<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 September 30, 1997
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 0-22375
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American Stone Industries, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3704099
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
8705 Quarry Road, Amherst, Ohio, 44001
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(Address of principal executive officer)
(440) 986-4501
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(Issuer's telephone number)
900 Keele Street, Toronto, Ontario Canada, M6N3E7
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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. X YES 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
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<PAGE> 2
INDEX
AMERICAN STONE INDUSTRIES, INC.
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<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
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<S> <C>
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996........................................................1
Consolidated Statements of Income
Three Months Ended September 30, 1997 and 1996;
Nine Months Ended September 30, 1997 and 1996...................................................2
Consolidated Statements of Cash Flows
Nine Months Ended September 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
</TABLE>
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AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
1997 1996
----------- -----------
Current Assets (Unaudited) (Note)
- --------------
<S> <C> <C>
Cash $ 720,053 $ 983,713
Accounts receivable 434,865 287,628
Inventory 727,237 431,810
Prepaid expenses -- 36,713
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Total Current Assets 1,882,155 1,739,864
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Property. Plant and Equipment, Net - At Cost 1,897,718 2,015,143
- -------------------------------------------- ----------- -----------
Other Assets 240,417 256,278
- ------------ ----------- -----------
$ 4,020,290 $ 4,011,285
=========== ===========
LIABILITIES
-----------
Current Liabilities
- -------------------
Notes payable, bank line of credit $ 750,000 $ 600,000
Current portion of notes payable 68,000 68,007
Accounts payable 362,873 373,422
Accrued liabilities 149,492 256,843
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Total Current Liabilities 1,330,365 1,298,272
----------- -----------
Long Term Liabilities 43,079 87,463
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SHAREHOLDERS' EQUITY
--------------------
Common Stock, $.001 par value,
2 million shares authorized
1,631,363 issued and
outstanding at September 30, 1997
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) (932,328) (953,624)
----------- -----------
2,646,846 2,625,550
----------- -----------
$ 4,020,290 $ 4,011,285
=========== ===========
</TABLE>
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.
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 Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 567,877 $ 484,513 $ 1,604,023 $ 1,184,403
- ---------
Cost of Sales 338,398 257,166 1,074,506 801,159
- ------------- ----------- ----------- ----------- -----------
Gross Profit 229,479 227,347 529,517 383,244
- ------------
Selling, General and Administrative
- -----------------------------------
Expenses 203,009 185,136 533,194 475,987
-------- ----------- ----------- ----------- -----------
Income (Loss) From Operations 26,470 42,211 (3,677) (92,743)
- ----------------------------- ----------- ----------- ----------- -----------
Other Income (Expense)
- ---------------------
Other income 10,416 3,336 32,298 28,954
Interest income 4,741 1,283 13,516 5,399
Interest expense (10,079) (13,852) (20,841) (46,764)
----------- ----------- ----------- -----------
5,078 (9,233) 24,973 (12,411)
----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes 31,548 32,978 21,296 (105,154)
- ---------------------------------
Provision For (Recovery Of) Income
- ----------------------------------
Taxes -- -- -- --
----- ----------- ----------- ----------- -----------
Net Income (Loss) $ 31,548 $ 32,978 $ 21,296 $ (105,154)
- ----------------- =========== =========== =========== ===========
Net Income (Loss) Per Common Share $ .02 $ .02 $ .01 $ (.06)
- ---------------------------------- =========== =========== =========== ===========
</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 NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
(Unaudited) (Unaudited)
Cash Flow From Operating Activities
- -----------------------------------
<S> <C> <C>
Net Income (Loss) $ 21,296 $(105,154)
--------- ---------
Noncash items included in income
Depreciation and amortization 84,905 63,458
Accounts receivable (147,237) (217,990)
Inventory (295,427) (110,113)
Prepaid expenses 36,713 -0-
Accounts payable - trade (10,549) 105,270
Accrued expenses (107,351) 8,996
-------- --------
Total Adjustments (438,946) (150,379)
-------- --------
Net Cash Used In Operating Activities (417,650) (255,533)
- -------------------------------------
Cash Flows From Investing Activities 48,381 (45,357)
- ------------------------------------
Cash Flows From Financing Activities 105,609 936,010
- ------------------------------------ --------- ---------
Net (Decrease) Increase in Cash (263,660) 635,120
- -------------------------------
Cash - Beginning of Period 983,713 14,161
- -------------------------- --------- ---------
Cash - End of Period $ 720,053 $ 649,281
- -------------------- ========= =========
Supplemental Disclosure of Cash Flows
- -------------------------------------
Information
-----------
Interest paid $ 20,900 $ 47,000
Income taxes paid $ -0- $ -0-
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 6
AMERICAN STONE INDUSTRIES, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 1997
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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 nine-month periods
ended September 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.
-4-
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
Net sales for the third quarter of 1997 were $567,877, up 17% when
compared to the third quarter of 1996. For the first nine months of 1997 net
sales were $1,604,023 up 35% from the same period in 1996. The 1997 net sales
increase was primarily due to the success of the marketing department in
establishing new distributors for promoting our material to a broader range of
architects and contractors. Additionally, our stone facing, custom fabrications
and other products have become increasingly popular with builders of high-end
residential homes, not only in the Great Lakes region but also in New England
and on the West Coast. Going into the winter months we have purchase orders and
commitments worth more than $850,000, which are expected to be completed by
March, 1998. To handle these orders and additional anticipated work, we are
planning to invest nearly half a million dollars in new equipment during the
fourth quarter. This equipment includes a top-of-the-line, Italian-made, diamond
blade gang saw and an automatic stone lathe for fabricating such products as
columns, balusters and vases.
The gross profit percentage for the second quarter of 1997 was 40%
compared to 47% for the same period in 1996. The gross profit percentage for the
first nine months of 1997 was 33% compared to 32% for the same period in 1996.
The increased demand for our product has caused our margins to suffer as a
result of high maintenance costs and the need to outsource some work to meet
customer demands. The purchase of the new equipment mentioned above is expected
to bring substantial improvements in operating efficiency and increase plant
capacity.
Selling and administrative expenses continue to decline as a percentage
of net sales due to nonrecurring legal, accounting and consulting costs in 1996.
The net income was $31,548 for the third quarter of 1997 and $32,978
for the third quarter of 1996. For the first nine months of 1997 net income was
$21,196 compared to a net loss of $(105,154) for the same period in 1996.
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.
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<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: October 31, 1997 /s/ Glen Gasparini
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Glen Gasparini, President
Date: October 31, 1997 /s/ Enzo Costantino
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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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 720,053
<SECURITIES> 0
<RECEIVABLES> 440,344
<ALLOWANCES> 5,479
<INVENTORY> 727,237
<CURRENT-ASSETS> 1,882,155
<PP&E> 2,032,826
<DEPRECIATION> 135,108
<TOTAL-ASSETS> 4,020,290
<CURRENT-LIABILITIES> 1,330,365
<BONDS> 0
0
0
<COMMON> 1,631
<OTHER-SE> 2,645,215
<TOTAL-LIABILITY-AND-EQUITY> 4,020,290
<SALES> 1,604,023
<TOTAL-REVENUES> 1,649,837
<CGS> 1,074,506
<TOTAL-COSTS> 533,194
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,841
<INCOME-PRETAX> 21,296
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,296
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
