| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2021
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock - Par value $1.00 per share | HMG | NYSE Amex |
PAGE | |||||
NUMBER | |||||
PART I. | Financial Information | ||||
Item 1. | Financial Statements | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
(UNAUDITED) | ||||||||
ASSETS | ||||||||
Investment properties, net of accumulated depreciation: | ||||||||
Office building and other commercial property | $ | 918,264 | $ | 925,963 | ||||
Total investment properties, net | 918,264 | 925,963 | ||||||
Cash and cash equivalents | 9,305,099 | 15,382,596 | ||||||
Investments in marketable securities | 3,178,457 | 3,473,521 | ||||||
Other investments | 5,267,342 | 5,585,666 | ||||||
Investment in affiliate | 1,208,164 | 1,442,423 | ||||||
Loans, notes and other receivables | 1,321,850 | 2,519,570 | ||||||
Investment in residential real estate partnership, Fort Myers, FL | 3,627,598 | 3,627,598 | ||||||
Deferred income tax asset | 27,499 | - | ||||||
Other assets | 63,795 | 55,152 | ||||||
TOTAL ASSETS | $ | 24,918,068 | $ | 33,012,489 | ||||
LIABILITIES | ||||||||
Margin payable | $ | 3,908,897 | $ | 9,916,774 | ||||
Accounts payable, accrued expenses and other liabilities | 223,095 | 373,649 | ||||||
Note payable to affiliate | 650,000 | 1,000,000 | ||||||
Amounts due to Adviser for incentive fee | - | 81,333 | ||||||
Dividends payable | - | 506,646 | ||||||
Deferred income taxes payable | - | 77,485 | ||||||
TOTAL LIABILITIES | 4,781,992 | 11,955,887 | ||||||
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 shares issued and 1,007,248 shares outstanding as of June 30, 2020; and 1,013,292 shares issued and outstanding as of December 31, 2019 | 1,013,292 | 1,013,292 | ||||||
Additional paid-in capital | 23,859,686 | 23,859,686 | ||||||
Less: treasury shares: 6,044 as of June 30, 2020 and zero as of December 31, 2019 | (66,392 | ) | - | |||||
Undistributed gains from sales of properties, net of losses | 54,136,119 | 54,136,119 | ||||||
Undistributed losses from operations | (59,042,944 | ) | (58,203,938 | ) | ||||
Total stockholders' equity | 19,899,761 | 20,805,159 | ||||||
Noncontrolling interest | 236,315 | 251,443 | ||||||
TOTAL EQUITY | 20,136,076 | 21,056,602 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 24,918,068 | $ | 33,012,489 |
June 30, | December 31, | ||||||||
2021 | 2020 | ||||||||
(UNAUDITED) | |||||||||
ASSETS | |||||||||
Investment properties, net of accumulated depreciation: | |||||||||
Office building and other commercial property | $ | 1,419,173 | $ | 1,431,539 | |||||
Total investment properties, net | 1,419,173 | 1,431,539 | |||||||
Cash and cash equivalents | 4,537,040 | 4,883,923 | |||||||
Investments in marketable securities | 2,828,497 | 3,406,328 | |||||||
Other investments | 5,230,720 | 4,940,403 | |||||||
Investment in affiliate | 1,098,407 | 1,206,782 | |||||||
Loans, notes and other receivables | 1,502,816 | 1,419,760 | |||||||
Investment in residential real estate partnership | 3,251,896 | 3,552,896 | |||||||
Other assets | 73,851 | 49,937 | |||||||
TOTAL ASSETS | $ | 19,942,400 | $ | 20,891,568 | |||||
LIABILITIES | |||||||||
Note payable to affiliate | $ | 400,000 | $ | 650,000 | |||||
Dividends payable | 0 | 503,624 | |||||||
Accounts payable, accrued expenses and other liabilities | 478,969 | 206,402 | |||||||
Deferred income tax liability | 142,125 | 107,237 | |||||||
TOTAL LIABILITIES | 1,021,094 | 1,467,263 | |||||||
STOCKHOLDERS' EQUITY | |||||||||
Excess common stock, $1 par value; 100,000 shares authorized: 0 shares issued | 0 | 0 | |||||||
Common stock, $1 par value; 1,050,000 shares authorized, 1,016,848 shares issued and outstanding as of June 30, 2021 and 1,013,292 shares issued and 1,007,248 outstanding as of December 31, 2020 | 1,016,848 | 1,013,292 | |||||||
Additional paid-in capital | 23,919,818 | 23,859,686 | |||||||
Less: Treasury shares at cost zero and 6,044 shares as of June 30, 2021 and December 31, 2020, respectively | 0 | (66,392 | ) | ||||||
Accumulated deficit | (6,260,368 | ) | (5,623,557 | ) | |||||
Total stockholders' equity | 18,676,298 | 19,183,029 | |||||||
Noncontrolling interest | 245,008 | 241,276 | |||||||
TOTAL EQUITY | 18,921,306 | 19,424,305 | |||||||
TOTAL LIABILITIES AND EQUITY | $ | 19,942,400 | $ | 20,891,568 |
1 |
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
REVENUES | ||||||||||||||||
Real estate rentals and related revenue | $ | 20,281 | $ | 19,516 | $ | 40,562 | $ | 39,031 | ||||||||
Total Revenues | 20,281 | 19,516 | 40,562 | 39,031 | ||||||||||||
EXPENSES | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Rental and other properties | 41,244 | 16,311 | 95,545 | 33,781 | ||||||||||||
Adviser's base fee | 165,000 | 165,000 | 330,000 | 330,000 | ||||||||||||
General and administrative | 33,597 | 23,793 | 122,314 | 104,761 | ||||||||||||
Professional fees and expenses | 97,122 | 20,987 | 182,082 | 114,928 | ||||||||||||
Directors' fees and expenses | 22,617 | 19,000 | 40,867 | 37,250 | ||||||||||||
Depreciation and amortization | 3,850 | 3,850 | 7,699 | 7,699 | ||||||||||||
Interest expense | 3,368 | 6,587 | 7,933 | 19,329 | ||||||||||||
Total expenses | 366,798 | 255,528 | 786,440 | 647,748 | ||||||||||||
Loss before other income and income taxes | (346,517 | ) | (236,012 | ) | (745,878 | ) | (608,717 | ) | ||||||||
Net realized and unrealized gains (losses) from marketable securities | 128,899 | 484,272 | 191,842 | (385,507 | ) | |||||||||||
Equity loss from operations of residential real estate partnership | (157,000 | ) | 0 | (301,000 | ) | 0 | ||||||||||
Net income from other investments | 89,066 | 58,425 | 132,550 | 172,268 | ||||||||||||
Other than temporary impairment losses from other investments | 0 | (265,000 | ) | 0 | (315,000 | ) | ||||||||||
Interest, dividend and other income | 65,994 | 83,089 | 121,566 | 177,468 | ||||||||||||
Total other income (loss) | 126,959 | 360,786 | 144,958 | (350,771 | ) | |||||||||||
(Loss) income before income taxes | (219,558 | ) | 124,774 | (600,920 | ) | (959,488 | ) | |||||||||
(Provision for) benefit from income taxes | (36,103 | ) | 4,605 | (32,159 | ) | 105,354 | ||||||||||
Net (loss) income | (255,661 | ) | 129,379 | (633,079 | ) | (854,134 | ) | |||||||||
(Gain) loss from non-controlling interest | (5,569 | ) | (3,516 | ) | (3,732 | ) | 15,128 | |||||||||
Net (loss) income attributable to the company | $ | (261,230 | ) | $ | 125,863 | $ | (636,811 | ) | $ | (839,006 | ) | |||||
Weighted average common shares outstanding-basic and diluted | 1,007,881 | 1,011,758 | 1,007,566 | 1,012,525 | ||||||||||||
Net (loss) income per common share: | ||||||||||||||||
Basic and diluted net income (loss) per share | $ | (0.26 | ) | $ | 0.12 | $ | (0.63 | ) | $ | (0.83 | ) |
2 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES |
IN STOCKHOLDERS’ EQUITY |
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 |
AND 2020 |
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUES | ||||||||||||||||
Real estate rentals and related revenue | $ | 19,516 | $ | 18,786 | $ | 39,031 | $ | 37,572 | ||||||||
Total Revenues | 19,516 | 18,786 | 39,031 | 37,572 | ||||||||||||
EXPENSES | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Rental and other properties | 16,311 | 31,539 | 33,781 | 45,013 | ||||||||||||
Adviser's base fee | 165,000 | 165,000 | 330,000 | 330,000 | ||||||||||||
General and administrative | 23,793 | 28,412 | 104,761 | 109,502 | ||||||||||||
Professional fees and expenses | 20,987 | 42,594 | 114,928 | 122,025 | ||||||||||||
Directors' fees and expenses | 19,000 | 20,661 | 37,250 | 38,161 | ||||||||||||
Depreciation and amortization | 3,850 | 3,850 | 7,699 | 7,699 | ||||||||||||
Interest expense | 6,587 | 14,286 | 19,329 | 29,301 | ||||||||||||
Total expenses | 255,528 | 306,342 | 647,748 | 681,701 | ||||||||||||
Loss before other income and income taxes | (236,012 | ) | (287,556 | ) | (608,717 | ) | (644,129 | ) | ||||||||
Net realized and unrealized gains (losses) from investments in marketable securities | 484,272 | 60,082 | (385,507 | ) | 240,556 | |||||||||||
Net income from other investments | 58,425 | 97,126 | 172,268 | 174,981 | ||||||||||||
Other than temporary impairment losses from other investments | (265,000 | ) | - | (315,000 | ) | - | ||||||||||
Interest, dividend and other income | 83,089 | 152,964 | 177,468 | 238,428 | ||||||||||||
Total other income (loss) | 360,786 | 310,172 | (350,771 | ) | 653,965 | |||||||||||
Income (loss) before income taxes | 124,774 | 22,616 | (959,488 | ) | 9,836 | |||||||||||
Benefit from (provision for) income taxes | 4,605 | (7,416 | ) | 105,354 | (2,944 | ) | ||||||||||
Net income (loss) | 129,379 | 15,200 | (854,134 | ) | 6,892 | |||||||||||
(Gain) loss from non-controlling interest | (3,516 | ) | (5,650 | ) | 15,128 | (8,458 | ) | |||||||||
Net income (loss) attributable to the company | $ | 125,863 | $ | 9,550 | $ | (839,006 | ) | $ | (1,566 | ) | ||||||
Weighted average common shares outstanding-basic and diluted | 1,011,758 | 1,013,292 | 1,012,525 | 1,013,292 | ||||||||||||
Net income (loss) per common share: | ||||||||||||||||
Basic and diluted net income (loss) per share | $ | 0.12 | $ | 0.01 | $ | (0.83 | ) | $ | (0.00 | ) |
Common Stock | Additional | Accumulated | Treasury Stock | Total Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Paid-In Capital | Deficit | Shares | Cost | Equity | ||||||||||||||||||||||
Balance as of January 1, 2021 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | (5,623,557 | ) | 6,044 | $ | (66,392 | ) | $ | 19,183,029 | ||||||||||||||
Net Loss for the three months ended March 31, 2021 | - | 0 | 0 | (375,581 | ) | - | 0 | (375,581 | ) | |||||||||||||||||||
Balance as of March 31, 2021 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | (5,999,138 | ) | 6,044 | $ | (66,392 | ) | 18,807,448 | |||||||||||||||
Net Loss for three months ended June 30, 2021 | - | 0 | 0 | (261,230 | ) | - | 0 | (261,230 | ) | |||||||||||||||||||
Stock Options Exercised | 9,600 | 9,600 | 120,480 | 0 | 0 | 0 | 130,080 | |||||||||||||||||||||
Retirement of 6,044 treasury shares | (6,044 | ) | (6,044 | ) | (60,348 | ) | 0 | (6,044 | ) | 66,392 | 0 | |||||||||||||||||
Balance as of June 30, 2021 | 1,016,848 | $ | 1,016,848 | $ | 23,919,818 | $ | (6,260,368 | ) | 0 | $ | 0 | $ | 18,676,298 |
Total | ||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated | Treasury Stock | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Paid-In Capital | Deficit | Shares | Cost | Equity | ||||||||||||||||||||||
Balance as of January 1, 2020 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | (4,067,819 | ) | 0 | $ | 0 | $ | 20,805,159 | |||||||||||||||
Net Loss for three months ended March 31, 2020 | - | 0 | 0 | (964,869 | ) | - | 0 | (964,869 | ) | |||||||||||||||||||
Balance as of March 31, 2020 | 1,013,292 | 1,013,292 | 23,859,686 | (5,032,688 | ) | 0 | 0 | 19,840,290 | ||||||||||||||||||||
Net Income for three months ended June 30, 2020 | - | 0 | 0 | 125,863 | - | 0 | 125,863 | |||||||||||||||||||||
Purchased treasury shares | 0 | 0 | 0 | 0 | 6,044 | (66,392 | ) | (66,392 | ) | |||||||||||||||||||
Balance as of June 30, 2020 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | (4,906,825 | ) | 6,044 | $ | (66,392 | ) | $ | 19,899,761 |
Common Stock | Additional | Undistributed Gains from Sales of Properties | Undistributed (Losses) gains from | Treasury Stock | Total Stockholders' | |||||||||||||||||||||||||||
Shares | Amount | Paid-In Capital | Net of Losses | Operations | Shares | Cost | Equity | |||||||||||||||||||||||||
Balance as of January 1, 2019 | 1,046,393 | $ | 1,035,493 | $ | 24,076,991 | $ | 54,642,765 | $ | (58,473,808 | ) | $ | 33,101 | $ | (340,281 | ) | $ | 21,033,055 | |||||||||||||||
Net income (loss) for three months ended March 31, 2019 | - | - | - | - | (11,116 | ) | - | - | (11,116 | ) | ||||||||||||||||||||||
Balance as of March 31, 2019 | 1,046,393 | $ | 1,046,393 | $ | 24,157,986 | $ | 54,642,765 | $ | (58,484,924 | ) | 33,101 | $ | (340,281 | ) | $ | 21,021,939 | ||||||||||||||||
Net loss for three months ended June 30, 2019 | - | - | - | - | 9,550 | - | - | 9,550 | ||||||||||||||||||||||||
Retired 33.101 treasury shares | (33,101 | ) | (33,101 | ) | (307,180 | ) | (33,101 | ) | 340,281 | |||||||||||||||||||||||
Balance as of June 30, 2019 | 1,013,292 | $ | 1,013,292 | $ | 23,850,806 | $ | 54,642,765 | $ | (58,475,374 | ) | - | $ | - | $ | 21,031,489 |
Common Stock | Additional | Undistributed Gains from Sales of Properties | Undistributed (Losses) gains from | Treasury Stock | Total Stockholders' | |||||||||||||||||||||||||||
Shares | Amount | Paid-In Capital | Net of Losses | Operations | Shares | Cost | Equity | |||||||||||||||||||||||||
Balance as of January 1, 2020 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | 54,136,119 | $ | (58,203,938 | ) | - | $ | - | $ | 20,805,159 | |||||||||||||||||
Net loss for three months ended March 31, 2020 | - | - | - | - | (964,869 | ) | - | - | (964,869 | ) | ||||||||||||||||||||||
Balance as of March 31, 2020 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | 54,136,119 | $ | (59,168,807 | ) | - | $ | - | $ | 19,840,290 | |||||||||||||||||
Net income for three months ended June 30, 2020 | - | - | - | - | 125,863 | - | - | 125,863 | ||||||||||||||||||||||||
Purchased treasury shares | - | - | - | - | - | 6,044 | (66,392 | ) | (66,392 | ) | ||||||||||||||||||||||
Balance as of June 30, 2020 | 1,013,292 | $ | 1,013,292 | $ | 23,859,686 | $ | 54,136,119 | $ | (59,042,944 | ) | 6,044 | $ | (66,392 | ) | $ | 19,899,761 |
3 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss attributable to the Company | $ | (839,006 | ) | $ | (1,566 | ) | ||
Adjustments to reconcile net loss attributable to the Company to net cash used in operating activities: | ||||||||
Depreciation expense | 7,699 | 7,699 | ||||||
Net income from other investments, excluding impairment losses | (172,268 | ) | (174,981 | ) | ||||
Other than temporary impairment losses from other investments | 315,000 | - | ||||||
Net loss (gain) from investments in marketable securities | 385,507 | (240,556 | ) | |||||
Net (loss) income attributable to non-controlling interest | (15,128 | ) | 8,458 | |||||
Deferred income tax (benefit) expense | (105,354 | ) | 2,944 | |||||
Changes in assets and liabilities: | ||||||||
Other assets and other receivables | (10,922 | ) | 20,182 | |||||
Accounts payable, accrued expenses and other liabilities | (231,516 | ) | 5,211 | |||||
Total adjustments | 173,018 | (371,043 | ) | |||||
Net cash used in operating activities | (665,988 | ) | (372,609 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Net proceeds from sales and redemptions of securities | 839,547 | 836,411 | ||||||
Investments in marketable securities | (929,990 | ) | (779,519 | ) | ||||
Distribution from investment in residential real estate partnership, Orlando, FL | - | 6,187 | ||||||
Contribution to investment in residential real estate partnership, Fort Myers, FL | - | (250,000 | ) | |||||
Distributions from other investments | 394,423 | 404,971 | ||||||
Contributions to other investments | (205,472 | ) | (654,873 | ) | ||||
Proceeds from collections of mortgage loans, notes, and other receivables | 1,200,000 | - | ||||||
Distribution from affiliate | 220,899 | 220,899 | ||||||
Purchases and improvements of properties | - | (2,718 | ) | |||||
Net cash provided by (used in) investing activities | 1,519,407 | (218,642 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Margin borrowings, net of repayments | (6,007,878 | ) | 100,258 | |||||
Dividends paid | (506,646 | ) | (506,646 | ) | ||||
Repayment of note payable to affiliate | (350,000 | ) | (340,000 | ) | ||||
Purchase of treasury shares | (66,392 | ) | - | |||||
Net cash used in financing activities | (6,930,916 | ) | (746,388 | ) | ||||
Net decrease in cash and cash equivalents | (6,077,497 | ) | (1,337,639 | ) | ||||
Cash and cash equivalents at beginning of the period | 15,382,596 | 19,738,174 | ||||||
Cash and cash equivalents at end of the period | $ | 9,305,099 | $ | 18,400,535 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for interest | $ | 19,000 | $ | 29,000 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITES: | ||||||||
Retirement of treasury stock during period | $ | - | $ | 340,281 |
For the six months ended June 30, | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss attributable to the Company | $ | (636,811 | ) | $ | (839,006 | ) | ||
Adjustments to reconcile net loss attributable to the Company to net cash used in operating activities: | ||||||||
Depreciation expense | 7,699 | 7,699 | ||||||
Net income from other investments, excluding impairment losses | (132,550 | ) | (172,267 | ) | ||||
Other than temporary impairment losses from other investments | 0 | 315,000 | ||||||
Loss on sale of land | 29,210 | 0 | ||||||
Equity loss from operations of residential real estate partnership | 301,000 | 0 | ||||||
Net (gains) losses from investments in marketable securities | (191,842 | ) | 385,507 | |||||
Net income (loss) attributable to noncontrolling interest | 3,732 | (15,128 | ) | |||||
Deferred income taxes | 34,887 | (105,354 | ) | |||||
Changes in assets and liabilities: | ||||||||
Other assets and other receivables | (53,660 | ) | (10,922 | ) | ||||
Accounts payable, accrued expenses and other liabilities | 78,352 | (231,516 | ) | |||||
Total adjustments | 76,828 | 173,019 | ||||||
Net cash used in operating activities | (559,983 | ) | (665,988 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Net proceeds from sales and redemptions of marketable securities | 1,233,705 | 839,547 | ||||||
Investments in marketable securities | (464,032 | ) | (929,990 | ) | ||||
Distributions from other investments | 249,580 | 394,423 | ||||||
Contributions to other investments | (437,035 | ) | (205,472 | ) | ||||
Proceeds from collections of mortgage loans, notes and other receivables | 124 | 1,200,000 | ||||||
Distribution from affiliate | 138,062 | 220,899 | ||||||
Purchases and improvements of properties | (10,253 | ) | 0 | |||||
Proceeds from sale of property | 129,926 | 0 | ||||||
Additions in mortgage loans, notes, and other receivables | (3,433 | ) | 0 | |||||
Net cash provided by investing activities | 836,644 | 1,519,407 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Margin borrowings, net of repayments | 0 | (6,007,878 | ) | |||||
Dividend paid | (503,624 | ) | (506,646 | ) | ||||
Repayment of note payable to affiliate | (250,000 | ) | (350,000 | ) | ||||
Stock options exercised | 130,080 | 0 | ||||||
Purchase of treasury shares | 0 | (66,392 | ) | |||||
Net cash used in financing activities | (623,544 | ) | (6,930,916 | ) | ||||
Net decrease in cash and cash equivalents | (346,883 | ) | (6,077,497 | ) | ||||
Cash and cash equivalents at beginning of the period | 4,883,923 | 15,382,596 | ||||||
Cash and cash equivalents at end of the period | $ | 4,537,040 | $ | 9,305,099 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for interest | $ | 8,000 | $ | 19,000 | ||||
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Retirement of treasury stock during the period | $ | 66,392 | $ | 0 | ||||
Accrual of construction costs incurred in period but not paid (Vermont) | $ | 194,918 | $ | 0 | ||||
Mortgage receivable on sale of land during the period (Rhode Island) | $ | 49,876 | $ | 0 |
4 |
Management continues monitoring
2. | REVOCATION OF REIT STATUS AND LIQUIDATION |
During the quarter ended June 30, 2020, the value of our portfolio in marketable securities improved substantially (over 50%) from the first quarter of 2020. This is in line with the substantial recovery of all major U.S. stock indices during the current quarter. We have made no substantial changes to our outlook regarding our marketable securities holdings from the first quarter. Our other investments with a carrying value of $5.27 million experienced further valuation impairments of $265,000 during the current quarter (refer to Note 6). We will continue monitoring these investments to determine if any further valuation adjustments are necessary. Our construction project in Fort Myers, Florida remains on schedule and is projected for completionCompany, followed by the first quarteradoption of 2021.
a plan of liquidation (the “Liquidation”) of the Company, subject to approval by the Board of Directors and majority vote of shareholders. The purpose of this Revocation and Liquidation is to liquidate the Company’s operations/assets in an orderly manner based upon market conditions permitting reasonable exit values for its existing portfolios. Because of the complexities associated with maintaining REIT status during this Liquidation and a two-year REIT liquidation constraint, if ultimately executed, the Company has not participated in any financial assistance provided under the CARES Actplans to revoke REIT status effective January 1, 2022, and is not expected to require any such assistance. Our liquidity remains strong and able to support continuing operations, fund commitments in other investments and meet all other liabilities as they become due in the foreseeable future. We continue to seek and explore development opportunities primarily in the multi-family segment, together with qualified partners in various markets.
3. | NEW ACCOUNTING PRONOUNCEMENTS |
5 |
4. | INVESTMENT IN RESIDENTIAL REAL ESTATE PARTNERSHIP (FORT MYERS, FL) |
As previously reported on Form 8-K dated July 19, 2019, pursuant
June 30, 2021 the carrying value of this investment is approximately $3.2 million.
5. | 260 RIVER CORP. MONTPELIER, VERMONT |
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6. | INVESTMENTS IN MARKETABLE SECURITIES |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Description | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net realized (loss) gain from sales of securities | $ | (44,000 | ) | $ | 16,000 | $ | (71,000 | ) | $ | (11,000 | ) | |||||
Unrealized net gain (loss) of securities | 528,000 | 44,000 | (315,000 | ) | 252,000 | |||||||||||
Total net gain (loss) from investments in marketable securities | $ | 484,000 | $ | 60,000 | $ | (386,000 | ) | $ | 241,000 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Description | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net realized loss from sales of securities | $ | (59,000 | ) | $ | (44,000 | ) | $ | (53,000 | ) | $ | (71,000 | ) | ||||
Unrealized net gain (loss) of securities | 188,000 | 528,000 | 245,000 | (315,000 | ) | |||||||||||
Total net gain (loss) from investments in marketable securities | $ | 129,000 | $ | 484,000 | $ | 192,000 | $ | (386,000 | ) |
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.
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.
7. | OTHER INVESTMENTS |
As previously reported, in the first quarter of 2019 the Company’s $300,000 investments in a private insurance company publicly registered all shares and began trading on the NASDAQ on March 29, 2019. Accordingly, this investment is included in marketable securities, and as of June 30, 2020, had an unrealized loss of approximately $175,000.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Investment Description | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Partnerships owning real estate and related investments | $ | 33,000 | $ | 85,000 | $ | 163,000 | $ | 127,000 | ||||||||
Partnerships owning diversified businesses | 6,000 | 9,000 | 8,000 | 37,000 | ||||||||||||
Technology and related investments | 14,000 | - | 14,000 | - | ||||||||||||
Income (loss) from investment in 49% owned affiliate (T.G.I.F. Texas, Inc.) | 5,000 | 3,000 | (13,000 | ) | 11,000 | |||||||||||
Total net income from other investments | $ | 58,000 | $ | 97,000 | $ | 172,000 | $ | 175,000 |
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June 30, 2020 and December 31, 2019, aggregated by investment category and the length of time that investments have been in a continuous loss position:
As of June 30, 2020 | ||||||||||||||||||||||||
12 Months or Less | Greater than 12 Months | Total | ||||||||||||||||||||||
Investment Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Partnerships owning investments in real estate and related | $ | 171,000 | (50,000 | ) | $ | - | $ | - | $ | 171,000 | $ | (50,000 | ) | |||||||||||
Partnerships owning diversified businesses investments | $ | 879,000 | $ | (95,000 | ) | - | - | 879,000 | (95,000 | ) | ||||||||||||||
Total | $ | 1,050,000 | $ | (145,00 | ) | $ | - | $ | - | $ | 1,050,000 | $ | (145,000 | ) |
As of December 31, 2019 | ||||||||||||||||||||||||
12 Months or Less | Greater than 12 Months | Total | ||||||||||||||||||||||
Investment Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Partnerships owning investments in real estate and related | $ | 169,000 | $ | (52,000 | ) | $ | - | $ | - | $ | 169,000 | $ | (52,000 | ) | ||||||||||
Partnerships owning diversified businesses investments | 363,000 | (57,000 | ) | 188,000 | (45,000 | ) | 551,000 | (102,000 | ) | |||||||||||||||
Total | $ | 532,000 | $ | (109,000 | ) | $ | 188,000 | $ | (45,000 | ) | $ | 720,000 | $ | (154,000 | ) |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
Investment Description | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Partnerships owning real estate and related investments | $ | 49,000 | $ | 33,000 | $ | 50,000 | $ | 163,000 | ||||||||
Partnerships owning diversified businesses | 9,000 | 6,000 | 53,000 | 8,000 | ||||||||||||
Technology and related investments | 0 | 14,000 | 0 | 14,000 | ||||||||||||
Income (loss) from investment in 49% owned affiliate (T.G.I.F. Texas, Inc.) | 31,000 | 5,000 | 30,000 | (13,000 | ) | |||||||||||
Total net income from other investments | $ | 89,000 | $ | 58,000 | $ | 133,000 | $ | 172,000 |
There were no OTTI adjustments for the six months ended June 30, 2019.
8. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
Fair value measurement at reporting date using Description Total
June 30,
2020 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 $ 1,255,000 $ 1,255,000 $ - $ - US T-Bills 7,599,000 7,599,000 Marketable securities: Corporate debt securities 665,000 - 665,000 - Marketable equity securities 2,513,000 2,513,000 - - Total assets $ 12,032,000 $ 11,367,000 $ 665,000 $ - Fair value measurement at reporting date using Description Total
December 31,
2019 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 $ 606,000 $ 606,000 $ - $ - US T-Bills 14,130,000 14,130,000 Marketable securities: Corporate debt securities 474,000 - 474,000 - Marketable equity securities 2,999,000 2,999,000 - - Total assets $ 18,209,000 $ 17,735,000 $ 474,000 $ - 7 8.
Six months ended June 30, | 2020 | 2019 | ||||||
Current: | ||||||||
Federal | $ | - | $ | - | ||||
State | - | - | ||||||
- | - | |||||||
Deferred: | ||||||||
Federal | $ | 74,000 | $ | (2,000 | ) | |||
State | 17,000 | (1,000 | ) | |||||
91,000 | (3,000 | ) | ||||||
Decreased valuation allowance | 14,000 | - | ||||||
Total | $ | 105,000 | $ | (3,000 | ) |
Six months ended June 30, | 2021 | 2020 | ||||||
Current: | ||||||||
Federal | $ | 0 | $ | 0 | ||||
State | 3,000 | 0 | ||||||
3,000 | 0 | |||||||
Deferred: | ||||||||
Federal | $ | (17,000 | ) | $ | 74,000 | |||
State | (3,000 | ) | 17,000 | |||||
(20,000 | ) | 91,000 | ||||||
Valuation allowance | (15,000 | ) | 14,000 | |||||
Total | $ | (32,000 | ) | $ | 105,000 |
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10. | STOCK OPTIONS |
Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans | ||||||||||
Equity compensation plan approved by shareholders | 9,600 | $ | 13.55 | 36,608 | ||||||||
Equity compensation plan not approved by shareholders | — | — | — | |||||||||
Total | 9,600 | $ | 13.55 | 36,608 |
As2021:
Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans | ||||||||||
Equity compensation plan approved by shareholders | 9,600 | $ | 13.55 | 42,752 | ||||||||
Options exercised | (9,600 | ) | 13.55 | 0 | ||||||||
Equity compensation plan not approved by shareholders | 0 | 0 | 0 | |||||||||
Total | 0 | $ | 0 | 42,752 |
11. | RELATED PARTY EXPENSE |
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RESULTS OF OPERATIONS
The Company reported net income of approximately $126,000 ($0.12 per share) and $10,000net loss of $839,000 ($0.010.83 per share), respectively.
REVENUES
Advisor to CII for its corporate office. Rentals and related revenues for the three and six months ended June 30, 2020 were approximately $19,000 and $39,000, respectively and primarily consists of rent from the Advisor to CII for its corporate office. For the three and six months ended June 30, 2019 rental and related revenues were $19,000 and $38,000, respectively.
Net realized loss from the sale of marketable securities for the three and six months ended June 30, 2020 was approximately $44,000 and $71,000, respectively. Net realized gain (loss) from the sale of marketable securities for the three and six months ended June 30, 2019 was approximately $16,000 and ($11,000), respectively. Unrealized net gain (loss) from investments in marketable securities for the threesecurities:
For
Interest, dividend and other income:
Interest, dividend and other incomeadjustments for the three and six months ended June 30, 2020, were $265,000 and $315,000, respectively. This was approximately $83,000 and $177,000, respectively. Interest, dividend and other income for the three and six months ended June 30, 2019 was approximately $153,000 and $238,000, respectively. The decreasesresult of one investment written down in the threefirst and six-month comparable periods was primarily duesecond quarters of 2020. For further details, refer to decreased interest incomeNote 7 to the Condensed Consolidated Financial Statements (unaudited).
EXPENSES
Expenses for rental and other properties for the three and six months ended June 30, 20202021, as compared with the same periods in 2019 decreased2020 increased by approximately $15,000 (48%$25,000 (or 153%) and $11,000 (25%$62,000 (or 183%), respectively. The decreases in the three and six month comparable periods wereThis was primarily due to decreased repairsa loss on the sale of land held for development located in Hopkinton, Rhode Island. The property had a carrying value of $209,000 and maintenance atwas sold for $200,000. After commissions, legal and closing costs the loss was approximately $29,000. The Company had attempted to develop this property for several years and was unsuccessful. We also incurred approximately $23,000 in pre-construction costs not previously billed relating to our property in Montpelier, Vermont.
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insurance costs of approximately $6,000, increased dues and subscriptions of $7,000 and $5,000 in placement fees relating to other investments.
(a) |
Not applicable
Evaluation of Disclosure Controls and Procedures. |
(b) | Changes in Internal Control Over Financial Reporting. |
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The following table presents information regarding the shares of our common stock we purchased during each of the six calendar months ended June 30, 2020:
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (1) | Maximum Dollar Plan (1) | |||||||||||||
April 1 –30, 2020 | 672 | $ | 10.60 | 672 | $ | 492,879 | ||||||||||
May 1 – 31, 2020 | 802 | $ | 10.18 | 802 | $ | 484,711 | ||||||||||
June 1 – 30, 2020 | 4,570 | $ | 11.18 | 4,570 | $ | 433,608 |
HMG/COURTLAND PROPERTIES, INC. | |
Dated: August 13, 2021 | /s/ Maurice Wiener |
CEO and President | |
Dated: August 13, | /s/ Carlos Camarotti |
Vice President- Finance and Controller | |
Principal Accounting Officer |
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