FIRST HARTFORD CORP | 2013 | FY | 3


2.   Restatement

 

The Company has restated its April 30, 2012 consolidated financial statements by adding three joint ventures into its consolidated results.  Upon reanalyzing its agreements, it was determined that the Company was the controlling partner of the ventures which triggers a requirement to consolidate.  The ventures are:

 

(1) Cranston Parkade, LLC which owns a retail shopping center 259,600 sq. ft.

(2) CP Associates, LLC which owns two 60,000 sq. ft commercial buildings plus land leased to a third party.

(3) Hartford Lubbock Limited Partnership which owns a retail shopping center 160,555 sq. ft.

(4) Trolley Barn Associates which owns approximately 7 acres of vacant land.

 

The Company which owns 50% of (1), (2) & (4) and 2% of (3) formerly accounted for them on the equity method. Previously, the investment in Trolley Barn Associates, which is 50% supported by the Company, was not considered material and was not consolidated.  The advances were considered loans.  The Company has determined that Trolley Barn qualifies as a Variable Interest Entity (VIE) and is consolidated as required.

 

The effects on the Company’s previously issued financial statements are summarized as follows:

Balance Sheet April 30, 2012

 

Previously Reported

 

Increase (Decrease)

 

Restatement

Real Estate and Equipment Net

$133,053,873

 

$42,424,291

 

$175,478,164

Cash

3,515,688

 

3,933,527

 

7,449,215

Investment in Marketable Securities

657,299

 

1,349,665

 

2,006,964

Accounts and notes receivable

1,955,838

 

1,982,388

 

3,938,226

Other receivable

8,600,078

 

-0-

 

8,600,078

Deposits, escrows & prepaid & deferred expenses net

9,894,914

 

2,187,512

 

12,082,426

Investment in affiliate

9,665

 

(9,665)

 

-0-

Due from related parties and affiliates

517,713

 

(350,454)

 

167,259

TOTAL ASSETS

$158,205,068

 

$51,517,264

 

$209,722,332

Mortgage & notes payables

142,551,542

 

63,266,446

 

205,817,988

Payables and accrued liabilities

12,935,664

 

1,217,957

 

14,153,621

Accrued cost of derivatives

-0-

 

4,013,042

 

4,013,042

Deferred income

657,215

 

(176,537)

 

480,678

Other liabilities

4,098,351

 

(1,644,433)

 

2,453,918

Due  to related parties

102,752

 

326,292

 

429,044

Total liabilities

160,345,524

 

67,002,767

 

227,348,291

Stockholders Deficit

(2,140,456)

 

(15,485,503)

 

(17,625,959) 

Total Liabilities and Shareholder Deficit

$158,205,068

 

$51,517,264

 

$209,722,332

 

Statement of Operations – April 30, 2012

 

Previously Reported

 

Increase (Decrease)

 

Restatement

Revenues

$27,613,440

 

$9,728,499

 

$37,341,939

Operating cost

22,593,012

 

3,947,140

 

26,540,152

Income from operations

5,020,428

 

5,781,359

 

10,801,787

Interest expenses

(7,684,732)

 

(3,876,009)

 

(11,560,741)

Other Income

319,120

 

-0-

 

319,120

Gain (Loss) or Derivatives

-0-

 

(1,333,944)

 

(1,333,944)

Equity in earnings of unconsolidated subsidiaries

1,307,101

 

(948,648)

 

358,453

Loss before income tax

(1,038,083)

 

(377,242)

 

(1,415,325)

Income Taxes

1,273,054

 

10,416

 

1,283,470

Consolidated Net Loss

(2,311,137)

 

(387,658)

 

(2,698,795)

Net Loss attributable to non-controlling interest

1,394,808

 

(473,782)

 

921,026

Net Loss attributable to First Hartford

$(916,329)

 

$(861,440)

 

$(1,777,769)

 

The increased loss attributable to the Company for the year ended April 30, 2012 was mainly due to differences in accounting between equity method and consolidation.  In the year ended April 30, 2012, under the equity method, the Company recorded income of $559,000 from distributions while there was a negative basis (recorded in other liabilities).  There was also $400,000 in losses that exceeded investments and guarantees that were not picked up under the equity method. The balance was timing difference as December 31st was the year end used for the equity method while March 31st was used for consolidation. These items were adjusted in the restatement.


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