SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended April 30, 2001 Commission File No. 0-8862
------
FIRST HARTFORD CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Maine 01-0185800
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. Box 1270, 149 Colonial Road, Manchester, Connecticut 06045-1270
- --------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(860) 646-6555
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
1. Common Stock, per value $1 per share
The Company hereby indicates by checkmark whether it (1) has filed all reports
required to be filed by Section 11 or 10 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES |_| NO |X|
Based on the most recent sales, the aggregate market value of the voting stock
held by non-affiliates of the Company was approximately $440,000.00.
Indicate by check mark whether the Company has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
YES |_| NO |X|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report: 3,089,985.
Total number of pages, including cover page 40 .
Part I
ITEM 1. DESCRIPTION OF BUSINESS
(a) General Development of Business
First Hartford Corporation (the "Company") which was incorporated in Maine
in 1909, is engaged in the purchase, development, ownership, management and sale
of real estate. As used herein, the term Company shall mean and refer to First
Hartford Corporation and its subsidiaries, unless the context otherwise
requires.
(b) Financial Information about Industry Segments
The Company is engaged in the purchase, development, ownership, management
and sale of real estate, therefore, segment information is not applicable.
(c) Narrative Description of Business
The Company is engaged in the acquisition, development and management of
land and properties with the ultimate goals of selling such properties when
profitable opportunities arise or obtaining rental income therefrom.
The real estate, owned and managed by the Company through various
subsidiaries, is located in Connecticut, New Jersey and Rhode Island. Tenants
are obtained through brokers and employed representatives of the Company, by
means of newspaper advertisements, inquiries by potential tenants at the
Company's on_site offices, and direct contacts with retail stores, banks and
other potential commercial tenants.
The real estate business of the Company is diversified in terms of
geographical location, type of commercial property and form of ownership or
management. The commercial real estate business is not normally thought of as
being divided into significant separate classes of products or services. For the
past four years development has been exclusively on retail.
Operation of the Company's real estate business requires construction
materials and suitable land. Construction materials can be obtained from many
sources, but supplies and construction are subject to strikes and delivery
delays which can greatly increase the cost of a project.
Commercial properties are available in the states where the Company is
qualified to do business, but all real property, is by its nature finite and
subject to fluctuations in cost
1
and to unpredictable changes in local zoning ordinances and to restrictions on
planned construction.
All phases of the real estate business are inherently speculative and
intensely competitive with many enterprises, both large and small, engaged in
businesses similar to the Company's throughout the United States. The success of
the Company, to a large extent, depends upon factors which may be beyond the
control of management. Some of these factors are variable construction costs,
the mortgage market, real estate taxes, income tax laws, government regulations,
the commercial rental market and the economy. The ability of the Company to meet
its debt service obligations and to operate profitably is also dependent on its
ability to attract tenants and to compete successfully with the numerous other
commercial properties available to prospective tenants. The ability to attract
tenants is dependent upon the changing character of the areas in which the
Company's properties are located, the rate of new construction in those areas
and the extent of present and future competition in those areas. The Company's
holdings are diversified both geographically and in use and types of occupancy.
The Company believes that it thereby increases stability and diminishes the
affect of possible adverse economic conditions in any particular geographic or
economic area, but the Company recognizes that diversification by itself will
not assure protection against risk and possible loss.
The real estate business does not experience "backlogs" as that term is
generally understood, nor is it seasonal.
To the Company's knowledge, its real estate business is not dependent upon
a single customer but there is a dependency on supermarkets for strip malls. The
company has Stop & Shop, A&P and Big Y as tenants.
The Company has no material patent, license, franchise or concession.
Research and development is not a part of the Company's business.
The Company anticipates that compliance with any applicable Federal, state
or local provisions regulating discharges into the environment or otherwise
relating to the protection of the environment will not have a material effect on
its capital expenditures, earnings or competitive position.
2
At April 30, 2001, the Company employed approximately 24 persons.
(d) Financial Information About Foreign And Domestic Operations and Export
Sales
The Company and its subsidiaries do not engage in operations in foreign
countries. No material part of their sales or revenues is derived from customers
in foreign countries.
ITEM 2. DESCRIPTION OF PROPERTY
The following table shows the location, general character and ownership
status of the materially important physical properties of the Company and its
subsidiaries:
Available Space
or Facilities Ownership
Location Use and Major Tenants Status
- -------- --- ----------------- ------
Commercial Properties:
Lubbock, Strip 162,404 sq. ft. Owned by a partnership in
Texas Shopping Walmart 51% which a subsidiary of the
Center TJ Maxx 15% Company is
the general partner with a 1%
interest.
Plainfield, Strip 60,150 sq. ft. Owned by a subsidiary of the
Connecticut Shopping Big Y 64% Company. There is an outside
Center CVS 14% equity interest in connection
with the financing
Putnam, Shopping 56,877 sq. ft. Owned by a subsidiary of the
CT Center T. J. Maxx 46% Company and part of a Shopping
Center complex.
Mt. Olive, Shopping 94,714 sq. ft. Owned by a subsidiary of the
New Jersey Center A & P 59% Company.
Dover Township Shopping 97,524 sq. ft. 50% owned by a subsidiary
New Jersey Center Stop & Shop 57% of the Company.
Dollar Tree 10%
Plus Outparcels
Cranston Shopping 259,600 sq. ft. 25% owned by a subsidiary of
Rhode Island Center Kmart 40% the Company.
Stop & Shop 25%
Dollar Tree 5%
3
ITEM 3. LEGAL PROCEEDINGS
Waterville Industries, Inc. v. First Hartford Corporation and
Finance Authority of Maine, CV-89-311 (Kennebec County Superior Court, Maine)
and 89-0209-B (United States district Court, District of Maine). Actions
commenced July 10, 1989.
These two lawsuits allege violation of environmental laws in connection
with property located in Waterville, Maine. Waterville Industries is the current
owner of property located in Waterville, Maine, which includes two waste
treatment lagoons; the Company, through an affiliate, formerly owned the
property, and the Maine Guarantee Authority, predecessor to the Financial
Authority of Maine (FAME) also owned the property prior to its transfer to
Waterville Industries. This lawsuit has been inactive for several years and the
Company does not believe that it will be continued.
First Hartford Corporation Pension Plan & Trust, on behalf of itself, Dollar Dry
Dock Bank of New York and all other similarly situated shareholders of Dollar
Dry Dock Bank of New York, Plaintiff-Appellant v. United States, Defendant -
Appellant No. 99-5032 (United States Court of Appeals for the Federal Circuit).
This is an appeal from the United States Court of Federal Claims in 96-CV-801,
Senior Judge Robert J. York. This was a suit to recover damages sustained by
Dollar Dry Dock Bank of New York, ("Dollar") and its shareholders resulting from
the United States abrogation and repudiation of its contractual obligations to
the institution. The Federal Deposit Insurance Corporation ("FDIC") breached the
Amended and Restated Assistance Agreement ("Agreement") between the FDIC and
Dollar. The Agreement gave Dollar the right to treat certain identified
supervisory goodwill as a regulatory asset to be amortized over eighteen years.
On December 19, 1991, Congress enacted the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). As interpreted by the FDIC, FDICIA
prohibited inclusion of supervisory goodwill in calculations of a bank's
regulatory capital. Within weeks after enactment of the FDICIA, the FDIC
recommended that the New York State Superintendent of Banks seize Dollar and
simultaneously appoint FDIC as receiver of Dollar even though Dollar's liquidity
was strong and its deposit base steady. The loss incurred by the First Hartford
Pension Plan & Trust was approximately $1,000,000 which was reimbursed by the
Company. This suit against the FDIC was dismissed by a Federal Court on November
20, 1998, but reinstated by a Federal Appeals Court on October 19, 1999.
Wal-Mart Real Estate Business Trust, v. New Hawthorn Management Services, Inc.,
("NHMS") Robert Piermarini, Trustee of A. P. Realty Trust and Ruth Piermarini,
Trustee of R&O Leominster Realty Trust, Third party Defendants.
4
The above referenced case was originally filed by NHMS against Wal-Mart (and the
Piermarini defendants) in the federal district court of Massachusetts but was
withdrawn due to lack of complete diversity jurisdiction.
After the aforesaid withdrawal, NHMS was preparing to refile the same complaint
in the state court of Massachusetts. However, Wal-Mart chose to file in the
state court first and is thus the plaintiff in the above referenced matter
styled Superior Court Civil Action No. 01-0810A. On information and belief, Wal-
Mart claims NHMS breached a purchase and sale agreement by failing to, inter
alia, provide an environmentally clean site and a requested (by Wal-Mart)
clarification of a local planning board approval along with various lien
waivers. Wal-Mart claims these breaches caused it not to purchase the property
and is seeking the return of its $425,000.00 deposit along with reimbursement of
certain expenses allegedly in the low six figure range.
NHMS has filed a counterclaim against Wal-Mart claiming Wal-Mart's allegations
to be without any basis in that the property was environmentally sound and that
any improperly alleged environmental issues could easily have been escrowed for
as provided under the contract. NHMS further asserts the planning board approval
in question was valid without need of further clarification particularly in
light of the numerous assurances given to Wal-Mart by the city of Leominster
regarding such approval and that any required lien waivers were properly
delivered to the title company. In its counterclaim, NHMS is seeking in excess
of $1,200,000.00 damages for lost profits and/or expenses along with additional
damages for unfair trade practices including Wal-Marts admitted efforts to try
to purchase the very same property from the land owners immediately after it
claimed that said property was not suitable for purchase under the terms of its
just terminated agreement with NHMS.
The Piermarini defendants (who are the current land owners of the property which
was to be acquired by Wal-Mart) were named as third party defendants by NHMS
because, to the extent that there might be any merit to the Wal-Mart allegations
regarding the environmental issues, then NHMS could claim that the Piermarini's
may have breached their contract with NHMS. The Piermarini's have filed a
counterclaim against NHMS for economic injury relating to liens filed against
the property and damage to existing buildings. The Piermarini's also assert that
NHMS claims against them regarding any environmental issues constitute an abuse
of process. The estimated value of these claims is unknown.
5
There is also an intervening broker claim filed against NHMS should NHMS prevail
against Wal-Mart. The estimated value of this broker claim is approximately
$80,000.00.
While there is uncertainty and risk in any litigation, NHMS is confident that it
will prevail in its counterclaim against Wal-Mart.
OTHER PROCEEDINGS
For proceedings involving officers and directors, see Item 10(f). on page
28 .
The Company is also involved in other legal proceedings which have arisen
during the normal course of its business, including disputes over tax
assessments, commercial contracts, lease agreements, construction contracts and
personal injuries, but the Company does not believe that any of these
proceedings will have a material impact on its consolidated financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The last meeting of security holders was held on February 13, 1986. The
Company did not solicit proxies and the Board of Directors as previously
reported were re-elected in its entirety:
Neil H. Ellis
Stuart Greenwald
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock, $1 par value, is traded over-the-counter. Any
bids would be contained in the National Daily Quotation Service of the National
Association of Securities Dealers (pink sheets).
The Company has paid no cash dividends in the last five years.
Small sales of the common stock have occurred from time to time, we
believe the range to be .125 to .875.
The number of shareholders of record for the Company's common stock as of
April 30, 2000, is 900.
6
ITEM 6. SELECTED FINANCIAL DATA
For the Years Ended April 30, 2001, 2000, 1999, 1998 and 1997
The selected financial data set forth below for the years ended April 30,
2001, 2000, 1999, 1998 and 1997 are derived from the Company's financial
statements. This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Conditions and Results of Operations"
included in Item 7 and "Financial Statements and Supplementary Data" included in
Item 8 which are incorporated therein by reference.
(Unaudited) (Unaudited)
2001 2000 1999 1998 1997
Revenues, net $ 5,880,747 $ 3,904,267 $ 2,864,744 $ 26,096,474 $ 16,447,667
Net Income (Loss) (381,536) (906,170) (507,501) 9,160,515 480,655
Weighted Average Number
of Shares Outstanding 3,089,985 3,089,985 3,089,985 3,089,985 3,089,985
Income (loss)per Share ($.12) ($.29) ($.16) $2.96 $.16
===== ===== ===== ===== ====
Balance Sheet Data
Properties under Construction
and Investment in
Undeveloped
Properties $ 19,048 -0- $ 11,641,378 $ 2,948,678 $ 1,104,498
Real Estate & Equipment Net 18,990,262 19,192,130 6,555,321 5,269,443 10,974,977
Total Assets 27,218,819 25,122,992 22,876,192 9,788,054 14,415,518
Construction Loans, Notes,
Mortgages Payable and
Finance Obligations 26,501,558 25,729,301 21,829,694 10,147,730 20,091,162
Accounts Payable and Accrued
Liabilities 3,594,192 3,019,427 3,740,021 3,152,503 10,832,085
Shareholders' Deficit $ (5,815,853) $ (5,434,317) $ (4,528,147) $ (4,020,646) $(13,181,161)
====================================================================================
7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Result of Operations 2001 2000 1999
Loss before income tax (381,536) (999,729) (593,143)
Less non-recurring income 971,698 -- 480,247
Add non-recurring expense 470,456 -- --
Operating results (882,778) (999,729) (1,073,390)
Per share (.29) (.32) (.35)
The year ended April 30, 2001 produced a Pretax Loss from operations prior
to Non-recurring items of $882,778 (.29) which compares to a loss of $999,729
(.32) and $1,073,390 (.35) in years ended April 30, 2000 and 1999. During 2001
the Company earned $687,000 for service and development fees from projects for
which the Company has a minority interest. Related costs are carried in
expenses. Rental income increased 160% from 1999 to 2000 and 15% from 2000 to
2001. This income is a result of the Mt. Olive shopping center coming online in
phases during the year ended April 2000. As a result, interest cost have risen
147% for the 2000 year and approximately 15% for 2001. Some additional debt has
been incurred in the current year but its cost has generally been offset by
lower rates.
Capital Resources and Liquidity
In recent years, the Company has pursued an aggressive path to end
litigation and pay down its debt. Management believes both of those objectives
were met, as there is no material litigation currently on the horizon and debt
has been reduced to manageable levels.
New properties have equity partners and the Company only has temporary
control of operations as a result of which these properties are not carried in
the balance sheet or statement of operations (see note for details). The effects
are only seen on our balance sheet through Receivables and Payables, which tend
to change dramatically when construction requisitions are funded.
Capital resource and liquidity have always been major impediments of the
Company. Reputation, industry contacts and capital resources are the key
elements of the real estate development business. Management has continued to
seek out new lenders and believes the Company will continue to find capital
resources at reasonable rates. Cash flow is managed on a daily basis through
tight cash management and the Company believes that will be adequate.
8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data begin on the following page.
I N D E X
Pages
-----
Independent Auditors' Report 10
Consolidated Balance Sheets _ April 30, 2001 and 2000 11-12
Consolidated Statements of Operations For Years Ended
April 30, 2001, 2000 and 1999 13
Consolidated Statements of Shareholders' Deficit
for the Years Ended April 30, 2001, 2000 and 1999 14
Consolidated Statement of Cash Flows for the Years Ended
April 30, 2001, 2000 and 1999 15-16
Notes to Consolidated Financial Statements 17-26
There are no Supplementary Data Schedules necessary
Schedule IX Short Term Borrowings 36
Schedule XI Real Estate and Accumulated Depreciation 37
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As of January 1999, the Company has engaged Kostin, Ruffkess Company, LLC
as accountants. The Company has filed a Form 8-K with the Commission reflecting
the engagement of accountants. There are no disagreements of any matters of
accounting principles or practices or financial statement disclosure and none
are contemplated.
9
[LOGO] KOSTIN
RUFFKESS
& COMPANY, LLC
To The Shareholders of
First Hartford Corporation and subsidiaries
Manchester, Connecticut
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of First Hartford
Corporation and Subsidiaries as of April 30, 2001 and 2000, and the related
consolidated statements of operations, shareholders' deficit, and cash flows,
and the related schedules listed in Item 14(a)(2) of the annual report on Form
10-K for the years ended April 30, 2001,2000 and 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and related schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements and related schedules are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements and related schedules. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Hartford
Corporation and Subsidiaries as of April 30, 2001 and 2000, and the results of
its consolidated operations and consolidated cash flows for the years ended
April 30, 2001, 2000 and 1999 in conformity with accounting principles generally
accepted in the United States of America. Further, it is our opinion that the
schedules referred to above present fairly, in all material respects, the
information set forth therein in compliance with the applicable accounting
regulation of the Securities and Exchange Commission.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency, which raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 9. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
10
West Hartford, Connecticut
July 23, 2001
Members of:
Leading Edge Alliance o Kreston International o American Institute of Certified
Public Accountants o Private Companies Practice Section o SEC Practice Section o
Connecticut Society of Certified Public Accountants
An Equal Opportunity Employer
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2001 AND 2000
ASSETS
2001 2000
---- ----
Real estate and equipment:
Developed properties $20,627,572 $20,374,092
Equipment and leasehold improvements 111,468 121,967
----------- -----------
20,739,040 20,496,059
Less accumulated depreciation
and amortization 1,748,778 1,303,929
----------- -----------
18,990,262 19,192,130
Properties under construction and
investment in undeveloped properties 19,048 -0-
----------- -----------
19,009,310 19,192,130
Cash 91,371 146,405
Accounts and notes receivable, less allowance
for doubtful accounts of $50,129
in 2001 And $96,000 in 2000
1,710,243 165,189
Deposits, escrows and prepaid and
deferred expenses 706,898 1,111,735
Investment in affiliates 847,500 -0-
Due from related parties and affiliates 3,153,497 2,807,533
Deferred Tax Assets (net of valuation
allowance of $1,700,000 in 2001 and 2000) 1,700,000 1,700,000
----------- -----------
$27,218,819 $25,122,992
=========== ===========
(Continued)
The accompanying notes are an integral part of the
consolidated financial statements.
11
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2001 AND 2000
LIABILITIES AND STOCKHOLDERS' DEFICIT
2001 2000
---- ----
Liabilities:
Mortgages and notes payable:
Mortgages payable $ 21,710,399 $ 20,228,142
Notes Payable - Other 4,791,159 5,501,159
------------ ------------
26,501,558 25,729,301
Accounts payable 2,863,259 2,277,685
Accrued liabilities 730,933 741,742
Deferred income
658,911 - 0 -
Due to related parties and affiliates
2,280,011 1,808,581
------------ ------------
33,034,672 30,557,309
Commitments and contingencies
Shareholders' deficit
Common stock, $1 par; Authorized 6,000,000
shares; Issued 3,322,213 shares 3,322,213 3,322,213
Capital in excess of par 4,857,645 4,857,645
Deficit (11,927,587) (11,546,051)
------------ ------------
(3,747,729) (3,366,193)
Less 232,228 shares of common
stock held in treasury, at cost 2,068,124 2,068,124
------------ ------------
(5,815,853) (5,434,317)
------------ ------------
$ 27,218,819 $ 25,122,992
============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
12
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR YEARS ENDED APRIL 30, 2001, 2000 AND 1999
2001 2000 1999
---- ---- ----
Revenues:
Sale of real estate $ 148,367 $ 28,647 $ 472,000
Construction 159,918 295,073 200,179
Rental 3,494,896 3,044,518 1,167,616
Other 1,105,868 536,029 544,702
Non-Recurring Items 971,698 -0- 480,247
----------- ----------- -----------
5,880,747 3,904,267 2,864,744
----------- ----------- -----------
Cost and expenses:
Cost of sales,
real estate 25,356 12,678 464,005
Construction 88,337 176,025 113,483
Operating 1,486,697 1,070,988 878,323
Interest 2,156,037 1,881,884 761,440
Depreciation and
amortization 493,404 388,703 204,655
Selling, general and
administrative 979,750 984,569 926,523
Property taxes 562,246 389,149 109,458
Non-Recurring Expense 470,456 -0- -0-
----------- ----------- -----------
6,262,283 4,903,996 3,457,887
----------- ----------- -----------
Loss before income tax
benefit (999,729) (593,143)
Income tax benefit (-0-) (93,559) (85,642)
----------- ----------- -----------
Net loss ($ 381,536) ($ 906,170) ($ 507,501)
=========== ===========
Basic Earning per share $(.12) $(0.29) $(0.16)
===== ====== ======
Weighted average number of
shares outstanding 3,089,985 3,089,985 3,089,985
=========== =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
13
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
Capital
in excess Treasury
Common stock of par Deficit stock Total
---------- ---------- ------------ ----------- -----------
Balance, April 30, 1998 (Unaudited) $3,322,213 $4,857,645 ($10,132,380) ($2,068,124) ($4,020,646)
Net Loss -- -- (507,501) -- (507,501)
---------- ---------- ------------ ----------- -----------
Balance, April 30, 1999 3,322,213 4,857,645 (10,639,881) (2,068,124) (4,528,147)
---------- ---------- ------------ ----------- -----------
Net Loss -0- -0- (906,170) -0- (906,170)
---------- ---------- ------------ ----------- -----------
Balance, April 30, 2000 3,322,213 4,857,645 (11,546,051) (2,068,124) (5,434,317)
========== ========== ============ =========== ===========
Net Loss -0- -0- (381,536) -0- (381,536)
---------- ---------- ------------ ----------- -----------
Balance, April 30, 2001 $3,322,213 $4,857,645 ($11,927,587) ($2,068,124) ($5,815,853)
========== ========== ============ =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
14
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
Cash flows from operating activities: 2001 2000 1999
---- ---- ----
Net loss ($ 381,536) ($ 906,170) ($ 507,501)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation 459,120 367,394 193,595
Amortization 34,284 21,309
11,060
Deferred tax asset -0- (93,559) 4,250
Deferred income 658,911 -0- -0-
Non-recurring income (971,698) -0- (480,247)
(Increase) decrease in:
Accounts receivable, net (1,545,054) (95,236) 74,162
Deposits, escrows, prepaid and
deferred expenses 370,553 34,898
(421,063)
Increase (decrease) in:
Accrued liabilities 120,006 102,741 (231,831)
Accounts payable 1,251,454 (823,335) 1,299,596
----------- ----------- ------------
Net cash provided by (used in)
operating activities (3,960) (1,391,958) (57,979)
----------- ----------- ------------
Cash flows from investing activities:
Investment in affiliates (847,500) -0- -0-
Purchases of equipment and leasehold
improvements (3,772) (9,656) (22,410)
Proceeds from sale of real estate net
of selling expenses -0- -0- 420,664
Additions to developed properties (272,528) (1,353,169) (12,139,833)
----------- ----------- ------------
Net cash used in
investing activities: ($1,123,800) ($1,362,825) ($11,741,579)
----------- ----------- ------------
The accompanying notes are an integral part of the
consolidated financial statements.
15
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
Cash flows from financing activities: 2001 2000 1999
---- ---- ----
Proceeds from:
Construction Loan Payable $ 419,545 $ 2,438,743 $ 13,960,332
Mortgage Payable 1,994,546 12,600,000 3,725,000
Notes payable 500,000 1,782,500 900,000
Principal payments on:
Construction loans payable (419,545) (12,600,000) (5,375,000)
Mortgages payable (337,286) (221,636) (593,185)
Notes payable (1,210,000) (100,000) (935,183)
Advances to/from related parties and
affiliated partnerships 125,466 (1,104,436) 219,493
----------- ------------ ------------
Net cash provided by
financing activities 1,072,726 2,795,171 11,901,457
----------- ------------ ------------
Net increase (decrease) in cash and cash
equivalents (55,034) 40,388 101,899
Cash and cash equivalents, beginning of year 146,405 106,017 4,118
----------- ------------ ------------
Cash and cash equivalents, end of year $ 91,371 146,405 $ 106,017
=========== ============ ============
Supplemental data:
Cash paid during the year for interest $ 1,993,998 1,784,459 $ 720,090
=========== ============ ============
Cash paid during the year for income taxes -0- $ -0- $ 89,092
=========== ============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
16
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
1. Summary of Significant accounting policies:
Description of business:
First Hartford Corporation (the Company) was incorporated in Maine in
1909, and is engaged in the purchase, development, ownership, management and
sale of real estate. The Company extends credit to companies/tenants throughout
the United States.
Principles of consolidation:
The accompanying financial statements include the accounts of the Company
and its wholly_owned subsidiaries, including partnerships in which the Company
is a majority owner. All significant intercompany transactions and accounts have
been eliminated in the consolidated financial statements, including construction
revenues and costs of development for the Company's own use (rental/future
sale). The Company records its investment in partnerships in which it is not a
majority owner on the equity method.
Financial Statement Presentation:
Because the Company is engaged in the development and sale of real estate
in various stages of construction, the operating cycle may extend beyond one
year. Accordingly, following the usual practice of the real estate industry, the
accompanying consolidated balance sheets are unclassified.
Statements of Cash Flows:
For purposes of the statements of cash flows, the Company considers all
highly liquid securities purchased with a maturity of 3 months or less to be
cash equivalents.
Real Estate and Equipment:
Properties under construction and investment in undeveloped properties,
developed properties and equipment and leasehold improvements are recorded at
the lower of cost or net realizable value.
17
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
1. Summary of significant accounting policies (continued): Real Estate and
Equipment (continued):
Properties under construction amounted to $19,048 and $ -0- at April 30,
2001 and 2000.
Following accounting practices of the real estate industry, interest and
property taxes are capitalized for those projects which have a current
development plan. In addition, properties under construction include revenue and
operating expenses through substantial completion of the property. When property
is substantially completed, the costs of property constructed for the Company's
own use are transferred to developed properties and depreciation commences.
Interest incurred at April 30, 2001 was $2,156,037 of which $ -0- was
capitalized. Interest incurred at April 30, 2000 was $2,017,346 of which
$135,462 was capitalized. Interest incurred at April 30, 1999 was $1,176,751 of
which $415,311 was capitalized. Property Taxes capitalized at April 30, 2001,
2000 and 1999 was $ -0-, $44,539 and $ -0- respectively.
Depreciation is provided using the straight line method for financial
reporting purposes based on the following estimated useful lives:
Description Range in Years
Developed properties 40
Equipment and leasehold
improvements 3 - 10
Leasing commissions and financing costs (included in deposits, escrows,
and prepaid and deferred expenses in the accompanying balance sheets) are
amortized using the straight_line method over the terms of the related leases
and mortgages, respectively. In addition, the Company capitalizes predevelopment
costs relating to potential new development projects. If the project is
abandoned, the related costs will be expensed.
Maintenance and repairs are charged to operations as incurred; renewals
and betterments are capitalized.
The cost of assets retired or otherwise disposed of and the related
accumulated depreciation is eliminated from the accounts. Income or loss
resulting from the disposal of properties and equipment is included in the
consolidated statements of operations.
18
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
1. Summary of significant accounting policies (continued):
Revenue recognition:
Since the Company is primarily involved in development for its own use
(rental/future sale), construction revenue is recorded only upon sale of the
property built for sale to third parties. Revenues from projects built for third
parties are recognized on the percentage_of_completion method of accounting
based on costs incurred to date in relation to total actual costs and estimated
costs to complete. Revisions in costs and profit estimates are reflected in
operations during the accounting period in which the facts become known. The
Company provides for estimated losses on contracts in the year such losses
become known. There are no properties built for sale to third parties during the
years ended April 30, 2001, 2000 and 1999.
Rental revenues are recognized as income under the operating method as the
rentals become due. Other income includes management and service fees and
interest income which is recognized over the period in which the service is
provided or the interest is earned.
Off Balance Sheet Risk
During the years ended April 30, 2001 and 2000, the Company had an amount
in excess of $100,000 in a single bank. Amounts over $100,000 are not insured by
the Federal Deposit Insurance Corporation. These balances fluctuate greatly
during the year and can exceed this $100,000 limit. Management regularly
monitors the financial institution, together with its cash balances, and tries
to keep this potential risk to a minimum.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
19
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
2. Construction loans, mortgages, and notes payable:
2001 2000
---- ----
Construction Loans and
Mortgage notes ranging from 6.625%
to 10.5%. Maturities are at
various dates through 2028
The loans are secured by the
respective real estate and
guaranteed by the President of
the Company
$21,710,399 $20,228,142
Notes payable, at interest rates
of 1% to 1 1/2% over the prevailing
prime rate and fixed rate of
6% maturing at various dates or
demand. The loans are unsecured
and guaranteed by the President
of the Company 4,791,159 5,501,159
----------- -----------
$26,501,558 $25,729,301
=========== ===========
Aggregate principal payments due on the above debt during the next five
years are as follows:
Year Ended April 30
-------------------
2002 $ 1,721,558
2003 677,534
2004 611,372
2005 460,863
2006 498,952
Included in notes payable are $2,250,000 of non-interest bearing notes to
an affiliate with no certain date of payment.
3. Pledge of stock of subsidiaries:
During the past ten years the Company has not been able to obtain
financing (secured or unsecured) without the personal guarantees of Neil Ellis,
the president of the Company. To some degree, the Company recently has been able
to obtain financing without that guarantee but it continues to be a necessary
component to most loans. In the past, we have disclosed stock pledges of
subsidiaries to Mr. Ellis as protection from personal losses due to his
guarantees. These pledges will stay in place until his guarantees are
eliminated.
20
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
4. Related party transactions:
Amounts included in revenue resulting from transactions with companies
affiliated by common ownership and/or management are as follows:
2001 2000 1999
Management and
service fees 1,005,248 376,726 351,485
Maintenance/Repairs -- 14,806 13,555
Interest income 28,160 28,160 28,160
Construction Income -0- 116,640 --
---------- -------- --------
$1,033,408 $536,332 $393,200
========== ======== ========
Amounts due to/from affiliates and related parties represent transactions
between affiliated and related entities under common ownership and/or management
in line with business transactions which generate the revenues noted above. The
Company and its subsidiaries also have received cash advances from other
entities affiliated with Neil Ellis, President of the Company and performed
services for these entities. These advances/loans are non-interest bearing and
have no specific repayment terms.
5. Accrued liabilities:
2001 2000
Accrued:
Federal income taxes $ 45,850 42,950
Taxes-other 181,068 170,883
Interest 331,854 365,098
Other 172,161 162,811
-------- --------
$730,933 $741,742
======== ========
21
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
6. Non-Recurring Items:
Income from non-recurring items are as follows:
2001 2000 1999
Income
Gain on write off of
prior period liabilities $971,698 $ -0- $480,247
======== ======= ========
Cost and expense
Loss of investment $470,456 $ -0- $-0-
======== ======= ========
Included in the current period is an investment write-off of $470,456 (.15
per share). The investment is comprised of option payments and development cost
related to property in Leominster, Massachusetts, which was under contract to
purchase and resell to Wal-mart. Wal-mart violated that contract and refused to
close. The Company has filed a lawsuit against Wal-mart in the Federal Circuit
Court in Worchester, Massachusetts to recover costs and lost profits in excess
of $1,000,000 and triple damages under Massachusetts law. The financial
statements do not include any revenue relating to this litigation.
7. Employee Retirement Plan:
The Company had a single employer defined benefit non contributory pension
plan. As of January, 1986 the benefits of the plan have been frozen. The Pension
Benefit Guaranty Corporation (PBGC) had started to make the benefit payments to
the participants at January 1, 1994.
In June, 1997 the PBGC had become interim Trustee of the Plan and in July,
1997 notified participants that they would seek to terminate the Plan.
In January, 1997, the Company had come to settlement terms with the
Pension Benefit Guaranty Corporation (PBGC) and the Department of Labor (DOL).
Under the settlement, the Company has given the PBGC a 10 year Note of
approximately $670,000 (6% interest payable quarterly) which is guaranteed by a
Bond of an Insurance Company. The Company has given cash to the Insurance
Company which was then invested in a zero coupon bond to yield $670,000 at
maturity.
8. Commitment and Contingencies:
The Company has budgets on both the Dover and Cranston project which if
exceeded will result in a cost overrun to the Company. It does not appear that
any significant overrun will occur on either project. However, the Company has
elected to defer $524,000 of revenue until the possibility of cost overruns
and/or accruals for unbilled work by subcontractors is eliminated.
22
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
9. Going concern:
Since the 1992 - 1994 period when the deficit in equity exceeded
$23,000,000, the Company has achieved substantial improvements that have reduced
the deficit to approximately $5,800,000. The improvements were a result of
selling properties and partnership interests. On a short term basis, it is
unrealistic to expect that the Company can continue to generate sales of any
magnitude on its existing asset base. Unless cash flow can be generated from
other services, conditions raise doubt about the Company's ability to continue
as a going concern and meet its obligations as they become due. That being said
the Company has significantly increased its development team. While this will
result in higher operating expenses, it hopefully will lead to new projects.
10. Subsequent events
In the first quarter the Company sold two parcels of land in which a
$800,000 gain will be recorded. The Company did not have any development plans
for those properties.
11. Income Taxes
The Company follows the requirements of Statement Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes," which requires
the use of an asset and liability approach that provides for the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS 109 generally considers all
expected future events other than enactments of changes in the tax law or rates.
The income tax benefit is comprised of the following:
2001 2000 1999
Current benefit $ -0- $ -0- $ (89,892)
Deferred -0- (93,559) 4,250
---------- ----------- -----------
$ -0- $ (93,559) $ (85,642)
========== =========== ===========
The components of the net deferred tax asset the following:
2001 2000
Tax effect of net operating
loss carryforwards $ 3,400,000 $ 3,400,000
Valuation allowance (1,700,000) (1,700,000)
----------- -----------
$(1,700,000) $(1,700,000)
=========== ===========
23
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
11. Income Taxes (Cont.)
The Company has set up an allowance of fifty percent (50%) against the
deferred tax asset since the likelihood of realization cannot be determined.
At April 30, 2000, the Company has net operating loss carryforwards of
approximately $11,700,000. Approximately $4,700,000 expire in 2004, $1,200,000
expire in 2007, $3,600,000 expire in 2012, $1,200,000 expire in 2014 and
$1,000,000 expire in 2015.
12. Leases
The Company leases commercial real estate under various operating leases
expiring in various years through 2019. The real estate available for lease have
a carrying value of $20,446,827 and accumulated depreciation of $1,649,961.
Minimum future rentals to be received on non-cancellable leases as of
April 30, 2001 for each of the next five years are as follows:
2002 $2,542,254
2003 $2,462,395
2004 $2,476,493
2005 $2,453,994
2006 $2,445,815
13. Investments
The Company has investments in partnerships and joint ventures which own
two shopping centers and is constructing a third shopping center. These
investments are accounted for on the equity method. They are the following:
Dover - New Jersey
Operating property 98% finished
Operating data - April 30
Company ownership - 50% investment at inception was $147,500
(Unaudited) (Unaudited)
2001 2000
---- ----
Assets $ 13,203,924 $7,991,784
Liabilities 13,157,201 7,991,784
Members capital 46,723 --
Revenue 1,607,725 --
Expenses 1,708,502 --
Net loss (100,777) --
24
Cranston - Rhode Island
Under construction
Operating data - December 31
Company ownership - 25% investment $700,000
Audited Unaudited
------- ---------
2001 2000
---- ----
Assets $10,671,331 $1,037,120
Liabilities 3,171,331 665,485
Partners capital 7,500,000 371,635
The Company is a 50% member in another Joint Venture that owns land in
Cranston adjacent to the shopping center. The land has no value.
Lubbock - Texas
The Company has performed services for a partnership in exchange for a one
percent general partner interest.
The Company is contingently liable for the satisfaction of all liabilities
of the Partnership. Summarized unaudited financial data for the Partnership as
of April 30, 2001, 2000 and 1999 is as follows:
2001 2000 1999
(Unaudited) (Unaudited) (Unaudited)
Assets $ 5,271,866 $ 5,070,768 $ 5,235,522
=========== =========== ===========
Liabilities $ 7,759,741 $ 7,783,654 $ 8,011,223
Partners' capital (2,487,875) (2,712,886) (2,775,701)
----------- ----------- -----------
$ 5,271,866 $ 5,070,768 $ 5,235,522
=========== =========== ===========
Revenues $ 1,188,879 $ 1,221,098 $ 1,233,758
Expenses (963,767) (1,158,384) (1,236,360)
----------- ----------- -----------
Net Income $ 225,112 $ 62,714 ($ 2,602)
=========== =========== ===========
25
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2001, 2000 AND 1999
14 Fair Value of Financial Instruments:
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practical to estimate
that value:
Cash and other current assets are carried in the accompanying balance
sheet at cost, which is a reasonable estimate for their fair value. Accounts
payable, notes payable and accrued expenses are also carried at cost, which is a
reasonable estimate of their fair value.
Carrying Estimated
Amount Fair Value
Assets:
Cash $ 91,371 $ 91,371
Accounts and notes
receivable 1,710,243 1,710,243
Deposits, escrows and prepaid
and deferred expenses 706,898 706,898
Liabilities:
Accounts payable $ 2,863,259 $ 2,863,259
Accrued expenses 730,933 730,933
Mortgages and notes payable 26,501,558 26,501,558
26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE Company
(a) Identification of Directors
The directors of the corporation, their ages and positions and the periods
during which each has served as such are as follows:
Name Age Position Period of Service
Neil H. Ellis 73 President l966 - Present
Stuart I. Greenwald 59 Treasurer/Secretary 1980 - Present
David B. Harding 56 Director 1992 - Present
There are no arrangements or understandings between any of the foregoing and any
other person pursuant to which such person was or is to be selected director or
officer.
(b) Identification of Executive Officers
The names and ages of all executive officers of the corporation, their
positions and the periods during which each has served as such are as follows:
Name Age Position Period of Service
Neil H. Ellis 73 President 1968 - Present
Stuart I. Greenwald 59 Treasurer/Secretar y 1978 - Present
There are no arrangements or understandings between any of the foregoing and any
other person pursuant to which such person was or is to be selected director or
officer.
(c) Identification of Certain Significant Employees
There are no significant employees not already mentioned above.
(d) Family Relationships
There are no family relationships among any directors or executive
officers.
(e) Business Experience
27
1. The following is a brief description of the background of each director
or executive officer.
Mr. Ellis has been President of the Company for more than five
years. He is also President and director of Green Manor Corporation, a holding
company, owned by him and his wife.
Mr. Greenwald has been Treasurer of the Company for more than five
years and also holds the position of Secretary. He is also Secretary/Treasurer
of First Hartford Realty Corporation, a subsidiary of the Company, which
position he has held for more than five years.
Mr. Harding has been the President of Richmond Realty, LLC a Real
Estate Management Company since January, 1996. Richmond manages certain
properties of the Company as well as properties of others. Prior to that, he had
worked for the Company in the area of finance for three years.
2. Directorships
No directors hold any other directorships, except directorships in
subsidiaries of the Company and the aforementioned Green Manor Corporation and
Richmond Realty, LLC.
(f) Involvement in Certain Legal Proceedings
No director or executive officer has been involved in any of the following
legal proceedings except as noted:
1. No director or executive officer has been involved in any criminal
proceedings in the last five years.
2. Temporary or permanent injunctions concerning securities dealings or
business practices, except for SEC v. First Hartford Corporation Civil Action
No. 89-3156-NHJ (D.DC. 1989) in which the Company consented to entry of Final
Judgment of Permanent Injunction requiring the Company to file its periodic
reports with the SEC on a timely basis, specifically, its Annual Report on form
10-K for its fiscal year ended April 30, 1989 and its Quarterly Reports on form
10-Q within 120 days from entry of the Judgment on November 30, 1989.
3. Orders, judgments or decrees of State or Federal authority barring,
suspending or otherwise limiting any securities dealing or business practices or
barring association with persons engaged in such activities, except for the
action described in 3. above.
4. Any findings in a civil action or by the SEC that such person violated
any Federal or State securities law, except for the action described in 3.
above.
28
ITEM 11. REMUNERATION
There is set forth below information relating to all direct remuneration
paid by the Company during the year ended April 30, 2001 to each director and
each executive officer of the Company whose aggregate remuneration totaled
$60,000 and to all directors and officers of the Company as a group.
Name or Number of Persons Other
in Group and Capacity Salary Compensation(1)
Neil H. Ellis, President $125,008
Stuart Greenwald, Treasurer $ 82,694
(1) To assist management of the Company in carrying out its responsibility and
to improve job performance, the Company provides certain of its officers
with automobiles. The Company cannot specifically or precisely ascertain
the amount of personal benefit, if any, derived by those officers from
such automobiles. However, after reasonable inquiry, the Company has
concluded that the amount of any such personal benefit is immaterial and
does not in any event exceed $10,000 as to all officers. No provision has
therefore been made for any such benefit.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth information as of the date hereof with
respect to all persons known to the Company to be beneficial owners of more than
5% of the Company's outstanding shares of common stock:
Title Name & Address of Amount and Nature
of Beneficial Owner or of Beneficial Percent
Class Identity of Group Ownerships of Class
----- ----------------- ---------- --------
Common Stock Neil H. Ellis 1,324,387 (l) 42.9%
43 Butternut Road
Manchester, CT 06040
(l) Includes 416,483 shares owned by a corporation which is wholly owned
by Mr. & Mrs. Ellis; 17,693 shares owned beneficially and of record by Mr.
Ellis' wife; 53,412 shares held as Trustee for his daughters in which he
disclaims beneficial ownership. Excludes 14,250 shares held as Trustee for the
Jonathan G. Ellis Leukemia Foundation (a charitable foundation).
29
(b) Security Ownership of Management
The following table sets forth information as of the date hereof with
respect to all shares beneficially owned by all directors and directors and
officers of the Company as a group:
Title Name & Address of Amount and Nature
of Beneficial Owner or of Beneficial Percent
Class Identity of Group Ownerships of Class
----- ----------------- ---------- --------
Common Neil H. Ellis 1,324,387 (l) 42.9%
43 Butternut Road
Manchester, CT 06040
Common All Directors 1,324,387 (l) 42.9%
and Officers
as a Group
(3 in number)
(c) Changes in Control
The Company is aware of no arrangements which may result at a subsequent
date in change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others
Since the filing of the Petition for Reorganization in February of 1981,
and due to the uncertainty surrounding the financial stability of the Company,
lenders, required by the Company to finance the purchase and development of real
estate, have required the personal guarantee of Neil H. Ellis, President and
Director of the Company, on any loans that they make. As consideration for this
personal guarantee, the Company has proceeded in its real estate development by
one of two methods. The first method involves having the loans made to a
corporation owned directly by Mr. Ellis. Mr. Ellis then grants to the Company a
free option to purchase the stock of the corporation to which the loans have
been made, at the lower of cost or market value. Unless the transaction is
beneficial to the Company, it need not exercise the option. The second method
involves lending the money directly to the subsidiaries of the Company which
develop the property, and pledging to Mr. Ellis the stock of the subsidiaries
until such time as the guaranteed loans are satisfied.
The Company and its subsidiaries have received from or made cash advances
to other companies which are owned or controlled by Neil Ellis, President of the
Company. The Company has also purchased from or sold property to, as well as
performed services for these companies.
(b) Certain Business Relationships
Refer to (a) above.
(c) Indebtedness of Management
There is none.
(d) Transactions with Promoters
There are none.
30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Pages
-----
(a) (1) The following financial statements are
included in Part II, Item 8:
Financial Statements:
Report of Independent Auditor 10
Consolidated Balance Sheets - April 30, 2000
and 1999 11-12
Consolidated Statements of Operations -
Years Ended April 30, 2000, 1999 and 1998 13
Consolidated Statements of Shareholders'
Deficit for the years Ended April 30, 2000,
1999 and 1998 14
Consolidated Statement of Cash Flows for the
years ended April 30, 2000, 1999 and 1998 15-16
Notes to Consolidated Financial Statements 17-26
(2) The following financial statement schedules
for the year ended April 30, 2000 are submitted herewith:
Schedule III - Real Estate and Accumulated Depreciation 36
Schedule IV - Mortgage loans on Real Estate 37
All other schedules are omitted because they are not required, not
applicable, or the information is otherwise shown in the financial statements or
notes thereto.
(b) Reports on Form 8_K:
A report on Form 8_K dated January 22, 1991 was filed by the Company
reporting the bankruptcy filing of the Company's former Accountants, Laventhol
and Horwath. A report on Form 8-K dated August 4,1999 was filed by the Company
appointing Kostin, Ruffkess & Company, LLC as new accountants.
31
(c) Exhibits
Exhibit Index 32
(3) Articles of Incorporation and by-laws.
Exhibit (3) to Form 10-K for the Fiscal Year ended April 30, 1984,
Pages 1-18 of Exhibits Binder, incorporated by reference to
Securities File Number 0-8862.
(4) Instruments defining the rights of security holders, including
Indentures.
Not Applicable
(9) Voting Trust Agreement.
Not Applicable
(10) Material Contracts.
Not Applicable
(ll) Statement regarding computation of per share earnings.
See Item 6 of this report.
(12) Statement regarding computation of ratios.
Not Applicable
(13) Annual Report to Security Holders, Form 10-Q or
Quarterly Report to Security Holders.
The annual report to security holders consists of
this report (Form 10-K) and the President's letter
attached as Exhibit 13. 38
(18) Letter regarding change in accounting principle.
Not Applicable
(19) Previously unfiled Documents.
Not Applicable
(22) Subsidiaries of the Registrant. 39
32
(23) Published report regarding matters submitted to vote of Security
Holders.
Not Applicable
(24) Consents of experts and counsel.
Consent of Kostin, Ruffkess & Company, LLC
(25) Power of Attorney.
Not Applicable
(28) Additional Exhibits.
Not Applicable
(29) Information from Reports furnished to State Insurance Regulatory
Authorities.
Not Applicable
(d) Other Financial Statements
Not Applicable
33
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, Thereunto Duly Authorized.
Dated: August 14, 2001
FIRST HARTFORD CORPORATION
By: /s/ Neil H. Ellis
---------------------------------
Neil H. Ellis
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
August 14, 2001 /s/ Neil H. Ellis
----------------------------------------
Neil H. Ellis
Principal Executive Officer
President and Director
August 14, 2001 /s/ Stuart I. Greenwald
----------------------------------------
Stuart I. Greenwald
Principal Financial Officer
Principal Accounting Officer
Secretary, Treasurer and Director
34
First Hartford Corporation and Subsidiaries
Schedule III
Real Estate and Accumulated Depreciation
April 30, 2001
Initial
Encumbrances Cost To Company
------------ ---------------
Bldgs. Bldgs.
Constr. Mortgage, Notes and and
Statement Loans Payable Land Imp. Land Imp.
- --------- ----- ------- ---- ---- ---- ----
Developed Properties
Shopping Centers
Connecticut -0- 9,237,937 582,000 7,155,042 582,000 7,155,042
Shopping Center - NJ -0- 12,472,462 1,992,417 10,894,784 1,992,417 10,894,784
------- ----------- ----------- ----------- ----------- -----------
-0- $21,710,399 $ 2,574,417 $18,049,826 $ 2,574,417 $18,049,826
======= =========== =========== =========== =========== ===========
Gross Amount at Which
Carried at Close of Period
--------------------------
Life On
Which Depr.
In Latest
Accum. Date of Income
Statement Total Depr. Constr. Is Computed
- --------- ----- ----- ------- -----------
Developed Properties
Shopping Centers
Connecticut 7,737,042 1,195,356 1990-1998 40 Years
Shopping Center - NJ 12,887,201 454,605 1999 40 Years
----------- ----------
$20,624,243 $1,649,961
=========== ==========
35
First Hartford Corporation and Subsidiaries
Schedule IV
Mortgage Loans on Real Estate
April 30, 2001
Principal
Amount of
Loans
Final Periodic Face Carrying Delinquent Subject to
Interest Maturity Payment Prior Amount of Amount of Principal or
Description Rate Date Terms Liens Mortgage Mortgage Interest
Mortgage Loans
Mt. Olive, NJ 8.375% 2028 $97,344 None $12,600,000 $12,472,462 --
Principal
& Interest
Monthly
Putnam
Parkade, CT 7% 2009 31,517 None 4,009,489 3,961,686 --
Principal
& Interest
Monthly
Putnam
Parkade, CT Prime +1 2003 Interest None 1,575,000 1,575,000 --
Only
Plainfield
Parkade, CT 8.875% 2006 34,343 None 3,797,115 3,256,749 --
Principal
& Interest
Monthly
$2,388,949
Final
Payment
Plainfield
Parkade, CT 8.70% 2006 10,000 None 500,000 444,502 --
Quarterly
Interest
-----------
$21,710,399
===========
Balance at April 30, 1998 $ 6,293,888
New Mortgage Loans 17,685,332
Principal Payments (5,968,185)
------------
Balance at April 30, 1999 18,011,035
============
New Mortgage Loans 15,038,743
Principal Payments (12,821,636)
------------
Balance at April 30, 2000 20,228,142
============
New Mortgage Loans 2,414,091
Principal Payments (756,831)
Principal Reductions (175,003)
------------
Balance at April 30, 2001 $ 21,710,399
============
36