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 November 30, 1996
Commission File Number 33-67536-A
FEDERAL AFFORDABLE HOUSING CORPORATION
(Exact Name of Small Business Issuer as specified in its charter)
Minnesota 59-3169033
(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1616 Gulf-to-Bay Boulevard
Clearwater, Florida 34615
(813) 446-7981
(Address of Principal Executive Offices, including
Zip Code, and telephone number)
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 No x
As of November 30, 1996, there were 164,500 shares of Common Stock outstanding
and 74,500 Investor's Stock Purchase Warrants outstanding.
Transitional Small Business Disclosure Format: Yes x No
INFORMATION REQUIRED IN QUARTERLY REPORT OF TRANSITIONAL SMALL
BUSINESS
ISSUERS.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The information required by Item 310(b) of Regulation S-B is attached.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
[The Registrant is a transitional small business issuer which relied upon
Alternative 2 under "Information Required in Annual Report of Transitional
Small Business Issuers" in its most recent 10-KSB, and accordingly chooses
here to update the response to Item 6(a)(3)(i) to Model B of Form 1-A.]
The Company completed its public offering on June 6, 1995, and received net
proceeds of $359,336.
The Company's plan of operation for the twelve month period ended May 31, 1997
calls for continued development of infrastructure scaled according to the net
proceeds of its offering and aggressive marketing. Management believes that
the balance remaining of its net proceeds of $359,336 from its offering
is sufficient to carry out its plan of operation for the twelve months
through May, 1997, without revenues from operations.
The Company anticipates that its major expense during the twelve month period
ending May 31, 1997 will be infrastructure development. Upon completion of
infrastructure development, the Company anticipates that its only expenses
will be executive compensation, real estate taxes, general corporate purposes
(including marketing and sales) and perhaps model home construction. In
addition, the Company plans to limit additional property acquisitions and
infrastructure development until purchase agreements have been executed
for approximately half of the developed lots. The Company believes that its
plan of scaled infrastructure development and limitation on acquisition and
development will enable it to operate with the net proceeds of its public
offering, without revenues from operations for the twelve month period ending
May 31, 1997.
The Company anticipates that it will hire additional commissioned sales persons
prior to June, 1997. However, such sales persons will be paid only on a
straight commission basis and will be entitled to payment only upon revenue
generation. Accordingly, the Company does not expect that hiring such
commissioned sales persons will have a significant impact on the Company's
ability to operate without revenues from operations.
The Company does not intend to conduct any product research or development or
to purchase or sell any plant or equipment prior to June , 1997.
PART II
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OR SECURITIES HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See the Index to Exhibits, below.
(b) Reports on Form 8-K. Not applicable.
INDEX TO EXHIBITS.
All of the items below are incorporated by reference to the Registrant's
Registration Statement on Form SB-2, File No. 33-67536-A, effective March 10,
1995, except for Item 27.1, which is included with this filing.
Number Description
4.1 Form of Common Stock Certificate
(Exhibit 4.A. of Form SB-2)
4.2 Form of Investor's Stock Purchase Warrant Certificate
(Exhibit 4.B. of Form SB-2)
10.1 Option Agreement between Registrant, RemProp, Inc.,
and Key Management, Inc.
(Exhibit 10.A. of Form SB-2)
10.2 First Amendment to Option Agreement
(Exhibit 10.B. of Form SB-2)
10.3 Second Amendment to Option Agreement
(Exhibit 10.C. of Form SB-2)
10.4 Lease Agreement between Registrant and RemProp, Inc.
(Exhibit 10.D. of Form SB-2)
27.1 Financial Data Schedule *
99.1 Registrant's Registration Statement on Form SB-2, as
amended.
99.2 Registrant's Final Prospectus, dated March 10, 1995,
filed under Rule 424(b) of the 1933 Act.
* Included with this report. All other items are incoporated by reference to
the Registrant's Form SB-2, File No. 33-67536-A, effective March 10, 1995.
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.
FEDERAL AFFORDABLE HOUSING CORPORATION
Date: May 24, 1997 By: /s/ Richard E. Metz
Richard E. Metz
President, CEO
(Principal Executive Officer)
By: /s/ Wayne A. Weyrauch
Wayne A. Weyrauch
Vice President of Finance, CFO
(Principal Financial Officer,
Principal Accounting Officer)
J. MICHAEL DAILY & ASSOCIATES
1822 DREW STREET, SUITE 1
CLEARWATER, FLORIDA 34625
May 9, 1997
FEDERAL AFFORDABLE HOUSING
P.O. BOX 6163
CLEARWATER, FL 34618
We have compiled the accompanying balance sheet of
FEDERAL AFFORDABLE HOUSING as of November 30, 1996, and the
related statement of revenues and expenses for the three
months and six months then ended, and the comparative
statement of income for the three months and six months ended
November 30, 1996 and 1995, and the statement of cash flows
for the three months and six months then ended in accordance
with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of
financial statements information that is the representation
of management. We have not audited or reviewed the
accompanying financial statements and, accordingly, do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the
disclosures required by generally accepted accounting
principles. If the disclosures were included in the financial
statements, they might influence the user's conclusions about
the Company's financial position, results of operations and
cash flows. Accordingly, these financial statements are not
designed for those who are not informed about such matters.
J. MICHAEL DAILY, CPA
FEDERAL AFFORDABLE HOUSING CORPORATION
BALANCE SHEET
NOVEMBER 30, 1996
ASSETS
CURRENT ASSETS
CASH IN BANK - SUNTRUST $ (719.43)
CD - SUN BANK 300,000.00
DUE FROM SUNCOAST FOOD 52,378.38
DUE FROM REMPROP 2,045.82
LAND HELD FOR DEVELOPMENT 58,512.00
COSTS- 35 LOTS 175,665.61
HOUSE CONSTRUCTION IN PROCESS 46,844.25
DADE CITY CONSTRUCTION IN PROGRESS 953.60
------------
TOTAL CURRENT ASSETS $ 635,680.23
OTHER ASSETS
REGISTRATION STATEMENT COSTS 59,955.14
DEPOSIT - UTILITY 423.53
-------------
TOTAL OTHER ASSETS 60,378.67
-------------
TOTAL ASSETS $ 696,058.90
=============
SEE ACCOUNTANT'S COMPILATION REPORT
J. MICHAEL DAILY & ASSOCIATES
CLEARWATER, FL
FEDERAL AFFORDABLE HOUSING CORPORATION
BALANCE SHEET
NOVEMBER 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
NOTE PAYABLE - R. METZ $ 8,931.00
COMMERCIAL LOAN-SUNTRUST 266,074.00
-------------
TOTAL CURRENT LIABILITIES $ 275,005.00
-------------
TOTAL LIABILITIES 275,005.00
EQUITY
COMMON STOCK 486,887.00
RETAINED EARNINGS (48,544.86)
CURRENT/YTD PROFIT OR LOSS (17,288.24)
-------------
TOTAL EQUITY 421,053.90
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 696,058.90
=============
SEE ACCOUNTANT'S COMPILATION REPORT
J. MICHAEL DAILY & ASSOCIATES
CLEARWATER, FL
FEDERAL AFFORDABLE HOUSING CORPORATION
STATEMENT OF REVENUES AND EXPENSES
FOR THE THREE MONTHS AND SIX MONTHS ENDED
NOVEMBER 30, 1996
CURRENT PERIOD YEAR TO DATE
AMOUNT PERCENT AMOUNT PERCENT
INCOME -------- ------ ------- ------
TOTAL INCOME $ 0.00 0.00 $ 0.00 0.00
-------- ------ ------- ------
EXPENSES
AMORTIZATION OF
ORG. EXPENSE 4,282.50 0.00 8,565.00 0.00
BANK CHARGES 128.14 0.00 192.68 0.00
GAS AND OIL 39.99 0.00 39.99 0.00
INTEREST EXPENSE 4,250.68 0.00 7,282.09 0.00
LEGAL AND
ACCOUNTING 1,536.61 0.00 5,845.86 0.00
RENT 1,070.00 0.00 1,070.00 0.00
UTILITIES 698.33 0.00 1,484.10 0.00
--------- ------ --------- ------
TOTAL EXPENSES 12,006.25 0.00 24,479.72 0.00
--------- ------ --------- ------
INCOME FROM
OPERATIONS (12,006.25) (0.00) (24,479.72) (0.00)
--------- ------ ---------- ------
OTHER INCOME
INTEREST INCOME
- CD 3,543.44 0.00 7,191.48 0.00
--------- ------ ---------- ------
TOTAL OTHER
INCOME 3,543.44 0.00 7,191.48 0.00
--------- ------ ---------- ------
NET INCOME $ (8,462.81) (0.00) $(17,288.24) (0.00)
=========== ====== =========== ======
SEE ACCOUNTANT'S COMPILATION REPORT
J. MICHAEL DAILY & ASSOCIATES
CLEARWATER, FL
FEDERAL AFFORDABLE HOUSING CORPORATION
COMPARATIVE STATEMENT OF REVENUES AND
EXPENSES FOR THE THREE MONTHS AND SIX MONTHS ENDED
NOVEMBER 30, 1996 AND 1995
1996 1995 1996 1995
CURRENT PERIOD CURRENT PERIOD YEAR TO DATE YEAR TO DATE
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
INCOME
------ ------ ------ ------ -------- ------ ------ ------
TOTAL INCOME$ 0.00 0.00 $ 0.00 0.00 $ 0.00 0.00 $ 0.00 0.00
------ ------ ------ ------ -------- ------ ------ ------
EXPENSES
ADVERTISING 0.00 0.00 0.00 0.00 0.00 0.00 66.81 0.00
AMORTIZATION OF
ORG.
EXPENSE 4,282.50 0.00 0.00 0.00 8,565.00 0.00 0.00 0.00
BANK CHARGES 128.14 0.00 105.88 0.00 192.68 0.00 118.55 0.00
GAS AND OIL 39.99 0.00 0.00 0.00 39.99 0.00 0.00 0.00
INTEREST
EXPENSE 4,250.68 0.00 0.00 0.00 7,282.09 0.00 0.00 0.00
LEGAL AND
ACCOUNTING 1,536.61 0.00 500.00 0.00 5,845.86 0.00 500.00 0.00
MANAGEMENT
FEES 0.00 0.00 7,500.00 0.00 0.00 0.00 16,500.00 0.00
OFFICE EXPENSE 0.00 0.00 417.47 0.00 0.00 0.00 504.35 0.00
RENT 1,070.00 0.00 1,605.00 0.00 1,070.00 0.00 3,210.00 0.00
TAXES AND
LICENSES 0.00 0.00 0.00 0.00 0.00 0.00 7,029.33 0.00
TELEPHONE 0.00 0.00 217.42 0.00 0.00 0.00 564.87 0.00
UTILITIES 698.33 0.00 720.84 0.00 1,484.10 0.00 1,131.71 0.00
-------- ------ ------ ------ --------- ------ -------- ------
TOTAL
EXPENSES 12,006.25 0.00 1,066.61 0.00 24,479.72 0.00 29,625.62 0.00
--------- ------ -------- ------ --------- ------ --------- -----
INCOME
FROM
OPERATIONS(12,006.25)(0.00)(11,066.61) (0.00)(24,479.72) (0.00)(29,625.62)(0.00)
---------- ------ --------- ----- --------- ----- ------- -----
OTHER INCOME
INTEREST INCOME
- CD 3,543.44 0.00 3,864.45 0.00 7,191.48 0.00 6,426.72 0.00
INTEREST INCOME
- ESCROW 0.00 0.00 0.00 0.00 0.00 0.00 1,691.46 0.00
ESCROW FEES 0.00 0.00 0.00 0.00 0.00 0.00 (813.76)(0.00)
-------- ----- ------- ------ ------ ------ --------- ----
TOTAL OTHER
INCOME 3,543.44 0.00 3,864.45 0.00 7,191.48 0.00 7,304.42 0.00
--------- ---- -------- ------ ------ ------ -------- ----
NET
INCOME $(8,462.81)(0.00) $(7,202.16)(0.00)$(17,288.24)(0.00)$(22,321.20)(0.00)
======== ====== ======= ====== ========= ====== ====== ======
SEE ACCOUNTANT'S COMPILATION REPORT
J. MICHAEL DAILY & ASSOCIATES
CLEARWATER, FL
FEDERAL AFFORDABLE HOUSING CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED NOVEMBER 30, 1996
CURRENT PERIOD YEAR TO DATE
______________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES
____________________________________
NET INCOME (LOSS) $ (8,462.81) $ (17,288.24)
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED:
AMORTIZATION - DEBITS TO INCOME 4,282.50 8,565.00
DECREASE (INCREASE) IN OPERATING ASSETS:
ACCOUNTS RECEIVABLE (7,914.98) (18,575.45)
INVENTORY (20,463.77) (54,671.57)
OTHER OPERATIONS-RELATED ASSETS 531.47 31.47
____________ _____________
TOTAL ADJUSTMENTS (23,564.78) (64,650.55)
____________ ____________
NET CASH FLOW FROM OPERATIONS (32,027.59) (81,938.79)
CASH FLOWS FROM FINANCING ACTIVITIES
____________________________________
INFLOWS:
INCREASES IN SHORT-TERM NOTES PAYABLE 30,000.00 80,000.00
____________ ___________
NET CASH FROM FINANCING ACTIVITIES 30,000.00 80,000.00
____________ ___________
NET INCREASE (DECR) IN CASH & EQUIVALENTS (2,027.59) (1,938.79)
BEGINNING CASH AND EQUIVALENTS 1,308.16 1,219.36
____________ ___________
ENDING CASH & CASH EQUIVALENTS $ (719.43) $ (719.43)
============= ===========
DISCLOSURE OF ACCOUNTING POLICY:
________________________________
FOR PURPOSES OF THE STATEMENT OF CASH FLOWS, THE COMPANY
CONSIDERSALL HIGHLY LIQUID DEBT INSTRUMENTS PURCHASED WITH A MATURITY OF
THREE MONTHS OR LESS TO BE CASH EQUIVALENTS.
SEE ACCOUNTANT'S COMPILATION REPORT
J. MICHAEL DAILY & ASSOCIATES
CLEARWATER, FL
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
(PURSUANT TO RULE 601(c) OF REGULATION S-B,
APPENDIX A/ARTICLE 5 OF REGULATION S-X)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF FEDERAL AFFORDABLE
HOUSING CORPORATION AS OF AND FOR THE FISCAL QUARTER ENDED NOVEMBER
30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1996
<CASH> 299,281
<SECURITIES> 0
<RECEIVABLES> 54,424
<ALLOWANCES> 0
<INVENTORY> 281,975
<CURRENT-ASSETS> 635,680
<PP&E> 60,379
<DEPRECIATION> 0
<TOTAL-ASSETS> 696,059
<CURRENT-LIABILITIES> 275,005
<BONDS> 0
0
0
<COMMON> 486,887
<OTHER-SE> (65,833)
<TOTAL-LIABILITY-AND-EQUITY> 696,059
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,755
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (708)
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<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (8,463)
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