RESULTS OF OPERATIONS

The Company reported a net loss of approximately $71,000 ($0.07 per share) for the three months ended September 30, 2020 and net income of approximately $339,000 ($0.33 per share) for the three months ended September 30, 2019. For the nine months ended September 30, 2020, the Company reported a net loss of approximately $910,000 ($0.90 per share) and net income of approximately $337,000 ($0.33 per share) for the nine months ended September 30, 2019.

REVENUES

Rentals and related revenues for the three and nine months ended September 30, 2020, were approximately $20,000 and $59,000, respectively, and primarily consists of rent from the Advisor to CII for its corporate office. For the three and nine months ended September 30, 2019 rental and related revenues were $19,000 and $56,000, 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 nine months ended September 30, 2020 was approximately $9,000 and $80,000, respectively. Net realized gain from the sale of marketable securities for the three and nine months ended September 30, 2019 was approximately $17,000 and $6,000, respectively. Unrealized net (loss) gain from investments in marketable securities for the three and nine months ended September 30, 2020 was approximately $128,000 and ($186,000), 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 (loss) gain from investments in marketable securities for the three and nine months ended September 30, 2019 was approximately ($5,000) and $247,000, respectively. For further details refer to Note 6 to the Condensed Consolidated Financial Statements (unaudited).

Income from other investments:

Income from other investments for the three and nine months ended September 30, 2020 was approximately $68,000 and $240,000, respectively. Income from other investments for the three and nine months ended September 30, 2019 was approximately $479,000 and $654,000, respectively. For further details refer to Note 7 to the Condensed Consolidated Financial Statements (unaudited).





  11

Other than temporary impairment losses from other investments ("OTTI"):

For the nine months ended September 30, 2020 OTTI valuation adjustment was $315,000 related to two investments. For further details, refer to Note 7 to the Condensed Consolidated Financial Statements (unaudited).

Interest, dividend, and other income:

Interest, dividend, and other income for the three and nine months ended September 30, 2020 was approximately $71,000 and $249,000, respectively. Interest, dividend, and other income for the three and nine months ended September 30, 2019 was approximately $137,000 and $375,000, respectively. The decreases in the three and nine-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 nine months ended September 30, 2020 as compared with the same period in 2019 decreased by approximately $16,000 (21%) primarily due to decreased repairs and maintenance at our corporate office.

General and administrative expenses for the three months ended September 30, 2020 as compared with the same period in 2019 decreased by approximately $10,000 (25%) primarily due to decreased non-employee stock compensation.

Interest expense for the nine months ended September 30, 2020 as compared with the same period in 2019 decreased by approximately $18,000 (42%) primarily due to decreased outstanding balance and decreased interest rate on note payable to our affiliate TGIF.





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 $668,000 due upon demand. The $1.91 million in margin is primarily related to the purchase of US T-bills at quarter end. The T-bills were sold in October 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 nine months ended September 30, 2020, net cash used in operating activities was approximately $995,000, primarily consisting of operating expenses.

For the nine months ended September 30, 2020, net cash provided by investing activities was approximately $1.94 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 $1.21 million, distributions from other investments of $598,000 and distribution from affiliate of $221,000. These sources of funds were partially offset by uses of cash consisting primarily of $1.06 million in purchases of marketable securities and $227,000 of contributions to other investments.

For the nine months ended September 30, 2020, net cash used in financing activities was approximately $8.9 million, consisting of $8.0 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.

© Edgar Online, source Glimpses