UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1997
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.)
2701 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)
Check 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Sections 12, 13, or 15 (d) of the Exchange Act after the distribution
of securities under a plan confirmed by court. Yes No
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.
1,166,835 Common shares were outstanding as of April 30, 1997.
- 1 -
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1997 (Unaudited) and December 31, 1996 1
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 (Unaudited) 3
Notes to Condensed Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. Other Information
Item 6. Reports on Form 8-K 6
<PAGE>
<TABLE>
<CAPTION>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES Part I Financial Information
Item I Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1997 1996
ASSETS
<S> <C> <C>
Investment Properties, net of accumulated depreciation:
Commercial and Industrial $2,831,562 $3,044,789
Hotel and Club Facility 7,871,933 8,086,619
Yacht Slips 1,557,675 1,708,307
Land Held for Development 5,663,659 6,712,173
------------ ------------
Total investment properties, net 17,924,829 19,551,888
Investments In and Receivables From Unconsolidated Entities 3,207,898 3,088,925
Notes and Advances Due From Related Parties 1,498,231 1,396,068
Mortgage Loans Receivable 864,127
Cash and Cash Equivalents 1,189,231 1,389,546
Cash Restricted 763,372 1,000,000
Other Assets 1,069,076 1,043,288
============ ============
TOTAL ASSETS $26,516,764 $27,469,715
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses 1,084,490 1,621,924
Mortgages and Notes payable 9,410,873 10,084,395
Other Liabilities 2,602,712 2,072,319
------------ ------------
TOTAL LIABILITIES 13,098,075 13,778,638
Minority interests 76,887 121,778
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, no par value; 2,000,000 shares
authorized; none issued
Common Stock, $1 par value; 1,500,000 shares authorized;
1,245,635 shares issued and outstanding 1,245,635 1,245,635
Additional Paid-in Capital 26,283,222 26,283,222
Undistributed Gains From Sales of Real Estate, net of losses 33,590,378 33,288,537
Undistributed Losses From Operations (46,780,971) (46,251,633)
------------ ------------
14,338,264 14,565,761
Less: Treasury Stock, at cost (78,800 shares) (996,462) (996,462)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 13,341,802 13,569,299
============ ============
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,516,764 $27,469,715
============ ============
</TABLE>
See notes to condensed consolidated financial statements
( 1 )
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) Three months ended
March 31,
1997 1996
REVENUES
<S> <C> <C>
Rentals and related revenue $472,928 $321,538
Hotel, club and marina revenues 155,290 2,100,449
Gain from sale of marketable securities 87,213
Interest from invested cash, dividends and other 138,902 70,160
--------- ---------
Total revenues 767,120 2,579,360
--------- ---------
EXPENSES
Operating expenses:
Rental Properties and other 219,682 383,427
Hotel, club and marina expenses:
Payroll and related expenses 61,287 798,993
Cost of food and beverage 358,584
Administrative and general expenses 234,161 902,423
Advisor's fee 218,751 218,751
General and administrative 106,491 102,138
Directors' fees and expenses 10,750 9,500
Depreciation and amortization 275,792 279,446
--------- ---------
Total operating expenses 1,126,914 3,053,262
Interest expense 228,382 221,826
Minority partners' interests in operating
losses of consolidated entities (58,838) (65,338)
--------- ---------
Total expenses 1,296,458 3,209,750
--------- ---------
Loss before sales of real estate (529,338) (630,390)
Gain (loss) on sales of real estate, net 301,841 (49,566)
--------- ---------
Net Loss ($227,497) ($679,956)
========= =========
Loss Per Common Share
(Based on 1,166,835 weighted average shares outstanding) ($0.19) ($0.58)
========= =========
</TABLE>
See notes to condensed consolidated financial statements
( 2 )
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) Three months ended
March 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($227,497) ($679,956)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 275,792 279,446
Loss (gain) from unconsolidated entities 32,677 (42,119)
(Gain) loss on sales of real estate, net (301,841) 49,566
Net gain from sales of marketable securities (87,213)
Minority partners' interest in operating losses (58,838) (65,338)
Changes in assets and liabilities:
(Decrease) increase in other assets (34,520) 52,547
Increase in due from affiliates (102,163) (66,428)
Decrease in accounts payable and accrued expenses (537,434) (144,801)
Increase (decrease) in other liabilities 767,021 (71,095)
----------- -----------
Total adjustments 40,694 (95,435)
----------- -----------
Net cash used in operating activities (186,803) (775,391)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (30,704) (79,333)
Net proceeds from disposals of properties 1,856,281 466,799
Increase in mortgage loan receivable (864,127)
Net contributions to unconsolidated entities (151,650) (189,697)
Net proceeds from sales and redemptions of securities 107,080
Purchases of investments in securities (5,363) (15,117)
----------- -----------
Net cash provided by investing activities 804,437 289,732
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (1,040,553) (137,281)
Additions to mortgages and notes payables 367,031
Net distributions to minority partners (144,427) (109,427)
----------- -----------
Net cash used in financing activities (817,949) (246,708)
----------- -----------
Net decrease in cash and cash equivalents (200,315) (732,367)
Cash and cash equivalents at beginning of the period 1,389,546 1,094,999
----------- -----------
Cash and cash equivalents at end of the period $1,189,231 $362,632
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $228,000 $222,000
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
The Company leased its Grove Isle Facility in November 1996 and received an
initial payment (as defined) of $1,000,000. The use of these funds is restricted
per agreement and accordingly this amount has been recorded as restricted cash
and included in other liabilities. As of March 31, 1997 the remaining balance of
this amount is approximately $763,000.
See notes to condensed consolidated financial statements
( 3 )
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
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 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 financial statements prepared in accordance with
generally accepted accounting principles 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,
1996. The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full year.
2. GAIN ON SALES OF REAL ESTATE
In January 1997, The Grove Towne Center-Texas, Ltd. sold approximately
three (3) acres of vacant land located in Houston, Texas for approximately
$823,000. The Company recognized a gain of approximately $55,000.
In January 1997, HMG-Fieber Associates sold its property located in
Springfield, Massachusetts for $937,000. The sales proceeds included a purchase
money mortgage note of $865,000. This mortgage matures in January 1998 and bears
interest at prime plus 2%. As required under the installment method of
accounting for sales of real estate the venture recognized a gain of
approximately $60,000. The Company's portion of the gain was approximately
$34,000.
In February 1997, The Grove Towne Center-Texas, Ltd. sold approximately one
(1) acre of vacant land located in Houston, Texas for approximately $244,000.
The Company recognized a gain of approximately $54,000.
In March 1997, HMG-Fieber Associates sold its property located in Vestal,
New York, for $350,000 and recognized a gain of approximately $224,000. The
Company's portion of this gain was approximately $146,000.
In March 1997 the Company sold approximately seve (7) acres of vacant land
located in Houston, Texas for $352,000. The Company recognized a gain on the
sale of $41,000.
( 4 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the three months ended March 31, 1997, as compared with
the same period in 1996, decreased approximately $1.8 million (70%). Total
expenses for the same comparable periods decreased by approximately $1.9 million
(60%).
REVENUES
Rentals and related revenue for the three months ended March 31, 1997 as
compared with the same period in 1996, increased by approximately $151,000
(47%). This increase was primarily attributable to increased rental income from
the Grove Isle property which was leased to an unaffiliated tenant commencing in
November 1996.
Hotel, club and marina revenues consisted of hotel rooms revenue, food and
beverage revenue, club membership dues and revenues from marina operations. As
previously reported, the Grove Isle property has been operated by an
unaffiliated tenant since November 1996. The marina at Grove Isle continues to
be operated by a consolidated affiliate of the Company.
For the three months ended March 31, 1997, hotel, club and marina revenues
decreased by approximately $1.9 million (93%) as compared to that of the same
period in 1996. This was attributable to the aforementioned lease in November
1996.
For the three months ended March 31, 1997 interest from invested cash,
dividends and other increased by $48,000 (69%) as compared to that of the same
period in 1996. This increase is attributable to the gain on sale of a boat slip
of approximately $117,000 in February 1997. This amount was partially offset by
increased losses from unconsolidated entities.
EXPENSES
Operating expenses of rental properties and other for the three months
ended March 31, 1997, as compared with the same period in 1996, decreased by
$164,000 (43%). This decrease was primarily attributable to decreased real
estate taxes of HMG-Fieber Associates as the result of sales of properties, and
due to decreased insurance costs at the Grove Isle property.
Hotel, Club and Marina payroll and related expenses for the three months ended
March 31, 1997 decreased by approximately $738,000 (92%) as compared with that
of the same period in 1996. Also, cost of food and beverage decreased from
$358,000 to zero between the two comparable periods. These decreases were
attributable to the aforementioned lease of the Grove Isle property.
Hotel, club and marina administrative and general expenses for the three
months ended March 31, 1997, increased by $668,000 (74%) as compared with that
of the same period in 1996. This was also attributable to the aforementioned
lease of the Grove Isle property.
All other expenses for the three months ended March 31, 1997 as compared to
the same period in 1996 remained consistent.
( 5 )
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's material commitments primarily consist of maturities of
debt obligations. The funds necessary to meet these obligations are expected
from the proceeds of sales of properties, refinancing, distributions from
investments and available cash. In addition, the Company intends to continue to
seek opportunities for investment in income producing properties.
MATERIAL COMPONENTS OF CASH FLOWS
For the three months ended March 31, 1997, net cash provided by
investing activities was approximately $1.9 million. This consisted primarily of
net proceeds from disposal of properties of $804,000, partially offset by
increased mortgage loans receivable of $864,000, net contributions to
unconsolidated entities of $152,000 and improvements of properties of $31,000.
For the three months ended March 31, 1997, net cash used in financing
activities was approximately $818,000. This consisted primarily of repayment of
mortgages payable of $1 million and distributions to minority partners of
$144,000. These uses of cash were partially offset by additions to mortgages and
notes payable of $367,000.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed for the quarter ended
March 31, 1997.
( 6 )
<PAGE>
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.
Dated: May 12, 1997
Lawrence Rothstein
Senior Vice President
Dated: May 12, 1997
Carlos Camarotti
Vice President - Finance
( 7 )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/Courtland Properties, Inc.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1997
<CASH> 1,189,231
<SECURITIES> 0
<RECEIVABLES> 1,498,231
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 21,927,447
<DEPRECIATION> 4,002,618
<TOTAL-ASSETS> 26,516,764
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,245,635
0
0
<OTHER-SE> 12,096,167
<TOTAL-LIABILITY-AND-EQUITY> 26,516,764
<SALES> 767,120
<TOTAL-REVENUES> 767,120
<CGS> 0
<TOTAL-COSTS> 1,126,914
<OTHER-EXPENSES> (58,838)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 228,382
<INCOME-PRETAX> (227,497)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227,497)
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0
</TABLE>
