Fortran Corp. (FRTN)

[samplescave]

HERE’S THE WHOLE REPORT! NICE INFORMATION IN HERE!!!!!!

Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines
FORTRAN CORPORATION A North Carolina corporation
3210 16th Avenue S.E. Conover, NC 28613 [phone] www.fortrancorp.com [e-mail] SIC Code: 4813
Quarterly Report for the Nine Months Ended March 31, 2019
As of March 31, 2019, the number of shares outstanding of our Common Stock was: 28,914,351
As of December 31, 2018, the number of shares outstanding of our Common Stock was: 28,012,351
Indicate whether the Company is a shell company (as defined in Rule 405 of the Securities Act of 1933 and Rule 12b-2 of the Exchange Act of 1934): NO
Indicate whether the Company’s shell status has changed since the previous reporting period: NO
Indicate whether a Change in Control of the Company has occurred over this reporting period: NO
Name of the Issuer and its Predecessors (if any)
Fortran Corporation, formerly known as Burkyarns, Inc. and Burke Mills, Inc., was incorporated in the state of North Carolina on March 17, 1948. Burkyarns, Inc. changed its name to Burke Mills, Inc. on May 7, 1979, and Burke Mills, Inc. changed its name to Fortran Corporation on February 12, 2013.

Security Information
Trading Symbol: FRTN
Exact title and class of securities outstanding: Common Stock
CUSIP: 34960D 108
Par or Stated Value: None
Total shares authorized: 50,000,000 as of March 31, 2019
Total shares outstanding: 28,914,351 as of March 31, 2019 and 23,262,828 as of May 15, 2019
Preferred share information:
Exact title and class of securities outstanding: Preferred Stock
CUSIP: N/A
Par or Stated Value: None
Total shares authorized: 10,000,000 as of March 31, 2019
Total shares outstanding: 2,850,000 as of March 31, 2019 and 1,500,000 as of May 15, 2019
Transfer Agent
Colonial Stock Transfer
66 Exchange Place, Suite 100
Salt Lake City, Utah 84111
[phone]
www.colonialstock.com
The Transfer Agent is registered under the Exchange Act.
List any restrictions on the transfer of security: See Item F under “Issuance History” below.
Describe any trading suspension orders issued by the SEC in the past 12 months: NONE List any stock split, stock dividend, recapitalization, merger, acquisition, spin-off, or
reorganization either currently anticipated or that occurred within the past 12 months: NONE
Issuance History
The goal of this section is to provide disclosure with respect to each event that resulted in any direct changes to the total shares outstanding of any class of the issuer’s securities in the past two completed fiscal years and any subsequent interim period.
Disclosure under this item shall include, in chronological order, all offerings and issuances of securities, including debt convertible into equity securities, whether private or public, and all shares or any other securities or options to acquire such securities issued for services. Using the tabular format below, please describe these events.

Changes to the Number of Outstanding Shares
Number of Shares outstanding as of July 1, 2016:
Opening Balance: Common: 24,662,351 Preferred: 1,700,000
Date of Transaction
Transaction type (e.g. new issuance, cancellation, shares returned to treasury)
Number of Shares Issued (or cancelled)
Class of Securities
Value of shares issued ($/per share) at Issuance
Were the shares issued at a discount to market price at the time of issuance? (Yes/No)
Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed).
Reason for share issuance (e.g. for cash or debt conversion) OR Nature of Services Provided (if applicable)
Restricted or Unrestricted as of this filing?
Exempti on or Registra tion Type?
May 31, 2017
New Issuance
1,285,714
Common
450,000
No
Emmett Crawford
Debt Conversion
Restricted
Book Entry
May 31, 2017
New Issuance
314,286
Common
110,000
No
Templeton Family Holdings, LLC
Debt Conversion
Restricted
Book Entry
June 30, 2017
New Issuance
687,500
Common
55,000
No
Richard C. Wilson
Officer Compensation
Restricted
Book Entry
June 30, 2017
New Issuance
687,500
Common
55,000
No
Douglas Rink
Officer Compensation
Restricted
Book Entry
December 3, 2018
New Issuance
375,000
Common
75,000
No
James M. Templeton
Debt Conversion
Restricted
Book Entry
January 16, 2019
New Issuance
52,000
Common
39,520
No
Frederick K. Greer
Employee Compensation
Restricted
Book Entry
January 16, 2019
New Issuance
150,000
Common
114,000
No
Brett Bertolami
Board Member Compensation
Restricted
Book Entry
January 16, 2019
New Issuance
100,000
Common
76,000
No
Douglas L. Miller
Board Member Compensation
Restricted
Book Entry
January 16, 2019
New Issuance
250,000
Common
190,000
No
Dayne L. Miller
Board Member Compensation
Restricted
Book Entry
January 16, 2019
New Issuance
350,000
Common
266,000
No
Glenn Withers
Board Member Compensation
Restricted
Book Entry
December 3, 2018
New Issuance
150,000
Preferred
No Par
No
Brett Bertolami
Board Member Voting Rights
Restricted Control
Book Entry
December 3, 2018
New Issuance
500,000
Preferred
No Par
No
James M. Templeton
Special Consultant Voting Rights
Restricted Control
Book Entry
December 3, 2018
New Issuance
500,000
Preferred
No Par
No
Glenn Withers
Board Member Voting Rights
Restricted Control
Book Entry
Number of Shares Outstanding on March 31, 2019:
Ending Balance: Common: 28,914,351 Preferred: 2,850,000

Fortran Corporation has made the following issuances between March 31, 2019 and May 15, 2019
On May 10, 2019, the following issuance of Common Stock occurred: 800,000 shares issued to Christopher L. Sharman in connection with the Peoples Bank foreclosure deficiency balance. See “Commitments and Contingencies” for further information.
Debt Securities, Including Promissory and Convertible Notes
Date of Note Issuance
Outstanding Balance ($)
Principal Amount at Issuance ($)
Intere st Accru ed ($)
Maturity Date
Conversion Terms (e.g. pricing mechanism for determining conversion of instrument to shares)
Name of Noteholder
Reason for Issuance (e.g. Loan, Services, etc.)
May 16, 2018
78,114.77
78,114.77
$0.00
May 16, 2023
At any time before maturity, the outstanding balance may be converted for preferred shares at $.10 per share.
James M. Templeton
Legal Fees incurred
November 23, 2018
60,000.00
60,000.00
$0.00
November 23, 2023
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
Douglas L. Miller
Working Capital Needs
December 21, 2018
100,000.00
100,000.00
$0.00
December 21, 2023
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
James M. Templeton
Provide LOC to affiliate
January 8, 2019
150,000.00
150,000.00
$0.00
January 8, 2024
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
James M. Templeton
Working Capital Needs
March 13, 2019
100,000.00
100,000.00
$0.00
March 13, 2024
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
James M. Templeton
Provide LOC to affiliate
March 28, 2019
150,000.00
150,000.00
$0.00
March 28, 2024
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
Charles D. Miller
Provide initial payment to TCA Global
March 29, 2019
100,000.00
100,000.00
$0.00
March 29, 2024
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
James M. Templeton
Working Capital Needs
March 29, 2019
107,250.00
107,250.00
$0.00
March 29, 2024
At any time before maturity, the outstanding balance may be converted for common shares at $.25 per share.
Peter A. R. Sharman
Provide Debt Settlement Funding
February 21, 2019
400,000.00
400,000.00
$0.00
September 3, 2020
$150,000 paid on April 3, 2019. $15,000 per month for 16 months. $10,000 due on 17th month.
TCA Global Fund
Prior Debt Settlement

Financial Statements
Provide the financial statements described below for the most recent fiscal year end or quarter end to maintain qualification for the OTC Pink Current Information tier. For the initial disclosure statement (qualifying for Current Information for the first time) please provide reports for the two previous fiscal years and any interim periods.
A. Balance sheet;
B. Statement of income;
C. Statement of cash flows;
D. Financial notes; and
E. Audit letter, if audited
The financial statements requested pursuant to this item shall be prepared in accordance with US GAAP by persons with sufficient financial skills.
You may either (i) attach/append the financial statements to this disclosure statement or (ii) post such financial statements through the OTC Disclosure & News Service as a separate report using the appropriate report name for the applicable period end. (“Annual Report,” “Quarterly Report” or “Interim Report”). See attached Balance Sheet, Statement of Operations, Statement of Cash Flows and Notes to the Financial Statements for the three months and nine months ending March 31, 2019 attached to the end of this Company Information and Disclosure Statement Quarterly Report.
If you choose to publish the financial reports separately as described in part (ii) above, you must state in the accompanying disclosure statement that such financial statements are incorporated by reference. You may reference the document(s) containing the required financial statements by indicating the document name, period end date, and the date that it was posted to otciq.com in the field below. N/A
Information contained in a Financial Report is considered current until the due date for the subsequent Financial Report. To remain in the OTC Pink Current Information tier, a company must post its Annual Report within 90 days from its fiscal year-end date and Quarterly Reports within 45 days of its fiscal quarter-end date.
Describe the Issuer’s Business, Products and Services
The Company
Fortran Corporation (“Fortran” or the “Company”), through its subsidiaries, is a leading telecommunications system integrator dedicated to designing, sourcing, implementing and maintaining complex telecommunications solutions and the installation, service and repair of cooling towers across the United States. The Company’s businesses are in two main segments:

Telecom Service Segment
We are converting the historical and traditional “telecom” business model to a “Telecom-As- A-Service” (“TaaS”), comprised of engineering and design, network service, technical certifications, on-site service, dedicated sales and engineering resources. The primary services offered through this platform include:
- Manage Service Agreements
- Box Sales
- Move-Adds-Changes (“MAC”)
- Data Cabling and in-building Wireless
The Company’s offerings allow it to service the needs of its clients independent of the technology that they choose, which we believe is a unique competitive advantage. For the sale and implementation of new box sales, or other major projects, most significant orders are subject to competitive bidding processes and, generally, competition can be significant for such new orders. The Company is continually bidding on new products to maintain and grow service revenues. Projects account for the majority of service revenues and are primarily driven by the overall economic environment and information technology capital spending. The Company also serves government clients whose revenues are not as dependent on the overall economic environment as commercial clients but are subject to governmental budgetary constraints.
New system sales (“Box Sales”) often generate a post-implementation maintenance agreement (“MSA”) to support the system, which generally ranges from 1-3 years for commercial clients and 3-5 years for government clients. Historically, such an agreement would result in a fixed fee earned ratably over the term of the contract. Recently, some of our clients have adopted a variable fee model based on time and materials per occurrence, similar to MAC work. While this shift decreases our contractually obligated revenues, the variable model also
generates profitable revenues. Revenues from MSA generally are not dependent on the economy as clients contract for maintenance to extend the life of their existing equipment and delay capital spending on new communications systems. MSA and MAC work revenues are also dependent upon the Company’s relationship with its clients and its long track record of providing high-quality service.
The Telecom Service Segment of business is operated in a 10,000 square foot, two story facility in Conover, North Carolina.
Cooling Tower Service Segment
On November 16, 2015, we acquired an eighty percent (80%) interest in Tower Performance, Inc. (“TPI”) to provide cooling tower services. TPI is a national specialty contractor involved with the repair, maintenance, upgrade, inspection, construction and sale of parts for all types of cooling towers, mechanical equipment parts and maintenance of air coolers. TPI has its own trained crews that perform work at its customers’ facilities.

Sales and Marketing
The Company acquires customers through the following sales and marketing methods:
- Ten full-time sales employees
- Advertise in ThomasNet
- Membership in the cooling Technology Institute
- Customer and supplier referrals
- Trade shows
- Magazine advertising
Customer Markets
TPI targets several industries including:
- Utilities, Chemical/petrochemical, Commercial real estate, Colleges and institutions
- Phosphate/fertilizer, Steel, Hospitals, Air Separation, Paper/bottling, Export/wholesale
This diversification protects the Company from the impact of a downturn in any specific industry and results in consistent demand.
Organization
TPI is organized as a C-Corporation and was established in 1964. TPI is headquartered in Florham Park, New Jersey in a 3,000 square foot office approximately 10 miles northwest of Newark Liberty International Airport. Additionally, TPI leases a 2,000 square foot office and a 4,000 square foot warehouse/yard in Houston, Texas. TPI leases its facilities from third parties at a fair market rate of $109,000 per year.
Employee Base
TPI has 50-70 full-time employees, including 10 salespersons, a construction crew of up to 60 in Texas and 4 in New York/New Jersey and 3 administrative persons. TPI values its staff and their experience and that treatment is reflected in a low employee turnover rate.
TPI has several success drivers in this industry:
- With revenue derived from over 10 industries, TPI is highly diversified, protecting it from the impact of a downturn in a single industry and reducing operational risk
- TPI has developed an established brand name over its 50+ years of operation resulting in significant industry recognition, customer referrals and repeat business.
- TPI provides its products and services to large and established clients, including Arizona Public Service, ExxonMobil, Valero, US Steel, PBF Energy and Mosaic. These utility and publicly traded companies result in consistent demand and stable revenue streams for TPI.
TPI produced net revenues of $6,759,000 and $7,515,000 for the nine months ended March 31, 2019 and 2018, respectively.

Describe the Issuer’s Facilities
The goal of this section is to provide a potential investor with a clear understanding of all assets, properties or facilities owned, used or leased by the issuer.
In responding to this item, please clearly describe the assets, properties or facilities of the issuer, give the location of the principal plants and other property of the issuer and describe the condition of the properties. If the issuer does not have complete ownership or control of the property (for example, if others also own property or if there is a mortgage on the property), describe the limitations of ownership.
If the issuer leases any assets, properties or facilities, clearly describe them as above and the terms of their leases.
See the “Describe the Issuer’s Business, Products and Services” section above.
Officers, Directors and Control Persons
The goal of this section is to provide an investor with a clear understanding of the identity of all the persons or entities that are involved in managing, controlling or advising the operations, business development and disclosure of the issuer, as well as the identity of any significant shareholders.
Using the tabular format below, please provide information regarding any person or entity owning 5% of more of the issuer, as well as any officer, and any director of the company, regardless of the number of shares they own. If any listed are corporate shareholders or entities, provide the name and address of the person(s) beneficially owning or controlling such corporate shar3eholders, or the name and contact information of an individual representing the corporation or entity in the note section.
Name of Officer/Director and Control Person
Affiliation with Company (e.g. Officer/Director/Owner of more than 5%)
Residential Address (City / State Only)
Number of shares owned
Share type/class
Ownership Percentage of Class Outstanding
Note
Glenn E. Withers
Officer (President), Director (Chairman)
Ocean Isle Beach, SC
500,000 413,279
Preferred Common
17.54% 1.43%
None
Douglas L. Miller
Director
Elon, NC
1,263,125
Common
4.36%
None
Dayne L. Miller
Office (CFO), Director
Claremont, NC
525,000
Common
1.82%
None
Brett Bertolami
Officer (V. President), Director (V. Chairman)
Mooresville, NC
150,000 300,000
Preferred Common
5.26% 1.04%
None
Richard C. Wilson
Owner of > 5%
Scottsburg, VA
350,000 5,688,500
Preferred Common
12.28% 19.67%
None
James M. Templeton
Owner of > 5% of Preferred and Common
Newton, NC
500,000 1,614,286
Preferred Common
17.54% 5.58%
None

A. Legal/Disciplinary History. Please identify whether any of the foregoing persons have, in the last five years, been the subject of:
1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses); Fortran Corporation is not currently aware of anything relevant to this subsection with respect to any of the foregoing persons.
2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities, commodities, or banking activities; Fortran Corporation is not currently aware of anything relevant to this subsection with respect to any of the foregoing persons.
3. A finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; Fortran Corporation is not currently aware of anything relevant to this subsection with respect to any of the foregoing persons.
4. The entry of an order by a self-regulatory organization that permanently or temporarily barred suspended or otherwise limited such person’s involvement in any type of business or securities activities. Fortran Corporation is not currently aware of anything relevant to this subsection with respect to any of the foregoing persons.
B. Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the issuer or any of its subsidiaries is a party or of which any of their property is the subject. Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought. Include similar information as to any such proceedings known to be contemplated by governmental authorities.
See “Commitments and Contingencies” footnote.

Third Party Providers
Please provide the name, address, telephone number, and email address of each of the following outside providers that advise your company on matters related to operations, business development and disclosure:
Accounting Advisory Firm
GreerWalker CPAs and Business Advisors Carillon Building
227 W. Trade Street, Ste. 1100
Charlotte, NC 28202
[phone]
Tax Advisory Firm
Keener Cassavaugh Farmer & Connor PA 426 Harper Avenue NW
Lenoir, NC 28645
[phone]
Investor Relations Consultant Fortran Corporation
3210 16th Avenue S.E. Conover, North Carolina 28613 [phone] [e-mail] www.fortrancorp.com

Issuer Certification
Principal Executive Officer:
I, Glenn E. Withers certify that:
1. I have reviewed this Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines of Fortran Corporation;
2. Based on my knowledge, this disclosure statement 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 disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by reference in this disclosure statement, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
May 20, 2019
/s/ GLENN E. WITHERS
Glenn E. Withers, CEO and President
Principal Financial Officer:
I, Dayne L. Miller certify that:
1. I have reviewed this Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines of Fortran Corporation;
2. Based on my knowledge, this disclosure statement 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 disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by reference in this disclosure statement, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
May 20, 2019
/s/ DAYNE L. MILLER Dayne L. Miller, CFO

INTERIM FINANCIAL STATEMENTS
March 31, 2019 and March 31, 2018
As of the Nine Months Ended March 31, 2019
FORTRAN CORPORATION
(A North Carolina Corporation)
TRADING SYMBOL: FRTN CUSIP NUMBER: 34960D 108

Condensed Consolidated Balance Sheets
Condensed Consolidated Statement of Operations
Condensed Consolidated Statement of Cash Flows
Notes to Financial Statements
Page 1
2
3
4 - 12
Table of Contents

Current assets:
Cash and cash equivalents
Receivables, less allowances
Inventories
Prepaid expenses and other current assets
Total current assets
Due from affiliate
Equity method investment Property, plant and equipment (net) Other assets
March 31, 2019
$ 166,702 $ 24,116
$ 95,681 $ -
$ 286,499
$ 1,511,000 $ 2,053,046 $ 63,465 $ 254,760
$ 4,168,770
$ 281,399 $ 1,100,000 $ 92,453 $ 29,245 $ 288,115 $ 2,908 $ 1,794,120 $ 1,096,208 $ 2,890,328
$ 505,000
$ 461,634 $ -
$ 311,808 $ 1,278,442 $ 4,168,770
March 31, 2018
$ 193,676 $ 64,123 $ 445,297 $ -
$ 703,096
$ 1,311,000 $ 2,451,079 $ 630,708 $ 266,778
$ 5,362,661
$ 282,044 $ 1,100,000 $ -
$ -
$ 1,932,536 $ 302,754 $ 3,617,334 $ -
$ 3,617,334
$ 120,000
$ 461,634 $ -
$ 1,163,693 $ 1,745,327
$ 5,362,661
FORTRAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Due to affiliate shareholders Deferred revenue
Accrued expenses
Current portion debt
Other current liabilities
Total current liabilities
Long-term debt
Total liabilities
Commitments and contingencies Stockholders' equity:
Stockholders' equity:
Common stock, no par value, 50,000,000 shares authorized, 27,487,351shares issued, respectively
Preferred stock, no par value, 10,000,000 shares authorized, 1,700,000 shares issued, respectively
Additional paid-in capital
Treasury stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
28,914,351 and 2,850,000
and
See accompanying notes to condensed consolidated financial statements
1

Revenue:
Net revenues
Total revenue Costs and expenses (a):
Net costs and expenses (exclusive of depreciation, amortization and accretion shown separately below) Depreciation, amortization and accretion
Total costs and expenses Operating income
Income (loss) in equity method investment Other income (expense)
Interest expense
Income before income taxes
Income tax expense
Net income Earnings per share:
Basic
Diluted
Weighted average shares outstanding:
995,683
995,683
1,361,284 27,662 1,388,946
(393,263)
(500,915) 616,409 (18,735) (296,504)
-
(296,504)
(0.01) (0.01)
28,914,351 28,914,351
$ 903,579
$ 903,579
$ 884,905 $ -
$ 884,905
$ 18,674
$ (212,733) $ 243,011 $ (7,813) $ 41,139
$ -
$ 41,139
$ 0.0015 $ 0.0015
27,487,351 27,487,351
FORTRAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31,
2019 2018
$ 318,205 $ 325,154 $
$ 318,205 $ 325,154 $
$ 369,357 $ 328,187 $ $ 11,228 $ - $ $ 380,585 $ 328,187 $
$ (62,380) $ (3,033) $
$ 55,501 $ (279,023) $ $ 304,761 $ (4,616) $ $ (5,820) $ (156) $ $ 292,062 $ (286,828) $
$ - $ - $
$ 292,062 $ (286,828) $
$ .01 $ (0.01) $ $ .01 $ (0.01) $
Nine Months Ended March 31,
2019 2018
Basic 28,914,351 27,487,351 Diluted 28,914,351 27,487,351
See accompanying notes to condensed consolidated
financial statements.
2

Cash flows from operating activities:
Net income
2019
$ (296,504)
$ (350,722)
$ 27,662 $ (350,722) $ 500,915 $ (288,958) $ 825,852
$ (148,967) $ -
$ 19,319 $ (212,242) $ (460,359)
2018
$ 41,139
$ -
$ -
$ -
$ 212,733 $ -
$ -
$ 23,278 $ -
FORTRAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cancellation of debt income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion Cancellation of debt income
Loss (gain) in equity method investment Debt repayments
Proceeds from debt
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets
Due from affiliate
Inventories
Accounts payable, deferred revenue and other liabilities Net cash provided by operating activities
$
$ (1,907)
$ 235,936
Cash flows from investing activities:
Capital expenditures $ Purchases of investments $
Net cash used in investing activities $
Cash flows from financing activities:
Debt repayments $ Proceeds from debt $
Net cash used in financing activities $
(Decrease) increase in cash and cash equivalents $ Cash and cash equivalents at beginning of period $ Cash and cash equivalents at end of period $
See accompanying notes to condensed consolidated financial statements
$ (74,355)
Nine Months Ended March 31,
3,020 -$-
(39,306)
3,020 $
(288,958) $ 825,852 $ 536,894 $ 79,375 $
87,327 $ 166,702 $
(74,355)
- -
-
161,581
32,095 193,676
3

FORTRAN CORPORATION AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2019 AND 2018
Basis of Presentation and Description of Business
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.
In the opinion of management, the unaudited condensed financial statements contain all adjustments consisting only of normal recurring accruals considered necessary to present fairly the Company’s financial position for all periods presented.
Description of Business
Fortran Corporation (the “Company”) is primarily engaged in the sales, installation and service of telecommunication systems in North Carolina and South Carolina. The Company purchased an eight percent (80%) interest in Tower Performance, Inc. (“TPI”) in November 2015. TPI is engaged in the engineering, sales, installation and servicing of cooling towers for large businesses in New Jersey, New York and Texas.
ITEM 1: Summary of Significant Accounting Policies
The accompanying financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
The Company considers cash equivalents to be those investments which are highly liquid and readily convertible to cash with a maturity date within three months of the date of purchase.
Earnings (Loss) Per Share
The Company reports earnings (loss) per share in accordance with Statement of Financial accounting Standard (SFAS) No.128. This statement requires dual presentation of basic and diluted earnings per share amounts and are based on the weighted average share of common stock outstanding. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants and convertible securities, unless the
4

effect is to reduce a loss or increase earnings per share. Accordingly, this presentation has been adopted for the periods presented. There were no adjustments required to net income for the period presented in the computation of diluted earnings per share. There were no common stock equivalents necessary for the computation of diluted loss per share.
Fixed Assets
Office equipment, vehicles and computer software are carried at cost, net of accumulated depreciation and amortization. Depreciation and amortization are provided using the straight- line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the terms (including renewal periods, as appropriate) of the related leases, whichever is shorter.
When fixed assets are sold or retired, their costs and accumulated depreciation or amortization are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations.
The Company incurs repair and maintenance expenses on its vehicles and equipment. These expenses are recognized when incurred, unless such repairs significantly extend the life of the asset, in which case the cost of the repairs is amortized over the remaining useful life of the asset utilizing the straight-line method.
Due From Affiliate
The amount due from affiliate represents management fees earned for services provided to an equity method investment in prior periods.
Basis of Consolidation
We present the financial statements of the Company and consolidate those financial statements with the financial statements of all subsidiaries that the Company controls. All significant intercompany transactions and balances have been eliminated from the consolidated financial statements.
Investments in affiliated companies that the Company does not control, but over which the Company exerts significant operating and financial influence, are accounted for using the equity method.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
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Allowance for Doubtful Accounts
Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company estimates the allowance based on an analysis of specific customers, taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. As of March 31, 2019 and 2018, all remaining accounts receivable were considered collectible. Accordingly, no allowance has been provided in the accompanying financial statements.
Inventory
Inventory consists of parts and materials valued at the lower of cost (first-in, first-out method) or net realizable value.
Subsequent Events
In preparing the consolidated financial statements, the Company has evaluated subsequent events through May 15, 2019, which is the date the financial statements were available to be issued.
Going Concern Statement
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The liquidity situation is improving rapidly, but ultimate success depends upon signed contracts with commensurate financing. (See subsequent events)
Tower Performance, Inc.’s Liabilities
In conjunction with the purchase of eighty percent (80%) of TPI’s stock on October 31, 2015, the Company entered into three subordinated promissory notes of $266,667 each, payable to the three individual sellers (the “Sellers”) of TPI upon maturity in November 2018. Interest is payable monthly at a five percent (5%) annual rate and is current through the period ended March 31, 2019 and 2018. Although the maturity date was November 2018, the Company feels strongly that a favorable restructuring of this debt obligation will occur by the end of this Fiscal year.
The TPI purchase agreement also provides Sellers with a put option requiring the Company to purchase the remaining twenty percent (20%) of TPI stock. The put option became exercisable at August 31, 2018; and, subsequent to that date, was exercised by the Sellers prior to its expiration. The put price is to be calculated by multiplying TPI’s average gross profit for the 12 month periods ending March 31, 2016, 2017 and 2018 by .829, minus the initial purchase price of $2,200,000. The Sellers have calculated a put price of $335,000, but the Company has yet to finalize the put option transaction. No amounts have been recorded related to the put option at March 31, 2019 or 2018.
In addition, the Company owes Sellers $300,000 held in a deposit account for three years after the transaction date. This amount does not bear interest and is expected to be paid in 2019. The liability was recorded as debt at March 31, 2019 and 2018.
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Debt Information
On February 10, 2016, The New Telephone Co. and B & L Telephone, LLC, subsidiaries of the Company, borrowed $115,625.00 plus interest at a rate of thirty two percent (32%) payable at $433.59 per day from CAN Capital. As of March 31, 2018, the outstanding principal balance was $26,450.31. The Company negotiated a favorable settlement of this obligation during the nine months ending March 31, 2019 and paid $10,000.00 to CAN Capital. The remaining $16,450.31 balance was record as “Other Income” in the Statement of Operations.
On March 26, 2007, New Telephone, Inc. borrowed $750,000 from Banco Poplar at a rate
of Prime + 2.75 percent per annum. Said loan was secured by New Telephone, Inc.’s assets, real estate owned by Rink Media and a personal guarantee of Douglas Rink. On August 17, 2017 Banco Poplar filed suit against New Telephone, Inc., Rink Media and Douglas Rink personally for non-payment of this loan. As of March 31, 2018, the outstanding principal balance of this obligation was $115,750.00. The Company negotiated a favorable settlement of this obligation during the nine months ending March 31, 2019 and paid $81,478.02 to Banco Poplar. The remaining $34,271.98 balance was record as “Other Income” in the Statement of Operations.
On June 6, 2014 Templeton Family Holdings purchased a convertible debenture from the Company in the amount of $110,000 plus interest payable monthly at a rate of six percent (6%) per annum. On July 10, 2017 Templeton Family Holdings filed suit against the Company for non- payment. On November 20, 2017, the court issued a judgment to Templeton Family Holdings in the amount of $112,000 plus interest and attorney’s fees. As of March 31, 2018, the outstanding principal balance was $110,000 and the outstanding interest and fees was $10,564.06. The outstanding interest and fees were paid in the quarter ended March 31, 2019. Templeton Family Holdings exercised its option to convert the outstanding principal balance to 314,286 shares of common stock at a rate of $.35 per common share. These common shares were issued on March 13, 2019.
On October 20, 2015, James M. Templeton loaned the Company $300,000 payable at $25,000 per month at an interest rate of ten percent (10%) per annum, with principal and interest paid monthly and with all payments due in full by October 15, 2016. On October 5, 2016, Mr. Templeton filed suit against the Company in the amount of $300,000 plus interest and attorney’s fees for non- payment. On August 28, 2017 the court awarded Mr. Templeton a judgment in the amount of $300,000 plus interest and attorney’s fees, which were recorded as liabilities at March 31, 2019. On December 3, 2018, the remaining principal balance, including accrued interest, was $75,000. On that date, Mr. Templeton exercised his option to convert the outstanding balance to 375,000 shares of common stock at the rate of $.25 per common share.
On May 20th, 2016 Peoples Bank, Inc. in Newton, NC loaned the Company $650,000 on two different tracks of land, including buildings. At the same time Peoples Bank loaned the Company $500,000 as a revolving account for the Company. In December 2016 the Company sold its property located at 725 11th Ave. SE, Hickory NC and reduced the $650,000 loan by $380,000. On July 25, 2018 Peoples Bank filed suit against the Company for non-payment on each of the above (See “Commitments and Contingencies”). Peoples Bank followed this action with a foreclosure suit against the Company on the office building of the Company. Sale of said foreclosure property was held during the month of November 2018. At the time legal action
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began, the approximate balance was $680,355.89 which was reflected as an outstanding obligation at March 31, 2018 in the accompanying Balance Sheet. It was anticipated that a deficiency balance would remain after the foreclosure sale. This balance was dealt with in the courts in accordance with the suit initially filed by Peoples Bank. After the foreclosure sale, the Company negotiated a fair rental agreement with the new owner. The property was sold by the bank for $400,000.00 which ultimately left a deficiency balance of $338,957.85 which included all attorneys’ fees, property taxes and closing costs. During the nine months ending March 31, 2019, this deficiency balance was settled by executing a Promissory Note to Peter A. R. Sharman for $138,957.85 and the issuance of 800,000 shares of common stock to Christopher L. Sharman with a conversion price of $.25 per common share.
On May 16, 2018 the Company issued to James M. Templeton a promissory note in the amount of $78,114.77 with an interest rate of five percent (5%) per annum payable upon demand with an option to convert to the Company preferred stock at $.10 cents per share at any time prior to maturity. The maturity date of this Convertible Debenture is May 16, 2023. Said note was issued in connection with a settlement and mutual release agreement with Mr. Templeton and certain shareholders.
On November 23, 2018, Douglas L. Miller purchased a Convertible Debenture from the Company in the amount of $60,000.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is November 23, 2023. Under the terms of this Convertible Debenture, Mr. Miller is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On December 21, 2018, James M. Templeton purchased a Convertible Debenture from the Company in the amount of $100,000.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is December 21, 2023. Under the terms of this Convertible Debenture, Mr. Templeton is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On January 8, 2019, James M. Templeton purchased a Convertible Debenture from the Company in the amount of $150,000.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is January 8, 2024. Under the terms of this Convertible Debenture, Mr. Templeton is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On March 13, 2019, James M. Templeton purchased a Convertible Debenture from the Company in the amount of $100,000.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is March 13, 2024. Under the terms of this Convertible Debenture, Mr. Templeton is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On March 28, 2019, Charles D. Miller purchased a Convertible Debenture from the Company in the amount of $150,000.00 plus interest payable monthly at a rate of six percent (6%) per annum.
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The maturity date of this Convertible Debenture is March 28, 2024. Under the terms of this Convertible Debenture, Mr. Miller is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On March 29, 2019, James M. Templeton purchased a Convertible Debenture from the Company in the amount of $100,000.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is March 29, 2024. Under the terms of this Convertible Debenture, Mr. Templeton is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On March 29, 2019, Peter A. R. Sharman purchased a Convertible Debenture from the Company in the amount of $107,250.00 plus interest payable monthly at a rate of six percent (6%) per annum. The maturity date of this Convertible Debenture is March 29, 2024. Under the terms of this Convertible Debenture, Mr. Sharman is entitled, at his option, to convert all or any lesser portion of the outstanding principal amount into shares of common stock of the Company at a conversion price of $.25 per common share at any time prior to maturity.
On February 21, 2019, the Company settled its legal matters with TCA Global by executing a Promissory Note in the amount of $400,000.00 plus giving title to a small tract of land in Lexington, NC with a transfer value of $100,000.00. This tract of land was not carried on the accounting records by the prior management; therefore, there is no Balance Sheet or Income Statement affect with its release to TCA Global. The Company recognized $300,000.00 as “Other Income” in the Statement of Operations as a result of the TCA Global settlement (See “Commitments and Contingencies”). The Promissory Note required the Company pay $150,000.00 to TCA Global on April 3, 2019 and $15,000.00 per month for 16 months and a final payment of $10,000.00 in the 17th month. This Promissory Note bears no interest rate. This Promissory Note had a balance at March 31, 2018 of $700,000.00.
Please see the Commitments and Contingencies Footnote below for additional legal matters related to certain Debt Instruments.
Impairment of Long-lived Assets
In accordance with SFAS NO.144, “Accounting for the Impairment or Disposal of Long-lived Assets”, the Company reviews long-lived assets, such rental equipment and fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount exceeds its estimate future cash flows, an impairment charge is recognized as the amount by which the carrying amount of an asset group exceeds the fair value of the asset group.
The Company evaluated its long-lived assets, including its equity method investment, and the Company does not consider these assets to be impaired.
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Income Taxes
Income taxes are accounted for in accordance with SFAS No.109, “Accounting for Income Taxes.” A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and for net operating loss carry forwards.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or the entire deferred tax asset will not be fully realizable. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
The Company expects to see a higher effective tax rate as a result of higher revenues and lower costs throughout the fiscal year. The effective tax rate for the period ended March 31, 2019 was zero percent (0%).
Fair Value of Financial Instruments
Financial instruments consist principally of cash, accounts and related party receivables, trade and related party payables, accrued liabilities and short-term obligations. The carrying amounts of such financial instruments in the accompanying consolidated balance sheets approximate their fair values due to their relatively short-term nature.
The carrying value of the Company’s long-term debt approximates fair value based on current market conditions for similar debt instruments.
Use of Estimates
The preparation of the accompanying financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting periods. Actual results may differ from those estimates and assumptions.
Commitments and Contingencies
On May 9, 2018, Peoples Bank filed a complaint against the Company, MMMG Transport, LLC, New TPI, LLC and Douglas Rink in the North Carolina General Court of Justice, Superior Court Division for Catawba County (Case No. 18-CVS-1256). Plaintiff Peoples Bank alleges in its complaint that the Company defaulted on two promissory notes in the original principal amounts of $650,000.00 and $500,000.00 (collectively, the “Promissory Notes”). Peoples Bank alleges that the principal sum of $680,355.89 plus interest remain unpaid on the Promissory Notes. Plaintiff further alleged that defendant Douglas Rink executed and delivered an unlimited personal guaranty of the Promissory Notes, and that the Company’s subsidiaries (MMMG Transport, LLC and New TPI, LLC) granted Plaintiff a security interest in certain assets and real property to secure the loans. Plaintiff sought the payment of the unpaid principal sums plus interest and related costs and attorneys’ fees associated with this action. After the filing of the complaint, Peoples Bank assigned all of its interests in the Promissory Notes to third parties Peter Sharman and Donna Sharman, who are now successors in interest to Peoples Bank on the Promissory Notes and are served as the
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Plaintiffs in this legal proceeding. The Sharmans purchased the bank’s position for $400,000.00 which left a deficiency balance of $338,957.85. The Company executed a Promissory Note with the Sharmans for $138,957.85 and issued 800,000 shares of common stock to Christopher L. Sharman at a conversion rate of $.25 per common share. The Company negotiated a favorable Lease Agreement with the Sharmans of $4,000 per month, triple net, for 24 months.
On August 23, 2018, the Company filed a complaint against Douglas Rink in the North Carolina General Court of Justice, Superior Court Division for Catawba County (Case No. 18-CVS-2382). In the Company’s action against Doug Rink, the Company seeks to invalidate 5 million shares of Common Stock and 350,000 shares of Series A Preferred Stock. The Company also seeks to invalidate 247,975 additional shares of Common Stock that Doug Rink improperly transferred to himself in connection with the settlement of a lawsuit with another party (Todd Rankin).
Defendant Rink served as the President, CEO and Chairman of the board of directors of the Company from 2013 until his resignation on April 19, 2018. The complaint alleges that defendant Rink breached his fiduciary duties while serving as an officer and director of the Company and engaged in self-interested transactions to benefit himself at the expense of the Company. The complaint alleges that defendant Rink improperly issued shares of the Company’s common stock and Series A Preferred Stock to himself without the vote, consent or approval of all the members of the board of directors of the Company. The complaint further alleges that defendant Rink mismanaged the Company’s operations and finances and that he misappropriated certain of the Company’s assets for his personal use and benefit. The complaint asserts claims against defendant Rink for declaratory relief, breach of fiduciary duty, constructive fraud, unfair and deceptive trade practices, negligence, conversion and civil theft. Defendant Rink responded to the complaint on December 27, 2018, denying the allegations of the Company’s complaint and asserting various counterclaims against the Company, including a request for a judicial dissolution and appointment of a receiver. On March 1, 2019, the Company and Douglas Rink entered into a Settlement and Release Agreement whereby Douglas Rink would, among other things, on or before April 1, 2019 deliver to the Company all Company stock certificates in his possession or control, sign a stipulation of dismissal with prejudice of his counterclaims in Case No. 18-CVS-2382 and resign as an officer, director and/or manager of all of the Company’s subsidiaries. Pursuant to the same Settlement and Release Agreement, the Company agreed to, among other things, on or before April 1, 2019 file a stipulation of dismissal with prejudice of the claims in Case No. 18-CVS-2382 and pay Douglas Rink the amount of $175,000. On May 10, 2019, Douglas Rink’s shares of common stock and preferred stock of the Company were canceled. To the Company’s knowledge, the obligations of the Company and Douglas Rink under the Settlement and Release Agreement have been satisfied and the case has been dismissed.
On August 16, 2018, TCA Global Credit Master Fund (“TCA”) filed, as the sole petitioning creditor, an involuntary bankruptcy petition under title 11 of the U.S. Bankruptcy Code against the Company (the “Involuntary Petition”). The Involuntary Petition was filed in the United States Bankruptcy Court for the Western District of North Carolina (Case No. 18-50532). The Company disputes that the Involuntary Petition was properly filed. The Company reached a favorable settlement with TCA Global on February 21, 2019. The Company executed a Promissory Note in the amount of $400,000.00 plus gave TCA Global clear title to a tract of land in Lexington, NC. This tract of land was not carried on the accounting records of the previous management so there is no Balance Sheet or Income Statement affect for this transfer of land. The Promissory Note obligated the Company to pay $150,000.00 on April 3, 2109 and $15,000.00 per month for 16
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months with a final payment of $10,000.00 in the 17th month. This Promissory Note bears no interest rate. This settlement resulted in a $300,000.00 reduction in the total amount due and this reduction is accounted for in “Other Income” on the Statement of Operations.
Banco Poplar North America v. The New Telephone Company
Banco Popular obtained a default judgment in the total amount of approximately $131,000 (including principal, interest and fees). The Company settled this obligation with Banco Poplar with a payment of $81,478.02. This settlement resulted in a $34,271.98 reduction in the total amount due and this reduction is accounted for in “Other Income” on the Statement of Operations.
Where a probable contingent liability exists and the amount of the loss can be easily estimated, the Company records the estimated liability. Considerable judgment is required in analyzing and recording such liabilities and actual results may vary from the estimates. Management is not aware of any unrecorded liabilities for which payment is probable and the amount can be reasonably estimated.
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