U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

_____________________________________________

FORM 10-QSB/A

Amendment No. 2

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2000

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________

Commission File Number 0-12914

_________________________________________________

WASTEMASTERS, INC.

(Exact name of small business issuer as specified in its charter)

Maryland

(State or other jurisdiction of incorporation or organization)
52-1507818

(IRS Employer Identification No.)

205 S. Bickford Avenue, Oklahoma City, OK 73036

(Address of Principal Executive Offices)

(405) 262-0800

(Issuer's telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes X 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: as of January 29, 2001, the Registrant had outstanding 137,051,136 shares of its Common Stock, $0.01 par value,which excludes any shares issued pursuant to the Nikko Litigation. See "Part I, Item 1, Notes to Financial Statements, Note 10."
**WasteMasters, Inc. and Subsidiaries

FORM 10-QSB REPORT INDEX**
 
Page No.
PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements (Unaudited)
 
 
Consolidated Balance Sheet as of June 30, 2000
3
 
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2000 and 1999
4
 
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999
5
 
Notes to Unaudited Consolidated Financial Statements for the Six Months Ended June 30, 2000
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
13
PART II. OTHER INFORMATION
15
Item 1. Legal Proceedings
15
Item 2. Changes in Securities
16
Item 3. Defaults on Senior Securities
16
Item 4. Submission of Matters to a Vote of Security Holders
16
Item 5. Other Information
16
Item 6. Exhibits and Reports on Form 8-K
16
Signatures
17** 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WasteMasters, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEET

As of June 30, 2000 (Unaudited)**

**ASSETS****June 30, 2000
 
 
Current Assets:
 
Cash and equivalents
$ 1,716
Due from Startec
179,643
Total current assets
181,359
 
 
Other Assets:
 
Marketable securities, long-term
913,025
Investments in Royalty Assets - net of amortization
1,420,713
Other Assets - net of amortization
235,000
Total other assets
2,568,738
 
 
Total assets
$ 2,750,097
 
 **LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
Accounts payable, and other liabilities
$ 6,474,716
Short term notes payable
296,990
Debentures
3,149,300
Liabilities to related parties, net
274,046
Total current liabilities
10,195,052
 
 
Long-term debt - related parties
200,000
 
 
Stockholders' Equity:
 
Convertible preferred, 5,000,000 shares authorized and outstanding
50,000
Common, $.01 par value; 495,000,000 authorized 123,211,136 issued and outstanding
1,232,111
Additional paid-in capital 
80,410,012
Accumulated deficit
(89,340,078)
Total stockholders' equity
(7,647,955)
 
 
Total liabilities and stockholders' equity
$ 2,750,097

The accompanying notes are an integral part of these financial statements.
** 

WasteMasters, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2000 and 1999

(Unaudited)**

 **Three Months ended June 30**Six Months ended June 30
 **2000**1999**2000**1999
 
 
 
 
 
Revenues
$116,640
$59,315
$116,640
$746,193
 
 
 
 
 
Expenses
 
 
 
 
Cost of sales
0
850
0
592,012
Selling, general and administrative
97,639
1,114,858
1,661,373
4,396,666
Depreciation and amortization
109,286
29,363
109,286
173,529
 
 
 
 
 
Income (Loss) from operations
(90,285)
(1,085,756)
(1,654,019)
(4,416,014)
 
 
 
 
 
Other income (expense)
 
 
 
 
Interest expense, net
(6)
(4,320)
(6)
(284,106)
Gain on sale of subsidiaries
0
0
0
910,661
Settlement - Nikko 
0
0
10,043,655
0
Loss on sale of assets
0
0
0
(1,169)
Gain (loss) on foreclosure
2,196,660
0
2,196,660
(546,798)
Other income (expense), net
0
(15,824)
0
(15,824)
Settlements
5,939,909
0
5,939,909
0
 
 
 
 
 
Total other income (expense)
8,136,562
(20,144)
18,180,218
62,764
 
 
 
 
 
NET INCOME (LOSS)
$8,046,277
($1,105,900)
$16,526,199
($4,353,250)
 
 
 
 
 
Unrealized Gain (Loss)
(506,000)
0
(618,080)
0
 
 
 
 
 
COMPREHENSIVE INCOME (LOSS)
$7,540,277
($1,105,900)
$15,908,119
($4,353,250)
 
 
 
 
 
Earnings per share:
 
 
 
 
Basic
$0.07
$(0.01)
$0.14
$(0.03)
Diluted
$0.03
$(0.01)
$0.07
$(0.03)
 
 
 
 
 
Weighted average number of common shares outstanding
 
 
 
 
Basic
118,713,296
148,376,231
118,713,296
148,376,231
Diluted
244,056,347
251,576,231
244,056,347
251,576,231

The accompanying notes are an integral part of these financial statements.
** 

WasteMasters, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2000 and 1999

(Unaudited)**
**INCREASE (DECREASE) IN CASH****2000**1999
 
 
 **Cash flow from operating activities:
 
 
Net income (loss)
$16,526,199
$(4,353,250)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
 
 
Depreciation and amortization
109,286
173,529
Changes in assets and liabilities:
 
 
Accounts receivable and prepaid expenses
(138,287)
1,126,863
Accounts payable, accrued interest and other liabilities
(7,000,080)
(2,421,119)
Other assets
0
79,587
Inventory
0
129,257
Due to related parties
(100,326)
0
 
 
 
Net cash provided by (used in) operating activities
9,396,792
(5,265,133)
 
 
 **Cash flow from investing activities:
 
 
Landfill development
0
(293,330)
Deposits on acquisitions
(235,000)
0
Asset acquisitions
(129,025)
0
Assets lost in foreclosure
0
1,947,628
Sale of subsidiaries
0
4,400,000
 
 
 
Net cash provided by (used in) investing activities
(364,025)
6,054,298
 
 
 **Cash flows from financing activities:
 
 
Issuance of notes receivable
0
(3,490,000)
Nikko Settlement
(10,669,984)
0
Repayment of loans
(86,010)
(77,287)
Proceeds from issuance of stock
1,137,572
3,179,294
Investment in Global
0
(996,000)
Proceeds from loans
586,000
509,560
 
 
 
Net cash provided by financing activities:
(9,032,422)
(874,433)
 
 
 
Net increase (decrease) in cash
345
(85,268)
 
 
 
Cash and cash equivalents at beginning of period
1,371
175,793
 
 
 
Cash and cash equivalents at end of period
$ 1,716
$ 90,255
 

SUPPLEMENTARY DISCLOSURE OF NON CASH TRANSACTIONS

 **2000**1999
Common stock issued for services and settlements
$ 1,137,572
$ 3,179,294
Assets lost in foreclosure less depreciation
$ 0
$ 1,947,629
Common stock issued to acquire assets
$ 229,979******************************