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 Condition and Results of Operations
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Concluded):
Item 3. Quantative and Quallitative Disclosures About Market Risk
Item 4. 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. Mine Safety Disclosures
Part II Other Information (Concluded):
Item 5. Other Information
Item 6. Exhibits
EX-31 exhibit31-1.htm
EX-31 exhibit31-2.htm
EX-32 exhibit32-1.htm

First Hartford Earnings 2014-07-31

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 fhc10q.htm Prepared by EdgarX.com

 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 July 31, 2014.

 

[  ]   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:                  0-8862                                                                                          

 

                                                    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                                                   06042                                           
(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 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          No X

 

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 X

 

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          No X

 

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.

2,411,965 as of November 25, 2014

 

 


FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I.

FINANCIAL INFORMATION

PAGE

 

Item 1.

Financial Statements (Unaudited)

 

 

 

Condensed Consolidated Balance Sheets –

                July 31, 2014 and April 30, 2014

 

 

3 - 4

 

Condensed Consolidated Statements of Operations for the

                Three Months Ended July 31, 2014 and 2013

 

 

5

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for

                the Three Months Ended July 31, 2014 and 2013

 

6

 

Condensed Consolidated Statements of Cash Flows for the

                Three Months Ended July 31, 2014 and 2013

 

 

7 - 8

 

Notes to Condensed Consolidated Financial Statements

 

9 - 13

Item 2.

Management’s Discussion and Analysis of Financial Condition

                and Results of Operations

 

 

13 - 15

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

16

Item 4.

Controls and Procedures

 

16

PART II.

OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

16

Item 1A.

Risk Factors

 

16

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

16

Item 3.

Defaults Upon Senior Securities

 

16

Item 4.

Mine Safety Disclosures

 

16

Item 5.

Other Information

 

17

Item 6.

Exhibits

17

 

 

Signatures

18

 

 

Exhibits

19 - 21

 

2

 


 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

ASSETS

 

July 31, 2014

 

April 30, 2014

 

 

 

 

Real estate and equipment:

 

 

 

     Developed properties and property under construction
          (including $71,650,082 in July and $71,574,105 in April for VIEs)

$204,197,144

 

$197,401,169

     Equipment and tenant improvements (including $2,338,997 in July and

          $2,314,849 in April for VIEs)

3,650,754

 

3,639,292

 

207,847,898

 

201,040,461

 

 

 

 

     Less accumulated depreciation and amortization (including $10,281,580 in

          July and $9,776,315 in April for VIEs)

 

35,536,314

 

 

34,260,586

 

172,311,584

 

166,779,875

 

 

 

 

Cash and cash equivalents (including $379,711 in July and $535,230 in April

     for VIEs)

5,953,738

 

6,500,885

 

 

 

 

Cash and cash equivalents – restricted (including $409,380 in July and

     $441,877 in April for VIEs)

600,052

 

769,231

 

 

 

 

Marketable securities (including $3,052,008 in July and $2,936,778 in April for VIEs)

5,138,349

 

4,906,248

 

 

 

 

Accounts and notes receivable, less allowance for doubtful accounts of

     $451,900 as of July 31, 2014 and $341,600 as of April 30, 2014 (including

     $123,171 in July and $87,049 in April for VIEs)

 

 

4,268,993

 

 

 

4,266,706

 

 

 

 

Other receivables

11,776,122

 

16,842,826

 

 

 

 

Deposits and escrows (including $1,584,853 in July and $1,768,581 in April for VIEs)

3,872,123

 

3,907,239

 

 

 

 

Prepaid expenses (including $335,602 in July and $223,453 in April for VIEs)

1,122,035

 

925,906

 

 

 

 

Deferred expenses (including $1,044,025 in July and $1,053,585 in April for  VIEs)

3,087,940

 

3,103,178

 

 

 

 

 

 

 

 

Investments in affiliates

100

 

100

 

 

 

 

Due from related parties and affiliates

165,647

 

165,206

 

 

 

 

Total Assets

$208,296,683

 

$208,167,400

 

 

See accompanying notes.

 

3


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Unaudited)

 

LIABILITIES AND EQUITY (DEFICIENCY)

 

 

July 31, 2014

 

April 30, 2014

Liabilities:

 

 

 

Mortgages and notes payable:

 

 

 

   Construction loans payable

$54,013,444

 

$49,316,486

   Mortgages payable (including $53,193,064 in July and $53,429,857 in April for VIEs)

144,859,083

 

148,308,158

   Notes payable (including $1,704,697 in July and in April for VIEs)

4,440,687

 

1,704,697

 

203,313,214

 

199,329,341

 

 

 

 

Accounts payable (including $788,757 in July and $488,140 in April for VIEs)

3,462,933

 

2,317,036

Other payables

9,931,858

 

14,845,606

Accrued liabilities (including $3,180,943 in July and $3,225,028 in April for VIEs)

5,326,150

 

5,467,707

Accrued cost of derivatives

2,458,413

 

2,411,173

Deferred income (including  $246,196 in July and $247,856 in April for VIEs)

533,862

 

855,121

Other liabilities

2,227,944

 

1,911,832

Due to related parties and affiliates (including $402,961 in July and $399,214 in April for VIEs)

474,814

 

471,114

 

227,729,188

 

227,608,930

 

 

 

 

Equity (Deficiency):

 

 

 

First Hartford Corporation:

 

 

 

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; outstanding 2,412,002 shares as of  July 2014 and as of April 2014

3,298,609

 

3,298,609

Capital in excess of par

5,198,928

 

5,198,928

Accumulated deficit

(26,438,707)

 

(27,222,017)

Accumulated other comprehensive income

79,951

 

34,313

Treasury stock, at cost, 886,607 shares as of July 31, 2014 and April 30, 2014

 (4,964,884)

 

(4,964,884)

Total First Hartford Corporation

(22,826,103)

 

(23,655,051)

Noncontrolling interests

3,393,598

 

4,213,521

 

 

 

 

Total Shareholders’ Equity (Deficiency)

(19,432,505)

 

(19,441,530)

 

 

 

 

Total Liabilities and Shareholders’ Equity (Deficiency)

$208,296,683

 

$208,167,400

 

 

See accompanying notes.

4

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

July  31, 2014

 

July  31, 2013

Operating revenues:

 

 

 

  Rental income

$7,587,625

 

$6,906,652

  Service income

2,121,557

 

995,514

  Sales of real estate

-0-

 

1,812,596

  Other income

618,066

 

325,160

 

10,327,248

 

10,039,922

 

 

 

 

Operating costs and expenses:

 

 

 

  Rental expenses

5,201,961

 

4,556,621

  Service expenses

1,096,280

 

730,744

  Cost of real estate sales

-0-

 

1,199,901

  Selling, general and administrative expenses

1,340,364

 

1,163,187

 

7,638,605

 

7,650,453

 

 

 

 

Income from operations

2,688,643

 

2,389,469

 

 

 

 

Non-operating income (expense):

 

 

 

  Interest expense

(2,502,915)

 

(2,705,143)

  Other income

152,998

 

80,000

  Gain (loss) on derivatives

(47,240)

 

724,789

  Equity in earnings of unconsolidated subsidiaries

283,889

 

164,951

 

(2,113,268)

 

(1,735,403)

 

 

 

 

Income before income taxes

575,375

 

654,066

 

 

 

 

Income taxes

61,937

 

23,422

 

 

 

 

Consolidated net income

513,438

 

630,644

 

 

 

 

Net (income) loss attributable to noncontrolling interests

269,872

 

(85,781)

 

 

 

 

Net income attributable to First Hartford Corporation

$783,310

 

$544,863

 

 

 

 

Net income per share – basic

$0.32

 

$0.23

 

 

 

 

Net income per share – diluted

$0.32

 

$0.21

 

 

 

 

Shares used in basic per share computation

2,412,002

 

2,414,925

 

 

 

 

Shares used in diluted per share computation

2,412,002

 

2,572,333

 

See accompanying notes.

5

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended

 

July  31, 2014

 

July 31, 2013

        

Consolidated net income

$513,438

 

$630,644

 

 

 

 

Other comprehensive income, net of income taxes:

 

 

 

    Unrealized gain (loss) on marketable securities

118,006

 

(448,390)

 

 

 

 

    Other comprehensive income

631,444

 

182,254

 

 

 

 

Amounts attributable to noncontrolling interests:

 

 

 

    Net loss (income)

269,872

 

(85,781)

    Unrealized (gain) loss on marketable securities

(72,368)

 

273,839

 

 

 

 

 

197,504

 

188,058

 

 

 

 

Comprehensive income attributable to First Hartford Corporation

$828,948

 

$370,312

 

 

See accompanying notes.

6

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended

 

July 31, 2014

 

July 31, 2013

Operating activities:

 

 

 

 

 

 

 

  Consolidated net income

$513,438

 

$630,644

 

 

 

 

  Adjustments to reconcile consolidated net loss to net cash provided by

  operating activities:

 

 

 

        Equity in earnings of unconsolidated subsidiaries, net of distributions of

                      $600,000 in 2014 and $45,000 in 2013

316,112

 

(119,951)

       Gain on sale of property

-0-

 

(612,695)

       Depreciation

1,275,295

 

1,276,773

       Amortization

100,035

 

111,692

 

 

 

 

  Changes in operating assets and liabilities:

 

 

 

       Accounts, notes and other receivables

5,064,417

 

397,893

       Deposits and escrows

35,116

 

(149,004)

       Prepaid expenses

(196,129)

 

(276,885)

       Deferred expenses

(84,797)

 

(360,884)

       Cash and cash equivalents – restricted

169,179

 

446,399

       Accrued liabilities

(141,557)

 

(136,412)

       Accrued cost of derivatives

47,240

 

(724,789)

       Deferred income

        (321,259)

 

           23,247

       Accounts and other payables

(3,767,851)

 

(604,539)

 

 

 

 

Net cash provided by (used in) operating activities

3,009,239

 

(98,511)

 

 

 

 

Investing activities:

 

 

 

  Investments in marketable securities

(114,095)

 

(2,317,131)

  Proceeds from sale of marketable securities

-0-

 

1,283,574

  Purchase of equipment and tenant improvements

(11,462)

 

(108,609)

  Proceeds from sale of real estate

-0-

 

1,812,596

  Additions to developed properties and properties under construction

(6,795,541)

 

(334,416)

 

 

 

 

  Net cash (used in) provided by investing activities

(6,921,098)

 

336,014

 

 

See accompanying notes.

7

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

 

 

Three Months Ended

 

July 31, 2014

 

July 31, 2013

Financing activities:

 

 

 

  Distributions to noncontrolling interests

$(622,420)

 

$(450,354)

  Purchase of treasury stock

-0-

 

(5,285)

 

 

 

 

  Proceeds from:

 

 

 

    Construction loans payable

4,696,958

 

-0-

 Principal payments on:

 

 

 

    Construction loans payable

-0-

 

(561,738)

    Mortgage loans payable

(713,085)

 

(663,630)

    Notes payable

-0-

 

(249,106)

Advances to related parties and affiliates, net

3,259

 

5,769

 

 

 

 

Net cash provided by(used in) financing activities

3,364,712

 

(1,924,344)

 

 

 

 

Net change in cash and cash equivalents

(547,147)

 

(1,686,841)

 

 

 

 

Cash and cash equivalents, beginning of period

6,500,885

 

8,346,956

 

 

 

 

Cash and cash equivalents, end of period

$5,953,738

 

$6,660,115

 

 

 

 

 

Cash paid during the period for interest

$2,537,560

 

$2,696,086

 

 

 

 

Cash paid during the period for income taxes

$112,313

 

$183,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

8

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.       Business and Significant Accounting Policies:

 

Business

 

First Hartford Corporation was incorporated in Maine in 1909 and is engaged in the purchase, development, ownership, management and sale of real estate, all of which is considered a single segment.  The Company has a second segment “Fee for Service” in which the Company is engaged as a preferred developer for CVS and Cumberland Farms, Inc. (see Service Income to follow).

 

Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements include the accounts of First Hartford Corporation (the “Company”), its wholly owned subsidiaries, and all other entities in which the Company has a controlling financial interest, including those where the Company has been determined to be a primary beneficiary of a variable interest entity or meets certain criteria as a sole general partner or managing member in accordance with the consolidation guidance of the Financial Accounting Standards Board Accounting Standards Codification.  As such, included in the unaudited condensed consolidated financial statements are the accounts of Rockland Place Apartments Limited Partnership and Clarendon Hill Somerville Limited Partnership.  The Company’s ownership percentage in these variable interest entity partnerships is nominal.  All significant intercompany balances and transactions have been eliminated.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8.03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments to previously accrued loss provisions) considered necessary for a fair presentation have been included.  Operating results for the interim periods are not necessarily indicative of the results that may be expected for the entire year.  The condensed consolidated balance sheet as of April 30, 2014 was derived from the audited financial statements for the year then ended.  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, 2014.

 

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.

 

Currently, there are no Accounting Standards Update (ASUs) that the Company is required to adopt which are likely to have a material effect on its financial statements.

 

9

 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.       Business and Significant Accounting Policies (continued):

 

Net Income (Loss) Per Common Share

 

Basic 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 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).

       

There were no options outstanding at July 31, 2014.  In the three month period ended July 31, 2013, 157,408 dilutive shares were added to the weighted number of shares outstanding to calculate the diluted net income per share.

 

Financial Instruments and Fair Value

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts payable, accrued expenses, and debt.  The fair values of accounts receivable, accounts payable and accrued expenses are estimated to approximate their carrying amounts because of their relative short-term nature.  In general, the carrying amount of variable rate debt approximates its fair value.  Further, the carrying amount of fixed rate debt approximates fair value since the interest rates on the debt approximates the Company’s current incremental borrowing rate.  Marketable securities consist of equity securities and are stated at fair value based on the last sale of the period obtained from recognized stock exchanges (i.e. Level 1). Accumulated other comprehensive (loss) income consists solely of unrealized gains (losses) on marketable securities.

 

Segment Information

 

The factors used by the Company to identify reportable segments include differences in products and services and segregated operations within the Company. The first segment, “Real Estate Operations” participates in the purchase, development, management, ownership and the sale of real estate. Within its second segment, “Fee for Service”, the Company provides preferred developer services to CVS and Cumberland Farms Inc. in certain geographic areas. Summary financial information for the two reportable segments are approximately as follows:

 

 

 

Three Months Ended

 

 

July 31,

 

 

2014

 

2013

 

 

 

 

 

Real Estate Operations

 

$8,311,089

 

$9,161,574

Fee for Service

 

2,016,159

 

878,348

Total

 

$10,327,248

 

$10,039,922

 

 

 

 

 

Operating Cost and Expense:

 

 

 

 

Real Estate Operations

 

$5,201,961

 

$5,756,522

Fee for Service

 

1,096,280

 

730,744

SGA

 

1,340,364

 

1,163,187

Total

 

$7,638,605

 

$7,650,453

 

10

 


 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.       Business and Significant Accounting Policies (concluded):

 

Segment Information (concluded):

 

All costs after operating expenses are costs of the real estate operation.

 

The only assets in the balance sheet belonging to the Fee for Service segment is restricted cash of approximately $191,000 on July 31, 2014 and $351,000 on April 30, 2014 and receivables of approximately $9,988,000 on July 31, 2014 and $15,054,000 on April 30, 2014.

 

2.       Consolidated Variable Interest Entities and Investments in Affiliated Partnerships:

 

The Company has consolidated both Rockland and Clarendon based on the express legal rights and obligations provided to it by the underlying partnership agreements and its control of their business activity.  The assets of these partnerships that can only be used to settle their obligations and their liabilities for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company are shown parenthetically in the line items of the consolidated balance sheets.  A summary of the assets and liabilities of Rockland and Clarendon included in the Company’s condensed consolidated balance sheets follows:

 

 

July 31, 2014

 

April 30, 2014

 

 

 

 

Real estate and equipment, net

$66,352,564

 

$66,786,598

Other assets

6,912,941

 

7,060,316

Total assets

73,265,505

 

73,846,914

Intercompany profit elimination

(3,056,408)

 

(3,085,303)

Total assets

$70,209,097

 

$70,761,611

 

 

 

 

Mortgages and other notes payable

$54,897,762

 

$55,134,554

Other liabilities

4,197,544

 

3,961,024

Total liabilities

$59,095,306

 

$59,095,578

 

The Company accounts for its 50% ownership interest in Dover Parkade, LLC under the equity method of accounting.  A summary of the operating results for this entity follows:

 

 

 

Three Months Ended

 

 

July 31

 

 

2014

 

2013

 

 

 

 

 

Dover Parkade, LLC

 

 

 

 

     Revenue

 

$642,144

 

$768,582

     Expenses

 

(475,054)

 

(528,678)

Defeasance & refinancing

 

(799,313)

 

-0-

Net(Loss) Income

 

($632,223)

 

$239,904

 

 

 

 

11


FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

3.       Income Taxes:

As of April 30, 2014 the Company has Federal net operating loss carryforwards in excess of $15,000,000 that are available to offset future Federal taxable income through various periods expiring between 2016 and 2028. The Company has concluded that it is more likely than not that it will not realize any deferred income tax assets in the near term.

4.       Litigation:

There has been no change in Litigation since April 30, 2014.

5.       Subsequent Events:

On August 15, 2014 the Company refinanced the mortgage on their shopping center in West Springfield, MA in the amount of $10,500,000.  A prior mortgage with a remaining balance of $7,778,424 with an interest rate of 5.52% was paid from the proceeds.  The new mortgage has an interest rate of 4.60% with a 30 year amortization and duration of 10 years, calls for interest only payments for the first two years.  Transaction cost of approximately $110,000 will be amortized over the life of the loan.

Effective as of September 30, 2014 a 100% owned subsidiary of the Company Main Street NA Parkade, LLC signed an agreement that the Mortgage loan secured by the property of Main Street NA Parkade located in North Adams, would be reduced from $12,575,423 to $7,260,000.  As of the date hereof the Note reflects an outstanding principal balance of $7,260,000 due to a reduction of principal indebtedness through debt forgiveness by Lender in the amount of $5,315,423.

TERMS:

Commencing October 1, 2014 through and including January 1, 2020.  Interest shall be 200 basis points in excess of the thirty day LIBOR rate.

Amortization commencing February 1, 2020 through October 1, 2030 (“Maturity Date”) on the basis of a 25 year schedule of amortization with a balloon payment due on October 1, 2030.  Interest during this period shall be 5.5% per annum. 

CALL OPTION – Lender may elect to accelerate this Note and require the Company to prepay without premium the entire unpaid principal balance at any time after March 1, 2017.

The Note is non-recourse.

Amended and restated escrow and Security Agreement

Beginning October 1, 2014 and including September 30, 2015 all net cash flow of the property shall be deposited in the Escrow account.

Additional interest Agreement (AIA) was amended as follows:

Commencing on October 1, 2015 and continuing through September 30, 2019 the Company will remit 50% of the cash flow of the property to Lender.  Lender will apply all such interest received to the outstanding amount due on the date of the next installment due under the loan.

12


 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

5.       Subsequent Events (concluded):

On November 1, 2014 a payment was due for the mortgage of the shopping center in Putnam, Connecticut in the amount of approximately $4,700,000.  The rentable space of the shopping center is 57,529 square feet, 46% of which is leased to one store.  That store has informed the Company that they are not renewing their lease which will expire January 31, 2015.  As a result the Company has found it to be impossible to refinance the mortgage until a replacement tenant is found.  We are awaiting contact with the Mortgagor to negotiate a solution.  In the event the Mortgagor forecloses on the property it would not impact the Company as (1) the mortgage is non recourse and (2) the mortgage is well in excess of the book value. 

A deferred compensation plan was put in place that awarded six key employees an annual payment of $21,667 each for three years.  All of the six employees have satisfied the vesting requirement and will receive the first payment on August 15, 2015.

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, results of operations and cash flows.  This 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 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.  These views may involve risk 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 relationship with key tenants 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

There have been no significant changes in the Company’s critical accounting policies from those included in Item 7 of its Annual Report on Form 10-K for the year ended April 30, 2014 under the subheading “Critical Accounting Policies and Estimates”. 

Results of Operations:

Rental Income:

Rental Income by type of tenant follows:

 

 

Three Months Ended

 

July 31

 

2014

 

2013

Residential

$2,785,619

 

$2,734,445

Commercial

4,802,006

 

4,172,207

 

$7,587,625

 

$6,906,652

 

13

 


 

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS (continued):

 

Results of Operations (concluded):

 

Service Income

 

 

Three Months Ended

 

July 31

 

2014

 

2013

Management fees

$105,398

 

$117,166

Preferred developer fees

2,016,159

 

878,348

 

$2,121,557

 

$995,514

 

Sales of Real Estate

 

The company did not sell any real estate in the three months ended July 31, 2014.  In the three month period ended July 31, 2013, the Company sold two parcels of real estate. A parcel in Houston, Texas was sold to Aldi Supermarkets for $1,220,000. The other sale was for an outparcel in the Edinburg shopping center in Edinburg, Texas for approximately $592,000.

 

Other Income

 

Revenue from the movie theater in North Adams, Massachusetts, was approximately $192,000 and $254,000 for the three month periods ended July 31, 2014 and 2013, respectively.  The downtrend in revenue was mainly due to a lack of box office hits and was industry wide.  Revenue from operation of the beer and wine store in North Adams was approximately $415,000 for the three month period ended July 31, 2014.  The store opened for business in September 2013.

 

Operating Cost and Expenses

 

Rental Expenses

 

 

Three Months Ended

 

July 31

 

2014

 

2013

Residential

$2,761,142

 

$2,330,421

Commercial

 2,440,819

 

 2,226,200

 

$5,201,961

 

$4,556,621

 

Service Expenses

 

Included in service expense are the expenses of the preferred developer program for the three months ended July 31, 2014 approximately $1,096,000 was incurred compared to $731,000 for the period ended July 31, 2013.  The increase was a result of the extra volume represented in the preferred developer revenue.

 

Selling, General and Administrative

 

Selling, general and administrative expenses increased approximately $178,000 on a period over period basis. This increase is due as a result of the expenses of the wine store in North Adams which was not yet opened during the three months ended July 31, 2013.

14

 


 

 

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS (concluded):

 

Non-operating Income (Expense)

 

Interest Expense

 

Interest expense breaks out as follows:

 

 

Three Months Ended

 

July 31

 

2014

 

2013

Commercial

$1,828,204

 

$1,993,489

Residential

      674,711

 

      687,467

Other

-0-

 

       24,187

 

$2,502,915

 

$2,705,143

 

 

Equity in Earnings of Unconsolidated Subsidiary

 

Equity in earnings of the unconsolidated subsidiary increased approximately $119,000 on a period over period basis for the three months ended July 31, 2014.  During the three month period ended July 31, 2014, the equity in earnings of the subsidiary were charged approximately $400,000 which represents 50% of the direct cost of defeasance on the refinancing of the prior mortgage plus some additional defeasance cost.  As a result of the refinancing the Company received a distribution of $600,000.  During the three month period ended July 31, 2013 the Company received a $45,000 distribution from operations.   Such distributions are in excess of net assets of the 50% owned investee since its accumulated net losses (including significant amounts for depreciation and amortization) have exceeded capital contributions.

 

While the Company has a policy of recording distributions in excess of basis as income, it does not control the rate of distributions of the investee partnership. Cash flow in excess of distribution is held at the partnership level.  Please refer to the summarized financial information of the Company’s investee partnerships which are included in the Company’s Form 10-K for the year ended April 30, 2014.

 

Income Taxes

 

The Company has significant net operating loss carryforwards, so it will likely not be required to pay Federal income taxes in the near term.

 

Capital Resource and Liquidity

 

At July 31, 2014, the Company had approximately $11,092,000 of unrestricted cash, cash equivalents and marketable securities. This includes approximately $9,018,000 belonging to partnership entities in which the Company’s financial interests range from .01% (VIEs) to 50%.  Funds received from CVS, which are to be paid out in connection with CVS developments, amounted to approximately $191,000 and tenant security deposits held by VIEs of approximately $409,000 are included in restricted cash and cash equivalents.

 

The Company believes it has sufficient cash and cash resources to fund operations and debt maturities in the next fiscal year without any new bank borrowings through July 31, 2015. Borrowings for new construction loans or property purchases are unclear at this time.

 

15

 


 

 

Item 3QUANTATIVE AND QUALLITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

Item 4.  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 Chief Financial Officer, 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 Chief Financial Officer, 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 the Evaluation, our President and Treasurer concluded that because of weaknesses in our control environment, our disclosure controls were not effective as of the end of the period covered by this report.  Notwithstanding weaknesses in our control environment, as of July 31, 2014, 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.

 

PART II                  OTHER INFORMATION

 

Item 1.                  LEGAL PROCEEDINGS

 

                             There has been no change in litigation since April 30, 2014.

 

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.                  MINE SAFETY DISCLOSURES

                               

                             Not applicable

 

16

 


 

 

PART II                 OTHER INFORMATION (concluded):

 

Item 5.                  OTHER INFORMATION

 

                             None

 

                             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

                              None

 

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 and 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                 

December 10, 2014        

 

Date  

Neil H. Ellis President and

   

Chief Executive Officer

   

 

   

/s/ Stuart I. Greenwald       

December 10, 2014        

 

Date  

Stuart I. Greenwald Treasurer

   

and Chief Financial Officer 

 

 

 

18