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, 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.)
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 30, 1997, were as follows:
Class A Common Stock, $.01 par value 683,707 Shares of Common Stock
Class B Common Stock, $.01 par value 317,973 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 12 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of March 31, 1997 and December 31, 1996.........................3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1997 and 1996.................4
Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1997...................5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 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
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and December 31, 1996
(in thousands except share amounts)
03-31-97 12-31-96
ASSETS
Cash $ 502 $ 1,438
Restricted Cash 126 125
Securities Purchased under Agreement to Resell - 1,400
Income Taxes Receivable - 17
Homes Held for Sale 1,437 1,437
Property Held for Development 20,838 21,682
Other Assets 659 626
TOTAL ASSETS $23,562 $26,725
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred Income Taxes - 9
Accrued Interest and Other Liabilities 685 1,490
Notes Payable 3,499 5,999
Minority Interest in Joint Venture 148 131
TOTAL LIABILITIES 4,332 7,629
STOCKHOLDERS' EQUITY
Class A Common Stock Par Value, $.01 Per Share --
Authorized 2,000,000 Shares; Issued 804,823 at
3/31/97 and 805,098 at 12/31/96 8 8
Class B Common Stock Par Value, $.01 Per Share --
Authorized 1,000,000 Shares; Issued 322,533 at
3/31/97 and 322,708 at 12/31/96 3 3
Additional Paid-In Capital 19,055 19,031
Retained Earnings from January 1, 1993 819 884
Treasury Stock (154,450 Class A and
4,560 Class B) (655) (830)
TOTAL STOCKHOLDERS' EQUITY 19,230 19,096
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $23,562 $26,725
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,
1997 1996
Home Sales $ 2,448 $ 2,446
Cost of Sales (2,172) (2,360)
Gross Profit 276 86
Selling Expenses (170) (233)
General and Administrative
Expenses (194) (145)
(364) (378)
Operating Loss (88) (292)
Interest Income 23 48
Income 23 48
Loss before Taxes (65) (244)
Net Loss $ (65) $ (244)
Net Loss Per Share $(0.07) $ (0.25)
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 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
Net Loss - - - (65) - (65)
Balance at March 31, 1997 $ 8 $ 3 $19,055 $ 819 $ (655) $19,230
<FN>
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, 1997 and 1996
(in thousands)
Three Months
Ended March 31,
1997 1996
Cash Flows from Operating Activities:
Net Loss $ (65) $ (244)
Reconciliation of Net Loss to Net Cash
(Used in) Provided by Operating Activities:
Minority Interest 17 17
Changes in Assets and Liabilities:
Restricted Cash (1) 49
Property Held for Development 844 1,441
Other Assets (16) (108)
Accrued Interest and Other Liabilities, Net (814) 92
Net Cash (Used in) Provided by Operating
Activities ( 35) 1,247
Cash Flows from Investing Activities:
Proceeds from (Purchases of) Securities Purchased
under Agreement to Resell 1,400 (200)
Net Cash Provided by (Used in)
Investing Activities 1,400 (200)
Cash Flows from Financing Activities:
Repayment of Notes Payable (2,500) (1,000)
Purchase of Common Stock - (161)
Reissuance of Treasury Stock 199 -
Net Cash Used in Financing Activities (2,301) (1,161)
Net Decrease in Cash (936) (114)
Cash at Beginning of Period 1,438 639
Cash and End of Period $ 502 $ 525
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1997
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of March 31, 1997, and December 31, 1996, the related
consolidated statements of operations for the three month periods ended
March 31, 1997 and 1996, the consolidated statements of stockholders' equity
for the three months period ended March 31, 1997, and cash flows for the
three month periods ended March 31, 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 quarter
ended March 31, 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 LOSS PER SHARE
Net 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 968,346 at March 31, 1997, and 975,199 at March 31, 1996.
3. CONTINGENCIES
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. No action has been taken by the
RTC on this matter for quite some time and the RTC went out of existence on
December 31, 1995. Counsel to the Company have advised the Company that in
light of these circumstances and the likelihood of the expiration of the
statute of limitation, they do not see any prospect of material liability
to the RTC. Consequently, the Company has not provided for any
contingencies on these matters.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company's investment in property held for development
and homes held for sale decreased by $844,000 from its carrying value at
December 31, 1996. This decrease resulted primarily from a reduction of
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 "Glenbriar Joint Venture"). At March 31, 1997, the
Company has completed lot improvements on one hundred and fifty lots and
partial improvements on ninety nine additional lots. Of the one hundred and
fifty lots with completed lot improvements, ten are part of a model complex,
one hundred and nine have been built, sold and closed, twenty nine are under
construction and presold and two are under construction and are for sale.
The market for homes at Marina Vista improved substantially during the latter
part of 1996 and in the first part of 1997.
The Company continues to be part of a Joint Venture (the"Glenbriar Joint
Venture") 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.
Glenbriar Joint Venture 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 up to three
hundred and ninety five lots on the Glenbriar Joint Venture property and up
to five hundred lots on the Glenbriar Venture #2 property. In December
of 1996, Glenbriar Joint Venture filed final subdivision maps and improvement
plans with the city of Tracy covering certain off tract improvements for one
hundred and seventy two lots. At March 31, 1997, Glenbriar Joint Venture
is negotiating with various builders for the sale of lots upon approval of
the final subdivision maps. The Company anticipates selling lots to merchant
builders first in the Glenbriar Venture property and thereafter in the
Glenbriar Venture #2 property.
During the three months ended March 31, 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 additional 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.
The Company made the final principal payment of $2,500,000 on March 28, 1997
to the seller of the Marina Vista property. The seller released the
remaining property from the lien of its deed of trust. At March 31, 1997,
the Company has outstanding construction borrowing of $1,596,850 secured by
lots and homes under construction with a maturity date of September 30, 1997.
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 March 31, 1997, the Company had a net loss of $65,000,
compared to a loss of $244,000 for the same period in 1995. Total sales for
the quarter ended March 31, 1997, were $2,448,000, resulting in a gross
profit of $276,000, compared to $2,446,000 in sales and a gross profit
of $86,000 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 $23,000 in the first 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 March 31, 1997,
such overnight investments were liquidated.
For the three months ended March 31, 1997, general and administrative
expenses increased by $49,000 from those expenses incurred in the same
period in 1996. The expense increase resulted from an increase in
administrative expenses. At March 31, 1997, the cost of sales decreased
by $188,000, compared to the same period in 1996.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information required by this item is incorporated by reference to
footnote 3 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, 1996 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 3.
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, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
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, 1997 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
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<INVENTORY> 22275
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