<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, 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
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(State or other jurisdiction (IRS Employer Identification No.)
of 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:
1,936,364
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<PAGE> 2
INDEX
AMERICAN STONE INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
September 30, 2000 and December 31, 1999......................1
Consolidated Statements of Income
Three Months Ended September 30, 2000 and 1999
Nine Months Ended September 30, 2000 and 1999.................2
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 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. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 545,160 $ 50,378
Accounts receivable 766,998 683,784
Inventory 916,204 901,101
Prepaid expenses 27,459 54,876
-------------- --------------
Total Current Assets 2,255,821 1,690,139
------------ ------------
Property, Plant and Equipment, Net - At Cost 3,120,187 3,001,369
------------ ------------
Other Assets 77,266 54,932
-------------- --------------
$ 5,453,274 $ 4,746,440
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable, bank line of credit $ 444,684 $ 668,720
Current portion of notes payable 438,119 413,338
Accounts payable 257,761 303,740
Accrued liabilities 192,781 190,707
------------- -------------
Total Current Liabilities 1,333,345 1,576,505
------------ ------------
Long Term Liabilities 337,512 527,366
------------- -------------
Shareholders' Equity
Common Stock, $.001 par value, 20 million shares authorized 1,936,364 and
1,723,364 issued and outstanding at September 30, 2000
and December 31, 1999, respectively 1,936 1,723
Additional capital 4,819,738 3,874,451
Retained earnings (deficit) (1,039,257) (1,233,605)
------------ ------------
3,782,417 2,642,569
------------ ------------
$ 5,453,274 $ 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.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ----------------------
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $1,061,761 $ 960,906 $2,725,028 $2,582,227
Cost of sales 832,964 885,208 1,938,320 2,038,193
------------ ---------- ----------- -----------
Gross Profit 228,797 75,698 786,708 544,034
Selling, general and
administrative expenses 189,371 264,546 523,574 668,939
------------ ---------- ------------ ------------
Income (loss) from operations 39,426 (188,848) 263,134 (124,905)
------------- ---------- ------------ ------------
Other income (expense)
Gain on sale of property 25,000 - 25,000 0
Interest income 7,171 - 7,171 1,702
Interest expense (30,497) (20,594) (100,957) (74,912)
------------- ----------- ------------ -------------
1,674 (20,594) (68,786) (73,210)
-------------- ----------- ------------- -------------
Income before income taxes 41,100 (209,442) 194,348 (198,115)
Provision for (recovery of)
income taxes - - - -
-------------- ----------- ------------- -------------
Net Income $ 41,100 $ (209,442) $ 194,348 $ (198,115)
============ ========== =========== ===========
Net income per common share
Basic $ .02 $ (.12) $ .11 $ (.12)
=============== ========== =============== ===============
Diluted $ .02 $ (.12) $ .11 $ (.12)
=============== ========== =============== ===============
</TABLE>
See notes to consolidated financial statements.
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AMERICAN STONE INDUSTRIES, INC.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
-----------------------------------------------------
<TABLE>
<CAPTION>
2000 1999
-------- ------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flow From Operating Activities
-----------------------------------
Net income $ 194,348 $(198,115)
--------- ---------
Noncash items included in income
Depreciation and amortization 226,661 181,080
Gain on sale of property (25,000) -
Accounts receivable (83,214) 34,424
Inventory (15,103) (54,315)
Prepaid expenses 27,417 (50,277)
Other assets (22,334) -
Accounts payable - trade (45,979) 72,323
Accrued expenses 2,074 26,907
------------ -----------
Total Adjustments 64,522 210,142
----------- ----------
Net Cash Used In Operating Activities 258,870 12,027
-------------------------------------
Cash Flows From Investing Activities (320,479) (506,902)
------------------------------------
Cash Flows From Financing Activities 556,391 485,449
------------------------------------ ---------- ----------
Net Increase (Decrease) in Cash 494,782 (9,426)
--------------------------------
Cash - Beginning of Period 50,378 196,942
-------------------------- ----------- ----------
Cash - End of Period $ 545,160 $ 187,516
-------------------- ========= =========
Supplemental Disclosure of Cash Flows
-------------------------------------
Information
-----------
Interest paid $ 101,000 $ 75,000
Income taxes paid $ -0- $ -0-
</TABLE>
See notes to consolidated financial statements.
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AMERICAN STONE INDUSTRIES, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 30, 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 nine-month period ended September 30,
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 operate 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>
Nine Months Ended September 30,
-------------------------------
2000 1999
---- ----
<S> <C> <C>
Net sales, including geographic transfers
United States $2,518,545 $2,168,586
Canada 206,483 438,946
Geographic transfers - (25,305)
---------- ----------
$2,725,028 $2,582,227
========== ==========
Income (loss) from operations:
United States $ 263,134 $ (107,280)
Canada - (17,625)
Income (loss) from operations: 263,134 (124,905)
Gain on sale of property 25,000 -
Interest expense (100,957) (74,912)
Interest income 7,171 1,702
---------- ----------
Income (loss) from operations before income taxes $ 194,348 $ (198,115)
========== ==========
Identifiable assets:
United States $5,453,274 $4,912,951
Canada - 187,023
---------- ----------
$5,453,274 $5,099,974
========== ==========
</TABLE>
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
Net sales for the third quarter of 2000 were $1,061,761, up 10.5% compared
with $960,906 for the third quarter of 1999. For the nine months ended September
30, 2000, net sales were $2,725,028 up 5.5% when compared to the same period in
1999. The sales increase for the third quarter was due to production for a new
building at Oberlin College and increased demand for the Company's slab stone
and stock products. The sales increase for the nine months ended September 30,
2000, was due to production for the building at Oberlin College, increased
demand for slab stone and stock products and restoration projects completed in
the first half of 2000 at Bethany College and the New York State Assembly
chamber.
Gross profit percentage for the third quarter of 2000 increased to 22%
compared with 8% in the same period a year ago. The gross profit percentage for
the first nine months ended September 30, 2000, was 29%, compared to 21% for the
same period for the prior year. The margin improvement was due to better
pricing, manufacturing efficiencies, workflow scheduling and utilization of new
equipment.
Selling, general and administrative expenses decreased as a percentage of
net sales to 18% in the third quarter of 2000 from 28% in 1999 due to cost
control measures and increased sales volume. For the nine months ended September
30, 2000, selling, general and administrative expenses as a percentage of net
sales were 19% compared to 26% for the same period in 1999.
Net other income for the third quarter of 2000 was $1,674 compared with
net expense of $20,594 for the third quarter of 1999. For the first nine months
ended September 30, 2000, net other expense was $68,786, compared to $73,210 for
the same period in 1999. The improvement in both the third quarter and
nine-month periods was a result of higher interest income and a one-time gain on
the sale of equipment offsetting an increase in interest expense.
Net income for the third quarter of 2000 was $41,100 compared with a net
loss of $209,442 for the third quarter of 1999. For the nine months ended
September 30, 2000, the net income was $194,348, compared to a net loss of
$198,115 for the same period of 1999. The improvement in earnings for the third
quarter and the nine-month period was due to higher sales volume, effective
cost-control measures, and an increase in net other income.
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
September 30, 2000 and December 31, 1999 was $444,684 and $668,720,
respectively.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (CONTINUED)
-------------------------------------
LIQUIDITY AND SOURCES OF CAPITAL (CONTINUED)
During the third quarter of 2000, the Company received $900,000 in cash
from the private placement of 200,000 shares of newly issued common stock. The
shares were acquired by Roulston Venture Capital Limited Partnership at $4.50
per share in a transaction approved by a majority of the independent members of
the Board.
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.
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: November 1, 2000 /s/ James M. Rallo
------------------------ --------------------------------
James M. Rallo, President
Date: November 1, 2000 /s/ Enzo Costantino
------------------------ --------------------------------
Enzo Costantino, Chief Financial
Officer
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