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. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
EX-31 ex31-1.htm
EX-31 ex31-2.htm
EX-32 ex32-1.htm

First Hartford Earnings 2014-10-31

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 form_10-q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

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

 

For the quarterly period ended October 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 ☒

 

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 ☒

 

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

Yes     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.

 

2,411,965 as of January 25, 2015

 

1
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

INDEX

         
PART I.   FINANCIAL INFORMATION   PAGE
         
Item 1.   Financial Statements (Unaudited)    
         
    Condensed Consolidated Balance Sheets – October 31, 2014 and April 30, 2014   3 - 4
         
    Condensed Consolidated Statements of Operations for the Three and Six Months Ended October 31, 2014 and 2013   5
         
    Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended October 31, 2014 and 2013   6
         
    Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended October 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 - 16
         
Item 3.   Quantitative and Qualitative Disclosures about Market Risk   16
         
Item 4.   Controls and Procedures   16
         
PART II.   OTHER INFORMATION    
         
Item 1.   Legal Proceedings   17
         
Item 1A.   Risk Factors   17
         
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds   17
         
Item 3.   Defaults Upon Senior Securities   17
         
Item 4.   Mine Safety Disclosures   17
         
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

                 
    October 31, 2014     April 30, 2014  
Real estate and equipment:                
Developed properties and property under construction (including $71,683,363 in October and $71,574,105 in April for VIEs)   $ 205,174,990     $ 197,401,169  
Equipment and tenant improvements (including $2,383,090 in October and $2,314,849 in April for VIEs)     3,722,846       3,639,292  
      208,897,836       201,040,461  
                 
Less accumulated depreciation and amortization (including $10,788,558 in October and $9,776,315 in April for VIEs)     36,810,389       34,260,586  
      172,087,447       166,779,875  
                 
Cash and cash equivalents (including $1,013,235 in October and $535,230 in April for VIEs)     6,395,443       6,500,885  
                 
Cash and cash equivalents – restricted (including $412,477 in October and $441,877 in April for VIEs)     821,289       769,231  
                 
Marketable securities (including $2,343,182 in October and $2,936,778 in April for VIEs)     4,455,629       4,906,248  
                 
Property under construction – held for sale     4,053,055       -0-  
                 
Accounts and notes receivable, less allowance for doubtful accounts of $598,500 as of October 31, 2014 and $341,600 as of April 30, 2014 (including $326,587 in October and $87,049 in April for VIEs)     4,184,299       4,266,706  
                 
Other receivables     18,965,001       16,842,826  
                 
Deposits and escrows (including $1,646,840 in October and $1,768,581 in April for VIEs)     3,763,802       3,907,239  
                 
Prepaid expenses (including $386,728 in October and $223,453 in April for VIEs)     1,176,364       925,906  
                 
Deferred expenses (including $1,034,452 in October and $1,053,585 in April for VIEs)     5,327,052       3,103,178  
                 
Investments in affiliates     100       100  
                 
Due from related parties and affiliates     165,647       165,206  
                 
Total Assets   $ 221,395,128     $ 208,167,400  

 

See accompanying notes.

 

3
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)

 

LIABILITIES AND EQUITY (DEFICIENCY)

                 
    October 31, 2014     April 30, 2014  
Liabilities:                
Mortgages and notes payable:                
Construction loans payable   $ 56,288,294     $ 49,316,486  
Mortgages payable (including $52,953,653 in October and $53,429,857 in April for VIEs)     141,621,458       148,308,158  
Notes payable (including $1,704,697 in October and in April for VIEs)     4,440,687       1,704,697  
      202,350,439       199,329,341  
                 
Accounts payable (including $1,229,168 in October and $488,140 in April for VIEs)     5,402,407       2,317,036  
Other payables     17,411,582       14,845,606  
Accrued liabilities (including $3,565,316 in October and $3,225,028 in April for VIEs)     6,084,037       5,467,707  
Accrued cost of derivatives     2,299,827       2,411,173  
Deferred income (including $244,536 in October and $247,856 in April for VIEs)     684,375       855,121  
Other liabilities     2,155,077       1,911,832  
Due to related parties and affiliates (including $407,081 in October and $399,214 in April for VIEs)     478,934       471,114  
      236,866,678       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 2,411,965 shares as of October 2014 and 2,412,002 as of April 2014     3,298,609       3,298,609  
Capital in excess of par     5,198,928       5,198,928  
Accumulated deficit     (21,943,538 )     (27,222,017 )
Accumulated other comprehensive income     79,989       34,313  
Treasury stock, at cost, 886,644 shares as of October 31, 2014 and 886,607 in April 30, 2014     (4,964,958 )     (4,964,884 )
Total First Hartford Corporation     (18,330,970 )     (23,655,051 )
Noncontrolling interests     2,859,420       4,213,521  
                 
Total Shareholders’ Equity (Deficiency)     (15,471,550 )     (19,441,530 )
                 
Total Liabilities and Shareholders’ Equity (Deficiency)   $ 221,395,128     $ 208,167,400  

 

See accompanying notes.

 

4
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                                 
    Three Months Ended     Six Months Ended  
    Oct. 31, 2014     Oct. 31, 2013     Oct. 31, 2014     Oct. 31, 2013  
Operating revenues:                                
Rental income   $ 7,373,174     $ 7,629,233     $ 14,960,799     $ 14,535,885  
Service income     1,630,968       1,573,780       3,752,525       2,569,294  
Sales of real estate     -0-       1,090,000       -0-       2,902,596  
Other income     574,958       328,680       1,193,024       653,840  
      9,579,100       10,621,693       19,906,348       20,661,615  
                                 
Operating costs and expenses:                                
Rental expenses     5,498,019       5,009,589       10,699,980       9,566,210  
Service expenses     1,001,700       958,026       2,097,980       1,688,770  
Cost of real estate sales     -0-       1,070,399       -0-       2,270,300  
Selling, general and administrative expenses     2,031,819       1,317,297       3,372,183       2,480,484  
      8,531,538       8,355,311       16,170,143       16,005,764  
                                 
Income from operations     1,047,562       2,266,382       3,736,205       4,655,851  
                                 
Non-operating income (expense):                                
Interest expense     (2,565,745 )     (2,782,186 )     (5,068,660 )     (5,487,329 )
Other income     202,344       121,447       355,342       201,447  
Gain on forgiveness of debt     5,315,423       -0-       5,315,423       -0-  
Loss on defeasance     -0-       (243,602 )     -0-       (243,602 )
Gain (loss) on derivatives     158,586       209,228       111,346       934,017  
Equity in earnings of unconsolidated subsidiaries     132,866       110,687       416,755       275,638  
      3,243,474       (2,584,426 )     1,130,206       (4,319,829 )
                                 
Income (loss) before income taxes     4,291,036       (318,044 )     4,866,411       336,022  
                                 
Income taxes     250,000       500       311,937       23,922  
                                 
Consolidated net income (loss)     4,041,036       (318,544 )     4,554,474       312,100  
                                 
Net loss (income) attributable to noncontrolling interests     454,132       45,012       724,004       (40,769 )
                                 
Net income (loss) attributable to First Hartford Corporation   $ 4,495,168     $ (273,532 )   $ 5,278,478     $ 271,331  
                                 
Net income (loss) per share – basic   $ 1.86     $ (0.11 )   $ 2.19     $ 0.11  
                                 
Net income (loss) per share – diluted   $ 1.86     $ (0.11 )   $ 2.19     $ 0.11  
                                 
Shares used in basic per share computation     2,411,965       2,418,863       2,411,965       2,419,333  
                                 
Shares used in diluted per share computation     2,411,965       2,418,863       2,411,965       2,576,584  

 

See accompanying notes.

 

5
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

                                 
    Three Months Ended     Six Months Ended  
    Oct. 31, 2014     Oct. 31, 2013     Oct. 31, 2014     Oct. 31, 2013  
                                 
Consolidated net income (loss)   $ 4,041,036     $ (318,544 )   $ 4,554,474     $ 312,100  
                                 
Other comprehensive income, net of income taxes:                                
Unrealized gains (losses) on marketable securities     (7,860 )     (1,545 )     110,146       (449,935 )
                                 
Other comprehensive income (loss)     4,033,176       (320,089 )     4,664,620       (137,835 )
                                 
Amounts attributable to noncontrolling interests:                                
Net loss (income)     454,132       45,012       724,004       (40,769 )
Unrealized gains (losses) on marketable securities     7,899       51,577       (64,469 )     325,416  
                                 
      462,031       96,589       659,535       284,647  
Comprehensive Income (loss) attributable to First Hartford Corporation   $ 4,495,207     $ (223,500 )   $ 5,324,155     $ 146,812  

 

See accompanying notes.

 

6
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                 
    Six Months Ended  
    October 31, 2014     October 31, 2013  
Operating activities:                
                 
Consolidated net income   $ 4,554,474     $ 312,100  
                 
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:                
Equity in earnings of unconsolidated subsidiaries, net of distributions of  $660,000 in 2014 and $100,000 in 2013     243,245       (175,637 )
Gain on sale of property     -0-       (632,296 )
Depreciation     2,550,580       2,571,556  
Amortization     190,758       221,426  
Forgiveness of debt     (5,315,423 )     -0-  
                 
Changes in operating assets and liabilities:                
Accounts, notes and other receivables     (2,039,768 )     (5,032,553 )
Deposits and escrows     143,437       (141,069 )
Prepaid expenses     (250,458 )     (528,460 )
Deferred expenses     (2,414,632 )     (612,559 )
Cash and cash equivalents – restricted     (52,058 )     721,789  
Accrued liabilities     616,330       374,251  
Accrued cost of derivatives     (111,346 )     (934,017 )
Deferred income     (170,746 )     110,757  
Accounts and other payables     5,651,348       3,959,042  
                 
Net cash provided by operating activities     3,595,741       214,330  
                 
Investing activities:                
Investments in marketable securities     (378,147 )     (2,341,332 )
Proceeds from sale of marketable securities     938,911       1,675,866  
Purchase of equipment and tenant improvements     (83,554 )     (127,709 )
Proceeds from sale of real estate     -0-       2,902,596  
Property under construction – held for sale     (4,053,055 )     -0-  
Additions to developed properties and properties under construction     (7,774,597 )     (763,567 )
                 
Net cash (used in) provided by investing activities     (11,350,442 )     1,345,854  

 

See accompanying notes.

 

7
 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)

                 
    Six Months Ended  
    October 31, 2014     October 31, 2013  
Financing activities:                
Distributions to noncontrolling interests   $ (694,567 )   $ (845,269 )
Purchase of treasury stock     (74 )     (5,285 )
Proceeds from:                
Construction loans payable     6,971,808       -0-  
Mortgage payable     2,705,986       59,630  
Principal payments on:                
Construction loans payable     -0-       (1,615,239 )
Mortgage loans payable     (1,341,273 )     (1,278,202 )
Advances to related parties and affiliates, net     7,379       13,436  
                 
Net cash provided by (used in) financing activities     7,649,259       (3,670,929 )
                 
Net change in cash and cash equivalents     (105,442 )     (2,110,745 )
                 
Cash and cash equivalents, beginning of period     6,500,885       8,346,956  
                 
Cash and cash equivalents, end of period   $ 6,395,443     $ 6,236,211  
                 
Cash paid during the period for interest   $ 5,149,081     $ 5,393,468  
                 
Cash paid during the period for income taxes   $ 112,313     $ 133,829  
                 
Refinancing of Debt:                
New mortgage loan   $ 10,500,000     $ 6,200,000  
Less debt paid     (7,794,014 )     (6,140,370 )
Net cash from refinancing   $ 2,705,986     $ 59,630  

 

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 October 31, 2014. In the six month period ended October 31, 2013, 157,251 dilutive shares were added to the weighted number of shares outstanding to calculate the diluted net income per share. In the three month period ended October 31, 2013 common stock options were antidilutive.
   
  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     Six Months Ended  
      October 31     October 31  
      2014     2013     2014     2013  
  Revenues:                                
  Real Estate Operations   $ 8,071,000     $ 9,172,000     $ 16,382,000     $ 18,334,000  
  Fee for Service     1,508,000       1,450,000       3,524,000       2,328,000  
  Total   $ 9,579,000     $ 10,622,000     $ 19,906,000     $ 20,662,000  
                                   
  Operating Cost and Expense:                                
  Real Estate Operations   $ 5,498,000     $ 6,080,000     $ 10,700,000     $ 11,837,000  
  Fee for Service     1,002,000       958,000       2,098,000       1,689,000  
  SGA     2,032,000       1,317,000       3,372,000       2,480,000  
  Total   $ 8,532,000     $ 8,355,000     $ 16,170,000     $ 16,006,000  

 

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 $409,000 on October 31, 2014 and $351,000 on April 30, 2014 and receivables of approximately $14,522,000 on October 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:

       
   October 31, 2014  April 30, 2014
       
Real estate and equipment, net  $65,894,067   $66,786,598 
Other assets   7,164,986    7,060,316 
Total assets   73,059,053    73,846,914 
Intercompany profit elimination   (3,027,515)   (3,085,303)
Total assets  $70,031,538   $70,761,611 
           
Mortgages and other notes payable  $54,658,350   $55,134,554 
Other liabilities   5,025,535    3,961,024 
Total liabilities  $59,683,885   $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    Six Months Ended  
                       
     October 31, 2014   October 31, 2013   October 31, 2014   October 31, 2013 
                       
  Dover Parkade, LLC                    
  Revenue  $676,556   $646,891    $1,318,700   $1,415,473 
  Expenses   530,822    535,520    1,005,876    1,064,198 
  Defeasance & refinancing   -0-    -0-    799,313    -0- 
  Net Income (Loss)  $145,734   $111,371   ($486,489)  $351,275 

 

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 of approximately $15,700,000 that are available to offset future Federal taxable income through various periods. As a result of a forgiveness of debt by the mortgage holder of the Main Street NA Parkade LLC, the Company recorded a gain through debt forgiveness of approximately $5,315,000. As a result the Company recorded a tax of approximately $1,855,000 (which includes an alternative minimum tax of approximately $100,000). The tax expense was then reduced by $1,755,000 after applying the $5,315,000 gain against the tax loss carry forward which is now reduced to approximately $10,000,000 which will expire between 2015 and 2028 unless utilized sooner.
   
4. Litigation:
   
  There has been no change in Litigation since April 30, 2014.
   
5. Refinancing:
   
  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 $7,794,014 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.
   
6. Gain on Forgiveness of Debt:
   
  During the three months ended October 31, 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. During the year ended April 30, 2014, the Company recorded an impairment loss of $4,027,053 on this property.
   
  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.

 

12
 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

   
6. Gain on Forgiveness of Debt (concluded):
   
  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.
   
7. Subsequent Events:
   
  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. The Company is in negotiation with the lender for 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”.

 

13
 

 

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

 

Results of Operations:

 

Rental Income:

 

Rental Income by type of tenant follows:

                                 
     Three Months Ended   Six Months Ended
  October 31,   October 31,
    2014   2013   2014   2013
Residential   $ 2,792,898   $ 2,790,893   $ 5,578,517   $ 5,525,338
Commercial     4,580,276     4,838,340     9,382,282     9,010,547
    $ 7,373,174   $ 7,629,233   $ 14,960,799   $ 14,535,885

 

Service Income

                                 
     Three Months Ended   Six Months Ended
    October 31,   October 31,
    2014   2013   2014   2013
Management fees   $ 123,000   $ 124,000   $ 228,000   $ 241,000
Preferred developer fees     1,508,000     1,450,000     3,524,000     2,328,000
    $ 1,631,000   $ 1,574,000   $ 3,752,000   $ 2,569,000

 

Sales of Real Estate

 

The company did not sell any real estate in the three and six months ended October 31, 2014. In the three month period ended October 31, 2013, the Company sold two outparcels from our shopping center in Edinburg, Texas for $1,090,000. In the six months ended October 31, 2013, the Company sold a total of three outparcels in our Edinburg shopping center for a total of $1,682,000 as well as a parcel in Houston, Texas to Aldi Supermarkets for $1,220,000.

 

Other Income

 

Revenue from the movie theater in North Adams, Massachusetts, was approximately $155,000 and $144,000 for the three month periods ended October 31, 2014 and 2013, respectively. For the six month periods ended October 31, 2014 and 2013 the revenue was $347,000 and $398,000 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 $421,000 and $836,000 for the three and six month period ended October 31, 2014. The store opened for business in September 2013 and had sales of approximately $119,000 for the period ended October 31, 2013.

 

Operating Cost and Expenses

 

Rental Expenses 

                                 
    Three Months Ended   Six Months Ended
  October 31,   October 31,
    2014   2013   2014   2013
Residential   $ 2,952,000   $ 2,586,000   $ 5,713,000   $ 4,916,000
Commercial     2,546,000     2,424,000     4,987,000     4,650,000
    $ 5,498,000   $ 5,010,000   $ 10,700,000   $ 9,566,000

 

14
 

 

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

 

Results of Operations (concluded):

 

Service Expenses

 

Included in service expense are the expenses of the preferred developer program for the three and six months ended October 31, 2014 of approximately $1,002,000 and $2,098,000 compared to $958,000 and $1,689,000 for the comparable periods ended October 31, 2013. The increase was a result of the extra volume represented in the preferred developer revenue.

 

Selling, General and Administrative

 

The increases in selling, general and administrative cost resulted from the operating cost of the wine store in North Adams which didn’t open until the middle of September 2013.

 

Non-operating Income (Expense)

 

Interest Expense

 

Interest expense breaks out as follows:

                                   
      Three Months Ended   Six Months Ended
                   
      October 31, 2014   October 31, 2013   October 31, 2014   October 31, 2013
                                   
  Commercial   $ 1,895,000   $ 2,133,000   $ 3,723,000   $ 4,126,000
  Residential     670,000     638,000     1,345,000     1,325,000
  Other     -0-     12,000     -0-     36,000
      $ 2,565,000   $ 2,783,000   $ 5,068,000   $ 5,487,000

 

Equity in Earnings of Unconsolidated Subsidiary

 

Equity in earnings of the unconsolidated subsidiary increased approximately $22,000 and $141,000 on a period over period basis for the three and six months ended October 31, 2014. During the six month period ended October 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. During the three and six month period ended October 31, 2014, the Company received distributions of $60,000 and $660,000 ($600,000 of the distribution was a result of the refinancing). For the three and six month period ended October 31, 3013 the Company received distribution from operations of $55,000 and $100,000. 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.

 

15
 

 

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

 

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 October 31, 2014, the Company had approximately $11,671,000 of unrestricted cash, cash equivalents and marketable securities. This includes approximately $9,417,000 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 $409,000 and tenant security deposits held by VIEs of approximately $412,000 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 October 31, 2015. Borrowings for new construction loans or property purchases will be encountered as needed.

   
Item 3.   QUANTITATIVE AND QUALITATIVE 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 October 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.

 

16
 

 

   
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
   
Item 5. OTHER INFORMATION
   
  None
   
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   
  The Company’s annual meeting of shareholders was held on January 21, 2015 in Hartford, Connecticut. The following nominees were elected as directors by vote indicated:
                   
        For     Against    
  Neil Ellis     2,295,796     1,299    
  Stuart Greenwald     2,295,858     1,237    
  David Harding     2,295,853     1,242    
  Jeff Carlson     2,295,858     1,237    
  John Toic     2,295,856     1,239    
  William Connolly     2,295,833     1,261    
       
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)
         
February 3, 2015   /s/ Neil H. Ellis  
Date   Neil H. Ellis Chairman of the Board and
    Chief Executive Officer
     
February 3, 2015   /s/ Stuart I. Greenwald  
Date   Stuart I. Greenwald Treasurer
    and Chief Financial Officer

 

18