RESULTS OF OPERATIONS
The Company reported net loss of approximately $261,000 ($0.26 per share) and
$637,000 ($0.63 per share) for the three and six months ended June 30, 2021,
respectively. For the three and six months ended June 30, 2020, the Company
reported net income of approximately $126,000 ($0.12 per share) and net loss of
$839,000 ($0.83 per share), respectively.
REVENUES
Rentals and related revenues for the three and six months ended June 30, 2021
were approximately $20,000 and $40,000, respectively and primarily consists of
rent from the Advisor to CII for its corporate office. Rentals and related
revenues for the three and six months ended June 30, 2020 were approximately
$19,000 and $39,000, respectively
Net realized and unrealized gain (loss) from investments in marketable
securities:
Net realized and unrealized gain from investments in marketable securities for
the three and six months ended June 30, 2021 was approximately $129,000 and
$192,000, respectively. For the three and six months ended June 30, 2020, net
realized and unrealized gain (loss) from marketable securities was approximately
$484,000 and ($385,000), respectively. Our marketable securities have recovered
in line with the overall U.S. stock market recovery as a result of business
re-openings after closures from the COVID-19 pandemic. For further details,
refer to Note 6 to the Condensed Consolidated Financial Statements (unaudited).
Investment gains and losses on marketable securities may fluctuate significantly
from period to period in the future and could have a significant impact on the
Company's net earnings. However, the amount of investment gains or losses on
marketable securities for any given period has no predictive value and
variations in amount from period to period have no practical analytical value.
Equity loss from operations of residential real estate partnership:
Equity loss from operations of residential real estate partnership for the three
and six months ended June 30, 2021 was approximately $157,000 and $301,000,
respectively. For further details, refer to Note 4 to the Condensed Consolidated
Financial Statements (unaudited).
Income from other investments:
Income from other investments for the three and six months ended June 30, 2021
was approximately $89,000 and $132,000, respectively. Income from other
investments for the three and six months ended June 30, 2020 was approximately
$58,000 and $172,000, respectively. For further details, refer to Note 7 to the
Condensed Consolidated Financial Statements (unaudited).
Other than temporary impairment losses from other investments ("OTTI"):
There were no OTTI valuation adjustments for the three and six months ended June
30, 2021. OTTI valuation adjustments for the three and six months ended June
30, 2020, were $265,000 and $315,000, respectively. This was the result of one
investment written down in the first and second quarters of 2020. For further
details, refer to Note 7 to the Condensed Consolidated Financial Statements
(unaudited).
EXPENSES
Operating expenses from rental and other properties for the three and six months
ended June 30, 2021, as compared with the same periods in 2020 increased by
approximately $25,000 (or 153%) and $62,000 (or 183%), respectively. This was
primarily due to a loss on the sale of land held for development located in
Hopkinton, Rhode Island. The property had a carrying value of $209,000 and was
sold for $200,000. After commissions, legal and closing costs the loss was
approximately $29,000. The Company had attempted to develop this property for
several years and was unsuccessful. We also incurred approximately $23,000 in
pre-construction costs not previously billed relating to our property in
Montpelier, Vermont.
10
General and administrative expenses for the six months ended June 30, 2021, as
compared with the same period in 2020 increased by approximately $18,000 (or
17%). This was primarily due to increased corporate insurance costs of
approximately $6,000, increased dues and subscriptions of $7,000 and $5,000 in
placement fees relating to other investments.
Professional fees and expenses for the three and six months ended June 30, 2021,
as compared with the same periods in 2020 increased by approximately $76,000 (or
363%) and $67,000 (or 58%). This was primarily due to increased accounting and
legal 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 $400,000 due on
demand and contributions committed to other investments of approximately $1.0
million due upon demand. 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 six months ended June 30, 2021, net cash used in operating activities
was approximately $560,000, primarily consisting of operating expenses.
For the six months ended June 30, 2021, net cash provided by investing
activities was approximately $837,000. This consisted primarily of net proceeds
from sales and redemptions of marketable securities of $1.23 million,
distributions from other investments of $250,000, distribution from affiliate of
$138,000 and proceeds from the sale of the land in Hopkinton, Rhode Island of
$130,000 (we took back a first mortgage of $50,000 on the sale). These sources
of funds were partially offset by uses of cash consisting primarily of $464,000
in purchases of marketable securities and $437,000 of contributions to other
investments.
For the six months ended June 30, 2021, net cash used in financing activities
was approximately $624,000, consisting of $504,000 dividend paid and $250,000
principal payment on note due to affiliate, partially offset by proceeds from
the exercise of stock options of $130,000.
Item 3.
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