RESULTS OF OPERATIONS
The Company reported net income of approximately $126,000 ($0.12 per share) and
$10,000 ($0.01 per share) for the three months ended June 30, 2020 and 2019,
respectively. For the six months ended June 30, 2020 and 2019, the Company
reported net loss of approximately $839,000 ($0.83 per share) and $2,000 ($0.00
per share), respectively.
REVENUES
Rentals and related revenues for the three and six months ended June 30, 2020,
were approximately $19,000 and $39,000, respectively and primarily consists of
rent from the Advisor to CII for its corporate office. For the three and six
months ended June 30, 2019 rental and related revenues were $19,000 and $38,000,
respectively.
Net realized and unrealized gains (losses) from investments in marketable
securities:
Net realized loss from the sale of marketable securities for the three and six
months ended June 30, 2020 was approximately $44,000 and $71,000, respectively.
Net realized gain (loss) from the sale of marketable securities for the three
and six months ended June 30, 2019 was approximately $16,000 and ($11,000),
respectively. Unrealized net gain (loss) from investments in marketable
securities for the three and six months ended June 30, 2020 was approximately
$528,000 and ($315,000), respectively. This was primarily due to the substantial
recovery in the overall U.S. stock market from lows in March 2020 as businesses
began reopening in the second quarter. Unrealized net gain from investments in
marketable securities for the three and six months ended June 30, 2019 was
approximately $44,000 and $252,000, respectively. For further details refer to
Note 5 to Condensed Consolidated Financial Statements (unaudited).
Income from other investments:
Income from other investments for the three and six months ended June 30, 2020
was approximately $58,000 and $172,000, respectively. Income from other
investments for the three and six months ended June 30, 2019 was approximately
$97,000 and $175,000, respectively. For further details refer to Note 6 to
Condensed Consolidated Financial Statements (unaudited).
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Other than temporary impairment losses from other investments ("OTTI"):
For the six months ended June 30, 2020 OTTI valuation adjustment was $315,000
related to two investments. For further details, refer to Note 6 to Condensed
Consolidated Financial Statements (unaudited).
Interest, dividend and other income:
Interest, dividend and other income for the three and six months ended June 30,
2020 was approximately $83,000 and $177,000, respectively. Interest, dividend
and other income for the three and six months ended June 30, 2019 was
approximately $153,000 and $238,000, respectively. The decreases in the three
and six-month comparable periods was primarily due to decreased interest income
from investments in U.S. T-bills.
EXPENSES
Expenses for rental and other properties for the three and six months ended June
30, 2020 as compared with the same periods in 2019 decreased by approximately
$15,000 (48%) and $11,000 (25%), respectively. The decreases in the three and
six month comparable periods were primarily due to decreased repairs and
maintenance at our corporate office.
Professional fees and expenses for the three months ended June 30, 2020 as
compared with the three months ended June 30, 2019 decreased by approximately
$22,000 (51%) due to decreased legal and tax 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 $689,000
due upon demand. The $3.91 million in margin payable is related to the purchase
of U.S. T-bills at quarter end. The T-bills were sold in July 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 six months ended June 30, 2020, net cash used in operating activities
was approximately $666,000, primarily consisting of operating expenses.
For the six months ended June 30, 2020, net cash provided by investing
activities was approximately $1.5 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 $840,000, distributions from other investments of $394,000 and
distribution from affiliate of $221,000. These sources of funds were partially
offset by uses of cash consisting primarily of $930,000 in purchases of
marketable securities and $205,000 of contributions to other investments.
For the six months ended June 30, 2020, net cash used in financing activities
was approximately $6.9 million, consisting of $6.0 million in repayment of
margin payable relating to the quarter end purchases of U.S. T-bills, $507,000
dividend paid, $350,000 principal payment on note due to affiliate and $66,000
in purchase of treasury shares.
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