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  September 30, 2019

 

OR

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                                                                     to                                                  

 

Commission file number 1-7865

 

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 ¨

 

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 ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company x

 

 

 

 

Emerging growth company ¨

 

 

 

 

(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 ¨  No x

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock - Par value $1.00 per share

 

HMG

 

NYSE

 

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.  1,013,292 Common shares were outstanding as of November 13, 2019. 

 
 
  
 
 

 

HMG/COURTLAND PROPERTIES, INC.

 

Index

 

 

 

PAGE

 

 

NUMBER

PART I.

Condensed Consolidated Financial Information

 

 

 

 

 

Item 1.  Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018

1

 

 

 

 

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

2

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

4

 

 

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

5

 

 

 

 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

11

 

 

 

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

12

 

 

 

 

Item 4.  Controls and Procedures

12

 

 

 

PART II.

Other Information

 

 

Item 1.  Legal Proceedings

12

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

12

 

Item 3.   Defaults Upon Senior Securities

12

 

Item 4.  Mine Safety Disclosures

12

 

Item 5.  Other Information

12

 

Item 6.  Exhibits

12

Signatures

13

 

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

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(UNAUDITED)

 

 

 

 

Investment properties, net of accumulated depreciation:

 

 

 

 

 

 

 

 

Office building and other commercial property

 

$

929,812

 

 

$

875,198

 

Total investment properties, net

 

 

929,812

 

 

 

875,198

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

16,237,134

 

 

 

19,738,174

 

Investments in marketable securities

 

 

3,491,531

 

 

 

3,075,718

 

Other investments

 

 

5,919,222

 

 

 

6,039,456

 

Investment in affiliate

 

 

1,437,632

 

 

 

1,637,985

 

Loans, notes and other receivables

 

 

1,799,055

 

 

 

1,796,926

 

Investment in residential real estate partnership

 

 

3,203,225

 

 

 

200,000

 

Other assets

 

 

72,779

 

 

 

73,477

 

TOTAL ASSETS

 

$

33,090,390

 

 

$

33,436,934

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Margin payable

 

$

9,926,672

 

 

$

9,857,918

 

Dividends payable

 

 

-

 

 

 

506,646

 

Accounts payable, accrued expenses and other liabilities

 

 

407,256

 

 

 

370,632

 

Amounts due to Adviser

 

 

64,356

 

 

 

40,426

 

Note payable to affiliate

 

 

1,000,000

 

 

 

1,340,000

 

Deferred income taxes payable

 

 

63,338

 

 

 

47,888

 

TOTAL LIABILITIES

 

 

11,461,622

 

 

 

12,163,510

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Excess common stock, $1 par value; 100,000 shares authorized: no shares issued

 

 

-

 

 

 

-

 

Common stock, $1 par value; 1,050,000 shares authorized, 1,013,292 issued as of September 30, 2019 and 1,046,393 shares issued as of December 31, 2018

 

 

1,013,292

 

 

 

1,046,393

 

Additional paid-in capital

 

 

23,859,686

 

 

 

24,157,986

 

Less: Treasury shares at cost 33,101 shares

 

 

-

 

 

 

(340,281

)

Undistributed gains from sales of properties, net of losses

 

 

54,642,764

 

 

 

54,642,764

 

Undistributed losses from operations

 

 

(58,136,652

)

 

 

(58,473,807

)

Total stockholders' equity

 

 

21,379,090

 

 

 

21,033,055

 

Noncontrolling interest

 

 

249,678

 

 

 

240,369

 

TOTAL EQUITY

 

 

21,628,768

 

 

 

21,273,424

 

TOTAL LIABILITIES AND EQUITY

 

$

33,090,390

 

 

$

33,436,934

 

 

See notes to the condensed consolidated financial statements

 
 
  1  
 

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate rentals and related revenue

 

$

18,786

 

 

$

18,092

 

 

$

56,358

 

 

$

54,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other properties

 

 

31,223

 

 

 

343,196

 

 

 

76,236

 

 

 

382,916

 

Adviser's base fee

 

 

165,000

 

 

 

165,000

 

 

 

495,000

 

 

 

495,000

 

General and administrative

 

 

41,048

 

 

 

92,540

 

 

 

150,550

 

 

 

212,682

 

Professional fees and expenses

 

 

22,637

 

 

 

13,527

 

 

 

144,662

 

 

 

134,819

 

Directors' fees and expenses

 

 

21,583

 

 

 

17,452

 

 

 

59,744

 

 

 

57,817

 

Depreciation and amortization

 

 

3,849

 

 

 

3,849

 

 

 

11,548

 

 

 

11,548

 

Interest expense

 

 

13,447

 

 

 

19,032

 

 

 

42,748

 

 

 

68,262

 

Total expenses

 

 

298,787

 

 

 

654,596

 

 

 

980,488

 

 

 

1,363,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before other income, income taxes and gain on sale of real estate

 

 

(280,001

)

 

 

(636,504

)

 

 

(924,130

)

 

 

(1,308,769

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains from investments in marketable securities

 

 

12,190

 

 

 

1,829

 

 

 

252,747

 

 

 

26,291

 

Equity gain (loss) from operations of residential real estate partnerships

 

 

3,225

 

 

 

-

 

 

 

3,225

 

 

 

(143,890

)

Net income from other investments

 

 

479,258

 

 

 

80,208

 

 

 

654,239

 

 

 

370,616

 

Interest, dividend and other income

 

 

136,909

 

 

 

82,756

 

 

 

375,336

 

 

 

271,298

 

Total other income

 

 

631,582

 

 

 

164,793

 

 

 

1,285,547

 

 

 

524,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before taxes and gain on sale of real estate

 

 

351,581

 

 

 

(471,711

)

 

 

361,417

 

 

 

(784,454

)

Provision for income taxes

 

 

(12,010

)

 

 

(26,532

)

 

 

(14,954

)

 

 

(60,111

)

Net income (loss) before gain on sale of real estate

 

 

339,571

 

 

 

(498,243

)

 

 

346,463

 

 

 

(844,565

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of real estate, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,473,887

 

Net income (loss)

 

 

339,571

 

 

 

(498,243

)

 

 

346,463

 

 

 

4,629,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain attributable to non-controlling interest

 

 

(850

)

 

 

(3,097

)

 

 

(9,308

)

 

 

(14,010

)

Net income (loss) attributable to the company

 

$

338,721

 

 

$

(501,340

)

 

$

337,155

 

 

$

4,615,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding-basic and diluted

 

 

1,013,292

 

 

 

1,013,292

 

 

 

1,013,292

 

 

 

1,011,349

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income (loss) per share

 

$

0.33

 

 

$

(0.49

)

 

$

0.33

 

 

$

4.56

 

 

See notes to the condensed consolidated financial statements

 

 
  2  

 

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Undistributed 

Gains from Sales
of Properties
 

 

 

Undistributed 

Losses from 

 

 

Treasury Stock

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Net of Losses

 

 

Operations

 

 

Shares

 

 

Cost

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2018

 

 

1,035,493

 

 

$

1,035,493

 

 

$

24,076,991

 

 

$

52,208,753

 

 

$

(57,120,990

)

 

 

33,101

 

 

$

(340,281

)

 

$

19,859,966

 

Net income (loss) for three months ended March 31, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,473,887

 

 

 

(282,994

)

 

 

-

 

 

 

-

 

 

 

5,190,893

 

Stock options exercised, net of 1,600 re-load shares

 

 

10,900

 

 

 

10,900

 

 

 

80,995

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

91,895

 

Dividend paid -$2.50 per share

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,533,230

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,533,230

)

Balance as of March 31, 2018

 

 

1,046,393

 

 

 

1,046,393

 

 

 

24,157,986

 

 

 

55,149,410

 

 

 

(57,403,984

)

 

 

33,101

 

 

 

(340,281

)

 

 

22,609,524

 

Net loss for three months ended June 30, 2018

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(74,240

)

 

 

-

 

 

 

-

 

 

 

(74,240

)

Balance as of June 30, 2018

 

 

1,046,393

 

 

 

1,046,393

 

 

 

24,157,986

 

 

 

55,149,410

 

 

 

(57,478,224

)

 

 

33,101

 

 

 

(340,281

)

 

 

22,535,284

 

Net loss for three months ended September 30, 2018

 

 

-

 

 

 

-