UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the Quarterly period endedJune 30, 2019

OR

For the transition period from _________________________________________________ to                                  ______________________________

Commission file number1-7865

(Exact name of small business issuer as specified in its charter)

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.

YesxNo¨

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).

YesxNo¨

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 companyx

Emerging growth company¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the exchange Act).   Yes¨     Nox

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer'sissuer’s classes of common equity, as of the latest practicable date. 1,013,292 Common shares were outstanding as of NovemberAugust 14, 2018.2019.

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"“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'sCompany’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.

See notes to the condensed consolidated financial statements

See notes to the condensed consolidated financial statements

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'sCompany’s Annual Report for the year ended December 31, 2017.2018. The balance sheet as of December 31, 20172018 was derived from audited consolidated financial statements as of that date. The results of operations for the three and ninesix months ended SeptemberJune 30, 20182019 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"“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, 2017 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.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers when it satisfies performance obligations. In February 2017, the FASB issued ASU No. 2017-05, Other Income: Gains and Losses from the Derecognition of Nonfinancial Assets, which amends ASC Topic 610-20. ASU No. 2017-05 provides guidance on how entities recognize sales, including partial sales, of nonfinancial assets (and in-substance nonfinancial assets) to non-customers. ASU No. 2017-05 requires the seller to recognize a full gain or loss in a partial sale of nonfinancial assets, to the extent control is not retained. Any noncontrolling interest retained by the seller would, accordingly, be measured at fair value. This guidance became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718).” ASU 2018-07 simplifies the accounting for nonemployee stock-based payment transactions. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018, and early application is permitted. The Company has evaluatedadopted the potential impactguidance as of this guidanceJanuary 1, 2019 and does not believe it will have a materialthere was no impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018, and early application is permitted. The adoption of this guidance on January 1, 2019 did not have an impact on the Company’s consolidated financial statements.

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'sCompany’s overall current investment objectives and activities its entire marketable securities portfolio is classified as trading. Accordingly, all unrealized gains (losses) on this portfolio are recorded in the condensed consolidated statements of income. Included in investments in marketable securities is approximately $3.10$1.95 million and $2.96$1.76 million of large capital real estate investment trusts (REITs) as of SeptemberJune 30, 20182019 and December 31, 2017,2018, respectively.

Approximate netNet realized and unrealized gain (loss) from investments in marketable securities for the three and ninesix months ended SeptemberJune 30, 2019 and 2018 and 2017 is approximately as follows:summarized below:

For the three months ended June 30, 2019, net realized gain from sales of marketable securities was approximately $16,000 which consisted of $18,000 of gross gains and $2,000 of gross losses. For the six months ended June 30, 2019, net realized loss from sales of marketable securities was approximately $11,000 and consisted of approximately $32,000 of gross losses net of $21,000 of gross gains.

For the three months ended SeptemberJune 30, 2018, net realized gain from sales of marketable securities was approximately $39,000 of$4,000 which approximately $44,000all consisted of gross gains and $5,000 of gross losses.gains. For the ninesix months ended SeptemberJune 30, 2018, net realized gainloss from sales of marketable securities was approximately $35,000$4,000 and consisted of approximately $68,000$29,000 of gross gainslosses net of $33,000$25,000 of gross losses.gains.

For the three months ended September 30, 2017, net realized gain from sales of marketable securities was approximately $115,000 and consisted of approximately $220,000 of gross gains and $105,000 of gross losses. For the nine months ended September 30, 2017, net realized gains from sales of marketable securities was approximately $26,000 and consisted of approximately $313,000 of gross gains net of $287,000 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'sCompany’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 on Form 8-K dated February 20, 2018, JY-TV Associates, LLC, a Florida limited liability company (“JY-TV”) (“Seller”) an entity one-third owned by HMG, completed the sale of its multi-family residential apartments located in Orlando, Florida pursuant to the previously reported Agreement of Sale (the “Agreement”) to Murano 240, LLC (as per an Assignment and Assumption of Agreement of Sale with Cardone Real Estate Acquisitions, LLC), a Delaware limited liability company, an unrelated entity (“Purchaser”). The final sales price was $50,150,000 and the sales proceeds were received in cash and payment of outstanding debt. The gain on the sale to HMG was approximately $5.5 million, net of the incentive fee.

For the nine months ended September 30, 2018 JY-TV reported net income of approximately $17.9 million, which includes approximately $18.2 million in gain on sale of property, depreciation and amortization expense of $402,000, interest expense of $159,000, write-off of certain prepaid and other assets upon the sale of property of approximately $147,000 and other net operating revenues. The Company’s portion of JY-TV’s net income is approximately $5.9 million ($144,000 of loss from operations and $6.1 million in gain on sale of property (before the $608,000 incentive fee). JY-TV made distributions totaling $21.75 million in February 2018. The Company’s portion of those distributions was $7.25 million. In June 2018 JY-TV made another distribution of $825,000, of which the Company’s portion was $275,000. Final accounting and distribution from JY-TV is expected before the end of fiscal 2018.

For the nine months ended September 30, 2017 JY-TV reported a net loss of approximately $457,000, which includes depreciation and amortization expense of $777,000 and interest expense of $573,000. The Company’s portion of that loss is approximately $153,000. In March 2017, JY-TV distributed $390,000 to its members. The Company’s portion of that distribution was $130,000.

5.OTHER INVESTMENTS

As of SeptemberJune 30, 2018,2019, the Company’s portfolio of other investments had an aggregate carrying value of approximately $5.9$6.2 million and we have committed to fund additional amounts of approximately $1.2 million$884,000 as required by agreements with the investees. The carrying value of these investments is equal to contributions less distributions received and loss valuation adjustments, if any.

During the ninesix months ended SeptemberJune 30, 2018,2019, we made cash contributions to other investments of approximately $1.08 million, consisting$655,000. This consisted of $455,000$500,000 in follow on existing investment commitmentstwo new investments. One for $200,000 which holds residential mortgages acquired from a bank at discount and $625,000 in four new investments, as follows: $200,000the other for $300,000 in a partnership developing real estatethat is constructing residential apartments in Orlando, Florida, $300,000 in a stock fund investing in pharmaceuticals and related industries, and a totalAtlanta, GA. We also made follow on contributions to existing investments of $125,000 in the second funds of two existing investees owning diversified businesses.approximately $155,000.

During the ninesix months ended SeptemberJune 30, 2018,2019, we received cash distributions from other investments of approximately $1.59 million. These distributions included approximately $475,000 (net$405,000. This consisted of 10% holdback pending year end audit of partnership) received in June 2018 from the redemption of an investment in a partnership owning investment contracts which resulted in a loss of less than $1,000, $404,000 from one investment in a partnership owning rental apartments in San Antonio, Texas which were sold in March 2018 at a gain to the Company of approximately $105,000, and approximately $141,000 in distributions from an on-going investment in a power and energy partnership. The other distributions were primarily fromexisting investments (primarily real estate and related investments.related). Also, in the first quarter of 20182019 the Company’s $300,000 investments in twoa private banks experienced mergers withinsurance company publicly traded larger banksregistered all shares and began trading on the NASDAQ on March 29, 2019. Accordingly, we received stock in those publicly traded banks plus approximately $34,000 in cash. The cash portion was recorded as gain from other investments. The bank securities we received from the mergers are being held in ourhave transferred this investment to marketable securities portfolio at the carrying value equal to our originalsecurities. As of June 30, 2019, this investment in the private banks (withhad an unrealized gainloss of approximately $182,000 as of September 30, 2018).$94,000.

Net income from other investments for the three and ninesix months ended SeptemberJune 30, 2019 and 2018, and 2017, is approximately as follows:summarized below:

The following tables present approximate gross unrealized losses and fair values for those investments that were in an unrealized loss position as of SeptemberJune 30, 20182019 and December 31, 2017,2018, aggregated by investment category and the length of time that investments have been in a continuous loss position:

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.

ThereIn accordance with ASC Topic 320-10-65, Recognition and Presentation of Other-Than-Temporary Impairments there were no impairment valuation adjustments for the three and ninesix months ended SeptemberJune 30, 20182019 and 2017.2018.

6.5. FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with ASC Topic 820, the Company measures cash and cash equivalents and 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 as of SeptemberJune 30, 20182019 and December 31, 2017,2018, 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 where significant unobservable inputs were used (Level 3):

Assets and liabilities measured at fair value on a recurring basis are summarized below:below:

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.

6.7.INCOME TAXES

The Company as a qualifying real estate investment trust (“REIT”) 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 taxable REIT subsidiary, CII, files a separate income tax return and its operations are not included in the REIT’s income tax return.

Distributed capital gains on sales of real estate as they relate to REIT activities are not subject to taxes; however, undistributed capital gains may be subject to corporate tax.

On December 14, 2018 the Company paiddeclared a cashcapital gain dividend of approximately $2.5 million (or$0.50 per share which was payable on January 9, 2019 to all shareholders of record as of December 28, 2018.

On March 7, 2018 the Company declared a capital gain dividend of $2.50 per share)share which is payable on March 30, 2018 to all shareholders of record as of March 21, 2018. The dividend was a capital gain distribution to shareholders. No dividends were declared for the year ended December 31, 2017.

In January 2017, the Company paid a cash dividend of approximately $501,000 (or $.50 per share) to shareholders of record as of December 29, 2016. The dividend was a return of capital to shareholders. No dividends were declared for the year ended December 31, 2017.

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 basis 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 SeptemberJune 30, 2018,2019, and December 31, 2017,2018, the Company has recorded a net deferred tax liability of approximately $144,000$51,000 and $84,000,$48,000, respectively, primarily 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 20182019 is approximately $1.1 million, the estimated tax benefits of which haveat $854,000 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 approximately of the following:

The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with ASC Topic 740 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. This topic 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 December 31, 2018. The Company’s federal income tax returns since 2014 are subject to examination by the Internal Revenue Service, generally for a period of three years after the returns were filed.

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.

7.8.STOCK OPTIONS

During the six months ended June 30, 2019 there were no options granted, expired or forfeited.

In January and March 2018 three directors and one officer exercised options to purchase a total of 10,900 shares at $9.31 per share (options to purchase 1,600 shares by one director were exchanged for new options via Stock Option Agreement re-load provision). Stock based compensation expense is recognized using the fair-value method for all awards. During the nine months ended September 30, 2018 there were no options granted, expired or forfeited.

The following table summarizes stock option activity during the nine months ended September 30, 2018:

The following table summarizes information concerning outstanding and exercisable options as of SeptemberJune 30, 2018:2019:

As of SeptemberJune 30, 2018,2019, the stock options outstanding and exercisable had no intrinsic value.

8.SUBSEQUENT EVENT

As previously reported on Form 8-K dated July 19, 2019, pursuant to the terms of a Construction and Mini Perm Loan Agreement (“Loan Agreement”), between Murano At Three Oaks Associates LLC, a Florida limited liability company formed in September 2018 (the “Borrower”) which is 25% owned by HMG, and PNC Bank, National Association (“Lender”), Lender provided a construction loan to the Borrower for the principal sum of approximately $41.59 million (“Loan”). The proceeds of the Loan shall be used to finance the construction of multi-family residential apartments containing 318 units totaling approximately 312,000 net rentable square feet on a 17.5-acre site located in Fort Myers, Florida (“Project”). The Project site was purchased by the Borrower concurrently with the closing of the Loan. Total development costs for the Project are estimated at $56.08 million and the Borrower’s equity totals approximately $14.49 million. HMG’s share of the equity is 25%, or approximately $3.62 million, of which $2.70 million has been funded to date including $2.25 million funded on July 2, 2019.

HMG and the other members (or affiliates thereof) of the Borrower (“Guarantors”) entered into a Completion Guaranty (“Completion Guaranty”) and a Guaranty and Suretyship Agreement (“Repayment Guaranty”) (collectively, the “Guaranties”). Under the Completion Guaranty, each Guarantor shall unconditionally guaranty, as a primary obligor, and become surety for the prompt payment and performance by Borrower of the “Guaranteed Obligations” (as defined). Under the Repayment Guaranty, Guarantor unconditionally guarantees, as a primary obligor, and becomes surety for the prompt payment and performance of, as defined (i) all Interest Obligations, (ii) all Loan Document Obligations, (iii) all Expense Obligations, (iv) the Carrying Cost Obligations, (v) the Principal Amount, (vi) interest on each of the foregoing including, if applicable, interest at the Default Rate (as defined). At all times prior to the First Reduction Date (as defined below), the Guarantors are collectively responsible for 30% of the Principal Obligations, (ii) at all times after the First Reduction Date, the Guarantors are collectively responsible for15% of the Principal Obligations, and (iii) at all times after the Second Reduction Date, 0% of the Principal Obligations. First Reduction Conditions” means satisfaction of the following conditions: (i) no Event of Default has occurred and is continuing; (ii) Completion of Construction has occurred; and (iii)   the Project has achieved a DSCR of not less than 1.25 to 1.00 for two (2) consecutive fiscal quarters.

Each Guarantor is required to maintain compliance with the following financial covenants, as defined: (1) liquidity shall not be less than $2.5 million. Liquidity is defined as the sum of unencumbered, unrestricted cash and cash equivalents and marketable securities, and (2) net worth shall not be less than $10 million.

9.SUBSEQUENT EVENT

In May 2018, the Company received a Determination of Eligibility under the Brownfields Reuse and Liability Limitation Act (BRELLA) related to environmental remediation of the Company’s 6-acre property located in Montpelier, Vermont (“the remediation plan”). Under BRELLA we will receive a Certificate of Completion upon performance of all actions required under the approved corrective action plan developed for the property. Statutory liability protections become effective upon issuance of the Certificate of Completion. Forbearance from state enforcement action is in effect during the BRELLA provided that all required activities are being implemented in good faith.

On October 17, 2018, the Company received approval from the Vermont Department Environmental Conservation (VTDEC) of its corrective action plan relating to the remediation plan. The estimated costs to remediate the property is $458,000. The Company owns approximately 70% of the property and we have recorded as expense our portion, $319,000, of the anticipated remediation costs as of September 30, 2018. The remediation work is expected to begin in the fourth quarter of 2018 with completion sometime in 2019.

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

RESULTS OF OPERATIONS

The Company reported a net lossincome of approximately $501,000$10,000 ($0.490.01 per share) for the three months ended SeptemberJune 30, 2019, and a net loss of approximately $2,000 for the six months ended June 30, 2019. The Company reported a net loss of approximately $74,000 ($0.07 per share) for the three months ended June 30, 2018, and net income of approximately $4.61$5.1 million ($4.565.06 per share) for the ninesix months ended SeptemberJune 30, 2018. For the three and nine months ended September 30, 2017, we reported net losses of $182,000 ($0.18 per share) and $151,000 ($0.15 per share), respectively.

REVENUES AND OTHER INCOME

Rentals and related revenues for the three and ninesix months ended SeptemberJune 30, 20182019 were approximately $18,000$19,000 and $54,000,$38,000, respectively and primarily consists of rent from the Advisor to CII for its corporate office. For the three and ninesix months ended SeptemberJune 30, 20172018 rental and related revenues were $16,000$18,000 and $52,000,$36,000, respectively.

Net realized and unrealized gaingains from investments in marketable securities:

Net realized gain from investments inthe sale of marketable securities for the three and nine months ended SeptemberJune 30, 20182019 was approximately $39,000 and $35,000, respectively.$16,000. Net realized loss from the sale of marketable securities for the six months ended June 30, 2019 was approximately $11,000. Unrealized net gain from investments in marketable securities for the three and ninesix months ended SeptemberJune 30, 20172019 was approximately $115,000$44,000 and $26,000,$252,000, respectively. Unrealized net (loss)Net realized gain from investments inthe sale of marketable securities for the three and nine months ended SeptemberJune 30, 2019 was approximately $16,000. Net realized gain from the sale of marketable securities for the three months ended June 30, 2018 was approximately ($37,000) and ($9,000), respectively.$4,000. Net realized loss from the sale of marketable securities for the six months ended June 30, 2018 was approximately $4,000. Unrealized net (loss) gain from investments in marketable securities for the three and ninesix months ended SeptemberJune 30, 20172018 was approximately (105,000)$41,000 and $215,000,$29,000, respectively. For further details refer to Note 3 to Condensed Consolidated Financial Statements (unaudited).

Equity loss from operations in residential real estate partnership:partnership (Orlando, FL):

Equity loss from operations in residential real estate partnership for the ninesix months ended SeptemberJune 30, 2018 was approximately $144,000. Equity loss from operationsThis property was sold in residential real estate partnership forFebruary 2018 and the nine months ended September 30, 2017 wasCompany recognized a gain on the sale of approximately $14,000 and $167,000, respectively. For further details, refer to Note 4 to Condensed Consolidated Financial Statements (unaudited).$5.47 million, net of incentive fee in the first quarter of 2018.

Net income from other investments:

Net income from other investments for the three and ninesix months ended SeptemberJune 30, 20182019 was approximately $80,000$97,000 and $371,000,$175,000, respectively. Net income from other investments for the three and ninesix months ended SeptemberJune 30, 20172018 was approximately $80,000$73,000 and $428,000,$291,000, respectively. For further details refer to Note 54 to Condensed Consolidated Financial Statements (unaudited).

Interest, dividend and other income:

Interest, dividend and other income for the three and ninesix months ended SeptemberJune 30, 20182019 was approximately $83,000$153,000 and $271,000,$238,000, respectively. Interest, dividend and other income for the three and ninesix months ended SeptemberJune 30, 20172018 was approximately $109,000$98,000 and $373,000,$188,000, respectively. The increases in the three and six-month comparable periods was primarily due to increased interest income from investments in US T-bills.

EXPENSES

Interest expense for the three and six months ended June 30, 2019 as compared with the same periods in 2018 decreased by approximately $14,000 (49%) and $20,000 (41%), respectively. The decreases in the three and nine-monthsix- month comparable periods waswere primarily due to decreased dividend income, offset partially by increase in interest income from T-bills.

EXPENSES

Rental and other properties operating expenses for the three and nine months ended September 30, 2018 as compared with the same periods in 2017 increased by $309,000 (908%) and $294,000 (333%), respectively. The increases were primarily the result of $319,000 in estimated environmental remediation costs relating the Company’s property located in Montpelier, Vermont. For further details refer to Note 9 to Condensed Consolidated Financial Statements (unaudited)

General and administrative expenses for the three and nine months ended September 30, 2018 as compared with the same periods in 2017 decreased by $25,000 (22%) and $23,000 (10%), respectively. The decreases were primarily attributable to decreased travel, dues and subscriptions expenses relating to Courtland Investments, Inc. of approximately $46,000, partially offset by increased costs relating to a proposed real estate venture in Orlando which was not pursued and the related deposits were written off.

Interest expense for the nine months ended September 30, 2018 as compared with the same period in 2017 increased by approximately $18,000 (37%). The increase was primarily due to increaseddecrease margin borrowings and increased interest rates.decreased Note Payable to Affiliate.

EFFECT OF INFLATION:

Inflation affects the costs of holding the Company'sCompany’s investments. Increased inflation would decrease the purchasing power of our mainly liquid investments.

LIQUIDITY, CAPITAL EXPENDITURE REQUIREMENTS AND CAPITAL RESOURCES

The Company'sCompany’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 $1.34$1.0 million due on demand, and contributions committed to other investments of approximately $1.2 million$884,000 due upon demand. The $9.99$9.96 million in margin is primarily related to the purchase of US T-bills at quarter end. The T-bills were sold in October 2018July 2019 and the related margin was repaid. The purchase of T-bills at each fiscal quarter end is for the purposes of qualifying for the REIT asset test. The funds necessary to meet the otherthese obligations are expected from the proceeds from the sales of investments, distributions from investments and available cash.

MATERIAL COMPONENTS OF CASH FLOWS

For the ninesix months ended SeptemberJune 30, 2018,2019, net cash used in operating activities was approximately $1.4 million,$371,000, primarily consisting of operating expenses less interest, dividend and $500,000 partial payment of the incentive fee due to the Advisor.other income.

For the ninesix months ended SeptemberJune 30, 2018,2019, net cash provided byused in investing activities was approximately $8.43 million.$219,000. This consisted primarily of distributions from investment in residential real estate partnership of $7.525 million (mainly from the sales proceeds of the Orlando, Florida property), net proceeds from redemptionspurchases of marketable securities of $1.14 million, distributions from$780,000, contribution to other investments of $1.56 million, proceeds from collection$655,000 and contribution to investment in residential partnership (Fort Myers, FL) of mortgage loan receivable of $500,000 and distribution from affiliate of $193,000.$250,000. These sourcesuses of funds were partially offset by usessources of cash consisting primarily of $1.38 million in purchases$836,000 of net proceeds from sales and redemptions of marketable securities, distributions from other investments of $405,000 and $1.08 milliondistribution from affiliate of contributions to other investments.$221,000.

For the ninesix months ended SeptemberJune 30, 2018,2019, net cash provided by financing activities was approximately $7.07 million,$746,000, consisting of margin borrowings of $9.73 million$506,000 dividends paid and $92,000 of proceeds from stock options exercised.$340,000 principal payment on note due to affiliate. These sourcesuses of funds were partially offset by a dividend paymentincreased margin borrowings (net of $2.53 million and repaymentrepayments) of note payable to affiliate of $210,000.$100,000.

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'sSEC’s rules and forms.

There were no changes in the Company'sCompany’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

As previously reported we have one current program to repurchaseon December 14, 2018, HMG announced that its Board of Directors has authorized the purchase of up to $600,000$500,000 of outstanding shares of ourHMG common stock from time to time inon the open market at prevailing market prices or inthrough privately negotiated transactions. ThisThe program was approved by our Board of Directors onwill be in place through December 31, 2021. During the six months ended June 30, 2016 and expires on June 29, 2021. As of September 30, 2018, the maximum dollar value of shares that may yet be purchased under the program is $259,719. During the nine months ended September 30, 20182019, there were no shares purchased as part of this publicly announced program.

(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.