<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 March 31, 2000
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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
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8705 Quarry Rd., Amherst, Ohio 44001
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(Address of principal executive officer)
(440) 986-4501
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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. X 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:
1,736,364
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INDEX
AMERICAN STONE INDUSTRIES, INC.
-------------------------------
PART I. FINANCIAL INFORMATION
- -----------------------------
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999.........................1
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999...................2
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999...................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.............................7
Signatures ....................................................8
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AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS
------
March 31, December 31,
2000 1999
------------- -------------
Current Assets (Unaudited) (Audited)
- --------------
<S> <C> <C>
Cash $ 92,364 $ 50,378
Accounts receivable 686,373 683,784
Inventory 1,108,397 901,101
Prepaid expenses 27,693 54,876
------------- -------------
Total Current Assets 1,914,827 1,690,139
------------- -------------
Property. Plant and Equipment, Net - At Cost 2,932,589 3,001,369
- -------------------------------------------- ------------- -------------
Other Assets 81,663 54,932
- ------------ ------------- -------------
$ 4,929,079 $ 4,746,440
============= =============
LIABILITIES
-----------
Current Liabilities
- -------------------
Notes payable, bank line of credit $ 738,835 $ 668,720
Current portion of notes payable 416,057 413,338
Accounts payable 339,904 303,740
Accrued liabilities 269,626 190,707
------------- -------------
Total Current Liabilities 1,764,422 1,576,505
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Long Term Liabilities 464,576 527,366
- --------------------- ------------- -------------
SHAREHOLDERS' EQUITY
--------------------
Common Stock, $.001 par value, 20 million shares authorized 1,736,364 and
1,723,364 issued and outstanding at March 31, 2000
and December 31, 1999, respectively 1,736 1,723
Additional capital 3,919,938 3,874,451
Retained earnings (deficit) (1,221,593) (1,233,605)
------------- -------------
2,700,081 2,642,569
------------ ------------
$ 4,929,079 $ 4,746,440
============= =============
</TABLE>
Note: The balance sheet at December 31, 1999 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
---------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
--------------------------------------------------
2000 1999
----------- -----------
(Unaudited) (Unaudited)
Net Sales $ 589,913 $ 633,905
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Cost of Sales 394,268 417,690
- ------------- --------- ---------
Gross Profit 195,645 216,215
- ------------
Selling, General and Administrative
- -----------------------------------
Expenses 146,242 183,733
-------- --------- ---------
Income From Operations 49,403 32,482
- ----------------------
Other Income (Expense)
- ----------------------
Interest income - 1,147
Interest expense (37,391) (24,687)
--------- ---------
(37,391) (23,540)
--------- ---------
Income Before Income Taxes 12,012 8,942
- -------------------------- --------- ---------
Provision For Income Taxes - -
- -------------------------- --------- ---------
Net Income $ 12,012 $ 8,942
- ---------- --------- ---------
Net Income Per Common Share
- ---------------------------
Basic $ .01 $ .01
========= =========
Diluted $ .01 $ .01
========= =========
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 THREE MONTHS ENDED MARCH 31, 2000 AND 1999
--------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
---------- -----------
(Unaudited) (Unaudited)
Cash Flow From Operating Activities
- -----------------------------------
<S> <C> <C>
Net income (loss) $ 12,012 $ 8,942
---------- -----------
Noncash items included in income
Depreciation and amortization 77,238 47,954
Accounts receivable (2,589) (1,852)
Inventory (207,296) (157,104)
Prepaid expenses 27,183 7,433
Accounts payable - trade 36,164 95,033
Accrued expenses 78,919 31,438
---------- -----------
Total Adjustments 9,619 22,902
---------- -----------
Net Cash Used In Operating Activities 21,631 31,844
- -------------------------------------
Cash Flows From Investing Activities (35,189) (300,176)
- ------------------------------------
Cash Flows From Financing Activities 55,544 240,581
- ------------------------------------ ---------- -----------
Net Increase (Decrease) in Cash 41,986 (27,751)
- -------------------------------
Cash - Beginning of Period 50,378 196,942
- -------------------------- ---------- -----------
Cash - End of Period $ 92,364 $ 169,191
- -------------------- ========== ===========
Supplemental Disclosure of Cash Flows
- -------------------------------------
Information
-----------
Interest paid $ 37,400 $ 24,700
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
------------------------------------------
MARCH 31, 2000
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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 period ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the American Stone
Industries, Inc. Annual Report on Form 10-KSB for the year ended December 31,
1999.
NOTE B - FINANCIAL REPORTING FOR SEGMENTS OF THE COMPANY
- --------------------------------------------------------
The Company and its subsidiaries operated predominantly in one industry,
the design, quarrying and cutting of sandstone primarily used in the
construction industry.
Following is the information regarding the Company's continuing operations
by geographic location. Transfers between geographic areas are accounted for on
a cost plus profit margin basis.
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
----------- -----------
<S> <C> <C>
Net sales, including geographic transfers
United States $ 508,473 $ 510,756
Canada 81,440 148,569
Geographic transfers - (25,420)
----------- -----------
$ 589,913 $ 633,905
=========== ===========
Income from operations:
United States $ 49,403 $ 63,096
Canada - (30,614)
----------- -----------
Income from operations: 49,403 32,482
Interest expense (37,391) (24,687)
Interest income - 1,147
----------- -----------
Income (loss) from operations before income taxes $ 12,012 $ 8,942
=========== ===========
Identifiable assets:
United States $ 4,929,079 $ 4,727,570
Canada - 361,835
----------- -----------
$ 4,929,079 $ 5,089,405
=========== ===========
</TABLE>
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<PAGE> 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
Net sales for the first quarter of 2000 were $589,913, down 7% compared with
$633,905 for the first quarter of 1999. The sales decrease reflected the
Company's previously disclosed intention to increase its profit margin targets
and not to take on new business that does not meet those targets. In addition,
the Company ended the quarter with a substantial order backlog of more than $1.2
million. Demand for stone products in the Company's primary market, the Great
Lakes region, is normally low in the first quarter compared with the rest of the
year due to the cold weather.
Gross profit percentage for the first quarter of 2000 decreased slightly to
33% compared with 34% in the same period a year ago.
Selling, general and administrative expenses continued to decline as a
percentage of net sales, falling from 29% in the first quarter of 1999 to 25% in
the latest quarter due to cost-control efforts.
Net other expense for the first quarter of 2000 was $37,391, compared with
$23,540 for the first quarter of 1999. This was due to an increase in interest
expense associated with increased borrowings during the second half of 1999 for
new equipment and working capital.
Net income for the first quarter of 2000 was $12,012, compared with net
income of $8,942 for the first quarter of 1999. Earnings in the stone quarrying
industry are normally the weakest in the first quarter of the year when cold
weather restricts operations and reduces demand for stone.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's primary source of liquidity is the Company's line of credit
under an agreement between the Company and FirstMerit Bank, N.A. (the "Credit
Agreement"). The Credit Agreement provides for maximum borrowings of $750,000,
with interest payable monthly at a rate equivalent to the prime lending rate.
Borrowings under the Credit Agreement are secured by substantially all real
estate, inventory and equipment of the Company. The outstanding balance at March
31, 2000 and December 31, 1999 was $738,835 and $668,720 respectively.
Management believes that 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. Management believes that 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.
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-------------------------------------
YEAR 2000
The Company has completed its Year 2000 remediation efforts and, since
January 1, 2000, has not experienced any significant problems internally or with
suppliers and customers in connection with this event. Nevertheless, the Company
is aware of some remaining future dates that could potentially cause computer
system problems, and is continuing to monitor its mission critical computer
applications to ensure that any problems are addressed promptly.
FORWARD-LOOKING STATEMENTS
The Company is making this statement in order to satisfy the "safe harbor"
provisions contained in the Private Securities Litigation Reform Act of 1995.
This Quarterly Report on Form 10-QSB includes forward-looking statements
relating to the business of the Company. Forward-looking statements contained
herein or in other statements made by the Company are made based on management's
expectations and beliefs concerning future events impacting the Company and are
subject to uncertainties and factors relating to the Company's operations and
business environment, all of which are difficult to predict and many of which
are beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed in or implied by
forward-looking statements. The Company believes that the following factors,
among others, could affect its future performance and cause actual results of
the Company to differ materially from those expressed in or implied by
forward-looking statements made by or on behalf of the Company; (a) general
economic, business and market conditions; (b) competition; (c) the success of
advertising and promotional efforts; (d) trends within the building construction
industry; (e) the existence or absence of adverse publicity; (f) changes in
relationships with the Company's major customers or in the financial condition
of those customers; and (g) the adequacy of the Company's financial resources
and the availability and terms of any additional capital.
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<PAGE> 9
PART II. OTHER INFORMATION
--------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
27.1 Financial Data Schedule
(b) There have been no reports on Form 8-K filed during the quarter for
which this report is filed.
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<PAGE> 10
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: May 5, 2000 /s/ James M. Rallo
-------------------- -------------------------
James M. Rallo, President
Date: May 5, 2000 /s/ Enzo Costantino
-------------------- -------------------------
Enzo Costantino, Chief
Financial Officer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 92,364
<SECURITIES> 0
<RECEIVABLES> 690,243
<ALLOWANCES> 3,870
<INVENTORY> 1,108,397
<CURRENT-ASSETS> 1,914,827
<PP&E> 3,540,390
<DEPRECIATION> 607,801
<TOTAL-ASSETS> 4,929,079
<CURRENT-LIABILITIES> 1,764,422
<BONDS> 464,576
0
0
<COMMON> 1,736
<OTHER-SE> 2,698,345
<TOTAL-LIABILITY-AND-EQUITY> 4,929,079
<SALES> 589,913
<TOTAL-REVENUES> 589,913
<CGS> 394,268
<TOTAL-COSTS> 146,242
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,391
<INCOME-PRETAX> 12,012
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,012
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
