Attached files
file | filename |
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EX-31 - FIRST HARTFORD CORP | ex31-1.htm |
EX-31 - FIRST HARTFORD CORP | ex31-2.htm |
EX-32 - FIRST HARTFORD CORP | ex32-1.htm |
EX-32 - FIRST HARTFORD CORP | ex32-2.htm |
EXCEL - IDEA: XBRL DOCUMENT - FIRST HARTFORD CORP | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2012.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXHANGE 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 character) |
|
|
|
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 |
|
(Registrants 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 X 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 X No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
Accelerated filer |
Non-accelerated filer (Do not check if a smaller reporting company) |
Smaller reporting company X |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No X
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuers classes of common stock as of the latest practicable date.
2,418,302 as of September 30, 2012
1
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
The financial statements for the three months ended July 31, 2012 have not been reviewed by an independent registered public accounting firm.
INDEX
PART I. |
FINANCIAL INFORMATION |
PAGE
|
Item 1. |
Financial Statements (Unaudited)
|
|
|
Condensed Consolidated Balance Sheets
|
3-4 |
|
Condensed Consolidated Statements of Operations
for the
|
5 |
|
Condensed Consolidated Statements of Comprehensive Income
|
6 |
|
Condensed Consolidated Statements of Cash Flows for the
|
7-8 |
|
Notes to Condensed Consolidated Financial Statements
|
9-11 |
Item 2. |
Managements Discussion and Analysis of Financial
Condition
|
12-13 |
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk
|
13 |
Item 4. |
|
13-14 |
PART II. |
OTHER INFORMATION
|
|
Item 1. |
|
14 |
Item 1A. |
|
14 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
14 |
Item 3. |
Defaults Upon Senior Securities
|
14 |
Item 4. |
|
14 |
Item 5. |
|
14 |
Item 6. |
15
|
|
|
16
|
|
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Exhibits |
17-20 |
2
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
|
July 31, 2012 |
April 30, 2012 |
|
|
|
|
|
Real estate and equipment: |
|
|
|
Developed properties (including $70,655,253 in July and $70,644,959 in April for VIEs) |
$143,711,276 |
$139,096,722 |
|
Equipment and tenant improvements (including $2,026,630 in July and $2,004,014 in April for VIEs) |
2,962,719 |
2,661,928 |
|
|
146,673,995 |
141,758,650 |
|
|
|
|
|
Less accumulated depreciation and amortization (including $6,250,437 in July and $5,722,182 in April for VIEs) |
16,004,772 |
15,086,499 |
|
|
130,669,223 |
126,672,151 |
|
|
|||
Property under construction (including $28,838 in July and April for VIEs) |
3,183,983 |
6,381,722 |
|
|
133,853,206 |
133,053,873 |
|
|
|
|
|
Cash and cash equivalents (including $585,660 in July and $418,838 in April for VIEs) |
1,873,180 |
3,057,736 |
|
|
|
|
|
Cash and cash equivalents restricted |
332,345 |
457,952 |
|
|
|
|
|
Marketable securities (including $161,048 in July and $155,799 in April for VIEs) |
978,642 |
657,299 |
|
|
|
|
|
Accounts and notes receivable, less allowance for doubtful accounts of $367,500 as of July 31, 2012 and April 30, 2012, respectively (including $124,178 in July and $172,899 in April for VIEs) |
2,281,215 |
1,955,838 |
|
|
|
|
|
Other receivables |
6,386,053 |
8,600,078 |
|
|
|
|
|
Deposits, escrows, prepaid and deferred expenses, net (including $7,323,126 in July and $7,375,023 in April for VIEs) |
10,115,867 |
9,894,914 |
|
|
|
|
|
Investments in affiliates |
9,665 |
9,665 |
|
|
|
|
|
Due from related parties and affiliates (including $0 in July and $65,345 in April for VIEs) |
524,513 |
517,713 |
|
|
|||
Total Assets |
$156,354,686 |
$158,205,068 |
See accompanying notes.
3
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND DEFICIENCY
|
July 31, 2012 |
April 30, 2012 |
|
Liabilities: |
|||
Mortgages and notes payable: |
|||
Construction loans payable (including $24,257,043 in July and $24,289,341 in April for VIEs) |
$76,408,845 |
$74,026,262 |
|
Mortgages payable (including $33,619,376 in July and $33,795,664 in April for VIEs) |
63,959,483 |
64,241,626 |
|
Notes payable (including $2,004,697 in July and April for VIEs) |
4,166,057 |
4,283,654 |
|
|
144,534,385 |
142,551,542 |
|
|
|
|
|
Accounts payable (including $623,547 in July and $801,353 in April for VIEs) |
1,787,185 |
2,673,293 |
|
Other payables |
3,992,396 |
6,102,292 |
|
Accrued liabilities (including $2,516,706 in July and $2,367,143 in April for VIEs) |
3,771,199 |
4,160,079 |
|
Deferred income (including $212,820 in July and $214,217 in April for VIEs) |
665,328 |
657,215 |
|
Other liabilities |
3,873,516 |
4,098,351 |
|
Due to related parties and affiliates (including $249 in July for VIEs) |
104,552 |
102,752 |
|
|
158,728,561 |
160,345,524 |
|
|
|
|
|
Deficiency: |
|
|
|
First Hartford Corporation: |
|
|
|
Preferred stock, $1 par value; $.50 cumulative and
convertible; authorized |
-0- |
-0- |
|
Common stock, $1 par value; authorized 6,000,000 shares; issued 3,298,609 Shares |
3,298,609 |
3,298,609 |
|
Capital in excess of par |
5,198,928 |
5,198,928 |
|
Accumulated deficit |
(18,444,732) |
(18,419,410) |
|
Accumulated other comprehensive (loss) income |
19,482 |
(12,558) |
|
Treasury stock, at cost, 878,807 and 875,407 shares as of July 31, 2012 and April 30, 2012, respectively |
(4,947,981) |
(4,943,289) |
|
Total First Hartford Corporation |
(14,875,694) |
(14,877,720) |
|
Noncontrolling interests |
12,501,819 |
12,737,264 |
|
|
|
|
|
Total Deficiency |
(2,373,875) |
(2,140,456) |
|
|
|
|
|
Total Liabilities and Deficiency |
$156,354,686 |
$158,205,068 |
See accompanying notes.
4
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Months Ended |
||
|
July 31, 2012 |
July 31, 2011 |
|
Operating revenues: |
|
|
|
Rental income |
$4,562,373 |
$4,420,707 |
|
Service income |
2,192,975 |
910,242 |
|
Other income |
214,339 |
1,165 |
|
|
6,969,687 |
5,332,114 |
|
|
|
|
|
Operating costs and expenses: |
|
|
|
Rental expenses |
3,444,322 |
3,160,936 |
|
Service expenses |
1,440,058 |
632,391 |
|
Selling, general and administrative |
1,007,458 |
731,548 |
|
|
5,891,838 |
4,524,875 |
|
|
|||
Income from operations |
1,077,849 |
807,239 |
|
|
|
|
|
Non-operating income (expense): |
|
|
|
Interest expense |
(1,776,099) |
(1,912,767) |
|
Other income |
79,780 |
74,769 |
|
Equity in earnings of unconsolidated subsidiaries |
365,720 |
791,757 |
|
|
(1,330,599) |
(1,046,241) |
|
|
|||
Loss before income taxes |
(252,750) |
(239,002) |
|
|
|
|
|
Provision for (benefit from) income taxes |
8,017 |
(125) |
|
|
|
|
|
Consolidated net loss |
(260,767) |
(238,877) |
|
|
|
|
|
Net loss attributable to noncontrolling interests |
235,445 |
265,826 |
|
|
|
|
|
Net (loss) income attributable to First Hartford Corporation |
$(25,322) |
$26,949 |
|
|
|
|
|
Net (loss) income per share basic |
$(0.01) |
$0.01 |
|
|
|
|
|
Net (loss) income per share diluted |
$(0.01) |
$0.01 |
|
|
|
|
|
Shares used in basic per share computation |
2,419,802 |
2,436,711 |
|
|
|
|
|
Shares used in diluted per share computation |
2,419,802 |
2,541,974 |
See accompanying notes.
5
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
Three Months Ended |
||
|
July 31, 2012 |
July 31, 2011 |
|
|
|
|
|
Consolidated net loss |
$(260,767) |
$(238,877) |
|
Other comprehensive income, net of tax: |
|||
Unrealized gains on marketable securities |
32,040 |
-0- |
|
|
|
|
|
Other comprehensive income |
32,040 |
-0- |
|
|
|
|
|
Comprehensive loss |
(228,727) |
(238,877) |
|
Comprehensive loss attributable to noncontrolling interests |
235,445 |
265,826 |
|
|
|
|
|
Comprehensive gain attributable to First Hartford Corporation |
$ 6,718 |
$ 26,949 |
|
|
|||
|
|
|
See accompanying notes.
6
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three Months Ended |
||
|
July 31, 2012 |
July 31, 2011 |
|
|
|||
Operating activities: |
|||
|
|||
Consolidated net loss |
$(260,767) |
$(238,877) |
|
|
|
|
|
Adjustments to reconcile consolidated net loss to net
cash provided (used) by |
|
|
|
Equity in earnings of unconsolidated subsidiaries, net
of distributions of |
(224,835) |
(426,238) |
|
Depreciation |
944,466 |
860,863 |
|
Amortization |
94,417 |
89,563 |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
Accounts, notes and other receivables |
1,888,648 |
3,256,170 |
|
Deposits, escrows, prepaid and deferred expenses |
(315,370) |
250,485 |
|
Cash and cash equivalents restricted |
125,607 |
(389,644) |
|
Accrued liabilities |
(388,880) |
18,585 |
|
Deferred income |
8,113 |
(47,651) |
|
Accounts and other payables |
(2,996,004) |
(2,057,037) |
|
|
|
|
|
Net cash provided (used) by operating activities |
(1,124,605) |
1,316,219 |
|
|
|||
Investing activities: |
|||
Distributions from affiliates |
-0- |
200,000 |
|
Purchase of marketable securities |
(289,303) |
(151,136) |
|
Purchase of equipment and tenant improvements |
(300,791) |
(24,919) |
|
Additions to developed properties and properties under construction |
(1,443,007) |
(2,200,384) |
|
|
|
|
|
Net cash used by investing activities |
(2,033,101) |
(2,176,439) |
See accompanying notes.
7
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
|
Three Months Ended |
||
|
July 31, 2012 |
July 31, 2011 |
|
|
|||
Financing activities: |
|
|
|
Purchase of treasury stock |
$(4,692) |
$-0- |
|
|
|
|
|
Proceeds from: |
|
|
|
Construction loans payable |
2,414,880 |
1,445,817 |
|
Mortgage loans payable |
-0- |
550,000 |
|
Notes payable |
-0- |
-0- |
|
Principal payments on: |
|
|
|
Construction loans payable |
(32,298) |
(177,312) |
|
Mortgage loans payable |
(282,143) |
(816,866) |
|
Notes payable |
(117,597) |
(118,970) |
|
Advances to related parties and affiliates, net |
(5,000) |
(14,750) |
|
|
|||
Net cash provided by financing activities |
1,973,150 |
867,919 |
|
|
|
|
|
Net change in cash and cash equivalents |
(1,184,556) |
7,699 |
|
|
|
|
|
Cash and cash equivalents, beginning of period |
3,057,736 |
858,175 |
|
|
|
|
|
Cash and cash equivalents, end of period |
$1,873,180 |
$865,875 |
|
|
|
|
|
Cash paid during the period for interest |
$1,780,702 |
$1,370,411 |
|
|
|
|
|
Cash paid during the period for income taxes |
$209,681 |
$12,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
8
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Significant Accounting Policies:
Description of Business
First Hartford Corporation was incorporated in Maine in 1909 and is engaged in the purchase, development, ownership, management and sales of real estate.
Principles of Consolidation
The accompanying 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 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 condensed consolidated financial statements are the accounts of Rockland Place Apartments Limited Partnership and Clarendon Hill Somerville Limited Partnership. The Companys 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 10-01 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 established 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, 2012 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 Companys annual report on Form 10-K for the fiscal year ended April 30, 2012.
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.
Change in Accounting Policy
The Company adopted, as required, Accounting Standards Update (ASU) 2009-17 Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities effective May 1, 2010. Under this ASU, the identification of a primary beneficiary of a variable interest entity (VIE) as defined as the enterprise that has both of the following characteristics: a) the power to direct the activities of a VIE that most significantly impacts the VIEs economic performance, and b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Based on this updated guidance, the Company determined that it is no longer considered to be the primary beneficiary of CP Associates, LLC (CP Associates). As a result of the initial application of this updated guidance, the Company deconsolidated CP Associates as of May 1, 2010 and has measured its 50% retained interest in CP Associates at the carrying amount of the Companys retained interest had this updated guidance been effective when CP Associates was initially formed.
9
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Significant Accounting Policies (concluded):
Change in Accounting Policy (concluded)
The difference between the net amount derecognized from the Companys balance sheet and the amount of the Companys 50% retained interest in CP Associates has been recognized as a cumulative effect adjustment to the Companys equity as of May 1, 2010.
Currently, there are no ASUs that the Company is required to adopt which are likely to have a material effect on its financial statements.
Net Loss Per Common Share
Basic net income (loss) per share amounts are determined using the weighted average number of shares of common stock outstanding during the reporting period. Common stock options of 46,297 were anti-dilutive for the three month period ended July 31, 2012. Diluted earnings (loss) per share amounts include the weighted average outstanding common shares as well as dilutive common stock options of 105,263 for the three months ended July 31, 2011.
Financial Instruments and Fair Value
The Companys financial instruments included 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 Companys 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). There were no significant gross unrealized gains or temporary losses on such securities as of either July 31, 2012 or April 30, 2012. Net unrealized gains of $32,040 are included in accumulated other comprehensive income.
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 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 Companys condensed consolidated balance sheets follows:
|
July 31, 2012 |
April 30, 2012 |
|
Real estate and equipment, net |
$69,589,300 |
$70,112,601 |
|
Other assets |
8,194,012 |
8,187,903 |
|
Total assets |
77,783,312 |
78,300,504 |
|
Intercompany profit elimination |
(3,129,016) |
(3,156,971) |
|
Total assets |
$74,654,296 |
$75,143,533 |
|
|
|
|
|
Mortgages and other notes payable |
$59,881,116 |
$60,089,702 |
|
Other liabilities |
3,353,322 |
3,382,713 |
|
Total liabilities |
$63,234,438 |
$63,472,415 |
10
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Consolidated Variable Interest Entities and Investments in Affiliated Partnerships (concluded):
The Company accounts for its 50% ownership interest in CP Associates, LLC, Cranston Parkade, LLC and Dover Parkade, LLC under the equity method of accounting. A summary of the operating results for these entities follows:
|
Three Months Ended |
||
|
March 31, 2012 |
|
March 31, 2011 |
CP Associates, LLC |
|
|
|
Revenue |
$778,243 |
|
$776,986 |
Expenses |
602,278 |
|
587,145 |
Gain on derivatives |
463,444 |
|
330,387 |
Net income |
$639,409 |
|
$520,228 |
|
|
|
|
|
|
|
|
|
March 31, 2012 |
|
March 31, 2011 |
Cranston Parkade, LLC |
|
|
|
Revenue |
$1,299,921 |
|
$1,224,115 |
Expenses |
980,519 |
|
1,000,181 |
Net income |
$319,402 |
|
$223,934 |
|
|
|
|
|
July 31, 2012 |
|
July 31, 2011 |
Dover Parkade, LLC |
|
|
|
Revenue |
$640,603 |
|
$598,760 |
Expenses |
510,335 |
|
484,711 |
Net income |
$130,268 |
|
$114,049 |
For the years prior to May 1, 2009, the Company was committed to provide funding to CP Associates, LLC, Cranston Parkade LLC and Dover Parkade LLC. Although the Company no longer considers itself liable for their obligations it had not previously discontinued applying the equity method on these investments since the Company had previously considered itself to be committed to providing financial support to them. The Companys investment in them was recorded at cost and subsequently adjusted for their gains, losses and distributions. The resulting carrying value of these investments is ($3,873,516) as of July 31, 2012 and ($4,098,351) as of April 30, 2012 is included in other liabilities.
3. Income Taxes:
As of July 31, 2012 the Company has Federal net operating loss carryforwards totaling approximately $13,100,000 that are available to offset future Federal taxable income through various periods expiring between 2013 and 2027. The Company has concluded that it is more likely than not that it would realize any deferred tax asset,
4. Litigation:
There has been no change in Litigation since April 30, 2012.
5. Subsequent Events:
On September 5, 2012 a prepayment of $290,000 was made to Richard Kaplan that will apply to a final payment of approximate $754,000 due in 2015.
11
Item 2. MANAGEMENTS 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 Companys financial position and results of operations. This financial and business analysis should be read in conjunction with the condensed consolidated financial statements and related notes.
The following discussion and certain other sections of this Report on Form 10-Q contain statements reflecting the Companys views about its future performance and constitutes 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 Companys 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 customers may affect the Companys 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 Companys critical accounting policies from those included in Item 7 of its Annual Report on Form 10-K for the year ended April 30, 2012 under the subheading Critical Accounting Policies and Estimates.
Results of Operations
Rental Income
Rental income increased approximately $142,000 for the three month period ended July 31, 2012 compared to the period ended July 31, 2011. Approximately $105,000 was from housing and the balance from shopping centers. The increase in the shopping centers came from opening of stores in our Edinburg, Texas center.
Service Income
Service income for the three month periods ended July 31, 2012 and 2011 was approximately $2,192,000 and $910,000, respectively. Of the $1,282,000 increase, approximately $1,200,000 was from construction income. This construction activity was for a non-controlled entity which is not consolidated and thereby not eliminated. For the period ended July 31, 2011, the construction income was $972,000 but had to be eliminated in consolidation as it was for a controlled entity.
For the comparative periods there was a decrease in CVS Pharmacy fees of approximately $154,000. This is anticipated to be made up in future periods. Fees earned by Connolly and Partners (75% owned) amounted to $216,000.
Other Income
Included in other income is revenue of approximately $190,000 from the movie theater the company owns in North Adams, Massachusetts. This was not owned in the three months ended July 30, 2011.
Operating Cost and Expenses
Operating cost for the three months ended July 31, 2012 increased approximately $1,367,000 over the three months ended July 31, 2011. Of this increase, $872,000 was from construction cost and $196,000 was cost of running the movie theater.
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Results of Operation (concluded):
Interest Expense
Interest expense for the three months ended July 31, 2012 decreased approximately $136,000 which was a result of the interest rate reduction the Company received from the mortgage holder for the Edinburg, Texas shopping center.
Equity in Earnings of Unconsolidated Subsidiaries
Earnings for the three months ended July 31, 2012 decreased approximately $426,000. At April 30, 2012 the loss in CP Associates LLC was due to an unfavorable change in the fair value of derivative liability. However, the loss was reduced by $400,000 for the Companys share of losses in excess of its commitment to provide additional funding. No income will be recognized until such unrecognized losses are recovered. At July 31, 2012 approximately $320,000 of that loss was recognized.
Income Taxes
The Company has significant net operating loss carryforwards, so it will likely not be required to pay income taxes in the near term.
Capital Resource and Liquidity
The Company ended the period with approximately $2,852,000 of unrestricted cash, cash equivalents and marketable securities. The unrestricted cash and cash equivalents includes approximately $747,000 belonging to VIEs (Rockland Place, LP and Clarendon Hill Somerville, LP). Funds received from CVS Pharmacy, which are to be paid out in connection with CVS developments, amounted to approximately $332,000 and are included in restricted cash and cash equivalents.
In August and September 2012, the Company received the balance of the capital contributions due ($5,557,737) and paid off the $2,900,000 balance of the bridge loan.
The Company believes it has sufficient cash and cash resources to fund operations and debt maturities (approximately $2,000,000 (plus the $2,900,000 above)) in the next twelve months without any new bank borrowings.
Item 3. QUANTATIVE AND QUALLITATIVE DISCLOSURES ABOUT MARKET RISK
Smaller reporting companies are not required to provide the information required by this item.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation ( the Evaluation), under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls
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Item 4. CONTROLS AND PROCEDURES (concluded):
Evaluation of Disclosure Controls and Procedures (concluded);
and procedures (Disclosure Controls) as of the end of the period covered by this report pursuant to Rule 13a-15b of the Exchange Act. Based on this Evaluation, our President and Treasurer concluded that because of weaknesses in our control environment, our Disclosure Controls were not effective as of the end of the period covered by this report. Notwithstanding weaknesses in our control environment, as of July 31, 2012, we believe that the condensed consolidated financial statements contained in this report present fairly the Companys 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 Companys internal control over financial reporting.
Item 1. LEGAL PROCEEDINGS
There has been no change in litigation since April 30, 2012.
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
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Item 6. | EXHIBITS |
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a) | Exhibits: |
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Exhibit 31.1 |
Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934. |
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Exhibit 31.2 |
Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934. |
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Exhibit 32.1 |
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350. |
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Exhibit 32.2 |
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. |
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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 |
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(Registrant) |
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/s/ Neil H. Ellis |
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October 5, 2012 |
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Date |
Neil H. Ellis President and |
Chief Executive Officer |
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/s/ Stuart I. Greenwald |
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October 5, 2012 |
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Date |
Stuart I. Greenwald Treasurer |
and Chief Financial Officer |
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