U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 1998
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)
(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 June 30, 1998 were as follows:
Class A Common Stock, $.01 par value 745,843 Shares of Common Stock
Class B Common Stock, $.01 par value 316,532 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
as of June 30, 1998 and December 31, 1997... ...................... 3
Consolidated Statements of Operations for the Three
Months and Six Months Ended June 30, 1998 and 1997................. 4
Consolidated Statement of Stockholders'
Equity for the Six Months Ended June 30, 1998...................... 5
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1997.................... 6
Notes to Consolidated Financial Statements......................... 7
Item 2.
Management's Discussion and Analysis or Plan of Operation.......... 9
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............... 11
Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................12
SIGNATURES ........................................................13
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(in thousands except share amounts)
06-30-98 12-31-97
ASSETS
Cash $ 2,352 $ 2,660
Restricted Cash 1,003 1,416
Homes Held for Sale 1,694 1,290
Property Held for Development 22,879 20,610
Other Assets 2,951 3,133
TOTAL ASSETS $30,879 $29,109
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 1,662 1,373
Notes Payable 7,492 7,063
Minority Interest in Joint Venture 175 226
TOTAL LIABILITIES 9,329 8,662
STOCKHOLDERS' EQUITY
Class A Common Stock Par Value,
$.01 Per Share --Authorized 2,000,000
Shares; Issued 805,909 at
6/30/98 and 804,927 at 12/31/97 8 8
Class B Common Stock Par Value,
$.01 Per Share --Authorized 1,000,000
Shares; Issued 321,092 at
6/30/98 and 322,427 at 12/31/97 3 3
Additional Paid-In Capital 20,137 19,810
Retained Earnings from January 1, 1993 1,739 1,272
Treasury Stock (60,066 at 6/30/98
and 119,316 at 12/31/97 of Class A
Shares and 4,560 of Class B Shares (337) (646)
TOTAL STOCKHOLDERS' EQUITY 21,550 20,447
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $30,879 $29,109
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Home Sales $ 2,152 $ 2,422 $ 5,267 $ 4,870
Lot Sales 2,021 - 2,021 -
Total Sales 4,173 2,422 7,288 4,870
Cost of Home Sales (1,739) (2,180) (4,328) (4,352)
Cost of Lot Sales (1,653) - (1,653) -
Total Cost of Sales (3,392) (2,180) (5,981) (4,352)
Minority Interest in
Joint Venture (8) - ( 8) -
Gross Profit 773 242 1,299 518
Selling Expenses (175) (211) (282) (381)
General and Administrative
Expenses (180) (116) (321) (310)
(355) (327) (603) (691)
Operating Income (Loss) 418 (85) 696 (173)
Other Income
Interest 30 13 77 36
Fees 32 - 32 -
Total Other Income 62 13 109 36
Income (Loss) before Taxes 480 (72) 805 (137)
Provision for Income Taxes (208) - (338) -
Net Income (Loss) $ 272 $ (72) $ 467 $ (137)
Basic Earnings Per Share $0.27 $(0.07) $0.45 $(0.14)
Diluted Earnings Per Share $0.25 $0.43
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1998
(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, 1998 $ 8 $ 3 $19,810 $ 1,272 $ (646) $20,447
Re-issuance of Treasury
Stock $ - - 17 - 309 326
Realization of Prequasi-
reorganization Net Operating
Loss Tax benefits $ - - 310 - - 310
Net Income $ - - - 467 - 467
Balance at June 30, 1998 $ 8 $ 3 $20,137 $1,739 $ (337) $21,550
<FN>
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months ended June 30, 1998 and 1997
(in thousands)
Six Months
Ended June 30,
1998 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ 467 $ (137)
Reconciliation of Net Income (Loss) to
Net Cash Used in Operating Activities:
Minority Interest (51) 32
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses 310 -
Changes in Assets and Liabilities:
Restricted Cash 413 (212)
Property Held for Development (2,673) (474)
Other Assets 182 (95)
Accrued Interest and Other Liabilities 289 (773)
Net Cash Used in Operating Activities ($1,063) (1,659)
Cash Flows from Investment Activities:
Proceeds from Securities Sold under
Agreement to Resell - 1,400
Net Cash Provided by Investing Activities - 1,400
Cash Flows from Financing Activities:
Proceeds from (Repayment of) Notes Payable 429 (780)
Re-issuance of Treasury Stock 326 199
Net Cash Provided by (Used in)
Financing Activities 755 (581)
Net Decrease in Cash (308) (840)
Cash at Beginning of Period 2,660 1,438
Cash at End of Period $ 2,352 $ 598
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of June 30, 1998, and December 31, 1997, the related
consolidated statements of operations for the three month and six month
periods ended June 30, 1998 and 1997, and the consolidated statements of
stockholders' equity for the six months period ended June 30, 1998, and cash
flows for the six month periods ended June 30, 1998 and 1997, reflect all
adjustments (consisting of normal recurring accruals and elimination of
significant inter-company transactions and balances, except for the adjustments
described below in Note 3) 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 1997 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the three months
and six months ended June 30, 1998, 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
Basic 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 basic
income per share was 1,026,794 at June 30, 1998, and 985,012 at June 30, 1997.
Diluted income per share took into consideration the outstanding stock options.
3. ADJUSTMENTS RELATED TO RESTATEMENT
In connection with the preparation of the year end financial statements, the
Company completed an analysis of inter-company transactions during 1998 and
concluded that certain transactions should not have been recorded as
sales during the second quarter. The Company recorded these adjustments after
determining to reduce the amounts recorded for lot sales for this quarter.
The restated amounts are as follows (in thousands, except share amounts):
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
June 30, 1998
As Reported As Restated
Property Held for Development $23,405 $22,879
Other Assets 2,757 2,951
Total Assets 31,211 30,879
Accrued Interest and Other Liabilities 1,562 1,662
Total Liabilities 9,229 9,329
Additional Paid-In Capital 20,237 20,137
Retained Earnings 2,071 1,739
Stockholders Equity 21,982 21,550
Total Liabilities and Stockholders' Equity 31,211 30,879
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Six Months
Ended June 30, 1998 Ended June 30, 1998
As Reported As Restated As Reported As Restated
Lot Sales $ 4,596 $ 2,021 $ 4,596 $ 2,021
Cost of Lot Sales (3,702) (1,653) (3,702) (1,653)
Gross Profit 1,299 773 1,825 1,299
Operating Income 944 418 1,222 696
Income before Taxes 1,006 480 1,331 805
Provision for Taxes (402) (208) (532) (338)
Net Income 604 272 799 467
Basic Earnings
Per Share $0.59 $0.27 $0.78 $0.45
Diluted Earnings
Per Share $0.56 $0.25 $0.74 $0.43
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 1998
As Reported As Restated
Realization of Prequasi-reorganization
Net Operating Loss Tax Benefits
Additional Paid-In Capital $ 410 $ 310
Net Income 799 467
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1998
As Reported As Restated
Net Income $ 799 $ 467
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses 410 310
Property Held for Development (3,199) (2,673)
Other Assets 376 182
Accrued Interest and Other Liabilities 189 289
Net Cash Used in Operating Activities (1,473) (1,063)
Re-issuance of Treasury Stock 736 326
Net Cash Provided by (Used in)
Financing Activities 1,165 755
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
As discussed in Note 3 of Notes to Consolidated Financial Statements, the
Company has restated its second quarter financial statements. The changes
from the restatement have been reflected throughout the financial statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company's investment in property held for development
and homes held for sale increased by $2,673,000 from its carrying value at
December 31, 1997. This increase resulted primarily from 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 June 30, 1998, the
Company has completed lot improvements at Marina Vista 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 sixty nine have been built,
sold and closed, nineteen are under construction and have contracts of sale.
The Company continues to be part of a Glenbriar Joint Venture (the "GJV")
with Westco Community Builders, Inc. ("Westco") in Tracy, California which
originally owned one hundred and eight acres of land comprising a portion
of the Glenbriar Estates Project. During 1996, the Company formed a limited
liability company with Westco, known as Glenbriar Venture #2 which holds
options to purchase approximately one hundred and thirty one
additional 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 approximately
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 1997, GJV completed rough grading of the
entire GJV property and has installed the principal off tract and "backbone"
improvements. GJV has obtained final subdivision maps covering one hundred
and eighty of the 6,000 square foot lots (units 5, 6 & 7), and eighty two of
the 7,200 square foot lots (units 1 & 2) and 38 lots which are approximately
10,000 square feet or larger (unit 3). Units 5 & 6 were sold in an
"unfinished" state to an unrelated merchantbuilder. This builder has sold
houses on all of the lots in units 5 & 6. GJV had also granted this builder
an option to purchase an additional eighty eight lots (unit 7) in an
"unfinished" state, and the builder has exercised the option and the sale has
closed. GJV currently has one other final subdivision map on file with the
City of Tracy pending approval covering forty six lots (unit 4). GJV intends
to sell these lots to a related entity, the Tracy Residential Venture
Partners, LLC, in order to develop these lots by construction of single family
homes for sale to the public. Additional subdivision maps will be submitted
for approval as the market will permit. Glenbriar Venture #2 currently has
one final subdivision map for one hundred and twenty three lots (unit 8) on
file with the City of Tracy pending approval.
During 1997, the Company entered into agreements with Westco whereby Westco
would construct and sell higher priced custom single family homes in the
Silicon Valley Region of California. The profits from these homes will
be split between the partners upon sale. The properties have been purchased
and construction has commenced on two homes.
The Company formed a limited liability company with Westco, known as the Tracy
Residential Venture Partners, LLC (the "TRVP") for the purpose of building and
selling single family homes on eighty two 7,200 square foot lots in
Units 1 & 2. Model homes have been completed. TRVP has also started
construction on twenty homes, of which all twenty are under contracts of sale.
During the six months ended June 30, 1998, 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 and lot 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.
At June 30, 1998, the Company borrowed a total of $7,492,000 to pay for
home construction costs. The loans are secured by lots and homes under
construction and will be paid from the proceeds of home and lot sales. The
loans bear interest at the rate of prime plus 1.5 percent per annum and mature
on September 30 and December 31, 1998. The Company also obtained an $802,000
loan secured by four model homes. The loan bears interest at the
rate of 11.25 percent per annum and matures on June 30, 1999.
RESULTS OF OPERATIONS
For the quarter ended June 30, 1998, the Company had income of $272,000,
compared to a loss of $72,000 for the same period in 1997. For the six
months ended June 30, 1998, net income was $467,000, compared to a loss
of $137,000 for the same period in 1997. Total sales for the six months ended
June 30, 1998, were $7,288,000, resulting in a gross profit of $1,299,000,
compared to $4,870,000 in sales and a gross profit of $518,000 for the
same period in 1997.
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.
Interest income in the second quarter of 1998 increased to $30,000, compared
to $13,000 in 1997, due to higher cash balances from increased home sales.
For the six months ended June 30, 1998, general and administrative expenses
increased by $11,000, from those expenses incurred in the same period in 1997.
The expense increase resulted from an increase in administrative
expenses. At June 30, 1998, home sales increased by $397,000, the cost of
sales decreased by $24,000, compared to the same period in 1997. The increase
resulted from the sale and construction of a larger number of homes.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 5, 1998, the Company held its annual meeting of stockholders
for the purpose of electing directors and ratifying the appointment
of the Company's auditors. All of the Company's nominees were
elected directors as follows: Arnold Addison, 523,684 votes for and
28,952 votes withheld; John Gilbert 2,657,094 votes for and 1,230
votes withheld; Lawrence Weissberg, 2,657,214 votes for and 1,110
withheld; and Will C. Wood, 2,657,094 votes for and 1,230 votes
withheld. The proposal to ratify the appointment of Grant Thornton
LLP as the Company's independent public accountant for the year
ended December 31, 1997 and 1998, was approved with 3,181,607 votes
for, 211 votes against and 29,142 votes abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits listed below are filed with this report.
Exhibit No. Description.
10.15 Partnership Agreement, Tracy Residential Venture
Partners, LLC, dated April 6, 1998 between Dover
Investments Corporation and Westco Community
Builders, Inc.
27.1 Financial Data Schedule for the Quarter Ended
June 30, 1998.
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DOVER INVESTMENTS CORPORATION
Date: March 29, 1999 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,355
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 24,573
<CURRENT-ASSETS> 27,928
<PP&E> 2,951
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,879
<CURRENT-LIABILITIES> 1,837
<BONDS> 7,492
0
0
<COMMON> 11
<OTHER-SE> 21,539
<TOTAL-LIABILITY-AND-EQUITY> 30,879
<SALES> 1,017
<TOTAL-REVENUES> 7,397
<CGS> 6,271
<TOTAL-COSTS> 6,271
<OTHER-EXPENSES> 321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 805
<INCOME-TAX> 338
<INCOME-CONTINUING> 467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 467
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.43
</TABLE>
