UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(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, 2015 |
OR
o | 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 1-7865
HMG/COURTLAND PROPERTIES, INC. |
(Exact
name of small business issuer as specified in its charter)
|
|
|
Delaware |
|
59-1914299 |
(State or other
jurisdiction of |
|
(I.R.S. Employer |
incorporation
or organization) |
|
Identification
No.) |
1870
S. Bayshore Drive, Coconut Grove, Florida |
|
33133 |
(Address of principal
executive offices) |
|
(Zip Code) |
|
|
|
305-854-6803 |
(Registrant’s telephone number, including area code) |
Not
Applicable
(Former
name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the issuer (1) has filed all reports required to be filed by Sections 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 o
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated
filer o Accelerated filer o Non-accelerated
filer o Smaller reporting company x
(Do
not check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the exchange Act). Yes o
No x
APPLICABLE
ONLY TO CORPORATE ISSUERS:
State
the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 1,039,693
Common shares were outstanding as of August 13, 2015.
HMG/COURTLAND
PROPERTIES, INC.
Index
Cautionary
Statement. This Form 10-Q contains certain statements relating to future results of the Company that are considered “forward-looking
statements” within the meaning of the Private Litigation Reform Act of 1995. Actual results may differ materially from those
expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political and economic
conditions; interest rate fluctuation; competitive pricing pressures within the Company’s market; equity and fixed income
market fluctuation; technological change; changes in law; changes in fiscal, monetary, regulatory and tax policies; monetary fluctuations
as well as other risks and uncertainties detailed elsewhere in this Form 10-Q or from time-to-time in the filings of the Company
with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date on which such statements
are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence of unanticipated events.
HMG/COURTLAND PROPERTIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
| |
| | |
| |
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
| (UNAUDITED) | | |
| | |
ASSETS | |
| | | |
| | |
Investment properties, net of accumulated depreciation: | |
| | | |
| | |
Office building and other commercial property | |
$ | 786,113 | | |
$ | 793,749 | |
Total investment properties, net | |
| 786,113 | | |
| 793,749 | |
| |
| | | |
| | |
Cash and cash equivalents | |
| 11,880,337 | | |
| 9,451,152 | |
Investments in marketable securities | |
| 10,685,397 | | |
| 11,790,037 | |
Other investments | |
| 4,004,350 | | |
| 3,793,420 | |
Investment in affiliate | |
| 2,249,032 | | |
| 2,232,972 | |
Loans, notes and other receivables | |
| 1,372,642 | | |
| 1,400,877 | |
Investment in real estate partnership | |
| 2,322,448 | | |
| 281,663 | |
Other assets | |
| 45,621 | | |
| 53,356 | |
TOTAL ASSETS | |
$ | 33,345,940 | | |
$ | 29,797,226 | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Note payable to affiliate | |
$ | 2,100,000 | | |
$ | 2,100,000 | |
Margin payable | |
| 8,266,258 | | |
| 3,253,065 | |
Accounts payable, accrued expenses and other liabilities | |
| 250,355 | | |
| 210,691 | |
Due to Adviser | |
| — | | |
| 54,111 | |
Dividend payable | |
| — | | |
| 526,963 | |
Deferred income taxes | |
| 217,000 | | |
| 217,000 | |
TOTAL LIABILITIES | |
| 10,833,613 | | |
| 6,361,830 | |
| |
| | | |
| | |
STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Excess common stock, $1 par value; 100,000 shares authorized: no shares issued | |
| — | | |
| — | |
Common stock, $1 par value; 1,200,000 shares authorized and 1,053,926
issued and as of June 30, 2015 and December 31, 2014. | |
| 1,053,926 | | |
| 1,053,926 | |
Additional paid-in capital | |
| 24,255,614 | | |
| 24,249,844 | |
Less: Treasury shares (14,233 shares and 800 shares as of June 30,
2015 and December 31, 2014, respectively | |
| (175,904 | ) | |
| (9,377 | ) |
Undistributed gains from sales of properties, net of losses | |
| 53,227,696 | | |
| 53,227,696 | |
Undistributed losses from operations | |
| (56,071,164 | ) | |
| (55,315,000 | ) |
Total stockholders’ equity | |
| 22,290,168 | | |
| 23,207,089 | |
Non controlling interest | |
| 222,159 | | |
| 228,307 | |
TOTAL STOCKHOLDERS’ EQUITY | |
| 22,512,327 | | |
| 23,435,396 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 33,345,940 | | |
$ | 29,797,226 | |
See notes to the condensed consolidated
financial statements
HMG/COURTLAND PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (UNAUDITED)
| |
For the three months ended | | |
For the six months ended | |
| |
June 30, | | |
June 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
REVENUES | |
| | | |
| | | |
| | | |
| | |
Real estate rentals and related revenue | |
$ | 16,200 | | |
$ | 20,156 | | |
$ | 32,400 | | |
$ | 36,845 | |
| |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Rental and other properties | |
| 21,104 | | |
| 24,926 | | |
| 43,193 | | |
| 41,567 | |
Adviser’s base fee | |
| 165,000 | | |
| 165,000 | | |
| 330,000 | | |
| 330,000 | |
General and administrative | |
| 99,213 | | |
| 44,378 | | |
| 172,021 | | |
| 101,686 | |
Professional fees and expenses | |
| 232,852 | | |
| 59,510 | | |
| 308,823 | | |
| 141,027 | |
Directors’ fees and expenses | |
| 19,000 | | |
| 26,250 | | |
| 46,250 | | |
| 48,750 | |
Depreciation and amortization | |
| 3,597 | | |
| 5,002 | | |
| 7,636 | | |
| 9,041 | |
Interest expense | |
| 17,402 | | |
| 25,268 | | |
| 44,634 | | |
| 48,724 | |
Total expenses | |
| 558,168 | | |
| 350,334 | | |
| 952,557 | | |
| 720,795 | |
| |
| | | |
| | | |
| | | |
| | |
Loss before other (loss) income and income taxes | |
| (541,968 | ) | |
| (330,178 | ) | |
| (920,157 | ) | |
| (683,950 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net realized and unrealized (losses) gains from investments in marketable securities | |
| (552,377 | ) | |
| 511,258 | | |
| (370,274 | ) | |
| 637,894 | |
Net income from other investments | |
| 109,662 | | |
| 71,829 | | |
| 176,613 | | |
| 84,096 | |
Interest, dividend and other income | |
| 167,153 | | |
| 418,188 | | |
| 351,504 | | |
| 488,186 | |
Total other (loss) income | |
| (275,562 | ) | |
| 1,001,275 | | |
| 157,843 | | |
| 1,210,176 | |
| |
| | | |
| | | |
| | | |
| | |
(Loss) income before income taxes | |
| (817,530 | ) | |
| 671,097 | | |
| (762,314 | ) | |
| 526,226 | |
Provision for income taxes | |
| — | | |
| 60,000 | | |
| — | | |
| 91,000 | |
Net (loss) income | |
| (817,530 | ) | |
| 611,097 | | |
| (762,314 | ) | |
| 435,226 | |
Noncontrolling interests | |
| 5,724 | | |
| (4,896 | ) | |
| 6,150 | | |
| (8,584 | ) |
Net (loss) income attributable to the Company | |
$ | (811,806 | ) | |
$ | 606,201 | | |
$ | (756,164 | ) | |
$ | 426,642 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding-basic | |
| 1,041,494 | | |
| 1,048,926 | | |
| 1,041,662 | | |
| 1,048,926 | |
Weighted average common shares outstanding-diluted | |
| 1,041,494 | | |
| 1,049,434 | | |
| 1,041,662 | | |
| 1,050,849 | |
| |
| | | |
| | | |
| | | |
| | |
Net (loss) income per common: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
$ | (0.78 | ) | |
$ | 0.58 | | |
$ | (0.73 | ) | |
$ | 0.41 | |
See notes to the condensed consolidated
financial statements
HMG/COURTLAND PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)
| |
For the six months ended June 30, | |
| |
2015 | | |
2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net (loss) income attributable to the Company | |
$ | (756,164 | ) | |
$ | 426,642 | |
Adjustments to reconcile net income (loss)
attributable to the Company to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 7,636 | | |
| 9,041 | |
Non-employee stock compensation expense | |
| 5,771 | | |
| — | |
Net income from other investments, excluding impairment losses | |
| (176,613 | ) | |
| (84,096 | ) |
Gain from dissolution of joint venture with related party | |
| — | | |
| (226,157 | ) |
Net loss (gain) from investments in marketable securities | |
| 370,274 | | |
| (637,894 | ) |
Net (income) loss attributable to non controlling interest | |
| (6,150 | ) | |
| 8,584 | |
Deferred income tax provision | |
| — | | |
| 91,000 | |
Changes in assets and liabilities: | |
| | | |
| | |
Other assets and other receivables | |
| 35,973 | | |
| 31,129 | |
Accounts payable, accrued expenses and other liabilities | |
| (14,447 | ) | |
| (3,756,839 | ) |
Total adjustments | |
| 222,444 | | |
| (4,565,232 | ) |
Net cash used in operating activities | |
| (533,720 | ) | |
| (4,138,590 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Investment in real estate partnership | |
| (2,040,785 | ) | |
| — | |
Collections in notes and advances from related parties | |
| — | | |
| 226,157 | |
Distributions from other investments | |
| 1,126,752 | | |
| 210,735 | |
Contributions to other investments | |
| (1,177,131 | ) | |
| (846,756 | ) |
Net proceeds from sales and redemptions of securities | |
| 4,595,021 | | |
| 1,303,196 | |
Purchase of marketable securities | |
| (3,860,655 | ) | |
| (7,997,675 | ) |
Additions in mortgage loans and notes receivable | |
| — | | |
| (138,000 | ) |
Purchases and improvements of properties | |
| — | | |
| (127,150 | ) |
Proceeds from partial sale of affiliate | |
| — | | |
| 39,000 | |
Net cash used in investing activities | |
| (1,356,798 | ) | |
| (7,330,493 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Margin borrowings | |
| 5,013,193 | | |
| — | |
Dividend paid | |
| (526,963 | ) | |
| — | |
Purchase of treasury stock | |
| (166,527 | ) | |
| — | |
Repayment of mortgages and notes payables | |
| — | | |
| (102,891 | ) |
Net cash provided by (used in) financing activities | |
| 4,319,703 | | |
| (102,891 | ) |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| 2,429,185 | | |
| (11,571,974 | ) |
Cash and cash equivalents at beginning of the period | |
| 9,451,152 | | |
| 17,655,568 | |
Cash and cash equivalents at end of the period | |
$ | 11,880,337 | | |
$ | 6,083,594 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |
| | | |
| | |
Cash paid during the period for interest | |
$ | 45,000 | | |
$ | 49,000 | |
Cash paid during the period for income taxes | |
$ | — | | |
$ | 1,593,000 | |
See notes to the condensed consolidated
financial statements
HMG/COURTLAND
PROPERTIES, INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion
of the Company, the accompanying unaudited condensed consolidated financial statements prepared in accordance with instructions
for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation
of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial
statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed
or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s
Annual Report for the year ended December 31, 2014. The balance sheet as of December 31, 2014 was derived from audited consolidated
financial statements as of that date. The results of operations for the three and six months ended June 30, 2015 are not necessarily
indicative of the results to be expected for future periods or the full year.
The condensed
consolidated financial statements include the accounts of HMG/Courtland Properties, Inc. (the “Company”) and entities
in which the Company owns a majority voting interest or controlling financial interest. All material transactions and balances
with consolidated and unconsolidated entities have been eliminated in consolidation or as required under the equity method.
2. RECENT
ACCOUNTING PRONOUNCEMENTS
Refer to
the consolidated financial statements and footnotes thereto included in the HMG/Courtland Properties, Inc. Annual Report on Form
10-K for the year ended December 31, 2014 for recent accounting pronouncements. The Company does not believe that any recently
issued, but not yet effective accounting standards, if currently adopted, will have a material effect on the Company’s consolidated
financial position, results of operations and cash flows.
3. INVESTMENTS
IN MARKETABLE SECURITIES
Investments
in marketable securities consist primarily of large capital corporate equity and debt securities in varying industries or issued
by government agencies with readily determinable fair values. These securities are stated at market value, as determined by the
most recent traded price of each security at the balance sheet date. Consistent with the Company’s overall current investment
objectives and activities its entire marketable securities portfolio is classified as trading. Included in investments in marketable
securities is approximately $7.7 million of large capital real estate investment trusts (REITs) as of June 30, 2015.
Net realized
and unrealized (loss) gain from investments in marketable securities for the three and six months ended June 30, 2015 and 2014
is summarized below:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
Description | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Net realized gain from sales of securities | |
$ | 49,000 | | |
$ | 34,000 | | |
$ | 204,000 | | |
$ | 46,000 | |
Unrealized net (loss) gain in trading securities | |
| (601,000 | ) | |
| 477,000 | | |
| (574,000 | ) | |
| 592,000 | |
Total net (loss) gain from investments in marketable securities | |
($ | 552,000 | ) | |
$ | 511,000 | | |
($ | 370,000 | ) | |
$ | 638,000 | |
For the
three and six months ended June 30, 2015, net unrealized losses from trading securities were $601,000 and $574,000, respectively.
This is compared to net unrealized gains of $477,000 and $592,000 for the three and six months ended June 30, 2014, respectively.
For the
three months ended June 30, 2015, net realized gain from sales of marketable securities was approximately $49,000, and consisted
of approximately $76,000 of gross gains and $27,000 of gross losses. For the six months ended June 30, 2015, net realized gain
from sales of marketable securities was approximately $204,000, and consisted of approximately $338,000 of gross gains net of
$134,000 of gross losses.
For the
three months ended June 30, 2014, net realized gain from sales of marketable securities was approximately $34,000, and consisted
of approximately $46,000 of gross gains and $12,000 of gross losses. For the six months ended June 30, 2014, net realized gain
from sales of marketable securities was approximately $46,000, and consisted of approximately $80,000 of gross gains net of $34,000
of gross losses.
Investment
gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant
impact on the Company’s net earnings. However, the amount of investment gains or losses on marketable securities for any
given period has no predictive value and variations in amount from period to period have no practical analytical value.
4. INVESTMENT
IN REAL ESTATE PARTNERSHIP
As
previously reported, in September 2014, the Company, through a newly-formed wholly owned subsidiary (HMG Orlando LLC, a Delaware
limited liability company), acquired a one-third equity membership interest in JY-TV Associates, LLC a Florida limited liability
company (“JY-TV”) and entered into the Amended and Restated Operating Agreement of JY-TV (the “Agreement”).
Also, as previously reported, on May 19, 2015, pursuant to the terms of a Construction Loan Agreement, between JY-TV Associates
LLC (“JY-TV” or the “Borrower”, which is one-third owned by a wholly-owned subsidiary of the Company)
and Wells Fargo Bank (“Lender”), Lender loaned to the Borrower the principal sum of $27 million pursuant to a senior
secured construction loan (“Loan”). The proceeds of the Loan shall be used to finance the previously reported construction
of multi-family residential apartments containing 240 units totaling approximately 239,000 net rentable square feet on a 9.5 acre
site located in Orlando, Florida (“Project”). Total development costs for the Project are estimated at $34 million
and the Borrower’s equity totals approximately $7 million. Construction of the Project commenced in June 2015.
As previously reported, the Company and certain affiliates of the other two members of the Borrower ("Guarantors") entered into a Completion Guaranty Agreement ("Completion Guaranty") and a Repayment Guaranty Agreement ("Repayment Guaranty") (collectively, the "Guaranties") with the Lender. Under the Completion Guaranty, Guarantors shall unconditionally guaranty, on a joint and several basis, lien free completion of all improvements with respect to the Project and any construction or completion obligations required to be made by the Borrower pursuant to any approved leases. Under the Repayment Guaranty, Guarantors shall provide an unconditional guaranty including the repayment of $11.5 million of the principal balance of the Loan, repayment of all accrued but unpaid interest and payment of any other sums payable under any of the Loan Agreement. Each Guarantor is required to maintain compliance at all times with certain financial covenants, as defined. As of June 30, 2015 the Company was in compliance with all debt covenants.
This investment
is accounted for under the equity method.
5. OTHER
INVESTMENTS
As of June
30, 2015, the Company’s portfolio of other investments had an aggregate carrying value of approximately $4 million and we
have committed to fund approximately $2.2 million as required by agreements with the investees. The carrying value of these investments
is equal to contributions less distributions and loss valuation adjustments, if any.
During the
six months ended June 30, 2015, we made contributions to other investments of approximately $1.2 million primarily in two new
real estate investments and two new private equity funds investing in diversified businesses. The real estate investments consisted
of one for $300,000 in a real estate partnership owning residential rental property in San Antonio, Texas and the other for $100,000
is a real estate partnership owning a second mortgage on a property located in Miami, Florida. The private equity fund investments
consisted of one for $500,000 commitment of which $225,000 was funded, and another private equity fund for $300,000 which was
fully funded.
During the
six months ended June 30, 2015, we received distributions from other investments of approximately $1.1 million primarily from
two real estate investments which sold property. We received $547,000 from our investment in a commercial building located near
the Company’s offices purchased in 2005 with a carrying value of $177,000 as of June 30, 2015. We also received $131,000
from our investment in a partnership which sold its rental property in Miami, Florida and distributed the sales proceeds in February
2015. Additionally, we received approximately $449,000 in cash distributions from various other investments during the six months
ended June 30, 2015.
Net income
from other investments for the three and six months ended June 30, 2015 and 2014, is summarized below:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
Description | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
Partnerships owning diversified businesses | |
$ | 107,000 | | |
$ | 74,000 | | |
$ | 114,000 | | |
$ | 77,000 | |
Partnerships owning real estate and related | |
| 2,000 | | |
| — | | |
| 47,000 | | |
| 1,000 | |
Income from investment in 49% owned affiliate (T.G.I.F. Texas, Inc.) | |
| 1,000 | | |
| (2,000 | ) | |
| 16,000 | | |
| 6,000 | |
Total net income from other investments (excluding other than temporary impairment losses) | |
$ | 110,000 | | |
$ | 72,000 | | |
$ | 177,000 | | |
$ | 84,000 | |
The following
tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June
30, 2015 and December 31, 2014, aggregated by investment category and the length of time that investments have been in a
continuous loss position:
| |
| | |
| | |
| | |
| | |
| | |
| |
| |
As of June 30,
2015 | |
| |
Less than 12
Months | | |
Greater than 12 Months | | |
Total | |
Investment Description | |
Fair Value | | |
Unrealized Loss | | |
Fair Value | | |
Unrealized Loss | | |
Fair Value | | |
Unrealized Loss | |
Partnerships
owning investments in technology related industries | |
$ | — | | |
$ | — | | |
$ | 5,000 | | |
$ | (12,000 | ) | |
$ | 5,000 | | |
$ | (12,000 | ) |
Partnerships owning
diversified businesses investments | |
| 199,000 | | |
| (1,000 | ) | |
| — | | |
| — | | |
| 199,000 | | |
| (1,000 | ) |
Other
(private banks, etc.) | |
| 286,000 | | |
| (13,000 | ) | |
| 242,000 | | |
| (8,000 | ) | |
| 528,000 | | |
| (21,000 | ) |
Total | |
$ | 485,000 | | |
$ | (14,000 | ) | |
$ | 247,000 | | |
$ | (20,000 | ) | |
$ | 732,000 | | |
$ | (34,000 | ) |
| |
| | |
| | |
| | |
| | |
| | |
| |
| |
As of December 31,
2014 | |
| |
Less than 12
Months | | |
Greater than 12 Months | | |
Total | |
Investment Description | |
Fair Value | | |
Unrealized Loss | | |
Fair Value | | |
Unrealized Loss | | |
Fair Value | | |
Unrealized Loss | |
Partnerships
owning investments in technology related industries | |
$ | — | | |
$ | — | | |
$ | 5,000 | | |
$ | (11,000 | ) | |
$ | 5,000 | | |
$ | (11,000 | ) |
Partnerships owning
diversified businesses investments | |
| 190,000 | | |
| (10,000 | ) | |
| — | | |
| — | | |
| 190,000 | | |
| (10,000 | ) |
Partnerships owning real estate and related investments | |
| 45,000 | | |
| (30,000 | ) | |
| — | | |
| — | | |
| 45,000 | | |
| (30,000 | ) |
Other
(private banks, etc.) | |
| 242,000 | | |
| (8,000 | ) | |
| | | |
| | | |
| 242,000 | | |
| (8,000 | ) |
Total | |
$ | 477,000 | | |
$ | (48,000 | ) | |
$ | 5,000 | | |
$ | (11,000 | ) | |
$ | 482,000 | | |
$ | (59,000 | ) |
When
evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent
to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s
intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s
amortized cost basis.
In
accordance with ASC Topic 320-10-65, Recognition and Presentation of Other-Than-Temporary Impairments there were no OTTI impairment
valuation adjustments for the three and six months ended June 30, 2015 and 2014.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance
with ASC Topic 820, the Company measures cash and cash equivalents, marketable debt and equity securities at fair value on a recurring
basis. Other investments are measured at fair value on a nonrecurring basis.
The
following are the major categories of assets and liabilities measured at fair value on a recurring basis during the three and
six months ended June 30, 2015 and for the year ended December 31, 2014, using quoted prices in active markets for identical assets
(Level 1) and significant other observable inputs (Level 2). For the periods presented, there were no major assets measured at
fair value on a recurring basis which uses significant unobservable inputs (Level 3):
Assets
and liabilities measured at fair value on a recurring basis are summarized below:
| |
Fair value measurement at reporting date using | |
Description | |
Total June 30, 2015 | | |
Quoted Prices
in Active Markets for
Identical Assets (Level 1) | | |
Significant
Other Observable
Inputs (Level 2) | | |
Significant Unobservable
Inputs (Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Cash equivalents: | |
| | | |
| | | |
| | | |
| | |
Money market mutual funds | |
$ | 2,087,000 | | |
$ | 2,087,000 | | |
$ | — | | |
$ | — | |
U.S. T-bills | |
| 9,500,000 | | |
| 9,500,000 | | |
| — | | |
| | |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
Corporate debt securities | |
| 793,000 | | |
| — | | |
| 793,000 | | |
| — | |
Marketable equity securities | |
| 9,892,000 | | |
| 9,892,000 | | |
| — | | |
| — | |
Total assets | |
$ | 22,272,000 | | |
$ | 21,479,000 | | |
$ | 793,000 | | |
$ | — | |
| |
| | |
| | |
| | |
| |
| |
Fair value measurement at reporting date using | |
Description | |
Total December 31, 2014 | | |
Quoted Prices
in Active Markets for
Identical Assets (Level 1) | | |
Significant
Other Observable
Inputs (Level 2) | | |
Significant Unobservable
Inputs (Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Cash equivalents: | |
| | | |
| | | |
| | | |
| | |
Time deposits | |
$ | 55,000 | | |
| | | |
$ | 55,000 | | |
| | |
Money market mutual funds | |
| 1,206,000 | | |
| 1,206,000 | | |
| — | | |
| — | |
U.S. T-bills | |
| 7,200,000 | | |
| 7,200,000 | | |
| — | | |
| — | |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
Corporate debt securities | |
| 1,098,000 | | |
| — | | |
| 1,098,000 | | |
| — | |
Marketable equity securities | |
| 10,692,000 | | |
| 10,692,000 | | |
| — | | |
| — | |
Total assets | |
$ | 20,251,000 | | |
$ | 19,098,000 | | |
$ | 1,153,000 | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
Carrying
amount is the estimated fair value for corporate debt securities and time deposits based on a market-based approach using observable
(Level 2) inputs such as prices of similar assets in active markets.
The
following are the major categories of assets and liabilities measured at fair value on a nonrecurring basis during the three and
six months ended June 30, 2015 and for the year ended December 31, 2014. This category includes other investments which are measured
using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):
| |
| | |
| | |
| | |
| | |
| |
| |
Fair value measurement at reporting date using | | |
| |
| |
Total
June 30, | | |
Quoted Prices
in Active
Markets for
Identical Assets | | |
Significant
Other
Observable
Inputs | | |
Significant
Unobservable
Inputs | | |
Total losses
for the
three and
six months
ended | |
Description | |
2015 | | |
(Level 1) | | |
(Level 2) (a) | | |
(Level 3) (b) | | |
6/30/2015 | |
Assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Other investments by investment focus: | |
| | | |
| | | |
| | | |
| | | |
| | |
Technology & Communication | |
$ | 284,000 | | |
$ | — | | |
$ | 284,000 | | |
$ | — | | |
$ | — | |
Diversified businesses | |
| 1,678,000 | | |
| — | | |
| 1,678,000 | | |
| — | | |
| — | |
Real estate and related | |
| 1,417,000 | | |
| — | | |
| 1,040,000 | | |
| 377,000 | | |
| — | |
Other | |
| 625,000 | | |
| — | | |
| — | | |
| 625,000 | | |
| — | |
Total assets | |
$ | 4,004,000 | | |
$ | — | | |
$ | 3,002,000 | | |
$ | 1,002,000 | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Fair value measurement at reporting date using | | |
| |
| |
| | |
Quoted Prices
in Active | | |
Significant
Other | | |
Significant | | |
Total | |
| |
Total
December 31, | | |
Markets for
Identical Assets | | |
Observable
Inputs | | |
Unobservable
Inputs | | |
losses for
year ended | |
Description | |
2014 | | |
(Level 1) | | |
(Level 2) (a) | | |
(Level 3) (b) | | |
12/31/2014 | |
Assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Other investments by investment focus: | |
| | | |
| | | |
| | | |
| | | |
| | |
Technology & Communication | |
$ | 288,000 | | |
$ | — | | |
$ | 288,000 | | |
$ | — | | |
$ | 11,000 | |
Diversified businesses | |
| 1,200,000 | | |
| — | | |
| 1,200,000 | | |
| — | | |
| — | |
Real estate and related | |
| 1,680,000 | | |
| — | | |
| 737,000 | | |
| 943,000 | | |
| — | |
Other | |
| 625,000 | | |
| — | | |
| — | | |
| 625,000 | | |
| — | |
Total assets | |
$ | 3,793,000 | | |
$ | — | | |
$ | 2,225,000 | | |
$ | 1,568,000 | | |
$ | 11,000 | |
| (a) | Other
investments measured at fair value on a non-recurring basis include investments in certain
entities that calculate net asset value per share (or its equivalent such as member units
or an ownership interest in partners’ capital to which a proportionate share of
net assets is attributed, “NAV”). This class primarily consists of private
equity funds that have varying investment focus. These investments can never be redeemed
with the funds. Instead, the nature of the investments in this class is that distributions
are received through the liquidation of the underlying assets of the fund. If these investments
were held it is estimated that the underlying assets of the fund would be liquidated
over 5 to 10 years. As of June 30, 2015, it is probable that all of the investments in
this class will be sold at an amount different from the NAV of the Company’s ownership
interest in partners’ capital. Therefore, the fair values of the investments in
this class have been estimated using recent observable information such as audited financial
statements and/or statements of partners’ capital obtained directly from investees
on a quarterly or other regular basis. During the six months ended June 30, 2015, the
Company received distributions of approximately $437,000 from this type of investment
primarily from investments in diversified businesses and real estate. During the six
months ended June 30, 2015, the Company made contributions totaling approximately $1.1
million in this type of investment. As of June 30, 2015, the amount of the Company’s
unfunded commitments related to the aforementioned investments is approximately $2.2
million. |
| (b) | Other
investments above which are measured on a nonrecurring basis using Level 3 unobservable
inputs consist of investments primarily in commercial real estate in Florida through
private partnerships and two investments in the stock of private banks in Florida and
Texas. The Company does not know when it will have the ability to redeem the investments
and has categorized them as a Level 3 fair value measurement. The Level 3 real estate
and related investments of approximately $377,000 include one investment in a commercial
building located near the Company’s offices purchased in 2005 with a carrying value
as of June 30, 2015 of $177,000. In January and April 2015, the Company received two
distributions totaling $547,000 from this investment. Investments in this category are
measured using primarily inputs provided by the managing member of the partnerships with
whom the Company has done similar transactions in the past and is well known to management.
The fair values of these real estate investments have been estimated using the net asset
value of the Company’s ownership interest in partners’ capital. The other
Level 3 investments include investments in private bank stocks and a reinsurance company.
The fair values of these other Level 3 investments have been estimated using the cost
method less distributions received and other than temporary impairments. This investment
is valued using inputs provided by the management of the investee. |
The following
table includes a roll-forward of the investments classified within level 3 of the fair value hierarchy for the six months ended
June 30, 2015:
| |
| |
| |
Level 3
Investments: | |
Balance at January 1, 2015 | |
$ | 1,568,000 | |
Investment in Level 3 investments | |
| 100,000 | |
Distributions from Level 3 investments, net of gains | |
| (666,000 | ) |
Balance at June 30, 2015 | |
$ | 1,002,000 | |
7. INCOME
TAXES
As
previously reported, during the fourth quarter of 2014 the Company discovered that it fell short of meeting the 75% asset test.
Management has taken the necessary steps to meet the test and intends to include the disclosure statement in the tax return for
the REIT, which will be filed by September 15, 2015. In addition, the $50,000 excise tax has been paid to the IRS as of March
15, 2015. Management believes it has reasonable cause for failing the test, and has met the 75% asset test as of June 30, 2015.
As such, the Company fully anticipates that it will qualify as a REIT for 2014 and beyond and thus will not be subject to federal income taxation.
The Company
(excluding CII) as a qualifying real estate investment trust distributes its taxable ordinary income to stockholders in conformity
with requirements of the Internal Revenue Code and is not required to report deferred items due to its ability to distribute all
taxable income. In addition, net operating losses can be carried forward to reduce future taxable income but cannot be carried
back.
The
Company’s 95%-owned subsidiary, CII, files a separate income tax return and its operations are not included in the REIT’s
income tax return.
The
Company accounts for income taxes in accordance with ASC Topic 740, “Accounting for Income Taxes”. ASC Topic 740 requires
a Company to use the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized
for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect
on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred
taxes only pertain to CII. As of June 30, 2015 the Company has recorded a net deferred tax liability of $217,000 as a result of
timing differences associated with the carrying value of the investment in affiliate (TGIF) and other investments. CII’s
NOL carryover to 2014 is estimated at $1.3 million expiring in 2033 and has been fully reserved due to CII historically having
tax losses.
The
provision for income taxes in the consolidated statements of comprehensive income consists of the following:
| |
| | |
| |
Three months ended June 30, | |
2015 | | |
2014 | |
Current: | |
| | | |
| | |
Federal | |
$ | — | | |
$ | — | |
State | |
| — | | |
| — | |
| |
| — | | |
| — | |
Deferred: | |
| | | |
| | |
Federal | |
$ | 42,000 | | |
$ | 82,000 | |
State | |
| 5,000 | | |
| 9,000 | |
| |
| 47,000 | | |
| 91,000 | |
Additional valuation allowance | |
| (47,000 | ) | |
| — | |
Total | |
$ | — | | |
$ | 91,000 | |
We adopted
the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” on January 1, 2007. This topic
clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance
with ASC Topic 740, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement process
for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Topic 740-10
also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition.
Based on
our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated
financial statements. Our evaluation was performed for the tax years ended since December 31, 2011 which are the tax years
which remain subject to examination by major tax jurisdictions as of June 30, 2015.
We may from
time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been
minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it
has been classified in the consolidated financial statements as selling, general and administrative expense.
8. STOCK OPTIONS
Stock based
compensation expense is recognized using the fair-value method for all awards. During the six months ended June 30, 2015 the Company
granted options to purchase 3,000 shares of the Company’s common stock to one director. The exercise price of the option
is equal to $12.75 per share, the market price of the stock on the date of grant and the option expires on August 25, 2016. The
Company determined the fair value of its option awards using the Black-Scholes option pricing model. The following assumptions
were used to value the options granted during the six months ended June 30, 2015: 1.6 year expected life; expected volatility
of approximately 37%; risk-free of .17% and annual dividend yield of 4%. The expected life for options granted during the period
represents the period of time that options are to be outstanding based on the expiration date of the Plan. Expected volatilities
are based upon historical volatility of the Company’s stock over a period equal to the 1.6 year expected life.
The weighted
average fair value for options granted during the six months ended June 30, 2015 was $12.04 per share. For the six months ended
June 30, 2015 the Company recorded approximately $6,000 in non-employee stock option expense relating to the options granted in
2015.
The following
table summarizes stock option activity during the three and six months ended June 30, 2015.
| |
| | |
Weighted | |
| |
| | |
Average | |
| |
Options | | |
Exercise | |
| |
Outstanding | | |
Price | |
Outstanding at January 1, 2015 | |
| 17,700 | | |
$ | 18.35 | |
Granted | |
| 3,000 | | |
$ | 12.75 | |
Outstanding at June 30, 2015 | |
| 20,700 | | |
$ | 17.54 | |
The following
table summarizes information concerning outstanding and exercisable options as of June 30, 2015:
| | |
Number
Outstanding | | |
Weighted
Average | |
Strike Price | | |
and exercisable | | |
Strike Price | |
$ | 12.75 | | |
| 3,000 | | |
$ | 12.75 | |
$ | 17.84 | | |
| 9,500 | | |
$ | 17.84 | |
$ | 18.89 | | |
| 7,500 | | |
$ | 18.89 | |
$ | 19.50 | | |
| 700 | | |
$ | 19.50 | |
| | | |
| 20,700 | | |
$ | 17.54 | |
As of June
30, 2015 the options outstanding and exercisable had no intrinsic value.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
RESULTS
OF OPERATIONS
The Company
reported a net loss of approximately $812,000 ($.78 per share) and approximately $756,000 ($.73 per share) for the three and six
months ended June 30, 2015, respectively. For the three and six months ended June 30, 2014, we reported net income of $606,000
($.58 per share) and approximately $427,000 ($.41 per share), respectively.
REVENUES
Rentals
and related revenues for the three and six months ended June 30, 2015 and 2014 consists of rent from the Advisor to CII for its
corporate office.
Net realized
and unrealized gain from investments in marketable securities:
Net realized
gain from investments in marketable securities for the three and six months ended June 30, 2015 was approximately $49,000 and
$204,000, respectively. Net realized gain from investments in marketable securities for the three and six months ended June 30,
2014 was approximately $34,000 and $46,000, respectively. Net unrealized loss from investments in marketable securities for the
three and six months ended June 30, 2015 was approximately $601,000 and $574,000, respectively. Net unrealized gain from investments
in marketable securities for the three and six months ended June 30, 2014 was approximately $477,000 and $592,000, respectively.
For further details refer to Note 3 to Condensed Consolidated Financial Statements (unaudited).
Net income
from other investments:
Net income
from other investments for the three and six months ended June 30, 2015 was approximately $110,000 and $177,000, respectively.
Net income from other investments for the three and six months ended June 30, 2014 was approximately $72,000 and $84,000, respectively.
For further details refer to Note 5 to Condensed Consolidated Financial Statements (unaudited).
Interest,
dividend and other income:
Interest,
dividend and other income for the three and six months ended June 30, 2015 was approximately $167,000 and $352,000, respectively.
Interest, dividend and other income for the three and six months ended June 30, 2014 was approximately $418,000 and $488,000,
respectively. The decrease in the three and six months ended June 30, 2015 as compared with the same periods in 2014 was primarily
due to a nonrecurring gain from the dissolution of South Bayshore Associates (SBA) in 2014, as previously reported.
EXPENSES
Professional
fees and expenses for the three and six months ended June 30, 2015 as compared with the same periods in 2014 increased by approximately
$173,000 (291%) and $168,000 (119%), respectively, primarily due to increased legal fees.
General
and administrative expenses for the three and six months ended June 30, 2015 as compared with the same periods in 2014 increased
by approximately $55,000 (123%) and $70,000 (69%), respectively, primarily due to increased broker fees of managed accounts.
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 approximately $2.1 million due on demand, contributions committed to other investments of approximately $2.2 million due upon
demand. 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
six months ended June 30, 2015, net cash used in operating activities was approximately $534,000, primarily consisting of operating
expenses.
For the
six months ended June 30, 2015, net cash used in investing activities was approximately $1.4 million. This consisted primarily
of $3.9 million in purchases of marketable securities, $2 million investment in real estate partnership (Orlando) and $1.2 million
of contributions to other investments. These uses of funds were partially offset by net proceeds from sales of marketable securities
of $4.6 million and distributions from other investments of $1.1 million.
For the
six months ended June 30, 2015, net cash provided by financing activities was $4.3 million, consisting of margin borrowings (net
of margin repayments) of $5 million, dividend payment of $527,000 and purchases of treasury shares of $167,000.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
Item
4. Controls and Procedures
| (a) | Evaluation
of Disclosure Controls and Procedures. |
Our Chief
Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as
defined in the Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report
on Form 10-Q have concluded that, based on such evaluation, our disclosure controls and procedures were effective and designed
to ensure that material information relating to us and our consolidated subsidiaries, which we are required to disclose in the
reports we file or submit under the Securities Exchange Act of 1934, was made known to them by others within those entities and
reported within the time periods specified in the SEC’s rules and forms.
| (b) | Changes
in Internal Control Over Financial Reporting. |
There were
no changes in the Company’s internal controls over financial reporting identified in connection with the evaluation of such
internal control over financial reporting that occurred during our last fiscal quarter which have materially affected, or reasonably
likely to materially affect, our internal control over financial reporting.
PART
II. OTHER INFORMATION
Item
1. Legal Proceedings
Grove Isle
Associates, LLLP is a co-defendant in two lawsuits in the circuit court in Miami Dade County Florida. These cases arose from claims
by a condominium association and resident seeking a declaratory judgment regarding certain provisions of the declaration of condominium
relating to the Grove Isle Club and the developer. The claim by the association had been dismissed as to all counts related to
the Company; however the association filed an appeal. In March 2014, the appellate court ruled on the appeal reversing the lower
court’s dismissal. Pursuant to an agreement dated February 25, 2013 in which the company sold its interests in Grove
Isle Associates, LLLP the company will continue to defend the lawsuit and will indemnify the purchaser for any related judgment.
The ultimate outcome of this litigation cannot presently be determined. However, in management’s opinion the likelihood
of a material adverse outcome is remote. Accordingly, adjustments, if any that might result from the resolution of this matter
have not been reflected in the consolidated financial statements.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds:
The following
table presents information regarding the shares of our common stock we purchased during each of the six calendar months ended
June 30, 2015:
Period | | |
Total Number of
Shares Purchased | | |
Average Price
Paid per Share | | |
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan (1) | | |
Maximum
Dollar
Value of Shares
That May Yet Be
Purchased Under
the Plan (1) | |
| Jan.
1 –31 2015 | | |
| 8,245 | | |
$ | 12.12 | | |
| 8,245 | | |
$ | 390,690 | |
| Feb.
1 –28 2015 | | |
| 1,619 | | |
$ | 12.30 | | |
| 1,619 | | |
$ | 370,778 | |
| March
1 –31 2015 | | |
| 1,309 | | |
$ | 12.53 | | |
| 1,309 | | |
$ | 354,377 | |
| April
1 –30 2015 | | |
| — | | |
| — | | |
| — | | |
$ | 354,377 | |
| May
1 –31 2015 | | |
| 260 | | |
$ | 12.57 | | |
| 260 | | |
$ | 351,108 | |
| June
1 –30 2015 | | |
| 2,000 | | |
$ | 13.51 | | |
| 2,000 | | |
$ | 324,096 | |
(1) |
We
have one current program to repurchase outstanding shares of our common stock from time
to time in the open market at prevailing market prices or in privately negotiated transactions.
This program was approved by our Board of Directors and announced in November 2012 (the
“2012 Program”) and expires on December 31, 2015. As previously reported,
on December 19, 2014, HMG’s Board of Directors authorized to increase the purchase
limit under the 2012 Program up to a limit of $500,000 (from $300,000) of HMG common
stock.
As
of June 30, 2015 the maximum dollar value of shares that may yet be purchased under the program is $324,096. During the six months
ended June 30, 2015, there were 13,433 shares purchased as part of this publicly announced program, as revised |
Item
3. Defaults Upon Senior Securities: None.
Item
4. Mine Safety Disclosures: Not applicable.
Item
5. Other Information: None
Item
6. Exhibits:
(a)
Certifications pursuant to 18 USC Section 1350-Sarbanes-Oxley Act of 2002. Filed herewith.
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.
|
|
|
HMG/COURTLAND
PROPERTIES, INC. |
|
|
|
/s/ Maurice Wiener |
Dated: August
14, 2015 |
Maurice Wiener |
|
CEO and President |
|
|
|
/s/ Carlos Camarotti |
Dated: August
14, 2015 |
Carlos Camarotti |
|
CFO and Vice President |
Exhibits:
EXHIBIT
31A: CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Maurice
Wiener, certify that:
1. I have
reviewed this quarterly report on Form 10-Q of HMG/Courtland Properties, Inc.
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant’s
other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f) for the registrant and have:
a)
designed such disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)), or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
quarterly report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
disclosed this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s
ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material
weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal controls over financial reporting.
Date: August
14, 2015
/s/ Maurice Wiener |
|
Maurice Wiener, Principal Executive Officer |
|
|
Exhibits:
EXHIBIT
31B: CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Carlos
Camarotti, certify that:
1. I have
reviewed this quarterly report on Form 10-Q of HMG/Courtland Properties, Inc.
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly report;
3. Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;
4. The registrant’s
other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f) for the registrant and have:
a)
designed such disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)), or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
quarterly report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
disclosed this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
5. The registrant’s
other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent function):
a)
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s
ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material
weaknesses in internal controls; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal controls over financial reporting.
Date: August
14, 2015
/s/ Carlos Camarotti |
|
Carlos Camarotti, Principal Financial Officer |
|
EXHIBIT 32
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED
PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection
with the Quarterly Report of HMG/Courtland Properties, Inc. (the “Company”) on Form 10-Q for the period ending June
30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Maurice Wiener,
Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company for the periods indicated in the Report.
/s/ Maurice Wiener |
|
Principal Executive Officer |
|
HMG/Courtland Properties, Inc. |
|
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED
PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection
with the Quarterly Report of HMG/Courtland Properties, Inc. (the “Company”) on Form 10-Q for the period ending June
30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carlos Camarotti,
Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company for the periods indicated in the Report.
/s/ Carlos Camarotti |
|
Principal Financial Officer |
|
HMG/Courtland Properties, Inc. |
|
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