UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C., 20549 FORM 10Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2001 OR [ ] 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 0-20309 ------- TAPISTRON INTERNATIONAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Georgia 58-1684918 ------- ------------------ (State or other jurisdiction of incorporation (IRS Employer or organization) Identification No.) 6203 Alabama Highway P. O. Box 1067 Ringgold, Georgia 30736-1067 ---------------------------------------- (Address of principal executive offices) (Zip Code) (706) 965-9300 -------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the most recent practicable date. Class Outstanding at June 13, 2001 ------------------------------------- ---------------------------- Common Stock $.0004 Par Value 37,176,161 TAPISTRON INTERNATIONAL, INC. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Pages ----- Condensed Consolidated Balance Sheets as of July 31, 2000 and April 30, 2001 3 Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 2000 and 2001 and the Nine Months Ended April 30, 2000 and 2001 5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2000 and 2001. 6 Notes to Condensed Consolidated Financial Statements 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II - OTHER INFORMATION ITEM 5 - OTHER INFORMATION 11 SIGNATURE 12 2 TAPISTRON INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS

~~PART~~Condensed Ifrom -Audited ~~FINANCIAL~~Financial ~~INFORMATION~~Statements ~~ITEM~~Unaudited 1July -31, ~~FINANCIAL~~2000 ~~STATEMENTS~~April ~~Condensed~~30, ~~Consolidated~~2001 ~~Balance~~------------- ~~Sheets~~-------------- asCURRENT ofASSETS ~~July~~Cash ~~31,~~and ~~2000~~cash ~~and~~equivalents ~~January~~$ 3165,812 ~~2001~~$ 3247,798 ~~Condensed~~Receivables, ~~Consolidated~~net ~~Statements~~of allowance of ~~Operations~~$25,000 ~~for~~84,945 ~~the~~212,506 ~~Three~~Receivables ~~Months~~from ~~Ended~~employees/others ~~January~~76,070 3134,030 ~~2000~~Sales ~~and~~contract ~~2001~~receivables ~~and~~520,000 ~~the~~250,000 ~~Six~~Inventory, ~~Months~~net ~~Ended~~of ~~January~~allowance 31of $30,000 ~~2000~~3,339,603 ~~and~~2,757,137 ~~2001~~Prepayments 581,107 ~~Condensed~~4,713 ~~Consolidated~~Deferred ~~Statements~~income oftaxes ~~Cash~~100,000 ~~Flows~~100,000 ~~for~~---------- ~~the~~---------- ~~Six~~Total ~~Months~~current ~~Ended~~assets ~~January~~4,267,537 313,606,184 ~~2000~~---------- ~~and~~---------- ~~2001.~~PROPERTY 6AND ~~Notes~~EQUIPMENT, toNET ~~Condensed~~619,641 ~~Consolidated~~500,825 ~~Financial~~---------- ~~Statements~~---------- 7OTHER ~~ITEM~~ASSETS 2Long-term receivables -- ~~MANAGEMENT'S~~-- ~~DISCUSSION~~Patents ~~AND~~and ~~ANALYSIS~~patent OFlicense ~~FINANCIAL~~202,085 ~~CONDITION~~208,039 ~~AND~~Deferred ~~RESULTS~~income OFtaxes ~~OPERATIONS~~1,800,000 81,800,000 ~~PART~~Other IIassets 2,500 -- ~~OTHER~~---------- ~~INFORMATION~~---------- ~~ITEM~~Total 5other assets 2,004,585 2,008,039 ---------- ~~OTHER~~---------- ~~INFORMATION~~TOTAL 10$6,891,763 ~~SIGNATURE~~$6,115,048 11========== ==========

The accompanying notes are an integral part of these financial statements. 3 TAPISTRON INTERNATIONAL, INC CONDENSED CONSOLIDATED BALANCE SHEETS--CONTINUED LIABILITIES AND STOCKHOLDERS' EQUITY

Condensed from Audited Financial Statements Unaudited July 31, 2000 ~~January~~April 3130, 2001 -------------~~--------~~ --------------~~------~~ CURRENT ~~ASSETS~~LIABILITIES ~~Cash~~Short-term ~~and~~debt ~~cash equivalents~~ $ 651,~~812 $ 260~~750,~~980~~125 ~~Receivables, net of allowance of~~ $~~25,000~~ 842,~~945 169~~180,~~420~~504 ~~Receivables~~Short-term ~~from~~debt ~~employees/others~~- ~~76,070~~related ~~77,574~~party ~~Sales contract receivables 520~~250,000 ~~250~~225,000 ~~Inventory,~~Current ~~net~~portion of ~~allowance~~long-term ofdebt ~~$30~~200,~~000~~972 3139,~~339~~463 Accounts payable 224,~~603~~998 3310,~~143,903~~253 ~~Prepayments~~Accrued 81expenses 269,~~107~~774 37158,~~986~~030 ~~Deferred~~Customer ~~income~~deposits ~~taxes 100~~24,~~000~~095 ~~100~~235,000 ------------~~---------~~ ------------~~--------~~ Total current ~~assets~~liabilities 42,~~267~~719,~~537~~964 43,~~039~~248,~~863~~251 ------------ ------------ CONTINGENT REORGANIZATION LIABILITY 632,145 -- ------------ ------ ~~PROPERTY AND EQUIPMENT, NET 619,641 536,430~~ ------ LONG-TERM DEBT 478 -- ------------ ------------ STOCKHOLDERS' EQUITY Preferred stock - $.001 par value - 2,000,000 shares authorized: no shares issued and outstanding -- -- Common stock -- ~~OTHER~~$.0004 ~~ASSETS~~par ~~Long~~value -~~term~~ ~~receivables~~100,000,000 ~~net~~shares ofauthorized: ~~allowance~~34,841,129 shares issued at July 31, 2000 and 37,551,494 as of ~~$500~~April 30,~~000~~ -2001 -13,936 ~~Patents~~15,021 ~~and~~Additional ~~patent~~paid ~~license~~in ~~202~~capital 26,~~085~~357,489 ~~198~~26,~~599~~865,524 ~~Deferred~~Accumulated ~~income~~deficit ~~taxes~~(22,709,223) 1(23,~~800~~959,~~000~~748) 1Treasury stock - 570,~~800~~018 shares outstanding at cost as of July 31, 2000 , 360,000 ~~Other~~shares ~~assets~~outstanding 2at April 30,~~500~~ -2001 (123,026) (54,000) ------------~~---------~~ ------------~~--------~~ Total ~~other~~stockholders' ~~assets~~equity 23,~~004~~539,~~585~~176 12,~~998~~866,~~599~~797 ------------~~---------~~ ------------~~--------~~ TOTAL $ 6,891,763 $ 6,~~574~~115,~~892~~048 ============~~=========~~ ============~~========~~

The accompanying notes are an integral part of these financial statements. 4 TAPISTRON INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

~~Condensed~~Three ~~from~~Months ~~Audited~~Three ~~Financial~~Months ~~Statements~~Nine ~~Unaudited~~Months ~~July~~Nine ~~31,~~Months Ended April 30 Ended April 30 Ended April 30 Ended April 30 2000 ~~January~~2001 ~~31,~~2000 2001 ------------ ------------ ------------ -------- ~~CURRENT LIABILITIES Short~~-~~term~~--- ~~debt~~SALES $ 12,~~750~~094,~~125~~891 $ 2895,~~419,382~~280 ~~Short-term~~$ ~~debt~~6,001,181 -$ ~~related party 250~~2,~~000 225~~757,~~000~~206 ~~Current~~COST ~~portion~~OF ofSALES ~~long-term debt 200~~1,~~972 120~~092,~~619~~770 ~~Accounts payable 224~~563,~~998~~625 ~~232~~3,~~935 Accrued expenses 269~~159,~~774~~689 ~~229~~1,~~629 Customer deposits 24~~797,~~095~~335 ~~25,919~~ ------------ ------------ ------------ ------------ ~~Total~~Gross ~~current~~profit ~~liabilities~~1,002,121 331,655 2,~~719~~841,~~964~~492 3959,~~253~~871 OPERATING EXPENSES 682,~~484~~666 670,973 1,903,557 1,983,831 ------------~~--------~~ ------------~~--------~~ ~~CONTINGENT REORGANIZATION LIABILITY 632,145~~ - -----------~~---------~~ ------------~~--------~~ ~~LONG-TERM~~OPERATING ~~DEBT~~INCOME ~~478~~(LOSS) -319,455 (339,318) 937,935 (1,023,960) ------------ ------------ ------------ -------- ~~STOCKHOLDERS' EQUITY Preferred stock~~ - ~~$.001 par value~~ - ~~2,000,000 shares authorized: no shares issued and outstanding~~ - - ~~Common~~OTHER ~~stock~~INCOME -(EXPENSE) ~~$.0004~~Interest ~~par~~expense ~~value - 100~~(33,~~000,000~~799) ~~shares authorized: 34~~(62,~~841,129~~459) ~~shares issued at July 31~~(126,539) ~~2000 and 37~~(161,~~551,494~~725) asInterest ofincome ~~January~~9 3110,693 ~~2001~~28 1310,~~936~~693 ~~15,021~~R&D ~~Additional~~Experimental ~~paid~~& inModifications ~~capital~~-- ~~26,357,489 26,865,524 Accumulated deficit~~ (221,~~709,223~~928) (2360,~~559,137~~149) ~~Treasury~~Gain ~~stock~~(Loss) -on ~~570,018~~foreign ~~shares~~currency ~~outstanding~~exchange atrates ~~cost~~6,268 ~~at July 31~~(7,599) ~~2000 and 0 shares outstanding at January 31~~(83,169) ~~2001~~ (~~123~~15,~~026~~384) - ----------- ------------ ------------ ------------ ~~Total~~Other ~~stockholders'~~income ~~equity~~(expense) 3(27,~~539~~522) (61,~~176~~293) 3(209,~~321~~680) (226,~~408~~565) ------------ ------------ ------------ ------------ ~~TOTAL~~NET INCOME (LOSS) $ 6291,~~891~~933 $ (400,~~763~~611) $ 6728,~~574~~255 $ (1,~~892~~250,525) ============ ============ ============ ============ EARNINGS PER SHARE Net income (loss) 0.008 (0.011) 0.021 (0.034) Weighted average number of shares outstanding 34,785,611 37,551,494 34,785,611 36,590,288

The accompanying notes are an integral part of these financial statements. 5 TAPISTRON INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITIED)

~~Three Months Three Months Six Months Six Months~~ Ended ~~Jan 31~~ Ended ~~Jan~~April 3130, ~~Ended Jan 31 Ended Jan 31~~ 2000 ~~2001~~April ~~2000~~30, 2001 --------------~~----~~ --------------~~---~~ ~~------------------~~CASH ~~---------------~~FLOWS ~~SALES~~FROM $OPERATING ~~1,090,486~~ACTIVITIES: $Net ~~141,996~~income (loss) $ 3728,~~906,290~~255 $ (1,~~861~~250,~~926~~525) ~~COST~~Adjustments OFto ~~SALES~~reconcile ~~641~~net income (loss) to net cash used in operating activities: Depreciation and amortization 150,~~499~~011 ~~143~~149,~~213~~512 2Loss on foreign currency exchange rates 83,~~066,919~~169 115,~~233,710~~384 ~~--------------~~Changes ~~-------------~~in ~~--------------~~operating ~~-------------~~assets ~~Gross~~and ~~profit~~liabilities: ~~448,987~~(Increase) decrease in receivables (1,~~217~~068,949) 1130,~~839~~479 (Increase) decrease in prepayments (14,~~371~~603) ~~628~~76,~~216~~394 ~~OPERATING~~(Increase) ~~EXPENSES~~decrease ~~571~~in inventory (510,~~061~~665) ~~680~~582,~~116~~466 1Increase (decrease) in accounts payable and accrued expenses 219,~~220~~047 (26,~~891~~488) 1Increase (decrease) in customer deposits 20,~~312~~646 210,~~857~~905 -----------~~---~~ ------------- Net cash used in operating activities (393,089) (111,873) -----------~~---~~ ------------- ~~OPERATING~~CASH ~~INCOME~~FLOWS ~~(LOSS)~~FROM ~~(122,074)~~INVESTING ACTIVITIES: Capital expenditures (~~681~~16,~~334~~332) ~~618,480~~ (~~684~~6,~~641~~000) -----------~~---~~ ------------- Net cash used in investing activities (16,332) (6,000) -----------~~---~~ ------------- ~~OTHER~~CASH ~~INCOME~~FLOWS ~~(EXPENSE)~~FROM ~~Interest~~FINANCING ~~expense~~ACTIVITIES: ~~(51,774)~~Proceeds ~~(41,122)~~from ~~(92,740)~~debt ~~(99~~920,~~266)~~020 ~~Interest income 10 (10) 19 R&D Experimental & Modifications - (29~~2,~~351) (58~~999,~~222)~~801 ~~Gain~~Principal ~~(Loss)~~repayments onof ~~foreign~~debt ~~currency exchange rates~~ (81,~~501~~080,333) (2,~~724) (89~~699,~~437~~942) ~~(7,785)~~ -----------~~---~~ ------------- Net cash provided by (used in) financing activities (160,313) 299,859 -----------~~---~~ ------------- ~~Other~~NET ~~income~~INCREASE ~~(expense)~~/ (~~60,265~~DECREASE) ~~(73,207)~~IN CASH: (~~182~~569,~~158~~734) ~~(165~~181,~~273)~~986 ~~--------------~~Cash and cash equivalents -~~------------~~ beginning of period 685,328 65,812 -----------~~---~~ ------------- ~~NET~~Cash ~~INCOME~~and ~~(LOSS)~~cash $equivalents ~~(182,339)~~- $end ~~(754,540)~~of period $ ~~436~~115,~~322~~594 $ ~~(849~~247,~~914)~~798 ===========~~===~~ ============= ~~==============~~SUPPLEMENTAL ~~=============~~DISCLOSURE ~~EARNINGS~~OF ~~PER~~CASH ~~SHARE~~FLOW ~~Net~~INFORMATION: ~~income~~Cash ~~(loss)~~paid ~~(0.005)~~for ~~(0.020)~~interest ~~0.013~~$ ~~(0.024)~~108,727 ~~Weighted~~$ ~~average~~161,725 ~~number~~SUPPLEMENTAL ofDISCLOSURE ~~shares~~OF ~~outstanding~~NONCASH ~~34,785,611~~INVESTING ~~37,551,494~~AND 34FINANCING ACTIVITIES: Contingent reorganization liability settled by stock issuance -- 632,~~785,611~~145 36Receivables from employees settled by assumption of common stock -- 54,~~119,725~~000

The accompanying notes are an integral part of these financial statements. 6 TAPISTRON INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APRIL 30, 2001 (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION ------------------------------ In the opinion of management of Tapistron International, Inc. ("Tapistron") and Fabrication Center, Inc. ("FCI"), a wholly-owned subsidiary of Tapistron, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the condensed consolidated financial statements) necessary to present fairly its financial position as of April 30, 2001 and the results of its operations for the nine months ended April 30, 2000 and 2001 and cash flows for the nine months ended April 30, 2000 and 2001. These statements are condensed, and therefore, do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended July 31, 2000. The results of operations for the nine months ended April 30, 2001 are not necessarily indicative of the results to be expected for the full year. NOTE 2 - EARNINGS (NET LOSS) PER SHARE -------------------------------------- Earnings (net loss) per share are computed using the weighted average number of shares of common stock outstanding. NOTE 3 - INVENTORY ------------------ Inventory at April 30, 2001 consists of the following: Raw Material $ 860,088 Work in Process 133,191 Finished Goods 1,772,031 ----------- $ 2,765,310 Allowance for obsolete inventory (8,173) ----------- Total $ 2,757,137 =========== 7 TAPISTRON INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto. Results of Operations Sales ----- Revenues for the three months ended April 30, 2001 were $895,280 compared with $2,094,891 for the three months ended April 30, 2000. The decrease in revenues was due to a decrease in units sold. Revenues for the nine months ended April 30, 2001 were $2,757,206 compared with $6,001,181 for the nine months ended April 30, 2000. The decrease in revenues was due to a decrease in units sold. Cost of Sales ------------- Cost of sales for the three months ended April 30, 2001 were $563,625 or 63% of sales, compared with $1,092,770 or 52% of sales, for the three months ended April 30, 2000. Cost of sales for the nine months ended April 30, 2001 were $1,797,335 or 65% of sales, compared with $3,159,689 or 53% of sales, for the nine months ended April 30, 2000. Lower margins were the result of machine sales to penetrate new market segments and to meet cash requirements. Operating Expenses ------------------ Operating expenses were $670,973 for the three months ended April 30, 2001 compared with $682,666 for the three months ended April 30, 2000. Operating expenses were $1,983,831 for the nine months ended April 30, 2001 compared with $1,903,557 for the nine months ended April 30, 2000. Interest Expense ---------------- Interest expense was $161,725 for the nine months ended April 30, 2001 compared with $126,539 for the nine months ended April 30, 2000. The increase was due to an increase in debt for the nine months ended April 30, 2001. 8 TAPISTRON INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS (continued) ------------------------ Income Tax Expense ------------------ The income tax provision for the period ended April 30, 2000, is $0 due to utilization of the net operating loss carry-forward to reduce current taxable income. Liquidity and Capital Resources ------------------------------- The following is a discussion of the impact of the significant factors affecting the Company's liquidity position and capital resources. These comments should be read in conjunction with, and are qualified in their entirety by, the Consolidated Financial Statements and Notes thereto and many of these comments also are forward-looking statements within the meaning of Section 21E of the Exchange Act (see page 10 of this discussion). The Company's consolidated cash and cash equivalents balance at April 30, 2001 was $247,798, a $181,986 increase from the July 31, 2000 balance of $65,812. Operating activities used $111,873 of cash in the first nine months of 2001 verses cash used of $393,089 in 2000. Cash provided by financing activities was $299,859 in the first nine months of 2001, verses cash used of $160,313 in 2000. The increase in cash provided by financing activities is the result of short term borrowing required to fund working capital in the first nine months of 2001. The Company's ability to improve its operating results and financial position will depend on a variety of factors, several of which are described below, and some of which are outside of management's control. The applicable risks and uncertainties include general and industry specific economic conditions that affect all international business and the markets that we serve. Such conditions include interest rates, housing starts, existing home sales, corporate profits, and hotel/motel occupancy rates. These factors affect the number of machines sold and the timing of sales of our machines. The Company is experiencing a critical shortage of working capital. The Company has no unused credit lines and must satisfy all of its working capital and capital expenditures requirements from cash provided by operating activities or from external borrowings. Substantially all of the Company's assets have been pledged to secure various outstanding indebtedness of the Company. In the event that the Company is unable to increase its credit lines or generate cash from operating activities to satisfy its liquidity needs, the Company's ability to continue to operate will be jeopardized. In this event, the Company would be forced to seek working capital from other sources to fund delinquent payable balances and meet ongoing trade obligations. However, no such sources have been identified as of the date of this filing and there can be no assurance that other financing sources will identified. Even if the Company is able to meet its short-term capital needs, the Company's ability to meet long-term capital needs will be subject to factors outside its control, and there can be no assurance that the Company will be able to satisfy its long-term capital needs. 9 TAPISTRON INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS (continued) ------------------------ As a result of the uncertainties described above, management is currently negotiating with a qualified buyer to execute an asset purchase agreement to sell substantially all the assets of the Company. Additional information will be provided as the negotiations progress. Availability of NOLs -------------------- The Company estimates that it had, for federal income tax purposes, net operating loss carryforwards ("NOLs") amounting to approximately $21.7 million at April 30, 2001. Such NOLs expire in 2002 through 2019 if not utilized before then to offset taxable income. Section 382 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder impose limitations on the ability of corporations to use NOLs if the corporation experiences a more than 50% change in ownership during certain periods. Changes in ownership in future periods could substantially restrict the Company's ability to utilize its tax net operating loss carryforwards. The Company believes that no such ownership change has occurred subsequent to the 1997 reorganization. There can be no assurance however, that such ownership change will not occur in the future. In addition, the NOLs are subject to examination by the Internal Revenue Service ("IRS") and, thus, are subject to adjustment or disallowance resulting from any such IRS examination. Forward-looking Statements for Purposes of "Safe Harbor" Under the Private -------------------------------------------------------------------------- Securities Reform Act of 1995 ----------------------------- The Company has made, and may continue to make, various forward-looking statements with respect to its financial position, projected costs, projected savings and plans and objectives of Management. Such forward-looking statements are identified by the use of forward-looking words or phrases such as "anticipates," "intends," "expects," "plans," "believes," "estimates," or words or phrases of similar import. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and the statements looking forward beyond April 30, 2001, are subject to greater uncertainty because of the increased likelihood of changes in underlying factors and assumptions. Actual results could differ materially from those anticipated by the forward-looking statements. The applicable risks and uncertainties include general economic and industry conditions that affect all international businesses, as well as, matters that are specific to the Company and the market it serves. Actual sales in Fiscal 2001 may be materially less than the sales projected in the forward-looking statements if the Company's customers cancel or delay current orders or if the Company reduces the rate at which it is building or expects to build CYP machines for such customers. Such cancellations, delays or reductions may occur if there is a substantial change in the general economy or if a customer were to experience major financial difficulties. Margins may differ from those projected in the forward-looking statements if management does not achieve success in improving margins or other events occur that differ from the estimates used in preparing the Company's financial statements. 10 TAPISTRON INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS (continued) ------------------------ In addition, all subsequent written and oral forward-looking statements attributable to the Company or person acting on behalf of the Company are expressly qualified in their entirety by reference to such factors. The Company's forward-looking statements represent its judgement only on the dates such statements are made. By making any forward-looking statements, the Company assumes no duty to update them to reflect new, changed, or unanticipated events or circumstances. EXHIBITS AND REPORTS ON FORM 8-K (a) There are no Exhibits filed with this report. (b) No reports on Form 8-K were filed during the quarterly period ended April 30, 2001. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, Tapistron International, Inc. ----------------------------- (Registrant) Date: June 19, 2001 /s/Rodney C. Hardeman, Jr. ------------------------- -------------------------- Rodney C. Hardeman, Jr. (Signing on behalf of the registrant as President and Chief Executive Officer)

Six Months Six Months Ended Ended January 31, 2000 January 31, 2001 ---------------------- ---------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 436,322 $ (849,914) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 99,918 99,675 Loss on foreign currency exchange rates 89,437 7,785 Changes in operating assets and liabilities: (Increase) decrease in receivables (1,198,742) 184,021 (Increase) decrease in prepayments (86,651) 43,122 (Increase) decrease in inventory 157,852 195,700 Increase (decrease) in accounts payable and accrued expenses 54,507 (32,208) Increase (decrease) in customer deposits (4,560) 1,824 ---------------------- ---------------------- Net cash used in operating activities (451,917) (349,995) ---------------------- ---------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (16,332) - ---------------------- ---------------------- Net cash used in investing activities (16,332) - ---------------------- ---------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt 920,020 2,514,620 Principal repayments of debt (1,111,451) (1,968,457) ---------------------- ---------------------- Net cash provided by (used in) financing activities (191,431) 546,163 ---------------------- ---------------------- NET INCREASE / (DECREASE) IN CASH: (659,680) 195,168 Cash and cash equivalents - beginning of period 685,328 65,812 ---------------------- ---------------------- Cash and cash equivalents - end of period $ 25,648 $ 260,980 ====================== ====================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 74,928 $ 99,266 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Decrease in liabilities subject to settlement under plan of reorganization - (632,145)

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