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, 2003
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.
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(Exact name of small business issuer as specified in its charter)
Delaware 59-1914299
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1870 S. Bayshore Drive, Coconut Grove, Florida 33133
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(Address of principal executive offices) (Zip Code)
305-854-6803
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(Registrant's telephone number, including area code)
Not Applicable
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(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 CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
1,089,135 Common shares were outstanding as of April 30, 2003.
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 2003 (Unaudited) and December 31, 2002.............................................1
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 2003 and 2002 (Unaudited).......................................2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2003 and 2002 (Unaudited).......................................3
Notes to Condensed Consolidated Financial Statements (Unaudited).............................4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................8
Item 3. Controls and Procedures............................................................12
PART II. Other Information
Item 1. Legal Proceedings . . . ..........................................................13
Item 6. Exhibits and Reports on Form 8-K..................................................13
Signatures...............................................................................................14
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.
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------------------------------------------
March 31, December 31,
2003 2002
ASSETS (UNAUDITED)
Investment properties, net of accumulated depreciation:
Commercial and industrial $2,705,577 $2,737,158
Hotel and club facility 4,508,215 4,607,964
Yacht slips 343,527 379,332
Land held for development 1,854,318 1,854,318
------------------- -----------------
Total investment properties, net 9,411,637 9,578,772
Cash and cash equivalents 2,434,385 1,863,534
Investments in marketable securities 3,157,789 3,730,820
Other investments 5,572,928 5,694,448
Investment in affiliate 2,906,645 2,894,196
Cash restricted pending delivery of securities 32,290 23,921
Loans, notes and other receivables 1,057,977 1,142,882
Notes and advances due from related parties 1,018,476 1,414,974
Deferred taxes 794,000 801,000
Other assets 211,261 195,612
------------------- -----------------
TOTAL ASSETS $26,597,388 $27,340,159
=================== =================
LIABILITIES
Mortgages and notes payable 8,594,346 8,622,406
Accounts payable and accrued expenses 356,149 235,948
Sales of securities pending delivery 110,139 80,117
Other liabilities 6,266 679,891
------------------- -----------------
TOTAL LIABILITIES $9,066,900 $9,618,362
Minority interests 275,918 270,738
------------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; 2,000,000 shares
authorized; none issued
Excess common stock, $1 par value; 500,000 shares authorized;
none issued
Common stock, $1 par value; 1,500,000 shares authorized;
1,315,635 shares issued and outstanding 1,315,635 1,315,635
Additional paid-in capital 26,571,972 26,571,972
Undistributed gains from sales of properties, net of losses 38,879,924 38,840,780
Undistributed losses from operations (47,565,097) (47,329,464)
------------------- -----------------
19,202,434 19,398,923
Less: Treasury stock, at cost (226,500 shares) (1,659,114) (1,659,114)
Notes receivable from exercise of stock options (288,750) (288,750)
------------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 17,254,570 17,451,059
------------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,597,388 $27,340,159
=================== =================
See notes to the condensed consolidated financial statements
(1)
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------
Three months ended March 31,
REVENUES 2003 2002
---- ----
Real estate rentals and related revenue $411,823 $404,505
Marina revenues 123,569 128,140
Net loss from investments in marketable securities (24,645) (196,561)
Net gain from other investments 68,629 31,497
Interest, dividend and other income 62,933 78,574
-----------------------------------------
Total revenues 642,309 446,155
EXPENSES
Operating expenses:
Rental and other properties 147,410 148,365
Marina expenses 94,544 90,105
Depreciation and amortization 146,935 151,875
Adviser's base fee 225,000 165,000
General and administrative 73,130 68,355
Professional fees and expenses 45,096 40,707
Directors' fees and expenses 11,800 18,723
-----------------------------------------
Total operating expenses 743,915 683,130
Interest expense 126,977 137,066
Minority partners' interests in operating gain (loss) of
consolidated entities 50 (12,736)
-----------------------------------------
Total expenses 870,942 807,460
-----------------------------------------
Loss before sales of properties and income taxes (228,633) (361,305)
Gain on sales of properties, net 39,144 7,695
-----------------------------------------
Loss before income taxes (189,489) (353,610)
Provision for (benefit from) income taxes 7,000 (175,250)
-----------------------------------------
Net loss ($196,489) ($178,360)
=========================================
Net Loss Per Common Share:
Basic and diluted ($0.18) ($0.16)
=========================================
Weighted average common shares outstanding, basic and diluted 1,089,135 1,089,135
See notes to the condensed consolidated financial statements
(2)
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31,
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($196,489) ($178,360)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 146,935 151,875
Net gain from other investments (68,629) (31,497)
Gain on sales of properties, net (39,144) (7,695)
Net loss from marketable securities 24,645 196,561
Minority partners' interest in operating gains (losses) 50 (12,736)
Deferred income taxes 7,000 (88,000)
Changes in assets and liabilities:
Decrease in other assets and other receivables (21,747) (7,197)
Net proceeds from sales and redemptions of securities 736,179 993,858
(Increase) decrease in restricted cash (8,369) 221,529
Increased investments in marketable securities (157,774) (376,799)
Increase in accounts payable and accrued expenses 120,202 55,233
Decrease in current income taxes payable (89,000)
Decrease in other liabilities (673,626) (186,598)
---------------- -----------------
Total adjustments 65,722 819,534
---------------- -----------------
Net cash (used in) provided by operating activities (130,767) 641,174
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from disposals of properties 45,000 40,145
Decrease (increase) in notes and advances from related parties 396,498 (37,521)
Increase in mortgage loans and notes receivables (2,594)
Decrease in mortgage loans and notes receivables 107,405 42,756
Distributions from other investments 270,595 15,418
Contributions to other investments (89,820) (350,024)
---------------- -----------------
Net cash provided by (used in) investing activities 729,678 (291,820)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (28,060) (59,484)
---------------- -----------------
Net cash used in financing activities (28,060) (59,484)
---------------- -----------------
Net increase in cash and cash equivalents 570,851 289,870
Cash and cash equivalents at beginning of the period 1,863,534 2,598,536
---------------- -----------------
Cash and cash equivalents at end of the period $2,434,385 $2,888,406
---------------- -----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $127,000 $83,000
---------------- -----------------
Cash paid during the period for income taxes $1,000
---------------- -----------------
See notes to the condensed consolidated financial statements
(3)
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 prepared in accordance with instructions for Form 10QSB,
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 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's Annual Report for the year ended December 31, 2002. The
balance sheet as of December 31, 2002 was derived from audited financial
statements as of that date. The results of operations for the three months ended
March 31, 2003 are not necessarily indicative of the results to be expected for
the full year.
2. RECENT ACCOUNTING PRONOUNCEMENTS.
---------------------------------
In June 2002, the FASB issued Statement 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement requires the recognition of a
liability for a cost associated with an exit or disposal activity when the
liability is incurred versus the date the Company commits to an exit plan. In
addition, this Statement states the liability should be initially measured at
fair value. The Statement is effective for exit or disposal activities that are
initiated after December 31, 2002. The primary effect to the Company's financial
statements would be in the timing of accounting recognition of potential future
exit activities. The adoption of this pronouncement did not have a material
effect on the Company's financial statements.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure. This statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in the financials statements about the
effects of stock-based compensation. The transitional guidance and annual
disclosure provisions of this Statement is effective for the December 31, 2002
financial statements. The interim reporting disclosures requirements are
effective for the Company's March 31, 2003 10-QSB. Because the Company continues
to account for employee stock-based compensation under APB opinion No. 25, the
transitional guidance of SFAS No. 148 has no effect on the financial statements
at this time. There was no pro forma effect for stock based compensation during
the three months ended March 31, 2003 and 2002.
(4)
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107
and a rescission of FASB Interpretation No. 34. This Interpretation elaborates
on the disclosures to be made by a guarantor in its interim and annul financial
statements about its obligations under guarantees issued. The Interpretation
also clarifies that a guarantor is required to recognize, at inception of a
guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and did not
have a material effect on the Company's financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. It applies in the first fiscal
year or interim period beginning after June 15, 2003, to VIE's in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
FIN 46 applies to public enterprises as of the beginning of the applicable
interim or annual period. We have identified no VIE's, accordingly, the adoption
of FIN 46 is not expected to have a material impact on the Company's
consolidated financial position, liquidity, or results of operations.
3. GAIN ON SALES OF PROPERTIES
---------------------------
For the three months ended March 31, 2003 Grove Isle Yacht Club Associates
(GIYCA) sold one yacht slip located in Miami, Florida resulting in a net gain to
the Company of approximately $39,000. In connection with this sale the Company
received a $22,500 promissory note with interest and principal due on August 31,
2003. This note bears interest at 9% per annum.
(5)
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
4. 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's overall
current investment objectives and activities its entire marketable securities
portfolio is classified as trading.
Net loss from investments in marketable securities for the three months ended
March 31, 2003 and 2002 is summarized below:
Three Months Ended March 31,
-----------------------------------------------------------------------
Description 2003 2002
-----------------------------------------------------------------------
Net realized loss from sales of
securities ($36,000) ($59,000)
Unrealized net gain (loss) in trading
securities 41,000 (136,000)
Net change in sales of securities
pending delivery (30,000) (2,000)
--------------------------------
Total net loss from investments in
marketable securities ($25,000) ($197,000)
================================
For the three months ended March 31, 2003 net realized loss from sales of
marketable securities of approximately $36,000 consisted of approximately
$49,000 of gross losses net of $13,000 of gross gains. For the three months
ended March 31, 2002 net realized loss from sales of marketable securities of
approximately $59,000 consisted of approximately $221,000 of gross losses net of
$162,000 of gross gains.
Net change in sales of securities pending delivery represents the changes in the
market value of those securities and the delivery of securities to realize gain
or loss from these transactions.
(6)
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
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.
5. OTHER INVESTMENTS
-----------------
As of March 31, 2003, the Company has committed to invest approximately $11.3
million in other investments primarily in private capital funds, of which
approximately $9.8 million has been funded. The carrying value of other
investments (which reflects distributions and valuation adjustments) is
approximately $5.6 million. During the three months ended March 31, 2003 the
Company has made follow-on contributions to two existing investments of
approximately $90,000 and has received approximately $271,000 in distributions
from other investments. The distributions in 2003 primarily consisted of one
return of capital distribution in the amount of $206,000 from an investment in a
partnership which recapitalized one of its operating businesses and distributed
the proceeds to its partners.
Net loss from other investments for the three months ended March 31, 2003 and
2002, is summarized below:
2003 2002
----------------------------
Real estate development and operation $59,000 $11,000
Income from investment in 49% owned
affiliate (T.G.I.F. Texas, Inc.) 13,000 23,000
Others, net (3,000) (3,000)
----------------------------
Total net gain from other investments $69,000 $31,000
============================
6. NOTES AND ADVANCES DUE FROM AND TRANSACTIONS WITH RELATED PARTIES
-----------------------------------------------------------------
In March 2003, the Company received a cash payment of $500,000 from the Adviser
which brought the balance due from the Adviser as of March 31, 2003 to
approximately $259,000.
(7)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
---------------------
The Company reported a net loss of approximately $196,000 (or $.18 per share)
for the three months ended March 31, 2003. This is as compared with a net loss
of approximately $178,000 (or $.16 per share) for the three months ended March
31, 2002. Total revenues for the three months ended March 31, 2003 as compared
with the same period in 2002, increased by approximately $196,000 or 44%. Total
expenses for the three months ended March 31, 2003, as compared with the same
periods in 2002, increased by approximately $63,000 or 9%. Gain on sales of
properties for the three months ended March 31, 2003 was approximately $39,000
as compared with gains of approximately $8,000 for the three months ended March
31, 2002.
REVENUES
Rentals and related revenues for the three months ended March 31, 2003 as
compared with the same comparable period in 2002 remained relatively consistent.
Net loss from investments in marketable securities for the three months ended
March 31, 2003 was approximately $25,000 as compared with a net loss of
approximately $197,000 for the same comparable three month period in 2002. See
discussion in Note 4 to Condensed Consolidated Financial Statements (unaudited).
Net gain from other investments for the three months ended March 31, 2003 was
approximately $69,000 as compared with a net gain of approximately $31,000 for
the same three month comparable period in 2002. See discussion in Note 5 to
Condensed Consolidated Financial Statements (unaudited).
Interest and dividend income for the three months ended March 31, 2003 was
approximately $63,000 as compared with approximately $79,000 for the same three
month comparable period in 2002. This decrease of approximately $16,000 (or 20%)
was primarily due to fewer investments in the portfolio that yielded interest
and dividends combined with lower market interest rates.
EXPENSES
Rental and other properties expenses for the three months ended March 31, 2003
remained consistent with that for the three months ended March 31, 2002.
Marina expenses for the three months ended March 31, 2003 increased by
approximately $4,000 or 5% as compared with the same comparable three month
period in 2002 primarily as a result of increased repairs and maintenance and
increased payroll costs.
Adviser's base fee increased by $60,000 (or 36%) for the three months ended
March 31, 2003 as compared with the same period in 2002. As previously
disclosed, this was as a result of a shareholder-approved contractual increase
in the Adviser's base fee. This amendment increased the annual Adviser base fee
from $660,000 to $900,000 effective January 1, 2003.
(8)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
Director's fees and expenses decreased by approximately $7,000 (or 37%) for the
three months ended March 31, 2003 as compared with the same period in 2002
primarily as a result of a reduction of meeting expenses.
Interest expense decrease by approximately $10,000 (or 7%) for the three months
ended March 31, 2003 as compared with the same period in 2003 primarily as a
result of decreased variable interest rates and overall reduction in outstanding
debt.
(9)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
EFFECT OF INFLATION:
--------------------
Inflation affects the costs of operating and maintaining the Company's
investments. In addition, rentals under certain leases are based in part on the
lessee's sales and tend to increase with inflation, and certain leases provide
for periodic adjustments according to changes in predetermined price indices.
LIQUIDITY, CAPITAL EXPENDITURE REQUIREMENTS AND CAPITAL RESOURCES
-----------------------------------------------------------------
The Company's material commitments in 2003 primarily consist of maturities of
debt obligations of approximately $3.9 million and commitments to fund private
capital investments of approximately $1.6 million due upon demand. The funds
necessary to meet these obligations are expected to be available from the
proceeds of sales of properties or investments, refinancing, distributions from
investments and available cash. The majority of maturing debt obligations for
2003 is a note payable to the Company's 49% owned affiliate, T.G.I.F. Texas,
Inc. ("TGIF") of approximately $3.6 million. This amount is due on demand. It is
expected that this obligation when due to TGIF would be paid with funds
available from distributions from its investment in TGIF and from available
cash.
MATERIAL COMPONENTS OF CASH FLOWS
---------------------------------
For the three months ended March 31, 2003, net cash used in operating activities
was approximately $131,000. Included in this amount are net proceeds from sales
and redemptions of marketable securities of approximately $736,000 less
increased investments in of marketable securities of approximately $158,000 and
decreased other liabilities (margin payables) of approximately $674,000.
For the three months ended March 31, 2003, net cash provided by investing
activities was approximately $730,000. This was comprised primarily of
repayments of notes and advances due from related parties of approximately
$396,000 and distributions from other investments of approximately $271,000.
For the three months ended March 31, 2003, net cash used in financing activities
was approximately $28,000 consisting repayments of mortgages and notes payable.
(10)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(continued)
RECENT ACCOUNTING PRONOUNCEMENTS.
---------------------------------
In June 2002, the FASB issued Statement 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Statement requires the recognition of a
liability for a cost associated with an exit or disposal activity when the
liability is incurred versus the date the Company commits to an exit plan. In
addition, this Statement states the liability should be initially measured at
fair value. The Statement is effective for exit or disposal activities that are
initiated after December 31, 2002. The primary effect to the Company's financial
statements would be in the timing of accounting recognition of potential future
exit activities. The adoption of this pronouncement did not have a material
effect on the Company's financial statements.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation--Transition and Disclosure. This statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in the financials statements about the
effects of stock-based compensation. The transitional guidance and annual
disclosure provisions of this Statement is effective for the December 31, 2002
financial statements. The interim reporting disclosures requirements are
effective for the Company's March 31, 2003 10-QSB. Because the Company continues
to account for employee stock-based compensation under APB opinion No. 25, the
transitional guidance of SFAS No. 148 has no effect on the financial statements
at this time. There was no pro forma effect for stock based compensation during
the three months ended March 31, 2003 and 2002.
(11)
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107
and a rescission of FASB Interpretation No. 34. This Interpretation elaborates
on the disclosures to be made by a guarantor in its interim and annul financial
statements about its obligations under guarantees issued. The Interpretation
also clarifies that a guarantor is required to recognize, at inception of a
guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and did have
a material effect on the Company's financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities ("VIE's") created after January 31, 2003, and to VIE's in which an
enterprise obtains an interest after that date. It applies in the first fiscal
year or interim period beginning after June 15, 2003, to VIE's in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
FIN 46 applies to public enterprises as of the beginning of the applicable
interim or annual period. We have identified no VIE's, accordingly, the adoption
of FIN 46 is not expected to have a material impact on the Company's
consolidated financial position, liquidity, or results of operations.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
The Company's Principal Executive Officer and Principal Financial Officer have
reviewed the Company's disclosure controls and procedures within 90 days prior
to the filing of this report. Based upon this review, these officers believe
that the Company's disclosure controls and procedures are effective in ensuring
that material information related to the Company is made known to them by others
within the Company.
(b) There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls during the
quarter covered by this report or from the end of the reporting period to the
date of this Form 10-QSB.
(12)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No items to report.
Item 6. Exhibits and Reports on Form 8-K
(a) Certifications pursuant to 18 USC Section 1350-Sarbanes-Oxley Act of
2002. Filed herewith.
(b) There were no reports on Form 8-K filed for the quarter ended March
31, 2003.
(13)
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 14, 2003
/s/Lawrence Rothstein
President, Treasurer and Secretary
Principal Financial Officer
Dated: May 14, 2003
/s/Carlos Camarotti
Vice President - Finance and Controller
Principal Accounting Officer
(14)
Exhibits:
--------
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Maurice Wiener, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of HMG/Courtland
Properties, Inc.
2. Based on my knowledge, this quarterly report does no contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
___________________________________
/s/ Maurice Wiener, Principal Executive Officer
CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lawrence Rothstein, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of HMG/Courtland
Properties, Inc.
2. Based on my knowledge, this quarterly report does no contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
___________________________________
/s/ Lawrence Rothstein, Principal Financial Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of HMG/Courtland Properties, Inc. (the
"Company") on Form 10-QSB for the period ending March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Maurice
Wiener, Principal Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of section 13 or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company for the periods indicated in the Report.
____________________________________
/s/ Maurice Wiener, Principal Executive Officer
HMG/Courtland Properties, Inc.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of HMG/Courtland Properties, Inc. (the
"Company") on Form 10-QSB for the period ending March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Lawrence Rothstein, Principal Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company for the periods indicated in the Report.
____________________________________
/s/ Lawrence Rothstein, Principal Financial Officer
HMG/Courtland Properties, Inc.