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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|(Mark One)                                   |                                                                                        
|-------------------------------------------- | ---------------------------------------------------------------------------------------
|/x/                                          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the Quarterly Period Ended July 31, 2001
|or                                          
|/ /                                          | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15() OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to

Commission file number 0-23789

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FLOUR CITY INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)

|Nevada(State of Incorporation)                                          |  | 62-1709152(I.R.S. Employer Identification No.)
|----------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                        |  |                                               
|1044 Fordtown Road Kingsport, TN(Address of principal executive offices |  | 37663zip code)                                

(423) 349-8692(Registrant's telephone number, including area code)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 / /

There
were 5,315,278 shares of common stock outstanding at September 24, 2001.

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FLOUR CITY INTERNATIONAL, INC.  INDEX

|           |                       |                                                                                       |  | Page
No.
|---------- | --------------------- | ------------------------------------------------------------------------------------- |  | --------
|PART I.    | FINANCIAL INFORMATION |                                                                                       | 
|           | Item 1.               | Financial Statements                                                                  |  |         
|           |                       | Condensed Consolidated Statements of Income                                           |  | 3       
|           |                       | Condensed Consolidated Balance Sheets                                                 |  | 4       
|           |                       | Condensed Consolidated Statements of Cash Flows                                       |  | 5       
|           |                       | Notes to the Condensed Consolidated Financial Statements                              |  | 6-10    
|           | Item 2.               | Management's Discussion and Analysis of Financial Condition And Results of Operations |  | 11-18   
|           | Item 3.               | Quantitative and Qualitative Disclosure About Market Risk                             |  | 18      
|PART II.   | OTHER INFORMATION     |                                                                                       | 
|           | Item 2.               | Changes in Securities and Use of Proceeds                                             |  | 19      
|           | Item 5.               | Other Information                                                                     |  | 19      
|           | Item 6.               | Exhibits and Reports on Form 8-K                                                      |  | 20      
|SIGNATURES |                       | 21                                                                                   
|EXHIBITS   |                       |                                                                                      

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FLOUR CITY INTERNATIONAL, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands except per share amounts)  (unaudited)

|                                                          |                         | Three Months Ended
July 31, |         | Nine Months Ended
July 31, |  
|--------------------------------------------------------- | ----------------------- | --------------------------- | ------- | -------------------------- | -
|
|Revenues                                                  |                         | $                           | 18,555  |                            | $
|Cost of revenues                                          |                         |                             | 18,303  |                            |  
|                                                          | Gross profit            |                             |         | 252                        |  
|Selling, general and administrative expenses              |                         |                             | 2,836   |                            |  
|Write off of billed and unbilled, and claim receivables   |                         |                             | 14,450  |                            |  
|Amortization, net                                         |                         |                             | (111    | )                          |  
|                                                          | Operating (loss) profit |                             |         | (16,923                    | )
|Foreign currency transaction losses                       |                         |                             | (28     | )                          |  
|Other income (expense), net                               |                         |                             | 6       |                            |  
|Minority interests in income of consolidated subsidiaries |                         |                             | (109    | )                          |  
|(Loss) income before income taxes                         |                         |                             | (17,054 | )                          |  
|Income taxes                                              |                         |                             | (871    | )                          |  
|                                                          | Net (loss) income       |                             | $       | (17,925                    | )
|                                                          |                         |                             |         |                            |  
|Net (loss) income per share:                              |                         |                             |         |                            |  
|                                                          | Basic                   |                             | $       | (3.37                      | )
|                                                          | Diluted                 |                             | $       | (3.37                      | )
|                                                          |                         |                             |         |                            |  
|Weighted average shares outstanding:                      |                         |                             |         |                            |  
|                                                          | Basic                   |                             |         | 5,315                      |  
|                                                          | Diluted                 |                             |         | 5,315                      |  
|                                                          |                         |                             |         |                            |  

See
Notes to Condensed Consolidated Financial Statements

3

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FLOUR CITY INTERNATIONAL, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS  (in thousands except per share amounts)

|                                                                                 |                                                                                                          | July 31,
2001                              |        | October 31,
2000 |       
|-------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ---------------- | ------
|
|ASSETS                                                                           |                                                                                                          |                                            |        |                  |       
|Cash and cash equivalents                                                        |                                                                                                          | $                                          | 236    |                  | $     
|Restricted cash                                                                  |                                                                                                          |                                            | 8,032  |                  |       
|Accounts receivables, net                                                        |                                                                                                          |                                            | 14,363 |                  |       
|Costs and estimated earnings in excess of billings on uncompleted contracts, net |                                                                                                          |                                            | 15,553 |                  |       
|Deferred income taxes                                                            |                                                                                                          |                                            |       |                  |       
|Other current assets                                                             |                                                                                                          |                                            | 4,746  |                  |       
|                                                                                 | Total current assets                                                                                     |                                            |        | 42,930           |       
|Plant and equipment, net                                                         |                                                                                                          |                                            | 3,667  |                  |       
|Claims receivable                                                                |                                                                                                          |                                            | 810    |                  |       
|Other assets                                                                     |                                                                                                          |                                            | 260    |                  |       
|                                                                                 | Total assets                                                                                             |                                            | $      | 47,667           |       
|                                                                                 |                                                                                                          |                                            |        |                  |       
|LIABILITIES AND STOCKHOLDERS' EQUITY                                             |                                                                                                          |                                            |        |                  |       
|Short-term debt                                                                  |                                                                                                          | $                                          | 17,552 |                  | $     
|Accounts payable and accrued expenses                                            |                                                                                                          |                                            | 15,925 |                  |       
|Billings in excess of costs and estimated earnings on uncompleted contracts      |                                                                                                          |                                            | 1,538  |                  |       
|Other current liabilities                                                        |                                                                                                          |                                            | 1,592  |                  |       
|                                                                                 | Total current liabilities                                                                                |                                            |        | 36,607           |       
|Other liabilities                                                                |                                                                                                          |                                            |       |                  |       
|Long-term convertible debt, net                                                  |                                                                                                          |                                            | 861    |                  |       
|Negative goodwill, net                                                           |                                                                                                          |                                            | 182    |                  |       
|                                                                                 | Total liabilities and deferred credits                                                                   |                                            |        | 37,650           |       
|Commitments and contingencies                                                    |                                                                                                          |                                            |        |                  |       
|Minority interests in equity of consolidated subsidiaries                        |                                                                                                          |                                            | 1,423  |                  |       
|Stockholders' equity:                                                            |                                                                                                          |                                            |        |                  |       
|                                                                                 | Preferred stock, par value $0.0001; authorized 5,000 shares; no shares issued                            |                                            |        |                 |       
|                                                                                 | Common stock, par value $0.0001; authorized 50,000 shares; issued 6,268 shares; outstanding 5,315 shares |                                            |        |                 |       
|                                                                                 | Additional paid-in-capital                                                                               |                                            |        | 16,498           |       
|                                                                                 | Retained earnings (accumulated deficit)                                                                  |                                            |        | (5,580           | )     
|                                                                                 | Less 953 shares of common stock in treasury, at cost                                                     |                                            |        | (1,668           | )     
|                                                                                 | Accumulated comprehensive income                                                                         |                                            |        | (646             | )     
|                                                                                 | Unearned compensation                                                                                    |                                            |        | (10              | )     
|                                                                                 |                                                                                                          | Total stockholders' equity                 |        |                  | 8,594 
|                                                                                 |                                                                                                          | Total liabilities and stockholders' equity |        | $                | 47,667
|                                                                                 |                                                                                                          |                                            |        |                  |       

See
Notes to Condensed Consolidated Financial Statements

4

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FLOUR CITY INTERNATIONAL, INC.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (unaudited)  (in thousands)

|                                               |                                                                                                                                | Nine Months Ended July 31,                                                       |       
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ------
|
|Cash flows from operating activities:          |                                                                                                                                |                                                                                  |       
|                                               | Net (loss) income                                                                                                              |                                                                                  | $     
|                                               | Adjustments:                                                                                                                   |                                                                                  |       
|                                               |                                                                                                                                | Depreciation and amortization                                                    |       
|                                               |                                                                                                                                | Non-cash stock compensation                                                      |       
|                                               |                                                                                                                                | Write-off of billed and unbilled, and claim receivables                          |       
|                                               |                                                                                                                                | Deferred income taxes                                                            |       
|                                               |                                                                                                                                | Income accruing to minority interest                                             |       
|                                               | Changes in assets and liabilities:                                                                                             |                                                                                  |       
|                                               |                                                                                                                                | Restricted cash                                                                  |       
|                                               |                                                                                                                                | Accounts receivable, net                                                         |       
|                                               |                                                                                                                                | Note receivable                                                                  |       
|                                               |                                                                                                                                | Costs and estimated earnings in excess of billings on uncompleted contracts, net |       
|                                               |                                                                                                                                | Tax refund receivable                                                            |       
|                                               |                                                                                                                                | Other current assets                                                             |       
|                                               |                                                                                                                                | Claims receivable                                                                |       
|                                               |                                                                                                                                | Other assets                                                                     |       
|                                               |                                                                                                                                | Accounts payable and accrued expenses                                            |       
|                                               |                                                                                                                                | Other current liabilities                                                        |       
|                                               |                                                                                                                                | Other non-current liabilities                                                    |       
|Net cash used in operating activities          |                                                                                                                                |                                                                                  | (7,993
|Cash flowsinvesting activities:               |                                                                                                                                |                                                                                  |       
|                                               | Purchase of property, plant and equipment                                                                                      |                                                                                  |       
|                                               | Purchase of treasury stock                                                                                                     |                                                                                  |       
|Net cash used in investing activities          |                                                                                                                                |                                                                                  | (308  
|Cash flowsfinancing activities:               |                                                                                                                                |                                                                                  |       
|                                               | Proceeds from bank borrowings                                                                                                  |                                                                                  |       
|                                               | Payments on bank borrowings                                                                                                    |                                                                                  |       
|                                               | Long-term convertible debt proceeds                                                                                            |                                                                                  |       
|Net cash provided by financing activities      |                                                                                                                                |                                                                                  | 6,601 
|Effect of exchange rate changes on cash        |                                                                                                                                |                                                                                  | (108  
|Net decrease in cash and cash equivalents      |                                                                                                                                |                                                                                  | (1,808
|Cash and cash equivalents, beginning of period |                                                                                                                                |                                                                                  | 2,044 
|Cash and cash equivalents, end of period       |                                                                                                                                | $                                                                                | 236   
|                                               |                                                                                                                                |                                                                                  |       
|Supplemental cash flow information:            |                                                                                                                                |                                                                                  |       
|                                               | Interest paid in cash                                                                                                          |                                                                                  | $     
|                                               | Income taxes paid in cash                                                                                                      |                                                                                  | $     
|Non-cash transactions:                         |                                                                                                                                |                                                                                  |       
|                                               | Discount on long-term convertible debt resulting from issuance of warrants and beneficial conversion feature of the debentures |                                                                                  | $     

See
Notes to Condensed Consolidated Financial Statements

5

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FLOUR CITY INTERNATIONAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (unaudited)

The
condensed consolidated financial statements include the accounts of Flour City International, Inc. and its wholly owned and majority owned subsidiary companies after
elimination of material intercompany accounts and transactions. Less than majority owned affiliates over which the Company exercises significant influence are accounted for as equity investments. Less
than twenty percent owned affiliates over which the Company cannot exercise significant influence are carried at cost.

When
reading the financial information contained in this Quarterly Report, reference should be made to the financial statements, schedules, and notes, included in the Company's Annual
Report on Form 10-K for the year ended October 31, 2000. Certain amounts have been reclassified to conform with the current period's presentation.

The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to contracts,
litigation, and contingencies, based on current available information. Changes in facts and circumstances may result in revised estimates. In the opinion of management, the Condensed Consolidated
Financial Statements include all material adjustments necessary to present fairly the Company's financial position, results of operations, and cash flows. The Company's construction projects are
awarded in a competitive bidding process. Due to the nature of the bidding process the Company has experienced and may continue to experience significant delays in project awards which have caused and
may continue to cause substantial variations in quarterly results.
The results for this interim period are not necessarily indicative of results for the entire year or any other interim period.

In
June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting For Derivative Instruments and Hedging Activities which defines derivatives,
requires that all derivatives be carried at fair value and provides for hedge accounting when certain conditions are met. SFAS No. 133, as amended, is effective for the Company in fiscal 2002.
Although the Company has not fully assessed the implication of SFAS No. 133, as amended, the Company does not believe that the adoption of this statement will have a material effect on its
financial condition or results of operations.

In
December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101). SAB 101,
as amended, summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements. The adoption of the provisions of SAB 101 is not
expected to have a material effect on the Company's consolidated operating results, statement of financial position or cash flows. SAB 101 is required to be adopted by the Company no later than the
fourth quarter of 2001.

6

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3.  ACCOUNTS RECEIVABLENET, AND COSTS AND ESTIMATED PROFITS IN EXCESS OF BILLINGS
(In thousands)

Accounts
receivable are net of allowance for doubtful accounts of $1,899 at July 31, 2001 and $435 at October 31, 2000. In accordance with the terms of
long-term contracts, customers withhold certain percentages of billings until completion and acceptance of performance under the contracts. Final payments of all such amounts withheld
which might not be received within a one-year period from July 31, 2001 and October 31, 2000, are $6,887 and $7,142, respectively. Of the allowance for doubtful accounts,
$902 and $117 were allocated to the withheld receivables as of July 31, 2001 and October 31, 2000, respectively. In conformity with trade practice, however, the full amount of accounts
receivable has been included in current assets.

Due
to the termination of contracts on several projects, $14,450 has been written off against certain billed and unbilled receivables. Of the amount written off, $7,986 represents
costs on terminated contracts, which may not be recoverable, $628 represents a reserve against accounts receivable from terminated contracts, and $836 was reserved against other active and or nearly
completed projects due to uncertainty of collection. Costs and estimated profits in excess of billings represent unbilled
receivables on costs incurred. The remaining amount of $1,760 represents a write-off against unbilled receivables for other projects nearing completion. In addition, $3,240 was set up as a
reserve against a certain claim receivable from a supplier. Based upon an agreement with the supplier, the claim receivable will be offset against amounts due for future purchases from the supplier.
Due to the uncertainty in securing new projects and the Company's ability to offset amounts due for future purchases, from the supplier, this amount was set up as a reserve against the claim
receivable.

4.  OTHER INCOME (EXPENSE), NET
(In thousands)

|                            |  | Three months
ended
July 31, |      | Nine months
ended
July 31, |  
|--------------------------- |  | --------------------------- | ---- | -------------------------- | -
|
|Interest income             |  | $                           | 137  |                            | $
|Interest expense            |  |                             | (214 | )                          |  
|Other income, net           |  |                             | 83   |                            |  
|Other income (expense), net |  | $                           | 6    |                            | $
|                            |  |                             |      |                            |  

SFAS
No. 109 requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. As a result of prior years and the current
nine-month period ended July 31, 2001 net operating losses, the Company has provided a valuation allowance on its deferred tax asset totaling approximately $7,300. This deferred tax
asset represents potential tax benefits that maybe realized to offset against income taxes on earnings in future years. With substantial losses during the current nine-month period, the
realization of such future tax benefits may be doubtful. Consequently, approximately $1,200 of the deferred tax asset from prior years was reversed from the income taxes for the current period.

The
Company is engaged in one industry segment: designing, engineering, manufacturing, and installation of custom curtainwall systems for the construction industry. The Company's
systems are sold through long-term construction contracts to general contractors and owners of high-rise and special purpose buildings. The Company manages its business in
three segments based on geographical

7

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location: North America, Pacific Rim and Europe. The accounting policies for each segment are the same as for the consolidated Company. Intersegment revenues consist of design and engineering
performed by one segment for another. In consolidation, such intersegment revenues are offset against the receiving segment's cost of revenues. Segment profit or loss includes all items that comprise
net income for the respective segments. Geographic financial information follows:

Segment Revenues and Profit (Loss)(In thousands)

|                                      |                                   | Three months
ended
July 31, |                                        | Nine months
ended
July 31, |        
|------------------------------------- | --------------------------------- | --------------------------- | -------------------------------------- | -------------------------- | -------
|
|Revenues                              |                                   |                             |                                        |                            |        
|                                      | Revenues from external customers: |                             |                                        |                            |        
|                                      |                                   | North America               |                                        | $                          | 13,224 
|                                      |                                   | Pacific Rim                 |                                        |                            | 2,092  
|                                      |                                   | Europe                      |                                        |                            | 3,239  
|                                      |                                   |                             |                                        |                            |        
|                                      |                                   |                             | Total revenues from external customers |                            | $      
|                                      |                                   |                             |                                        |                            |        
|Profit (loss):                        |                                   |                             |                                        |                            |        
|                                      |                                   | North America               |                                        | $                          | (12,482
|                                      |                                   | Pacific Rim                 |                                        |                            | (3,335 
|                                      |                                   | Europe                      |                                        |                            | (627   
|                                      |                                   |                             |                                        |                            |        
|Profit (loss) for reportable segments |                                   |                             | (16,444                                |                            |        
|Unallocated corporate expenses, net   |                                   |                             | (1,481                                 | )                          |        
|                                      |                                   |                             |                                        |                            |        
|                                      | Consolidated net (loss) income    |                             | $                                      | (17,925                    | )      
|                                      |                                   |                             |                                        |                            |        

Segment Assets(In thousands)

Segment
assets are the total assets of the three geographical locations. Unallocated corporate assets consist primarily of cash and certificates of deposit.

|                                     |                           | July 31
2001 |        | October 31
2000
|------------------------------------ | ------------------------- | ------------ | ------ | ---------------
|Assets                               |                           |              |        |                
|                                     | North America             |              | $      | 15,760         
|                                     | Pacific                   |              |        | 24,998         
|                                     | Europe                    |              |        | 1,946          
|                                     |                           |              |        |                
|Total assets for reportable segments |                           |              | 42,704 |                
|Unallocated corporate assets         |                           |              |        |                
|                                     | Cash and cash equivalents |              |        | 4,750          
|                                     | Other Assets              |              |        | 213            
|Consolidated total assets            |                           | $            | 47,667 |                
|                                     |                           |              |        |                

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The
long-term debt consists of subordinated secured convertible debentures as follows:

July 31
2001Debentures




$
2,500Less: Discount on debentures

$
1,710Amortization of discount


(71
)

(1,639
)Debentures, net of discount




$
861


The
debentures, which carry interest at 81/2% per annum, were issued in a private financing transaction to Dimensional Partners L.P. and Dimensional Partners Ltd. on
June 11, 2001 and will mature on June 11, 2004. Interest is due and payable quarterly on the first day of the month beginning August 1, 2001. These debentures are convertible into
shares of the Company's common stock at a conversion price of $3.50 per share, subject to dilution adjustment and may convert at $2.50 per share if annual earnings targets are not met. The holders of
the note also received warrants to purchase a total of 389,916 shares of the Company's common stock, subject to adjustment as set forth in the warrants. The warrants carry an exercise price of $4.64
per share, and expire on June 11, 2006. The debentures are subordinated to certain present or future senior debt of the Company.

The
value of the warrant and the beneficial conversion feature of the convertible debentures have resulted in a discount on the debentures of $1,710.

The
Company is party to various legal actions that may have a material adverse effect on the Company. Due to the termination of several of its contracts during the quarter and
subsequent to the end of the quarter, the Company is contingently liable to reimburse its surety, American International Group, Inc. (AIG), in accordance with the Agreement of Indemnity, for
any losses or expenses the surety may incur. The liability owed under the agreement and or other contracts cannot be reasonably estimated at
this point in time. The Company is working on reaching an agreement with AIG and the various parties to the contracts, and may face certain claims under the contracts. The Company is exploring its
legal options to pursue claims against various parties related to the projects.

In
addition, due to the contract terminations, the Company has defaulted on its outstanding indebtedness to several of its banks as follows:

On
September 5, 2001, one of the US banks filed a complaint and application for expedited writ of possession in a Circuit Court against the Company. Under this lawsuit, this
bank filed for a judgment against the Company in the amount of $4,232 plus interest and attorneys fees. This bank also obtained a writ of possession in order to take possession of its collateral
consisting of equipment and inventory, and a restraining order against the Company prohibiting it from using the collateral. The Company is currently working with the bank and has reached an agreement
with the bank to resolve the payment of the outstanding debt to allow the Company to release its inventory.

On
August 31, 2001, one of the banks in Hong Kong filed a statutory demand against Flour City Architectural Metals (Asia) Ltd., a wholly owned subsidiary of the Company,
for payment of its outstanding debt in the amount of $2,818. Of the amount outstanding, $1,953 is collateralized by certain certificates of deposit held by the bank. This bank has fully exercised its
rights to setoff against these certificates of deposit, in partial satisfaction of the outstanding debt. The remaining $865 of debt owed to this bank is secured by a deed of assignment of the
outstanding billings on a certain project in Hong Kong. Flour City Architectural Metals (Asia) Ltd. executed this deed of assignment on August 17, 2001. The Company is currently working
with the bank to resolve this matter.

9

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Another one of the banks in Hong Kong has served the Company a letter of demand requiring the Company to pay its outstanding debts in the amount of $1,914. As one of the conditions to
providing security for this banking facility, the Company's Chairman and Chief Executive Officer has provided a personal guarantee dated June 27, 2001 in the amount of $769. On
September 13, 2001, the bank filed a petition to wind up Flour City Architectural Metals (Asia) Ltd. in accordance with the laws of the Hong Kong Special Administrative Region and
demanded payment of the outstanding debt. The Company is currently working with the bank to resolve this matter.

Prior
to the Company's purchase in January 1997 of Flour City Architectural Metals, Inc. ("FCAM") from Armco, Inc. ("Armco"), FCAM operated facilities that
allegedly generated hazardous substances. FCAM has been named as a potentially responsible party in relation to several sites for actions that allegedly occurred prior to the Company's purchase of
FCAM. Pursuant to the terms of the Armco sale, Armco agreed to defend, indemnify and hold harmless the Company in connection with certain lawsuits, including environmental claims associated with any
property owned by FCAM at or before the date of sale. Any and all cleanup responsibility and litigation with respect to such environmental claims
have been assumed by Armco pursuant to the sale agreement. The Company believes that to the extent FCAM incurs any loss or liability in connection with any such actions, it will be fully compensated
by Armco. In the opinion of management, any ultimate liability with respect to these actions will not have a material impact on the financial position of the Company.

10

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Flour City International, Inc. and its majority owned subsidiaries (the "Company" or the "Registrant") are primarily engaged in the design, engineering,
manufacturing, and installation of custom curtainwall systems for the construction industry with operations primarily in the United States, Asia and Europe. The Company's primary operating units are
FCAM, Flour City Architectural Metals (Asia) Ltd. ("FCAM Asia") and Flour City Arlo Corporation ("FC-Arlo", a consolidated joint venture formed in May 1998 in which the
Company has a 55% ownership interest) and Flour City Architectural Metals (UK) Ltd.

The
Company works closely with architects, general contractors and owners/developers in the development and construction of highly recognizable mid-rise and
high-rise office buildings, public-use buildings such as courthouses and airport terminals and other well-known landmark buildings and uniquely designed structures.

Several
of the Company's construction contracts in the United States, Asia and most recently, the United Kingdom have been terminated. The termination of the contracts, representing
most of the Company's current projects, and related defaults on its surety bonds and its outstanding bank debts has subjected the Company to severe liquidity problems. The Company's ability to
continue operations will depend on its ability to successfully obtain new financing, collect on existing account receivables and to return to profitable operations.



RESULTS OF OPERATIONS

The Company has recognized substantial losses during the third quarter due primarily to the termination of multiple contracts in the United States, Asia and,
most recently, the United Kingdom (see Note 3 of the Notes to the Condensed Financial Statements). The termination of the contracts and related defaults on its surety bonds and several of its
outstanding bank debts have subjected the Company to severe liquidity problems.

Quarter Ended July 31, 2001 Compared to Quarter Ended July 31, 2000

REVENUES: Revenues for the quarter ended July 31, 2001 was $18.6 million, a decrease of 9.0% or $1.8 million, from $20.4 million as
reported in the quarter ended July 31, 2000. The net decrease in revenues is primarily due to the slow down in construction activities during the latter part of the quarter as a result of the
termination of contracts, the subsequent default of the indemnity agreement with its surety, related defaults on outstanding indebtedness and shortage of working capital. Such

11

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decrease is partially offset by an increase in construction activities for several projects. Revenues in North America increased during the third quarter and reached $13.2 million, or an
increase of 16.9% or $1.9 million from the same quarter last year. The increase is attributable to the increase in construction activities for several contracts prior to their subsequent
termination. Pacific Rim revenues in the third quarter of this year totaled $2.1 million, a decrease of 76.9% as compared to $9.1 million in the same quarter last year. The decrease in
Pacific Rim revenues is primarily due to suspension of construction activities for projects in Hong Kong and China and the decrease in activities for certain projects in the Philippines, Hong Kong and
China that are near completion. The European operations started generating revenues during the first quarter of 2001 and the revenues from such operations for the quarter ended July 31, 2001
amounted to $3.2 million.

GROSS
MARGIN: Gross margin for the quarter ended July 31, 2001, was $0.3 million, or 1.4% of revenue, compared to $3.2 million, or 15.5% of revenue, for the same
quarter in the prior year. The decrease in gross margin is primarily due to the deterioration of margins as a result of the recognition of additional costs caused by the suspension and termination of
certain contracts. Gross margin in North America was 15.2% as compared to 8.9% for the same quarter last year. Gross margin in the Pacific Rim was (120.7%) as compared to 23.6% for the same quarter
last year. This decrease is primarily due to the deterioration of margin and the recognition of additional costs as a result the
suspension of projects in Hong Kong and China. Gross margin for Europe for the quarter ended July 31, 2001 was 23.5%.

SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses for the quarter ended July 31, 2001 totaled $2.8 million, or 15.3% of
revenues, compared to $2.5 million, or 12.7% of revenues, for the same quarter last year. The increase is primarily attributable to the increase in costs incurred to support the growth of
revenues during the current year.

Selling,
general and administrative expenses in North America, the Pacific Rim and Europe in the third quarter of fiscal year 2001 were $1.2 million, $0.8 million, and
$0.3 million, respectively. During the third quarter of last year, selling, general and administrative expenses in North America and Pacific Rim were both the same at $0.9 million.
Unallocated corporate selling, general and administrative expenses totaled $0.6 million for the same quarter in both current and prior years.

WRITE-OFF
OF BILLED AND UNBILLED, AND CLAIM RECEIVABLES: The write-off of billed and unbilled, and claim receivables for the quarter ended July 31, 2001 totaled
$14.5 million. This amount is attributable to the termination of contracts in the United States, Asia and the United Kingdom during and subsequent to the end of the quarter. The Company has
written-off certain project costs incurred and estimated earnings for each of the terminated projects that may not be recovered as such cost were unbilled as of the end of the quarter, in
accordance with the terms of the contract. Such unbilled receivables are classified as Costs and Estimated Profits in Excess of Billings on the Company's financial statements. The amount of billed and
unbilled receivables written-off on terminated contracts amounted to $8.7 million, while the amount of billed and unbilled receivables written off on active or nearly completed
projects amounted to $2.6 million. In addition, a reserve of $3.2 million has been set up in relation to a certain claims receivable from a major supplier on one of the projects because
of the uncertainty of securing new projects and the ability to offset future purchases from that supplier.

RESULTS OF OPERATIONS

Nine Months Ended July 31, 2001 Compared to Nine Months Ended July 31, 2000

REVENUES: Revenues for the nine-month period ended July 31, 2001 increased to $60.8 million, an increase of 28.2% or
$13.4 million, from $47.3 million as reported in the same period last year. The increase is primarily the result of increased project activities in the three geographical regions.

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Revenues in North America increased during the nine-month period to $36.0 million, or an increase of 49.8% or $12.0 million from the same period last year. The increase is
primarily attributable to an increase in construction activities for several projects prior to their subsequent termination. Pacific Rim revenues in the nine-month period of this year
totaled $17.4 million, a decrease of 25.8% compared to $23.4 million in the same period last year. The decrease is primarily due to the suspensions of construction activities for the
projects in Hong Kong and China and the decrease in activities for certain projects in the Philippines, Hong Kong and China that are near completion. The European operations started generating
revenues during the first quarter of 2001, and the revenues for the nine months ended July 31, 2001 amounted to $7.5 million.

GROSS
MARGIN: Gross margin for the nine-month period ended July 31, 2001, was $7.8 million, or 12.8% of revenues, compared to $8.8 million, or 18.7%
of revenue, for the same period last year. The decrease in gross margin is primarily due to the deterioration of margins due to the recognition of additional costs caused by the suspension and
termination of certain contracts.

Gross
margin in North America was 15.7% for the nine-month period ended July 31, 2001 as compared to 10.0% for the same period last year. Gross margin in the
Pacific Rim was 1.8% as compared to 27.5% for the same period last year. This decrease is primarily due to the decrease in margin as a result of the recognition of additional costs caused by the
suspension of construction activities for certain projects in Hong Kong and China. Gross margin for Europe for the nine months ended July 31, 2001 was 24.4%.

SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses for the nine-month period ended July 31, 2001 totaled
$8.8 million, or 14.4% of revenues, compared to $7.0 million, or 14.8% of revenues, for the same period last year. The increase of $1.8 million or 25.6% is attributable to and in
support of the 28.2% increase in revenue as the Company continued to build its infrastructure in anticipation of future growth.

Selling,
general and administrative expenses in North America, Pacific Rim and Europe for the nine- month period ended July 31, 2001 were $3.6 million,
$2.8 million, and $0.8 million, respectively. During the same period last year, selling, general and administrative expenses in North America and Pacific Rim were $2.5 million,
and $2.8 million, respectively. Unallocated Corporate selling, general and administrative expenses totaled $1.6 million for the nine months in both the current and prior years.

BACKLOG.
The Company's backlog totaled $34.8 million at July 31, 2001, of which, $6.7 million was from North America, $17.9 million from Pacific Rim, and
$10.2 million from Europe. Bids outstanding at July 31, 2001 totaled $247.3 million, of which $14.5 million was in North America, $163.0 million was in Pacific Rim,
and $69.8 million was in Europe.

LIQUIDITY AND CAPITAL RESOURCES

The Company manages its liquidity through the allocation of working capital among North American, Pacific Rim and European operations as needed and through the
use of import loans and bank loans that are secured by restricted cash, equipment, inventory and accounts receivable. The Company attempts to structure payment arrangements with its customers to match
costs incurred under projects. To the extent the Company is not able to match payments with costs, it relies on its cash reserves and its credit facilities to meet its working capital needs.

On
June 11, 2001, the Company completed the sale of $2.5 million in principal amount of 81/2% Subordinated Secured Convertible Debentures. The proceeds of
the sale of the debentures were used to increase the Company's working capital. However, due to the termination of several of its contracts and the subsequent default of the Agreement of Indemnity
with its surety, AIG, and the default of the lines of credit with various banks, the Company has encountered severe liquidity problems which impair its ability to meet its current operating needs.
Until recently, the surety has been providing working

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capital to the Company in accordance with its agreement with the Company. In addition, one of the US banks has provided temporary working capital funds to finance part of the Company's working capital
needs. The Company is continuing to negotiate with its surety to provide funding for the bonded projects. Presently, the Company has no available working capital. It is uncertain as to whether the
bank and the surety will continue to provide coverage of the Company's payroll and other working capital requirements.

In
order to remedy the Company's liquidity problem, additional working capital and cash to finance existing construction projects will be required. Failure to obtain such financing
will have a material adverse effect on the Company and may force the Company to cease operations. Management is currently working with various banks and investment bankers to obtain such financing.

OPERATING ACTIVITIES.The Company used $7.9 million in cash in operating activities for the quarter ended
July 31, 2001, compared to $3.3 million for the same quarter of last year. Construction projects typically result in cash in-flows being less than cash outflows until units
are installed on the building, which can be as long as twelve months from the beginning of the project. Cash flow from operating losses was partly offset by funds from a decrease in accounts
receivable of $1.4 million, a decrease in restricted cash of $2.9 million and an increase in accounts payable of $3.8 million.

INVESTING ACTIVITIES.Capital expenditures amounted to $0.3 million of cash during the nine months ended
July 31, 2001, compared to $1.6 million in the same period last year.

FINANCING ACTIVITIES.The Company increased borrowings under its lines of credit by $4.1 million during the nine
months ended July 31, 2001 compared to $3.4 million during the same period last year. The Company completed the sale of $2.5 million in principal amount of 81/2%
Subordinated Secured Convertible Debentures. Minority interest in the equity of the Company's joint venture increased by $0.01 million as compared to an increase of $1.1 million during
the same period last year.

EFFECT OF EXCHANGE RATES.The effect of exchange rates primarily on intercompany receivables caused an increase to
other comprehensive loss of $0.1 million. Exchange rate fluctuations were not a material contributor to cash flows during the quarter ended July 31, 2001.

GENERAL.The Company attempts to structure payment arrangements with its customers to match costs incurred under
projects. To the extent the Company is not able to match costs, it relies on its cash reserves and its credit facility to meet its working capital needs. As of July 31, 2001 and 2000, the
Company had working capital of $7.6 million and $19.6 million, respectively. Presently, for the reasons noted earlier, the Company has no available working capital.

CONTINGENCIES.Due to the termination of several of its contracts during the quarter and subsequent to the end of the
quarter, the Company is contingently liable to its surety, in accordance with the Agreement of Indemnity, to reimburse the surety for losses on expenses it may incur. Such amounts cannot be reasonably
estimated at this point. In addition, due to the contract terminations, the Company has defaulted on all of its outstanding indebtedness to several banks, as more fully described in Note 8 to
the Condensed Consolidated Financial Statements.

See
Note 8 to the Condensed Consolidated Financial Statements for a discussion of environmental liabilities and loss contingency established for a lawsuit.

FACTORS THAT MAY AFFECT FUTURE RESULTS

GENERAL.  The Company's projects are awarded by private or governmental entities in a competitive bidding process. Due to the nature of
the bidding and award process, the Company has experienced, and in the future expects to experience, significant delays in project awards. The timing of a project

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award may not be consistent with the Company's expectations. In addition, numerous factors, many of which are out of the Company's ability to control, have caused and will continue to cause
substantial variations in its results of operations in any quarterly or annual reporting period. Some of these factors are:



Any
of these factors could cause the Company's results of operations to fluctuate significantly from period to period, including on a quarterly basis. In addition, some of these
factors may cause the Company to cease operations or otherwise have a material adverse effect on the Company's business, financial condition and results of operation for any period.

FOREIGN
EXCHANGE RISKS. The Company generally attempts to mitigate foreign exchange risk by entering into contracts providing for payment in United States dollars instead of the local
currency wherever possible. Nonetheless, local currency must be used to pay for local labor, raw materials or other local country costs of operations. The Company currently has contracts denominated
in the Hong Kong dollar, Thai baht, British pound and Philippine peso. Future contracts may be denominated in the currency of other countries. The Company maintains cash, short-term debt
(based on floating interest rates), accounts receivable, and accounts payable in several currencies. The functional currencies in which those accounts are maintained match the functional currencies of
construction contracts in process. Accounts are also maintained in United States dollars in certain countries in which the Company operates. The following table shows the July 31, 2001, United
States

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dollar translated balances of selected non-US dollar denominated current accounts by the currency in which they are maintained:

|(In Millions)
At July 31, 2001           |  | Hong Kong
Dollars |      | Thai
Baht |   | British
Pounds |  | Philippine
Peso
|---------------------------------------- |  | ----------------- | ---- | --------- | - | -------------- |  | ---------------
|Cash and restricted cash                 |  | $                 | 1.32 |           | $ |               |  | $              
|Short-term debt                          |  |                   | 3.93 |           |   |               |  |                
|Accounts payable and accrued expenses    |  |                   | 5.65 |           |   | .03            |  |                
|US dollar exchange rate at July 31, 2001 |  |                   | 7.79 |           |   | 35.39          |  |                
|                                         |  |                   |      |           |   |                |  |                

Materials
and services to perform project contracts are procured globally. Aluminum extrusion is typically the largest material cost and is generally denominated in United States
dollars. Glass purchases are generally denominated in United States dollars unless sourced locally in a foreign locale. The expenses associated with erection services are generally denominated in
local currency. To the extent that foreign currencies weaken against the United States dollar, the Company will experience translation gains or losses due to the revaluation of accounts payable,
accounts receivable and other asset and liability accounts.

The
Company generally attempts to contract to secure compensation for devaluation of local currencies relative to the United States dollar. In these instances, although the Company
may incur translation losses, the Company seeks to offset such losses by increases in the amount of local currency payable to the Company under contract so as to approximate the original United States
dollar equivalent value of the contract. The Company may not be successful in negotiating contracts with terms that maintain a United States dollar equivalency. As of July 31, 2001 the
Company's backlog of non-US dollar based contracts totaled approximately $12.3 million as compared to $63.0 million as of July 31, 2000. There are no contract
provisions to ensure compensation for devaluation of local currency relative to the United States dollar. Exchange rate fluctuations in local currency denominated contracts that do not have a
United States dollar equivalency, and in exchange rates in general, could have a material adverse effect on the Company's financial position, results of operations, and cash flows.

FLUCTUATING
QUARTERLY RESULTS OF OPERATIONS. The Company has experienced, and in the future is expected to continue to experience, substantial variations in its results of operations
because of a number of factors, many of which are outside the Company's control. In particular, the Company's operating results may vary because of downturns in one or more segments of the building
construction industry, changes in economic conditions, the Company's failure to obtain, or delays in awards of, major projects, the cancellation of major projects, changes in construction schedules
for major projects or the Company's failure to timely replace projects that have been completed or are nearing completion. Any of these factors could result in the periodic under-utilization of the
Company's resources and could cause the Company's operating results to fluctuate significantly from period to period, including on a quarterly basis.

FIXED
PRICE CONTRACTS. Most of the Company's $34.8 million backlog at July 31, 2001 consisted of projects being performed on a fixed price basis. In bidding on projects,
the Company estimates its costs, including projected increases in costs of labor, material and services. Despite these estimates, costs and gross profit realized on a fixed price contract may vary
from estimated amounts because of unforeseen conditions or changes in job conditions, variations in labor and equipment productivity over the terms of contracts, higher than expected increases in
labor or material costs and other factors. These variations could have a material adverse effect on the Company's business, financial condition and results of operations for any period.

VARIATIONS
IN BACKLOG; DEPENDENCE ON LARGE CONTRACTS. The receipt, or loss, of individual contracts can significantly affect the Company's backlog. During the third quarter, the

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Company lost several contracts, resulting in substantial decrease of backlog. The Company's future business and results of operations will be adversely affected if it is unable to replace significant
contracts when lost or completed, or if it otherwise fails to maintain a sufficient level of backlog. See "Management's Discussion and Analysis of Financial Conditions and Results of Operations".

DEPENDENCE
ON CONSTRUCTION INDUSTRY. The Company earns virtually all of its revenues in the building construction industry, which is subject to local, regional and national economic
cycles. The Company's revenues and cash flows depend to a significant degree on major construction projects. These projects may be adversely affected by general or specific economic conditions. If
construction activity declines significantly in the Company's principal markets, the Company's business, financial condition and results of operations would be adversely affected.

CAPACITY
CONSTRAINTS; DEPENDENCE ON SUBCONTRACTORS. The Company routinely relies on subcontractors to perform a significant portion of its fabrication, erection and project detailing
to fulfill projects that the Company cannot fulfill in-house due to capacity constraints or that are in markets in which the Company has not established a strong local presence. With
respect to these projects, the Company's success depends on its ability to retain and successfully manage these subcontractors. Any difficulty in attracting and retaining qualified subcontractors on
terms and conditions favorable to the Company could have an adverse effect on the Company's ability to complete these projects in a timely and cost effective manner.

UNION
CONTRACTORS. The Company currently is a party to a number of collective bargaining agreements with various unions representing some of the Company's fabrication and erection
employees. These contracts expire or are subject to expiration at various times in the future. The inability of the Company to renew such contracts could result in work stoppages and other labor
disturbances, which could disrupt the Company's business and adversely affect the Company's results of operations.

REVENUE
RECOGNITION ESTIMATES. The Company recognizes revenues using the percentage of completion accounting method. Under this method, revenues are recognized based on the ratio that
costs incurred to date bear to the total estimated costs to complete the project. Estimated losses on contracts are recognized in full when the Company determines that a loss will be incurred. The
Company frequently reviews and revises revenues and total cost estimates as work progresses on a contract and as contracts are modified. Accordingly, revenue adjustments based upon the revised
completion percentage are reflected in the period that estimates are revised. Although revenue estimates are based upon management assumptions supported by historical experience, these estimates could
vary materially from actual results. To the extent percentage of completion adjustments reduce previously reported revenues, the Company would recognize a charge against operating results, which could
have a material adverse effect on the Company's results of operations for the applicable period.

COMPETITION.
Many small and various large companies offer fabrication, erection and related services that compete with those provided by the Company. Local and regional companies
offer competition in one or more of the Company's geographic markets or product segments. Out of state or international companies may provide competition in any market. The Company competes for every
project it obtains. Although the Company believes customers consider, among other things, the availability and technical capabilities of equipment and personnel, efficiency, safety record and
reputation, price competition usually is the primary factor in determining which qualified contractor is awarded a contract. Competition may result in pressure on pricing and operation margins, and
the effects of competitive pressure in the industry could continue indefinitely. Some of the Company's competitors may have greater capital and other resources than the Company and are well
established in their respective markets. The Company's competitors may substantially increase their commitment of resources devoted to competing aggressively with the Company. The Company may not be
able to compete profitably with its competitors.

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SUBSTANTIAL LIQUIDITY REQUIREMENTS. The Company's operations require significant amounts of working capital to procure materials for contracts to be performed over relatively long
periods, and for purchases and modifications of heavy-duty and specialized fabrication equipment. In addition, the Company's contract arrangements with customers sometimes require the
Company to provide payment and performance bonds to partially secure the Company's obligations under its contracts, which may require the Company to incur significant expenditures prior to receipt of
payments. Furthermore, the Company's customers often will retain a portion of amounts otherwise payable to the Company during the course of a project as a guarantee of completion of that project. To
the extent the Company is unable to receive progress payments in the early stages of a project, the Company's cash flow could be reduced, which could have a material adverse effect on the Company's
business, financial condition and results of operations. For these and other reasons, the Company expects to require additional financing to meet its liquidity needs. Failure to obtain such financing
could have a material adverse effect on the Company.

DEPENDENCE
UPON KEY PERSONNEL. The Company's success depends on the continued services of the Company's senior management and key employees as well as the Company's ability to attract
additional members to its management team with experience in the steel fabrication and erection industry. The unexpected loss of the services of any of the Company's management of other key personnel,
or its inability to attract new management when necessary, could have a material adverse affect upon the Company.

GOVERNMENTAL
REGULATION. Many aspects of the Company's operations are subject to governmental regulations in the United States and in other countries in which the Company operates,
including regulations relating to occupational health and workplace safety, principally the Occupational Safety and Health Act and regulations thereunder. In addition, the Company is subject to
licensure and holds or has applied for licenses in each of the states in the United States in which it operates and in certain local jurisdictions within such states. Although the Company believes
that it is in material compliance with applicable laws and permitting requirements, it may not be able to maintain this status. Further, the Company cannot determine to what extent future operations
and earnings of the Company may be affected by new legislation, new regulations or changes in or new interpretations of existing regulations.

POLITICAL
UNCERTAINTIES. The Company operates in several countries, primarily in North America, Asia and Europe. Economic development in countries in which the Company operates may be
limited by the imposition of measures intended to control economic conditions which may contribute to inadequate development of an infrastructure to support manufacturing and large-scale construction
projects. Changes in governmental policies as well as general economic conditions including interest rates or rates of inflation could have a material adverse affect on the Company's financial
position, results of operations, and cash flows.

ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of July 31, 2001 and October 31, 2000, the Company had no holdings of commodity-based instruments, long-term debt instruments,
forward contracts, futures contracts, firmly committed foreign sales contracts, interest rate swaps, currency swaps, or other items in the nature of derivative financial instruments. The Company
maintains cash, short-term debt (based on floating interest rates), accounts receivable, and accounts payable in several currencies. For a discussion of foreign exchange risks, see
"Factors That May Affect Future Results" in Management's Discussion and Analysis of Financial Conditions and Results of Operations, in Item 2 of this report.

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PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

The
Company is party to several legal proceedings due to its default with its bank financing arrangements and its surety as discussed above in Note 8 of the Condensed Consolidated Financial
Statements.

Item 2.  Changes in Securities and Use of Proceeds.

On
June 11, 2001, the Company completed a $2.5 million subordinated secured convertible debenture financing with New York-based Dimensional Partners L.P. and Dimensional
Partners Ltd. (the "Purchasers"). The funds were to be used as working capital, including to financing the Company's project backlog. Under the terms of the debenture, the Company will pay
interest at 81/2 percent per annum on the notes which mature June 11, 2004. The Purchasers shall have the right at anytime to convert the principal amount of the notes into
shares of the Company's common stock at a conversion price of $3.50 per share, subject to dilution adjustment and adjustment if annual earnings targets are not met. The Purchasers also received
warrants to purchase 389,916 shares of the Company's common stock, subject to adjustment as set forth in the warrants. The exercise price of the warrants is $4.64 per share, and will expire on
June 11, 2006. In addition, the Company agreed to register the shares of Company common stock issuable upon conversion of the notes and exercise of the warrants and to file a
registration statement with the Securities and Exchange Commission registering the shares within 90 days of the closing of the transaction. The Company did not make this filing and is working
with the Purchasers to extend the time to file this registration statement.

ITEM 3.  Defaults Upon Senior Securities in Excess of 5% of Total Assets.

On September 5, 2001, one of the US banks filed a complaint and application for expedited writ of possession in a Circuit Court against the Company.
Under this lawsuit, this bank filed for a judgment against the Company in the amount of $4,232 plus interest and attorneys fees. This bank also obtained a writ of possession in order to take
possession of its collateral consisting of equipment and inventory, and a restraining order against the Company prohibiting it from using the collateral. The Company is currently working with the bank
and has reached an agreement with the bank to resolve the payment of the outstanding debt to allow the Company to release its inventory.

On
August 31, 2001, one of the banks in Hong Kong filed a statutory demand against Flour City Architectural Metals (Asia) Ltd., a wholly owned subsidiary of the Company, for payment of
its outstanding debt in the amount of $2,818. Of the amount outstanding, $1,953 is collateralized by certain certificates of deposit held by the bank. This bank has fully exercised its rights to
setoff against these certificates of deposit, in partial satisfaction of the outstanding debt. The remaining $865 of debt owed to this bank is secured by a deed of assignment of the outstanding
billings on a certain project in Hong Kong. Flour City Architectural Metals (Asia) Ltd. executed this deed of assignment on August 17, 2001, to resolve this matter.

Another
one of the banks in Hong Kong has served the Company a letter of demand requiring the Company to pay its outstanding debts in the amount of $1,914. As one of the conditions to
providing security for this banking facility, the Company's Chairman and Chief Executive Officer has provided a personal guarantee dated June 27, 2001 in the amount of $769. On
September 13, 2001, the bank filed a petition to wind up Flour City Architectural Metals (Asia) Ltd. in accordance with the laws of the Hong Kong Special Administrative Region and
demanded payment of the outstanding debt. The Company is currently working with the bank to resolve this matter.

Under
the covenants of the long-term convertible debt, the Company is in default of certain provisions. The debentures totaling $2,500, which carry interest at
81/2% per annum, were issued on

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June 11, 2001 and will mature on June 11, 2004. Interest is due and payable quarterly on the first day of the month beginning August 1, 2001. These debentures are convertible into
shares of the Company's common stock at a conversion price of $3.50 per share, subject to dilution adjustment and may convert at $2.50 per share if annual earnings targets are not met. The holders of
the note also received warrants to purchase a total of 389,916 shares of the Company's common stock, subject to adjustment as set forth in the warrants. The warrants carry an exercise price of $4.64
per share, and expire on June 11, 2006. The debentures are subordinated to certain present or future senior debt of the Company. In addition, the Company agreed to register the shares of
Company common stock issuable upon conversion of the notes and exercise of the warrants and to file a registration statement with the Securities and Exchange Commission registering the shares
within 90 days of the closing of the transaction. The Company did not make this filing and is working with the Purchasers to extend the time to file this registration statement.

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBIT

Agreement
of Indemnity with AIG

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 2nd day of October 2001.

| |  | FLOUR CITY INTERNATIONAL, INC.                                   
| |  | -----------------------------------------------------------------
| |  | /s/JOHN W. TANGJohn W. Tang
President and Chief Executive Officer
| |  | /s/JOHNSON K. FONGJohnson K. Fong
Chief Financial Officer        

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