U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
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 0-29523
SOFTSTONE INC.
(Exact name of small business issuer as specified in its charter)
Delaware
(State of Incorporation)
73-1564807
(IRS Employer Identification Number)
111 Hilltop Lane, Pottsboro, TX 75076
(Address of principal executive offices)
903-786-9618
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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 [ ]
As of May 16, 2003, the Company had 7,621,965 shares of its $.001 par value
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet March 31, 2003 (Unaudited) 3
Statements of Operations for the Three Month and
Nine Month Periods Ended March 31,
2003 and 2002 (Unaudited) 4
Statements of Cash Flows for the Three Month and
Nine Month Periods Ended March 31,
2003 and 2002 (Unaudited) 5
Notes to Unaudited Financial Statements 6
2
SOFTSTONE, INC.
BALANCE SHEET
March 31, 2003
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash & cash equivalents $ 196
Accounts receivable 30,035
------------
Total current assets 30,231
PROPERTY AND EQUIPMENT, net 310,879
------------
$ 341,110
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 29,921
Accounts payable-related party 161,682
Accrued expenses 66,656
Loans - current, including $547,852 to related parties 747,614
------------
Total current liabilities 1,005,873
LONG TERM LIABILITIES
Notes payable, financial institutions 48,554
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value;
30,000,000 shares authorized;
7,041,965 shares issued and outstanding 7,042
Additional paid-in capital 2,232,162
Shares to be issued 41,749
Accumulated deficit (2,994,270)
------------
Total stockholders' deficit (713,317)
------------
$ 341,110
============
The accompanying notes are an integral part of these financial statements.
3
SOFTSTONE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
Three months ended March 31, Nine months ended March 31,
----------------------------- ----------------------------
2003 2002 2003 2002
----------- ------------ ----------- -----------
Revenues $ 5,079 $ 8,624 $ 95,354 $ 36,120
Cost of revenue 38,329 - 92,719 -
----------- ------------ ----------- -----------
Gross profit (loss) (33,250) 8,624 2,635 36.120
Operating expenses
General and administrative 26,205 355,172 111,722 630,545
----------- ------------ ----------- -----------
Operating loss (59,455) (346,548) (109,087) (594,425)
Other expense
Interest expense 16,322 12,857 48,920 35,259
Loss on sale of assets 5,802 - 26,916 -
----------- ------------ ----------- -----------
Total other expense 22,124 12,857 75,835 35,259
----------- ------------ ----------- -----------
Loss before income taxes (81,579) (359,405) (184,922) (629,684)
Income taxes - - 800 -
----------- ------------ ----------- -----------
Net loss $ (81,579) $ (359,405) $ (185,722) $ (629,684)
=========== =========== =========== ===========
Basic and diluted weighted average number
of common stock outstanding 7,041,965 6,348,697 7,041,965 6,471,385
=========== =========== ============ ===========
Basic and diluted net loss per share $ (0.01) $ (0.06) $ (0.03) $ (0.10)
=========== =========== ============ ===========
The accompanying notes are an integral part of these financial statements.
4
SOFTSTONE, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (185,722) $ (629,684)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 51,466 64,689
Non Cash Compensation - 306,581
Loss on sale of assets 26,916 -
Increase of accounts receivable (27,452) (21,011)
Decrease in other current assets - 3,355
Decrease of accounts payable (8,652) 22,354
Increase of license fees payable - 125,000
Increase of accrued expense 37,049 (10,253)
------------ ------------
Total adjustments 79,327 490,715
------------ ------------
Net cash used in operating activities (106,396) (138,969)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets 32,576 -
Purchase of exclusive license - (125,000)
Purchase of stock - (125,000)
Purchase of property and equipment - (10,000)
------------ ------------
Net cash provided by (used in)
investing activities 32,576 (260,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Investments by stockholders - 89,000
Proceeds from loans 40,100 96,697
Payments of loans (6,087) (15,046)
Cash received for shares to be issued 38,750 -
Issuance of common stock pursuant to
offering - 237,020
------------ ------------
Net cash provided by
financing activities 72,763 407,671
------------ ------------
Net increase (decrease) in cash & cash
equivalents (1,057) 8,702
CASH & CASH EQUIVALENTS, BEGINNING 1,253 12,673
------------ ------------
CASH & CASH EQUIVALENTS, ENDING $ 196 $ 21,375
============ ============
CASH PAID FOR:
Interest $ 14,057 $ 12,417
============ ============
Income taxes $ - $ -
============ ============
The accompanying notes are an integral part of these financial statements.
5
SOFTSTONE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Softstone, Inc. (the "Company"), was formed to manufacture a patented
rubber product used in the road and building construction industries. The
Company plans to create rubber modules entirely from recycled tires, which
can be used in the construction of roads, driveways, decks, and other types
of walkways. Its principal activities have consisted of financial planning,
establishing sources of production and supply, developing markets, and
raising capital. Prior to July 2002, the Company was in the development
stage in accordance with Statement of Financial Accounting Standards No. 7.
Its principal operations began in the quarter ended September 30, 2002.
On October 7, 1998, SoftStone Building Products, Inc. ("SSBI" - an Oklahoma
corporation and predecessor to the Company) was incorporated. Effective May
31, 1999, SSBI was merged into Softstone, Inc. (incorporated January 28,
1999 under the laws of the State of Delaware) and SSBI was subsequently
dissolved. Each share of previously outstanding common stock was converted
into 2,500 shares of common stock of the new entity and the new
capitalization is reflected in the accompanying financial statements as if
it had occurred at the beginning of the period presented.
On July 24, 2001, the Company entered into a plan of reorganization
involving Kilkenny Acquisition Corp. (Kilkenny) whereby the Company is the
survivor and in control of the board of directors. The merger agreement
provided for the exchange of 1,158,387 shares of the Company's common stock
for all the common stock of Kilkenny. In connection with this merger, on
April 4, 2001, certain insider shareholders of the Company contributed
3,947,698 shares of their common stock to the Company effectively reducing
the then outstanding shares of stock to 3,685,992. Subsequent issues of
common stock for cash and services increased the outstanding stock of the
Company to 4,590,646. The issuance of the above mentioned shares of the
Company's common stock on the merger date increased the common stock of the
Company to 5,669,033 with the Company shareholders, prior to the merger,
owning approximately 81% of the outstanding shares of the Company. For
accounting purposes, the transaction between the Company and Kilkenny has
been treated as a re-capitalization of the Company, with the Company as the
accounting acquirer (reverse acquisition), and has been accounted for in a
manner similar to a pooling of interests.
Basis of presentation
The accompanying unaudited condensed interim financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for the presentation of interim financial information,
but do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
audited consolidated financial statements for the year ended June 30, 2002
were filed on October 15, 2002 with the Securities and Exchange Commission
and are hereby referenced. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the nine-month ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the year ended June 30,
2003.
Segment Reporting
During the periods ended March 31, 2003 and 2002, the Company only operated
in one segment. Therefore, segment disclosure has not been presented.
6
SOFTSTONE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Reclassifications
Certain comparative amounts have been reclassified to conform to the
current year's presentation.
2. RECENT PRONOUNCEMENTS
In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections ("SFAS 145"). SFAS 145 rescinds the automatic treatment of
gains or losses from extinguishments of debt as extraordinary unless they
meet the criteria for extraordinary items as outlined in APB Opinion No.
30, Reporting the Results of Operations, Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions. SFAS 145 also requires sale-leaseback
accounting for certain lease modifications that have economic effects that
are similar to sale-leaseback transactions and makes various technical
corrections to existing pronouncements. The provisions of SFAS 145 related
to the rescission of FASB Statement 4 are effective for fiscal years
beginning after May 15, 2002, with early adoption encouraged. All other
provisions of SFAS 145 are effective for transactions occurring after May
15, 2002, with early adoption encouraged. The adoption of SFAS 145 does not
have a material effect on the earnings or financial position of the
Company.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with exit or Disposal Activities." This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force (EITF) Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost
associated with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3 a liability for an exit cost as
defined, was recognized at the date of an entity's commitment to an
exit plan. The adoption of SFAS 146 does not have a material effect on the
earnings or financial position of the Company.
In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No.
72 and Interpretation 9 thereto, to recognize and amortize any excess of
the fair value of liabilities assumed over the fair value of tangible and
identifiable intangible assets acquired as an unidentifiable intangible
asset. This statement requires that those transactions be accounted for in
accordance with SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." In addition, this statement amends
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," to include certain financial institution-related intangible
assetsThe adoption of SFAS 147 does not have a material effect on the
earnings or financial position of the Company.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that upon
issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective
for financial statements of interim or annual periods ending after December
15, 2002The adoption of this pronouncement does not have a material effect
on the earnings or financial position of the Company.
7
SOFTSTONE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based
Compensation-Transition and Disclosure". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock Based Compensation", to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this
Statement amends the disclosure requirements of Statement 123 to require
prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the
effect of the method used, on reported results. The Statement is effective
for the Companies' interim reporting period ending January 31, 2003. The
adoption of SFAS 148 does not have a material effect on the earnings or
financial position of the Company.
On April 30, the FASB issued FASB Statement No. 149 (FAS 149), Amendment of
Statement 133 on Derivative Instruments and Hedging Activities. FAS 149
amends and clarifies the accounting guidance on (1) derivative instruments
(including certain derivative instruments embedded in other contracts) and
(2) hedging activities that fall within the scope of FASB Statement No. 133
(FAS 133), Accounting for Derivative Instruments and Hedging Activities.
FAS 149 also amends certain other existing pronouncements, which will
result in more consistent reporting of contracts that are derivatives in
their entirety or that contain embedded derivatives that warrant separate
accounting. FAS 149 is effective (1) for contracts entered into or modified
after June 30, 2003, with certain exceptions, and (2) for hedging
relationships designated after June 30, 2003. The guidance is to be applied
prospectively. The Company does not expect the adoption of SFAS No. 149 to
have a material impact on its financial position or results of operations
or cash flows.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 31, 2003:
Furniture and computer equipment $ 42,198
Production and other equipment 450,063
Vehicles 29,381
----------
521,642
Less: Accumulated depreciation (210,763)
----------
$ 310,879
==========
4. NOTES PAYABLE
Notes payable consist of the following at March 31, 2003:
Revolving note payable to bank;
interest due 7/5/02, prime + 1%,
due on demand $ 96,448
Notes payable to stockholder, 8% & 12%
interest rates 547,852
Bank term loan; 3.9% interest rate;
due on demand. The fair value of the
loan at current market rate of 9%
would be approximately $64,000 63,214
8
Bank term loan; 6.78% interest rate;
maturing September 13, 2003. 40,100
Note payable to finance vehicle, 9.5%
interest rate, maturing July 15, 2005,
collaterized by vehicle 14,739
Refinanced bank term loan; payable on
demand or in semiannual payments of
$6,485, including interest at 10.75%
(variable); collateralized by
equipment, accounts receivable and
intangibles and guaranteed by the
principal stockholder of the Company,
due July 15, 2004 25,331
Note payable to bank, collateralized
by tractor, 9%, variable payable in
60 monthly installments beginning
July 29, 2001 8,484
Payable to stockholder; interest
free; due on demand and unsecured 161,682
----------
957,850
Less: current portion 909,296
----------
Long-term debt $ 48,554
==========
The following is a summary of maturities of principal under long-term debt
for periods ending March 31:
2004 $ 25,331
2005 14,250
2006 8,973
----------
$ 48,554
==========
The notes payable has been classified in the balance sheet at March
31, 2003 as per follows:
Accounts payable - related party $ 161,682
Loans current 747,614
----------
Current liabilities 909,296
Notes Payable 48,554
----------
$ 957,850
==========
5. MERGER & ACQUISITION
The Company has agreed to participate in a plan of reorganization involving
Kilkenny Acquisition Corp. (Kilkenny) whereby the Company, upon merger, is
the survivor and controls the board of directors. To facilitate the merger
9
SOFTSTONE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
and acquire additional capital, the Company is committed to issue certain
of the Company stock for all the common stock of Kilkenny. In connection
with this merger, on April 4, 2001, certain insider shareholders of the
Company contributed 3,947,686 of their common stock to the Company and
effectively reduced the then outstanding shares of stock to 3,685,992.
Subsequent issues of common stock for cash and services increased the
outstanding stock of the Company to 4,590,646. The issuance of the above
mentioned shares of the Company's common stock on the merger date, July 24,
2001, increased the Common stock of the Company to 5,669,033 with the
Company shareholders, prior to the merger, owning approximately 81% of the
outstanding shares of the merged Company.
In March 2002, the Company entered into a purchase agreement with Levgum,
Ltd. (Levgum) of Tel Aviv, Israel, where the Company received 83 shares
with 1.00 par value representing 10% of outstanding capital, for $250,000.
The Company also received the right to use their technology for rubber
devulcanization and right to sublicense as part of this purchase agreement.
The recorded its investment in Levgum for $125,000 and license agreement
acquired through acquisition at $125,000. On June 30, 2002, the Company
evaluated its investment and patents rights according to FASB 121 and
recognized an impairment loss equal to the book value of these intangible
assets.
6. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company's assets and the satisfaction of
its liabilities in the normal course of business. Through March 31, 2003,
the Company had incurred cumulative losses of $2,994,270 and negative
working capital of $975,642. The Company's goal to attain profitable
operations is dependent upon obtaining financing adequate to fulfill its
research and development activities, production of its equipment and
achieving a level of revenues adequate to support the Company's cost
structure. Management's plan of operations anticipates that the cash
requirements for the next twelve months will be met by obtaining capital
contributions through the sale of common stock and cash flow from
operations. However, there is no assurance that the Company will be able to
implement its plan.
10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified in
its entirety by the foregoing and by more detailed financial information
appearing elsewhere. See "Item 1. Financial Statements."
Results of Operations - Third Quarter (Q3) of Fiscal Year 2003 Compared to
---------------------------------------------------------------------------
Third Quarter of Fiscal Year 2002
--------------------------------------
Softstone had sales of $5,079 in Q3 2003, as compared with sales of $8,624
in Q3 2002 (Softstone's fiscal year ends on June 30). Softstone is making
significant progress in the areas of brokering specified crumb rubber and sees
this area of the business increasing, enabling the company to operate
profitably. Furthermore, until Softstone (i) increases its volume of sales of
specified crumb rubber or (ii) expands the Levgum devulcanized technology
throughout the Western Hemisphere, it is unable to operate profitably.
Accordingly, Softstone is pursuing sales in these areas and has a significant
purchase order that it is filling currently.
Our general, selling and administrative expenses - which have been devoted
to raising capital, brokering specified crumb rubber, expanding on our rights to
the Levgum Devulcanization Technology and acquiring a public market for our
common stock - were $26,205 in Q3 2003 as compared with $355,172 in Q3 2002.
We had a loss of $81,579 in Q3 2003, or $0.01 a share, as compared with a
loss of $359,405 in Q3 2002, or $0.06 a share.
Results of Operations - First Nine Months of Fiscal Year 2003 Compared to
---------------------------------------------------------------------------
First Nine Months of Fiscal Year 2002
-------------------------------------------
Softstone had sales of $95,354 in the first nine months of FY 2003 (March
31, 2003) compared to sales of $36,120 in the first nine months of FY 2002
(March 31, 2002). Softstone is making significant progress in the areas of
brokering specified crumb rubber and sees this area of the business increasing,
enabling the company to operate profitably. Furthermore, until Softstone (i)
increases its volume of sales of specified crumb rubber or (ii) expands the
Levgum devulcanized technology throughout the Western Hemisphere, it is unable
to operate profitably. Accordingly, Softstone is pursuing sales in these areas
and has a significant purchase order that it is filling currently.
Our general, selling and administrative expenses - which have been devoted
to raising capital, brokering specified crumb rubber, expanding our rights to
the Levgum Devulcanization Technology and acquiring a public market for our
common stock - were $111,722 in the first nine months of FY 2003 as compared
with $630,545 in the first nine months of FY 2002.
We had a net loss of $185,722, or $0.03a share, in the first nine months of
FY 2003 as compared with a net loss of $629,684, or $0.10 a share, in the first
nine months of FY 2002.
11
We covered our $185,722 loss in the first nine months of FY 2003 by loans
of $40,100, an increase of accrued expenses of $37,049, proceeds of $32,576 from
the sale of assets, and the sale of $38,750 in stock in private placements.
Additionally, some $51,466 of the loss was attributable to a non-cash line item,
depreciation and amortization.
OUTLOOK
The statements made in this Outlook are based on current plans and
expectations. These statements are forward looking, and actual results may vary
considerably from those that are planned.
We propose to raise additional funds for the purposes of pursuing the
marketing of our devulcanized rubber technology that we purchased from Levgum,
Ltd. for the exclusive rights to the Western Hemisphere, as well as further
expanding our brokering of crumb rubber business that was founded in August of
2002.
On April 17, 2002 our common stock was approved for listing on the OTC
Bulletin Board. Out stock market symbol is "SOFS".
Item 3. Controls and Procedures
Evaluation of disclosure controls and procedures. We maintain controls and
procedures designed to ensure that information required to be disclosed in this
report is recorded, processed, accumulated and communicated to our management,
including our chief executive officer and our chief financial officer, to allow
timely decisions regarding the required disclosure. Within the 90 days prior to
the filing date of this report, our management, with the participation of our
chief executive officer and chief financial officer, carried out an evaluation
of the effectiveness of the design and operation of these disclosure controls
and procedures. Our chief executive officer and chief financial officer
concluded, as of fifteen days prior to the filing date of this report, that
these disclosure controls and procedures are effective.
Changes in internal controls. Subsequent to the date of the above
evaluation, we made no significant changes in our internal controls or in other
factors that could significantly affect these controls, nor did we take any
corrective action, as the evaluation revealed no significant deficiencies or
material weaknesses.
12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed, by incorporation by reference, as
part of this Form 10-QSB:
2 Agreement and Plan of Reorganization of July 24, 2001 between
Softstone, Inc. and Kilkenny Acquisition Corp.*
3 Certificate of Incorporation of Softstone Inc.*
3.1 Bylaws of Softstone, Inc.*
10 Lease Agreement of February 1, 2000, between Ardmore
Development Authority, as lessor, and Softstone, Inc., as
lessee.*
10.1 Scrap Tire Disposal Agreement of January 11, 2000, between
Michelin North America, Inc., and Softstone, Inc.*
10.2 Letter of intent of May 1, 2001, of Little Elm Independent
School District regarding the Little Elm Walking Trail.*
10.3 Agreement of March 15, 2002 with Levgum, Inc. concerning
exclusive license to Western Hemisphere for Levgum's
devulcanization technology.
99 United States Patent No. 5,714,219.*
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* Previously filed with Form 8-K August 8, 2001 Commission File
No. 000-29523; incorporated by reference.
(b) Reports on Form 8-K
None.
13
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.
SOFTSTONE INC.
By:/s/ Keith P. Boyd
------------------------------------------
Keith P. Boyd
Chief Executive Officer
Dated: May 19, 2003
14
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Keith Boyd, Chief Executive Officer of the registrant, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Softstone
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 19, 2003 /s/ Keith Boyd
---------------------------------------
Keith Boyd
Chief Executive Officer
15
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
I, Keith Boyd, Chief Financial Officer of the registrant, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Softstone
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 19, 2003 /s/ Keith Boyd
---------------------------------------
Keith Boyd
Chief Financial Officer
15
SOFTSTONE INC.
Commission File Number 0-29523
Index to Exhibits to Form 10-QSB 03-31-03
The following exhibits are filed, by incorporation by reference, as part of this
Form 10-QSB:
2 Agreement and Plan of Reorganization of July 24, 2001 between
Softstone, Inc. and Kilkenny Acquisition Corp.*
3 Certificate of Incorporation of Softstone Inc.*
3.1 Bylaws of Softstone, Inc.*
10 Lease Agreement of February 1, 2000, between Ardmore
Development Authority, as lessor, and Softstone, Inc., as
lessee.*
10.1 Scrap Tire Disposal Agreement of January 11, 2000, between
Michelin North America, Inc., and Softstone, Inc.*
10.2 Letter of intent of May 1, 2001, of Little Elm Independent
School District regarding the Little Elm Walking Trail.*
10.3 Agreement of March 15, 2002 with Levgum, Inc. concerning
exclusive license to Western Hemisphere for Levgum's
devulcanization technology.
99 United States Patent No. 5,714,219.*
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* Previously filed with Form 8-K August 8, 2001 Commission File
No. 000-29523; incorporated by reference.