U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 1995
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 1-8631
Dover Investments Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 94-1712121
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
350 California Street, Suite 1650, San Francisco, CA 94104
(Address of Principal Executive Offices)
(415) 951-0200
(Issuer's Telephone Number, Including Area Code)
(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 CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of common
stock, as of April 28, 1995, were as follows:
Class A Common Stock, $.01 par value 795,020 Shares of Common Stock
Class B Common Stock, $.01 par value 327,338 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 13 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of March 31, 1995 and December 31, 1994............... 3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1995 and 1994....... 4
Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1995......... 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995 and 1994....... 6
Notes to Consolidated Financial Statements............... 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operation.......................10
PART II. OTHER INFORMATION ................................12
SIGNATURES ....................................................13
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1995 and December 31, 1994
(in thousands except share amounts)
ASSETS 03-31-95 12-31-94
Cash $ 415 $ 381
Restricted Cash 87 92
Securities Purchased under
Agreement to Resell 1,300 2,400
Cash and Securities Held in
Trust Account 2,500 2,500
Homes Held for Sale 1,291 1,291
Property Held for Development 22,325 22,231
Other Assets 1,323 923
TOTAL ASSETS $29,241 $29,818
LIABILITIES AND STOCKHOLDERS' EQUITY
Income Taxes Payable $ 230 $ 230
Accrued Interest and Other Liabilities 4,028 3,576
Notes Payable 9,400 10,400
TOTAL LIABILITIES 13,658 14,206
Minority Interest in Joint Venture 352 297
STOCKHOLDERS' EQUITY
Class A Common Stock par value, $.01
per share--Authorized 2,000,000 shares;
issued 795,020 at 3/31/95 and
795,020 at 12/31/94 8 8
Class B Common Stock par value, $.01
per share--Authorized 1,000,000 shares;
issued 327,338 at 3/31/95 and
327,338 at 12/31/94 3 3
Additional paid-in capital 14,715 14,715
Retained Earnings from January 1, 1993 522 606
Treasury Stock (5000 Shares Class A) (17) (17)
TOTAL STOCKHOLDERS' EQUITY 15,231 15,315
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $29,241 $29,818
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended
March 31,
1995 1994
Home Sales $ 1,007 $ 379
Cost of Sales (819) (275)
Gross Profit 188 104
Selling Expenses (133) (79)
General and Administrative
Expenses (168) (133)
(301) (212)
Operating Loss (113) (108)
Other Income
Interest 29 26
Other - 22
Total Other Income 29 48
Loss before Taxes (84) (60)
Provision for Taxes - (4)
Net (Loss) $ (84) $ (64)
Net (Loss) Per Share $ (0.07) $ (0.06)
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1995
(in thousands)
<CAPTION>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 8 $ 3 $14,715 $ 606 $ (17) $15,315
Additions to Paid-In Capital - - - - - -
Treasury Stock - - - - - -
Net (Loss) - - - (84) - (84)
Balance at March 31, 1995 $ 8 $ 3 $14,715 $ 522 $ (17) $15,231
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March, 31, 1995 and 1994
(in thousands)
Three Months
Ended March 31,
1995 1994
Increase in Cash
Cash Flows from Operating Activities:
Net (Loss) $ (84) $ (64)
Reconciliation of Net Income (Loss) to Net Cash
(Used in) Provided by Operating Activities:
Changes in Assets and Liabilities:
Restricted Cash 5 233
Property Held for Development (94) (2,602)
Homes Held for Sale - (1)
Other Assets (400) 1,117
Income Taxes Payable - (12)
Accrued Interest and Other
Liabilities, Net 452 (439)
Net Cash (Used in) Provided by
Operating Activities: (121) (1,768)
Equity of Minority Interest 55 -
Cash Flows from Investment Activities:
Securities Sold under Agreement
to Resell 1,100 -
Cash and Securities Held in Trust Account - -
Cash Flows from Financing Activities:
Repayment of Notes Payable (1,000) -
Proceeds from Notes Payable - 663
Treasury Stock - -
Net Decrease in Cash (34) (1,105)
Cash at Beginning of Period 381 1,667
Cash at End of Period $ 415 $ 562
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1995
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of March 31, 1995, and December 31, 1994, the related
consolidated statements of operations for the three month periods ended March
31, 1995 and 1994, and the consolidated statements of stockholders' equity
and cash flows for the three month periods ended March 31, 1995 and 1994,
reflect all adjustments (consisting of normal recurring accruals and
elimination of significant intercompany transactions and balances) necessary
for a fair presentation of Dover Investments Corporation ("Dover") and its
wholly-owned subsidiaries (collectively with Dover, the "Company").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, these statements
should be read in conjunction with the statements and notes thereto included
in the Company's 1994 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the quarter
ended March 31, 1995, are not necessarily indicative of the results which may
be expected for the entire year.
Prior year financial statements have been reclassified to conform to current
year presentation.
2. ORGANIZATION AND ACCOUNTING POLICIES
In connection with the Company's change of business focus from a savings and
loan holding company to a builder of single family homes, the Company, with
the approval of its Board of Directors, adopted a quasi-reorganization
effective January 1, 1993. The quasi-reorganization, which did not require
the approval of the Company's stockholders, resulted in the elimination of
the accumulated deficit of $16,017,000, the cancellation of the treasury
stock having a cost of $14,526,000, a decrease in additional paid-in capital
of $30,512,000, a decrease in Class A Common Stock of $25,000, and a decrease
in Class B Common Stock of $6,000, but did not result in any adjustments to
the value of assets or liabilities. As part of the plan, 2,479,929 Class A
and 594,029 Class B Common Shares held by the Company as treasury shares were
cancelled.
The symbols for the Class A Common Stock and the Class B Common Stock are
"DOVR-A" and "DOVR-B", respectively.
3. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed, on a combined basis, for the two
classes of common stock, Class A and Class B. Computations are based upon
the weighted average number of common shares outstanding. The weighted
average number of Class A and Class B share equivalents used to compute net
income per share was 1,122,358 at March 31, 1995, and 1,127,360 at March 31,
1994.
4. CONTINGENCIES
The Company, as the parent company of a group of affiliated corporations
filing consolidated Federal income tax returns, is contingently liable for
any liabilities arising with respect to the Association from such returns
filed for tax years through August 6, 1991. The Internal Revenue Service
("IRS") has completed examinations of all such federal income tax returns
from 1985 through 1990. The results of such examinations are as follows; all
of these items are attributable to the operations of the Association: a tax
refund of $949,552 for the year 1985; a tax deficiency of $97,265 for the
year 1986; no tax refunds or deficiencies for the years 1988, 1989 and 1990;
and interest due to the IRS for the years 1986 through 1990. Although the
interest due to the IRS referred to above has not yet been calculated, it is
anticipated that the amount of such interest plus the 1986 deficiency will
not exceed the amount of the 1985 refund which has been approved.
Additionally, the Company has been allowed a 1987 refund of $2,854,669 and a
loss carryforward (from 1990) of $34,682,841, due to the worthlessness of the
stock of the Association, which occurred in the taxable year ended December
31, 1990. This refund is not attributable to the operations of the
Association and will be paid by the IRS directly to the Company.
The Franchise Tax Board ("FTB") of the State of California has also made tax
claims against the Company for certain years when combined returns were filed
with the Association. The RTC is handling these claims, all of which are
attributable to the operations of the Association. The FTB and RTC have
verbally advised representatives of the Company that the amount of tax in
controversy is approximately $1,000,000 plus interest.
The Company filed a lawsuit against the RTC in 1994 based on the RTC's
disallowance of certain claims made against the RTC by the Company in its
capacity as a creditor of the Association. Most of the claims made by the
Company against the RTC had to do with the Company's potential liability to
the IRS and FTB arising from the tax controversies referred to above. Since
the above-referenced IRS tax controversies are now being resolved as set
forth above, it is hoped that a basis for settlement of the RTC lawsuit can
be reached and documented.
The Company has an agreement to indemnify its directors who formerly served
as directors and/or officers of the Association and its subsidiaries. The
RTC, in a letter dated March 10, 1993, advised the present and former
directors and officers of the Association and its subsidiaries of potential
claims that the RTC may assert against them for the recovery of losses
suffered by the Association and its subsidiaries in connection with certain
specified actions and loan transactions. The Company maintained a directors
and officers liability insurance policy to cover such potential liabilities.
The Company cannot estimate at this time its liability under the indemnity
agreement nor can it estimate the extent of its insurance coverage with
respect to such potential claims.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company's investment in property held for development
and homes held for sale increased by $94,000 from its carrying value at
December 31, 1994. This increase resulted from the capitalized expenditures
for the ongoing development of real property located in San Leandro,
California (the "Marina Vista property"), and the subdivision in Tracy,
California (the "Tracy Joint Venture"). At March 31, 1995, the Company has
improved 97 lots, and has built seventy houses at the Marina Vista property.
Aside from four model homes, which are not for sale, all but five of the
houses have been sold. The Company has recently commenced construction on an
additional 10 houses. In addition, the Marina Vista property has land for an
additional 152 lots. The Tracy Joint Venture property currently has an
approved tentative subdivision map for 160 lots. At March 31, 1995, the
Tracy Joint Venture had substantially completed the off-tract improvement
plans and grading plans for the entire project, and the final improvement
plans and final subdivision map for the first phase of 50 lots. Concurrently
with the processing described above, the Tracy Joint Venture is proceeding to
process a new subdivision map for the entire property which would subdivide
the property into approximately 380 lots. If the venture is successful in
subdividing the property into approximately 380 lots, there should be a
proportionate increase in the value of the property which will enhance the
eventual development or sale of the property.
During the three months ended March 31, 1995, the Company's primary liquidity
needs were to fund expenditures in connection with the Marina Vista property,
the Tracy Joint Venture, and its general and administrative expenses. The
Company met its funding requirements primarily from cash reserves and from
revenues from home sales. The Company also obtained construction financing
from private sources secured by the homes under construction. The Company's
primary source of liquidity in the future will continue to be from revenues
generated from home sales and from construction financing when deemed
appropriate. The Company believes that it will have sufficient cash
available to complete the development and construction of the Marina Vista
property, has the ability to pay off the debt discussed below when it becomes
due, and make its required contributions to the Tracy Joint Venture.
The Company is the obligor on a $7,500,000 promissory note carried back by
the seller of the Marina Vista property. The Company paid an additional
principal payment of $1,500,000 on December 6, 1994, therefore reducing the
required principal payment on September 29, 1995, to $1,000,000. The note
requires a principal payment of $2,500,000 on September 29, 1996, and the
balance of unpaid principal on March 29, 1997. At March 31, 1995, the
Company has outstanding construction borrowing of $1,500,000 secured by lots
and homes under construction with a maturity date of September 28, 1995. The
Company also has previously obtained an $800,000 loan secured by the four
model homes. The loans on the model homes mature on July 1, 1995. The
interest rates on the construction loan and model homes range between prime
plus one and one half percent and eleven percent.
RESULTS OF OPERATIONS
For the quarter ended March 31, 1995, the Company had a net loss of $84,000,
compared to a loss of $64,000 for the same period in 1994. Total sales for
the quarter ended March 31, 1995, were $1,007,000, resulting in a gross
profit of $188,000, compared to $379,000 in sales and a gross profit of
$104,000 for the same period in 1994.
The interest income of $29,000 in the first quarter of 1995 was attributable
to the Company investing its funds in overnight investments which are
collateralized by mortgage-backed certificates and are held on behalf of the
Company by the dealers who arranged the transaction. At March 31, 1995, such
overnight investments, with a weighted average interest rate of 5.60% and a
market value of the underlying collateral of $1,264,969, totaled $1,200,000.
For the first three months ended March 31, 1995, general and administrative
expenses increased by $35,000 from those expenses incurred in the same period
in 1994. The expense increase resulted from professional fees and other
administrative expenses.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information required by this item is incorporated by reference to
footnote 4 to the notes to the Consolidated Unaudited Financial
Statements included herein and to Item 3 of the Annual Report on
Form 10-KSB for the year ended December 31, 1994 of the Company.
There have been no material developments since the filing of such
report except as to the income tax disclosure described in footnote
4.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
The Company's Class A Common Stock and Class B Common Stock are
traded on the National Quotation Bureau pink sheets and on the
NASD OTC Bulletin Board under the symbols DOVR-A and DOVR-B.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The exhibit listed below is filed with this report.
27.1 Financial Data Schedule for the Quarter Ended March 31,
1995.
Incorporated by reference to Item 13 of the Annual Report on Form
10-KSB for the year ended December 31, 1994 of the Company.
B. Reports on Form 8-K
A report on Form 8-K, dated April 28, 1995, reported a tax
settlement with the IRS for tax years 1985 - 1990.
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.
DOVER INVESTMENTS CORPORATION
Date: May 9, 1995 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 502
<SECURITIES> 3800
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23616
<CURRENT-ASSETS> 27918
<PP&E> 1323
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<CURRENT-LIABILITIES> 4258
<BONDS> 9400
<COMMON> 11
0
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<OTHER-SE> 15572
<TOTAL-LIABILITY-AND-EQUITY> 29241
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<OTHER-EXPENSES> 168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (84)
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