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.