U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the quarter ended: October 31, 2001
Commission file no.: 0-28155
NATURAL SOLUTIONS CORPORATION
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(Name of small business issuer as specified in its charter)
Nevada 88-0367024
- --------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 Volvo Parkway, Suite 200
Chesapeake, Virginia 23320
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (757) 548-4242
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None None
- --------------------- ---------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-------------------------------------
(Title of class)
Copies of Communications Sent to:
Williams Mullen Clark & Dobbins
One Columbus Center, Suite 900
Virginia Beach, Virginia 23462-6762
Tel: (757) 473-5308 Fax: (757) 473-0395
Indicate by 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 ___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 30, 2001, there are
26,743,873 shares of voting common stock of the issuer issued and outstanding.
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets F-2
Condensed Consolidated Statements of Operations F-3
Condensed Consolidated Statements of Cash Flows F-4
Condensed Consolidated Statements of Changes in
Stockholders' Deficit F-5
Notes to Condensed Consolidated Financial Statements F-6
F-1
NATURAL SOLUTIONS CORPORATION
Condensed Consolidated Balance Sheets
Unaudited Unaudited
October 31, October 31,
ASSETS 2001 2000 July 31, 2001
- -------------------------------------------------------------------- -------------- -------------- --------------
Current Assets:
Cash and Cash Equivalents $ 144,285 $ 487,834 $ 6,161
Trade Accounts Receivable, net 133,540 282,688 72,688
Stock Subscription Receivable 200,000 - 490,000
Other Receivables, net 39,001 38,803 36,479
Inventories 227,418 584,700 239,784
Prepaid Expenses 65,986 26,499 34,692
-------------- -------------- --------------
Total Current Assets 810,230 1,420,524 879,804
Property and Equipment, at cost 178,616 156,350 233,673
Less Accumulated Depreciation (82,094) (81,305) (110,916)
-------------- -------------- --------------
96,522 75,045 122,757
Licensing Agreement, net 196,045 298,949 221,771
-------------- -------------- --------------
$ 1,102,797 $ 1,794,518 $ 1,224,332
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Trade Accounts Payable 1,264,047 951,065 1,165,436
Accrued Expenses 484,783 218,396 387,958
Notes Payable 100,138 102,000 104,974
Other Liabilities - - 150,000
-------------- -------------- --------------
Total Current Liabilities 1,848,968 1,271,461 1,808,368
Convertible Debentures to Related Party 1,604,550 1,441,352 1,588,751
Other Liabilities 150,000 - 150,000
Long Term Debt to Related Party 257,000 257,000 257,000
-------------- -------------- --------------
Total Liabilities 3,860,518 2,969,813 3,804,119
Commitments and Contingent Liabilities
Stockholders' Deficit:
8% Convertible Preferred Stock, $0.001 par value, 20,000,000
shares authorized, 7,770 issued and outstanding on October 31,
2001, 7,500 on July 31, 2001, and 4,500 on October 31, 2000 8 4 8
Common Stock, $0.001 par value, 55,000,000 shares authorized,
26,743,873 issued and outstanding on October 31, 2001,
24,743,873 on July 31, 2001, and 20,046,540 on October 31, 2000 26,744 20,046 24,744
Additional Paid-in Capital 14,796,385 14,035,776 14,271,385
Accumulated Deficit (17,580,858) (15,231,121) (16,875,924)
-------------- -------------- --------------
Total Stockholders' Deficit (2,757,721) (1,175,295) (2,579,787)
-------------- -------------- --------------
$ 1,102,797 $ 1,794,518 $ 1,224,332
============== ============== ==============
See Notes to Condensed Consolidated Financial Statements.
F-2
NATURAL SOLUTIONS CORPORATION
Condensed Consolidated Statements of Operations
For the Three Months Ended
October 31
-------------------------------
2001 2000
Unaudited Unaudited
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Net Sales $ 147,125 $ 366,585
Costs Applicable to Sales 146,631 255,037
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Gross Profit 494 111,548
Operating Costs and Expenses:
Selling and Administrative Expenses 456,370 557,850
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Losses from Operations (455,876) (446,302)
Other Expense, net (79,924) (210,432)
-------------- --------------
Loss from Continuing Operations Before Taxes (535,800) (656,734)
Income Tax Expense - -
-------------- --------------
Loss from Continuing Operations $ (535,800) $ (656,734)
Discontinued Operations:
Loss from operations of discontinued product
line, net of taxes - (107,345)
Loss on discontinuance of product line, including
provision of $44,507 for operating losses
during phase-out period, net of taxes (142,136) -
-------------- --------------
Net Loss $ (677,936) $ (764,079)
============== ==============
Loss per Share, Basic and Diluted from
Continuing Operations ($ 0.02) ($ 0.03)
============== ==============
Loss per Share, Basic and Diluted, from
Discontinued Product Line, net of taxes ($ 0.00) ($ 0.01)
============== ==============
Loss per Share, Basic and Diluted, from
Discontinuance of Product Line ($ 0.01) $ 0.00
============== ==============
Loss per Share, Basic and Diluted ($ 0.03) ($ 0.04)
============== ==============
Weighted Average Common
Shares Outstanding 26,263,873 20,036,540
============== ==============
See Notes to Condensed Consolidated Financial Statements.
F-3
NATURAL SOLUTIONS CORPORATION
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended
October 31
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Unaudited Unaudited
2001 2000
-------------- --------------
Operating Activities:
Net Loss $ (677,936) $ (764,079)
Adjustments to Reconcile Net Loss to Cash
Used in Operating Activities:
Depreciation and Amortization 34,029 33,911
Non-Cash Interest Charges 15,799 178,997
Loss on Sale of Equipment 7,935 -
Product and Services Purchased for Stock
and Options - 7,000
Increase in Accounts and Other Receivables (63,374) (189,799)
Decrease (Increase) in Inventories 12,366 (74,010)
Increase in Prepaid Expenses (31,294) (1,193)
Increase in Accounts Payable and
Accrued Expenses 195,435 219,741
Decrease in Other Liabilities (150,000) -
-------------- --------------
Cash Used in Operating Activities (657,040) (589,432)
-------------- --------------
Investing Activities:
Acquisition of Equipment - (3,234)
Proceeds from the Sale of Equipment 10,000 -
-------------- --------------
Cash Used in Investing Activities 10,000 (3,234)
-------------- --------------
Financing Activities:
Payment of Note Payable (4,836) -
Proceeds from Issuance of Convertible Debentures - 435,000
Proceeds from Issuance of Common Stock 790,000 -
Proceeds from Issuance of Preferred Stock 27,000 450,000
Preferred Stock Dividends Paid (27,000) -
-------------- --------------
Cash Provided by Financing Activities 785,164 885,000
-------------- --------------
Net Increase in Cash 138,124 292,334
Cash and Cash Equivalents - Beginning of Period 6,161 195,500
-------------- --------------
Cash and Cash Equivalents - End of Period $ 144,285 $ 487,834
============== ==============
Supplemental disclosures of cash flow information:
Non-cash charges against income:
Amortization of charges to stock warrants $ 15,799 $ 15,799
One-time charge from issuance of convertible debentures $ - $ 163,198
See Notes to Condensed Consolidated Financial Statements.
F-4
NATURAL SOLUTIONS CORPORATION
Condensed Consolidated Statements of Changes in Stockholders' Deficit
For the Three Months Ended October 31, 2001
(Unaudited)
Par Par Additional
Preferred Value Common Value Paid-in Accumulated
Shares Preferred Shares Common Capital Deficit Totals
------------- ------------ ------------- ----------- -------------- ---------------- ---------------
Balance, July 31, 2001 7,500 $ 8 24,743,873 $ 24,744 $ 14,271,385 $ (16,875,923) $ (2,579,786)
============= ============ ============= =========== ============== ================ ===============
Stock Issued for Cash - - 2,000,000 2,000 498,000 - 500,000
Preferred Stock Dividends Paid 270 - - - 27,000 (27,000) -
Net Loss October 31, 2001 - - - - - (677,936) (677,936)
------------- ------------ ------------- ----------- -------------- ---------------- ---------------
Balance October 31, 2001 7,770 $ 8 26,743,873 $ 26,744 $ 14,796,385 $ (17,580,858) $ (2,757,721)
============= ============ ============= =========== ============== ================ ===============
See Notes to Condensed Consolidated Financial Statements.
F-5
NATURAL SOLUTIONS CORPORATION
Notes to Condensed Consolidated Financial Statements
October 31, 2001
Note 1. The interim financial statements include all adjustments, which, in the
opinion of management, are necessary in order to make the financial statements
not misleading. The unaudited condensed consolidated financial statements and
notes are prepared in accordance with Rule 310(b) of Regulation S-B.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. The accompanying condensed consolidated financial
statements and notes should be read in conjunction with the audited financial
statements and notes of the Company for the year ended July 31, 2001. The
balance sheet as of July 31, 2001 was derived from the audited financial
statements as of that date. The results of operations for the three-months ended
October 31, 2001 are not necessarily indicative of those to be expected for the
entire year.
Note 2. In accordance with a settlement agreement dated February 16, 2001, on
August 3, 2001, M.G. Robertson consummated the purchase of 3,925,000 shares of
Common Stock for $375,000 in a private transaction.
Note 3. On September 12, 2001, the Company sold 2,000,000 shares of common stock
in a private sale for $500,000. The subscription agreement calls for payments of
$300,000 on or before October 10, 2001 and $200,000 on or before January 10,
2002. The $300,000 payment was received on October 5, 2001 and the $200,000
payment was received on December 3, 2001.
Note 4. On August 1, 2001 the Company signed an employment agreement with Lowell
W. Morse, to act as President of the Company. Among others, the terms of the
agreement provide for a salary of $240,000 per year, and stock options for
2,000,000 shares of the Company's common stock, which vest over the first two
years of his employment. The grant of these options was made under the Company's
2001 Employee Stock Option Plan. The 2001 Employee Stock Option Plan was
approved by a vote of the shareholders at the annual meeting of the shareholders
which was held in December 2001.
Note 5. On July 17, 2001, the Company discontinued its dust control and road
stabilization business to focus its resources on distribution of its Ice Ban(R)
products. The Company determined that the investment required to develop product
demand and a nationwide sales, distribution, and support network for its
Roadbind products required more resources than were available to the Company at
the time.
In accordance with the discontinuance plan, the Company terminated all of its
sales staff associated with the Roadbind product line, began efforts to
liquidate all remaining Roadbind products, sell the equipment associated with
the products, and terminate any contracts associated with the Roadbind product
line. During the quarter ended October 31, 2001, the Company determined that the
net realizable value of the remaining inventory and two remaining application
trucks was below the estimates made at the end of the fiscal year ended July 31,
2001. Accordingly additional losses of $77,629 and $20,000 were recorded for
inventory and application trucks, respectively. In addition, $44,507 was
recorded for a change in estimate for operating losses during the phase-out
period.
For the three-month period ended October 31, 2000, the operating results for the
Roadbind product line are summarized as follows:
2000
----
Sales $ 80,214
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Gross Profit (Loss) (20,842)
Sales, Marketing, and Other Expenses 86,503
-------------
Net Loss $ (107,345)
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F-6
NATURAL SOLUTIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Continued)
October 31, 2001
Note 6. The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share computations.
For the Three Months Ended October 31, 2001
-------------------------------------------------
Net Loss Shares Per Share
(Numerator) (Denominator) Amount
-------------------------------------------------
Net Loss from Continuing Operations ($535,800)
Less: Preferred Stock Dividends (15,123)
-------------
Loss Per Share, Basic and Diluted from
Continuing Operations Available to Common
Shareholders (550,923) 26,263,873 $ (0.02)
============
Loss Per Share, Basic and Diluted from
Discontinuance of Product Line Available to
Common Shareholders (142,136) 26,263,873 $ (0.01)
------------- ============
Loss per Share, Basic and Diluted ($693,059) 26,263,873 $ (0.03)
============
Exercisable options, warrants, and convertible securities to acquire 11,872,000
shares of common stock were outstanding at October 31, 2001, but were not
included in the computation of diluted earnings per share as their effect was
antidilutive to the reported loss per basic common share.
For the Three Months Ended October 31, 2000
-----------------------------------------------
Net Loss Shares Per Share
(Numerator) (Denominator) Amount
-----------------------------------------------
Loss Per Share, Basic and Diluted from
Continuing Operations Available to Common
Shareholders ($656,734) 20,036,540 $ (0.03)
===========
Loss Per Share, Basic and Diluted from
Discontinued of Product Line Available to
Common Shareholders (107,345) 20,036,540 $ (0.01)
------------ ===========
Loss per Share, Basic and Diluted ($764,079) 20,036,540 $ (0.04)
===========
Exercisable options, warrants, and convertible securities to acquire 10,605,847
shares of common stock were outstanding at October 31, 2000, but were not
included in the computation of diluted earnings per share as their effect was
antidilutive to the reported loss per basic common share.
Note 7. Contingencies and Legal Matters include the following:
Sears Oil Company alleges fraudulent misrepresentation and inducement regarding
the Toth Patent. The plaintiff amended their complaint to allege patent
infringement of the Toth patent. Plaintiffs seek damages of $400,000 plus
dissolution of a New York LLC in which both parties are principals. The Company
has filed counterclaims alleging breach of fiduciary duty, breach of a
confidentiality agreement
F-7
NATURAL SOLUTIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Continued)
October 31, 2001
by Sears Oil Company and others acting in concert with Sears Oil Company. No
trial has been scheduled as of the date of the issuance of these financial
statements. Management is uncertain of the outcome in this case and unable to
estimate the amount or range of potential loss.
Minnesota Corn Processors seeks $143,555 in damages for product allegedly
delivered to the Company, which is included in trade payables as of July 31,
2001. The Company disputes this claim, and has filed a counterclaim, seeking
damages for MCP's breach of a Supply Agreement and Sublicense Agreement.
Note 8. The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company has incurred losses since
its inception, August 14, 1996, and has aggregate operating losses of
$17,580,858 through October 31, 2001. As a result of these continued losses, the
Company has been unable to generate sufficient cash flow from its operating
activities to support current operations.
The Company believes that increased sales are necessary in order to achieve
adequate short-term and long-term liquidity and solvency. The Company's ability
to generate sufficient future cash flows from its operating activities in order
to sustain future operations cannot be determined at this time. The Company has
primarily funded its operations through the sale of its common stock and
issuance of debt. There can be no assurance that the Company will be able to do
so in the future, and, if so, will provide sufficient capital and on terms
favorable to the Company.
Management's plan to overcome these problems include the following:
1. The Company is seeking to raise $1,250,000 of additional capital
through the sale of stock in the Company or the issuance of debt.
2. The Company's Board of Directors has made changes to its management
team by replacing is President and Director of Sales and Marketing.
3. The Company has developed a series of upgraded Ice Ban(R) products,
which better meet the performance and environmental standards,
developed in the industry. As a result, the Company has added several
significant new customers, which are anticipated to increase sales in
the coming winter season.
4. The Company has refined its strategic plan addressing marketing, sales,
product quality, and operational issues and is in the process of
implementing each of the elements of that plan.
5. The Company is also continuing to streamline its central organization
and eliminating unnecessary overhead costs.
6. Company has begun efforts to locate businesses with products for sale
and distribution through the Company's network of customers and
distributors.
These uncertainties and the uncertainties associated with the unresolved legal
matters raise substantial doubt about the Company's ability to continue as a
going concern and, therefore, about its ability to realize its assets and
discharge its liabilities in the normal course of business. The financial
statements do not include any adjustments and classification of liabilities that
may be necessary if the entity is unable to continue as a going concern.
F-8
Item 2. Management's Discussion and Analysis
Forward Looking Statements:
This Form 10-QSB includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), expansion
and growth of the Company's business and operations, and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions and expected future developments as
well as other factors it believes are appropriate in the circumstances. However,
whether actual results or developments will conform with the Company's
expectations and predictions is subject to a number of risks and uncertainties,
including increased competition from other products and product resellers; the
Company's ability to maintain and increase its distributor network; the
Company's ability to acquire sufficient raw materials to meet customer demands;
changes in environmental regulations; general economic market and business
conditions; the business opportunities (or lack thereof) that may be presented
to and pursued by the Company; changes in laws or regulation; and other factors,
most of which are beyond the control of the Company. Consequently, all of the
forward-looking statements made in this Form 10-QSB are qualified by these
cautionary statements and there can be no assurance that the actual results or
developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected consequence to or
effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
Overview:
The Company was formed to exploit in the United States certain patents, rights
to patents, and other proprietary products covered under a licensing agreement
to market agricultural and timber co-products such as road de-icing and
anti-icing products. The products are marketed under the protected trade names
of Ice Ban(R). These products are sold through a network of direct sales
representatives and licensed distributors throughout the United States.
Until July 17, 2001, the Company also marketed a product under the trade name RB
ULTRA(TM) in the U.S. RB ULTRA(TM) is a biodegradable, environmentally friendly,
non-toxic, non-corrosive dust control and road stabilization product for use in
the maintenance of unpaved roads.
In fiscal year 2002, the Company began efforts to locate businesses with
products for sale and distribution through the Company's network of customers
and distributors. The Company will actively seek out, research, and consider
acquisition of such companies and products that complement the existing products
and customer needs. There can be no assurance that the Company will locate or
successfully negotiate terms with any such businesses or that such new products
will result in significant increases in sales.
Results of Operations - The Three Months Ended October 31, 2001 Compared to the
Three Months Ended October 31, 2000:
Net sales from continuing operations for the three months ended October 31, 2001
were $147,125, compared to $366,585 for the same period last year; resulting in
an decrease of $219,460 or 60%. The Company believes that the decrease in sales
is largely due a carryover of customer and distributor inventories from last
winter, a warmer than normal fall, and the economic recession. Discounted sales
of the previous generation of Ice Ban products also had a negative impact on
sales, which resulted from the introduction of the next generation of Ice Ban
products.
The Company has increased its government bid activities and added new customers
and distributors to its sales and distribution network. Although there can be no
assurances, management believes that the continued implementation of the its
sales and marketing plans, the introduction of enhanced Ice Ban products, and a
return to normal winter weather conditions may result in higher net sales for
the remainder of fiscal years
2002 and beyond.
The gross profit for the current period totaled $494 (.3% of net sales),
compared to $111,548 (30% of net sales) for the comparable period in the prior
year, a decrease of $111,054. The dollar decrease in gross margin is largely due
to decreased sales volume and margins, which cover fixed storage and rail car
leases.
Selling and administrative expenses totaled $456,370, compared to $557,850 for
the same period last year; a reduction of $101,480. The most significant items
effecting the reduction of these expenses is the $66,372 reduction of legal
fees, due to the settlements of several legal disputes in fiscal year 2001.
Professional fees also declined by $37,655, which was primarily the result of a
change in auditors. A variety of small expense reductions further contributed to
these savings. As the Company continues to expand its marketing, sales, and
distribution efforts, advertising, payroll, and travel expenses are expected to
increase.
Other expense totaled $79,924 in the current year compared to $210,432 in the
same quarter of the prior year. This improvement is primarily due to a non-cash
interest charge of $178,997 in the prior year, which resulted from changes in
the required accounting treatment for convertible debentures and regular
interest accruals on that debt. The non-cash charges for these items totaled
$15,799 in the current year. Normal interest accruals associated with long-term
debt totaled $64,125 in the current period and $31,435 in the prior year.
Loss from continuing operations for the three-months ended October 31, 2001 was
$535,800, compared to $656,735 for the same period ended October 31, 2000, an
improvement of $120,935 or 18%.
In July 2001, the Company discontinued its efforts to market Roadbind dust
control and soil stabilization products. During the previous two years, the
Company incurred losses from Roadbind operations and discontinuance of the
product line of $780,519 and $325,638 in fiscal years ended July 31, 2001 and
2000, respectively. In the current year, the Company recorded additional losses
on discontinuance of the product line totaling $142,136. This loss reflects
management's changes in estimates of the net realizable value of inventory and
other Roadbind assets including a provision for operating losses during the
phase-out period.
The Company had a net loss of $677,936 for quarter ended October 2001 compared
to a net loss of $764,079 for the quarter ended October 31, 2000.
Liquidity and Capital Resources:
In the three-months ended October 31, 2001, operating activities consumed
$657,040, compared to $589,432 consumed in the comparable period in 2000, an
increase of $67,608 or 11%. This increase in cash consumed is primarily due to
the payment of $150,000 for legal settlement obligations, which was partially
offset by a variety of smaller items.
The Company recorded an infusion of $790,000 from financing activities in the
first three-months of the current fiscal year. The following paragraphs describe
each of the transactions.
On July 25, 2001, Dr. Robertson invested $500,000 through the sale of 5,208,333
shares of common stock to Dr. Robertson. At the end of the fiscal year ended
July 31, 2001, the company had received $10,000 of this subscription. The
remaining $490,000 was received during the three-months ended October 31, 2001.
On September 12, 2001, the Company sold 2,000,000 shares of common stock in a
private sale for $500,000. The subscription agreement called for payments of
$300,000 on or before October 10, 2001 and $200,000 on or before January 10,
2002. The $300,000 payment was received on October 5, 2001 and the $200,000
payment was received on December 3, 2001.
The Company believes that it is necessary to raise additional debt or equity
capital in order to meet its short-term liquidity and solvency needs over the
next twelve months while maintaining operations and supporting the continued
expansion of the marketing, sales, and distribution efforts throughout the
United States. Currently, sales volumes do not produce sufficient profits to
support the expansion planned for the remainder of the current fiscal year. The
Company continues to seek an additional $1,250,000 in debt and equity to finance
its current operational plans and expand its sales, marketing, and distribution
networks. The Company is seeking other qualified investors to fund this amount.
The Company believes that these funds will be sufficient to achieve operating
profits and fuel its growth for the foreseeable future. There can be no
assurance, however, that the Company will secure such additional financing.
There also can be no assurance that any additional financing will be available
to the Company on acceptable terms, or at all. If issuing equity securities
raises additional funds, such securities may contain restrictive covenants and
result in further dilution to the existing stockholders.
The Company also believes that increased sales are necessary in order to achieve
adequate short-term and long-term liquidity and solvency. The plan of operations
for the next twelve months anticipates that Ice Ban(R) will provide the dominant
share of revenue. However, due to the significant amount fixed storage costs,
increased sales volumes are expected to result in a decline in the cost of
product sold as a percent of net sales.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Except as set forth below, please see the disclosures provided in Item 3 of the
annual report on Form 10-KSB for the fiscal year ended July 31, 2001 for a
description of the Company's pending legal proceedings.
1. Natural Solutions Corporation et al. vs. Sears Oil, et al., Case No.
99-3344, in the Circuit Court in and for Palm Beach County. This is a lawsuit
filed on April 6, 1999, by the Company and IBUSA for breach of contract and for
a declaratory judgement against the named Hungarian inventors of the so-called
"Vinasz" patent, and tortious interference with the Company's rights to the
so-called Vinasz patent acquired by Mr. Janke from the Hungarian inventors. Some
limited discovery on jurisdiction has been undertaken in this case. The Company
has filed an Amended Complaint and is awaiting the Defendants' responsive
pleadings.
2. Terrabind International, Inc., et al. v. Natural Solutions Corporation,
et al., Case No. 01-89700. This case was filed on November 7, 2001 in the United
States District Court for the southern District of Florida by Terrabind and
certain former officers and managers of the Company against the Company and one
former officer and one current officer of the Company. The suit seeks
unspecified compensatory and punitive damages. It alleges securities fraud for
activities of the Company between 1996 and 1999, malicious prosecution and abuse
of process with respect to the Company's previous lawsuit against the
plaintiffs. A description of this lawsuit is included in the Form 10-KSB. The
Company is investigating the allegations and intends to vigorously defend this
matter.
Item 2. Changes in Securities and Use of Proceeds
On September 12, 2001, the Company sold 2,000,000 shares of common stock in a
private sale for $500,000. The subscription agreement called for payments of
$300,000 on or before October 10, 2001 and $200,000 on or before January 10,
2002. The $300,000 payment was received on October 5, 2001 and the $200,000
payment was received on December 3, 2001. The Company relied upon the exemption
from registration provided by ss.4(2) of the Securities Act of 1933.
Item 3. Defaults in 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
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- ----------- -----------------------------------------------------------------
10.1 Employment Contract between Lowell W. Morse and Natural Solutions
Corporation dated August 1, 2001 (See Form 10-KSB filed on
October 29, 2001)
- --------------------------------------
(b) Reports on Form 8-K
On August 8, 2001, the Company filed a Current Report on Form 8-K dated July 27,
2001 to disclose, under Item 5, a press release that announced the appointment
of the President of the Company.
On August 17, 2001, the Company filed a Current Report on Form 8-K dated August
9, 2001 to disclose, under Item 5, a press release that announced that the
Company would suspend its expansion efforts into the dust suppression market.
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Natural Solutions Corporation (Registrant)
Date: December 17, 2001 By: /s/ Lowell W. Morse
--------------------------------------
Lowell W. Morse, President
By: /s/ Michael D. Klansek
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Michael D. Klansek, Treasurer
and Chief Financial Officer