SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 0-14019
Ridgewood Properties, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1656330
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia
30339
- -------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(770) 434-3670
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 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
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes _____ No _____
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1996 AND AUGUST 31, 1996
-------------------------------------
($000'S omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
November 30, August 31,
ASSETS 1996 1996
------ ----------- -----------
<S> <C> <C>
Real Estate Investments:
Real Estate Properties
Operating Properties $ 1,374 $ 1,383
Land Held for Sale or
Future Development 8,048 9,769
------------ ------------
9,422 11,152
Mortgage Loans 4 5
------------ ------------
Total real estate investments 9,426 11,157
Allowance for Possible Losses (3,544) (4,700)
------------ ------------
Net real estate investments 5,882 6,457
Investment in Limited Partnership 947 957
Cash and Cash Equivalents 1,167 298
Other Assets 1,195 1,012
------------ ------------
$ 9,191 $ 8,724
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1996 AND AUGUST 31, 1996
-------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
November 30, August 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1996 1996
---------------------------------------- ------------ ------------
<S> <C> <C>
Accounts Payable $ 109 $ 103
Accrued Salaries, Bonuses and
Other Compensation 793 782
Accrued Property Tax Expense 18 151
Accrued Interest and Other Liabilities 299 389
Term Loans 2,848 2,858
------------ ------------
Total Liabilities 4,067 4,283
------------ ------------
Commitments and Contingencies
Shareholders' Investment
Series A Convertible Preferred Stock,
$1 par value, 1,000,000 shares authorized, 450,000
shares issued and outstanding at November 30, 1996
and August 31, 1996, liquidation preference
and callable at $3,600,000. 450 450
Common Stock, $.01 par value, 5,000,000
shares authorized, 1,088,480 shares issued and
outstanding at November 30, 1996 and
August 31, 1996. 11 11
Paid-in Surplus 16,157 16,202
Accumulated Deficit since December 30, 1985 (11,494) (12,222)
------------ ------------
5,124 4,441
------------ ------------
$ 9,191 $ 8,724
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
STATEMENTS OF CONSOLIDATED LOSS
-------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND NOVEMBER 30, 1995
-----------------------------------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
For the Three Months Ended
-----------------------------
November 30, November 30,
1996 1995
------------ ------------
<S> <C> <C>
REVENUES:
Operating revenues ................................ $ 636 $ 520
Revenues from hotel management .................... 254 58
Sales of real estate properties ................... 1,945 235
Equity in net income of partnership ............... 3 --
Income from loans and temporary investments ....... (1) 23
------------- -------------
2,837 836
------------- -------------
COSTS AND EXPENSES:
Operating expenses ................................ 565 549
Expenses of hotel management ...................... 190 44
Expenses of real estate sales ..................... 866 180
Depreciation and amortization ..................... 62 39
Interest expense .................................. 85 85
General, administration and other ................. 309 295
Business development .............................. 32 40
------------- -------------
2,109 1,232
------------- -------------
NET INCOME (LOSS) ..................................... $ 728 $ (396)
============= =============
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE ............................. $ 0.52 $ (0.46)
============= =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND NOVEMBER 30, 1995
-----------------------------------------------------------------
Decrease in Cash and Cash Equivalents
-------------------------------------
($000's Omitted)
----------------
<CAPTION>
1996 1995
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................................. $ 728 $ (396)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation and amortization ............................. 62 35
Gain from sales of real estate property ................... (1,079) (55)
Increase in other assets .................................. (214) (35)
Decrease in accounts payable and
accrued liabilities ..................................... (206) (109)
------------- ----------
Total adjustments ......................................... (1,437) (164)
------------- ----------
Net cash used by operating activities ..................... (709) (560)
Cash flows from investing activities:
Principal payments received on mortgage loans ............... 1 37
Proceeds from sales of real estate .......................... 1,644 275
Additions to real estate properties ......................... (22) (14)
Investment in limited partnership ........................... 10 --
------------- ----------
Net cash received from investing activities ............... 1,633 298
Cash flows from financing activities:
Repayments of notes payable ................................. (10) (6)
Payment of dividends on preferred stock ..................... (45) (45)
------------- ----------
Net cash used by financing activities ..................... (55) (51)
------------- ----------
Net increase (decrease) in cash and cash equivalents ............ $ 869 $ (313)
Cash and cash equivalents at beginning of period ................ 298 1,880
------------- ----------
Cash and cash equivalents at end of period ...................... $ 1,167 $ 1,567
============= ==========
The accompanying notes are an integral part of these consolidated financial statements.
Supplemental disclosure of noncash activity:
1996 1995
Decrease in allowance for possible losses ---- ----
due to sale of parcel of land ............................ $ 1,156,000 $ --
============= ==========
</TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 AND NOVEMBER 30, 1995
(Unaudited)
1. GENERAL:
Ridgewood Properties, Inc. (the "Company") is
primarily engaged in the business of acquiring, developing,
operating and selling real estate property in the Southeast
and "Sunbelt" areas. Additionally, the Company, through its
investment in a limited partnership, is engaged in acquiring
and managing hotel properties in the Southeast, as well as
managing other hotels throughout the country. The Company
also owns and operates a hotel in Longwood, Florida. All of
the Company's other properties are land properties held for
sale, and no additional development is currently anticipated
for the land. The Company was incorporated under the laws of
the State of Delaware on October 29, 1985. Prior to December
31, 1985, the Company operated under the name CMEI, Inc.
The Company's common stock is currently listed in
the broker-dealer "Pink Sheets" and trades in the
over-the-counter market. Of the Company's issued and
outstanding shares of common stock, 37% of the common stock is
owned by the Company's President, N. Russell Walden. All of
the Company's issued and outstanding shares of preferred stock
are owned by Triton Group, Ltd.
The accompanying financial statements of the
Company present the historical cost basis amount of assets,
liabilities and shareholders' investment of the real estate
business for the periods presented. The consolidated
financial statements include the accounts of the Company, its
wholly-owned subsidiaries and its joint venture investments
after the elimination of all intercompany amounts.
2. BASIS OF PRESENTATION:
The accompanying consolidated financial statements
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the consolidated
financial statements reflect all adjustments, consisting of
normal recurring adjustments, which are necessary to present
fairly the financial position, results of operations and
changes in cash flow for the interim periods covered by this
report. Although 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, management believes that the disclosures are
adequate to make the information presented not misleading.
These financial statements should be read in conjunction with
the audited consolidated financial statements and notes
thereto included in the Company's annual report for the fiscal
year ended August 31, 1996. The results of operations for the
three months ended November 30, 1996 are not necessarily
indicative of the results to be expected for the fiscal year
ending August 31, 1997.
The Company has net operating loss carryforwards
for both book and tax purposes which may be used to offset
future taxable income. In September 1993, the Company adopted
SFAS 109. The adoption of SFAS 109 did not have a material
effect on the Company's consolidated financial position or
results of operations.
For the purpose of the Statement of Cash Flows,
cash includes cash equivalents which are highly liquid
investments with maturity of three months or less.
Certain prior year amounts have been reclassified to
conform with the current presentation.
3. ALLOWANCE FOR POSSIBLE LOSSES:
The allowance for possible losses decreased by
$1,156,000 during the three months ended November 30, 1996 due
to the sale of a portion of the land in Dallas, Texas, for
which a reserve had previously been established.
4. INCOME TAXES:
The Company's income tax provision for the three
months ended November 30, 1996 and November 30, 1995 is as
follows:
1996 1995
Income tax provision 292,000 --
Utilization of net operating
loss carryforwards (292,000) --
-------- ----
Net income tax provision -- --
======== ====
5. SHAREHOLDERS' INVESTMENT:
Income (Loss) Per Common and Common Equivalent Share --
The calculation of earnings per common and common
equivalent share includes certain stock options (see options
granted below to the President and Chief Financial Officer).
A value of $1.13 per share was used in the calculations, which
was calculated on the average of the bid and ask prices of the
common stock during the three months ended November 30, 1996.
The bid and ask prices were used due to the absence of an
established public trading market in the stock.
The loss per common share is calculated based upon
the weighted average number of shares outstanding of
approximately 1,088,000 for the three months ended November
30, 1995.
Dividends paid on preferred stock were $45,000 for
the three months ended November 30, 1996 and 1995. These
dividends were deducted from the net income and added to the
loss for purposes of computing the income (loss) per common
share.
Stock Option Plan --
On March 30, 1993, the Company granted options to
purchase 378,000 shares of common stock at a price of $1.83
per share to its key employees and one director under the
Ridgewood Properties, Inc. Stock Option Plan (the "Plan").
The options vested over a four year period in 25% increments.
All options expire ten years from the date of grant, unless
earlier on account of death, disability, termination of
employment, or for other reasons outlined in the Plan. As of
November 30, 1996, all of the options are exercisable.
On January 28, 1994, the Company granted options to
purchase 375,000 and 75,000 shares of common stock at a price
of $1.00 per share to its President and Chief Financial
Officer, respectively, under the Plan. The options are
exercisable immediately and expire on January 31, 1997.
6. NOTES PAYABLE:
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood,
Florida. The loan proceeds are $2,800,000. The loan is for a
term of 20 years with an amortization period of 25 years, at
the rate of 10.35%. Principal and interest payments are
approximately $26,000 per month beginning August 1, 1995. In
addition, the Company is required to make a repair escrow
payment comprised of 4% of estimated revenues, as well as real
estate tax and insurance escrow payments. The total amount
for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be
used as tax, insurance and repair needs arise. As of November
30, 1996, there was approximately $110,000 of escrowed funds
related to this loan agreement. Also, commitment fees and
loan costs of approximately $159,000 are being amortized over
20 years. The balance of this loan as of November 30, 1996
was approximately $2,764,000.
In December 1995 and in conjunction with the
acquisition of a hotel management company, the Company assumed
three promissory notes dated September 22, 1994 and payable to
three different Georgia corporations. The total combined
outstanding principal was approximately $106,000. All three
notes are for a term of five years at a rate of 6.83%.
Combined principal and interest payments are approximately
$2,667 per month through October 1, 1999. The combined
balance of these loans at November 30, 1996 was approximately
$84,000.
Maturities of long-term debt during the Company's
next five fiscal years are as follows: 1998 - $59,000; 1999 -
$65,000; 2000 - $43,000; 2001 - $42,000; thereafter -
$2,594,000.
7. INVESTMENT IN LIMITED PARTNERSHIP:
On August 16, 1995, RW Hotel Partners, L.P. was
organized as a limited partnership (the "Partnership") under
the laws of the State of Delaware. Concurrently, the Company
formed Ridgewood Hotels, Inc., a Georgia corporation
("Ridgewood Hotels") which became the sole general partner in
the Partnership with RW Hotel Investments Associates, L.L.C.
("Investor") as the limited partner. Ridgewood Hotels has a
1% base distribution percentage versus 99% for the Investor.
However, distribution percentages do vary depending on certain
defined preferences and priorities pursuant to the Partnership
Agreement ("Agreement") which are discussed below. The
partnership was originally formed to acquire a hotel property
in Louisville, Kentucky. The partnership consists of six
hotel properties at November 30, 1996. The terms of this
partnership will serve as a guideline for other potential
acquisitions with this or other investors.
Income and loss are allocated to the Company and the
limited partner based upon the formula for allocating
distributable cash as described below but subject to an annual
limitation which would result in no more than 88% of
partnership income or loss (as defined) being allocated to the
limited partner.
Distributable Cash is defined as the net income from
the property before depreciation plus any net sale proceeds
and net financing proceeds less capital costs. Distributions
of Distributable Cash shall be made as follows:
- First, to the Investor until there has been
distributed to the Investor an amount equal to a 15%
cumulative internal rate of return on the Investor's
investment.
- Second, to Ridgewood Hotels until the aggregate
amount received by Ridgewood Hotels equals the aggregate cash
contributions made by Ridgewood Hotels to the Partnership (as
of November 30, 1996, Ridgewood Hotels contributed
approximately $748,000).
- Third, 12% to Ridgewood Hotels and 88% to the
Investor until there has been distributed to the Investor an
amount equal to a 25% cumulative internal rate of return on
Investor's investment.
- Fourth, 75% of the residual to the Investor and
25% to Ridgewood Hotels.
A Management Agreement exists between the
Partnership and the Company as Manager ("Manager") for the
purpose of managing hotels in Kentucky, Georgia and South
Carolina. The Manager shall be entitled to the following
property management fees:
(1) 2.5% of the gross revenues from the hotel
property.
(2) 1% of the gross revenues from the hotel
property as an incentive fee if distributable cash equals or
exceeds 13.5% of certain aggregate acquisition costs. No
management fees were payable with respect to the first
12-month period of management of the hotel in Kentucky.
A Construction Management Agreement exists between
the Partnership and the Manager for the purpose of managing
future improvements to the properties.
The Company currently has approximately $748,000
invested in the Partnership. Also, at November 30, 1996, the
Company recorded approximately $212,000 equity in the income
of the Partnership, bringing the total investment in the
limited Partnership to approximately $947,000. The equity
method of accounting is used for accounting for the investment
in the Partnership. Also, the investment of $947,000 is after
the elimination of intercompany transactions. The Partnership
purchased a hotel in Louisville, Kentucky for approximately
$16,000,000. In December 1995 and January 1996, the
Partnership purchased four hotel properties in Georgia for
approximately $15,000,000 and a hotel in South Carolina for
$4,000,000, respectively. The Company may make future capital
contributions to the Partnership. Management expects to fund
such capital contributions through available cash or from
loans from the Partnership. Additionally, the Company may
invest in other partnerships to acquire hotels in the future.
8. SUBSEQUENT EVENT:
On December 16, 1996, 75,000 warrants were issued to
Hugh Jones, a hotel acquisitions consultant for the Company.
Each warrant represents the right to purchase from the Company
one share of common stock at the exercise price of $3.50 per
share. The warrants may be exercised at any time within five
years from the date of issuance.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996
COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 1995
LIQUIDITY AND CAPITAL RESOURCES --
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood,
Florida. The loan proceeds are $2,800,000. The loan is for a
term of 20 years with an amortization period of 25 years, at
the rate of 10.35%. Principal and interest payments are
approximately $26,000 per month beginning August 1, 1995. In
addition, the Company is required to make a repair escrow
payment comprised of 4% of estimated revenues, as well as real
estate tax and insurance escrow payments. The total amount
for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be
used as tax, insurance and repair needs arise. As of November
30, 1996, there was approximately $110,000 of escrowed funds
related to this loan agreement.
During the first three months of fiscal year 1997,
the Company sold land in Florida and Texas for net proceeds of
approximately $1,220,000 and $432,000, respectively.
The Company signed a contract for the sale of a
parcel of land in Longwood, Florida for net proceeds of
approximately $300,000. The Company also signed a contract
for the sale of its land in Maitland, Florida for net proceeds
of approximately $1,300,000. The above sales are scheduled to
close in January and February, 1997, respectively, but both of
the contracts have several contingencies which allow the
buyers to withdraw at any time.
On August 16, 1995, RW Hotel Partners, L.P. was
organized as a limited partnership (the "Partnership") under
the laws of the State of Delaware. Concurrently, the Company
formed Ridgewood Hotels, Inc., a Georgia corporation
("Ridgewood Hotels") which became the sole general partner in
the Partnership with RW Hotel Investments Associates, L.L.C.
("Investor") as the limited partner. Ridgewood Hotels has a
1% base distribution percentage versus 99% for the Investor.
However, distribution percentages do vary depending on certain
defined preferences and priorities pursuant to the Partnership
Agreement ("Agreement") which are discussed below. The
partnership was originally formed to acquire a hotel property
in Louisville, Kentucky. The partnership consists of six
hotel properties at November 30, 1996. The terms of this
partnership will serve as a guideline for other potential
acquisitions with the Investor or other investors.
Income and loss are allocated to the Company and the
limited partner based upon the formula for allocating
distributable cash as described below but subject to an annual
limitation which would result in no more than 88% of
partnership income or loss (as defined) being allocated to the
limited partner.
Distributable Cash is defined as the net income from
the property before depreciation plus any net sale proceeds
and net financing proceeds less capital costs. Distributions
of Distributable Cash shall be made as follows:
- First, to the Investor until there has been
distributed to the Investor an amount equal to a 15%
cumulative internal rate of return on the Investor's
investment.
- Second, to Ridgewood Hotels until the aggregate
amount received by Ridgewood Hotels equals the aggregate cash
contributions made by Ridgewood Hotels to the Partnership (as
of November 30, 1996, Ridgewood Hotels had contributed
approximately $748,000).
- Third, 12% to Ridgewood Hotels and 88% to the
Investor until there has been distributed to the Investor an
amount equal to a 25% cumulative internal rate of return on
Investor's investment.
- Fourth, 75% of the residual to the Investor and
25% to Ridgewood Hotels.
A Management Agreement exists between the
Partnership and the Company as Manager ("Manager") for the
purpose of managing hotels in Kentucky, Georgia and South
Carolina. The Manager shall be entitled to the following
property management fees:
(1) 2.5% of the gross revenues from the hotel
property.
(2) 1% of the gross revenues from the hotel
property as an incentive fee if distributable cash equals or
exceeds 13.5% of certain aggregate acquisition costs. No
management fees were payable with respect to the first
12-month period of management of the hotel in Kentucky.
A Construction Management Agreement exists between
the Partnership and the Manager for the purpose of managing
future improvements to the properties.
The Company currently has approximately $748,000
invested in the Partnership. Also, at November 30, 1996, the
Company recorded approximately $212,000 equity in the income
of the Partnership, bringing the total investment in the
limited Partnership to approximately $947,000. The
Partnership purchased a hotel in Louisville, Kentucky for
approximately $16,000,000. In December 1995 and January 1996,
the Partnership purchased four hotel properties in Georgia for
approximately $15,000,000 and a hotel in South Carolina for
$4,000,000, respectively. The Company may make future capital
contributions to the Partnership. Management expects to fund
such capital contributions through available cash or from
loans from the Partnership. Additionally, the Company may
invest in other partnerships to acquire hotels in the future.
Since the Company is not currently generating
sufficient operating cash to cover overhead and debt service,
the Company must continue to sell real estate, seek
alternative financing or otherwise recapitalize the Company.
The Company also intends to aggressively pursue the
acquisition of hotels and hotel management contracts which
would provide additional cash flow.
RESULTS OF OPERATIONS --
The Company had gains from real estate sales of
approximately $1,079,000 for the three months ended November
30, 1996. During the three months ended November 30, 1995,
the Company had gains from real estate sales of approximately
$55,000. Gains or losses on sales are dependent upon the
specific assets sold in a particular period and the terms of
each sale.
Operating revenues from real estate properties
increased approximately $116,000, or 22%, for the three
months ended November 30, 1996, compared to the three months
ended November 30, 1995 due to increased revenues at the
Company's hotel in Longwood, Florida.
Revenues from hotel management increased
approximately $196,000, or 338%, for the three months ended
November 30, 1996 compared to the three months ended November
30, 1995 due to the acquisition of hotels and a hotel
management company. In turn, expenses of hotel management
increased approximately $146,000, or 332%, for the three
months ended November 30, 1996 compared to the three months
ended November 30, 1995.
Operating expenses during the three months ended
November 30, 1996 increased $16,000, or 3%, compared to the
three months ended November 30, 1995 due to increased business
at the Company's hotel in Florida.
General, administration and other expenses increased
approximately $14,000, or 5%, for the three months ended
November 30, 1996 compared to the three months ended November
30, 1995 as a result of slightly increased overhead due to an
expanding business entity.
Business development expenses decreased
approximately $8,000, or 20%, for the three months ended
November 30, 1996 compared to the three months ended November
30, 1995 due to fewer overall expenses compared to the prior
year. However, the Company is continuing its aggressive
movement into the business of acquiring, developing, operating
and selling hotel properties throughout the country.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits:
10 Warrants to Purchase Shares of Common
Stock of Ridgewood Properties, Inc.
issued to Hugh Jones on December 16,
1996
27 Financial Data Schedule
B. Reports on Form 8-K:
No exhibits or reports on Form 8-K were filed
during the three months ended November 30, 1996.
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.
RIDGEWOOD PROPERTIES, INC.
By: __________________________
N. Russell Walden
President
By: __________________________
Karen S. Hughes
Vice President,
Chief Accounting Officer
Date: January 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from
the Consolidated Balance Sheets, Statements of Consolidated Loss and
Consolidated Statement of Cash Flows and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 1,167,000
<SECURITIES> 0
<RECEIVABLES> 524,000
<ALLOWANCES> 3,544,000
<INVENTORY> 16,000
<CURRENT-ASSETS> 0
<PP&E> 3,031,000
<DEPRECIATION> 1,561,000
<TOTAL-ASSETS> 9,191,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
450,000
<COMMON> 11,000
<OTHER-SE> 4,663,000
<TOTAL-LIABILITY-AND-EQUITY> 9,191,000
<SALES> 1,945,000
<TOTAL-REVENUES> 2,837,000
<CGS> 866,000
<TOTAL-COSTS> 1,683,000
<OTHER-EXPENSES> 341,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,000
<INCOME-PRETAX> 728,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 728,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 728,000
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.52
</TABLE>
Exhibit 10
WARRANTS TO PURCHASE SHARES
OF COMMON STOCK OF RIDGEWOOD PROPERTIES, INC.
This Warrant Certificate certifies that Hugh Jones or
registered assigns (the "Holder"), is the owner of 75,000 Warrants
(subject to adjustment as provided herein) (the "Warrants"), each
of which represents the right to subscribe for and purchase from
Ridgewood Properties, Inc., a Delaware corporation (the
"Company"), one share of the Common Stock, par value of $.Ol per
share, of the Company (the common stock, including any stock into
which it may be changed, reclassified or converted, is herein
referred to as the "Common Stock") at the purchase price (the
"Exercise Price") set forth in Section 1B below and subject to
adjustment as provided herein.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. THEY
MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR
EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. IF THE HOLDER PROPOSES TO SELL OR
TRANSFER SUCH SECURITIES PURSUANT TO ANY SUCH EXEMPTIONS, THE
HOLDER SHALL GIVE NOTICE OF SUCH PROPOSED SALE OR TRANSFER TO
THE COMPANY AND, UPON THE REQUEST OF THE COMPANY, SHALL
DELIVER TO THE COMPANY, PRIOR TO ANY SUCH SALE OR TRANSFER,
AN OPINION OF COUNSEL EXPERIENCED IN SECURITIES ACT MATTERS,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY AND SHALL STATE THAT SUCH EXEMPTIONS
ARE AVAILABLE.
The Warrants represented by this Warrant Certificate are subject
to the following provisions, terms and conditions:
1. EXERCISE OF WARRANTS
A. Exercise Period.
The Warrants may be exercised at any time within the period
beginning on the date of this Warrant Certificate, and expiring at
5:00 p.m., Atlanta time, on the date five years after the date of
this Warrant Certificate (the "Expiration Date").
B. Exercise Price.
The Exercise Price shall be $3.50 per share, subject to
adjustment as provided herein.
C. Manner of Exercise. At any time when the Warrants are
subject to exercise as set forth in Section 1A, the Warrants may
be exercised by the Holder, in whole or in part (but not as to a
fractional share of Common Stock), by surrender of this Warrant
Certificate at the principal office of the Company at 2859 Paces
Ferry Road, Suite 700, Atlanta, Georgia 30339 (or such other
office or agency of the Company as may be designated by notice in
writing to the Holder at the address of such Holder appearing on
the books of the Company), with the appropriate form attached
hereto duly executed, and by payment to the Company by certified
check or bank draft of the purchase price for such shares. The
Company agrees that the shares of Common Stock so purchased shall
be and are deemed to be issued to the Holder as the record owner
of such shares of Common Stock as of the close of business on the
date on which the Warrant Certificate shall have been surrendered
and payment made for such shares of Common Stock. Certificates
representing the shares of Common Stock so purchased, together
with any cash for fractional shares of Common Stock paid pursuant
to Section 2E, shall be delivered to the Holder promptly and in no
event later than ten (10) days after the Warrants shall have been
so exercised, and, unless the Warrants have expired, a new Warrant
Certificate representing the number of Warrants represented by the
surrendered Warrant Certificate, if any, that shall not have been
exercised shall also be delivered to the Holder within such time.
2. ADJUSTMENTS
A. Adjustments. The Exercise Price and the number of
shares of Common Stock issuable upon exercise of each Warrant
shall be subject to adjustment from time to time as follows:
(1) Stock Dividends; Stock Splits; Reverse Stock
Splits; Reclassifications. In case the Company shall (i) pay
a dividend with respect to its capital stock in shares of
Common Stock, (ii) subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of any class of Common Stock,
or (iv) issue any shares of its capital stock to its then
holders of capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with
a merger, consolidation or other business combination in
which the Company is the continuing corporation) (any one of
which actions is herein referred to as an "Adjustment
Event"), the number of shares of Common Stock purchasable
upon exercise of each Warrant immediately prior to the record
date for such Adjustment Event shall be adjusted so that the
Holder shall thereafter be entitled to receive the number of
shares of Common Stock or other securities of the Company
(such other securities thereafter enjoying the rights of
shares of Common Stock under this Warrant Certificate) that
such Holder would have owned or have been entitled to receive
after the happening of such Adjustment Event, had such
Warrant been exercised immediately prior to the happening of
such Adjustment Event or any record date with respect
thereto. An adjustment made pursuant to this Section 2A(l)
shall become effective immediately after the effective date
of such Adjustment Event retroactive to the record date, if
any, for such Adjustment Event.
(2) Adjustment of Exercise Price. Whenever the number
of shares of Common Stock purchasable upon the exercise of
each Warrant is adjusted pursuant to Section 2A(l), the
Exercise Price for each share of Common Stock payable upon
exercise of each Warrant shall be adjusted by multiplying
such Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common
Stock so purchasable immediately thereafter.
(3) Duly to Make Fair Adjustments in Certain Cases. If
any event occurs as to which in the opinion of the Board of
Directors the other provisions of this Section 2A are not
strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as
to protect such purchase rights as aforesaid.
(4) Adjustment for Asset Distributions. If the Company
shall fix a record date for the making of a distribution to
all holders of shares of Common Stock of evidence of
indebtedness of the Company or other assets (other than
ordinary cash dividends not in excess of the retained
earnings of the Company determined by the application of
generally accepted accounting principles), then the Exercise
Price for each share of Common Stock payable upon exercise of
each Warrant shall be reduced by the then fair value (as
determined in good faith by the Board of Directors) of the
indebtedness or other assets distributed in respect of one
such share. Such adjustment shall be made whenever any such
distribution is made and shall become effective on the date
of distribution retroactive to the record date for the
determination of stockholders entitled to receive such
distribution.
B. Notice of Adjustment. Whenever the number of shares of
Common Stock purchasable upon the exercise of each Warrant or the
Exercise Price is adjusted, as herein provided, the Company shall
promptly notify each Holder in writing (such writing referred to
as an "Adjustment Notice") of such adjustment or adjustments and
shall deliver to each Holder a certificate of an officer of the
Company setting forth the number of shares of Common Stock
purchasable upon the exercise of each Warrant and the Exercise
Price after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
C. Statement on Warrant Certificates. The form of this
Warrant Certificate need not be changed because of any change in
the Exercise Price or in the number or kind of shares purchasable
upon the exercise of a Warrant. However, the Company may at any
time in its sole discretion make any change in the form of the
Warrant Certificate that it may deem appropriate and that does not
affect the substance thereof and any Warrant Certificate
thereafter issued, whether in exchange or substitution for any
outstanding Warrant Certificate or otherwise, may be in the form
so changed.
D. Notice to Holder of Record Date, Dissolution,
Liquidation or Winding Up. During any period in which this
Warrant is exercisable hereunder, the Company shall cause to be
mailed (by first class mail, postage prepaid) to each Holder at
such Holder's address as shown on the books of the Company, notice
of the record date for any dividend, distribution or payment, in
cash or in kind (including, without limitation, evidence of
indebtedness and assets), with respect to shares of Common Stock
at least 20 calendar days before any such date. Prior to the
Expiration Date, if there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company, then the
Company shall cause to be mailed (by first class mail, postage
prepaid) to the Holder at such Holder's address as shown on the
books of the Company, at the earliest practicable time (and, in
any event, not less than 20 calendar days before any date set for
definitive action), notice of the date on which such dissolution,
liquidation or winding up shall take place, as the case may be.
The notices referred to above shall also specify the date as of
which the holders of the shares of Common Stock of record or other
securities underlying the Warrants shall be entitled to receive
such dividend, distribution or payment or to exchange their shares
for securities, money or the property deliverable upon such
dissolution, liquidation or winding up, as the case may be (the
"Entitlement Date"). In the case of a distribution of evidence of
indebtedness or assets (other than in dissolution, liquidation or
winding up) occurring during a period in which this Warrant is
exercisable which has the effect of reducing the Exercise Price to
zero or less pursuant to Section 2A(4), if a Holder elects to
exercise the Warrants in accordance with Section 1 and become a
holder of the Common Stock on the Entitlement Date, such Holder
shall thereafter receive the evidence of indebtedness or assets
distributed in respect of shares of Common Stock. In the case of
any dissolution, liquidation or winding up of the Company
occurring prior to the Expiration Date, each Holder shall receive
on the Entitlement Date the cash or other property, less the
Exercise Price for the Warrants then in effect, that such Holder
would have been entitled to receive had the Warrants been
exercisable and exercised immediately prior to such dissolution,
liquidation or winding up (or, if appropriate, record date
therefor) and any right of a Holder to exercise the Warrants shall
terminate.
E. Fractional Interest. The Company shall not be required
to issue fractional shares of Common Stock on the exercise of the
Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number
of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of
whole shares of Common Stock purchasable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock
would, except for the provisions of this Section 2E, be issuable
on the exercise of the Warrants (or specified proportion thereof,
the Company shall pay an amount in cash calculated by it to be
equal to the then fair value of one share of Common Stock, as
determined by the Board of Directors of the Company in good faith,
multiplied by such fraction computed to the nearest whole cent.
3. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company covenants and agrees (A) that all shares of
Common Stock which may be issued upon the exercise of the Warrants
represented by this Warrant Certificate will, upon issuance, be
validly issued, fully paid and nonassessable and free of all
issuance or transfer taxes, liens and charges with respect to the
issue thereof, (B) that during the Exercise Period, the Company
will at all times have authorized, and reserved for the purpose of
issue or transfer upon exercise of the Warrants evidenced by this
Warrant Certificate, sufficient shares of Common Stock to provide
for the exercise of the Warrants represented by this Warrant
Certificate, and (C) that the Company will take all such action as
may be necessary to ensure that the shares of Common Stock
issuable upon the exercise of the Warrants may be so issued
without violation of any applicable law or regulation, or any
requirements of any domestic securities exchange upon which any
capital stock of the Company may be listed, provided, however,
that nothing contained herein shall impose upon the Company any
obligation to register the warrants evidenced by this Warrant
Certificate or such Common Stock under applicable securities laws.
In the event that any securities of the Company other than the
Common Stock are issuable upon exercise of the Warrants, the
Company will take or refrain from taking any action referred to in
clauses (A) through (C) of this Section 3 as though such clauses
applied, mutatis mutandis, to such other securities then issuable
upon the exercise the Warrants.
4. NO VOTING RIGHTS
This Warrant Certificate shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company.
5. WARRANTS TRANSFERABLE
Subject to any restrictions on transfer under applicable
securities laws, this Warrant Certificate and the Warrants it
evidences are transferable, in whole or in part, without charge to
the Holder, at the office or agency of the Company referred to in
Section 1, by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant Certificate properly endorsed.
Each taker and Holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant
Certificate, when endorsed in blank, shall be deemed negotiable,
and that the Holder, when this Warrant Certificate shall have been
so endorsed, may be treated by the Company and all other persons
dealing with this Warrant Certificate as the absolute owner hereof
for any purpose and as the person entitled to exercise the rights
represented by this Warrant Certificate, or to the transfer hereof
on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the
Company may treat the registered holder hereof as the owner for
all purposes.
6. CLOSING OF BOOKS
The Company will at no time close its transfer books against
the transfer of any Warrant or of any shares of Common Stock or
other securities issuable upon the exercise of any Warrant in any
manner which interferes with the timely exercise of the Warrants.
7. WARRANTS EXCHANGEABLE, LOSS, THEFT
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Holder at the office or agency of the Company
referred to in Section 1, for new Warrant Certificates of like
tenor representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder, each such new Warrant to
represent the right to subscribe for and purchase such number of
shares of Common Stock as shall be designated by said holder
hereof at the time of such surrender. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant Certificate and, in the case of any
such loss, theft or destruction, upon delivery of a bond or
indemnity satisfactory to the Company, or, in the case of any such
mutilation, upon surrender or cancellation of this Warrant
Certificate, the Company will issue to the holder hereof a new
Warrant Certificate of like tenor, in lieu of this Warrant
Certificate, representing the right to subscribe for and purchase
the number of shares of Common Stock which may be subscribed for
and purchased hereunder.
8. MERGERS, CONSOLIDATIONS, ETC.
A. If the Company shall merge or consolidate with another
corporation, the holder of this Warrant shall thereafter have the
right, upon due exercise in accordance with Section 1 hereof and
payment of the Exercise Price, to receive solely the kind and
amount of shares of stock (including, if applicable, Common
Stock), other securities, property or cash or any combination
thereof receivable by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately
prior to such merger or consolidation (assuming, if applicable,
that the holder of such Common Stock failed to exercise its rights
of election, if any, as to the kind or amount of shares of stock,
other securities, property or cash or combination thereof
receivable upon such merger or consolidation).
B. In case of any reclassification or change of the shares
of Common stock issuable upon exercise of this Warrant, (other
than elimination of par value, a change in par value, or from par
value to no par value, or as the result of a subdivision or
combination of shares (which is provided for elsewhere herein),
but including any reclassification of the shares of Common stock
into two or more classes or series of shares), or in case of any
merger or consolidation of another corporation into the Company,
in which the Company is the surviving corporation and in which
there is a reclassification or change of the shares of Common
Stock (other than a change in par value, or from par value to no
par value, or as a result of a subdivision or combination (which
is provided for elsewhere herein), but including any
reclassification of the shares of Common Stock into two or more
classes or series of shares), the holder of this Warrant shall
thereafter have the right, upon due exercise in accordance with
Section 1 hereof and payment of the Exercise Price, to receive
solely the kind and amount of shares of stock (including, if
applicable, Common Stock), other securities, property or cash or
any combination thereof receivable upon such reclassification,
change, merger or consolidation by a holder of the number of
shares of Common Stock for which this Warrant might have been
exercised immediately prior to such reclassification, change,
merger or consolidation (assuming, if applicable, that the holder
of such Common Stock failed to exercise its rights of election, if
any, as to the kind or amount of shares of stock, other
securities, property or cash or combination thereof receivable
upon such reclassification, change, merger or consolidation).
Dated: December 16, 1996.
Ridgewood Properties, Inc.
By: /s/ N. R. Walden
Title: President
Attest:
/s/ Karen S. Hughes
Secretary
SUBSCRIPTION AGREEMENT
Date: _____________, 19____
TO: _____________________
The undersigned, pursuant to the provisions set forth in the
attached Warrant Certificate , hereby agrees to subscribe for and
purchase _____________ shares of the Common Stock covered by such
Warrant Certificate, and tenders payment herewith in full thereof
at the price per share provided by such Warrant Certificate.
Holder: ______________________
By: __________________________
Its: _____________________
Address: _____________________
_____________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered holder of the
attached Warrant Certificate hereby sells, assigns, and transfers
unto the Assignee(s) named below (including the undersigned with
respect to any Warrants that are evidenced by the Warrant
Certificate that are not being assigned hereby) all of the right
of the undersigned under the Warrant Certificate, with respect to
the number of Warrants set forth below:
Social Security
or other
identifying
Names of number of Number of
Assignee(s) Address Assignee(s) Warrants
and does hereby irrevocably constitute and appoint
___________________________________ the undersigned's attorney in
fact to make such transfer on the books of _____________________
maintained for the purpose, with full power of substitution in the
premises.
Date: _______________, 19____.
______________________(1)
(1) The signature must correspond with the name as written upon
the face of the Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and must be
guaranteed by a national bank or trust company or by a member of
any national securities exchange.
