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FORM 10-QSB/A AMENDMENT NO. 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from ____________ to ___________.
Commission file number 0-25634
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
(FORMERLY KNOWN AS FORTE COMPUTER EASY, INC.)
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(Exact name of small business issuer as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization
(IRS Employer Identification No.) 87-0365268
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1350 Albert Street, Youngstown, Ohio 44505
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(Address of principal executive offices)
(330) 746-1331
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(Issuer's telephone number)
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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. Yes No X
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common stock, $.01 par value, 48,153,794 shares outstanding at
June 30, 1996
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The Registrant's Quarterly Report on Form 10-QSB for the period ended June 30,
1996 is hereby amended in its entirety as follows:
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Current Assets:
Cash $ 185,726 $ 143,254
Accounts receivable, less allowance for
doubtful accounts and returns of
$0 and $299,939, respectively 527,504 437,160
Inventory 2,039,604 1,666,832
Prepaid expenses 24,374 31,474
Costs and estimated earnings in
excess of billings on
uncompleted contracts 80,601 246,472
----------- -----------
Total Current Assets 2,857,809 2,525,192
----------- -----------
Property, Plant and Equipment:
Land 74,969 74,969
Buildings and improvements 2,968,203 2,957,795
Equipment, machinery and tooling 1,840,056 2,099,581
Office furniture and equipment 85,424 122,709
Vehicles 157,440 140,787
Airplane 207,600 207,600
----------- -----------
5,333,692 5,603,441
Less: accumulated depreciation (1,139,059) (1,196,182)
----------- -----------
4,194,633 4,407,259
----------- -----------
Other Assets:
Net assets of discontinued operations - 74,000
Goodwill, net 333,581 360,533
Other intangible costs, net 32,007 27,170
Deposits and other 4,698 3,467
----------- -----------
370,286 465,170
----------- -----------
$ 7,422,728 $ 7,397,621
=========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt $ 242,000 $ 243,438
Revolving line of credit 107,906 107,906
Amount due officer 18,013 18,013
Accounts payable 548,315 596,369
Net liabilities of discontinued
operations 176,453 -
Accrued costs of discontinued operations 175,114 277,619
Accrued liabilities 195,548 457,170
Billings in excess of costs
and estimated earnings on
uncompleted contracts 403,886 371,778
----------- -----------
Total Current Liabilities 1,867,235 2,072,293
----------- -----------
Long-Term Debt, Net of Current Portion 4,525,198 4,021,664
Lease Deposit 9,575 9,575
Deferred Tax Liability 57,373 160,573
----------- -----------
4,592,146 4,191,812
----------- -----------
Commitments - -
Stockholders' Equity:
Preferred stock - $.01 par value;
20,000,000 shares authorized; no
shares issued or outstanding - -
Common stock - $.01 par value;
50,000,000 shares authorized;
48,610,111 shares issued;
48,153,794 outstanding; 1,718,422
shares subscribed 484,601 484,601
Paid-in capital 2,669,485 2,669,485
Common stock subscribed 79,143 79,143
Accumulated deficit (1,897,778) (1,727,609)
----------- -----------
1,335,451 1,505,620
Less: Treasury stock, 456,317
shares at cost (372,104) (372,104)
----------- -----------
963,347 1,133,516
----------- -----------
$ 7,422,728 $ 7,397,621
=========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenues $ 618,618 $ 1,791,250 $ 1,519,414 $ 2,995,385
Cost of Revenues 469,979 1,387,155 1,191,517 2,321,423
----------- ----------- ----------- -----------
Gross Profit 148,639 404,095 327,897 673,962
Selling, general and
administrative 131,025 193,122 272,625 366,421
----------- ----------- ----------- -----------
Operating Income from
Continuing Operations 17,614 210,973 55,272 307,541
Other Income (Expense):
Other income 3,378 (19,924) 17,261 7,110
Rental income 23,938 22,532 47,876 45,064
Interest expense (101,079) (87,563) (211,276) (177,019)
Amortization of
intangibles (16,651) (14,900) (33,302) (29,799)
----------- ----------- ----------- -----------
Income (Loss) from Continuing
Operations before Provision
for Income Taxes (72,800) 111,118 (124,169) 152,897
Provision for Income Tax
Benefit (Expense) 34,700 (47,600) 47,000 (58,000)
----------- ----------- ----------- -----------
Income (Loss) from
Continuing Operations (38,100) 63,518 (77,169) 94,897
Discontinued Operations:
Loss from operations of
software division and
disk fulfillment division
to be disposed of - (207,792) - (259,612)
Estimated loss on disposal
of software division and
disk fulfillment division (93,000) - (93,000) -
----------- ----------- ----------- -----------
Net Loss $ (131,100) $ (144,274) $ (170,169) $ (164,715)
=========== =========== =========== ===========
Earnings per Share
Income (loss) from
continuing operations (-) - (-) -
Loss from discontinued
operations and operations
to be disposed of (-) (-) (-) (-)
Loss from disposal of disk
and fulfillment division (-) - (-) -
----------- ----------- ----------- -----------
Net Loss $ (-) (-) (-) (-)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding $49,922,245 $48,900,487 $49,922,245 $48,900,487
=========== =========== =========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For The Eighteen Months Ended June 30, 1996
<TABLE>
<CAPTION>
Shares Paid-in Stock Treasury Accumulated Stockholders'
of Common Common Capital Subscribed Stock Deficit Equity
--------- ------ ------- ---------- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 48,460,111 $484,601 $2,669,485 $79,143 $ - $ (282,134) $ 2,951,095
Acquisition of 456,317
shares of treasury
stock, at cost - - - - (372,104) - (372,104)
Net loss - - - - - (1,445,475) (1,445,475)
----------- -------- ---------- ------- --------- ----------- -----------
Balance,
December 31, 1995 48,460,111 484,601 2,669,485 79,143 (372,104) (1,727,609) 1,133,516
Net loss (unaudited) - - - - - (170,169) (170,169)
----------- -------- ---------- ------- --------- ----------- -----------
Balance,
June 30, 1996 48,460,111 $484,601 $2,669,485 $79,143 $(372,104) $(1,897,778) $ 963,347
=========== ======== ========== ======= ========= =========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended
-----------------------
June 30, June 30,
-------- --------
1996 1995
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $(170,169) $(164,715)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 169,294 186,655
Amortization of software development costs - 68,400
Amortization of intangibles 35,902 25,687
Decrease in provision for returns and
doubtful accounts - (63,547)
Changes in Assets and Liabilities:
(Increase) Decrease in Assets:
Accounts receivable (194,450) 775,982
Inventory (376,834) 253,504
Prepaid expenses 7,100 45,602
Costs and estimated earnings in
excess of billings
on uncompleted contracts 165,871 (142,278)
Deposits and intangibles (22,783) (34,232)
Increase (Decrease) in Liabilities:
Accounts payable 124,548 (398,281)
Accrued liabilities (55,851) 28,468
Accrued costs of discontinued operations (32,713) -
Billings in excess of costs
and estimated earnings
on uncompleted contracts 32,108 (126,569)
Net deferred tax liability (103,200) (100,900)
--------- ---------
Net cash provided (used) by operating activities (421,177) 353,776
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures (41,709) (81,406)
Computer software development costs - (47,761)
--------- ---------
Net cash used by investing activities (41,709) (129,167)
--------- ---------
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended
-----------------------
June 30, June 30,
-------- --------
1996 1995
-------- --------
<S> <C> <C>
Cash Flows from Financing Activities:
Proceeds from debt $ 2,942,000 333,886
Principal payments on debt (2,436,642) (529,772)
Payments on amount due officers - (10,879)
----------- ---------
Net cash provided (used) by
financing activities 505,358 (206,765)
----------- ---------
Net Increase in Cash 42,472 17,844
Cash, Beginning of Period 143,254 122,631
----------- ---------
Cash, End of Period $ 185,726 $ 140,475
=========== =========
</TABLE>
Supplemental Disclosure of Non-Cash Investing and Financing Activities
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
---- ----
<S> <C> <C>
Payment of accrued liability with equity
in a building $ 31,811 $ -
========= ========
</TABLE>
The Accompanying Notes are an Integral Part
of the Consolidated Financial Statements
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation:
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles and in accordance with the instructions to
Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for audited year-end financial statements. In the
opinion of management, all adjustments for normal recurring
accruals considered necessary to present fairly the Company's
consolidated statements for all periods presented have been made.
Operating results for the six month period ended June 30, 1996 are
not necessarily indicative of the results that may be expected for
the year ended December 31, 1996. These unaudited consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes thereto of the
Company for the year ended December 31, 1995.
Principles of Consolidation:
The consolidated financial statements include the accounts of Forte
Computer Easy, Inc. and its wholly-owned subsidiaries, Forte, Inc.
and Arizona Disk Fulfillment, Inc. All significant inter-company
balances and transactions have been eliminated in consolidation.
Discontinued Operations:
The Company phased out its software operating division in late 1995
and has adopted a plan to sell or liquidate the disk fulfillment
division by August 31, 1996.
Results of operations for these two divisions in 1995, and the
results of operations for the disk fulfillment division in 1996,
are presented in the accompanying Statements of Operations as loss
from discontinued operations.
Loss per Common Share:
The computation of loss per common share is based on the net loss
attributable to common stockholders and the weighted average number
of common shares outstanding for each period.
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
General:
The Company has decided to discontinue its operations in the
software publishing and computer disk duplication and fulfillment
divisions. Management is of the opinion it is in the best
long-range interest of the Company to focus its financial
resources in the fenestration division of the Company
The Company has made significant advancement during the six month
period ended June 30, 1996 to close out the assets and
liabilities of the software publishing division and its related
assets and liabilities. Management believes it will have all
affairs of the discontinued division finalized early in the
fourth quarter of 1996.
The Company is in the process of negotiating the sale of the disk
duplication and fulfillment division to its current president for
a nominal value. The Company anticipates having this transaction
finalized by August 31, 1996. Based upon current negotiations,
the Company has booked an additional liability for loss on
disposal of discontinued operations of $150,000 in the three
month period ended June 30, 1996.
Results of Operations for the Six Months Ended June 30, 1996 and
1995:
Revenues decreased 49.3% to $1,519,414 for the six months ended
June 30, 1996, compared to $2,995,385 for the comparable period
in 1995. The decrease in revenue is attributable to two major
contracts which were in process during the six month period ended
June 30, 1995 and were completed during 1995.
Gross profit decreased 51.3% to $327,897 for the six months ended
June 30, 1996, compared to $673,962 for the comparable period in
1995. The gross profit percentage decreased by 1% to 21.6% for
the six months ended June 30, 1996, compared to 22.5% for the
comparable period in 1995. The overall reduction in total gross
profit for the six months ended June 30, 1996 is attributable to
the significant reduction in recognized contract revenues from
the comparable period in 1995.
Selling, general and administrative costs decreased to $272,625
for the six months ended June 30, 1996, compared to $366,421 for
the comparable period in 1995. The reduction in 1996 is due to an
allocation of overhead costs to accrued discontinued operating
costs. This allocation represents an estimated portion of costs
incurred to assist in the affairs of the two discontinued
divisions of the Company.
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS: (CONTINUED)
Results of Operations for the Six Months Ended June 30, 1996
and 1995: (Continued)
Interest expense increased 19.4% to $211,276 for the six months
ended June 30, 1996, compared to $177,019 for the comparable
period in 1995. The increase in interest expense is attributable
to interest incurred in increased long-term debt approximating
$20,500; interest on a loan with the City of Youngstown, Ohio
approximating $12,750 (which loan was non-interest-bearing until
November 1, 1995); and higher interest on variable rate loans
approximating $1,007.
The net loss increased 3% to $170,169 for the six months ended
June 30, 1996, compared to $164,715 for the comparable period in
1995. The decrease in the net loss is primarily due to a
reduction in losses incurred by discontinued software division
and absorption of discontinued operating costs by the accrual for
costs of discontinued operations made at December 31, 1995 and
an increase in interest expense. During the six months ended
June 30, 1996, the Company accrued an additional estimated
amount of $150,000 for loss on disposal of discontinued
operations.
Results of Operations for the Three Months Ended June 30, 1996
and 1995:
Revenues decreased 65.5% to $618,618 for the three months ended
June 30, 1996, compared to $1,791,250 for the comparable period
in 1995. The decrease in revenues is due to two major contracts
which were in process during the three month period ended June
30, 1995, and were completed during 1995.
Gross profit decreased 63.2% to $148,639 for the three months
ended June 30, 1996, compared to $404,095 for the comparable
period in 1995. The gross profit percentage increased to 24.0%
for the three months ended June 30, 1996, compared to 22.6% for
the comparable period in 1995. This increase in gross profit
percentage is due to a high percentage of revenue recognized on a
contract with an above average gross profit margin.
Selling, general and administrative costs decreased to $131,025
for the three months ended June 30, 1996, compared to $193,122
for the comparable period in 1995. This reduction is mainly due
to an allocation of overhead cost to accrued discontinued
operating costs. The allocation represents an estimated portion
of costs incurred to assist the affairs of the two discontinued
divisions of the Company.
Interest expense increased 15.4% to $101,079, for the three
months ended June 30, 1996, compared to $87,563 for the
comparable period in 1995. The increase in interest expense is
due to new debt incurred during the three month period ended
March 31, 1996, higher interest rates and a significant loan with
the City of Youngstown which was non-interest bearing until
November 1, 1995.
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FORTE COMPUTER EASY, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS: (CONTINUED)
Results of Operations for the Three Months Ended June 30, 1996
and 1995: (Continued)
The net loss decreased 33.7% to $131,100 for the three months
ended June 30, 1996, compared to a loss of $144,274 for the
comparable period in 1995. The decrease in the loss is
attributable to reduction of losses incurred by the discontinued
software division and absorption of discontinued operating costs
by the accrual for costs of discontinued operations made at
December 31, 1995. During the three months ended June 30, 1996,
the Company accrued an additional estimated amount of $150,000
for loss on disposal of discontinued operations.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any litigation other than routine
litigation incidental to the business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote or Security Holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits required to be filed.
(b) The Company did not file any reports on Form 8-K during this
quarter.
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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.
FORTE COMPUTER EASY, INC.
Date: June 23, 1997 /s/ Frank J. Amedia
-------------------
Frank J. Amedia
President, Chief Executive Officer
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