RESULTS OF OPERATIONS

The Company reported net loss of approximately $965,000 (or $0.95 per share) for the three months ended March 31, 2020. For the three months ended March 31, 2019 the Company reported a net loss of approximately $11,000 (or $0.01 per share).

REVENUES

Rentals and related revenues for the three months ended March 31, 2020 and 2019 were approximately $20,000 and $19,000, respectively and primarily consists of rent from the Advisor to CII for its corporate office.

Net realized and unrealized (loss) gain from investments in marketable securities:

Net realized and unrealized loss from investments in marketable securities for the three months ended March 31, 2020 was approximately $870,000. For the three months ended March 31, 2020, net unrealized loss from marketable securities of approximately $843,000 was primarily the result of the large decline in the overall U.S. stock market experienced as a result of business closures from the on-going pandemic.

For the three months ended March 31, 2019 net realized and unrealized gains from marketable securities was approximately $180,000. For further details, refer to Note 5 to Condensed Consolidated Financial Statements (unaudited).

Income from other investments:

Income from other investments for the three months ended March 31, 2020 and 2019 was approximately $113,000 and $78,000, respectively. For further details, refer to Note 6 to Condensed Consolidated Financial Statements (unaudited).

Other than temporary impairment losses from other investments ("OTTI"):

For the three months ended March 31, 2019 OTTI valuation adjustment was $50,000 from one investment. For further details, refer to Note 6 to Condensed Consolidated Financial Statements (unaudited).

EXPENSES

Professional fees and expenses for the three months ended March 31, 2020 as compared with the same period in 2019 increased by approximately $15,000 (or 18%) primarily due to increased tax preparation fees.

EFFECT OF INFLATION:

Inflation affects the costs of holding the Company's investments. Increased inflation would decrease the purchasing power of our mainly liquid investments.

LIQUIDITY, CAPITAL EXPENDITURE REQUIREMENTS AND CAPITAL RESOURCES

The Company's material commitments primarily consist of a note payable to the Company's 49% owned affiliate, T.G.I.F. Texas, Inc. ("TGIF") of $650,000 due on demand, contributions committed to other investments of approximately $715,000 due upon demand. The $9.98 million in margin is primarily related to the purchase of US T-bills at quarter end. The T-bills were sold in April 2020 and the related margin was repaid. The purchase of T-bills at each fiscal quarter end is for the purposes of qualifying for the REIT asset test. The funds necessary to meet these obligations are expected from the proceeds from the sales of investments, distributions from investments and available cash.

MATERIAL COMPONENTS OF CASH FLOWS

For the three months ended March 31, 2020, net cash used in operating activities was approximately $353,000, primarily consisting of operating expenses.

For the three months ended March 31, 2020, net cash provided by investing activities was approximately $1.2 million. This consisted primarily of $1 million collection of loan due from purchaser of Grove Isle, $200,000 collection of loan participation, net proceeds from sales and redemptions of marketable securities of $373,000, distributions from other investments of $185,000 and distribution from affiliate of $221,000. These sources of funds were partially offset by uses of cash consisting primarily of $570,000 in purchases of marketable securities and $189,000 of contributions to other investments.





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For the three months ended March 31, 2020, net cash used in financing activities was approximately $792,000, consisting of $507,000 dividend paid and $350,000 principal payment on note due to affiliate. These uses of funds were partially offset by increased margin borrowings (net of repayments) of $64,000.

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