SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 2000 Commission File No. 0-8862
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First Hartford Corporation
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(Exact name of registrant as
specified in its charter)
Maine 01-0185800
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(State of Incorporation) (I.R.S. Employer
Identification No.)
149 Colonial Road, Manchester, Connecticut 06040
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(Address of principal executive offices) (Zip Code)
(860) 646-6555
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(Registrant's telephone number, including area code)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES |_| NO |X|
As of November 8, 1997, 3,089,985 shares of common stock of the Registrant
were outstanding.
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FIRST HARTFORD CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Independent Auditor's Review Letter 1
Consolidated Balance Sheets -
July 31, 2000 and April 30, 2000 2 & 3
Consolidated Statements of Income (Loss)
Three Months Ended July 31, 2000 and
Three Months Ended July 31, 1999 4
Consolidated Statements of Cash Flows
Three Months Ended July 31, 2000 and
Three Months Ended July, 31, 1999 5 & 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION
Signatures 9
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[LETTERHEAD OF KOSTIN, RUFFKESS & COMPANY, LLC]
To the Board of Directors
First Hartford Corporation and Subsidiaries
INDEPENDENT ACCOUNTANTS' REPORT
We have reviewed the accompanying consolidated balance sheet of First Hartford
Corporation and Subsidiaries as of July 31, 2000, and the related consolidated
statements of operations, and cash flows for the three months then ended. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them
to be in conformity with generally accepted accounting principles.
/s/ Kostin, Ruffkess & Company, LLC
West Hartford, Connecticut
September 12, 2000
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Assets July 31, April 30,
------ 2000 2000
----------- -----------
Real Estate and equipment:
Developed properties $20,371,874 $20,374,092
Equipment and leasehold improvements 121,967 121,967
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20,493,841 20,496,059
Less accumulated depreciation and
amortization 1,418,834 1,303,929
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19,075,007 19,192,130
Properties under construction and
investment in undeveloped properties 70,115 -0-
and investments ----------- -----------
19,145,122 19,192,130
Cash 272,387 146,405
Accounts receivable, less allowance
for doubtful accounts 227,417 165,189
Deposits, escrows, and prepaid and
deferred expenses 1,527,374 1,111,735
Due from related parties and affiliates, and
investment in affiliated partnership 3,326,347 2,807,533
Deferred Tax Assets 1,700,000 1,700,000
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$26,198,647 $25,122,992
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2
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PART I - FINANCIAL INFORMATION
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 31, April 30,
2000 2000
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Liabilities:
Mortgages, notes payable
and capital lease obligations:
Construction loan payable $ 419,545 $ -0-
Mortgages payable 21,735,889 20,228,142
Notes Payable:
Other 5,341,159 5,501,159
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27,496,593 25,729,301
Accounts payable 1,700,798 2,277,685
Accrued Liabilities 821,907 741,742
Due to Related Parties and affiliated
partnerships 1,794,739 1,808,581
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31,814,037 30,557,309
Shareholders' equity (deficiency):
Common stock, $1 par; authorized
6,000,000 shares; issued 3,322,213
shares 3,322,213 3,322,213
Capital in excess of par 4,857,645 4,857,645
Deficit (11,727,124) (11,546,051)
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(3,547,266) (3,366,193)
Less 232,228 shares of common stock
held in treasury, at cost 2,068,124 2,068,124
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(5,615,390) (5,434,317)
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$ 26,198,647 $ 25,122,992
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3
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FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
Three Months Ended
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July 31, 2000 July 31, 1999
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Revenues, Including Related
Party Respectively:
Sale of Real Estate $ 148,367 $ --
Construction 63,761 79,743
Rental 975,785 553,511
Other 45,962 31,757
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1,233,875 665,011
Costs and Expenses:
Cost of Sales Real Estate 25,356 --
Construction 38,928 35,636
Operating, selling, general
and administrative 446,182 411,320
Interest 536,247 413,571
Depreciation and amortization 120,811 73,213
Real estate taxes 247,424 27,920
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1,414,948 961,660
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Net Income Gain (Loss) $ (181,073) $ (296,649)
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Income Per Share $ (0.06) $ (0.10)
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Weighted Average Number of Common
Shares Outstanding 3,089,985 3,089,985
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4
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FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
JULY 31, 2000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating 3 months ended 3 months ended
activities: July 31, 2000 July 31, 1999
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Net Profit (Loss) $ (181,073) $ (296,649)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 114,820 70,450
Amortization 5,991 2,763
Changes in assets and liabilities:
Increase in:
Accounts and Notes Receivable (62,228) 1,892
Deposits, escrows, prepaid and
deferred expenses (421,630) (255,756)
Accrued liabilities 80,165 44,764
Decrease in:
Accounts payable (576,887) (723,091)
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Net cash used in operating activities (1,040,842) (1,155,627)
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Cash flows from investing activities:
Purchase of Investments (26,244)
Purchase of Equipment -- (4,295)
Payments for:
Additions to Properties under
construction (67,812) (876,136)
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Net Cash used in investing activities $ (94,056) $ (880,431)
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5
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FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
JULY 31, 2000
Cash flows from financing 3 months ended 3 months ended
activities: July 31, 2000 July 31, 1999
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Proceeds from:
Construction Loans $ 419,545 $ 1,864,601
Mortgage Payable 1,575,000
Notes Payable 500,000 350,000
Principal payments on:
Mortgages payable (67,253) (49,590)
Notes payable (660,000) --
Repayment to related parties and
affiliated partnerships (506,412) (197,626)
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Net Cash provided by financing
activities 1,260,880 1,967,385
Net increase (decrease) in cash
and cash equivalents 125,982 (68,673)
Cash and cash equivalents, beginning
of year 146,405 106,017
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Cash and cash equivalents,
end of year $ 272,387 $ 37,344
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6
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Summary of Significant Account 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.
Revenue recognition:
Since the Registrant 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
Registrant 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, 2000, 1999 and 1998.
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.
7
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Interim Financial Information (Unaudited)
The interim financial statements of the Company for the three months ended July
31, 2000 and 1999 included herein, have been prepared by the Company, without
audit, pursuant to the rules and regulations of the SEC. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principals have been condensed or
omitted pursuant to the rules and regulations relating to interim financial
statements.
Item 2. FIRST HARTFORD CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Result of Operations
The quarter ended July 31, 2000 produced a loss of $181,073 or (.06) per
share compared to a loss of $296,649 (.10) per share for the quarter ended July
31, 1999.
Rental income has increased to $975,785 from $553,511 due to new rentals
at our shopping centers in Putnam, Connecticut and Mt. Olive, New Jersey. The
increase in real estate taxes to 247,424 from 27,920 is a result of full
assessment of new rental properties most of which have been passed through to
tenants and are included in rental income.
In the quarter ended July 31, 2000 total debt increased approximately
$1,250,000 while investment in projects through partnerships increased
approximately $500,000 and escrows increased $400,000.
Capital resource and liquidity have always been a major impediment of the
Registrant. Reputation, industry contacts and capital resources are the key
elements of the real estate development business. Management has continued to
explore new lenders and believes we will continue to find capital resources at
reasonable rates. Liquidity is worked on a daily basis through tight cash
management and the Registrant believes that will be adequate. In the event that
it is not, the Registrant will seek to bring a partner into one of the existing
properties or an outright sale.
8
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PART II - OTHER INFORMATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST HARTFORD CORPORATION
/s/ Stuart Greenwald
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Stuart Greenwald
Treasurer
Chief Financial Officer
(Duly Authorized Officer,
Principal Financial and
Accounting Officer)
Date: 9/13/00
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