Company Quick10K Filing
First Hartford
Price2.45 EPS3
Shares2 P/E1
MCap6 P/FCF-13
Net Debt-9 EBIT18
TEV-3 TEV/EBIT-0
TTM 2018-07-31, in MM, except price, ratios
10-Q 2018-07-31 Filed 2018-09-28
10-K 2018-04-30 Filed 2018-07-30
10-Q 2018-01-31 Filed 2018-03-29
10-Q 2017-10-31 Filed 2017-12-28
10-Q 2017-07-31 Filed 2017-10-10
10-K 2017-04-30 Filed 2017-07-31
10-Q 2017-01-31 Filed 2017-04-24
10-Q 2016-10-31 Filed 2017-01-17
10-Q 2016-07-31 Filed 2016-10-07
10-K 2016-04-30 Filed 2016-08-05
10-Q 2016-01-31 Filed 2016-04-05
10-Q 2015-10-31 Filed 2015-12-28
10-Q 2015-07-31 Filed 2015-09-29
10-K 2015-04-30 Filed 2015-08-05
10-Q 2015-01-31 Filed 2015-04-15
10-Q 2014-10-31 Filed 2015-02-04
10-Q 2014-07-31 Filed 2014-12-12
10-K 2014-04-30 Filed 2014-10-27
10-Q 2014-01-31 Filed 2014-08-07
10-Q 2013-10-31 Filed 2014-06-10
10-Q 2013-07-31 Filed 2014-05-09
10-K 2013-04-30 Filed 2014-03-25
10-Q 2013-01-31 Filed 2013-03-29
10-Q 2012-10-31 Filed 2012-12-19
10-Q 2012-07-31 Filed 2012-10-05
10-K 2012-04-30 Filed 2012-09-06
10-Q 2012-01-31 Filed 2012-04-20
10-Q 2011-10-31 Filed 2012-01-27
10-Q 2011-07-31 Filed 2011-12-14
10-K 2011-04-30 Filed 2011-11-02
10-Q 2011-01-31 Filed 2011-03-31
10-Q 2010-10-31 Filed 2011-01-11
10-Q 2010-07-31 Filed 2010-10-06
10-K 2010-04-30 Filed 2010-08-05
10-Q 2010-01-31 Filed 2010-03-26
10-Q 2009-10-31 Filed 2010-01-13
8-K 2018-10-19

FHRT 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4T. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Removed and Reserved
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

First Hartford Earnings 2011-01-31

Balance SheetIncome StatementCash Flow
2501951408530-252013201520172019
Assets, Equity
352719113-42013201520172019
Rev, G Profit, Net Income
1593-3-9-152013201520172019
Ops, Inv, Fin

10-Q 1 esfirsthartford10q.htm First Hartford 10-Q

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

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 January 31, 2011.

 

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________________________________ to ___________________________________

 

Commission File Number: _______________________________________________________________________________

 

First Hartford Corporation

(Exact name of registrant as specified in its charter)

 

Maine

 01-0185800

 (State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

149 Colonial Road    Manchester, CT

06045-1270

(Address of principal executive offices)

(Zip Code)

 

860-646-6555

 (Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

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.                                                                                                                                                                                                            X Yes    No   

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

                                                                                                                                                             Yes    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer        

Accelerated filer  

 

 

Non-accelerated filer    (Do not check if a smaller reporting company)     

Smaller reporting company X

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                                                                                                                                 Yes   X No

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

2,436,711 as of March 25, 2011   

 

1


 


 


 

 

 

 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I.            FINANCIAL INFORMATION   

PAGE

 

 

Item 1.              Financial Statements

 

 

 

Condensed Consolidated Balance Sheets -

 

January 31, 2011 (unaudited) and April 30, 2010 (audited)

3 - 4

 

 

Condensed Consolidated Statements of Operations and Other

 

Comprehensive Income (Loss) for the Three and Nine Months

 

Ended January 31, 2011 and 2010 (unaudited)  

5

 

 

Condensed Consolidated Statements of Cash Flows for the

 

            Nine Months Ended January 31, 2011 and 2010 (unaudited)    

6 - 7

 

 

Notes to Condensed Consolidated Financial Statements 

8 - 12

 

 

Item 2.              Management’s Discussion and Analysis of Financial Condition  

 

and Results of Operations   

12 - 14

 

 

Item 3.              Quantitative and Qualitative Disclosures About Market Risk 

14

 

 

Item 4T.            Controls and Procedures  

14

 

 

PART II           OTHER INFORMATION

 

 

 

Item 1.              Legal Proceedings

15

 

 

Item 1A.           Risk Factors    

15

 

 

Item 2.              Unregistered Sales of Equity Securities and Use of Proceeds

15

 

 

Item 3.              Defaults Upon Senior Securities   

15

 

 

Item 4.              Removed and Reserved    

15

 

 

Item 5.              Other Information     

15

 

 

Item 6.              Exhibits 

16

 

 

Signatures

17

 

 

Exhibits

18 - 21

 

 

 

 

 

 

 

 

 

 

2


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

 

 

 

 

 

January 31, 2011

 

 

April 30, 2010

 

 

 

 

 

(unaudited)

 

 

(audited)

Real estate and equipment:

 

 

 

 

 

 

 

   Developed properties

 

 

 

$110,901,957

 

 

$131,437,600

 

   Equipment and tenant improvements

 

 

1,542,370

 

1,408,206

 

 

112,444,327

 

132,845,806

 

 

 

 

 

   Less: accumulated depreciation and amortization

 

 

10,646,570

 

 

11,200,570

 

 

 

101,797,757

 

121,645,236

 

 

 

 

 

   Property under construction

 

22,402,379

 

5,525,858

 

 

124,200,136

 

127,171,094

 

 

 

 

 

 

Cash and cash equivalents  

 

 

1,136,308

 

5,179,164

 

 

 

 

 

 

Cash and cash equivalents - restricted

 

645,692

 

 

2,350,003

 

 

 

 

 

Marketable securities 

 

172,216

 

1,323,571

 

 

 

 

 

 

Accounts and notes receivable, less allowance for doubtful accounts of $162,000

 

 

 

 

 

 

 

 

   and $214,000 as of January 31, 2011 and April 30, 2010, respectively

 

 

2,171,770

 

 

2,175,177

 

 

 

Other receivables

 

10,893,420

 

 

15,654,514

 

 

 

 

 

Deposits, escrows, prepaid and deferred expenses, net

 

11,402,302

 

 

10,316,964

 

 

 

 

 

Investments in affiliates

 

 

 

9,665

 

 

9,665

 

 

 

 

 

 

Due from related parties and affiliates

 

 

 

497,412

 

454,467

 

 

 

 

 

Deferred tax assets, net

 

 

1,238,000

 

1,238,000

 

 

 

 

 

 

Total Assets

 

 

 

 

$152,366,921

 

 

$165,872,619

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

3


 


 


 

 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

 

 

LIABILITIES AND SHAREHOLDERS’ DEFICIENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 31, 2011

 

 

April 30, 2010

 

Liabilities:

 

 

 

(unaudited)

 

 

(audited)

 

   Mortgages and notes payable:

 

 

 

 

 

 

 

 

   Construction loans payable

 

 

 

$70,963,788

 

 

$52,683,189

 

   Mortgages payable

 

 

 

65,593,212

 

 

86,613,734

 

   Notes payable

 

 

 

4,853,109

 

 

2,165,321

 

 

141,410,109

 

141,462,244

 

 

 

 

 

 

Accounts payable

 

 

 

2,561,520

 

1,815,727

 

Other payables

 

 

4,092,947

 

10,133,280

 

Accrued liabilities

 

 

3,152,468

 

 

7,454,741

 

Deferred income

 

 

 

149,738

 

 

198,090

 

Derivative liabilities

 

 

 

-0-

 

 

2,677,363

 

Other liabilities

 

 

 

4,487,223

 

 

4,709,772

 

Due to related parties and affiliates

 

 

 

102,752

 

 

62,418

 

Total Liabilities

 

 

 

155,956,757

 

 

168,513,635

 

 

 

 

 

 

 

 

 

 

Shareholders’ Deficiency:

 

 

 

 

 

 

 

 

Preferred stock, $1 par value; $.50 cumulative and convertible;

 

 

  authorized 4,000,000 shares; no shares issued and outstanding

 

 

-0-

 

-0-

 

Common stock, $1 par value; authorized 6,000,000 shares;

 

 

 

 

 

 

  issued 3,298,609 shares

 

3,298,609

 

 

3,298,609

 

Capital in excess of par

 

 

 

5,056,111

 

 

2,176,704

 

Accumulated deficit

 

 

 

(16,035,808)

 

 

(15,118,235)

 

Accumulated other comprehensive loss

 

 

-0-

 

 

(85,414)

Treasury stock, at cost, 861,898 and 270,644 shares as of January 31, 2011 and

 

 

 

 

   and April 30, 2010, respectively

 

 

 

(4,923,836)

 

(2,044,429)

 

Total Company Shareholders’ Deficiency

 

 

 

(12,604,924)

 

 

(11,772,765)

 

Noncontrolling interests

 

 

 

9,015,088

 

9,131,749

 

 

 

 

 

 

Total Shareholders’ Deficiency

 

 

 

(3,589,836)

 

 

(2,641,016)

 

 

 

 

 

 

Total Liabilities and Shareholders’ Deficiency

 

 

 

$152,366,921

 

 

$165,872,619

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

OTHER COMPREHENSIVE (LOSS) INCOME

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Jan. 31, 2011

 

Jan. 31, 2010

 

Jan. 31, 2011

 

Jan. 31, 2010

Operating revenues:

 

 

 

 

 

 

 

     Rental income

$4,551,140

 

$3,090,674

 

$12,903,160

 

$9,767,086

     Service income

521,943

 

1,162,323

 

2,198,172

 

3,902,437

     Sales of real estate

-0-

 

-0-

 

-0-

 

4,300,000

     Other income

4,883

 

106,943

 

5,674

 

411,749

 

5,077,966

 

4,359,940

 

15,107,006

 

18,381,272

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

     Rental expenses

3,601,221

 

2,211,137

 

10,159,477

 

6,706,465

     Services expenses

523,447

 

702,251

 

1,870,198

 

2,231,947

     Cost of sales, real estate

-0-

 

-0-

 

-0-

 

3,750,828

     Selling, general and administrative

539,047

 

838,591

 

2,276,714

 

2,675,381

 

4,663,715

 

3,751,979

 

14,306,389

 

15,364,621

 

 

 

 

 

 

 

 

Income from operations

414,251

 

607,961

 

800,617

 

3,016,651

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

     Interest expense

(1,807,505)

 

(1,633,935)

 

(5,212,619)

 

(4,838,129)

     Other income

229,822

 

9,827

 

371,926

 

245,144

     Gain on derivatives

-0-

 

264,726

 

-0-

 

881,639

     Equity in earnings of unconsolidated subsidiaries

207,298

 

131,698

 

703,569

 

559,793

 

(1,370,385)

 

(1,227,684)

 

(4,137,124)

 

(3,151,553)

 

 

 

 

 

 

 

 

Loss before income taxes

(956,134)

 

(619,723)

 

(3,336,507)

 

(134,902)

 

 

 

 

 

 

 

 

Provision for income taxes

29,629

 

2,041

 

31,979

 

18,802

 

 

 

 

 

 

 

 

Net loss

(985,763)

 

(621,764)

 

(3,368,486)

 

(153,704)

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

61,621

 

125,813

 

484,844

 

198,418

 

 

 

 

 

 

 

 

Net (loss) income attributable to Company

(924,142)

 

(495,951)

 

(2,883,642)

 

44,714

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

Unrealized holding gains on securities during

             

     the period

-0-

 

48,175

 

-0-

 

223,156

 

 

 

 

 

 

 

 

Comprehensive (loss) income

$(924,142)

 

$(447,776)

 

$(2,883,642)

 

$267,870

 

 

 

 

 

 

 

 

Comprehensive income attributable noncontrolling Interests

-0-

 

(32,293)

 

-0-

 

(162,967)

 

             

Comprehensive (loss) income attributable to Company

$-0-

 

$(480,069)

 

$-0-

 

$104,903

 

             

Net (loss) income per share - basic

$(0.35)

 

$(0.16)

 

$(0.99)

 

0.01

 

             

Net (loss) income per share - diluted

$(0.35)

 

$(0.16)

 

$(0.99)

 

0.01

 

 

 

 

 

 

 

 

Shares used in basic per share computation

2,612,138

 

3,027,965

 

2,899,691

 

3,027,998

 

 

 

 

 

 

 

 

Shares used in diluted per share computation

2,612,138

 

3,027,965

 

2,899,691

 

3,027,998

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 


 


 

 

 

 

 

   

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

January 31, 2011

   

 

January 31, 2010

 

Cash flows from operating activities:

 

 

   

 

 

 

  Net loss   

 

$(3,368,486)

 

 

 

$(153,704)

 

Adjustments to reconcile net loss  

 

 

 

 

 

 

 

 

  to net cash used in operating activities:

 

 

 

 

 

 

 

 

  Equity in earnings of unconsolidated subsidiaries

 

(703,569)

 

 

 

 

(559,793)

 

  Gain on sale of real estate

 

-0-

 

 

 

(549,172)

 

  Gain on sales of marketable securities

 

-0-

 

 

 

(245,144)

  Depreciation

 

2,352,722

 

 

 

 

1,912,873

  Amortization

207,746

 

 

 

222,420

  Gain on purchase of noncontrolling interest

(87,718)

 

 

-0-

 

  Gain on derivatives

-0-

 

 

 

(881,639)

 

 

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

  Accounts, notes and other receivables, net

 

4,402,819

 

 

 

3,597,317

 

  Deposits, escrows, prepaid and deferred expenses

 

(1,721,436)

 

 

 

 

(1,697,803)

 

  Cash and cash equivalents – restricted

1,704,311

 

 

 

(1,801,319)

 

Increase (decrease) in:

 

 

 

 

 

 

 

 

  Accrued liabilities

 

(2,037,634)

 

 

 

94,769

 

  Deferred income

 

89,001

 

 

 

13,285

 

  Accounts and other payables

(5,294,540)

 

 

 

(1,230,823)

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

(4,456,784)

 

 

 

 

(1,278,733)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

  Distributions from affiliates, net

481,020

 

 

 

 

201,681

 

 (Investment in) proceeds from sale of marketable securities, net

(160,000)

 

 

 

111,203

 

  Purchase of equipment and tenant improvements

 

(134,164)

 

 

 

 

(41,970)

 

  Proceeds from sale of real estate, net of closing costs

 

-0-

 

 

 

3,750,343

 

  Deconsolidation of CP Associates, LLC

 

(1,891,798)

 

 

 

-0-

 

  Additions to developed properties and properties under construction

 

(16,922,580)

 

 

 

(1,028,975)

Net cash (used in) provided by investing activities

 

(18,627,522)

 

 

 

 

2,992,282

         
Cash flows from financing activities:        
  Limited partners investment in consolidated joint ventures

1,553,927

   

374,664

  Purchase of treasury stock

500,000

   

(315)

 

 

 

 

 

 

 

 

  

 

 

 

  

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 


 


 

 

 

 

 

           

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

 

 

 

 

 

 

Nine Months Ended

 

 

 

January 31, 2011

 

 

 

January 31, 2010

Proceeds from:

 

 

 

 

 

   Construction loans payable

 

18,280,599

 

 

 

2,921,677

 

Principal payments on:

 

 

 

 

 

 

 

 

  Construction loans payable

 

-0-

 

 

 

(3,622,607)

 

  Mortgages payable

 

(788,579)

 

 

 

(694,234)

 

  Notes payable

 

(484,598)

 

 

 

 

(4,558)

 

  Advances to related parties and affiliates, net

 

(19,899)

 

 

 

 

(23,400)

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

19,041,450

 

 

 

(1,048,771)

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(4,042,856)

 

 

 

664,778

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

5,179,164

 

 

 

 

2,760,342

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

$1,136,308

 

 

$3,425,120

 

 

 

 

 

$4,663,547

 

 

$4,431,129

 

Cash paid during the period for income taxes

$65,179

 

 

 

$30,502

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

  Reduction of developed properties resulting from an increase in

 

 

 

 

 

      other receivables related to Edinburg reimbursement agreement

 

$-0-

 

 

 

 

$8,000,000

 

 

 

 

 

  Reduction of accrued liabilities resulting from decrease in capital in

 

 

 

 

      excess of par for common stock to be redeemed in connection

 

 

 

 

 

      with the Kaplan matter

 

$-0-

 

 

 

 

$2,190,349

 

 

 

 

 

 Conversion of accrued liabilities into a note payable in connection

 

 

 

 

     with the redemption of  Kaplan’s common stock

$3,172,385

 

 

$-0-

 

 

 

 

 

Increase in accrued liabilities for the purchase of the remaining 50%

 

 

 

 

   interest in  Rockland Place Developers, LLC

$600,000

 

 

$-0-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                               

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.         Nature of Business and Significant Accounting Policies:

 

Description of Business

 

First Hartford Corporation was incorporated in Maine in 1909 and is engaged in the purchase, development, ownership, management and sale of real estate.

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of First Hartford Corporation, its wholly owned subsidiaries and other controlled subsidiaries (collectively referred to as the “Company”).  The Company reflects noncontrolling interest for the non-owned portions of consolidated subsidiaries.  All significant intercompany transactions and accounts have been eliminated in the condensed consolidated financial statements, including construction revenues and costs of development for the Company’s own use (rental/future sale). 

 

Financial Statement Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments to previously established loss provisions) considered necessary for a fair presentation have been included.  Operating results for the three and nine months ended January 31, 2011 are not necessarily indicative of the results that may be expected for the year ending April 30, 2011.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended April 30, 2010.

           

Because the Company is engaged in the development and sale of real estate at various stages of construction, the operating cycle may extend beyond one year. Accordingly, following the usual practice of the real estate industry, the accompanying condensed consolidated balance sheets are unclassified.

 

Estimates

 

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 amount of assets and liabilities, and the disclosure of contingent assets and liabilities as of 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.

 

Significant Accounting Policies

 

There has been no change in the Company's significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended April 30, 2010, except as discussed below.

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued consolidation guidance, which amended the previous consolidation guidance applicable to variable interest entities.  Under the updated

 

8


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.         Nature of Business and Significant Accounting Policies (continued):

 

Significant Accounting Policies (continued):

 

guidance, the identification of a primary beneficiary of a variable interest entity (“VIE”) is defined as the enterprise that has both of the following characteristics: a) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance, and b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  The application of this updated guidance was effective for the Company as of May 1, 2010.  Based on this updated guidance, the Company determined that it is no longer considered to be the primary beneficiary of the Company’s joint venture, CP Associates, LLC (“CP Associates”).  As a result of the initial application of this updated guidance, the Company has deconsolidated CP Associates as of May 1, 2010 and has measured its 50% retained interest in CP Associates at the carrying amount of the Company’s retained interest had this updated guidance been effective when CP Associates was initially formed.  The difference between the net amount removed from the Company’s balance sheet and the amount of the Company’s 50% retained interest in CP associates has been recognized as a cumulative effect adjustment to the Company’s beginning equity as of May 1, 2010 (see Note 2).

 

Net Income (Loss) Per Common Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted net income (loss) per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method).

 

2.         Investments in Affiliated Partnerships:

 

On May 1, 2010, the Company deconsolidated CP Associates based on updated consolidation guidance issued by the FASB.  The following is a summary of the carrying amount of CP Associates’ assets and liabilities and the resulting cumulative effect adjustment to the Company’s equity as of May 1, 2010.

 

Assets     

$21,685,455 

Liabilities    

23,238,912 

Equity: Cumulative effect adjustment      

($1,553,457)

  

 

At April 30, 2010, the Company reported approximately $1,892,000 of unrestricted cash and cash equivalents belonging to CP Associates, LLC.  Due to the deconsolidation, it is no longer included in the Company’s balance sheet subsequent to April 30, 2010.

 

The following is a summary of the effects of CP Associates included in the Company’s condensed consolidated statement of operations for the three and nine month period ended January 31, 2010.

 

                                          

 

Three Months    Nine Months

Operating revenue   

 $779,390   $2,347,573

Expenses    

474,647    1,950,282

Gain on derivatives    

600,892   1,217,805

Net income  

$905,635   $1,615,096

 

 

9


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

2.         Investments in Affiliated Partnerships (continued):

 

The Company has prospectively accounted for its retained interest in CP Associates under the equity method of accounting.  In addition, the Company also accounts for its 50% interest in Cranston Parkade, LLC and Dover Parkade, LLC under the equity method of accounting.  The following is a summary of the unconsolidated operating results of CP Associates for the three and nine month period ended January 31, 2011 and of Cranston Parkade, LLC and Dover Parkade, LLC for the three and nine month periods ended January 31, 2011 and 2010.

 

                                                           

 

                   

Three Months Ended   Nine Months Ended
 

 

January 31, 2011    January 31, 2011
 

 

     
 

CP Associates, LLC

     
 

            Revenues

$  779,506   $2,336,216
 

            Expenses 

591,593   1,849,382
 

            Gain (Loss) on derivatives 

1,198,046    (149,163)
 

            Net Income     

$1,385,959    $   337,671

 

 

 

                               

Three Months Ended Nine Months Ended
 

 

 January 31

January 31
 

 

             
 

 

2011   2010    2011   2010
 

 

             
 

Cranston Parkade, LLC

             
 

            Revenues

$1,121,660   $1,193,022   $3,613,796   $3,596,659
 

            Expenses 

  1,003,989    1,024,685   3,022,444   3,043,108
 

            Net Income   

 $   117,671   $   168,337   $   591,352   $   553,551
 

 

             
 

Dover Parkade, LLC

             
 

            Revenues  

$654,611   $619,310    $1,937,163    $1,738,461
 

            Expenses    

599,845   524,489    1,663,418   1,575,791
 

            Net Income 

$  54,766   $  94,821   $  273,745    $   162,670
 

 

             

 

The Company’s investments in CP Associates, Cranston Parkade and Dover Parkade have been recorded at cost and have been subsequently adjusted for gains, losses and distributions such that the carrying value is less than zero. Although the Company no longer considers itself liable for the obligations of Cranston Parkade and Dover Parkade, it had not previously discontinued applying the equity method on these investments since the Company had previously considered itself to be committed to providing financial support to these partnerships. Other liabilities in the condensed consolidated balance sheets represents the negative carrying value of these investments.

 

The Company received a $210,000 distribution from C.P. Associates during the nine months ended January 31, 2011.  The Company recorded the distribution as a reduction of its investment in C.P. Associates, which has resulted in the carrying value of this investment being less than zero.  The Company reduced the carrying value of its investment in C.P. Associates below zero on the basis that the Company is committed to providing financial support to C.P. Associates due to a personal guarantee made by Mr. Ellis, President of the Company, on a mortgage obtained by C.P. Associates.  The personal guarantee made by Mr. Ellis is 5% of the outstanding balance of the mortgage (approximately $525,000 as of January 31, 2011) and would be recovered by Mr. Ellis from the Company in the event Mr. Ellis is required to perform under the guarantee.  The Company will record any future distributions from C.P. Associates as a further reduction in its investment up to the amount of the guarantee.

 

10


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

3.         Income Taxes:

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years before May 1, 2007. State jurisdictions could remain subject to examination for longer periods.

 

Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or benefits are based on the changes in the deferred tax assets and liabilities from period to period.

 

In assessing the need for a valuation allowance, the Company estimates future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable income levels. In the event the Company were to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, it would reduce such amounts through a charge to income in the period in which that determination is made. Conversely, if the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, it would decrease the recorded valuation allowance through an increase to income in the period in which that determination is made.

 

The Company accounts for uncertain income tax positions in accordance with the accounting guidance in FASB ASC topic 740, Income Taxes. Using that guidance, tax positions are initially recognized by the Company in the consolidated financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. The Company’s policy is to recognize interest and penalties accrued on any uncertain income tax positions as a component of income tax expense.

 

The Company will only recognize a deferred tax asset when, based upon available evidence, realization is more likely than not. In making this determination, the Company has considered both available positive and negative evidence including, but not limited to, cumulative losses in recent years, future taxable income and prudent and feasible tax planning strategies. As of January 31, 2011 and April 30, 2010, the Company concluded that it was more-likely-than-not that the Company would realize $1,238,000 in deferred tax assets. Accordingly, the Company increased its valuation allowance by approximately $556,000 during the nine months ended January 31, 2011. The Company has federal net operating loss carry-forwards totaling approximately $15 million at January 31, 2011 that are available to offset future federal taxable income through various periods expiring between 2012 and 2026.

 

4.         Legal:

           

On November 29, 2010, the Company purchased 591,254 shares of common stock beneficially owned by Richard Kaplan.  The terms of repayment as set by the court consisted of a $500,000 initial payment made on November 23, 2010 and a secured note for the balance.  There will be 20 quarterly payments of approximately $119,000 each plus interest at the statutory rate (approximately .05%) for the first 12 months and thereafter based on the average rate First Hartford pays to its first mortgage creditors.  There will be a balloon payment of approximately $790,000 for pre-judgement interest from September 15, 2005 through November 29, 2010.

 

11


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

4.         Legal (continued):

            The first quarterly payment was made on February 1, 2011.

The Company will pay the quarterly payment from a dedicated account, which will retain the net cash flow of three of the Company’s shopping centers.  It is expected that the cash flow generated from these shopping centers will adequately fund the repayment of the note. 

Although the Company has given additional collateral in the form of the aforementioned 591,254 shares of repurchased common stock and a security interest in certain of the Company’s other assets, it is highly unlikely in management’s opinion that any of it will be utilized.  On December 14, 2010, the Company filed an appeal with the United States Court of Appeal for the First Circuit.

5.         Acquisition of Additional Interest:

On November 30, 2010, Connolly and Partners, LLC (a 75% owned subsidiary consolidated by the Company) acquired the remaining 50% interest in Rockland Place Developers, LLC) (previously 50% owned and consolidated by Connolly and Partners, LLC) for a purchase price of $600,000. The fair value of the additional interest acquired was estimated to be $687,718, which resulted in the Company recognizing a gain of $87,718. 

 

Item 2.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

 

The financial and business analysis below provides information which the Company believes is relevant to an assessment and understanding of the Company’s financial position and results of operations.  This financial and business analysis should be read in conjunction with the condensed consolidated financial statements and related notes.

 

The following discussion and certain other sections of this Report on Form 10-Q contain statements reflecting the Company’s views about its future performance and constitutes “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.  These views may involve risks and uncertainties that are difficult to predict and may cause the Company’s actual results to differ materially from the results discussed in such forward-looking statements.  Readers should consider how various factors including changes in general economic conditions, cost of materials, interest rates and availability of funds, and the nature of competition and relationships with key customers may affect the Company’s performance.  The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or other.

 

Critical Accounting Policies

 

The discussion and analysis of financial condition and results of operations is based upon the condensed consolidated financial statements contained in Item 1 in this Quarterly Report.  The condensed consolidated financial statements include the accounts of the Company and its controlled affiliates.  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 and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period.  Actual results could differ from those estimates.

 

The discussion included in Item 7 of our Annual Report on Form 10-K for the year ended April 30, 2010 under the subheading "Critical Accounting Policies and Estimates" is still considered current and applicable, and is hereby incorporated into this Quarterly Report on Form 10-Q.

 

12


 


 


 

 

 

 

Item 2.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

                        CONDITION AND RESULTS OF OPERATIONS (continued):

 

Results of Operations

 

Rental Income

 

Increase in rental income for the three and nine month periods ended January 31, 2011 compared to the three and nine month periods ended January 31, 2010 was mainly due to the acquisition of Clarendon Tower’s, a low income residential apartment complex during April 2010, offset partially by the deconsolidation of CP Associates as of May 1, 2010.

 

Service Income

 

Decrease in service income (approximately $640,000 and $1,704,000) for the three and nine month periods ended January 31, 2011 compared to the three and nine month periods ended January 31, 2010 was mainly due to a slowdown in our CVS Pharmacy business.  Additionally, management fees from Clarendon Towers for the current periods were eliminated in consolidation.  Prior to acquisition such management fees were included in service income.

 

Rental Expense

 

The increase in rental expense for the three and nine month periods ended January 31, 2011 was a direct result of the inclusion of Clarendon Towers less the deconsolidation of the rental expense of C P Associates.

 

Service Expense

 

Service expense decreased approximately $179,000 and $362,000 for the three and nine months period ended January 31, 2011.  This reduction is mostly from a decline in activity related to our CVS Pharmacy business, which is consistent with the decline in our income generated from this business.

 

Gain (Loss) on Derivative 

 

The gain (loss) on derivatives relates to the change in fair value of interest rate swaps held by CP Associates, which was deconsolidated as of May 1, 2010.

 

Interest Expense

 

The increase in interest expense for the three and nine months ended January 31, 2011 is due to the deconsolidation of C P Associates offset by the addition of Clarendon Towers.

 

Capital Resource and Liquidity

 

The Company ended the period with approximately $1,136,000 of unrestricted cash and cash equivalents.  Unrestricted cash and cash equivalents include approximately $816,000 belonging to less than wholly-owned consolidated partnerships (Rockland Place, LP, and Clarendon Hill Somerville, LP).  Funds received from CVS Pharmacy, which are to be paid out in connection with CVS developments amounted to approximately $645,000 and is included in restricted cash and cash equivalents.

 

At April 30, 2010, the Company reported approximately $1,892,000 of unrestricted cash and cash equivalents belonging to CP Associates, LLC.  Due to the deconsolidation, it is no longer included in the Company’s balance sheets.

 

 

 

13


 


 


 

 

 

 

Item 2.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

                        CONDITION AND RESULTS OF OPERATIONS (continued):

 

Capital Resource and Liquidity (continued):

 

The following schedule outlines our long-term obligations.

 

 

Contractual Obligations

Total

Less Than

1 year

1-3 years

3-5 years

More Than

5 years

 

 

 

 

 

 

Long-Term Debt

$137,687,724

$20,955,349

$41,139,465

$15,024,224

$60,568,686

 

 

 

 

 

 

Short-Term Debt

550,000

550,000

 

 

 

 

 

 

 

 

 

Stock Repurchase-Note

3,172,385

476,000

952,000

952,000

792,385

 

 

 

 

 

 

Purchase Obligations

1,071,000

1,071,000

 

 

 

 

 

 

 

 

 

Total

$142,481,109

$23,052,349

$42,091,465

$15,976,224

$61,361,071

 

Item 3.             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 4T.           CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated  to our management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15b of the Exchange Act. Based on this Evaluation, our President and Treasurer concluded that because of weaknesses in our control environment, our Disclosure Controls were not fully effective as of the end of the period covered by this report. Notwithstanding weaknesses in our control environment, as of January 31, 2011, we believe that the condensed consolidated financial statements contained in this report present fairly the Company’s financial condition, results of operations and cash flows for the periods presented.

 

Changes in Internal Control Over Financial Reporting

 

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period covered by this report, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

 

 

 

 

14


 


 


 

 

 

 

PART II           OTHER INFORMATION

 

Item 1.             LEGAL PROCEEDINGS

 

On November 29, 2010, the Company purchased 591,254 shares of common stock beneficially owned by Richard Kaplan.  The terms of repayment as set by the court consisted of  a $500,000 initial payment made on November 23, 2010 and a secured note for the balance.  There will be 20 quarterly payments of approximately $119,000 each plus interest at the statutory rate (approximately .05%) for the first 12 months and thereafter based on the average rate First Hartford pays to its first mortgage creditors.  There will be a balloon payment of approximately $790,000 for pre-judgement interest from September 15, 2005 through November 29, 2010.

The first quarterly payment was made on February 1, 2011.

The Company will pay the quarterly payment from a dedicated account, which will retain the net cash flow of three of the Company’s shopping centers.  It is expected that the cash flow generated from these shopping centers will adequately fund the repayment of the note. 

Although the Company has given additional collateral in the form of the aforementioned 591,254 shares of repurchased common stock and a security interest in certain of the Company’s other assets, it is highly unlikely in management’s opinion that any of it will be utilized.  On December 14, 2010, the Company filed an appeal with the United States Court of Appeal for the First Circuit.

Item 1A.           RISK FACTORS

 

                        Smaller reporting companies are not required to provide the information required by this item.

 

Item 2.             UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

                        None

 

Item 3.             DEFAULTS UPON SENIOR SECURITIES

 

                        None

 

Item 4.             REMOVED AND RESERVED

 

Item 5.             OTHER INFORMATION

                        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

(a)    The annual meeting of the Company was held on November 9, 2010.

 

(b)    Elected as Directors:       Neil H. Ellis, David Harding and Stuart Greenwald

 

(c)

 

Director

Votes For

Votes Withheld

Abstention

 

Ellis

1,880,304

6,258

None

 

Harding

1,880,604

5,958

None

 

Greenwald

1,880,604

5,958

None

 

 

 

 

 

 

 

16


 


 


 

 

 

 

Item 6.             EXHIBITS

 

a)         Exhibits:

 

Exhibit 31.1      Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.

 

Exhibit 31.2      Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.

 

Exhibit 32.1      Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.

 

Exhibit 32.2      Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.

 

 

 

 

 

 

 

 

 


17

 


 


 

 

 

 

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.

 

 

First Hartford Corporation

 

(Registrant)

 

 

 

/s/ Neil H. Ellis

            March 31, 2011   

______________________________

Date 

Neil H. Ellis B President and

 

Chief Executive Officer

 

 

 

/s/ Stuart I. Greenwald

             March 31, 2011

______________________________

Date

Stuart I. Greenwald B Treasurer

 

and Chief Financial Officer