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, 2000
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 (Zip Code)
offices)
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.
1,040,185 Common shares were outstanding as of April 30, 2000.
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 2000 (Unaudited) and December 31, 1999.....................1
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2000 and 1999 (Unaudited)...............2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (Unaudited)...............3
Notes to Condensed Consolidated Financial Statements (Unaudited).....4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................6
PART II. Other Information
Item 1. Legal Proceedings . . . ...................................8
Item 6. Reports on Form 8-K........................................8
Cautionary Statement. This Form 10-QSB 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-QSB 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.
<PAGE>
<TABLE>
<CAPTION>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES Part I Financial Information
Item I Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
(UNAUDITED)
March 31, December 31,
2000 1999
---- ----
ASSETS
Investment Properties, net of accumulated depreciation:
Commercial and Industrial $3,058,927 $3,097,027
Hotel and Club Facility 5,812,079 5,924,872
Yacht Slips 1,676,244 1,699,853
Land Held for Development 2,451,404 2,451,404
------------------------ -------------------------
Total investment properties, net 12,998,654 13173156
Investments in Marketable Securities 5,075,972 4,166,747
Other Investments 8,002,852 6,543,353
Cash and Cash Equivalents 3,671,661 3,410,476
Cash Restricted Pending Delivery of Securities 358,525 2,268,559
Loans, Notes and Other Receivables 819,464 1,319,420
Notes and Advances Due From Related Parties 979,113 925,130
Other Assets 483,182 355,643
------------------------ -------------------------
TOTAL ASSETS $32,389,423 $32,162,484
======================== =========================
LIABILITIES
Accounts Payable and Accrued Expenses $747,001 $971,098
Mortgages and Notes payable 9,790,811 9,808,478
Sales of Securities Pending Delivery 1,220,575 1,215,355
Income taxes payable 465,000 465,000
Other Liabilities 242,393 879,844
------------------------ -------------------------
TOTAL LIABILITIES 12,465,780 13,339,775
Minority Interests 343,573 372,729
------------------------ -------------------------
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 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 37,314,284 37,314,284
Undistributed Losses From Operations (44,686,796) (46,095,572)
Accumulated other comprehensive income 988,114 1,084,775
------------------------ -------------------------
21,144,459 19,832,344
Less: Treasury Stock, at cost (205,450 and 165,000 shares as of
March 31, 2000 and December 31, 1999, respectively) (1,564,389) (1,382,364)
------------------------ -------------------------
TOTAL STOCKHOLDERS' EQUITY 19,580,070 18,449,980
------------------------ -------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,389,423 $32,162,484
======================== =========================
</TABLE>
See notes to condensed consolidated financial statements
(1)
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
REVENUES March 31,
2000 1999
------------------------------------------
<S> <C> <C>
Rentals and related revenue $415,211 $433,089
Marina revenues 134,780 161,833
Net gain from sale of marketable securities 1,598,194 94,892
Gain from other investments 51,890 108,117
Interest and dividends from invested cash and other 69,305 52,476
------------------------------------------
Total revenues 2,269,380 850,407
------------------------------------------
EXPENSES
Operating expenses:
Rental Properties and other 141,495 162,140
Marina 92,374 148,356
Advisor's fee 165,000 165,000
General and administrative 48,410 45,974
Professional fees and expenses 20,741 297,520
Directors' fees and expenses 11,880 8,587
Depreciation and amortization 181,522 227,836
------------------------------------------
Total operating expenses 661,422 1,055,413
Interest expense 223,152 191,956
Minority partners' interests in operating
gains of consolidated entities 84,414 20,005
------------------------------------------
Total expenses 968,988 1,267,374
------------------------------------------
Income (loss) before sales of real estate and income
from litigation 1,300,392 (416,967)
Gain on sales of real estate, net 199,576
Income from litigation 108,384
------------------------------------------
Net income (loss) $1,408,776 ($217,391)
==========================================
Net Income (Loss) Per Common Share:
Basic $1.30 ($0.20)
===== =======
Diluted $1.29 ($0.20)
===== =======
</TABLE>
See notes to condensed consolidated financial statements
(2)
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $1,408,776 ($217,391)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 181,522 227,836
Gain from other investments (51,890) (108,117)
Gain on sales of real estate, net (199,576)
Net gain from sales of marketable securities (1,598,194) (94,892)
Minority partners' interest in operating gains 84,414 20,005
Changes in assets and liabilities:
Decrease (increase) in other assets 21,414 (4,531)
Increase in due from affiliates (53,983) (32,707)
(Decrease) increase in accounts payable and accrued expenses (224,097) 205,074
Increase (decrease) in other liabilities (637,452) 5,878
------------------ -----------------
Total adjustments (2,278,266) 18,970
------------------ -----------------
Net cash used in operating activities (869,490) (198,421)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (171) (5,032)
Net proceeds from disposals of properties 494,314
Increase in mortgage loans, notes and other receivables (109,128) (31,503)
Decrease in mortgage loans, notes and other receivables 161,031 17,786
Contributions to other investments, net of distributions (1,407,609) (213,464)
Net proceeds from sales and redemptions of securities 2,015,813 273,608
Decrease in restricted cash from sales of securities pending delivery 1,915,254
Increased investments in marketable securities (1,423,505) (327,574)
------------------ -----------------
Net cash provided by investing activities 1,151,685 208,135
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (17,667) (239,080)
Distributions to minority partners (3,343) (1,875)
------------------ -----------------
Net cash used in financing activities (21,010) (240,955)
------------------ -----------------
Net increase (decrease) in cash and cash equivalents 261,185 (231,241)
Cash and cash equivalents at beginning of the period 3,410,476 1,834,365
Cash and cash equivalents at end of the period $3,671,661 $1,603,124
================== =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $160,000 $131,000
================== =================
</TABLE>
See notes to 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,
1999. The balance sheet as of December 31, 1999 was derived from audited
financial statements as of that date. The results of operations for the three
months ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year.
2. INVESTMENTS IN MARKETABLE SECURITIES
Investments in marketable securities are composed primarily of large
capital corporate equity securities in varying industries. These securities are
classified as available-for-sale and carried at fair value, based on quoted
market prices. The net unrealized gains or losses on these investments are
reported as a separate component of stockholders' equity. Gross unrealized gains
on available-for-sale securities as of March 31, 2000 were approximately
$1,307,000. Gross unrealized losses as of March 31, 2000 were approximately
$306,000.
Gross gains on sales of marketable securities of approximately
$1,638,000 and $96,000 were realized during the three months ended March 31,
2000 and 1999, respectively. Gross losses of approximately $40,000 and $1,000
were realized during the three months ended March 31, 2000 and 1999,
respectively. Gross gains and losses are based on the average cost method of
determining cost, net of incentive fee.
3. COMPREHENSIVE INCOME
The Company has elected to report comprehensive income in stockholders'
equity. Comprehensive income is the change in equity from transactions and other
events from non-owner sources. Comprehensive income includes net income and
other comprehensive income. The components and related activity of accumulated
other comprehensive income, resulting from net unrealized gain on
available-for-sale investments, are as follows:
Accumulated Other Comprehensive Income
Balance as of January 1, 2000.........................$1,084,775
Changes in First Quarter.............................. (96,661)
----------
Balance as of March 31, 2000..........................$ 988,114
==========
(4)
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(continued)
3. PURCHASE OF MINORITY PARTNERSHIP INTEREST
On January 1, 2000 the Company purchased the 10% minority partnership
interest in Fashion Square Partnership for approximately $266,000 which was paid
for by the cancellation of a promissory note in the same amount.
4. BASIC AND DILUTED EARNINGS PER SHARE
Basic and diluted earnings per share for the three months ended March
31, 2000 and 1999 are computed as follows:
March 31, 2000 March 31, 1999
----------- -----------
Basic:
Net Income (loss) $1,408,776 ($217,391)
Weighted average shares outstanding 1,080,190 1,100,235
----------- -----------
Basic earnings (loss) per share $1.30 ($0.20)
=========== ===========
Diluted:
Net Income (loss) $1,408,776 ($217,391)
Weighted average shares outstanding 1,080,190 1,100,235
Options to acquire common stock 8,884 --
----------- -----------
Diluted weighted average common shares 1,089,074 1,100,235
Diluted earnings (loss) per share $1.29 ($0.20)
=========== ===========
(5)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported net income of approximately $1,409,000 or ($1.30
per share) for the three months ended March 31, 2000. This is as compared with a
net loss of approximately $217,000 (or $.20 per share) for the three months
ended March 31, 1999. Total revenues for the three months ended March 31, 2000,
as compared with the same period in 1999, increased by approximately $1,419,000
(or 167%). Total expenses for the three months ended March 31, 2000, as compared
with the same period in 1999, decreased by approximately $298,000 (or 23%).
There were no sales of real estate for the three months ended March 31, 2000, as
compared with gains of approximately $200,000 for the three months ended March
31, 1999.
REVENUES
Marina revenues for the three months ended March 31, 2000 were
approximately $135,000. This is as compared with approximately $162,000 for the
same comparable period in 1999. This decrease of approximately $27,000 (or 17%)
for the three month comparable period was primarily the result of the closing of
the marina ships store in March 1999.
Net gain from the sale of marketable securities for the three months
ended March 31, 2000 was approximately $1,598,000. This is as compared with
approximately $95,000 for the same comparable period in 1999. This increase of
approximately $1,503,000 (or 1,584%) for the three month comparable period was
primarily the result of the sale of two securities which were distributed to the
Company from one of its investments in privately held partnerships.
Gain from unconsolidated investments for the three months ended March
31, 2000 was approximately $52,000. This is as compared with approximately
$108,000 for the same periods in 1999. This decrease of approximately $56,000
(or 52%) for the three month comparable periods were primarily attributable to
non recurring gain recognized in 1999 relating to one of it's investments in
privately held partnership.
Interest and dividends from invested cash and other for the three
months ended March 31, 2000 was approximately $69,000. This is as compared with
approximately $52,000 for the same comparable period in 1999. This increase of
approximately $17,000 (or 32%) for the three month comparable period was
primarily the result of increased dividend income from investments in marketable
securities.
EXPENSES
Operating expenses of rental properties and other for the months ended
March 31, 2000 was approximately $141,000. This is as compared with
approximately $162,000 for the same period in 1999. This decrease of
approximately $20,000 (or 13%) for the three month comparable period were
primarily the result of lower insurance costs relating to the Grove Isle
property.
Marina related expenses for the three months ended March 31, 2000 was
approximately $92,000. This is as compared with approximately $148,000 for the
same period in 1999. The decrease of approximately $56,000 (or 38%) for the
three months comparable period was primarily attributable to lower operating
costs.
(6)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Professional fees for the three months ended March 31, 2000 were
approximately $21,000. This is as compared with approximately $297,000 for the
same period in 1999. The decrease of approximately $277,000 (or 93%) for the
comparable period was the result of decreased legal fees as the result of the
culmination of previously reported litigation.
Depreciation and amortization expense for the three months ended March
31, 2000 was approximately $181,000. This is as compared with approximately
$228,000 for the same period in 1999. This decrease of approximately $47,000 (or
20%) for the three month comparable period was primarily due to decreased
depreciation of furniture and fixtures owned by Grove Isle Club, Inc. ("GICI").
Interest expense for the three months ended March 31, 2000 was
approximately $223,000. This is as compared with approximately $192,000 for the
same period in 1999. The increase of approximately 31,000 (or 16%) for the three
month comparable period was attributable to increased amounts due to TGIF Texas,
Inc. and temporary increases in margin balances.
Minority partners' interest in operating gains of consolidated entities
for the three months ended March 31, 2000 was approximately $84,000. This is as
compared with approximately $20,000 for the same comparable period in 1999. This
increase of approximately $64,000 for the three month comparable period was
primarily the result of increased income from 95%-owned Courtland Investments,
Inc.
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, 2000, net cash provided by
investing activities was approximately $1,152,000. This was comprised primarily
of net proceeds from the sales and redemptions of securities of approximately
$2,016,000 and a decrease in cash restricted pending delivery of securities of
approximately $1,915,000. These increases were partially offset by uses of cash
resulting from increased investments in marketable securities of approximately
$1,423,000 and increased net contributions to other investments of approximately
$1,408,000.
For the three months ended March 31, 2000, net cash used in financing
activities was approximately $21,000. This consisted primarily of principal
payments of mortgages and notes payable.
(7)
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, on August 31, 1999 the court issued a final
order and judgement in favor of the Company relating to it's litigation with two
former Directors. The monetary award to the Company was $4,538,294. Of the total
amount of the award, $4,363,148 which includes 40,450 shares of the
Company'stock (plus post judgement interest of $76,955) has been collected. The
Company is continuing in its efforts to collect the remaining balance of
$175,146 (plus post judgement interest) pursuant to the court's order.
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, 2000.
(8)
<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, 2000
Lawrence Rothstein
Director, President, Treasurer &
Secretary
Dated: May 12, 2000
Carlos Camarotti
Vice President - Finance and Controller
(9)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/COURTLAND PROPERTIES, INC
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,671,661
<SECURITIES> 5,075,972
<RECEIVABLES> 1,798,577
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,506,404
<DEPRECIATION> 6,507,750
<TOTAL-ASSETS> 32,389,423
<CURRENT-LIABILITIES> 0
<BONDS> 0
1,245,635
0
<COMMON> 0
<OTHER-SE> 18,334,435
<TOTAL-LIABILITY-AND-EQUITY> 32,389,423
<SALES> 2,269,380
<TOTAL-REVENUES> 2,269,380
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 745,836
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 223,152
<INCOME-PRETAX> 1,408,776
<INCOME-TAX> 1,408,776
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,408,776
<EPS-BASIC> 1.30
<EPS-DILUTED> 1.29
</TABLE>
