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 SEPTEMBER 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 September 30, 2000, 13,798,472 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 September 30, 2000
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets as of September 30, 2000 and 1999...........2
Statements of Operations for the nine months
and three months ended September 30, 2000 and 1999.......3
Statements of Shareholders' Deficit for the nine months
ended September 30, 2000.................................4
Statements of Cash Flows for the nine months ended
September 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 September 30,
<TABLE>
<S> <C> <C>
2000 1999
Assets
Cash and cash equivalents $ 11,140 $ 86,776
Account receivable, net 316,772 379,724
Inventory 270,468 214,267
Other current assets 16,959 18,144
Total current assets 615,339 698,911
Property and equipment, net 835,844 845,266
Other assets 46,473 630
Total assets $1,497,656 $1,544,807
Liabilities and Shareholders' Deficit
Accounts payable $1,144,083 $ 846,507
Accrued liabilities 199,467 336,153
Notes payable, current portion 8,828 4,000
Total current liabilities 1,352,378 1,186,660
Long term debt, less current portion 1,040,865 2,308,506
Total liabilities 2,393,243 3,495,166
Common stock, $0.001 par value, 25,000,000 13,799 5,500
shares authorized,13,798,472 issued and
outstanding
Additional paid-in capital 5,764,975 4,377,080
Accumulated deficit (6,674,361) (6,332,930)
Total shareholders' deficit ( 895,587) (1,950,359)
Total liabilities and shareholders' $1,497,656 $1,544,807
deficit
</TABLE>
-2-
National Sorbents, Inc.
Statements of Operations
(Unaudited)
For the nine months and three months ended September 30,
<TABLE>
<S> <C> <C> <C> <C>
Nine months ended Three months ended
2000 1999 2000 1999
Revenues $2,767,356 $2,530,126 $ 837,695 $841,081
Cost of revenues 2,301,495 1,967,299 754,116 613,265
Gross profit 465,861 562,827 83,579 227,816
Selling, general and 1,029,491 819,545 356,985 254,754
administrative expenses
Loss from operations (563,628) (256,718) (273,406) (26,938)
Other expenses, net 48,997 52,160 19,051 36,600
Loss before provision for (612,624) (308,878) (292,457) (63,539)
income taxes
Provision for income taxes 0 0 0 0
Net loss $(612,624) $(308,878) $(292,457) $(63,539)
Net loss per common share ($0.05) ($0.06) ($0.02) ($0.01)
</TABLE>
-3-
National Sorbents, Inc.
Statements of Shareholders' Deficit
(Unaudited)
For the nine months ended September 30, 2000
Shares Par value, $0.001
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional
Common Common paid-in Accumulated
stock stock capital deficit Total
Balance December 31, 1999 9,763,938 $ 9,764 $4,898,180 ($6,061,737) ($1,153,793)
Proceeds from sale 4,034,534 4,035 866,795 - 870,830
Net loss (612,624) (612,624)
Balance September 30, 2000 13,798,472 $13,799 $5,764,975 ($6,674,361) ($895,587)
</TABLE>
-4-
National Sorbents, Inc.
Statements of Cash Flows
(Unaudited)
For the nine months ended September 30,
<TABLE>
<S> <C> <C>
2000 1999
Net loss ($612,624) ($308,878)
Adjustments to reconcile net income to net cash
Used for operating activities:
Depreciation and amortization 25,347 21,069
Change in assets and liabilities:
Decrease/(increase) in accounts receivable 106,307 (34,912)
(Increase) in inventories (65,397) (46,395)
Decrease/(increase) in prepaid expenses 1,185 (10,164)
Increase in accounts payable 65,746 151,082
(Decrease)/increase in accrued expeneses 44,734 (110,014)
(Increase)/decrease in other assets (41,633) 375
Net cash used in operations (476,335) (337,837)
Cash used for investing activities:
Purchase of land & building - -
Purchase of property & equipment (28,277) (12,090)
Net cash used for investing activities (28,277) (12,090)
Cash flows from financing activities:
Repayment of debt (367,366) (8,000)
Borrowings - 444,702
Common stock 870,830 -
Net cash provided by financing activities 503,464 436,702
Cash, beginning 12,287 0
Cash, ending $ 11,139 $ 86,775
</TABLE>
-5-
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 $612,624 for the
nine months ended September 30, 2000. The Company had negative
working capital of $737,039 at September 30, 2000.
The Company has undertaken efforts to raise additional equity
capital or other financing. The Company's continued operations
are dependent upon its ability to raise adequate additional
equity capital or other financing, 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 $237,230, or 9%, to $2,767,356 from $2,530,126
and revenues decreased $3,386, or 1%, to $837,695 from $841,081
for the nine and three month periods ended September 30, 2000 and
1999 respectively. The increase for the nine month period was the
result of the increased volume of sorbent products sold both
domestically and internationally, rather than a price
increase.The decrease for the three month period was the result
of a lower volume of sorbent products sold, offset by an increase
in revenues from environmental services as the cleanup of product
remaining from the catastrophic event at the major customer for
these services, took place during the quarter. Regular services
to the customer had not resumed by the end of the quarter.
Cost of Revenues increased $334,195, or 17%, to $2,301,495 from
$1,967,299 and increased $140,852, or 23%, to $754,117 from
$613,265 for the nine and three month periods ended September 30,
2000 and 1999 respectively. The increase for the nine months was
the result of the increase in quantity of sorbent products sold
rather than the result of a price increase, combined with higher
costs of environmental services performed, cleanup services did
not carry the markup of normal services. The increase for the
three month period is the result of lower margin product being
sold rather than a general price increase, combined with the
higher cost of cleanup environmental services rather than any
general change in cost of services.
Operating Expenses
Selling, general and administrative expenses increased $209,946,
or 26%, to $1,029,491 from $819,545 and $102,231, or 40%, to
$356,985 from $254,754 for the nine and three month periods ended
September 30, 2000 and 1999 respectively. The increases resulted
from 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 $632,899, or 20%, to $2,253,126 from
$3,163,025 and revenues decreased $328,832, or 28%, to $841,081
from $1,169,913 for the nine and three month periods ended
September 30, 1999 and 1998 respectively. The decreases for both
the nine and three month periods were the result of a loss of
revenues from environmental contract services offset by increased
volume of sorbent products sold both domestically and
internationally. The decrease in revenues from environmental
contract services were the result of a shutdown of operations due
to a plant fire at the major customer for these services.
Cost of Revenues decreased $664,684, or 25%, to $1,967,300 from
$2,631,984 and decreased $372,058, or 38%, to $613,265 from
$985,323 for the nine and three month periods ended September 30,
1999 and 1998 respectively. The decrease was the result of the
lower activity in environmetal services offset by the higher
amount of sorbent products sold, rather than a change in unit
prices.
-7-
Operating Expenses
Selling, general and administrative expenses increased $96,501,
or 13%, to $819,545 from $723,237 and $54,244, or 27%, to
$254,754 from $200,704 for the nine and three month periods ended
September 30, 1999 and 1998 respectively. The increases resulted
from an increase in professional fees combined with an increase
in sales activities, including personnel.
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 October 26, 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
-10-
