U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
OMB Approval Expires: Approval Pending
OMB Number: xxxx-xxxx Estimated Average Burden Hours Per Response: 1.0
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended OCTOBER 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
----------- ----------.
Commission file number 0-23356
---------------------
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
----------------------------------------------
(Name of Small Business Issuer in Its Charter)
UTAH 87-0421089
(State or Other Jurisdiction of IRS Employer Identification
Incorporation or Organization)
6015 LOHMAN FORD ROAD, SUITE 100 LAGO VISTA, TEXAS 78645
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
512-267-2221
--------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
--------------------------------------------------------------------------------
(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
Section13 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 past 90 days.
Yes X No
------------ ----------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes__________ No___________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable DATE: OCTOBER 31, 2000 6,956,982
($0.001 PAR VALUE) COMMON SHARES
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following interim consolidated financial statements as of October 31, 2000
and for the nine months and quarter then ended, are unaudited, but in the
opinion of management, have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with those of the annual
audited financial statements and in conformity with the instructions provided in
Item 310(b) of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete audited financial statements. Such interim financial statements
reflect all adjustments (consisting of normal recurring adjustments and
accruals) which management considered necessary for a fair presentation of the
financial position and the results of operations for the quarters presented. The
results of operations for the quarters presented are not necessarily indicative
of the results to be expected for the year ending January 31, 2001. The interim
consolidated financial statements should be read in connection with the audited
consolidated financial statements for the year ended January 31, 2000.
SAFE HARBOR UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Forward looking statements made herein are based on current expectations of the
Company that involve a number of risks and uncertainties and should not be
considered as guarantees of future performance. These statements are made under
the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. The factors that could cause actual results to differ materially include
but are not limited to: interruptions or cancellation of existing contracts,
impact of competitive products and pricing, product demand and market acceptance
risks, the presence of competitors with greater financial resources than the
Company, product development and commercialization risks and an inability to
arrange additional debt or equity financing.
-2-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Financial Statements
For the Nine Months Ended
October 31, 2000 and 1999
(Unaudited)
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBERS
Item 1. Financial Statements (Unaudited) 4
Consolidated Balance Sheets at October 31, 2000 and 4-5
January 31, 2000
Consolidated Statement of Operations for the three 6
months and quarter
ended October 31, 2000
Consolidated Statements of Stockholders' Equity 7-11
from inception on February 9, 1984 through
October 31, 2000
Consolidated Statement of Cash Flows for the 12-13
nine months ended October 31, 2000 and 1999
and from inception to October 31, 2000
Notes to the Consolidated Financial Statements 14-19
Item 2. Management's Discussion and Analysis of Financial 20-21
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security-Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 23
Exhibit 1, Statement of Earnings (Loss) Per Share 24
Exhibit 2, Subsidiary of the Registrant 25
-3-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets
October 31, 2000 and January 31, 2000
(unaudited)
ASSETS
OCTOBER 31, 2000 JANUARY 31, 2000
---------------- ----------------
CURRENT ASSETS
Cash $ 1,487 $ 9,512
Accounts receivable
Trade 380 31,447
Prepaid expenses 29,584 17,208
Inventory 318,161 345,851
---------- ----------
Total Current Assets 349,612 404,018
---------- ----------
PROPERTY AND EQUIPMENT 476,583 651,984
OTHER ASSETS
Mining claims 5,081,569 5,081,569
Certificates of deposit 15,000 15,000
Trademarks & product development cost 1,725 1,725
---------- ----------
Total Other Assets 5,098,294 5,098,294
---------- ----------
TOTAL ASSETS $5,924,489 $6,154,296
========== ==========
-4-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
October 31, 2000 and January 31, 2000
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31, 2000 JANUARY 31, 2000
---------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 322,368 $ 391,938
Note payable 220,000 155,000
Current portion of related party long-term debt 311,705 252,397
------------------ --------------------
Total current liabilities 854,073 799,335
------------------ --------------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM LIABLITIES
Related Party Long-Term Debt, Less Current Maturities 608,232 755,884
------------------ --------------------
Total Liabilites 1,462,305 1,555,219
------------------ --------------------
STOCKHOLDERS' EQUITY
Common stock; authorized 50,000,000 common shares at $0.001 par value
9,831,763 and 7,635,766 shares issued and 6,941,763 and 4,745,766 shares
outstanding respectively (2,890,000 in treasury) 9,771 7,560
Preferred stock; authorized 10,000,000 preferred shares at 0 295
$0.001 par value
Common Stock Subscription 0 0
Common Stock Subscription Receivable 0 0
Capital in excess of par value 10,691,156 10,120,390
Deficit accumulated during the development
stage (5,293,743) (4,584,168)
Treasury stock (cost of 2,890,000 shares held by the company) (945,000) (945,000)
------------------ --------------------
Total Stockholders' Equity 4,462,184 4,599,077
------------------ --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,924,489 $ 6,154,296
================== ====================
</TABLE>
-5-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Operations
October 31, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
Third Quarter (three months) From Inception
Nine Months Ended October 31 Ended October 31 February 9, 1984)
---------------------------- --------------------------- -------------------
2000 1999 2000 1999 to October 31, 2000
<S> <C> <C> <C> <C> <C>
REVENUES
Net sales $ 83,706 $ 26,480 $ 14,029 $ 7,941 $ 582,445
Cost of goods sold 49,977 18,536 32,849 5,559 366,650
----------- ----------- ----------- ----------- -----------
Gross Profit 33,728 7,944 (18,820) 2,382 215,794
----------- ----------- ----------- ----------- -----------
EXPENSES
General and administrative 848,624 619,476 357,561 224,877 5,408,907
Depreciation and amortization 72,474 71,276 23,899 23,928 311,301
----------- ----------- ----------- ----------- -----------
Total expenses 921,098 690,752 381,460 248,805 5,720,208
----------- ----------- ----------- ----------- -----------
Other Income
Rent 5,220 7,830 0 2,610 32,092
Interest 552 526 174 181 3,220
Other Income 57,084 0 0 0 57,084
Gain on sale of assets 68,335 0 0 0 74,318
----------- ----------- ----------- ----------- -----------
Net Other Income 131,191 8,356 174 2,791 166,714
Net loss before provision ----------- ----------- ----------- ----------- -----------
for income taxes (756,178) (674,452) (400,106) (243,632) (5,337,699)
Provision for income taxes 0 0 0 0 2,647
----------- ----------- ----------- ----------- -----------
Net loss before extraordinary items (756,178) (674,452) (400,106) (243,632) (5,340,346)
Extraordinary gain, modification
of note payable, net of taxes 46,603 0 0 0 46,603
----------- ----------- ----------- ----------- -----------
Net Loss $ (709,575) $ (674,452) $ (400,106) $ (243,632) $(5,293,743)
=========== =========== =========== =========== ===========
Weighted average loss per share $ (0.13) $ (0.11) $ (0.06) $ (0.05)
=========== =========== =========== ===========
Average shares outstanding 5,519,067 6,134,087 6,420,186 4,540,524
</TABLE>
-6-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
From Inception on February 9, 1984 to October 31, 2000
(unaudited)
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at Inception February 9, 1984 -0- $ -0- -0- $ -0- -0- $ -0-
Issuance of common stock for cash 37,500 38 -0- -0- -0- -0-
Expenses paid by shareholders for the years
ended January 31, 1990 -0- -0- -0- -0- -0- --
Net Loss From Inception to January 31, 1990 -0- -0- -0- -0- -0- -0-
-------- -------- --------- -------- ---------- --------
Balance at January 31, 1990 37,500 38 -0- -0- -0- -0-
Issuance of common stock for services rendered
in August 1990 391,000 391 -0- -0- -0- -0-
Issuance of common stock in September 1990 for
various assets from Austin-Young, Inc. 50,000 50 -0- -0- -0- -0-
Issuance of common stock for distribution
licenses from Global Environmental
Industries (GEI) for UT & WA, September 1990 50,000 50 -0- -0- -0- -0-
Contribution from Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Issuance of common stock for services rendered
in October 1990 12,500 12 -0- -0- -0- -0-
Net loss for the year ended January 31, 1991 -0- -0- -0- -0- -0- -0-
-------- -------- --------- -------- ---------- --------
Balance at January 31, 1991 541,000 541 -0- -0- -0- -0-
Common stock returned in exchange for common
stock of GEI in March 1991 (17,000) (17) -0- -0- -0- -0-
Repurchase of common stock from Austin-Young,
Inc. in May 1991 (338,000) (338) -0- -0- -0- -0-
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
<S> <C> <C> <C>
Balance at inception February 9, 1984 $ -0- $ -0- $ -0-
Issuance of common stock for cash -0- 962 -0-
Expenses paid by shareholders for the years
ended January 31, 1990 -0- 518 -0-
Net loss from inception to January 31, 1990
-0- -0- (1,618)
------ ------- -------
Balance at January 31, 1990 -0- 1,480 (1,618)
Issuance of common stock for services rendered
in August 1990 -0- 7,429 -0-
Issuance of common stock in September 1990 for
various assets from Austin-Young, Inc. -0- 198,890 -0-
Issuance of common stock for distribution
licenses from Global Environmental -0- 37,070 -0-
Industries (GEI) for UT & WA, September 1990
Contribution from Austin-Young, Inc. -0- 13,500 -0-
Issuance of common stock for services rendered
in October 1990 -0- 37,488 -0-
Net loss for the year ended January 31, 1991 -0- -0- (57,756)
------ ------- -------
Balance at January 31, 1991 -0- 295,857 (59,374)
Common stock returned in exchange for common
stock of GEI in March 1991 -0- (85,423) -0-
Repurchase of common stock from Austin-Young,
Inc. in May 1991 -0- (64,682) -0-
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cancellation of common shares (20,000) (20) -0- -0- -0- -0-
Issuance of common stock for the purchase of
product from steelhead specialty mineral in
August 1991 10,000 10 -0- -0- -0- -0-
Issuance of common stock for the purchase of
mining claims in October 1991 13,214 13 -0- -0- -0- -0-
Common stock canceled by officers/directors in
January 1992 (20,000) (20) -0- -0- -0- -0-
Contribution from Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Net loss for the year ended January 31, 1992 -0- -0- -0- -0- -0- -0-
-------- -------- ------- -------- -------- --------
Balance at January 31, 1992 169,214 169 -0- -0- -0- -0-
Issuance of common stock for the acquisition of
Geo-Environment Services, Inc. in February
1992 701,800 702 -0- -0- -0- -0-
Issuance of common stock for the purchase of
mining claims in March 1992 243,000 243 -0- -0- -0- -0-
Common stock canceled by officers and directors
in June 1992 (32,430) (32) -0- -0- -0- -0-
Cancellation of Fractional shares due to
reverse stock split (21) -0- -0- -0- -0- -0-
Contribution by Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Issuance of common stock (pursuant to a
repurchase agreement in May, 1991) to
Austin-Young, Inc. for relief of debt in
July 1992 3,380,000 3,380 -0- -0- -0- -0-
Net loss for the year ended January 31, 1993 -0- -0- -0- -0- -0- -0-
-------- -------- ------- -------- -------- --------
Balance at January 31, 1993 4,461,563 4,462 -0- -0- -0- -0-
Issuance of common stock for services rendered 17,800 -0- -0- -0- -0- -0-
in June 1993
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
<S> <C> <C> <C>
Cancellation of common shares -0- 20 -0-
Issuance of common stock for the purchase of
Product from steelhead specialty mineral in -0- 74,990 -0-
August 1991
Issuance of common stock for the purchase of
Mining Claims in October 1991 -0- 184,987 -0-
Common stock canceled by officers/directors in
January 1992 -0- 20 -0-
Contribution from Austin -0- 17,000 -0-
Net loss for the year ended January 31, 1992 -0- -0- (93,315)
------- -------- --------
Balance at January 31, 1992 -0- 422,769 (152,689)
Issuance of common stock for the acquisition of
Geo-Environment Services, Inc. in February -0- 96,442 -0-
1992
Issuance of common stock for the purchase of
mining claims in March 1992 -0- 4,859,757 -0-
Common stock canceled by officers and directors
in June 1992 -0- 32 -0-
Cancellation of fractional shares due to
reverse stock split -0- -0- -0-
Contribution by Austin-Young, Inc. -0- 10,000 -0-
Issuance Of common stock (pursuant to a
repurchase agreement in May, 1991) to
Austin-Young, Inc. for relief of debt in
July 1992 -0- 61,620 -0-
Net Loss for the year ended January 31, 1993 -0- -0- (136,304)
------- -------- --------
Balance at January 31, 1993 -0- 5,450,620 (288,993)
Issuance of common stock for services rendered
in June 1993 -0- 26,682 -0-
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock Austin-Young, Inc. in
June 1993 12,000 12 -0- -0- -0- -0-
Issuance of common stock for cash October 1993 66,667 67 -0- -0- -0- -0-
Issuance of common stock as down payment on
building October 1993 6,000 6 -0- -0- -0- -0-
Issuance of common stock for services rendered
October 1993 17,000 17 -0- -0- -0- -0-
Issuance of common stock for cash December 1993 80,072 18
-0- -0- -0- -0-
Contribution by Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Net loss for the year ended January 31, 1994 -0- -0- -0- -0- -0- -0-
--------- -------- --------- --------- --------- --------
Balance at January 31, 1994 4,661,102 4,662 -0- -0- -0- -0-
Issuance of common stock for services rendered
February 1994 6,000 6 -0- -0- -0- -0-
Issuance of common stock for services rendered
in June 1994 41,750 42 -0- -0- -0- -0-
Issuance of common stock in a private offering 22,500 22 -0- -0- -0- -0-
Issuance of common stock for services rendered
in November 1994 15,000 -0- -0- -0- -0- -0-
Contribution by Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Net loss for the year ended January 31, 1995 -0- -0- -0- -0- -0- -0-
Balance at January 31, 1995 4,746,352 4,747 -0- -0- -0- -0-
--------- -------- --------- --------- --------- --------
Issuance of common stock for services 9,000 9 -0- -0- -0- -0-
Issuance of common stock in a private offering 214,168 214 -0- -0- -0- -0-
Contribution by Austin-Young, Inc. -0- -0- -0- -0- -0- -0-
Net loss for the year ended January 31, 1996 -0- -0- -0- -0-
--------- -------- --------- --------- --------- --------
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
<S> <C> <C> <C>
Issuance of common stock Austin-young, Inc. in -0- 35,988 -0-
June 1993
Issuance of common stock for cash October 1993
-0- 199,936 -0-
Issuance of common stock as down payment on
building October 1993 -0- 29,994 -0-
Issuance of common stock for services rendered
October 1993 -0- 50,983 -0-
Issuance of common stock for cash December 1993 -0- 191,321 -0-
Contribution by Austin-Young, Inc. -0- 36,000 -0-
Net loss for the year ended January 31, 1994 -0- -0- (310,862)
-------- ---------- ----------
Balance at January 31, 1994 -0- 6,021,524 (599,855)
Issuance of common stock for services rendered
February 1994 -0- 29,994 -0-
Issuance of common stock for services rendered
in June 1994 -0- 175,458 -0-
Issuance of common stock in a private offering -0- 89,978 -0-
Issuance of common stock for services rendered
in November 1994 -0- 46,235 -0-
Contribution by Austin-Young, Inc. -0- 36,000 -0-
Net loss for the year ended January 31, 1995 -0- -0- (709,048)
-------- ---------- ----------
Balance at January 31, 1995 -0- 6,399,189 (1,308,903)
Issuance of common stock for services -0- 22,391 -0-
Issuance of common stock in a private offering -0- 394,148 -0-
Contribution by Austin-Young, Inc. -0- 36,000 -0-
Net loss for the year ended January 31, 1996 -0- -0- (401,467)
-------- ---------- ---------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 31, 1996 4,969,520 4,970 -0- -0- -0- -0-
Issuance of common stock for cash in a
private offering 130,960 131 -0- -0- -0- -0-
Issuance of common stock for services 259,620 260 -0- -0- -0- -0-
Net loss for the year ended January 31, 1997 -0- -0- -0- -0- -0- -0-
---------- ---------- --------- --------- --------- ----------
Balance at January 31, 1997 5,360,100 5,361 -0- -0- -0- -0-
Issuance of common stock for cash in a private
offering (net of commissions of $84,575) 582,000 582 -0- -0- -0- -0-
Issuance of common stock for services 129,784 130 -0- -0- -0- -0-
Issuance of common stock for purchase of
Equipment 13,555 13 -0- -0- -0- -0-
Issuance of common stock for cash pursuant to a
stock option plan 25,000 25 -0- -0- -0- -0-
Issuance of common stock for partial redemption
of a note pursuant to a stock option plan 100,000 100 -0- -0- -0- -0-
Net loss for the year ended January 31, 1998 -0- -0- -0- -0- -0- -0-
---------- ---------- --------- --------- --------- ----------
Balance at January 31, 1998 6,210,439 6,211 -0- -0- -0- -0-
Issuance of common stock in a private placement
offering (net of commissions of $53,428) 963,269 963 -0- -0-
Issuance of common stock for services 135,480 136 -0- -0- -0- -0-
Issuance of common stock for purchase of
Equipment 82,063 82 - -0- -0- -0-
Net loss for the year ended JANUARY 31, 1999 -0- -0- -0- -0- -0- -0-
---------- ---------- --------- --------- --------- ----------
Balance at January 31, 1999 7,391,251 7,392 -0- -0- -0- -0-
Issuance of common stock in a private placement
offering 129,001 78 -0- -0- -0- -0-
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
<S> <C> <C> <C>
Balance at January 31, 1996 -0- 6,851,728 (1,710,370)
Issuance of common stock for cash in a
private offering -0- 156,729 -0-
Issuance of common stock for services -0- 262,359 -0-
Net loss for the year ended January 31, 1997 -0- -0- (464,662)
----- --------- -----------
Balance at January 31, 1997 -0- 7,270,816 (2,175,032)
Issuance of common stock for cash in a private
offering (net of commissions of $84,575) -0- 729,843 -0-
Issuance of common stock for services -0- 131,782 -0-
Issuance of common stock for purchase of
Equipment -0- 15,236 -0-
Issuance of common stock for cash pursuant to a
stock option plan -0- 9,350 -0-
Issuance of common stock for partial redemption
of a note pursuant to a stock option plan -0- 37,400 -0-
Net loss for the year ended January 31, 1998 -0- -0- (489,525)
----- --------- ----------
Balance at January 31, 1998 -0- 8,194,427 (2,664,557)
Issuance of common stock in a private placement
offering (net of commissions of $53,428) -0- 1,218,676 -0-
Issuance of common stock for services -0- 147,628 -0-
Issuance of common stock for purchase of -0- 121,472 -0-
equipment
Net loss for the year ended January 31, 1999 -0- -0- (961,270)
----- --------- ----------
Balance at January 31, 1999 -0- 9,682,203 (3,625,827)
Issuance of common stock in a private placement
offering -0- 79,921 -0-
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock for services 115,514 90 -0- -0- -0- -0-
Issuance of preferred stock to redeem debt -0- -0- 142,084 142 -0- -0-
Issuance of preferred stock in a private
offering -0- -0- 152,500 153 -0- -0-
Reacquire common stock for note payable (2,520,000) -0- -0- -0- -0- -0-
Reacquire common stock in settlement of note
receivable (50,000) -0- -0- -0- -0- -0-
Repurchase common stock (320,000) -0- -0- -0- -0- -0-
Net loss for the year ended January 31, 2000 -0- -0- -0- -0- -0- -0-
---------- ---------- ---------- --------- ---------- -----------
Balance at JANUARY 31, 2000 4,745,766 $7,560 294,584 $295 -0- -0-
Issuance of common stock for services 12,616 13 -0- -0- -0- -0-
Issuance of common stock for debt,
Compensation, and accrued interest 415,754 416 -0- -0- -0- -0-
Issuance of common stock for compensation 100,000 100 -0- -0- -0- -0-
Cancellation of common stock issued for
compensation (33,000) (33) -0- -0- -0- -0-
Issuance of common stock subscription (500,000) -0- -0- -0- -0- 187,500 (187,500)
Amortization of common stock subscription
receivable earned -0- -0- -0- -0- -0- 58,756
Issuance of common stock for compensation 347,125 347 -0- -0- -0- -0-
Balance at July 31, 2000 5,588,261 $8,403 294,584 $295 $187,500 $(128,744)
========== ========== ========== ========= ========== ============
Issuance of Common Stock for Compensation 338,203 338 -0- -0- -0- -0-
Issuance of Common Stock for Stock Subscription 250,000 250 -0- -0- (93,750) 34,994
Reduction in Common Stock Subscription -0- -0- -0- -0- (93,750) 93,750
Issuance of Common Stock for Professional 323,882 324 -0- -0- -0- -0-
Services
Conversion of Preferred Stock to Common Stock 441,880 442 (294,584) (295) -0- -0-
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
Issuance of common stock for services -0- 65,547 -0-
Issuance of preferred stock to redeem debt -0- 140,372 -0-
Issuance of preferred stock in a private
offering -0- 152,347 -0-
Reacquire common stock for note payable (831,600) -0- -0-
Reacquire common stock in settlement of note
receivable (5,000) -0- -0-
Repurchase common stock (108,400) -0- -0-
Net loss for the year ended January 31, 2000 -0- -0- (958,341)
--------- ----------- -----------
Balance at January 31, 2000 $(945,000) $10,120,390 $(4,584,168)
Issuance of common stock for services -0- 4,120
Issuance of common stock for debt,
compensation, and accrued interest -0- 136,783
Issuance of common stock for compensation -0- 24,900
Cancellation of common stock issued for
Compensation -0- (16,467)
Issuance of common stock subscription (500,000) -0- -0- -0-
Amortization of common stock subscription
receivable earned -0- -0- -0-
Issuance of common stock for compensation -0- 46,549
Net loss for the period ended July 31, 2000 -0- -0- (310,753)
Balance at July 31, 2000 $(945,000) $10,316,275
Issuance of Common Stock for Compensation -0- 153,818
Issuance of Common Stock for Stock Subscription -0- 93,500
Reduction in Common Stock Subscription -0- -0-
Issuance of Common Stock for Professional Services -0- 117,985
Conversion of Preferred Stock to Common Stock -0- (147)
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Capital
Capital Stock
Common Stock Preferred Stock Stock Subscription
Shares Amount Shares Amount Subscription Receivable
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock for Payment of 14,756 15 -0- -0- -0- -0-
Dividend due to Preferred Share Holders
Net Loss for the period ended October 31, 2000 -0- -0- -0- -0- -0- -0-
Balance at October 31, 2000 6,956,982 9,772 -0- -0- -0- -0-
============ ============ ========== ========== ============== ==============
<CAPTION>
Deficit
Accumulated
Additional During the
Treasury Paid-in Development
Stock Ampount Capital Stage
------------- ---------- ------------
Issuance of Common Stock for Payment of -0- 9,724
Dividend due to Preferred Share Holders
Net Loss for the period ended October 31, 2000 -0- -0- (709,575)
Balance at October 31, 2000 (945,000) 10,691,155 (5,293,743)
============== ============ ==============
</TABLE>
-12-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statement of Cashflows
<TABLE>
<CAPTION>
From Inception on
Nine Months Ended February 9, 1984
October 31 Through
2000 1999 October 31, 2000
<S> <C> <C> <C>
Cash flows from operating activities
Net Loss (709,575) (675,522) (5,293,743)
Extraordinary gain, modification of debt (52,275) 0 (52,275)
Depreciation and amortization 72,474 67,944 311,301
(Increase) decrease in receivables 31,067 37,386 (380)
Decrease (increase) in prepaid expenses (17,375) (21,031) (22,583)
Decrease (increase) in inventory 27,689 (78,670) (244,987)
Increase (decrease) in payables (63,943) 193,475 290,578
Gain from disposal of fixed assets (66,500) 0 (53,123)
Stock issued for services 468,484 0 1,474,099
Stock Issued for interest on debts 4,199 0 4,199
Expenses paid by shareholder 0 0 149,018
---------------------------------------------------------
Net cash used by operating activities (305,755) (476,418) (3,437,896)
---------------------------------------------------------
Cash flows from investing activities
Purchase of fixed & other assets (20,575) (37,105) (742,086)
Proceeds from Sale of warehouse 190,000 0 190,000
Purchase certificates of deposit 0 0 (15,000)
Purchase of product tradenames 0 (1715) (28,683)
Purchase of note receivable 0 0 (5,000)
Organization costs 0 0 (1,524)
Business Development Costs 0 (8,168) (58,599)
Purchase/sale of mining development costs 0 0 7,920
Purchase of mining claims 0 0 150,000
Sale of licenses & other assets 0 29,607 (65,000)
---------------------------------------------------------
Net cash used by investing activities 169,425 (17,381) (567,972)
---------------------------------------------------------
Cash flows from financing activities
Issuance of common stock 0 41,480 3,210,061
Issuance of preferred stock 0 273,014 152,500
Issuance of notes payable 435000 1,163,245 1,638,031
Purchase of treasury stock 0 (945000) (108,400)
Principal payments on long-term debt (306,695) 0 (884,837)
---------------------------------------------------------
Net cash provided by financing activities 128,305 532,739 4,007,355
---------------------------------------------------------
Net (decrease) increase in cash (8,025) 38,940 1,487
Cash at beginning of period 9,512 4,966 0
---------------------------------------------------------
Cash at end of period 1,487 43,906 1,487
=========================================================
</TABLE>
-13-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Continued)
<TABLE>
<CAPTION>
From Inception on
For the Nine Months Ended February 9, 1984
October 31 Through
2000 1999 October 31, 2000
<S> <C> <C> <C>
Supplemental cash flow information:
Cash paid for:
Interest 22,613 6,627 43,312
Income taxes 0 0 2,547
Non-cash transactions:
Stock issued for mining claims 0 0 5,045,000
Stock issued for down payment on building 0 0 30,000
Stock issued for services 468,484 0 1,474,099
Stock issued for stock of Geo-Environmental
Services, Inc. (name changed to
American Absorbents, Inc.) 0 0 97,144
Stock issued for inventory 0 0 75,000
Stock issued for assets of Austin-Young, Inc.
and Global Environmental Industries 0 0 236,000
Stock issued for purchase of equipment 0 0 136,803
Stock issued for redemption of note 109,199 0 142,500
Treasury stock repurchased in exchange for debt 0 0 831,600
Treasury stock repurchased in settlement of note receivable 0 0 5,000
Debt assumed by buyer of fixed asset disposition 0 0 14,281
Preferred stock issued as redemption of debt 0 0 140,000
</TABLE>
-14-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ORGANIZATION
American Absorbents Natural Products, Inc. was incorporated on February
9, 1984 under the laws of the State of Utah and under the name of TPI
Land, Inc. as a wholly-owned subsidiary of TPI, Inc. On September 14,
1990, the Company changed its name to Environmental Fuels, Inc. and
began developing its involvement in various phases of the conversion of
vehicles to operating on compressed natural gas. That developing
business was sold on April 23, 1991.
On May 6, 1991, the Company changed its name to Geo-Environmental
Resources, Inc. and is now developing its involvement in the
distribution of zeolite, a mineral product which is an absorbent and
has many potential uses such as oil and gas well cleanup, shoe and
refrigerator freshener, landfill absorption, and other agricultural
uses.
On February 6, 1992, the Company acquired the outstanding stock of
Geo-Environment Services, Inc., a wholly owned subsidiary involved in
marketing of the zeolite products. The transaction was accounted for at
historical cost in a manner similar to that in pooling of interest
accounting for business combinations.
In June 1995, the Company changed its name to American Absorbents
Natural Products, Inc. and the name of its subsidiary to American
Absorbents, Inc.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of American
Absorbents Natural Products, Inc. and its subsidiary American
Absorbents, Inc. Collectively, these entities are referred to as the
Company. All significant intercompany transactions and accounts have
been eliminated.
METHOD OF ACCOUNTING
The Company recognizes income and expenses according to the accrual
method of accounting. Expenses are recognized when performance is
substantially complete and income is recognized when earned. Earnings
(loss) per share are computed based on the weighted average method.
Stock options, preferred stock and convertible debt currently
outstanding were not used in calculating earnings per share since the
effect would be antidilutive. The fiscal year of the Company ends on
January 31 of each year. The financial statements reflect activity from
inception, February 9, 1984.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows,
the Company considers all highly liquid debt instruments with a
maturity of three months or less to be cash equivalents.
NONMONETARY TRANSACTIONS Nonmonetary transactions are transactions for
which no cash was exchanged and for which shares of common stock were
exchanged for assets or services. These transactions are recorded at
fair market value as determined by the board of directors.
-15-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INVENTORIES
Inventories are accounted for using the first in, first out (FIFO)
method and are valued at the lower of cost or market. Inventories
consist of finished goods and packaging materials.
ACCOUNTS RECEIVABLE Accounts receivable are shown net of the allowance
for doubtful accounts. This amount was determined to be $0 and $0 at
October 31, 2000 and 1999 after writing off all accounts determined to
be uncollectible.
PREPAID EXPENSES Prepaid expenses consist of the following:
October 31, 2000 January 31, 2000
---------------- ----------------
Prepaid mining land lease $ 24,584 $ 17,208
Prepaid Accounting Fees 5,000 -
-------- --------
Total Prepaid Expenses $ 29,584 $ 17,208
MINING CLAIMS
Mining claims are stated at the lower of cost or market. Any costs
incurred for the betterment or to increase the expected efficiency of
the operations related to the extraction from the Company mining claims
are capitalized and charged off to operations over the expected
economic life of the claims.
PROPERTY AND EQUIPMENT
The Company has adopted SFAS statement #121, which requires a review of
any potential for the impairment of value of any long-lived assets. It
is the policy of the Company to annually review the future economic
benefit of all long-lived assets and to charge off to operations any
potential impairment of value of long-lived assets when applicable.
NOTE 2 - DEVELOPMENT STAGE ENTERPRISE The Company, per FASB Statement No. 7,
is properly accounted for and reported as a development stage
enterprise. Substantially all of the Company's efforts since its
formation have been devoted to establishing its new business. No
significant revenue has been earned as of the balance sheet date.
Operations have been devoted to raising capital, purchasing zeolite
property and establishing a marketing plan.
Continuation of the development effort is contingent upon the Company
raising sufficient capital from shareholders or other sources. It is
management's intent to raise capital and further develop the marketing
of its zeolite products.
-16-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 3 - COMMON STOCK AND STOCKHOLDERS' EQUITY
Stock of the Company has been issued for cash, license agreements,
mining claims, compensation for services, and in exchange for other
stock.
During the period ended October 31, 2000, the Company issued shares of
stock for services, the payment of debt, and compensation.
On March 7, 2000, the Company issued 12,616 shares at $0.33/share for
legal services.
On April 13, 2000, the Company issued 330,906 shares at $0.33/share for
payment of debt and accrued interest.
On April 13, 2000, the Company issued 84,848 shares at $0.33/share for
payment of accrued salaries to an officer of the Company.
On April 27, 2000, the Company cancelled 33,000 shares issued for
compensation to two officers of the Company. The shares were issued at
$0.50/share.
On April 27, 2000 the Company issued 100,000 shares at $0.25/share for
compensation to two officers of the Company.
On July 21, 2000 the Company issued 500 shares at $0.21/share as part
of the judgement directed in the Calkins' lawsuit.
On July 21, 2000 the Company issued 21,625 shares at $0.21/share for
professional services and as part of the settlement with a former
officer of the company.
On July 21, 2000 the Company issued 325,000 shares at $0.13/share for
consulting and investor relations services.
On August 17, 2000 the Company issued 52,203 shares at $0.33/share for
compensation to two current officers and a former officer for
compensation due.
On August 17, 2000 the Company issued 20,500 shares at $0.31/share for
compensation for administrative and production staff.
On August 17, 2000 the Company issued 265,500 shares at $0.50/shares to
officers of the Company in lieu of unissued options.
On August 17, 2000 the Company issued 250,000 share at $0.375/share for
professional services rendered.
On August 31, 2000 the Company issued 15,000 at $1.00/share for
consulting services.
-17-
<PAGE>
AMERICAN ABSORBENTS NATURAL
PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 3 - COMMON STOCK AND STOCKHOLDERS' EQUITY (Continued)
On August 31, 2000 the Company issued 275,178 shares at $0.33/share for
professional services.
On September 18, 2000 the Company issued 33,704 shares at prices
ranging from $0.26/share to $0.41/share for directors' compensation.
On October 4, 2000 the Company converted 294,584 Preferred shares to
441,880 share of Common stock. The company also issued 14,756 shares to
pay the $9,085 in dividends due to the preferred shareholders.
NOTE 4 - MINING CLAIMS
The Company has purchased several zeolite mining claims in three
different regions in the western United States. All purchases were
acquired through stock issuance and are described below.
In April 1991 (before acquisition by Geo-Environmental Resources) (now
American Absorbents Natural Products, Inc.), the Company's subsidiary
issued 440,000 shares of its stock for mining claims containing zeolite
in the Mohave County, Arizona region, and the stock given was
originally valued at $.50 per share. Thus the mining claims were
originally valued at $220,000. Since the value of the mining claims was
not readily determined the mining claims were written down to a nominal
value.
In October 1991 the Company acquired twenty zeolite mining claims in
Harney County, Oregon. The value of the claims was agreed to be
$185,000 by the seller and purchaser and 13,214 (132,143 pre-split)
shares of common stock were issued. The stock was quoted on the market
at $1.40 per share, thus determining the number of shares to be issued
for the claims.
In December 1991, the Company acquired an additional 203 zeolite mining
claims in the Harney County, Oregon region. A geological study was
conducted and reserves were estimated at over 477,600,000 tons. The
value per ton was also estimated based on mining costs and market value
of other companies in the industry. The reserves were then discounted
99 1/2% and a value was determined to be approximately $4,800,000.
Stock was then issued at market price to equal the value given to the
claims.
On July 10, 1997, the Department of the Interior Bureau of Land
Management granted approval of the Company's Permanent Mining Permit
and Plan of Operations to mine its Harney County, Oregon zeolite
properties.
To date $100 depletion has been taken on any of these claims.
Additional depletion of these assets will begin once material mining
operations on these claims begins.
-18-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 5 - NOTES PAYABLE
During the quarter ended October 31, 2000, total notes payable
outstanding increased by $101,049 from the previous quarter due
primarily to the $220,000 in funds advanced to the Company by Centre
Capital in accordance with the capitalization plan outlined in the
definitive agreement signed August 9, 2000. These funds are in the form
of a short-term note that was scheduled to expire upon completion of
the acquisition of the Company by Centre Capital Corp. Subsequent to
the end of the quarter ended October 31, 2000, the Company has
terminated the agreement with Centre Capital due to the recent
significant decline in their stock price and their inability to provide
the remaining funds as provided for in the definitive agreement. The
company also made the first installment payment due on the note to
Austin-Young, Inc. as part of the stock buyback executed in July 1999.
In addition to the funding provided by Centre Capital Corp, the Company
has three notes payable, all outstanding to stockholders and bear
interest at the rate of 8.25, 10.5%, and 0.00%. The Company did not
make any additional draws on the $215,000 line of credit and as of
October 31, 2000 the outstanding balance was $210,292.
NOTE 6 - PRIVATE PLACEMENT OF COMMON STOCK or PREFERRED STOCK
During the third quarter ended October 31, 2000, there were no issuance
of private placements of common stock. There were, however, several
transactions completed with common stock as detailed in Note 3 - Common
Stock and Stockholders' Equity of this filing.
-19-
<PAGE>
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2000
(unaudited)
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company has sold two private placements that include a royalty
payment. The first private placement includes a $3 per ton per minimum
investment on 6,000 tons of zeolite mined and sold. Total royalties
paid per minimum investment will be $18,000. The company sold 91 units
of this private placement. The second private placement includes a $2
per ton per minimum investment on 10,000 tons of zeolite mined and
sold. Total royalties paid per minimum investment will be $20,000. The
Company sold 144 units of this private placement. The royalties will be
paid simultaneously ($5 per ton) to the shareholders proportionately
once the zeolite has been mined and sold. The Company may increase the
amount of the royalty payment to any holder of the royalty right above
the specified dollar per ton royalty, but in no event will the total
royalty payment exceed the maximum per investment. The increase in the
royalty amount paid would only decrease the time limit in which the
holder of a royalty right would receive the total royalty amount.
Royalty payments will be made quarterly after the Company has made its
quarterly financial statement filing with the Securities and Exchange
Commission and determined the total tonnage that has been mined, milled
and sold during the quarter.
The Company is not aware of any outstanding legal matters at this
time.
NOTE 8 - ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. In these financial statements, assets, liabilities and earnings
involve extensive reliance on management's estimates. Actual results
could differ from those estimates.
NOTE 9 - SUBSEQUENT EVENTS
On November 30, the Company announced that it had suspended its merger
discussions with Centre Capital Corp due to their inability to meet their
initial funding requirements and the recent drop in Centre Capital's stock
price.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND PLAN OF OPERATIONS.
The Company, per FASB statement No. 7, is properly accounted for and reported as
a development stage enterprise. The Company's efforts since entering its current
business have been devoted primarily to Company capitalization, acquisition of
mining properties, packaging and milling facility acquisitions and product and
market development.
-20-
<PAGE>
RESULTS OF OPERATIONS
The Company is a development stage enterprise and has incurred losses in each of
its fiscal years ended January 31, 1998, 1999 and 2000 and for the quarters
ended October 31, 2000, and October 31, 1999. These losses are the result of the
continued operating expenses the Company incurs as it develops its niche in the
retail and industrial marketplaces. Revenues have been insufficient to cover
operating expenses or operational cash flow requirements.
A net loss of $400,106 was incurred in the three-month period ended October 31,
2000, compared to a net loss of $243,632 for the same quarter of the previous
year. For the nine months ended October 31, 2000, the Company incurred a net
loss of $709,575 as compared to a net loss of $674,452 for the same period a
year ago. Revenue for the quarter ended October 31, 2000 increased to $14,029
from $7,941 for the same quarter the previous year and for the first nine months
of 2001 and 2000 was $83,706 and $26,480 an increase of $37,226.
General and administrative expenses increased by approximately $132,684 from
$224,877 to $357,561 during the three months ended October 31, 2000 as compared
to the same period of the previous year. Significant expenditures during the
third quarter included a charge of $49,994 for consulting services, $23,898 for
depreciation, and $16,370 for interest. Personnel related expenses increased by
approximately $57,439 from $131,673 for the period ended October 31, 1999 to
$189,112 for the period ended October 31, 2000. The increase in personnel
expenses was primarily the result of stock issued for services provided by
management and other employees. Legal and accounting increased by approximately
$5,000 due in part to the costs associated with the audit required as part of
the now terminated agreement with Centre Capital.
For the three months ended October 31, 2000, the Company wrote down inventory to
more accurately account for the purchase of advertising and marketing material.
These $28,000 in charges included $17,000 for our 101 Uses of Zeolites booklet
and $11,000 for inventory liquidated in order to clear our Austin warehouse. Of
the $14,079 in sales this quarter, $12,289 was for our Mother Earth Cat Litter.
We shipped this product into the Los Angeles, California marketplace at an
introductory price to begin developing a presence in the California market. This
sale represents nearly 15% of our year-to-date sales of $83,706.
The ratio of current assets to current liabilities (current ratio) was 0.51,
2.69, 0.77, and 0.47, respectively, for the fiscal years ended January 31, 2000,
1999, 1998 and 1997. Current ratios at October 31, 2000 and 1999 were .41 and
.51, respectively. The decrease in the current ratio is attributable to an
additional $100,000 in short-term debt moving into current liabilities. This
$100,000 increase resulted from the partial capitalization as provided for in
our now terminated merger. October 31, 2000 the outstanding balance on the line
of credit was $210,292. As of the end of the quarter, the Company was delinquent
on both the line of credit and the short-term note to Austin-Young, Inc.
Payments for October, November, and now December 1st are due and payable totally
$15,000. We have been notified by Austin-Young, Inc. of this situation and are
seeking to resolve this issue as soon as possible.
LIQUIDITY AND FINANCIAL CONDITIONS
The Company has financed its operations to date primarily through the sale of
equity securities and borrowings from stockholders. The Company has been
unprofitable since its inception and has incurred net losses in each year,
including a net loss of $400,106 for quarter ended October 31, 2000. Revenues to
date have provided insufficient funding of working capital. During the quarter,
the Company's primary sources of funding were the $220,000 advanced as part of
the capitalization plan outlined in the definitive agreement signed August 9,
2000 with Centre Capital. This was provided as a short-term loan that was to
expire upon completion of the merger. The Company is now fully extended on the
line of credit and is actively identifying alternative sources of funding. Also
subsequent to the end of the quarter, the Company retained the services of Tribe
Communication to assist us in raising investor awareness and to raise capital.
The $118,800 principal payment
-21-
<PAGE>
on the $831,600 note to Austin-Young was made on August 15, 2000 using the
proceeds from the first installment of funds provided for in the capitalization
plan as part of the definitive agreement. Also during the quarter, the Company
secured the zeolite reserves for an additional year by making the $29,500
payment to the Bureau of Land Management.
At October 31, 2000, the Company had $322,368 in accounts payable and accrued
expenses; a year ago at October 31, 1999, the Company had $391,938. Notes
payable, current and long-term totaled $1,139,937 at October 31, 2000, versus
$1,163,281 at October 31, 1999. Management continues to believe it will be able
to raise capital to provide for operations and debt service. However, there can
be no assurance that additional financing will be available at all or, if
available, such financing would be obtainable on terms acceptable to the
Company. If adequate financing is not available, the Company may be required to
curtail its operation significantly or to obtain funds through entering
collaborative agreements or other arrangements on less favorable terms. The
failure of the Company to raise capital on acceptable terms would have a
material adverse effect on the Company's business, financial condition, and
results of operations.
During the development stage the Company has paid for almost everything as it
was acquired including the build up in inventory levels. As a result, and now
that the milling facility is in production, the future cash flow of the Company
will benefit as the inventory is converted into sales with the implementation of
the marketing efforts.
During the development stage of the Company incurred losses that reflect the
development stage activity of researching and test marketing its products. The
Company paid $91,700 to the Bureau of Land Management for the fiscal year ended
January 31, 1996 and $29,500 in the fiscal years ended January 31, 1997, 1998,
1999, and 2000. In the future, approximately $29,500 will be due to the Bureau
of Land Management in August of each year to satisfy claim maintenance fees on
existing claims.
The Company did not issue any stock for cash investments into the Company during
this quarter.
INFLATION
The Company does not expect inflation to have any material effect on its
revenues, costs or overall operation.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During the quarter ended October 31, 2000 there were no material pending or
threatened legal proceedings against the Company or, to the best of the
company's knowledge, its directors, officers, affiliates and owners of record or
beneficially of more than five percent of any class of voting securities of the
Company nor, to the best of the company's knowledge, was there any associate of
any such director, officer, affiliate or security-holder who is a party in any
action that is adverse to the Company or its subsidiary. (SEE NOTE 7 -
COMMITMENTS AND CONTINGENCIES, page 17)
ITEM 2. CHANGES IN SECURITIES.
During the quarter ended October 31, 2000, there were no material modifications
to instruments defining the rights of the holders of any class of registered
securities nor were the rights evidenced by any class of registered securities
materially limited or qualified by the issuance or modification of any class of
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
During the quarter ended October 31, 2000, there was no material default in the
payment of principal, interest, sinking or purchase fund installments, or any
other material default not cured within 30 days, with respect to any
indebtedness of the Company exceeding five percent of the total assets of the
Company, nor was there any material arrearage in the payment of
-22-
<PAGE>
dividends with respect to any class of preferred stock of the Company which is
registered or which ranks prior to any class of registered securities, or with
respect to any class of preferred stock of any significant subsidiary of the
Company. (The Company currently has no dividend policy.)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
During the quarter ended October 31, 2000, no matters were submitted to a vote
of security-holders.
ITEM 5. OTHER INFORMATION.
On August 24, 2000, the Company filed an 8-K detailing the signing of a
definitive agreement with Centre Capital Corp. Centre Capital will acquire
American Absorbents Natural Products, Inc. for a combination of common stock,
preferred stock, and detachable warrants. Persons wanting additional information
may access the 8-K filing through edgar-online.com and on the Centre Capital
Corp website (cccx.net).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) (1) The following financial statements are included in Part I, Item 1:
(2) The following exhibits are included for the nine months and quarters
ended October 31, 2000 and 1999:
Exhibit 1 - Computation of Earnings (Loss) Per Share 24
Exhibit 2 - Subsidiary of the Registrant 25
All other exhibits are omitted since the required information is included in the
financial statements or notes thereto, or since the required information is
either not present, not present in sufficient amount or is not applicable.
(b) A Form 8-K was filed on August 24, 2000 during the quarter ended October 31,
2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AMERICAN ABSORBENTS NATURAL PRODUCTS, INC.
By: /S/ ROBERT L. BITTERLI
Robert L. Bitterli, Chairman of the Board
and Chief Executive Officer
Date: December 14, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Company and in their
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert L. Bitterli Chief Executive December 14, 2000
----------------------- Officer and Chairman of the Board
Robert L. Bitterli (Principal Executive Officer)
/s/ David C. Scott President and Chief Financial December 14, 2000
------------------- Officer
David C. Scott (Principal Accounting Officer)
-23-
