US Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended JANUARY 31, 2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number 0-1684
Gyrodyne Company of America, Inc.
---------------------------------
(Exact name of small business issuer as specified in its charter)
New York 11-1688021
- --------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
102 Flowerfield, St. James, N.Y. 11780
----------------------------------------
(Address of principal executive offices)
(516) 584-5400
---------------------------
(Issuer's telephone number)
Former Address: 7 Flowerfield, Suite 28, St. James, N.Y. 11780
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,113,910 Common $1 P.V. as of
February 25, 2000
Seq. Page 1
<PAGE>
INDEX TO QUARTERLY REPORT
QUARTER ENDED JANUARY 31, 2000
Seq. Page
Form 10-QSB Cover 1
Index to Form 10-QSB 2
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Footnotes to Consolidated Financial Statements 6
Management's Discussion and Analysis or Plan of Operation 7
Part II - Other Information 8
Signatures 9
Seq. Page 2
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS January 31,
- ------ 2000
----
REAL ESTATE
Rental property:
Land $ 4,746
Building and improvements 4,566,404
Machinery and equipment 337,998
-----------
4,909,148
Less accumulated depreciation 3,446,922
-----------
1,462,226
-----------
Land held for development:
Land 803,592
Land development costs 1,191,092
-----------
1,994,684
Total real estate, net 3,456,910
CASH AND CASH EQUIVALENTS 1,395,638
RENT RECEIVABLE, net of allowance for doubtful accounts of $18,283 73,169
PREPAID EXPENSES AND OTHER ASSETS 260,906
INVESTMENT IN CITRUS GROVE PARTNERSHIP 1,585,104
PREPAID PENSION COSTS 1,652,493
-----------
$ 8,424,220
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
LIABILITIES:
Accounts payable and accrued expenses $ 194,569
Tenant security deposits payable 225,581
Loans payable 811,229
Deferred income taxes 999,026
-----------
2,230,405
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 4,000,000 shares;
1,531,086 shares issued 1,531,086
Additional paid-in capital 7,493,330
Deficit (431,189)
-----------
8,593,227
Less cost of 417,176 shares of common stock held in treasury (2,399,412)
-----------
6,193,815
-----------
$ 8,424,220
===========
See notes to consolidated financial statements
Seq. Page 3
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
January 31, January 31,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE FROM RENTAL PROPERTY $ 1,751,996 $ 1,643,526 $ 582,652 $ 566,568
----------- ----------- ----------- -----------
RENTAL PROPERTY EXPENSES:
Real estate taxes 279,760 264,750 96,574 87,001
Operating and maintenance 604,337 591,504 155,476 218,447
Interest expense 53,151 56,182 17,527 18,659
Depreciation 75,710 75,191 25,320 26,691
----------- ----------- ----------- -----------
1,012,958 987,627 294,897 350,798
----------- ----------- ----------- -----------
INCOME FROM RENTAL PROPERTY 739,038 655,899 287,755 215,770
----------- ----------- ----------- -----------
GENERAL AND ADMINISTRATIVE 966,137 754,060 303,922 247,216
(LOSS) FROM OPERATIONS (227,099) (98,161) (16,167) (31,446)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Aerospace Income/(expense), net 22,848 544,456 (3,611) 723,174
Income from oil investment, net 51,225 20,477 129 5,180
Gain on sale of oil investment 360,000 0 0 0
Interest income and dividends 32,249 22,908 13,121 9,119
----------- ----------- ----------- -----------
466,322 587,841 9,639 737,473
----------- ----------- ----------- -----------
INCOME/(LOSS) BEFORE INCOME TAX 239,223 489,680 (6,528) 706,027
PROVISION/(BENEFIT) FOR INCOME TAXES 100,590 196,627 (1,892) 282,453
----------- ----------- ----------- -----------
NET INCOME/(LOSS) $ 138,633 $ 293,053 ($ 4,636) $ 423,574
=========== =========== =========== ===========
NET INCOME/(LOSS) PER COMMON SHARE:
Basic $ 0.13 $ 0.27 ($ 0.00) $ 0.39
=========== =========== =========== ===========
Diluted $ 0.13 $ 0.27 ($ 0.00) $ 0.39
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic 1,101,807 1,070,280 1,108,982 1,078,155
=========== =========== =========== ===========
Diluted 1,108,395 1,074,540 1,108,982 1,090,936
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
Seq. Page 4
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
January 31,
-----------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 138,633 $ 293,053
----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 73,843 75,192
Bad debt expense 13,000 3,935
Deferred income tax provision 96,026 193,053
Non-cash compensation 357,095 383,073
Pension (income) (41,516) (48,089)
Changes in operating assets and liabilities:
(Increase) in assets:
Accounts receivable (23,112) (4,922)
Prepaid expenses and other assets (137,558) (80,050)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (166,468) (32,617)
Tenant security deposits 16,424 25,729
----------- -----------
Total adjustments 187,734 515,304
----------- -----------
Net cash provided by operating activities 326,367 808,357
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (265,398) (493,249)
----------- -----------
Net cash (used in) investment activities (265,398) (493,249)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable (39,882) (34,320)
Proceeds from exercise of stock options 45,396 4,814
----------- -----------
Net cash provided by (used in) financing activities 5,514 (29,506)
----------- -----------
Net increase in cash and cash equivalents 66,483 285,602
Cash and cash equivalents at beginning of period 1,329,155 1,053,304
----------- -----------
Cash and cash equivalents at end of period $ 1,395,638 $ 1,338,906
=========== ===========
</TABLE>
See notes to consolidated financial statements
Seq. Page 5
<PAGE>
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Quarterly Presentations:
The accompanying quarterly financial statements have been prepared in conformity
with generally accepted accounting principles. The financial statements of the
Registrant included herein have been prepared by the Registrant pursuant to the
rules and regulations of the Securities and Exchange Commission and, in the
opinion of management, reflect all adjustments which are necessary to present
fairly the results for the three and nine month periods ended January 31, 2000,
and 1999.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations; however,
management believes that the disclosures are adequate to make the information
presented not misleading.
This report should be read in conjunction with the financial statements and
footnotes therein included in the audited annual report on Form 10-KSB as of
April 30, 1999.
The results of operations for the three and nine month periods ended January 31,
2000, and 1999 are not necessarily indicative of the results to be expected for
the full year.
2. Principle of Consolidation:
The accompanying consolidated financial statements include the accounts of
Gyrodyne Company of America, Inc. ("GCA") and its wholly-owned subsidiaries. All
intercompany balances and transactions have been eliminated.
3. Earnings Per Share:
Basic earnings per common share is computed by dividing the net income (loss) by
the weighted average number of shares of common stock outstanding during the
period. Dilutive earnings per share give effect to stock options and warrants
which are considered to be dilutive common stock equivalents. Treasury shares
have been excluded from the weighted average number of shares.
The following is a reconciliation of the weighted average shares:
Nine months ended Three Months Ended
January 31, January 31,
2000 1999 2000 1999
- --------------------------------------------------------------------------------
Basic 1,101,807 1,070,280 1,108,982 1,078,155
- --------------------------------------------------------------------------------
Effect of dilutive securities 6,588 4,260 0 12,781
- -----------------------------------=============================================
Diluted 1,108,395 1,074,540 1,108,982 1,090,936
- -----------------------------------=============================================
4. Income Taxes:
Deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
Seq. Page 6
<PAGE>
Item 2 Management's Discussion and Analysis or Plan of Operation
A) Not applicable.
B) Management's Discussion and Analysis of Financial Condition and Results of
Operation
The Company recorded a net loss after tax of $4,636 for the three month period
ending January 31, 2000 compared to net income of $423,574 for the same period
last year. For the most part, this decrease of $428,210 to last year's result is
attributable to a nonrecurring November, 1998 payment of $760,000 pertaining to
Gyrodyne's Technology Transfer Agreement with Dornier GmbH. On a year to date
basis, net income for the nine months ended totaled $138,633 compared to
$293,053 for the same period last year. Here again, the Dornier payment in last
year's results coupled with $410,000 in current year proceeds from the sale of
our oil and aerospace assets are the major contributors for period to period
variances; other factors are discussed in the ensuing analysis.
Per share earnings for the current quarter were $0.00 while earnings of $0.13
per share were recorded for the nine month period. Earnings per share totaled
$0.39 and $0.27 for the prior year periods, respectively.
Revenue from rental property totaled $582,652 and $1,751,996 for the three and
nine month reporting period. This compares to $566,568 and $1,643,526 for last
year, respectively, and represents a $108,470 or 6.6% increase over prior year
to date results. The improvement is primarily attributable to contractual
increments in current leases and the rental of additional space to existing and
new tenants.
Costs associated with operating the property declined by $55,901 for the quarter
and totaled $294,897 compared to $350,798 the prior year. The expenses
associated with maintenance on buildings and grounds, salaries and the cost of
insurance all reflect decreases as compared to the prior year. This 16% cost
reduction helped bring our year-to-date expenses of $1,012,958 in line with the
prior year total of $987,627.
As a result, income from rental property improved for both the quarter and nine
month periods amounting to $287,755 and $739,038, respectively, as compared to
$215,770 and $655,899 the prior year. The year-to-date improvement amounts to
$83,139 or approximately 13%.
General and administrative expenses continue to reflect increases over prior
year periods. For the quarter, these costs totaled $303,922 compared to last
year at $247,216. Likewise, for the nine months ending January 31, 2000 general
and administrative expenses totaled $966,137 vs. $754,060 the prior year. Salary
expense increased $54,750, legal and consulting increased $126,981 and corporate
governance expenses pertaining primarily to our annual shareholders' meeting
experienced a $47,938 increment.
The Company experienced losses from operations of $16,167 and $227,099 for the
current three and nine month periods compared to prior year losses of $31,446
and $98,161, respectively.
Other income, which reflects the nonrecurring events (the Dornier payment and
the sale of oil and aerospace assets) mentioned earlier in this report, totaled
$9,639 for the quarter and $466,322 for the nine month reporting period compared
to $737,473 and $587,841 for the prior year, respectively.
As of January 31, 2000 the Company had cash and cash equivalents of $1,395,638
and working capital of $1,445,856 and anticipates having the capacity to fund
normal operating and administrative expenses as well as its regular debt service
requirements.
Capitalized expenses associated with the Company's Flowerfield property amounted
to $253,895 for the nine months and cumulatively total $1,275,229 to date.
The results of operations for both the quarter and nine month period ending
January 31, 2000 are not necessarily indicative of nor should they be used in
projecting annual or future operating results.
Subsequent to the close of business for this current period, the Company
received a ten-acre change of zone approval for the construction of an assisted
living facility to be developed by Marriott Senior Living Services (MSLS), a
division of Marriott
Seq. Page 7
<PAGE>
International, Inc. Terms of the long-term land lease with MSLS call for a
prepayment of rent in the amount of $2 million upon issuance of building
permits.
Part II Other Information
Item 1 Legal Proceedings
On February 23, 2000 the Company announced it had resolved the arbitration
proceedings and other related matters between Gyrodyne Company of America, Inc.
and Dimitri P. Papadakos, the former Chairman, President and Chief Executive
Officer. Both parties agreed to exchange releases from all claims and damages
arising out of legal actions and employment relationships.
Items 2 through 3 are not applicable to the November 1, 1999 through January 31,
2000 period.
Item 4 Submission of Matters to a Vote of Security Holders
The Company's annual shareholder meeting was held on November 16, 1999. On each
matter submitted to shareholders, the votes were as follows:
Votes For Votes Withheld
--------- --------------
To elect one Director (Robert Beyer)
to serve for a term of three years and
until his successor shall be
elected and shall qualify 813,043 138,044
Messrs. Friemann, Goudes, Lamb, Marburger, Maroney and Palmedo continue to serve
as Directors in accordance with their terms of office.
For Against Abstain
--- ------- -------
To ratify the engagement of Holtz,
Rubenstein & Co., LLP as certified
public accountants for the current
fiscal year 825,693 133,289 974
In addition, the following shareholder proposals were voted on:
Supermajority (66 2/3%) shareholder
approval for the sale of realty or
liquidation of the Company 155,095 427,155 39,741
Proposal on Compensation of Directors 197,916 416,148 7,927
Proposal on Election of Directors 205,999 408,413 7,849
Proposal on Company Transactions 168,344 407,772 45,875
Proposal on Sale Price of
Callery-Judge Grove 201,003 413,010 7,978
Item 5 and 6 are not required for the November 1, 1999 through January 31, 2000
period.
Seq. Page 8
<PAGE>
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.
GYRODYNE COMPANY OF AMERICA, INC.
(Registrant)
Date: March 06, 2000 SGD/ Stephen V. Maroney
----------------------------------
Stephen V. Maroney
President, Chief Executive Officer
and Treasurer
Date: March 06, 2000 SGD/ Frank D'Alessandro
----------------------------------
Frank D'Alessandro
Controller
Seq. Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JAN-31-2000
<CASH> 1,395,638
<SECURITIES> 0
<RECEIVABLES> 91,452
<ALLOWANCES> (18,283)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,903,832
<DEPRECIATION> (3,446,922)
<TOTAL-ASSETS> 8,424,220
<CURRENT-LIABILITIES> 0
<BONDS> 811,229
0
0
<COMMON> 1,531,086
<OTHER-SE> 4,662,729
<TOTAL-LIABILITY-AND-EQUITY> 8,424,220
<SALES> 1,751,996
<TOTAL-REVENUES> 1,751,996
<CGS> 1,012,958
<TOTAL-COSTS> 1,012,958
<OTHER-EXPENSES> 966,137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 239,223
<INCOME-TAX> 100,590
<INCOME-CONTINUING> 138,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,633
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
</TABLE>
