|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
284,593
|
|
|
$
|
280,958
|
|
|
$
|
1,446,571
|
|
|
$
|
3,297,059
|
|
Accounts receivables, net
|
|
|
431,970
|
|
|
|
439,904
|
|
|
|
324,507
|
|
|
|
396,880
|
|
Investments, at fair value
|
|
|
10,519,544
|
|
|
|
10,200,149
|
|
|
|
10,297,532
|
|
|
|
10,008,902
|
|
Real estate, total
|
|
|
11,619,448
|
|
|
|
11,185,601
|
|
|
|
9,254,731
|
|
|
|
815,491
|
|
Goodwill and other assets
|
|
|
6,354,881
|
|
|
|
6,099,339
|
|
|
|
5,581,801
|
|
|
|
2,798,471
|
|
Total assets
|
|
$
|
29,210,436
|
|
|
$
|
28,205,951
|
|
|
$
|
26,905,142
|
|
|
$
|
17,316,803
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
444,090
|
|
|
$
|
454,221
|
|
|
$
|
329,481
|
|
|
$
|
262,065
|
|
Accrued expenses
|
|
|
221,893
|
|
|
|
213,286
|
|
|
|
307,675
|
|
|
|
330,073
|
|
Deferred revenue
|
|
|
213,383
|
|
|
|
227,476
|
|
|
|
261,017
|
|
|
|
269,134
|
|
Notes payable and other liabilities
|
|
|
8,773,111
|
|
|
|
7,954,270
|
|
|
|
6,799,620
|
|
|
|
564,876
|
|
Total liabilities
|
|
|
9,652,477
|
|
|
|
8,849,253
|
|
|
|
7,697,793
|
|
|
|
1,426,148
|
|
Total stockholders’ equity
|
|
|
19,557,959
|
|
|
|
19,356,698
|
|
|
|
19,207,349
|
|
|
|
15,890,655
|
|
Total liabilities and stockholders’ equity
|
|
$
|
29,210,436
|
|
|
$
|
28,205,951
|
|
|
$
|
26,905,142
|
|
|
$
|
17,316,803
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
Results of Operations
Asset Management Operations
The Company operates its asset management business through a wholly-owned subsidiary, Willow Oak Asset Management, LLC. This subsidiary was formed on October 10, 2016. Asset management is a core competency of the Company with many members of management and the board having asset management backgrounds. The asset management segment has been a growth area for the Company since its inception. Capital reallocations continue to be made to the subsidiary with long-term investment strategies being the primary focus.
As of the quarter ended September 30, 2018, Willow Oak holds a direct investment in the Alluvial Fund. In accordance with GAAP, for financial reporting purposes, these investment gains and losses are reported as revenue on the condensed consolidated statement of income. This treatment can result in reporting negative revenue numbers. Willow Oak also continues to earn revenue through fee share arrangements through both Alluvial Fund and Bonhoeffer Capital Management LLC, the general partner to Bonhoeffer Fund.
On August 1, 2018, Willow Oak, through a newly-organized, wholly-owned subsidiary, Willow Oak Capital Management, LLC (“Willow Oak Capital Management”), launched a newly-organized private investment partnership, Willow Oak Select Fund, LP (“Select Fund”). Willow Oak Capital Management serves as the general partner of Select Fund. Select Fund focuses on investing in securities worldwide based upon “best ideas” submitted by various third-party fund managers comprising the Willow Oak fund manager alliance, some of whom may be affiliated with Willow Oak and/or the Company. Fund managers who have signed a fee share agreement with Willow Oak Capital Management and who have had their investment ideas selected by Select Fund’s investment manager for inclusion in the Select Fund portfolio share in a pool of, and receive allocations of, any performance fees Willow Oak Capital Management receives from limited partners in Select Fund (as determined after the end of each fiscal year of Select Fund), with such allocations being awarded to a fund manager in the form of equity interest in Select Fund (unless the parties mutually agree to a cash payment in lieu thereof), all in accordance with the terms and conditions of the respective fee share agreements. As of September 30, 2018, Willow Oak Capital Management has entered into fee share agreements with
six
funds and managers.
During the quarter ended September 30, 2018, the asset management segment produced $330,112 of revenue. Cost of revenue was $0 and operating expenses totaled $107,538. Other income attributable to the asset management segment totaled $11,075. Other income was primarily attributable to a sublease arrangement for shared office space in New York City. The comprehensive income for the quarter ended September 30, 2018, totaled $233,649. This compares to the quarter ended September 30, 2017, when the asset management segment produced $715,598 of revenue, cost of revenue was $0, and operating expenses totaled $41,544. Additionally, comprehensive income for the quarter ended September 30, 2017, was $674,054.
As of the quarter ended September 30, 2018, the fair value of investments held through the asset management segment totaled $10,519,544. This compares to the quarter ended September 30, 2017, when the fair value of investments held through the asset management segment totaled $12,067,983. As of September 30, 2017, investments were held through both the asset management and corporate segments. Currently, the Alluvial Fund investment is held through the asset management segment, with additional investments being held through other company segments.
Real Estate Operations
As previously reported in our Current Reports on Form 8-K filed with the SEC on December 11, 2017, January 17, 2018, March 2, 2018, March 28, 2018, and July 12, 2018, respectively, ENDI created a wholly-owned subsidiary named Mt Melrose, LLC, a Delaware limited liability company (“New Mt Melrose”), on January 10, 2018, which has acquired a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on December 10, 2017 with a like-named seller, Mt. Melrose, LLC (“Old Mt. Melrose”), a Kentucky limited liability company owned by Jeff Moore, also an ENDI director. As set forth in our Form 8-K filed on January 17, 2018, on January 10, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a first acquisition from Old Mt. Melrose of 44 residential and other income-producing real properties located in Lexington, Kentucky. As further set forth in our Form 8-K filed on July 12, 2018, on June 29, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a second acquisition from Old Mt. Melrose of an additional 69 residential and other income-producing real properties located in Lexington, Kentucky.
Subsequent to the quarterly period ended September 30, 2018, and as previously reported in our Current Report on Form 8-K filed with the SEC on November 5, 2018, pursuant to that certain Termination of Master Real Estate Asset Purchase Agreement entered into effective November 1, 2018 between the Company and Old Mt. Melrose, the parties mutually agreed to terminate the Master Real Estate Asset Purchase Agreement as of November 1, 2018. Accordingly, neither the Company nor New Mt Melrose have any further rights or obligations concerning additional acquisitions of real properties from Old Mt. Melrose under the Master Real Estate Asset Purchase Agreement. A third-party property manager has been engaged as of November 1, 2018 to manage certain of the real properties previously acquired by New Mt Melrose. In addition, our management currently is undertaking an assessment of all of the real properties previously acquired by New Mt Melrose to determine whether New Mt Melrose should divest or restructure any of its holdings. Management expects to divest certain of its New Mt Melrose holdings in order to right size its New Mt Melrose operations, and reduce its level of high-interest debt. Upon completion of its right sizing efforts, management expects New Mt Melrose to own for the long term a sizable portfolio of income producing properties in Lexington, KY.
Through Mt Melrose, as of September 30, 2018, we own 194 rental units consisting of single-family properties, multi-family properties, commercial properties, and vacant lots. Of the 194 units held for investment, 100 of the units are occupied or available to rent, 85 of the units are vacant units being prepared or to be prepared to market to tenants, and nine of the units are vacant lots. The leases in effect as of the quarter ended September 30, 2018, are based on either annual or multi-year time periods. Month-to-month leases are reserved for special circumstances. Mt Melrose currently has one property held for resale.
During the quarter ended September 30, 2018, Mt Melrose generated rental revenue of $220,600. The cost of rental revenue totaled $107,527. Operating expenses for the quarter ended September 30, 2018, were $275,414. Other expenses totaled $137,406 and comprehensive loss for the quarter ended September 30, 2018 totaled $299,747.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
As of September 30, 2018, Mt Melrose real estate held for investment was carried on the balance sheet at $10,800,245. No comparable figures exist as Mt Melrose did not commence operations until January 10, 2018. Depreciation expense was $64,908, and accumulated depreciation totaled $145,648 for the quarter ended September 30, 2018.
During the quarter ended September 30, 2018, Mt Melrose purchased a total of 11 rental properties for a gross purchase price of $356,121. Nearly all of these purchases resulted in a note payable.
Home Services Operations
The Company operates its home services operations through HVAC Value Fund, LLC, a wholly owned subsidiary focused on the acquisition and management of HVAC and plumbing companies in Arizona. After gaining experience with HVAC acquisitions, management noted the complementary nature of plumbing providers and completed two acquisitions where a significant amount of their revenue originated from plumbing services. As previously reported in our Current Report on Form 8-K filed with the SEC on June 14, 2016, we, along with JNJ Investments, LLC, an unaffiliated third party and member of HVAC Value Fund, LLC, organized and launched this subsidiary on June 13, 2016. On May 18, 2018, the Company terminated its operating agreement with JNJ Investments, LLC, dated June 13, 2016. ENDI has a 100% voting interest in HVAC Value Fund. Although the operating agreement provided JNJ Investments with the opportunity to earn non-voting profit interests, the Company does not believe JNJ Investments earned any non-voting profit interests during the term of the operating agreement because HVAC Value Fund did not exceed the profit thresholds under the operating agreement necessary for JNJ Investments to earn non-voting profit interests.
HVAC Value Fund closed on five acquisitions totaling $1,455,000 during the year ended December 31, 2016, and one acquisition during the year ended December 31, 2017, totaling $560,000. As previously reported in our Current Report on Form 8-K filed with the SEC on June 14, 2016, and discussed further herein, the purpose of HVAC Value Fund is to acquire HVAC and plumbing businesses. Accordingly, all of our acquisitions were made in the ordinary course of business and consistent with the customs and practices (including with respect to nature, scope, magnitude, quantity, frequency, and contemplated purpose) of HVAC Value Fund, and, in turn, the Company.
During the quarter ended September 30, 2018, our home services operations generated revenue of $995,867, cost of revenue totaled $608,767, and operating expenses totaled $302,233. Other expenses for the quarter ended September 30, 2018 totaled $1,613. Comprehensive income for our home services operations for the quarter ended September 30, 2018, totaled $83,254. This compares to the quarter ended September 30, 2017, when the segment generated revenue of $1,332,239, cost of revenue totaled $875,991, operating expenses totaled $322,639, other expenses were $13,928, and comprehensive income for the quarter was $119,681.
Internet Operations
As of September 30, 2018, the focus of our internet segment is to generate cash flow, work to make our costs variable, and reinvest in our operations when an acceptable return is available. We did not make significant reinvestments into the internet segment during 2017. Additionally, competitive pressures have negatively affected our ongoing revenue.
Revenue attributed to the internet segment during the quarter ended September 30, 2018 totaled $288,312, cost of revenue during the quarter ended September 30, 2018 totaled $86,658, and operating expenses totaled $58,475. Other income for the quarter ended September 30, 2018 totaled $479 and comprehensive income for the segment totaled $143,658.
This compares to the quarter ended September 30, 2017, when revenue totaled $314,202, cost of revenue totaled $81,144, operating expenses were $61,299, other income was $656, and comprehensive income was $172,415.
Management is currently identifying the market value for domain names owned by the Company in order to assess potential income opportunities. Management also evaluates domain names available for purchase in order to generate new revenue from customers who utilize the domains.
Our current sales mix of customers consists of approximately 49% internet access and 51% web hosting and storage. As of the quarter ended September 30, 2018, all of our customer accounts are managed by our U.S. operations. Revenue generated by our U.S. accounts totaled $273,219, and revenue generated by our Canadian accounts totaled $15,093 during the quarter ended September 30, 2018. This compares to revenue generated by our U.S. accounts of $295,371, and revenue generated by our Canadian accounts of $18,831 during the quarter ended September 30, 2017.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
Other Operations
EDI Real Estate
ENDI created a wholly owned real estate subsidiary on July 10, 2017, named EDI Real Estate, LLC to hold ENDI’s legacy portfolio of real estate. As of September 30, 2018, we owned nine residential properties, one commercial property, and interests in several undeveloped lots. This compares to September 30, 2017, when we owned 10 residential properties, one commercial property, and interests in several undeveloped lots. In 2008, the Company had implemented a program to redirect cash generated from the internet operations into the purchase and renovation of real estate. This program was terminated with the change in management on December 14, 2015. As of December 14, 2015, several real estate agents and investors were engaged to determine the marketability of our properties. Repair work ceased until a more thorough review for each property could be completed to determine the most profitable course forward. Prior to year-end 2015, a list of properties was assigned to a real estate agent. Additionally, during 2016 and 2017, we entered into negotiations with several investors to sell various properties. Many of these properties were held for resale by prior management, but prior marketing activity was poor. As of September 30, 2018, the majority of these properties have been successfully sold and monetized. Real estate agents continue to be engaged to market the remaining properties listed for resale.
Through EDI Real Estate, we own eight rental properties managed by a third-party property management company. As of September 30, 2018, we had eight properties available for rent, with six properties being occupied. The two unoccupied units are in the process of being turned over for new tenants. One additional property continues to be renovated with the intention to have it ready for rent during the remainder of 2018. The leases in effect as of the quarter ended September 30, 2018, are based on either annual or multi-year time periods and include month-to-month provisions after the completion of the initial term. The property management company has introduced updated and renewed leases for existing rental properties.
During the quarter ended September 30, 2018, we did not purchase or sell any properties through EDI Real Estate. Subsequent to the quarter ended September 30, 2018, the commercial property was sold at its carrying value for $26,000. This sale will be recognized in October 2018. In connection with the sale of the commercial property, a downward $24,038
valuation a
djustment was made against the basis of the property as of September 30, 2018. This compares to the quarter ended September 20, 2017, when real estate sales were $299,900 and cost of real estate sales were $304,404. Additionally, during the quarter ended September 30, 2017, a downward $10,001 valuation adjustment was made against the basis of properties held for resale. As of September 30, 2018, real estate held for resale was carried on the balance sheet at $66,047. This compares to the quarter ended September 30, 2017, when real estate held for resale was carried at $337,481.
During the quarter ended September 30, 2018, EDI Real Estate generated rental revenue of $20,934, net of bad debt expense. The cost of rental revenue totaled $7,762. This compares to rental revenue of $24,144, net of bad debt expense and cost of rental revenue of $6,081 during the quarter ended September 30, 2017. As of September 30, 2018, EDI real estate held for investment was carried on the balance sheet at $607,750. This compares to the quarter ended September 30, 2017, when EDI real estate held for investment was held at $502,368. Depreciation expense totaled $5,304 for the quarter ended September 30, 2018. Total accumulated depreciation as of September 30, 2018, totaled $102,272.
Operating expenses for EDI Real Estate for the quarter ended September 30, 2018 totaled $4,046. This compares to the quarter ended September 30, 2017, when operating expenses were $12,024.
Corporate
In the quarter ended September 30, 2018, corporate expenses totaled $126,828. This compares to corporate expenses of $168,872 incurred during the quarter ended September 30, 2017. Expenses were lower during the quarter ended September 30, 2018 compared to the quarter ended September 30, 2017, primarily due to the lack of a bonus accrual. Remaining corporate expenses were comparable quarter over quarter.
For the quarter ended September 30, 2018, total operating expenses for other business operations were $130,874. This compares to operating expenses of $180,896 for the quarter ended September 30, 2017. Other income for the other business operations was $1,908 for the quarter ended September 30, 2018. This compares to other income of $4,395 for the quarter ended September 30, 2017. The comprehensive loss for other business operations for the quarter ended September 30, 2018 was $139,832. This compares to $148,926 of comprehensive loss for other business operations for the quarter ended September 30, 2017.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
Financial Condition, Liquidity, and Capital Resources
ENDI carries out its business strategy in five operating segments: Asset Management Operations, Real Estate Operations, Home Services Operations, Internet Operations, and Other Operations. Our primary focus is on generating cash flow so that we have the flexibility to make reinvestments as opportunities present themselves. We will only reinvest cash in each segment if we believe that the return on this invested capital is appropriate for the risk associated with the investment. This consideration is measured against all investment opportunities available to us and is not limited to these five segments or the Company’s historical operations.
Cash and equivalents totaled $284,593 at quarter-end September 30, 2018, compared to $3,297,059 at year-end December 31, 2017. This decrease in cash and equivalents is the result of our investment in Mt Melrose, LLC. Real estate held for investment increased to $11,407,995 at quarter-end September 30, 2018, compared to $616,374 at year-end December 31, 2017. Property and equipment also increased from $331,299 at year-end December 31, 2017, to $3,867,228 at quarter-end September 30, 2018. Total notes payable increased to $8,773,111 from $564,876 during the same time period. Additionally, accounts payable increased from $262,065 to $444,090 from December 31, 2017, to September 30, 2018. The increases in these accounts are also due to the acquisitions and consolidation of and with Mt. Melrose, LLC.
The Company currently believes that our existing balances of cash, cash equivalents, and cash generated from operations, proceeds from our Huckleberry investment and from the sale of portions of our real estate portfolio will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and the foreseeable future. The Company did acquire long-term debt with the Mt Melrose acquisitions; however, the debt is collateralized by the real properties that were also acquired.
The aging of accounts receivable as of September 30, 2018 and December 31, 2017 is as shown:
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Current
|
|
$
|
276,295
|
|
|
$
|
225,114
|
|
30 – 60 days
|
|
|
84,368
|
|
|
|
59,425
|
|
60 + days
|
|
|
71,307
|
|
|
|
112,341
|
|
Total
|
|
$
|
431,970
|
|
|
$
|
396,880
|
|
Contractual Obligations
As previously reported in our Current Reports on Form 8-K filed with the SEC on September 19, 2016, and December 30, 2016, respectively, on September 19, 2016, the Company announced that it had entered into a letter of intent agreement with Alluvial Capital Management, LLC (“Alluvial Capital”) to make a seed investment through Willow Oak Asset Management in Alluvial Fund, LP, a private investment partnership that was launched by Alluvial Capital on January 1, 2017 (“Alluvial Fund”). Alluvial Capital acts as the general partner and the Company, through Willow Oak Asset Management, has invested in Alluvial Fund as a limited partner.
The Company agreed to make capital contributions to Alluvial Fund in the aggregate amount of $10 million to be provided over four equal tranches on January 1, 2017, April 1, 2017, July 1, 2017, and October 1, 2017. As of September 30, 2017, the Company satisfied its obligation to provide $10 million in accordance with the contribution schedule. On January 1, 2018, pursuant to an amendment to the Alluvial Side Letter Agreement, dated December 15, 2017, Willow Oak Asset Management, LLC withdrew $3,000,000 from its $10,000,000 investment in Alluvial Fund, LP in order to partially fund the first close of the Mt Melrose Transaction. Under the terms of the amendment to the Alluvial Side Letter Agreement, to the extent that funds withdrawn by Willow Oak are replaced coincidentally by funds from a third party, Willow Oak is no longer subject to the former “lockup” restrictions, which formerly conditioned any withdrawals upon Willow Oak having a $50,000,000 capital account balance. Arquitos Capital Partners, LP, which is managed by our director Steven L. Kiel, simultaneously invested $3,000,000 in Alluvial, to replace the amount withdrawn by Willow Oak. The Arquitos investment into Alluvial counts toward Willow Oak’s seed investment total for purposes of Willow Oak’s agreement with Alluvial.
Also through the asset management segment, a lease on office space in New York City commenced on October 1, 2017. This lease extends through September 30, 2020. All related expenses will be allocated to the asset management segment.
Through the home services segment, multiple capital lease obligations were acquired as part of the most recent acquisition that occurred during the quarter ended March 31, 2017. These obligations include leases on various vehicles and equipment that extend through 2020.
As previously reported in our Current Reports on Form 8-K filed with the SEC on December 11, 2017, January 17, 2018, March 2, 2018, March 28, 2018, and July 12, 2018, respectively, ENDI created a wholly-owned subsidiary named Mt Melrose, LLC (“New Mt Melrose”) on January 10, 2018, which has acquired a portfolio of residential and other income-producing real estate in Lexington, Kentucky, pursuant to a certain Master Real Estate Asset Purchase Agreement entered into on December 10, 2017 with a like-named seller, Mt. Melrose, LLC (“Old Mt. Melrose”), a Kentucky limited liability company owned by Jeff Moore, a former ENDI director.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)
As set forth in our Form 8-K filed on January 17, 2018, on January 10, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a first acquisition from Old Mt. Melrose of 44 residential and other income-producing real properties located in Lexington, Kentucky, pursuant to the purchase agreement. This first tranche of real properties was acquired for total consideration of $3,814,500, which was payable as follows:
|
●
|
by payment of $500,000 to Old Mt. Melrose in cash;
|
|
●
|
by New Mt Melrose’s assumption of $1,798,713 of outstanding indebtedness secured by the acquired real properties; and
|
|
●
|
the balance by issuance to Old Mt. Melrose of 120,602 shares of the Company’s common stock.
|
As further set forth in our Form 8-K filed on July 12, 2018, on June 29, 2018, New Mt Melrose, consistent with the terms of the purchase agreement, completed a second acquisition from Old Mt. Melrose of an additional 69 residential and other income-producing real properties located in Lexington, Kentucky, pursuant to the purchase agreement. This second tranche of real properties was acquired for total consideration of $4,619,130, which was payable as follows:
|
●
|
by New Mt Melrose’s assumption of $2,767,158 of outstanding indebtedness secured by the acquired real properties; and
|
|
●
|
the balance by issuance to Old Mt. Melrose of 148,158 shares of the Company’s common stock.
|
Subsequent to the quarterly period ended September 30, 2018, and as previously reported in our Current Report on Form 8-K filed with the SEC on November 5, 2018, pursuant to that certain Termination of Master Real Estate Asset Purchase Agreement entered into effective November 1, 2018 between the Company and Old Mt. Melrose, the parties mutually agreed to terminate the above-discussed purchase agreement as of November 1, 2018. Accordingly, neither the Company nor New Mt Melrose have any further rights or obligations concerning additional acquisitions of real properties from Old Mt. Melrose under the purchase agreement.
On January 10, 2018, New Mt Melrose and Old Mt. Melrose entered into a certain Cash Flow Agreement (the “Cash Flow Agreement”), pursuant to which, in connection with the parties’ anticipated consummation of all of the real property purchase transactions under the purchase agreement described above, the parties agreed that as of and from and after January 10, 2018, until such time as the parties consummate the relevant closing as to each real property under the purchase agreement, Old Mt. Melrose would assign to New Mt Melrose all of the income, rents, receivables, and revenues arising from or issuing out of such real property, and New Mt Melrose would assume Old Mt. Melrose’s responsibility for payment of certain of the costs and expenses attributable to such real property.
Under the Cash Flow Agreement, New Mt Melrose has been responsible for Old Mt. Melrose’s monthly payments of interest and/or principal under the outstanding debt secured by the real properties; Old Mt. Melrose’s real property taxes with respect to the real properties due and attributable to the periods from and after the effective date; and Old Mt. Melrose’s ordinary expenses of operating the real properties, actually incurred, to the extent attributable to
de minimis
repairs, recurring maintenance services, and/or water, electricity, sewer, gas, telephone, or other similar utility charges. However, the risk of loss and casualty damage with respect to all or any portion of the real properties has continued to be borne by Old Mt. Melrose up to and including the actual time of the relevant closing respecting such real property.
Based on the number of properties presently outstanding for purchase under the purchase agreement at September 30, 2018, New Mt Melrose was obligated under the Cash Flow Agreement as of September 30, 2018 for (i) monthly payments of interest and/or principal under the outstanding debt secured by such real properties in the aggregate amount of $10,568 per month, (ii) insurance of $1,073 per month, (iii) estimated annualized obligations for real property taxes with respect to such real properties in the aggregate amount of approximately $7,461 per year, and (iv) ordinary recurring expenses of operating such real properties that are expected to be immaterial in aggregate.
However, subsequent to the quarterly period ended September 30, 2018, and as previously reported in our Current Report on Form 8-K filed with the SEC on November 5, 2018, pursuant to that certain Termination of Cash Flow Agreement entered into effective November 1, 2018 between New Mt Melrose and Old Mt. Melrose, the parties mutually agreed to terminate the above-discussed Cash Flow Agreement as of November 1, 2018. Accordingly, neither the Company nor New Mt Melrose have any further rights or obligations under the Cash Flow Agreement.
We have no other meaningful long-term debt obligations, purchase obligations, or other long-term liabilities as of September 30, 2018, other than those previously mentioned related to the asset management segment, home services, and real estate segments. The only operating lease obligations are agreements for leased office and warehouse space for HVAC Value Fund, LLC, which extend through July 31, 2019, and for leased office space for Willow Oak Asset Management, LLC, which extends through September 30, 2020.
Off-Balance Sheet Arrangements
We are not a party to any material off-balance sheet arrangements as of September 30, 2018.