-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWuOvjJcdIKRrHL/FdHuiqT/E1FgFlRq25lRSR3ortWu82kmoiwxvqjOZZ5yY9zq NHjvrz8lmemWRnVSMbzNwQ== 0001047469-98-030153.txt : 19980812 0001047469-98-030153.hdr.sgml : 19980812 ACCESSION NUMBER: 0001047469-98-030153 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPROP CORP CENTRAL INDEX KEY: 0000016496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 954044835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06844 FILM NUMBER: 98681271 BUSINESS ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 BUSINESS PHONE: 3103064314 MAIL ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1998 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________________ to _________________ Commission File Number 1-6844 CALPROP CORPORATION (Exact name of registrant as specified in its charter) California 95-4044835 - ----------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13160 Mindanao Way, Suite 180, Marina Del Rey, California 90292 - ------------------------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (310) 306-4314 Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Number of shares outstanding of each of Registrant's classes of common stock, as of July 8, 1998:
Number of Shares Title of Each Class Outstanding - ------------------------------ ----------------- Common Stock, no par value 10,154,785
CALPROP CORPORATION PART I ITEM I - FINANCIAL INFORMATION Set forth is the unaudited quarterly report for the quarters ended June 30, 1998 and 1997, for Calprop Corporation. The information set forth reflects all adjustments which were, in the opinion of management, necessary for a fair presentation. 2 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS (Unaudited)
June 30, December 31, 1998 1997 ----------- ------------ Real estate development $34,861,932 $26,325,978 Investment in land 2,975,982 2,975,982 ----------- ----------- Total investment in real estate 37,837,914 29,301,960 Other assets: Cash and cash equivalents 2,978,245 1,100,028 Prepaid expenses 0 23,149 Deferred and other assets 545,830 531,665 ----------- ----------- Total other assets 3,524,075 1,654,842 ----------- ----------- Total assets $41,361,989 $30,956,802 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 3 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
June 30, December 31, 1998 1997 ----------- ------------ Trust deeds and notes payable $12,205,350 $6,713,809 Related party notes 17,035,925 12,718,829 ----------- ---------- Total trust deeds and notes payable 29,241,275 19,432,638 Community facilities district special tax bonds 2,336,544 2,336,544 Accounts payable and accrued liabilities 4,957,341 3,954,885 Warranty reserves 279,885 288,278 ----------- ---------- Total liabilities 36,815,045 26,012,345 Minority interest (note 4) 1,872,191 2,187,847 Stockholders equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 10,154,785 and 9,304,785 shares at June 30, 1998 and December 31, 1997, respectively 10,154,785 9,304,785 Additional paid-in capital 25,791,358 25,886,906 Deferred compensation (106,595) (106,595) Notes receivable from common stock sale (note 3) (447,813) -- Accumulated deficit (32,716,982) (32,328,486) ----------- ---------- Total stockholders equity 2,674,753 2,756,610 ----------- ---------- Total liabilities and stockholders equity $41,361,989 $30,956,802 ----------- ---------- ----------- ----------
The accompanying notes are an integral part of these financial statements. 4 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ------------------------------ 1998 1997 1998 1997 ------------ ----------- ------------ ------------ Development operations: Real estate sales $7,632,478 $9,085,987 $10,438,264 $14,230,482 Cost of real estate sales 6,932,486 9,053,525 9,820,775 14,196,813 ---------- ---------- ----------- ----------- Income from development operations 699,992 32,462 617,489 33,669 Other income 11,370 27,946 47,351 35,332 Other expenses: General and administrative expenses 446,521 465,299 832,497 803,842 Interest expense 37,486 40,916 106,053 128,092 Investment property holding costs -- 75,600 -- 151,200 ---------- ---------- ----------- ----------- Total other expenses 484,007 581,815 938,550 1,083,134 Minority interests (note 4) 121,688 (4,257) 114,786 (4,257) Net income (loss) $105,667 ($517,150) $(388,496) $(1,009,876) ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- Basic and diluted net income (loss) per share (note 3) $0.01 ($0.06) $(0.04) $(0.11) ---------- ---------- ----------- ----------- ---------- ---------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 5 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------------- ------------------------------ 1998 1997 1998 1997 ------------- ------------ ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $105,667 $(517,150) $(388,496) $(1,009,876) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activites: Minority interests 121,688 (4,257) 114,786 (4,257) Depreciation and amortization 10,705 8,099 20,290 16,031 Provision for warranty reserves 73,601 84,764 90,601 132,153 Change in assets and liabilities: (Decrease) increase in deferred and other assets (240,113) 19,371 (663) (2,503) Increase in prepaid expenses 11,574 19,293 23,149 29,587 (Decrease) increase in accounts payable and accrued liabilities and warranty reserves (1,040,483) (91,441) 903,462 445,597 Additions to real estate development in process (12,036,920) (6,274,796) (18,356,729) (11,672,022) Cost of real estate sales 6,932,486 9,053,525 9,820,775 14,196,813 ------------- ------------ ------------- ------------- Net cash (used in) provided by operating activies (6,061,795) 2,297,408 (7,772,825) 2,131,523 CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (13,175) (4,121) (33,792) (8,220) ------------- ------------ ------------- ------------- Net cash used in investing activities (13,175) (4,121) (33,792) (8,220) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under construction loans-related parties 4,121,212 4,107,260 6,171,212 4,628,078 Payments under construction loans-related parties (250,024) (4,847,693) (1,854,116) (5,586,751) Borrowings under construction loans 8,241,168 3,320,306 14,310,510 6,915,122 Payments under construction loans (6,058,316) (3,561,878) (8,818,969) (7,331,626) Contributions from joint venture partner 377,920 -- 669,558 287,980 Distributions to joint venture partner (1,100,000) (287,980) (1,100,000) (287,980) Proceeds from issuance of common stock -- -- 306,639 -- ------------- ------------ ------------- ------------- Net cash provided by (used in) financing activities 5,331,960 (1,269,985) 9,684,834 (1,375,177) ------------- ------------ ------------- ------------- Net (decrease) increase in cash and cash equivalents (743,010) 1,023,302 1,878,217 748,126 Cash and cash equivalents at beginning of periods 3,721,255 949,604 1,100,028 1,224,780 ------------- ------------ ------------- ------------- Cash and cash equivalents at end of periods $2,978,245 1,972,906 $2,978,245 $1,972,906 ------------- ------------ ------------- ------------- ------------- ------------ ------------- ------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for - Interest (net of amount capitalized) 37,486 40,916 68,567 128,092 NON-CASH INVESTING AND FINANCING ACTIVITIES: Exchange of loan from related party to minority interest -- -- 447,813 120,000
The accompanying notes are an integral part of these financial statements 6 CALPROP CORPORATION NOTES TO FINANCIAL STATEMENTS PERIODS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Note 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The unaudited, condensed, financial statements included herein have been prepared by the registrant pursuant to the instructions to Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission and do not include all information and footnote disclosure required by generally accepted accounting principles. The accompanying financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments necessary to summarize fairly the Company's financial position and results of operations. The condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the registrant's latest Annual Report on Form 10-K, particularly with regard to disclosures relating to major accounting policies. The results of operations for the six months ended June 30, 1998 may not be indicative of the operating results for the year ending December 31, 1998. Note 2: INCOME TAXES As of June 30, 1998, the Company had net operating carryforwards for federal and state tax purposes of approximately $15,900,000 and $18,500,000, respectively. For federal and state tax purposes the net operating carryforwards expire from 2007 through 2013, and from 1998 through 2007, respectively. Note 3: NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income (loss) per share:
Three Months Ended Six Months Ended June 30, June 30, -------------------------- -------------------------- 1998 1997 1998 1997 -------------------------- -------------------------- Numerator for basic and diluted net income (loss) per share $105,667 $(517,150) $(388,495) $(1,009,876) -------------------------- -------------------------- -------------------------- -------------------------- Denominator for basic net income (loss) per share 10,154,785 9,223,932 9,846,674 9,224,257 Effect of dilutive stock options 283,638 -- -- -- -------------------------- -------------------------- Denominator for dilutive net income (loss) per share 10,438,423 9,223,932 9,846,674 9,224,257 -------------------------- -------------------------- -------------------------- -------------------------- Basic and diluted net income (loss) Per share $0.01 $(0.06) $(0.04) $(0.11) -------------------------- -------------------------- -------------------------- --------------------------
7 Note 3: NET INCOME PER SHARE (continued) Options and warrants to purchase 799,000 and 1,269,250 shares of common stock were outstanding as of June 30, 1998 and 1997, respectively. For the six months ended June 30, 1998 and 1997, and the three months ended June 30, 1997, options and warrants for the respective periods were not included in the computation of diluted net loss per common share because the effect would be antidilutive due to the net loss in these periods. However, for the three months ended June 30, 1998, 79,500 options and warrants were not included in the computation of diluted net income because their exercise prices were higher than the average market price per share of common stock. On February 20, 1998, an officer of the company exercised options to purchase 130,000 shares of common stock with an exercise price of $0.825 per share. The Company received $107,250 cash as a result of the exercise of these options. On March 10, 1998, three officers and a director of the Company exercised options to purchase a total of 720,000 shares of common stock with a weighted-average exercise price of $0.8989 per share. The Company received $199,389 cash from an officer and received $447,813 in notes receivable from the remaining two officers and the director as a result of the exercise of these options. The notes receivable are secured by 520,000 shares of the Company's common stock, accrue interest at 4.987% and mature on March 10, 2001. Note 4: MINORITY INTEREST The Company has consolidated the financial statements of Colorado Pacific Homes, Inc. ("CPH"), a corporation formed for the purpose of developing real estate in the state of Colorado; DMM Development, LLC ("DMM"), a joint-venture formed for the development of the Cierra del Lago and Antares projects; and Montserrat II, LLC, a joint-venture formed for the development of 117 lots adjacent to the Company's original Montserrat project. Colorado Pacific Homes, Inc. is owned eighty percent by the Calprop Corporation ("Calprop") and twenty percent by the President of CPH. Calprop is entitled to receive two-thirds of the profits of DMM, and the other member, RGC Courthomes, Inc. ("RGC"), is entitled to receive the remaining one-third of the profits. As of June 30, 1998, RGC's ownership percentage in DMM was fifty percent. Pursuant to the operating agreement of Montserrat II, LLC, losses are allocated 100% first to Calprop until its capital account is zero, then to PICal Housing Associates, L.P. (PICal), member. Income is allocated first to reverse losses, then to PICal to attain a return on its capital, then to Calprop. As of June 30, 1998, PICal's ownership interest in Montserrat II, LLC was eighty percent. As a result of the consolidations, the Company has recorded minority interest of $1,872,191 and $2,187,847 as of June 30, 1998 and December 31, 1997, respectively. 8 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1998, the Company had remaining loan commitments from financial institutions of approximately $16,613,432, which may be drawn down by the Company upon the satisfaction of certain conditions. The Company continues to seek joint venture partners and additional financing to fund its operations. During March of 1998, the Curci-Turner Company, a related party, made a $500,000 loan commitment to the company for the development of 19 lots in phase 3 of the Summertree Park project in Elk Grove, California. The loan provides for interest at 12% and matures on June 19, 1998. As of June 30, 1998, the outstanding balance on the loan was $500,000. During April of 1998, the Curci-Turner Company made a $1,500,000 loan to the company for the purchase of the High Ridge Court project, consisting of 170 lots in Thornton, Colorado. The loan provides for interest at 12% and is due on demand. As of June 30, 1998, the outstanding balance on the loan was $1,500,000. During May of 1998, the Curci-Turner Company made a $2,131,201 loan to the company for the purchase of an additional 34 lots in the Parkland Farms project in Healdsburg, California. The loan provides for interest at 12% and is due on October 1, 2000. As of June 30, 1998, the outstanding balance on the loan was $2,131,201. During June of 1998, the Curci-Turner Company made a $1,000,000 loan commitment to the company for the development of land in the Parkland Farms project in Healdsburg, California. The loan provides for interest at 12% and matures on August 30, 1998. As of June 30, 1998, the outstanding balance on the loan was $350,000. As of June 30, 1998, the Company had eight projects in various stages of development, with four producing revenues from completed homes: Summertree Park, Montserrat, Montserrat Estates and Cierra Del Lago. The remaining four projects, Antares, High Ridge Court, Parkland Farms and Mockingbird Canyon, are in the initial stages of development. As of June 30, 1998, the Company controlled 1,887 lots, of which, 1,146 were owned by the company and in various stages of development, and 741 were in escrow to be purchased by the Company. Of the 1,146 owned lots, the Company had 14 homes completed (5 were in escrow and 9 were models not yet released for sale), 169 homes under construction (146 were in escrow and 23 were available for sale), 446 lots under development and 517 lots held for investment. As of June 30, 1998, the Company had 151 units in escrow ("backlog") compared with a backlog of 30 units as of June 30, 1997. The gross revenues of such backlog was $31,700,000 and $6,200,000 as of June 30, 1998 and 1997, respectively. The increase in backlog is a result of an increase in the number of total units available for sale. The Company believes that, based on agreements with its existing institutional lenders and the Curci-Turner Company, it will have sufficient liquidity to finance its construction projects in 1998 through funds generated from operations and funds available under its existing loan commitments. In addition, the Company believes that if necessary, additional funds could be obtained by using its unencumbered real estate developments as collateral for additional loans. 9 RESULTS OF OPERATIONS Net income of $105,667 changed from a loss of $517,150 for the second quarters of 1998 and 1997 respectively. Net loss for the first six months of 1998 and 1997 was $388,496 and 1,009,876, respectively. The changes for the noted periods are a result of an increase in profit from operations as the Company began selling homes in its Cierra Del Lago and Montserrat Estates projects. Gross profit was $699,992 and $32,462 in the second quarters of 1998 and 1997, respectively. For the first six months of 1998 and 1997, gross profit was $617,489 and $33,669, respectively. The increases in gross profit for the noted periods are a result of the Company beginning to sell homes in its Cierra Del Lago and Montserrat Estates projects. As during the noted periods, the Company was selling homes in the Cypress Cove and Summertree Park projects both of which had been adjusted for impairment in 1996. Gross revenues decreased to $7,632,478 in the second quarter of 1998 from $9,085,987 in the second quarter of 1997. During the first six months of the year, gross revenues decreased to $10,438,264 from $14,230,482, in 1998 and 1997, respectively. In the second quarter of 1998 the Company sold 35 homes with an average sales price of $218,000, and in the second quarter of 1997 the Company sold 37 homes with an average sales price of $246,000. During the first six months of 1998 the Company sold 52 homes with an average sales price of $201,000, and during the first six months of 1997 the Company sold 60 homes with an average sales price of $237,000. The higher average sales prices in both periods in 1997 are due to the Company selling homes in its higher priced Cypress Cove project during that period. The Cypress Cove project was completely sold out during 1997. 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - 27 Financial data schedule SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALPROP CORPORATION By: /s/ Mark F. Spiro ----------------------------------- Mark F. Spiro Vice President/Secretary/Treasurer (Chief Financial and Accounting Officer) August 14, 1998 11 EX-27 2 EXHIBIT 27
5 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 2,978,245 0 0 0 37,837,914 3,524,075 0 0 41,361,989 5,237,226 0 0 0 10,154,785 (7,480,032) 41,361,989 10,438,264 10,485,615 9,820,775 9,820,775 938,550 0 106,053 0 0 (388,496) 0 0 0 (388,496) (0.04) (0.04)
-----END PRIVACY-ENHANCED MESSAGE-----