RESULTS OF OPERATIONS
The Company reported net income of approximately $225,000 ($0.22 per share) for
the three months ended September 30, 2021 and a net loss of $412,000 ($0.41 per
share) for the nine months ended September 30, 2021. For the three and nine
months ended September 30, 2020, the Company reported a net loss of
approximately $71,000 ($0.07 per share) and a net loss of $910,000 ($0.90 per
share), respectively.
REVENUES
Rentals and related revenues for the three and nine months ended September 30,
2021 were approximately $20,000 and $61,000, respectively and primarily consists
of rent from the Advisor to CII for its corporate office. Rentals and related
revenues for the three and nine months ended September 30, 2020 were
approximately $20,000 and $59,000, 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 nine months ended September 30, 2021 was approximately $89,000 and
$280,000, respectively. For the three and nine months ended September 30, 2020,
net realized and unrealized gain (loss) from marketable securities was
approximately $119,000 and ($266,000), 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 income (loss) from operations of residential real estate partnership:
Equity income (loss) from operations of residential real estate partnership for
the three and nine months ended September 30, 2021 was approximately $19,000 and
($282,000), 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 nine months ended September 30,
2021 was approximately $374,000 and $507,000, respectively. Income from other
investments for the three and nine months ended September 30, 2020 was
approximately $68,000 and $240,000, 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 nine months ended
September 30, 2021. OTTI valuation adjustments for three and nine months ended
September 30, 2021, were zero 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 nine months ended
September 30, 2021, as compared with the same period in 2020 increased by
approximately $58,000 (or 95%). 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.
General and administrative expenses for the nine months ended September 30,
2021, as compared with the same period in 2020 increased by approximately
$20,000 (or 14%). This was primarily due to increased corporate insurance costs
of approximately $6,000, increased dues and subscriptions of $9,000 and $5,000
in placement fees relating to other investments.
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Professional fees and expenses for the nine months ended September 30, 2021, as
compared with the same period in 2020 increased by approximately $74,000 (or
16%). 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 nine months ended September 30, 2021, net cash used in operating
activities was approximately $910,000, primarily consisting of operating
expenses.
For the nine months ended September 30, 2021, net cash provided by investing
activities was approximately $1.38 million. This consisted primarily of net
proceeds from sales and redemptions of marketable securities of $1.73 million,
distributions from other investments of $1.03 million, 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
$890,000 in purchases of marketable securities, $504,000 of contributions to
other investments, $204,000 of improvements to our Montpelier, Vermont property
and $122,000 of loans to one of the partners in the Vermont property.
For the nine months ended September 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.
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