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 September 30, 1997
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.)
100 Spear Street, Suite 520, San Francisco, CA 94105
(Address of Principal Executive Offices)
(415) 777-0414
(Issuer's Telephone Number, Including Area Code)
350 California Street, Suite 1650, San Francisco, CA 94104
(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 September 30, 1997 were as follows:
Class A Common Stock, $.01 par value 684,801 Shares of Common Stock
Class B Common Stock, $.01 par value 317,877 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 11 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of September 30, 1997 and December 31, 1996........... .............3
Consolidated Statements of Operations for the Three
Months and Nine Months Ended September 30, 1997 and 1996................4
Consolidated Statement of Stockholders'
Equity for the Nine Months Ended September 30, 1997.....................5
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1997 and 1996.................. 6
Notes to Consolidated Financial Statements............................. 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operation......................................8
PART II. OTHER INFORMATION ................................................10
SIGNATURES .................................................................11
DOVER INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, 1997 and December 31, 1996
(in thousands except share amounts)
09-30-97 12-31-96
ASSETS
Cash $ 1,604 $ 1,438
Restricted Cash 2,482 125
Securities Purchased under Agreement to Resell - 1,400
Income Taxes Receivable - 17
Homes Held for Sale 1,437 1,437
Property Held for Development 21,011 21,682
Other Assets 1,905 626
TOTAL ASSETS $28,439 $26,725
LIABILITIES AND STOCKHOLDERS' EQUITY
Income Taxes Payable 12 -
Deferred Income Taxes - 9
Accrued Interest and Other Liabilities 1,929 1,490
Notes Payable 6,149 5,999
Minority Interest in Joint Venture 228 131
TOTAL LIABILITIES 8,318 7,629
STOCKHOLDERS' EQUITY
Class A Common Stock Par Value, $.01 Per Share --
Authorized 2,000,000 Shares; Issued 804,917 at
9/30/97 and 805,098 at 12/31/96 8 8
Class B Common Stock Par Value, $.01 Per Share --
Authorized 1,000,000 Shares; Issued 322,437 at
9/30/97 and 322,708 at 12/31/96 3 3
Additional Paid-In Capital 19,380 19,031
Retained Earnings from January 1, 1993 1,385 884
Treasury Stock (119,666 at 9/30/97 and 154,450 at
12/31/96 of Class A Shares and
4,560 of Class B Shares) (655) (830)
TOTAL STOCKHOLDERS' EQUITY 20,121 19,096
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,439 $26,725
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Home Sales $ 7,020 $ 2,719 $ 11,890 $ 5,165
Lot Sales 1,949 - 1,949 -
Total Sales 8,969 2,719 13,839 5,165
Cost of Home Sales (6,168) (2,390) (10,520) (4,750)
Cost of Lot Sales (1,321) - (1,321) -
Total Cost of Sales (7,489) (2,390) (11,841) (4,750)
Minority Interest in Joint Venture (6) - (6) -
Gross Profit 1,474 329 1,992 415
Selling Expenses (408) (252) ( 789) (551)
General and Administrative Expenses (155) (142) ( 465) (408)
(563) (394) (1,254) (959)
Operating Income (Loss) 911 ( 65) 738 (544)
Other Income
Interest 30 21 66 106
Fees 34 - 34 -
Total Other Income 64 21 100 106
Income (Loss) before Taxes 975 (44) 838 (438)
Provision for Income Taxes (388) - (337) -
Net Income (Loss) $ 587 $ (44) $ 501 $ (438)
Net Income (Loss) Per Share $ 0.59 $(0.05) $ 0.50 $(0.45)
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1997
(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, 1997 $ 8 $ 3 $19,031 $ 884 $ (830) $19,096
Reissuance of Class A
Common Stock $ - - 24 - 175 199
Realization of Prequasi-
reorganization Net Operating
Loss Tax Benefits $ - - 325 - - 325
Net Income (Loss) $ - - - 501 - 501
Balance at
September 30, 1997 $ 8 $ 3 $19,380 $1,385 $(655) $20,121
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months ended September 30, 1997 and 1996
(in thousands)
Nine Months
Ended September 30,
1997 1996
Cash Flows from Operating Activities:
Net Income (Loss) $ 501 $ (438)
Reconciliation of Net Income (Loss) to Net Cash
Used in Operating Activities:
Minority Interest 97 60
Deferred Taxes (9) -
Tax Benefit of Utilizing Prequasi-reorganization
Net Operating Losses 325 -
Changes in Assets and Liabilities:
Restricted Cash (2,357) 170
Property Held for Development 671 (193)
Other Assets (1,262) (46)
Income Taxes Payable 12 -
Accrued Interest and Other Liabilities, Net 439 288
Net Cash Used in Operating Activities (1,583) (159)
Cash Flows from Investment Activities:
Proceeds from Securities Sold under
Agreement to Resell 1,400 2,300
Net Cash Provided by Investing Activities 1,400 2,300
Cash Flows from Financing Activities:
Proceeds from (Repayment of) Notes Payable 150 (2,271)
Stock Option Exercise - (159)
Reissuance of Treasury Stock 199 -
Net Cash Provided by (Used in)
Financing Activities 349 (2,430)
Net Increase (Decrease in) Cash 166 (289)
Cash at Beginning of Period 1,438 639
Cash at End of Period $ 1,604 $ 350
Additional paid-in capital for the nine months ended 9/30/97
increased and taxes payable decreased by $325, resulting
from prequasi-reorganization net operating loss tax benefits.
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
September 30, 1997
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim
consolidated balance sheets as of September 30, 1997, and December 31, 1996,
the related consolidated statements of operations for the three month and
nine month periods ended September 30, 1997 and 1996, and the consolidated
statements of stockholders' equity for the nine months period ended
September 30, 1997, and cash flows for the nine month periods ended
September 30, 1997 and 1996, 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 ("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 1996 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the three
months and nine months ended September 30, 1997, are not necessarily
indicative of the results which may be expected for the entire year.
The symbols for the Class A Common Stock and the Class B Common Stock are
"DOVR-A" and "DOVR-B", respectively.
2. 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 (loss) per share was 990,913 at September 30, 1997, and 968,346 at
September 30, 1996.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company's investment in property held for
development and homes held for sale decreased by $671,000 from its carrying
value at December 31, 1996. This decrease resulted primarily from a
reduction of capitalized expenditures and the sale of homes and lots for the
ongoing development of real property located in San Leandro, California
(the "Marina Vista property"), and the subdivision in Tracy, California
(the "Glenbriar Joint Venture"). At September 30, 1997, the Company has
completed lot improvements on one hundred and ninety eight lots and partial
improvements on fifty one additional lots. Of the one hundred and ninety
eight lots with completed lot improvements, ten are part of a model complex,
one hundred and forty have been built, sold and closed, twenty six are under
construction and presold. The Company will commence construction on an
additional nine houses, three of which have contracts of sale. Thirteen
lots of the one hundred and ninety eight have lot improvements. The market
for homes at Marina Vista improved substantially during 1997.
The Company continues to be part of Glenbriar Joint Venture (the "GJV") with
Westco Community Builders, Inc. ("Westco") in Tracy, California which owns
one hundred and eight acres of land comprising a portion of the Glenbriar
Estates Project. During 1996, the Company also formed a limited liability
company with Westco, known as Glenbriar Venture #2 which holds options to
purchase approximately one hundred and thirty one acres of land also
comprising a portion of the Glenbriar Estates Project. GJV and Glenbriar
Venture #2 have succeeded in rezoning the Glenbriar Estates property to Low
Density Residential and have obtained the approval of new tentative
subdivision maps which provide for three hundred and eighty two lots on the
GJV property and approximately five hundred lots on the Glenbriar Venture #2
property. The tentative subdivision maps provide for four lot types ranging
in size from 6,000 square feet to one acre in size. In June of 1997, GJV
commenced rough grading of the entire GJV property and is currently
installing the principle off tract and "backbone" improvements. GJV has
obtained final subdivision maps covering ninety two of the 6,000 square foot
lots (Units 5 & 6) and has sold these lots in an "unfinished" state to an
unrelated merchant builder. This builder expects to close the sale of its
first houses within the subdivision during the month of November 1997.
GJV has also granted this builder an option to purchase an additional eighty
eight lots (Unit 7) in an "unfinished" state. Additionally, GJV has obtained
approval of a final subdivision map covering eighty two of the 7,200 square
foot lots (Unit 2) and plans to build homes for sale on these lots. Site
improvements on these lots (e.g. utilities, streets, curbs, gutters, paving,
etc.) are currently being installed. GJV currently has two other final
subdivision maps on file with the City of Tracy pending approval covering
eighty four lots (Units 3 & 4). GJV intends to develop these lots itself by
construction of single family homes for sale to the public. Additional
subdivision maps will be submitted for approval as the market will permit.
In the future, GJV intends to build homes itself for sale to the public, as
well as sell lots to unrelated merchant builders.
During the third quarter, the Company entered into agreements with Westco
whereby Westco would construct and sell two higher priced custom single
family homes on the Peninsula. The profits from these two homes will be
split between the partners upon sale. The properties have been purchased
and plans are being submitted to the respective cities for approval.
It is expected that construction on these homes will commence within the
next sixty days.
During the nine months ended September 30, 1997, the Company used its
liquidity 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, lot sales, and from construction
financing when deemed appropriate. The Company believes that it has
sufficient cash available to complete the development and construction of
the Marina Vista property, as well as pay off the debt discussed below
when it becomes due, and make its required contributions to the Glenbriar
Joint Ventures.
On March 28, 1997, the Company made the final principal payment of $2,500,000
to the seller of the Marina Vista property. The seller released the
remaining property from the lien of its deed of trust. At September 30, 1997
the Company has outstanding construction borrowing of $6,149,000 secured by
lots and homes under construction with a maturity date of September 30, 1998.
The Company also has previously obtained an $802,000 loan secured by the four
model homes. The loans on the model homes mature on June 30, 1998. The
interest rates on the construction loan and model homes are prime plus one
and one half percent and eleven and one quarter percent, respectively.
RESULTS OF OPERATIONS
For the quarter ended September 30, 1997, the Company had net income of
$587,000, compared to a loss of $44,000 for the same period in 1996.
For the nine months ended September 30, 1997, net income was $501,000,
compared to a loss of $438,000 for the same period in 1996. Total sales
for the nine months ended September 30, 1997, were $13,839,000, resulting
in a gross profit of $1,992,000, compared to $5,165,000 in sales and a gross
profit of $415,000 for the same period in 1996.
The Company expects that the Marina Vista project and the Glenbriar Joint
Ventures will provide a profit from the sale of homes and lots. Factors
such as interest rates and general economic conditions influence the prices
at which the Company is able to sell homes. In order to maintain its market
share of new home sales, the Company keeps home prices competitive with other
builders of a similar product in the vicinity of the property.
The interest income of $30,000 in the third quarter of 1997 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 September 30, 1997, such overnight investments were liquidated.
For the nine months ended September 30, 1997, general and administrative
expenses increased by $57,000, from those expenses incurred in the same
period in 1996. The expense increase resulted from an increase in
administrative expenses. At September 30, 1997, home sales increased
by $6,725,000, the cost of sales increased by $5,770,000, compared to
the same period in 1996. The increase resulted from the sale and
construction of a larger number of homes.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEDURES
Information required by this item is incorporated by reference in
Item 3 of the Annual Report on Form 10-KSB for the year ended
December 31, 1996.
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
September 30, 1997.
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: November 7, 1997 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 22448
<CURRENT-ASSETS> 26534
<PP&E> 1905
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<CURRENT-LIABILITIES> 2169
<BONDS> 6149
0
0
<COMMON> 11
<OTHER-SE> 20110
<TOTAL-LIABILITY-AND-EQUITY> 28439
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<TOTAL-REVENUES> 13939
<CGS> 12636
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<OTHER-EXPENSES> 465
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 838
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