Net loss $(320,167) $(245,340) $(138,127) $(125,355)
Net loss per common share ($0.03) ($0.04) ($0.01) ($0.02)
</TABLE>
-3-
National Sorbents, Inc.
Statements of Shareholders' Deficit
(Unaudited)
For the three months ended March 31, 2000
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Par value,
$0.001
Additional
Common Common paid-in Accumulated
Stock stock capital deficit Total
Balance December
31, 1999 9,764,000 $9,764 $4,898,180 ($6,061,737) ($1,153,793)
Proceeds from sale - - - - -
Net loss ( 320,167) ( 320,167)
Balance June 30, 9,764,000 $9,764 $4,898,180 ($6,381,904) ($1,530,114)
2000
</TABLE>
-4-
National Sorbents, Inc.
Statements of Cash Flows
(Unaudited)
For the six months ended June 30,
<TABLE>
<S> <C> <C>
2000 1999
Net loss ($320,167) ($245,340)
Adjustments to reconcile net income to net
cash
Used for operating activities:
Depreciation and amortization 16,001 13,928
Change in assets and liabilities:
Decrease in accounts receivable 99,932 55,895
(Increase) in inventories (72,895) (1,712)
(Increase) in prepaid expenses (19,482) -
(Decrease)/increase in accounts payable (137,207) 40,322
(Decrease)/increase in accrued expenses 35,788 (100,507)
(Increase)/decrease in other assets (26,583) 375
Net cash used in operations (424,612) (237,039)
Cash used for investing activities:
Purchase of land & building - -
Purchase of property & equipment (6,330) (1,328)
Net cash used for investing activities (6,330) (1,328)
Cash flows from financing activities:
Repayment of debt (5,730) (10,479)
Borrowings 461,095 -
Common stock - 388,520
Net cash provided by financing activities 455,365 378,041
Cash, beginning 12,287 0
Cash, ending $36,710 $139,674
</TABLE>
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National Sorbents, Inc.
Notes to Financial Statements
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have
been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's Form 10-KSB which included audited
financial statements for the year ended December 31, 1999.
Income Taxes
During the periods presented the Company has not provided for
income taxes as a result of the losses during the periods and the
available operating loss carry forwards.
Basis of Presentation
The accompanying financial statements have been prepared on a
"going concern" basis which contemplates the realization of
assets and the liquidation of liabilities in the ordinary course
of business.
The Company has incurred operating losses aggregating $6,061,737
through the year ended December 31, 1999 and $320,167 for the six
months ended June 30, 2000. The Company had negative working
capital of $458,196 at June 30, 2000.
The Company has undertaken efforts to raise additional equity
capital. The Company's continued operations are dependent upon
its ability to raise adequate additional equity capital in
addition to the increased marketing of its products and services.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS
OF OPERATIONS.
Results of Operations
Year 2000 compared to 1999
Revenues increased $240,616, or 46%, to $1,929,661 from
$1,689,045 and revenues decreased $96, 202, or 10%, to $853,693
from $949,895 for the six and three month periods ended June 30,
2000 and 1999 respectively. The increase for the six month period
was the result of an increased volume of sorbent products sold
both domestically and internationally. The decrease for the three
month period was the result of the loss of revenues from
environmental contract services, which resulted from a
catastrophic event at the major customer for these services.
Cost of Revenues increased $193,345, or 14%, to $1,547,379 from
$1,354,034 and decreased $116,572, or 15%, to $652,805 from
$769,377 for the six and three month periods ended June 30, 2000
and 1999 respectively. The increase for the six months was
primarily the result of the higher amount of sorbent products
sold rather than the result of a price increase, while the
decrease for the three month period is the result of lower
activity in environmental services rather than any change in cost
of services.
Operating Expenses
Selling, general and administrative expenses increased $107,714,
or 19%, to $672,505 from $564,790 and $22,778, or 8%, to
$321,745 from $298,967 for the six and three month periods ended
June 30, 2000 and 1999 respectively. The increase was the result
of an increase in professional fees related to preparation and
filing of required documents, an increase in investor relations
activity, and an increase in sales activities.
Liquidity and Capital Resources
The Company has historically financed its operations through the
sale of common stock and borrowings from individuals and a bank.
The Company does not have any significant material commitments
for capital expenditures.
Year 1999 compared to 1998
Revenues decreased $304,067, or 15%, to $1,689,045 from
$1,993,112 and revenues decreased $75,845, or 7%, to $949,895
from $1,025,740 for the six and three month periods ended June
30, 1999 and 1998 respectively. The decreases for both the six
and three month periods were the result of a loss of revenues
from environmental contract services offset by an increased
volume of sorbent products sold both domestically and
internationally. The decrease in revenues from environmental
contract services resulted from a shutdown of operations due to
a plant fire at the major customer for these services.
Cost of Revenues decreased $292,627, or 18%, to $1,354,034 from
$1,646,661 and decreased $51,235, or 6%, to $769,377 from
$820,612 for the six and three month periods ended June 30, 1999
and 1998 respectively. The decrease was the result of the lower
activity in environmetal contract services offset by the higher
amount of sorbent products sold, rather than the result of a
change in unit prices.
Operating Expenses
Selling, general and administrative expenses increased $42,257,
or 7%, to $564,790 from $522,534 and $45,086, or 18%, to
$298,967 from $253,881 for the six and three month periods ended
June 30, 1999 and 1998 respectively. The increases resulted from
an increase in professional fees combined with an increase in
sales activities, including personnel.
-7-
Liquidity and Capital Resources
The Company has historically financed its operations through the
sale of common stock and borrowings from individuals and a bank.
The Company does not have any significant material commitments
for capital expenditures.
-8-
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Not applicable.
(b) Not applicable.
-9-
SIGNATURES
Pursuant to the requirements 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.
Dated August 8, 2000
NATIONAL SORBENTS, INC.
By: /s/ Daniel B. Jones
Daniel B. Jones
President and Chief Executive Officer
By: /s/ Jerome J. Cain
Jerome J. Cain
Chief Financial Officer
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