| Business and Significant Accounting Policies | 1.
Business and Significant Accounting Policies: Business First
Hartford Corporation, which was incorporated in Maine in 1909, and its subsidiaries (the Company), is engaged in two business
segments: 1) the purchase, development, ownership, management and sale of real estate and 2) providing preferred developer services
for two corporate franchise operators (i.e., “Fee for Service”). Principles of Consolidation The
accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries,
and all other entities in which the Company has a controlling financial interest, including those where the Company has been determined
to be a primary beneficiary of a variable interest entity or meets certain criteria as a sole general partner or managing member
in accordance with the consolidation guidance of the Financial Accounting Standards Board Accounting Standards Codification.
As such, included in the unaudited condensed consolidated financial statements are the accounts of Rockland Place Apartments Limited
Partnership and Clarendon Hill Somerville Limited Partnership, in which the Company is the sole general partner. The Company’s
ownership percentage in these variable interest entity partnerships is nominal. All significant intercompany balances and
transactions have been eliminated. Basis of Presentation The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8.03 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals
and adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods
are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated balance
sheet as of April 30, 2018 was derived from the audited financial statements for the year then ended. For further information,
refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K
for the fiscal year ended April 30, 2018. Because
the Company is engaged in the development and sale of real estate at various stages of construction, the operating cycle may extend
beyond one year. Accordingly, following the usual practice of the real estate industry, the accompanying condensed consolidated
balance sheets are unclassified. Revenue
Recognition We
account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers”
(Topic 606). We adopted new revenue recognition guidance on May 1, 2018, using the full retrospective method (see Note 2). Revenue
is recognized when or as control of the promised services or goods is transferred to our customers, in an amount that reflects
the consideration we expect to be entitled to in exchange for those services. The
following is a description of our revenue recognition policies, updated for the effects of Topic 606, for the Company’s
principal activities, separated by our reportable segments as discussed further within this Note 1. Real
Estate Operations Segment Rental
Income Management
Services Sales
of Real Estate Development
Services Construction
Income Other
Revenues Fee
for Service Segment Preferred
Developer Services – The Company is party to preferred developer agreements with CVS and Cumberland Farms. Under these
agreements, the Company satisfies its performance obligation over time as services are provided. Fees are typically payable upon
contractually defined events, like project milestones. Accounts
Receivable and Allowance for Doubtful Accounts We
record accounts receivable for our unconditional rights to consideration arising from our performance under contracts with customers.
The carrying value of such receivables, net of the allowance for doubtful accounts, represents their estimated net realizable
value. We estimate our allowance for doubtful accounts for specific accounts receivable balances based on historical collection
trends, the age of outstanding accounts receivables and existing economic conditions associated with the receivables. Past-due
accounts receivable balances are written off when our internal collection efforts have been unsuccessful. As a practical expedient,
we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at
contract inception, that the period between our transfer of a promised service to a customer and when the customer pays for that
service will be one year or less. We do not typically include extended payment terms in our contracts with customers. Remaining
Performance Obligations Remaining
performance obligations represent the aggregate transaction prices for contracts where our performance obligations have not yet
been satisfied. On July 31, 2018, we had $4,950,557 of remaining performance obligations relating to construction projects. We
expect to recognize approximately 100% of our remaining performance obligation as revenue during the remainder of fiscal 2019. Contract
Assets and Contract Liabilities Contract
assets represent assets for revenue that has been recognized in advance of billing the customer and for which the right to bill
is contingent upon something other than the passage of time. Included in contract assets are costs and estimated earnings in excess
of billings, uninstalled materials, and other costs related to long-term construction contracts. When we receive consideration,
or such consideration is unconditionally due, from a customer prior to transferring services to the customer under the terms of
the services contract, we record a contract liability. Included in contract liabilities are billings in excess of costs and estimated
earnings and deferred revenue. Such deferred revenue typically results from milestone payments pertaining to future services not
yet rendered. We recognize the contract liability as revenue once we have transferred control of service to the customer and all
revenue recognition criteria are met. Contract
assets and contract liabilities are determined for each contract on a net basis. As of July 31, 2018, contract liabilities
of $343,050 are included in deferred income in the accompanying consolidated balance sheets. Contract
Costs Contract
costs include all direct material, direct labor and benefits, materials unique to or installed in the project, subcontract costs
and allocations of indirect construction costs. Provisions for estimated losses on contracts in progress are made in the period
in which such losses are determined. As
long-term contracts extend over one or more years, revisions in estimates of costs and earnings during the course of the contract
are reflected in the accounting period in which the facts, which require the revision, become known. Applying
the contract cost practical expedient, we recognize the incremental costs of obtaining contracts as an expense when incurred if
the amortization period of the assets that we otherwise would have recognized is one year or less. Net Income (Loss)
Per Common Share Basic income (loss)
per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted
average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted income (loss)
per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding
from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method). There
were no common stock equivalents outstanding at July 31, 2018 or July 31, 2017. Financial Instruments
and Fair Value The
Company’s financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts
payable, accrued expenses, and debt. The fair values of accounts receivable, accounts payable and accrued expenses are estimated
to approximate their carrying amounts because of their relative short-term nature. In general, the carrying amount of variable
rate debt approximates its fair value. Further, the carrying amount of fixed rate debt approximates fair value since the
interest rates on the debt approximates the Company’s current incremental borrowing rate. Marketable securities consist
of equity securities and are stated at fair value based on the last sale of the period obtained from recognized stock exchanges
(i.e. Level 1). Accumulated other comprehensive (loss) income consists solely of unrealized gains (losses) on marketable securities. Segment
Information The
factors used by the Company to identify reportable segments include differences in products and services and segregated operations
within the Company. The first segment, “Real Estate Operations” participates in the purchase, development, management,
ownership and sale of real estate. Within its second segment, “Fee for Service”, the Company provides preferred developer
services to CVS and Cumberland Farms Inc. in certain geographic areas. Summary financial information for the two reportable
segments is as follows:
Three
Months Ended
July
31,
2018 2017
Revenues:
Real Estate Operations $26,848,019 $30,506,118
Fee for Service 967,500 513,250
Total $27,815,519 $31,019,368
Operating Costs &
Expenses:
Real Estate Operations $17,321,517 $25,324,567
Fee for Service 1,028,403 876,409
Administrative Expenses 1,192,441 1,560,962
Total $19,542,361 $27,761,938 All
costs after operating expenses are costs of the real estate operation. The
only assets in the balance sheet belonging to the Fee for Service segment is restricted cash of $334,147 on July 31, 2018 and
$375,501 on April 30, 2018 and receivables of $3,319,079 on July 31, 2018 and $4,516,807 on April 30, 2018. |
