<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
-------------
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____ to ____
Commission file number 0-22375
---------------------
American Stone Industries, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-3704099
- -------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or organization) (IRS Employer
Identification No.)
900 Keele Street, Toronto, Ontario Canada, M6N3E7
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(Address of principal executive officer)
(416) 653-6111
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(Issuer's telephone number)
Not Applicable
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(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) has been
subject to such filing requirements for the 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:
1,631,363
- ----------------------
<PAGE> 2
INDEX
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
PART I. FINANCIAL INFORMATION
- -----------------------------
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996.................................1
Consolidated Statements of Income
Three Months Ended June 30, 1997 and 1996;
Six Months Ended June 30, 1997 and 1996.............................2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996.............................3
Notes to Consolidated Financial Statements...................................4
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................5
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K....................................6
Signatures ...........................................................7
Exhibit 27 Financial Data Schedule as required by Item 601(c) of Regulation S-B
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AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Current Assets (Unaudited) (Note)
- --------------
Cash $ 283,488 $ 983,713
Accounts receivable 515,559 287,628
Inventory 688,090 431,810
Prepaid expenses - 36,713
---------- -----------
Total Current Assets 1,487,137 1,739,864
---------- ----------
Property. Plant and Equipment, Net - At Cost 1,914,646 2,015,143
- -------------------------------------------- ---------- ----------
Other Assets 217,295 256,278
- ------------ ---------- ----------
$3,619,078 $4,011,285
========== ==========
LIABILITIES
-----------
Current Liabilities
- -------------------
Notes payable, bank line of credit $ 300,000 $ 600,000
Current portion of notes payable 68,000 68,007
Accounts payable 405,255 373,422
Accrued liabilities 167,921 256,843
--------- ---------
Total Current Liabilities 941,176 1,298,272
--------- ---------
Long Term Liabilities 62,604 87,463
- --------------------- --------- ---------
SHAREHOLDERS' EQUITY
--------------------
Common Stock, $.001 par value,
2 million shares authorized
1,631,363 issued and
outstanding at June 30, 1996
and 20 million shares authorized,
16,313,638 issued and outstanding
at December 31, 1996. 1,631 16,314
Additional capital 3,577,543 3,562,860
Retained earnings (deficit) (963,876) (953,624)
---------- ----------
2,615,298 2,625,550
---------- ----------
$3,619,078 $4,011,285
========== ==========
<FN>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
</TABLE>
See notes to consolidated financial statements.
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AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- -------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 657,780 $ 402,232 $ 1,036,146 $ 699,890
- ---------
Cost of Sales 362,027 221,200 736,108 543,993
- ------------- ----------- ---------- ---------- -----------
Gross Profit 295,753 181,032 300,038 155,897
- ------------
Selling, General and Administrative
- -----------------------------------
Expenses 166,314 128,730 330,185 290,851
-------- ----------- ---------- ---------- -----------
Income (Loss) From Operations 129,439 52,302 (30,147) (134,954)
- ----------------------------- ----------- ---------- ---------- -----------
Other Income (Expense)
- ----------------------
Other income 5,146 10,497 21,882 25,618
Interest income 2,760 1,342 8,775 4,116
Interest expense (2,849) (12,538) (10,762) (32,912)
----------- ---------- ---------- -----------
5,057 (699) 19,895 (3,178)
----------- ---------- ---------- -----------
Income (Loss) Before Income Taxes 134,496 51,603 (10,252) (138,132)
- ---------------------------------
Provision For (Recovery Of) Income
- ----------------------------------
Taxes - - - -
----- ----------- ---------- ---------- -----------
Net Income (Loss) $ 134,496 $ 51,603 $ (10,252) $ (138,132)
- ----------------- =========== =========== ========= ===========
Net Income (Loss) Per Common Share $ .08 $ .03 $ (.01) $ (.08)
- ---------------------------------- =========== =========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 5
AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30,
---------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flow From Operating Activities
- -----------------------------------
Net (Loss) $ (10,252) $(138,132)
--------- ---------
Noncash items included in income
Depreciation and amortization 55,426 19,712
Accounts receivable (227,931) (112,188)
Inventory (256,280) (34,546)
Prepaid expenses 36,713 -0-
Accounts payable - trade 31,833 152,517
Accrued expenses (88,922) 15,256
--------- --------
Total Adjustments (449,161) 40,751
--------- --------
Net Cash Used In Operating Activities (459,413) (97,381)
- -------------------------------------
Cash Flows From Investing Activities 84,054 (12,200)
- ------------------------------------
Cash Flows From Financing Activities (324,866) 147,744
- ------------------------------------ --------- --------
Net (Decrease) Increase in Cash (700,225) 38,163
- --------------------------------
Cash - Beginning of Period 983,713 14,161
- -------------------------- --------- --------
Cash - End of Period $283,488 $ 52,324
- -------------------- ======== ========
Supplemental Disclosure of Cash Flows
- -------------------------------------
Information
-----------
Interest paid $10,800 $33,000
Income taxes paid $ -0- $ -0-
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 6
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JUNE 30, 1997
-------------
NOTE A - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and 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
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month periods ended
June 30, 1997 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the American
Stone Industries, Inc. annual report on Form 10-SB for the year ended December
31, 1996.
NOTE B - CHANGES IN SECURITIES
- ------------------------------
Effective May 30, 1997, all shareholders of record received one new share
of stock for each 10 shares of old stock.
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<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
Net sales for the second quarter of 1997 was $657,780, up 64% when
compared to the second quarter of 1996. For the first six months of 1997 net
sales were $1,036,146 up 48% for the same period in 1996. The 1997 sales
increase was primarily due to the success of the marketing department in
establishing new distributors and promoting our material to a broader range of
Architects and Contractors. Also, by means of trade shows and advertising in
trade magazines and personal presentations and large group seminars by our sales
staff at our Quarries for such bodies as A.I.A. (American Institute of
Architecture) and N.O.M.I. (North Eastern Ohio Masonry Institute). Additionally,
in the first three months of 1997 all departments of our Cleveland Quarry
operation were in full scale production. The steps taken in the latter part of
1996 to winterize our operation were beneficial in producing product for sale
and inventory. This was not the case for the same period in 1996. The Company
records most of its sales in the second and third quarters of the year. Demand
for stone products is normally low in the first quarter in the Great Lakes
market due to the cold weather.
The gross profit percentage for the second quarter of 1997 was 45% the
same as compared to the same period in 1996. The gross profit percentage for the
first six months of 1997 of 29% compared to 22% of the same period for the prior
year was improved due to the Company's cost-cutting efforts and the
winterization of its primary sawing facility allowing year-round production. The
Company was able to build up inventory levels and thus absorbed greater fixed
costs incurred during the first quarter.
Selling and administrative expenses continue to decline as a percentage of
net sales due to nonrecurring legal, accounting and consulting costs in 1996 as
a result of the Company's need to explain to its existing and potential
shareholders the full extent of changes to the Company.
The net income was $134,496 for the second quarter of 1997 and $51,603 for
the second quarter of 1996. For the first six months net loss was $(10,252)
compared to $(138,132) for the same period in 1996. Losses are normally
generated during the first quarter of the year and are primarily the result of
the cold weather in the Great Lakes market and its lower demands for stone.
LIQUIDITY AND SOURCES OF CAPITAL
The Company does not currently have, and is not expected to have within
the next twelve (12) calendar months, any cash flow or liquidity problems. The
Company is not in default with respect to any note, loan, lease or other
indebtedness or financing agreement. The Company is not subject to any
unsatisfied judgments, liens or settlement obligations; however, there are
accrued, unpaid and delinquent property taxes which are being brought current
pursuant to a five-year payment plan with the applicable County.
-5-
<PAGE> 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
There have been no reports on Form 8-K filed during the quarter for which
this report is filed.
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<PAGE> 9
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
American Stone Industries, Inc.
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(Registrant)
Date: July 31, 1997 /s/ Glen Gasparini
---------------------- -------------------------
Glen Gasparini, President
Date: July 31, 1997 /s/ Enzo Costantino
---------------------- -------------------------
Enzo Costantino, Chief Financial Officer
*Print the name and title of each signing officer under his or her signature
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 283,488
<SECURITIES> 0
<RECEIVABLES> 521,038
<ALLOWANCES> 5,479
<INVENTORY> 688,090
<CURRENT-ASSETS> 1,487,137
<PP&E> 2,022,319
<DEPRECIATION> 107,673
<TOTAL-ASSETS> 3,619,078
<CURRENT-LIABILITIES> 941,176
<BONDS> 0
0
0
<COMMON> 1,631
<OTHER-SE> 2,613,667
<TOTAL-LIABILITY-AND-EQUITY> 3,619,078
<SALES> 1,036,146
<TOTAL-REVENUES> 1,066,803
<CGS> 736,108
<TOTAL-COSTS> 330,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,762
<INCOME-PRETAX> (10,252)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,252)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,252)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
